OFFICE LEASE

EXHIBIT 10.17

 

OFFICE LEASE

 

BETWEEN

 

METROPOLITAN LIFE INSURANCE COMPANY (LANDLORD)

 

AND

 

LEARNING TREE INTERNATIONAL, INC. (TENANT)

 

CONTINENTAL GRAND PLAZA II

 

El Segundo, California

TABLE OF CONTENTS

 

 

i

 

ii

OFFICE LEASE

 

ARTICLE ONE

BASIC LEASE PROVISIONS

 

1.01	BASIC LEASE PROVISIONS - In the event of any conflict between these Basic Lease Provisions and any other Lease provision, such other Lease provision shall control.

 

(1)	BUILDING AND ADDRESS:

 

400 North Continental Boulevard

 

El Segundo, California 90245

 

(2)	LANDLORD AND ADDRESS:

 

Metropolitan Life Insurance Company,

 

a New York corporation

 

Notices to Landlord shall be addressed:

 

Metropolitan Life Insurance Company

 

c/o CB Richard Ellis, Inc.

 

400 North Continental Boulevard, Suite 140

 

El Segundo, California 90245

 

Attention: Property Manager

 

with copies to the following:

 

Metropolitan Life Insurance Company

 

333 South Hope Street, Suite 3650

 

Los Angeles, CA 90071

 

Attention: Director, EIM

 

and

 

Metropolitan Life Insurance Company

 

400 South El Camino Real, 8 th Floor

 

San Mateo, CA 94402

 

Attention: Associate General Counsel

 

(3)	TENANT AND CURRENT ADDRESS:

 

(a)

Name: Learning Tree International, Inc.

 

(b)

State of formation and type of entity: a Delaware corporation

 

(c)

Federal Tax Identification Number:

 

Tenant shall promptly notify Landlord of any change in the foregoing items.

 

Notices to Tenant shall be addressed:

 

Prior to Commencement Date:

 

Learning Tree International, Inc.

 

6053 W. Century Blvd.

 

Los Angeles, CA 90045

 

Attention: CAO

 

After Commencement Date:

 

Learning Tree International, Inc.

 

400 North Continental Boulevard, Suite 200

 

El Segundo, CA 90245

 

Attention: CAO

 

(4)	DATE OF LEASE: as of May 20, 2005

 

(5)	LEASE TERM: Sixty six (66) months

 

(6)	PROJECTED COMMENCEMENT DATE: June 1, 2005

 

(7)	PROJECTED EXPIRATION DATE: November 30, 2010

 

(8)	MONTHLY BASE RENT:

 

 

(9)	RENTABLE AREA OF THE PROJECT: 238,388 square feet

 

(10)	RENTABLE AREA OF THE PREMISES: 34,374 square feet, comprised of 24,485 square feet on Floor 2 and 9,889 square feet on Floor 1

 

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(11)	USABLE AREA OF THE PREMISES: 29,534 square feet, comprised of 20,750 square feet on Floor 2 and 8,784 square feet on Floor 1

 

(12)	SECURITY DEPOSIT: Sixty-Eight Thousand Four Hundred Four and 26/100 Dollars ($68,404.26)

 

(13)	OPERATING EXPENSES BASE YEAR: The calendar year 2005.

 

(14)	TAXES BASE YEAR: The calendar year 2005.

 

(15)	SUITE NUMBER OF PREMISES: 150 and 200

 

(16)	TENANT’S SHARE: 14.42%

 

(17)	TENANT’S USE OF PREMISES: General office uses and business technology training.

 

(18)	PARKING SPACES:

 

Starting on the Commencement Date and continuing during the Term, Tenant shall have the use of parking stalls of the number and type described below, for which the monthly charge shall be the prevailing rates as described in Article Twenty-Five, which as of the date of this Lease are agreed to be the amounts set forth below, and it is understood and agreed such rates are subject to increase from time to time as provided in Article Twenty-Five.

 

115 unassigned spaces at $60.00 per month per parking space

 

    5 reserved spaces at $100.00 per month per parking space

 

Notwithstanding anything to the contrary contained herein, Tenant shall not be responsible for parking charges through and including Month 48 of the Term. Beginning Month 49 through the remainder of the Term, Tenant shall pay the Parking Rent as defined herein subject to the terms and conditions contained herein.

 

(20)

BROKERS:

 

Landlord’s Broker:         CB Richard Ellis, Inc.

 

Tenant’s Broker:             CB Richard Ellis, Inc.

 

1.02	ENUMERATION OF EXHIBITS

 

The Exhibits and Rider(s) set forth below and attached to this Lease are incorporated in this Lease by this reference:

 

 

1.03 DEFINITIONS

 

For purposes hereof, the following terms shall have the following meanings:

 

ADJUSTMENT YEAR: The applicable calendar year or any portion thereof after the Operating Expenses Base Year and Taxes Base Year for which a Rent Adjustment computation is being made.

 

AFFILIATE: Any Person (as defined below) which is currently owned or controlled by, owns or controls, or is under common ownership or control with Tenant. For purposes of this definition, the word “control,” as used above means, with respect to a Person that is a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power at all times to direct or cause the direction of the management and policies of the controlled Person. The word Person means an individual, partnership, trust, corporation, firm or other entity.

 

BASE YEAR. Collectively refers to the Operating Expenses Base Year and Taxes Base Year.

 

BUILDING: The office building located at the address specified in Section 1.01.

 

COMMENCEMENT DATE: The date specified in Section 1.01 as the Projected Commencement Date, unless changed by operation of Article Two.

 

COMMON AREAS: All areas of the Project made available by Landlord from time to time for the general common use or benefit of the tenants of the Building or Project, and their employees and invitees, or the public, as such areas currently exist and as they may be changed from time to time.

 

DECORATION: Tenant Alterations which do not require a building permit and which do not involve any of the structural elements of the Building, or any of the Building’s systems, including its electrical, mechanical, plumbing, security, heating, ventilating, air-conditioning, communication, and fire and life safety systems.

 

DEFAULT RATE: Ten percent (10%).

 

DELIVERY DATE: The date for Landlord’s delivery to Tenant of possession of the Premises, if different from the Commencement Date, as provided for in Rider 2.

 

ELECTRICITY USE EXPENSES: The separate category of Operating Expenses defined in the definition of Operating Expenses below in this Section 1.03.

 

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ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or generation of any Hazardous Material, or pertaining to environmental conditions on, under or about the Premises or any part of the Project, including the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), and the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et seq.).

 

EXPIRATION DATE: The date specified in Section 1.01 unless changed by operation of Article Two.

 

FORCE MAJEURE: Any accident, casualty, act of God, war or civil commotion, strike or labor troubles, or any cause whatsoever beyond the reasonable control of Landlord, including water shortages, energy shortages or governmental preemption in connection with an act of God, a national emergency, or by reason of Law, or by reason of the conditions of supply and demand which have been or are affected by act of God, war or other emergency.

 

GENERAL EXPENSES: The separate category of Operating Expenses defined in the definition of Operating Expenses below in this Section 1.03.

 

HAZARDOUS MATERIAL: Such substances, material and wastes which are or become regulated under any Environmental Law; or which are classified as hazardous or toxic under any Environmental Law; and explosives and firearms, radioactive material, asbestos, and polychlorinated biphenyls.

 

INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the Property, the property manager and the leasing manager for the Property and their respective directors, officers, agents and employees.

 

LAND: The parcel(s) of real estate on which the Building and Project are located.

 

LANDLORD WORK: The construction or installation of improvements to the Premises, to be furnished by Landlord, if any, specifically described in the Workletter, if any.

 

LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements, orders, rulings or decisions adopted or made by any governmental body, agency, department or judicial authority having jurisdiction over the Property, the Premises or Tenant’s activities at the Premises and any covenants, conditions or restrictions of record which affect the Property.

 

LEASE: This instrument and all exhibits and riders attached hereto, as may be amended from time to time.

 

LEASE YEAR: The twelve month period beginning on the first day of the first month following the Commencement Date (unless the Commencement Date is the first day of a calendar month in which case beginning on the Commencement Date), and each subsequent twelve month, or shorter, period until the Expiration Date.

 

MONTHLY BASE RENT: The monthly rent specified in Section 1.01, subject to the provisions of Section 2.04.

 

MORTGAGEE: Any holder of a mortgage, deed of trust or other security instrument encumbering the Property.

 

NATIONAL HOLIDAYS: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day and other holidays recognized by the Landlord and the janitorial and other unions servicing the Building in accordance with their contracts.

 

