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STANDARD OFFICE LEASE--NET AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

Office Lease Agreement

STANDARD OFFICE LEASE--NET

                   AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION | Document Parties: QUADRAMED CORP | CTF2 - Outlet LLC You are currently viewing:
This Office Lease Agreement involves

QUADRAMED CORP | CTF2 - Outlet LLC

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Title: STANDARD OFFICE LEASE--NET AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
Governing Law: California     Date: 1/21/2004
Industry: Software and Programming    

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                                                                   Exhibit 10.18

                            STANDARD OFFICE LEASE--NET

                   AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

 

                                 [LOGO OF AIR]

 

1.    Basic Lease Provisions ("Basic Lease Provisions")

 

     1.1   Parties: This Lease, dated, for reference purposes only, November 26,

2001 is made by and between CTF2 - Outlet LLC, A Delaware Limited Liability

Company, (herein called "Lessor") and QuadraMed Corporation, doing business

under the name of _____________________________________________________, (herein

called "Lessee").

 

     1.2   Premises: Suite Number(s) 104 & 105 floors, consisting of

approximately 41,000 square feet, more to less, as defined in paragraph 2 and as

shown on Exhibit "A" hereto (the "Premises").

 

     1.3   Building: Commonly described as being located at 1050 Los Vallecitos

Blvd, in the City of San Marcos, County of San Diego, State of California, as

more particularly described in Exhibit A hereto, and as defined in paragraph 2.

 

     1.4   Use: Administrative Offices, subject to paragraph 6.

 

     1.5   Term: seventy-two (72) months commencing See paragraph 52

("Commencement Date") and ending seventy-two (72) months after commencement

date, as defined in paragraph 3.

 

     1.6   Base Rent: See paragraph 51 per month, payable on the 1st day of each

month, per paragraph 4.1 ______________________________________________________.

 

     1.7   Base Rent Increase: On See paragraph 51.

 

     1.8   Rent Paid Upon Execution: $45,100.00 for **.

 

     1.9   Security Deposit: $250,OO0.00 (see paragraph 61).

 

     1.10 Lessee's Share of Operating Expenses: 39% as defined in paragraph 4.2

          *See paragraph 55

 

2.    Premises, Parking and Common Areas.

 

     2.1   Premises: The Premises are a portion of a building, herein sometimes

referred to as the "Building" identified in paragraph 1.3 of the Basic Lease

Provisions "Building" shall include adjacent parking structures used in

connection therewith. The Premises, the Building, the Common Areas, the land

upon which the same are located, along with all other buildings and improvements

thereon to thereunder, are herein collectively referred to as the "Office

Building Project," Lessor hereby leases to Lessee and Lessee leases from Lessor

for the term, at the rental, and upon all of the conditions set forth herein,

the real property referred to in the Basic Lease Provisions, paragraph 1.2, as

the "Premises", including rights of the Common Areas as hereinafter specified.

 

     2.2   Vehicle Parking: So long as Lessee is not in default and subject to

the rules and regulations attached hereto, and as established by Lessor from

time to time, Lessee shall be entitled to use 6/1000 parking spaces in the

Office Building Project at no cost throughout the Term or the Option Term. See

Paragraph 59.

 

          2.2.1 If Lessee commits, permits to allows any of the prohibited

activities described in the Lease or the rules then in effect, then Lessor shall

have the right, without notice. In addition to such other rights and remedies

that it may have, to remove or low away the vehicle involved and charge the cost

to Lessee, which cost shall be immediately payable upon demand by Lessor.

 

     2.3   Common Areas-Definition. The term "Common Areas" is defined as all

areas and facilities outside the Premises and within the exterior boundary line

of the Office Building Project that are provided and designated by the Lessor

from time to time for the general non-exclusive use of Lessor, Lessee and of

other lessees of the Office Building Project and their respective employees,

suppliers, shippers, customers and invitees, including but not limited to common

entrances, lobbies, corridors, stairways and stairwells, public restrooms,

elevators, escalators, parking areas to the extent not otherwise prohibited by

this Lease, loading and unloading areas, trash areas, roadways, sidewalks,

walkways, parkways, ramps, driveways, landscaped areas and decorative walls.

