EXHIBIT 10.5
Commercial Lease Form
1. Parties. This
Lease dated December 11, 1996, is made by and between The Richlar
Partnership (a California general partnership) (herein called
"Lessor") and Digital Domain, Inc. (a Delaware corporation) (herein
called "Lessee).
2. Premises. Lessor
hereby leases to Lessee and Lessee leases from Lessor for the term,
at the rental, and upon all of the conditions set forth herein,
that certain premises situated in the County of Los Angeles, State
of California, commonly known as 344 Main Street, Venice,
California, consisting of approximately 21,295 square feet of
offices and warehouse (see Exhibit A) (herein called "The
Premises").
3. Term.
3.1 Term. The
term of this Lease shall be for five (5) years commencing on
January 1, 1997 and ending on December 31, 2001 unless sooner
terminated pursuant to any provision hereof.
3.2 Delay in Commencement. Notwithstanding
said commencement date, if for any reason Lessor cannot deliver
possession of the Premises to Lessee on said date, Lessor shall not
be subject to any liability therefor, nor shall such failure affect
the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof, but in such case Lessee shall not be
obligated to pay rent until possession of the Premises is tendered
to Lessee. If Lessee occupies the Premises prior to said
commencement date (any such occupancy to be only with Lessor's
consent), such occupancy shall be subject to all provisions hereof,
such occupancy shall be subject to all provisions hereof, such
occupancy shall not advance the termination date, and Lessee shall
pay rent for such period at the initial monthly rates set forth
below.
4. Rent. Lessee
shall pay to Lessor rent for the Premises at an annual rate
of
(See Addendum) payable in equal monthly payments of
(See
Addendum) in advance, on the first day of each month of the term
hereof. Lessee shall pay Lessor upon execution hereof $19,493.96 as
base rent for January 1997. Rent
for any period during the term hereof which is for less than one
month shall be a pro rata portion
of the monthly installment. Rent shall be payable without deduction
or offset, in lawful money of the United States, to Lessor
at
the address stated herein or to such other persons or at such other
places as Lessor may designate in writing.
5. Security Deposit. Lessee
shall deposit with Lessor upon execution hereof $21,295 as security
for Lessee's faithful performance of Lessee's
obligation hereunder. If Lessee fails to pay rent or other charges
due hereunder, or otherwise defaults with respect to any provision
of this Lease, Lessor may use, apply or retain all or any portion
of said deposit for the payment of any rent or any other charge in
default beyond any applicable grace period or for the payment of
any other sum which the Lessor may spend or become
obligated
to spend by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby.
If
Lessor so uses or applies all or any portion of said deposit,
Lessee shall within ten (10) days after demand therefor
deposit cash
with Lessor in an amount sufficient to restore said deposit to the
full amount hereinbefore stated and Lessee's failure to do
so shall
be a material breach of this Lease. Lessor shall not be required to
keep said deposit separate from its general accounts. If
Lessee
performs all of Lessee's obligations hereunder as of the expiration
of the Lease, said deposit, or so much thereof as
has
not been theretofore applied by Lessor
, shall
be returned, without payment of interest or other increment for its
use, to Lessee
(or, at Lessor's option
, to
the last assignee, if any, of Lessee's interest hereunder) at the
expiration of the term hereof, and after
Lessee has vacated the Premises. No trust relationship is created
herein between Lessor and Lessee with respect to said
Security
Deposit.
6. Use
6.1 Use. The
Premises shall be used and occupied only for an entertainment,
communications, computer applications and film production
firm and related office and support functions and parking therefor
and for no other purpose.
6.2 Compliance with Law. Lessee
shall, at Lessee's expense, comply promptly with all applicable
statutes, ordinances, rules, regulations,
orders, restrictions of record, and requirements in effect during
the term or any part of the term hereof regulating the use by
Lessee of the Premises, Lessee shall not use nor permit the use of
the Premises in any manner that will tend to create waste or
a nuisance
or, if there shall be more than one tenant in the building
containing the Premises, shall tend to disturb other
tenants.
