THIS LEASE made as
of the January 20, 2004, between 9944 SANTA MONICA, LLC, a
Delaware limited liability company (“Landlord”), and
SBA1, LLC, a Delaware limited liability company
(“Tenant”).
Landlord hereby
leases to Tenant and Tenant hereby leases from Landlord that
certain space comprised of the entire building
(“Building”) located at 9944 Santa Monica Boulevard,
Beverly Hills, California (“Property”, as further
described in Article 25) and the Property, including, without
limitation, the basement, first and second floors thereof
(collectively, the “Premises”), as described or shown
on Exhibit A attached hereto, subject to the provisions herein
contained. The term (“Term”) of this Lease shall
commence on February 1, 2004 (the “Commencement
Date”) and shall end on January 31, 2009
(“Expiration Date”), unless sooner terminated as
provided herein. The Commencement Date shall be subject to
adjustment as provided in Article 4. Landlord and Tenant agree
that for purposes of this Lease the rentable area of the Premises
is 20,000 square feet.
Notwithstanding
anything else to the contrary in this Lease, Landlord (referenced,
in such capacity, in this paragraph as “LL Occupant”)
may continue during the Occupancy Period (as defined below) to
occupy the two (2) offices in the southeastern portion of the
basement of the Building (“LL Occupancy Space”),
described or shown on Exhibit A-l attached hereto, which LL
Occupant is currently occupying. During the Occupancy Period, LL
Occupant shall occupy the LL Occupancy Space, shall continue to use
the parking spaces that it currently uses, and the shall continue
to use and receive the utilities and services at the Building that
it currently uses and receives, all without any obligation to pay
Tenant any base rent, additional rent or other charges, fees, costs
or other amounts of any kind in connection therewith. The
“Occupancy Period” shall begin on the date that this
Lease is executed and delivered by both Landlord and Tenant and
shall end on the date that is thirty (30) days after Tenant
gives LL Occupant written notice of the termination of the
Occupancy Period, provided, however, that (a) Tenant shall not
terminate the Occupancy Period before the date that is three
(3) months after the Commencement Date, and (b) LL
Occupant may terminate the Occupancy Period at any time by giving
written notice to Tenant of the date of the termination of the
Occupancy Period.
(A) Base
Rent. Tenant shall pay Landlord monthly Base Rent in accordance
with the following schedule in advance on or before the first
(1 st
) day of each calendar month during
the
Term, except
that Base Rent for the first and last full months for which Base
Rent shall be due (i.e., a total payment of $63,765.00) shall be
paid when Tenant executes this Lease.
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Time Period
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Monthly Base Rent
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February 1, 2004 —
January 31,2005
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$
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30,000.00
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February 1, 2005 —
January 31,2006
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$
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30,900.00
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February 1, 2006 —
January 31,2007
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$
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31,827.00
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February 1, 2007 — January 31,
2008
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$
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32,782.00
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February 1, 2008 — January 31,
2009
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$
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33,765.00
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If the Term
begins on a day other than the first day of a calendar month or
ends on a day other than the last day of a calendar month, then the
Rent payable for such month shall be prorated on the basis of
1/30th of the monthly Rent for each day of such month.
All amounts (other
than Base Rent) which Tenant is or becomes obligated to pay
Landlord under this Lease or other agreement entered in connection
herewith (including, without limitation, Furniture Payments (as
defined in Article 3) and parking charges) (collectively,
“Additional Rent”), together with the Base Rent, are
sometimes herein referred to collectively as “Rent,”
and all remedies applicable to the non-payment of Rent shall be
applicable thereto. Rent shall be paid to Landlord c/o Crescent
Heights, 2930 Biscayne Boulevard, Miami, Florida 33137, attention:
Joseph Zdon, or at such other place as Landlord may designate from
time to time.
(a) Tenant
shall pay as Additional Rent for each “Lease Year” (as
defined below) during the Term (and the Renewal Term, if any) an
amount equal to Operating Expenses for such Lease Year to the
extent that such amount is in excess of the amount of Operating
Expenses for the Base Year (as defined below).
(b) Any
costs or expenses for services or utilities other than or in excess
of those specifically required by this Lease to be supplied by
Landlord (if any), not otherwise included in Operating Expenses,
and which are attributable directly to Tenant’s use or
occupancy of the Premises shall be paid in full by Tenant as
Additional Rent when such costs are incurred or, if Landlord makes
such payments, within five (5) days after being billed
therefor by Landlord. This paragraph does not limit or modify the
provisions of Article 7.
(c) “Operating
Expenses” shall mean the total of all costs incurred by
Landlord in connection with the management, operation, maintenance,
cleaning, protecting, servicing and repair of the Property.
Operating Expenses shall include, without limitation, (i) the
cost associated with providing, operating, and repairing air
conditioning, sprinkler, fire and life safety, electricity, steam,
heating, mechanical, ventilation, escalator and elevator systems
and all other utilities and the cost of supplies and equipment and
maintenance and service contracts in connection therewith, except
to the extent that the same are paid directly by Tenant;
(ii) the cost of repairs, general maintenance, trash removal,
telephone service, light bulb and tube replacement, and
2
supplies, and
security; (iii) the cost of insurance maintained by Landlord
in accordance with Article 11; (iv) wages, salaries and
other labor costs including taxes, insurance, retirement, medical
and other employee benefits; (v) fees, charges and other
costs, including management fees, consulting fees, legal fees and
accounting fees, of all independent contractors (if any) engaged by
Landlord or reasonably charged by Landlord if Landlord performs
management services in connection with the Property, which may
include an annual fee equal to at least three percent of gross
revenue of the Property; (vi) the fair market rental value of
the Property manager’s offices (if any) and storage areas (if
any) in the Building (excluding the LL Occupancy Space);
(vii) the cost of business licenses; (viii) fees imposed
by any governmental entity for services which do not constitute
Real Property Taxes hereunder; (ix) capital costs incurred in
connection with any equipment, device or other improvement
reasonably anticipated to achieve economies in the operation,
maintenance or repair of the Property or portion thereof, or to
comply with Laws; provided, however, the same shall be amortized
(including interest on the unamortized cost) over the shorter of
(A) the useful life, or (B) the cost recovery period
(i.e., the anticipated period to recover the full cost of such
capital item from cost savings achieved by such capital item), of
the relevant capital item as reasonably determined by Landlord; and
(x) depreciation of the cost of acquiring or the rental
expense of personal property used in the maintenance, operation and
repair of the Building or Property.
