EXHIBIT 10.30
SUBLEASE AGREEMENT
SUBLEASE INFORMATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
DATE: November 6, 2003
LANDLORD: CITIBANK (WEST), FSB
TENANT: GENIUS PRODUCTS, INC.
RENTABLE AREA OF PREMISES: 5,603 Square Feet
PREMISES: Suite 210
TERM COMMENCEMENT: January 1, 2004
TERM EXPIRATION: December 31, 2008
BASIC RENT: $11,206.00 per month
EXHIBITS:
A - MASTER LEASE
A-1 - PREMISES
A-2 - EXPANSION SPACE
B - RULES AND REGULATIONS
C - PARKING RULES AND REGULATIONS
D - BROKERS
THIS SUBLEASE INFORMATION SHALL BE READ AS ONE DOCUMENT WITH THE SUBLEASE
AGREEMENT AND IN THE EVENT OF ANY CONFLICT BETWEEN THE SUBLEASE INFORMATION AND
THE SUBLEASE AGREEMENT, THE LATTER SHALL CONTROL.
LANDLORD TENANT
CITIBANK (WEST), FSB, GENIUS PRODUCTS, INC.,
a federal savings bank a Nevada corporation
BY: /s/ [Illegible] BY: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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NAME: ▇. ▇▇▇▇▇▇▇▇ NAME: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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TITLE: V.P. TITLE: CEO
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, VP
Corporate Realty Service
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Emp #▇▇▇▇▇▇▇▇▇▇
TABLE OF CONTENTS
PAGE
1. LEASE..............................................................1
2. MASTER LEASE.......................................................1
3. TERM; POSSESSION...................................................2
3.1 Initial Term...........................................2
3.2 Possession.............................................2
3.3 Option to Extend Term..................................3
3.4 Right of First Refusal.................................4
4. RENT...............................................................4
4.1 Basic Rent.............................................4
4.2 Annual Increase........................................5
4.3 Rental Abatement.......................................5
4.4 Partial Month Proration................................5
5. OTHER CHARGES PAYABLE BY TENANT....................................5
5.1 Common Area Expenses...................................5
5.2 Additional Charges.....................................7
5.3 Personal Property Taxes................................7
6. SECURITY DEPOSIT...................................................7
6.1 Landlord Security Deposit..............................7
7. USE................................................................7
7.1 Use....................................................8
7.2 Suitability............................................8
7.3 Prohibited Uses........................................8
7.4 Hazardous Materials....................................8
8. SERVICES AND UTILITIES............................................10
8.1 Landlord's Obligations................................10
8.2 Tenant's Obligations..................................10
8.3 Tenant's Additional Requirements......................10
8.4 Nonliability..........................................11
9. INSURANCE.........................................................11
9.1 Coverage..............................................11
9.2 Insurance Policies....................................12
9.3 Waiver of Subrogation.................................12
10. MAINTENANCE AND REPAIRS...........................................12
10.1 Landlord's Obligations................................12
10.2 Tenant's Obligations..................................13
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TABLE OF CONTENTS (CONTINUED)
PAGE
11. ALTERATIONS AND ADDITIONS.........................................13
11.1 Alterations...........................................13
11.2 Landlord Consent......................................14
11.3 Alterations Are Property of Landlord..................14
11.4 Tenant's Property.....................................14
12. INDEMNIFICATION...................................................14
13. LIENS.............................................................14
14. ASSIGNMENT AND SUBLETTING.........................................15
14.1 Landlord's Consent Required...........................15
14.2 Landlord's Options....................................15
14.3 Additional Conditions; Excess Rent....................16
14.4 Reasonable Disapproval................................16
14.5 No Release of Tenant..................................17
14.6 Administrative and Attorneys' Fees....................17
14.7 Material Inducement...................................17
15. ENTRY BY LANDLORD.................................................17
16. HOLDING OVER......................................................17
17. DAMAGE OR DESTRUCTION.............................................18
17.1 Partial Damage - Insured..............................18
17.2 Partial Damage - Uninsured............................18
17.3 Total Destruction.....................................18
17.4 Damage Near End of the Term...........................18
17.5 Landlord's Obligations................................18
18. DEFAULT; REMEDIES.................................................19
18.1 Default by Tenant.....................................19
18.2 Remedies of Landlord..................................19
18.3 Rights and Obligations Under the Bankruptcy Code......20
18.4 Default by Landlord; Mortgage Protection..............21
19. CONDEMNATION......................................................21
20. LATE CHARGES......................................................22
21. LANDLORD'S PERFORMANCE OF TENANT'S OBLIGATIONS....................22
22. PARKING...........................................................22
23. ESTOPPEL CERTIFICATE..............................................22
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TABLE OF CONTENTS (CONTINUED)
PAGE
24. BROKERS...........................................................23
25. NOTICES...........................................................23
26. SUBORDINATION.....................................................23
27. FORCE MAJEURE.....................................................23
28. SURRENDER OF PREMISES.............................................24
29. RULES AND REGULATIONS.............................................24
30. intentionally deleted.............................................24
31. LIMITATION ON LANDLORD'S LIABILITY................................24
32. GENERAL PROVISIONS................................................24
32.1 Waiver................................................24
32.2 Time..................................................24
32.3 Severability..........................................24
32.4 Quiet Possession......................................25
32.5 Successors and Assigns................................25
32.6 Attorneys' Fees.......................................25
32.7 Cost of Suit..........................................25
32.8 Entire Agreement......................................25
32.9 Light and Air Easement................................25
32.10 Governing Law.........................................25
32.11 Joint and Several Liability...........................25
32.12 Headings; Exhibits....................................26
32.13 Recording.............................................26
32.14 Financial Statements..................................26
32.15 Tenant's Authority....................................26
32.16 Construction..........................................26
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SUBLEASE AGREEMENT
This Sublease Agreement (the "Lease") is dated, for reference
purposes only, November 6, 2003 and is between Citibank (West), FSB, a federal
savings bank ("Landlord"), and GENIUS PRODUCTS, INC., a Nevada corporation
("Tenant").
RECITALS
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A. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee, successor in interest to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as landlord ("MASTER LANDLORD") and Landlord's,
predecessor-in-interest Glendale Savings and Loan Association, as tenant,
entered into that certain Lease, dated June 30, 1978, as amended by Letter
Agreement dated July 13, 1978 (together the "MASTER LEASE") for the real
property described in the Master Lease (the "MASTER PREMISES"). A copy of the
Master Lease is attached as Exhibit A hereto. The Master Premises includes the
Building, land, and Common Areas as described herein.
B. Capitalized terms not otherwise defined herein are used as
defined in the Lease.
C. Landlord desires to lease to Tenant, and Tenant desires to lease
from Landlord that certain office space known as Suite 210 and consisting of
approximately 5,603 square feet (the "Premises") on the 2nd floor of the
building known as ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Building") on the
terms and subject to the covenants and conditions contained herein. For purposes
of this Lease, the Building is agreed to contain 26,007 leasable square feet.
The Premises exclude the common stairways, stair ▇▇▇▇▇, hallways, access ways
and pipes, ducts, conduits, wires and appurtenant fixtures serving exclusively,
or in common with, other parts of the Building.
NOW, THEREFORE, the parties agree as follows:
1. LEASE. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises for the term and subject to the covenants and
conditions set forth herein. Tenant accepts the Premises "AS IS", without
representation or warranty as to their condition or suitability for Tenant's
intended use, and with no obligation on the part of Landlord to make any
alterations or modifications to the Premises or any area outside the Premises
for the benefit of Tenant. Any alterations or improvements desired by Tenant or
required by any and all applicable laws to the Premises shall be made by Tenant
at its sole cost and expense. Plans and specifications for Tenant's alterations
and improvements shall be subject to the prior written approval of Master
Landlord and Landlord. Tenant shall, at Tenant's sole cost and expense, comply
promptly with all applicable statutes, ordinances, rules, regulations, orders,
restrictions of record, and requirements in effect during the term hereof or any
part of the term hereof regulating the use by Tenant of the Premises. Upon
termination of this Lease, Tenant shall be responsible for the cost of removing
any alterations which were installed for or by Tenant in the Premises, except
that Tenant shall not be required to remove any alterations if under the
applicable provisions of the Master Lease such alterations may remain in the
Premises upon the termination of the Master Lease.
2. MASTER LEASE.
(a) Except as otherwise expressly provided in
Subsection 2(b) below, the covenants, agreements, provisions and conditions of
the Master Lease, are made a part of and incorporated into this Lease as if
recited in full in this Lease, except that the following sections of the Master
Lease are not incorporated by reference: Articles 1, 2, 3.01, 2nd paragraph of
3.03, 3.05, 2nd paragraph of 4.01(a), 4.05, 5.01, 5.02, 5.03, 5.04, 6, 8, 12, 16
and 21. Except as otherwise expressly modified in this Lease, this Lease is
subject to all of the terms and conditions of the Master Lease. As applied to
this Lease, the word tenant in the Master Lease will be deemed to refer to
Tenant under this Lease. The obligations of the tenant under the Master Lease
(other than the obligation to pay rent under the Master Lease) will be deemed
the obligations of the Tenant under this Lease and the rights of the landlord
under the Master Lease will be deemed the rights of the Landlord under this
Lease. Tenant hereby assumes and agrees to perform the obligations of Landlord
as Tenant under the Master Lease to the extent such terms and conditions are
applicable to the Premises subleased pursuant to this Lease. As between the
parties to this Lease only, in the event of a conflict between the terms of the
Master Lease and this Lease, the terms of this Lease will control.
Notwithstanding the foregoing, Landlord does not assume the obligations of
Master Landlord under the provisions of the Master Lease, but shall use
commercially reasonable efforts in attempting to cause Master Landlord to
perform its obligations under the Master Lease for the benefit of Tenant.
(b) Tenant shall not commit or permit to be committed on
the Premises any act or omission which would violate any term, covenant or
condition of the Master Lease. In the event of the termination of Landlord's
interest as tenant under the Master Lease due to Tenant's act or omission, then
this Lease shall terminate automatically without any liability of Landlord to
Tenant. If the Landlord's interest as tenant under the Master Lease is
terminated for any reason other than Tenant's act or omission, and if it is not
possible for Lease to be assumed by Master Landlord, this Lease shall terminate
automatically and Tenant shall have a claim against Landlord for reasonable
damages suffered by reason of such termination. Whenever the consent of Master
Landlord is required under the Master Lease, (i) the consent of Landlord shall
also be required under this Lease and (ii) provided Landlord shall grant its
consent, at Tenant's sole cost and expense, Landlord agrees to use its
reasonable, good faith efforts to obtain Master Landlord's consent of Tenant.
(c) Tenant recognizes that Landlord is not in a position
to render any of the services or to perform any of the obligations required of
Master Landlord by the terms of the Master Lease, and Landlord's sole obligation
with respect to such performance shall be to use commercially reasonable efforts
to obtain Master Landlord's compliance with the Master Lease upon Tenant's
written request. Landlord will not be liable to Tenant for any default of the
Master Landlord under the Master Lease. Tenant will not have any claim against
Landlord based on the Master Landlord's failure or refusal to comply with any of
the provisions of the Master Lease unless that failure or refusal is a result of
Landlord's act or failure to act. Despite Master Landlord's failure or refusal
to comply with any of those provisions of the Master Lease, this Lease will
remain in full force and effect and Tenant will pay the Basic Rent (hereinafter
defined) and all other charges provided for in this Lease without any abatement,
deduction or setoff.
(d) At any time and on prior notice to Tenant and with
the written consent of Master Landlord, Landlord may elect to require Tenant to
perform its obligations under this Lease directly to Master Landlord, and Tenant
shall do so on Landlord's election in which event Tenant shall send to Landlord
from time to time copies of all notices and other communications it shall send
to and secure from Master Landlord.
3. TERM; POSSESSION.
3.1. INITIAL TERM. The term of this Lease shall commence
on January 1, 2004 or upon Master Landlord approval of the Lease, whichever is
last (the "Commencement Date") and shall end sixty (60) months following the
Commencement Date (the "Expiration Date").
3.2. POSSESSION.
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(a) Tenant shall be permitted to take early possession
of the Premises on upon full execution of the Lease, for the purpose of making
tenant improvements in accordance with Section 11 below. Early occupancy of the
Premises by Tenant may occur on or after December 1, 2003. All terms and
conditions of this Lease shall apply to any such early possession and early
occupancy, including the abatement of rent as described in Section 4.4 below,
with the intention that the Commencement Date will be January 1, 2004.
