California-Newport Beach-500 Newport Center Drive Lease - The Irvine Co. and Acacia Research Corp.
OFFICE SPACE LEASE
BETWEEN
THE IRVINE COMPANY
AND
ACACIA RESEARCH CORPORATION
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OFFICE SPACE LEASE
THIS LEASE is made as of the 28th day of January, 2002, by and between THE
IRVINE COMPANY, hereafter called "Landlord," and ACACIA RESEARCH CORPORATION, a
Delaware corporation, hereafter called "Tenant."
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean
and refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.
1. TENANT'S TRADE NAME: N/A
2. PREMISES: Suite No. 700 (the Premises are more particularly described in
Section 2.1).
ADDRESS OF BUILDING: 500 Newport Center Drive, Newport Beach, CA 92660
PROJECT DESCRIPTION Newport Center Block 500 (consisting of the Building
and the adjacent building at 550 Newport Center Drive, together with all
attendant parking and other Common Areas).
3. USE OF PREMISES: General Office and for no other use.
4. COMMENCEMENT DATE: February 15, 2002
5. LEASE TERM: The Term of this Lease shall expire on the date immediately
preceding the fifth anniversary of the Commencement Date.
6. BASIC RENT: Twenty-Three Thousand Two Hundred Fifteen Dollars ($23,215.00)
per month.
RENTAL ADJUSTMENTS:
Commencing February 1, 2003, the Basic Rent shall be Twenty-Three Thousand
Nine Hundred Twenty-Nine Dollars ($23,929.00) per month.
Commencing February 1, 2004, the Basic Rent shall be Twenty-Four Thousand
Six Hundred Forty-Three Dollars ($24,643.00) per month.
Commencing February 1, 2005, the Basic Rent shall be Twenty-Five Thousand
Three Hundred Fifty-Eight Dollars ($25,358.00) per month.
Commencing February 1, 2006, the Basic Rent shall be Twenty-Six Thousand
Seventy-Two Dollars ($26,072.00) per month.
7. PROPERTY TAX BASE: The Property Taxes per rentable square foot incurred by
Landlord and attributable to the twelve month period ending June 30, 2002
(the "Base Year").
BUILDING COST BASE: The Building Costs per rentable square foot incurred
by Landlord and attributable to the Base Year.
EXPENSE RECOVERY PERIOD: Every twelve month period during the Term (or
portion thereof during the first and last Lease years) ending June 30.
8. FLOOR AREA OF PREMISES: approximately 7,143 rentable square feet and
approximately 6,028 usable square feet
9. SECURITY DEPOSIT: $28,679.00
10. BROKER(S): The Staubach Company
11. PLAN APPROVAL DATE: N/A
12. PARKING: Twenty-Four (24) unreserved vehicle parking spaces (see Exhibit
C).
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13. ADDRESS FOR PAYMENTS AND NOTICES:
LANDLORD TENANT
The Irvine Company Acacia Research Corporation
c/o Insignia/ESG, Inc. 500 Newport Center Drive
630 Newport Center Drive, Suite 100 Suite 700
Newport Beach, CA 92660 Newport Beach, CA 92660
Attn: Property Manager Attn: Robert Berman, Esq.
with a copy of notices to: with a copy of default notices to:
THE IRVINE COMPANY Allen Matkins Leck Gamble
P.O. Box 6370 & Mallory LLP
Newport Beach, CA 92658-6370 1901 Avenue of the Stars
Attn: Vice President, Suite 1800
Operations - Office Properties Los Angeles, CA 90067
Attn: Mark Kelson, Esq.
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ARTICLE II. PREMISES
SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant rents
from Landlord the premises shown in Exhibit A (the "Premises"), containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions
and known by the suite number identified in Item 2 of the Basic Lease
Provisions. The Premises are located in the building identified in Item 2 of the
Basic Lease Provisions (the "Building"), which is a portion of the project
described in Item 2 (the "Project").
SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, except as set forth in this Lease. Nothing
contained in this Section shall affect the commencement of the Term or the
obligation of Tenant to pay rent. Landlord shall diligently complete all punch
list items of which it is notified as provided above.
SECTION 2.3. BUILDING NAME, ADDRESS AND DEPICTION. Tenant shall not
utilize any name selected by Landlord from time to time for the Building and/or
the Project as any part of Tenant's corporate or trade name. Landlord shall have
the right to change the name, number or designation of the Building or Project
without liability to Tenant upon reasonable prior notice to Tenant. Tenant shall
not use any picture of the Building in its advertising, stationery or in any
other manner.
SECTION 2.4. RIGHT OF FIRST OFFER. Provided Tenant is not then in default
beyond any applicable cure period hereunder, Landlord hereby grants Tenant the
continuing right ("First Right") to lease, during the initial sixty (60) month
Term of this Lease, any space which is contiguous to the Premises that may
become available for lease on the seventh (7th) floor of the Building ("First
Right Space") in accordance with and subject to the provisions of this Section
2.4. At any time after the date of this Lease, but prior to leasing the First
Right Space, or any portion thereof, to any other party, Landlord shall give
Tenant written notice of the basic economic terms including but not limited to
the Basic Rent, term, operating expense base, rent abatement, security deposit,
and tenant improvement allowance (collectively, the "Economic Terms"), upon
which Landlord is willing to lease such particular First Right Space to Tenant
or to a third party; provided that the Economic Terms shall exclude brokerage
commissions and other Landlord payments that do not directly inure to the
tenant's benefit. It is understood that should Landlord intend to lease other
space in addition to the First Right Space as part of a single transaction, then
Landlord's notice shall so provide and all such space shall collectively be
subject to the following provisions. Within five (5) business days after receipt
of Landlord's notice, Tenant shall give Landlord written notice pursuant to
which Tenant shall elect to (i) lease all, but not less than all, of the space
specified in Landlord's notice (the "Designated Space") upon such Economic Terms
and the same non-Economic Terms as set forth in this Lease; (ii) refuse to lease
the Designated Space, specifying that such refusal is not based upon the
Economic Terms, but upon Tenant's lack of need for the Designated Space, in
which event Landlord may lease the Designated Space upon any terms it deems
appropriate; or (iii) refuse to lease the Designated Space, specifying that such
refusal is based upon said Economic Terms, in which event Tenant shall also
specify revised Economic Terms upon which Tenant shall be willing to lease the
Designated Space. In the event that Tenant does not so respond in writing to
Landlord's notice within said period, Tenant shall be deemed to have elected
clause (ii) above. In the event Tenant gives Landlord notice pursuant to clause
(iii) above, Landlord may elect to either (x) lease the Designated Space to
Tenant upon such revised Economic Terms and the same other non-Economic Terms as
set forth in this Lease, or (y) lease the Designated Space to any third party
upon Economic Terms which are not more favorable to such party than those
Economic Terms proposed by Tenant. Should Landlord so elect to lease the
Designated Space to Tenant, then Landlord shall promptly prepare and deliver to
Tenant an amendment to this Lease consistent with the foregoing, and Tenant
shall execute and return same to Landlord within ten (10) business days. In the
event that Landlord shall not enter into a lease for the Designated Space with a
third party within one hundred eighty (180) days following Landlord's notice
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described above, then prior to leasing the First Right Space to any third party,
Landlord shall repeat the procedures set forth in this Section 2.4. In the event
that Landlord leases the Designated Space to a third party in accordance with
the provisions of this Section 2.4, and during the initial sixty (60) month term
of this Lease the First Right Space, or any portion thereof, shall again become
available for releasing, then prior to Landlord entering into any such new lease
with a third party for the First Right Space, Landlord shall repeat the
procedures specified above in this Section 2.4. Notwithstanding the foregoing,
it is understood that Tenant's First Right shall be subject to any extension or
expansion rights previously granted by Landlord to any existing third party
tenant in the Building, and to any extension rights which may hereafter be
granted by Landlord to any third party tenant now or hereafter occupying the
First Right Space or any portion thereof, and in no event shall any such First
Right Space be deemed available for leasing unless the then-existing tenant
thereof shall vacate that First Right Space. In addition, Landlord may from time
to time utilize segments of the First Right Space for temporary office or
storage purposes, and such temporary use shall not trigger the First Right
granted herein. Tenant's rights under this Section 2.4 shall belong solely to
Acacia Research Corporation and any Tenant Affiliate (as defined in Section
9.1(f) below) to which this Lease may be assigned, and may not otherwise be
assigned or transferred by it.
ARTICLE III. TERM
SECTION 3.1. GENERAL. The Term shall be for the period shown in Item 5 of
the Basic Lease Provisions. The Term shall commence ("Commencement Date") on the
Commencement Date as set forth in Item 4 of the Basic Lease Provisions and shall
expire on the date set forth in Item 5 of the Basic Lease Provisions
("Expiration Date"). Landlord shall complete the recarpet and painting of the
Premises in accordance with the provisions of the Work Letter attached as
Exhibit X hereto.
SECTION 3.2. RIGHT TO EXTEND THIS LEASE. Provided that Tenant is not then
in default under any provision of this Lease after the expiration of any
applicable notice and cure period, Tenant may extend the Term of this Lease for
one (1) period of sixty (60) months. Tenant shall exercise its right to extend
the Term by and only by delivering to Landlord, not less than ten (10) months
prior to the expiration date of the Term, Tenant's written notice of its
election to extend (the "Exercise Notice"). The Basic Rent payable under the
Lease during the extension of the Term shall be at the prevailing rental rate
and other economic terms for office space being leased by Landlord in the
Building and in the other high-rise buildings in Block 600 of Newport Center
with a term commencing at or about the commencement of the extension period (the
"Prevailing Rate").
In determining the Prevailing Rate, recent new and renewal leases with
non-equity tenants shall be considered. The Prevailing Rate shall reflect the
rental rate and terms payable in those third party transactions, taking into
account pertinent economic concessions then generally being granted by Landlord
such as "free rent," Operating Expense base years, parking charge limitations,
tenant improvement allowances and the like. It is understood, however, that no
consideration shall be given to brokerage commissions, lease "takeover"
payments, or moving allowances. The rental rates payable in any third party
transactions executed more than nine (9) months prior to the commencement of the
extension period shall be reasonably extrapolated, if applicable, to reflect
anticipated changes in the Prevailing Rate based on current rental trends.
Following Tenant's delivery of the Exercise Notice, but not later than nine (9)
months prior to the expiration date of the Term, Landlord shall notify Tenant in
writing ("Landlord's Notice") of Landlord's calculation of the Prevailing Rate
for the extension period based on the foregoing criteria. Not later than fifteen
(15) days following delivery of the Landlord's Notice, Tenant may elect to
rescind the Exercise Notice by delivery of written notice to Landlord
("Rescission Notice"), in which event this extension right shall lapse and cease
to be of any force or effect; provided that should Tenant fail timely to deliver
the Rescission Notice, Tenant's election to extend this Lease shall be
irrevocable.
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Provided that Tenant does not elect to rescind as provided above, the parties
shall diligently and in good faith attempt to agree in writing on the Prevailing
Rate. In the event the parties are unable to so agree on the Prevailing Rate by
the date that is six (6) months prior to the commencement of the extension
period, then either party may cause the Prevailing Rate to be determined by
arbitration in accordance with Section 14.7(b). The arbitrator shall determine
the Prevailing Rate based on the criteria set forth above, and neither party
shall be bound in the arbitration by any earlier calculation by such party of
the Prevailing Rate.
Within twenty (20) days after the determination of the Prevailing Rate, Landlord
shall prepare a reasonably appropriate amendment to this Lease for the extension
period and Tenant shall execute and return same to Landlord within ten (10)
business days. Should the Prevailing Rate not be established by the commencement
of the extension period, then Tenant shall continue paying rent at the rate in
effect during the last month of the initial Term, and a lump sum adjustment
shall be made within thirty (30) days following the determination of such new
rental.
If Tenant does not deliver the Exercise Notice by the date set forth above, or
otherwise fails to comply with any of the other provisions of this paragraph,
then Tenant's right to extend the Term shall be extinguished and the Lease shall
automatically terminate as of the expiration date of the Term, without any
extension and without any liability to Landlord. Any attempt by the original
Tenant herein to assign or transfer any right or interest created by this
paragraph, except in connection with an assignment of this Lease to a Tenant
Affiliate, shall be void from its inception. Time is specifically made of the
essence of this Section.
ARTICLE IV. RENT AND OPERATING EXPENSES
SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset (except as otherwise provided
in this Lease) a Basic Rent for the Premises in the total amount shown
(including subsequent adjustments, if any) in Item 6 of the Basic Lease
Provisions. Any rental adjustment shown in Item 6 shall be deemed to occur on
the specified monthly anniversary of the Commencement Date, whether or not that
date occurs at the end of a calendar month. The rent shall be due and payable in
advance commencing on the Commencement Date and continuing thereafter on the
first day of each successive calendar month of the Term, as prorated for any
partial month. No demand, notice or invoice shall be required. An installment of
rent in the amount of one (1) full month's Basic Rent at the initial rate
specified in Item 6 of the Basic Lease Provisions shall be delivered to Landlord
concurrently with Tenant's execution of this Lease and shall be applied against
the Basic Rent first due hereunder; the next installment of Basic Rent shall be
due on the first day of the second calendar month of the Term, which installment
shall, if applicable, be appropriately prorated to reflect the amount prepaid
for that calendar month.
SECTION 4.2. OPERATING EXPENSE INCREASE.
(a) Commencing twelve (12) months following the Commencement Date,
Tenant shall compensate Landlord, as additional rent, for Tenant's proportionate
shares of "Building Costs" and "Property Taxes," as those terms are defined
below, incurred by Landlord in the operation of the Building, inclusive of the
Building's proportionate share of expenses attributable to the Common Areas of
the Project as reasonably determined by Landlord. Property Taxes and Building
Costs are mutually exclusive and may be billed separately or in combination as
determined by Landlord, provided Tenant is treated in a nondiscriminatory manner
with respect to other tenants of the Building. Tenant's proportionate share of
Property Taxes shall equal the product of the rentable floor area of the
Premises, as set forth in Item 8 of the Basic Lease Provisions, multiplied by
the difference of (i) Property Taxes per rentable square foot less (ii) the
Property Tax Base set forth in Item 7 of the Basic Lease Provisions. Tenant's
proportionate share of Building Costs shall equal the product of the rentable
floor area of the Premises multiplied by the difference of (i) Building Costs
per rentable square foot less (ii) the Building Cost Base set forth in Item 7 of
the Basic Lease Provisions. For convenience of reference, Property Taxes and
Building Costs may sometimes be collectively referred to as "Operating
Expenses."
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(b) Commencing prior to the start of the first full "Expense Recovery
Period" of the Lease (as defined in Item 7 of the Basic Lease Provisions), and
prior to the start of each full or partial Expense Recovery Period thereafter,
Landlord shall give Tenant a written estimate of the amount of Tenant's
proportionate shares of Building Costs and Property Taxes for the Expense
Recovery Period or portion thereof. Commencing twelve (12) months following the
Commencement Date, Tenant shall pay the estimated amounts to Landlord in equal
monthly installments, in advance, with Basic Rent. If Landlord has not furnished
its written estimate for any Expense Recovery Period by the time set forth
above, Tenant shall continue to pay cost reimbursements at the rates established
for the prior Expense Recovery Period, if any; provided that when the new
estimate is delivered to Tenant, Tenant shall, within thirty (30) days following
Tenant's receipt of the new statement, pay any accrued cost reimbursements based
upon the new estimate. Landlord may from time to time change the Expense
Recovery Period to reflect a calendar year or a new fiscal year of Landlord, as
applicable, in which event Tenant's share of Operating Expenses shall be
equitably prorated for any partial year.
