OFFICE BUILDING LEASE

Exhibit 10.9

 

OFFICE BUILDING LEASE

 

BETWEEN

 

FLUOR ENTERPRISES, INC.

 

LANDLORD

 

AND

 

QUEST SOFTWARE, INC.,

 

TENANT

TABLE OF CONTENTS

 

 

(i)

 

(ii)

 

(iii)

 

(iv)

 

(v)

OFFICE BUILDING LEASE

 

This OFFICE BUILDING LEASE (“Lease”) is entered into as of the 13 ^th day of February, 2004 (the “Effective Date”) by and between FLUOR ENTERPRISES, INC., a California corporation (“Landlord”), and QUEST SOFTWARE, INC., a California corporation (“Tenant”) (collectively, the “Parties”).

 

1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have the following definitions and meanings:

 

(a) Landlord: Fluor Enterprises, Inc., a California corporation

 

(b) Landlord’s Address (For Notices) :

 

One Enterprise Drive

Aliso Viejo, CA 92656

Attn: Director, Corporate Real Estate

 

or such other place as Landlord may from time to time designate by notice to Tenant.

 

(c) Tenant : Quest Software Inc., a California corporation.

 

(d) Tenant’s Address (For Notices) :

 

Prior to the Commencement Date:

 

Quest Software, Inc.

8001 Irvine Center Drive

Irvine, CA 92618

Attention: General Counsel

 

After the Commencement Date:

 

Quest Software, Inc.

[At the Address of the Premises]

Attention: General Counsel

 

In each case with a copy to:

 

Paul, Hastings, Janofsky & Walker LLP

695 Town Center Drive, 17 ^th Floor

Costa Mesa, CA 92626

Attention: John F. Simonis, Esq.

 

or such other place as Tenant may from time to time designate by notice to Landlord.

 

(e) Project: The parcel(s) of real property located in the City of Aliso Viejo (the “City”), County of Orange (the “County”), State of California (“State”), as shown on the site plan attached hereto as Exhibit “A” , including buildings, surface parking areas, landscaping, walkways and other common areas situated thereon (the “Project”).

(f) Building: A four (4) story office building upon the Land which, for purposes for this Lease, the Parties agree contains 88,885 Rentable Square Feet (and 83,286 Useable Square Feet), with the street address of One Fluor Daniel Drive, Aliso Viejo, California 92698.

 

(g) Premises: Those certain premises generally shown on the floor plans attached hereto as Exhibits “B-I, 2 & 3” located on a portion of the ground floor as well as the entire second (2nd) and third (3rd) floors of the Building, which for purposes for this Lease, the Parties agree contains 57,717 Rentable Square Feet and 53,941 Useable Square Feet.

 

(h) Premises Parcel: The legal parcel upon which the Building is located as shown on the site plan attached hereto as Exhibit “A ”.

 

(i) Project CC&Rs: Those certain Declaration of Reciprocal Easements and Covenants recorded against or to be recorded against the Project in accordance with the Building E Purchase Agreement (as defined in Section 3(b) below).

 

(j) Tenant’s Percentage of Building: “Tenant’s Percentage of the Building” shall be the ratio of the Rentable Square Footage of the Premises to the total Rentable Square Footage of the Building. For purposes of this Lease the Parties agree that the initial Tenant’s Percentage of Building is 62.5%. In the event the Premises or the Building is materially modified, the exact Rentable Square Footage and Usable Square Footage of the Building and/or Premises, as the case may be, shall be recalculated in accordance with the Method for Measuring Floor Area in Office Buildings, ANSI Z65.1996 (the “BOMA Standard”).

 

(k) Building’s Percentage of Project: The “Building’s Percentage of the Project” shall be the ratio of the Rentable Square Footage of the Building to the total Rentable Square Footage of all buildings in the Project. For purposes of this Lease, the Building’s Percentage of the Project is 20.56%. Landlord represents and warrants that the Rentable Square Footage for the Building and the other Buildings in the Project has been calculated using the BOMA Standard. In the event the Building or any other building in the Project is materially modified, the exact Rentable Square Footage and Usable Square Footage of the Building and/or Premises, as the case may be, shall be recalculated in accordance with the BOMA Standard.

 

(l) Term: Ten (10) years, subject to Tenant’s early termination option pursuant to Sections 3(b) and 3(c) below.

 

(m) Commencement Date: The Commencement Date shall be December 1, 2005, subject to extension on a day-for-day basis for Force Majeure Delays (as defined in Section 31 below) and Landlord Delays, as defined in Section 9 of the Work Letter Agreement attached hereto as Exhibit C (the “Work Letter”).

 

(n) Initial Monthly Base Rent: $2.10 per rentable square foot, full service gross, subject to adjustment as provided in Section 1(o) below and as otherwise provided in this Lease.

 

(o) Adjustment to Monthly Base Rent: Monthly Base Rent will be adjusted in accordance with the following:

 

 

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(p) Expense Allowance: The Expense Allowance as to Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs means Tenant’s Percentage of Operating Expenses, Real Property Taxes and Assessments and Utilities Costs on an aggregate basis, as described in Section 6 below, for the 2006 calendar base year (hereinafter, the “Base Year”), which amount on an annual basis shall be included in Monthly Base Rent and shall be funded by Landlord without reimbursement by Tenant.

 

(q) Security Deposit: There shall be no security deposit under this Lease, unless Tenant fails to pay an installment of rent within ten (10) days of the date when due on three (3) or more occasions during any two-calendar year period, in which case Tenant shall deposit, with Landlord, a security deposit equal to one (1) month’s rent.

 

(r) Tenant Improvements: All tenant improvements installed or to be installed by Tenant within the Premises to prepare the Premises for occupancy pursuant to the terms of the Work Letter.

 

(s) Tenant Improvement Allowance: One Million Seventy-Eight Thousand Eight Hundred Twenty Dollars ($1,078,820).

 

(t) Permitted Use: General office use and any other legally permitted uses under the Project CC&Rs.

 

(u) Parking: Except for the exclusive parking rights set forth below in this Section, all parking within the Project shall be available for the non-exclusive use of Tenant, the Tenant Parties and the other occupants and visitors of the Project and otherwise in accordance with the Project CC&Rs. At Tenant’s option, up to twenty (20) parking stalls on the Premises Parcel (other than stalls committed to handicapped parking or loading/unloading for the Building) may be converted to reserved spaces for the exclusive use of Tenant. Pursuant to the Project CC&Rs, Landlord or successor owners of other buildings in the Project may also designate up to twenty (20) parking stalls for each other building in the Project as reserved parking stalls for the exclusive use of such Building, provided that the reserved spaces for other buildings must be located outside the parcel on which the Building is located. In addition, prior to the Commencement Date Landlord shall create and stripe a loading and unloading area for the Building (not to exceed three (3) parking spaces) in a reasonably convenient location reasonably acceptable to Tenant within the parking area on the Premise Parcel or the adjacent Building E Parcel. All parking shall be provided free of charge to Tenant and its employees, subtenants, assignees, customers, contractors and invitees (collectively, the “Tenant Parties”) for the Term of the Lease, including any exercised Extension Options (as defined in Section 38 of the Addendum). The use of Project parking areas by Tenant and the Tenant Parties shall be subject to the Project CC&Rs, the terms and conditions of Section 31 below and the Rules and Regulations regarding parking contained in Exhibit “E ”.

 

(v) Broker(s): Cushman and Wakefield of California, Inc., representing Landlord, and Julien J. Studley, Inc., representing Tenant.

 

(w) Interest Rate: shall mean ten percent (10%) per annum; provided, however, the Interest Rate will in no event exceed the maximum interest rate permitted to be charged by applicable law.

 

(x) Exhibits: Exhibits A through M, inclusive, which Exhibits are attached to this Lease and incorporated herein by this reference.

 

(y) Addendum Paragraphs: 38 through 45, inclusive, which Addendum Paragraphs are attached to this Lease and incorporated herein by this reference.

 

This Section 1 represents a summary of the basic terms and definitions of this Lease. In the event of any inconsistency between the terms contained in this Section 1 and any specific provision of this Lease, the terms of the more specific provision shall prevail.

 

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2. PREMISES AND COMMON AREAS .

 

(a) Premises . Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises as improved or to be improved with the Tenant Improvements described in the Work Letter. Tenant shall have entry access to the Building and access to the Premises twenty-four (24) hours per day, seven (7) days per week year-round. Landlord reserves the right to require Tenant to comply with Project security procedures and practices in accordance with the Project CC&Rs, applied on a consistent basis to all occupants in the Project.

 

(b) Mutual Covenants . Landlord and Tenant agree that the letting and hiring of the Premises is upon and subject to the terms, covenants and conditions contained in this Lease and each party covenants as a material part of the consideration for this Lease to keep and perform their respective obligations under this Lease.

 

(c) Tenant’s Use of Common Areas . During the Term of this Lease, Tenant and the Tenant Parties (as defined below) shall have the nonexclusive right to use in common with Landlord and all persons, firms and corporations conducting business in the Project and their respective customers, guests, licensees, invitees, subtenants, employees and agents (collectively, “Project Occupants”), subject to the terms of this Lease, the Rules and Regulations of the Project and the Project CC&Rs, the following common areas of the Building and/or the Project (collectively, the “Common Areas”):

 

(i) The Building’s common entrances, hallways, lobbies, public restrooms on multi-tenant floors, elevators, stairways and accessways, loading docks, ramps, drives and platforms and any passageways and serviceways thereto, and the common pipes, conduits, wires and appurtenant equipment within the Building which serve the Premises (collectively, “Building Common Areas”); and

 

(ii) All Project common areas, including, without limitation, the parking facilities of the Project (the “Parking Areas”), trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, plaza areas, outdoor eating areas, fountains and similar areas and facilities and all other common areas identified in the Project CC&Rs and the Building C loading dock area, which will not be a common area under the Project CC&Rs but will be made available for Tenant’s use pursuant to a separate license agreement with Landlord in accordance with the same terms as set forth in Section 5.5 of the Building E Purchase Agreement (collectively, “Project Common Areas”).

 

(iii) The right to utilize any unutilized conduits connecting the Building and Building E in the Project and the right to install and maintain conduits, cabling and/or wiring within such conduits and other conduit & risers previously installed by Landlord for such purposes or in other commercially feasible locations reasonably approved by Landlord within the Project Common Areas to connect Tenant’s power and telecommunications systems from the minimum point of entry of the Building to existing telecommunications and power systems in Building E and in public roads and/or utility easements.

 

(iv) For so long as Landlord has direct control of the cafeteria located in Building C of the Project (“Cafeteria”) or such Cafeteria remains a Project common area under the Project CC&Rs, Tenant and the Tenant Parties shall have the right to use the Cafeteria on a non-exclusive, non-discriminatory basis with the Landlord and other Project Occupants and at prices generally charged to all Project Occupants, all as more particularly described in the Project CC&Rs. Tenant’s rights under this Subsection 2(c)(iv) shall survive the purchase of the Premises Parcel by Tenant pursuant to the Right of First Offer or the Purchase Option pursuant to Section 40 of the Addendum.

 

(v) For so long as Landlord has direct control of the gymnasium and work-out facility in Suites D1-A028 and D1-A033 on the first floor of Building D of the Project (“Gymnasium”) or such Gymnasium remains a Project common area under the Project CC&Rs, Tenant and the Tenant Parties shall have the right to use the Gymnasium, including the shower and locker room area, on a non-exclusive, non-discriminatory basis with Landlord’s employees and other Project Occupants. The use of the gym will be available to Tenant and its employees at a monthly fee per person, that is subject to periodic change at Landlord’s discretion and in accordance to certain terms and conditions as set forth in the Project CC&Rs

 

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and otherwise in accordance with non-discriminatory and reasonable rules and regulations as may be promulgated from time to time, without any other Landlord fee or mark-up. Tenant’s rights under this Subsection 2(c)(v) shall survive the purchase of the Premises Parcel by Tenant pursuant to the Right of First Refusal to Purchase or the Purchase Option pursuant to Section 40 of the Addendum.

 

(vi) For so long as Landlord has direct control or other right to use of the presentation room located in Suite A1-A031 on the first floor of Building A or any replacement presentation room that is created as a common area of the Project in accordance with the Project CC&Rs (the “Presentation Room”), Tenant and the Tenant Parties shall have the right to use the Presentation Room on a non-exclusive, non-discriminatory basis with Landlord and other Project Occupants. If Landlord sells Building A to a third party and reserves a lease or license for Landlord and/or its affiliates to continue to use the Presentation Room, Landlord shall reserve a similar right for Tenant to use the Presentation Room on the same terms and conditions as applicable to Landlord, applied on a non-discriminatory basis. The use of the Presentation Room by Tenant and the Tenant Parties shall be subject to reasonable fees and other terms and conditions as set forth in the Project CC&Rs and otherwise in accordance with non-discriminatory and reasonable rules and regulations as may be promulgated from time to time, without any other Landlord fee or mark-up. Tenant’s rights under this Subsection 2(c)(vi) shall survive the purchase of the Premises Parcel by Tenant pursuant to the Right of First Offer or the Purchase Option pursuant to Section 40 of the Addendum.