Operating Expenses
shall not include the following: (1) the cost of repair to the
Building including the Premises, to the extent the cost of the
repairs is reimbursed by insurance; (2) leasing commissions;
(3) the cost of utilities charged to individual tenants
(including Tenant) and payroll, material and contract costs of
other services charged to tenants (including Tenant); (4) the
depreciation of the Building and other real property structures in
the Property; (5) interest, points and fees on debt or amortization
payments on any real property mortgages or deeds of trust and
ground lease payments; (6) advertising costs incurred directly
for leasing individual space in the Building or other portions of
the Property; (7) Landlord’s general corporate overhead
and general administrative expenses not related to the operation of
the Property; (8) all items and services for which Tenant or
any other tenant in the Building directly reimburses Landlord,
provided that, any item or service supplied selectively by Landlord
to Tenant shall be paid for by Tenant; (9) to the extent
reimbursed by parking fees, the cost of payroll for clerks and
attendants, bookkeeping, garage keepers liability insurance,
parking management fees, tickets and uniforms (if any) directly
incurred in operating the parking facilities; and (10) costs
of capital improvements to the Building and other portions of the
Property except as otherwise included in Operating Expenses
pursuant to Section 2(B)(l)(c)(ix).
(a) Tenant
shall pay as Additional Rent for each Lease Year during the Term
(and the Renewal Term, if any) an amount equal to the Real Property
Taxes for such Lease Year to the extent that such amount is in
excess of the amount of Real Property Taxes for the Base
Year.
(b) “Real
Property Taxes” shall mean all taxes, assessments (special or
otherwise) and charges levied upon or with respect to the Property
and ad valorem taxes on personal property used in connection
therewith. Real Property Taxes shall include, without limitation,
any tax, fee or excise on the act of entering into this Lease, on
the occupancy of Tenant, the rent
3
hereunder or in
connection with the business of owning and/or renting space in the
Property which are now or hereafter levied or assessed against
Landlord by any governmental entity or district or other political
or public entity, and shall also include any other tax, assessment,
fee or excise, however described (whether general or special,
ordinary or extraordinary, foreseen or unforeseen), which may be
levied or assessed in lieu of, as a substitute for, or as an
addition to, any other Real Property Taxes. Real Property Taxes
shall also include any private assessments or the Building’s
contribution towards a private cost-sharing agreement for the
purpose of augmenting or improving the quality of service and
amenities normally provided by governmental agencies. Real Property
Taxes shall also include legal fees, costs and disbursements
incurred in connection with proceedings to contest, determine or
reduce Real Property Taxes. Real Property Taxes shall not include
income, franchise, transfer, inheritance or capital stock taxes,
unless, due to a change in the method of taxation, any of such
taxes are levied or assessed against Landlord, in whole or in part,
in lieu of, as a substitute for or as an addition to, any other tax
which would otherwise constitute a Real Property Tax.
(3)
Payment. Before the commencement of each Lease Year, or as
soon thereafter as possible, Landlord shall furnish to Tenant a
statement containing Landlord’s reasonable estimate of the
Operating Expenses and Real Property Taxes (collectively,
“Project Expenses”) for such Lease Year and a
calculation of the Additional Rent, if any, payable by Tenant for
such Lease Year pursuant to this Section 2(B) on the basis of
such estimate. If the Lease Year is a full year; Tenant shall pay
to Landlord one-twelfth (1/12th) of the amount of said Additional
Rent on each monthly rent payment date during such year (commencing
on January 1) until further adjustment pursuant to this
Section 2(B). If the Lease Year is a partial year, Tenant
shall pay to Landlord on each monthly rent payment date in such
partial year an amount equal to said Additional Rent divided by the
number of months in said partial Lease Year. If Landlord’s
statement is furnished after the start of the Lease Year, then on
the next monthly rent payment date Tenant shall pay the entire
portion of the Additional Rent attributable to portions of the
Lease Year prior to such date. Landlord may reasonably adjust
Tenant’s monthly rent payments of Project Expenses from time
to time to reflect the then current or estimated Project Expenses
and actual expenditures made during the elapsed portion of the
Lease Year. Following each Lease Year, Landlord shall furnish to
Tenant a statement showing the actual Project Expenses during the
previous Lease Year, and Landlord shall compute any charge or
credit to Tenant necessary to adjust rent previously paid by Tenant
to reflect the actual Project Expenses. If such statement and
computation reveal an underpayment, Tenant shall promptly pay to
Landlord an amount equal to such underpayment (whether or not this
Lease has expired or been terminated), and if such statement and
computation show an overpayment, Landlord shall credit the next
monthly rental payment of Tenant with an amount equal to such
overpayment, or, if the Term has expired, refund the overpayment to
Tenant.