(b) The parties hereto acknowledge that obtaining the
prior written consent of Master Landlord in form and substance acceptable to
Landlord is a condition subsequent to the validity of this Lease. In the event
Landlord has not obtained any written consent required by Master Landlord under
the Master Lease prior to January 1, 2004 or is otherwise unable to deliver
possession of the Premises on the Commencement Date, Landlord shall not be
liable for any damage caused thereby, but Tenant shall not be liable for rent
until such time as Landlord offers to deliver possession of the Premises to
Tenant and has secured and delivered to Tenant the written consent of Master
Landlord. If Landlord is unable to obtain Master Landlord's consent to this
Lease on or before December 15, 2003 (the "Termination Date"), this Lease shall
terminate and be of no force and effect without any liability to Landlord. If,
however, Landlord delivers to Tenant the consent of Master Landlord on or before
the Termination Date, the condition subsequent set forth in this Section shall
be satisfied and this Lease shall continue in full force and effect.
3.3. OPTION TO EXTEND TERM.
(a) Tenant shall have the option (the "Renewal Option")
to extend the term of this Lease for one (1) additional period of five (5) years
(the "Renewal Term"). The Renewal Option shall be exercisable by Tenant
delivering a renewal notice to Landlord not earlier than nine (9) months prior
to the expiration of the initial term and not later than six (6) months prior to
such date. Tenant shall have no right to extend the term of this Lease if Tenant
is in default at the time it exercises the Renewal Option or on the date the
Renewal Term is scheduled to begin. Tenant must exercise the Renewal Option with
respect to the entire Premises.
(b) Rent for the Premises during any Renewal Term shall
be equal to the Fair Market Rental Value (as defined below) at the time of
commencement of such Renewal Term. Whenever "Fair Market Rental Value" is to be
determined pursuant to this Section 3.2(b), it shall mean the monthly rental
rate per square foot of net rentable area prevailing at the time of the
applicable valuation date for space in the Building and in comparable buildings
in Del Mar / Solana Beach area of San Diego, CA that are comparable to the space
in question, multiplied by the net rentable area of the Premises. Following
Tenant's request, but no earlier than eight (8) months prior to the expiration
of the current term, Landlord shall notify Tenant of the Fair Market Rental
Value applicable for such Renewal Term. If Tenant notifies that it does not
agree with the Fair Market Rental Value then the parties agree to bargain in
good faith to arrive at a Fair Market Rental Value acceptable to Landlord and
Tenant. If Landlord and Tenant are unable to agree on Fair Market Rental Value
within sixty (60) days, the rental shall be determined by an MAI Appraiser who
has substantial experience in the leasing market in Del Mar / Solana Beach area
of San Diego, CA selected by mutual agreement. If Landlord and Tenant cannot
agree on an MAI Appraiser, each party at its sole cost and expense shall select
an MAI Appraiser with similar experience and the two appraisers shall determine
the Fair Market Rental Value. If the two appraisers cannot agree on the Fair
Market Rental Value, but the higher determination of one appraiser is not more
than five percent (5%) greater than the lower determination of the other, the
Fair Market Rental Value shall be equal to the lower determination plus one-half
the difference between the two determinations. If the two appraisers cannot
agree on the Fair Market Rental Value within five percent (5%) within fifteen
(15) days of appointment, they shall jointly select a third MAI Appraiser with
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similar experience and the third appraiser shall choose one of the Fair Market
Values determined by the other two appraisers as the Fair Market Rental Value.
The decision of the third appraiser shall be final and binding on Landlord and
Tenant. Costs of the third appraiser shall be divided equally between the
parties.
3.4. RIGHT OF FIRST REFUSAL.
(a) Landlord hereby grants to Tenant the option
("Refusal Option") to expand the Premises to include approximately 1,234
rentable square feet located in Suite 209 on the second floor of the Building in
the area depicted on Exhibit A-2 attached to this Lease and incorporated herein
by this reference (the "Expansion Space"). If at any time, commencing January 1,
2006, during the term of this Lease the Expansion Space becomes available to the
open market for lease, Landlord shall notify Tenant in writing (the "Expansion
Notice") of the availability. Tenant shall have the right for thirty (30) days
after delivery of the Expansion Notice (the "Notice Period") to notify Landlord
in writing of Tenant's intention to lease the Expansion Space and incorporate
the Expansion Space into the Premises (as herein defined) upon the same terms
and conditions, including rental rate per square foot, for the remainder of the
Lease Term and Option Term. If Tenant does not elect to lease the Expansion
Space within the Notice Period, Landlord may then freely lease the space to any
other party upon any terms and conditions Landlord chooses to accept without any
further notification to Tenant. If Tenant elects not to exercise this right of
first refusal within the Notice Period, Tenant shall have no further right of
refusal on the Expansion Space.
(b) Tenant's lease of the Expansion Space shall be on
the same terms and conditions as affect the original Premises, except Section
3.4, and shall be accepted "AS IS"; provided, however: (i) Tenant's Share (as
defined below) shall be increased to take into account the additional rentable
square feet of the Expansion Space and all figures in the Lease affected by the
addition of the square footage of the Expansion Space to the Premises shall be
adjusted accordingly; (ii) the annual Basic Rent for the Expansion Space shall
be at the same per square foot rental rate as the annual Basic Rent then payable
for the Premises. By way of example: at the time of the Notice the Basic Rent
has adjusted, in accordance with Lease Section 4.2, to $2.20 per foot per month
then the Expansion Space rent shall be $2.20 per foot per month until the next
adjustment date; (iii) Tenant shall be entitled to three (3) additional
unreserved parking stalls with respect to the Expansion Space; and (iv) as a
result of the addition of the Expansion Space, Tenant shall pay to Landlord an
increase in the Security Deposit in an amount equal to one month rent
attributable to the Expansion Space, which payment shall be delivered to
Landlord with Tenant's notice accepting the Expansion Space.
(c) Notwithstanding anything to the contrary herein
Tenant shall forfeit all rights to the Refusal Option should Tenant be, at the
time of the Expansion Notice, in default under the terms of the Lease.
4. RENT.
4.1. BASIC RENT. Tenant agrees to pay monthly in
advance, without offset, deduction, prior notice, or demand a basic rental
("Basic Rent") to Landlord at Citibank (West), FSB Attn: R.E. Property
Administrator, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other
address as Landlord may direct. One payment of Basic Rent for the first month of
this Lease shall be made concurrently upon the execution hereof and thereafter
Tenant shall pay the Basic Rent on or before the first day of each calendar
month succeeding the Commencement Date during the term of this Lease. Basic Rent
shall be paid to Landlord in lawful money of the United States of America, which
shall be legal tender at the time of payment. Tenant shall pay an annual rent of
One Hundred Thirty Four Thousand Four Hundred Seventy Two and No/100 Dollars
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($134,472.00) per lease year, payable in equal monthly installments of Eleven
Thousand Two Hundred Six and No/100 Dollars ($11,206.00) as Basic Rent. A "Lease
Year" shall mean a 12-month period beginning with the Commencement Date.
4.2. ANNUAL INCREASE. The Basic Rent provided for in
Section 4.1 shall be adjusted effective upon the first day of the month
immediately following the expiration of twelve (12) months from the Commencement
Date and upon the expiration of each twelve (12) months thereafter throughout
the term (including any Renewal Term) by an increase equal to three point five
percent (3.5%) of the then applicable Basic Rent.
4.3 PARTIAL MONTH PRORATION. In the event of a partial
month at the beginning of the term of this Lease, the Basic Rent and any other
charges or costs for such partial month, payable by Tenant shall be prorated on
the basis of a thirty-day (30) month. All Basic Rent and other charges payable
by Tenant pursuant to this Lease shall be payable without relief from valuation
and appraisement laws, and with reasonable attorney's fees and costs of
collection.
4.4 RENTAL ABATEMENT. Provided Tenant is not in default
under any provision of this Lease, Landlord hereby agrees to ▇▇▇▇▇ Tenant's
obligation to pay Basic Rent for the first three (3) months of the initial term
of this Lease. During such abatement period, Tenant shall still be responsible
for all of Tenant's other monetary obligations under the Lease. In the event of
a default under this Lease, Landlord shall be entitled to recover the Basic Rent
which was abated under the provisions of this Section 4.4 ("Abated Amount"). The
Abated Amount shall become immediately due and payable as unpaid rent which had
been earned at the date of the default.
5. OTHER CHARGES PAYABLE BY TENANT.
5.1. COMMON AREA EXPENSES. For purposes of this Lease,
the following terms shall have the meanings described below:
(a) "Base Year" shall mean 2004;
(b) "Excess Taxes" with respect to any tax year shall
mean the amount, if any, by which Real Estate Taxes for such Tax Year exceed the
Real Estate Taxes for the Base Year;
(c) "Excess Expenses" with respect to any Expense Year
shall mean the amount, if any, by which the Expenses for such Expense Year
exceed the Expenses for the Base Year;
(d) "Tax Year" or "Expense Year" shall mean each twelve
(12) consecutive month period commencing January 1st of each year during the
term. Landlord, upon notice to Tenant, may change the Tax Year or Expense Year
from time to time to any other twelve (12) consecutive month period;
(e) "Tenant's Share" shall mean twenty one point five
four percent (21.54%). Tenant's Share has been computed by dividing Landlord's
estimate of the leasable area of the Premises by Landlord's estimate of the
total leasable area within the Building and, in the event that either Landlord's
estimate of the leasable area of the Premises or Landlord's estimate of the
total leasable area within the Building is changed at any time, Tenant's Share
will be appropriately adjusted, and, as to the Tax Year or Expense Year in which
such change occurs, for purposes of this Section 5, Tenant's Share shall be
determined on the basis of the number of days during such Tax Year and Expense
Year at each such percentage;
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(f) "Real Estate Taxes" shall mean all taxes,
assessments and charges levied on or with respect to the Building, land and
common areas or any personal property of Landlord used in the operation of the
Building, or Landlord's interest in the Building or such personal property. Real
Estate Taxes shall include, without limitation, all general real property taxes
and general and special assessments, charges, fees, or assessments for transit,
housing, police, fire, or other governmental services or purported benefits to
the Building, service payments in lieu of taxes, and any tax, fee, or excise on
the act of entering into this Lease or any other lease of space in the Building,
or on the use or occupancy of the Building or any part of the Building, or on
the rent payable under any lease or in connection with the business of renting
space in the Building, that are now or hereafter levied or assessed against
Landlord by the United States of America, the State in which the Building is
located, or any political subdivision, public corporation, district, or any
other political or public entity, and shall also include any other tax, fee,
charge or other excise, however described, that may be levied or assessed as a
substitute for, or as an addition to, in whole or in part, any other Real Estate
Taxes, whether or not now customary or in the contemplation of the parties on
the date of this Lease. Real Estate Taxes shall also include reasonable legal
fees, costs, and disbursements incurred in connection with proceedings to
contest, determine or reduce Real Estate Taxes. Real Estate Taxes shall not
include franchise, transfer, inheritance or capital stock taxes or income taxes
measured by the net income of Landlord from all sources unless, due to a change
in the method of taxation, any of such taxes is levied or assessed against
Landlord as a substitute for, or as an addition to, in whole or in part, any
other tax that would otherwise constitute a Real Estate Tax; and
(g) "Expenses" shall mean the total costs and expenses
paid or incurred by Landlord in connection with the management, operation,
maintenance and repair of the Building, including, without limitation, all sums
expended in connection with the common areas of the Building ("Common Area") for
all general maintenance, repairs, resurfacing or painting, restriping, cleaning,
sweeping and janitorial services; purchase, replacement and maintenance of trash
receptacles located within the Common Area; maintenance and repair of sidewalks,
parking areas, lavatories, washrooms, curbs and Building signs, sprinkler
systems, planting and landscaping; exterior window washing, including windows on
the Premises; lighting and other utilities; directional signs and other markers
or bumpers; maintenance and repair of any fire protection systems, lighting
systems, storm drainage systems, and any other utility system; personnel to
implement such services, including, if Landlord deems necessary, in its sole
discretion, the cost of security guards; garbage, trash, rubbish and waste
removal; any governmental imposition or surcharge imposed upon Landlord or
assessed against any portion of the Common Area, including, without limitation,
any tax, assessment (general or special), fee or imposition or other charge on
any parking space or parking lot or other facility within the Common Areas
(other than the Real Estate Taxes set forth in subsection 5.1(f) above); the
cost to Landlord of any additional improvements made to the Common Area after
commencement of the term or made as a labor saving device or to effect other
economies in the operation or maintenance of the Building or that are required
under any governmental law or regulation that was not applicable to the Premises
or Building at the Commencement Date; such costs to be amortized over such
period as Landlord may determine in its sole discretion, together with interest
on the unamortized balance at the rate of ten percent (10%) per annum or at such
higher rate as may have been paid by Landlord on funds borrowed for the purpose
of constructing such capital improvements; all costs with respect to repairs and
maintenance of utility facilities (including pipes and conduits) serving more
than one tenant's premises, unless caused by the intentional act of Landlord or
the tenant within the premises wherein such repairs are required; public
liability, property damage insurance, fire and extended coverage insurance and
earthquake insurance, if any, on the Premises and the Common Area. In addition,
Tenant shall pay a sum to Landlord for accounting, bookkeeping and collecting of
the expenses in connection with the Common Area in the amount equal to fifteen
percent (15%) of the total of Tenant's pro rata share of the foregoing expenses
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for each calendar year. Landlord may cause any or all of the services to be
provided by an independent contractor or contractors. Expenses shall not include
the utility costs payable by Tenant pursuant to Section 8.2 below.
