EXHIBIT 10.64
STANDARD LEASE AGREEMENT
(OFFICE)
BETWEEN
PANATTONI DEVELOPMENT COMPANY, A
CALIFORNIA LIMITED LIABILITY COMPANY,
AS
“LANDLORD”
AND
HEALTH NET, INC., A DELAWARE
CORPORATION,
AS
“TENANT”
JULY 24, 2006
(11031 SUN CENTER DRIVE, RANCHO
CORDOVA)
OFFICE GROSS LEASE
AGREEMENT
Basic Lease
Information
Terms and Definitions
. For the purpose of this Lease, the
following capitalized terms shall have the following
definitions:
|
|
|
|
|
|
Lease Date:
|
|
July 24,
2006
|
|
|
|
Landlord:
|
|
Panattoni
Development Company, a California Limited
Liability Company
8401 Jackson Road
Sacramento, California 95826
|
|
|
|
Tenant:
|
|
Health Net,
Inc., a Delaware Corporation
|
|
|
|
Tenant’s Notice
|
|
|
|
Address:
|
|
Health Net,
Inc.
P. O. Box 2470
Rancho Cordova, CA 95741-2470
Attn: Director of Real Estate
|
|
|
|
Tenant’s
Billing
|
|
|
|
Address:
|
|
Health Net,
Inc.
P. O. Box 2470
Rancho Cordova, CA 95741-2470
Attn: Director of Real Estate
|
|
|
|
Tenant Contact:
|
|
Director of
Real Estate
Phone Number: (916) 935-1317
Fax Number: (916) 935-4406
|
|
|
|
Building:
|
|
An
approximately 112,142 rentable square foot two-story office
building on approximately 8.98 acres of land commonly known as
11031 Sun Center Drive, Rancho Cordova, California. The location of
the Building is shown on the site plan attached as Exhibit
A.
|
|
|
|
Tenant’s Proportionate Share:
|
|
100%, based on
a Building rentable area of approximately 112,142 square
feet.
|
|
|
|
Premises:
|
|
The Premises
referred to in this Lease consists of approximately 112,142
rentable square feet on the first and second floors of the
Building, as shown on the floor plans attached hereto as Exhibit G.
The Premises include approximately 5 parking spaces per 1,000
rentable square feet.
|
|
|
|
Term:
|
|
The term shall
be thirty-six (36) months from the Commencement Date as defined in
Section 4 below. This Lease shall be subject to Landlord
acquiring title to the Premises no later than August 15,
2006.
|
|
|
|
Scheduled Lease
Commencement Date:
|
|
January 1,
2007.
|
|
|
|
Business Hours:
|
|
The hours of
8:00 a.m. to 6:00 p. m, Monday through Friday, and 9:00 a.m.
to 2:00 p.m. Saturday (excepting Federally recognized
holidays).
|
|
|
|
|
|
|
|
|
|
Base Rent:
|
|
Months
01-12:
|
|
$1.85 per
rentable square foot per month.
|
|
|
|
|
|
Months
13-24:
|
|
$1.90 per
rentable square foot per month.
|
|
|
|
|
|
Months
25-36:
|
|
$1.94 per
rentable square foot per month.
|
-1-
|
|
|
|
Base Year:
|
|
2007 calendar
year
|
|
|
|
Lease Year:
|
|
The calendar
year in which the Term commences and each succeeding calendar year
thereafter.
|
|
|
|
Use:
|
|
General office
and any other lawful use approved in writing by Landlord, which
shall not be unreasonably withheld, delayed or
conditioned.
|
|
|
|
Security Deposit:
|
|
Waived
|
|
|
|
Broker for Landlord:
|
|
None
|
|
|
|
Broker for Tenant:
|
|
Madison
Partners
2029 Century Park East, Suite 515
Los Angeles, California 90067
|
LIST OF EXHIBITS:
|
|
|
|
A
|
|
Site
Plan
|
|
|
|
A-1
|
|
Base Building
Work
|
|
|
|
B
|
|
Lease
Improvement Agreement
|
|
|
|
C
|
|
First Amendment
to Lease and Acknowledgment
|
|
|
|
D
|
|
Rules and
Regulations
|
|
|
|
E
|
|
Janitorial
Specifications
|
|
|
|
F
|
|
Exclusions From
Operating Expenses and Real Estate Taxes
|
|
|
|
G
|
|
Floor Plans of
Premises
|
-2-
STANDARD LEASE
AGREEMENT
(OFFICE)
This Standard Lease Agreement (
“Lease” ) is made and entered into by the
Landlord and Tenant referred to in the Basic Lease Information. The
Basic Lease Information attached to this Lease as page 1 and page 2
is hereby incorporated into this Lease by this
reference.
(a) This Lease shall be effective as
between Landlord and Tenant as of the full execution and delivery
hereof by both Landlord and Tenant. Landlord hereby leases to
Tenant and Tenant hereby leases from Landlord upon the terms and
conditions contained herein the Premises, which are more
particularly described in Exhibit A attached hereto and
made a part hereof (the “Premises” ), including
any tenant improvements (the “Tenant
Improvements” ) thereon presently existing or to be
constructed by Tenant in accordance with the “Lease
Improvement Agreement” attached as Exhibit B
, which is made a part hereof by this reference. As hereinafter
used in this Lease, the term “Building” shall
refer to the entire structure which is synonymous with the
Premises, and the term “Lot” shall refer to the
Assessor’s tax parcel on which the Building is situated. This
Lease confers no rights either with regard to the subsurface of the
land below the ground level of the Building or with regard to
airspace above the roof of the Building.
(b) Tenant acknowledges that, as of
the Lease Date, the Building is vacant. Prior to the Commencement
Date, Landlord and Tenant have agreed that Landlord will complete
certain improvements to the Building (the “ Base Building
Work ”) and Tenant will complete certain improvements to
the Building (the “ Tenant Improvements ), both as
more particularly described on Exhibit A-1 and Exhibit
B attached hereto. The Tenant Improvements shall be funded in
part by the Tenant Improvement Allowance and Additional Allowance
as set forth in the Section 4.2 of the Lease Improvement
Agreement. The Base Building Work shall be at Landlord’s sole
cost and expense. Tenant agrees to construct the Tenant
Improvements in compliance with all applicable laws, statutes and
ordinances, and such construction shall be consistent with the
Building Standards attached as Schedule 2 to Exhibit
B , subject to events preventing such compliance beyond the
reasonable control of Tenant (provided that Tenant has advised
Landlord in writing of such noncompliance and the specific reasons
therefor). Tenant may, not later than the Commencement Date, at
Tenant’s expense, have a licensed architect measure the
Premises (using the Standard Method for Measuring Floor Area in
Office Buildings, ANSI Z65.1-1996, published by BOMA International
(the “ BOMA Standard ”)) to determine the
rentable area and usable area of the Premises. Based on such
measurement, the Base Rent, and Tenant Improvement Allowance and
Additional Allowance shall be proportionately adjusted; provided,
however, that in no event (i) will such measurement result in
a Rent increase to Tenant of more than two percent (2%), or
(ii) will the rentable area of the Premises be more than ten
percent (10%) greater than the “ Office Area
” (as that term is defined in the BOMA Standard) of the
Premises.
|
2.
|
ACCEPTANCE
OF PREMISES
|
Except as otherwise provided in this
Lease, Tenant’s taking possession of the Premises shall
constitute Tenant’s acknowledgment that, to Tenant’s
actual knowledge, the Premises are in good condition and that the
Base Building Work (as defined in the Lease Improvement Agreement)
is constructed in accordance with the Lease Improvement Agreement,
and that Tenant agrees to accept the same in its condition existing
as of the date of such entry and subject to all applicable
municipal, county, state and federal statutes, laws, ordinances,
including zoning ordinances, and regulations governing and relating
to the use, occupancy or possession of the Premises.
