California-Irvine-16245/16277 Laguna Canyon Road Lease - Magellan Irvine Oaks LP and Kofax Image Products Inc.
OFFICE LEASE
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IRVINE OAKS EXECUTIVE PARK
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MAGELLAN IRVINE OAKS LIMITED PARTNERSHIP,
an Arizona limited partnership,
as Landlord,
and
KOFAX IMAGE PRODUCTS, INC.,
a Delaware corporation,
as Tenant.
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
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IRVINE OAKS EXECUTIVE PARK
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INDEX
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ARTICLE SUBJECT MATTER PAGE
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ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS................................5
ARTICLE 2 LEASE TERM; OPTION TERMS.....................................................8
ARTICLE 3 BASE RENT...................................................................11
ARTICLE 4 ADDITIONAL RENT.............................................................12
ARTICLE 5 USE OF PREMISES.............................................................21
ARTICLE 6 SERVICES AND UTILITIES......................................................22
ARTICLE 7 REPAIRS.....................................................................23
ARTICLE 8 ADDITIONS AND ALTERATIONS...................................................25
ARTICLE 9 COVENANT AGAINST LIENS......................................................27
ARTICLE 10 INSURANCE...................................................................27
ARTICLE 11 DAMAGE AND DESTRUCTION......................................................31
ARTICLE 12 NONWAIVER...................................................................32
ARTICLE 13 CONDEMNATION................................................................33
ARTICLE 14 ASSIGNMENT AND SUBLETTING...................................................34
ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES..............38
ARTICLE 16 HOLDING OVER................................................................39
ARTICLE 17 ESTOPPEL CERTIFICATES.......................................................39
ARTICLE 18 SUBORDINATION...............................................................40
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ARTICLE 19 DEFAULTS; REMEDIES..........................................................41
ARTICLE 20 COVENANT OF QUIET ENJOYMENT.................................................44
ARTICLE 21 INTENTIONALLY DELETED.......................................................44
ARTICLE 22 INTENTIONALLY DELETED.......................................................44
ARTICLE 23 SIGNS.......................................................................44
ARTICLE 24 COMPLIANCE WITH LAW.........................................................45
ARTICLE 25 LATE CHARGES................................................................45
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT........................46
ARTICLE 27 ENTRY BY LANDLORD...........................................................46
ARTICLE 28 TENANT PARKING..............................................................47
ARTICLE 29 MISCELLANEOUS PROVISIONS....................................................47
EXHIBITS
A OUTLINE OF PREMISES
B TENANT WORK LETTER
C FORM OF NOTICE OF LEASE TERM DATES
D RULES AND REGULATIONS
E FORM OF TENANT'S ESTOPPEL CERTIFICATE
F RESERVED AND VISITOR PARKING SPACES
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IRVINE OAKS EXECUTIVE PARK
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INDEX OF MAJOR DEFINED TERMS
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LOCATION OF
DEFINITION IN
DEFINED TERMS OFFICE LEASE
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Abatement Event.............................................................................43
Abatement Notice............................................................................43
ADA.........................................................................................53
Additional Rent.............................................................................11
Alterations.................................................................................25
Applicable Laws.............................................................................53
Approved Working Drawings....................................................................3
Architect....................................................................................2
Base Building...........................................................................23, 25
Base Rent...................................................................................11
Base, Shell, and Core........................................................................1
Brokers.....................................................................................51
Building.....................................................................................5
Building Direct Expenses....................................................................12
Building Operating Expenses.................................................................12
Building Tax Expenses.......................................................................12
Code.........................................................................................1
Common Areas.................................................................................6
Comparable Buildings.........................................................................7
Construction Drawings........................................................................2
Contractor...................................................................................3
Cosmetic Alterations........................................................................24
Cost Pools..................................................................................18
Cost Proposal.............................................................................3, 4
Design Plans.................................................................................1
Direct Expenses.............................................................................12
Engineers....................................................................................2
Estimate....................................................................................19
Estimate Statement..........................................................................19
Estimated Payment...........................................................................19
Existing Leases..............................................................................7
Expense Payment.............................................................................18
Expense Year................................................................................12
Final Space Plan.............................................................................2
Final Working Drawings.......................................................................3
First Offer Commencement Date................................................................8
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First Offer Notice...........................................................................7
First Offer Rent.............................................................................7
First Offer Space............................................................................6
Force Majeure...............................................................................49
Hazardous Material..........................................................................15
Hazardous Materials.........................................................................53
Holdover Rent................................................................................9
Irvine Oaks Executive Park...................................................................5
Landlord.....................................................................................1
Landlord Parties............................................................................27
Landlord Supervision Fee..................................................................2, 4
Lease........................................................................................1
Lease Commencement Date......................................................................8
Lease Expiration Date........................................................................8
Lease Term................................................................................6, 8
Lease Year...................................................................................8
Mail........................................................................................50
Management Fee Cap..........................................................................15
Mortgagees..................................................................................39
Notices.....................................................................................50
Operating Expenses..........................................................................12
Option Rent.................................................................................10
Option Rent Notice..........................................................................11
Option Term.................................................................................10
Original Improvements.......................................................................29
Original Tenant..............................................................................6
Other Improvements..........................................................................52
Over Allowance Amount........................................................................4
Permits......................................................................................3
Premises.....................................................................................5
Premises Delivery............................................................................9
Project......................................................................................5
Project Direct Expenses.....................................................................12
Proposition 13..............................................................................17
Ready for Occupancy..........................................................................9
Reimbursement Holdover Time Period...........................................................9
Renovations.................................................................................53
Rent........................................................................................11
rentable square feet.........................................................................6
Specifications...............................................................................2
Standard Improvement Package.................................................................2
Statement...................................................................................18
Subject Space...............................................................................33
Summary......................................................................................1
Superior Rights..............................................................................7
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Tax Expenses................................................................................16
Tenant.......................................................................................1
Tenant Improvement Allowance.................................................................1
Tenant Improvement Allowance Items...........................................................2
Tenant Improvements..........................................................................1
Tenant Parties..............................................................................27
Tenant Work Letter...........................................................................5
Tenant's Architect...........................................................................2
Tenant's Building Share.....................................................................18
Tenant's Project Share......................................................................18
Tenant's Subleasing Costs...................................................................35
Time Deadlines...............................................................................3
Transfer....................................................................................36
Transfer Notice.............................................................................33
Transfer Premium............................................................................35
Transfer Response Notice....................................................................36
Transferee..................................................................................33
Transfers...................................................................................33
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IRVINE OAKS EXECUTIVE PARK
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OFFICE LEASE
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This Office Lease (the "LEASE"), dated as of the date set forth in
Section 1 of the Summary of Basic Lease Information (the "SUMMARY"), below, is
made by and between MAGELLAN IRVINE OAKS LIMITED PARTNERSHIP, an Arizona limited
partnership ("LANDLORD"), and KOFAX IMAGE PRODUCTS, INC., a Delaware corporation
("TENANT").
SUMMARY OF BASIC LEASE INFORMATION
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TERMS OF LEASE DESCRIPTION
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1. Date: June __, 1998
2. Premises (Article 1).
2.1 Building: That certain building to be constructed by
Landlord in accordance with the terms of the
Tenant Work Letter, which is to be located
at 16245 Laguna Canyon Road, Irvine,
California
2.2 Premises: Approximately 58,814 rentable square feet
of space (subject to adjustment as set forth
in Section 1.2 of this Lease) comprising the
entire Building, as further set forth in
EXHIBIT A to the Office Lease.
2.3 Project: Irvine Oaks Executive Park
16245 - 16277 Laguna Canyon Road
Irvine, California 92718
3. Lease Term (Article 2).
3.1 Length of Term: Five (5) years.
3.2 Lease Commencement
Date: The earlier to occur of (i) the date upon
which Tenant first commences to conduct
business in the Premises and (ii) the Monday
following the date upon which the Premises
are "Ready for Occupancy," as that term is
defined in the Tenant Work Letter, which
date is anticipated to be February 1, 1999.
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TERMS OF LEASE DESCRIPTION
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3.3 Lease Expiration Date: The last day of the month in which the 5th
anniversary of the Lease Commencement Date
occurs.
4. Base Rent (Article 3): (Subject to adjustment as set forth in
Section 1.2 of the Lease).
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Monthly
Monthly Rental Rate
Annual Installment per Rentable
Lease Year Base Rent of Base Rent Square Foot
---------- --------- ------------ -----------
1 $811,633.20 $67,636.10 $1.15
2 $846,921.60 $70,576.80 $1.20
3 $882,210.00 $73,517.50 $1.25
4 $917,498.40 $76,458.20 $1.30
5 $952,786.80 $79,398.90 $1.35
5. Tenant's Share
(Article 4):
5.1 Tenant's Building Share: 100%.
5.2 Tenant's Project Share: Approximately 18.6%. (Subject to adjustment
as set forth in Section 1.2 of the Lease).
6. Permitted Use
(Article 5): General office use and/or engineering, testing,
light manufacturing and storage of small
electronic components consistent with a first-
class office park
7. Security Deposit
(Article 21): None.
8. Parking Ratio
(Article 28): Up to four (4) parking spaces for every 1,000
rentable square feet of the Premises, of
which ten (10) parking spaces shall be reserved
parking spaces, subject to the provisions of
Article 28.
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TERMS OF LEASE DESCRIPTION
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9. Address of Tenant Kofax Image Products, Inc.
