|
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY FIVE
ASTERISKS
("*****"). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED
WITH THE
SECURITIES AND EXCHANGE COMMISSION.
OFFICE LEASE AGREEMENT
BY AND BETWEEN
LBA REALTY FUND-HOLDING CO. II, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AS LANDLORD
AND
PERFORMANCE CAPITAL MANAGEMENT, LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
AS TENANT
7001 VILLAGE DRIVE, SUITES 200 AND 255
BUENA PARK, CALIFORNIA
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS
EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY FIVE
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("*****"). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED
WITH THE
SECURITIES AND EXCHANGE COMMISSION.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
1. DEMISE . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2. PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . .
1
3. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
4. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
5. UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . . .
7
6. LATE CHARGE. . . . . . . . . . . . . . . . . . . . . . . . .
9
7. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . .
9
8. POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . .
9
9. USE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . .
10
10. ACCEPTANCE OF PREMISES . . . . . . . . . . . . . . . . . . .
11
11. SURRENDER. . . . . . . . . . . . . . . . . . . . . . . . . .
11
12. ALTERATIONS AND ADDITIONS. . . . . . . . . . . . . . . . . .
11
13. MAINTENANCE AND REPAIRS OF PREMISES. . . . . . . . . . . . .
12
14. LANDLORD'S INSURANCE . . . . . . . . . . . . . . . . . . . .
13
15. TENANT'S INSURANCE . . . . . . . . . . . . . . . . . . . . .
13
16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . .
14
17. WAIVER OF CLAIMS; WAIVER OF SUBROGATION. . . . . . . . . . .
15
18. SIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
19. FREE FROM LIENS. . . . . . . . . . . . . . . . . . . . . . .
16
20. ENTRY BY LANDLORD. . . . . . . . . . . . . . . . . . . . . .
16
21. DESTRUCTION AND DAMAGE . . . . . . . . . . . . . . . . . . .
16
22. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . .
17
23. ASSIGNMENT AND SUBLETTING. . . . . . . . . . . . . . . . . .
18
24. TENANT'S DEFAULT . . . . . . . . . . . . . . . . . . . . . .
20
25. LANDLORD'S REMEDIES. . . . . . . . . . . . . . . . . . . . .
21
26. LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS . . . . . .
23
27. ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . .
23
28. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
29. EFFECT OF CONVEYANCE . . . . . . . . . . . . . . . . . . . .
24
30. TENANT'S ESTOPPEL CERTIFICATE. . . . . . . . . . . . . . . .
24
31. SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . .
24
32. ENVIRONMENTAL COVENANTS. . . . . . . . . . . . . . . . . . .
25
33. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . .
25
34. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
35. HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . .
26
36. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . .
26
37. TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
38. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . .
26
39. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . .
26
40. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .
27
41. RULES AND REGULATIONS. . . . . . . . . . . . . . . . . . . .
27
42. MORTGAGEE PROTECTION . . . . . . . . . . . . . . . . . . . .
27
43. RELOCATION . . . . . . . . . . . . . . . . . . . . . . . . .
27
44. PARKING. . . . . . . . . . . . . . . . . . . . . . . . . . .
27
45. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . .
28
46. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . .
28
47. GOVERNING LAW; CONSTRUCTION. . . . . . . . . . . . . . . . .
28
48. REPRESENTATIONS AND WARRANTIES OF TENANT . . . . . . . . . .
28
49. NAME OF BUILDING . . . . . . . . . . . . . . . . . . . . . .
29
50. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . .
29
51. JURY TRIAL WAIVER; JUDICIAL REFERENCE. . . . . . . . . . . .
29
52. RECORDATION. . . . . . . . . . . . . . . . . . . . . . . . .
30
53. RIGHT TO LEASE . . . . . . . . . . . . . . . . . . . . . . .
30
(i)
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SECURITIES AND EXCHANGE COMMISSION.
54. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . .
30
55. ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . .
30
56. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . .
31
57. ACCORD AND SATISFACTION. . . . . . . . . . . . . . . . . . .
31
58. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . .
31
59. NONDISCLOSURE OF LEASE TERMS . . . . . . . . . . . . . . . .
31
60. LEASE EXECUTION. . . . . . . . . . . . . . . . . . . . . . .
31
61. MOVING ALLOWANCE . . . . . . . . . . . . . . . . . . . . . .
31
62. ABATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .
31
63. LANDLORD'S DEFAULT . . . . . . . . . . . . . . . . . . . . .
32
64. QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . .
32
</TABLE>
INDEX OF EXHIBITS
A Diagram of the Premises
A-2 Site Plan
B Work Letter Agreement
C Notice of Lease Term Dates
D Rules and Regulations
E Form of Estoppel Certificate
RIDERS:
Rider No. 1 - Extension Option Rider
Rider No. 2 - Fair Market Rental Rate Rider
(ii)
<PAGE>
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<TABLE>
<CAPTION>
INDEX
-----
Page(s)
-------
<S> <C>
ADA . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Additional Rent . . . . . . . . . . . . . . . . . . . . . .
2
Alteration. . . . . . . . . . . . . . . . . . . . . . . . .
11
Alterations . . . . . . . . . . . . . . . . . . . . . . . .
11
Base Insurance Expenses . . . . . . . . . . . . . . . . . .
5
Base Operating Expenses . . . . . . . . . . . . . . . . . .
5
Base Rent . . . . . . . . . . . . . . . . . . . . . . . . .
2
Base Taxes. . . . . . . . . . . . . . . . . . . . . . . . .
5
Base Utility Expenses . . . . . . . . . . . . . . . . . . .
5
Base Year . . . . . . . . . . . . . . . . . . . . . . . . .
5
Basic Lease Information . . . . . . . . . . . . . . . . . .
1
BOMA Standard . . . . . . . . . . . . . . . . . . . . . . .
1
Building. . . . . . . . . . . . . . . . . . . . . . . . . .
1
Building Share. . . . . . . . . . . . . . . . . . . . . . .
6
Building-Top Sign . . . . . . . . . . . . . . . . . . . . .
15
Casualty Discovery Date . . . . . . . . . . . . . . . . . .
16
Chronic delinquency . . . . . . . . . . . . . . . . . . . .
21
Chronic overuse . . . . . . . . . . . . . . . . . . . . . .
21
Commencement Date . . . . . . . . . . . . . . . . . . . . .
2
Common Areas. . . . . . . . . . . . . . . . . . . . . . . .
1
Computation Year. . . . . . . . . . . . . . . . . . . . . .
5
Condemnation. . . . . . . . . . . . . . . . . . . . . . . .
17
Cost Pools. . . . . . . . . . . . . . . . . . . . . . . . .
6
Default . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Electric Service Provider . . . . . . . . . . . . . . . . .
8
Environmental Laws. . . . . . . . . . . . . . . . . . . . .
25
Expiration Date . . . . . . . . . . . . . . . . . . . . . .
2
Force Majeure . . . . . . . . . . . . . . . . . . . . . . .
30
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . .
21
Hazardous Materials . . . . . . . . . . . . . . . . . . . .
25
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Insurance Expenses. . . . . . . . . . . . . . . . . . . . .
4
Landlord Parties. . . . . . . . . . . . . . . . . . . . . .
26
Landlord's Agents . . . . . . . . . . . . . . . . . . . . .
9
Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Minor Modifications . . . . . . . . . . . . . . . . . . . .
11
Moving Allowance. . . . . . . . . . . . . . . . . . . . . .
31
Moving Costs. . . . . . . . . . . . . . . . . . . . . . . .
31
Normal Business Hours . . . . . . . . . . . . . . . . . . .
7
Operating Expenses. . . . . . . . . . . . . . . . . . . . .
2
Parking Areas . . . . . . . . . . . . . . . . . . . . . . .
1
Premises. . . . . . . . . . . . . . . . . . . . . . . . . .
1
Private Restrictions. . . . . . . . . . . . . . . . . . . .
10
Project . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Project Expenses. . . . . . . . . . . . . . . . . . . . . .
6
Proportionate Share . . . . . . . . . . . . . . . . . . . .
6
Referee Sections. . . . . . . . . . . . . . . . . . . . . .
29
Related Corporation . . . . . . . . . . . . . . . . . . . .
20
Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Rules and Regulations . . . . . . . . . . . . . . . . . . .
27
Superior Lease(s) . . . . . . . . . . . . . . . . . . . . .
24
Superior Lessor . . . . . . . . . . . . . . . . . . . . . .
25
Superior Mortgage(s). . . . . . . . . . . . . . . . . . . .
24
Superior Mortgagee. . . . . . . . . . . . . . . . . . . . .
25
Systems . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Tenant's Agents . . . . . . . . . . . . . . . . . . . . . .
10
Tenant's Property . . . . . . . . . . . . . . . . . . . . .
14
Term. . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Transfer Notice . . . . . . . . . . . . . . . . . . . . . .
18
Utilities . . . . . . . . . . . . . . . . . . . . . . . . .
4
Utility Expenses. . . . . . . . . . . . . . . . . . . . . .
4
Visitor Parking Fees. . . . . . . . . . . . . . . . . . . .
28
Visitors. . . . . . . . . . . . . . . . . . . . . . . . . .
28
Work Letter Agreement . . . . . . . . . . . . . . . . . . .
1
worth at the time of award. . . . . . . . . . . . . . . . .
22
</TABLE>
(i)
<PAGE>
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SECURITIES AND EXCHANGE COMMISSION.