Notwithstanding the foregoing, within fifteen (15) days
following the Commencement Date, Tenant shall deliver to Landlord a
list of items ( “Punch List Items” ) that Tenant
reasonably deems that Landlord complete or correct in order for the
Premises to be reasonably acceptable (which shall not include any
items damaged by Tenant, its agents, employees, contractors and/or
subcontractors). Within thirty (30) days following
Landlord’s receipt of the Punch List Items, to the extent
commercially possible, Landlord shall complete and/or correct such
items set forth on the Punch List Items using its good faith
efforts and due diligence. No promise of Landlord to alter,
remodel, repair or improve the Premises or the Building and no
representation, express or implied, respecting any matter or thing
related to the Premises or Building or this Lease
-3-
(including, without limitation, the condition of
the Building or Premises) have been made to Tenant by Landlord, its
agents or employees, other than as set forth in the Lease
Improvement Agreement and as otherwise provided in this Lease.
Nothing in this Section 2 shall, however, relieve Landlord of
its obligation to correct any latent defects in the Premises or
Building, or to construct the Base Building Work in compliance with
all applicable laws.
The term “Common
Areas” shall refer to all areas and facilities outside
the Premises (including all appurtenant parking facilities).
Landlord hereby grants to Tenant, during the term of this Lease,
the exclusive right to use the Common Areas as they exist from time
to time, subject to any reasonable rules, regulations, and
restrictions governing the use of the Premises as from time to time
made or amended by Landlord. Under no circumstances shall the right
granted herein to use the Common Areas be deemed to include the
right to store any property in the Common Areas. Provided that
Landlord, using its commercially reasonable efforts, does not
unreasonably interfere with Tenant’s use of the Premises or
the parking facilities, Landlord reserves the right at any time and
from time to time, to: (i) make alterations in or additions to
the Premises and to the Common Areas; (ii) close the Common
Areas to whatever extent required in the opinion of
Landlord’s counsel to prevent a dedication of any of the
Common Areas or the accrual of any rights of any person or of the
public to the Common Areas; (iii) temporarily close any of the
Common Areas for maintenance purposes; and (iv) promulgate
reasonable rules and regulations governing the use of the Common
Areas.
Subject to and upon the terms and
conditions set forth herein, the term of this Lease shall be for
the period specified in the Basic Lease Information, commencing
upon the earlier of the following dates (the “Commencement
Date” ): (i) the date on which the Premises are
Substantially Complete (as defined below); or (ii) the date
upon which the Tenant takes possession of the Premises in order to
conduct its business operations therein, provided, however, and
notwithstanding the foregoing, in no event shall the Commencement
Date be later than the Scheduled Lease Commencement Date. Landlord
shall give Tenant possession of the Premises for the purposes of
Tenant installing the Tenant Improvements upon the date this Lease
is fully executed, provided that such possession does not
unreasonably interfere with or delay completion of the Base
Building Work. Such early possession shall be upon all the terms
and conditions of this Lease, except that in no event shall Tenant
be required to pay Base Rent, Tenant’s Proportionate Share of
Excess Expenses (as defined in Section 7(a) below), or any
costs for parking, hoists, freight elevators, utilities or
temporary HVAC during such early possession period. Within thirty
(30) days after the Commencement Date, Landlord and Tenant
shall execute an amendment to this Lease ( “First
Amendment to Lease and Acknowledgment” ) setting forth
the Commencement Date and the expiration date of the term of the
Lease, which shall be in the form attached hereto as
Exhibit C. For purposes of the foregoing, the Premises shall
be deemed to be “ Substantially Complete ” when
(i) a certificate of occupancy (temporary or final) for the
Premises has been issued by the appropriate governmental entity,
and (ii) the Base Building Work has been completed, with the
exception of the Punch List Items.
(a) Tenant agrees to pay Landlord
the Base Rent set forth in the Basic Lease Information, without
prior notice, demand, deduction or offset (except as expressly set
forth in this Lease or under applicable law) in the manner and
amounts set forth in this Section 5. Landlord agrees to accept
payment of Base Rent pursuant to wire transfer from Tenant. The
term “Rent” as used in this Lease shall mean
Base Rent, Tenant’s Proportionate Share of Excess Expenses,
and any other amounts owing from Tenant to Landlord pursuant to the
provisions of this Lease. The Base Rent shall be payable in advance
on or before the first day of each month throughout the term of
this Lease. Base Rent for any period during the term hereof which
is for less than one month shall be a prorated portion of the
monthly installment based upon a thirty (30)-day month.
(b) [Intentionally
omitted]
(c) If the amount of Rent or any
other payments due under this Lease violates the terms of any
governmental restrictions on such Rent or payment, then the Rent or
payment due
-4-
during the period of such restrictions shall be
the maximum amount allowable under those restrictions.
Waived.
(a) For the purpose of this
Section 7(a) and this Lease, the following terms are defined
as follows:
|
|
(1)
|
“Base
Year” shall mean
the calendar year set forth in the Basic Lease
Information.
|
|
|
(2)
|
“Tenant’s Proportionate
Share” shall equal
one hundred percent (100%).
|
|
|
(3)
|
“Operating
Expenses” shall
mean all reasonable and necessary costs and expenses paid or
incurred by or on behalf of Landlord (whether directly or through
independent contractors) in connection with the operation, repair,
replacement and maintenance of the Building, including the
following costs by way of illustration, but not limitation:
(i) salaries, wages, compensation, benefits, pension or
contributions and all medical, insurance and other fringe benefits
paid to, for, or with respect to all persons, excluding management
personnel (whether they be employees of Landlord, its managing
agent or any independent contractor) for their services in the
operation (including security services for the Building),
maintenance, repair or cleaning of the Building, and payroll taxes,
worker’s compensation, uniforms and dry cleaning costs for
such persons; (ii) payments under service contracts with
independent contractors for operating (including providing security
services, if any), maintaining, repairing or cleaning the Building
or any portion thereof or any fixtures or equipment therein;
(iii) all costs for water, steam, sewer and other utility
services to the Building, including any taxes on any such
utilities; (iv) repairs and replacements which are appropriate
to the continued operation of the Building as a first-class office
building; (v) [intentionally omitted]; (vi) cost of
landscaping in, on or about the Building; (vii) cost of
building and cleaning supplies and equipment, cost of replacements
for tools and equipment used in the operation, maintenance and
repair of the Building and charges for lobby and elevator telephone
service for the Building; (viii) financial expenses incurred
in connection with the operation of the Building, such as insurance
costs, including, but not limited to, any premiums, deductibles and
other costs of insurance, as Landlord may, in its reasonable
discretion, from time to time carry (including, without limitation,
liability insurance, fire and casualty insurance, rental
interruption insurance, flood and earthquake insurance, and any
other insurance), attorneys’ fees and disbursements, auditing
and other professional fees and expenses, association dues and any
other ordinary and customary financial expenses incurred in the
ordinary course in connection with the operation of the Building;
(ix) fees payable to a property management company (which may
be owned or controlled by Landlord or Landlord’s principals)
for the property and asset management of a first-class office
building, provided such fee shall not exceed the fee that would be
charged by a first-class management company unaffiliated with
Landlord that does not have a brokerage listing agreement with
Landlord for the Building; (x) the cost of capital
improvements made by Landlord in order (A) to conform to any
changes enacted after the Commencement Date in laws, rules,
regulations or requirements of any governmental authority having
jurisdiction, or of the board of fire underwriters or similar
insurance body, provided that such expense, if a capital
expenditure as determined by generally accepted accounting
procedures, shall be amortized on a straight line basis over
such
|
-5-
|
|
expenditure’s useful life,
and only such amortized portion shall be included in Operating
Expenses, not to exceed One Hundred Thousand and No/100ths Dollars
($100,000.00) in any given Lease Year (which limitation shall apply
only during the initial Term of this Lease), or (B) to effect
a labor saving, energy saving or other economy, which cost shall be
included in Operating Expenses for the Lease Year in which such
improvement was made not in excess of the savings resulting from
such expenditure; (xi) costs for accounting, legal and other
professional services incurred in the operation of the Building;
(xii) rental payments made for equipment used in the operation
and maintenance of the Building; (xiii) the cost of
governmental licenses and permits, or renewals thereof, necessary
for the operation of the Building; (xiv) sales, use and excise
taxes on goods and services; (xv) real property taxes,
assessments and bonds (collectively, “Real Estate
Taxes” ), which shall include, but not be limited to, any
and all taxes, assessments, water and sewer charges and other
similar governmental charges levied on or attributable to the
Building, including the Building and the Lot, or their operation,
ordinary and extraordinary, substitute and additional, unforeseen
as well as foreseen, present and future, of any kind and nature
whatsoever, including without limitation, (A) real property
taxes or assessments levied or assessed against the Building and
the Lot, (B) assessments or charges levied or assessed against
the Building and the Lot by any redevelopment agency, (C) any
tax measured by gross rentals received from the leasing of the
Premises, excluding any documentary transfer taxes, net income,
franchise, capital stock, estate or inheritance taxes imposed by
the state or federal government or their agencies, branches or
departments; provided that if at any time during the term any
governmental entity levies, assesses or imposes on Landlord any
(1) general or special, ad valorem or specific, excise,
capital levy or other tax, assessment, levy or charge directly on
the rent received under this Lease, or (2) any license fee,
excise or franchise tax, assessment, levy or charge measured by or
based, in whole or in part upon such rent, or (3) any
transfer, transaction, succession, gift, transit, or similar tax,
assessment, levy or charge based directly or indirectly upon the
transaction represented by this Lease or such other leases, or
(4) any occupancy, use, per capita or other tax, assessment,
levy or charge based directly or indirectly upon the use or
occupancy of the Premises, then any such taxes, assessments, levies
and charges shall be deemed to be included in real property taxes
and assessments (real estate taxes and assessments shall also
include the reasonable cost to Landlord of contesting the amount,
validity, or applicability of any real estate taxes and
assessments); (xvi) [intentionally omitted]; and
(xvii) all other reasonable or necessary expenses paid in
connection with the operation, maintenance, repair, replacement and
cleaning of the Building, that pursuant to sound property
management practices consistently applied would be considered an
operating expense. Please see Exhibit F for Operating Expense
exclusions (in the event of any inconsistency between this
Section 7(a)(3) and Exhibit F, the terms of
Exhibit F shall control).