(Section 29.18): 3 Jenner
Irvine, California 92618
Attention: Mr. Ron Fikert
(Prior to Lease Commencement Date)
and
Irvine Oaks Executive Park
16245 Laguna Canyon Road
Irvine, California 92618
Attention: Mr. Ron Fikert
(After Lease Commencement Date)
10. Address of Landlord
(Section 29.18): LaSalle Partners
16261 Laguna Canyon Road
Irvine, California 92618
Attention: Property Manager
and
Magellan Corporations
2198 East Camelback Road
Suite 325
Phoenix, Arizona 85016
Attention: Mr. Brian Snider
and
(only as to notices of default and other
legal notices)
Allen, Matkins, Leck, Gamble & Mallory
1999 Avenue of the Stars, Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
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TERMS OF LEASE DESCRIPTION
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11. Broker(s)
(Section 29.24): CB Richard Ellis
24422 Avenida La Carlota, Suite 120
Laguna Hills, California 92653
Attention: Mr. Scott Johnstone
and
Grubb & Ellis
4695 MacArthur Court, Suite 600
Newport Beach, California 92660
Attention: Mr. Gary Allen
12. Additional Tenant Rights: Two (2) Options to Extend the Lease
Term for a period of Three (3)
years each, pursuant to the
terms of Section 2.2 of this
Lease.
13. Tenant Improvement Allowance
(Exhibit B, Section 2.1): $1,416,175.00.
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ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the premises set forth in Section 2.2 of the Summary
(the "PREMISES"). The outline of the Premises is set forth in EXHIBIT A attached
hereto and each floor or floors of the Premises has the number of rentable
square feet as set forth in Section 2.2 of the Summary. The parties hereto agree
that the lease of the Premises is upon and subject to the terms, covenants and
conditions herein set forth, and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of such terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance. The parties hereto hereby
acknowledge that the purpose of EXHIBIT A is to show the approximate location of
the Premises in the "Building," as that term is defined in Section 1.1.2, below,
only, and such Exhibit is not meant to constitute an agreement, representation
or warranty as to the construction of the Premises, the precise area thereof or
the specific location of the "Common Areas," as that term is defined in Section
1.1.3, below, or the elements thereof or of the accessways to the Premises or
the "Project," as that term is defined in Section 1.1.2, below. Except as
specifically set forth in this Lease and in the Tenant Work Letter attached
hereto as EXHIBIT B (the "TENANT WORK LETTER"), Landlord shall not be obligated
to provide or pay for any improvement work or services related to the
improvement of the Premises. Tenant also acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the
condition of the Premises, the Building or the Project or with respect to the
suitability of any of the foregoing for the conduct of Tenant's business, except
as specifically set forth in this Lease and the Tenant Work Letter. The taking
of possession of the Premises by Tenant shall conclusively establish that the
Premises and the Building were at such time in good and sanitary order,
condition and repair, subject to Landlord's obligation to complete punch list
items, if any, as provided in the Tenant Work Letter.
1.1.2 THE BUILDING AND THE PROJECT. The Premises are a part of
the building set forth in Section 2.1 of the Summary (the "BUILDING"). The
Building shall be constructed by Landlord in accordance with the terms of the
Tenant Work Letter, and shall be part of an office project known as "IRVINE OAKS
EXECUTIVE PARK." The term "PROJECT," as used in this Lease, shall mean (i) the
Building and the Common Areas, (ii) the land (which is improved with
landscaping, parking areas and other improvements) upon which the Building and
the Common Areas are located, (iii) the other office buildings located within
the Project and the land upon which such adjacent office buildings are located,
and (iv) at Landlord's discretion, any additional real property, areas, land,
buildings or other improvements added thereto outside of, but contiguous to, the
Project.
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in
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[Kofax Image Products, Inc.]
<PAGE> 12
Article 5 of this Lease, those portions of the Project which are provided, from
time to time, for use in common by Landlord, Tenant and any other tenants of the
Project (such areas, together with such other portions of the Project designated
by Landlord, in its discretion, including certain areas designated for the
exclusive use of certain tenants, or to be shared by Landlord and certain
tenants, are collectively referred to herein as the "COMMON AREAS"). The manner
in which the Common Areas are maintained and operated shall be at the sole
discretion of Landlord and the use thereof shall be subject to such rules,
regulations and restrictions as Landlord may make from time to time; provided
that Landlord shall maintain and operate the Common Areas in a manner consistent
with that of other first-class office buildings in the vicinity of the Building
and enforce such rules, regulations and restrictions in a consistent and
nondiscriminatory manner regarding all tenants and occupants of the Project.
Landlord reserves the right to close temporarily, make alterations or additions
to, or change the location of elements of the Project and the Common Areas;
provided that Tenant shall have right of access to the Premises and the Project
twenty-four (24) hours per day, seven (7) days per week during the "LEASE TERM,"
as that term is defined in Section 2.1 of this Lease, except to the extent
necessary for any of the foregoing alterations, additions, changes or repairs to
the Project, Premises or Common Areas, provided, in such event Section 19.5 of
this Lease shall apply.
1.2 VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES, BUILDING, AND
PROJECT. For purposes of this Lease, "RENTABLE SQUARE FEET" shall be calculated
based on the "drip line" area of the Building, as measured to the exterior walls
on each floor of the Building, without exclusions for any soffits or
penetrations. The "USABLE SQUARE FEET" of the Premises shall be determined
pursuant the Standard Method For Measuring Office Buildings, ANZI Z65.1996
("BOMA"). The rentable square footage of the Project shall include all of the
Building Common Areas. Following the "Lease Commencement Date," as that terms is
defined in Article 3, below, Landlord shall verify the rentable square footage
of Premises. In the event that the rentable area of the Premises, the Building
and/or the Project shall change due to such verification, or due to subsequent
alterations and/or other modifications to the Premises, the Building and/or the
Project, the rentable area of the Premises, the Building and/or the Project, as
the case may be, shall be appropriately adjusted as of the date of such
alteration and/or other modification, based upon the written verification by
Landlord's space planner of such revised rentable area. In the event of any such
adjustment to the rentable area of the Premises, the Building and/or the
Project, all amounts, percentages and figures appearing or referred to in this
Lease based upon such rentable area (including, without limitation, the amount
of the "Rent" and any "Security Deposit," as those terms are defined in Article
4 and Article 21 of this Lease, respectively and "Tenant's Project Share," as
that term is defined in Section 4.2.10, below) shall be modified in accordance
with such determination.
1.3 RIGHT OF FIRST OFFER. Landlord hereby grants to the Tenant named in
the Summary (the "ORIGINAL TENANT") an ongoing right of first offer during the
Lease Term to lease any space in any other building in the Project as space
becomes available (the "FIRST OFFER SPACE"). Notwithstanding the foregoing, such
first offer right of Tenant shall (i) commence only following the expiration or
earlier termination of any leases currently in effect for any premises in the
Project or the initial lease(s) entered into by Landlord with a third party or
parties which are currently under negotiation, if the same are consummated, for
First Offer Space those certain
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<PAGE> 13
buildings located in the Project, commonly known as 16271 and 16241 Laguna
Canyon Road, including any renewal of such lease(s), whether or not such renewal
is pursuant to an express written provision in such lease(s), and regardless of
whether any such renewal is consummated pursuant to a lease amendment or a new
lease (the "EXISTING LEASES") and (ii) be subordinate and secondary to all
rights of expansion, first refusal, first offer or similar rights set forth in
such Existing Leases with respect to the First Offer Space (collectively, the
"SUPERIOR RIGHTS"). Tenant's right of first offer shall be on the terms and
conditions set forth in this Section 1.3.
1.3.1 PROCEDURE FOR OFFER. Prior to entering into a new lease for
the First Offer Space other than pursuant to a Superior Right, Landlord shall
notify Tenant (the "FIRST OFFER NOTICE") when and if the First Offer Space
becomes available for lease to third parties other than the holders of the
Superior Rights. Pursuant to such First Offer Notice, Landlord shall offer to
lease to Tenant the First Offer Space. The First Offer Notice shall describe the
space so offered to Tenant and shall set forth the "First Offer Rent," as that
term is defined in Section 1.3.3 below, the rentable and usable square footage,
and the other economic terms upon which Landlord is willing to lease such space
to Tenant.
1.3.2 PROCEDURE FOR ACCEPTANCE. If Tenant wishes to exercise
Tenant's right of first offer with respect to the space described in the First
Offer Notice, then within five (5) business days of delivery of the First Offer
Notice to Tenant, Tenant shall deliver notice to Landlord of Tenant's intention
to exercise its right of first offer with respect to the entire space described
in the First Offer Notice on the terms contained in such notice. If Tenant does
not so notify Landlord within the five (5) business day period, then Landlord
shall be free to lease the space described in the First Offer Notice to anyone
to whom Landlord desires on any terms Landlord desires. Notwithstanding anything
to the contrary contained herein, Tenant must elect to exercise its right of
first offer, if at all, with respect to all of the space offered by Landlord to
Tenant, and Tenant may not elect to lease only a portion thereof.
1.3.3 FIRST OFFER RENT. The rent payable by Tenant for the First
Offer Space (the "FIRST OFFER RENT") shall be equal to the rent (including
additional rent and considering any "base year" or "expense stop" applicable
thereto), including all escalations, at which tenants, as of the "First Offer
Commencement Date," as that term is defined in Section 1.3.5, below, are leasing
non-sublease, non-encumbered, non-equity, non-renewal, non-expansion space
comparable in size, location and quality to the First Offer Space for a similar
lease term, in an arms length transaction, which comparable space is located in
the Project, or, if there are not at least three (3) current comparable
transactions in the Project, then located in the "Irvine Spectrum" area in
Irvine, California (collectively, "COMPARABLE BUILDINGS"), in either case taking
into consideration the following concessions: (a) rental abatement concessions,
if any, being granted such tenants in connection with such comparable space, (b)
tenant improvements or allowances provided or to be provided for such comparable
space, taking into account, and deducting the value of, the existing
improvements in the First Offer Space, such value to be based upon the age,
design, quality of finishes, and layout of the improvements and the extent to
which the same could be utilized by a general office user, (c) any period of
rental abatement, if any, granted to tenants in comparable transactions in
connection with the design, permitting and construction of tenant improvements
in such comparable spaces, and (d) other reasonable monetary concessions, if
any, being granted
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<PAGE> 14
such tenants in connection with such comparable space; provided, however, that
in calculating the First Offer Rent, no consideration shall be given to the fact
that Landlord is or is not required to pay a real estate brokerage commission in
connection with Tenant's lease of the First Offer Space or the fact that
Landlord is or is not paying real estate brokerage commissions in connection
with such comparable space.