<TABLE>
<CAPTION>
OFFICE LEASE AGREEMENT
BASIC LEASE INFORMATION
<S> <C> <C>
1. Lease Date: July 17, 2006
--------
2. Landlord: LBA REALTY FUND-HOLDING CO. II, LLC, a Delaware
limited liability
company
3. Landlord's Address: c/o LBA Realty
17901 Von Karman, Suite 950
Irvine, CA 92614
Attn: Property Manager - The Village Business Park
4. Tenant: PERFORMANCE CAPITAL MANAGEMENT, LLC,
a California limited liability company
5. Tenant's Contact Person: Bill Constantino, Esq., Chief Legal
Officer
6. Tenant's Address and Prior to the Commencement Date:
Telephone Number:
Performance Capital Management, LLC
222 S. Harbor Boulevard, Suite 400
Anaheim, California 92805
Attention: Bill Constantino, Esq., Chief Legal Officer
(714) 502-3780
After the Commencement Date: To the Premises
7. Premises Square Footage: Approximately ***** total
rentable square feet; i.e., ***** rentable square feet in Suite
200 and
***** rentable square feet in Suite 255
8. Premises Address: 7001 Village Drive, Suites 200 and 255
Buena Park, California
9. Site; Project: The Site is comprised of the real property
commonly known as The
Village located at the southeast corner of the Santa Ana (I-5)
Freeway
and Knott Avenue in the City of Buena Park, County of Orange,
State of
California, as shown on the site plan attached hereto as EXHIBIT
A-2
(the "Site Plan") as such area may be expanded or reduced from
time
to time. The Project includes the Site and all buildings,
improvements
and facilities, now or subsequently located on the Site from
time to time,
including, without limitation, the two (2) office buildings and
the five (5)
industrial/R&D buildings currently located on the Site as
depicted on the
Site Plan. The aggregate rentable square feet of the office
and
industrial buildings (including the Building) currently existing
within the
Project is approximately 438,945 rentable square feet.
10. Building (if not the A two (2) story office building located
on the Site, containing
same as the Project): approximately 53,757 rentable square feet,
the address of which is
7001 Village Drive, Buena Park, California.
11. Tenant's Proportionate Share *****
of Project:
12. Tenant's Proportionate Share *****
of Building:
13. Length of Term: Eighty-seven (87) months
14. Commencement Date: December 1, 2006
15. Estimated Expiration Date: February 28, 2014
-1-
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16. Base Rent: Period Monthly Base Rent
------------------- -----------------
12/01/06 - 12/31/06 *****
01/01/07 - 03/31/07 *****
04/01/07 - 09/30/07 *****
10/01/07 - 08/31/09 *****
09/01/09 - 02/28/12 *****
03/01/12 - 02/28/14 *****
17. Prepaid Base Rent: *****
18. Month to which Prepaid Base First (1st) month of the
Term
Rent will be applied:
19. Base Year: Calendar year 2006
20. Security Deposit: *****
21. Guarantor: None
22. Permitted Use: General office use
23. Reserved Parking Spaces: Five (5) reserved, exclusive and
designated parking spaces. Tenant's
remaining parking spaces allocated pursuant to Section 24 below
will
be available to Tenant on a non-exclusive, in common basis
within the
unreserved, non-visitor portions of the parking lot.
24. Unreserved Parking Spaces: ***** unreserved, nonexclusive
and undesignated
parking spaces, based upon a ratio of ***** spaces per *****
rentable
square feet leased.
25. Broker(s): CB Richard Ellis, Inc. (Landlord's Broker)
and
Cushman & Wakefield of California, Inc. (Tenant's
Broker)
</TABLE>
-2-
<PAGE>
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EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY FIVE
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WITH THE
SECURITIES AND EXCHANGE COMMISSION.
OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT is made and entered into by and
between
Landlord and Tenant entered into as of the Lease Date. The
defined terms used
in this Lease which are defined in the Basic Lease Information
attached to this
Lease Agreement ("BASIC LEASE INFORMATION") shall have the
meaning and
definition given them in the Basic Lease Information. The Basic
Lease
Information, the exhibits, the addendum or addenda described in
the Basic Lease
Information, and this Office Lease Agreement are and shall be
construed as a
single instrument and are referred to herein as the "LEASE".
1. DEMISE
In consideration for the rents and all other charges and
payments payable
by Tenant, and for the agreements, terms and conditions to be
performed by
Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND
TENANT DOES
HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below
(the
"PREMISES"), upon the agreements, terms and conditions of this
Lease for the
Term hereinafter stated.
2. PREMISES
The Premises demised by this Lease are located in that certain
building
(the "BUILDING") specified in the Basic Lease Information, which
Building is
located in that certain real estate development (the "PROJECT")
specified in the
Basic Lease Information. The Premises has the address and
contains the square
footage specified in the Basic Lease Information; provided,
however, that any
statement of square footage set forth in this Lease, or that may
have been used
in calculating any of the economic terms hereof, is an
approximation which
Landlord and Tenant agree is reasonable and, except as expressly
set forth in
Paragraphs 4(c)(3) and 4(c)(5) below, no economic terms based
thereon shall be
subject to revision whether or not the actual square footage is
more or less.
Landlord represents to Tenant that the rentable area of the
Premises and the
Building was measured in accordance with the "Standard Method
for Measuring
Floor Area in Office Buildings" as published by the Building
Owner's and
Manager's Association International on June 7, 1996 (the "BOMA
STANDARD"). The
location and dimensions of the Premises are depicted on EXHIBIT
A, which is
attached hereto and incorporated herein by this reference.
Tenant shall have
the non-exclusive right (in common with the other tenants,
Landlord and any
other person granted use by Landlord) to use the Common Areas
(as hereinafter
defined), except that with respect to the Project's parking
areas (the "PARKING
AREAS"), Tenant shall have only the rights, if any, set forth in
Paragraph 44
below. For purposes of this Lease, the term "COMMON AREAS" shall
mean all areas
and facilities outside the Premises and within the exterior
boundary line of the
Project that are, from time to time, provided and designated by
Landlord for the
non-exclusive use of Landlord, Tenant and other tenants of the
Project and their
respective employees, guests and invitees, including, without
limitation, the
following areas: the parking areas, loading and unloading areas,
trash areas,
roadways, sidewalks, walkways, parkways, driveways and
landscaped areas,
fixtures, systems, decor, facilities and landscaping contained,
maintained or
used in connection with those areas, any city sidewalks adjacent
to the Project,
any pedestrian walkway system, park or other facilities located
on the Site and
open to the general public, and the following areas of the
Building: the common
entrances, lobbies, restrooms on multi-tenant floors, elevators,
stairways and
accessways, loading docks, ramps, drives and platforms and any
passageways and
serviceways thereto to the extent not exclusively serving
another tenant or
contained within another tenant's premises, and the common
pipes, conduits,
wires and appurtenant equipment serving the Premises.
Tenant understands and agrees that the Premises shall be leased
by Tenant
in its as-is condition without any improvements or alterations
by Landlord
unless Landlord has expressly agreed to make such improvements
or alterations in
a tenant improvement work agreement attached hereto, if at all,
as EXHIBIT B
("WORK LETTER AGREEMENT"). If Landlord has agreed to make any
such improvements
or alterations, then the Premises demised by this Lease shall
include any Tenant
Improvements (as that term is defined in the aforesaid tenant
improvement work
agreement) to be constructed by Landlord within the interior of
the Premises.
Landlord shall construct any Tenant Improvements on the terms
and conditions set
forth in EXHIBIT B, if attached hereto. Landlord and Tenant
agree to and shall
be bound by the terms and conditions of EXHIBIT B, if any.
Notwithstanding
anything contained in this Lease to the contrary, Landlord
represents and
warrants that it has not received any written notice of any
violations of any
laws, codes or regulations applicable to the Premises from any
governmental,
city or county agency. Landlord shall construct all the tenant
improvements
required to be made by Landlord under the Work Letter Agreement
in compliance
with all applicable laws, codes and regulations, including the
ADA and title 24.
Landlord further represents and warrants that all plumbing,
mechanical, HVAC,
electrical and fire/life-safety systems serving the Premises
shall be in good
working order as of the date possession of the Premises is
delivered to Tenant.
Landlord has the right, in its reasonable discretion, from time
to time,
to: (a) make changes to the Common Areas, the Building and/or
the Project,
including, without limitation, changes in the location, size,
shape and number
of driveways, entrances, parking spaces, parking areas, ingress,
egress,
direction of driveways, entrances, hallways, corridors, lobby
areas and
walkways; (b) close temporarily any of the Common Areas for
maintenance purposes
so long as reasonable access to the Premises remains available;
(c) add
additional buildings and improvements to the Common Areas or
remove existing
buildings or improvements therefrom; (d) use the Common Areas
while engaged in
making additional improvements, repairs or alterations to the
Project or any
portion thereof, (e) do and perform any other acts, alter or
expand, or make any
other changes in, to or with respect to the Common Areas, the
Building
<PAGE>
and/or the Project as Landlord may, in its reasonable
discretion, deem to be
appropriate; and (f) further subdivide the land comprising the
Site and to
create multiple legal and/or tax parcels for the land comprising
the Site.
Without limiting the foregoing, Landlord reserves the right from
time to time to
install, use, maintain, repair, relocate and replace pipes,
ducts, conduits,
wires, and appurtenant meters and equipment for service to the
Premises or to
other parts of the Building which are above the ceiling
surfaces, below the
floor surfaces, within the walls and in the central core areas
of the Building
which are located within the Premises or located elsewhere in
the Building. In
connection with any of the foregoing activities of Landlord,
Landlord shall use
reasonable efforts while conducting such activities to minimize
any interference
with Tenant's use of the Premises.
No rights to any view or to light or air over any property,
whether
belonging to Landlord or any other person, are granted to Tenant
by this Lease.
If at any time any windows of the Premises are temporarily
darkened or the light
or view therefrom is obstructed by reason of any repairs,
improvements,
maintenance or cleaning in or about the Building, the same shall
be without
liability to Landlord and without any reduction or diminution of
Tenant's
obligations under this Lease.
3. TERM
The term of this Lease (the "TERM") shall commence on December
1, 2006 (the
"COMMENCEMENT DATE") and shall terminate on February 28, 2014
(the "EXPIRATION
DATE").
Landlord and Tenant shall promptly execute a Notice of Lease
Term Dates in
the form attached hereto as EXHIBIT C, wherein the parties shall
specify the
Commencement Date, the Expiration Date and the date on which
Tenant is to
commence paying Rent (as defined below).
4. RENT
(a) BASE RENT. Tenant shall pay to Landlord, in advance on the
first
day of each month, without further notice or demand and without
abatement,
offset, rebate, credit or deduction for any reason whatsoever,
the monthly
installments of rent specified in the Basic Lease Information
(the "BASE RENT").