OPERATING EXPENSES: All Taxes, costs, expenses and disbursements of every kind and nature which Landlord shall pay or become obligated to pay in connection with the ownership, management, operation, maintenance, replacement and repair of the Property (including the amortized portion of any capital expenditure or improvement (“Capital Expenditure”) which is either (i) required due to law (including due to governmental authority or regulation) enacted, or required due to an interpretation of law by governmental authorities made, subsequent to the date of this Lease or (2) intended by Landlord to reduce Operating Expenses, together with interest thereon, and the cost of changing utility service providers). Such amortization shall be in accordance with GAAP and include interest at the prime rate as determined by Bank of America plus two percent (2%) as of the date of installation of the capital improvement; adjusted however, if necessary, so that Operating Expenses for any Capital Expenditure under subsection (2) above shall not exceed the excess of the amount Landlord reasonably estimates all Operating Expenses affected by such Capital Expenditure would have been had such Capital Expenditure not been made, over the actual amount of such affected Operating Expenses. If any Operating Expense, though paid in one year, relates to more than one calendar year, at the option of Landlord such expense may be proportionately allocated among such related calendar years. Operating Expenses shall for all purposes be calculated and payable in two separate categories as follows: (1) charges for electricity consumption (“Electricity Use Expenses”) and all other Operating Expenses (“General Expenses”); (2) all references to Operating Expenses (including, for example, Operating Expenses Base Year and Tenant’s Share of Operating Expenses) shall mean Electricity Use Expenses and General Expenses as separate categories, and an increase in one such category shall not be offset by a decrease in another category; and (3) no expense shall be double counted. Operating Expenses shall not include, (i) costs of alterations of the premises of tenants of the Project, (ii) costs of capital improvements to the Project (except for amortized portion of capital improvements installed for the purpose of reducing or controlling Operating Expenses or complying with applicable Laws), (iii) depreciation charges, (iv) interest and principal payments on loans (except for loans for capital expenditures or improvements which Landlord is allowed to include in Operating Expenses as provided above), (v) ground rental payments, (vi) real estate brokerage and leasing commissions, (vii) advertising and marketing expenses, (viii) costs of Landlord reimbursed by insurance proceeds, (ix) expenses incurred in negotiating leases of other tenants in the Project or enforcing lease obligations of other tenants in the Project ; (x) Landlord’s or Landlord’s property manager’s corporate general overhead or corporate general administrative expenses; (xi) expenses in connection with services or other benefits which are not offered to Tenant but which are provided to another tenant or occupant of the Project; (xii) costs incurred due to violation by Landlord or any tenant of the terms and conditions of this Lease or any lease in excess of the costs which would be includable in Operating Expenses if Landlord or such tenant had complied with the respective lease; (xiii) overhead and profit increment paid to subsidiaries or affiliates of Landlord for services on or to the Real Property, to the extent only that the charges for such service exceed competitive charges of comparable services in Class A, high-rise, multi-tenant office properties of comparable quality if such services were not so rendered by such subsidiary or affiliate; (xiv) Landlord’s general corporate overhead and general and administrative expenses; (xv) compensation paid to clerks, attendants or other persons in commercial concessions (subject to the exclusions below) operated by Landlord for the purpose of producing a profit from such concession to the extent such compensation is offset by revenue from operation of such concessions. (As used herein, commercial concession does not mean or include any service Landlord provides generally to tenants or occupants pursuant to terms of lease agreements, such as after-hours HVAC, additional electricity or parking facilities. Further, commercial concession does not mean or include any concession for the purpose of providing an amenity, convenience or service to occupants of the Project, such as a newsstand, lobby shop, convenience store or food and/or beverage service.); (xvi) advertising and marketing expenses; (xvii) management fees in excess of one and one-half percent (1.5%) of rents of the Building; (xviii) any fines, penalties, attorneys’ fees or litigation costs incurred due to violations by Landlord or its employees, agents or contractors of any Law and any other costs of such violation in excess of the costs which would be includable in Operating Expenses if Landlord had complied with such Law; (xix) costs arising from Hazardous Materials which

 

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were installed by Landlord, its agents, officers and employees and which, at the time of installation, Landlord knew or should have known were in fact Hazardous Materials; (xx) costs arising from Landlord’s charitable or political contributions; (xxi) expenses incurred in enforcing lease obligations of other tenants in the Building or in negotiations or disputes with existing or prospective tenants or occupants; (xxii) real estate brokerage and leasing commissions and (xxiii) expenses incurred by Landlord in connection with any financing, sale or syndication of the Building.

 

OPERATING EXPENSES BASE YEAR: The calendar year designated in Section 1.01.

 

PREMISES: The space located in the Building at the Suite Number listed in Section 1.01 and depicted on Exhibit A attached hereto.

 

PROJECT OR PROPERTY: The Building is part of an office project known as “Continental Grand Plaza II”. The Project consists of (a) the Building and Common Areas of the Building whose present address is set forth above in El Segundo, California with an aggregate of 238,388 square feet of Rentable Area of the Project; (b) associated parking facilities, landscaping and other improvements; (c) the Land on which the foregoing are located and any associated interests in real property; and (d) the personal property, fixtures, machinery, equipment, systems and apparatus located in or used in conjunction with any of the foregoing. The Project may also be referred to as the Property.

 

REAL PROPERTY: The Property excluding any personal property.

 

RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment Deposits, and all other charges, payments, late fees or other amounts required to be paid by Tenant under this Lease.

 

RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Operating Expenses or Taxes. The Rent Adjustments shall be determined and paid as provided in Article Four.

 

RENT ADJUSTMENT DEPOSIT: An amount equal to Landlord’s estimate of the Rent Adjustment attributable to each month of the applicable Adjustment Year. On or before the beginning of each Adjustment Year or with Landlord’s Statement (defined in Article Four), Landlord may estimate and notify Tenant in writing of its estimate of the excess, if any, of Operating Expenses over those for the Operating Expenses Base Year and of Taxes over those for the Taxes Base Year. Prior to the first determination by Landlord of the amount of Operating Expenses for the Operating Expenses Base Year and of Taxes for the Taxes Base Year, Landlord may estimate such amounts in the foregoing calculation. Landlord shall have the right from time to time during any Adjustment Year to provide a new or revised estimate of Operating Expenses and to notify Tenant in writing thereof, of corresponding adjustments in Tenant’s Rent Adjustment Deposit payable over the remainder of such year, and of the amount or revised amount due allocable to months preceding such change. The last estimate by Landlord shall remain in effect as the applicable Rent Adjustment Deposit unless and until Landlord notifies Tenant in writing of a change.

 

RENTABLE AREA OF THE PREMISES: The amount of square footage set forth in Section 1.01, subject to the provisions of Section 2.04.

 

RENTABLE AREA OF THE PROJECT: The amount of square footage set forth in Section 1.01, which represents the sum of the rentable area of all space intended for occupancy in the Project is subject to the provisions of Section 2.04.

 

SECURITY DEPOSIT: The funds specified in Section 1.01, if any, deposited by Tenant with Landlord as security for Tenant’s performance of its obligations under this Lease.

 

STANDARD OPERATING HOURS: Monday through Friday from 8 A.M. to 6 P.M. and on Saturdays from 9 A.M. to 1 P.M., excluding National Holidays.

 

SUBSTANTIALLY COMPLETE: The completion of the Landlord Work or Tenant Work, as the case may be, except for minor insubstantial details of construction, decoration or mechanical adjustments which remain to be done.

 

TAXES: All federal, state and local governmental taxes, assessments and charges of every kind or nature, whether general, special, ordinary or extraordinary, which Landlord shall pay or become obligated to pay because of or in connection with the ownership, leasing, management, control or operation of the Property or any of its components (including any personal property used in connection therewith), which may also include any rental or similar taxes levied in lieu of or in addition to general real and/or personal property taxes. For purposes hereof, Taxes for any year shall be Taxes which are assessed for any period of such year, whether or not such Taxes are billed and payable in a subsequent calendar year. There shall be included in Taxes for any year the amount of all fees, costs and expenses (including reasonable attorneys’ fees) paid by Landlord during such year in seeking or obtaining any refund or reduction of Taxes. Taxes for any year shall be reduced by the net amount of any tax refund received by Landlord attributable to such year. If a special assessment payable in installments is levied against any part of the Property, Taxes for any year shall include only the installment of such assessment and any interest payable or paid during such year. Taxes shall not include any federal or state inheritance, general income, gift or estate taxes, except that if a change occurs in the method of taxation resulting in whole or in part in the substitution of any such taxes, or any other assessment, for any Taxes as above defined, such substituted taxes or assessments shall be included in the Taxes. Taxes shall not include income, inheritance or estate taxes or any interest, penalties or other charges due to Landlord’s failure to pay Taxes prior to delinquency.

 

TAXES BASE YEAR: The calendar year set forth in Section 1.01.

 

TENANT ADDITIONS: Collectively, Landlord Work, Tenant Work and Tenant Alterations.

 

TENANT ALTERATIONS: Any alterations, improvements, additions, installations or construction in or to the Premises or any Real Property systems serving the Premises done or caused to be done by Tenant after the date hereof (excluding Landlord Work or Tenant Work); and any supplementary air-conditioning systems installed by Landlord or by Tenant at Landlord’s request pursuant to Section 6.01(b).

 

TENANT

DELAY: As defined in the Workletter, if applicable.

 

TENANT WORK: All work installed or furnished to the Premises by Tenant pursuant to Rider 2, if any.

 

TENANT’S SHARE: The percentage specified in Section 1.01 which represents the ratio of the Rentable Area of the Premises to the Rentable Area of the Project, subject to the provisions of Section 2.04.

 

USABLE AREA OF THE PREMISES: The amount of square footage set forth in Section 1.01, subject to the provisions of Section 2.04.

 

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TERM: The term of this Lease commencing on the Commencement Date and expiring on the Expiration Date.

 

TERMINATION DATE: The Expiration Date or such earlier date as this Lease terminates or Tenant’s right to possession of the Premises terminates.

 

WORKLETTER: The Agreement regarding the manner of completion of Landlord Work, if any, and Tenant Work, if any, set forth on Exhibit B attached hereto.

 

ARTICLE TWO

PREMISES, TERM, FAILURE TO GIVE POSSESSION

 

2.01	LEASE OF PREMISES

 

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term and upon the terms, covenants and conditions provided in this Lease. In the event Landlord delivers possession of the Premises to Tenant prior to the Commencement Date, Tenant shall be subject to all of the terms, covenants and conditions of this Lease (except with respect to the payment of Rent) as of the date of such possession.

 

2.02

TERM

 

(a) The Commencement Date shall be the date Landlord delivers the Premises to Tenant in accordance with Section 2 of the Workletter; provided, however, that in the event such delivery occurs prior to the Projected Commencement Date, the Commencement Date shall be the earlier to occur of (i) the Projected Commencement Date, or (ii) the date Tenant first accepts possession of, or otherwise occupies for any purpose, all or any part of the Premises. In the event the Commencement Date differs from the Projected Commencement Date, the Expiration Date shall be hereby changed from the Projected Expiration Date by the identical difference.

 

(b) Within thirty (30) days following the Commencement Date, Landlord, through its property manager, and Tenant shall enter into an agreement (which is attached hereto as Rider 1 ) confirming the Commencement Date and the Expiration Date, and the length of the Term shall be as specified in Section 1.01(5). If Tenant fails to enter into such agreement, then the Commencement Date and the Expiration Date shall be the dates designated by Landlord in such agreement.