(4)
Lease Year; Base Year; Proration. “Lease Year”
shall mean the whole or partial calendar year commencing on the
Commencement Date and ending on December 31 of the calendar
year in which the Commencement Date occurs, and all subsequent
calendar years within the Term and (if any) Renewal Term. The Base
Year shall mean the calendar year of 2004; provided that, to the
extent that Tenant does not occupy the Premises during the entirety
of 2004, Landlord shall reasonably estimate what the Operating
Expenses and Real Property Taxes would have been for such period of
Tenant’s non-occupancy during 2004, based on the actual usage
during Tenant’s occupancy during the remainder of 2004, and
the calculation of the Base Year shall be
4
adjusted so as
to include such estimate. The amount of Additional Rent payable
hereunder shall be proportionately abated in the case of a partial
month or if the Lease Year is less than 365 days.
Tenant hereby
leases from Landlord the Furniture (as defined below) during the
Term. Landlord and Tenant acknowledge that, for purposes of this
Lease, the Furniture shall be deemed to have a value during the
Term of this Lease (as the same may be extended) of $30,000.00.
Tenant shall have no right to remove the Furniture from the
Premises prior to or upon the expiration of the Lease. The
“Furniture” shall be such items of furniture that are
currently located in the Premises and which are detailed on a
written schedule prepared by Landlord and acknowledged by Tenant on
or before the Commencement Date. Without limiting the terms of
Article 35, upon the expiration of the Lease, Landlord may,
but shall not be required to, draw upon all or any part of the LC
and/or LC Account (as defined in Article 35) or use, retain or
apply all or any part of the proceeds thereof for the payment of
any cost or loss incurred by Landlord with respect to needed repair
or replacement of any Furniture.
Commencement of Term; Renewal
Term
(A)
Commencement Date. The Commencement Date set forth in
Article 1 shall be delayed and Base Rent shall be abated to
the extent that Landlord fails to deliver possession of the
Premises for any reason on the intended Commencement Date,
including but not limited to holding over by prior occupants,
except to the extent that Tenant, its contractors, agents or
employees in any way contribute to such failure. If Landlord so
fails for a sixty (60) day initial grace period, or such
additional time as may be necessary due to fire or other casualty,
strikes, lock-outs or other labor troubles, shortages of equipment
or materials, governmental requirements, power shortages or
outages, acts or omissions of Tenant or other Persons, or other
causes beyond Landlord’s reasonable control, Tenant shall
have the right to terminate this Lease by written notice to
Landlord any time thereafter up until Landlord delivers the
Premises to Tenant. Any such delay in the Commencement Date shall
not subject Landlord to liability for loss or damage resulting
therefrom, and Tenant’s sole recourse with respect thereto
shall be the abatement of Base Rent and right to terminate this
Lease described above. Upon any such termination, Landlord and
Tenant shall be entirely relieved of their obligations hereunder,
and any Security Deposit and Rent payments shall be returned to
Tenant. If the Commencement Date is delayed, the Expiration Date
shall be similarly extended (in which case, the parties shall
confirm the same in writing). Tenant may enter the Premises during
the seven (7) day period prior to the intended Commencement
Date (“Early Entry Period”) only for purposes of
installing its furniture, fixtures and equipment (including
telecommunications and computer equipment) and for purposes of
moving into the Premises, (but not for occupancy or the operation
of Tenant’s business). During the Early Entry Period, Tenant
shall comply with all terms and provisions of this Lease, except
those provisions requiring the payment of Rent. If Tenant shall be
permitted by Landlord in writing to enter the Premises prior to the
intended Commencement Date for the purpose of occupying the same,
then the Commencement Date shall be deemed to be such
5
date of
occupancy. Landlord shall permit early entry other than the Early
Occupancy Period in its sole and absolute discretion and only by
giving Tenant prior written notice thereof. At any time during the
Term, Landlord may deliver to Tenant a written notice setting forth
the Commencement Date and other reasonable dates and information
relating to this Lease (“Notice of Lease Dates”), which
notice Tenant shall execute and return to Landlord within five
(5) days of receipt thereof, and thereafter the dates set
forth on such notice shall be conclusive and binding;
Tenant’s failure to timely execute and deliver the Notice of
Lease Dates shall constitute an acknowledgment by Tenant that the
statements included in such notice are true and correct, without
exception.
(i) Provided
Tenant is not in default under this Lease as of the date of
exercise or the commencement of the Renewal Term (“Renewal
Term Commencement Date”), Tenant shall have the option to
renew this Lease (“Renewal Option”) for the entire
Premises for one (1) period of five (5) years (“Renewal
Term”), exercisable by giving written notice thereof
(“Renewal Notice”) to Landlord of its exercise of the
Renewal Option at least six (6) and no more than nine
(9) months prior to the expiration of the initial Term of this
Lease.
(ii) The
Base Rent payable hereunder for the Premises during the Renewal
Term shall be adjusted to the Fair Market Rental Rate (as defined
in Article 25) as of the Renewal Term Commencement Date;
provided, however, in no event shall the Base Rent during the
Renewal Term be less than the Base Rent payable hereunder in the
month immediately preceding the Renewal Term Commencement Date.