|
Any costs or expenses of the nature
described above shall be included in Operating Expenses for any
Lease Year no more than once, notwithstanding that such cost or
expenses may fall under more than one of the categories listed
above. Operating Expenses shall not be reduced as a result of
Tenant performing for itself any of the services that Landlord
provides for the Building. Landlord may use related or affiliated
entities to provide service or furnish materials for the Building;
provided the fees and charges of such related and affiliated
entities do not exceed the reasonable fees charged in the
applicable industry for a building similar to the
Building.
-6-
|
|
(4)
|
Tenant’s
Proportionate Share of Excess Expenses shall be payable by Tenant
to Landlord as follows:
|
|
|
(i)
|
Beginning with
the Lease Year following the Base Year and for each Lease Year
thereafter, Tenant shall pay Landlord an amount equal to
Tenant’s Proportionate Share of the Operating Expenses
incurred by Landlord in the Lease Year which exceeds the total
amount of Operating Expenses payable by Landlord for the Base Year.
This excess is referred to as the “ Excess Expenses
.” Notwithstanding anything in this Lease to the contrary, in
no event shall the Operating Expenses for any Lease Year exceed the
Operating Expenses for the prior Lease Year by more than one
hundred five percent (105%) (“Operating Expense
Cap”) on a non-cumulative basis (the “ Excess
Expenses Cap ”). The Excess Expenses Cap shall not apply
to increases attributable to Real Estate Taxes, insurance or
utilities.
|
|
|
(ii)
|
To provide for
current payments of Excess Expenses, Tenant shall, at
Landlord’s request, pay as additional rent during each Lease
Year, an amount equal to Tenant’s Proportionate Share of the
Excess Expenses payable during such Lease Year, as estimated and
modified by Landlord from time to time, but not in excess of once
per Lease Year. Such payments shall be made in monthly
installments, commencing on the first day of the month following
the month in which Landlord notifies Tenant of the amount it is to
pay hereunder and continuing until the first day of the month
following the month in which Landlord gives Tenant a new notice of
estimated Excess Expenses. It is the intention hereunder to
estimate from time to time the amount of the Excess Expenses for
each Lease Year, including the Lease Year immediately following the
Base Year, and Tenant’s Proportionate Share thereof, and then
to make an adjustment in the following year based on the actual
Excess Expenses incurred for that Lease Year.
|
|
|
(iii)
|
On or before
April 1 of each Lease Year after the first Lease Year (or as
soon thereafter as is practical), Landlord shall deliver to Tenant
a statement ( “Expense Statement” ) setting
forth Tenant’s Proportionate Share of the Excess Expenses and
Excess Utilities Payments (as defined in Section 7(a)(5)
below) for the preceding Lease Year; provided, however, that the
failure of Landlord to supply such statement shall not constitute a
waiver of Landlord’s rights to collect for such Excess
Expenses or Excess Utilities Payments, except, however, in the
event that Landlord’s failure to provide such statement
exceeds two hundred seventy (270) days after the Lease Year in
question, Landlord’s right to collect such Excess Expenses
and Excess Utilities Payments shall terminate at such time. If
Tenant’s Proportionate Share of the actual Excess Expenses or
Excess Utilities Payments for the previous Lease Year exceeds the
total of the estimated monthly payments made by Tenant for such
year, Tenant shall pay Landlord the amount of the deficiency within
thirty (30) days of the receipt of the statement. If such
total exceeds Tenant’s Proportionate Share of the actual
Excess Expenses or Excess Utilities Payments for such Lease Year,
then Landlord shall credit against Tenant’s next ensuing
monthly installment(s) of Base Rent and Excess Expense and Excess
Utilities Payments an amount equal to the difference until the
credit is exhausted. If a credit is due from Landlord on the
Expiration Date, Landlord shall pay Tenant the amount of the credit
within thirty (30) days following the determination of such
amount. The obligations of Tenant and Landlord to make payments
required under this Section 7 shall survive the Expiration
Date. Tenant’s Proportionate Share of Excess Expenses and
Excess Utilities Payments in any Lease Year having less than three
hundred sixty-five (365) days shall be appropriately
prorated.
|
|
|
(iv)
|
For a period of six
(6) months after receipt of the Expense Statement, Tenant, or
its representatives, shall be entitled, upon ten
|
-7-
|
|
(10) days prior written notice and
during normal business hours, at the office of the Building’s
property manager or such other place as Landlord shall reasonably
designate, to inspect, copy and examine those books and records of
Landlord relating to the determination of Excess Expenses and
Excess Utilities Payments for the immediately preceding Lease Year.