5.2. ADDITIONAL CHARGES. Tenant shall pay to Landlord as
Additional Charges: Tenant's Share of Excess Taxes and Excess Expenses for each
Tax Year or Expense Year within twenty (20) days after Landlord delivers Tenant
a statement setting forth Tenant's Share of Excess Taxes due for the previous
Tax Year and Excess Expenses due for the previous Expense Year ("Landlord's Tax
and Expense Statement"); or, if Landlord elects, in its sole discretion, 1/12th
of Tenant's Share of Excess Taxes and Excess Expenses for each Tax Year and
Expense Year on or before the first day of each month during the Tax Year or
Expense Year, in advance, in an amount estimated by Landlord and billed by
Landlord to Tenant, and Landlord shall have the right initially to determine
monthly estimates and to revise such estimates from time to time. If the actual
Excess Taxes or Excess Expenses exceed the estimated Excess Taxes or Excess
Expenses paid by Tenant for such Tax Year or Expense Year, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual Excess
Taxes and Excess Expenses within twenty (20) days after the receipt of
Landlord's Tax and Expense Statement, and if the total amount paid by Tenant for
any such Tax Year or Expense Year exceeds the actual Excess Taxes or Excess
Expenses for such Tax Year or Expense Year, such Excess shall be credited
against the next installment of Excess Taxes and Excess Expenses due from Tenant
to Landlord. Any annual increase in Excess Expenses shall be limited to 10% of
the prior Expense Year's Expenses plus Excess Expenses.
5.3. PERSONAL PROPERTY TAXES. Tenant hereby agrees to
pay all taxes which may be levied with respect to Tenant's personal property
located in the Premises including, without limitation, the portion of the
improvements to the Premises, if any, the cost of which was borne by Tenant,
furniture, office equipment and other furnishings. Tenant agrees to use its best
efforts to cause such personal property to be taxed or assessed separately from
the Premises and not as a lien thereon.
6. SECURITY DEPOSIT.
6.1. LANDLORD SECURITY DEPOSIT. Concurrently with the
execution of this Lease, Tenant shall deliver to Landlord the sum of Thirty
Three Thousand Six Hundred Eighteen and No/100 Dollars ($33,618.00) (the
"Deposit") in the form of cash, receipt of which is hereby acknowledged, to
secure the faithful performance by Tenant of all the terms, covenants and
conditions of this Lease by Tenant to be kept and performed during the term
hereof. Tenant agrees that if it shall fail to pay when due any installment of
rent or any other sums provided in this Lease to be paid by Tenant to Landlord,
or if Tenant shall default in or breach any of the other terms, covenants and
conditions of this Lease and Landlord shall suffer any damages as a result of
said default or breach, then in any such event Landlord may, at its option (but
Landlord shall not be required to) apply the Deposit to any rent or other sum
due and unpaid by Tenant to Landlord hereunder and/or to any damage suffered by
Landlord as a result of such default or breach to the extent of the amount of
damage incurred by Landlord in connection with such default or breach. If
Landlord applies the Deposit or a portion thereof as provided in the preceding
sentence, Tenant shall immediately pay to Landlord the amount necessary to
restore the Deposit. Should Tenant comply with all the terms, covenants and
conditions of this Lease and promptly pay all rent herein provided for as it
falls due and all other sums payable by Tenant to Landlord hereunder, the
unappropriated balance of the Deposit shall be returned to Tenant at the
expiration of the term of this Lease or upon any earlier termination. Landlord
shall have the right to commingle the Deposit with other funds of Landlord, and
Tenant shall not be entitled to interest on the Deposit. Should Landlord assign
its interest in the Lease during the term hereof and if Landlord deposits with
the assignee thereof, the then unappropriated funds of the Deposit, thereupon
Landlord shall be discharged from any further liability with respect to the
Deposit.
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7. USE.
7.1. USE. The Premises shall be used and occupied by
Tenant for general office purposes and for no other purpose without the prior
written consent of Landlord and Master Landlord, but in no event in violation of
Master Lease.
7.2. SUITABILITY. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation or warranty with
respect to the Premises or with respect to the suitability for the conduct of
Tenant's business, nor has Landlord agreed to undertake any modification,
alteration or improvement. The taking of possession of the Premises by Tenant
shall conclusively establish that the Premises and the Building were at such
time in satisfactory condition unless within fifteen (15) days after such date
Tenant shall give Landlord written notice specifying in reasonable detail the
respects in which the Premises or the Building were not in satisfactory
condition.
7.3 PROHIBITED USES.
(a) Tenant shall not do or permit anything to be done in
or about the Premises nor bring or keep anything therein which will in any way
increase the existing rate or affect any fire or other insurance on the Building
or any of its contents, or cause a cancellation of any insurance policy covering
the Building or any part thereof or any of its contents, nor shall Tenant sell
or permit to be kept, used or sold, in or about the Premises, any articles or
substances, inflammable or otherwise, which may be prohibited by a standard form
policy of the insurance.
(b) Tenant shall not do or permit anything to be done in
or about the Premises which will in any way obstruct space or interfere with the
rights of other tenants or occupants of the Building or injury or annoy them or
use or allow the Premises to be used for any unlawful or objectionable purpose,
nor shall Tenant cause, maintain or permit any nuisance in or about the
Premises. Tenant shall not commit or suffer to be committed any waste in or upon
the Premises.
(c) Tenant shall not use the Premises or permit anything
to be done in or about the Premises which will in any way conflict with any law,
statute, ordinance or governmental rule or regulation or requirement of duly
constituted public authorities now in force or which may hereafter be enacted or
promulgated. Tenant shall at its sole cost and expense promptly comply with all
laws, statutes, ordinances and governmental rules, regulations or requirements
now in force or which may hereafter be in force and with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted
relating to or affecting the condition, use or occupancy of the Premises,
excluding structural changes not relating to or affecting the condition, use or
occupancy of the Premises not related or afforded by Tenant's improvements or
acts. The judgment of any court of competent jurisdiction or the admission of
Tenant in any action against Tenant, whether Landlord be a party thereto or not,
that Tenant has violated any law, statute, ordinance or governmental rule,
regulation or requirement shall be conclusive of the fact as between Landlord
and Tenant.
7.4 HAZARDOUS MATERIALS.
(a) Tenant shall not cause or permit any Hazardous
Material, as defined below, to be brought upon, kept or used in or about the
Premises by Tenant, its agents, employees, contractors or invitees, without the
prior written consent of Landlord which may be granted or withheld in Landlord's
sole discretion. In the event that Tenant proposes to conduct any use or to
operate any equipment which will or may utilize or generate a Hazardous Material
other than as specified in the first sentence of this Section 7.4(a), Tenant
shall first in writing submit such use or equipment to Landlord for approval. No
approval by Landlord shall relieve Tenant of any obligation of Tenant pursuant
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to this Section 7.4, including the removal, clean-up and indemnification
obligations imposed upon Tenant by this Section 7.4. Tenant shall, within five
(5) days after receipt thereof, furnish to Landlord copies of all notices or
other communications received by Tenant with respect to any actual or alleged
release or discharge of any Hazardous Material in or about the Premises or the
Building and shall, whether or not Tenant receives any such notice or
communication, notify Landlord in writing of any discharge or release of
Hazardous Material by Tenant or anyone for whom Tenant is responsible in or
about the Premises or the Building. In the event that Tenant is required to
maintain any Hazardous Materials license or permit in connection with any use
conducted by Tenant or any equipment operated by Tenant in the Premises, copies
of each such license or permit, each renewal or revocation thereof and any
communication relating to suspension, renewal or revocation thereof shall be
furnished to Landlord within five (5) days after receipt thereof by Tenant.
Compliance by Tenant with the two immediately preceding sentences shall not
relieve Tenant of any other obligation of Tenant pursuant to this Section 7.4.
(b) If Tenant breaches the obligations stated in this
Section 7.4, or if the presence of Hazardous Material on the Premises or the
Building caused or permitted by Tenant results in contamination of the Premises
or the Building, or if contamination of the Premises or the Building by
Hazardous Material otherwise occurs for which Tenant is legally liable to
Landlord for damage resulting therefrom, then Tenant shall indemnify, defend,
protect and hold Landlord harmless from any and all claims, judgments, damages,
penalties, fines, costs, liabilities or losses (including, without limitation,
diminution in value of the Premises or the Building, damages for the loss or
restriction on use of rentable or usable space or of any amenity of the Premises
or the Building, damages arising from any adverse impact on marketing of space
in the Building, and sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees) which arise during or after the lease term as a
result of such contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Building. Without limiting the foregoing, if the
presence of any Hazardous Material in the Premises or in or under the Building
caused or permitted by Tenant results in any contamination of the Premises or
the Building, Tenant shall be obligated, at Tenant's sole cost, to clean-up and
remove from the Premises and Building all Hazardous Materials introduced into
the Premises or the Building by Tenant or any person or entity for whom Tenant
is responsible. Such clean-up and removal shall include all testing and
investigation required by any governmental authorities having jurisdiction and
preparation and implementation of any remedial action plan required by any
governmental authorities having jurisdiction. All such clean-up and removal
activities of Tenant shall, in each instance, be conducted to the satisfaction
of Landlord and all governmental authorities having jurisdiction. Landlord's
right of entry pursuant to Section 15 shall include the right to enter and
inspect the Premises for violations of Tenant's covenants herein.
(c) Upon any violation of the foregoing covenants in
this Section 7.4, Landlord shall be entitled to exercise all remedies available
to a landlord against a defaulting tenant including but not limited to those set
forth in Section 18. Without limiting the generality of the foregoing, Tenant
expressly agrees that upon any such violation Landlord may, at its option, (i)
immediately terminate this Lease, or (ii) continue this Lease in effect until
compliance by Tenant with its clean-up and removal covenant notwithstanding any
earlier expiration date of the term of this Lease. No action by Landlord
hereunder shall impair the obligations of Tenant pursuant to this Section 7.4.
(d) As used herein, the term "Hazardous Material" means
any hazardous or toxic substance, material or waste which is or becomes
regulated by any local governmental authority, the State of California or the
United States Government. The term "Hazardous Material" includes, without
limitation, any material or substance which is (i) defined as a "hazardous
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waste," "extremely hazardous waste" or "restricted hazardous waste" under
Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste
Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code, Division 20, Chapter 6.8
(▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act), (iii) defined as a
"hazardous material," "hazardous substance," or "hazardous waste" under Section
25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances),
(v) defined by any federal, state or local law as hazardous or toxic, (vi)
petroleum, (vii) asbestos, (viii) listed under Article 9 or defined as hazardous
or extremely hazardous pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (ix) designated as a "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution Control Act
(33 U.S.C.ss.1317), (x) defined as a "hazardous waste" pursuant to Section 1004
of the Federal Resource Conservation and Recovery Act, 42 U.S.C.ss.6901 et seq.
(42 U.S.C.ss.6903), or (xi) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.ss.9601 et seq. (42 U.S.C.ss.9601).
8. SERVICES AND UTILITIES.
8.1. LANDLORD'S OBLIGATIONS. Landlord shall furnish to
the Premises during reasonable hours of generally recognized business days to be
determined by Landlord, and subject to the Rules and Regulations of the
Building, janitorial, water, gas and electricity, heat and air conditioning
required in Landlord's judgment for the comfortable use and occupancy of the
Premises, scavenger, exterior window washing, and security customary in similar
buildings in the competing geographical areas. Landlord shall also maintain and
keep lighted the common stairs, entries and toilet rooms in the Building.
8.2. TENANT'S OBLIGATIONS. Tenant shall pay for, prior
to delinquency, all telephone, utility and other materials and services, not
expressly required to be paid by Landlord, which may be furnished to or used in,
on or about the Premises during the term of this Lease.
8.3 TENANT'S ADDITIONAL REQUIREMENTS.
(a) Tenant will not, without the prior written consent
of Landlord and subject to any conditions which Landlord may impose, use any
apparatus or device in the Premises, including, without limitation, electronic
data processing machines, punch card machines and machines using current in
excess of 110 volts, which will in any way increase the amount of electricity or
water usually furnished or supplied for use of the Premises as general office
space. Tenant shall not connect with electrical current except through existing
electrical outlets in the Premises, or connect to water pipes any apparatus or
device for the purposes of using electric current or water.