 

2.03	FAILURE TO GIVE POSSESSION

 

If the Landlord shall be unable to deliver possession of the Premises on the Projected Commencement Date by reason of the following: (i) the holding over or retention of possession of any tenant, tenants or occupants, or (ii) for any other reason, then Landlord shall not be subject to any liability for the failure to give possession on said date. Under such circumstances the rent reserved and covenanted to be paid herein shall not commence until the Premises are made available to Tenant by Landlord, and no such failure to give possession on the Projected Commencement Date shall affect the validity of this Lease or the obligations of the Tenant hereunder. Tenant shall have the option at any time after eight (8) months after the Projected Commencement Date and before such delivery of the Premises to terminate this Lease by notice to Landlord to that effect, in which event neither party shall have any liability to the other as a result of such delays or termination.

 

2.04	AREA OF PREMISES

 

Landlord and Tenant agree that for all purposes of this Lease the Rentable Area of the Premises, the Usable Area of the Premises and the Rentable Area of the Project as set forth in Article One are controlling, and are not subject to revision after the date of this Lease except as otherwise provided herein. In the event that the demising walls of the Premises are to be built or modified after the date of execution of the Lease (either upon Tenant’s initial occupancy or any subsequent change in the Premises pursuant to other provisions of this Lease), then when such demising walls are substantially complete, Landlord shall have the right to verify or correct such square footage and accordingly adjust other amounts hereunder based upon such square footage.

 

2.05	CONDITION OF PREMISES

 

Subject to the provisions of the immediately following paragraph, Tenant shall notify Landlord in writing within sixty (60) days of the date Tenant takes possession of the Premises of any defects in the Premises claimed by Tenant.

 

Except for defects stated in such 60-day notice and Latent Defects (defined below) of which Tenant gives Landlord notice within eighteen (18) months after Tenant takes possession of the Premises, Tenant shall be conclusively deemed to have accepted the Premises “AS IS” in the condition existing on the date Tenant first takes possession, and to have waived all claims relating to the condition of the Premises. Landlord shall proceed diligently to correct the defects stated in such notice unless Landlord disputes the existence of any such defects. In the event of any dispute as to the existence of any such defects, the decision of Landlord’s architect shall be final and binding on the parties. No agreement of Landlord to alter, remodel, decorate, clean or improve the Premises or the Building and no representation regarding the condition of the Premises or the Building has been made by or on behalf of Landlord to Tenant, except as may be specifically stated in this Lease or in the Work Letter. For purposes of this Lease, “Latent Defects” shall mean defects which were not readily apparent when the sixty (60) day notice was due. No agreement of Landlord to alter, remodel, decorate, clean or improve the Premises or the Real Property and no representation regarding the condition of the Premises or the Real Property has been made by or on behalf of Landlord to Tenant, except as may be specifically stated in this Lease or in the Workletter.

 

ARTICLE THREE

RENT

 

Tenant agrees to pay to Landlord at the first office specified in Section 1.01, or to such other persons, or at such other places designated by Landlord, without any prior demand therefor in immediately available funds and without any deduction or offset whatsoever, Rent, including Monthly Base Rent and Rent Adjustments in accordance with Article Four, during the Term. Monthly Base Rent shall be paid monthly in advance on the first day of each month of the Term, except that the first installment of Monthly Base Rent shall be paid by Tenant to Landlord concurrently with the execution of this Lease. Monthly Base Rent shall be prorated for partial months within the Term. Unpaid Rent shall bear interest at the Default Rate from the date due until paid. Tenant’s covenant to pay Rent shall be independent of every other covenant in this Lease.

 

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ARTICLE FOUR

RENT ADJUSTMENTS AND PAYMENTS

 

4.01	RENT ADJUSTMENTS

 

Tenant shall pay to Landlord Rent Adjustments with respect to each Adjustment Year as follows:

 

(i) The Rent Adjustment Deposit representing Tenant’s Share of Operating Expenses for the applicable Adjustment Year in excess of Operating Expenses for the Operating Expenses Base Year, monthly during the Term with the payment of Monthly Base Rent;

 

(ii) The Rent Adjustment Deposit representing Tenant’s Share of Taxes for the applicable Adjustment Year in excess of Taxes for the Taxes Base Year, monthly during the Term with the payment of Monthly Base Rent; and

 

(iii) Any Rent Adjustments due in excess of the Rent Adjustment Deposits in accordance with Section 4.02. Rent Adjustments due from Tenant to Landlord for any Adjustment Year shall be Tenant’s Share of Operating Expenses for such year in excess of Operating Expenses for the Operating Expenses Base Year and Tenant’s Share of Taxes for such year in excess of Taxes for the Taxes Base Year.

 

Notwithstanding the foregoing, (a) Tenant’s Share of Operating Expenses for 2006 in excess of Operating Expenses for the Operating Expenses Base Year, and (b) Tenant’s Share of Taxes for 2006 in excess of Taxes for the Taxes Base Year, shall each be multiplied by a fraction, the numerator of which shall be the number of days in 2006 from and after the first anniversary of the Commencement Date, and the denominator of which shall be 365.

 

4.02	STATEMENT OF LANDLORD

 

Within one hundred and twenty (120) days after the expiration of the Operating Expenses Base Year and the Taxes Base Year and each Adjustment Year thereafter, Landlord will furnish Tenant a statement (“Landlord’s Statement”) showing the following:

 

(i) Operating Expenses and Taxes for the Operating Expenses Base Year and Taxes Base Year and thereafter for the last Adjustment Year;

 

(ii) The amount of Rent Adjustments due Landlord for the last Adjustment Year, less credit for Rent Adjustment Deposits paid, if any; and

 

(iii) Any change in the Rent Adjustment Deposit due monthly in the current Adjustment Year, including the amount or revised amount due for months preceding any such change pursuant to Landlord’s Statement.

 

Tenant shall pay to Landlord within sixty (60) days after receipt of such statement any amounts for Rent Adjustments then due in accordance with Landlord’s Statement. Any amounts due from Landlord to Tenant pursuant to this Section shall be credited to the Rent Adjustment Deposit next coming due, or refunded to Tenant within sixty (60) days of completion of such statement if the Term has already expired provided Tenant is not in default hereunder. No interest or penalties shall accrue on any amounts which Landlord is obligated to credit or refund to Tenant by reason of this Section 4.02. Landlord’s failure to deliver Landlord’s Statement or to compute the amount of the Rent Adjustments shall not constitute a waiver by Landlord of its right to deliver such items nor constitute a waiver or release of Tenant’s obligations to pay such amounts. The Rent Adjustment Deposit shall be credited against Rent Adjustments due for the applicable Adjustment Year. During the last complete calendar year or during any partial calendar year in which the Lease terminates, Landlord may include in the Rent Adjustment Deposit its estimate of Rent Adjustments which may not be finally determined until after the termination of this Lease. Tenant’s obligation to pay Rent Adjustments survives the expiration or termination of the Lease. Notwithstanding the foregoing, in no event shall the sum of Monthly Base Rent and the Rent Adjustments be less than the Monthly Base Rent payable.

 

4.03	BOOKS AND RECORDS

 

Landlord shall maintain books and records showing Operating Expenses and Taxes in accordance with generally accepted accounting principles, consistently applied. The Tenant or its representative (which representative shall be a certified public accountant licensed to do business in the state in which the Property is located and whose primary business is certified public accounting) shall have the right, for a period of one (1) year following the date upon which Landlord’s Statement is delivered to Tenant, to examine the Landlord’s books and records with respect to the items in the foregoing statement of Operating Expenses and Taxes during normal business hours, upon written notice, delivered at least three (3) business days in advance. If Tenant does not object in writing to Landlord’s Statement within one (1) year of Tenant’s receipt thereof, specifying the nature of the item in dispute and the reasons therefor, then Landlord’s Statement shall be considered final and accepted by Tenant. Any amount due to the Landlord as shown on Landlord’s Statement, whether or not disputed by Tenant as provided herein shall be paid by Tenant when due as provided above, without prejudice to any such written exception.

 

If after such examination by Tenant, Tenant disputes any item or amount of any item reflected on Landlord’s Statement, Tenant shall promptly provide written notice thereof to Landlord, and Landlord and Tenant shall thereafter work in good faith to resolve such dispute. If such dispute is not resolved within sixty (60) calendar days after Landlord’s receipt of notice thereof, an audit shall be performed at Landlord’s principal accounting offices by a national or California certified public accounting firm whose primary business is certified public accounting and who is selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld or delayed. There shall be no more than one (1) audit of Operating Expenses for any twelve (12) month period. An audit for any Adjustment Year must be commenced within one (1) year after Landlord’s delivery of the Landlord’s Statement, or the right to audit Operating Expenses shall be deemed waived. Tenant agrees to diligently pursue and complete (or abandon) any audit commenced by Tenant and, further, that its failure to either commence an audit with respect to any Landlord’s Statement within such one (1) year period or to commence litigation with respect to such Landlord’s Statement’s audit results within six (6) months after such audit commencement shall conclusively constitute its waiver of all objections it may have with respect to any aspect such Landlord’s Statement. Tenant shall provide Landlord a copy of such audit, whether such audit shows an overstatement or understatement of Operating Expenses. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated Operating Expenses for the Expense Stop calendar year by more than five percent (5%), in which case Landlord shall pay the non-contingency fee costs and expenses of the audit up to a maximum of Seven Thousand Five Hundred Dollars ($7,500.00). After determination of the amount of Operating Expenses for the entire period under audit (after review and resolution of all questions and objections of Landlord with respect to such audit), Landlord shall refund to Tenant any amount so determined to be an overcharge of Tenant’s share of Operating Expenses and Tenant shall pay any amount so determined to be an underpayment of Tenant’s share of Operating Expenses within thirty (30) days after such determination. Tenant shall keep any information gained from such audit confidential and shall not disclose it to any other party except where Tenant is legally required to do so. The exercise by Tenant of its audit rights hereunder shall not relieve Tenant of its obligation to pay, prior to any request for inspection and examination of Landlord’s books and records or any audit, all sums due hereunder without limitation, the disputed Operating Expenses.