Failure of Tenant to request such inspection within such six
(6) month period shall render such Expense Statement
conclusive and binding on Tenant. If, after inspection and
examination of such books and records, Tenant disputes the amounts
of the Excess Expenses or Excess Utilities Payments charged by
Landlord, Tenant may, by written notice to Landlord, request an
independent audit of such books and records. The independent audit
of the books and records shall be conducted by a certified public
accountant, an independent property management company, or other
reputable professional with the requisite experience regarding
operating expenses (each, a “ Qualified Auditor
”) reasonably acceptable to both Landlord and Tenant. If,
within thirty (30) days after Landlord’s receipt of
Tenant’s notice requesting an audit, Landlord and Tenant are
unable to agree on the Qualified Auditor to conduct such audit,
then the presiding judge of the superior court may designate a
Qualified Auditor not then employed by Landlord or Tenant to
conduct such audit. The audit shall be limited to the determination
of the amount of Excess Expenses and Excess Utilities Payments for
the subject Lease Year. If the audit discloses that the amount of
Excess Expenses or Excess Utilities Payments billed to Tenant was
incorrect, the appropriate party shall pay to the other party the
deficiency or overpayment, as applicable. Tenant shall pay all
costs and expenses of the audit unless the audit shows that
Landlord overstated Excess Expenses or Excess Utilities Payments
for the subject Lease Year by more than five percent (5.00%), in
which case Landlord shall pay all costs and expenses of the audit
in an amount not to exceed two thousand five hundred dollars
($2,500). Tenant and the Qualified Auditor shall keep any
information gained from such audit confidential and shall not
disclose it to any other party (other than Tenant’s
attorneys, accountants and other consultants and advisors), except
as necessary to enforce the terms of this Lease. The exercise by
Tenant of the audit rights hereunder shall not relieve Tenant of
its obligation to timely pay all sums due hereunder, including,
without limitation, the disputed Excess Expenses or Excess
Utilities Payments.
|
|
|
(v)
|
Payment in
Installments. All assessments and premiums which are not
specifically charged to Tenant because of what Tenant has done,
which can be paid by Landlord in installments, shall be paid by
Landlord in the maximum number of installments permitted by law and
not included as Operating Expenses except in the year in which the
assessment or premium installment is actually paid; provided,
however, that if the prevailing practice in comparable buildings is
to pay such assessments or premiums on an earlier basis, and
Landlord pays on such basis, such assessments or premiums shall be
included in Operating Expenses as paid by Landlord.
|
|
|
(vi)
|
Line Item
Detail. Each time Landlord provides Tenant with an actual and/or
estimated statement of Operating Expenses or Excess Utilities
Payments, such statement shall be itemized on a line item by line
item basis, showing the applicable expense for the applicable year
and the year prior to the applicable year; such format and detail
shall be reasonably consistent from year to year in order to
facilitate Tenant’s review.
|
-8-
|
|
(vii)
|
Payment of
Taxes and Insurance Premiums. Tenant shall not be required to pay
its Proportionate Share of Real Estate Taxes or insurance premiums
on the basis of estimates or in monthly installments. Tenant shall
only be required to pay such Proportionate Share of Real Estate
Taxes or insurance premiums ten (10) days prior to the due
date Landlord is required to pay such taxes or insurance premiums.
Landlord shall bill Tenant for Tenant’s Proportionate Share
of Real Estate Taxes thirty (30) days before Landlord is
required to make payments of such taxes to the appropriate taxing
authorities. Landlord shall bill Tenant for Tenant’s
Proportionate Share of insurance premiums thirty (30) days
before Landlord is required to make payment of such insurance
premiums to the appropriate insurer(s).
|
|
|
(viii)
|
Proposition 8.
If Landlord receives a reduction in Real Estate Taxes attributable
to the Base Year as a result of commonly called Proposition 8
application, then Real Estate Taxes for the Base Year and each
Lease Year shall be calculated as if no Proposition 8 reduction in
Real Estate Taxes were received.
|
|
|
(ix)
|
Service
Agreements: If any portion of the Building is covered by a service
agreement at any time during the Base Year and to the extent the
Building is not covered by such service agreement during a
subsequent Lease Year, Operating Expenses for the Base Year shall
be deemed increased by such amount as Landlord would have incurred
during the Base Year with respect to the items or matters covered
by the subject or service agreement, had such service agreement not
been in effect at the time during the Base Year.
|
|
|
(x)
|
Management
Agreement. In the event that the property management agreement in
effect during the Base Year changes in any subsequent year, and a
service that was previously performed pursuant to, and as part of,
such property management agreement is thereafter excluded from the
scope of such management agreement, then such cost shall either be
excluded from Operating Expenses or the Base Year shall be grossed
up to reflect such cost of such performance.
|
Tenant shall use the Premises for
the uses set forth in the Basic Lease Information, and shall not
use the Premises for any other purposes. Tenant shall be solely
responsible for obtaining any necessary governmental approvals of
such use that is of a non-office nature. Tenant shall not do,
bring, or keep anything in or about the Premises that will cause a
cancellation of any insurance covering the Premises. If the rate of
any insurance carried by Landlord is increased as a result of
Tenant’s use for non-office purposes, Tenant shall pay to
Landlord within thirty (30) days before the date Landlord is
obligated to pay a premium on the insurance, or within thirty
(30) days after Landlord delivers to Tenant a certified
statement from Landlord’s insurance carrier stating that the
rate increase was caused solely by an activity of Tenant on the
Premises as permitted in this Lease, whichever date is later, a sum
equal to the difference between the original premium and the
increased premium. Landlord reserves the right to prescribe the
weight and position of all safes, fixtures and heavy installations
that Tenant desires to place in the Premises so as to distribute
properly the weight, or to require plans prepared by a qualified
structural engineer for such heavy objects, which shall be prepared
at Tenant’s sole cost and expense.
|
9.
|
COMPLIANCE
WITH THE LAW
|
(a) Tenant shall not use the
Premises or permit anything to be done in or about the Premises
which will in any way conflict with any law, statute, zoning
restriction, ordinance or governmental law or rule, regulation, or
requirement of any duly constituted public authorities now in force
or which may hereafter be enacted or promulgated, or subject
Landlord to any liability for injury to any person or property by
reason of any business operation being conducted
-9-
in or about the Premises. Subject to
Section 9(b) below, to the extent required due to
Tenant’s specific use of the Premises, alterations of the
Premises, or as a result of Tenant’s application for permits
or authorizations, as opposed to compliance required by office
tenants in general, Tenant shall, at its sole cost and expense,
promptly comply with all laws, statutes, ordinances, and
governmental rules, regulations, including, but not limited to, the
Americans with Disabilities Act ( “ADA” ) of
1990 (42 U.S.C. § 12101 et seq.), any amendment thereto or
regulations promulgated thereunder, or state or local ordinances or
codes enacted pursuant thereto; or requirements of any board or
fire insurance underwriters or other similar bodies, now or
hereafter constituted, relating to or affecting the condition, use,
or occupancy of the Premises by Tenant, excluding structural
changes not related to or affected by Tenant’s improvements
or acts. The final judgment of any court of competent jurisdiction
or the admission of Tenant in any action against Tenant, whether
Landlord be a party thereto or not, that Tenant has violated any
law, statute, ordinance, or governmental rule, regulation, or
requirement, shall be conclusive of that fact as between Landlord
and Tenant.
(b) Landlord represents and warrants
that to its actual knowledge, the Building and Premises, as of the
Commencement Date to the extent such were constructed by or caused
to be constructed by Landlord, are in compliance with all laws,
statutes, ordinances and governmental rules, regulations including,
but not limited to ADA, and all laws governing hazardous materials
or hazardous substances, air quality and other environmental
regulations. The foregoing representation and warranty of Landlord
does not (i) include any improvements constructed or caused to
be constructed by Tenant, and/or (ii) affect the
Tenant’s obligations pursuant to Section 9(a) above
and/or (iii) apply to any non-office use to which Tenant will
put the Premises. In the event Landlord’s representation or
warranty in this section is finally determined to be incorrect, as
Tenant’s sole remedy, Landlord shall be responsible for
promptly taking actions to cause such compliance, at
Landlord’s sole cost and expense.
|
10.