(b) If Tenant shall require water or electric current in
excess of that usually furnished or supplied for use of the Premises as general
office space, Tenant shall first procure the consent of Landlord of the use
thereof, which consent Landlord may grant or withhold in Landlord's sole
discretion. Landlord may cause a water meter or electric current meter to be
installed in the Premises, so as to measure the amount of water and electric
current consumed for any such other use. The cost of such meters and of
installation, maintenance, and repair thereof shall be paid for by Landlord and
Tenant agrees to pay Landlord promptly upon demand by Landlord for all such
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water and electric current consumed as shown by said meters, at the rates
charged for such services by the city in which the Building is located or the
local public utility, as the case may be, furnishing the same, plus any
additional expense incurred in keeping account of water and electric current so
consumed.
(c) Whatever heat generating machines or equipment are
used in the Premises which affect the temperature otherwise maintained by the
air conditioning system, Landlord reserves the right to install supplementary
air conditioning units in the Premises and the cost, including the cost of
installation, operation and maintenance thereof shall be paid by Tenant upon
demand by Landlord.
(d) If at any time any utility or service is separately
metered and billed to the Premises, Tenant shall during the Term promptly pay to
the utility company or entity furnishing the same all costs and charges incurred
for the use and consumption of such utilities and services on the Premises.
8.4. NONLIABILITY. Landlord shall not be liable for, and
Tenant shall not be entitled to, any abatement or reduction of rent by reason of
Landlord's failure to furnish any of the foregoing where such failure is caused
by accidents, breakages, repairs, strikes, lockouts or other disturbances or
labor disputes of any character, or by any other cause similar or dissimilar,
beyond the reasonable control of Landlord. Landlord shall not be liable under
any circumstances for loss of or injury to property, however occurring, through
or in connection with or incidental to failure to furnish any of the foregoing.
9. INSURANCE.
9.1. COVERAGE. Tenant shall assume the risk of damage to
any fixtures, goods, inventory, merchandise, equipment, furniture and leasehold
improvements and Landlord shall not be liable for injury to Tenant's business or
any loss of income therefrom relative to such damage. Tenant shall at all times
during the term of this Lease, and at its own cost and expense, procure and
continue in force the following insurance policies and/or endorsements
(individually "Policy" and collectively the "Policies"):
(a) Commercial general liability insurance, including
bodily injury and property damage, personal injury and contractual liability,
with respect to all claims, demands or actions by any person or entity, in and
arising from, related to, or connected with the conduct and operation of
Tenant's business in the Premises or Tenant's use of the Premises, with a
minimum limit of One Million and No/100 Dollars ($1,000,000.00) per occurrence
with a Two Million and No/100 Dollars ($2,000,000.00) aggregate combined single
limit;
(b) Insurance on all its personal property, tenant
improvements, and alterations, in, on, or about the Premises, a policy of "all
risk" coverage insurance to the extent of at least one hundred percent (100%) of
their full replacement value. The proceeds from any such policy shall be used by
Tenant for the replacement of personal property or the restoration of tenant
improvements or alterations;
(c) Business interruption insurance with sufficient
coverage to provide for payment of rent and other fixed costs for a period of
not less than twelve (12) consecutive months during any interruption of Tenant's
business by reason of fire or other similar cause;
(d) Workers' compensation insurance as required by law,
including employer's liability, with respect to all claims, demands or actions
by any person or entity, in and arising from, related to, or connected with the
operation of Tenant's business;
(e) Plate glass insurance on the Premises.
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9.2 INSURANCE POLICIES.
(a) The limits of said policies shall not, however,
limit the liability of Tenant hereunder. Tenant may carry said insurance under
blanket policies. If Tenant fails to procure and maintain said insurance,
Landlord may, but shall not be required to, procure and maintain same, but at
the expense of Tenant. Insurance required hereunder shall be in companies rated
A or better in "Best's Insurance Guide".
(b) Tenant shall cause each of the Policies to name
Master Landlord, Landlord, Landlord's parent corporation (Citigroup, Inc.), and
their respective affiliates, officers, directors, employees, agents and assigns
as additional insureds. Each of the Policies shall be primary and
noncontributing with respect to any coverage that Landlord and/or Master
Landlord may carry. Each of the Policies shall (i) be issued by insurance
companies licensed to do business in the State of California, (ii) include a
waiver of subrogation by the insurer against Master Landlord, Landlord, and
Landlord's parent corporation (Citigroup, Inc.), and (iii) contain an
endorsement requiring thirty (30) days' written notice from the insurance
company to Tenant, Master Landlord and Landlord before cancellation or change in
the coverage, scope, or amount of any policy. On the Commencement Date and on
renewal of any Policy and not less than thirty (30) days before expiration of
the term of a Policy, Tenant shall deposit with Master Landlord and Landlord a
copy of each of the Policies, or a certificate of each of the Policies, together
with evidence of payment of premiums.
9.3. WAIVER OF SUBROGATION. The parties release each
other, and their respective authorized representatives, from any claims for
damage to any person or to the Premises and the Building and to the fixtures,
personal property, tenant's improvements, and alterations of either Landlord or
Tenant in or on the Premises and the Building that are caused by or result from
risks insured against under any insurance policies carried by the parties and in
force at the time of any such damage. Each party shall cause each insurance
policy obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy. Neither party shall be liable to the other for any
damages caused by fire or any risks insured against under any insurance policy
required by this Lease. If any insurance policy cannot be obtained with a waiver
of subrogation, or is obtainable only by the payment of an additional premium
charged above that charged by insurance companies issuing policies without
waiver of subrogation, the party undertaking to obtain the insurance shall
notify the other party of this fact. The other party shall have a period of ten
(10) days after receiving the notice either to place the insurance with a
company that is reasonably satisfactory to the other party and that will carry
the insurance with a waiver of subrogation, or to agree to pay the additional
premium if such a policy is obtainable at additional cost. If the insurance
cannot be obtained or the party in whose favor a waiver of subrogation is
desired refuses to pay the additional premium, charged the other party is
relieved of the obligation to obtain a waiver of subrogation rights with respect
to the particular matter involved.
10. MAINTENANCE AND REPAIRS.
10.1. LANDLORD'S OBLIGATIONS. Landlord shall maintain in
good order, condition and repair the Building and all other portions of the
Premises not the obligation of the Tenant or any other tenant in the Building,
including the basic plumbing, air conditioning, heating and electrical systems
and all plumbing pipes, but not any plumbing in the Premises, electrical wiring,
and switches installed or furnished by Tenant, unless such maintenance and
repairs are caused in part or in whole by the act, neglect, fault or omissions
of Tenant, its agents, servants, employees or invitees, in which case Tenant
shall pay to Landlord the reasonable cost of such maintenance and repairs.
Landlord shall not be liable for any failure to make any such repairs or to
perform any maintenance unless such failure shall persist for an unreasonable
time as determined by Landlord after written notice of the need for such repairs
-12-
or maintenance is given to Landlord by Tenant. Except as provided in Section 18
hereof, there shall be no abatement of rent and no liability of Landlord by
reason of any injury to or interference with Tenant's business arising from the
making of any repairs, alterations or improvements in or to any portion of the
Building or the Premises or in or to fixtures, appurtenances and equipment
therein. Tenant waives the right to make repairs at Landlord's expense under any
law, statute or ordinance now or hereafter in effect.
10.2. TENANT'S OBLIGATIONS. By taking possession of the
Premises, Tenant shall be deemed to have accepted the Premises as being in good,
sanitary order, condition and repair, and Tenant's obligation to preserve the
Premises are as follows:
(a) Tenant at Tenant's sole cost and expense, except for
services furnished by Landlord pursuant to Section 8 hereof, shall maintain the
Premises in good order, condition and repair including the interior surfaces of
the ceilings, light fixtures and light bulbs, plate glass, walls and floors, all
doors, interior windows, exterior windows at or below street level, and special
items in excess of building standard furnishings, and equipment installed by or
at the expense of Tenant. Tenant expressly waives the benefits of any statute
now or hereafter in affect which would otherwise afford Tenant the right to make
repairs at Landlord's expense or to terminate this Lease because of Landlord's
failure to keep the Premises in good order, condition and repair.
(b) Upon the expiration or earlier termination of this
Lease, Tenant shall surrender the Premises in the same condition as received,
ordinary wear and tear and damage by fire, earthquake, act of God or the
elements alone excepted, and shall promptly remove or cause to be removed from
the Premises and the Building at Tenant's expense, any signs, notices and
displays placed by Tenant.
(c) Tenant agrees to repair any damage to the Premises
or the Building caused by or in connection with the removal of any articles of
personal property, business or trade fixtures, machinery, equipment, furniture,
movable partitions, including, without limitation, repairing the floor and
patching and painting the walls where required by Landlord to Landlord's
reasonable satisfaction, all at Tenant's sole cost and expense. Tenant shall
indemnify Landlord against any loss or liability resulting from delay by Tenant
in so surrendering the Premises, including, without limitation, any claims made
by any succeeding tenant founded on such delay.
(d) If Tenant fails to maintain the Premises in good
order, condition and repair, Landlord shall give Tenant notice to do such acts
as are reasonably required to so maintain the Premises. If Tenant fails to
promptly commence such work and diligently prosecute it to completion, then
Landlord shall have the right to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work. Any amount so
expended by Landlord shall be paid by Tenant promptly after demand with interest
at ten percent (10%) per annum from the date of such demand. Landlord shall have
no liability to Tenant for any damage, inconvenience or interference with the
use of the Premises by Tenant as a result of performing any such work.
11. ALTERATIONS AND ADDITIONS.
11.1. ALTERATIONS. Landlord has no obligation to alter,
remodel, decorate or improve the Premises or any part thereof. Tenant shall make
no alterations, additions or improvements to the Premises or any part thereof,
without obtaining the prior written consent of Landlord. Unless Landlord agrees
otherwise, Tenant shall be required to remove such items and restore the
Premises upon removal provided that Tenant shall not be required to replace or
install any floor covering if such covering is exposed by such removal, but
-13-
Tenant shall cap any exposed wires. Landlord shall not be liable for any injury,
loss or damage which may occur to any of the Tenant's employees, agents, or
invitees to the Premises or Tenant's work or installations unless caused by the
gross negligence or willful misconduct of Landlord, its agents or employees. Any
damage to the Premises or the tenant improvements caused by Tenant or Tenant's
agents, employees, contractors, workmen or suppliers shall be the sole
responsibility of Tenant.
11.2. ANDLORD CONSENT. Landlord may impose as a
condition to the aforesaid consent such requirements as Landlord may deem
necessary in its sole discretion, including, without limitation, the manner in
which the work is done, a right of approval of the licensed contractor by whom
the work is to be performed, a right to require payment and performance bonds,
the times during which it is to be accomplished, and the requirement that, upon
written request of Landlord provided to Tenant a reasonable amount of time prior
to the expiration or earlier termination of the Lease, Tenant will remove any
and all movable partitions, counters, personal property, equipment, fixtures and
furniture prior to the surrender of the Premises. Tenant shall obtain all
required governmental licenses, building permits, and approvals before
commencing any tenant improvements and Tenant's contractor shall be bonded.
11.3. ALTERATIONS ARE PROPERTY OF LANDLORD. All such
alterations, additions or improvements shall at the expiration or earlier
termination of the Lease, become the property of Landlord and remain upon and be
surrendered with the Premises, unless otherwise specified pursuant to Section
11.2 above.
11.4. TENANT'S PROPERTY. All articles of personal
property and all business and trade fixtures, machinery and equipment, furniture
and movable partitions owned by Tenant or installed by Tenant at its expense in
the Premises shall be and remain the property of Tenant and may be removed by
Tenant at any time during the lease term when Tenant is not in default
hereunder.
12. INDEMNIFICATION. Tenant shall indemnify, defend, protect and
hold harmless Master Landlord, Landlord, and their respective agents, employees,
officers and directors from and against any and all claims, demands, damages,
costs or liability, including, without limitation attorney's fees (collectively
"Claim(s)") arising from (i) Tenant's use of the Premises, or from the conduct
of Tenant's business or from any activity, work or things done, permitted or
suffered by Tenant in or about the Premises or the Building, (ii) any breach or
default in the performance of any obligation or covenant on the Tenant's part to
be performed under the terms of this Lease and/or Master Lease, or (iii) any
negligence of Tenant, or any of Tenant's agents, contractors or employees. Upon
notice from Landlord, Tenant shall defend Master Landlord and/or Landlord
against any such Claim(s), at Tenant's expense by counsel satisfactory to
Landlord. As used herein, the term Claim(s) shall include all costs, attorney's
fees, expenses and liabilities incurred in the defense of such Claim(s) or in
any action or proceeding brought against Landlord in connection with such
Claim(s). Landlord shall not be liable for injury to the person of Tenant,
Tenant's employees, agents or contractors, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause whether the said damage or injury results from conditions arising upon the
Premises or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Tenant. Landlord shall not be liable to Tenant for any damages arising from any
act or neglect of any other tenant of the Building. The provisions of this
Section 12 shall survive the expiration or early termination of the Master Lease
or this Lease.