1.3.4 CONSTRUCTION IN FIRST OFFER SPACE. Tenant shall take the
First Offer Space in its "as is" condition, and if Tenant elects to construct
improvements in the First Offer Space, then such construction shall be performed
in compliance with the terms of Article 8 of this Lease.
1.3.5 AMENDMENT TO LEASE. If Tenant timely exercises Tenant's
right to lease the First Offer Space as set forth herein, Landlord and Tenant
shall within fifteen (15) days thereafter execute an amendment to this Lease for
such First Offer Space upon the terms and conditions as set forth in the First
Offer Notice and this Section 1.3. Tenant shall commence payment of rent for the
First Offer Space, and the term of the First Offer Space shall commence upon the
date of delivery of the First Offer Space to Tenant (the "FIRST OFFER
COMMENCEMENT DATE") and terminate coterminously with the expiration or earlier
termination of this Lease.
1.3.6 TERMINATION OF RIGHT OF FIRST OFFER. The rights contained
in this Section 1.3 shall be personal to the Original Tenant, and may only be
exercised by the Original Tenant (and not any assignee, sublessee or transferee
of Tenant's interest in this Lease) if Tenant occupies the entire Premises as of
the date of the attempted exercise of the right of first offer by Tenant and as
of the scheduled date of delivery of such First Offer Space to Tenant. Tenant
shall not have the right to lease the First Offer Space, as provided in this
Section 1.3, if, as of the date of the attempted exercise of the right of first
offer by Tenant, or as of the scheduled date of delivery of such First Offer
Space to Tenant, Tenant is in default under this Lease beyond the applicable
cure period provided in this Lease or Tenant has previously been in default
under this Lease beyond the applicable cure period provided in this Lease more
than twice. The right of first offer granted herein shall terminate upon the
failure by Tenant to exercise its right of first offer with respect to the First
Offer Space offered by Landlord.
ARTICLE 2
LEASE TERM; OPTION TERMS
2.1 INITIAL TERM. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "LEASE
TERM") shall be as set forth in Section 3.1 of the Summary, shall commence on
the date set forth in Section 3.2 of the Summary (the "LEASE COMMENCEMENT
DATE"), and shall terminate on the date set forth in Section 3.3 of the Summary
(the "LEASE EXPIRATION DATE") unless this Lease is sooner terminated as
hereinafter provided. For purposes of this Lease, the term "LEASE YEAR" shall
mean each consecutive twelve (12) month period during the Lease Term. At any
time during the Lease Term, Landlord may deliver to Tenant a notice in the form
as set forth in EXHIBIT C, attached hereto, as a confirmation only of
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the information set forth therein, which Tenant shall execute and return to
Landlord within five (5) days of receipt thereof.
2.2 DELAY IN DELIVERY OF THE PREMISES. If the Premises are not "READY
FOR OCCUPANCY," as that term is defined in Section 5.1 of the Tenant Work
Letter, as of February 1, 1999, and provided any such delay is not the result of
"Tenant Delay," as that term is defined in Section 5.2 in the Tenant Work
Letter, Landlord will pay to Tenant, upon Tenant's presentation to Landlord of
evidence of payment by Tenant to Tenant's current landlord of any increased
rental resulting from Tenant's holdover, fifty percent (50%) of any increased
amount of rental due as a result of Tenant's failure to vacate its existing
premises at 3 and 5 Jenner, Irvine, California ("Holdover Rent") incurred by
Tenant during the "Reimbursement Holdover Time Period," as hereinafter
calculated (which monthly amount shall be prorated on a day-by-day basis). For
purposes herein, the "Reimbursement Holdover Time Period" shall be the number of
days calculated between February 1, 1999, and the earlier of: (i) the date the
Premises are Ready for Occupancy, and (ii) the date Tenant commences business in
the Premises, and for those number of days, Landlord shall be responsible for
the Holdover Rent on a daily prorated basis; provided, however, if Tenant is
required to pay Holdover Rent for a full month notwithstanding the fact that
Tenant holds over for less than a month, and Tenant provides Landlord with
evidence of such full month payment, Landlord shall pay Tenant the amounts
hereinabove specified for a full month rather than on a prorated basis.
2.3 Termination Based on Delay in Delivery of the Premises.
2.3.1 Outside Date of Premises Delivery. If the Premises are not
Ready for Occupancy and Landlord does not cause the delivery (the "Premises
Delivery") to occur by September 1, 1999 (the "Outside Date"), then the sole
remedy of Tenant for such failure shall be the right to deliver a notice to
Landlord (a "Termination Notice") electing to terminate this Lease effective
upon the date occurring five (5) business days following receipt by Landlord of
the Termination Notice (the "Effective Date"). The Termination Notice must be
delivered by Tenant to Landlord, if at all, not earlier than the Outside Date
(as the same may be extended pursuant to the terms of Section 2.3.2 below) nor
later than five (5) business days after the Outside Date. The effectiveness of
any such Termination Notice delivered by Tenant to Landlord shall be governed by
the terms of this Section 2.3.
2.3.2 Extension of Outside Date Prior to the Delivery of
Termination Notice. If a Termination Notice has not been delivered by Tenant to
Landlord and, prior to the Outside Date, Landlord determines that the Premises
Delivery will not occur by the Outside Date, Landlord shall have the right to
deliver a written notice to Tenant stating Landlord's opinion as to the date by
which the Premises Delivery shall occur, and Tenant shall be required, within
five (5) business days after receipt of such notice, to deliver a notice to
Landlord pursuant to which Tenant shall elect to either terminate this Lease, in
which case this Lease shall immediately terminate and be of no further force and
effect, or to agree to extend the Outside Date to that date set forth in such
notice delivered by Landlord. Failure by Tenant to deliver such notice or to so
elect shall be deemed Tenant's agreement to extend the Outside Date set forth in
Landlord's notice to Tenant. If Tenant agrees to extend the Outside Date,
Landlord shall have a continuing right to
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deliver a notice to Tenant which requests Tenant to so elect to either terminate
this Lease or to further extend the Outside Date as set forth in this Section
2.3.2, above, until the occurrence of the delivery or until this Lease is
terminated.
2.3.3 Other Terms. The date of the Premises Delivery, the
Effective Date and the Outside Date shall be extended to the extent of any
Tenant Delays. Upon any termination as set forth in Section 2.3, Landlord and
Tenant shall be relieved from any and all liability to each other resulting
hereunder except that Landlord shall return to Tenant any prepaid rent. Tenant's
rights to terminate this Lease, as set forth in this Section 2.3, shall be
Tenant's sole and exclusive remedy at law or in equity for the failure of the
Premises Delivery to occur as set forth above.
2.3 OPTION TERM.
2.3.1 OPTION RIGHT. Landlord hereby grants the Original Tenant
two (2) options to extend the Lease Term for a period of three (3) years each
(each, an "OPTION Term"), which options shall be exercisable only by written
notice delivered by Tenant to Landlord as provided below, provided that, as of
the date of delivery of such notice, Tenant is not in default under this Lease
beyond the applicable cure period provided in this Lease and Tenant has not
previously been in default under this Lease beyond the applicable cure period
provided in this Lease more than twice. Upon the proper exercise of any such
option to extend, and provided that, as of the end of the initial Lease Term as
initial Option Term, as the case may be, Tenant is not in default under this
Lease and Tenant has not previously been in default under this Lease more than
once, the Lease Term, as it applies to the Premises, shall be extended for a
period of three (3) years. The rights contained in this Section 2.3 shall be
personal to the Original Tenant and may only be exercised by the Original Tenant
(and not any assignee, sublessee or other transferee of Tenant's interest in
this Lease) if the Original Tenant occupies the entire Premises.
2.3.2 OPTION RENT. The rent payable by Tenant during the Option
Term (the "OPTION RENT") shall be equal to the greater of (i) the Rent being
paid by Tenant as of the expiration of the initial Lease Term, or initial Option
Term, as the case may be, and (ii) the rent including all escalations, at which,
as of the commencement of the Option Term, tenants are leasing non-sublease,
non-encumbered, non-equity space in Comparable Buildings for a term of three (3)
years, taking into consideration the following concessions: (a) rental abatement
concessions, if any, being granted such tenants in connection with such
comparable space; (b) tenant improvements or allowances provided or to be
provided for such comparable space, taking into account, and deducting the value
of, the existing improvements in the Premises, such value to be based upon the
age, quality and layout of the improvements and the extent to which the same can
be utilized by Tenant based upon the fact that the precise tenant improvements
existing in the Premises are specifically suitable to Tenant; and (c) other
reasonable monetary concessions, if any, being granted such tenants in
connection with such comparable space; provided, however, that in calculating
the Option Rent, no consideration shall be given to the fact that Landlord is or
is not required to pay a real estate brokerage commission in connection with
Tenant's right to lease the Premises during the Option Term or the fact that
Landlord is or is not paying real estate brokerage commissions in connection
with such comparable space.