 

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4.04 PARTIAL OCCUPANCY

 

For purposes of determining Rent Adjustments, if the Building is less than 95% occupied during all or a portion of any year during the Term, Landlord shall make appropriate adjustments to the Operating Expenses for such year employing sound accounting and management principles consistently applied, to determine the amount of Operating Expenses that would have been paid or incurred by Landlord had the Building been 95% occupied, and the amount so determined shall be deemed to have been the amount includable in Operating Expenses for such year. In the event that the Real Property is not fully assessed for all or a portion of any year during the Term, then Taxes shall be adjusted to an amount which would have been payable in such year if the Real Property had been fully assessed. In the event any other tenant in the Building provides itself with a service of a type which Landlord would supply under the Lease without an additional or separate charge to Tenant, then Operating Expenses shall be deemed to include the cost Landlord would have incurred had Landlord provided such service to such other tenant.

 

4.05 TENANT OR LEASE SPECIFIC TAXES

 

In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment Deposits and other charges to be paid by Tenant, Tenant shall pay to Landlord, upon demand, any and all taxes payable by Landlord (other than federal or state inheritance, general income, gift or estate taxes) whether or not now customary or within the contemplation of the parties hereto: (a) upon, allocable to, or measured by the Rent payable hereunder, including any gross receipts tax or excise tax levied by any governmental or taxing body with respect to the receipt of such rent; or (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (c) upon the measured value of Tenant’s personal property located in the Premises or in any storeroom or any other place in the Premises or the Property, or the areas used in connection with the operation of the Property, it being the intention of Landlord and Tenant that, to the extent possible, such personal property taxes shall be billed to and paid directly by Tenant; or (d) resulting from Landlord Work if any, Tenant Work or Tenant Alterations to the Premises, whether title thereto is in Landlord or Tenant; or (e) upon this transaction. Taxes paid by Tenant pursuant to this Section 4.05 shall not be included in any computation of Taxes payable pursuant to Sections 4.01 and 4.02.

 

ARTICLE FIVE

SECURITY DEPOSIT

 

(a) Tenant shall pay Landlord, concurrently with execution of this Lease, in immediately available funds the amount of the Security Deposit specified in Section 1.01 as security (“Security”) for the full and faithful performance by Tenant of each and every term, provision, covenant, and condition of this Lease. If Tenant fails timely to perform any of the terms, provisions, covenants and conditions of this Lease or any other document executed by Tenant in connection with this Lease, including, but not limited to, the payment of any Rent or the repair of damage to the Premises caused by Tenant (excluding normal wear and tear) then Landlord may use, apply, or retain the whole or any part of the Security for the payment of any such Rent not paid when due, for the cost of repairing such damage, for the cost of cleaning the Premises, for the payment of any other sum which Landlord may expend or may be required to expend by reason of Tenant’s failure to perform, and otherwise for compensation of Landlord for any other loss or damage to Landlord occasioned by Tenant’s failure to perform, including, but not limited to, any loss of future Rent and any damage or deficiency in the reletting of the Premises (whether such loss, damages or deficiency accrue before or after summary proceedings or other reentry by Landlord) and the amount of the unpaid past Rent, future Rent loss, and all other losses, costs and damages, that Landlord would be entitled to recover if Landlord were to pursue recovery under Section 11.02(b) or (c) of this Lease. If Landlord so uses, applies or retains all or part of the Security, Tenant shall within five (5) business days after demand pay or deliver to Landlord in immediately available funds the sum necessary to replace the amount used, applied or retained. If Tenant shall fully and faithfully comply with all of Tenant’s terms, provisions, covenants and conditions of this Lease, the Security (except any amount retained for application by Landlord as provided herein) shall be returned or paid over to Tenant no later than thirty (30) days after the latest of: (i) the Termination Date; (ii) the removal of Tenant from the Premises; (iii) the surrender of the Premises by Tenant to Landlord in accordance with this Lease; or (iv) the date Rent Adjustments owed pursuant to this Lease have been computed by Landlord and paid by Tenant. Provided, however, in no event shall any such return be construed as an admission by Landlord that Tenant has performed all of its obligations hereunder.

 

(b) The Security shall not be deemed an advance rent deposit or an advance payment of any kind, or a measure of Landlord’s damages with respect to Tenant’s failure to perform, nor shall any action or inaction of Landlord with respect to it be a waiver of, or bar or defense to, enforcement of any right or remedy of Landlord. Landlord shall not be required to keep the Security separate from its general funds and shall not have any fiduciary or other duties concerning the Security except as set forth in this Section. Tenant shall not be entitled to any interest on the Security. In the event of any sale, lease or transfer of Landlord’s interest in the Building, Landlord shall have the right to transfer the Security, or balance thereof, to the vendee, transferee or lessee and any such transfer shall release Landlord from all liability for the return of the Security. Tenant thereafter shall look solely to such vendee, transferee or lessee for the return or payment of the Security. Tenant shall not assign or encumber or attempt to assign or encumber the Security or any interest in it and Landlord shall not be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance, and regardless of one or more assignments of this Lease, Landlord may return the Security to the original Tenant without liability to any assignee. Tenant hereby waives any and all rights of Tenant under the provisions of Section 1950.7 of the California Civil Code or other Law, now or hereafter enacted, regarding security deposits.

 

(c) If Tenant fails timely to perform any obligation under this Article Five, such breach shall constitute a Default by Tenant under this Lease without any right to or requirement of any further notice or cure period under any other Article of this Lease, except such notice and cure period expressly provided under this Article Five.

 

ARTICLE SIX

SERVICES

 

6.01	LANDLORD’S GENERAL SERVICES

 

(a) So long as the Lease is in full force and effect, Landlord shall furnish or cause to be furnished to the Premises the utilities and services described below, subject to the conditions and in accordance with the standards set forth below:

 

(1) Landlord shall provide automatic elevator facilities without card access during Standard Operating Hours. Elevator facilities will be available by card access only after Standard Operating Hours. Tenant shall have access to the Premises seven (7) days per week, twenty-four (24) hours per day, and if the Premises does not have a separate door directly from the Premises to outside the Building, then Tenant shall have such access to the Premises through a common entrance to the Building and its Common Areas, subject to such reasonable measures and systems for access control and/or tenant identification as exist from time to time at the Building, including, for example only, keys or card-keys for entry. The Building provides for controlled card access to tenant floors during non-Standard Operating Hours using an access card reader located in the elevators.

 

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(2) Landlord shall ventilate the Premises during Standard Operating Hours and shall furnish heat or air conditioning comparable to other Class A building in the El Segundo, California when in the reasonable judgment of Landlord it is required for the comfortable occupancy of the Premises during Standard Operating Hours, subject to any requirements or standards relating to, among other things, energy conservation, imposed or established by governmental agencies. Upon request, Landlord shall make available at Tenant’s expense heat or air conditioning for use at all other times, provided that such request is made no later than 2:00 P.M. on the date of such service or by 2:00 P.M. on the date preceding a National Holiday or weekend and provided further that the minimum use of such additional heat or air conditioning and the cost thereof shall be determined by Landlord based on Landlord’s actual costs of such additional hear and air conditioning service and confirmed in writing to Tenant as the same may change from time to time.

 

(3) Landlord shall furnish electric current to the Premises at all times. Tenant’s use of electric current shall at no time exceed the capacity of the feeders to the Building or the risers or wiring installation therein. Tenant shall not install or use or permit the installation or use of any computer or electronic data processing equipment in the Premises other than personal computers without the prior written consent of Landlord.

 

(4) Landlord shall furnish water for drinking, cleaning and lavatory purposes only in the Common Areas of the Building, as well as hot and cold water in the kitchen areas of the Premises.

 

(5) Provided that the Premises are used exclusively as offices and are kept reasonably in order by Tenant, Landlord shall provide janitorial services in the Premises five (5) days per week, excluding National Holidays; however, in no event materially less than such services then being provided in comparable office buildings in the El Segundo market. If the Premises are not used exclusively as offices and education classroom facilities (provided Section 1.01 permits such use), Tenant or persons approved by Landlord shall keep the Premises clean and in order to the satisfaction of Landlord, but at Tenant’s sole expense. No persons other than Tenant and those persons approved by Landlord shall be permitted to enter the Premises for the purpose of keeping the Premises clean and in order. Tenant shall pay to Landlord the cost of removal of any of Tenant’s refuse and rubbish, to the extent that such refuse and rubbish removed by Landlord exceeds the refuse and rubbish usually attendant upon the use of premises as offices.

 

(6) Landlord shall replace, as necessary, the light bulbs in the Building standard lighting fixtures installed by Landlord. Tenant shall replace, as necessary, all bulbs and fluorescent tubes in non-Building standard lighting fixtures, if any, installed in the Premises. If Tenant shall fail to make any such replacement within five (5) days after written notice from Landlord, Landlord may make such replacement and charge the cost of labor and materials involved therein to Tenant, as additional rent. C

 

(b) In addition to any after-hours use of the Building’s heating, ventilation or air conditioning systems under Section 6.01(a)(2) above, Landlord may impose a reasonable charge upon Tenant for all utilities and services used by Tenant or at the Premises which involves (1) any substantial recurrent use of the Premises at any time other than Standard Operating Hours, (2) any use beyond that which Landlord is required to furnish under Section 6.01(a) above, (3) any special cooling or ventilating needs created in certain areas of the Premises by special telephone equipment, computers or other similar equipment or uses by Tenant, or (4) any use of electrical service in the Premises (including, without limitation, all lighting) in excess of seven (7) watts per square foot of Usable Area of the Premises per hour during Standard Operating Hours. At any time and from time to time during the term of this Lease, Landlord may in its sole discretion install meters or other similar devices in the Premises or the Building for the purpose of measuring the electricity or other utilities supplied to the Premises. If such meter or other device shows at any time that utilities have been supplied to the Premises for which Landlord may impose a charge as provided in this Section 6.01(b), then the cost of such meter or similar device and the cost of installation thereof shall be borne by Tenant and Tenant shall reimburse Landlord for such costs within ten (10) days of receipt of Landlord’s invoice thereof.