 

     2.4   Common Areas-Rules and Regulations. Lessee agrees to abide by and

conform to the rules and regulations attached hereto as Exhibit B with respect

to the Office Building Project and Common Areas, and to cause its employees,

suppliers, shippers, customers, and invitees to so abide and conform Lessor or

such other person(s) as Lessor may appoint shall have the exclusive control and

management of the Common Areas and shall have the right, from time to time, to

modify, amend and enforce said rules and regulations which such modifications

shall be in writing. Lessor shall not be responsible to Lessee for the

non-compliance with said rules and regulations by other lessees, their agents,

employees and invitees of the Office Building Project.

 

     2.5   Common Areas-Changes. Lessor shall have the right, in Lessor's sole

discretion, from time to time:

 

          (a)   To make changes to the Building interior and exterior and Common

Areas, including, without limitation, changes in the location, size, shape,

number, and appearance thereof, including but not limited to the lobbies,

windows, stairways, air shafts, elevators, escalators, restrooms, driveways,

entrances, parking spaces, parking areas, loading and unloading areas, ingress,

egress, direction of traffic, decorative walls, landscaped areas and walkways;

provided, however Lessor shall at all times provide the parking facilities

required by applicable law and Lessee shall at all times during the term and the

Option Term be entitled to 6/1000 spaces.

 

          (b)   To close temporarily any of the Common Areas for maintenance

purposes so long as reasonable access to the Premises remains available:

 

          (c)   To designate other land and improvements outside the boundaries

of the Office Building Project to be a part of the Common Areas, provided that

such other land and improvements have a reasonable and functional relationship

to the Office Building Project;

 

          (d)   To add additional buildings and improvements to the Common Areas:

 

          (e)   To use the Common Areas while engaged in making additional

improvements, repairs or alterations to the Office Building Project or any

portion thereof:

 

          (f)   To do and perform such other acts and make such other changes in,

to or with respect of the Common Areas and Office Building Project as Lessor

may, in the exercise of sound business judgment deem to be appropriate.

 

3.    Term.

 

     3.1   Term. The term and Commencement Date of this Lease shall be as

specified in paragraph 1.5 of the Basic Lease Provisions.

 

     3.2   Delay in Possession. Notwithstanding said Commencement Date, if for

any reason Lessor cannot deliver possession of the Premises to Lessee on said

date and subject to paragraph 3.2.2, Lessor shall not be subject to any

liability therefor, nor shall such failure affect the validity of this Lease or

the obligations of Lessee hereunder or extend the term hereof; but in such case,

Lessee shall not be deligated to pay rent to perform any other obligation of

Lessee under the terms of this Lease, except as may be otherwise provided in

this Lease, until possession of the Premises is tendered to Lessee, as

hereinafter defined; provided, however, that if Lessor shall not have delivered

possession of the Premises within sixty (60) days following said Commencement

Date, as the same may be extended under the terms of a Work Letter executed by

Lessor and Lessee, Lessee may, at Lessee's option, by notice in writing to

Lessor within ten (10) business days thereafter, cancel this Lease, in which

event the parties shall be discharged from all obligations hereunder; provided,

however, that, as of Lessee's obligations, Lessee first reimburses Lessor for

all costs incurred for Non-Standard Improvements and, as of Lessor's

obligations, Lessor shall return any money previously deposited by Lessee (less

any offsets due Lessor for Non-Standard Improvements); and provided further,

that if such written notice by Lessee is not received by Lessor within said ten

(10) business day period, Lessee's right to cancel this Lease hereunder shall

terminate and be of no further force to effect. See Paragraph 52 To be credited

towards Base Rent for the first month after the Commencement Date with the

remainder to be credited towards Base Rent after the Rent Credit per Exhibit C

Paragraph 3(d).

 

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          3.2.1 Possession Tendered-Defined. Possession of the Premises shall be

deemed tendered of Lessee ("Tender of Possession") when (1) the improvements to

be provided by Lessor under this Lease are substantially completed, (2) the

Building utilities are ready for use in the Premises. (3) Lessee has reasonable

access of the Premises, and (4) ten (10) days shall have expired following

advance written notice to Lessee of the occurrence of the matters described in

(1), (2), (3), and (4) The City of San Marcos has completed and approved the

final inspection of the tenant improvements. above of this paragraph 3.2.1.

 

          3.2.2 Delay Caused by Lessee. There shall be no abatement of rent,

and the sixty (60) day period following the Commencement Date before which

Lessee's right to cancel this Lease accrues under paragraph 3.2, shall be deemed

extended to the extent of any delays caused by acts to omissions of Lessee, its

agents, employees and contractors.