Tenant shall continue during the Renewal Term to pay all Additional
Rent in accordance with the terms of this Lease. In order to
determine the Fair Market Rental Rate for the Renewal Term,
Landlord and Tenant, thirty (30) days after the date on which
the Renewal Notice is given by Tenant, shall each simultaneously
submit to the other in writing its good faith estimate of the Fair
Market Rental Rate, which estimates shall in no event be less than
the Base Rent payable hereunder in the month immediately preceding
the Renewal Term Commencement Date. If the higher of said estimates
is not more than one hundred and five percent (105%) of the lower
of such estimates, the Fair Market Rental Rate in question shall be
deemed to be the average of the submitted rates. If otherwise, and
if Landlord and Tenant cannot agree on the Fair Market Rental Rate
for the Renewal Term within two (2) months after
Landlord’s receipt of the Renewal Notice, then the Fair
Market Rental Rate shall be set by a single arbitrator jointly
selected by Landlord and Tenant, which arbitrator shall be a real
estate broker active for over five (5) years and with
generally recognized experience and competence in the leasing of
commercial office properties in the vicinity of the Building;
neither Landlord nor Tenant shall consult with such broker as to
his or her opinion as to Fair Market Rental Rate prior to the
appointment (if Landlord and Tenant fail to agree upon and appoint
an arbitrator within three (3) months after Landlord’s
receipt of the Renewal Notice, then the appointment of the
arbitrator shall be made by the Presiding Judge of the Los Angeles
Superior Court, or, if he or she refuses to act, by any judge
having jurisdiction over the parties). The arbitration shall be
conducted by a single arbitrator and shall be on the basis that the
arbitrator shall pick one of the two proposed Fair Market Rental
Rates submitted by Landlord and Tenant, which is closer to the
proposed Fair Market Rental Rate as determined by the arbitrator
using the definition set forth in Article 25. Such arbitrator
may hold such meetings or hearings and require such briefs or other
materials as the arbitrator
6
determines is
necessary. The parties agree to be bound by the decision of the
arbitrator, which shall be final and non-appealable, and shall
share equally the costs of arbitration, and judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof. If the Fair Market Rental Rate is determined
after the Renewal Term Commencement Date, then Tenant.shall
continue to pay the Base Rent applicable immediately before the
Renewal Term Commencement Date until such determination is made,
the parties shall promptly reconcile any additional amounts of Base
Rent that may be owed by Tenant for such interim period, and Tenant
shall pay any such additional amounts of Base Rent to Landlord
along with the monthly payment of Base Rent next coming
due.
(iii) The
Renewal Option set forth in this Section 4(B) is personal to
Tenant and may not be assigned, transferred or conveyed to any
party, except in connection with an assignment of the Lease in its
entirety to a permitted Transferee in accordance with
Article 21.
(iv) Notwithstanding
anything herein to the contrary, if the original Landlord
identified in this Lease transfers its interest in the Property at
any time during the initial Term, the transferee landlord shall
have the right, prior to the Renewal Term Commencement Date, to
terminate the Renewal Option in its entirety by giving written
notice thereof to Tenant.
Tenant has
inspected the Premises, Property, Systems and Equipment (as defined
in Article 25), or has had an opportunity to do so, and agrees to
accept the same “as is” without any agreements,
representations, understandings or obligations on the part of
Landlord to perform any alterations, repairs or
improvements.
Tenant shall use
the Premises for customary general office, post-production and
incidental and limited videography purposes, all in keeping with
the character of a first-class office building and for no other
purpose whatsoever, in compliance with all applicable Laws, and
without disturbing or interfering with any other tenant or occupant
of the Property. Without limiting the foregoing, office uses
permitted under this Lease do not include uses for a medical
practice, retail sales operation, showroom, classroom, testing
center or non-incidental storage). Tenant shall not use the
Premises in any manner so as to cause a cancellation of
Landlord’s insurance policies, or an increase in the premiums
thereunder. Tenant shall comply with all rules set forth in Rider
One attached hereto (the “Rules”). Landlord shall have
the right to reasonably amend such Rules and supplement the same
with other reasonable Rules (not expressly inconsistent with this
Lease) relating to the Property, or the promotion of safety, care,
cleanliness or good order therein, and all such amendments or new
Rules shall be binding upon Tenant after five (5) days’
notice thereof to Tenant. All Rules shall be applied on a
non-discriminatory basis, but nothing herein shall be construed to
give Tenant or any other Person (as defined in Article 25) any
claim, demand or
7
cause of action
against Landlord arising out of the violation of such Rules by any
other tenant, occupant, or visitor of the Property, or out of the
enforcement or waiver of the Rules by Landlord in any particular
instance.
Tenant shall
provide and pay for the following services and
utilities:
(A) Electricity
for standard office lighting fixtures, and equipment and
accessories, of such type and in such quantities as are customary
in Landlord’s reasonable opinion for normal general office
use, where the connected electrical load of all of the same does
not exceed such amount as maybe made available by Landlord, based
on the judgment of Landlord’s engineers as to the safe and
lawful capacity of the existing electrical circuit(s) and
facilities serving the Premises.
(B) Heat and
air-conditioning for occupancy of the Premises under normal
business operations by a normal general office tenant, during
Normal Business Hours (as defined in Article 25). Landlord shall
not be responsible for inadequate air-conditioning or ventilation
to the extent the same occurs because Tenant uses any item of
equipment consuming more than 500 watts at rated capacity without
providing adequate air-conditioning and ventilation
therefor.
(C) Water for
drinking, lavatory and toilet purposes.
(D) Operatorless
passenger elevator service (if the Property has such equipment
serving the Premises), and subject to scheduling by Landlord) in
common with Landlord and other tenants and their contractors,
agents and visitors.
(E) Janitorial
services in and about the Premises. Such janitorial services shall
be at a standard at least equal to that of the janitorial services
provided by reasonable landlords of office buildings comparable to
the Building and shall include, without limitation, customary
office cleaning and trash removal service Monday through Friday or
Sunday through Thursday. Tenant shall select and contract with a
third party supplier of such janitorial services, which selection
shall be subject to Landlord’s written approval, which
approval Landlord shall not unreasonably withhold. Tenant shall
indemnify Landlord for all damages, costs, losses, liability, legal
fees and costs (including, without limitation, attorneys’
fees) and any other amounts resulting from any property damage,
personal injury or death directly or indirectly arising from or
related to (i) any act or omission by of such janitorial
services or its employees, agents or contractors or (ii) the
selection and engagement of such janitorial services by or on
behalf of Tenant. If Tenant fails to cause the performance of the
janitorial services required by this paragraph, Landlord, without
limiting its rights or remedies under this Lease or under
applicable law, shall have the right, but not the obligation, to
undertake such janitorial services as it deems appropriate, and
Tenant shall pay as Additional Rent hereunder the cost of such
services undertaken by Landlord, along with Landlord’s
related reasonable administrative and other charges, at the same
time as the installment of Base Rent next coming due or, if
earlier, within twenty (20) days after demand.