6.3 Condition of Premises. Lessee
hereby accepts the Premises in their condition existing as of the
date of the execution hereof, subject
to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of
the Premises,
and accepts this Lease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto. Lessee
acknowledges
that neither Lessor nor Lessor's agent has made any representation
or warranty as to the suitability of the Premises for
the
conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
7.1 Lessee's Obligations. Lessee
shall keep in good order, condition and repair the Premises and
every part thereof, structural (excepting
pre-existing structural defects) and nonstructural whether or not
such portion of the Premises requiring repair, or the
means
of repairing the same are reasonable or readily accessible to
Lessee and whether or not the need for such repairs occurs as
a result
of Lessee's use, any prior use, the elements or age of such portion
of the equipment within the Premises, fixtures, walls
(interior and
exterior), foundations, ceilings, roofs (interior and exterior),
floors, windows, doors, plate glass and skylights located within
the Premises,
and all landscaping, driveways, parking lots, fences and signs
located on the Premises and sidewalks and parkways
adjacent
to the Premises.
7.2 Surrender. On
the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in
good condition and repair, broom clean, ordinary wear and tear and
casualty excepted. Lessee shall repair any damage to the
Premises
occasioned
by the
installation and/or removal of Lessee's trade fixtures, furnishings
and equipment pursuant to Paragraph 7.5(d), which repair shall
include without limitation the patching and filling of holes and
repair of structural damage.
7.3 Lessor's Rights. If
Lessee fails to perform Lessee's obligations under this Paragraph
7, Lessor may at its option (but shall not be
required to) enter upon the Premises, after ten (10) days' prior
notice to Lessee, and put the same in good order, condition and
repair, and the reasonable cost thereof together with interest
thereon at the maximum rate permitted by law shall become due and
shall be collectible as additional rental to Lessor together with
Lessee's next rental installment.
7.4 Lessor's Obligation. Except
for the obligations of Lessor under Paragraph 9 (relating to
destruction of the Premises) and under
Paragraph 14 (relating to condemnation of the Premises), it is
intended by the parties hereto that Lessor have no obligation,
in any
manner whatsoever, to repair and maintain the Premises nor the
building located thereon nor the equipment therein, whether
structural (excepting pre-existing structural defects) or
non-structural
, all
of which obligations are intended to be those of Lessee under
Paragraph 7.1 hereof. Lessee expressly waives the benefit of any
statute now or hereinafter
in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of
Lessor's failure to keep the Premises in good order, condition and
repair.
7.5 Alterations and Additions.
(a)
Lessor may require Lessee to provide
Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal
to one and one-half times the estimated cost of such
improvements, to insure Lessor against any liability for
mechanic's and materialmen's liens and to insure completion of
the work. Should Lessee make any alterations, improvements,
additions or Utility Installations without the prior approval
of Lessor, Lessor may require that Lessee remove any or all of
the same.
(b)
Deleted.
(c)
Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee
at or for use in the Premises, which claims are or may be
secured by any mechanic's or materialmen's lien against the
Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days'
notice prior to the commencement of any work in the
Premises, and
Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law.
Lessee shall discharge,
by bond or otherwise, within ten (10) days after the filing
thereof, any mechanic's lien filed against the Premises for
work claimed
to have been done for, or materials claimed to have been
furnished to, Lessee. If Lessee shall, in good faith, contest
the validity
of any such lien, claim or demand, then Lessee shall, at its
sole expense, defend itself and Lessor against the same and
shall pay
and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof against the Lessor or
the Premises,
upon condition that Lessor may require Lessee to furnish to
Lessor a surety bond satisfactory to Lessor in an
amount equal
to such contested lien, claim or demand indemnifying Lessor
against liability for the same and holding the Premises
free from
the effect of such a lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorneys' fees and costs
in participating
in such an action if Lessor shall decide it is to its best
interest to do so.
(d)
Unless Lessor requires their removal, as set forth in
Paragraph 7.5(a), all alterations, improvements, additions and
Utility Installations
(whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall
become the property of Lessor and remain upon and be
surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7 5(d),
Lessee's machinery and equipment, other than that which is
affixed to the Premises so that it cannot
be removed without material damage to the Premises, shall
remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2.
7.6 Lessor's Option. Upon
reasonable advance notice and notwithstanding anything to the
contrary contained herein and in addition to the rights provided
Lessor in Paragraph 7.3, Lessor may at its option (but shall not be
required to) enter upon the Premises
at any time
during
the term hereof and perform any maintenance, repairs or alterations
which Lessor is entitled to perform under
the terms of the Lease, and Lessee shall pay Lessor Lessee's share
of the cost of any such maintenance, repairs or alterations,
as
such share shall be equitably determined by Lessor, promptly upon
Lessor's billing Lessee therefor. Lessor's reasonable
determination
thereof, in good faith, shall be conclusive. Lessor agrees to
perform any such work in a manner which reasonably minimizes
disruption to Lessee's business activities.