|
ALTERATIONS
AND ADDITIONS
|
(a) Tenant shall not make or suffer
to be made any non-structural alterations, additions, or
improvements (collectively, “Alterations” ) to
or of the Premises, or any part thereof, without first obtaining
the written consent of Landlord, which shall not be unreasonably
withheld or delayed; provided, however, if the Alterations would
adversely affect the structure or safety of the Building or its
electrical, plumbing, HVAC, mechanical or safety systems, or if
such Alterations would create an obligation on Landlord’s
part to make modifications to the Building, and Tenant is not
willing to pay the cost necessary to remediate such problems,
Landlord may withhold its consent in its sole and absolute
discretion. Notwithstanding the foregoing, without the prior
consent of Landlord, but with the prior notice to Landlord, Tenant
shall be entitled to make Alterations within the Premises, provided
that (i) the cost of construction of such Alterations does not
exceed One Hundred Thousand and No/100ths Dollars ($100,000.00) per
project, and (ii) does not affect the plumbing, electrical,
structural or mechanical systems of the Building, and
(iii) Tenant otherwise complies with the provisions of this
Section. In no event shall carpeting, painting or other work of a
similar decorative nature (and which does not require a building
permit) require the consent of, or notice to, the Landlord. All
Alterations shall comply with all applicable laws, statutes and
ordinances, which include, but are not limited to ADA. Any
Alterations to or of said Premises, including, but not limited to,
wall covering, paneling, and built-in cabinet work, but excepting
movable furniture and trade fixtures, shall on the expiration of
the Term become a part of the realty and belong to Landlord, and
shall be surrendered with the Premises. However, Landlord shall
provide written notice to Tenant (concurrently with
Landlord’s approval of such Alteration) whether Tenant will
be required to remove such Alteration. If Landlord so states in
such written notice, Tenant, at its own cost shall remove such
Alteration upon the expiration of the Term. Upon Landlord’s
approval of the requested Alterations, Tenant shall secure all
necessary permits, if applicable. Before Landlord’s consent
to such Alterations, Tenant shall submit detailed specifications,
floor plans and necessary permits (if applicable) to Landlord for
review. In no event shall any Alterations affect the structure of
the Building or its facade. Landlord and Tenant acknowledge and
agree that Tenant may install supplemental HVAC in the Premises in
the future at Tenant’s sole cost and expense, with the prior
approval by Landlord of the plans, specifications, and installation
contractor for the supplemental HVAC, such approval not to be
unreasonably withheld or unduly delayed. Any supplemental HVAC
shall be left in the Premises upon expiration of the Lease term.
Any HVAC servicing of the existing HVAC or supplemental HVAC shall
be performed by contractors reasonably approved in advance by
Landlord. As a condition to its consent, Landlord may request
adequate assurance that all contractors who will
-10-
perform such work have in force workman’s
compensation and such other employee and public liability insurance
as Landlord deems reasonably necessary. In the event Landlord
consents to the making of any Alterations to the Premises by
Tenant, the same shall be made by Tenant at Tenant’s sole
cost and expense, completed to the reasonable satisfaction of
Landlord, and the contractor or person selected by Tenant to make
the same must first be approved in writing by Landlord which
approval shall not be unreasonably withheld or delayed. If Tenant
makes any Alterations to the Premises as provided in this Section,
the Alterations shall not be commenced until ten (10) business
days after Landlord has received notice from Tenant stating the
date the installation of the Alterations is to commence so that
Landlord can post and record an appropriate notice of
non-responsibility. Tenant shall reimburse Landlord for any
reasonable out-of-pocket expenses incurred by Landlord in
connection with the Alterations made by Tenant, including any
reasonable fees charged by Landlord’s contractors or
consultants to review plans and specifications prepared by Tenant,
and the cost of updating the existing as-built plans of the
Building to reflect the Alterations, not to exceed One Thousand and
No/100ths Dollars ($1,000.00) in total per Alteration; Landlord
must, at the time that Landlord consents to the Alteration, have
provided Tenant with a binding estimate of such costs. Tenant shall
indemnify, defend and hold the Landlord, the Building and the
Premises free and harmless from any liability, loss, damage, cost,
attorneys’ fees and other expenses incurred on account of
such construction, or claims by any person performing work or
furnishing materials or supplies for Tenant or any persons claiming
under Tenant. Notwithstanding anything in this Section 10(a)
to the contrary, in no event shall Landlord require Tenant to
remove any portion of the Tenant Improvements, except that any
cabling installed by Tenant, pursuant to Section 11(a), and/or
trade fixtures and Tenant Improvements installed by Tenant without
the prior, written consent of Landlord, shall be removed at the
expiration of the Lease Term.
(b) Landlord agrees that, subject to
Tenant’s compliance with Section 10(a) above, Tenant
shall be entitled to install a satellite/microwave dish upon the
roof of the Building in a location reasonably acceptable to
Landlord and Tenant; no rent or license fee shall be charged.
Tenant acknowledges that view aesthetics of the Building shall be
considered in the placement of such dish. Tenant shall be
responsible for the maintenance and repair of such dish and shall
remove, at Tenant’s cost, such dish from the roof of the
Building upon the expiration or earlier termination of this Lease
and shall repair any damage caused thereby and reseal any roof
penetrations.
|
11.
|
REPAIRS AND
MAINTENANCE:
|
(a) By taking possession of the
Premises, Tenant shall be deemed to have accepted the Premises as
being in good and sanitary order, condition and repair, excepting
the Punch List Items and latent defects in the construction done by
Landlord, its agents, employees, contractors, and subcontractors.
Except as provided in Section 11(c) (pursuant to which
Landlord is to undertake various repairs and maintenance), Tenant
shall, at Tenant’s sole cost and expense, maintain the
Premises, in clean and good condition and repair, ordinary wear and
tear and casualty excepted. Without limiting the generality of the
foregoing, Tenant shall be solely responsible for maintaining and
repairing all fixtures, non-building standard electrical lighting
(if identified as being non-building standard at the time that
Landlord approves the Plans under the Lease Improvement Agreement),
ceilings and floor coverings, doors, and interior walls within the
Premises to the extent the foregoing are nonstructural elements of
the Building, using the same quality of materials as used in the
original construction. In addition, Tenant shall be responsible for
all repairs made necessary by Tenant or Tenant’s invitees.
Landlord acknowledges that Tenant shall have no obligation to
repair or maintain any areas outside of the Premises, unless such
repair or maintenance is required due to acts of Tenant, its
agents, employees, contractors and subcontractors and the cost
thereof is not covered by insurance carried by Landlord or required
to be carried by Landlord under this Lease. Excepting maintenance,
repairs or replacements required due to the negligence or willful
misconduct of Landlord, its agents, employees, contractors and
subcontractors, Tenant acknowledges that Landlord shall have no
obligation to maintain, repair or replace any telecommunications or
computer cabling or wiring which is located in the Premises or
which exclusively serves the Premises (collectively,
“Cabling” ), except in the event that such would
be required due to Landlord’s negligent acts or omissions.
Tenant shall have the right to install in the Premises such Cabling
as it may require. Tenant shall, at Tenant’s expense,
contract with SBC or another reputable contractor to maintain the
Cabling. Landlord shall have no obligation to alter, remodel,
improve, repair, decorate or paint the Premises except as
specifically set forth in this Lease. Under no circumstances shall
Tenant make any repairs to the Building or to the
-11-
mechanical, electrical or heating, ventilating
or air conditioning systems of the Premises or the Building, unless
such repairs are previously approved in writing by Landlord. Tenant
waives the provisions of Sections 1931(1), 1941 and 1942 of the
California Civil Code, and any similar or successor law regarding
Tenant’s right to make repairs and deduct expenses of such
repairs from the Rent due under this Lease, subject, however, to
the terms of Section 11(d) below. In no event shall Tenant be
responsible for repairs or replacements necessitated by ordinary
wear and tear, damage by third party casualty or damage caused by
Landlord or others for which Tenant is not responsible, nor shall
Tenant be responsible for the correction or repair of any latent
defect in the Premises, or any condition, dilapidation or defect of
which Landlord has actual knowledge prior to the Commencement
Date.
(b) Landlord shall operate the
Building (and provide maintenance, repairs and replacements
pursuant to Section 11(c) below) to a standard or quality
consistent with that of other first-class buildings in the
immediate geographical area and shall (i) provide janitorial
service to the Premises on a five (5)-day-a-week basis (excepting
holidays described in the Basic Lease Information), consistent with
the janitorial specification attached hereto as
Exhibit E , (ii) provide nonexclusive,
non-attended automatic passenger elevator service at all times,
(iii) replace Building standard lamps, starters and ballasts
(all nonstandard lighting within the Premises shall be the
responsibility of Tenant), and (iv) provide monitoring for the
fire sprinklers, exit lighting and parking lot lighting, in or
outside the Building.