8
(F) Trash
removal services.
If for any reason
any of the above utilities and services cannot be, or are not,
provided directly to Tenant, then Landlord shall provide such
services to Tenant, and Tenant shall pay as Additional Rent
hereunder the cost of such services undertaken by Landlord, along
with Landlord’s related reasonable administrative and other
charges, at the same time as the installment of Base Rent next
coming due or, if earlier, within twenty (20) days after
demand. Landlord may install and operate meters and/or any other
reasonable systems for monitoring or estimating or for supplying
any services or utilities used by Tenant in excess of those deemed
customary by Landlord (including a system for Landlord’s
engineer to reasonably estimate any such excess usage). If any of
such systems indicate in Landlord’s reasonable opinion that
Tenant has used such excess services or utilities, then Landlord
may require Tenant to pay Landlord’s reasonable charges for
installing and operating any of such systems and any supplementary
air-conditioning, ventilation, heat, electrical or other systems or
equipment (or adjustments or modifications or increased wear and
tear to the existing Systems and Equipment) and Landlord’s
reasonable charges for such amount of excess services or utilities
used by Tenant.
Landlord does not
warrant that any services or utilities will be free from shortages,
failures, variations, or interruptions caused by repairs,
maintenance, replacements, improvements, alterations, changes of
service, strikes, lockouts, labor controversies, accidents,
inability to obtain services, fuel, steam, water or supplies,
governmental requirements or requests, or other causes beyond
Landlord’s reasonable control. None of the same shall be
deemed an eviction or disturbance of Tenant’s use and
possession of the Premises or any part thereof, or (subject to the
provisions of paragraph 9 (B)) render Landlord liable to Tenant for
abatement of Rent, or relieve Tenant from performance of
Tenant’s obligations under this Lease. Landlord in no event
shall be liable for damages by reason of loss of profits, business
interruption or other consequential damages.
9
Tenant shall make
no additions, changes, alterations or improvements (the
“Work”) to the Premises or the Systems and Equipment
(as defined in Article 25) pertaining to the Premises without
the prior written consent of Landlord, which Landlord shall not
unreasonably withhold. Landlord may impose reasonable requirements
as a condition of such consent including without limitation the
submission of plans and specifications for Landlord’s prior
written approval, obtaining necessary permits, posting bonds,
obtaining insurance, prior approval of contractors, subcontractors
and suppliers, prior receipt of copies of all contracts and
subcontracts, contractor and subcontractor lien waivers, affidavits
listing all contractors, subcontractors and suppliers, use of union
labor (if Landlord’s lenders require that union labor be used
in connection with the Property), affidavits from engineers
acceptable to Landlord stating that the Work will not adversely
affect the Systems and Equipment or the structure of the Property,
and requirements as to the manner and times in which such Work
shall be done. All Work shall be performed in a good and
workmanlike manner and all materials used shall be of a quality
comparable to or better than those in the Premises and Property and
shall be in accordance with plans and specifications approved by
Landlord, and Landlord may require that all such Work be performed
under Landlord’s supervision. In all cases, Tenant shall
reimburse Landlord for reasonable amounts Landlord actually pays to
third parties involved in reviewing Tenant’s plans and
specifications and performing any supervision of the Work. If
Landlord consents or supervises, the same shall not be deemed a
warranty as to the adequacy of the design, workmanship or quality
of materials, and Landlord hereby expressly disclaims any
responsibility or liability for the same. Landlord shall under no
circumstances have any obligation to repair, maintain or replace
any portion of the Work.
Tenant shall keep
the Property and Premises free from any mechanic’s,
materialman’s or similar liens or other such encumbrances in
connection with any Work on or respecting the Premises performed
by, or at the request of, Tenant and shall indemnify and hold
Landlord harmless from and against any claims, liabilities,
judgments, or costs (including attorneys’ fees) arising out
of the same or in connection therewith. Tenant shall give Landlord
notice at least twenty (20) days prior to the commencement of
any Work on the Premises (or such additional time as may be
necessary under applicable Laws), to afford Landlord the
opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such lien or
encumbrance by bond or otherwise within thirty (30) days after
written notice by Landlord, and if Tenant shall fail to do so,
Landlord may pay the amount necessary to remove such lien or
encumbrance, without being responsible for investigating the
validity thereof. The amount so paid shall be deemed Additional
Rent under this Lease payable upon demand, without limitation as to
other remedies available to Landlord under this Lease. Nothing
contained in this Lease shall authorize Tenant to do any act which
shall subject Landlord’s title to the Property or Premises to
any liens or encumbrances whether claimed by operation of law or
express or implied contract. Any claim to a lien or encumbrance
upon the Property or Premises arising in connection with any Work
on or respecting the Premises not performed by or at the request of
Landlord shall be null and void, or at Landlord’s option
shall attach only against Tenant’s interest in the Premises
and shall in all respects be subordinate to Landlord’s title
to the Property and Premises.