 

(d) Landlord’s Reservation of Rights . Subject to Section 2(c) above and provided Tenant’s use of and access to the Premises and Parking Areas is not interfered with in an unreasonable manner, Landlord reserves for itself and for all successor owner(s) of parcels within the Project, the right from time to time to: (i) install, use, maintain, repair, replace and relocate pipes, ducts, conduits, wires and appurtenant meters and equipment above the ceiling surfaces, below the floor surfaces, within the walls and in the central core areas of the Building; (ii) make changes to the design and layout of the Project, including, without limitation, changes to buildings, driveways, entrances, loading and unloading areas, direction of traffic, landscaped areas and walkways, and, subject to the parking provisions contained in Section 31 and Exhibit “E ” the Parking Areas and (iii) use or close temporarily the Building Common Areas and the Project Common Areas while engaged in making improvements, repairs or alterations to the Building, the Project, or any portion thereof. Landlord shall operate and maintain the Building and Project in a manner consistent with the standards of comparable first class office properties (at least three rentable stories in height) in Aliso Viejo, California (“Comparable Projects”). In exercising any of the rights reserved to Landlord in this Section 2(d), and except to the extent otherwise permitted under this Lease, Landlord agrees that any exercise of the reserved rights hereunder shall impose no cost upon Tenant, and Landlord shall use commercially reasonable efforts to minimize any interference with Tenant’s use and occupancy of and access to the Premises, the Building Common Areas and the Project Common Areas.

 

(e) Tenant Right to Approve Changes to Project CC&Rs or Design Guidelines . Landlord shall not amend or modify (i) the Project CC&Rs in a manner that would or could materially adversely impact Tenant’s rights and interests under this Lease and the Purchase Option hereunder or (ii) the Design Guidelines (as defined in the Project CC&Rs) for the Project without the prior written consent of Tenant, which consent shall not be unreasonably withheld or delayed.

 

3. TERM .

 

(a) Term . The term of this Lease (“Term”) will be for the period designated in Section 1(k) above, commencing on the Commencement Date, plus any extensions of the Term pursuant to any provision of this Lease or any future amendment of this Lease, but subject to potential early termination in accordance Sections 3(b) or 3(c) below. If the actual Commencement Date is other than the date specified in the Basic Lease Terms, the Parties shall enter into a mutually acceptable commencement date agreement to reflect the actual Commencement Date.

 

(b) Termination of Lease Upon Termination of Building E Sale . Landlord and Tenant have entered into a purchase and sale agreement of even date (the “Building E Purchase Agreement”) for the

 

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potential sale by Landlord to Tenant of adjacent Building E in the Project and the legal parcel upon which Building is situated (the “Building E Parcel”). This Lease shall automatically terminate and be of no further force and effect in the event the Building E Purchase Agreement is terminated prior to the closing of the sale of the Building E Parcel to Tenant.

 

(c) Tenant Early Termination Right . Tenant shall have the option, upon not less than twelve (12) months prior written notice to Landlord, to terminate the Lease at any time after the seventh (7th) year of the Term. Any such election to terminate shall be irrevocable once given and, unless otherwise agreed by the Parties, the effective date of any such termination must be on an anniversary date of the Commencement Date (i.,e., the 7th, 8th or 9th anniversary date). If Tenant exercises such Option, Tenant shall pay Landlord a termination fee equal to the unamortized portion of the Tenant Improvement Allowance, space planning costs and brokerage commissions paid by Landlord’s in connection with this Lease, determined based upon a straight line amortization of such costs over the initial ten (10) year Term.

 

4. POSSESSION .

 

(a) Delivery of Possession . Landlord shall deliver the Premises in broom-clean condition and ready for Tenant’s improvement work on or before May 1, 2005 (the “Delivery Date”). In the event Tenant takes possession of the Premises prior to the Commencement Date, Tenant’s use and occupancy of the Premises until the Commencement Date shall be subject to all terms, conditions and covenants contained in this Lease other than the obligation to pay Monthly Base Rent. Pending such delivery, Landlord shall not materially modify the Premises or the Building and shall maintain same in substantially the condition that exists as of the date of this Lease, reasonable and ordinary wear and tear excepted.

 

(b) Condition of Premises . Landlord hereby represents and warrants to Tenant that the Premises, the Building and the Project Common Areas are, and as of the Delivery Date shall be, in material compliance with all applicable Laws (as hereinafter defined) in effect as of the date of this Lease, including, without limitation, the ADA (as defined below in but otherwise subject to the provisions of Section 7(b)), the local building fire/life safety codes and that the Building and shall not, as of the Delivery Date, contain any Hazardous Materials (as defined in Section 7(c) below) which are not permitted construction materials under applicable Laws; provided, however, Landlord shall not be responsible for compliance with Laws as to (i) Tenant’s specific and unique use (if any) of the Premises for other than general office uses or (ii) the Tenant Improvements and any Alterations (as defined in Section 12) by Tenant. Landlord at its sole cost shall be responsible for correcting any latent defects in the Building, as well as for correcting any breaches of the foregoing. Except as expressly set forth above or elsewhere in this Lease, Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises, the Building, the Project or any portions thereof or with respect to the suitability of same for the conduct of Tenant’s business, and Tenant further acknowledges that Landlord will have no obligation to construct or complete any additional buildings or improvements within the Project. Because Tenant will have had possession of the Premises prior to the Commencement Date, Tenant shall be deemed to have accepted the Premises, the Building and the Project as in good and satisfactory condition, except for latent defects and any discoverable defects that Tenant has disclosed to Landlord in writing prior to the Commencement Date.

 

5. RENT .

 

(a) Monthly Base Rent . Subject to the terms of this Lease, Tenant agrees to pay Landlord the Monthly Base Rent for the Premises (subject to adjustment as hereinafter provided) in advance on the first day of each calendar month during the Term without prior notice or demand, except that Tenant agrees to pay the Monthly Base Rent for the first month of the Term directly to Landlord concurrently with the execution of this Lease. If the Term of this Lease commences or ends on a day other than the first day of a calendar month, then the rent for such period will be prorated in the proportion that the number of days this Lease is in effect during such period bears to the number of days in such month. Subject to the terms of this Lease, all rent must be paid to Landlord, without any deduction or offset except as expressly permitted under this Lease, in lawful money of the United States of America, at the address designated by Landlord or to such other person or at such other place as Landlord may from time to time designate in writing. Monthly Base Rent will be adjusted during the Term of this Lease as provided in Section l(o).

 

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(b) Additional Rent . All amounts and charges to be paid by Tenant hereunder (other than Monthly Base Rent), including, without limitation, payments for Operating Expenses, Real Property Taxes and Assessments and Utilities Costs, will be considered additional rent for purposes of Landlord’s default remedies under this Lease, and the word “rent” as used in this Lease will include all such additional rent unless the context specifically or clearly implies that only Monthly Base Rent is intended.

 

(c) Late Payments. Late payments of Monthly Base Rent and/or any item of additional rent will be subject to interest and a late charge as provided in Section 21(f) below.

 

(d) Abatement . Notwithstanding anything to the contrary contained in this Lease, in the event Tenant’s use of all or a part of the Premises is materially impaired, for any reason other than the acts or omissions of Tenant or any of the Tenant Parties (as defined in Section 1(u) above), such that the disruption materially and adversely interferes with the conduct of Tenant’s business in the Premises for five (5) consecutive business days after written notice from Tenant to Landlord or twenty (20) days after written notice from Tenant to Landlord in any twelve (12) month period (such five (5) consecutive business day period or twenty (20) day period after written notice from Tenant to Landlord, as applicable, is referred to herein as the “Eligibility Period”), due to (i) an interruption of utility or mechanical services to the Premises, (ii) an inability to access the Premises or parking areas within the Project which Tenant is entitled to use pursuant to this Lease unless resulting from governmental mandate, (iii) repairs, maintenance or other work required to be made to the Premises or Building which are the responsibility of Landlord under this Lease or which otherwise are performed by or on behalf of Landlord, and/or (iv) Landlord’s failure to perform repairs, maintenance or other work required to be made to the Premises or Building which are the responsibility of Landlord under this Lease or which otherwise are performed by or on behalf of Landlord, then Tenant shall be entitled to an equitable abatement of Monthly Base Rent and additional rent under this Lease based upon the portion of the Premises affected thereby (provided that if the operation of Tenant’s business from the remainder of the Premises not affected thereby is not reasonably practicable under the circumstances and Tenant in fact does not operate for business from the remainder of the Premises, all Monthly Base Rent and additional rent under this Lease shall be subject to such abatement) from the commencement of the Eligibility Period until the applicable material impairment is cured. The provisions of this Section 5(d) shall not, however, apply in the event of a casualty governed by the provisions of Section 19 below or in the event of a taking or condemnation governed by the provisions of Section 20 below.

 

6. OPERATING EXPENSES; REAL PROPERTY TAXES AND ASSESSMENTS; UTILITIES COSTS .

 

(a) Covenant to Pay . In addition to Monthly Base Rent, commencing on January 1, 2007, Tenant agrees to pay Landlord as additional rent in accordance with the terms of this Section 6, determined on an annual basis, but payable monthly as provided herein, the amount by which Tenant’s Percentage of Operating Expenses, Real Property Taxes and Assessments and Utilities Costs on an aggregate basis for any calendar year during the Term exceeds the aggregate Expense Allowance for Operating Expenses, Real Property Taxes and Assessments and Utilities Costs for the Base Year. “Operating Expenses,” “Real Property Taxes and Assessments,” and “Utilities Costs” shall have the meanings set forth in Exhibit “F” hereto.

 

(b) Estimate Statement . Commencing with calendar year 2007, and from time to time thereafter during the Term of this Lease, Landlord may deliver to Tenant a statement (“Estimate Statement”) wherein Landlord will estimate some or all of the Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs for the then current calendar year and Tenant’s Percentage thereof. If the estimate of Tenant’s Percentage of Operating Expenses, Real Property Taxes and Assessments and Utilities Costs in the Estimate Statement exceeds Tenant’s Expense Allowance with respect to Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs for the Base Year, Tenant agrees to pay Landlord, as additional rent, one-twelfth (1/12th) of such excess each month thereafter, beginning

 

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with the next installment of rent due, until such time as Landlord issues a revised Estimate Statement; except that, (i) concurrently with the regular monthly rent payment next due following the receipt of each such Estimate Statement, Tenant agrees to pay Landlord an amount equal to one monthly installment of such excess (less any applicable Operating Expenses, Real Property Taxes and Assessments, and/or Utilities Costs already paid) multiplied by the number of months from the beginning of the applicable calendar year to the month of such rent payment next due, all months inclusive, and (ii) Landlord shall not provide Tenant with revised Estimate Statements more than one time in any calendar year of the Term. Until a new Estimate Statement is furnished, Tenant shall pay monthly, along with Basic Rent, an amount equal to one-twelfth (1/12 ^th) of the total estimated Operating Expenses, Real Property Taxes and Assessments set forth in the last Estimate Statement delivered by Landlord to Tenant.

 

(c) Reconciliation Statement . Within one hundred twenty (120) days after the end of each calendar year during the Term of this Lease, Landlord will deliver to Tenant a statement (“Reconciliation Statement”) which states the actual amounts incurred by Landlord for Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs for the preceding calendar year. If the Reconciliation Statement reveals that Tenant’s Percentage of the actual Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs is more than the total additional rent paid by Tenant for Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs on account of the preceding calendar year, Tenant agrees to pay Landlord the difference in a lump sum within ten (10) business days of receipt of the Reconciliation Statement. If the Reconciliation Statement reveals that Tenant’s Percentage of the actual Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs is less than the additional rent paid by Tenant for Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs on account of the preceding calendar year, Landlord will credit any overpayment toward the next monthly installments of Tenant’s Percentage of, Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs due under this Lease; provided however, if such excess exceeds $10,000 or this Lease has expired or terminated, Landlord will promptly refund any such overpayment to Tenant.