8. Insurance and Indemnity.
8.1 Insuring Party. As
used in this Paragraph 8, the term "insuring party" shall mean
Lessor. Lessee shall reimburse Lessor for the
cost of the insurance obtained in monthly installments as
additional rent hereunder in accordance with the provisions
of Paragraph
16.24. If the Premises is a part of a larger building or group of
buildings and is not separately insured, Lessee's liability
shall
be an equitable proportion of the insurance costs for all of the
insured property, such equitable proportion to be reasonably
determined by Lessor in a manner reasonably satisfactory to
Lessee.
8.2 Liability Insurance. Lessee,
at its sole cost and expense, shall maintain during the term hereof
comprehensive (commercial) general liability insurance on an
"occurrence basis" against claims for "personal injury", including
without limitation bodily injury, death and/or damage, occurring
upon, in or about the Premises in a combined single limit or not
less than $1,000,000 per occurrence and with policy aggregate limit
of no less than $2,000,000 (or such higher amounts thereof as may
be reasonably requested by Lessor not to exceed a policy aggregate
limit of $5,000,000 from time to time during this Lease). Said
insurance shall name Lessor as an additional insured; shall be
written by companies and in form satisfactory to Lessor (which
companies shall be authorized to do business in California); shall
apply primary to any other comparable liability coverage; and shall
contain an endorsement requiring thirty (30) days' prior written
notice sent by certified or registered mail, return receipt
requested, to Lessor at the address set forth below, or such other
address as may be provided to any such insurer by Lessor, before
cancellation thereof or change in the coverage, scope or amount of
such policy or policies. Lessee shall provide Lessor with a
Certificate of Insurance as evidence of such insurance within
twenty (20) days of the date of this Lease. In the event Lessee
fails to obtain such insurance as provided in this Lease, Lessor
may obtain any such insurance, and the cost thereof shall be paid
by Lessee as additional rent with the first payment of rent which
is due subsequent to Lessor's incurring such cost, and Lessor shall
have all remedies to collect the same as rent in the Lease
provided, and/or as otherwise provided by law for the collection of
rent. The policy shall contain "cross-liability" or "separation of
insureds" coverage and shall insure performance by Lessee of the
indemnity provisions of this Paragraph 8. The limits of said
insurance shall not, however, limit the liability of Lessee
hereunder. In the event that the Premises constitutes a part of a
larger property, said insurance shall have a Lessor's Protective
Liability endorsement attached thereto.
8.3 Property Insurance.
(a)
The insuring party shall obtain and keep in force during the
term of this lease a policy or policies of insurance covering
loss or damage
to the Premises, in the amount of the full replacement value
thereof, as the same may exist from time to time, which
replacement value is now $2,000,000.00, against all perils
included within the classification of fire, extended coverage,
vandalism, malicious
mischief, special extended perils (all risk), sprinkler
leakage and
, at
Lessors option, earthquake. Said insurance shall
provide for payment of loss thereunder to lessor or to the holders
of mortgages or deeds of trust on the Premises. The insuring
party shall,
in addition, obtain and keep in force during the term of this Lease
a policy of rental income insurance covering a period of
twelve
(12) months, with loss payable to Lessor, which insurance shall
also cover all real estate taxes and insurance costs for
said period.
If such insurance coverage has a deductible clause, Lessee shall be
liable for the deductible amount.
(b)
If the Premises are part of a larger building, or if the
Premises are part of a group of buildings owned by Lessor
which are adjacent to the Premises, then Lessee shall pay for
any increase in the property insurance of such other building
or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(c)
Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in Paragraph
8.3. If Lessee does or permits to be done anything which shall
increase the cost of the insurance policies referred to in
Paragraph 8.3, then Lessee shall forthwith upon Lessor's
demand reimburse Lessor for any additional premiums
attributable to any act or omission or operation
of Lessee causing such increase in the cost of
insurance.
8.4 Waiver of Subrogation. Lessee
and Lessor each hereby waive
any
and all rights of recovery against the other, or against the
officers,
employees, agents and representatives of the other, for loss of or
damage to such waiving party or its property or the
property
of others under its control to the extent that such loss or damage
is insured against under any insurance policy in force at
the time
of such loss or damage. The insuring party shall, if possible, in
obtaining the policies of insurance required hereunder,
obtain policies
which permit such waiver.