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2.3.3 EXERCISE OF OPTION. The options contained in this Section
2.2 shall be exercised by Tenant, if at all, only in the following manner: (i)
Tenant shall deliver written notice to Landlord not more than thirteen (13)
months nor less than twelve (12) months prior to the expiration of the initial
Lease Term or initial Option Term, as applicable, stating that Tenant is
interested in exercising its option; (ii) Landlord, after receipt of Tenant's
notice, shall deliver notice (the "OPTION RENT NOTICE") to Tenant not less than
ten (10) months prior to the expiration of the initial Lease Term or initial
Option Term, as applicable, setting forth the Option Rent; and (iii) if Tenant
wishes to exercise such option, Tenant shall, on or before the earlier of (A)
the date occurring nine (9)months prior to the expiration of the initial Lease
Term or initial Option Term, as applicable, and (B) the date occurring thirty
(30) days after Tenant's receipt of the Option Rent Notice, exercise the option
by delivering written notice thereof to Landlord.
ARTICLE 3
BASE RENT
Tenant shall pay, without prior notice or demand, to Landlord or
Landlord's agent at the management office of the Project, or, at Landlord's
option, at such other place as Landlord may from time to time designate in
writing, by a check for currency which, at the time of payment, is legal tender
for private or public debts in the United States of America, base rent ("BASE
RENT") as set forth in Section 4 of the Summary, payable in equal monthly
installments as set forth in Section 4 of the Summary in advance on or before
the first day of each and every calendar month during the Lease Term, without
any setoff or deduction whatsoever, except as otherwise provided in this Lease.
The Base Rent for the first full month of the Lease Term shall be paid at the
time of Tenant's execution of this Lease. If any Rent payment date (including
the Lease Commencement Date) falls on a day of the month other than the first
day of such month or if any payment of Rent is for a period which is shorter
than one month, the Rent for any fractional month shall accrue on a daily basis
for the period from the date such payment is due to the end of such calendar
month or to the end of the Lease Term at a rate per day which is equal to 1/365
of the applicable annual Rent. All other payments or adjustments required to be
made under the terms of this Lease that require proration on a time basis shall
be prorated on the same basis.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Building Share" of the
annual "Building Direct Expenses," and "Tenant's Project Share" of the annual
"Project Direct Expenses" as those terms are defined in Section 4.2, below. Such
payments by Tenant, together with any and all other amounts payable by Tenant to
Landlord pursuant to the terms of this Lease, are hereinafter collectively
referred to as the "ADDITIONAL RENT", and the Base Rent and the Additional Rent
are herein collectively referred to as "RENT." All amounts due under this
Article 4 as Additional Rent shall be payable
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for the same periods and in the same manner as the Base Rent. Without limitation
on other obligations of Tenant which survive the expiration of the Lease Term,
the obligations of Tenant to pay the Additional Rent provided for in this
Article 4, which accrues during Lease Term, shall survive the expiration of the
Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:
4.2.1 "PROJECT DIRECT EXPENSES" shall mean the portion of "Direct
Expenses," as that term is defined in Section 4.2.5 below, which is not
attributable to any particular Building in the Project, but which instead
relates to the Project as a whole.
4.2.2 "BUILDING DIRECT EXPENSES" shall mean "Building Operating
Expenses" and "Building Tax Expenses", as those terms are defined in Sections
4.2.3 and 4.2.4, below, respectively.
4.2.3 "BUILDING OPERATING EXPENSES" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.7 below, allocated
to the tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.4 "BUILDING TAX EXPENSES" shall mean that portion of "Tax
Expenses", as that term is defined in Section 4.2.8 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.5 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.6 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires, provided that Landlord, upon notice to Tenant, may
change the Expense Year from time to time to any other twelve (12) consecutive
month period, and, in the event of any such change, Tenant's Share of Building
Direct Expenses shall be equitably adjusted for any Expense Year involved in any
such change.
4.2.7 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts of every kind and nature which Landlord pays or accrues during any
Expense Year because of or in connection with the ownership, management,
maintenance, security, repair, replacement, restoration or operation of the
Project, or any portion thereof. Without limiting the generality of the
foregoing, Operating Expenses shall specifically include any and all of the
following: (i) the cost of supplying all utilities, the cost of operating,
repairing, maintaining, and renovating the utility, telephone, mechanical,
sanitary, storm drainage, and elevator systems, and the cost of maintenance and
service contracts in connection therewith; (ii) the cost of licenses,
certificates, permits and inspections and the cost of contesting any
governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with a transportation system management program or
similar program; (iii) the cost of all insurance carried by Landlord in
connection with the Project (excluding earthquake insurance) as reasonably
determined by Landlord; (iv) the cost of landscaping, relamping, and all
supplies, tools, equipment and materials
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used in the operation, repair and maintenance of the Project, or any portion
thereof; (v) the cost of parking area repair, restoration, and maintenance ;
(vi) fees and other costs, including management fees, consulting fees, legal
fees and accounting fees, of all contractors and consultants in connection with
the management, operation, maintenance and repair of the Project; (vii) payments
under any equipment rental agreements and the fair rental value of any
management office space; (viii) wages, salaries and other compensation and
benefits, including taxes levied thereon, of all persons engaged in the
operation, maintenance and security of the Project; (ix) costs under any
instrument pertaining to the sharing of costs by the Project; (x) operation,
repair, maintenance and replacement of all systems and equipment and components
thereof of the Building; (xi) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and fixtures in
common areas, maintenance and replacement of curbs and walkways, repair to roofs
and re-roofing; (xii) amortization (including interest on the unamortized cost)
of the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof; (xiii)
the cost of capital improvements or other costs incurred in connection with the
Project (A) which are intended to effect economies in the operation or
maintenance of the Project, or any portion thereof, to the extent of cost
savings reasonably anticipated by Landlord at the time of such expenditure to be
incurred in connection therewith, (B) that are required to comply with present
or anticipated conservation programs, (C) which are replacements or
modifications of nonstructural items located in the Common Areas required to
keep the Common Areas in good order or condition, (D) that are required under
any governmental law or regulation or (E) which are reasonably determined by
Landlord to be in the best interests of the Building and/or the Project;
provided, however, that any capital expenditure shall be amortized over its
useful life as Landlord shall reasonably determine, and the unamortized cost of
the same shall bear interest at the rate of ten percent (10%) per annum or such
higher rate as was paid by Landlord on funds borrowed for the purpose of
purchasing, installing, and constructing such capital improvements; and (xiv)
costs, fees, charges or assessments imposed by, or resulting from any mandate
imposed on Landlord by, any federal, state or local government for fire and
police protection, trash removal, community services, or other services which do
not constitute "Tax Expenses" as that term is defined in Section 4.2.8, below,
unless such cost, fee, charge or assessment is imposed as a result of Landlord's
violation of such mandate. Notwithstanding the foregoing, Operating Expenses
shall not include:
(a) 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 tenants in the Project (other than Tenant)
or incurred in renovating or otherwise improving, decorating, painting
or redecorating any portion of the Project for tenants or other
occupants of the Project (excluding, however, such costs relating to any
common areas of the Project or parking facilities which benefit all
Project tenants);
(b) except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other
debt costs, if any, penalties and
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interest, costs of capital repairs and alterations, and costs of capital
improvements and equipment;
(c) 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;
(d) any bad debt loss, rent loss, or reserves for bad debts or
rent loss;
(e) 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;
(f) 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 or
Project engineer;
(g) amount paid as ground rental for the Project by the Landlord;
(h) except for a Project management fee to the extent allowed
pursuant to item (m), 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;
(i) any compensation paid to clerks, attendants or other persons
in commercial concessions operated by the Landlord, provided that any
compensation paid to any concierge at the Project shall be includable as
an Operating Expense;
(j) 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
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this exclusion such equipment rented or leased to remedy or ameliorate
an emergency condition in the Project ;
(k) 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;
(l) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings, fountains or other objects of art;
(m) fees payable by Landlord for management of the Project in
excess of five percent (5%) (the "Management Fee Cap") of gross
receipts;
(n) any costs expressly excluded from Operating Expenses
elsewhere in this Lease;
(o) rent for any office space occupied by Project 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 the Comparable Buildings in the vicinity of the
Building, with adjustment where appropriate for the size of the
applicable project;
(p) costs arising from the negligence or wilful misconduct of
Landlord or its agents, employees, vendors, contractors, or providers of
materials or services;
(q) costs incurred to comply with laws relating to the removal of
hazardous material (as defined under applicable law) and asbestos
containing material (collectively, "Hazardous Material") 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;
(r) costs arising from Landlord's charitable or political
contributions;
(s) any gifts provided to any entity whatsoever, including, but
not limited to, Tenant, other tenants, employees, vendors, contractors,
prospective tenants and agents;
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(t) the cost of any magazine, newspaper, trade or other
subscriptions;
(u) 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);
(v) marketing costs, including, but not limited to, leasing
commissions, attorneys' fees and court costs in connection with the
negotiation and preparation of letters, deal memos, letters of intent,
leases, subleases and/or assignments, space planning costs, and other
costs and expenses incurred in connection with lease, sublease and/or
assignment negotiations and transactions with present or prospective
tenants or other occupants of the Building, including attorneys' fees
and other costs and expenditures incurred in connection with disputes
with present or prospective tenants or other occupants of the Building:
(w) advertising and promotional expenditures, and costs of signs
in or on the Building identifying the owner of the Building or other
tenants' signs;
(x) bad debt expenses and interest, principal, points and fees on
debts (except in connection with the financing of items which may be
included in Operating Expenses) or amortization on any mortgage or
mortgages or any other debt instrument encumbering the Building or the
Project (including the land on which the Building is situated);
(y) tax penalties incurred as a result of Landlord's negligence,
inability or unwillingness to make payments or file returns when due;
(z) costs of correcting defects in the initial construction of
the Building or any portion thereof, or repair and/or replacement of any
of the original materials or equipment required as a result of such
defects;
(aa) costs incurred due to a violation by Landlord or any tenant
or occupant (other than Tenant) of any term or condition of any lease or
rental arrangement covering space in the Project;
(bb) any interest or penalties incurred as a result of
Landlord's failure to pay any bill when due; and
(cc) reserves for anticipated future expenses to the extent not
budgeted to be incurred within the year in which they are collected or
the immediately following year.