 

(d) Miscellaneous . Any delay or failure by Landlord in delivering any Estimate Statement or Reconciliation Statement pursuant to this Section 6 (so long as such delay or failure does not exceed twenty-four (24) months from the expiration of the calendar year in question) will not constitute a waiver of its right to require any payments by Tenant of additional rent nor will it relieve Tenant of its obligations pursuant to this Section 6, except that Tenant will not be obligated to make any payments based on such Estimate Statement or Reconciliation Statement until ten (10) business days after receipt of such Estimate Statement or Reconciliation Statement. Even though the Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Percentage of the actual Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs for the year in which this Lease terminates (which shall occur if at all within 120 days of the expiration of the calendar year in which Lease termination occurs), Tenant agrees to promptly pay any increase due over the estimated amounts paid and, conversely, if Tenant was not in Default (as defined in Section 21(a) below) of any monetary or material nonmonetary obligation under this Lease upon such expiration, any overpayment made in the event said amounts decrease shall promptly be rebated by Landlord to Tenant. Such obligation will be a continuing one which will survive the expiration or earlier termination of this Lease. Prior to the expiration or sooner termination of the Lease Term and Landlord’s acceptance of Tenant’s surrender of the Premises, Landlord will have the right to estimate the actual Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs for the then calendar year and to collect from Tenant prior to Tenant’s surrender of the Premises Tenant’s Percentage of any excess of such actual Operating Expenses, actual Real Property Taxes and Assessments, and Utilities Costs over the estimated amounts thereof paid by Tenant in such calendar year.

 

(e) Audit Rights . Tenant and its duly authorized representatives or any certified public accountant selected by Tenant shall have the right to audit the records of Landlord related to Operating Expenses, Real Property Taxes and Assessments with respect to the Base Year or any subsequent calendar year. Any such audit shall be performed, if at all, (i) for the Base Year within thirty (30) months after the delivery of the Reconciliation Statement for the Base Year and (ii) for any subsequent calendar year within one (1) year after receipt of the applicable Reconciliation Statement for such calendar year. Notwithstanding the

 

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foregoing, if any audit reveals that Operating Expenses have been overcharged by Landlord for any measurement year, Tenant shall, for a period of one year after receipt of such audit, have the right to audit Operating Expenses, Real Property Taxes and Assessments for all prior years, provided that once either (a) the period for review of the Base Year has passed without an audit or (b) a Base Year audit has been completed and agreed upon, the Base Year shall be deemed fixed and shall not be subject to further adjustment or audit. Any audit hereunder shall be upon not less then ten (10) days’ prior written notice to Landlord, during normal business hours at management office of the Project or an alternate location designated by Landlord in Orange County, California. Tenant’s audit to be limited to an on-site review of Landlord’s general ledger of accounts and Tenant may photocopy, at Tenant’s expense, Landlord’s ledgers and reasonable documentation supporting Operating Expense items under review. If Tenant’s Percentage of actual Operating Expenses are determined to have been overstated by Landlord for any calendar year in excess of four percent (4%), Landlord shall reimburse Tenant for the reasonable cost of Tenant’s audit within thirty (30) days following Tenant’s submission to Landlord of reasonable evidence of the amount of such costs. Tenant’s payment of Operating Expenses, Real Property Taxes and Assessments in accordance with Landlord’s Estimate Statements or Reconciliation Statements shall not constitute a waiver of any right to audit and/or dispute such expenses as set forth herein. Tenant agrees to keep, and to request that its accountant(s) and employees keep, all information revealed by any audit of Landlord’s books and records strictly confidential and not to disclose any such information or permit any such information to be disclosed to anyone other than Landlord, unless compelled to do so by a court of law or in connection with the resolution of any dispute with Landlord regarding Common Area Expenses. Landlord shall have the right to require that Tenant’s accountants and employees execute reasonable written confidentiality agreements as a condition to reviewing Landlord’s books and records. Regardless of the outcome of any such audit, if conducted, Tenant shall deliver a copy of the results thereof to Landlord. In the event that Tenant elects to conduct an audit, Tenant will not hire an auditor who conducts such audit on a contingency basis or is otherwise compensated based upon a percentage of alleged overcharges, discrepancies or errors discovered unless such auditor is a member of a public accounting firm that does not conduct operating expense audits as its primary business.

 

7.

USE.

 

(a) Tenant’s Use of the Premises . The Premises may be used for the use or uses set forth in Section 1(t) only, and Tenant will not use or permit the Premises to be used for any other purpose without the prior written consent of Landlord, which consent Landlord shall not unreasonably withhold or delay.

 

(b) Compliance . At Tenant’s sole cost and expense, Tenant agrees to procure, maintain all governmental licenses, insurance and permits required for the proper and lawful conduct of Tenant’s business from the Premises, if any. Tenant agrees not to use, alter or occupy the Premises or allow the Premises to be used, altered or occupied in violation of, and Tenant, at its sole cost and expense, agrees to use and occupy the Premises and cause the Premises to be used and occupied in compliance with: (i) any and all laws, statutes, zoning restrictions, ordinances, rules, regulations, orders and rulings now or hereafter in force and related to Tenant’s use of the Premises, Tenant’s particular use of the Common Areas and any reasonable requirements of any insurer, insurance authority or duly constituted public authority having jurisdiction over the Premises, the Building or the Project now or hereafter in force, including, without limitation, the provisions of Title III of the Americans With Disabilities Act of 1990 (as currently or subsequently amended, the “ADA”) and all similar federal, state and local laws, rules, regulations, codes, and ordinances and any amendments thereof, with respect to Tenant’s use, operation, alteration or improvement of the Premises, (ii) the requirements of the Board of Fire Underwriters and any other similar body, and (iii) the Certificate of Occupancy issued for the Building. Tenant agrees to comply with the Rules and Regulations referenced in Section 26 below, provided such Rules and Regulations are not modified or enforced unreasonably and are enforced against all Project Occupants on a non-discriminatory basis. Tenant agrees not to do or permit anything to be done in or about the Premises which will materially obstruct or interfere with the rights of other tenants or occupants of the Project, or injure or unreasonably annoy them, or use or allow the Premises to be used for any unlawful or unreasonably objectionable purpose. Tenant agrees not to cause, maintain or permit any nuisance or waste in, on, under or about the Premises or elsewhere within the Project. No obligation of Tenant to comply with laws shall require Tenant to make any alterations, additions or improvements to the systems

 

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or structure of the Building or any areas outside the Premises except to the extent the same arise from the Tenant Improvements to be completed by Tenant pursuant to the Work Letter or are otherwise caused or triggered by Tenant’s unique and specific use of the Premises for other than general office purposes. Tenant shall not bring on to, do or permit anything to be done on the Premises which will cause a weight load or stress on the floors or any other portion of the Premises in excess of 40 lbs. per square foot live load unless Tenant provides structural Alterations, reasonably acceptable to Landlord, to accommodate such additional load. If by reason of Tenant’s failure to comply with the provisions of this Article, the fire insurance rate shall at the beginning of this Lease or at any time thereafter be higher than it otherwise would be, then Tenant shall reimburse Landlord, as additional rent hereunder, for that part of all fire insurance premiums thereafter paid by Landlord which shall have been charged because of such failure of Tenant, and shall make such reimbursement upon the first day of the month following such outlay by Landlord.

 

Notwithstanding the foregoing and Section 4(b), as of the Commencement Date and throughout the Term, subject to Tenant’s obligations regarding the Premises as described above, Landlord shall be responsible for compliance with all applicable laws, rules and regulations, including the ADA, including making physical changes or additions to the Building, Common Areas, and other areas not maintained by Tenant, if and when required by applicable laws, rules and regulations including the ADA.

 

(c)

Hazardous Materials

 

(i) Tenant Hazardous Materials Requirements . Except for ordinary office and equipment supplies typically used in the ordinary course of business within office buildings, such as copier toner, liquid paper, glue, ink and common household cleaning materials (some or all of which may constitute “Hazardous Materials” as defined in this Lease and are referred to hereinafter as the “Permitted Substances”), Tenant agrees not to cause or permit any Hazardous Materials to be brought upon, stored, used, handled, generated, released or disposed of on, in, under or about the Premises, the Building, the Common Areas or any other portion of the Project by Tenant or the Tenant Parties, without the prior written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion.

 

(ii) Landlord Hazardous Materials Requirements . Landlord, to the best of its knowledge, is not aware of the presence of any Hazardous Material(s) which are, or have previously been, located in, or about the Building and Project. Landlord, at its sole cost and expense, shall be responsible for the removal of any such Hazardous Materials located in or about the Building or Project as of the Commencement Date of this Lease. Except for Permitted Substances, and except as may be in compliance with applicable Environmental Laws, Landlord agrees not to cause or knowingly permit any Hazardous Materials to be brought upon, stored, used, handled, generated, released or disposed of on, in, under or about the Premises, the Building, the Common Areas or any other portion of the Project by Landlord, its agents, employees, tenants, subtenants, assignees, licensees, contractors or invitees (collectively, “Landlord’s Parties”). Further, Landlord’s cost of the removal of Hazardous Materials in the Building or in any other location in the Project shall be excluded from an Operating Expenses that would be passed through to Tenant.

 

(iii) Hazardous Materials Indemnities . To the fullest extent permitted by law, Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord and Landlord’s partners, officers, directors, employees, agents, successors and assigns (collectively, “Landlord Indemnified Parties”) from and against any and all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs (including, without limitation, clean-up, removal, remediation and restoration costs, sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees and court costs) which arise or result from the presence of Hazardous Materials on, in, under or about the Premises, the Building or any other portion of the Project the presence of which was caused by Tenant or any of Tenant’s Parties. Tenant agrees to promptly notify Landlord of any release of Hazardous Materials at the Premises, the Building or any other portion of the Project which Tenant becomes aware of during the Term of this Lease,

 

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whether caused by Tenant or any other persons or entities. In the event of any release of Hazardous Materials caused or permitted by Tenant or any of Tenant’s Parties, Landlord shall have the right, but not the obligation, to cause Tenant to immediately take all steps Landlord deems necessary or appropriate to remediate such release and prevent any similar future release to the satisfaction of Landlord and Landlord’s mortgagee(s). To the fullest extent permitted by law, Landlord agrees to promptly indemnify, protect, defend and hold harmless Tenant and Tenant’s partners, officers, directors, employees, agents, successors and assigns (collectively, “Tenant Indemnified Parties”) from and against any and all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs (including, without limitation, clean-up, removal, remediation and restoration costs, sums paid in settlement of claims, reasonable attorneys’ fees, consultant fees and expert fees and court costs) which arise or result from the presence of Hazardous Materials on, in, under or about the Premises, the Building or any other portion of the Project which exist prior to the Commencement Date or which are caused by Landlord.

 

(iv) Hazardous Materials . As used in this Lease, the term “Hazardous Materials” shall mean and include any chemical, substance, material, controlled substance, object, condition, waste, living organism or combination thereof, whether solid, semi-solid, liquid or gaseous, which is or may be hazardous to human health or safety or to the environment due to its radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity, phytotoxicity, infectiousness or other harmful or potentially harmful properties or effects, including, without limitation, tobacco smoke, petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls (PCBs), refrigerants (including those substances defined in the Environmental Protection Agency’s “Refrigerant Recycling Rule,” as amended from time to time) and all of those chemicals, substances, materials, controlled substances, objects, conditions, wastes, living organisms or combinations thereof which are now or become in the future listed, defined or regulated in any manner by any Environmental Law based upon, directly or indirectly, such properties or effects. As used herein, “Environmental Laws” means any and all federal, state or local environmental, health and/or safety-related laws, regulations, standards, decisions of courts, ordinances, rules, codes, orders, decrees, directives, guidelines, permits or permit conditions, currently existing and as amended, enacted, issued or adopted in the future which are or become applicable to Tenant, the Premises or the Project.

 

(v) Survival. The provisions of this Section 7(c) shall survive the expiration of earlier termination of this Lease.

 

8. NOTICES . Any notice required or permitted to be given hereunder must be in writing and may be given by personal delivery (including delivery by overnight courier or an express mailing service) or by mail, if sent by registered or certified mail. Notices to Tenant shall be sufficient if delivered to Tenant at the address designated in Section 1(d) and notices to Landlord shall be sufficient if delivered to Landlord at the address designated in Section 1(b). Either party may specify a different address for notice purposes by written notice to the other, except that the Landlord may in any event use the Premises as Tenant’s address for notice purposes.

 

9. BROKERS . The Parties acknowledge that the brokers who negotiated this Lease are stated in Section 1(v). Landlord shall be responsible for the commissions payable to such brokers in connection with this Lease in accordance with separate commission agreements between Landlord and such brokers. Each party represents and warrants to the other, that, to its knowledge, no other broker, agent or finder (a) negotiated or was instrumental in negotiating or consummating this Lease on its behalf, and (b) is or might be entitled to a commission or compensation in connection with this Lease. Landlord and Tenant each agree to promptly indemnify, protect, defend and hold harmless the other from and against any and all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs (including attorneys’ fees and court costs) resulting from any breach by the indemnifying party of the foregoing representation, including, without limitation, any claims that may be asserted by any broker, agent or finder undisclosed by the indemnifying party. The foregoing mutual indemnity shall survive the expiration or earlier termination of this Lease.