8.5 Indemnity. Lessee
shall indemnify and hold harmless Lessor from and against any and
all claims arising out of any alleged defective
or unsafe condition of the Premises and from Lessee's use of the
Premises, or from the conduct of Lessee's business or
from
any activity, work or things done, permitted or suffered by Lessee
in or about the Premises or elsewhere unless due to the
willful acts
or gross negligence of Lessor, its employees, agents or contractors
and shall further indemnify and hold harmless Lessor from
and
against any and all claims arising from any breach or default in
the performance of any obligation on Lessee's part to be performed
under the terms
- of
this Lease, or arising from willful acts or gross negligence of
Lessee, or any of Lessee's agents, contractors,
or employees, and from and against all costs, attorneys' fees,
expenses and liabilities incurred in the defense of any such claim
or any action or proceeding brought thereon; and in case any action
or proceeding be brought against Lessor by reason of any
such
claim, Lessee upon notice from Lessor shall defend the same at
Lessee's expense by counsel satisfactory to Lessor. Lessee, as a
material part of 'he consideration to Lessor, hereby assumes all
risk of damage to property or injury to persons in, upon, or about
the Premises arising from any cause and Lessee hereby waives all
claims in respect thereof against Lessor.
8.6 Exemption of Lessor from Liability.
Unless due to the willful acts or gross negligence of Lessor, its
employees, agents or contractors,
Lessor shall not be liable for injury to Lessee's business or any
loss of income therefrom or for damage to the goods,
wares,
merchandise or other property of Lessee, Lessee's employees,
invitees, customers, agents, contractors, or any other person
in or
about the Premises, nor shall Lessor be liable for injury to the
person of Lessee, Lessee's employees, invitees, customers, 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 upon other portions of
the building of which the Premises is a part, 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
Lessee. Lessor shall not be liable for any damages arising from
any act
or neglect of any other tenant, if any, of the building in which
the Premises is located.
9. Damage or Destruction.
9.1 If
the Premises shall be partially damaged by fire or other cause,
then the Premises shall be repaired by and at the expense of
Lessor
and the rent, until such repairs shall be made, shall be
apportioned according to the part of the Premises which is usable
by Lessee.
No penalty shall accrue for reasonable delay which may arise by
reason of adjustment of fire insurance on the part of Lessor
or
Lessee, for reasonable delay on account of "labor troubles", or any
other cause beyond Lessors control. If (i) the Premises are
totally
damaged or are rendered wholly untenantable, (ii) the Premises are
totally or partially damaged by uninsured fire or other
uninsured
cause, or (iii) the Premises shall be so damaged that Lessor shall
decide to demolish the entire Premises, then within
ninety
(90) days after the occurrence of the event or damage or
destruction Lessor may elect, by written notice to Lessee,
to terminate
this Lease. In such event, the term of this Lease shall expire by
lapse of time upon the third day after such notice is given,
and
Lessee shall vacate the Premises and surrender the same to Lessor.
If Lessor does not elect to terminate this Lease pursuant to
the
preceding sentence, then: Lessor shall diligently undertake and
prosecute to completion the repair of the Premises, to
substantially
their condition immediately prior to the event of damage or
destruction; and rent shall be apportioned according to the
part
of the Premises which is usable by Lessee, until such restoration
or rebuilding is complete. Notwithstanding anything to the
contrary
contained herein, if Lessor notifies Lessee of Lessor's election to
terminate this Lease pursuant to the foregoing, then for a period
of ten (10) days following Lessee's receipt of written notice of
such election, Lessee may elect, by written notice to Lessor, at
Lessee's own cost and expense, to restore or rebuild the Premises
to substantially their condition immediately prior to the event
of damage
or destruction, in which event: (i) this Lease shall continue
thereafter in full force and effect, as if Lessors election to
terminate had never been made; (ii) Lessee shall diligently cause
the Premises to be restored or rebuilt in accordance with
the foregoing;
and (iii) rent shall be apportioned according to the part of the
Premises which is usable by Lessee until such restoration or
rebuilding is complete, to the extent of rental loss insurance
available to Lessor.
Notwithstanding
anything to the contrary contained herein, in the event that
Lessor does not or may not elect to terminate this
Lease
pursuant to the terms of this Paragraph 9.1, then within sixty
(60) following the occurrence of any event of damage or
destruction
to the Premises, Lessor shall provide Lessee with written
notice, prepared by a licensed California contractor,
reasonably estimating
the period of time which will be required to repair or rebuild
the Premises to substantially the condition in which
they existed
immediately prior to such damage or destruction. If such
reparation or rebuilding is not reasonably estimated to be
complete within two hundred forty (240) days following the
occurrence of such damage or destruction, then Lessee may
elect by written notice to Lessor with ten (10) business days
of Lessor's notice to terminate this Lease in which event: (i)
the term of this Lease shall expire by
lapse of time upon the third day after such notice is given,
and (ii) Lessee shall vacate the Premises and surrender the
same to Lessor.