(c) Within one hundred twenty (120) days after the end of each
Expense Recovery Period, Landlord shall furnish to Tenant a reasonably detailed
statement setting forth the actual or prorated Property Taxes and Building Costs
attributable to that period, and the parties shall within thirty (30) days
thereafter make any payment or allowance necessary to adjust Tenant's estimated
payments, if any, to Tenant's actual proportionate shares as shown by the annual
statement. If Tenant has not made estimated payments during the Expense Recovery
Period, any amount owing by Tenant pursuant to subsection (a) above shall be
paid to Landlord in accordance with Article XVI. If actual Property Taxes or
Building Costs allocable to Tenant during any Expense Recovery Period are less
than the Property Tax Base or the Building Cost Base, respectively, Landlord
shall not be required to pay that differential to Tenant, although Landlord
shall refund any applicable estimated payments collected from Tenant. Should
Tenant fail to object in writing to Landlord's determination of actual Operating
Expenses within six (6) months following delivery of Landlord's expense
statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on Tenant.
(d) Tenant shall not be responsible for Tenant's proportionate share
of any Operating Expenses attributable to any Expense Recovery Period which are
first billed to Tenant more than two (2) calendar years after the end of the
applicable Expense Recovery Period. Landlord shall have the right to recalculate
Operating Expenses and to deliver to Tenant revisions of previously delivered
statements setting forth such recalculation, whereupon any increase in the
amount payable by Tenant shall be paid by Tenant within thirty (30) days after
receipt of any such revised statement or any decrease in the amount payable by
Tenant shall be refunded to Tenant concurrently with Landlord's delivery of such
revised statement to Tenant; provided, however, Landlord shall have no right to
recalculate Operating Expenses more than two (2) years following the expiration
of the applicable Expense Recovery Period. Even though the Lease has terminated
and the Tenant has vacated the Premises, when the final determination is made of
Tenant's share of Property Taxes and Building Costs for the Expense Recovery
Period in which the Lease terminates, Tenant shall upon notice pay the entire
increase due over the estimated expenses paid; conversely, any overpayment made
in the event expenses decrease shall be rebated by Landlord to Tenant.
(e) If, at any time during any Expense Recovery Period but after the
first twelve (12) months of the Lease Term, any one or more of the Operating
Expenses are increased to a rate(s) or amount(s) in excess of the rate(s) or
amount(s) used in calculating the estimated expenses for the year, and provided
such increase(s) are in excess of the costs and expenses incurred during the
Base Year, then Tenant's estimated share of Property Taxes or Building Costs, as
applicable, shall be increased for the month in which the increase becomes
effective and for all succeeding months by an amount equal to Tenant's
proportionate share of the increase. Landlord shall give Tenant written notice
of the amount or estimated amount of the increase, the month in which the
increase will become effective, Tenant's monthly share thereof and the months
for which the payments are due. Tenant shall pay the increase to Landlord as a
part of Tenant's monthly payments of estimated expenses as provided in paragraph
(b) above, commencing with the month in which effective. Landlord shall not
exercise its rights under this subsection (e) more than once during any Expense
Recovery Period.
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(f) The term "Building Costs" shall include all expenses of operation
and maintenance of the Building, together with the Building's proportionate
allotment of the expenses attributable to all appurtenant Common Areas (as
defined in Section 6.2), and shall include the following charges by way of
illustration but not limitation: water and sewer charges; insurance premiums or
reasonable premium equivalents should Landlord elect to self-insure any risk or
deductible that Landlord is authorized to insure hereunder; license, permit, and
inspection fees; heat; light; power; janitorial services; repairs; air
conditioning; supplies; materials; tools; programs instituted to comply with
mandatory transportation management requirements; amortization of capital
investments reasonably intended to produce a reduction in operating charges or
energy conservation; amortization of capital investments necessary to bring the
Building into compliance with applicable laws and building codes enacted
subsequent to the date of this Lease; labor; reasonably allocated wages and
salaries, fringe benefits, and payroll taxes for administrative and other
personnel directly applicable to the Building and/or Project, including both
Landlord's personnel and outside personnel; any expense incurred pursuant to
Sections 6.1, 6.2, 6.4, 7.2, and 10.2 and Exhibits B and C below; and a
reasonable management fee. It is understood that Building Costs shall include
competitive charges for direct services provided by any subsidiary or division
of Landlord. The term "Property Taxes" as used herein shall include the
following: (i) all real estate taxes or personal property taxes (which personal
property taxes are imposed upon the fixtures, machinery, equipment, apparatus,
systems and equipment, appurtenances, furniture and other personal property used
in connection with the Building), as such property taxes may be reassessed from
time to time, which real property and personal property taxes were paid in
connection with the ownership, leasing and operation of the Building or
Landlord's interest therein during any Expense Recovery Period; and (ii) other
taxes, documentary transfer fees, charges and assessments which are levied with
respect to this Lease or to the Building and/or the Project, and any
improvements, fixtures and equipment and other property of Landlord located in
the Building and/or the Project, except that all excess profits taxes, franchise
taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate
taxes, federal and state income taxes, and other taxes to the extent applicable
to Landlord's general or net income (as opposed to rents or income attributable
to operations at the Building), and any items included as Building Costs shall
be excluded; and (iii) any tax, surcharge or assessment which shall be levied in
addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (iv) costs and expenses incurred in
contesting the amount or validity of any Property Tax by appropriate
proceedings. A copy of Landlord's unaudited statement of expenses shall be made
available to Tenant upon request. The Building Costs may be extrapolated by
Landlord to reflect at least ninety-five percent (95%) occupancy of the rentable
area of the Building.
(g) Notwithstanding any contrary provision set forth above, Operating
Expenses for purposes of this Lease shall not include:
(1) costs, including marketing costs, legal fees, space
planners' fees, advertising and promotional expenses, and brokerage fees
incurred in connection with the original construction or development, or
original or future leasing of the Project, and costs, including permit, license
and inspection costs, incurred with respect to the installation of tenant
improvements made for new tenants initially occupying space in the Project after
the Lease Commencement Date or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other occupants
of the Project (excluding, however, such costs relating to any common areas of
the Project or parking facilities);
(2) depreciation, interest and principal payments on mortgages
and other debt costs, if any, or any penalties thereon;
(3) costs for which the Landlord is reimbursed by any tenant or
occupant of the Project or by insurance by its carrier or any tenant's carrier
or by anyone else, and electric power costs for which any tenant directly
contracts with the local public service company;
(4) any bad debt loss, rent loss, or reserves for bad debts or
rent loss;
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(5) costs associated with the operation of the business of the
partnership or entity which constitutes the Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated with
the operation of the Project). Costs associated with the operation of the
business of the partnership or entity which constitutes the Landlord include
costs of partnership accounting and legal matters, costs of defending any
lawsuits with any mortgagee (except as the actions of the Tenant may be in
issue), costs of selling, syndicating, financing, mortgaging or hypothecating
any of the Landlord's interest in the Project, and costs incurred in connection
with any disputes between Landlord and its employees, between Landlord and
Project management, or between Landlord and other tenants or occupants, and
Landlord's general corporate overhead and general and administrative expenses;
(6) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such wages
and benefits are prorated to reflect time spent on operating and managing the
Project vis-a-vis time spent on matters unrelated to operating and managing the
Project; provided, that in no event shall Operating Expenses for purposes of
this Lease include wages and/or benefits attributable to personnel above the
level of Project manager;
(7) except for a Project management fee to the extent allowed
pursuant to item (l), below, overhead and profit increment paid to the Landlord
or to subsidiaries or affiliates of the Landlord for services in the Project to
the extent the same exceeds the costs of such services rendered by qualified,
first-class unaffiliated third parties on a competitive basis;
(8) any compensation paid to clerks, attendants or other persons
in commercial concessions (other than parking) operated by the Landlord;
(9) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the cost
of which would be excluded from Operating Expenses as a capital cost, except
equipment not affixed to the Project which is used in providing janitorial or
similar services and, further excepting from this exclusion such equipment
rented or leased to remedy or ameliorate an emergency condition in the Project;
(10) all items and services for which Tenant or any other tenant
in the Project reimburses Landlord or which Landlord provides selectively to one
or more tenants (other than Tenant) without reimbursement;
(11) costs, other than those incurred in ordinary maintenance
and repair, for sculpture, paintings or other objects of art;
(12) fees and reimbursements payable to Landlord (including its
affiliates) for management of the Project which would ordinarily be included in
a management fee to the extent in excess of the fee comparably paid by other
landlords of high-rise office projects in Orange County;
(13) costs incurred to comply with laws relating to the removal
of a hazardous material (as defined under applicable law) which was in existence
in the Building or on the Project prior to the Lease Commencement Date, and was
of such a nature that a federal, State or municipal governmental authority, if
it had then had knowledge of the presence of such hazardous material, in the
state, and under the conditions that it then existed in the Building or on the
Project, would have then required the removal of such hazardous material or
other remedial or containment action with respect thereto; and costs incurred to
remove, remedy, contain, or treat hazardous material, which hazardous material
is brought into the Building or onto the Project after the date hereof by
Landlord or any other tenant of the Project and is of such a nature, at that
time, that a federal, State or municipal governmental authority, if it had then
had knowledge of the presence of such hazardous material, in the state, and
under the conditions, that it then exists in the Building or on the Project,
would have then required the removal of such hazardous material or other
remedial or containment action with respect thereto;
(14) costs arising from Landlord's charitable or political
contributions;
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(15) advertising and promotional expenditures by Landlord;
(16) costs, fines and penalties incurred due to the violation by
Landlord of any governmental rule or regulation, or due to the negligence or
wilful misconduct of Landlord or its agents, employees, vendors, contractors, or
providers of materials or services;
(17) any reserves retained by Landlord;
(18) costs incurred by Landlord for expenditures which are
considered capital improvements and replacements under generally accepted
accounting principles, consistently applied, except for those expenditures
incurred to comply with new laws and/or to reduce other Building Costs as
authorized under subsection (f) above;
(19) costs incurred due to the violation by Landlord or any
other tenant of the terms and conditions of any lease of space in the Building;
(20) costs of general overhead and general administrative
expenses;
(21) amounts paid as ground rental for the Project by the
Landlord;
(22) any costs expressly excluded from Operating Expenses
elsewhere in this Lease;
(23) the cost of any magazine, newspaper, trade or other
subscriptions;
(24) any costs covered by any warranty, rebate, guarantee or
service contract which are actually collected by Landlord (which shall not
prohibit Landlord from passing through the costs of any such service contract if
otherwise includable in Operating Expenses);
(25) tax penalties incurred as a result of Landlord's
negligence, inability or unwillingness to make payments or file returns when
due;
(26) rent for any office space occupied by Project or Building
management personnel to the extent the size or rental rate of such office space
exceeds the size or fair market rental value of office space occupied by
management personnel of comparable buildings in the vicinity of the Project,
with adjustment for size where appropriate for the size of the applicable
project (it being understood that the current office size as of the date hereof
is approved); and
(27) costs arising from the negligence or willful misconduct of
Landlord, its partners and their respective officers, agents, servants,
employees and independent contractors.
Landlord shall not (i) make a profit by charging items to Operating
Expenses that are otherwise also charged separately to others and (ii) collect
Operating Expenses from Tenant and all other tenants in the Building in an
amount in excess of what Landlord incurs for the items included in Operating
Expenses. In the event Landlord incurs costs during any calendar year after the
Base Year relating to insurance premiums from earthquake insurance which were
not part of Operating Expenses during the Base Year, Operating Expenses for the
Base Year shall be deemed increased by the amounts Landlord would have incurred
during the Base Year with respect to such insurance premiums had such earthquake
insurance been carried by Landlord during the Base Year.
(h) Provided Tenant is not then in default hereunder, Tenant shall
have the right to cause a certified public accountant, engaged on a
non-contingency fee basis, to audit Operating Expenses by inspecting Landlord's
general ledger of expenses not more than once during any Expense Recovery
Period. However, to the extent that insurance premiums or any other component of
Operating Expenses is determined by Landlord on the basis of an internal
allocation of costs utilizing information Landlord in good faith deems
proprietary, such expense component shall not be subject to audit so long as it
does not exceed the amount per square foot typically imposed by landlords of
other first class office projects in Orange County, California. Tenant shall
<PAGE>
give notice to Landlord of Tenant's intent to audit within six (6) months after
Tenant's receipt of Landlord's expense statement which sets forth Landlord's
actual Operating Expenses. Such audit shall be conducted at a mutually agreeable
time during normal business hours at the office of Landlord or its management
agent where such accounts are maintained. If Tenant's audit determines that
actual Operating Expenses have been overstated by more than five percent (5%),
then subject to Landlord's right to review and/or contest the audit results,
Landlord shall reimburse Tenant for the reasonable out-of-pocket costs of such
audit. Tenant's rent shall be appropriately adjusted to reflect any
overstatement in Operating Expenses (or, if the determination is made after the
end of the Lease Term, any sums owing to Tenant shall be paid within thirty (30)
days). In addition, if any component of Operating Expenses is determined to be
either inappropriate or excessive during an Expense Recovery Period, and if the
Building Cost Base or Property Tax Base also included such component, then the
appropriate Base shall concurrently be adjusted if and to the extent reasonably
appropriate, subject to Tenant's right to review the Base Year expenses for that
component. In the event of a dispute between Landlord and Tenant regarding such
audit, either party may elect to submit the matter for binding arbitration
pursuant to Section 14.7(b) below. All of the information obtained by Tenant
and/or its auditor in connection with such audit, as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant as a result
thereof, shall be held in strict confidence and, except as may be required
pursuant to litigation, shall not be disclosed to any third party, directly or
indirectly, by Tenant or its auditor or any of their officers, agents or
employees. Landlord may require Tenant's auditor to execute a separate
confidentiality agreement affirming the foregoing as a condition precedent to
any audit. Notwithstanding the foregoing, Tenant shall have no right of audit
with respect to any Expense Recovery Period unless the total Operating Expenses
per square foot for such Expense Recovery Period, as set forth in Landlord's
annual expense reconciliation, exceed the total Operating Expenses per square
foot during the Base Year, as increased by the percentage change in the United
States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for
all Urban Consumers, Los Angeles - Riverside - Orange County Area Average, all
items (1982-84 = 100) (the "Index"), which change in the Index shall be measured
by comparing the Index published for January of the Base Year with the Index
published for January of the applicable Expense Recovery Period.
SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions (the "Security Deposit"), to be held by Landlord as
security for the full and faithful performance of Tenant's obligations under
this Lease to pay any rent as and when due, including without limitation such
additional rent as may be owing under any provision hereof, and to maintain the
Premises as required by Sections 7.1 and 15.3 or any other provision of this
Lease. Upon any breach of those obligations by Tenant following the expiration
of any applicable notice and cure period, Landlord may apply all or part of the
Security Deposit as full or partial compensation. If any portion of the Security
Deposit is so applied, Tenant shall within ten (10) business days after written
demand by Landlord deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to its original amount. Landlord shall not be required to
keep this Security Deposit separate from its general funds, and Tenant shall not
be entitled to interest on the Security Deposit. In no event may Tenant utilize
all or any portion of the Security Deposit as a payment toward any rental sum
due under this Lease. If Tenant fully performs its obligations under this Lease,
the Security Deposit or any balance thereof shall be returned to Tenant or, at
Landlord's option, to the last assignee of Tenant's interest in this Lease
within thirty (30) days following the expiration or earlier termination of this
Lease and Tenant's vacation of the Premises.