10
(A) Except
for damage covered under Article 10, Tenant shall keep the
Premises in good and sanitary condition, working order and repair
(including without limitation, carpet, wall-covering, doors,
plumbing and other fixtures, equipment, alterations and
improvements whether installed by Landlord or Tenant). In the event
that any repairs, maintenance or replacements are required, Tenant
shall promptly arrange for the same either through Landlord for
such reasonable charges as Landlord may from time to time
establish, or such contractors as Landlord generally uses at the
Property or such other contractors as Landlord shall first approve
in writing, and in a first class, workmanlike manner approved by
Landlord in advance in writing. If Tenant does not promptly make
such arrangements, Landlord may, but need not, make such repairs,
maintenance and replacements, and the costs paid or incurred by
Landlord therefor shall be reimbursed by Tenant promptly after
request by Landlord. Tenant shall indemnify Landlord and pay for
any repairs, maintenance and replacements to areas of the Property
outside the Premises, caused, in whole or in part, as a result of
moving any furniture, fixtures, or other property to or from the
Premises, or by Tenant or its employees, agents, contractors, or
visitors (notwithstanding anything to the contrary contained in
this Lease). Except as provided in the preceding sentence, or for
damage covered under Article 10, Landlord shall keep the
common areas of the Property, Systems and Equipment and structure
(including the roof) in good and sanitary condition, working order
and repair. Tenant waives and releases its right to make repairs at
Landlord’s expense under Sections 1941 and 1942 of the
California Civil Code or under any other law, statute or ordinance
now or hereafter in effect (subject to paragraph 9 (B)), and Tenant
waives and releases the right to terminate this Lease under
Section 1932(1) of the California Civil Code or any similar or
successor statute.
(B) Notwithstanding
anything to the contrary in this Lease, Tenant shall have the right
to “self-help” and/or rental abatement with respect to
Landlord’s maintenance and services obligations hereunder,
but only on the terms expressly set forth in this paragraph 9(B).
If Landlord fails to perform its obligations under this Lease and
such failure causes all or a portion of the Premises to be
untenantable and unusable by Tenant to an extent that materially
interferes with Tenant’s operation of its business, then such
failure shall be (i) a “Maintenance Default” if it
relates directly to Landlord’s maintenance and repair
obligations specifically set forth in paragraph 9(A), and
(ii) a “Services Default” if it relates directly
to material shortages, failures, variations, or interruptions in
services or utilities to be provided pursuant to Article 7 (a
“Landlord Default” is a Maintenance Default and/or a
Services Default). If a Landlord Default occurs, Tenant shall give
Landlord notice (the “Default Notice”), specifying such
Landlord Default. If Landlord has not, within five
(5) business days after the receipt of a Default Notice
thereof, used reasonable diligence to commence to cure a
Maintenance Default, then Tenant may take reasonable measures to
perform Landlord’s maintenance obligations described in the
Default Notice, after giving written notice to Landlord (but
without adversely affecting the Systems and Equipments or the
Building structure; in accordance with applicable law and Building
rules and regulations; in a good and workmanlike manner; with
materials at least equal in quality to those in the Premises and
Property; and without permitting any liens or encumbrances in
connection with the work) (“Self-Help”). If Landlord
has not, within fifteen (15) business days after the receipt
of a Default Notice thereof, used reasonable diligence to commence
to cure a Landlord Default (and Tenant has not, with respect to a
Maintenance Default, taken Self-Help), Tenant may immediately abate
Base Rent payable under this Lease for that portion of the Premises
rendered untenantable and not used by Tenant, for the period
beginning on the date fifteen (15) business days after the Default
Notice and ending on the earlier of the date Landlord commences the
cure
11
of such
Landlord Default or the date Tenant recommences (or could
reasonably recommence) the use of such portion of the Premises,
provided that Tenant shall continue to pay all Additional Rent due
hereunder during such period. Each of such right to take Self-Help
and to abate Base Rent shall be Tenant’s sole and exclusive
remedy at law or in equity for a Landlord Default. Except as
specifically provided in this paragraph 9(B) or elsewhere in this
Lease, nothing contained in this Lease shall be interpreted to mean
that Tenant is excused from paying any Rent due
hereunder.
If the Premises or
any common areas of the Property providing access thereto shall be
damaged by fire or other casualty, Landlord shall use available
insurance proceeds to restore the same. Such restoration shall be
to substantially the condition prior to the casualty, except for
modifications required by zoning and building codes and other Laws
or by any Holder (as defined in Article 25), any other
modifications to the common areas deemed desirable by Landlord
(provided access to the Premises is not materially impaired), and
except that Landlord shall not be required to repair or replace any
of Tenant’s furniture, furnishings, fixtures or equipment, or
any alterations or improvements in excess of any work performed or
paid for by Landlord under any separate agreement signed by the
parties in connection herewith. Landlord shall not be liable for
any inconvenience or annoyance to Tenant or its visitors, or injury
to Tenant’s business resulting in any way from such damage or
the repair thereof. However, Landlord shall allow Tenant a
proportionate abatement of Base Rent during the time and to the
extent the Premises are unfit for occupancy for the purposes
permitted under this Lease and not occupied by Tenant as a result
thereof (unless Tenant or its employees or agents caused the
damage). Notwithstanding the foregoing to the contrary, Landlord
may elect to terminate this Lease by notifying Tenant in writing of
such termination within sixty (60) days after the date of
damage (such termination notice to include a termination date
providing at least ninety (90) days for Tenant to vacate the
Premises), if the Property shall be materially damaged by Tenant or
its employees or agents, or if the Property shall be damaged by
fire or other casualty or cause such that: (a) repairs to the
Premises and access thereto cannot reasonably be completed within
120 days after the casualty without the payment of overtime or
other premiums, (b) more than 25% of the Premises is affected
by the damage, and fewer than 24 months remain in the Term, or
any material damage occurs to the Premises during the last
12 months of the Term, (c) any Holder (as defined in
Article 25) shall require that the insurance proceeds or any
portion thereof be used to retire the Mortgage debt (or shall
terminate the ground lease, as the case may be), or the damage is
not fully covered by Landlord’s insurance policies, or
(d) the cost of the repairs, alterations, restoration or
improvement work would exceed 25% of the replacement value of the
Building, or the nature of such work would make termination of this
Lease necessary or convenient. Tenant agrees that Landlord’s
obligation to restore, and the abatement of Base Rent provided
herein, shall be Tenant’s sole recourse in the event of such
damage, and waives any other rights Tenant may have under any
applicable Law to terminate the Lease by reason of damage to the
Premises or Property, including all rights under California Civil
Code, Sections 1932(2), 1933(4), and 1942, as the same may be
modified or replaced hereafter. Tenant acknowledges that this
Article represents the entire agreement between the parties
respecting damage to the Premises or Property.