 

     3.3   Early Possession. If Lessee occupies the Premises prior to said

Commencement Date, such occupancy shall be subject to all provisions of this

lease such occupancy shall not change the terminations date and Lessee shall pay

rent for such occupancy. Notwithstanding the foregoing, Lessee may occupy

Premises up to 30 days prior to Commencement Date without payment of rent.

 

     3.4   Uncertain Commencement. In the event commencement of the Lease term is

defined as the completion of the improvements, Lessee and Lessor shall execute

an amendment to this Lease establishing the date of Tender of Possession (as

defined in paragraph 3.2.1) as the Commenncement Date.

 

4.    Rent

 

     4.1   Base Rent Subject to adjustment as hereinafter provided in paragraph

4.3, and except as may be otherwise expressly provided in this Lease, Lessee

shall pay to Lessor the Base Rent for the Premises set forth in paragraph 1.6 of

the Basic Lease Provisions, without offset to deduction. Lessee shall pay Lessor

upon execution hereof the advance Base Rent described in paragraph 1.8 of the

Basic Lease Provisions. Rent for any period during the term hereof which is for

less than one month shall be prorated based upon the actual number of days of

the calendar month involved. Rent shall be payable in lawful money of the United

States to Lessor at the address stated herein or to such other persons or at

such other places as Lessor may designate in writing.

 

     4.2   Operating Expenses. Lessee shall pay of Lessor during the term hereof,

in addition to the Base Rent, Lessee's Share as hereinafter defined of all

Operating Expenses, as hereinafter defined, during each calendar year of the

term of the Lease, to accordance with the following provisions.

 

          (a)   "Lessee's Share" is defined, for purposes of this Lease, as the

percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which

percentage has been determined by dividing the approximate square footage of the

Premises by the total approximate square footage of the rentable space contained

in the Office Building Project. It is understood and agreed that the rentable

area of square footage figures set forth in the Basic Lease Provisions are

approximations which Lessor and Lessee agree are reasonable and shall not be

subject to revision except in connection with an actual change in the size of

the Premises to a change in the space available for lease in the Office Building

Project.

 

          (b)   "Operating Expenses" is defined, for purposes of this Lease, to

include all costs, if any, incurred by Lessor in the exercise of its reasonable

discretion, for:

 

               (i) The operation, repair, maintenance, and replacement, in

neat, clean, sale, good order and condition, of the Office Building Project,

including but not limited to, the following:

 

                     (aa) The Common Areas, including their surfaces, coverings,

decorative items, carpets, drapes and window coverings, and including parking

areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,

stairways, parkways, driveways, landscaped areas, striping, bumpers, irrigation

systems, Common Area lighting facilities, building exteriors and roofs, fences

and gates;

 

                     (bb) All heating, air conditioning, plumbing, electrical

systems, life safety equipment, telecommunication and other equipment used in

common by, to for the benefit of, lessees or occupants of the Office Building

Project, including elevators and escalators, tenant directories, fire detection

systems including sprinkler system maintenance and repair.

 

                (ii)    Trash disposal, janitorial and security services;

 

               (iii)   Any other service to be provided by Lessor that is

elsewhere in this Lease stated to be an "Operating Expense";

 

               (iv)    The cost of the premiums for the liability and properly

insurance policies to be maintained by Lessor under paragraph 8 hereof;

 

               (v)     The amount of the real property taxes to be paid by Lessor

under paragraph 10.1 hereof;

 

               (vi)    The cost of water, sewer, gas, electricity, and other

publicly mandated services to the Office Building Project;

 

               (vii)   Labor, salaries and applicable fringe benefits and costs,

materials, supplies and tools, used in maintaining and/or cleaning the Office

Building Project and accounting and a management lee attributable to the

operation of the Office Building Project;

 

               (viii) Replacing and/or adding improvements mandated by any

governmental agency after the completion date of the tenant improvements and any

repairs to removals necessitated thereby amortized over its useful life

according to Federal income tax regulations or guidelines for depreciation

thereof (including interest on the unamortized balance as is then reasonable in

the judgment of Lessor's accountants);

 

               (ix)    Replacements of equipment to improvements that have a

useful life for depreciation purposes according to 'Federal income tax

guidelines of five (5) years or less, as amortized over such life.