Upon execution of this Lease, Tenant shall pay to Landlord the
Security
Deposit, Prepaid Rent, and the first monthly installment of
estimated Additional
Rent (as hereinafter defined) specified in the Basic Lease
Information to be
applied toward Base Rent and Additional Rent for the month of
the Term specified
in the Basic Lease Information.
As used in this Lease, the term "ADDITIONAL RENT" shall mean all
sums of
money, other than Base Rent, that shall become due from and
payable by Tenant
pursuant to this Lease.
(b) ADDITIONAL RENT.
(1) Commencing on the first day of the 13th month of the
Term,
concurrently with, and in addition to the payment of Base Rent,
Tenant shall pay
to Landlord as Additional Rent, in accordance with this
Paragraph 4, (i)
Tenant's Proportionate Share(s) of the total dollar increase, if
any, in
Operating Expenses (as defined below) attributable to each
Computation Year (as
defined below) over Base Operating Expenses (as defined below),
(ii) Tenant's
Proportionate Share(s) of the total dollar increase, if any, in
Insurance
Expenses (as defined below) attributable to each Computation
Year over Base
Insurance Expenses (as defined below), (iii) Tenant's
Proportionate Share(s) of
the total dollar increase, if any, in Utility Expenses (as
defined below)
attributable to each Computation Year over Base Utility Expenses
(as defined
below), and (iv) Tenant's Proportionate Share(s) of the total
dollar increase,
if any, in Taxes (as defined below) attributable to each
Computation Year over
Base Taxes (as defined below). Except as otherwise expressly set
forth in this
Lease, the foregoing Additional Rent shall be due and payable by
Tenant monthly
in advance on the first day of each calendar month of the Term
following the
Base Year.
(2) As used in this Lease, the following terms shall have
the
meanings specified:
(A) "OPERATING EXPENSES" means the total costs and expenses
paid or incurred by Landlord in connection with the ownership,
operation,
maintenance, management and repair of the Premises, the Building
and/or the
Project or any part thereof, including, without limitation, all
the following
items:
(i) Common Area Operating Expenses. All costs to
operate, maintain, repair, replace, supervise, insure and
administer the Common
Areas, including, without limitation, any Parking Areas owned by
Landlord for
the use of tenants, and further including, without limitation,
supplies,
materials, labor and equipment used in or related to the
operation and
maintenance of the Common Areas, including Parking Areas
(including, without
limitation, all costs of resurfacing and restriping Parking
Areas), signs and
directories on the Building and/or the Project, landscaping
(including, without
limitation, maintenance contracts and fees payable to
landscaping consultants),
amenities, sprinkler systems, sidewalks, walkways, driveways,
curbs, Project
signs, lighting systems and security services, if any, provided
by Landlord for
the Common Areas, and any charges, assessments, costs or fees
levied by any
association or entity of which the Project or any part thereof
is a member or to
which the Project or any part thereof is subject.
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<PAGE>
(ii) Parking Charges; Public Transportation Expenses.
Any parking charges or other costs levied, assessed or imposed
by, or at the
direction of, or resulting from statutes or regulations, or
interpretations
thereof, promulgated by any governmental authority or insurer in
connection with
the use or occupancy of the Building or the Project, and the
cost of maintaining
any public transit system, vanpool, or other public or
semi-public
transportation imposed upon Landlord's ownership and operation
of the Building
and/or the Project.
(iii) Maintenance and Repair Costs. Except for costs
which are the responsibility of Landlord pursuant to Paragraph
13(b) below, all
costs to maintain, repair, and replace the Premises, the
Building and/or the
Project or any part thereof and the personal property used in
conjunction
therewith, including without limitation, (a) all costs paid
under maintenance,
management and service agreements such as contracts for
janitorial, security and
refuse removal, (b) all costs to maintain, repair and replace
the roof coverings
of the Building or the Project or any part thereof, (c) all
costs to maintain,
repair and replace the heating, ventilating, air conditioning,
plumbing, sewer,
drainage, electrical, fire protection, escalator, elevator, life
safety and
security systems and other mechanical, electrical and
communications systems and
equipment serving the Premises, the Building and/or the Project
or any part
thereof (collectively, the "SYSTEMS"), (d) the cost of all
cleaning and
janitorial services and supplies, the cost of window glass
replacement and
repair, and (e) the cost of maintenance, depreciation and
replacement of
machinery, tools and equipment (if owned by Landlord) and for
rental paid for
such machinery, tools and equipment (if rented) used in
connection with the
operation or maintenance of the Building.
(iv) Life Safety Costs. All costs to install, maintain,
repair and replace all life safety systems, including, without
limitation, all
fire alarm systems, serving the Premises, the Building and/or
the Project or any
part thereof (including all maintenance contracts and fees
payable to life
safety consultants) whether such systems are or shall be
required by Landlord's
insurance carriers, Laws (as hereinafter defined) or
otherwise.
(v) Management and Administration. All costs for
management and administration of the Premises, the Building
and/or the Project
or any part thereof, including, without limitation, a property
management fee,
accounting, auditing, billing, postage, salaries and benefits
for all employees
and contractors engaged in the management, operation,
maintenance, repair and
protection of the Building and the Project, whether located on
the Project or
off-site, payroll taxes and legal and accounting costs, fees for
licenses and
permits related to the ownership and operation of the Project,
and office rent
for the Building and/or Project management office or the rental
value of such
office if it is located within the Building and/or Project.
(vi) Capital Improvements. The cost of capital
improvements or other costs incurred in connection with the
Project (a) which
are intended to effect, and actually result in, economies in the
operation or
maintenance of the Project, or any portion thereof, (b) that are
required to
comply with present or anticipated conservation programs, (c)
which are
replacements or modifications of structural or nonstructural
items located in
the Common Areas required to keep the Common Areas in good order
or condition,
or (d) that are required under any governmental law or
regulation which comes
into effect after the Commencement Date.
Notwithstanding anything in this Paragraph 4(b) to the contrary,
Insurance
Expenses, Utility Expenses and Taxes (and costs expressly
excluded therefrom as
provided below), and the following items shall not be deemed to
constitute
"Operating Expenses" for purposes of this Paragraph
4(b)(2)(A):
(I) any costs which, under generally acceptable accounting
principles, consistently applied, are of a capital nature
(including rental
costs for equipment and services that would be considered
capital in nature),
except those that are expressly permitted under clause (vi)
above;
(II) costs of repairs, restoration, replacements or other
work
occasioned by fire or other casualty which is insured or
required to be insured
by Landlord pursuant to the terms of this Lease, or the exercise
by governmental
or quasi-governmental entities of the right of eminent
domain;
(III) interest and amortization of funds borrowed by Landlord,
or
rent under any ground lease or master lease entered into by
Landlord;
(IV) costs, fines, penalties or fees incurred due to
Landlord's
failure to make any payment when due;
(V) costs incurred for any items to the extent Landlord has
the
right to be reimbursed for, or to recover the same, under any
warranty or any
insurance policy, and/or costs incurred for items to the extent
Landlord
actually recovers the same from any other third party;
(VI) the costs of items provided by affiliates of Landlord to
the
extent that such costs exceed reasonable and customary charges
for such
services;
(VII) leasing commissions;
(VIII) costs and expenses (including court costs, attorneys'
fees
and disbursements and prepayment of any indebtedness) incurred
in connection
with any mortgaging, financing, or
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<PAGE>
refinancing of the Building or Project or any portion thereof or
related to or
in connection with disputes with any holder of a mortgage or by
or among any
persons having a security interest in Landlord or the Building
or Project;
(IX) Any charge for Landlord's income taxes, excess profit
taxes,
franchise taxes, or similar taxes on Landlord's business;
(X) all costs and expenses (including costs and expenses for
utilities and Building amenities) paid directly by Tenant or
other tenants or
users of the Building or Project and not paid by Landlord, and
all costs for any
services, utilities and/or amenities provided to any tenant or
occupant of the
Building or Project, but not provided to all tenants and
occupants;
(XI) costs and expenses incurred by Landlord associated
solely
with the operation of the business of the legal entity or
entities which
constitute Landlord (as opposed to operation of the
Premises);
(XII) depreciation of the Building or Project;
(XIII) costs incurred to defend Landlord and any judgments
or
costs of settlement of such lawsuits, judgments and/or
settlements (but without
limiting Tenant's indemnification obligations or any other
rights of Landlord
under this Lease);
(XIV) acquisition or leasing costs of sculpture, paintings
or
other objects of art;
(XV) charitable or political contributions;
(XVI) salaries and benefits of any employee (whether paid by
Landlord or Landlord's Agents): (a) above the grade of on-site
property manager
or similarly designated on-site individual who has
responsibility for the
management of the Building, and (b) who does not devote
substantially all of his
or her time to the Building, unless such salaries and benefits
of any such
employee at or below the grade of property manager who does not
devote
substantially all of his/her time to the Building are equitably
prorated to
reflect time spent on operating, managing or otherwise servicing
the Building
vis-a-vis time spent on matters unrelated to operating, managing
or otherwise
servicing the Building;
(XVII) any costs to the extent incurred by Landlord by reason
of
the negligence or intentional misconduct of Landlord or
Landlord's Agents or any
breach of this Lease by Landlord;
(XVIII) costs of decorating, redecorating, or special cleaning
or
other services provided to certain tenants and not provided on a
regular basis
to all tenants of the Building;
(XIX) all costs relating to activities for the marketing,
solicitation, negotiation and execution of leases of space in
the Building,
including without limitation, costs of tenant improvements;
(XX) all costs for which Tenant or any other tenant in the
Building is being charged other than pursuant to the operating
expense clauses
of leases for the Building;
(XXI) the cost of correcting defects in the construction of
the
Building or in the building equipment, except that conditions
(not occasioned by
construction defects) resulting from ordinary wear and tear will
not be deemed
defects for the purpose of this category;
(XXII) any operating expense representing an amount paid to
the
related corporation, entity, or person which is in excess of the
amount which
would be paid in the absence of such relationship; and
(XXIII) the cost of any work or service performed for or
facilities furnished to any tenant of the Building to a greater
extent or in a
manner more favorable to such tenant than that performed for or
furnished to
Tenant.