<PAGE>
ARTICLE V. USES
SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way unreasonably
interfere with the rights or quiet enjoyment of other occupants of the Building
or the Project, or use or allow the Premises to be used for any unlawful
purpose, nor shall Tenant permit any nuisance or commit any waste in the
Premises or the Project. Tenant shall not do or permit to be done anything which
will invalidate or increase the cost of any insurance policy(ies) covering the
Building, the Project and/or their contents, and shall comply with all
applicable reasonable insurance underwriters rules of which Tenant has received
written notice. Tenant shall comply at its expense with all present and future
laws, ordinances and requirements of all governmental authorities that pertain
to Tenant or its use of the Premises for non-general office use, including
without limitation all federal and state occupational health and safety and
handicap access requirements, whether or not Tenant's compliance will
necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall not generate, handle, store or dispose of hazardous or
toxic materials (as such materials may be identified in any federal, state or
local law or regulation) in the Premises or Project without the prior written
consent of Landlord; provided that the foregoing shall not be deemed to
proscribe the use by Tenant of customary office supplies in normal quantities so
long as such use comports with all applicable laws. Tenant agrees that it shall
promptly complete and deliver to Landlord any disclosure form regarding
hazardous or toxic materials that may be required by any governmental agency.
Tenant shall also, from time to time upon request by Landlord, execute such
commercially reasonable affidavits concerning Tenant's best knowledge and belief
regarding the presence of hazardous or toxic materials in the Premises.
Notwithstanding anything to the contrary set forth in this Lease, Tenant shall
have no obligation to clean up, remediate, monitor, or abate, or to reimburse,
release, indemnify or defend Landlord with respect to, any hazardous materials
which Tenant did not cause to be introduced onto the Premises or any other
portion of the Building. Landlord shall have the right at any time to perform an
assessment of the environmental condition of the Premises and of Tenant's
compliance with this Section. As part of any such assessment, Landlord shall
have the right, upon reasonable prior notice to Tenant, to enter and inspect the
Premises and to perform tests, provided those tests are performed in a manner
that minimizes disruption to Tenant. Tenant will cooperate with Landlord in
connection with any assessment by, among other things, promptly responding to
inquiries and providing relevant documentation and records. The reasonable cost
of the assessment/testing shall be reimbursed by Tenant to Landlord if such
assessment/testing determines that Tenant failed in a material way to comply
with the requirements of this Section. In all events Tenant shall indemnify
Landlord in the manner elsewhere provided in this Lease from any release of
hazardous or toxic materials caused by Tenant, its agents, employees,
contractors, subtenants or licensees. The foregoing covenants shall survive the
expiration or earlier termination of this Lease.
SECTION 5.2. SIGNS. Landlord shall, upon request by Tenant and at Tenant's
expense, affix and maintain a sign (restricted solely to Tenant's name as set
forth herein or such other name as Landlord may consent to in writing) adjacent
to the entry door of the Premises, together with a proportional allotment of
directory strips in the lobby directory of the Building; provided that the cost
of such initial signage and directory strips shall be borne by Landlord. The
signage shall conform to the criteria for signs established by Landlord and
shall be ordered through Landlord. Tenant shall not place or allow to be placed
any other sign, decoration or advertising matter of any kind that is visible
from the exterior of the Premises. Any violating sign or decoration may, if not
removed by Tenant within twenty-four hours after written or oral notice from
Landlord, be removed by Landlord at Tenant's expense without the removal
constituting a breach of this Lease or entitling Tenant to claim damages.
SECTION 5.3. TENANT'S SECURITY SYSTEM. Tenant may, at its own expense,
subject to Landlord's prior written consent, which consent shall not be
unreasonably conditioned, withheld or delayed, install its own security system
("Tenant's Security System") in the Premises, provided that Tenant shall
coordinate the installation and operation of Tenant's Security System with
Landlord to assure that Tenant's Security System is compatible with any security
system of Landlord and the systems and equipment of the Building. Tenant shall
be solely responsible, at Tenant's sole cost and expense, for the monitoring,
operation and removal of Tenant's Security System.
<PAGE>
ARTICLE VI. LANDLORD SERVICES
SECTION 6.1. UTILITIES AND SERVICES. Landlord shall furnish to the
Premises the utilities and services described in Exhibit B. Except as set forth
in Section 6.6 below, Landlord shall not be liable for any failure to furnish
any services or utilities when the failure is the result of any accident or
other cause beyond Landlord's reasonable control, nor shall Landlord be liable
for damages resulting from power surges or any breakdown in telecommunications
facilities or services except to the extent arising from Landlord's negligence
or willful misconduct and not covered by Tenant's insurance. Except as set forth
in Section 6.6 below, Landlord's temporary inability to furnish any services or
utilities shall not entitle Tenant to any damages, relieve Tenant of the
obligation to pay rent or constitute a constructive or other eviction of Tenant,
except that Landlord shall diligently attempt to restore the service or utility
promptly. Tenant shall comply with all nondiscriminatory rules and regulations
which Landlord may reasonably establish for the provision of services and
utilities, and shall cooperate with all reasonable conservation practices
established by Landlord. Upon reasonable prior written or oral notice, Landlord
shall at all reasonable times have free access to all electrical and mechanical
installations of Landlord.
SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Building and the Project. The
term "Common Areas" shall mean all areas within the Building and other buildings
in the Project which are not held for exclusive use by persons entitled to
occupy space, and all other appurtenant areas and improvements provided by
Landlord for the common use of Landlord and tenants and their respective
employees and invitees, including without limitation parking areas and
structures, driveways, sidewalks, landscaped and planted areas, hallways and
interior stairwells not located within the premises of any tenant, common
entrances and lobbies, elevators, and restrooms not located within the premises
of any tenant.
SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas in common with Landlord and with all
others for whose convenience and use the Common Areas may be provided by
Landlord, subject, however, to compliance with all reasonable nondiscriminatory
rules and regulations as are prescribed from time to time by Landlord. Landlord
shall at all times during the Term have exclusive control of the Common Areas,
and may reasonably restrain or permit any use or occupancy, except as otherwise
provided in this Lease or in Landlord's rules and regulations. Tenant shall keep
the Common Areas clear of any obstruction or unauthorized use related to
Tenant's operations. Landlord may temporarily close any portion of the Common
Areas for repairs, remodeling and/or alterations, to prevent a public dedication
or the accrual of prescriptive rights, or for any other reasonable purpose, but
Landlord shall not thereby interfere with Tenant's use of or access to the
Premises.
SECTION 6.4. PARKING. Parking shall be provided in accordance with the
provisions set forth in Exhibit C to this Lease.
SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. No change shall entitle Tenant
to any abatement of rent or other claim against Landlord, provided that the
change does not materially adversely affect Tenant's access to or use of the
Premises.
SECTION 6.6. ABATEMENT. If Tenant is prevented from using, and does not
use, the Premises, or any portion thereof, for five (5) consecutive business
days (the "Eligibility Period") as a result of any failure of Landlord to
provide services, utilities, or access to the Premises, or due to the presence
of hazardous materials not introduced by Tenant, its agents or contractors, then
rent payable by Tenant shall be abated or reduced, as the case may be, after
expiration of the Eligibility Period for such time that Tenant continues to be
so prevented from using, and does not use, the Premises or a portion thereof, in
the proportion that the rentable area of the portion of the Premises that Tenant
is prevented from using, and does not use, bears to the total rentable area of
the Premises. However, if Tenant is prevented from conducting, and does not
<PAGE>
conduct, its business in a portion of the Premises for a period of time in
excess of the Eligibility Period, and the remaining portion of the Premises is
not sufficient to allow Tenant to effectively conduct its business therein, and
if Tenant does not conduct its business from such remaining portion, then for
such time after expiration of the Eligibility Period during which Tenant is so
prevented from effectively conducting its business therein, the rent payable by
Tenant for the entire Premises shall be abated. If Tenant thereafter reoccupies
and conducts its business from any portion of the Premises during such period,
then the Rent allocable to such reoccupied portion, based on the proportion that
the rentable area of such reoccupied portion of the Premises bears to the total
rentable area of the Premises, shall be payable by Tenant from the date such
business operations commence.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Subject to Article XI,
Tenant at its sole expense shall make all repairs reasonably necessary to keep
the Premises and all improvements and fixtures therein in the condition as
existed on the Commencement Date (or on any later date that the applicable
improvements may have been installed), excepting ordinary wear and tear.
Notwithstanding Section 7.2 below, Tenant's maintenance obligation shall include
without limitation all appliances, non-building standard lighting/electrical
systems, and plumbing fixtures and installations located within or servicing
only the Premises. All repairs shall be at least equal in quality to the
original work, shall be made only by a licensed, bonded contractor reasonably
approved in writing in advance by Landlord and shall be made only at the time or
times reasonably approved by Landlord. Any contractor utilized by Tenant shall
be subject to Landlord's reasonable standard requirements for contractors, as
modified from time to time. Landlord may impose reasonable restrictions and
requirements with respect to repairs, as provided in Section 7.3, and the
provisions of Section 7.4 shall apply to all repairs. Alternatively, should
Landlord or its management agent agree to make a repair on behalf of Tenant and
at Tenant's request, Tenant shall promptly reimburse Landlord as additional rent
for all costs incurred within thirty (30) days following delivery of an invoice.
SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Article XI,
Landlord shall provide service, maintenance and repair with respect to the
heating, ventilating and air conditioning ("HVAC") equipment of the Building
(exclusive of any supplemental HVAC equipment servicing only the Premises) and
shall maintain in good repair the Common Areas, roof, foundations, footings, the
exterior surfaces of the exterior walls of the Building, and the structural,
electrical, mechanical and plumbing systems of the Building except as provided
in Section 7.1 above. Landlord shall have the right to employ or designate any
reputable person or firm, including any employee or agent of Landlord or any of
Landlord's affiliates or divisions, to perform any service, repair or
maintenance function provided such agents and/or affiliates perform first class
work at prices which are competitive with other first class contractors
performing similar work. Landlord need not make any other improvements or
repairs except as specifically required under this Lease, and nothing contained
in this Section shall limit Landlord's right to reimbursement from Tenant for
maintenance, repair costs and replacement costs as provided elsewhere in this
Lease. Tenant understands that it shall not make repairs at Landlord's expense
or by rental offset. Except as provided in Sections 6.6, 11.1 and 12.1 below,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant's business arising from the making of
any repairs, alterations or improvements to any portion of the Building,
including repairs to the Premises, nor shall any related activity by Landlord
constitute an actual or constructive eviction; provided, however, that in making
repairs, alterations or improvements, Landlord shall use commercially reasonable
efforts to avoid or minimize any interference with Tenant's access to the
Premises or parking areas and with the conduct of Tenant's business in the
Premises. In no event shall Landlord change the nature of the Building to
something other than a first class office building project. Landlord shall
comply with all laws, statutes, ordinances or other governmental rules,
regulations or requirements now in force or which may hereafter be enacted
relating to the base Building and the Common Areas within the Project, provided
that compliance is not the responsibility of Tenant.
<PAGE>
SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises without the prior written consent of Landlord,
which consent shall be given or refused within ten (10) business days.
Landlord's consent shall not be unreasonably withheld as long as the proposed
changes do not affect the structural, electrical or mechanical components or
systems of the Building, are not visible from the exterior of the Premises, and
utilize only building standard materials. Moreover, as long as the foregoing
criteria are satisfied, Landlord's consent shall not be required (but prior
written notice to Landlord must be given) for cosmetic alternations costing in
the aggregate not more than Forty Thousand Dollars ($40,000.00). Landlord may
impose, as a condition to its consent, any requirements that Landlord in its
discretion may deem reasonable, including but not limited to requirements as to
the manner and time for performance of the work. Without limiting the generality
of the foregoing, Tenant shall use Landlord's designated mechanical and
electrical contractors for all work affecting the mechanical or electrical
systems of the Building. Should Tenant perform any work that would necessitate
any ancillary Building modification or other expenditure by Landlord, then
Tenant shall promptly fund the reasonable cost thereof to Landlord. Tenant shall
obtain all required permits for the work and shall perform the work in
compliance with all applicable laws, regulations and ordinances, and Landlord
shall be entitled to a supervision fee in the amount uniformly established by
Landlord for the Building, but not in excess of five percent (5%) of the cost of
the work. Under no circumstances shall Tenant make any improvement which
incorporates asbestos-containing construction materials into the Premises. Any
request for Landlord's consent shall be made in writing and, if applicable,
shall contain architectural plans describing the work in detail reasonably
satisfactory to Landlord. Landlord may elect to cause its architect to review
Tenant's architectural plans, and the reasonable cost of that review shall be
reimbursed by Tenant. Should the work proposed by Tenant modify the internal
configuration of the Premises, then Tenant shall, at its expense, furnish
Landlord with as-built drawings and CAD disks compatible with Landlord's
systems. Unless Landlord otherwise agrees in writing, all alterations, additions
or improvements affixed to the Premises (excluding moveable trade fixtures and
furniture) shall become the property of Landlord and shall be surrendered with
the Premises at the end of the Term, except that Landlord may, by notice to
Tenant given at the time of Landlord's consent to the alteration or improvement,
require Tenant to remove by the Expiration Date, or sooner termination date of
this Lease, all or any alterations, decorations, fixtures, additions,
improvements and the like installed either by Tenant or by Landlord at Tenant's
request and to repair any damage to the Premises arising from that removal.
Landlord may require Tenant to remove an improvement provided as part of the
initial build-out pursuant to Exhibit X, if any, if and only if the improvement
is a non-building standard item and Tenant is notified of the requirement in
writing prior to the build-out. Except as otherwise provided in this Lease or in
any Exhibit to this Lease, should Landlord make any alteration or improvement to
the Premises at the request of Tenant, Landlord shall be entitled to prompt
payment from Tenant of the reasonable cost thereof, inclusive of the standard
coordination fee of Landlord's management agent uniformly established for the
Project.
SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free from
any liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause
any such lien to be released by posting a bond in accordance with California
Civil Code Section 3143 or any successor statute. In the event that Tenant shall
not, within thirty (30) days following the imposition of any lien, cause the
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other available remedies, the right to cause the
lien to be released by any means it deems proper, including payment of or
defense against the claim giving rise to the lien. All reasonable expenses so
incurred by Landlord, including Landlord's reasonable attorneys' fees, shall be
reimbursed by Tenant promptly following Landlord's demand, together with
interest from the date of payment by Landlord at the rate of ten percent (10%)
per annum until paid. Tenant shall give Landlord no less than fifteen (15) days'
prior notice in writing before commencing construction of any kind on the
Premises so that Landlord may post and maintain notices of nonresponsibility on
the Premises.
<PAGE>
SECTION 7.5. ENTRY AND INSPECTION. Landlord shall upon reasonable prior
written or oral notice and at all reasonable times have the right to enter the
Premises to inspect them, to supply services in accordance with this Lease, to
protect the interests of Landlord in the Premises, to make repairs and
renovations as reasonably deemed necessary by Landlord, and to submit the
Premises to prospective or actual purchasers or encumbrance holders (or, during
the final nine months of the Term or when an uncured monetary or other material
Tenant default exists, to prospective tenants), all without being deemed to have
caused an eviction of Tenant and without abatement of rent except as provided
elsewhere in this Lease. Landlord shall at all times have and retain a key which
unlocks all of the doors in the Premises, excluding Tenant's vaults and safes,
and Landlord shall have the right to use any and all means which Landlord may
reasonably deem proper to open the doors in an emergency in order to obtain
entry to the Premises, and any entry to the Premises obtained by Landlord shall
not under any circumstances be deemed to be a forcible or unlawful entry into,
or a detainer of, the Premises, or any eviction of Tenant from the Premises. In
exercising Landlord's rights under this Section 7.5, Landlord shall use
commercially reasonably efforts to not interfere with Tenant's use of, or access
to, the Premises.