 

(c) Tenant agrees to cooperate fully with Landlord and to abide by all reasonable regulations and requirements which Landlord may prescribe for the use of the above-described utilities and services to be provided by Landlord. Any failure to pay any excess costs as described above shall constitute a breach of the obligation to pay Rent under this Lease and shall entitle Landlord to the rights granted herein, at law or in equity as a result of such a breach.

 

(d) Notwithstanding anything to the contrary above, Landlord reserves the right from time to time to make reasonable modifications to the above standards for utilities and services.

 

6.02 TELEPHONE SERVICES

 

All telegraph, telephone, and communication connections which Tenant may desire shall be subject to Landlord’s prior written approval, in Landlord’s sole discretion, and the location of all wires and the work in connection therewith shall be performed by contractors approved by Landlord and shall be subject to the direction of Landlord, except that such approval is not required as to Tenant’s telephone equipment (including cabling) within the Premises and from the Premises in a route designated by Landlord to any telephone cabinet or panel provided (as existing or as installed as part of Landlord’s Work, if any) on Tenant’s floor for Tenant’s connection to the telephone cable serving the Building, so long as Tenant’s equipment does not require connections different than or additional to those to the telephone cabinet or panel provided. Except to the extent of such cabling within the Premises or from the Premises to such telephone cabinet or panel, Landlord reserves the right to designate and control the entity or entities providing telephone or other communication cable installation, removal, repair and maintenance in the Building (so long as such providers’ charges are at then market rates) and to restrict and control access to telephone cabinets or panels; notwithstanding the foregoing, Tenant may use any entity for such services with Landlord’s prior approval, which approval may not be unreasonably withheld, conditioned or delayed (“Tenant’s Communications Provider”). In the event Landlord designates a particular vendor or vendors to provide such cable installation, removal, repair and maintenance for the Building and Tenant does not use Tenant’s Communications Provider, Tenant agrees to abide by and participate in such program. Tenant shall be responsible for and shall pay all costs incurred in connection with the installation of telephone cables and communication wiring in the Premises, including any hook-up, access and maintenance fees related to the installation of such wires and cables in the Premises and the commencement of service therein, and the maintenance thereafter of such wire and cables; and there shall be included in Operating Expenses for the Building all installation, removal, hook-up or maintenance costs incurred by Landlord in connection with telephone cables and communication wiring serving the Building which are not allocable to any individual users of such service but are allocable to the Building generally. If Tenant fails to maintain all telephone cables and communication wiring in the Premises and such failure affects or interferes with the operation or maintenance of any other telephone cables or communication wiring serving the Building, if upon notice to Tenant (which may be verbal if Landlord believes an emergency situation exists) Tenant fails to act immediately to perform such repairs, restorations or alterations necessary in order to eliminate any such interference, then Landlord may by verbal notice require Tenant to shut down the equipment, wiring or cables believed to be causing the interference, and if not so shut down, then

 

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upon further verbal notice Landlord (or any vendor hired by Landlord) may enter into and upon the Premises forthwith and perform such repairs, restorations or alterations as Landlord deems necessary in order to eliminate any such interference (and Landlord may recover from Tenant all of Landlord’s costs in connection therewith). No later than the Termination Date, Tenant agrees to remove all telephone cables and communication wiring installed by Tenant for and during Tenant’s occupancy, which Landlord shall request Tenant to remove. Except for Landlord’s gross negligence, Tenant agrees that neither Landlord nor any of its agents or employees shall be liable to Tenant, or any of Tenant’s employees, agents, customers or invitees or anyone claiming through, by or under Tenant, for any damages, injuries, losses, expenses, claims or causes of action because of any interruption, diminution, delay or discontinuance at any time for any reason in the furnishing of any telephone or other communication service to the Premises and the Building.

 

6.03	DELAYS IN FURNISHING SERVICES

 

In the event of any failure to furnish or delay in furnishing the services, including any utilities, to be supplied by Landlord, Landlord shall use good faith efforts to have service promptly resumed. Where the cause of any such failure, stoppage or interruption of such utilities or services is within the system or control of a utility company or public or quasi-public entity outside Landlord’s control, notification to such utility or entity of such failure, stoppage or interruption and request to remedy the same shall constitute “good faith efforts” by Landlord to have service promptly resumed. Should any equipment or machinery furnished by Landlord break down or for any cause cease to function properly, Landlord shall use reasonable diligence to repair same promptly, but Tenant shall have no claim for abatement of Rent or damages on account of any interruption of service occasioned thereby or resulting therefrom. Tenant agrees that Landlord shall not be in breach of this Lease nor be liable to Tenant for damages or otherwise, for any failure to furnish, or a delay in furnishing, or a change in the quantity or character of any service when such failure, delay or change is occasioned, in whole or in part, by repairs, improvements or mechanical breakdowns by the act or default of Tenant or other parties or by an event of Force Majeure. No such failure, delay or change shall be deemed to be an eviction or disturbance of Tenant’s use and possession of the Premises, or relieve Tenant from paying Rent or from performing any other obligations of Tenant under this Lease, without any deduction or offset. Failure to any extent to make available, or any slowdown, stoppage, or interruption of, the specified utility services resulting from any cause, including changes in service provider or Landlord’s compliance with any voluntary or similar governmental or business guidelines now or hereafter published or any requirements now or hereafter established by any governmental agency, board, or bureau having jurisdiction over the operation of the Property, shall not render Landlord liable in any respect for damages to either persons, property, or business, nor be construed as an eviction of Tenant or work an abatement of Rent, nor relieve Tenant of Tenant’s obligations for fulfillment of any covenant or agreement hereof. Notwithstanding the foregoing, in the event and to the extent that Tenant is unable to occupy the Premises for more than five (5) consecutive business days in any Lease Year (the “Eligibility Period”) as a result of Landlord’s (or its agent’s) failure to provide access or services which Landlord is obligated to provide, but excluding any period occupancy is prevented to the extent caused by any of the following: (i) caused by any act or omission of Tenant, any assignee, any subtenant or any other occupant of the Premises, or (ii) where Tenant or any assignee requests Landlord to make a decoration, alteration, improvement or addition, or (iii) caused by Force Majeure, or (iv) caused by a matter located outside of the Property and beyond the control of Landlord, then Monthly Base Rent and Rent Adjustments shall abate in the proportion in which the area of the Premises which is unusable and unused bears to the total area of the Premises on a per diem basis from the expiration of the Eligibility Period until the earlier of restoration of the applicable service or access or Tenant’s re-occupancy or use of the affected portion of the Premises.

 

6.04 CHOICE OF SERVICE PROVIDER

 

Tenant acknowledges that Landlord may, at Landlord’s sole option, to the extent permitted by applicable law and except as otherwise provided under Section 6.02 of this Lease, elect to change, from time to time, the company or companies which provide services (including electrical service, gas service, water, telephone and technical services) to the Property, the Premises and/or its occupants. Except if Landlord believes an emergency situation exists, Landlord shall provide Tenant at least twenty-four (24) hours prior notice (x) of any work by Landlord on any such equipment or machinery if an interruption of utilities or service to Tenant is scheduled as part of such work or (y) if Landlord schedules an interruption of utilities or service supplied by Landlord which are not directly obtained by Tenant. Notwithstanding anything to the contrary set forth in this Lease, Tenant acknowledges that Landlord has not and does not make any representations or warranties concerning the identity or identities of the company or companies which provide services to the Property and the Premises or its occupants and Tenant acknowledges that the choice of service providers and matters concerning the engagement and termination thereof shall be solely that of Landlord. The foregoing provision is not intended to modify, amend, change or otherwise derogate any provision of this Lease concerning the nature or type of service to be provided or any specific information concerning the amount thereof to be provided. Tenant agrees to cooperate with Landlord and each of its service providers in connection with any change in service or provider.

 

ARTICLE SEVEN

POSSESSION, USE AND CONDITION OF PREMISES

 

7.01	POSSESSION AND USE OF PREMISES

 

(a) Tenant shall occupy and use the Premises only for the uses specified in Section 1.01 to conduct Tenant’s business. Tenant shall not occupy or use the Premises (or permit the use or occupancy of the Premises) for any purpose or in any manner which: (1) is unlawful or in violation of any Law or Environmental Law; (2) may be dangerous to persons or property or which may increase the cost of, or invalidate, any policy of insurance carried on the Building or covering its operations; (3) is contrary to or prohibited by the terms and conditions of this Lease or the rules and regulations of the Building set forth in Article Eighteen; or (4) would tend to create or continue a nuisance.