12
Insurance, Subrogation, and
Waiver of Claims
Tenant shall
maintain during the Term commercial general liability insurance,
with limits of not less than $2,000,000 combined single limit for
personal injury, bodily injury or death, or property damage or
destruction (including loss of use thereof) for any one occurrence.
Tenant shall also maintain during the Term workers compensation
insurance as required by statute, and primary, noncontributory,
“all-risk” property damage insurance covering
Tenant’s personal property, business records, fixtures and
equipment, for damage or other loss caused by fire or other
casualty or cause including, but not limited to, vandalism and
malicious mischief, theft, water damage of any type, including
sprinkler leakage, bursting or stoppage of pipes, explosion,
business interruption, and other insurable risks in amounts not
less than the full insurable replacement value of such property and
full insurable value of such other interests of Tenant (subject to
reasonable deductible amounts). Landlord shall maintain during the
Term commercial general liability insurance, with limits of not
less than $2,000,000 combined single limit for personal injury,
bodily injury or death, or property damage or destruction
(including loss of use thereof) for any one occurrence. Landlord
shall also maintain during the Term workers compensation insurance
as required by statute, and primary, non-contributory, extended
coverage or “all-risk” property damage insurance, in an
amount equal to at least ninety percent (90%) of the full insurable
replacement value of the Property (exclusive of the costs of
excavation, foundations and footings, and such risks required to be
covered by Tenant’s insurance, and subject to reasonable
deductible amounts), or such other amount necessary to prevent
Landlord from being a co-insured, and such other coverage as
Landlord shall deem appropriate or that may the required by any
Holder (as defined in Article 25).
Tenant shall
provide Landlord with certificates evidencing such coverage (and,
with respect to liability coverage, showing Landlord and Builders
Bank, an Illinois banking corporation, as additional insureds)
prior to the Commencement Date, which shall state that such
insurance coverage may not be changed or cancelled without at least
twenty (20) days’ prior written notice to Landlord, and
shall provide renewal certificates to Landlord at least twenty
(20) days prior to expiration of such policies. Landlord may
periodically, but not more often than every five years, require
that Tenant reasonably increase the aforementioned coverage. Except
as provided to the contrary herein, any insurance carried by
Landlord or Tenant shall be for the sole benefit of the party
carrying such insurance. Any insurance policies hereunder may be
“blanket policies.” All insurance required hereunder
shall be provided by responsible insurers and Tenant’s
insurer shall be reasonably acceptable to Landlord. By this
Article, Landlord and Tenant intend that their respective property
loss risks shall be borne by responsible insurance carriers to the
extent above provided, and Landlord and Tenant hereby agree to look
solely to, and seek recovery only from, their respective insurance
carriers in the event of a property loss to the extent that such
coverage is agreed to be provided hereunder. The parties each
hereby waive all rights and claims against each other for such
losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the
right of the insured to recover thereunder. The parties agree that
their respective insurance policies are now, or shall be, endorsed
such that said waiver of subrogation shall not affect the right of
the insured to recover thereunder, so long as no material
additional premium is charged therefor.
13
If the whole or
any material part of the Premises or Property shall be taken by
power of eminent domain or condemned by any competent authority for
any public or quasi-public use or purpose, or if any adjacent
property or street shall be so taken or condemned, or reconfigured
or vacated by such authority in such manner as to require the use,
reconstruction or remodeling of any part of the Premises or
Property, or if Landlord shall grant a deed or other instrument in
lieu of such taking by eminent domain or condemnation, Landlord
shall have the option to terminate this Lease upon ninety
(90) days’ notice, provided such notice is given no
later than 180 days after the date of such taking,
condemnation, reconfiguration, vacation, deed or other instrument.
Tenant shall have reciprocal termination rights if the whole or any
material part of the Premises is permanently taken, or if access to
the Premises is permanently materially impaired. Landlord shall be
entitled to receive the entire award or payment in connection
therewith, except that Tenant shall have the right to file any
separate claim available to Tenant for any taking of Tenant’s
personal property and fixtures belonging to Tenant and removable by
Tenant upon expiration of the Term, and for good will and moving
expenses (so long as such claim does not diminish the award
available to Landlord or any Holder, and such claim is payable
separately to Tenant). All Rent shall be apportioned as of the date
of such termination, or the date of such taking, whichever shall
first occur. If any part of the Premises shall be taken, and this
Lease shall not be so terminated, the Rent shall be proportionately
abated. Tenant hereby waives any and all rights it might otherwise
have pursuant to Section 1265.130 of the California Code of
Civil Procedure.