SECTION 7.6. SPACE PLANNING AND SUBSTITUTION. Landlord shall have the
one-time right, upon providing not less than forty-five (45) days written
notice, to move Tenant to other space of comparable size and on the same floor
or above in the Building or in one of the buildings located at 610, 620 or 660
Newport Center Drive. The new space shall be provided with improvements of
comparable quality to those within the Premises and shall have a comparable
interior configuration. Landlord shall pay the reasonable out-of-pocket costs to
relocate and reconnect Tenant's personal property and equipment within the new
space; provided that Landlord may elect to cause such work to be done by its
contractors. Landlord shall also reimburse Tenant for such other reasonable
out-of-pocket costs that Tenant may incur in connection with the relocation,
including without limitation necessary stationery revisions, provided that a
reasonable estimate thereof is given to Landlord within twenty (20) days
following Landlord's notice. In no event, however, shall Landlord be obligated
to incur or fund total relocation costs, exclusive of tenant improvement
expenditures, in an amount in excess of three (3) months of Basic Rent at the
rate then payable hereunder. Should Tenant be relocated by Landlord pursuant to
this Section, Tenant shall also be afforded an abatement of the first full month
of Basic Rent for the new space. Within ten (10) business days following request
by Landlord, Tenant shall execute an amendment to this Lease prepared by
Landlord to memorialize the relocation. Notwithstanding the foregoing, in the
event the new space designated by Landlord not be acceptable to Tenant for any
reason, then Tenant may, by written notice to Landlord within ten (10) business
days following Landlord's relocation notice, elect to terminate this Lease
without penalty, which termination shall be effective sixty (60) days following
delivery of Landlord's relocation notice unless otherwise agreed in writing by
the parties.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY
Tenant shall be liable for and shall pay before delinquency, all taxes and
assessments levied against all personal property of Tenant located in the
Premises. When possible Tenant shall cause its personal property to be assessed
and billed separately from the real property of which the Premises form a part.
If any taxes on Tenant's personal property are levied against Landlord or
Landlord's property and if Landlord pays the same, or if the assessed value of
Landlord's property is increased by the inclusion of a value placed upon the
personal property of Tenant and if Landlord pays the taxes based upon the
increased assessment, Tenant shall pay to Landlord the taxes so levied against
Landlord or the proportion of the taxes resulting from the increase in the
assessment.
<PAGE>
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1. RIGHTS OF PARTIES.
(a) Tenant may not, either voluntarily or by operation of law, assign,
sublet, encumber, or otherwise transfer all or any part of Tenant's interest in
this Lease, or permit the Premises to be occupied by anyone other than Tenant,
without Landlord's prior written consent, which consent shall not unreasonably
be withheld in accordance with the provisions of Section 9.1.(c). For purposes
of this Lease, references to any subletting, sublease or variation thereof shall
be deemed to apply not only to a sublease effected directly by Tenant, but also
to a sub-subletting or an assignment of subtenancy by a subtenant at any level.
No assignment (whether voluntary, involuntary or by operation of law) and no
subletting shall be valid or effective without Landlord's prior written consent.
Landlord shall not be deemed to have given its consent to any assignment or
subletting by any other course of action, including its acceptance of any name
for listing in the Building directory. To the extent not prohibited by
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord's standard for consent as set forth in
Section 9.1(c) of this Lease. If this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord an
instrument confirming that assumption.
(b) [Intentionally omitted]
(c) If Tenant or any subtenant hereunder desires to transfer an
interest in this Lease, Tenant shall first notify Landlord and request in
writing Landlord's consent to the transfer. Tenant shall also submit in writing
to Landlord: (i) the name and address of the proposed transferee; (ii) the
nature of any proposed subtenant's or assignee's business to be carried on in
the Premises; (iii) the terms and provisions of any proposed sublease or
assignment (including without limitation the rent and other economic provisions,
term, improvement obligations and commencement date); (iv) any other information
reasonably requested by Landlord and reasonably related to the transfer. Except
as provided in Subsection (d) of this Section, Landlord shall not unreasonably
withhold its consent, provided: (1) the use of the Premises will be consistent
with the provisions of this Lease and with Landlord's commitment to other
tenants of the Building and Project; (2) any proposed assignee demonstrates that
it is financially responsible by submission to Landlord of all reasonable
information as Landlord may request concerning the proposed assignee, including,
but not limited to, a balance sheet of the proposed assignee as of a date within
ninety (90) days of the request for Landlord's consent and statements of income
or profit and loss of the proposed assignee for the two-year period preceding
the request for Landlord's consent; (3) the proposed assignee or subtenant is
neither an existing tenant or occupant of the Building or Project nor a
prospective tenant with whom Landlord is then actively negotiating unless
Landlord does not have sufficient available space in the Building to offer for
lease; and (4) the proposed transfer will not impose additional burdens or
adverse tax effects on Landlord. If Landlord consents to the proposed transfer,
then the transfer may be effected within one hundred eighty (180) days after the
date of the consent upon the terms described in the information furnished to
Landlord; provided that any material change in the terms shall be subject to
Landlord's consent as set forth in this Section. Landlord shall approve or
disapprove any requested transfer within fifteen (15) days following receipt of
Tenant's written notice and the information set forth above. Tenant shall pay to
Landlord a transfer fee of Five Hundred Dollars ($500.00) if and when any
transfer request submitted by Tenant is approved.
<PAGE>
(d) Notwithstanding the provisions of Subsection (c) above, in lieu of
consenting to a proposed assignment or subletting of the entire Premises,
Landlord may elect to terminate this Lease, effective on the date that the
proposed sublease or assignment would have commenced. Landlord may thereafter,
at its option, assign or re-let any space so recaptured to any third party,
including without limitation the proposed transferee identified by Tenant.
Notwithstanding the foregoing, however, should Landlord exercise its right of
recapture pursuant to this subsection, Tenant may, within five (5) business days
following delivery of Landlord's recapture notice, elect by written notice to
rescind Tenant's request to sublease or assign this Lease, in which event
Landlord's recapture election shall be null and void.
(e) Should any assignment or subletting occur, Tenant shall promptly
pay or cause to be paid to Landlord, as additional rent, fifty percent (50%) of
any amounts paid by the assignee or subtenant, after all rental abatements and
however described and whether funded during or after the Lease Term (but
exclusive of sums attributable to the sale of Tenant's business, if applicable),
to the extent such amounts are in excess of the sum of (i) the scheduled rental
sums payable by Tenant hereunder (or, in the event of a subletting of only a
portion of the Premises, the rent allocable to such portion as reasonably
determined by Landlord) and (ii) the direct out-of-pocket costs, as evidenced by
third party invoices provided to Landlord, incurred by Tenant to effect the
transfer. Upon request by Landlord, Tenant and all other parties to the transfer
shall memorialize in writing the amounts to be paid pursuant to this paragraph.
(f) Notwithstanding the foregoing, provided Tenant is not then in
default hereunder, Tenant may, without Landlord's prior consent but with written
notice to Landlord and subject to the provisions of Section 9.2, assign or
transfer its right, title and interest in this Lease or sublease the Premises to
any of the following: (i) any entity resulting from a merger or consolidation
with Tenant; (ii) any entity succeeding to the business and assets of Tenant; or
(iii) any entity controlling, controlled by, or under common control with,
Tenant (collectively, "Tenant Affiliate"). For purposes of the foregoing,
"control" shall mean the ownership, directly or indirectly, of at least fifty
percent (50%) of the voting securities of, or possession of the right to vote,
in the ordinary direction of its affairs, of at least fifty percent (50%) of the
voting interest in the entity.
SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant, or any successor-in-interest to
Tenant hereunder, of its obligation to pay rent and to perform all its other
obligations under this Lease. Moreover, Tenant shall indemnify and hold Landlord
harmless, as provided in Section 10.3, for any act or omission by an assignee or
subtenant. Each assignee, other than Landlord, shall be deemed to assume all
obligations of Tenant under this Lease and shall be liable jointly and severally
with Tenant for the payment of all rent, and for the due performance of all of
Tenant's obligations, under this Lease. Such joint and several liability shall
not be discharged or impaired by any subsequent modification or extension of
this Lease. No transfer to other than a Tenant Affiliate shall be binding on
Landlord unless any document memorializing the transfer is delivered to Landlord
and both the assignee/subtenant and Tenant deliver to Landlord an executed and
commercially reasonable consent to transfer instrument prepared by Landlord and
consistent with the requirements of this Article. The acceptance by Landlord of
any payment due under this Lease from any other person shall not be deemed to be
a waiver by Landlord of any provision of this Lease or to be a consent to any
transfer. Consent by Landlord to one or more transfers shall not operate as a
waiver or estoppel to the future enforcement by Landlord of its rights under
this Lease. In addition to the foregoing, no change in the status of Tenant or
any party jointly and severally liable with Tenant as aforesaid (e.g., by
conversion to a limited liability company or partnership) shall serve to
abrogate the liability of any person or entity for the obligations of Tenant,
including any obligations that may be incurred by Tenant after the status change
by exercise of a pre-existing right in this Lease.
SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be included in each sublease:
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(a) Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default occurs in
the performance of Tenant's obligations under this Lease and is not timely cured
by Tenant as required herein, Tenant shall have the right to receive and collect
the sublease rentals. Landlord shall not, by reason of this assignment or the
collection of sublease rentals, be deemed liable to the subtenant for the
performance of any of Tenant's obligations under the sublease. Tenant hereby
irrevocably authorizes and directs any subtenant, upon receipt of a written
notice from Landlord stating that an uncured default exists in the performance
of Tenant's obligations under this Lease, to pay to Landlord all sums then and
thereafter due under the sublease. Tenant agrees that the subtenant may rely on
that notice without any duty of further inquiry and notwithstanding any notice
or claim by Tenant to the contrary. Tenant shall have no right or claim against
the subtenant or Landlord for any rentals so paid to Landlord. In the event
Landlord collects amounts from subtenants that exceed the total amount then due
from Tenant hereunder, Landlord shall promptly remit the excess to Tenant.
(b) In the event of the termination of this Lease, Landlord may, at its
sole option, take over Tenant's entire interest in any sublease and, upon notice
from Landlord, the subtenant shall attorn to Landlord. In no event, however,
shall Landlord be liable for any previous act or omission by Tenant under the
sublease or for the return of any advance rental payments or deposits under the
sublease that have not been actually delivered to Landlord, nor shall Landlord
be bound by any sublease modification executed without Landlord's consent or for
any advance rental payment by the subtenant in excess of one month's rent. The
general provisions of this Lease, including without limitation those pertaining
to insurance and indemnification, shall be deemed incorporated by reference into
the sublease despite the termination of this Lease.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.
SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance, with or without deductible and
in amounts and coverages as may be determined by Landlord in its reasonable
discretion: "all risk" property insurance, subject to standard exclusions,
covering the Building or Project, and such other risks as Landlord or its
mortgagees may from time to time deem appropriate, and commercial general
liability coverage. Notwithstanding the foregoing, Landlord shall at a minimum
carry insurance with coverages and amounts comparable to that carried by
landlords of comparable first class office projects in the Newport Beach area
(except that Landlord may self-insure a portion of such risks), together with
workers' compensation and employer liability coverage as required by applicable
law. Landlord shall not be required to carry insurance of any kind on
improvements, trade fixtures, furnishings, equipment, interior plate glass,
signs and all items of personal property in the Premises, and shall not be
obligated to repair or replace that property should damage occur. All proceeds
of insurance maintained by Landlord upon the Building and Project shall be the
property of Landlord, whether or not Landlord is obligated to or elects to make
any repairs.
SECTION 10.3. INDEMNITY.
(a) To the fullest extent permitted by law, Tenant shall defend,
indemnify and hold harmless Landlord, its agents, lenders, and any and all
affiliates of Landlord, from and against any and all claims, liabilities, costs
or expenses arising either before or after the Commencement Date from Tenant's
use or occupancy of the Premises, the Building or the Common Areas, or from the
conduct of its business, or from any activity, work, or thing done, permitted or
suffered by Tenant or its agents, employees, subtenants, vendors, contractors or
licensees in or about the Premises, the Building or the Common Areas, or from
any default in the performance of any obligation on Tenant's part to be
performed under this Lease, or from any willful misconduct or negligence of
Tenant or its agents, employees, subtenants, vendors, contractors or licensees.
Landlord may, at its option, require Tenant to assume Landlord's defense in any
action covered by this Section through counsel reasonably satisfactory to
Landlord.
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(b) Landlord shall indemnify and hold harmless Tenant from and
against any liability to third parties, together with any attorneys fees, costs
and expenses reasonably incurred in connection with such third party claims, to
the extent arising out of the negligence or willful misconduct of Landlord or
Landlord's breach of this Lease.
SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord, its employees and agents for loss of or damage to any
property, or any injury to any person, or loss or interruption of business or
income, resulting from any condition including, but not limited to, fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak or flow from or into any part of the Premises or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building. It is understood that any
such condition may require the temporary evacuation or closure of all or a
portion of the Building. Should Tenant elect to receive any service from a
concessionaire, licensee or third party tenant of Landlord, Tenant shall not
seek recourse against Landlord for any breach or liability of that service
provider. Neither Landlord nor its agents shall be liable for interference with
light or other similar intangible interests. Tenant shall immediately notify
Landlord in case of fire or accident in the Premises, the Building or the
Project and of defects in any improvements or equipment unless Landlord already
has knowledge thereof.
SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other on account of loss and damage
occasioned to the property of such waiving party to the extent that the waiving
party is entitled to proceeds for such loss and damage under any "all risk"
property insurance policies carried or otherwise required to be carried by this
Lease. By this waiver it is the intent of the parties that neither Landlord nor
Tenant shall be liable to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage insured against under
any "all risk" property insurance policies, even though such loss or damage
might be occasioned by the negligence of such party, its agents, employees, or
contractors. The foregoing waiver by Tenant shall also inure to the benefit of
Landlord's management agent for the Building.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1. RESTORATION.
(a) If the Building of which the Premises are a part is damaged as the
result of an event of casualty, then subject to the provisions below, Landlord
shall repair that damage as soon as reasonably possible unless: (i) Landlord
reasonably determines that the cost of repair would exceed ten percent (10%) of
the full replacement cost of the Building ("Replacement Cost") and the damage is
not covered by Landlord's fire and extended coverage insurance; or (ii) Landlord
reasonably determines that the cost of repair would exceed twenty-five percent
(25%) of the Replacement Cost; or (iii) Landlord reasonably determines that the
cost of repair would exceed ten percent (10%) of the Replacement Cost and the
damage occurs during the final twelve (12) months of the Term, as the Term may
have been extended pursuant to Section 3.2. Should Landlord elect not to repair
the damage for one of the preceding reasons, Landlord shall so notify Tenant in
the "Casualty Notice" (as defined below), and this Lease shall terminate as of
the date of delivery of that notice. Landlord agrees that it shall not exercise
its right to terminate this Lease in a manner that unreasonably discriminates
against Tenant.
(b) As soon as reasonably practicable following the casualty event but
not later than sixty (60) days thereafter, Landlord shall notify Tenant in
writing ("Casualty Notice") of Landlord's election, if applicable, to terminate
this Lease. If this Lease is not so terminated, the Casualty Notice shall set
forth the anticipated period for repairing the casualty damage. If the
anticipated repair period exceeds the period (the "Maximum Period") of one
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hundred eighty (180) days (or sixty (60)) days if the casualty occurs during the
final year of the Term, as the Term may have been extended), and if the damage
is so extensive as to reasonably prevent Tenant's substantial use and enjoyment
of the Premises, then Tenant may elect to terminate this Lease by written notice
to Landlord within fifteen (15) days following delivery of the Casualty Notice.