(B) "INSURANCE EXPENSES" means the total costs and expenses
paid or incurred by Landlord in connection with the obtaining of
insurance on
the Premises, the Building and/or the Project or any part
thereof or interest
therein, including, without limitation, premiums for "all risk"
fire and
extended coverage insurance, commercial general liability
insurance, rent loss
or abatement insurance, earthquake insurance, flood or surface
water coverage,
and other insurance as Landlord deems necessary in its sole
discretion, and any
deductibles paid under policies of any such insurance. The
foregoing shall not
be deemed an agreement by Landlord to carry any particular
insurance relating to
the Premises, Building, or Project.
(C) "UTILITY EXPENSES" means the cost of all electricity,
water, gas, sewers, oil and other utilities (collectively,
"UTILITIES"),
including any surcharges imposed, serving the Premises, the
Building and the
Project or any part thereof that are not separately metered to
Tenant or any
other tenant, and any amounts, taxes, charges, surcharges,
assessments or
impositions levied, assessed or imposed upon the Premises, the
Building or the
Project or any part thereof, or upon Tenant's use and occupancy
thereof, as a
result of any rationing of Utility services or restriction on
Utility use
affecting the Premises, the Building and/or the Project, as
contemplated in
Paragraph 5 below.
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<PAGE>
(D) "TAXES" means all real estate taxes and assessments,
which shall include any form of tax, assessment (including any
special or
general assessments and any assessments or charges for Utilities
or similar
purposes included within any tax bill for the Building or the
Project or any
part thereof, including, without limitation, entitlement fees,
allocation unit
fees and/or any similar fees or charges), fee, license fee,
business license
fee, levy, penalty (if a result of Tenant's delinquency), sales
tax, rent tax,
occupancy tax or other tax (other than net income, profit,
estate, succession,
inheritance, gift, excise, transfer or franchise taxes, capital
levies, late
payment fees and penalties), imposed by any authority having the
direct or
indirect power to tax, or by any city, county, state or federal
government or
any improvement or other district or division thereof, whether
such tax is
determined by the area of the Premises, the Building and/or the
Project or any
part thereof, or the Rent and other sums payable hereunder by
Tenant or by other
tenants, including, but not limited to, (i) any gross income or
excise tax
levied by any of the foregoing authorities, with respect to
receipt of Rent
and/or other sums due under this Lease; (ii) upon any legal or
equitable
interest of Landlord in the Premises, the Building and/or the
Project or any
part thereof, (iii) upon this transaction or any document to
which Tenant is a
party creating or transferring any interest in the Premises, the
Building and/or
the Project; (iv) levied or assessed in lieu of, in substitution
for, or in
addition to, existing or additional taxes against the Premises,
the Building
and/or the Project, whether or not now customary or within the
contemplation of
the parties; or surcharged against the Parking Areas. "TAXES"
shall also include
legal and consultants' fees, costs and disbursements incurred in
connection with
proceedings to contest, determine or reduce taxes, Landlord
specifically
reserving the right, but not the obligation, to contest by
appropriate legal
proceedings the amount or validity of any taxes. Tenant and
Landlord acknowledge
that Proposition 13 was adopted by the voters of the State of
California in the
June, 1978 election and that assessments, taxes, fees, levies
and charges may be
imposed by governmental agencies for such purposes as fire
protection, street,
sidewalk, road, utility construction and maintenance, refuse
removal and for
other governmental services which may formerly have been
provided without charge
to property owners or occupants. It is the intention of the
parties that all new
and increased assessments, taxes, fees, levies and charges due
to any cause
whatsoever are to be included within the definition of real
property taxes for
purposes of this Lease.
(E) "BASE YEAR" shall mean the calendar year specified in
the
Basic Lease Information.
(F) "BASE OPERATING EXPENSES" shall mean the amount of
Operating Expenses for the Base Year. For purposes of
determining Base Operating
Expenses, Operating Expenses shall not include one-time special
assessments,
charges, costs or fees or extraordinary charges or costs
incurred in the Base
Year only, including those attributable to boycotts, embargoes,
strikes or other
shortages of services or supplies or amortized costs relating to
capital
improvements.
(G) "BASE INSURANCE EXPENSES" shall mean the amount of
Insurance Expenses for the Base Year.
(H) "BASE TAXES" shall mean the amount of Taxes for the Base
Year. When calculating Taxes for purposes of establishing Base
Taxes, Taxes
shall not include Taxes attributable to one-time special
assessments, charges,
costs, or fees arising from modifications or changes in
governmental laws or
regulations, including, but not limited to, the institution of a
split tax roll
during the Base Year. If after the Commencement Date Taxes are
reduced, then for
purposes of all subsequent Lease years including the Lease year
in which the
reduction occurs, Base Taxes shall be proportionately reduced.
Such reduction in
Base Taxes shall not be limited to the initial reduction, if
any, but may, at
Landlord's election, be subject to reduction annually upon each
subsequent
reduction in Taxes.
(I) "BASE UTILITY EXPENSES" shall mean the amount of Utility
Expenses for the Base Year. For purposes of determining Base
Utility Expenses,
Utility Expenses shall not include any one time special charges,
costs or fees
or any extraordinary charges or costs incurred in the Base Year
only, including,
without limitation, utility rate increases and other costs
arising from
extraordinary market circumstances such as by way of example,
boycotts,
black-outs, brown-outs, the leasing of auxiliary power supply
equipment,
embargoes, strikes or other shortages of services or fuel
(whether or not such
shortages are deemed actual or manufactured), or any
conservation surcharges,
penalties or fines incurred by Landlord. Furthermore,
notwithstanding any
contrary provision in this Lease, if at any time after the
Commencement Date,
the amount of Utility Expenses decreases, then for purposes of
the calendar year
in which such decrease in Utility Expenses occurs, and for all
subsequent
calendar years, Base Utility Expenses shall be reduced by an
amount equal to
such decrease in Utility Expenses. Such decrease in Base Utility
Expenses shall
not be limited to the initial decrease, if any, but may, at
Landlord's election,
be subject to decrease annually upon each subsequent decrease in
Utility
Expenses.
(J) "COMPUTATION YEAR" shall mean each twelve (12)
consecutive month period commencing January 1 of each year
during the Term
following the Base Year, provided that Landlord, upon notice to
Tenant, may
change the Computation Year from time to time to any other
twelve (12)
consecutive month period, and, in the event of any such change,
Tenant's
Proportionate Share(s) of Operating Expenses over Base Operating
Expenses, of
Insurance Expenses over Base Insurance Expenses, of Utility
Expenses over Base
Utility Expenses, and of Taxes over Base Taxes shall be
equitably adjusted for
the Computation Years involved in any such change.
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(c) PAYMENT OF ADDITIONAL RENT
(1) Within ninety (90) days of the end of the Base Year and
each
Computation Year or as soon thereafter as practicable, Landlord
shall give to
Tenant notice of Landlord's estimate of the total amounts that
will be payable
by Tenant under Paragraph 4(b) for the following Computation
Year, and Tenant
shall pay such estimated Additional Rent on a monthly basis, in
advance, on the
first day of each month. Tenant shall continue to make said
monthly payments
until notified by Landlord of a change therein. If at any time
or times
Landlord determines that the amounts payable under Paragraph
4(b) for the
current Computation Year will vary from Landlord's estimate
given to Tenant,
Landlord, by notice to Tenant, may revise the estimate for such
Computation
Year, and subsequent payments by Tenant for such Computation
Year shall be based
upon such revised estimate. By April 1 of each calendar year
following the
initial Computation Year, Landlord shall endeavor to provide to
Tenant a
statement showing the actual Additional Rent due to Landlord for
the prior
Computation Year. If the total of the monthly payments of
Additional Rent that
Tenant has made for the prior Computation Year is less than the
actual
Additional Rent chargeable to Tenant for such prior Computation
Year, then
Tenant shall pay the difference in a lump sum within ten (10)
days after receipt
of such statement from Landlord. Any overpayment by Tenant of
Additional Rent
for the prior Computation Year shall, at Landlord's option, be
either credited
towards the Additional Rent next due or returned to Tenant in a
lump sum payment
within ten (10) days after delivery of such statement.
(2) Landlord's then-current annual operating and capital
budgets
for the Building and the Project or the pertinent part thereof
shall be used for
purposes of calculating Tenant's monthly payment of estimated
Additional Rent
for the current year, subject to adjustment as provided above.
Landlord shall
make the final determination of Additional Rent for the year in
which this Lease
terminates as soon as possible after termination of such year.
Even though the
Term has expired and Tenant has vacated the Premises, with
respect to the year
in which this Lease expires or terminates, Tenant shall remain
liable for
payment of any amount due to Landlord in excess of the estimated
Additional Rent
previously paid by Tenant, and, conversely, Landlord shall
promptly return to
Tenant any overpayment. Failure of Landlord to submit statements
as called for
herein shall not be deemed a waiver of Tenant's obligation to
pay Additional
Rent as herein provided. Notwithstanding anything to the
contrary in this Lease,
if Landlord fails to deliver a statement of actual Operating
Expenses, Insurance
Expenses, Utility Expenses or Taxes within eighteen (18) months
after the
expiration of the calendar year for which such a statement is
due, Landlord
shall be deemed to have waived its right to receive Tenant's
payment of Tenant's
Proportionate Share of Operating Expenses, Insurance Expenses,
Utility Expenses
or Taxes for the applicable calendar year; provided, however,
Landlord shall not
be deemed to have waived its right to receive Tenant's payment
of Tenant's
Proportionate Share of any supplemental Taxes resulting from a
transfer of
ownership of the Building if such supplemental Taxes are
assessed by the County
of Orange ("County") more than eighteen (18) months after the
expiration of the
calendar year in which the transfer of ownership occurred, and
Tenant shall
remain liable for payment of Tenant's Proportionate Share of
such supplemental
Taxes irrespective of when the assessment is actually made by
the County.
(3) With respect to Operating Expenses, Insurance Expenses,
Utility Expenses or Taxes which Landlord allocates to the
Building, Tenant's
"PROPORTIONATE SHARE" shall be the percentage set forth in the
Basic Lease
Information as Tenant's Proportionate Share of the Building, as
adjusted by
Landlord from time to time for a remeasurement of or changes in
the physical
size of the Premises or the Building, whether such changes in
size are due to an
addition to or a sale or conveyance of a portion of the Building
or otherwise.