(c) Landlord shall be responsible
for maintaining and repairing all structural portions and latent
defects of the Building, at Landlord’s sole expense (and not
as part of Operating Expenses), and shall maintain the roof, side
walls, and foundations of the Building in good, clean and safe
condition and repair. Landlord shall be entitled to approve, in its
sole discretion, the sealing of any roof penetrations caused by
Tenant Improvements. Landlord shall also maintain all landscaping,
driveways, parking lots, fences, signs, sidewalks and the Common
Areas. Landlord shall be responsible for maintenance and repair of
all washrooms, mechanical, electrical and common area telephone
closets, windows, plate glass, exterior doors, plumbing, heating,
electrical, air conditioning and ventilation and life safety
systems, and elevators. Except as otherwise provided in this Lease,
Landlord shall have no liability to Tenant, nor shall
Tenant’s obligations under this Lease be reduced or abated in
any manner whatsoever by reason of any inconvenience, annoyance,
interruption or injury to business arising from Landlord making any
repairs or changes which Landlord is required or permitted by this
Lease or required by law to make in or to any portion of the
Building or the Premises. Landlord shall use reasonable efforts to
minimize any interference with Tenant’s business at the
Premises. If Tenant fails to maintain the Premises as required in
Section 11(a), Landlord may give Tenant thirty
(30) days’ written notice to do such acts as are
reasonably required to so maintain the Premises. If Tenant fails to
promptly commence such work within such time period and diligently
prosecute it to completion, then Landlord shall have the right to
do such acts and expend such funds at the expense of Tenant as are
reasonably required to perform such work. Any amount so expended by
Landlord shall be paid by Tenant promptly after demand with
interest at the Prime Rate plus two percent (2%) per annum,
from the date of such work, but not to exceed the maximum amount
then allowed by law. Landlord shall have no liability to Tenant for
any damage, inconvenience, or interference with the use of the
Premises by Tenant as the result of performing any such work. For
the purpose of this Lease, the “Prime Rate”
shall mean the rate, or base rate, reported in the Money Rates
column or section of The Wall Street Journal as being the base rate
on corporate loans at large U.S. money center commercial banks
(whether or not such rate has actually been charged by any such
bank) on the first date on which The Wall Street Journal is
published in the month preceding the month in which the subject
costs are incurred.
(d) If Landlord fails to provide
repairs or maintenance as required under this Lease, and such
failure interferes with Tenant’s use of the Premises, and
Tenant has notified Landlord of the necessity of such repairs or
maintenance in writing, then Tenant may perform such repairs or
maintenance at Landlord’s cost by taking whatever action is
reasonably necessary to do so, provided:
(1) Tenant gives Landlord (and any
mortgagee whose address has been provided to Tenant) notice of
Tenant’s intent to take such action at least ten
(10) business days prior to taking any such action, Landlord
further fails or refuses to commence repairs within three
(3) business days after a second written notice to Landlord
and such mortgagee (which notice cannot be effective until the
lapse of the aforementioned ten (10) business day period) (if
the nature of the required repair is such that Landlord’s
failure to act is reasonably likely to result
-12-
in injury to Tenant’s
employees or visitors, or damage to Tenant’s personal
property, the aforementioned notice period shall be one
(1) business day, and there shall be no requirement that
Tenant notify Landlord’s mortgagee);
(2) If such repairs or maintenance
will affect the Building’s electrical or mechanical systems,
or the structural integrity of the Building, Tenant shall use only
those contractors used by Landlord in the Building that work on the
Building’s systems, equipment or structure (unless such
contractors are unwilling or unable to perform such work, or the
urgent nature of the required repair makes using those contractors
impractical, in which events Tenant may utilize the services of any
other qualified contractor approved by Landlord, which approval
shall not be unreasonably withheld, conditioned or
delayed).
If Landlord does not deliver a
detailed written reasonable objection to Tenant within thirty
(30) days after receipt of any invoice from Tenant of the
reasonable costs and expenses incurred by Tenant in so repairing or
maintaining (such invoice to contain a reasonably particularized
breakdown of the costs and expenses incurred by Tenant in
connection therewith) then Tenant shall be entitled to deduct from
Rent next due the amount set forth in such invoice (to the extent
not previously paid by Landlord).
Tenant shall not use the Premises in
any manner that will constitute waste, nuisance, or unreasonable
annoyance (which includes excessive noise and/or vibration) to
owners or occupants of adjacent properties or to other tenants of
the Building.
Tenant shall keep the Premises and
the Lot free from any liens arising out of any work performed,
materials furnished, or obligations incurred by Tenant. Landlord
may, at its election, and upon ten (10) days’ notice to
Tenant, remove any liens, in which case Tenant shall pay to
Landlord the cost of removing the lien, including reasonable
attorneys’ fees. Landlord shall have the right at all times
to post on the Premises any notices permitted or required by law
for the protection of Landlord, the Premises, the Building or the
Lot from mechanics’ and materialmen’s liens. To the
extent a lien arises out of any work performed, materials
furnished, or obligations incurred by Tenant, Tenant shall have
thirty (30) days to remove such lien, or provide a bond to
Landlord in an amount sufficient to satisfy the lien.
|
14.
|
UTILITIES
AND SERVICES
|
(a) Landlord agrees to furnish to
the Premises during the Business Hours (and during non-Business
Hours, subject to the terms of this Section 14), subject to
the conditions and in accordance with the standards set forth in
this Lease, adequate quantities of electric current for normal
lighting and fractional horsepower office machines, water for
lavatory and drinking purposes (hot and cold), heat and air
conditioning required in the comfortable use and occupation of the
Premises, and elevator service by non-attended automatic elevators.
Tenant acknowledges and agrees that Landlord may impose a
reasonable charge for the use of any additional or unusual
janitorial services required by Tenant’s carelessness or the
nature of Tenant’s business that is inconsistent with the Use
permitted under this Lease. Landlord shall not be obligated to
service, maintain, repair or replace any system or improvement in
the Premises that has not been installed by Landlord at
Landlord’s expense, or which is a specialized improvement
requiring additional or extraordinary maintenance or repair (by way
of example only, if the standard premises in the Building contain
fluorescent light fixtures, Landlord’s obligation shall be
limited to the replacement of fluorescent light tubes, irrespective
of any incandescent fixtures that may have been installed in the
Premises at Tenant’s expense). Landlord shall not be liable
for, and (except as provided in Section 14(b) below) Tenant
shall not be entitled to any abatement or reduction of rent by
reason of Landlord’s failure to furnish any of the foregoing
when such failure is caused by accident, breakage, repairs,
strikes, lockouts or other labor disturbances or labor disputes of
any character or for any other causes; provided, however, Landlord
shall use its reasonable efforts to cause such services to be
restored as soon as possible. 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 the
interruption or failure of any services to be provided under this
Lease.
-13-
(b) If there shall be an
interruption, curtailment or suspension of the Building’s
elevator, electricity or HVAC service or water supply (and no
reasonably equivalent alternative service or supply is provided by
Landlord) (each, a “ Service Interruption ”),
and if (i) such Service Interruption shall not have been
caused, in whole or in part, by an act or omission or negligence of
Tenant, or of Tenant’s agents, employees or contractors,
(ii) such Service Interruption does not arise as a result of a
matter, event or condition affecting the general area in which the
Building is located, such as rolling electrical blackouts,
(iii) such Service Interruption shall have been caused, in
whole or in part, by an act or omission or negligence of Landlord,
or of Landlord’s agents, employees or contractors, and
(iv) Landlord shall have failed to cure such Service
Interruption within five (5) business days after the
occurrence thereof, Rent hereunder shall thereafter be abated in
the same proportion as the portion of the Premises affected by the
Service Interruption bears to the entire Premises from the end of
such five (5) business day period until such time as such
services or utilities are restored or Tenant begins using the
Premises (or affected portion thereof) again, whichever shall first
occur.