If the anticipated repair period as set forth in the Casualty Notice was less
than the Maximum Period but Landlord determines subsequently that the actual
repair period will exceed the Maximum Period, then Landlord shall so notify
Tenant and Tenant may, within five (5) business days thereafter, elect to
terminate this lease; otherwise, the Maximum Period shall be deemed extended as
set forth in Landlord's notice. Should Landlord fail substantially to complete
the restoration within the Maximum Period (as the same may be extended as
aforesaid), then Tenant may terminate this Lease by notice to Landlord.
(c) From and after the sixth business day following the casualty event,
the rental to be paid under this Lease shall be abated in the same proportion
that the floor area of the Premises that is rendered unusable by the damage from
time to time bears to the total floor area of the Premises.
(d) Notwithstanding the provisions of subsections (a), (b) and (c) of
this Section, Tenant shall not be entitled to rental abatement or termination
rights if the damage is due to the willful misconduct of Tenant or its
employees, subtenants, contractors, or representatives. In addition, the
provisions of this Section shall not be deemed to require Landlord to repair any
improvements, fixtures and other items that Tenant is obligated to repair or
insure pursuant to Article VII, Exhibit D, or any other provision of this Lease;
provided, however, that if and to the extent Landlord receives insurance
proceeds from Landlord's insurance carrier for damage to interior leasehold
improvements, as reasonably determined by Landlord after first applying any
proceeds to damage in areas other than tenant suites, then Landlord shall,
subject to the rights of any mortgagee or ground lessor, make those excess
proceeds available for repair of the affected leasehold improvements.
SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event title to a portion of the Building or Project, other
than the Premises, is taken or sold in lieu of taking, and if Landlord elects to
restore the Building in such a way as to alter the Premises materially, either
party may terminate this Lease, by written notice to the other party, effective
on the date of vesting of title. In the event neither party has elected to
terminate this Lease as provided above, then Landlord shall promptly, after
receipt of the condemnation award, proceed to restore the Premises to
substantially their condition prior to the taking, and a proportionate allowance
shall be made to Tenant for the rent corresponding to the time during which, and
to the part of the Premises of which, Tenant is deprived on account of the
taking and restoration. In the event of a taking, Landlord shall be entitled to
the entire amount of the condemnation award without deduction for any estate or
interest of Tenant; provided that nothing in this Section shall be deemed to
give Landlord any interest in, or prevent Tenant from seeking any award against
the taking authority for, the taking of personal property and fixtures belonging
to Tenant or for relocation or business interruption expenses recoverable from
the taking authority.
SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety (90)
days.
<PAGE>
SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking
of the parking area such that Landlord can no longer provide sufficient parking
to comply with this Lease, Landlord shall use commercially reasonable efforts to
substitute reasonably equivalent parking in a location reasonably close to the
Building; provided that if Landlord fails to make that substitution within
ninety (90) days following the taking and if the taking materially impairs
Tenant's use and enjoyment of the Premises, Tenant may, at its option, terminate
this Lease by written notice to Landlord. If this Lease is not so terminated by
Tenant, there shall be no abatement of rent (other than the parking charges) and
this Lease shall continue in effect.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE
SECTION 13.1. SUBORDINATION. At the option of Landlord or any of its
mortgagees/deed of trust beneficiaries, this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust, if
any, which may hereafter affect the Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant's quiet enjoyment of the Premises disturbed in the event
of termination of any such ground or underlying lease, or the foreclosure of any
such mortgage or deed of trust, to which this Lease has been subordinated
pursuant to this Section. In the event of a termination or foreclosure, Tenant
shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall
promptly execute any commercially reasonable instrument reasonably required by
Landlord's successor for that purpose. Tenant shall also, within twenty (20)
days following written request of Landlord (or the beneficiary under any deed of
trust encumbering the Building), execute and deliver all commercially reasonable
instruments as may be required from time to time by Landlord or such beneficiary
(including without limitation any commercially reasonable subordination,
nondisturbance and attornment agreement in the form customarily required by such
beneficiary) to subordinate this Lease and the rights of Tenant under this Lease
to any ground or underlying lease or to the lien of any mortgage or deed of
trust; provided, however, that any such beneficiary may, by written notice to
Tenant given at any time, subordinate the lien of its deed of trust to this
Lease. It is understood that Tenant may condition its execution of a
subordination agreement upon receipt of a commercially reasonable nondisturbance
covenant. Tenant shall agree that any purchaser at a foreclosure sale or lender
taking title under a deed in lieu of foreclosure shall not be responsible for
any act or omission of a prior landlord, shall not be subject to any offsets or
defenses Tenant may have against a prior landlord, and shall not be liable for
the return of any security deposit not actually recovered by such purchaser or
bound by any rent paid in advance of the calendar month in which the transfer of
title occurred; provided that the foregoing shall not release the applicable
prior landlord from any liability for those obligations. Tenant acknowledges
that Landlord's mortgagees and successors-in-interest and all beneficiaries
under deeds of trust encumbering the Building are intended third party
beneficiaries of this Section.
SECTION 13.2. ESTOPPEL CERTIFICATE. Tenant shall, within twenty (20) days
following written notice from Landlord, execute, acknowledge and deliver to
Landlord, in any commercially reasonable form that Landlord may reasonably
require, a statement in writing in favor of Landlord and/or any prospective
purchaser or encumbrancer of the Building (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
the modification and certifying that this Lease, as modified, is in full force
and effect) and the dates to which the rental, additional rent and other charges
have been paid in advance, if any, and (ii) acknowledging that, to Tenant's
actual knowledge, there are no uncured defaults on the part of Landlord, or
specifying each default if any are claimed, and (iii) setting forth all further
information that Landlord may reasonably require. Tenant's statement may be
relied upon by any prospective purchaser or encumbrancer of all or any portion
of the Building or Project. In addition to Landlord's other rights and remedies,
Tenant's failure to deliver any estoppel statement within the provided time
shall be conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are no
uncured defaults in Landlord's performance, and (iii) not more than one month's
rental has been paid in advance. Within twenty (20) days following request by
Tenant but not more often than once annually, Landlord shall execute and deliver
a corresponding estoppel certificate for the benefit of a purchaser or lender of
Tenant.
<PAGE>
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1. TENANT'S DEFAULTS. In addition to any other event of default
set forth in this Lease, the occurrence of any one or more of the following
events shall constitute a default by Tenant:
(a) The failure by Tenant to make any payment of rent required to be
made by Tenant, as and when due, where the failure continues for a period of
five (5) business days after written notice from Landlord to Tenant; provided,
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 and
1161(a) as amended. For purposes of these default and remedies provisions, the
term "additional rent" shall be deemed to include all amounts of any type
whatsoever other than Basic Rent to be paid by Tenant pursuant to the terms of
this Lease.
(b) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.
(c) The failure or inability by Tenant to observe or perform any of the
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in any other subsection of this Section, where the
failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 and 1161(a) as amended. However, if the nature of the
failure is such that more than thirty (30) days are reasonably required for its
cure, then Tenant shall not be deemed to be in default if Tenant commences the
cure within thirty (30) days, and thereafter diligently pursues the cure to
completion.
(d) (i) The making by Tenant of any general assignment for the benefit
of creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event described
in this subsection unless notification in writing is received by Landlord, nor
shall there be any presumption attributable to Landlord of Tenant's insolvency.
In the event that any provision of this subsection is contrary to applicable
law, the provision shall be of no force or effect.
SECTION 14.2. LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant, then in addition to any
other remedies available to Landlord, Landlord may exercise the following
remedies:
(i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:
(1) The worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination;
(2) The worth at the time of award of the amount by which
the unpaid rent and additional rent which would have been earned after
termination until the time of award exceeds the amount of such loss that Tenant
proves could have been reasonably avoided;
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(3) The worth at the time of award of the amount by which
the unpaid rent and additional rent for the balance of the Term after the time
of award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;
(4) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result from Tenant's default, including, but not limited to, the cost
of recovering possession of the Premises, commissions and other expenses of
reletting, including necessary repair, renovation, improvement and alteration of
the Premises for a new tenant, reasonable attorneys' fees, and any other
reasonable costs; and
(5) At Landlord's election, all other amounts in addition
to or in lieu of the foregoing as may be permitted by law. The term "rent" as
used in this Lease shall be deemed to mean the Basic Rent and all other sums
required to be paid by Tenant to Landlord pursuant to the terms of this Lease.
Any sum, other than Basic Rent, shall be computed on the basis of the average
monthly amount accruing during the twenty-four (24) month period immediately
prior to default, except that if it becomes necessary to compute such rental
before the twenty-four (24) month period has occurred, then the computation
shall be on the basis of the average monthly amount during the shorter period.
As used in subparagraphs (1) and (2) above, the "worth at the time of award"
shall be computed by allowing interest at the rate of ten percent (10%) per
annum. As used in subparagraph (3) above, the "worth at the time of award" shall
be computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
(ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this subsection (ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord's consent as are contained in
this Lease.
(b) The various rights and remedies reserved to Landlord in this Lease
or otherwise shall be cumulative and, except as otherwise provided by California
law, Landlord may pursue any or all of its rights and remedies at the same time.
No delay or omission of either party to exercise any right or remedy shall be
construed as a waiver of the right or remedy or of any default by the other
party. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of the breach or default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant's estate shall not waive or cure a default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be deemed to be other than a
partial payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord's right to recover the balance of the rent or pursue any other remedy
available to it. Tenant hereby waives any right of redemption or relief from
forfeiture under California Code of Civil Procedure Section 1174 or 1179, or
under any other present or future law, in the event this Lease is terminated by
reason of any default by Tenant. No act or thing done by Landlord or Landlord's
agents during the Term shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept a surrender shall be valid unless in
writing and signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys to the Premises prior to the termination
of this Lease, and the delivery of the keys to any employee shall not operate as
a termination of the Lease or a surrender of the Premises.
<PAGE>
SECTION 14.3. LATE PAYMENTS. Any rent due under this Lease that is not
paid to Landlord within five (5) business days after written notice that the
same was not paid when due shall bear interest at the rate of ten percent (10%)
per annum from the date due until fully paid. The payment of interest shall not
cure any default by Tenant under this Lease. In addition, Tenant acknowledges
that the late payment by Tenant to Landlord of rent will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Those costs may include, but
are not limited to, administrative, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any ground lease,
mortgage or trust deed covering the Premises. Accordingly, if any rent due from
Tenant shall not be received by Landlord or Landlord's designee within five (5)
business days after written notice of nonpayment, then Tenant shall pay to
Landlord, in addition to the interest provided above, a late charge for each
delinquent payment equal to two hundred and fifty dollars ($250.00). Acceptance
of a late charge by Landlord shall not constitute a waiver of Tenant's default
with respect to the overdue amount, nor shall it prevent Landlord from
exercising any of its other rights and remedies.
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense and without any abatement of rent or right of set-off except as
otherwise set forth in this Lease. If Tenant fails to pay any sum of money, or
fails to perform any other act on its part to be performed under this Lease, and
the failure continues beyond any applicable grace period set forth in Section
14.1, then in addition to any other available remedies, Landlord may, at its
election, make the payment or perform the other act on Tenant's part. Landlord's
election to make the payment or perform the act on Tenant's part shall not give
rise to any responsibility of Landlord to continue making the same or similar
payments or performing the same or similar acts. Tenant shall, promptly upon
demand by Landlord, reimburse Landlord for all reasonable sums paid by Landlord
and all necessary incidental costs, together with interest at the rate of ten
percent (10%) per annum from the date of the payment by Landlord.
SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.
SECTION 14.6. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant
bring any action in connection with this Lease, the prevailing party shall be
entitled to recover as a part of the action its reasonable attorneys' fees, and
all other costs. The prevailing party for the purpose of this paragraph shall be
determined by the trier of the facts.
SECTION 14.7. WAIVER OF JURY TRIAL/RIGHT TO ARBITRATE.
(a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS
HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL BY
JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL
SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY
MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.
(b) SHOULD A DISPUTE ARISE BETWEEN THE PARTIES REGARDING ANY MATTER
DESCRIBED ABOVE, THEN EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR FORCIBLE
DETAINER EITHER PARTY MAY CAUSE THE DISPUTE TO BE SUBMITTED TO JAMS/ENDISPUTE
("JAMS") OR ITS SUCCESSOR, IN THE COUNTY IN WHICH THE BUILDING IS SITUATED FOR
BINDING ARBITRATION BEFORE A SINGLE ARBITRATOR. HOWEVER, EACH PARTY RESERVES THE
RIGHT TO SEEK A PROVISIONAL REMEDY BY JUDICIAL ACTION. NO ARBITRATION ELECTION
BY EITHER PARTY PURSUANT TO THIS SUBSECTION SHALL BE EFFECTIVE IF MADE LATER
THAN THIRTY (30) DAYS FOLLOWING SERVICE OF A JUDICIAL SUMMONS AND COMPLAINT BY
OR UPON SUCH PARTY CONCERNING THE DISPUTE. THE ARBITRATION SHALL BE CONDUCTED IN
ACCORDANCE WITH THE RULES OF PRACTICE AND PROCEDURE OF JAMS AND OTHERWISE
<PAGE>
PURSUANT TO THE CALIFORNIA ARBITRATION ACT (CODE OF CIVIL PROCEDURE SECTIONS
1280 ET SEQ.). NOTWITHSTANDING THE FOREGOING, THE ARBITRATOR IS SPECIFICALLY
DIRECTED TO LIMIT DISCOVERY TO THAT WHICH IS ESSENTIAL TO THE EFFECTIVE
PROSECUTION OR DEFENSE OF THE ACTION, AND IN NO EVENT SHALL SUCH DISCOVERY BY
EITHER PARTY INCLUDE MORE THAN ONE NON-EXPERT WITNESS DEPOSITION UNLESS BOTH
PARTIES OTHERWISE AGREE. THE ARBITRATOR SHALL, TO THE EXTENT APPLICABLE, FOLLOW
THE SUBSTANTIVE LAW OF CALIFORNIA AND SHALL RENDER A REASONED WRITTEN DECISION
WITHIN TWENTY DAYS FOLLOWING THE HEARING. THE ARBITRATOR SHALL APPORTION THE
COSTS OF THE ARBITRATION, TOGETHER WITH THE ATTORNEYS' FEES OF THE PARTIES, IN
THE MANNER DEEMED EQUITABLE BY THE ARBITRATOR, IT BEING THE INTENTION OF THE
PARTIES THAT THE PREVAILING PARTY ORDINARILY BE ENTITLED TO RECOVER ITS
REASONABLE COSTS AND FEES. JUDGMENT UPON ANY AWARD RENDERED BY THE ARBITRATOR
MAY BE ENTERED BY ANY COURT HAVING JURISDICTION; PROVIDED THAT SUCH AWARD SHALL
BE VACATED IN ACCORDANCE WITH THE CALIFORNIA ARBITRATION ACT SHOULD THE COURT
DETERMINE, UPON TIMELY PETITION, THAT THE ARBITRATOR EXCEEDED HIS/HER POWERS BY
RENDERING A DECISION INCONSISTENT WITH CALIFORNIA LAW OR THAT OTHER GOOD AND
SUFFICIENT CAUSE FOR VACATION EXISTS.
ARTICLE XV. END OF TERM
SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term, Landlord may, at its option, treat Tenant as a tenant
at sufferance only, commencing on the first (1st) day following the termination
of this Lease. However, should Landlord accept the payment of monthly hold-over
rent by Tenant, then a month-to-month tenancy shall be deemed effected and
neither party shall terminate this Lease without thirty (30) days prior written
notice to the other party. Any hold-over by Tenant shall be subject to all of
the terms of this Lease, except that the monthly rental shall be one hundred
fifty percent (150%) of the total monthly rental for the month immediately
preceding the date of termination, subject to Landlord's right to modify same
upon thirty (30) days notice to Tenant. If Tenant fails to surrender the
Premises upon the expiration of this Lease despite demand to do so by Landlord,
Tenant shall indemnify and hold Landlord harmless from all loss or liability,
including without limitation, any claims made by any succeeding tenant relating
to such failure to surrender, provided that Tenant was notified of the existence
of such succeeding tenant. Acceptance by Landlord of rent after the termination
shall not constitute a consent to a holdover or result in a renewal of this
Lease. The foregoing provisions of this Section are in addition to and do not
affect Landlord's right of re-entry or any other rights of Landlord under this
Lease or at law.
SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear, casualty damage and repairs which are
Landlord's obligation excepted, and shall remove or fund to Landlord the cost of
removing all wallpapering and voice and/or data transmission cabling installed
by or for Tenant, together with all personal property and debris, except for any
items that Landlord may by written authorization allow to remain. Tenant shall
repair all damage to the Premises resulting from the removal, which repair shall
include the patching and filling of holes. If Tenant shall fail to comply with
the provisions of this Section, Landlord may, after five (5) business days
notice to Tenant (if Landlord has been given Tenant's new address), effect the
removal and/or make any repairs, and the reasonable cost to Landlord shall be
additional rent payable by Tenant upon demand. If requested by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord a commercially reasonable
instrument in writing releasing and quitclaiming to Landlord all right, title
and interest of Tenant in the Premises.
<PAGE>
ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid, without deduction or
offset (except as otherwise set forth in this Lease), in lawful money of the
United States to Landlord at its address set forth in Item 13 of the Basic Lease
Provisions, or at any other place as Landlord may designate in writing. Unless
this Lease expressly provides otherwise, as for example in the payment of rent
pursuant to Section 4.1, all payments shall be due and payable within five (5)
business days after written demand. All payments requiring proration shall be
prorated on the basis of the number of days in the pertinent calendar month or
year, as applicable. Any notice, election, demand, consent, approval or other
communication to be given or other document to be delivered by either party to
the other may be delivered to the other party, at the address set forth in Item
13 of the Basic Lease Provisions, by personal service, or by any courier or
"overnight" express mailing service, or may be deposited in the United States
mail, postage prepaid, certified mail, return receipt requested. Either party
may, by written notice to the other, served in the manner provided in this
Article, designate a different address. If any notice or other document is sent
by mail, it shall be deemed served or delivered upon the date personal delivery
is made, or one (1) business day after deposit with a nationally recognized
courier service or three (3) business days after mailing or, if sooner, upon
actual receipt. The refusal to accept delivery of a notice, or the inability to
deliver the notice (whether due to a change of address for which notice was not
duly given or other good reason), shall be deemed delivery and receipt of the
notice as of the date of attempted delivery. If more than one person or entity
is named as Tenant under this Lease, service of any notice upon any one of them
shall be deemed as service upon all of them.
ARTICLE XVII. RULES AND REGULATIONS
Tenant agrees to comply with the Rules and Regulations attached as Exhibit
E, and any reasonable and nondiscriminatory amendments, modifications and/or
additions as may be adopted and published by written notice to tenants
(including Tenant) by Landlord for the safety, care, security, good order, or
cleanliness of the Premises, Building, Project and/or Common Areas. Landlord
shall not be liable to Tenant for any violation of the Rules and Regulations or
the breach of any covenant or condition in any lease or any other act or conduct
by any other tenant, and the same shall not constitute a constructive eviction
hereunder. One or more waivers by Landlord of any breach of the Rules and
Regulations by Tenant or by any other tenant(s) shall not be a waiver of any
subsequent breach of that rule or any other. Landlord shall not enforce, change
or modify the Rules and Regulations in a manner discriminatory to Tenant.
Tenant's failure to keep and observe the Rules and Regulations after notice and
a reasonable cure period under the circumstances shall constitute a default
under this Lease. In the case of any conflict between the Rules and Regulations
and this Lease, this Lease shall be controlling.
ARTICLE XVIII. BROKER'S COMMISSION
The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Each party warrants that it has had no dealings with any other real
estate broker or agent in connection with the negotiation of this Lease, and
agrees to indemnify and hold the other party harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by the indemnifying party in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that Tenant is duly notified of the transfer, the transferor turns over
or credits any prepaid rent or Security Deposit to the transferee, and the
transferee assumes in writing the obligations of Landlord accruing from and
after the date of the transfer. Any funds held by the transferor in which Tenant
has an interest shall be turned over, subject to that interest, to the
transferee. No holder of a mortgage and/or deed of trust to which this Lease is
or may be subordinate shall be responsible in connection with the Security
Deposit unless the mortgagee or holder of the deed of trust actually receives
the Security Deposit. It is intended that the covenants and obligations
contained in this Lease on the part of Landlord shall, subject to the foregoing,
be binding on Landlord, its successors and assigns, only during and in respect
to their respective successive periods of ownership.
<PAGE>
ARTICLE XX. INTERPRETATION
SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.
SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.
SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease. This Section is not intended to apply
to the joint and several obligations imposed by an assignment of the Lease.
SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.
SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Should any
litigation be commenced between the parties in connection with this Lease, such
action shall be prosecuted in the applicable State Court of California in the
county in which the Building is located.
SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
SECTION 20.8. WAIVER. One or more waivers by Landlord or Tenant of any
breach of any term, covenant or condition contained in this Lease shall not be a
waiver of any subsequent breach of the same or any other term, covenant or
condition. Consent to any act by one of the parties shall not be deemed to
render unnecessary the obtaining of that party's consent to any subsequent act.
No breach of this Lease shall be deemed to have been waived unless the waiver is
in a writing signed by the waiving party.
SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall
be delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay; provided that the foregoing shall not be deemed to extend the time
periods set forth in Article XI of this Lease. The provisions of this Section
shall not operate to excuse Tenant from the prompt payment of rent.
SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement or
implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.
<PAGE>
SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant's part to be observed and
performed, Tenant shall have the right of quiet enjoyment and use of the
Premises for the Term without hindrance or interruption by Landlord or any other
person claiming by or through Landlord.
SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.
ARTICLE XXI. EXECUTION AND RECORDING
SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.
SECTION 21.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation, limited liability company or partnership, each individual executing
this Lease on behalf of the entity represents and warrants that he is duly
authorized to execute and deliver this Lease and that this Lease is binding upon
the corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord's request, deliver a certified copy of its
organizational documents or an appropriate certificate authorizing or evidencing
the execution of this Lease.
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.
SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for recording
purposes.
SECTION 21.5. AMENDMENTS. No amendment or mutual termination of this Lease
shall be effective unless in writing signed by authorized signatories of Tenant
and Landlord, or by their respective successors in interest. No actions,
policies, oral or informal arrangements, business dealings or other course of
conduct by or between the parties shall be deemed to modify this Lease in any
respect.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Building or Project, either directly or
indirectly, without the prior written consent of Landlord, provided, however,
that Tenant may disclose the terms to prospective subtenants or assignees under
this Lease, to Tenant's agents, or as required by applicable law.
SECTION 22.2. REPRESENTATIONS BY TENANT. The application, financial
statements and tax returns, if any, submitted and certified to by Tenant as an
accurate representation of its financial condition have been prepared, certified
and submitted to Landlord as an inducement and consideration to Landlord to
enter into this Lease. The application and statements are represented and
warranted by Tenant to be correct in all material respects and to accurately and
fully reflect in all material respects Tenant's true financial condition as of
the date of execution of this Lease by Tenant. Tenant shall during the Term
promptly furnish Landlord with current annual financial statements accurately
reflecting Tenant's financial condition upon written request from Landlord but
not more than one (1) time in any calendar year.
<PAGE>
SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Building, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications do
not increase the obligations of Tenant or adversely affect the leasehold
interest created by this Lease or Tenant's rights hereunder.
SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part
of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a release
or termination unless (a) Tenant has given notice by registered or certified
mail to any beneficiary of a deed of trust or mortgage covering the Building
whose address has been furnished to Tenant and (b) such beneficiary is afforded
the same period following notice that Landlord is granted herein to cure the
default.
SECTION 22.5. WAIVER OF CONSEQUENTIAL DAMAGES. Notwithstanding anything to
the contrary contained in this Lease, nothing in this Lease shall impose any
obligation on either party ("Releasee") to be responsible or liable for, and the
other party ("Releasor") hereby releases the Releasee from all liability for,
consequential damages incurred by the Releasor; provided that the foregoing
shall not apply to those consequential damage incurred by Landlord in connection
with a holdover of the Premises by Tenant after the expiration or earlier
termination of this Lease, subject to the terms of Section 15.1, above.
LANDLORD: TENANT:
THE IRVINE COMPANY ACACIA RESEARCH CORPORATION
By /s/ Donald S. McNutt By /s/ Robert L. Harris II
----------------------------------- --------------------------
Donald S. McNutt
Senior Vice President, Leasing, Printed Name Robert L. Harris II
Office Properties
Title President
By /s/ Lydia Kennedy By /s/ Robert A. Berman
----------------------------------- -------------------------------
Lydia Kennedy
Vice President, Asset Management, Printed Name Robert A. Berman
Office Properties
Title Sr. VP & Secretary
<PAGE>
EXHIBIT A
[floor plan diagram here]
<PAGE>
EXHIBIT B
UTILITIES AND SERVICES
The following standards for utilities and services shall be in effect at
the Building. In the case of any conflict between these standards and the Lease,
the Lease shall be controlling. Subject to all of the provisions of the Lease,
including but not limited to the restrictions contained in Section 6.1, the
following shall apply:
1. Landlord shall make available to the Premises during the hours of 8:00
a.m. to 6:00 p.m., Monday through Friday ("Building Hours"), generally
recognized national holidays excepted, HVAC services for normal comfort for
normal office use in the Premises. Subject to the provisions set forth below,
Landlord shall also furnish the Building with elevator service, reasonable
amounts of electric current consistent with that utilized for normal office
purposes by other tenants of the Building, and water for lavatory purposes.
Tenant will not, without the prior written consent of Landlord, increase the
amount of electricity, gas or water usually furnished or supplied for use of the
Premises as general office space; nor shall Tenant connect any apparatus,
machine or device with water pipes or electric current (except through existing
electrical outlets in the Premises) for the purpose of using electric current or
water. This paragraph shall at all times be subject to applicable governmental
regulations.
2. Upon written request from Tenant delivered to Landlord at least 24
hours prior to the period for which service is requested, but during normal
business hours, Landlord will provide HVAC services to Tenant at such times when
such services are not otherwise available. Tenant agrees to pay Landlord for
those after-hour services at rates that Landlord may establish from time to
time, provided such rates are generally consistent with those imposed by
landlords of comparable high-rise office projects in the Newport Beach area. If
Tenant requires electric current in excess of that which Landlord is obligated
to furnish under this Exhibit B, Tenant shall first obtain the consent of
Landlord, which consent shall not be unreasonably withheld, and Landlord may
cause an electric current meter to be installed in the Premises to measure the
amount of electric current consumed. The cost of installation, maintenance and
repair of the meter shall be paid for by Tenant, and Tenant shall reimburse
Landlord promptly upon demand for all electric current consumed for any special
power use as shown by the meter. The reimbursement shall be at the rates charged
for electrical power by the local public utility furnishing the current.
3. If any lights, machines or equipment (including without limitation
electronic data processing machines) are used by Tenant in the Premises which
materially affect the temperature otherwise maintained by the air conditioning
system, or generate substantially more heat in the Premises than would be
generated by the building standard lights and usual fractional horsepower office
equipment, Landlord shall have the right at its reasonable election (but upon
prior written notice to Tenant) to install or modify any machinery and equipment
to the extent Landlord reasonably deems necessary to restore temperature
balance. The reasonable cost of installation, and any reasonable additional cost
of operation and maintenance, shall be paid by Tenant to Landlord promptly upon
demand.
4. Landlord shall furnish water for drinking, personal hygiene and
lavatory purposes only. If Tenant requires or uses water for any purposes in
addition to ordinary drinking, cleaning and lavatory purposes, Landlord may, in
its discretion but upon prior written notice to Tenant, install a water meter to
measure Tenant's water consumption. Tenant shall pay Landlord for the reasonable
cost of the meter and the cost of its installation, and for consumption
throughout the duration of Tenant's occupancy. Tenant shall keep the meter and
installed equipment in good working order and repair at Tenant's own cost and
expense, in default of which Landlord may cause the meter to be replaced or
repaired at Tenant's expense. Tenant agrees to pay for water consumed, as shown
on the meter and when bills are rendered, and on Tenant's default in making that
payment Landlord may pay the charges on behalf of Tenant. Any costs or expenses
or payments made by Landlord for any of the reasons or purposes stated above
shall be deemed to be additional rent payable by Tenant to Landlord upon demand.
5. In the event that any utility service to the Premises is separately
metered or billed to Tenant, Tenant shall pay all charges for that utility
service to the Premises and the cost of furnishing the utility to tenant suites
shall be excluded from the Operating Expenses as to which reimbursement from
Tenant is required in the Lease. If any utility charges are not paid when due
Landlord may pay them, and any amounts paid by Landlord shall immediately become
due to Landlord from Tenant as additional rent. If Landlord elects to furnish
any utility service to the Premises, Tenant shall purchase its requirements of
that utility from Landlord as long as the rates charged by Landlord do not
exceed those which Tenant would be required to pay if the utility service were
furnished it directly by a public utility.
6. Landlord shall provide janitorial services five days per week,
equivalent to that furnished in comparable first class high-rise office
buildings in the Newport Beach area, and window washing as reasonably required
but in any event at least twice per year; provided, however, that Tenant shall
pay for any additional or unusual janitorial services required by reason of any
nonstandard improvements in the Premises, including without limitation wall
coverings and floor coverings installed by or for Tenant, or by reason of any
use of Premises other than exclusively as offices. The cleaning services
provided by Landlord shall also exclude refrigerators, eating utensils (plates,
drinking containers and silverware), and interior glass partitions.
7. Tenant shall have access to the Building and parking 24 hours per day,
7 days per week, 52 weeks per year; provided that Landlord may install access
control systems as it deems advisable for the Building. Such systems may, but
need not, include full or part-time lobby supervision, the use of a sign-in
sign-out log, a card identification access system, building parking and access
pass system, closing hours procedures, access control stations, fire stairwell
exit door alarm system, electronic guard system, mobile paging system, elevator
control system or any other access controls. In the event that Landlord elects
to provide any or all of those services, Landlord may discontinue providing them
at any time with or without notice; provided that Landlord shall continue to
utilize a reasonable access control system for the Building. Landlord may impose
a reasonable charge that is uniform for the Building for access control cards
and/or keys issued to Tenant. Landlord shall have no liability to Tenant for the
provision by Landlord of improper access control services, for any breakdown in
service, or for the failure by Landlord to provide access control services.
Tenant further acknowledges that Landlord's access systems may be temporarily
inoperative during building emergency and system repair periods.
<PAGE>
EXHIBIT C
PARKING
The following parking regulations shall be in effect at the Building.
Landlord reserves the right to adopt reasonable, nondiscriminatory modifications
and additions to the regulations by written notice to Tenant. In the case of any
conflict between these regulations and the Lease, the Lease shall be
controlling.
1. Landlord agrees to maintain, or cause to be maintained, an automobile
parking area ("Parking Area") in reasonable proximity to the Building for the
benefit and use of the visitors and patrons and, except as otherwise provided,
employees of Tenant, and other tenants and occupants of the Building. The
Parking Area shall include, whether in a surface parking area or a parking
structure, the automobile parking stalls, driveways, entrances, exits, sidewalks
and attendant pedestrian passageways and other areas designated for parking.