 

(b) Tenant shall comply with all Environmental Laws pertaining to occupancy and use of the Premises by Tenant and concerning the proper use storage, handling and disposal of any Hazardous Material introduced to the Premises, the Building or the Property by Tenant or Tenant’s Agents (defined below). For purposes hereof, “Tenant’s Agents” shall mean any assignees, or any subtenants, or other occupants of the Premises permitted or suffered by Tenant or assignees or subtenants, or any employees, servants, agents, contractors, licensees, customers, visitors or invitees of any of them. Landlord shall comply with all Environmental Laws applicable to the Property other than those to be complied with by Tenant or Tenant’s Agents pursuant to the preceding sentences. Tenant and Tenant’s Agents shall not introduce, use, generate, store, handle or dispose of any Hazardous Material in, on, or about the Property without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion, except that such consent shall not be required to the extent of Hazardous Material packaged and contained in office products for consumer use in general business offices in quantities for ordinary day-to-day use provided such use does not give rise to, or pose a risk of, exposure to or release of Hazardous Material. In the event that Tenant is notified of any investigation or violation of any Environmental Law arising from activities of Tenant or Tenant’s Agents at the Premises, Tenant shall immediately deliver to Landlord a copy of such notice. In such event or in the event Landlord reasonably believes that there exists a violation of Environmental Law by Tenant or Tenant’s Agents, Landlord may conduct such tests and studies relating to compliance by Tenant with Environmental Laws or the alleged presence of Hazardous Materials upon the Premises as Landlord deems desirable, all of which shall be completed at Tenant’s expense. Landlord’s inspection and testing rights are for Landlord’s own protection only, and Landlord has not, and shall not be deemed to have

 

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assumed any responsibility to Tenant or any other party for compliance with Environmental Laws, as a result of the exercise, or non-exercise of such rights. Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, the Indemnitees from any and all loss, claim, demand, action, expense, liability and cost (including attorneys’ fees and expenses) arising out of or in any way related to the presence of any Hazardous Material introduced to the Premises or the Property during the Lease Term by Tenant or other occupants of the Premises, or their employees, servants, agents, contractors, customers or invitees. In case of any action or proceeding brought against the Indemnitees by reason of any such claim, upon notice from Landlord, Tenant covenants to defend such action or proceeding by counsel chosen by Landlord, in Landlord’s sole discretion. Landlord reserves the right to settle, compromise or dispose of any and all actions, claims and demands related to the foregoing indemnity. If any Hazardous Material is released, discharged or disposed of on or about the Property and such release, discharge or disposal is not caused by Tenant or other occupants of the Premises, or their employees, servants, agents, contractors customers or invitees, such release, discharge or disposal shall be deemed casualty damage under Article Fourteen to the extent that the Premises are affected thereby; in such case, Landlord and Tenant shall have the obligations and rights respecting such casualty damage provided under such Article.

 

(c) Landlord and Tenant acknowledge that the Americans With Disabilities Act of 1990 (42 U.S.C. §12101 et seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”) establish requirements for business operations, accessibility and barrier removal, and that such requirements may or may not apply to the Premises, the Building and the Project depending on, among other things: (1) whether Tenant’s business is deemed a “public accommodation” or “commercial facility”, (2) whether such requirements are “readily achievable”, and (3) whether a given alteration affects a “primary function area” or triggers “path of travel” requirements. The parties hereby agree that: (a) Landlord shall be responsible for ADA Title III compliance in the Common Areas, except as provided below, (b) Tenant shall be responsible for ADA Title III compliance in the Premises, (c) Landlord may perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title III “path of travel” requirements triggered by or arising from any change in Tenant’s use of the Premises from that described in Section 1.01(17) above, and (d) Landlord may perform and Tenant shall be responsible for a portion of the cost of, ADA Title III compliance in the Common Areas or “path of travel” requirements necessitated or triggered by or arising from (i) any aspect of Tenant Alterations (provided, however, that unless (ii) below is applicable, Tenant shall not be responsible under this clause (d) for more than the lesser of 25% of the cost of such requirements or $10,000 for each Tenant Alteration), or (ii) the Building being deemed to be a “public accommodation” instead of a “commercial facility” as a result of Tenant’s use of the Premises (provided, however, that Tenant shall not be responsible under this clause (d) for more than 50% of the cost of such requirements). Tenant shall be solely responsible for requirements under Title I of the ADA relating to Tenant’s employees.

 

(d) Landlord and Tenant agree to cooperate and use commercially reasonable efforts to participate in traffic management programs generally applicable to businesses located in or about the Building and Tenant shall encourage and support van and car pooling by, and staggered and flexible working hours for, its office workers and service employees to the extent reasonably permitted by the requirements of Tenant’s business. Neither this Section or any other provision of this Lease is intended to or shall create any rights or benefits in any other person, firm, company, governmental entity or the public.

 

(e) Tenant agrees to cooperate with Landlord and to comply with any and all guidelines or controls concerning energy management imposed upon Landlord by federal or state governmental organizations or by any energy conservation association to which Landlord is a party or which is applicable to the Building.

 

(f) Tenant shall comply with all recorded covenants, conditions and restrictions now or hereafter affecting the Project (collectively, the “Underlying Documents”). Tenant agrees that Landlord may, without Tenant’s prior consent, modify the terms of the Underlying Documents without affecting Tenant’s obligations to comply with the terms thereto, so long as such modifications do not materially, adversely affect Tenant’s rights or materially increase or affect Tenant’s obligations thereunder.

 

7.02	LANDLORD ACCESS TO PREMISES; APPROVALS

 

(a) Tenant shall permit Landlord to erect, use and maintain pipes, ducts, wiring and conduits in and through the Premises, so long as Tenant’s use, layout or design of the Premises is not materially affected or altered. Landlord or Landlord’s agents shall have the right to enter upon the Premises in the event of an emergency, or to inspect the Premises, to perform janitorial and other services, to conduct safety and other testing in the Premises and to make such repairs, alterations, improvements or additions to the Premises or the Building or other parts of the Property as Landlord may deem necessary or desirable (including all alterations, improvements and additions in connection with a change in service provider or providers). Janitorial and cleaning services shall be performed after Standard Operating Hours. Any entry or work by Landlord may be during Standard Operating Hours and Landlord shall use reasonable efforts to ensure that any entry or work shall not materially interfere with Tenant’s access to or occupancy of the Premises.

 

(b) If Tenant shall not be personally present to permit an entry into the Premises when for any reason an entry therein shall be necessary or permissible, Landlord (or Landlord’s agents), after attempting to notify Tenant (unless Landlord believes an emergency situation exists), may enter the Premises without rendering Landlord or its agents liable therefor, and without relieving Tenant of any obligations under this Lease.

 

(c) On not less than twenty-four (24) hours advance notice given during Standard Operating Hours, Landlord may enter the Premises for the purpose of conducting such inspections, tests and studies as Landlord may deem desirable or necessary to confirm Tenant’s compliance with all Laws and Environmental Laws or for other purposes necessary in Landlord’s reasonable judgment to ensure the sound condition of the Property and the systems serving the Property. Landlord’s rights under this Section 7.02(c) are for Landlord’s own protection only, and Landlord has not, and shall not be deemed to have assumed, any responsibility to Tenant or any other party, as a result of the exercise or non-exercise of such rights, for compliance with Laws or Environmental Laws or for the accuracy or sufficiency of any item or the quality or suitability of any item for its intended use.

 

(d) Landlord may do any of the foregoing, or undertake any of the inspection or work described in the preceding paragraphs without such action constituting an actual or constructive eviction of Tenant, in whole or in part, or giving rise to an abatement of Rent by reason of loss or interruption of business of the Tenant, or otherwise.

 

(e) The review, approval or consent of Landlord with respect to any item required or permitted under this Lease is for Landlord’s own protection only, and Landlord has not, and shall not be deemed to have assumed, any responsibility to Tenant or any other party, as a result of the exercise or non-exercise of such rights, for compliance with Laws or Environmental Laws or for the accuracy or sufficiency of any item or the quality or suitability of any item for its intended use.

 

7.03 QUIET ENJOYMENT

 

Landlord covenants, in lieu of any implied covenant of quiet possession or quiet enjoyment, that so long as Tenant is in compliance with the covenants and conditions set forth in this Lease, Tenant shall have the right to quiet enjoyment of the Premises without hindrance or interference from Landlord or those claiming through Landlord, and subject to the covenants and conditions set forth in the Lease and to the rights of any Mortgagee or ground lessor.

 

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ARTICLE EIGHT

MAINTENANCE

 

8.01	LANDLORD’S MAINTENANCE

 

Subject to the provisions of Article Fourteen, Landlord shall maintain and make necessary repairs to the foundations, roofs, exterior walls, and the structural elements of the Building, the electrical, plumbing, heating, ventilating, air-conditioning, mechanical, communication, security and the fire and life safety systems of the Building and those corridors, washrooms and lobbies in the Common Areas of the Building, except that: (a) Landlord shall not be responsible for the maintenance or repair of any floor or wall coverings in the Premises or any of such systems which are located within the Premises and are supplemental or special to the Building’s standard systems; and (b) the cost of performing any of said maintenance or repairs whether to the Premises or to the Building caused by the negligence of Tenant, its employees, agents, servants, licensees, subtenants, contractors or invitees, shall be paid by Tenant, subject to the waivers set forth in Section 16.04. Landlord shall not be liable to Tenant for any expense, injury, loss or damage resulting from work done in or upon, or in connection with the use of any adjacent or nearby building, land, street or alley.

 

8.02	TENANT MAINTENANCE

 

Subject to the provisions of Article Fourteen, Tenant, at its expense, shall keep and maintain the Premises and all Tenant Additions in good order, condition and repair, normal wear and tear excepted, and in accordance with all Laws and Environmental Laws. Tenant shall not permit waste and shall promptly and adequately repair all damages to the Premises and replace or repair all damaged or broken glass in the interior of the Premises, fixtures or appurtenances. Any repairs or maintenance shall be completed with materials of similar quality to the original materials, all such work to be completed under the supervision of Landlord. Any such repairs or maintenance shall be performed only by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld, and whose work will not cause or threaten to cause disharmony or interference with Landlord or other tenants in the Building and their respective agents and contractors performing work in or about the Building. If Tenant fails to perform any of its obligations set forth in this Section 8.02, Landlord may, in its reasonable discretion and upon 24 hours prior notice to Tenant (except without notice in the case of emergencies), perform the same, and Tenant shall pay to Landlord any costs or expenses incurred by Landlord upon demand.