13. LIENS. Tenant shall not permit to be enforced against the
Premises any mechanic's, materialmen's, contractor's or other liens arising
from, or any claims for damages growing out of, any work of repair or alteration
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as herein authorized or otherwise arising (except from the actions of Landlord)
and Tenant shall pay or cause to be paid all of said liens and claims before any
action is brought to enforce the same against Landlord or the Premises. Tenant
agrees to indemnify, defend, protect and hold Landlord harmless from any claims,
demands, damages, costs or liability, including without limitation attorney's
fees in connection with any such liens. Tenant shall give Landlord no less than
twenty (20) days prior notice in writing before commencing construction of any
kind on the Premises so that Landlord may post notices of nonresponsibility.
14. ASSIGNMENT AND SUBLETTING.
14.1. LANDLORD'S CONSENT REQUIRED. Tenant shall not
assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any
interest herein, whether voluntarily or by operation of law and shall not sublet
the Premises or any part thereof, or permit the use or occupancy of the Premises
by any party other than Tenant (any such assignment, encumbrance, sublease or
the like shall sometimes be referred to as a "Transfer"), without the prior
written consent of Landlord, which consent shall not be unreasonably withheld.
Any Transfer without Landlord's consent shall constitute a default by Tenant
under this Lease, and in addition to all of Landlord's other remedies at law, in
equity or under this Lease, such Transfer shall be voidable at Landlord's
election. For purposes of this Section 14, if Tenant is a corporation,
partnership or other entity, any transfer, assignment, encumbrance or
hypothecation of twenty-five percent (25%) or more (individually or in the
aggregate) of any stock or other ownership interest in such entity, and/or any
transfer, assignment, hypothecation or encumbrance of any controlling ownership
or voting interest in such entity, shall be deemed an assignment of this Lease
and shall be subject to all of the restrictions and provisions contained in this
Section 14. Notwithstanding the foregoing, the immediately preceding sentence
shall not apply to any transfers of stock of Tenant if Tenant is a publicly-held
corporation and such stock is transferred publicly over a recognized security
exchange or over-the-counter market.
14.2. LANDLORD'S OPTIONS. If at any time or from time to
time during the term of this Lease, Tenant desires to effect a Transfer, Tenant
shall deliver to Landlord written notice ("Transfer Notice") setting forth the
terms and provisions of the proposed Transfer and the identity of the proposed
assignee, sublessee or other transferee (sometimes referred to hereinafter as a
"Transferee"). Tenant shall also deliver to Landlord with the Transfer Notice, a
current financial statement and financial statements for the preceding two (2)
years of Transferee, and such other information concerning the business
background and financial condition of the proposed Transferee as Landlord may
reasonably request. Landlord shall have the option, exercisable by written
notice delivered to Tenant within twenty (20) days after Landlord's receipt of
the Transfer Notice, such financial statements and other information, either to:
(a) Approve or disapprove such Transfer, which approval
shall not be unreasonably withheld; provided however, Landlord and Tenant hereby
acknowledge that Landlord's disapproval of any proposed Transfer pursuant to
this Section 14.2(a) of the Lease shall be deemed reasonably withheld if the
proposed Transfer would, in Landlord's sole and exclusive discretion result in a
violation of the Master Lease; or
(b) Sublet from Tenant that portion of the Premises
which Tenant has requested to sublease at the rental and on the other terms set
forth in this Lease for the term set forth in Tenant's Notice, or, in the case
of an assignment or encumbrance, terminate this Lease with respect to the entire
Premises, which termination shall be effective thirty (30) days after Tenant's
receipt of Landlord's notice.
If Landlord exercises its option to sublease any such
space from Tenant following Tenant's request for Landlord's approval of the
proposed sublease of such space, (i) Landlord shall be responsible for the
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construction of any partitions which Landlord reasonably deems necessary to
separate such space from the remainder of the Premises, and (ii) Landlord and
any sub-subtenant or assignee of Landlord with respect to such subleased space
shall have the right to use in common with Tenant all lavatories, corridors and
lobbies which are within the Premises and which are reasonably required for the
use of such space.
14.3. ADDITIONAL CONDITIONS; EXCESS RENT. If Landlord
does not exercise its sublease or termination option and instead approves of the
proposed Transfer pursuant to Section 14.2(a) above, Tenant may enter into the
proposed Transfer with such proposed Transferee subject to the following further
conditions:
(a) the Transfer shall be on the same terms set forth in
the Transfer Notice delivered to Landlord (if the terms have changed, Tenant
must submit a revised Transfer Notice to Landlord and Landlord shall have
another twenty (20) days after receipt thereof to make the election in Section
14.2(a) or 14.2(b) above);
(b) no Transfer shall be valid and no Transferee shall
take possession of the Premises until an executed counterpart of the assignment,
sublease or other instrument affecting the Transfer has been delivered to
Landlord pursuant to which Transferee shall expressly assume all of Tenant's
obligation under this Lease (or with respect to a sublease of a portion of the
Premises or for a portion of the term, all of Tenant's obligations applicable to
such portion);
(c) no Transferee shall have a further right to assign,
encumber or sublet, except on the terms herein contained; and
(d) any rent or other economic consideration received by
Tenant as a result of such Transfer which exceeds, in the aggregate, the total
rent which Tenant is obligated to pay Landlord under this Lease (prorated to
reflect obligations allocable to any portion of the Premises subleased), shall
be paid to Landlord within ten (10) days after receipt thereof as additional
rental under this Lease, without affecting or reducing any other obligations of
Tenant hereunder.
14.4.REASONABLE DISAPPROVAL. Landlord and Tenant hereby
acknowledge that Landlord's disapproval of any proposed Transfer pursuant to
Section 14.2(a) shall be deemed reasonably withheld if based upon any reasonable
factor, including, without limitation, any or all of the following factors: (a)
the proposed Transfer would result in more than two subleases of portions of the
Premises being in effect at any one time during the term of this Lease; (b) the
net effective rent payable by the Transferee (adjusted on a rentable square foot
basis) is less than the net effective rent then being quoted by Landlord for new
leases in the Building for comparable size space for a comparable period of
time; (c) the proposed Transferee is an existing tenant of the Building or is
negotiating with Landlord (or has negotiated with Landlord in the last six (6)
months) for space in the Building; (d) the proposed Transferee is a governmental
entity; (e) the portion of the Premises to be sublet or assigned is irregular in
shape with inadequate means of ingress and egress; (f) the use of the Premises
by Transferee (i) is not permitted by the use provisions in Section 7 above, or
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(ii) violates any exclusive use granted by Landlord to another tenant in the
Building; (g) the Transfer would likely result in significant increase in the
use of the parking areas or common areas by Transferee's employees or visitors,
and/or significant increase in the demand upon utilities and services to be
provided by Landlord to the Premises; (h) Transferee does not, in Landlord's
reasonable judgment, have the financial capability to fulfill the obligations
imposed by the Transfer; (i) the Transferee is not in Landlord's reasonable
opinion of reputable or good character or consistent with Landlord's desired
tenant mix; or (j) Transferee is a real estate developer or landlord or is
acting directly or indirectly on behalf of a real estate developer or landlord.
It shall not be unreasonable for Landlord to withhold its consent to any
proposed Transfer, as defined in Section 14.1 above, if (i) the proposed
transferee's anticipated use of the Premises involves the generation, storage,
use, treatment or disposal of Hazardous Material, (ii) the Transferee has been
required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Material contaminating a property
if the contamination resulted from such transferee's actions or use of the
property in question, or (iii) the proposed transferee is subject to an
enforcement order issued by any governmental authority in connection with the
use, disposal or storage of a Hazardous Material.
14.5. NO RELEASE OF TENANT. No consent by Landlord to
any assignment or subletting by Tenant shall relieve Tenant of any obligation to
be performed by Tenant under this Lease, whether occurring before or after such
consent, assignment or subletting. The consent by Landlord to any assignment or
subletting shall not relieve Tenant from the obligation to obtain Landlord's
express prior written consent to any other assignment or subletting. The
acceptance of rent by Landlord from any other persons shall not be deemed to be
a waiver by Landlord of any provision of this Lease or to be a consent to any
assignment, subletting or other transfer. Consent to one assignment, subletting
or other transfer shall not be deemed to constitute consent to any subsequent
assignment, subletting or other transfer. No sublease, once consented to by
Landlord, shall be modified or terminated by Tenant without Landlord's prior
consent, which consent shall not be unreasonably withheld.
14.6. ADMINISTRATIVE AND ATTORNEYS' FEES. If Tenant
effects a Transfer or requests the consent of Landlord to any Transfer, then
Tenant shall, upon demand, pay Landlord a non-refundable administrative fee of
Two Hundred Fifty Dollars ($250.00), plus any reasonable attorneys' and
paralegal fees incurred by Landlord in connection with such Transfer or request
for consent (whether attributable to Landlord's in-house attorneys or paralegals
or otherwise). Acceptance of the $250.00 administrative fee and/or reimbursement
of Landlord's attorneys' and paralegal fees shall in no event obligate Landlord
to consent to any proposed Transfer.
14.7. MATERIAL INDUCEMENT. Tenant understands,
acknowledges and agrees that (a) Landlords' option to sublease from Tenant any
space which Tenant proposes to sublease or terminate this Lease upon any
proposed assignment or encumbrance of this Lease by Tenant as provided in
Section 14.2(b) above rather than approve the proposed sublease, assignment or
encumbrance, and (b) Landlord's right to receive any excess consideration paid
by a Transferee in connection with an approved Transfer as provided in Section
14.3(d) above, are a material inducement for Landlord's agreement to lease the
Premises to Tenant upon the terms and conditions herein set forth.
15. ENTRY BY LANDLORD. Landlord reserves and shall have the right to
enter the Premises upon reasonable advance notice (which notice may be oral and
which notice shall not be necessary in an emergency), to inspect the same, to
supply any service to be provided by Landlord to Tenant hereunder, to submit the
Premises to prospective purchasers or tenants, to post notices of
nonresponsibility and "for lease" signs, and to alter, improve or repair the
Premises and any portion of the Building, providing that the business of Tenant
shall not be interfered with unreasonably. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in, upon and about the Premises excluding Tenant's vaults and safes,
and Landlord shall have the right to use any and all means which Landlord may
deem proper to open said doors in an emergency, in order to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord by any of said
means or otherwise, shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into, or a detainer of the Premises or an
eviction of Tenant from the Premises or any portion thereof.
16. HOLDING OVER. Tenant acknowledges that the Tenant's right to
occupy the Premises shall expire on the Expiration Date. In the event Tenant
holds over after the Expiration Date, Tenant shall be deemed a tenant at
sufferance. Tenant acknowledges that, in such event, Tenant shall be charged
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holdover rent of one hundred and fifty percent (150%) of the Basic Rent, plus
any additional rent and other charges assessed against the Landlord by the
Master Landlord, it being the intent of the parties hereto that Landlord shall
not incur any monetary loss by virtue of the Tenant's continued occupancy upon
termination of the Master Lease.
17. DAMAGE OR DESTRUCTION.
17.1. PARTIAL DAMAGE - INSURED. In the event the
Premises are damaged by any casualty which is covered under fire and extended
coverage insurance carried by Landlord, then Landlord shall restore such damage
provided insurance proceeds are available to pay ninety percent (90%) or more of
the cost of restoration and provided such restoration can be completed within
sixty (60) days after the commencement of the work in the opinion of a
registered architect or engineer appointed by Landlord. In such event this Lease
shall continue in full force and effect, except that Tenant shall be entitled to
a proportionate reduction of rent as determined by Landlord while such
restoration takes place; such proportionate reduction to be based upon the
extent to which the restoration efforts interfere with Tenant's business in the
Premises. Tenant shall not be entitled to any compensation or damages for loss
of the use of the whole or any part of the Premises and/or any inconvenience or
annoyance occasioned by any such damage, repair, reconstruction or restoration.