No
penalty shall accrue for reasonable delay which may arise by
reason of adjustment of fire insurance on the part of Lessor
or Lessee, for reasonable delay on account of "labor
troubles", or any other cause beyond the control of Lessor or
Lessee.
9.2 Damage Near End of Term. If
the Premises are partially destroyed or damaged during the last six
(6) months of the term of this
Lease, either party hereto may at its option cancel and terminate
this Lease as of the date of occurrence of such damage by
giving
notice to the other party of its election to do so within thirty
(30) days after the date of occurrence of such damage.
9.3 Termination - Advance Payments. Upon
termination of this Lease pursuant to this Paragraph 9, an
equitable adjustment shall be
made concerning advance rent and any advance payments made by
Lessee to Lessor. Lessor shall, in addition, return to
Lessee so
much of Lessee's security deposit as has not theretofore been
applied by Lessor.
9.4 Waiver. Lessee
waives the provisions of California Civil Code Sections 1932(2) and
1933(4) which relate to termination of leases when the thing leased
is destroyed and all rights under any law in existence during the
term of this Lease authorizing a tenant to make repairs at the
expense of a landlord or to terminate a lease on complete or
partial destruction of the leased premises, and agrees that any
such event shall be governed by the terms of this
Lease.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessee
shall pay to Lessor in monthly installments, as additional rent,
Lessee's share of the real property taxes
applicable to the Premises in accordance with the provisions of
Paragraph 16.24.
10.2 Definition of "Real Property" Tax.
As used herein, the term "real property tax" shall include any form
of assessment, license fee,
commercial rental tax, levy, penalty, or tax (other than
inheritance or estate tax or State or Federal income tax of
Lessor), imposed
by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or
any school,
agricultural, lighting, drainage or other improvement district
thereof
, as
against any legal or equitable interest of Lessor in the
Premises
or in the real property of which the Premises are a part, as
against Lessor's right to rent or other income therefrom, or
as against
Lessor's business of leasing the Premises or any tax imposed in
substitution, partially or totally, of any tax previously
included
within the definition of real property tax, or any additional tax
the nature of which was previously included within the
definition of
real property tax. Any surcharge or regulatory fee imposed by any
governmental entity with reference to parking applicable to
the Premises
shall also be included within the term "real property
tax."
10.3 Proration of Taxes. If
the Premises are not separately assessed, Lessee's liability shall
be an equitable proportion of the real property
taxes for all of the land and improvements included within
the
tax
parcel assessed, such proportion to be determined by
Lessor
from the respective valuations assigned in the assessor's work
sheets or such other information as may be reasonable
available.
Lessor's reasonable determination thereof shall be reasonably
acceptable to Lessee.
10.4 Personal Property Taxes.
(a)
Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Lessee contained in the
Premises or elsewhere. When possible, Lessee, shall cause said
trade fixtures, furnishings,
equipment and all other personal property to be assessed and
billed separately from the real property of
Lessor.
(b)
If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the
taxes attributable
to Lessee in accordance with the provisions of Paragraph
16.24.
11. Utilities. Lessee
shall pay for all water, gas, heat, light, power, telephone and
other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion to
be determined
by Lessor of all charges jointly metered with other
premises.
12. Assignment. Mortgage and Subletting. (See Addendum-Paragraph
21.)