 

          (c)   Operating Expenses shall not include the costs of replacements of

equipment or improvements that have a useful life for Federal income tax

purposes in excess of five (5) years unless it is of the type described in

paragraph 4.2(b)(viii), in which case their cost shall be included as above

provided.

 

          (d)   Operating Expenses shall not include any expenses paid by any

lessee directly to third parties, or as to which Lessor is otherwise reimbursed

by any third party, other tenant, or by insurance proceeds.

 

           (e)   Lessee's Share of Operating Expenses shall be payable by Lessee

within ten (10) Days after a reasonably detailed statement of actual expenses is

presented to Lessee by Lessor. At Lessor's option, however, an amount may be

estimated by Lessor from time to time of Lessee's Share of annual Operating

Expenses and the same shall be payable monthly to quarterly, as Lessor shall

designate, during each calendar year of the Lease term, on the same day as the

Base Rent is due hereunder. In the event that Lessee pays Lessor's good faith

estimate of Lessee's Share of Operating Expenses as aforesaid, Lessor shall

deliver to Lessee within sixty (60) days after the expiration of each calendar

year a reasonably detailed statement showing Lessee's Share of the actual

Operating Expenses incurred during the preceding year. If Lessee's payments

under this paragraph 4.2(e) during said preceding calendar year exceed Lessee's

Share as indicated on said statement. Lessee shall be entitled to credit the

amount of such overpayment against Lessee's Share of Operating Expenses next

falling due. If Lessee's payments under this paragraph during said preceding

calendar year were less than Lessee's Share as indicated on said statement.

Lessee shall pay to Lessor the amount of the deficiency within ten (10) days

after delivery by Lessor of Lessee of said statement.

 

     5.    Security Deposit. Lessee shall deposit with Lessor upon execution

hereof the security deposit set forth in paragraph 1.9 of the Basic Lease

Provisions as security for Lessee's faithful performance of Lessee's obligations

hereunder. If Lessee fails to pay rent or other charges due hereunder, or

otherwise defaults with respect to any provision of this Lease. Lessor may use,

apply or retain all to any portion of said deposit for the payment of any rent

to other charge in default for the payment of any other sum to which Lessor may

become obligated by reason of Lessee's default or to

 

<PAGE>

 

compensate Lessor for any loss or damage which Lessor may suffer thereby. If

Lessor so uses or applies all or any portion of said deposit, Lessee shall

within ten (10) days after written demand therefor deposit cash with Lessor in

an amount sufficient to restore said deposit to the full amount then required

of Lessee. Lessor shall not be required of keep said security deposit separate

from its general accounts. If Lessee performs all of Lessee's obligations

hereunder, said deposit, or so much thereof as has not heretofore been applied

by Lessor, shall be returned, without payment of interest or other increment for

its use, to Lessee (or, at Lessor's option, to the last assignee, if any, of

Lessee's Interest hereunder) at the expiration of the term hereof, and after

Lessee has vacated the Premises. No trust relationship is created herein between

Lessor and Lessee with respect to said Security Deposit.

 

6.    Use

 

     6.1   Use. The Premises shall be used and occupied only for the purpose set

forth in paragraph 1.4 of the Basic Lease Provisions

 

     6.2   Compliance with Law.

 

           (a)   Lessor warrants of Lessee that the Premises, in the state

existing on the date that the Lease term commences, but without regard to

alterations or Improvements made by Lessee or the use for which Lessee will

occupy the Premises, does not violate any covenants or restrictions of record,

or any applicable building code, regulation or ordinance in effect on such Lease

term Commencement Date. In the event it is determined that this warranty has

been violated, then it shall be the obligation of the Lessor, after written

notice from Lessee, to promptly, at Lessor's sole cost and expense, rectify any

such violation.

 

          (b)   Except as provided in paragraph 6.2(a) Lessee shall, at Lessee's

expense, promptly comply with all applicable statutes, ordinances, rules,

regulations, orders, covenants and restrictions of record, and requirements of

any fire insurance underwriter or rating bureaus, now in effect to which may

hereafter come into effect, whether or not they reflect a change in policy from

that now existing, during the term or any part of the term hereof, relating in

any manner to the Premises and the occupation and use by Lessee of the Premises.

Lessee shall conduct its business in a lawful manner and shall not use to permit

the use of the Premises to the Common Areas in any manner that will tend to

create waste or a nuisance or shall tend to disturb other occupants of the

Office Building Project.