With respect to Operating Expenses, Insurance Expenses, Utility
Expenses or
Taxes which Landlord allocates to the Project as a whole or to
only a portion of
the Project (hereinafter, "PROJECT EXPENSES"), Landlord shall
allocate 14.29% of
Project Expenses to the Building (the "BUILDING SHARE").
Accordingly, Tenant's
"PROPORTIONATE SHARE" with respect to the Building shall include
the Building
Share of Project Expenses. Notwithstanding the foregoing,
Landlord may equitably
adjust Tenant's Proportionate Share for all or part of any item
of expense or
cost reimbursable by Tenant that relates to a repair,
replacement, or service
that benefits only the Premises or only a portion of the
Building and/or the
Project or that varies with the occupancy of the Building and/or
the Project.
Without limiting the generality of the foregoing, Tenant
understands and agrees
that Landlord shall have the right to adjust Tenant's
Proportionate Share of any
Utility Expenses based upon Tenant's use of the Utilities or
similar services as
reasonably estimated and determined by Landlord based upon
factors such as size
of the Premises and intensity of use of such Utilities by Tenant
such that
Tenant shall pay the portion of such charges reasonably
consistent with Tenant's
use of such Utilities and similar services. If Tenant disputes
any such estimate
or determination of Utility Expenses, then Tenant shall either
pay the estimated
amount or, with the prior written approval of Landlord, which
approval may be
given or withheld in Landlord's sole and absolute discretion,
cause the Premises
to be separately metered at Tenant's sole expense. In addition
to the foregoing,
Landlord shall have the right, from time to time, to equitably
allocate some or
all of the Operating Expenses, Taxes, Insurance Expenses and
Utility Expenses
among different tenants and/or different buildings of the
Project (the "COST
POOLS"). Such Cost Pools may include, without limitation, office
space tenants
and industrial/R&D space tenants in the Project and may be
modified to take into
account the addition of any additional buildings within the
Project.
Accordingly, in the event of such allocation into Cost Pools,
Tenant's
Proportionate Shares with respect to the Building and the
Project shall be
appropriately adjusted to reflect such allocation.
(4) In the event the average occupancy level of the Building
or
the Project for the Base Year and/or any subsequent Computation
Year is not
ninety-five percent (95%) or more of full occupancy, then the
Operating Expenses
for such year shall be apportioned among the tenants by the
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Landlord to reflect those costs which would have occurred had
the Building or
the Project, as applicable, been ninety-five percent (95%)
occupied during such
year.
(5) Without limiting the terms of Paragraph 4(c) above,
Landlord
reserves the right from time to time to remeasure the Premises,
the Building
and/or the Project in accordance with the current or revised
standards
promulgated from time to time by the Building Owners and
Managers Association
(BOMA) or the American National Standards Institute or other
generally accepted
measurement standards utilized by Landlord and to thereafter
adjust the
Proportionate Share(s) of Tenant and any other affected tenants
of the Building
and/or Project.
(d) GENERAL PAYMENT TERMS. The Base Rent, Additional Rent and
all
other sums payable by Tenant to Landlord hereunder, any late
charges assessed
pursuant to Paragraph 6 below and any interest assessed pursuant
to Paragraph 46
below, are referred to as the "RENT". All Rent shall be paid in
lawful money of
the United States of America. Checks are to be made payable to
LBA REALTY
FUND-HOLDING CO. II, LLC and shall be mailed to: P.O. Box 30760,
Los Angeles,
California 90030-0760, or to such other person or place as
Landlord may, from
time to time, designate to Tenant in writing. The Rent for any
fractional part
of a calendar month at the commencement or termination of the
Term shall be a
prorated amount of the Rent for a full calendar month based upon
a thirty (30)
day month.
(e) STATEMENTS BINDING. Every statement given by Landlord
pursuant to
paragraph (c) of this Paragraph 4 shall be conclusive and
binding upon Tenant
unless within ninety (90) days after the receipt of such
statement Tenant shall
notify Landlord that it disputes the correctness thereof,
specifying the
particular respects in which the statement is claimed to be
incorrect. Pending
the determination of such dispute by agreement or arbitration as
aforesaid,
Tenant shall, within ten (10) days after receipt of such
statement, pay
Additional Rent in accordance with Landlord's statement and such
payment shall
be without prejudice to Tenant's position. If the dispute shall
be determined in
Tenant's favor, Landlord shall forthwith pay Tenant the amount
of Tenant's
overpayment of Additional Rent resulting from compliance with
Landlord's
statement.
(f) AUDIT RIGHTS. Notwithstanding anything to the contrary
contained in
this Paragraph 4 or elsewhere in this Lease, if Tenant
reasonably disputes any
amount set forth in any actual statement of Operating Expenses,
Insurance
Expenses, Utility Expenses and Taxes described above in
Paragraph 4(c) (an
"ACTUAL STATEMENT"), Tenant will have the right not later than
ninety (90) days
following receipt of an Actual Statement and upon no less than
ten (10) days
notice to Landlord, to cause Landlord's books and records with
respect to the
preceding calendar year only to be audited, at no cost or
expense to Landlord,
by a party selected by Tenant and reasonably approved by
Landlord. Any audit
conducted by or on behalf of Tenant shall be performed at
Landlord's office
during Landlord's normal business hours and in a manner so as to
minimize
interference with Landlord's business operations. Landlord shall
have no
obligation and Tenant shall have no right to make photocopies of
any of
Landlord's ledgers, invoices or other items; Tenant's audit to
be limited to an
on-site review of Landlord's books and records respecting the
accounting for the
items comprising the Operating Expenses, Taxes, Insurance
Expenses and Utility
Expenses. Pending completion of any such audit, Tenant agrees to
pay Landlord
any such disputed Operating Expenses, Taxes, Insurance Expenses
and Utility
Expenses. The amounts payable under this Paragraph 4(f) by
Landlord to Tenant or
Tenant to Landlord, as the case may be, will be appropriately
adjusted on the
basis of such audit. If such audit discloses an overstatement of
Operating
Expenses, Taxes, Insurance Expenses, and Utility Expenses in
excess of four
percent (4%) of the actual total amount thereof for such
calendar year, Tenant
will receive a credit against Tenant's future Additional Rent
obligations (or,
if the Term of this Lease has expired, Landlord shall pay
Tenant) for the
reasonable cost of an audit performed by a third party;
otherwise the cost of
such audit will be borne by Tenant. To the extent landlord must
pay the cost of
such third party audit, such cost shall not exceed a reasonable
hourly charge
for a reasonable amount of hours spent by such third-party in
connection with
the audit. In no event shall Landlord be liable for any
contingency fee payments
to any consultants of Tenant. Tenant agrees to keep, and to
cause its accountant
and employees to keep, all information revealed by any audit of
Landlord's books
and records strictly confidential and not to disclose any such
information or
permit any such information to be disclosed to anyone other than
Landlord or
Tenant's auditors or attorneys, unless compelled to do so by a
court of law or
in connection with any litigation between Landlord and Tenant
with respect to
same. If Landlord disputes the results of any Tenant audit,
Landlord shall have
the right to initiate an arbitration in accordance with the
rules of the
American Arbitration Association.
5. UTILITIES AND SERVICES
(a) From 7:00 a.m. to 6:00 p.m. on weekdays and 8:00 a.m. to
1:00 p.m.
on Saturday excluding legal holidays ("NORMAL BUSINESS HOURS"),
Landlord shall
furnish to the Premises electricity for lighting and operation
of low-power
usage office machines (not to exceed without additional charge
to Tenant, 5
watts per usable square foot of the Premises), water, heat and
air conditioning,
and common elevator service. During all other hours, Landlord
shall furnish
such service except for heat and air conditioning, provided
Tenant may be
charged for after-hours electricity as provided herein. Landlord
shall provide
janitorial services for the Premises Monday through Friday
(excluding legal
holidays) in accordance with Building standard cleaning
specifications
reasonably established by Landlord. Tenant shall separately
arrange with, and
pay directly to, the applicable local public authorities or
utilities, as the
case may be, for the furnishing, installation and maintenance of
all telephone
services and equipment as may be required by Tenant in the use
of the Premises.
Landlord shall not be liable for any damages resulting from
interruption of, or
Tenant's inability to receive such service, and any such
inability shall not
relieve Tenant of any of its obligations under this Lease. If at
any time
during the Term Landlord shall
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determine that installation of a separate electrical meter for
the Premises is
necessary or desirable as a result of Tenant's after-hours or
excess electrical
usage, Tenant shall pay the cost of installing and maintaining
such meter and
the cost of Tenant's electrical usage as measured by such
meter.
(b) If requested by Tenant, Landlord shall furnish heat and
air
conditioning at times other than Normal Business Hours and the
cost of such
services as established by Landlord shall be paid by Tenant as
Additional Rent,
payable concurrently with the next installment of Base Rent.
Subject to
Landlord's prior written approval of Tenant's plans and
specifications, all
supplemental HVAC equipment required (if any) to accommodate
Tenant's computer
room shall be installed and separately metered at Tenant's
expense. The cost of
operation (including usage charges, fees, and assessments
incurred by Landlord)
and maintenance of any supplemental HVAC equipment shall be the
sole
responsibility of the Tenant and paid to Landlord as Additional
Rent.