 

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10. SURRENDER; HOLDING OVER .

 

(a) Surrender . The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not constitute a merger, and shall, at the option of Landlord, operate as an assignment to Landlord of any or all subleases or subtenancies. Upon the expiration or earlier termination of this Lease, Tenant agrees to peaceably surrender the Premises to Landlord broom clean and in reasonably good repair and condition, ordinary wear and tear and casualty damage excepted, with all of Tenant’s personal property removed from the Premises and all damage caused by such removal repaired. The delivery of keys to any employee of Landlord or to Landlord’s agent or any employee thereof alone will not be sufficient to constitute a termination of this Lease or a surrender of the Premises.

 

(b) Holding Over . Tenant will not be permitted to hold over possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion. If Tenant holds over after the expiration or earlier termination of the Term, Landlord may, at its option, treat Tenant as a tenant at sufferance only, and such continued occupancy by Tenant shall be subject to all of the terms, covenants and conditions of this Lease, so far as applicable, except that the Monthly Base Rent for any such holdover period shall be equal to one hundred twenty-five percent (125%) of the Monthly Base Rent in effect under this Lease immediately prior to such holdover during the first ninety (90) days of holdover and one hundred fifty percent (150%) of the Monthly Base Rent in effect under this Lease immediately prior to such holdover commencing as of the ninety first (91 ^st ) day of holdover and continuing for the duration of the holdover period, prorated on a daily basis. Acceptance by Landlord of rent after such expiration or earlier termination will not result in a renewal of this Lease. The foregoing provisions of this Section 10 are in addition to and do not affect Landlord’s right of re-entry or any rights of Landlord under this Lease or as otherwise provided by law. Tenant shall not be liable for any consequential, punitive or other damages caused by the first ninety (90) days of any holdover, but if Tenant fails to surrender the Premises within ninety (90) days after the expiration of this Lease in accordance with the terms of this Section 10 despite demand to do so by Landlord, Tenant agrees to promptly indemnify, protect, defend and hold Landlord harmless from all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs (including attorneys’ fees and costs), including, without limitation, costs and expenses incurred by Landlord in returning the Premises to the condition in which Tenant was to surrender it and claims made by any succeeding tenant founded on or resulting from Tenant’s failure to surrender the Premises. The provisions of this Section 10(b) will survive the expiration or earlier termination of this Lease.

 

11. TAXES ON TENANT’S PROPERTY . Tenant agrees to pay before delinquency, all taxes and assessments (real and personal) levied against (a) any personal property or trade fixtures placed by Tenant in or about the Premises (including any increase in the assessed value of the Premises based upon the value of any such personal property or trade fixtures); and (b) any Tenant Improvements or Alterations in the Premises (whether installed and/or paid for by Landlord or Tenant) to the extent such items are assessed at a valuation higher than the valuation at which tenant improvements conforming to standard tenant improvements within the Project are assessed. If any such taxes or assessments are levied against Landlord or Landlord’s property, Landlord may, after written notice to Tenant (and under proper protest if requested by Tenant) pay such taxes and assessments, in which event Tenant agrees to reimburse Landlord all amounts paid by Landlord within ten (10) business days after demand by Landlord; provided, however, Tenant, at its sole cost and expense, will have the right, with Landlord’s cooperation, to bring suit in any court of competent jurisdiction to recover the amount of any such taxes and assessments so paid under protest.

 

12. ALTERATIONS . After installation of the initial Tenant Improvements for the Premises pursuant to Exhibit “C” , Tenant may, at its sole cost and expense, make alterations, additions, improvements and decorations (including, without limitation, wall coverings, window coverings, floor coverings and other finishes) to the Premises (collectively, “Alterations”) subject to and upon the following terms and conditions:

 

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(a) Prohibited Alterations . Tenant shall in no event make any Alterations which: (i) affect any area outside the Premises; (ii) affect the Building’s structure, equipment, services or systems, or the proper functioning thereof, or Landlord’s access thereto; (iii) affect the outside appearance, character or use of the Building or the Building Common Areas; (iv) in the reasonable opinion of Landlord, lessen the value of the Building; (v) will violate or require a change in any occupancy certificate applicable to the Premises; or (vi) exceed the greater of $2.00 per square foot or Fifty Thousand and No/100ths Dollars ($50,000.00) in cost per project; provided, however, so long as the proposed Alteration does not violate any of the clauses (i) through (v), Tenant may make Alterations costing in excess of the greater of $2.00 per square foot or Fifty Thousand and No/100ths Dollars ($50,000.00) per project without Landlord’s consent, but with reasonable prior notice to Landlord, for carpeting, floor covering and/or painting, or otherwise with Landlord’s consent, which consent shall not be unreasonably withheld, conditioned or delayed (Alterations not requiring Landlord’s consent hereunder are referred to hereinafter as “Permitted Alterations”).

 

(b) Landlord’s Approval . Before proceeding with any Alterations other than Permitted Alterations, Tenant must first obtain Landlord’s written approval of the plans, specifications and working drawings for such Alterations, which approval Landlord will not unreasonably withhold, condition or delay; for any such Alterations which are not prohibited by Section 12(a) above and which cost less than $2.00 per square foot as long as (i) Tenant delivers to Landlord notice and a copy of any final plans, specifications and working drawings for any such Alterations at least ten (10) days prior to commencement of the work thereof, and (ii) the other conditions of this Section 12 are satisfied, including, without limitation, conforming to Landlord’s rules, regulations and insurance requirements which govern contractors. Landlord’s approval of plans, specifications and/or working drawings for Alterations will not create any responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with applicable permits, laws, rules and regulations of governmental agencies or authorities. Landlord shall approve or be deemed to have approved all such requests for approval within twenty (20) days after request therefore. Any cosmetic alterations (e.g., paint, carpeting, etc.) will not require plans and specifications or Landlord’s prior approval; however, Tenant shall provide Landlord with reasonable prior notice of all such proposed alterations.

 

(c) Contractors . Alterations may be made or installed only by contractors and subcontractors which have been approved by Landlord, which approval Landlord will not unreasonably withhold, condition or delay; provided, however, Landlord reserves the right to require that Landlord’s contractor for the Building be given an opportunity to bid for any Alteration work. Before proceeding with any Alterations, Tenant agrees to provide Landlord with ten (10) days prior written notice and Tenant’s contractors must obtain and maintain, on behalf of Tenant and at Tenant’s sole cost and expense all necessary governmental permits and approvals for the commencement and completion of such Alterations. Throughout the performance of any Alterations, Tenant agrees to obtain, or cause its contractors to obtain, workers compensation insurance and general liability insurance in compliance with the provisions of Section 18 of this Lease.

 

(d) Manner of Performance . All Alterations must be performed: (i) substantially in accordance with the approved plans, specifications and working drawings (if applicable); (ii) in a lien-free and first-class and workmanlike manner; (iii) in compliance with all applicable permits, laws, statutes, ordinances, rules, regulations, orders and rulings now or hereafter in effect and imposed by any governmental agencies and authorities which assert jurisdiction; (iv) in such a manner so as not to materially interfere with the occupancy of any other tenant in the Building, nor impose any additional expense upon nor unreasonably delay Landlord in the maintenance and operation of the Building; and (v) at such times, in such manner, and subject to such rules and regulations as Landlord may from time to time reasonably designate.

 

(e) Ownership . The Tenant Improvements and all Alterations will become the property of Landlord and will remain upon and be surrendered with the Premises and become the property of the Landlord at the end of the Term of this Lease; provided, however, Landlord may, by written notice delivered to Tenant concurrently with Landlord’s approval of the final working drawings for any Alterations, identify those Alterations which Landlord will require Tenant to remove at the end of the Term of this Lease. Tenant shall have no obligation to remove upon termination of the Lease any initial Tenant Improvements

 

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constructed in accordance with the Work Letter or any Alterations to which Landlord does not specify removal in writing concurrently with its approval of working drawings. Landlord may also require Tenant to remove Alterations which Landlord did not have the opportunity to approve as provided in this Section 12. If Landlord requires Tenant to remove any Alterations, Tenant, at its sole cost and expense, agrees to remove the identified Alterations on or before the expiration or earlier termination of this Lease and repair any damage to the Premises caused by such removal and return the Premises back to the condition as when originally received by landlord, normal wear and tear and casualty excepted.

 

(f) Plan Review . Except for Permitted Alterations, Tenant agrees to pay Landlord, as additional rent, the reasonable costs of professional services (or comparable costs for Landlord’s in-house consultants, so long as their charges do not exceed market rates for review of all plans, specifications and working drawings for any Alterations, within ten (10) business days after Tenant’s receipt of invoices either from Landlord or such consultants. In addition, Tenant agrees to pay Landlord, within ten (10) business days after completion of any Alterations, a fee to cover Landlord’s costs of supervising and administering the installation of such Alterations, in an amount equal to the lesser of two percent (2%) of the cost of such Alterations or $5,000, but in no event less than Two Hundred Fifty Dollars ($250.00).

 

(g) Personal Property . All articles of personal property owned by Tenant or installed by Tenant at its expense in the Premises (including Tenant’s business and trade fixtures, furniture, movable partitions, raised floors, and equipment such as telephones and switches, copy machines, computer terminals, refrigerators, supplemental HVAC units and facsimile machines, telephone, data wiring and all other telecommunications wiring installed by Tenant) will be and remain the property of Tenant, and must be removed by Tenant from the Premises, at Tenant’s sole cost and expense, on or before the expiration or earlier termination of this Lease. Tenant agrees to repair any damage caused by such removal at its cost on or before the expiration or earlier termination of this Lease.

 

(h) Removal of Alterations . If Tenant fails to remove by the expiration or earlier termination of this Lease all of its personal property, or any Alterations identified in accordance with this Section 12 by Landlord for removal, Landlord may (without liability to Tenant for loss thereof) treat such personal property and/or Alterations as abandoned and, at Tenant’s sole cost and expense, and in addition to Landlord’s other rights and remedies under this Lease, at law or in equity: (a) remove and store such items; and/or (b) upon thirty (30) days prior notice to Tenant, sell, discard or otherwise dispose of all or any such items at private or public sale for such price as Landlord may obtain or by other commercially reasonable means. Tenant shall be liable to Landlord for all delay damages suffered by Landlord by reason of Tenant’s failure to timely surrender the Premises to Landlord with all Alterations and personal property removed as required in this subparagraph (h) and for all costs of removal, storage and disposition of Tenant’s abandoned property and Landlord shall have no liability to Tenant with respect to any such abandoned property. Landlord agrees to apply the proceeds of any sale of any such property to any amounts due to Landlord under this Lease from Tenant (including Landlord’s delay damages, attorneys’ fees and other costs incurred in the removal, storage and/or sale of such items), with any remainder to be paid to Tenant.

 

13. REPAIRS .

 

(a) Landlord’s Obligations . Landlord agrees to repair and maintain or cause to be repaired or maintained in a manner Comparable Projects in the Comparison Area, the structural portions of the Building, and Common Areas (including the shell and core) and the plumbing, heating, ventilating, air conditioning, elevator and electrical systems for the Building, and all Common Areas of the Project, unless such maintenance and repairs are (i) attributable to items installed in Tenant’s Premises which are above standard interior improvements (such as, for example, custom lighting, special HVAC and/or electrical panels or systems, kitchen or restroom facilities and appliances constructed or installed within Tenant’s Premises) or (ii) caused by the act, neglect or omission of any duty by Tenant or the Tenant Parties under this Lease. Landlord will not be liable for any failure to make any such repairs or to perform any maintenance unless such failure shall persist for ten (10) days (or 24 hours in the case of an emergency) after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. Except as provided in Paragraphs 5 and 20, Tenant will not be entitled to any abatement of rent

 

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and Landlord will not have any liability 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.

 

(b) Tenant’s Obligations . Tenant agrees to keep, maintain and preserve the Premises in good condition and repair (reasonable wear and tear and damage by casualty event or the negligence or misconduct of Landlord or Landlord’s Parties excepted) and, when and if needed, at Tenant’s sole cost and expense, to make all repairs to the Premises and every part thereof. Any such maintenance and repairs will be performed by Landlord’s contractor, or at Landlord’s option, by such contractor or contractors as Tenant may choose from an approved list to be submitted by Landlord. Tenant agrees to pay all costs and expenses incurred in such maintenance and repair within seven (7) days after billing by Landlord or such contractor or contractors. Tenant agrees to cause any mechanics’ liens or other liens arising as a result of work performed by Tenant or at Tenant’s direction to be eliminated as provided in Section 14 below. Except as provided in Section 13(a) above, Landlord has no obligation to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof.