 

     6.3   Condition of Premises.

 

          (a)   Lessor shall deliver the Premises of Lessee in a clean condition

on the Lease Commencement Date (unless Lessee is already in possession) and

Lessor warrants to Lessee that the plumbing, lighting, air conditioning, and

heating system in the Premises shall be in good operating condition. In the

event that it is determined that this warranty has been violated, then it shall

be the obligation of Lessor, after receipt of written notice from Lessee setting

forth with specificity the nature of the violation, to promptly, at Lessor's

sole cost, rectify such violation.

 

          (b)   Except as otherwise provided in this Lease, Lessee hereby accepts

the Premises and the Office Building Project in their condition existing as of

the Lease Commencement Date or the date that Lessee takes possession of the

Premises, whichever is earlier, subject to all applicable zoning, municipal,

county and state laws, ordinances and regulations governing and regulating the

use of the Premises, and any easements, covenants or restrictions of record, and

accept this Lease subject thereto and to all matters disclosed thereby and by

any exhibits attached hereto. Lessee acknowledges that it has satisfied itself

by its own independent investigation that the Premises are suitable for its

intended use, and that neither Lessor nor Lessor's agent or agents has made any

representation or warranty as to the present or future suitability of the

Premises, Common Areas, or Office Building Project for the conduct of Lessee's

business.

 

7.    Maintenance, Repairs, Alteration, and Common Area Services.

 

     7.1   Lessor's Obligations. Lessor shall keep the Office Building Project,

including exterior walls, roof, and common areas, and the equipment whether used

exclusively for the Premises or in common with other premises. In good condition

and repair; provided, however, Lessor shall not be obligated to paint, repair or

replace wall coverings, or to repair or replace any improvements that are not

ordinarily a part of the Building or are above then Building standards. Except

as provided in paragraph 9.5, there shall be no abatement of rent or liability

of Lessee on account of any injury or interference with Lessee's business with

respect to any improvements, alterations or repairs made by Lessor to the Office

Building Project or any part thereof. Lessee expressly waives the benefits of

any statute now or hereafter in effect which would otherwise afford Lessee the

right to make repairs at Lessor's expense or to terminate this Lease because of

Lessor's failure to keep the Premises in good order, condition and repair.

 

     7.2   Lessee's Obligations.

 

          (a)   Notwithstanding Lessor's obligation to keep the Premises in good

condition and repair, Lessee shall be responsible for payment of the cost

thereof to Lessor as additional rent for that portion of the cost of any

maintenance and repair of the Premises, or any equipment (wherever located) that

serves only Lessee or the Premises, to the extent such cost is attributable to

causes beyond normal wear and tear. Lessee shall be responsible for the cost of

painting, repairing or replacing wall coverings, and to repair or replace any

Premises improvements that are not ordinarily a part of the Building or that are

above then Building standards. Lessor may, at its option, upon reasonable

notice, elect to have Lessee perform any particular such maintenance to repairs

the cost of which is otherwise Lessee's responsibility hereunder.

 

          (b)   On the last day of the term hereof, or on any sooner termination.

Lessee shall surrender the Premises to Lessor in the same condition as received,

ordinary wear and tear excepted, clean and free of debris. Lessee shall repair

any damage to the Premises occasioned by the installation or removal of Lessee's

trade fixtures, alterations, furnishings and equipment. Except as otherwise

stated in this Lease, Lessee shall leave the air lines, power panels, electrical

distribution systems, lighting fixtures, air conditioning, window coverings,

wall coverings, carpets, wall panelling, ceilings and plumbing on the Premises

and in good operating condition.

 

     7.3   Alterations and Additions.

 

          (a)   Lessee shall not, without Lessor's prior written consent make any

alterations, improvements, additions, Utility installations or repairs in, on or

about the Premises, or the Office Building Project. As used in this paragraph

7.3 the term "Utility installation" shall mean carpeting, window and wall

coverings, power panels, electrical distribution systems, lighting fixtures, air

conditioning, plumbing, and telephone and telecommunication wiring and

equipment. At the expiration of the term, Lessor may require the removal of any

or all of said alterations, improvements, additions or Utility Installations,

and the restoration of the Premises and the Office Building Project to their

prior condition, at Lessee's expense. Should Lessor permit Lessee to make its

own alterations, improvements, additions or Utility Installations, Lessee shall

use only such contractor as has been expressly approved by Lessor, and Lessor

may require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien

and completion bond in an amount equal of one and one-half times the estimated

cost of such improvements, to insure Lessor against any liability for mechanic's

and materialmen's liens and to insure completion of the work. Should Lessee

make any alterations, improvements, additions to Utility Installations without

the prior approval of Lessor, to use a contractor not expressly approved by

Lessor. Lessor may, at any time during the term of this Lease, require that

Lessee remove any part or all of the same. Lessee may make cosmetic,

non-structural alterations without Lessor's consent.