(c) Tenant acknowledges and agrees
that Tenant’s use of the Premises during non-Business Hours
imposes additional burden on the Building’s janitorial
services, fluorescent light tubes, HVAC, and the Common Areas.
Accordingly, non-Business Hours use of services will be made
available to Tenant through an access or override switch accessible
to Tenant from the Premises and will be billed as an after hours
rent assessment (the “ After Hours Charge ”) as
reasonably determined by Landlord from time to time. The current
After Hours Charge is Twenty-Seven and 00/100 Dollars ($27.00) per
hour per zone, which rate Landlord may increase only due to actual
increases in Landlord’s maintenance or utility costs. Tenant
shall be entitled to access to the Premises twenty-four
(24) hours per day, three hundred sixty-five (365) days
per calendar year.
(d) Except as otherwise provided in
the Lease Improvement Agreement, Tenant shall not, without the
prior consent of Landlord, connect to the utility systems of the
Building any apparatus, machinery or other equipment except typical
office machines and devices such as electric typewriters, word
processors, mini and micro-computers and office-size photocopiers.
Nor shall Tenant, without the prior written consent of Landlord,
connect to any electrical circuit in the Premises any apparatus or
equipment with power requirements that exceed the designed
electrical capacity of the Premises as described in the Lease
Improvement Agreement. Landlord agrees that in all events, Tenant
shall have the use of all current available electricity to the
Building and parking lot for Tenant’s equipment, at no
additional charge. Tenant shall pay the cost of all utilities and
services supplied to Tenant in connection with Tenant’s use
of additional office equipment approved by Landlord hereunder.
Notwithstanding Landlord’s consent to such excess loading of
circuits, Tenant shall pay the cost of any additional or
above-standard capacity electrical circuits necessitated by such
excess loading circuits and the installation thereof.
(e) All sums payable hereunder by
Tenant for additional services or for excess utility usage shall be
payable within thirty (30) days after written request from
Landlord, including reasonable supporting documentation, except
that Landlord may require Tenant to pay monthly for the estimated
cost of Tenant’s excess utility usage if such usage occurs on
a regular basis, and such estimated amounts shall be payable in
advance on the first day of each month.
(f) Tenant may elect to hire its own
cleaning and janitorial service, upon not less than thirty
(30) days notice to Landlord. If Tenant makes such an
election, Tenant shall receive a reduction in Base Rent equal to
the cost that Landlord actually incurred in the Base Year in
providing such janitorial service.
(g) Landlord shall provide
commercially reasonable levels of security service for the
Building, the cost of which shall be included in Operating
Expenses.
(h) Landlord shall cause the
Building’s windows to be washed, inside and out, as often as
commercially reasonable, but in all events no less frequently than
twice per calendar year; the cost of such window washing shall be
included in Operating Expenses.
|
15.
|
ASSIGNMENT
AND SUBLETTING
|
(a) Tenant shall not, without the
prior written consent of Landlord, which shall not be unreasonably
withheld or delayed as provided in this Section 15:
(a) assign, mortgage, pledge, encumber or otherwise transfer
this Lease, the term or estate hereby granted, or any
interest
-14-
hereunder; (b) permit the Premises or any
part thereof to be utilized by anyone other than Tenant (whether as
concessionaire, franchisee, licensee, permittee or otherwise); or
(c) except as hereinafter provided, sublet or offer or
advertise for subletting the Premises or any part thereof. Any
assignment, mortgage, pledge, encumbrance, transfer or sublease
without Landlord’s consent shall be voidable and, at
Landlord’s election, shall constitute a default.
Notwithstanding the foregoing and
Subsections (b) and (c) below, Tenant may assign this
Lease or sublet the Premises or a portion thereof, without
Landlord’s consent, but with prior written notice, to any
corporation, partnership, individual or other entity which
controls, is controlled by or is under common control with Tenant;
or to any corporation, partnership, individual or other entity,
resulting from the merger or consolidation with Tenant; or to any
person or entity which acquires all of the assets of Tenant’s
business going concern, provided that (i) the assignee or
subtenant assumes, in full, the obligations of Tenant under this
Lease (or, in the case of a sublease, the non-monetary obligations
relevant to the portion of the Premises being subleased),
(ii) Tenant remains fully liable under this Lease,
(iii) the use of the Lease by such transferee conforms with
the requirements of this Lease, and (iv) if Tenant is no
longer a viable operating business, the proposed transferee shall
have a net worth which is comparable to that of Tenant as of the
Lease Date. Provided that Tenant is a corporation, and (i) the
stock of Tenant is traded on a national exchange, the transfer of
stock in Tenant shall not be considered an assignment, sublease or
transfer under the Lease, or (ii) the stock of Tenant is not
traded on a national exchange, the collective transfer of fifty
percent (50.00%) or less of such stock shall not be considered
an assignment, sublease or transfer under this Lease.
(b) If at any time or from time to
time during the Term of this Lease, Tenant desires to assign this
Lease with respect to, or to sublet, all or any part of the
Premises, then at least twenty (20) days prior to the date
when Tenant desires the assignment or subletting to be effective
(the “Transfer Date” ), Tenant shall give
Landlord a notice (the “Transfer Notice” ) which
shall set forth the name, address and business of the proposed
assignee or subtenant, information (including financial statements
and references) concerning the character of the proposed assignee
or subtenant, in the case of a proposed sublease, a detailed
description of the space proposed to be sublet, which must be a
single, self-contained unit (the “Space” ), any
rights of the proposed assignee or subtenant to use Tenant’s
improvements and the like, the Transfer Date, and the fixed rent
and/or other consideration and all other material terms and
conditions of the proposed assignment or subletting, all in such
detail as Landlord may reasonably require, if Landlord promptly
(not later than ten (10) business days after receipt of the
Transfer Notice) requests additional detail, the Transfer Notice
shall not be deemed to have been received until Landlord receives
such additional detail. If this Lease or any interest in this Lease
is sold, assigned or transferred by Tenant, or Tenant subleases any
part of the Premises, without Landlord’s consent, Landlord
may, cumulative of any other right or remedy available to Landlord,
elect to terminate this Lease (as it affects the portion of the
Premises sought to be sublet or assigned) as of the effective date
of the proposed transfer. Landlord’s acceptance of any name
for listing on the Building directory will not be deemed, not will
it substitute for, Landlord’s consent, as required by this
Lease, to any sublease, assignment or other occupancy of the
Premises.
(c) Landlord shall be permitted to
consider any reasonable factor in determining whether or not to
withhold its consent to a proposed assignment or sublease and
Landlord shall make such determination within twenty (20) days
following Landlord’s receipt of the Transfer Notice. The
failure of Landlord to deliver written notice of such determination
within such time period shall be deemed Landlord’s
disapproval thereof. Without limiting the other instances in which
it may be reasonable for Landlord to withhold its consent to an
assignment or sublease, it shall be reasonable for Landlord to
withhold its consent if Landlord establishes that any of the
following conditions are not satisfied:
(1) The proposed use by the
transferee shall (i) comply with Tenant’s permitted use,
(ii) not materially increase the likelihood of damage or
destruction, (iii) not materially increase the density of
occupancy of the Premises or increase the amount of pedestrian and
other traffic through the Building beyond the limits for which the
Building was designed, (iv) not be likely to cause an increase
in insurance premiums for insurance policies applicable to the
Building, unless paid for by Tenant or the transferee, (v) not
require new tenant improvements incompatible with then-existing
Building systems and components, unless paid for by Tenant or the
transferee, (vi) unless paid by Tenant or the transferee, not
require Landlord to make material modifications to the Building
outside of the Premises (in order, for example, to
-15-
comply with laws such as the ADA),
and (viii) not otherwise have or cause a material adverse
impact on the Premises, the Building, or Landlord’s interest
therein.