(c) Without limiting the terms of Paragraph 5(a) above,
Tenant
acknowledges that Landlord has contracted with Southern
California Edison to
provide electricity for the Building, and that Landlord reserves
the right to
change the provider of such service at any time and from time to
time in
Landlord's sole discretion (any such provider being referred to
herein as the
"ELECTRIC SERVICE PROVIDER"). Tenant shall obtain and accept
electrical service
for the Premises only from and through Landlord, in the manner
and to the extent
expressly provided in this Lease, at all times during the term
of this Lease,
and Tenant shall have no right (and hereby waives any right
Tenant may otherwise
have) (i) to contract with or otherwise obtain any electrical
service for or
with respect to the Premises or Tenant's operations therein from
any provider of
electrical service other than the Electric Service Provider, or
(ii) to enter
into any separate or direct contract or other similar
arrangement with the
Electric Service Provider for the provision of electrical
service to Tenant at
the Premises. Tenant shall cooperate with Landlord and the
Electric Service
Provider at all times to facilitate the delivery of electrical
service to Tenant
at the Premises and to the Building, including without
limitation allowing
Landlord and the Electric Service Provider, and their respective
agents and
contractors, (a) to install, repair, replace, improve and remove
and any and all
electric lines, feeders, risers, junction boxes, wiring, and
other electrical
equipment, machinery and facilities now or hereafter located
within the Building
or the Premises for the purpose of providing electrical service
to or within the
Premises or the Building, and (b) reasonable access for the
purpose of
maintaining, repairing, replacing or upgrading such electrical
service from time
to time. Tenant shall provide such information and
specifications regarding
Tenant's use or projected use of electricity at the Premises as
shall be
required from time to time by Landlord or the Electric Service
Provider to
efficiently provide electrical service to the Premises or the
Building. In no
event shall Landlord be liable or responsible for any loss,
damage, expense or
liability, including without limitation loss of business or any
consequential
damages, arising from any failure or inadequacy of the
electrical service being
provided to the Premises or the Building, whether resulting from
any change,
failure, interference, disruption, or defect in the supply or
character of the
electrical service furnished to the Premises or the Building, or
arising from
the partial or total unavailability of electrical service to the
Premises or the
Building, from any cause whatsoever, or otherwise, nor shall any
such failure,
inadequacy, change, interference, disruption, defect or
unavailability
constitute an actual or constructive eviction of Tenant, or
entitle Tenant to
any abatement or diminution of Rent or otherwise relieve Tenant
from any of its
obligations under this Lease.
(d) Tenant acknowledges that the Premises, the Building and/or
the
Project may become subject to the rationing of Utility services
or restrictions
on Utility use as required by a public utility company,
governmental agency or
other similar entity having jurisdiction thereof. Tenant
acknowledges and agrees
that its tenancy and occupancy hereunder shall be subject to
such rationing or
restrictions as may be imposed upon Landlord, Tenant, the
Premises, the Building
and/or the Project, and Tenant shall in no event be excused or
relieved from any
covenant or obligation to be kept or performed by Tenant by
reason of any such
rationing or restrictions. Tenant agrees to comply with energy
conservation
programs implemented by Landlord by reason of rationing,
restrictions or Laws.
(e) Landlord shall not be liable for any loss, injury or damage
to
property caused by or resulting from any variation,
interruption, or failure of
Utilities due to any cause whatsoever, including, without
limitation, (i)
accident, breakage or repairs; (ii) strikes, lockouts or other
labor
disturbances or labor disputes of any such character; (iii)
governmental
regulation, moratorium or other governmental action; (iv)
inability, despite the
exercise of reasonable diligence, to obtain electricity, water
or fuel; (v)
service interruptions or any other unavailability of utilities
resulting from
causes beyond Landlord's control including without limitation,
any Service
Provider initiated "brown-out" or "black-out," war, terrorism or
bioterrorism;
and (vi) any other cause beyond Landlord's reasonable control,
or from failure
to make any repairs or perform any maintenance. No temporary
interruption or
failure of such services incident to the making of repairs,
alterations,
improvements, or due to accident, strike, or conditions or other
events shall be
deemed an eviction of Tenant or relieve Tenant from any of its
obligations
hereunder. In no event shall Landlord be liable to Tenant for
any damage to the
Premises or for any loss, damage or injury to any property
therein or thereon
occasioned by bursting, rupture, leakage or overflow of any
plumbing or other
pipes (including, without limitation, water, steam, and/or
refrigerant lines),
sprinklers, tanks, drains, drinking fountains or washstands, or
other similar
cause in, above, upon or about the Premises, the Building, or
the Project.
Tenant hereby waives the provisions of California Civil Code
Section 1932(1) or
any other applicable existing or future law, ordinance or
governmental
regulation permitting the termination of this Lease due to an
interruption,
failure or inability to provide any services.
(f) Landlord makes no representation with respect to the
adequacy or
fitness of the air-conditioning or ventilation equipment in the
Building to
maintain temperatures which may be required for, or because of,
any equipment of
Tenant, other than normal fractional horsepower office
equipment, and
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<PAGE>
Landlord shall have no liability for loss or damage in
connection therewith.
Tenant shall not, without Landlord's prior written consent, use
heat-generating
machines, machines other than normal fractional horsepower
office machines,
equipment or lighting other than building standard lights in the
Premises, which
may affect the temperature otherwise maintained by the air
conditioning system
or increase the water normally furnished for the Premises by
Landlord pursuant
to the terms of this Paragraph 5. If such consent is given,
Landlord shall have
the right to install supplementary air conditioning units or
other facilities in
the Premises, including supplementary or additional metering
devices, and the
cost thereof, including the cost of installation, operation and
maintenance,
increased wear and tear on existing equipment and other similar
charges, shall
be paid by Tenant to Landlord upon billing by Landlord. Tenant
shall not use
water or heat or air conditioning in excess of that normally
supplied by
Landlord. Tenant's consumption of electricity shall not exceed
the Building's
capacity considering all other tenants of the Building.
(g) Tenant shall cooperate fully at all times with Landlord, and
abide
by all reasonable regulations and requirements which Landlord
may prescribe for
the proper functioning and protection of the Building's services
and systems.
Tenant shall not use any apparatus or device in, upon or about
the Premises
which may in any way increase the amount of services or
utilities usually
furnished or supplied to the Premises or other premises in the
Building. In
addition, Tenant shall not connect any conduit, pipe, apparatus
or other device
to the Building's water, waste or other supply lines or systems
for any purpose.
Neither Tenant nor its employees, agents, contractors, licensees
or invitees
shall at any time enter, adjust, tamper with, touch or otherwise
in any manner
affect the mechanical installations or facilities of the
Building.
6. LATE CHARGE
Notwithstanding any other provision of this Lease to the
contrary, Tenant
hereby acknowledges that late payment to Landlord of Rent, or
other amounts due
hereunder will cause Landlord to incur costs not contemplated by
this Lease, the
exact amount of which will be extremely difficult to ascertain.
If any Rent or
other sums due from Tenant are not received by Landlord or by
Landlord's
designated agent within five (5) business days after their due
date, then Tenant
shall pay to Landlord as additional Rent a late charge equal to
the greater of
five percent (5%) of such overdue amount or $250.00. Landlord
and Tenant hereby
agree that such late charges represent a fair and reasonable
estimate of the
cost that Landlord will incur by reason of Tenant's late payment
and shall not
be construed as a penalty. Landlord's acceptance of such late
charges shall not
constitute a waiver of Tenant's default with respect to such
overdue amount or
estop Landlord from exercising any of the other rights and
remedies granted
under this Lease.
7. SECURITY DEPOSIT
Concurrently with Tenant's execution of the Lease, Tenant shall
deposit
with Landlord the Security Deposit specified in the Basic Lease
Information as
security for the full and faithful performance of each and every
term, covenant
and condition of this Lease. Landlord may use, apply or retain
the whole or any
part of the Security Deposit as may be reasonably necessary (a)
to remedy any
Default by Tenant under this Lease, (b) to repair damage to the
Premises caused
by Tenant, (c) to clean the Premises upon termination of this
Lease, (d) to
reimburse Landlord for the payment of any amount which Landlord
may reasonably
spend or be required to spend by reason of Tenant's Default, and
(e) to
compensate Landlord for any other loss or damage which Landlord
may suffer by
reason of Tenant's Default. Should Tenant faithfully and fully
comply with all
of the terms, covenants and conditions of this Lease, within
thirty (30) days
following the expiration of the Term, the Security Deposit or
any balance
thereof shall be returned to Tenant or, at the option of
Landlord, to the last
assignee of Tenant's interest in this Lease. Landlord shall not
be required to
keep the Security Deposit separate from its general funds and
Tenant shall not
be entitled to any interest on such deposit. If Landlord so uses
or applies all
or any portion of said deposit, within five (5) days after
written demand
therefor Tenant shall deposit cash with Landlord in an amount
sufficient to
restore the Security Deposit to the full extent of the above
amount, and
Tenant's failure to do so shall be a default under this Lease.
In the event
Landlord transfers its interest in this Lease, Landlord shall
transfer the then
remaining amount of the Security Deposit to Landlord's successor
in interest,
and thereafter Landlord shall have no further liability to
Tenant with respect
to such Security Deposit. Tenant hereby waives the provisions of
Section 1950.7
of the California Civil Code and agrees that the provisions of
this Paragraph 7
shall govern the treatment of Tenant's Security Deposit in all
respects for this
Lease.
8. POSSESSION
(a) TENANT'S RIGHT OF POSSESSION. Subject to Paragraph 8(b),
Tenant
shall be entitled to possession of the Premises upon
commencement of the Term.
(b) DELAY IN DELIVERING POSSESSION. If for any reason
whatsoever,
Landlord cannot deliver possession of the Premises to Tenant on
or before the
Estimated Commencement Date, this Lease shall not be void or
voidable, nor shall
Landlord, or Landlord's agents, advisors, employees, partners,
shareholders,
directors, invitees, independent contractors or Landlord's
Investment Advisors
(as hereinafter defined) (collectively, "LANDLORD'S AGENTS"), be
liable to
Tenant for any loss or damage resulting therefrom. Tenant shall
not be liable
for Rent until Landlord delivers possession of the Premises to
Tenant. The
Expiration Date shall be extended by the same number of days
that Tenant's
possession of the Premises was delayed beyond the Estimated
Commencement Date.
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<PAGE>
(c) EARLY OCCUPANCY. Subject to Landlord's prior approval, which
may be
withheld at Landlord's reasonable discretion, Tenant may occupy
the Premises
prior to the Commencement Date. If Tenant occupies the Premises
prior to the
Commencement Date, such early occupancy shall be subject to all
of the terms and
conditions of this Lease, including, without limitation, the
provisions of
Paragraphs 15, 16 and 17, except that provided Tenant does not
commence the
operation of business from the Premises, Tenant will not be
obligated to pay
Base Rent or any additional rent during the period of such early
occupancy.