At the expiration
or earlier termination of this Lease or Tenant’s right of
possession, Tenant shall surrender possession of the Premises in
the condition required under Article 9, ordinary wear and tear
and (subject to compliance with Article 10) damage by casualty
excepted, and shall surrender all keys, any key cards, and any
parking stickers or cards, to Landlord, and advise Landlord as to
the combination of any locks or vaults then remaining in the
Premises, and shall remove all trade fixtures and personal
property. All improvements, fixtures and other items in or upon the
Premises (except trade fixtures and personal property belonging to
Tenant), whether installed by Tenant or Landlord, shall be
Landlord’s property and shall remain upon the Premises, all
without compensation, allowance or credit to Tenant. However, if
prior to such termination or within ten (10) days thereafter
Landlord so directs by notice, Tenant shall promptly remove such of
the foregoing items as are designated in such notice and restore
the Premises to the condition prior to the installation of such
items; provided, Landlord shall not require removal of customary
office improvements installed by Tenant with Landlord’s
written approval (except as expressly required by Landlord in
connection with granting such approval). If Tenant shall fail to
perform any repairs or restoration, or fail to remove any items
from the Premises required hereunder, Landlord may do so, and
Tenant shall pay Landlord the cost thereof upon demand. All
property removed from the Premises by Landlord pursuant to any
provisions of this Lease or any Law may be handled or
stored
14
by Landlord at
Tenant’s expense, and Landlord shall in no event be
responsible for the value, preservation or safekeeping thereof. All
property not removed from the Premises or retaken from storage by
Tenant within thirty (30) days after expiration or earlier
termination of this Lease or Tenant’s right to possession,
shall at Landlord’s option be conclusively deemed to have
been conveyed by Tenant to Landlord as if by bill of sale without
payment by Landlord. Unless prohibited by applicable Law, Landlord
shall have a lien against such property for the costs incurred in
removing and storing the same.
Unless Landlord
expressly agrees otherwise in writing, Tenant shall pay Landlord
200% of the amount of Rent then applicable prorated on per diem
basis for each day Tenant shall retain possession of the Premises
or any part thereof after expiration or earlier termination of this
Lease, together with all damages sustained by Landlord on account
thereof. The foregoing provisions shall not serve as permission for
Tenant to hold-over, nor serve to extend the Term (although Tenant
shall remain bound to comply with all provisions of this Lease
until Tenant vacates the Premises, and shall be subject to the
provisions of Article 13). Notwithstanding the foregoing to
the contrary, at any time before or after expiration or earlier
termination of the Lease, Landlord may serve notice advising Tenant
of the amount of Rent and other terms required, should Tenant
desire to enter a month-to-month tenancy (and if Tenant shall hold
over more than one full calendar month after such notice, Tenant
shall thereafter be deemed a month-to-month tenant, on the terms
and provisions of this Lease then in effect, as modified by
Landlord’s notice, and except that Tenant shall not be
entitled to any renewal or expansion rights contained in this Lease
or any amendments hereto).
No provision of
this Lease will be deemed waived by either party unless expressly
waived in writing signed by the waiving party. No waiver shall be
implied by delay or any other act or omission of either party. No
waiver by either party of any provision of this Lease shall be
deemed a waiver of such provision with respect to any subsequent
matter relating to such provision, and Landlord’s consent or
approval respecting any action by Tenant shall not constitute a
waiver of the requirement for obtaining Landlord’s consent or
approval respecting any subsequent action. Acceptance of Rent by
Landlord shall not constitute a waiver of any breach by Tenant of
any term or provision of this Lease. No acceptance of a lesser
amount than the Rent herein stipulated shall be deemed a waiver of
Landlord’s right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter
accompanying such check or payment be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the full amount due.
The acceptance of Rent or of the performance of any other term or
provision from any Person other than Tenant, including any
Transferee, shall not constitute a waiver of Landlord’s right
to approve any Transfer.
15
Attorneys’ Fees and Jury
Trial
In the event of
any litigation between the parties, the prevailing party shall be
entitled to obtain, as part of the judgment, all reasonable
attorneys’ fees, costs and expenses incurred in connection
with such litigation, except as may be limited by applicable Law.
In the interest of obtaining a speedier and less costly-hearing of
any dispute, the parties hereby each irrevocably waive the right to
trial by jury.
Personal Property Taxes, Rent
Taxes and Other Taxes
Tenant shall pay
prior to delinquency all taxes, charges or other governmental
impositions assessed against or levied upon Tenant’s
fixtures, furnishings, equipment and personal property located in
the Premises, and any Work to the Premises under Article 8.
Whenever possible, Tenant shall cause all such items to be assessed
and billed separately from the property of Landlord. In the event
any such items shall be assessed and billed with the property of
Landlord, Tenant shall pay Landlord its share of such taxes,
charges or other governmental impositions within thirty (30) days
after Landlord delivers a statement and a copy of the assessment or
other documentation showing the amount of such impositions
applicable to Tenant’s property. Tenant shall pay any rent
tax or sales tax, service tax, transfer tax or value added tax, or
any other applicable tax on the Rent or services herein or
otherwise respecting this Lease.
Whenever
Landlord’s approval or consent is expressly required under
this Lease (including Article 21) or any other agreement
between the parties, Landlord shall not unreasonably withhold or
delay such approval or consent (reasonableness shall be a condition
to Landlord’s enforcement of such consent or approval
requirement, and not a covenant), except as otherwise provided
herein and except for matters affecting the structure, safety or
security of the Property, or the appearance of the Property from
any common or public areas.
Subordination, Attornment and
Mortgagee Protection
This Lease is
subject and subordinate to all Mortgages (as defined in
Article 25) now or hereafter placed upon the Property, and all
other encumbrances and matters of public record applicable to the
Property. If any foreclosure proceedings are initiated by any
Holder or a deed in lieu is granted (or if any ground lease is
terminated), Tenant agrees, upon written request of any such Holder
or any purchaser at foreclosure sale, to attorn and pay Rent to
such party and to execute and deliver any instruments necessary or
appropriate to evidence or effectuate such attornment
16
(provided such
Holder or purchaser shall agree to accept this Lease and not
disturb Tenant’s occupancy, so long as Tenant does not
default and fail to cure within the time permitted hereunder).
However, in the event of attornment, no Holder shall be:
(i) liable for any act or omission of Landlord, or subject to
any offsets or defenses which Tenant might have
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