4.2.8 TAXES.
4.2.8.1 "Tax Expenses" shall mean all federal, state,
county, or local governmental or municipal taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate
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taxes, general and special assessments, transit taxes, leasehold taxes or taxes
based upon the receipt of rent, including gross receipts or sales taxes
applicable to the receipt of rent, unless required to be paid by Tenant,
personal property taxes imposed upon the fixtures, machinery, equipment,
apparatus, systems and equipment, appurtenances, furniture and other personal
property used exclusively in connection with the Project, or any portion
thereof), which shall be paid or accrued during any Expense Year (without regard
to any different fiscal year used by such governmental or municipal authority)
because of or in connection with the ownership, leasing and operation of the
Project, or any portion thereof.
4.2.8.2 Tax Expenses shall include, without limitation:
(i) Any tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof; (ii) Any assessment, tax, fee, levy or charge in addition to,
or in substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("PROPOSITION 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project's contribution towards a
governmental or private cost-sharing agreement for the purpose of augmenting or
improving the quality of services and amenities normally provided by
governmental agencies; (iii) Any assessment, tax, fee, levy, or charge allocable
to or measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any business or gross income tax or excise tax
with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises, or any portion thereof; and (iv) Any
assessment, tax, fee, levy or charge, upon this transaction or any document to
which Tenant is a party, creating or transferring an interest or an estate in
the Premises.
4.2.8.3 Any costs and expenses (including, without
limitation, reasonable attorneys' fees) reasonably incurred in attempting to
protest, reduce or minimize Tax Expenses shall be included in Tax Expenses in
the Expense Year such expenses are paid. Tax refunds shall be credited against
Tax Expenses and refunded to Tenant regardless of when received, based on the
Expense Year to which the refund is applicable, provided that in no event shall
the amount to be refunded to Tenant for any such Expense Year exceed the total
amount paid by Tenant as Additional Rent under this Article 4 for such Expense
Year. If Tax Expenses for any period during the Lease Term or any extension
thereof are increased after payment thereof for any reason, including, without
limitation, error or reassessment by applicable governmental or municipal
authorities, Tenant shall pay Landlord upon demand Tenant's Share of any such
increased Tax Expenses included by Landlord as Building Tax Expenses pursuant to
the terms of this Lease. Notwithstanding anything to the contrary contained in
this Section 4.2.8 (except as set forth in Section 4.2.8.1, above), there shall
be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes,
gift taxes, capital stock taxes, inheritance and succession taxes,
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estate taxes, federal, state and local income taxes, and other taxes to the
extent applicable to Landlord's general or net income (as opposed to rents,
receipts or income attributable to operations at the Project), (ii) any items
included as Operating Expenses, and (iii) any items paid by Tenant under Section
4.5 of this Lease.
4.2.9 "TENANT'S BUILDING SHARE" shall mean the percentage set
forth in Section 6.1 of the Summary.
4.2.10 "TENANT'S PROJECT SHARE" "Tenant's Project Share" shall
mean the percentage set forth in Section 6.2 of the Summary.
4.3 ALLOCATION OF DIRECT EXPENSES.
4.3.1 METHOD OF ALLOCATION. The parties acknowledge that the
Building is a part of a multi-building project and that the Project Direct
Expenses should be shared between the tenants of the Building and the tenants of
the other buildings in the Project. Accordingly, as set forth in Section 4.2
above, Direct Expenses (which consists of Operating Expenses and Tax Expenses)
are determined annually for the Project as a whole, and a portion of the Direct
Expenses, which portion shall be determined by Landlord on an equitable basis,
shall be allocated to the tenants of the Building (as opposed to the tenants of
any other buildings in the Project) and such portion shall be the Building
Direct Expenses for purposes of this Lease. Such portion of Direct Expenses
allocated to the tenants of the Building shall include all Direct Expenses
attributable solely to the Building.
4.3.2 COST POOLS. Landlord shall have the right, from time to
time, to equitably allocate some or all of the Project Direct Expenses among
different portions or occupants of the Project (the "COST POOLS"), in Landlord's
discretion. Such Cost Pools may include, but shall not be limited to, the office
space tenants of a building of the Project or of the Project, and the retail
space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner. The Direct Expenses within
any such Cost Pool shall be allocated and charged to the tenants within such
Cost Pool in an equitable manner, as reasonably determined by Landlord in
accordance with sound real estate management principles, provided Landlord shall
not apply such principles in a manner which discriminates against Tenant's
particular use of the Premises.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. For each Expense Year
ending or commencing within the Lease Term, Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the sum of (i) Tenant's Share of Building Direct Expenses for such
Expense Year and (ii) Tenant's Project Share of Project Direct Expenses for such
Expense Year (collectively, the "EXPENSE PAYMENT").
4.4.1 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY TENANT.
Landlord shall endeavor to give to Tenant within one hundred eighty (180) days
following the end of each Expense Year, a statement (the "STATEMENT") which
shall state the Building Direct Expenses and Project Direct Expenses incurred or
accrued for such preceding Expense Year, and which shall indicate the amount of
the Expense Payment. The failure of Landlord to furnish the
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Statement for any Expense Year within the time provided above, however, shall
not prejudice Landlord or Tenant from enforcing its rights under this Article 4.
Upon receipt of the Statement for each Expense Year commencing or ending during
the Lease Term, Tenant shall pay, with its next installment of Base Rent due,
the full amount of the Expense Payment for such Expense Year, less the amounts,
if any, paid during such Expense Year as an "Estimated Payment," as that term is
defined in Section 4.4.2, below. In the event the amount of the Expense Payment
for any Expense Year is less than the Estimated Payment paid by Tenant for such
Expense Year, Tenant shall receive a credit in the amount of Tenant's
overpayment against Rents next due under this Lease. Even though the Lease Term
has expired and Tenant has vacated the Premises, when the final determination is
made of Tenant's Building Share of Building Direct Expenses and Tenant's Project
Share of Project Direct Expenses for the Expense Year in which this Lease
terminates, Tenant shall immediately pay to Landlord such amount within ten (10)
business days of receipt of the applicable Statement, and if Tenant paid more as
an Estimated Payment than the amount set forth in the applicable Statement,
Landlord shall, within ten (10) business days after delivery of the applicable
Statement, deliver a check payable to Tenant in the amount of the overpayment.
The provisions of this Section 4.4.1 shall survive the expiration or earlier
termination of the Lease Term.
4.4.2 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition,
Landlord shall endeavor to give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Building Direct Expenses and Project
Direct Expenses for the then-current Expense Year shall be and the estimated
payment (the "ESTIMATED PAYMENT") which shall be based upon the Estimate. The
failure of Landlord to timely furnish the Estimate Statement for any Expense
Year shall not preclude Landlord from enforcing its rights to collect any
Estimated Payment under this Article 4, nor shall Landlord be prohibited from
revising any Estimate Statement or Estimated Payment theretofore delivered to
the extent necessary. Thereafter, Tenant shall pay, with its next installment of
Base Rent due, a fraction of the Estimated Payment for the then-current Expense
Year (reduced by any amounts paid pursuant to the next to last sentence of this
Section 4.4.2). Such fraction shall have as its numerator the number of months
which have elapsed in such current Expense Year, including the month of such
payment, and twelve (12) as its denominator. Until a new Estimate Statement is
furnished (which Landlord shall have the right to deliver to Tenant at any
time), Tenant shall pay monthly, with the monthly Base Rent installments, an
amount equal to one-twelfth (1/12) of the total Estimated Payment set forth in
the previous Estimate Statement delivered by Landlord to Tenant. Landlord shall
maintain books and records with respect to Building Direct Expenses and Project
Direct Expenses in accordance with generally accepted accounting and management
practices, consistently applied.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 PERSONAL PROPERTY TAXES. Tenant shall be liable for and
shall pay prior to delinquency, taxes levied against Tenant's equipment,
furniture, fixtures and any other personal property located in or about the
Premises. If any such taxes on Tenant's equipment, furniture, fixtures and any
other personal property are levied against Landlord or Landlord's property or if
the assessed value of Landlord's property is increased by the inclusion therein
of a value placed
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upon such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 "ABOVE-STANDARD" IMPROVEMENTS. If the tenant improvements
in the Premises, whether installed and/or paid for by Landlord or Tenant and
whether or not affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation in excess of the highest
per square foot value of improvements in the Building for which Landlord passes
through Tax Expenses without direct charge, then the Tax Expenses levied against
Landlord or the property by reason of such excess assessed valuation shall be
deemed to be taxes levied against personal property of Tenant and shall be
governed by the provisions of Section 4.5.1, above.
4.5.3 OTHER TAXES. Notwithstanding any contrary provision herein,
Tenant shall pay prior to delinquency any (i) rent tax or sales tax, service
tax, transfer tax or value added tax, or any other applicable tax on the rent or
services herein or otherwise respecting this Lease, (ii) taxes assessed upon or
with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion of
the Project, including the Project parking facility; or (iii) taxes assessed
upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.
4.5.4 SERVICE CHARGES. To the extent that Landlord provides any
services directly to Tenant, which are not otherwise included in Direct
Expenses, including, without limitation, janitorial, locksmithing, lamp
replacement, or repair and maintenance services, Tenant shall pay to Landlord,
as Additional Rent and concurrently with Tenant's payment of Base Rent to
Landlord, the sum of all costs of Landlord of such services, plus an
administration fee.