 

ARTICLE NINE

ALTERATIONS AND IMPROVEMENTS

 

9.01	TENANT ALTERATIONS

 

(a) The following provisions shall apply to the completion of any Tenant Alterations:

 

(1)

Tenant shall not, except as provided herein, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, make or cause to be made any Tenant Alterations in or to the Premises or any Property systems serving the Premises. Prior to making any Tenant Alterations, Tenant shall give Landlord ten (10) days prior written notice (or such earlier notice as would be necessary pursuant to applicable Law) to permit Landlord sufficient time to post appropriate notices of non-responsibility. Subject to all other requirements of this Article Nine, Tenant may undertake Decoration work without Landlord’s prior written consent. Tenant shall furnish Landlord with the names and addresses of all contractors and subcontractors and copies of all contracts. All Tenant Alterations shall be completed at such time and in such manner as Landlord may from time to time designate, and only by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld, provided, however, that Landlord may, in its reasonable discretion, specify the engineers and contractors to perform all work relating to the Building’s structural elements or the Building’s systems (including the mechanical, heating, plumbing, security, ventilating, air-conditioning, electrical, communication and the fire and life safety systems in the Building), so long as such engineers and contractor are duly licensed and perform such work at then market rates. The contractors, mechanics and engineers who may be used are further limited to those whose work will not cause or threaten to cause disharmony or interference with Landlord or other tenants in the Building and their respective agents and contractors performing work in or about the Building. Landlord may further condition its consent upon Tenant furnishing to Landlord and Landlord approving prior to the commencement of any work or delivery of materials to the Premises related to the Tenant Alterations such of the following as specified by Landlord: architectural plans and specifications, opinions from Landlord’s engineers stating that the Tenant Alterations will not in any way adversely affect the Building’s systems, necessary permits and licenses, certificates of insurance, and such other documents in such form reasonably requested by Landlord. Landlord may, in the exercise of reasonable judgment, request that Tenant provide Landlord with appropriate evidence of Tenant’s ability to complete and pay for the completion of the Tenant Alterations such as a performance bond or letter of credit where the cost of such Tenant Alterations exceed Fifty Thousand Dollars ($50,000.00). Upon completion of the Tenant Alterations, other than Decorations, Tenant shall deliver to Landlord an as-built mylar and digitized (if available) set of plans and specifications for the Tenant Alterations.

 

(2)

Tenant shall pay the cost of all Tenant Alterations and the cost of decorating the Premises and any work to the Property occasioned thereby. In connection with completion of any Tenant Alterations, other than Decorations, Tenant shall pay Landlord a construction fee not exceeding five percent (5%) of the cost of Tenant Alterations. Upon completion of Tenant Alterations, Tenant shall furnish Landlord with contractors’ affidavits and full and final waivers of lien and receipted bills covering all labor and materials expended and used in connection therewith and such other documentation reasonably requested by Landlord or Mortgagee.

 

(3)

Tenant agrees to complete all Tenant Alterations (i) in accordance with all Laws, Environmental Laws, all requirements of applicable insurance companies and in accordance with Landlord’s standard construction rules and regulations, and (ii) in a good and workmanlike manner with the use of good grades of materials. Tenant shall notify Landlord immediately if Tenant receives any notice of violation of any Law in connection with completion of any Tenant Alterations and shall immediately take such steps as are necessary to remedy such violation. In no event shall such supervision or right to supervise by Landlord nor shall any approvals given by Landlord under this Lease constitute any warranty by Landlord to Tenant of the adequacy of the design, workmanship or quality of such work or materials for Tenant’s intended use or of compliance with the requirements of Section 9.01(a)(3)(i) and (ii) above or impose any liability upon Landlord in connection with the performance of such work.

 

(b) All Tenant Additions to the Premises whether installed by Landlord or Tenant, shall without compensation or credit to Tenant, become part of the Premises and the property of Landlord at the time of their installation and shall remain in the Premises, unless pursuant to Article Twelve, Tenant may remove them or is required to remove them at Landlord’s request.

 

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9.02

LIENS

 

Tenant shall not permit any lien or claim for lien of any mechanic, laborer or supplier or any other lien to be filed against the Building, the Land, the Premises, or any other part of the Property arising out of work performed, or alleged to have been performed by, or at the direction of, or on behalf of Tenant. If any such lien or claim for lien is filed, Tenant shall within ten (10) days of receiving notice of such lien or claim (a) have such lien or claim for lien released of record or (b) deliver to Landlord a bond in form, content, amount, and issued by surety, satisfactory to Landlord, indemnifying, protecting, defending and holding harmless the Indemnitees against all costs and liabilities resulting from such lien or claim for lien and the foreclosure or attempted foreclosure thereof. If Tenant fails to take any of the above actions, Landlord, in addition to its rights and remedies under Article Eleven, without investigating the validity of such lien or claim for lien, may pay or discharge the same and Tenant shall, as payment of additional Rent hereunder, reimburse Landlord upon demand for the amount so paid by Landlord, including Landlord’s expenses and attorneys’ fees.

 

ARTICLE TEN

ASSIGNMENT AND SUBLETTING

 

10.01 ASSIGNMENT AND SUBLETTING

 

(a) Without the prior written consent of Landlord, which shall not be unreasonably withheld or delayed, Tenant may not sublease, assign, mortgage, pledge, hypothecate or otherwise transfer or permit the transfer of this Lease or the encumbering of Tenant’s interest therein in whole or in part, by operation of Law or otherwise or permit the use or occupancy of the Premises, or any part thereof, by anyone other than Tenant, provided, however, Landlord shall not unreasonably withhold its consent to a subletting or assignment under this Section 10.01. Tenant agrees that the provisions governing sublease and assignment set forth in this Article Ten shall be deemed to be reasonable. If Tenant desires to enter into any sublease of the Premises or assignment of this Lease, Tenant shall deliver written notice thereof to Landlord (“Tenant’s Notice”), together with the identity of the proposed subtenant or assignee and the proposed principal terms thereof and financial and other information sufficient for Landlord to make an informed judgment with respect to such proposed subtenant or assignee at least thirty (30) days prior to the commencement date of the term of the proposed sublease or assignment. If Tenant proposes to sublease less than all of the Rentable Area of the Premises, the space proposed to be sublet and the space retained by Tenant must each be a marketable unit as reasonably determined by Landlord and otherwise in compliance with all Laws. Landlord shall notify Tenant in writing of its approval or disapproval of the proposed sublease or assignment or its decision to exercise its rights under Section 10.02 within fifteen (15) days after receipt of Tenant’s Notice (and all required information). In no event may Tenant sublease any portion of the Premises or assign the Lease to any other tenant of the Building. Tenant shall submit for Landlord’s approval (which approval shall not be unreasonably withheld) any advertising which Tenant or its agents intend to use with respect to the space proposed to be sublet.

 

(b) With respect to Landlord’s consent to an assignment or sublease, Landlord may take into consideration any factors which Landlord may deem relevant, and the reasons for which Landlord’s denial shall be deemed to be reasonable shall include, without limitation, the following:

 

(i) the business reputation or creditworthiness of any proposed subtenant or assignee is not reasonably acceptable to Landlord; or

 

(ii) in Landlord’s reasonable judgment the proposed assignee or subtenant would diminish the value or reputation of the Building or Landlord; or

 

(iii) any proposed assignee’s or subtenant’s use of the Premises would violate Section 7.01 of the Lease or would violate the provisions of any other leases of tenants in the Project;

 

(iv) the proposed assignee or subtenant is either a governmental agency or similar operation, or a medical related practice; or

 

(v) the proposed subtenant or assignee is a bona fide prospective tenant of Landlord in the Project as demonstrated by a written proposal dated within ninety (90) days prior to the date of Tenant’s request; or

 

(vi) the proposed subtenant or assignee would materially increase the estimated pedestrian and vehicular traffic to and from the Premises and the Building.

 

In no event shall Landlord be obligated to consider a consent to any proposed assignment of the Lease which would assign less than the entire Premises. In the event Landlord wrongfully withholds its consent to any proposed sublease of the Premises or assignment of the Lease, Tenant’s sole and exclusive remedy therefor shall be to seek specific performance of Landlord’s obligations to consent to such sublease or assignment.

 

(c) Any sublease or assignment shall be expressly subject to the terms and conditions of this Lease. Any subtenant or assignee shall execute such documents as Landlord may reasonably require to evidence such subtenant or assignee’s assumption of the obligations and liabilities of Tenant under this Lease. Any subtenant or assignee shall execute such documents as Landlord may reasonably require to evidence the terms of Landlord’s consent to the sublease or assignment, including agreement to the effect set forth in Section 10.01(e) and Section 10.05 below. Landlord’s approval of a sublease, assignment, hypothecation, transfer or third party use or occupancy shall not constitute a waiver of Tenant’s obligation to obtain Landlord’s consent to further assignments or subleases, hypothecations, transfers or third party use or occupancy.

 

(d) For purposes of this Article Ten, an assignment shall be deemed to include a change in the majority control of Tenant, resulting from any transfer, sale or assignment of shares of stock of Tenant occurring by operation of Law or otherwise if Tenant is a corporation whose shares of stock are not traded publicly. Notwithstanding any provision of this Section to the contrary, an assignment for purposes of this Article does not include any transfer of control of the stock or membership interests of Tenant through (i) any public offering of shares of stock in Tenant in accordance with applicable State and Federal law, rules, regulations and orders if thereafter the stock shall be listed and publicly traded through the New York Stock Exchange, American Stock Exchange or Pacific Stock Exchange, or listed and publicly traded through the NASDAQ national market and its price listed at least daily in the Wall Street Journal ; or (ii) public sale of such stock effected through such Exchanges or the NASDAQ national market. If Tenant is a partnership, any change in the partners of Tenant shall be deemed to be an assignment.

 

(e) Notwithstanding anything to the contrary contained in this Article Ten and provided there is no uncured default under this Lease, Tenant shall have the right, without the prior written consent of Landlord, to assign this Lease to an Affiliate or to sublease the Premises or any part thereof to an Affiliate, but (i) no later than fifteen (15) days prior to the effective date of the assignment or sublease, the assignee shall execute documents satisfactory to Landlord to evidence such assignee’s assumption of the obligations and liabilities of Tenant under this Lease, unless Landlord modifies or waives such

 

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requirement in the case of any assignment which occurs by operation of law (and without a written assignment) as a consequence of merger, consolidation or non-bankruptcy reorganization, and the subtenant shall execute documents satisfactory to Landlord to evidence that the sublease is subject to the terms and conditions of this Lease and that the subtenant shall perform and be bound by all the terms and conditions of this Lease (except payment of Monthly Base Rent and Rent Adjustments hereunder and other obligations which the sublease expressly provides are to be performed by Tenant as the sublessor) to the extent applicable to the space and period covered by the sublease; (ii) within ten (10) days after the effective date of such assignment or sublease, give notice to Landlord which notice shall include the full name and address of the assignee or subtenant, and a copy of all agreements executed between Tenant and the assignee or subtenant with respect to the Premises or part thereof, as may be the case; and (iii) within fifteen (15) days after Landlord’s written request, provide such reasonable documents or information which Landlord reasonably requests for the purpose of substantiating whether or not the assignment or sublease is to an Affiliate.