 

          (b)   Any alterations, improvements, additions or Utility Installations

in or about the Premises or the Office Building Project that Lessee shall desire

to make shall be presented to Lessor in written form, with proposed detailed

plans. If Lessor shall give its consent to Lessee's making such alteration,

improvement, addition or Utility Installation, the consent shall be deemed

conditioned upon Lessee acquiring a permit to do so from the applicable

governmental agencies, furnishing a copy thereof to Lessor prior to the

commencement of the work, and compliance by Lessee with all conditions of said

permit in a prompt and expeditious manner.

 

          (c)   Lessee shall pay, when due, all claims for labor or materials

furnished to alleged of have been furnished to or for Lessee at or for use in

the Premises, which claims are or may be secured by any mechanic's or

materialmen's lien against the Premises, the Building or the Office Building

Project, or any interest therein.

 

          (d)   Lessee shall give Lessor not less than ten (10) days' notice

prior to the commencement of any work in the Premises by lessee and Lessor shall

have the right to post notices of non-responsibility in or on the Premises or

the Building as provided by law. If Lessee shall, in good faith, contest the

validity of any such lien, claim or demand, then Lessee shall, at its sole

expense defend itself and Lessor against the same and shall pay and satisfy any

such adverse judgment that may be rendered thereon before the enforcement

thereof against the Lessor or the Premises, the Building or the Office Building

Project, upon the condition that if Lessor shall require, Lessee shall furnish

to Lessor a surety bond satisfactory to Lessor in an amount equal to such

contested lien claim or demand indemnifying Lessor against liability for the

same and holding the Premises, the Building and the Office Building Project free

from the effect of such lien or claim. In addition, Lessor may require Lessee to

pay Lessor's reasonable attorneys fees and costs in participating in such action

if Lessor shall decide it is to Lessor's best interest so to do.

 

          (e)   All alterations, improvements, additions and Utility

Installations (whether or not such Utility Installations constitute trade

fixtures of Lessee), which may be made to the Premises by Lessee, including but

not limited to, floor coverings, panelings, doors, drapes, built-ins, moldings,

sound attenuation, and lighting and telephone to communication systems, conduit,

wiring and outlets, shall be made and done in a good and workmanlike manner and

of good and sufficient quality and materials and shall be the property of Lessor

and remain upon and be surrendered with the Premises at the expiration of the

Lease term, unless Lessor requires their removal pursuant to paragraph 7.3(a).

Provided Lessee is not in default, notwithstanding the provisions of this

paragraph 7.3(e), Lessee's personal property and equipment, other than that

which is affixed to the Premises so that it cannot be removed without material

damage to the Premises or the Building, and other than Utility Installations,

shall remain the property of Lessee and may be removed by Lessee subject to the

provisions of paragraph 7.2.

 

          (i)   Lessee shall provide Lessor with as-built plans and

specifications for any alterations, improvements, additions or Utility

Installations.

 

<PAGE>

 

     7.4   Utility Additions. Lessor reserves the right of install new or

additional utility facilities throughout the Office Building Project for the

benefit of Lessor or Lessee or any other lessee of the Office Building Project,

including, but not by way of limitation, such utilities as plumbing, electrical

systems, security systems, communication systems, and fire protection and

detection systems, so long as such installations do not unreasonably interfere

with Lessee's use of the Premises.

 

8.    Insurance; Indemnity.

 

     8.1   Liability Insurance-Lessee. Lessee shall, at Lessee's expense, obtain

and keep in force during the term of this Lease a policy of commercial General

Liability insurance utilizing an insurance Services Office standard form with

Broad Form General Liability Endorsement (GL0404), or equivalent, in an amount

of not less than $1,000,000 per occurrence of bodily injury and property damage

combined or in a greater amount as reasonably determined by Lessor and shall

insure Lessee with Lessor as an additional insured against liability arising out

of the use, occupancy or maintenance of the Premises. Compliance with the above

requirement shall not, however, limit the liability of Lessee hereunder.