4.6 LANDLORD'S BOOKS AND RECORDS. Within one (1) year after receipt of a
Statement by Tenant, if Tenant disputes the amount of Additional Rent set forth
in the Statement, an independent certified public accountant (which accountant
must be qualified and experienced in reviewing financial operating records of
landlords of office buildings and employed by a firm which derives its primary
revenues from its accounting practice and must not be paid on a contingency fee
basis), designated and paid for by Tenant, may, after reasonable notice to
Landlord and at reasonable times, inspect Landlord's records with respect to the
Statement at Landlord's offices, provided that Tenant is not then in default
under this Lease beyond the applicable cure period provided in this Lease, and
Tenant has paid all amounts required to be paid under the applicable Estimate
Statement and Statement, as the case may be. In connection with such inspection,
Tenant and Tenant's agents must agree in advance to follow Landlord's reasonable
rules and procedures regarding inspections of Landlord's records, and shall
execute a commercially reasonable confidentiality agreement regarding such
inspection. Tenant's failure to dispute the amount of Additional Rent set forth
in any Statement within one (1) year of Tenant's receipt of such Statement shall
be deemed to be Tenant's approval of such Statement and Tenant,
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thereafter, waives the right or ability to dispute the amounts set forth in such
Statement. If after such inspection, Tenant still disputes such Additional Rent,
a determination as to the proper amount shall be made by an independent
certified public accountant (the "ACCOUNTANT") selected by Landlord and subject
to Tenant's reasonable approval. If the Accountant's decision reveals an error
in the calculation of Tenant's Share of Direct Expenses to be paid for such
Expense Year, the parties' sole remedy shall be for the parties to make
appropriate payments or reimbursements, as the case may be, to each other as are
determined to be owing. Any such payments shall be made within thirty (30) days
following the resolution of such dispute, along with interest at the interest
rate set forth in Section 25, below from the date such amounts were originally
due, until the date of such payment. At Tenant's election, the parties shall
treat any overpayments (plus the interest described above) resulting from the
foregoing resolution of such parties' dispute as a credit against Rent next due
and owing. Tenant shall be responsible for all costs and expenses associated
with any audit, provided that if the final resolution of the dispute establishes
an overstatement by Landlord of Direct Expenses for such Expense Year in excess
of five percent (5%) or more, then Landlord shall be responsible for all
reasonable costs and expenses associated with Tenant's audit.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises solely for the
Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or
permit the Premises or the Project to be used for any other purpose or purposes
whatsoever without the prior written consent of Landlord, which may be withheld
in Landlord's sole discretion.
5.2 PROHIBITED USES. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the Premises or
any part thereof for any use or purpose contrary to the provisions of the Rules
and Regulations set forth in EXHIBIT D, attached hereto, or in violation of the
laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project)
including, without limitation, any such laws, ordinances, regulations or
requirements relating to hazardous materials or substances, as those terms are
defined by applicable laws now or hereafter in effect. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way damage
the reputation of the Project or obstruct or interfere with the rights of other
tenants or occupants of the Building, or injure or annoy them or use or allow
the Premises to be used for any improper, unlawful or objectionable purpose, nor
shall Tenant cause, maintain or permit any nuisance in, on or about the
Premises. Tenant shall comply with all recorded covenants, conditions, and
restrictions now or hereafter affecting the Project.
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ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Landlord shall provide adequate electrical wiring and
facilities for connection to Tenant's lighting fixtures and incidental use
equipment, which electrical usage shall be subject to applicable laws and
regulations, including Title 24, and provided further that Tenant's use of
electricity shall never exceed the capacity of the feeders to the Project or
Building or the risers or wiring installation related thereto. Tenant shall bear
the cost of replacement of lamps, starters and ballasts for lighting fixtures
within the Premises.
6.1.2 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes in the Building Common Areas.
6.1.3 Landlord shall provide exterior window washing services in
a manner consistent with other comparable buildings in the vicinity of the
Building.
6.1.4 Landlord shall not provide janitorial services for the
Premises. Tenant shall be solely responsible maintaining the Premises in a
manner consistent with a first-class office building, including, without
limitation, the following.
6.1.4.1 Tenant shall cause the carpets or other floor
coverings in the Premises to be professionally cleaned at least once every year
during the Lease Term.
6.1.4.2 Tenant shall cause to be provided interior window
washing in the Premises at least once every year, and (ii) sweeping and cleaning
of the Premises, as needed.
6.1.4.3 In the event Tenant fails to maintain the Premises
as provide herein, Landlord shall have the option to cause such janitorial
services to be provided by a service company designated by Landlord, in which
case Tenant shall pay the cost of such services directly to Landlord. Any other
janitorial service provider shall be approved in advance by Landlord in
Landlord's sole discretion.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.
6.2 INTERRUPTION OF USE. Except as provided in Section 19.5 below,
Tenant agrees that Landlord shall not be liable for damages, by abatement of
Rent or otherwise, for failure to furnish or delay in furnishing any service
(including telephone and telecommunication services), or for any diminution in
the quality or quantity thereof, when such failure or delay or diminution is
occasioned, in whole or in part, by breakage, repairs, replacements, or
improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, or other fuel at
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the Building or Project after reasonable effort to do so, by any riot or other
dangerous condition, emergency, accident or casualty whatsoever, by act or
default of Tenant or other parties, or by any other cause beyond Landlord's
reasonable control; and such failures or delays or diminution shall never be
deemed to constitute an eviction or disturbance of Tenant's use and possession
of the Premises or relieve Tenant from paying Rent or performing any of its
obligations under this Lease. Furthermore, Landlord shall not be liable under
any circumstances for a loss of, or injury to, property or for injury to, or
interference with, Tenant's business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the services or utilities as set forth in this Article
6.
6.3 SUBMETERING UTILITIES. The Premises shall be separately metered for
electricity, water, or any other utility service provided, however, Landlord
shall have the right (i) to bill Tenant directly the cost of such utility, and
Tenant shall pay such costs directly to Landlord at the rates charged by the
public utility company furnishing the same, or (ii) to require Tenant to
contract directly with the applicable public utility for such service. Any such
costs paid by Tenant shall not be included in Operating Expenses.
ARTICLE 7
REPAIRS
7.1 DUTIES TO REPAIR. Landlord shall maintain and repair the "BASE
BUILDING," as that term is defined in Section 8.4 below, except to the extent
that such repairs are required due to the negligence or willful misconduct of
Tenant, and provided that if such repairs are due to the negligence or willful
misconduct of Tenant, Landlord shall nevertheless make such repairs at Tenant's
sole cost and expense, except that, if covered by Landlord's insurance, Tenant
shall only be obligated to pay any deductible in connection therewith. Tenant
shall, at Tenant's own expense, keep the Premises, including all improvements,
fixtures and furnishings therein, and the floor or floors of the Building on
which the Premises are located, in good order, repair and condition at all times
during the Lease Term. In addition, Tenant shall, at Tenant's own expense, but
under the supervision and subject to the prior approval of Landlord, and within
any reasonable period of time specified by Landlord, promptly and adequately
repair all damage to the Premises and replace or repair all damaged, broken, or
worn fixtures and appurtenances, except for damage caused by ordinary wear and
tear or beyond the reasonable control of Tenant; provided however, that, at
Landlord's option, or if Tenant fails to make such repairs, Landlord may, but
need not, make such repairs and replacements, and Tenant shall pay Landlord the
cost thereof, including a percentage of the cost thereof (to be uniformly
established for the Building and/or the Project) sufficient to reimburse
Landlord for all overhead, general conditions, fees and other costs or expenses
arising from Landlord's involvement with such repairs and replacements forthwith
upon being billed for same. Landlord may, but shall not be required to, enter
the Premises at all reasonable times to make such repairs, alterations,
improvements or additions to the Premises or to the Project or to any equipment
located in the Project as Landlord shall desire or deem necessary or as Landlord
may be required to do by governmental or quasi-governmental authority or court
order or decree. Tenant hereby waives any and all rights under and benefits of
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subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil
Code or under any similar law, statute, or ordinance now or hereafter in effect.