 

(f) With respect to any sublease to an Affiliate pursuant to Subsection (e) above, Tenant hereby irrevocably assigns to Landlord, effective upon any such sublease, all rent and other payments due from subtenant under the sublease, provided however, that Tenant shall have a license to collect such rent and other payments until the occurrence of a default by Tenant under any of the provisions of the Lease, and notice to Tenant of such default shall not be a prerequisite to Landlord’s right to collect subrent. At any time at Landlord’s option, Landlord shall have the right to give notice to the subtenant of such assignment. Landlord shall credit Tenant with any rent received by Landlord under such assignment but the acceptance of any payment on account of rent from the subtenant as the result of any such default shall in no manner whatsoever serve to release Tenant from any liability under the terms, covenants, conditions, provisions or agreement under the Lease. No such payment of rent or any other payment by the subtenant directly to Landlord and/or acceptance of such payment(s) by Landlord, regardless of the circumstances or reasons therefor, shall in any manner whatsoever be deemed an attornment by the subtenant to Landlord in the absence of a specific written agreement signed by Landlord to such an effect. For purposes of this Subsection, any use or occupancy by an Affiliate (unless it is an assignee) without a formal sublease shall for the purposes of this Subsection be deemed to be a sublease at the same rental rate as provided in the Lease.

 

10.02 INTENTIONALLY OMITTED

 

10.03 EXCESS RENT

 

Tenant shall pay Landlord on the first day of each month during the term of the sublease or assignment, fifty percent (50%) of the amount by which the sum of all rent and other consideration (direct or indirect) due from the subtenant or assignee for such month exceeds: (i) that portion of the Monthly Base Rent and Rent Adjustments due under this Lease for said month which is allocable to the space sublet or assigned; and (ii) the following costs and expenses for the subletting or assignment of such space: (1) brokerage commissions and attorneys’ fees and expenses; (2) the actual costs paid in making any improvements or substitutions in the Premises required by any sublease or assignment; and (3) “free rent” periods, costs of any inducements or concessions given to subtenant or assignee, moving costs, and other amounts in respect of such subtenant’s or assignee’s other leases or occupancy arrangements. All such costs and expenses shall be amortized over the term of the sublease or assignment pursuant to sound accounting principles. This Section 10.03 shall not apply to an assignment of this Lease to an Affiliate of Tenant or to a sublease of all or a portion of the Premises to an Affiliate of Tenant.

 

10.04 TENANT LIABILITY

 

In the event of any sublease or assignment, whether or not with Landlord’s consent, Tenant shall not be released or discharged from any liability, whether past, present or future, under this Lease, including any liability arising from the exercise of any renewal or expansion option, to the extent such exercise is expressly permitted by Landlord. Tenant’s liability shall remain primary, and in the event of default by any subtenant, assignee or successor of Tenant in performance or observance of any of the covenants or conditions of this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against said subtenant, assignee or successor. After any assignment, Landlord may consent to subsequent assignments or subletting of this Lease, or amendments or modifications of this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto, and such action shall not relieve Tenant or any successor of Tenant of liability under this Lease. If Landlord grants consent to such sublease or assignment, Tenant shall pay all reasonable attorneys’ fees and expenses up to $1,000.00 incurred by Landlord with respect to such assignment or sublease. In addition, if Tenant has any options to extend the term of this Lease or to add other space to the Premises, such options shall not be available to any subtenant or assignee, directly or indirectly without Landlord’s express written consent, which may be withheld in Landlord’s sole discretion.

 

10.05 ASSUMPTION AND ATTORNMENT

 

If Tenant shall assign this Lease as permitted herein, the assignee shall expressly assume all of the obligations of Tenant hereunder in a written instrument satisfactory to Landlord and furnish it to Landlord not later than fifteen (15) days prior to the effective date of the assignment. If Tenant shall sublease the Premises as permitted herein, Tenant shall, at Landlord’s option, within fifteen (15) days following any request by Landlord, obtain and furnish to Landlord a written agreement satisfactory to Landlord to the effect that (a) the subtenant will attorn to Landlord and will pay all subrent directly to Landlord in the event of any termination of this Lease for any reason, including rejection or deemed rejection in any bankruptcy proceeding, and (b) that in the event of any default by Tenant under this Lease, subtenant will pay all subrent directly to Landlord.

 

ARTICLE ELEVEN

DEFAULT AND REMEDIES

 

11.01

EVENTS OF DEFAULT

 

The occurrence or existence of any one or more of the following shall constitute a “Default” by Tenant under this Lease:

 

(i) Tenant fails to pay any installment or other payment of Rent including Rent Adjustment Deposits or Rent Adjustments within three (3) days after the date when due;

 

(ii) Tenant fails to observe or perform any of the other covenants, conditions or provisions of this Lease or the Workletter and fails to cure such default within fifteen (15) days after written notice thereof to Tenant, unless the default involves a hazardous condition, which shall be cured forthwith or unless the failure to perform is a Default for which this Lease specifies there is no cure or grace period;

 

(iii) the interest of Tenant in this Lease is levied upon under execution or other legal process;

 

(iv) a petition is filed by or against Tenant to declare Tenant bankrupt or seeking a plan of reorganization or arrangement under any Chapter of the Bankruptcy Act, or any amendment, replacement or substitution therefor, or to delay payment of, reduce or modify Tenant’s debts, which in the case of an involuntary action is not discharged within sixty (60) days;

 

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(v) Tenant is declared insolvent by Law or any assignment of Tenant’s property is made for the benefit of creditors;

 

(vi) a receiver is appointed for Tenant or Tenant’s property, which appointment is not discharged within thirty (30) days;

 

(vii) any action taken by or against Tenant to reorganize or modify Tenant’s capital structure in a materially adverse way which in the case of an involuntary action is not discharged within thirty (30) days;

 

(viii) upon the dissolution of Tenant;

 

(ix) [intentionally omitted];

 

(x) any abandonment (as such term is defined by California Civil Code Section 1951.3) of the Premises by Tenant;

 

(xi) any warranty, representation or statement made or furnished by Tenant to Landlord in connection with inducing Landlord to enter into this Lease is determined to have been false or misleading in any material respect when made or furnished; or

 

(xii) Tenant makes or attempts any sublease, assignment, mortgage, pledge, hypothecation or other transfer, or permit any transfer of this Lease or encumbering of Tenant’s interest, or permit the use or occupancy of the Premises or any part thereof in violation of Article Ten.

 

11.02

LANDLORD’S REMEDIES

 

(a) A Default shall constitute a breach of the Lease for which Landlord shall have the rights and remedies set forth in this Section 11.02 and all other rights and remedies set forth in this Lease or now or hereafter allowed by Law, whether legal or equitable, and all rights and remedies of Landlord shall be cumulative and none shall exclude any other right or remedy.

 

(b) With respect to a Default, at any time Landlord may terminate Tenant’s right to possession as allowed by Law by written notice to Tenant stating such election. Upon the termination of Tenant’s right to possession pursuant to this Section 11.02, Tenant’s right to possession shall terminate and this Lease shall terminate, and Tenant shall remain liable as hereinafter provided. Upon such termination, Landlord shall have the right, subject to applicable Law, to re-enter the Premises and dispossess Tenant and the legal representatives of Tenant and all other occupants of the Premises by unlawful detainer or other summary proceedings, or otherwise as permitted by Law, regain possession of the Premises and remove their property (including their trade fixtures, personal property and those Tenant Additions which Tenant is required or permitted to remove under Article Twelve), but Landlord shall not be obligated to effect such removal, and such property may, at Landlord’s option, be stored elsewhere, sold or otherwise dealt with as permitted by Law, at the risk of, expense of and for the account of Tenant, and the proceeds of any sale shall be applied pursuant to Law. Landlord shall in no event be responsible for the value, preservation or safekeeping of any such property. Tenant hereby waives all claims for damages that may be caused by Landlord’s removing or storing Tenant’s personal property pursuant to this Section or Section 12.01, and Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, the Indemnitees from any and all loss, claims, demands, actions, expenses, liability and cost (including attorneys’ fees and expenses) arising out of or in any way related to such removal or storage. Upon such written termination of Tenant’s right to possession and this Lease, Landlord shall have the right to recover damages for Tenant’s Default as provided herein or by Law, including the following damages provided by California Civil Code Section 1951.2:

 

(1) the worth at the time of award of the unpaid Rent which had been earned at the time of termination;

 

(2) 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 reasonably have been avoided;

 

(3) the worth at the time of award of the amount by which the unpaid Rent for the balance of the term of this Lease after the time of award exceeds the amount of such Rent loss that Tenant proves could be reasonably avoided; and

 

(4) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. The word “rent” as used in this Section 11.02 shall have the same meaning as the defined term Rent in this Lease. The “worth at the time of award” of the amount referred to in clauses (1) and (2) above is computed by allowing interest at the Default Rate. The worth at the time of award of the amount referred to in clause (3) above 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%). For the purpose of determining unpaid Rent under clause (3) above, the monthly Rent reserved in this Lease shall be deemed to be the sum of the Monthly Base Rent, monthly storage space rent (if any), and the amounts last payable by Tenant as Rent Adjustments for the calendar year in which Landlord terminated this Lease as provided hereinabove.

 

(c) Even if Tenant is in Default and/or has abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession by written notice as provided in Section 11.02(b) above, and Landlord may enforce all its rights and remedies under this Lease, including the right to recover Rent as it becomes due under this Lease. In such event, Landlord shall have all of the rights and remedies of a landlord under California Civil Code Section