Landlord shall have the right and privilege of determining the nature and extent
of the automobile Parking Area, whether it shall be surface, underground or
other structure, and of making such changes to the Parking Area from time to
time which in its opinion are desirable and for the best interests of all
persons using the Parking Area, provided that Landlord does not thereby
materially adversely affect Tenant's parking rights hereunder. Landlord shall
keep the Parking Area in a neat, clean and orderly condition, and shall repair
any damage to its facilities. Landlord shall not be liable for any damage to
motor vehicles of visitors or employees, for any loss of property from within
those motor vehicles, or for any injury to Tenant, its visitors or employees,
unless ultimately determined to be caused by the negligence or willful
misconduct of Landlord. Unless otherwise instructed by Landlord, every parker
shall park and lock his or her own motor vehicle. Landlord shall also have the
right to establish, and from time to time amend, and to enforce against all
users of the Parking Area all reasonable nondiscriminatory rules and regulations
(including the designation of areas for employee parking) as Landlord may deem
necessary and advisable for the proper and efficient operation and maintenance
of the Parking Area. Garage managers or attendants are not authorized to make or
allow any exceptions to these regulations.
2. Landlord may, if it deems advisable in its sole discretion, charge for
parking and may establish for the Parking Area a system or systems of permit
parking for Tenant, its employees and its visitors, which may include, but not
be limited to, a system of charges against nonvalidated parking, verification of
users, a set of regulations governing different parking locations, and an
allotment of reserved or nonreserved parking spaces based upon the charges paid
and the identity of users. In no event shall Tenant or its employees park in
reserved stalls leased to other tenants or in stalls within designated visitor
parking zones, nor shall Tenant or its employees utilize more than the number of
parking stalls allotted in this Lease to Tenant. It is understood that Landlord
shall not have any obligation to cite improperly parked vehicles or otherwise
attempt to enforce reserved parking rules during hours when parking attendants
are not present at the Parking Area. Tenant shall comply with such system in its
use of the Parking Area (and shall endeavor to cause its visitors to comply),
provided, however, that the system and rules and regulations shall apply to all
persons entitled to the use of the Parking Area, and all charges to Tenant for
use of the Parking Area shall be no greater than Landlord's then current
scheduled charge for parking.
3. Tenant shall, upon request of Landlord from time to time, furnish
Landlord with a list of its employees' names and of Tenant's and its employees'
vehicle license numbers. Tenant agrees to acquaint its employees with these
regulations, and shall be liable to Landlord for all unpaid parking charges
incurred by its employees. Any amount due from Tenant shall be deemed additional
rent. Tenant authorizes Landlord to tow away from the Building any vehicle
belonging to Tenant or Tenant's employees parked in violation of these
provisions, and/or to attach violation stickers or notices to those vehicles. In
the event Landlord elects or is required to limit or control parking by tenants,
employees, visitors or invitees of the Building, whether by validation of
parking tickets, parking meters or any other method of assessment, Tenant agrees
to participate in the validation or assessment program under reasonable
nondiscriminatory rules and regulations as are established by Landlord and/or
any applicable governmental agency.
<PAGE>
4. Landlord may establish an identification system for vehicles of Tenant
and its employees which may consist of stickers, magnetic parking cards or other
identification devices supplied by Landlord. All identification devices shall
remain the property of Landlord, shall be displayed as required by Landlord or
upon request and may not be mutilated or obliterated in any manner. Those
devices shall not be transferable and any such device in the possession of an
unauthorized holder shall be void and may be confiscated. Landlord may impose a
reasonable and uniform fee for identification devices and a reasonable and
uniform replacement charge for devices which are lost or stolen. Each
identification device shall be returned to Landlord promptly following the
Expiration Date or sooner termination of this Lease. Loss or theft of parking
identification devices shall be reported to Landlord or its Parking Area
operator immediately and a written report of the loss filed if requested by
Landlord or its Parking Area operator.
5. Persons using the Parking Area shall observe all directional signs and
arrows and any posted speed limits. Unless otherwise posted, in no event shall
the speed limit of 5 miles per hour be exceeded. All vehicles shall be parked
entirely within painted stalls, and no vehicles shall be parked in areas which
are posted or marked as "no parking" or on or in ramps, driveways and aisles.
Only one vehicle may be parked in a parking space. In no event shall Tenant
interfere with the use and enjoyment of the Parking Area by other tenants of the
Building or their employees or invitees.
6. Parking Areas shall be used only for parking vehicles. Washing, waxing,
cleaning or servicing of vehicles, or the parking of any vehicle on an overnight
basis, in the Parking Area (other than emergency services) by any parker or his
or her agents or employees is prohibited unless otherwise authorized by
Landlord. Tenant shall have no right to install any fixtures, equipment or
personal property (other than vehicles) in the Parking Area, nor shall Tenant
make any alteration to the Parking Area.
7. It is understood that the employees of Tenant and the other tenants of
Landlord within the Building and Project shall not be permitted to park their
automobiles in the portions of the Parking Area which may from time to time be
designated for patrons of the Building and/or Project and that Landlord shall at
all times have the right to establish reasonable and nondiscriminatory rules and
regulations for employee parking. Landlord shall make available for lease by
Tenant the number of vehicle parking spaces set forth in Item 12 of the Basic
Lease Provisions, and Tenant shall at all times lease not fewer than six (6) of
those allotted stalls. During the initial sixty (60) month Lease Term, the
monthly rate for each of the allotted unreserved stalls leased by Tenant shall
be Fifty-Five Dollars ($55.00). In addition, Tenant may, by notice to Landlord
given not later than two (2) months after the Commencement Date, convert up to
six (6) of the allotted unreserved stalls to reserved spaces (the "Converted
Stalls"). During the initial sixty (60) month Term, the monthly rate for each
Converted Stall leased continuously by Tenant shall be Ninety-Eight Dollars
($98.00). Should Tenant fail timely to lease the full allotment of six (6)
Converted Stalls, or should Tenant thereafter relinquish its leasing of any of
those reserved stalls, then Tenant may thereafter lease additional reserved
stalls (up to the aggregate total of six) subject to their then-current
availability and at Landlord's scheduled rate from time to time. Following the
initial sixty (60) month Term, all parking shall be at Landlord's scheduled
rates from time to time, as shall any parking that may be leased by Tenant in
addition to the foregoing. Should any monthly parking charge installment not be
paid within five (5) business days following the date due, then a late charge
shall be payable by Tenant equal to fifty dollars ($50.00), which late charge
shall be separate and in addition to any late charge that may be assessed
pursuant to Section 14.3 of the Lease for other than delinquent monthly parking
charges. Landlord may authorize persons other than those described above,
including occupants of other buildings, to utilize the Parking Area. In the
event of the use of the Parking Area by other persons, those persons shall pay
for that use in accordance with the terms established above; provided, however,
Landlord may allow those persons to use the Parking Area on weekends, holidays,
and at other non-office hours without payment.
8. Notwithstanding the foregoing paragraphs 1 through 7, Landlord shall be
entitled to pass on to Tenant, pursuant to Article IV of this Lease, its
proportionate share of any charges or parking surcharge or transportation
management costs levied by any governmental agency. The foregoing parking
provisions are further subject to any mandatory governmental regulations which
limit parking or otherwise seek to encourage the use of carpools, public transit
or other alternative transportation forms or traffic reduction programs. Tenant
agrees that it will use its commercially reasonable efforts to cooperate,
including registration and attendance, in governmentally mandated programs which
may be undertaken to reduce traffic. Tenant acknowledges that as a part of those
programs, it may be required to distribute employee transportation information,
participate in employee transportation surveys, allow employees to participate
in commuter activities, designate a liaison for commuter transportation
activities, distribute commuter information to all employees, and otherwise
participate in other programs or services initiated under a transportation
management program.
9. Should any parking spaces be allotted by Landlord to Tenant, either on
a reserved or nonreserved basis, Tenant shall not assign or sublet any of those
spaces, either voluntarily or by operation of law, without the prior written
consent of Landlord, except in connection with an authorized assignment of this
Lease or subletting of the Premises.
<PAGE>
EXHIBIT D
TENANT'S INSURANCE
The following standards for Tenant's insurance shall be in effect at the
Building. Tenant agrees to obtain and present evidence to Landlord that it has
fully complied with the insurance requirements.
1. Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
personal injury, nonowned automobile, blanket contractual, independent
contractors, broad form property damage, fire legal liability, products
liability (if a product is sold from the Premises), liquor law liability (if
alcoholic beverages are sold, served or consumed within the Premises), and cross
liability and severability of interest clauses, which policy(ies) shall be
written on an "occurrence" basis and for not less than $2,000,000 combined
single limit (with a $50,000 minimum limit on fire legal liability) per
occurrence for bodily injury, death, and property damage liability; (ii)
workers' compensation insurance coverage as required by law, together with
employers' liability insurance coverage; (iii) with respect to improvements,
alterations, and the like required or permitted to be made by Tenant under this
Lease, builder's all-risk insurance, in amounts reasonably satisfactory to
Landlord; (iv) insurance against fire, vandalism, malicious mischief and such
other additional perils as may be included in a standard "all risk" form,
insuring the improvements, trade fixtures, furnishings, equipment and items of
personal property in the Premises, in an amount equal to not less than ninety
percent (90%) of their actual replacement cost (with replacement cost
endorsement), which policy shall also include loss of income/business
interruption/extra expense coverage in an amount not less than nine months loss
of income from Tenant's business in the Premises. Notwithstanding the foregoing,
Tenant may elect to self-insure the loss of income/business interruption/extra
expense coverage with full waiver of subrogation in favor of Landlord. In no
event shall the limits of any policy be considered as limiting the liability of
Tenant under this Lease.
2. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit shall be written by insurance companies authorized to do business
in the State of California and with a general policyholder rating of not less
than "A" and financial rating of not less than "X" in the most current Best's
Insurance Report. Any insurance required of Tenant may be furnished by Tenant
under any blanket policy carried by it or under a separate policy. A certificate
of insurance, certifying that the policy has been issued, provides the coverage
required by this Exhibit and contains the required provisions, together with
endorsements reasonably acceptable to Landlord evidencing the waiver of
subrogation and additional insured provisions required under Paragraph 3 below,
shall be delivered to Landlord prior to the date Tenant is given the right of
possession of the Premises. Proper evidence of the renewal of any insurance
coverage shall also be delivered to Landlord not less than thirty (30) days
prior to the expiration of the coverage.
3. Unless otherwise provided below, each policy evidencing insurance
required to be carried by Tenant pursuant to this Exhibit shall contain the
following provisions and/or clauses satisfactory to Landlord: (i) with respect
to Tenant's commercial general liability insurance, a provision that the policy
and the coverage provided shall be primary and that any coverage carried by
Landlord shall be excess and noncontributory, together with a provision
including Landlord, its management agent and lender as additional insureds; (ii)
a waiver by the insurer of any right to subrogation against Landlord, its
agents, employees, contractors and representatives which arises or might arise
by reason of any payment under the policy or by reason of any act or omission of
Landlord, its agents, employees, contractors or representatives; and (iii) a
provision that the insurer will not cancel or change the coverage provided by
the policy without first giving Landlord thirty (30) days prior written notice.
4. In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Exhibit, any insurance
required by this Exhibit, or fails to carry insurance required by any
governmental authority, Landlord may, upon ten (10) days prior written notice to
Tenant and Tenant's failure to cure, at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all reasonable sums
paid by Landlord, together with interest at ten percent (10%) per annum and any
related reasonable costs or expenses incurred by Landlord, within ten (10) days
following Landlord's written demand to Tenant.
NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST
PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD'S MANAGEMENT AGENT PRIOR
TO BEING AFFORDED ACCESS TO THE PREMISES.
<PAGE>
EXHIBIT E
RULES AND REGULATIONS
The following Rules and Regulations shall be in effect at the Building.
Landlord reserves the right to adopt reasonable nondiscriminatory modifications
and additions at any time. In the case of any conflict between these regulations
and the Lease, the Lease shall be controlling.
1. Except with the prior written consent of Landlord, or unless otherwise
specifically authorized in this Lease, Tenant shall not sell or permit the
retail sale of goods or services in or from the Premises, nor shall Tenant allow
the Premises to be utilized for any manufacturing or medical practice.
2. The sidewalks, halls, passages, elevators, stairways, and other common
areas shall not be obstructed by Tenant or used by it for storage, for
depositing items, or for any purpose other than for ingress to and egress from
the Premises. The halls, passages, entrances, elevators, stairways, balconies
and roof are not for the use of the general public, and Landlord shall in all
cases retain the right to control and prevent access to those areas of all
persons whose presence, in the judgment of Landlord, shall be prejudicial to the
safety, character, reputation and interests of the Building and its tenants.
Should Tenant have access to any balcony or patio area, Tenant shall not place
any furniture or other personal property in such area without the prior written
approval of Landlord. Nothing contained in this Lease shall be construed to
prevent access to persons with whom Tenant normally deals only for the purpose
of conducting its business on the Premises (such as clients, customers, office
suppliers and equipment vendors and the like) unless those persons are engaged
in illegal activities. Neither Tenant nor any employee or contractor of Tenant
shall go upon the roof of the Building without the prior written consent of
Landlord
3. The sashes, sash doors, windows, glass lights, solar film and/or
screen, and any lights or skylights that reflect or admit light into the halls
or other places of the Building shall not be covered or obstructed. The toilet
rooms, water and wash closets and other water apparatus shall not be used for
any purpose other than that for which they were constructed, and no foreign
substance of any kind shall be thrown in those facilities, and the expense of
any breakage, stoppage or damage resulting from the violation of this rule by
Tenant shall be borne by Tenant.
4. No sign, advertisement or notice visible from the exterior of the
Premises shall be inscribed, painted or affixed by Tenant on any part of the
Building or the Premises without the prior written consent of Landlord. If
Landlord shall have given its consent at any time, whether before or after the
execution of this Lease, that consent shall in no way operate as a waiver or
release of any of the provisions of this Lease, and shall be deemed to relate
only to the particular sign, advertisement or notice so consented to by Landlord
and shall not be construed as dispensing with the necessity of obtaining the
specific written consent of Landlord with respect to any subsequent sign,
advertisement or notice. If Landlord, by a notice in writing to Tenant, shall
object to any curtain, blind, tinting, shade or screen attached to, or hung in,
or used in connection with, any window or door of the Premises, then provided
such curtain, blind, tinting, shade or screen is visible from outside the
Premises, the use of that curtain, blind, tinting, shade or screen shall be
immediately discontinued and removed by Tenant. No awnings shall be permitted on
any part of the Premises. No antenna or satellite dish shall be installed by
Tenant that is either located or visible from outside the Premises without the
prior written agreement of Landlord.
5. Tenant shall not do or permit anything to be done in the Premises, or
bring or keep anything in the Premises, which shall in any way increase the rate
of fire insurance on the Building, or on the property kept in the Building, or
obstruct or interfere with the rights of other tenants, or in any way injure or
annoy them, or conflict with the regulations of the Fire Department or the fire
laws, or with any insurance policy upon the Building, or any portion of the
Building or its contents, or with any rules and ordinances established by the
Board of Health or other governmental authority.
<PAGE>
6. The installation and location of any unusually heavy equipment in the
Premises, including without limitation file storage units, safes and electronic
data processing equipment, shall require the prior written approval of Landlord.
Landlord may restrict the weight and position of any equipment that may exceed
the weight load limits for the structure of the Building, and may further
require, at Tenant's expense, the reinforcement of any flooring on which such
equipment may be placed and/or an engineering study to be performed to determine
whether the equipment may safely be installed in the Building and the necessity
of any reinforcement. The moving of large or heavy objects shall occur only
between those reasonable hours as may be designated by, and only upon previous
written notice to, Landlord, and the persons employed to move those objects in
or out of the Building must be reasonably acceptable to Landlord. Without
limiting the generality of the foregoing, no freight, furniture or bulky matter
of any description shall be received into or moved out of the lobby of the
Building or carried in any elevator other than the freight elevator designated
by Landlord unless approved in writing by Landlord.