7.2 TENANT'S RIGHT TO MAKE REPAIRS. Notwithstanding the provisions of
Section 7.1, above, if Tenant provides notice to Landlord of an event or
circumstance which requires the action of Landlord with respect to repair and/or
maintenance as set forth in Section 7.1, above, and such repair and/or
maintenance relates solely to the Building (specifically excluding any right of
Tenant to repair any Building core systems and equipment, including the Building
elevators or any other portions of the Project), and Landlord fails to provide
such action within a reasonable period of time, given the circumstances, after
the giving of such notice, but in any event not later than thirty (30) days
after giving of such notice, then Tenant may proceed to take the required action
upon delivery of an additional ten (10) business days notice to Landlord
specifying that Tenant is taking such required action. In the event Tenant takes
such action, Tenant shall use only those contractors used by Landlord in the
Building for similar work unless such contractors are unwilling or unable to
perform such work, in which event Tenant may utilize the services of any other
qualified contractor which normally and regularly performs similar work in
Comparable Buildings. Further, if Landlord does not deliver a detailed written
objection to Tenant within thirty (30) days after receipt of an invoice from
Tenant of its costs of taking action which Tenant claims should have been taken
by Landlord, and if such invoice from Tenant sets forth a reasonably
particularized breakdown of its costs and expenses in connection with taking
such action on behalf of Landlord, and such action was required under the terms
of this Lease to be taken by Landlord, then Tenant shall be entitled to deduct
the amount set forth in such invoice from Rent payable by Tenant under this
Lease. If, however, Landlord delivers to Tenant within thirty (30) days after
receipt of Tenant's invoice, a written objection to the payment of such invoice,
setting forth with reasonable particularity Landlord's reasons for its claim
that such action did not have to be taken by Landlord pursuant to the terms of
this Lease or that the charges are excessive (in which case Landlord shall pay
the amount it contends would not have been excessive), then Tenant shall not be
entitled to such deduction from Rent. If Tenant receives a final, non-appealable
judgment from a court of competent jurisdiction that the costs set forth in the
invoice are due and payable, Tenant shall either (i) immediately have the right
to deduct such costs from Rent next due under this Lease or (ii) if the Lease
Expiration Date has occurred, be entitled to immediate cash reimbursement from
Landlord, in either event such amount shall include interest on such costs from
the date such costs should have been paid by Landlord.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant shall have the right,
without Landlord's consent, but upon five (5) business days prior notice to
Landlord, to make strictly cosmetic, non-structural additions and alterations
("COSMETIC ALTERATIONS") to the Premises that do not (i) involve the expenditure
of more than Twenty-Five Thousand and No/100 Dollars ($25,000.00) in the
aggregate, (ii) affect the exterior appearance of the Building, (iii) affect the
Building Systems or the Building Structure, or (iv) violate law. Except in
connection with Cosmetic Alterations, Tenant may make improvements, alterations,
additions or changes to the
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Premises or the Base Building (collectively, the "ALTERATIONS") only upon first
procuring the prior written consent of Landlord to such Alterations, which
consent shall be requested by Tenant not less than thirty (30) days prior to the
commencement thereof, and which consent shall not be unreasonably withheld by
Landlord, provided it shall be deemed reasonable for Landlord to withhold its
consent to any Alteration which adversely affects the structural portions or the
systems or equipment of the Building or is visible from the exterior of the
Building. The construction of the initial improvements to the Premises shall be
governed by the terms of the Tenant Work Letter and not the terms of this
Article 8.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such reasonable requirements as Landlord in its reasonable discretion
may deem desirable (except in the event such Alterations or Repairs will affect
the exterior appearance of the Building, the Systems of the Building or the
structure of the Building, in which event any requirement shall be at Landlord's
sole discretion). Such requirements may include, but are not limited to, the
requirement that Tenant utilize for such purposes only contractors,
subcontractors, materials, mechanics and materialmen selected by Tenant from a
list provided and approved by Landlord, in Landlord's reasonable discretion,
provided that in the event that such Alterations or Repairs will affect the
exterior appearance of the Building, the systems of the Building or the
structure of the Building, such contractors and subcontractors shall be selected
from a list provided and approved by Landlord in its sole discretion. Upon
Landlord's request, which request must be made at the time Landlord grants its
consent, if at all, to any proposed Alterations or Repairs, Tenant shall, at
Tenant's expense, remove such Alterations upon the expiration or any early
termination of the Lease Term. Tenant shall construct such Alterations and
perform such repairs in a good and workmanlike manner, in conformance with any
and all applicable federal, state, county or municipal laws, rules and
regulations and pursuant to a valid building permit, issued by the City of
Irvine, all in conformance with Landlord's construction rules and regulations.
In the event Tenant performs any Alterations in the Premises which require or
give rise to governmentally required changes to the "Base Building," as that
term is defined below, then Landlord shall, at Tenant's expense, make such
changes to the Base Building. The "BASE BUILDING" shall include the structural
portions of the Building, and the public restrooms and the systems and equipment
located in the internal core of the Building on the floor or floors on which the
Premises are located. In performing the work of any such Alterations, Tenant
shall have the work performed in such manner so as not to obstruct access to the
Project or any portion thereof, by any other tenant of the Project, and so as
not to obstruct the business of Landlord or other tenants in the Project. Tenant
shall not use (and upon notice from Landlord shall cease using) contractors,
services, workmen, labor, materials or equipment that, in Landlord's reasonable
judgment, would disturb labor harmony with the workforce or trades engaged in
performing other work, labor or services in or about the Building or the Common
Areas. In addition to Tenant's obligations under Article 9 of this Lease, upon
completion of any Alterations, Tenant agrees to cause a Notice of Completion to
be recorded in the office of the Recorder of the County of Orange in accordance
with Section 3093 of the Civil Code of the State of California or any successor
statute, and Tenant shall deliver to the Project management office a
reproducible copy of the "as built" drawings of the Alterations as well as all
permits, approvals and other documents issued by any governmental agency in
connection with the Alterations.
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8.3 PAYMENT FOR IMPROVEMENTS. If payment is made directly to
contractors, Tenant shall comply with Landlord's requirements for final lien
releases and waivers in connection with Tenant's payment for work to
contractors. Whether or not Tenant orders any work directly from Landlord,
Tenant shall pay to Landlord a percentage of the cost of such work sufficient to
compensate Landlord for all overhead, general conditions, fees and other costs
and expenses arising from Landlord's involvement with such work.
8.4 CONSTRUCTION INSURANCE. In connection with the construction of any
Alterations, Tenant shall comply with the terms of Section 10.3.4 regarding
Tenant's and its agents' insurance obligations.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures,
equipment and/or appurtenances which may be installed or placed in or about the
Premises, from time to time, shall be at the sole cost of Tenant and shall be
and become the property of Landlord, except that Tenant may remove any
Alterations, improvements, fixtures and/or equipment which Tenant can
substantiate to Landlord have not been paid for with any Tenant improvement
allowance funds provided to Tenant by Landlord, provided Tenant repairs any
damage to the Premises and Building caused by such removal and returns the
affected portion of the Premises to a building standard tenant improved
condition as reasonably determined by Landlord. Tenant shall not be required to
remove the initial Tenant Improvements installed pursuant to the Tenant Work
Letter. Furthermore, if Landlord, as a condition to Landlord's consent to any
Alteration, requires that Tenant remove any Alteration upon the expiration or
early termination of the Lease Term, Landlord may, by written notice to Tenant
prior to the end of the Lease Term, or given following any earlier termination
of this Lease, require Tenant, at Tenant's expense, to remove such Alterations
and to repair any damage to the Premises and Building caused by such removal and
returns the affected portion of the Premises to a building standard tenant
improved condition as reasonably determined by Landlord. If Tenant fails to
complete such removal and/or to repair any damage caused by the removal of any
Alterations and returns the affected portion of the Premises to a building
standard tenant improved condition as reasonably determined by Landlord,
Landlord may do so and may charge the cost thereof to Tenant. Tenant hereby
protects, defends, indemnifies and holds Landlord harmless from any liability,
cost, obligation, expense or claim of lien in any manner relating to the
installation, placement, removal or financing of any such Alterations,
improvements, fixtures and/or equipment in, on or about the Premises, which
obligations of Tenant shall survive the expiration or earlier termination of
this Lease.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least twenty (20) days prior to the commencement of any such
work on the Premises (or such additional time
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as may be necessary under applicable laws) to afford Landlord the opportunity of
posting and recording appropriate notices of non-responsibility. Tenant shall
remove any such lien or encumbrance by bond or otherwise within five (5) days
after notice by Landlord, and if Tenant shall fail to do so, Landlord may pay
the amount necessary to remove such lien or encumbrance, without being
responsible for investigating the validity thereof. The amount so paid shall be
deemed Additional Rent under this Lease payable upon demand, without limitation
as to other remedies available to Landlord under this Lease. Nothing contained
in this Lease shall authorize Tenant to do any act which shall subject
Landlord's title to the Building or Premises to any liens or encumbrances
whether claimed by operation of law or express or implied contract. Any claim to
a lien or encumbrance upon the Building or Premises arising in connection with
any such work or respecting the Premises not performed by or at the request of
Landlord shall be null and void, or at Landlord's option shall attach only
against Tenant's interest in the Premises and shall in all respects be
subordinate to Landlord's title to the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever and agrees that Landlord, its partners, subpartners and their
respective officers, agents, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, and are hereby
released from any responsibility for, any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant or
by other persons claiming through Tenant. Tenant shall indemnify, defend,
protect, and hold harmless the Landlord Parties from any and all loss, cost,
damage, expense and liability (including without limitation court costs and
reasonable attorneys' fees) incurred in connection with or arising from any
cause in, on or about the Premises, any intentional acts, or omissions or
negligence of Tenant or Tenant's contractors, agents, employees or licensees or
any such person (collectively, "TENANT PARTIES"), in, on or about the Project,
or any breach of the terms of this Lease, during Tenant's occupancy of the
Premises, provided that the terms of the foregoing indemnity shall not apply to
the intentional acts, or omissions or negligence of Landlord or Landlord
Parties. Landlord shall indemnify, defend, protect, and hold harmless Tenant and
the Tenant Parties from any and all loss, cost, damage, expense and liability
(including without limitation reasonable attorneys' fees) arising from the
intentional acts, or omissions or negligence of the Landlord or Landlord Parties
in, on or about the Project, except to the extent caused by the intentional
acts, omissions or negligence of the Tenant Parties. Notwithstanding anything to
the contrary set forth in this Lease, either party's agreement to indemnify the
other party as set forth in this Article 10, above, shall be ineffective to the
extent the matters for which such party agreed to indemnify the other party are
covered by insurance. Further, Tenant's agreement to indemnify Landlord and
Landlord's agreement to indemnify Tenant pursuant to this Article 10 are not
intended and shall not relieve any insurance carrier of its obligations under
policies required to be carried pursuant to the provision of this Lease, to the
extent such policies cover subject to the parties' respective indemnification
obligations; nor shall they supersede any inconsistent agreement of the parties
set forth in any other provision of this Lease. Should Landlord be named as a
defendant in any suit brought
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against Tenant in connection with or arising out of Tenant's occupancy of the
Premises, to the extent Landlord is not found liable, Tenant shall pay to
Landlord its costs and expenses incurred in such suit, including without
limitation, its actual professional fees such as appraisers', accountants' and
attorneys' fees. In addition, Tenant shall pay to Landlord any costs and
expenses, including without limitation, its actual attorney's fees, incurred by
Landlord in successfully enforcing Tenant's indemnity obligations set forth in
this Section 10.1. Should Tenant be named as a defendant in any suit brought
against Landlord in connection with or arising out of Landlord's operation of
the Project, to the extent Tenant is not found liable, Landlord shall pay to
Tenant its costs and expenses incurred in such suit, including without
limitation, its actual professional fees such as appraisers', accountants' and
attorneys' fees. In addition, Landlord shall pay to Tenant any costs and
expenses, including without limitation, its actual attorney's fees, incurred by
Tenant in successfully enforcing Landlord's indemnity obligations set forth in
this Section 10.1. The provisions of this Section 10.1 shall survive the
expiration or sooner termination of this Lease with respect to any claims or
liability arising in connection with any event occurring prior to such
expiration or termination.