Tenant agrees to provide Landlord with prior notice of any such
intended early
occupancy and to cooperate with Landlord during the period of
any such early
occupancy so as not to interfere with Landlord in the completion
of any
improvements to the Premises constructed pursuant to EXHIBIT
B.
9. USE OF PREMISES
(a) PERMITTED USE. Subject to factors beyond Landlord's control
and
the other provisions of this Lease, including, without
limitation, Sections 21
and 22, during the Term, Tenant shall have access to the
Building and the
Premises 24 hours each day, 7 days per week by standard door key
system. The use
of the Premises by Tenant and Tenant's agents, advisors,
employees, partners,
shareholders, directors, customers, invitees and independent
contractors
(collectively, "TENANT'S AGENTS") shall be solely for the
Permitted Use
specified in the Basic Lease Information and for no other use.
Tenant shall not
permit any objectionable or unpleasant odor, smoke, dust, gas,
noise or
vibration to emanate from or near the Premises. The Premises
shall not be used
to create any nuisance or trespass, for any illegal purpose, for
any purpose not
permitted by Laws (as hereinafter defined), for any purpose that
would
invalidate the insurance or increase the premiums for insurance
on the Premises,
the Building or the Project or for any purpose or in any manner
that would
interfere with other tenants' use or occupancy of the Project.
If any of
Tenant's office machines or equipment disturb any other tenant
in the Building,
then Tenant shall provide adequate insulation or take such other
action as may
be necessary to eliminate the noise or disturbance. Tenant
agrees to pay to
Landlord, as Additional Rent, any increases in premiums on
policies resulting
from Tenant's Permitted Use or any other use or action by Tenant
or Tenant's
Agents which increases Landlord's premiums or requires
additional coverage by
Landlord to insure the Premises. Tenant agrees not to overload
the floor(s) of
the Building. Tenant shall not use or allow the Premises to be
used for any
improper, immoral, unlawful or reasonably objectionable purpose.
Tenant shall
not do or permit to be done anything which will obstruct or
interfere with the
rights of other tenants or occupants of the Project or the
Building, or injure
or annoy them. Tenant shall not cause, maintain or permit any
nuisance in, on or
about the Premises, the Building, the Project or the Site, nor
commit or suffer
to be committed any waste in, on or about the Premises. Tenant
shall have no
right to conduct any auction in, on or about the Premises, the
Building or Site.
(b) COMPLIANCE WITH GOVERNMENTAL REGULATIONS AND PRIVATE
RESTRICTIONS.
Tenant and Tenant's Agents shall, at Tenant's expense,
faithfully observe and
comply with (1) all municipal, state and federal laws, statutes,
codes, rules,
regulations, ordinances, requirements, and orders (collectively,
"LAWS"), now in
force or which may hereafter be in force pertaining to the
Premises or Tenant's
use of the Premises, the Building or the Project; (2) all
recorded covenants,
conditions and restrictions affecting the Project ("PRIVATE
RESTRICTIONS") now
in force or which may hereafter be in force, including, without
limitation, the
provisions of that certain Declaration of Restrictions for The
Village Business
and Industrial Center recorded on November 15, 1979 as
Instrument No. 19568 in
Book 13396 at Page 740, among the Official Records of Orange
County; and (3) the
Rules and Regulations (as defined in Paragraph 41 of this
Lease). Without
limiting the generality of the foregoing, to the extent Landlord
is required by
the city or county in which the Building is located to maintain
carpooling and
public transit programs, Tenant shall cooperate in the
implementation and use of
these programs by and among Tenant's employees. The judgment of
any court of
competent jurisdiction, or the admission of Tenant in any action
or proceeding
against Tenant, whether Landlord be a party thereto or not, that
Tenant has
violated any Laws or Private Restrictions, shall be conclusive
of that fact as
between Landlord and Tenant.
(c) COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT. Landlord
and Tenant
hereby agree and acknowledge that the Premises, the Building
and/or the Project
may be subject to, among other Laws, the requirements of the
Americans with
Disabilities Act, a federal law codified at 42 U.S.C. 12101 et
seq., including,
but not limited to Title III thereof, and all regulations and
guidelines related
thereto, together with any and all laws, rules, regulations,
ordinances, codes
and statutes now or hereafter enacted by local or state agencies
having
jurisdiction thereof, as the same may be in effect on the date
of this Lease and
may be hereafter modified, amended or supplemented including
Title 24 enacted by
the State of California (collectively, the "ADA"). Any Tenant
Improvements to be
constructed hereunder shall be in compliance with the
requirements of the ADA,
and all costs incurred for purposes of compliance therewith
shall be a part of
and included in the costs of the Tenant Improvements. Tenant
shall be solely
responsible for conducting its own independent investigation of
this matter and
for ensuring that the design of all Tenant Improvements strictly
complies with
all requirements of the ADA. Subject to reimbursement pursuant
to Paragraph 4
above, if any barrier removal work or other work is required to
the Building,
the Common Areas or the Project under the ADA, then such work
shall be the
responsibility of Landlord; provided, if such work is required
under the ADA as
a result of Tenant's use of the Premises or any work or
Alteration (as
hereinafter defined) made to the Premises by or on behalf of
Tenant, then such
work shall be performed by Landlord at the sole cost and expense
of Tenant.
Except as otherwise expressly provided in this provision, Tenant
shall be
responsible at its sole cost and expense for fully and
faithfully complying with
all applicable requirements of the ADA. Within ten (10) days
after receipt,
Tenant shall advise Landlord in writing, and provide Landlord
with copies of (as
applicable), any notices alleging violation of the ADA relating
to any portion
of the Premises, the Building or the Project; any claims
made
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<PAGE>
or threatened orally or in writing regarding noncompliance with
the ADA and
relating to any portion of the Premises, the Building, or the
Project; or any
governmental or regulatory actions or investigations instituted
or threatened
regarding noncompliance with the ADA and relating to any portion
of the
Premises, the Building or the Project. Tenant shall and hereby
agrees to
protect, defend (with counsel acceptable to Landlord) and hold
Landlord and
Landlord's Agents harmless and indemnify Landlord and Landlord's
Agents from and
against all liabilities, damages, claims, losses, penalties,
judgments, charges
and expenses (including attorneys' fees, costs of court and
expenses necessary
in the prosecution or defense of any litigation including the
enforcement of
this provision) arising from or in any way related to, directly
or indirectly,
Tenant's or Tenant's Agents violation or alleged violation of
the ADA. Tenant
agrees that the obligations of Tenant herein shall survive the
expiration or
earlier termination of this Lease.
(d) NO ROOF ACCESS. At no time during the Term shall Tenant
have
access to the roof of the Building or have the right to install,
operate or
maintain a satellite-earth communications station (antenna and
associated
equipment), microwave equipment and/or an FM antenna on the
Building or the
Project.
10. ACCEPTANCE OF PREMISES
By taking possession of the Premises, Tenant accepts the
Premises as
suitable for Tenant's intended use and as being in good and
sanitary operating
order, condition and repair, AS IS, and without representation
or warranty by
Landlord as to the condition, use or occupancy which may be made
thereof. Any
exceptions to the foregoing must be by written agreement
executed by Landlord
and Tenant.
11. SURRENDER
Tenant agrees that on the last day of the Term, or on the
sooner
termination of this Lease, Tenant shall surrender the premises
to Landlord (a)
in good condition and repair (damage by acts of God, fire, and
normal wear and
tear excepted), but with all interior walls cleaned and
repaired, any carpets
cleaned, and all floors cleaned and waxed, and (b) otherwise in
accordance with
Paragraph 32(e). Normal wear and tear shall not include any
damage or
deterioration that would have been prevented by proper
maintenance by Tenant or
Tenant otherwise performing all of its obligations under this
Lease. On or
before the expiration or sooner termination of this Lease, (i)
Tenant shall
remove all of Tenant's Property (as hereinafter defined) and
Tenant's signage
from the Premises, the Building and the Project and repair any
damage caused by
such removal, and (ii) Landlord may, by notice to Tenant given
not later than
ninety (90) days prior to the Expiration Date (except in the
event of a
termination of this Lease prior to the scheduled Expiration
Date, in which event
no advance notice shall be required), require Tenant at Tenant's
expense to
remove any or all Alterations in accordance with Paragraph 12 of
this Lease and
to repair any damage caused by such removal. Any of Tenant's
Property not so
removed by Tenant as required herein shall be deemed abandoned
and may be
stored, removed, and disposed of by Landlord at Tenant's
expense, and Tenant
waives all claims against Landlord for any damages resulting
from Landlord's
retention and disposition of such property; provided, however,
that Tenant shall
remain liable to Landlord for all costs incurred in storing and
disposing of
such abandoned property of Tenant. All Tenant Improvements and
Alterations
except those which Landlord requires Tenant to remove shall
remain in the
Premises as the property of Landlord. Notwithstanding anything
to the contrary
contained in this Lease, Tenant shall only be required to remove
Alterations
which Landlord identifies in writing as requiring removal at the
time Tenant
requests Landlord's consent to such Alterations (or at the time
Tenant notifies
Landlord of any Minor Modifications pursuant to Paragraph
12).
12. ALTERATIONS AND ADDITIONS
(a) Tenant shall not make, or permit to be made, any
alteration,
addition or improvement (hereinafter referred to individually as
an "ALTERATION"
and collectively as the "ALTERATIONS") to the Premises or any
part thereof
without the prior written consent of Landlord, which consent
shall not be
unreasonably withheld; provided, however, that Landlord shall
have the right in
its sole and absolute discretion to consent or to withhold its
consent to any
Alteration which would (i) affect any area outside the Premises;
(ii) affect the
Building's structure, equipment, services or systems, or the
proper functioning
thereof, or Landlord's access thereto; (iii) affect the outside
appearance,
character or use of the Project, the Building or the Common
Areas; (iv) weaken
or impair the structural strength of the Building; (v) in the
reasonable opinion
of Landlord, lessen the value of the Project or Building; (vi)
will violate or
require a change in any occupancy certificate applicable to the
Premises; or
(vii) would trigger a legal requirement which would require
Landlord to make any
alteration or improvement to the Premises, Building or Project.