 

(c) Tenant’s Failure to Repair . If Tenant refuses or neglects to repair and maintain the Premises properly as required hereunder to the reasonable satisfaction of Landlord, Landlord, at any time following ten (10) days from the date on which Landlord makes a written demand on Tenant to effect such repair and maintenance, may enter upon the Premises and make such repairs and/or maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as additional rent, Landlord’s out-of-pocket costs for making such repairs plus an amount not to exceed five percent (5%) of such costs for overhead, within thirty (30) days of receipt from Landlord of a written itemized bill therefor. Any amounts not reimbursed by Tenant within such thirty (30) day period will bear interest at the Interest Rate until paid by Tenant.

 

(d) Self-Help. Notwithstanding anything to the contrary contained in this Lease, Landlord agrees that if Landlord fails to perform any repair or maintenance obligation under this Lease which it is obligated to perform within the time periods set forth in Section 22 below, then Tenant shall be permitted to perform such obligations on Landlord’s behalf in the Premises, provided Tenant first delivers to Landlord an additional two (2) business days prior written notice that Tenant will be performing such obligations, and provided Landlord fails to commence to perform such obligations within such additional two (2) business day period and diligently prosecutes such work to completion. Notwithstanding the foregoing, if the nature of the unperformed obligation is such that a bona fide emergency involving an immediate and imminent danger to life, health or property or material interference with Tenant’s business exists, the foregoing time periods and those set forth in Section 22 shall be reasonably reduced based upon such emergency circumstances. If the obligations to be performed by Tenant will affect the Building’s utility or mechanical systems, then Tenant shall use only those contractors used by Landlord in the Building for work on such systems if such contractors are available and able to act in a timely manner; otherwise, Tenant may use other qualified and reputable contractors. All other contractors shall be subject to Landlord’s reasonable approval, and Landlord agrees to approve or reject any contractor proposed to be used by Tenant within twenty-four (24) hours of receipt of Tenant’s second notice, provided that if a proposed contractor is licensed and reputable, and all requisite permits have been obtained for the desired work, then Landlord shall be deemed to have given its approval of the proposed contractor. Any work performed by or on behalf of Tenant shall be performed in accordance with provisions of clauses (ii), (iii) and (iv) of Section 13(d) of this Lease. Landlord agrees to promptly reimburse Tenant following the receipt of a written statement of all reasonable and actual costs incurred by Tenant in performing such obligations on behalf of Landlord together with interest at the Interest Rate. If Landlord fails or refuses to so reimburse Tenant within thirty (30) days after demand for same, then commencing as of the expiration of said thirty (30) day period, Tenant shall have the right to offset the cost of performing any such obligations together with interest at the Interest Rate from date such costs are incurred by Tenant, against rental or other charges payable under this Lease, and Tenant shall have the right to pursue any other remedies against Landlord available to it for failure by Landlord to timely make such payment, subject to the limitations contained in this Lease. Subject to the foregoing offset right, nothing contained in this Section 13(d) shall be interpreted to mean that Tenant shall be excused from paying rent or any other amount due under this Lease when due in the event of any alleged default by Landlord.

 

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14. LIENS . Tenant agrees not to permit any mechanic’s, materialmen’s or other liens to be filed against all or any part of the Project, the Building or the Premises, nor against Tenant’s leasehold interest in the Premises, by reason of or in connection with any repairs, alterations, improvements or other work contracted for or undertaken by Tenant or any other act or omission of Tenant or the Tenant Parties. At Landlord’s request, Tenant agrees to provide Landlord with enforceable, conditional and final lien releases (or other evidence reasonably requested by Landlord to demonstrate protection from liens) from all persons furnishing labor and/or materials at the Premises. Landlord will have the right at all reasonable times to post on the Premises and record any notices of non-responsibility which it deems necessary for protection from such liens. If any such liens are filed, Tenant will, at its sole cost, promptly cause such liens to be released of record or bonded so that it no longer affects title to the Project, the Building or the Premises. If Tenant fails to cause any such liens to be so released or bonded within twenty (20) days after written notice to Tenant of the filing thereof, then without further notice to Tenant Landlord may, without waiving its rights and remedies based on such breach, and without releasing Tenant from any of its obligations, cause such liens to be released by any means it shall deem proper, including payment in satisfaction of the claims giving rise to such liens. Tenant agrees to pay to Landlord within thirty (30) days after receipt of invoice from Landlord, any sum paid by Landlord to remove such liens, together with interest at the Interest Rate from the date of such payment by Landlord.

 

15. ENTRY BY LANDLORD . Landlord and its employees and agents will at all times have the right to enter the Premises as reasonably necessary to inspect the same, to supply janitorial service and any other service to be provided by Landlord to Tenant hereunder, to show the Premises to prospective purchasers and prospective lenders and/or (during the last nine (9) months of the term only) to prospective tenants, to post notices of nonresponsibility, and/or to repair the Premises as permitted or required by this Lease. In exercising such entry rights, Landlord will use commercially reasonable efforts to minimize, as reasonably practicable, the interference with Tenant’s business, and will provide Tenant with reasonable advance notice of any such entry (except in emergency situations). Landlord may, in order to carry out such purposes, erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed. Landlord will at all times have and retain a key with which to unlock all doors in the Premises, excluding Tenant’s vaults and safes. Landlord will have the right to use any and all means which Landlord may reasonably deem proper to open said doors in an emergency in order to obtain entry to the Premises. Any entry to the Premises obtained by Landlord by any of said means, or otherwise, will not be construed or deemed to be a forcible or unlawful entry into the Premises, or an eviction of Tenant from the Premises. Landlord will not be liable to Tenant for any damages or losses for any entry by Landlord. Unless caused by the negligence or willful misconduct of Landlord or any Landlord Parties, Landlord, in exercising its rights under this Lease, (i) shall not interfere with access to the Premises or Tenant’s use and enjoyment of the Premises and all Common Areas, (ii) shall in no event have access to Tenant’s designated secure area except in the case of an emergency, and (iii) shall repair, restore and redecorate any damage to the Premises caused by or at the direction of Landlord in exercising such rights.

 

16. UTILITIES AND SERVICES . Throughout the Term of the Lease so long as the Premises are occupied, Landlord agrees to furnish or cause to be furnished to the Premises the utilities and services described in the Standards for Utilities and Services attached hereto as Exhibit “G” , subject to the conditions and in accordance with the standards set forth therein. Landlord may require Tenant from time to time to provide Landlord with a list of Tenant’s employees and/or agents which are authorized by Tenant to subscribe on behalf of Tenant for any additional services which may be provided by Landlord. Any such additional services will be provided to Tenant at Tenant’s cost. Landlord will not be liable to Tenant for any failure to furnish any of the foregoing utilities and services if such failure is caused by all or any of the following: (i) accident, breakage or repairs unless caused by the negligence or willful misconduct of Landlord or the Landlord Parties; (ii) strikes, lockouts or other labor disturbance or labor dispute of any character; (iii) governmental regulation, moratorium or other governmental action or inaction; (iv) inability despite the exercise of reasonable diligence to obtain electricity, water or fuel; (v) service interruptions or any other unavailability of utilities resulting from causes beyond Landlord’s control, including, without limitation, any utility service provider initiated “brown-out” or “black-out”; or (vi) any other cause beyond Landlord’s reasonable control. In the event of any failure, stoppage or interruption thereof, Landlord agrees to diligently attempt to resume service promptly. If Tenant requires

 

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or utilizes more water or electrical power than is to be provided by Landlord as indicated on Exhibit G” , Landlord may at its option require Tenant to pay, as additional rent, the additional cost incurred by such extraordinary usage. Landlord, as part of the operating expenses of the Building, shall furnish Heating Ventilation and Air Conditioning (“HVAC”) Monday through Friday from 7:00 a.m. to 6:00 p.m. and on Saturday from 8:00 a.m. to 12:00 p.m (but exclusive, in any event, of New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day). The Landlord’s charge to Tenant for after hours HVAC and after hours electrical consumption (in excess of standard dormant use) shall be Landlord’s actual costs, which shall include direct and indirect utility costs. There shall be no start-up charge, no minimum usage requirement (other than the first one hour) and, if other Building tenants are using the HVAC systems, Tenant’s direct cost shall be pro-rated.

 

17. ASSUMPTION OF RISK AND INDEMNIFICATION .

 

(a) Assumption of Risk . Subject to Sections 5(d) and 7(c), the insurance, indemnity, repair and restoration obligations with respect to the Project Common Areas under the Project CC&Rs and Landlord’s restoration obligations under Section 19 of this Lease, Tenant, as a material part of the consideration to Landlord, hereby agrees that neither Landlord nor any Landlord Indemnified Parties will be liable to Tenant for, and Tenant expressly assumes the risk of and waives any and all claims it may have against Landlord or any Landlord Indemnified Parties with respect to, (i) any and all damage to property or injury to persons in, upon or about the Premises, the Building or the Project resulting from any act or omission (except for the negligent or intentionally wrongful act or omission) of Landlord or any Landlord’s Parties, (ii) any such damage caused by other tenants or persons in or about the Building or the Project, or caused by quasi-public work, (iii) any damage to property entrusted to employees of the Building, (iv) any loss of or damage to property by theft or otherwise, or (v) any injury or damage to persons or property resulting from any casualty, explosion, falling plaster or other masonry or glass, steam, gas, electricity, water or rain which may leak from any part of the Building or any other portion of the Project or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface or from any other place, or resulting from dampness. Notwithstanding anything to the contrary contained in this Lease except for Section 24, neither Landlord or any Landlord Indemnified Parties nor Tenant or any Tenant Parties will be liable for consequential damages arising out of any loss of the use of the Premises or any equipment or facilities therein by Tenant or any Tenant Parties or for interference with light or other incorporeal hereditaments. Tenant agrees to give prompt notice to Landlord in case of fire or accidents in the Premises or the Building, or of defects therein or in the fixtures or equipment. Tenant shall give prompt written notice to Landlord in case of damage caused by fire or accident on the Premises. Tenant shall look solely to Landlord to enforce Landlord’s obligations hereunder and shall not seek any damages against any of Landlord Indemnified Parties (as hereinafter defined). Except with respect to a breach of Section 24, the liability of Landlord for Landlord’s obligations under this Lease shall not exceed and shall be limited to Landlord’s interest in the Building and Tenant shall not look to any other property or assets in seeking either to enforce Landlord’s obligations under this Lease to satisfy a judgment for Landlord’s failure to perform such obligations.

 

(b) Indemnification . Except to the extent arising from any negligent or intentionally wrongful act or omission of, or any breach of this Lease by, Landlord or any Landlord Parties, Tenant will be liable for, and agrees, to the maximum extent permissible under applicable law, to promptly indemnify, protect, defend and hold harmless Landlord and all Landlord Indemnified Parties, from and against, any and all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs, including attorneys’ fees and court costs (collectively, “Indemnified Claims”), arising or resulting from (i) any act or omission of Tenant or any Tenant Parties; (ii) the use of the Premises and Common Areas and conduct of Tenant’s business by Tenant or any Tenant Parties, or any other activity, work or thing done, permitted or suffered by Tenant or any Tenant Parties, in or about the Premises, the Building or elsewhere within the Project, including, without limitation, Indemnified Claims arising from the construction of the Tenant Improvements; and/or (iii) any Default by Tenant of any obligations on Tenant’s part to be performed under the terms of this Lease. In case any action or proceeding is brought against Landlord or any Landlord Indemnified Parties by reason of any such Indemnified Claims, Tenant, upon notice from Landlord, agrees to promptly defend the same at Tenant’s sole cost and expense by counsel approved in writing by Landlord, which approval Landlord will not unreasonably withhold.

 

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Subject to Section 18(e), Landlord shall indemnify, defend and hold harmless Tenant from any and against any and all liability, claims, suits, actions, losses, damages, penalties, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) (“Losses”) for any damage or injury occurring in, on, or about any part of the Building and/or the Common Areas other than the Premises except to the extent caused by the negligence or willful misconduct of Tenant or the Tenant Parties. Subject to Section 18(e), Landlord shall further indemnify, defend and save Tenant harmless from and against any and all Losses to the Premises and to any person or property to the extent caused by or resulting from any act or negligence of Landlord or of any employee, agent, contractor or any other person or entity under the direction or control of Landlord.

 

(c) Survival; No Release of Insurers . The indemnification obligations under Section 17(a) and (b) will survive the expiration or earlier termination of this Lease. The covenants, agreements and indemnification obligation in Subparagraphs 18(a) and 18(b) above, are not intended to and will not relieve any insurance carrier of its obligations under policies required to be carried by Tenant pursuant to the provisions of this Lease.