17.2. PARTIAL DAMAGE - UNINSURED. If the Premises are
damaged by a risk not covered by Landlord's insurance or the proceeds of
available insurance are less than ninety percent (90%) of the cost of
restoration, or if the restoration cannot be completed within sixty (60) days
after the commencement of work in the opinion of the registered architect or
engineer appointed by Landlord, then Landlord shall have the option either to
(a) repair or restore such damage, this Lease continuing proportionately abated
as provided in Section 17.1 above, or (b) give notice to Tenant (at any time
within thirty (30) days after such damage) terminating this Lease as of a date
to be specified in such notice, which date shall not be less than thirty (30)
nor more than sixty (60) days after giving such notice. In the event of the
giving of such notice, this Lease shall expire and all interest of Tenant in the
Premises shall terminate on such date so specified in such notice and the rent,
reduced by any proportionate reduction based upon the extent, if any, to which
said damage interfered with the use and occupancy of Tenant as determined in
Section 17.1 above shall be paid to the date of such termination.
17.3. TOTAL DESTRUCTION. In the event the Premises are
totally destroyed or the Premises cannot be restored as required herein under
the applicable laws and regulations, notwithstanding the availability of
insurance proceeds, this Lease shall be terminated effective the date of the
damage.
17.4. DAMAGE NEAR END OF THE TERM. Notwithstanding
anything to the contrary contained in this Section 17, Landlord shall not have
any obligation whatsoever to repair, reconstruct or restore the Premises when
the damage resulting from any casualty covered under this Section 17 occurs
during the last twelve (12) months of the term of this Lease or any extension
hereof.
17.5. LANDLORD'S OBLIGATIONS. Landlord shall not be
required to repair any injury or damage by fire or other cause or to make any
restoration or replacement of any paneling, decorations, partitions, railings,
floor covering, office fixtures or any other improvements or property installed
in the Premises by Tenant or at the direct or indirect expense of Tenant. Tenant
shall be required to restore or replace same in the event of damage. Except for
abatement of rent, if any, Tenant shall have no claim against Landlord for any
damages suffered by reason of any such damage, destruction, repair or
restoration nor shall Tenant have the right to terminate this Lease as the
result of any statutory provision now or hereafter in effect pertaining to the
damage and destruction of the Premises except as expressly provided herein.
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18. DEFAULT; REMEDIES.
18.1. DEFAULT BY TENANT. Tenant shall be deemed to be in
default under this Lease upon the occurrence of any of the following events:
(a) Tenant shall fail to pay when due any Rent or any
other amounts payable under this Lease; or
(b) Tenant shall neglect or fail to perform or observe
any of the other Lease covenants and/or Master Lease covenants to be performed
or observed by Tenant, and Tenant shall fail to remedy this failure or neglect
within thirty (30) days after Landlord shall have given to Tenant written notice
specifying such neglect or failure (or within such period, if any, as may be
reasonably required to cure such default, if it is of such nature that it cannot
be cured within this thirty (30) day period provided that Tenant shall have
commenced to effect such cure and shall proceed with due diligence to complete
such cure); or
(c) Tenant shall neglect or fail to perform or observe
any of the Lease covenants (including, without limitation, the timely payment of
Rent, or any other amounts payable hereunder) and/or Master Lease covenants
three or more times in any 12-month period, such third occurrence being agreed
between Landlord and Tenant to be incurable; or
(d) The making by Tenant of any general assignment or
general arrangement for the benefit of creditors; or the filing of any action by
or against Tenant under any insolvency, bankruptcy, reorganization, moratorium,
or other debtor relief statute, whether now or hereafter existing, (unless in
the case of such action taken against Tenant, the same is dismissed within sixty
(60) days); or the appointment of a trustee or a receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged in ten (10) days;
or the admission by Tenant in writing of the inability to pay its debts as they
become due; or
(e) Any guarantor of Tenant's obligations under this
Lease revokes, or attempts to revoke, such guaranty.
18.2. REMEDIES OF LANDLORD. Upon default under this
Lease by Tenant, Landlord shall have the following rights and remedies in
addition to any other rights or remedies available to Landlord at law or in
equity:
(a) The rights and remedies provided by California Civil
Code Section 1951.2, including, but not limited to, recovery of the worth at the
time of award of the amount by which the unpaid Rent for the balance of the Term
after the time of award exceeds the amount of rental loss for the same period
that the Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of California Civil Code Section 1951.2. 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 the award plus one
percent (1%);
(b) The rights and remedies provided by California Civil
Code Section 1951.4, that allows Landlord to continue this Lease in effect and
to enforce all of its rights and remedies under this Lease, including the right
to recover Rent as it becomes due, for so long as Landlord does not terminate
Tenant's right to possession; provided, however, if Landlord elects to exercise
its remedies described in this subsection (b) and Landlord does not terminate
this Lease, and if Tenant requests Landlord's consent to an assignment of this
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Lease or a sublease of the Premises at such time as Tenant is in default,
Landlord shall not unreasonably withhold its consent to such assignment or
sublease. Acts of maintenance or preservation, efforts to relet the Premises or
the appointment of a receiver on Landlord's initiative to protect its interest
under this Lease shall not constitute a termination of Tenant's right to
possession;
(c) The right to terminate this Lease by giving notice
to Tenant in accordance with applicable law;
(d) The right and power, as attorney-in-fact for Tenant,
to enter the Premises and remove all persons and property, to store such
property in a public warehouse or elsewhere for the account of Tenant, and to
sell such property and apply such proceeds pursuant to applicable California
law. Landlord, as attorney-in-fact for Tenant, may from time to time sublet the
Premises or any part thereof for such term or terms (which may exceed the term
of this Lease) and at such rent and such other terms as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises. Upon each such subletting, (1) Tenant shall be immediately liable
to pay to Landlord, in addition to indebtedness other than Rent due hereunder,
the cost of such subletting and such alterations and repairs incurred by
Landlord and the amount, if any, by which the Rent and additional charges due
hereunder for the period of such subletting (to the extent such period does not
exceed the term of this Lease) exceeds the amount to be paid as Rent for the
Premises for such period or (2) at the option of Landlord, rents received from
such subletting shall be applied first, to payment of any indebtedness other
than Rent due from Tenant to Landlord; second, to the payment of any costs of
such subletting and of such alterations and repairs; third, to payment of Rent
due and unpaid; and the residue, if any, shall be held by Landlord and applied
in payment of future Rent as it becomes due. If Tenant has been credited with
any rentals to be received by such subletting under option (i) and such rentals
shall not be promptly paid to Landlord by the subtenant(s), or if such rentals
received from such subletting under option (ii) during any month be less than
that to be paid during that month by Tenant, Tenant shall pay any such
deficiency to Landlord. This deficiency shall be calculated and paid monthly.
For all purposes set forth in this subsection (d), Landlord is hereby
irrevocably appointed attorney-in-fact for Tenant, with power of substitution.
The taking possession of the Premises by Landlord, as attorney-in-fact for
Tenant, shall not be construed as an election on its part to terminate this
Lease unless a written notice of such intention be given to Tenant.
Notwithstanding any such subletting without termination, Landlord may at any
time thereafter elect to terminate this Lease for such previous breach; and
(e) The right to have a receiver appointed for Tenant,
upon application by Landlord, to take possession of the Premises and to apply
any rent collected from the Premises and to exercise all other rights and
remedies granted to Landlord as attorney-in-fact for Tenant pursuant to
subsection (d) above.
18.3 RIGHTS AND OBLIGATIONS UNDER THE BANKRUPTCY CODE.
(a) Upon the filing of a petition by or against Tenant
under the United States Bankruptcy Code, Tenant as debtor in possession, or any
trustee who may be appointed agree as follows: (i) to perform each and every
obligation of Tenant under this Lease until such time as this Lease is either
rejected or assumed by order of the United States Bankruptcy Court or otherwise;
(ii) to pay monthly in advance on the first day of each month, as reasonable
compensation for use and occupancy of the Premises, Basic Rent and all
additional charges otherwise due pursuant to this Lease; (iii) to reject or
assume this Lease within sixty (60) days of the filing of such petition under
Chapter 7 of the Bankruptcy Code or within one hundred twenty (120) days of the
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filing of a petition under any other Chapter; (iv) to give Landlord at least
forty-five (45) days' prior written notice of any abandonment or vacation of the
Premises (and that such abandonment or vacation shall be deemed to be a
rejection of this Lease); (v) to do all other things of benefit to Landlord
otherwise required under the Bankruptcy Code; (vi) to be deemed to have rejected
this Lease in the event of the failure to comply with any of the above; and
(vii) to have consented to the entry of an order by an appropriate United States
Bankruptcy Court providing all of the above.
(b) No default by Tenant under this Lease, either prior
to or subsequent to the filing of a petition in the United States Bankruptcy
Court, shall be deemed to have been waived unless Landlord expressly does so.
(c) Included within and in addition to any other
conditions or obligations imposed upon Tenant or its successor in the event of
assumption and/or assignment are the following: (i) the deposit of an additional
sum equal to three (3) months' Basic Rent to be held pursuant to the terms of
Section 6 of this Lease as Security Deposit; (ii) that the use of the Premises
shall be as set forth in Section 7 of this Lease; (iii) the demonstration in
writing by the reorganized debtor, its assignee or trustee in bankruptcy that it
has sufficient background including, but not limited to, substantial business
experience in and financial ability to operate a business in the Premises in the
manner contemplated in this Lease and meets all other reasonable criteria of
Landlord as did Tenant upon execution of this Lease; (iv) the prior written
consent of any mortgagee to whom this Lease has been assigned or hypothecated as
collateral security; and (v) that the Premises, at all times, remain a single
premises and no physical changes of any kind may be made to the Premises unless
in compliance with the applicable provisions of this Lease.
18.4. DEFAULT BY LANDLORD; MORTGAGE PROTECTION. Tenant
shall not exercise any right or remedy available to it by reason of a default by
Landlord under this Lease unless Tenant has first given written notice to
Landlord (and to any lender or ground lessor of the Premises of which Tenant is
given written notice) describing the nature of such default and has afforded to
Landlord (and any such lender or ground lessor) a period of thirty (30) days
within which to cure such default or, in the event such default cannot
reasonably be cured within such 30 day period, such longer period of time as may
be necessary to effect such cure (including time to obtain possession of the
Premises by judicial or non-judicial foreclosure, unlawful detainer or
otherwise), provided that Landlord (or such lender or ground lessor) shall
commence and diligently pursue such cure to completion.
19. CONDEMNATION. If all or any part of the Premises shall be taken
or appropriated for public or quasi-public use by right of eminent domain with
or without litigation or transferred by agreement in connection with such public
or quasi-public use, either party hereto shall have the right at its option
exercisable within thirty (30) days of receipt of notice of such taking to
terminate this Lease as of the date possession is taken by the condemning
authority provided, however, that before Tenant may terminate this Lease by
reason of taking or appropriation as provided hereinabove, such taking or
appropriation shall be of such an extent and nature as to substantially
handicap, impede or impair Tenant's use of the Premises. If any part of the
Building other than the Premises shall be so taken or appropriated, Landlord
shall have the right at its option to terminate this Lease. No award for any
partial or entire taking shall be apportioned, and Tenant hereby assigns to
Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof, provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for taking of personal property and fixtures
belonging to Tenant and/or the interruption of or damage to Tenant's business
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and/or Tenant's unamortized cost of leasehold improvements. In the event of a
partial taking which does not result in a termination of this Lease, rent shall
be abated in the proportion which the part of the Premises so made unusable
bears to the rented area of the Premises immediately prior to the taking. No
temporary taking of the Premises and/or of Tenant's rights herein or under this
Lease shall terminate this Lease or give Tenant any right to any abatement of
rent thereunder, any award made to Tenant by reason of any such temporary taking
shall be entirely to Tenant and Landlord shall not be entitled to share therein.
20. LATE CHARGES. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any mortgage or trust deed covering the Premises.
Accordingly, in the event that Tenant shall fail to pay to Landlord within five
(5) days of the date when due any payment owing to Landlord pursuant to the
terms of this Lease, such past due amount shall become subject to a service
charge of ten percent (10%) of the amount due, and such service charge shall
become immediately due and payable in addition to other amounts owed under this
Lease.
21. LANDLORD'S PERFORMANCE OF TENANT'S OBLIGATIONS. Should Tenant
fail to pay and discharge, when due and payable, any tax or assessment, or any
premium or other charge in connection with any insurance policy or policies
which Tenant is obligated to pay, or any lien or claim for labor or material
employed or used in, or any claim for damages arising out of the repair,
alteration, maintenance and use of the Premises as provided in this Lease, after
fifteen (15) days' written notice from Landlord, Landlord may, at its option,
and without waiving or releasing Tenant from any of Tenant's obligations
hereunder, pay any such tax, assessment, lien, claim, insurance premium or
charge, or settle or discharge any action therefore or satisfy any judgment
thereon. All costs, expenses and other sums incurred or paid by Landlord in
connection therewith, together with interest at the rate of ten percent (10%)
per annum on such costs, expenses and sums from the date incurred or paid by
Landlord, shall be deemed to be an additional charge hereunder and shall be paid
by Tenant with and at the same time as the next installment of rent hereunder,
and any default therein shall constitute a breach of the covenants and
conditions of the Lease.