Notwithstanding
the foregoing, Tenant may, without Landlord's prior consent, but
upon no less
than ten (10) days prior notice to Landlord, shall have the
right to make
interior, non-structural Alterations that are solely cosmetic or
decorative in
nature (such as painting, carpeting and other wall coverings),
or installation,
removal, replacement or assembly of office furniture, fixtures
or equipment
(including cubicles and computers) ("MINOR MODIFICATIONS");
provided, however,
that the cost of such Minor Modifications does not exceed
$25,000 and such Minor
Modifications otherwise comply with the provisions of this
Paragraph 12.
(b) Any Alteration to the Premises shall be at Tenant's sole
cost and
expense, in compliance with all applicable Laws and all
requirements requested
by Landlord, including, without limitation, the requirements of
any insurer
providing coverage for the Premises or the Project or any part
thereof, and in
accordance with plans and specifications approved in, writing by
Landlord, and
shall be constructed and installed by a contractor approved in
writing by
Landlord. In connection with any Alteration, Tenant shall
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deliver plans and specifications therefor to Landlord. Before
Alterations may
begin, valid building permits or other permits or licenses
required must be
furnished to Landlord, and, once the Alterations begin, Tenant
will diligently
and continuously pursue their completion. Landlord may monitor
construction of
the Alterations and Tenant shall reimburse Landlord for its
costs (including,
without limitation, the costs of any construction manager
retained by Landlord)
in reviewing plans and documents and in monitoring construction;
provided,
however, that Tenant shall not be assessed more than $500.00 per
project for
Landlord's costs. Tenant shall maintain during the course of
construction, at
its sole cost and expense, builders' risk insurance for the
amount of the
completed value of the Alterations on an all-risk non- reporting
form covering
all improvements under construction, including building
materials, and other
insurance in amounts and against such risks as Landlord shall
reasonably require
in connection with the Alterations. In addition to and without
limitation on the
generality of the foregoing, Tenant shall ensure that its
contractors procure
and maintain in full force and effect during the course of
construction a "broad
form" commercial general liability and property damage policy of
insurance
naming Landlord, Tenant, Landlord's Investment Advisors, any
property manager
designated by Landlord and Landlord's lenders as additional
insureds. The
minimum limit of coverage of the aforesaid policy shall be in
the amount of not
less than Three Million Dollars ($3,000,000.00) for injury or
death of one
person in any one accident or occurrence and in the amount of
not less than
Three Million Dollars ($3,000,000.00) for injury or death of
more than one
person in any one accident or occurrence, and shall contain a
severability of
interest clause or a cross liability endorsement. Such insurance
shall further
insure Landlord and Tenant against liability for property damage
of at least One
Million Dollars ($1,000,000.00).
(c) All Alterations, including, but not limited to, heating,
lighting,
electrical, air conditioning, fixed partitioning, drapery, wall
covering and
paneling, built-in cabinet work and carpeting installations made
by Tenant,
together with all property that has become an integral part of
the Premises or
the Building, shall at once be and become the property of
Landlord, and shall
not be deemed trade fixtures or Tenant's Property.
(d) All telephone, computer and/or telecommunication equipment
and
cabling shall be installed within the Premises and shall be
removed upon the
expiration or sooner termination of this Lease and the Premises
restored to the
same condition as before such installation.
(e) Notwithstanding anything herein to the contrary, before
installing
any equipment or lights which generate an undue amount of heat
in the Premises,
or if Tenant plans to use any high-power usage equipment in the
Premises, Tenant
shall obtain the written permission of Landlord which permission
shall not be
unreasonably withheld or delayed.
(f) Tenant agrees not to proceed to make any Alterations,
not
withstanding consent from Landlord to do so, until Tenant
notifies Landlord in
writing of the date Tenant desires to commence construction or
installation of
such Alterations and Landlord has approved such date in writing,
in order that
Landlord may post appropriate notices to avoid any liability to
contractors or
material suppliers for payment for Tenant's improvements. Tenant
will at all
times permit such notices to be posted and to remain posted
until the completion
of work.
(g) Tenant shall not, at any time prior to or during the Term,
directly
or indirectly employ, or permit the employment of, any
contractor, mechanic or
laborer in the Premises, whether in connection with any
Alteration or otherwise,
if it is reasonably foreseeable that such employment will
materially interfere
or cause any material conflict with other contractors,
mechanics, or laborers
engaged in the construction, maintenance or operation of the
Project by
Landlord, Tenant or others. In the event of any such
interference or conflict,
Tenant, upon demand of Landlord, shall cause all contractors,
mechanics or
laborers causing such interference or conflict to leave the
Project immediately.
13. MAINTENANCE AND REPAIRS OF PREMISES
(a) MAINTENANCE BY TENANT. Throughout the Term, Tenant shall, at
its
sole expense, subject to Paragraphs 5(a) and 13(b) hereof, (1)
keep and maintain
in good order and condition the Premises including, without
limitation, all
Tenant Improvements, Alterations, utility meters, all special or
supplemental
HVAC systems, and electrical systems located within the
Premises, all fixtures,
furniture and equipment, including, without limitation, all
computer, telephone
and data cabling and equipment, Tenant's signs, locks, closing
devices, security
devices, interior windows, window sashes, casements and frames,
floors and floor
coverings, shelving, kitchen and/or restroom facilities and
appliances located
within the Premises to the extent such facilities and appliances
are intended
for the exclusive use of Tenant, if any, custom lighting, and
any alterations,
additions and other property located within the Premises in
first-class
condition and repair, reasonable wear and tear excepted and
Tenant's Property,
(2) keep and maintain in good order and condition, repair and
replace all of
Tenant's security systems in or about or serving the Premises,
and (3) maintain
and replace all specialty lamps, bulbs, starters and ballasts.
Tenant shall
replace, at its expense, any and all plate and other glass in
and about the
Premises which is damaged or broken by Tenant, Tenant's Agents
or invitees. Such
maintenance and repairs shall be performed with due diligence,
lien-free and in
a first-class and workmanlike manner, by licensed contractor(s)
which are
selected by Tenant and approved by Landlord, which approval
Landlord shall not
unreasonably withhold or delay. Tenant shall not do nor shall
Tenant allow
Tenant's Agents to do anything to cause any damage,
deterioration or
unsightliness to the Premises, the Building or the Project.
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(b) MAINTENANCE BY LANDLORD. Subject to the provisions of
Paragraphs
13(a), 21 and 22, and further subject to Tenant's obligation
under Paragraph 4
to reimburse Landlord, in the form of Additional Rent, for
Tenant's
Proportionate Share(s) of the cost and expense of the following
items, Landlord
agrees to repair and maintain the following items: the roof
coverings (provided
that Tenant installs no additional air conditioning or other
equipment on the
roof that damages the roof coverings, in which event Tenant
shall pay all costs
resulting from the presence of such additional equipment); the
Systems serving
the Premises and the Building; and the Parking Areas, pavement,
landscaping,
sprinkler systems, sidewalks, driveways, curbs, and lighting
systems in the
Common Areas. Subject to the provisions of Paragraphs 13(a), 21
and 22,
Landlord, at its own cost and expense, agrees to repair and
maintain the
following items: the structural portions of the roof
(specifically excluding the
roof coverings), the foundation, the footings, the floor slab,
and the load
bearing walls and exterior walls of the Building (excluding any
glass and any
routine maintenance, including, without limitation, any
painting, sealing,
patching and waterproofing of such walls). Landlord shall
perform its
obligations hereunder in an manner consistent with that employed
by owners of
comparable office buildings in the vicinity of the Project.
Notwithstanding
anything in this Paragraph 13 to the contrary, Landlord shall
have the right to
either repair or to require Tenant to repair any damage to any
portion of the
Premises, the Building and/or the Project caused by or created
due to any act,
omission, negligence or willful misconduct of Tenant or Tenant's
Agents and to
restore the Premises, the Building and/or the Project, as
applicable, to the
condition existing prior to the occurrence of such damage;
provided, however,
that in the event Landlord elects to perform such repair and
restoration work,
Tenant shall reimburse Landlord upon demand for all costs and
expenses incurred
by Landlord in connection therewith. Landlord's obligation
hereunder to repair
and maintain is subject to the condition precedent that Landlord
shall have
received written notice of the need for such repairs and
maintenance and a
reasonable time to perform such repair and maintenance. Tenant
shall promptly
report in writing to Landlord any defective condition known to
it which Landlord
is required to repair, and failure to so report such defects
shall make Tenant
responsible to Landlord for any liability incurred by Landlord
by reason of such
condition. Landlord shall not be liable to Tenant for failure to
perform any
such maintenance, repairs or replacements, unless Landlord shall
fail to make
such maintenance, repairs or replacements and such failure shall
continue for an
unreasonable time following written notice from Tenant to
Landlord of the need
therefor. Without limiting the foregoing, Tenant waives the
right to make
repairs at Landlord's expense under any law, statute or
ordinance now or
hereafter in effect (including the provisions of California
Civil Code Sections
1932(1), 1941, and 1942 and any successive sections or statutes
of a similar
nature).
14. LANDLORD'S INSURANCE
Landlord shall purchase and keep in force ISO Special Form
(formerly known
as "all risk") insurance covering the Building and the Project.
Tenant shall,
at its sole cost and expense, comply with any and all reasonable
requirements
pertaining to the Premises, the Building and the Project of any
insurer
necessary for the maintenance of reasonable fire and commercial
general
liability insurance, covering the Building and the Project.
Landlord may
maintain "Loss of Rents" insurance, insuring that the Rent will
be paid in a
timely manner to Landlord for a period of at least twelve (12)
months if the
Premises, the Building or the Project or any portion thereof are
destroyed or
rendered unusable or inaccessible by any cause insured against
under this Lease.
15. TENANT'S INSURANCE
(a) COMMERCIAL GENERAL LIABILITY INSURANCE. Tenant shall, at
Tenant's
expense, secure and keep in force a "broad form" commercial
general liability
insurance and property damage policy covering the Premises,
insuring Tenant, and
naming Landlord, Landlord's lenders and, at Landlord's request,
such ot
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