 

18. INSURANCE .

 

(a) Tenant’s Insurance . On or before the earlier to occur of (i) the Commencement Date, or (ii) the date Tenant commences any work of any type in the Premises pursuant to this Lease (which may be prior to the Commencement Date), and continuing throughout the entire Term hereof and any other period of occupancy, Tenant agrees to keep in full force and effect, at its sole cost and expense, the following insurance:

 

(i) “Special Form” property insurance including at least the following perils: fire and extended coverage, smoke damage, vandalism, malicious mischief, sprinkler leakage. This insurance policy must be upon all property owned by Tenant, for which Tenant is legally liable, or which is installed at Tenant’s expense, and which is located in the Building including, without limitation, any Alterations made by or for the Tenant (expressly excluding the initial Tenant Improvements installed by Tenant per Exhibit “C” which shall be insured by Landlord as part of the Base Building coverage), and all furniture, fittings, installations, fixtures and any other personal property of Tenant, in an amount not less than the full replacement cost thereof.

 

(ii) Commercial General Liability Insurance or Comprehensive General Liability Insurance (on an occurrence form) insuring bodily injury, personal injury and property damage including the following divisions and extensions of coverage: Premises and Operations; Owners and Contractors protective; blanket contractual liability (including coverage for Tenant’s indemnity obligations under this Lease to the extent related to third party bodily injury or property damage); products and completed operations; and liquor liability (if Tenant serves alcohol on the Premises). Such insurance must have the following minimum limits of liability: bodily injury, personal injury and property damage - $3,000,000 each occurrence, $5,000,000 in the aggregate, provided that such minimum limits of liability may be adjusted periodically to reflect increases in coverages in accordance with then real estate industry standards generally observed by the owners of Comparable Projects, rounded to the nearest five hundred thousand dollars.

 

(iii) Workers’ Compensation as required by the laws of the State.

 

(iv) Comprehensive Automobile Liability insuring bodily injury and property damage arising from all owned, non-owned and hired vehicles, if any, with minimum limits of liability of $1,000,000 per accident; provided, however, that Tenant shall have the right to self-insure its obligations under this subparagraph (iv) upon written notice to Landlord.

 

(v) Any other form or forms of insurance as Tenant or Landlord or any mortgagees of Landlord may reasonably require from time to time in form, in amounts, and for insurance risks against which, a prudent tenant would protect itself, but only to the extent coverage for such risks and amounts are available in the insurance market at commercially acceptable rates; provided, however, that such requirements shall be

 

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consistent with the coverage then being required by lessors of Comparable Projects and provided all other tenants of the Building are required to carry such insurance unless such additional insurance is required due to a specific or unusual use of the Premises by Tenant. Landlord makes no representation that the limits of liability required to be carried by Tenant under the terms of this Lease are adequate to protect Tenant’s interests and Tenant should obtain such additional insurance or increased liability limits as Tenant deems appropriate.

 

(b) Supplemental Tenant Insurance Requirements .

 

(i) All policies must be in a form reasonably satisfactory to Landlord and issued by an insurer admitted to do business in the State.

 

(ii) All policies must be issued by insurers with a policyholder rating of “A” and a financial rating of “VIII” in the most recent version of Best’s Key Rating Guide.

 

(iii) All policies must contain a requirement that the insurer will endeavor to notify Landlord (and Landlord’s partners, members and property manager and any mortgagees or ground lessors of Landlord who are named as additional insureds, if any) in writing not less than thirty (30) days prior to any material adverse change, reduction in coverage, cancellation or other termination thereof, except ten (10) days in the event of non-payment of premium by Tenant. Tenant agrees to deliver to Landlord, as soon as practicable after placing the required insurance, but in any event within the time frame specified in Section 18(a) above, certificate(s) of insurance evidencing the existence of such insurance and Tenant’s compliance with the provisions of this Section 18. Tenant agrees to cause replacement certificates to be delivered to Landlord not less than ten (10) days prior to the expiration of any such policy or policies. If any such initial or replacement certificates are not furnished within the time(s) specified herein, Landlord will have the right, but not the obligation, to procure such insurance as Landlord deems necessary to protect Landlord’s interests at Tenant’s expense. If Landlord obtains any insurance that is the responsibility of Tenant under this Section 18, Landlord agrees to deliver to Tenant a written statement setting forth the cost of any such insurance and showing in reasonable detail the manner in which it has been computed and Tenant agrees to promptly reimburse Landlord for such costs as additional rent.

 

(iv) General Liability policies under Subparagraphs 19(a)(ii) must include policy endorsements naming Landlord and Landlord’s property manager (and at Landlord’s request, Landlord’s mortgagees of which Tenant has been informed in writing as additional insureds and must also contain a provision that the insurance afforded by such policy is primary insurance and any insurance carried by Landlord and Landlord’s property manager or Landlord’s mortgagees or ground lessors, if any, will be excess over and non-contributing with Tenant’s insurance.

 

(c) Tenant’s Use . Tenant will not keep, use, sell or offer for sale in or upon the Premises any article which may be prohibited by any insurance policy periodically in force covering the Building or the Project Common Areas. If Tenant’s occupancy or business in, or on, the Premises, whether or not Landlord has consented to the same, results in any increase in premiums for the insurance periodically carried by Landlord with respect to the Building or the Project Common Areas, Tenant agrees to pay Landlord the cost of any such increase in premiums or special or additional coverage as additional rent within ten (10) days after being billed therefor by Landlord. In determining whether increased premiums are a result of Tenant’s use of the Premises, a schedule issued by the organization computing the insurance rate on the Building, the Project Common Areas or the Tenant Improvements showing the various components of such rate, will be conclusive evidence of the several items and charges which make up such rate. Tenant agrees to promptly comply with all reasonable requirements of the insurance authority or any present or future insurer relating to the Premises.

 

(d) Cancellation of Landlord’s Policies . If any of Landlord’s insurance policies are cancelled or cancellation is threatened or the coverage reduced or threatened to be reduced in any way because of the use of the Premises or any part thereof by Tenant or any assignee or subtenant of Tenant for any purpose other than office use and, if Tenant fails to remedy the condition giving rise to such cancellation, threatened cancellation, reduction of coverage, threatened reduction of coverage, increase in premiums,

 

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or threatened increase in premiums, within forty-eight (48) hours after notice thereof, Tenant will be deemed to be in material default of this Lease and Landlord may, at its option, and attempt to remedy such condition, and Tenant shall promptly pay Landlord the reasonable costs of such remedy as additional rent. If Landlord is unable, or elects not to remedy such condition, then Landlord will have all of the remedies provided for in this Lease in the event of a default by Tenant.

 

(e) Mutual Waiver of Parties . Landlord and Tenant hereby waive their rights against each other with respect to any claims or damages or losses which are caused by or result from (a) any occurrence insured against under any insurance policy (other than the commercial general liability insurance) carried by Landlord or Tenant (as the case may be) pursuant to the provisions of this Lease and enforceable at the time of such damage or loss, or (b) any occurrence which would have been covered under any insurance (other than the commercial general liability insurance) required to be obtained and maintained by Landlord or Tenant (as the case may be) under this Lease (as applicable) had such insurance been obtained and maintained as required therein. The foregoing waivers shall be in addition to, and not a limitation of, any other waivers or releases contained in this Lease.

 

(f) Waiver of Insurers . Each party shall cause each insurance policy (other than the commercial general liability insurance) required to be obtained by it pursuant to this Lease to provide that the insurer waives all rights of recovery by way of subrogation against either Landlord or Tenant, as the case may be, in connection with any claims, losses and damages covered by such policy. If either party fails to maintain any such insurance required hereunder, such insurance shall be deemed to be self-insured with a deemed full waiver of subrogation as set forth in the immediately preceding sentence.

 

(g) Landlord Insurance . Landlord agrees to carry with solvent and responsible companies “all risk” coverage insurance for the full replacement cost of the Building (including the Tenant Improvements) excluding excavation, footings, foundations and any Alterations which Tenant is required to insure pursuant to the terms of this Lease. Landlord also agrees to carry commercial general liability insurance with limits of not less than $3,000,000 per occurrence, $5,000,000 in the aggregate, insuring against any and all liability with respect to the Building or arising out of Landlord’s maintenance, use or occupancy thereof. Landlord reserves the right to carry such insurance under an “umbrella” or “blanket” policy or policies of insurance. The costs for such insurance as applicable to the Building and the Project shall constitute an Operating Expense.

 

(h) Blanket Insurance . Notwithstanding anything to the contrary in this Section 18, Tenant’s obligation to obtain and maintain the insurance required hereunder may be satisfied by obtaining coverage under so-called blanket and excess liability policies of insurance carried and maintained by Tenant provided that the coverage afforded Landlord will not be reduced or diminished by reason of the use of such blanket and excess liability policies of insurance and provided further that the other applicable requirements of this Section 18 are satisfied.

 

(i) Landlord Self-Insurance . Provided that the Landlord is Fluor Enterprises, Inc. or an Affiliate thereof and has a net worth of at least $250,000,000, Landlord may self-insure all or a portion of the Landlord Insurance required pursuant to Section 18(g) above, provided that Landlord shall be responsible for satisfying any claim which would have been covered by the third party insurance without reimbursement (as an Operating Expense or otherwise). Any deductible in excess of $20,000 shall be deemed Landlord self-insured.

 

19. DAMAGE OR DESTRUCTION .

 

(a) Partial Destruction . If the Premises or the Building are damaged by fire or other casualty to an extent not exceeding fifty percent (50%) of the full replacement cost thereof, and the damage thereto may be repaired, reconstructed or restored to substantially its condition immediately prior to such damage within two hundred seventy (270) days from the date of such casualty, and Landlord will receive insurance proceeds sufficient to cover the costs of such repairs, reconstruction and restoration (including proceeds from Tenant and/or Tenant’s insurance which Tenant is required to (or elects to) deliver to Landlord pursuant to Section 19(e) below, then Landlord agrees to commence and proceed diligently with the work of repair, reconstruction and restoration and this Lease will continue in full force and effect.

 

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(b) Substantial Destruction . Any damage or destruction to the Premises or the Building which Landlord is not obligated to repair pursuant to Section 19(a) above will be deemed a substantial destruction. In the event of a substantial destruction, Landlord may elect to either (i) repair, reconstruct and restore the portion of the Building or the Premises damaged by such casualty, in which case this Lease will continue in full force and effect, subject to Tenant’s termination right contained in Section 19(d) below; or (ii) terminate this Lease effective as of the date thirty (30) days after Tenant’s receipt of Landlord’s election to so terminate. Any right of Landlord to terminate this Lease by reason of fire or other casualty shall only be exercisable if Landlord also terminates all other leases in the Building of tenants who are similarly affected by the fire or casualty in question.

 

(c) Notice . Under any of the conditions of Section 19(a) or (b) above, Landlord agrees to give written notice to Tenant of its intention to repair or terminate, as permitted in such paragraphs, within the earlier of sixty (60) days after the occurrence of such casualty, or fifteen (15) days after Landlord’s receipt of the estimate from Landlord’s contractor (the applicable time period to be referred to herein as the “Notice Period”).

 

(d) Tenant’s Termination Rights . If Landlord elects to repair, reconstruct and restore pursuant to Section 19(b)(i) hereinabove but the time reasonably required to repair the casualty and restore the Premises to substantially the condition prior to the casualty exceeds two hundred seventy (270) days after the date of such damage, then Tenant may terminate this Lease effective upon delivery of written notice to Landlord within ten (10) business days after Landlord delivers notice to Tenant of its election to so repair, reconstruct or restore.

 

(e) Restoration Obligations . In the event of any damage or destruction of all or any part of the Premises, Tenant agrees to immediately (i) notify Landlord thereof. Landlord shall insure the Tenant Improvements installed by Tenant pursuant to Exhibit “C” and, subject to any termination rights hereunder, shall be responsible for repairing and restoring the Tenant Improvements if Landlord elects or is required to repair and restore the Premises and/or Building under this Lease. Subject to Section 13, at Tenant’s expense as provided in this Lease, shall restore any Alterations and Tenant’s furniture, fixtures, equipment and other personal property unless this Lease is terminated as permitted in this Section 19.

 

(f) Abatement of Rent . In the event of any damage, repair, reconstruction and/or restoration described in this Section190, rent will be abated or reduced, as the case may be, from the date of such casualty, in proportion to the degree to which Tenant’s use of the Premises is impaired during such period of repair until Landlord completes all repairs to be performed by Landlord under this Lease and Tenant has been given a reasonable period of time not to exceed forty-five (45) days to re-fixturize and move back into the Premises. Except for abatement of rent as provided hereinabove, Tenant will not be entitled to any compensation or damages for loss of, or interference with, Tenant’s business or use or access of all or any part of the Premises or for lost profits or any other consequential damages of any kind or nature, which result from any such damage, repair, reconstruction or restoration.