12.1 Lessor's Consent. Neither
Lessee, nor Lessee's legal representatives, successors or assigns,
shall assign, mortgage or encumber
this Lease, or sublet, or use or occupy or permit the Premises or
any part thereof to be used or occupied by others, without
the
prior consent of Lessor and the payment of any applicable
processing fee in each instance, and any such assignment,
mortgage, encumbrance,
sublease or permission without such consent and payment shall be
voidable at the option of Lessor and, at the further
option of Lessor, shall terminate this Lease subject to the
provisions of Paragraph 13 "Defaults; Remedies". If this
Lease
be assigned, or if the Premises or any part thereof be sublet or
occupied by any party other than Lessee, Lessor may, after
default
by Lessee, collect rent from the assignee, subtenant or
occupant
, and
apply the net amount collected to the rent herein
reserved,
but no such assignment, subletting, occupancy or collection shall
be deemed a waiver of this covenant or the acceptance of
the
assignee, subtenant or occupant as tenant, or a release of Lessee
from the further performance by Lessee of the obligations on
the
part of Lessee herein contained. The consent by Lessor to an
assignment or subletting shall not in any wise be construed
to relieve
Lessee, the assignee or the subtenant from obtaining the express
consent of Lessor to any further assignment or subletting or to
release Lessee from any liability, whether past, present or future,
under this Lease or to release Lessee from any liability under
this Lease
because of Lessor's failure to give notice of default under or in
respect of any of the terms, covenants, conditions, provisions
or agreements
of this Lease. Notwithstanding the consent of Lessor to such
assignment or subletting, Lessee shall remain liable for the
payment
of all bills rendered by Lessor for the charges incurred by the
assignee or subtenant for services and materials supplied to
the
Premises. A transfer of control of Lessee shall be deemed an
assignment under this Lease and shall be subject to all the
provisions
of this Article, including but not limited to the requirement of
obtaining Lessor's prior consent, unless Lessee at the time
of the
proposed transfer is then a publicly held corporation freely traded
on a major stock exchange.
Notwithstanding
any contrary provision of the immediately preceding provisions
of this Paragraph 12.1, but subject to the provisions
of Subparagraph 12.2(b), Lessee may assign this Lease or
sublet the Premises or any portion thereof upon the
following express
conditions:
(1)
that the proposed assignee or subtenant shall be subject to
the prior consent of Lessor, which consent will not be
unreasonably
withheld or delayed more than ten (10) business days after
Lessor's receipt of all information required from Lessee
but, without
limiting the generality of the foregoing, it shall be
reasonable for Lessor to deny such consent if:
(a)
the use to be made of the Premises by the proposed assignee or
subtenant is a use which would be prohibited by any
other portion
of this Lease (including but not limited to any Rules and
Regulations then in effect) or a use which would impose
any additional
burden upon Lessor in the operation of the Building; however,
Lessor shall not unreasonably withhold its consent to a
use differing
from those set forth in Paragraph 6.1 of this Lease;
or
(b)
the character, moral stability, reputation and financial
responsibility of the proposed assignee or subtenant are not
reasonably satisfactory
to Lessor or in any event not at least equal to those which
were possessed by Lessee as of the date of execution of
this Lease;
(2)
that Lessee shall reimburse Lessor for all reasonable costs
incurred by Lessor in connection with such assignment
or subletting
including without limitation all attorneys' fees applicable
thereto;
(3)
that the proposed assignee or subtenant shall execute an
agreement pursuant to which it shall agree to perform
faithfully and be bound
by all of the terms, covenants, conditions, provisions and
agreements of this Lease;
(4)
that an executed duplicate original of said assignment and
assumption agreement or sublease, as the case may be, on
Lessor's then
standard form, shall be delivered to Lessor within five (5)
days after the execution thereof, and that such assignment
or subletting
shall not be binding upon Lessor until the delivery thereof to
Lessor; and
(5)
that Lessee shall pay to Lessor, as additional rent, one-half
(1/2) of any consideration given to Lessee by the proposed
assignee or
subtenant for or in connection with such assignment or
subletting. Lessor and Lessee have each given full
consideration to the possibility
that the rental value of the Premises may appreciate during
the term of the Lease. In such regard, Lessor and Lessee
have expressly
allocated the possibility of such rental value increase as
part of their negotiations of this Lease. Lessor and Lessee
freely negotiated all of the terms and conditions of this
Lease, including but not limited to, the possibility that this
Lease may be terminated by
Lessor pursuant to this Paragraph 12 Lessor and Lessee
expressly thus agree that any such rental increase value is
not an element of value or property right granted to Lessee,
and that Lessor retains all rights thereto, including, but not
limited to, the termination
and allocation rights herein set forth.
12.2 Procedure.
(a)
At least thirty (30) days prior to any proposed subletting or
assignment or mortgage, Lessee shall submit to Lessor a
statement containing the name and address of the proposed
subtenant or assignee or mortgagee and all of the principal
terms and conditions of the
proposed subletting or assignment or mortgage including, but
not limited to, in the event of a subletting the
proposed commencement
and expiration dates of the term thereof. If the proposed
sublet area shall not constitute the entire Premises,
such statement
shall be accompanied by a floor plan delineating the proposed
sublet area. Lessor shall have a reasonable amount of
time but
in no event less than ten (10) business days from the receipt
of any such notice to consent, decline to consent or make one
of the elections
provided in Subparagraph (b) below.
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