(2) The proposed transferee shall
not be a foreign government entity.
(3) Any ground lessor or mortgagee
whose consent to such transfer is required fails to consent
thereto, notwithstanding Landlord’s good faith and diligent
efforts to obtain such consent.
(d) Provided Landlord has consented
to such assignment or subletting, Tenant shall be entitled to enter
into such assignment or sublease with the third party identified in
the Transfer Notice subject to the following conditions:
(1) At the time of the transfer, no
event of monetary default or monetary material default under this
Lease (following the giving of notice and passage of the applicable
cure period under Section 24) shall have occurred and be
continuing;
(2) The assignment or sublease shall
be on the same terms substantially set forth in the Transfer Notice
given to Landlord;
(3) No assignment or sublease shall
be valid and no assignee or sublessee shall take possession until
an executed counterpart of the assignment or sublease has been
delivered to Landlord;
(4) No assignee or sublessee shall
have a right further to assign or sublet without Landlord’s
consent thereto in each instance, which consent in the case of a
future assignment should not be unreasonably withheld or
delayed;
(5) Any assignee shall have assumed
in writing the obligations of Tenant under this Lease;
(6) Any subtenant shall have agreed
in writing to comply with all applicable terms and conditions of
this Lease with respect to the Space;
(7) In the event Tenant sublets the
entire Premises or any part thereof, and where the Landlord’s
consent is otherwise required, Tenant shall deliver to Landlord
fifty percent (50.00%) of any excess rent within thirty
(30) days of Tenant’s receipt thereof pursuant to such
subletting. As used herein, “excess rent” shall
mean any sums or economic consideration per square foot of the
Premises received by Tenant pursuant to such subletting in excess
of the amount of the rent per square foot of the Premises payable
by Tenant under this Lease applicable to the part or parts of the
Premises so sublet; provided, however, that no excess payment shall
be payable until Tenant shall have recovered therefrom all of the
costs incurred by Tenant for brokerage commissions, tenant
improvement work approved by Landlord, reasonable rent concessions,
reasonable attorneys fees, and reasonable marketing fees, in
conjunction with such sublease; and
(8) In the event Tenant assigns this
Lease, and where the Landlord’s consent is otherwise
required, Tenant shall deliver to Landlord fifty percent
(50.00%) of any excess payment within thirty (30) days of
Tenant’s receipt thereof pursuant to such assignment. As used
herein, “excess payment” shall mean the amount
of payment received for such assignment of this Lease in excess of
the rent payable by Tenant under this Lease; provided, however,
that no excess payment shall be payable until Tenant shall have
recovered therefrom all of the costs incurred by Tenant for
brokerage commissions, tenant improvement work approved by
Landlord, rent concessions, reasonable attorneys fees, and
reasonable marketing fees, in conjunction with such
assignment.
(e) No subletting or assignment
shall release Tenant of Tenant’s obligations under this Lease
or alter the liability of Tenant to pay the rent and to perform all
other obligations to be performed by Tenant hereunder. The
acceptance of rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision hereof. Consent
to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by an
assignee or subtenant of Tenant or any successor of Tenant in the
performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting
remedies against such assignee, subtenant or successor.
Landlord
-16-
may consent to subsequent assignments of the
Lease or sublettings or amendments or modifications to the Lease
with assignees of Tenant, after notifying Tenant, or any successor
of Tenant, and after obtaining its or their consent thereto and any
such actions shall not relieve Tenant of liability under this
Lease.
(f) If Tenant assigns the Lease or
sublets the Premises or requests the consent of Landlord to any
assignment or subletting, then Tenant shall, upon demand, pay
Landlord an administrative fee not to exceed Five Hundred and
No/100ths Dollars ($500.00).
(g) Tenant may require, as part of
its Transfer Notice, that a transferee receive a recognition
agreement (the “ Recognition Agreement ”) from
Landlord which provides that in the event this Lease is terminated,
Landlord shall recognize the transferee (and such transferee shall
be bound to and recognize Landlord), provided that Landlord shall
only execute a Recognition Agreement with such transferee, under
the following conditions (which conditions must be reflected in the
Recognition Agreement): (i) such transfer is made upon the
same terms and conditions set forth in this Lease, subject to
equitable modifications based on the number of rentable square feet
contained in the Space; provided, however, the economic terms of
such transfer may be more favorable to Landlord than those set
forth in this Lease, (ii) the Space contains only full floors
in the Building, (iii) all Space is contiguous, (iv) the
transferee is, as of the date this Lease is terminated, a party of
reasonable financial worth and/or financial stability in light of
the responsibilities involved under the subject transfer (it being
agreed that it would be reasonable for Landlord to deny a
Recognition Agreement to any transferee whose net worth is less
than the product of $20,000,000 times the number of floors the
transferee is leasing, but such specific minimum net worth
requirement shall not, however, be imposed on transferees not
requesting a Recognition Agreement), (v) Landlord shall not be
liable for any act or omission of Tenant, (vi) Landlord shall
not be subject to any offsets or defenses which the transferee
might have as to Tenant or to any claims for damages against
Tenant, (vii) Landlord shall not be required or obligated to
credit the transferee with any rent or additional rent paid by the
transferee to Tenant, (viii) Landlord shall not be bound by
any terms or conditions of the transfer which are inconsistent with
the terms and conditions of this Lease, (ix) Landlord shall be
responsible for performance of only those covenants and obligations
of Tenant pursuant to the transfer accruing after the termination
of this Lease, (x) the transferee shall make full and complete
attornment to Landlord, as lessor, pursuant to a written agreement
executed by Landlord and the transferee, so as to establish direct
privity of contract between Landlord and the transferee with the
same force and effect as though the transfer was originally made
directly between Landlord and the transferee, (xi) the
transferee benefiting from the Recognition Agreement must agree to
sign a commercially reasonable subordination, non-disturbance and
attornment agreement (“ SNDA ”) in favor of any
Superior Lienor (as defined in Section 31(d) below), which
SNDA shall require the transferee to be bound to recognize the
Superior Lienor and any successor thereto, and (xii) Tenant
shall remain fully liable under this Lease, as provided in Sections
15(a)(ii) and 15(e) above. Upon Landlord’s written request
given any time after the termination of this Lease, the transferee
shall execute a lease for the space subject to the applicable
transfer upon the same terms and conditions as set forth in the
Recognition Agreement. Tenant agrees that Landlord may consider, in
exercising its reasonable discretion under Section 15(a) above
whether or not to consent to a given transfer, the Tenant’s
request for a Recognition Agreement under this Section 15(g).
If it is reasonable do so, Landlord may reject the transfer on the
grounds that the proposed transferee does not have sufficient
creditworthiness to be entitled to a Recognition Agreement, in
which event Tenant shall have the right to amend its Transfer
Notice to delete the request for a Recognition
Agreement.
(h) Notwithstanding anything to the
contrary in this Lease, Tenant shall not be deemed to have waived
any of its rights under California Civil Code
Section 1995.310.
(i) Tenant may allow any person or
company which is a client or customer of Tenant or which is
providing service to Tenant or one of Tenant’s clients to
occupy certain portions of the Premises (not to exceed, at any one
time, a total of 20,000 rentable square feet), without such
occupancy being deemed an assignment or subleasing as long as no
new demising walls are constructed to accomplish such occupancy and
as long as such relationship was not created as a subterfuge to
avoid the obligations set forth in this Section 15.
-17-
(a) Subject to the provisions of
Section 18(e) below and to the extent not funded and paid to
Landlord by any insurance maintained by Tenant, Tenant shall
indemnify, defend and hold harmless Landlord against and from any
and all claims, damages, liabilities, and expenses (including
reasonable attorneys’ fees) to the extent arising from
Tenant’s use of the Premises for the conduct of its business
or from any activity, work or other thing done, permitted or
suffered by the Tenant in or about the Building, and shall further
indemnify, defend and hold harmless Landlord against and from any
and all claims to the extent arising from any breach or
defaul