 

(g) Inability to Complete . Notwithstanding anything to the contrary contained in this Section 19, if Landlord is obligated or elects to repair, reconstruct and/or restore the damaged portion of the Building or the Premises pursuant to Section 19(a) or 20(b)(i) above, but is delayed from completing such repair, reconstruction and/or restoration beyond the date which is forty-five (45) days after the date estimated by Landlord’s contractor for completion thereof by reason of any causes (other than delays caused by Tenant, its subtenants, employees, agents or contractors or delays which are beyond the reasonable control of Landlord as described in Section 31), then Tenant may elect to terminate this Lease upon ten (10) days prior written notice given to Landlord after the expiration of such forty-five (45) day period.

 

(h) Damage Near End of Term . Landlord and Tenant shall each have the right to terminate this Lease if any damage to the Premises occurs during the last twelve (12) months of the Term of this Lease where Landlord’s contractor estimates in a writing delivered to Landlord and Tenant that the repair,

 

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reconstruction or restoration of such damage cannot be completed within sixty (60) days after the date of such casualty. If either party desires to terminate this Lease under this Section 19(h), it shall provide written notice to the other party of such election within ten (10) days after receipt of Landlord’s contractor’s repair estimates. Notwithstanding the foregoing, if within thirty (30) days following any damage or destruction Tenant exercises Tenant’s Extension Option in accordance with the provisions of this Lease and is not otherwise in Default (beyond all applicable cure periods), Landlord shall not have the right under this Section 19(h) to terminate this Lease, and provided the casualty was covered by Landlord’s insurance for the Building or would have been covered if Landlord maintained the required insurance, Landlord shall perform its repair obligations pursuant to this Section 19 and Tenant shall likewise perform its restoration obligations pursuant to this Section 19.

 

(i) Waiver of Termination Right . Landlord and Tenant agree that the foregoing provisions of this Section 19 are to govern their respective rights and obligations in the event of any damage or destruction and supersede and are in lieu of the provisions of any applicable law, statute, ordinance, rule, regulation, order or ruling now or hereafter in force which provide remedies for damage or destruction of leased premises (including, without limitation, to the extent the Premises are located in California, the provisions of California Civil Code Section 1932, Subsection 2, and Section 1933, Subsection 4 and any successor statute or laws of a similar nature).

 

(j) Termination . Upon any termination of this Lease under any of the provisions of this Section 19, the Parties will be released without further obligation to the other from the date possession of the Premises is surrendered to Landlord except for items which have accrued and are unpaid as of the date of termination and matters which are to survive any termination of this Lease as provided in this Lease.

 

20. EMINENT DOMAIN .

 

(a) Substantial Taking . If the whole of the Premises, or such part thereof as shall substantially and adversely interfere with Tenant’s use and occupancy of the Premises, as contemplated by this Lease, is taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or sold to prevent such taking, either party will have the right to terminate this Lease effective as of the date possession is required to be surrendered to such authority.

 

(b) Partial Taking; Abatement of Rent . In the event of a taking of a portion of the Premises which does not materially or adversely interfere with Tenant’s use and occupancy of the Premises, then, neither party will have the right to terminate this Lease and Landlord will thereafter proceed to make a functional unit of the remaining portion of the Premises, and rent will be abated with respect to the part of the Premises which Tenant is deprived of on account of such taking.

 

(c) Condemnation Award . In connection with any taking of the Premises or the Building, Landlord will be entitled to receive the entire amount of any award which may be made or given in such taking or condemnation, without deduction or apportionment for any estate or interest of Tenant, it being expressly understood and agreed by Tenant that no portion of any such award will be allowed or paid to Tenant for any so-called bonus or excess value of this Lease, and such bonus or excess value will be the sole property of Landlord. Tenant agrees not to assert any claim against Landlord or the taking authority for any compensation because of such taking (including any claim for bonus or excess value of this Lease); provided, however, if any portion of the Premises is taken, Tenant will have the right to recover from the condemning authority (but not from Landlord) any compensation as may be separately awarded or recoverable by Tenant for the taking of Tenant’s furniture, fixtures, equipment and other personal property within the Premises, for Tenant’s relocation expenses, and for any loss of goodwill or other damage to Tenant’s business by reason of such taking.

 

(d) Temporary Taking . In the event of taking of the Premises or any part thereof for temporary use, (i) this Lease will remain unaffected thereby and rent will abate for the duration of the taking in proportion to the extent Tenant’s use of the Premises is interfered with, and (ii) Landlord will be entitled to receive such portion or portions of any award made for such use provided that if such taking remains in force at

 

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the expiration or earlier termination of this Lease, Tenant will then pay to Landlord a sum equal to the reasonable cost of performing Tenant’s obligations under Section 10 with respect to surrender of the Premises and upon such payment Tenant will be excused from such obligations. For purpose of this Section 20(d), a temporary taking shall be defined as a taking for a period of ninety (90) days or less.

 

21. DEFAULTS AND REMEDIES .

 

(a) Defaults . The occurrence of any one or more of the following events will be deemed a “Default” by Tenant:

 

(i) The failure by Tenant to make any payment of rent or additional rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure continues for a period of five (5) business days after written notice thereof from Landlord to Tenant; provided, however, that any such notice shall be in addition to, and not in lieu of, any notice required under applicable law (including, without limitation, to the extent the Premises are located in California, the provisions of California Code of Civil Procedure Section 1161 regarding unlawful detainer actions or any successor statute or law of a similar nature).

 

(ii) The failure by Tenant to observe or perform any of the express or implied covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in Section 21(a)(i) or (ii) above, where such failure continues (where no other period of time is expressly provided) for a period of thirty (30) days after written notice thereof from Landlord to Tenant. The provisions of any such notice will be in lieu of, and not in addition to, any notice required under applicable law (including, without limitation, to the extent the Premises are located in California, California Code of Civil Procedure Section 1161 regarding unlawful detainer actions and any successor statute or similar law). If the nature of Tenant’s Default is such that more than thirty (30) days are reasonably required for its cure, then Tenant will not be deemed to be in Default if Tenant, with Landlord’s concurrence, commences such cure within such thirty (30) day period and thereafter diligently prosecutes such cure to completion.

 

(iii) (a) The making by Tenant of any general assignment for the benefit of creditors; (b) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (c) the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where possession is not restored to Tenant within thirty (30) days; or (d) 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 within thirty (30) days.

 

(b) Landlord’s Remedies; Termination . In the event of any Default by Tenant, in addition to any other remedies available to Landlord at law or in equity under applicable law (including, without limitation, to the extent the Premises are located in California, the remedies of Civil Code Section 1951.4 and any successor statute or similar law, which provides that Landlord may continue this Lease in effect following Tenant’s breach and abandonment and collect rent as it falls due, if Tenant has the right to sublet or assign, subject to reasonable limitations), Landlord will have the immediate right and option to terminate this Lease and all rights of Tenant hereunder. If Landlord elects to terminate this Lease then, to the extent permitted under applicable law, Landlord may recover from Tenant (i) The worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rent loss that Tenant proves could have been reasonably avoided; plus (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rent loss that Tenant proves could be reasonably avoided; plus (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which, in the ordinary course of things, results therefrom including, but not limited to: reasonable attorneys’ fees and costs; brokers’ commissions; the costs of refurbishment, alterations, renovation and repair of the Premises, and removal (including the repair of any damage caused by such removal) and storage (or

 

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disposal) of Tenant’s personal property, equipment, fixtures, Alterations, the Tenant Improvements and any other items which Tenant is required under this Lease to remove but does not remove. As used in Subparagraphs 22(b)(i) and (ii) above, the “worth at the time of award” is computed by allowing interest at the Interest Rate. As used in Section 21(b)(iii) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

 

(c) Landlord’s Remedies; Re-Entry Rights . In the event of any Default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord will also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere and/or disposed of at the sole cost and expense of and for the account of Tenant in accordance with the provisions of Section 13(h) of this Lease or any other procedures permitted by applicable law. No re-entry or taking possession of the Premises by Landlord pursuant to this Section 21(c) will be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction.

 

(d) Landlord’s Remedies; Re-Letting . In the event that Landlord elects to re-enter the Premises or takes possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law, then if Landlord does not elect to terminate this Lease, Landlord may from time to time, without terminating this Lease, either recover all rent as it becomes due or relet the Premises or any part thereof on terms and conditions as Landlord in its sole and absolute discretion may deem advisable with the right to make alterations and repairs to the Premises in connection with such reletting. If Landlord elects to relet the Premises, then rents received by Landlord from such reletting will be applied: first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any cost of such reletting; third, to the payment of the cost of any alterations and repairs to the Premises incurred in connection with such reletting; fourth, to the payment of rent due and unpaid hereunder and the residue, if any, will be held by Landlord and applied to payment of future rent as the same may become due and payable hereunder. Should that portion of such rents received from such reletting during any month, which is applied to the payment of rent hereunder, be less than the rent payable during that month by Tenant hereunder, then Tenant agrees to pay such deficiency to Landlord immediately upon demand therefor by Landlord. Such deficiency will be calculated and paid monthly.

 

(e) Landlord’s Remedies; Performance for Tenant . All covenants and agreements to be performed by Tenant under any of the terms of this Lease are to be performed by Tenant at Tenant’s sole cost and expense and, except as expressly provided in this Lease, without any abatement of rent. If Tenant fails to pay any sum of money owed to any party other than Landlord, for which it is liable under this Lease, or if Tenant fails to perform any other act on its part to be performed hereunder, and such failure continues for ten (10) days after notice thereof by Landlord, Landlord may, without waiving or releasing Tenant from its obligations, but shall not be obligated to, make any such payment or perform any such other act to be made or performed by Tenant. Tenant agrees to reimburse Landlord upon demand for all sums so paid by Landlord and all necessary incidental costs, together with interest thereon at the Interest Rate, from the date of such payment by Landlord until reimbursed by Tenant. This remedy shall be in addition to any other right or remedy of Landlord set forth in this Section 21.

 

(f) Late Payment . If Tenant fails to pay any installment of rent within ten (10) days of when due or if Tenant fails to make any other payment for which Tenant is obligated under this Lease within five (5) days of when due, such late amount will accrue interest at the Interest Rate and Tenant agrees to pay Landlord as additional rent such interest on such amount from the date such amount becomes due until such amount is paid. In addition, Tenant agrees to pay to Landlord concurrently with such late payment amount, as additional rent, a late charge equal to four percent (4%) of the amount due to compensate Landlord for the extra costs Landlord will incur as a result of such late payment. The Parties agree that (i) it would be impractical and extremely difficult to fix the actual damage Landlord will suffer in the event of Tenant’s late payment, (ii) such interest and late charge represents a fair and reasonable estimate of the detriment that Landlord will suffer by reason of late payment by Tenant, and (iii) the payment of

 

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interest and late charges are distinct and separate in that the payment of interest is to compensate Landlord for the use of Landlord’s money by Tenant, while the payment of late charges is to compensate Landlord for Landlord’s processing, administrative and other costs incurred by Landlord as a result of Tenant’s delinquent payments. Acceptance of any such interest and late charge will not constitute a waiver of the Tenant’s Default with respect to the overdue amount, or prevent Landlord from exercising any of the other rights and remedies available to Landlord. Notwithstanding the foregoing, for the first two (2) monetary delinquencies in any calendar year, Tenant shall be entitled to receive written notice and 5-days from receipt of such notice to cure such monetary delinquency before Landlord may assess any interest or late charges under this Lease.

 

(g) Rights and Remedies Cumulative . All rights, options and remedies of Landlord and Tenant contained in this Lease will be construed and held to be cumulative, and no one of them will be exclusive of the other, and except as otherwise expressly stated in this Lease, Landlord and Tenant shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law or in equity, whether or not stated in this Lease. Nothing in this Section 21 will be deemed to limit or otherwise affect each party’s indemnification of the other pursuant to any provision of this Lease.

 

22. LANDLORD’S DEFAULT . Landlord will not be in default in the performance of any obligation required to be performed by Landlord under this Lease unless Landlord fails to perform such obligation within thirty (30) days after the receipt of written notice from Tenant specifying in detail Landlord’s failure to perform; provided however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are required for performance, then Landlord will not be deemed in default if it commences such performance within such thirty (30) day period and thereafter diligently pursues the same to completion. Upon any default by Landlord, Tenant may exercise any of its rights provided at law or in equity.

 

23. ASSIGNMENT AND SUBLETTING .

 

(a) Restriction on Transfer . Tenant shall have the right subject to Landlord’s consent, which shall be unreasonably withheld or delayed, to sublease or assign (any such assignment, encumbrance, sublease or the like will sometimes be referred to as a “Transfer”), any portion of the Premises, and any portion of any space subsequently leased, at any time during the Term of the Lease and Renewal Option Periods. Landlord shall not have the right to recapture the Premises.