 

     8.2   Liability Insurance-Lessor. Lessor shall obtain and keep in force

during the term of this Lease a policy of Combined Single Limit Bodily injury

and Broad Form Property Damage Insurance, plus coverage against such other risks

Lessor deems advisable from time to time, insuring Lessor, but not Lessee,

against liability arising out of the ownership, use occupancy or maintenance of

the Office Building Project in an amount not less than $5,000,000.00 per

occurrence.

 

     8.3   Property Insurance-Lessee. Lessee shall at Lessee's expense, obtain

and keep in force during the term of this Lease for the benefit of Lessee,

replacement cost fire and extended coverage insurance, with vandalism and

malicious mischief, sprinkler leakage and earthquake sprinkler leakage

endorsements, in an amount sufficient to cover not less than 100% of the full

replacement cost, as the same may exist from time to time, of all of Lessee's

personal property, fixtures, equipment and tenant improvements.

 

     8.4   Property Insurance-Lessor. Lessor shall obtain and keep in force

during the term of this Lease a policy to policies of insurance covering loss or

damage to the Office Building Project improvements, but not Lessee's personal

property, fixtures, equipment or tenant improvements. In the amount of the full

replacement cost thereof, as the same may exist from time of time, Utilizing

Insurance Services Office standard form or equivalent, providing protection

against all perils included within the classification of fire, extended

coverage, vandalism, malicious mischief, plate glass, and such other perils as

Lessor deems advisable to may be required by a lender having a lien on the

Office Building Project. In addition, Lessor shall obtain and keep in force,

during the term of this Lease, a policy of rental value insurance covering a

period of one year, with loss payable of Lessor, which insurance shall also

cover all Operating Expenses for said period. Lessee will not be named in any

such policies carried by Lessor and shall have no right to any proceeds

therefrom. The policies required by these paragraphs 8.2 and 8.4 shall contain

such deductibles as Lessor or the aforesaid lender may determine. In the event

that the Premises shall suffer an insured loss as defined in paragraph 9.1(f)

hereof, the deductible amounts under the applicable insurance policies shall be

deemed an Operating Expense. Lessee shall not do or permit to be done anything

which shall invalidate the insurance policies carried by Lessor. Lessee shall

pay the entirety of any increase in the property insurance premium for the

Office Building Project over what it was immediately prior to the commencement

of the term of this Lease if the increase is specified by Lessor's insurance

carrier as being caused by the nature of Lessee's occupancy to any act or

omission of Lessee.

 

     8.5   Insurance Policies. Lessee shall deliver to Lessor copies of liability

insurance policies required under paragraph 8.1 or certificates evidencing the

existence and amounts of such insurance within seven (7) days after the

Commencement Date of this Lease. No such policy shall be cancellable or subject

to reduction of coverage to other modification except after thirty (30) days

prior written notice to Lessor. Lessee shall, at least thrity (30) days prior to

the expiration of such policies, furnish Lessor with renewals thereof.

 

     8.6   Waiver of Subrogation. Lessee and Lessor each hereby release and

relieve the other, and waive their entire right of recovery against the other,

for direct to consequential loss to damage arising out of or incident to the

perils covered by property insurance carried by such party, whether due to the

negligence of Lessor to Lessee to their agents, employees, contractors and/or

invitees. If necessary all property insurance policies required under this Lease

shall be endorsed to so provide.

 