22. PARKING. Tenant, Tenant's agents and employees are allotted up
to seventeen (17) unreserved spaces in the parking facilities in common with the
business invitees of other tenants or occupants of the Building, subject to the
rules and regulations of Landlord for such parking lot attached hereto as
Exhibit C and made a part hereof, as such rules and regulations may be changed
from time to time by Landlord. Tenant acknowledges that Landlord occupies a
portion of the Building and may allocate to itself the right to use parking
spaces in the Building parking facilities which may be exclusive and/or more
numerous than Tenant may have in relation to the relative square footage of the
Premises and the space occupied by Landlord.
23. ESTOPPEL CERTIFICATE. TENANT'S CERTIFICATES. Tenant, at any time
and from time to time upon not less than ten (10) days' prior written notice
from Landlord, will execute, acknowledge and deliver to Landlord and, at
Landlord's request, to any prospective purchaser, ground or underlying lessor or
mortgagee of the Premises or the Building, a certificate of Tenant stating: (a)
that Tenant has accepted the Premises (or, if Tenant has not done so, that
Tenant has not accepted the Premises and specifying the reasons therefor), (b)
the Commencement Date and Expiration Date of this Lease, (c) that this Lease is
unmodified and in full force and effect (or, if there have been modifications,
that this Lease is in full force and effect as modified and stating the
modifications), (d) whether or not there are then existing any defenses against
the enforcement of any of the obligations of Tenant under this Lease (and, if
so, specifying same), (e) the dates, if any, to which the Rent and other charges
under this Lease have been paid, and (f) any other information that may
-22-
reasonably be required by any of such persons. At the request of Landlord,
Tenant will prepare and furnish to Landlord its most current and (if available)
past three years' annual financial statements for Landlord's confidential use
with proposed purchasers of or lenders on the Premises. Failure by Tenant to
execute a certificate within this 10 day period shall constitute Landlord as
Tenant's special attorney-in-fact for the purpose of executing and delivering
such a statement on Tenant's behalf. It is acknowledged that such certificate
may be relied upon by Landlord, any prospective purchaser, ground or underlying
lessor or lender of the Building or the land on which the Building is located.
24. BROKERS. See Exhibit D attached hereto and made a part hereof.
25. NOTICES. All notices and demands which are required or permitted
hereunder shall be in writing, sent by "Certified" United States Mail, postage
prepaid at the following addresses:
If to Landlord Attn: Real Estate Director
CITIBANK (WEST), FSB
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With copy to:
Citibank-Lease Administration
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Tenant Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
GENIUS PRODUCTS, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any notice so sent shall be deemed to have been given forty-eight hours after
the same has been deposited in the United States mail with postage thereon fully
prepaid.
26. SUBORDINATION. Tenant covenants and agrees that it will execute
without further consideration any and all instruments desired by Landlord or
Landlord's mortgagee subordinating this Lease in the manner requested by
Landlord to all ground or underlying leases and the lien of any mortgage and/or
any deed of trust or other encumbrance which may now or hereafter affect the
Premises together with all renewals, modifications, consolidations, replacements
or extensions thereof, provided that this Lease shall remain in full force and
effect and Tenant shall not be disturbed in the event of sale or foreclosure so
long as Tenant is not in default hereunder. Tenant agrees to attorn to the
successor in interest of Landlord following any transfer of such interest either
voluntarily or by operation of law and to recognize such successor as Landlord
under this Lease. However, if Landlord or any such ground lessor or mortgagee so
elects, this Lease shall be deemed prior in lien to any ground lease, mortgage,
deed of trust or other encumbrance upon or including the Premises regardless of
date of recording and Tenant will execute a statement in writing to such effect
at Landlord's request. Landlord is hereby irrevocably appointed and authorized
as agent and attorney-in-fact of Tenant to execute said instruments within five
(5) days after notice from Landlord demanding the execution thereof.
27. FORCE MAJEURE. If the performance of any act to be performed
hereunder by either party is delayed for reasons beyond the control of the party
responsible for such performance, including but not limited to acts of God
(e.g., earthquake), war, acts of civil disobedience or strike, the time for
performance shall be extended for a period of time equivalent to the period of
such delay or delays; provided, however, that the time for performance shall in
-23-
no event be extended due to financial or economic problems of either party,
their architects, contractors, agents or employees, or delays caused by the
inability of architects, contractors (except where caused by strike), suppliers
or other employees and agents to meet deadline, delivery or contract dates,
unless such inability is caused by an act of God, war, act of civil disobedience
or strike. It shall be a condition of Tenant's right to claim an extension of
time as a result hereof that Tenant notify Landlord in writing within ten (10)
days after the occurrence of such cause, specifying the nature thereof and the
period of time contemplated or necessary for performance.
28. SURRENDER OF PREMISES. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all such subleases or subtenancies.
29. RULES AND REGULATIONS. Tenant, Tenant's agents, servants,
employees, visitors and licensees shall observe and comply fully and faithfully
with all rules and regulations adopted by Landlord for the care, protection,
cleanliness and operation of the Building and its tenants, including those rules
and regulations attached hereto as Exhibit B and incorporated herein by this
reference, and any modification or addition thereto adopted by Landlord,
provided Landlord shall give written notice thereof to Tenant. Landlord shall
not be responsible to Tenant for the nonperformance by any other tenant or
occupant of the Building of any rules and regulations.
30. INTENTIONALLY DELETED.
31. LIMITATION ON LANDLORD'S LIABILITY. Notwithstanding anything
contained in this Lease to the contrary, the obligations of Landlord under this
Lease (including any actual or alleged breach or default by Landlord) do not
constitute personal obligations of the individual partners, directors, officers
or shareholders of Landlord or Landlord's partners, and Tenant shall not seek
recourse against the individual partners, directors, officers or shareholders of
Landlord or Landlord's partners, or any of their personal assets for
satisfaction of any liability with respect to this Lease. In addition, in
consideration of the benefits accruing hereunder to Tenant and notwithstanding
anything contained in this Lease to the contrary, Tenant hereby covenants and
agrees for itself and all of its successors and assigns that the liability of
Landlord for its obligations under this Lease (including any liability as a
result of any actual or alleged failure, breach or default hereunder by
Landlord), shall be limited solely to, and Tenant's and its successors' and
assigns' sole and exclusive remedy shall be against, Landlord's interest in the
Building and proceeds therefrom, and no other assets of Landlord.
32. GENERAL PROVISIONS.
32.1 WAIVER. No waiver of any default or breach of any
covenant by either party hereunder shall be implied from any omission by either
party to take action on account of such default if such default persists or is
repeated, and no express waiver shall affect any default other than the default
specified in the waiver, and then said waiver shall be operative only for the
time and to the extent therein stated. Waivers of any covenant, term or
condition contained herein by either party shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition. The consent or
approval by either party to or of any act by either party requiring further
consent or approval shall not be deemed to waive or render unnecessary their
consent or approval to or of any subsequent similar acts. No payment by Tenant
or receipt by Landlord of a lesser amount than the rent payment herein
stipulated shall be deemed to be other than on account of the rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy provided in this Lease.
32.2 TIME. Time is of the essence hereof.
-24-
32.3 SEVERABILITY. If any term, covenant, condition or
provision of this Lease, or the application thereof to any person or
circumstance, shall to any extent be held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of the terms, covenants,
conditions, or provisions of this Lease, or the application thereof to any
person or circumstance, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby.
32.4 QUIET POSSESSION. Provided Tenant has performed all
of the terms, covenants, agreements and conditions of this Lease, including the
payment of rental and all other sums due hereunder, Tenant shall peaceably and
quietly hold and enjoy the Premises for the term herein described subject to the
provisions and conditions of this Lease.
32.5 SUCCESSORS AND ASSIGNS. Subject to the restrictions
on transfer contained in Section 14 above, this Lease and each of its covenants
and conditions shall be binding and shall inure to the benefit of the parties
hereto and their respective heirs, successors and legal representatives and
their respective assigns, subject to the provisions hereof. Whenever in this
Lease a reference is made to Landlord, such reference shall be deemed to refer
to the person in whom the interest of landlord shall be vested. Any successor or
assignee of Tenant who accepts an assignment of or receives the benefit of this
Lease and enters into possession or enjoyment hereunder shall thereby assume and
agree to perform and be bound by the covenants and conditions hereof. Nothing
herein contained shall be deemed in any manner to give a right of assignment to
Tenant without the prior written consent of Landlord.
32.6 ATTORNEYS' FEES. If any legal action, arbitration
or other proceeding is commenced to enforce or interpret any provision of this
Lease, the prevailing party shall be entitled to an award of its attorneys' fees
and expenses. The phrase "prevailing party" shall include a party who receives
substantially the relief desired whether by dismissal, summary judgment,
judgment or otherwise.
32.7 COST OF SUIT. In the event that any action shall be
instituted by either of the parties hereto for the enforcement of any of its
rights or remedies in and under this Lease, or any facts based upon or involving
same, the prevailing party, whether in court or by way of out-of-court
settlement, shall be entitled to recover from the nonprevailing party or parties
such prevailing party's attorney's fees, court costs, expert witness fees,
and/or other expenses relating to such controversy including attorney's fees,
court costs and/or expenses on appeal, if any.
32.8 ENTIRE AGREEMENT. This Lease contains the entire
agreement between the parties regarding the Premises and supersedes all prior
agreements, whether written or oral, between the parties regarding the same
subject. This Lease may only be modified by subsequent written agreement signed
by both parties.
32.9 LIGHT AND AIR EASEMENT. Any diminution or shutting
off of light or air by any structure which may be erected on lands adjacent to
the Building shall in no way affect this Lease, ▇▇▇▇▇ rent or otherwise impose
any liability on Landlord.
32.10 GOVERNING LAW. This Lease and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the state in which the Building is located.
32.11 JOINT AND SEVERAL LIABILITY. If more than one
person or entity executes this Lease as Tenant: (a) each of them is and shall be
jointly and severally liable for the covenants, conditions, provisions and
agreements of this Lease to be kept, observed and performed by Tenant; and (b)
the act or signature of, or notice from or to, any one or more of them with
respect to this Lease shall be binding upon each and all of the persons and
-25-
entities executing this Lease as Tenant with the same force and effect as if
each and all of them had so acted or signed, or given or received such notice.
32.12 HEADINGS; EXHIBITS. The headings of the sections
of this Lease are for convenience only and shall not be deemed to be relevant in
resolving any question or construction of any section of this Lease. Exhibits
attached hereto are deemed by attachment to constitute a part of this Lease and
are incorporated herein.
32.13 RECORDING. Neither Landlord nor Tenant shall
record this Lease. In addition, neither party shall record a short form
memorandum of this Lease without the prior written consent (and signature on the
memorandum) of the other, and provided that prior to recordation Tenant executes
and delivers to Landlord, in recordable form, a properly acknowledged quitclaim
deed or other instrument distinguishing all of Tenant's rights and interest in
and to the Building and the Premises, and designating Landlord as the
transferee, which deed or other instrument shall be held by Landlord and may be
recorded by Landlord once the Lease terminates or expires (but not prior
thereto). If such short form memorandum is recorded in accordance with the
foregoing, the party requesting the recording shall pay for all costs of or
related to such recording, including, but not limited to, recording charges and
documentary transfer taxes.
32.14 FINANCIAL STATEMENTS. Upon ten (10) days' prior
written request from Landlord (which Landlord may make at any time during the
term but not more often that two (2) times in any calendar year), Tenant shall
deliver to Landlord (a) a current financial statement of Tenant and any
guarantor of this Lease, and (b) financial statements of Tenant and such
guarantor for the two (2) years prior to the current financial statement year.
Such statements shall be prepared in accordance with generally acceptable
accounting principles and certified as true in all material respects by Tenant
(if Tenant is an individual) or by an authorized officer or general partner of
Tenant (if Tenant is a corporation or partnership, respectively).
32.15 TENANT'S AUTHORITY. If Tenant executes this Lease
as a partnership or corporation, then Tenant and the persons and/or entities
executing this Lease on behalf of Tenant represent and warrant that: (a) Tenant
is a duly authorized and existing partnership or corporation, as the case may
be, and is qualified to do business in the state in which the Building is
located; (b) such persons and/or entities executing this Lease are duly
authorized to execute and deliver this Lease on Tenant's behalf in accordance
with the Tenant's partnership agreement (if Tenant is a partnership), or a duly
adopted resolution of Tenant's board of directors and the Tenant's by-laws (if
Tenant is a corporation); and (c) this Lease is binding upon Tenant in
accordance with its terms.