 

(b) Non-Transfers . Notwithstanding the provisions of this Section 23 to the contrary, for purposes of this Section 23, a reorganization, merger, sale, partnership change, assignment, transfer or hypothecation of any partnership or other ownership interest in Tenant shall not be deemed a Transfer under the Lease so long as the new entity is of comparable or greater financial strength to that of the Tenant as of the Commencement Date. Neither the use by nor the subletting of all or a portion of the Premises to any subsidiary or Affiliate of Tenant or to any entity to whom Tenant outsources a portion of its operations or business shall be deemed a Transfer under this Lease and shall not require Landlord’s consent hereunder. For purposes of this Lease, an “Affiliate” of any entity shall mean another entity which controls, is controlled by, or is under common control with such entity.

 

(c) Transfer Notice . If Tenant desires to effect a Transfer, then at least ten (10) days prior to the date when Tenant desires the Transfer to be effective (the “Transfer Date”), Tenant agrees to give Landlord a notice (the “Transfer Notice”), stating the name, address and business of the proposed assignee, sublessee or other transferee (sometimes referred to hereinafter as “Transferee”), reasonable information (including references) concerning the character, ownership, and financial condition of the proposed Transferee, the Transfer Date, any ownership or commercial relationship between Tenant and the proposed Transferee, and the consideration and all other material terms and conditions of the proposed Transfer, all in such detail as Landlord may reasonably require. If Landlord reasonably requests additional detail, the Transfer Notice will not be deemed to have been received until Landlord receives such additional detail, and Landlord may withhold consent to any Transfer until such information is provided to it.

 

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(d) Reasonable Disapproval . Landlord and Tenant hereby acknowledge that Landlord’s disapproval of any proposed Transfer pursuant to Article 23 will be deemed reasonably withheld if based upon any reasonable factor, including, without limitation, any or all of the following factors: (i) the proposed Transferee is a Governmental Entity, if the proposed Transferee is entitled, directly or indirectly, to diplomatic or sovereign immunity or shall not be subject to the service of process in, and the jurisdiction of, the courts of the State of California; (ii) the use of the Premises by the Transferee) is not permitted by the use provisions in this Lease or the Project CC&Rs; (iii) the Transfer would likely result in a material increase in the demand upon utilities and services above that to be provided by Landlord to the Premises pursuant to Exhibit “G” (unless Tenant or the Transferee provides supplemental facilities to service such excess demand); (iv) the Transfer would likely result in an increase in the use of the Parking Facilities by the Transferee’s employees or visitors in excess of 4.25 spaces per thousand square feet, calculated for the entire Premises; (v) the Transferee is not a reputable person or entity or does not have the financial capability to fulfill the obligations imposed by the Transfer and this Lease (or has not furnished Landlord with reasonable proof thereof); (vi) the proposed Transferee is engaged in a business or activity, or the Premises or the relevant part thereof, will be used in a manner, which is not in keeping with the then standards of the Building or the Project; or (vii) the proposed Transferee is a person or entity with whom Landlord is or has been, within the preceding nine (9) month period, negotiating to lease space in the Project and Landlord has space comparable to the space Tenant is proposing to Transfer available for lease in the Project; or (viii) the proposed form of sublease or instrument of assignment does not comply with the applicable provisions of this Article 23.

 

(e) Additional Conditions . A condition to Landlord’s consent to any Transfer of this Lease will be the delivery to Landlord of a true copy of the fully executed instrument of assignment, sublease, transfer or hypothecation, and, in the case of an assignment, the delivery to Landlord of an agreement executed by the Transferee in form and substance reasonably satisfactory to Landlord, whereby the Transferee assumes and agrees to be bound by all of the terms and provisions of this Lease and to perform all of the obligations of Tenant hereunder. As a condition to Landlord’s consent to any sublease, such sublease must provide that it is subject and subordinate to this Lease and to all mortgages; that Landlord may enforce the provisions of the sublease, including collection of rent.

 

(f) Landlord’s Options . Within ten (10) days of Landlord’s receipt of any Transfer Notice, and Landlord will elect in writing to do one of the following (i) consent to the proposed Transfer; or (ii) refuse such consent, which refusal shall be on reasonable grounds (set forth in reasonable detail in such notice of election).

 

(g) Landlord Competitors . For so long as Fluor Enterprises, Inc. or any entity controlled, controlled by or under common control with Fluor Enterprises, Inc. owns or leases the Building, notwithstanding anything to the contrary contained in this Article 23, Tenant shall not assign this Lease, or sublease all or a portion of the Premises, to Bechtel Corporation, The Shaw Group, Washington Group International, Kellogg, Brown & Root, Jacobs Engineering Group, Inc., Parsons Corporation, Chicago Bridge & Iron, Foster Wheeler or any Affiliate or successor entities to such parties and any similar entity which itself or through affiliated entities generates annual revenues in excess of $750 million from the engineering, procurement, maintenance and/or construction businesses .

 

(h) Additional Conditions . Upon any Transfer of this Lease, Tenant shall deliver to Landlord a true copy of the fully executed instrument of assignment, sublease, transfer or hypothecation, and, in the case of an assignment, the Transferee shall assume and agree to be bound by all of the terms and provisions of this Lease and to perform all of the obligations of Tenant hereunder.

 

(i) Excess Rent . If Landlord consents to any assignment of this Lease, Tenant agrees to pay to Landlord, as additional rent, fifty percent (50%) of all sums and other consideration payable to and for the benefit of Tenant by the assignee on account of the assignment, after recovery of Tenant’s Re-Leasing Costs (as defined below), as and when such sums and other consideration are due and payable by the assignee to or for the benefit of Tenant (or, if Landlord so requires, and without any release of Tenant’s liability for the same, Tenant agrees to instruct the assignee to pay such sums and other consideration directly to Landlord). If for any proposed sublease Tenant receives rent or other consideration, either

 

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initially or over the term of the sublease, in excess of the rent fairly allocable to the portion of the Premises which is subleased based on square footage, Tenant agrees to pay to Landlord as additional rent fifty percent (50%) of the excess of each such payment of rent or other consideration received by Tenant, after recovery of Tenant’s Re-Leasing Costs (as defined below), promptly after its receipt. In calculating excess rent or other consideration which may be payable to Landlord under this subsection, Tenant will be entitled to deduct commercially reasonable third party brokerage commissions, transaction costs, tenant improvement costs or allowances funded by Tenant, tenant incentives, free rent periods, attorneys’ fees and other amounts reasonably and actually expended by Tenant in connection with such assignment or subletting (“Tenant’s Re-Leasing Costs”) if acceptable written evidence of such expenditures is provided to Landlord.

 

(j) No Release . No Transfer will release Tenant of Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay the rent and to perform all other obligations to be performed by Tenant hereunder.

 

24. LANDLORD COVENANT TO REPURCHASE FROM SYNTHETIC LESSOR/ SUBORDINATION/NON-DISTURBANCE AND ATTORNMENT AGREEMENT.

 

(a) Landlord Covenant to Reacquire Premises Parcel and Adjacent Sale Parcel. Landlord and Tenant have entered into a Purchase and Sale Agreement of even date herewith (the “Building E Purchase Agreement”) for the sale to Tenant of the parcel of real property in the Project upon which Building E is located (the “Building E Parcel”). The Parties acknowledge that the Building E Parcel and the Premises Parcel are currently leased by Landlord from Fluor Daniels Realty Trust 1997 (“Synthetic Lessor”) pursuant to that certain Lease, Security Agreement and Financing Agreement dated as of December 18, 1997, a so-called synthetic lease (the “Synthetic Lease”). As a material inducement to Tenant to enter into this Lease and the Building E Purchase Agreement, Landlord covenants to reacquire the Building E Parcel and the Premises Parcel from the Synthetic Lessor and to terminate the Synthetic Lease as provided below. Upon the earlier of (a) the expiration of the “Contingency Period” pursuant to the Building E Purchase Agreement or (b) Tenant’s waiver of all contingency Items pursuant to the Building E Purchase Agreement, Landlord shall (i) exercise its purchase option under Section 20.1 of the Synthetic Lease with respect to both the Building E Parcel and the Premises Parcel (including the Building and all other Improvements thereon), (ii) timely deliver all notices to the Synthetic Lessor required under the Synthetic Lease for Landlord to acquire unencumbered fee interest in the Building E Parcel and the Premises Parcel from the Synthetic Lessor, and (iii) use good faith efforts to close escrow and consummate its acquisition of the Building E Parcel and the Premises Parcel from the Synthetic Lessor and terminate the Synthetic Lease (the “Syn Lease Closing”) on or before March 31, 2004 or as soon as commercially feasible thereafter, but in any event Landlord shall cause the Syn Lease Closing to occur on or before April 30, 2004. Notwithstanding any provision of this Lease to the contrary, upon any breach of the covenants in this Section 24, Tenant shall be entitled to pursue any and all remedies against Landlord available at law or in equity, including without limitation the specific performance of Seller’s obligations under this Section 24, the recovery of consequential damages, lost profits and lost opportunities caused by Landlord’s breach of this Section 24 and the recovery of all costs expended by Tenant in connection with this Lease. Further, Landlord shall indemnify, protect, defend and hold Tenant harmless from and against any and all Liabilities arising from Landlord’s breach or failure to perform its covenants under this Section 24. Landlord acknowledges and agrees that (i) Tenant has halted its efforts to locate and negotiate for other relocation premises suitable for Tenant’s business, (ii) Tenant intends to relocate its current headquarters to the Building E Parcel and the Premises hereunder and will incur significant costs and obligations in connection with such relocation if this Lease is terminated because of Landlord’s failure to comply with its covenant hereunder, which costs and obligations cannot be readily mitigated, (iii) the Premises are uniquely suited to the needs and requirements of Tenant, (iv) Landlord’s failure to perform its obligations under this Section 24 would severely interrupt Tenant’s business operations, cause Tenant to incur significant lost profits, opportunities and revenues, and (v) in executing this Lease, Tenant has materially relied on Landlord’s covenants and acknowledgments in this Section 24 and would not be willing to enter into this Lease without Landlord’s commitment to reacquire the Building E Parcel and the Premises Parcel from the Synthetic Lessor in accordance with this Section 24 and the right to specifically enforce Landlord’s obligations hereunder.

 

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(b) Subordination, Non-Disturbance and Attornment Agreement. In the event of any future financing of the Premises Parcel by Landlord (after its reacquisition of the Premises Parcel from the Synthetic Lessor) during the Term of this Lease, Landlord and Tenant agree to execute, and Landlord agrees to cause its lender to execute, a Subordination, Non-Disturbance and Attornment Agreement substantially in the form attached hereto as Exhibit “H” attached hereto.

 

25. ESTOPPEL CERTIFICATE .

 

(a) Tenant’s Obligations . Within ten (10) days following any written request which Landlord may make from time to time, Tenant agrees to execute and deliver to Landlord a statement, in a form substantially similar to the form of Exhibit “I-1” attached hereto or as may reasonably be required by Landlord’s lender, certifying to Tenant’s actual knowledge (subject to any applicable exceptions set forth in such statement): (i) the Commencement Date of this Lease; (ii) the fact 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, and stating the date and nature of such modifications); (iii) the date to which the rent and other sums payable under this Lease have been paid; (iv) that there are no current Defaults under this Lease by either Landlord or Tenant except as specified in Tenant’s statement; and (v) such other matters reasonably requested by Landlord. Landlord and Tenant intend that any statement delivered pursuant to this Section 25 may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the Building or any interest therein.

 

(b) Tenant’s Failure to Deliver . Tenant’s failure to deliver such statement within such time will be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured Defaults in Landlord’s performance, and (iii) that not more than one (1) month’s rent has been paid in advance. Without limiting the foregoing, if Tenant fails to deliver any such statement within such ten (10) day period, Landlord may deliver to Tenant an additional request for such statement and Tenant’s failure to deliver such statement to Landlord within ten (10) days after delivery of such additional request will constitute a Default under this Lease and Tenant shall be liable for and shall pay to Landlord upon demand Five Hundred Dollars ($500.00) per day for each day beyond the expiration of the foregoing second ten (10) day period that Tenant delays in delivering the statement to Landlord.

 

(c) Landlord’s Obligations . Within ten (10) days following any written request which Tenant may make from time to time, Landlord agrees to execute and deliver to Tenant a statement, in a form substantially similar to the form of Exhibit “I-2” attached hereto, certifying to Landlord’s actual knowledge (subject to any applicable exceptions set forth in such statement): (i) the Commencement Date of this Lease; (ii) the fact 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, and stating the date and nature of such modifications