     8.7   Indemnity. Lessee shall indemnify and hold harmless Lessor and its

agents. Lessor's master to ground lessor, partners and lenders, from and against

any and all claims for damage of the person or property of anyone or any entity

arising from Lessee's use of the Office Building Project, or from the conduct of

Lessee's business or from any activity, work or things done, permitted or

suffered by Lessee in or about the Premises to else where and shall further

indemnify and hold harmless Lessor from and against any and all claims, costs

and expenses arising from any breach or default in the performance of any

obligation on Lessee's part to be performed under the terms of this Lease, or

arising from any act or omission of Lessee, or any of Lessee's agents,

contractors, employees or invitees and from and against all costs, attorney's

fees, expenses and liabilities incurred by Lessor as the result of any such use,

conduct, activity, work, things done, permitted or suffered, breach, default or

negligence, and in dealing reasonably therewith, including but not limited to

the defense or pursuit of any claim or any action or proceeding involved

therein; and in case any action to proceeding be brought against Lessor by

reason of any such matter. Lessee upon notice from Lessor shall defend the same

at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor

shall cooperate with Lessee in such defense. Lessor need not have first paid any

such claim in order to be so indemnified. Lessee, as a material part of the

consideration of Lessor, hereby assumes all risk of damage to property of Lessee

or injury to persons. In upon or about the Office Building Project arising

from any, cause and Lessee hereby waives, all claims in respect thereof against

Lessor, excluding gross negligence to willful misconduct of Lessor, its

employees, contractors and agents.

 

     8.8   Exemption of Lessor from Liability. Lessee hereby agrees that Lessor

shall not be liable for injury to Lessee's business or any loss of income

therefrom or for loss of or damage to the goods, wares, merchandise to other

property of Lessee, Lessee's employees, invitees, customers, or any other person

in or about the Premises or the Office Building Project, nor shall Lessor be

liable for injury to the person of Lessee, Lessee's employees, agents or

contractors, whether such damage or injury is caused by or results from theft,

fire, steam, electricity, gas, water or rain, or from the breakage, leakage,

obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,

air conditioning to lighting fixtures, or from any other cause, whether said

damage or injury results from conditions arising upon the Premises or upon other

portions of the Office Building Project, or from other sources or places, or

from new construction or the repair, alteration or improvement of any part of

the Office Building Project, or of the equipment, fixtures or appurtenances

applicable thereto, and regardless of whether the cause of such damage or injury

or the means of repairing the same is inaccessible, Lessor shall not be liable

for any damages arising from any act to neglect of any other lessee, occupant or

user of the Office Building Project, nor from the failure of Lessor to enforce

the provisions of any other lease of any other lessee of the Office Building

Project.

 

     8.9   No Representation of Adequate Coverage. Lessor makes no representation

that the limits or forms of coverage of insurance specified in this paragraph 8

are adequate of cover Lessee's property or obligations under this Lease.

 

9.    Damage to Destruction.

 

     9.1   Definitions.

 

          (a)   "Premises Damage" shall mean if the Premises are damaged or

destroyed to any extent.

 

          (b)   "Premises Building Partial Damage" shall mean if the Building of

which the Premises are a part is damaged to destroyed to the extent that the

cost of repair is less than fifty percent (50%) of the then Replacement Cost of

the Building.

 

          (c)   "Premises Building Total Destruction" shall mean if the Building

of which the Premises are a part is damaged or destroyed to the extent that

the cost to repair is fifty percent (50%) to more of the then Replacement Cost

of the Building.

 

          (d)   "Office Building Project Buildings" shall mean all of the

buildings on the Office Building Project site.

 

          (e)   "Office Building Project Buildings Total Destruction" shall mean

if the Office Building Project Buildings are damaged or destroyed to the extent

that the cost of repair is fifty percent (50%) to more of the then Replacement

Cost of the Office Building Project Buildings.

 

          (f)   "Insured Loss" shall mean damage or destruction which was caused

by an event required to be covered by the insurance described in paragraph 8.

The fact that an insured Loss has a deductible amount shall not make the loss an

uninsured loss.

 

          (g)   "Replacement Cost" shall mean the amount of money necessary to be

spent in order to repair or rebuild the damaged area to the condition that

existed immediately prior to the damage occurring, excluding all improvements

made by lessees, other than those installed by Lessor at Lessee's expense.

 

     9.2   Premises Damage; Premises Building Partial Damage.

 

          (a)   Insured Loss: Subject to the provisions of paragraphs 9.4 and

9.5, if at any time during the term of this Lease there is damage which is an

insured Loss and which falls into the classification of either Premises Damage

or Premises Building Partial Damage, then Lessor shall, as soon as reasonably

possible and to the extent the required materials and labor are readily

available through usual commercial channels, at Lessor's expense, repair such

damage (but not Lessee's fixtures, equipment or tenant improvements originally

paid for by Lessee) to its condition existing at the time of the damage, and

this Lease shall continue in full force and effect.

 

          (b)   Uninsured Loss: Subject to the provisions of paragraphs 9.4 and

9.5, if at any time during t


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