32.16 CONSTRUCTION. It is acknowledged that both parties
and their professional advisors have participated equally in the negotiation and
drafting of this Lease and have had ample opportunity to review and comment upon
the same prior to the execution hereof. Accordingly, any ambiguities herein
shall be construed without regard to any rule of law providing for the
resolution of contractual ambiguities against the party who drafted the
applicable document.
[Remainder of page intentionally left blank. Signature page follows.]
-26-
IN WITNESS WHEREOF, the parties hereto have executed this Lease as
of the date first above written.
TENANT: LANDLORD:
GENIUS PRODUCTS, INC., CITIBANK (WEST), FSB,
a Nevada corporation a federal savings bank
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /S/ [Illegible]
--------------------------------- -------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chief Executive Officer Title: V.P.
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, VP
Corporate Realty Service
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Emp #▇▇▇▇▇▇▇▇▇▇
The undersigned Master Landlord under the Master Lease hereby consents to the
subletting of the Premises described herein on the terms and conditions
contained in this Lease. This consent shall apply only to this Lease and shall
not be deemed to be a consent to any other sublease of the Master Premises.
Dated October 17, 2003 By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------- ------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Trustee
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
-27-
EXHIBIT A TO LEASE
MASTER LEASE
------------
TENANT ACKNOWLEDGES RECEIPT OF THE MASTER LEASE
▇-▇
▇▇▇▇▇▇▇ ▇-▇ TO LEASE
PREMISES
--------
TENANT ACKNOWLEDGES RECEIPT OF THE PREMISES FLOORPLAN
A-2
EXHIBIT A-2 TO LEASE
EXPANSION SPACE
---------------
TENANT ACKNOWLEDGES RECEIPT OF THE EXPANSION SPACE FLOORPLAN
A-3
EXHIBIT B TO LEASE
LEASE AGREEMENT
RULES AND REGULATIONS
1. Tenant shall not install, construct, or place signs or advertising
in the windows, the door, or the exterior windows of the Premises
without the prior written consent of Landlord. Such signage shall be
subject to Landlord approval which shall not be unreasonably
withheld. All signage shall also be subject to government approval.
All approved signs or lettering on doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person approved
of by Landlord. Tenant shall not place anything or allow anything to
be placed near the glass of any window, door, partition or wall
which may appear unsightly from outside the Premises, provided,
however, that Landlord may furnish and install a Building standard
window covering at all exterior windows, Tenant shall not without
prior written consent of Landlord cause or otherwise sunscreen any
window.
2. Tenant shall not obtain for use upon the Premises, towel or other
similar service or accept barbering or bootblacking services on the
Premises, except from persons authorized by Landlord and at the
hours and under regulations fixed by Landlord.
3. The sidewalks, halls, passages, exits and entrances shall not be
obstructed by any of the tenants or used by them for a purpose other
than for ingress to and egress from their respective premises. The
halls, passages, exits, entrances and roof are not for the use of
the general public and Landlord shall in all cases retain the right
of control and prevent access thereto by all persons whose presence
in the judgment of Landlord shall be prejudicial to the safety,
character, reputation and interest of the Building and its tenants,
provided that nothing herein contained shall be construed to prevent
such access to persons with whom Tenant normally deals in the
ordinary course of Tenant's business unless such persons are engaged
in illegal activities. No tenant and no employees or invitees of any
tenant shall go upon the roof of the Building.
4. Tenant shall not alter any lock or install any new or additional
locks or any bolts on any door of the Premises without the written
consent of Landlord.
5. 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 and the expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the
tenant who, or whose employees or invitees shall have caused it.
6. Tenant shall not overload the floor of the Premises. Tenant shall
not drive nails, screw or drill into the partitions, woodwork or
plaster or in any way deface the Premises or any part thereof. No
boring, cutting or stringing of wires or laying of linoleum or other
similar floor coverings shall be permitted except with the prior
written consent of the Landlord and as the Landlord may direct or
during the construction of the Tenant improvements pursuant to
Section 11 of the Lease.
7. No furniture, freight or equipment of any kind shall be brought into
the Building without the consent of Landlord and all moving of the
same into or out of the Building shall be done at such time and in
such manner as Landlord shall designate. Landlord shall have the
right to prescribe the weight, size and position of all safes and
other heavy equipment brought into the Building and also the times
B-1
and manner of moving the same in and out of the Building. Safes or
other heavy objects shall, if considered necessary by Landlord,
stand on wood strips 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 from any cause and all damage
done to the Building by moving or maintaining any such safe or other
property shall be repaired at the expense of Tenant. There shall not
be used in any space, or in the public halls of the Building, either
by Tenant or others, any hand trucks except those equipped with
rubber tires and side guards.
8. Tenant shall not employ any person or persons other than the janitor
of Landlord for the purpose of cleaning the Premises unless
otherwise agreed to by Landlord. Except with the written consent of
Landlord, no person or persons other than those approved by Landlord
shall be permitted to enter the Building for the purpose of cleaning
the same. Tenant shall not cause any unnecessary labor by reason of
Tenant's carelessness or indifference in the preservation of good
order and cleanliness. Landlord shall in no way be responsible to
Tenant for any loss of property on the Premises, however occurring
or for any damage done to the effects of Tenant by the janitor or
any other employee or any other person.
9. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the
Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by
reason of noise, odors and or vibrations, or interfere in any way
with other tenants or those having business therein, nor shall any
animals or birds be brought in or kept in or about the Premises or
the Building. No Tenant shall make or permit to be made any unseemly
or disrupting noises or disturb or interfere with occupants of this
Building or neighboring buildings or Premises or those having
business with them whether by the use of any musical instrument,
radio, phonograph, unusual noise, or in any other way. No Tenant
shall throw anything out of doors or down the passageways.
10. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material,
or use any method of heating or air conditioning other than that
supplied by Landlord.
11. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires
will be allowed without the consent of Landlord. The location of
telephones, call boxes and other office equipment affixed to the
Premises shall be subject to the approval of Landlord.
12. All keys to office, rooms and toilet rooms shall be obtained from
Landlord's representative and Tenant shall not from any other source
duplicate, obtain keys or have keys made. Tenant, upon termination
of the tenancy, shall deliver to Landlord the keys of the offices,
rooms and toilet rooms which shall have been furnished or shall pay
Landlord the cost of replacing same or of changing the lock or locks
operated by such lost key if Landlord deems it necessary to make
such change.
13. Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the
Premises in any manner except as approved by Landlord. The expense
of repairing any damage resulting from a violation of this rule or
removal of any floor covering shall be borne by Tenant.
14. 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 and in such elevators as shall be
designated by Landlord.
B-2
15. On Sundays and legal holidays, and on other days between the hours
of 6:00 p.m. and 8:00 a.m. the following day, access to the Building
or to the halls or corridors in the Building, or to the Premises may
be refused unless the person seeking access is known to the person
or employee of the Building in charge, if any, and has a pass or is
properly identified. Landlord 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 the case of invasion, mob, public
excitement, or other commotion, Landlord reserves the right to
prevent access to the Building during the continuance of the same by
closing of the doors or otherwise, for the safety of the tenants and
protection of property in the Building.
16. Tenant shall see that the doors of the Premises are closed and
securely locked before leaving the Building and must observe strict
care and caution that all water faucets or water apparatus are
entirely shut off before Tenant or Tenant's employees leave the
Building, and that all electricity shall likewise be carefully shut
off, so as to prevent waste or damage, and for any default or
carelessness Tenant shall make good all injuries sustained by other
tenants or occupants of the Building or Tenant.
17. Landlord reserves the right to exclude or expel from the Building
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 the rules and regulations of the
Building.
18. The requirements of Tenant will be attended to only upon application
to the Landlord's representative. Employees of Landlord shall not
perform any work or do anything outside of their regular duties
unless under special instructions from Landlord, and no employee
will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.
19. No vending machine or machines of any description shall be
installed, maintained or operated upon the Premises without the
written consent of the Landlord.
20. Landlord shall have the right, exercisable without notice and
without liability to Tenant, to change the name and the street
address of the Building of which the Premises are a part.
21. Tenant agrees that it shall comply with all fire and security
regulations that may be issued from time to time by Landlord and
Tenant also shall provide Landlord with the name of a designated
responsible employee to represent Tenant in all matters pertaining
to such fire or security regulations.
22. Landlord reserves the right by written notice to Tenant, to rescind,
alter or waive any rule or regulation at any time prescribed for the
Building when, in Landlord's judgment, it is necessary, desirable or
proper for the best interest of the Building and its tenants.
23. Tenants shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent same.
24. Without the written consent of Landlord, Tenant shall not use the
name of the Building in connection with or in promoting or
advertising the business of Tenant except as Tenant's address.
25. Landlord shall furnish heating and air conditioning during the hours
of 7:00 a.m. to 6:00 p.m. Monday through Friday, except for
holidays.
Landlord reserves the right to make such other and further rules and regulations
as in its judgment may be for the safety, care and cleanliness of the Premises
and for the preservation of good order therein. Tenant agrees to abide by all
such rules and regulations hereinabove stated and additional rules and
regulations which are adopted.
B-3
DATED: NOV 7, 2003 DATED: 11/21, 2003
------------------ ---------------------
TENANT'S INITIALS: KM LANDLORD'S INITIALS: WB
---------- ----------
B-4
EXHIBIT C TO LEASE
PARKING RULES AND REGULATIONS
1. The assignment of parking spaces shall be at the discretion of
Landlord. Within reason KM
2. Tenant and its employees utilizing the parking facilities shall
complete a parking information card which shall be kept on file with
the Corporate Realty Services for the Building.
3. Tenant and its employees agree to park in their assigned areas. At
no time shall Tenant or its employees park in a space assigned to a
Citibank (West), FSB Customer Parking Area, without prior approval.
4. Tenant and its employees agree to park at their own risk. Citibank
(West), FSB, Citigroup, Inc., their respective officers, employees,
successors and assigns, shall not be held liable for any damages
incurred while parking on the premises.
5. Tenant and its employees shall not use the parking area as a trash
receptacle.
6. Tenant and its employees, by parking their vehicles in the parking
facility, agree to abide by the Rules and Regulations governing the
parking facility as determined and amended, from time to time, by
Landlord.
TENANT: LANDLORD:
GENIUS PRODUCTS, INC., CITIBANK (WEST), FSB,
a Nevada corporation a federal savings bank
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /S/ [Illegible]
------------------------------ ------------------------------
Name: K ▇▇▇▇▇▇▇ Name: ▇. ▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
Title: CEO Title: V.P.
--------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, VP
Corporate Realty Service
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Emp #▇▇▇▇▇▇▇▇▇▇
C-1
EXHIBIT D TO LEASE
BROKERS
BROKER: Landlord represents and warrants that, except for BRE
Commercial, a California corporation ("BRE"), Landlord
has not dealt with any real estate broker, sales person,
or finder in connection with this Lease, and no such
person initiated or participated in the negotiation of
this Lease. Tenant represents that it has not dealt with
any real estate broker, sales person, or finder other
than BRE in connection with this Lease, and no such
person initiated or participated in the negotiation of
this Lease. Landlord hereby agrees to indemnify and hold
harmless Tenant from and against any and all demands,
damages, costs, liabilities and claims, including
without limitation attorney's fees, for commissions and
fees arising out of a breach of the foregoing
representation of Landlord. Tenant hereby agrees to
indemnify and hold harmless Landlord from and against
any and all demands, damages, costs, liabilities and
claims, including without limitation attorney's fees,
for commissions and fees arising out of a breach of the
foregoing representation of Tenant.
PAYMENT: Landlord agrees to pay a leasing commission equal to
five percent (5%) of the base rental for the initial
term of the Lease (but excluding any rental abatement
granted to Tenant) within fifteen (15) days after the
latest to occur of the following: (i) Landlord's receipt
of fully executed Lease (including without limitation
consent of Master Landlord), (ii) Tenant is in
possession of the Premises and the Lease is in full
force and effect, and (iii) payment of all rental and
security deposits due under the Lease. Upon receipt of
[Illegible] such commission, BRE releases any and all claims
for any commissions or broker's fees which arise out of
or are in any way connected with this Lease.
Terms not otherwise defined herein shall have the meaning given to
them in the Lease executed by and between Landlord and Tenant dated as of August
11, 2003.
IN WITNESS WHEREOF, the parties have executed this Exhibit as of the
2ND day of December, 2003.
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Brokers: Landlord:
BRE COMMERCIAL, CITIBANK (WEST), FSB,
a California corporation a federal savings bank
By: /S/ [Illegible] By: /S/ [Illegible]
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇. ▇▇▇▇▇▇▇▇
-------------------------------- ------------------------------
Title: EVP & COO Title: V.P.
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, VP
Corporate Realty Service
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Emp #▇▇▇▇▇▇▇▇▇▇
Tenant:
GENIUS PRODUCTS, INC.
a Nevada corporation
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: CEO
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