7. Landlord shall clean the Premises as provided in the Lease, and except
with the written consent of Landlord, no person or persons other than those
reasonably approved by Landlord will be permitted to enter the Building for that
purpose. Tenant shall not cause unnecessary labor by reason of Tenant's
carelessness and indifference in the preservation of good order and cleanliness.
Landlord shall not be responsible to Tenant or its employees for loss or damage
to property in connection with the provision of janitorial services by third
party contractors, except to the extent due to Landlord's direct negligence or
willful misconduct.
8. Tenant shall not sweep or throw, or permit to be swept or thrown, from
the Premises any dirt or other substance into any of the corridors or halls or
elevators, or out of the doors or windows or stairways of the Building, and
Tenant shall not use, keep or permit to be used or kept any foul or noxious gas
or substance in the Premises, or interfere in any material way with other
tenants or those having business with other tenants, nor shall any animals or
birds be kept by Tenant in or about the Building. Smoking or carrying of lighted
cigars, cigarettes, pipes or similar products anywhere within the Premises or
Building is strictly prohibited, and Landlord may enforce such prohibition
pursuant to Landlord's leasehold remedies. Smoking is permitted outside the
Building and within the project only in areas designated by Landlord.
9. No cooking shall be done or permitted by Tenant on the Premises, except
pursuant to the normal use of a U.L. approved microwave oven and coffee maker
for the benefit of Tenant's employees and invitees, nor shall the Premises be
used for the storage of merchandise or for lodging.
10. Tenant shall not use or keep in the Building any kerosene, gasoline,
or inflammable fluid or any other illuminating material, exclusive of normal
office supplies, or use any method of heating other than that supplied by
Landlord.
11. If Tenant desires telephone, telegraph, burglar alarm or similar
connections, Landlord will direct electricians as to where and how the wires are
to be introduced. No boring or cutting for wires or otherwise shall be made
without directions from Landlord.
12. Upon the termination of its tenancy, Tenant shall deliver to Landlord
all the keys to offices, rooms and toilet rooms and all access cards which shall
have been furnished to Tenant or which Tenant shall have had made.
13. Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork or plaster or in any way deface the Premises, except to
install normal wall hangings. Tenant shall not affix any floor covering to the
floor of the Premises in any manner except by a paste, or other material which
may easily be removed with water, the use of cement or other similar adhesive
materials being expressly prohibited. The method of affixing any floor covering
shall be subject to reasonable approval by Landlord. The expense of repairing
any damage resulting from a violation of this rule shall be borne by Tenant.
<PAGE>
14. On Saturdays, Sundays and legal holidays, and on other days between
the hours of 6:00 p.m. and 8:00 a.m., access to the Building, or to the halls,
corridors, elevators or stairways in the Building, or to the Premises, may be
refused unless the person seeking access complies with any reasonable and
nondiscriminatory access control system that Landlord may establish. Landlord
shall in no case be liable for damages for the admission to or exclusion from
the Building of any person whom Landlord has the right to exclude under Rules 2
or 18 of this Exhibit. In case of invasion, mob, riot, public excitement, or
other commotion, or in the event of any other situation reasonably requiring the
evacuation of the Building, Landlord reserves the right at its election and
without liability to Tenant to prevent access to the Building by closing the
doors or otherwise, for the safety of the tenants and protection of property in
the Building.
15. Tenant shall be responsible for protecting the Premises from theft,
which includes keeping doors and other means of entry closed and securely
locked. Tenant shall use commercially reasonable efforts to cause all water
faucets or water apparatus to be shut off before Tenant or Tenant's employees
leave the Building so as to prevent waste or damage.
16. Tenant shall not alter any lock or install a new or additional lock or
any bolt on any door of the Premises without the prior written consent of
Landlord. If Landlord gives its consent, Tenant shall in each case promptly
furnish Landlord with a key for any new or altered lock.
17. Tenant shall not install equipment, such as but not limited to
electronic tabulating or computer equipment, requiring electrical or air
conditioning service in excess of that to be provided by Landlord under the
Lease except in accordance with Exhibit B.
18. Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person. In the event any such person
is a guest or invitee of Tenant, Tenant shall notify Landlord in advance of each
desired entry, and Landlord shall authorize the person so designated to enter
the Premises, provided that in the reasonable judgment of Landlord, such person
will not be involved in general solicitation activities, or the proselytizing,
petitioning, or disturbance of other tenants or their customers or invitees.
Notwithstanding the foregoing, Landlord may condition such access by a food or
beverage vendor upon the vendor's execution of an entry permit agreement which
may contain provisions for insurance coverage.
19. Tenant shall, at its expense, be required to utilize the third party
contractor designated by Landlord for the Building to provide any telephone
wiring services from the minimum point of entry of the telephone cable in the
Building to the Premises, provided that such contractor's charges shall be
generally competitive with those of other contractors performing like services
in other high-rise office projects in the area.
20. Tenant shall, upon request by Landlord, supply Landlord with the names
and telephone numbers of personnel designated by Tenant to be contacted on an
after-hours basis should circumstances warrant.
21. Landlord may from time to time grant tenants individual and temporary
variances from these Rules, provided that any variance does not have a material
adverse effect on the use and enjoyment of the Premises by Tenant.
<PAGE>
EXHIBIT X
WORK LETTER
DOLLAR ALLOWANCE
[SECOND GENERATION SPACE]
The Tenant Improvement work (herein Tenant Improvements") shall consist of any
work required to complete the Premises pursuant to plans and specifications
approved by both Landlord and Tenant. All of the Tenant Improvement work shall
be performed by Turelk Inc. in accordance with the procedures and requirements
set forth below.
I. ARCHITECTURAL AND CONSTRUCTION PROCEDURES
A. Tenant and Landlord shall approve both (i) a detailed space
plan for the Premises, prepared by the architect engaged by
Landlord for the work described herein, Gensler ("Landlord's
Architect"), which includes interior partitions, ceilings,
interior finishes, interior office doors, suite entrance,
floor coverings, window coverings, lighting, electrical and
telephone outlets, plumbing connections, heavy floor loads and
other special requirements ("Preliminary Plan"), and (ii) an
estimate, prepared by the contractor engaged by Landlord for
the work herein ("Landlord's Contractor"), of the cost for
which Landlord will complete or cause to be completed the
Tenant Improvements ("Preliminary Cost Estimate"). Tenant
shall approve or disapprove each of the Preliminary Plan and
the Preliminary Cost Estimate by written notice and delivering
same to Landlord within ten (10) business days of its receipt
by Tenant. If Tenant disapproves any matter, Tenant shall
specify in detail the reasons for disapproval and Landlord
shall attempt to modify the Preliminary Plan and the
Preliminary Cost Estimate to incorporate Tenant's suggested
revisions in a mutually satisfactory manner.
B. Before Landlord's Architect commences any work on the Working
Drawings and Specifications (as defined below), Tenant shall
provide in writing to Landlord or Landlord's Architect all
specifications and information reasonably requested by
Landlord for the preparation of final construction documents
and costing, including without limitation Tenant's final
selection of wall and floor finishes, complete specifications
and locations (including load and HVAC requirements) of
Tenant's equipment, and details of all "Non-Standard
Improvements" (as defined below) to be installed in the
Premises (collectively, "Programming Information"). Tenant
understands that final construction documents for the Tenant
Improvements shall be predicated on the Programming
Information, and accordingly that such information must be
accurate and complete.
C. Within ten (10) business days following Tenant's approval of
the Preliminary Plan and Preliminary Cost Estimate and
delivery of the complete Programming Information, Landlord's
Architect and engineers shall prepare and deliver to the
parties working drawings and specifications ("Working Drawings
and Specifications"), and Landlord's Contractor shall prepare
a final construction cost estimate ("Final Cost Estimate") for
the Tenant Improvements in conformity with the Working
Drawings and Specifications. Tenant shall have ten (10)
business days from the receipt thereof to approve or
disapprove the Working Drawings and Specifications and the
Final Cost Estimate. Should Tenant disapprove the Working
Drawings and Specifications or the Final Cost Estimate, such
disapproval shall be accompanied by a detailed list of
revisions. Any revision requested by Tenant and accepted by
Landlord shall be incorporated by Landlord's Architect into a
revised set of Working Drawings and Specifications and Final
Cost Estimate, and Tenant shall approve or disapprove same in
writing within five (5) business days of receipt.
<PAGE>
D. In the event that Tenant requests in writing a revision in the
approved Working Drawings and Specifications ("Change"), then
provided such Change is acceptable to Landlord in good faith,
Landlord shall advise Tenant by written change order as soon
as is practical of any increase in the Completion Cost such
Change would cause. Tenant shall approve or disapprove such
change order in writing within three (3) business days
following its receipt from Landlord. Tenant's approval of a
Change shall be accompanied by Tenant's payment of any
resulting increase in the Completion Cost provided that the
"Landlord's Contribution" (as defined below) has been
exceeded.
E. It is understood that the Preliminary Plan and the Working
Drawings and Specifications, together with any Changes
thereto, shall be subject to the prior good faith approval of
Landlord. Landlord shall identify any disapproved items within
three (3) business days (or two (2) business days in the case
of Changes) after receipt of the applicable document. In lieu
of disapproving an item, Landlord may approve same on the
condition that Tenant pay to Landlord, prior to the start of
construction and in addition to all sums otherwise due
hereunder, an amount equal to the cost, as reasonably
estimated by Landlord, of removing and replacing the item upon
the expiration or termination of the Lease. Should Landlord
approve work that would necessitate any ancillary Building
modification or other expenditure by Landlord, then Landlord
shall so notify Tenant at the time of Landlord's approval and
except to the extent of any remaining balance of the
"Landlord's Contribution" as described below, Tenant shall, in
addition to its other obligations herein, promptly fund the
cost thereof to Landlord.
F. Landlord shall permit Tenant and its agents to enter the
Premises up to ten (10) business days prior to the
Commencement Date of the Lease in order that Tenant may
perform any work to be performed by Tenant hereunder through
its own contractors, subject to Landlord's prior written
approval (which shall not be unreasonably withheld), and in a
manner and upon terms and conditions and at times satisfactory
to Landlord's representative. The foregoing license to enter
the Premises prior to the Commencement Date is, however,
conditioned upon Tenant's contractors and their subcontractors
and employees working in harmony and not interfering with the
work being performed by Landlord. If at any time that entry
shall cause disharmony or unreasonably interfere with the work
being performed by Landlord, this license may be withdrawn by
Landlord upon twenty-four (24) hours written notice to Tenant.
That license is further conditioned upon the compliance by
Tenant's contractors with all requirements reasonably imposed
by Landlord on third party contractors and subcontractors,
including without limitation the maintenance by Tenant and its
contractors and subcontractors of workers' compensation and
public liability and property damage insurance in amounts and
with companies and on forms reasonably satisfactory to
Landlord, with certificates of such insurance being furnished
to Landlord prior to proceeding with any such entry. The entry
shall be deemed to be under all of the provisions of the Lease
except as to the covenants to pay rent. Except to the extent
caused by the negligence or willful misconduct of Landlord or
Landlord's agents, Landlord shall not be liable in any way for
any injury, loss or damage which may occur to any such work
being performed by Tenant, the same being solely at Tenant's
risk. In no event shall the failure of Tenant's contractors to
complete any work in the Premises extend the Commencement Date
of this Lease.
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G. Tenant hereby designates Chip Harris, Telephone No. (626)
396-8300, as its representative and agent for the purpose of
receiving notices, approving submittals and issuing requests
for Changes, and Landlord shall be entitled to rely upon
authorizations and directives of such person(s) as if given
directly by Tenant. Tenant may amend the designation of its
construction representative(s) at any time upon delivery of
written notice to Landlord. Conversely, Landlord hereby
designates Stewart Morse of lnsignia/ESG, Telephone No. (949)
784-0844, as its construction representative, subject to
modification by written notice to Tenant.
H. It is understood that the Tenant Improvements shall be
completed during Tenant's occupancy of the Premises. However,
Landlord agrees that it shall use diligent efforts to recarpet
and paint those areas of the Premises not affected by the
demising walls by February 15, 2002 (which date is based on
the assumption that Tenant shall execute and deliver this
Lease to Landlord by January 22, 2002). In this regard, Tenant
agrees to assume any risk of injury, loss or damage which may
result, except for the gross negligence or willful misconduct
of Landlord or its contractors or agents. Tenant further
agrees that it shall be solely responsible for relocating its
office equipment and furniture in the Premises in order for
Landlord to complete the work in the Premises and that no
rental abatement shall result while the Tenant Improvements
are completed in the Premises.
Landlord agrees that it shall use diligent efforts to complete
the Tenant Improvements as expeditiously as is reasonably
possible once such work has commenced and to minimize
interference with Tenant's access to and use of the Premises;
provided that overtime charges shall be included in the
Completion Cost. Landlord further agrees that it shall
cooperate in good faith with Tenant to provide notice to
Tenant of the schedule of the various components of the work.
II. COST OF TENANT IMPROVEMENTS
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A. Landlord shall complete, or cause to be completed, the Tenant
Improvements, at the construction cost shown in the approved
Final Cost Estimate (subject to the provisions of this Work
Letter), in accordance with final Working Drawings and
Specifications approved by both Landlord and Tenant. Landlord
shall pay towards the final construction costs ("Completion
Cost") as incurred a maximum of Seventy-Eight Thousand Three
Hundred Sixty-Four Dollars ($78,364.00) ("Landlord's
Contribution"), and Tenant shall be fully responsible for the
remainder ("Tenant's Contribution"); provided, however, that
Landlord shall, in addition to the Landlord's Contribution,
be responsible for the cost of the following items as
reflected in the January 14, 2002 cost estimate (the "Landlord
Work"), which cost items shall not be included in the Tenant's
Contribution: (i) the installation and finishing of the
demising walls of the Premises, (ii) the life safety upgrade
work, and (iii) the retrofit of the existing ceilings to
comport with applicable codes. If the actual cost of
completion of the Tenant Improvements is less than the maximum
amount provided for the Landlord's Contribution, such savings
shall inure to the benefit of Landlord and Tenant shall not be
entitled to any credit or payment.
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B. The Completion Cost shall include all direct costs of Landlord
in completing the Tenant Improvements (exclusive of the cost
of the Landlord Work as provided above), including but not
limited to the following: (i) payments made to architects,
engineers, contractors, subcontractors and other third party
consultants in the performance of the work, (ii) permit fees
and other sums paid to governmental agencies, and (iii) costs
of all materials incorporated into the work or used in
connection with the work. The Completion Cost shall also
include an administrative/supervision fee to be paid to
Landlord in the amount of five percent (5%) of all hard
construction costs.
C. Prior to start of construction of the Tenant Improvements,
Tenant shall pay to Landlord the amount of the Tenant's
Contribution set forth in the approved Final Cost Estimate. In
addition, if the actual Completion Cost of the Tenant
Improvements is greater than the Final Cost Estimate because
of modifications or extras not reflected on the approved
Working Drawings and Specifications which are requested by
Tenant, and further provided that the sum of (i) the cost of
such modifications and extras and (ii) the Final Cost
Estimate, exceeds the Landlord's Contribution, then Tenant
shall pay to Landlord, within ten (10) days following
submission of an invoice therefor, all such additional costs,
including any additional architectural fee, so long as the
additional cost of any changes had been approved by Tenant. If
Tenant defaults in the payment of any sums due under this Work
Letter, Landlord shall (in addition to all other remedies)
have the same rights as in the case of Tenant's failure to pay
rent under the Lease.