10.2 LANDLORD'S FIRE AND CASUALTY INSURANCE. Landlord shall insure the
Project during the Lease Term against loss or damage due to fire and other
casualties covered within the classification of fire and extended coverage,
vandalism coverage and malicious mischief, sprinkler leakage, water damage and
special extended coverage on the Project. Such coverage shall be in such
amounts, from such companies, and on such terms and conditions, as Landlord may
from time to time determine. Additionally, at the option of Landlord, such
insurance coverage may include the risks of earthquakes and/or flood damage and
additional hazards, a rental loss endorsement and one or more loss payee
endorsements in favor of the holders of any mortgages or deeds of trust
encumbering the interest of Landlord in the Project or the ground or underlying
lessors of the Project, or any portion thereof. Notwithstanding the foregoing
provisions of this Section 10.2, the coverage and amounts of insurance carried
by Landlord in connection with the Project shall at a minimum be comparable to
the coverage and amounts of insurance which are carried by reasonably prudent
landlords of Comparable Buildings. Tenant shall, at Tenant's expense, comply
with all insurance company requirements pertaining to the use of the Premises.
If Tenant's conduct or use of the Premises causes any increase in the premium
for such insurance policies then Tenant shall reimburse Landlord for any such
increase.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages
in the following amounts.
10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
(including loss of use thereof) arising out of Tenant's operations, actions, and
contractual liabilities (covering the performance by Tenant of its indemnity
agreements) including a Broad Form endorsement covering the insuring provisions
of this Lease and the performance by Tenant of the indemnity agreements set
forth in Section 10.1 of this Lease, for limits of liability (with a
commercially reasonable deductible) not less than:
Bodily Injury and $3,000,000 each occurrence
Property Damage Liability $3,000,000 annual aggregate
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate
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10.3.2 All Risk Property Insurance covering (i) all office
furniture, business and trade fixtures, office equipment, free-standing cabinet
work, movable partitions, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the "Tenant
Improvements", as that term is defined in Section 2.1 of the Tenant Work Letter
and any other improvements which exist in the Premises as of the Lease
Commencement Date (excluding the Base Building) (the "ORIGINAL IMPROVEMENTS"),
(iii) the Tenant's business interruption and extra expense in an amount equal to
one (1) year of Rent due under this Lease and (iv) all other improvements,
alterations and additions to the Premises. Such insurance shall be written on an
"all risks" of physical loss or damage basis, for the full replacement cost
value (subject to reasonable deductible amounts) and with an agreed amount
endorsement, and shall include coverage for damage or other loss caused by fire
or other peril including, but not limited to, vandalism and malicious mischief,
theft, water damage of any type, including sprinkler leakage, earthquake
sprinkler leakage, bursting or stoppage of pipes, and explosion.
10.3.3 Worker's Compensation and Employer's Liability in an
amount no less than $1,000,000.00 or other similar insurance pursuant to all
applicable state and local statutes and regulations.
10.3.4 Prior to commencing any construction in the Premises,
either in connection with the initial construction of the Tenant Improvements,
or in connection with any Alterations, Tenant shall provide Landlord with
evidence that any contractors, subcontractors, architects or engineers engaged
in such construction carry insurance of the type and in the amount required to
be carried by Tenant pursuant to Sections 10.3.1 and 10.3.2, above. In addition,
any general contractor's policy of insurance shall contain an owner's contractor
protective endorsement, and coverage for work performed by others, and any
contractors or subcontractors insurance shall contain products and completed
operations coverage and said contractor shall warrant that it shall continue to
carry such coverage for a period of not less than ten (10) years. Any architects
or engineers engaged by Tenant in connection with any such construction shall
additionally carry errors and omissions insurance coverage. In addition,
Landlord may, in its discretion, require that Tenant obtain a lien and
completion bond or some alternate form of security satisfactory to Landlord in
an amount sufficient to ensure the lien-free completion of such Alterations and
naming Landlord as a co-obligee.
10.4 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant or its contractors, subcontractors, architects or engineers
under this Lease shall in no event limit the liability of Tenant under this
Lease. Such insurance shall (i) as appropriate name Landlord, and any other
party the Landlord so specifies, as an additional insured, including Landlord's
managing agent, if any; (ii) specifically cover the liability assumed by Tenant
under this Lease,
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including, but not limited to, Tenant's obligations under Section 10.1 of this
Lease; (iii) be issued by an insurance company having a rating of not less than
A-X in Best's Insurance Guide or which is otherwise acceptable to Landlord and
licensed to do business in the State of California; (iv) be primary insurance as
to all claims thereunder and provide that any insurance carried by Landlord is
excess and is non-contributing with any insurance requirement of Tenant; (v) be
in form and content reasonably acceptable to Landlord; and (vi) provide that
said insurance shall not be canceled or coverage materially changed unless
thirty (30) days' prior written notice shall have been given to Landlord and any
mortgagee of Landlord by the insurer or the Tenant. Tenant shall deliver said
policy or policies or certificates thereof to Landlord on or before the Lease
Commencement Date and at least thirty (30) days before the expiration dates
thereof. In the event Tenant shall fail to procure such insurance, or to deliver
such policies or certificate, Landlord may, at its option, procure such policies
for the account of Tenant, and the cost thereof shall be paid to Landlord within
fifteen (15) days after delivery to Tenant of bills therefor. Landlord shall, in
good faith, attempt to provide Tenant with notice of Landlord's exercise of the
foregoing right, if any, within thirty (30) days following such exercise,
provided, Landlord's failure to deliver such notice shall not affect Landlord's
rights hereunder.
10.5 SUBROGATION. Landlord and Tenant intend that their respective
property loss risks shall be borne by insurance carriers to the extent above
provided, and Landlord and Tenant hereby agree to look solely to, and seek
recovery only from, their respective insurance carriers in the event of a
property loss. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor.
10.6 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10 and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
loss. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the
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holder of a mortgage on the Building or Project or any other modifications to
the Common Areas deemed desirable by Landlord, provided that access to the
Premises and any common restrooms serving the Premises shall not be materially
impaired. Upon the occurrence of any damage to the Premises, if the Lease is not
terminated as provided in Section 11.2 below, Tenant shall assign to Landlord
(or to any party designated by Landlord) all insurance proceeds payable to
Tenant under Tenant's insurance required under Sections 10.3.2(ii) and (iv) of
this Lease, and Landlord shall repair any injury or damage to the Tenant
Improvements and the Original Improvements installed in the Premises and shall
return such Tenant Improvements and Original Improvements to their original
condition; provided that if the cost of such repair by Landlord exceeds the
amount of insurance proceeds received by Landlord from Tenant's insurance
carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant
to Landlord prior to Landlord's commencement of repair of the damage. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or its
visitors, or injury to Tenant's business resulting in any way from such damage
or the repair thereof; provided however, that if such fire or other casualty
shall have damaged the Premises or Common Areas necessary to Tenant's occupancy,
Landlord shall allow Tenant a proportionate abatement of Rent to the extent
Landlord is reimbursed from the proceeds of rental interruption insurance
purchased by Landlord as part of Operating Expenses, during the time and to the
extent the Premises are unfit for occupancy for the purposes permitted under
this Lease, and not occupied by Tenant as a result thereof; provided, further,
however, that if the damage or destruction is due to the negligence or willful
misconduct of Tenant or any of its agents, employees, contractors, invitees or
guests, Tenant shall be responsible for any reasonable, applicable insurance
deductible (which shall be payable to Landlord upon demand) and there shall be
no rent abatement.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after the
date of the discovery of damage, such notice to include a termination date
giving Tenant sixty (60) days to vacate the Premises, but Landlord may so elect
only if the Building or Project shall be damaged by fire or other casualty or
cause, whether or not the Premises are affected, and one or more of the
following conditions is present: (i) in Landlord's reasonable judgment, repairs
cannot reasonably be completed within ninety (90) days (or in the event of
damage resulting from earthquake, one hundred eighty (180) days) after the date
of damage (when such repairs are made without the payment of overtime or other
premiums); (ii) the holder of any mortgage on the Building or Project or ground
lessor with respect to the Building or Project shall require that the insurance
proceeds or any portion thereof be used to retire the mortgage debt, or shall
terminate the ground lease, as the case may be; (iii) the damage is not fully
covered, except for deductible amounts, by Landlord's insurance policies; (iv)
Landlord decides to rebuild the Building or Common Areas so that they will be
substantially different structurally or architecturally; (v) the damage occurs
during the last twelve (12) months of the Lease Term as the same may have been
extended, if at all, pursuant to Tenant's exercise of any option right granted
in Section 2.3 of this Lease; or (vi) any owner of any other portion of the
Project, other than Landlord, does not intend to repair the damage to such
portion of the Project; provided, however, that if Landlord does not elect to
terminate this Lease pursuant to Landlord's termination right as provided above,
and the repairs cannot, in the reasonable opinion of Landlord, be completed
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within one hundred eighty (180) days after being commenced, Tenant may elect, no
earlier than sixty (60) days after the date of the damage and not later than
ninety (90) days after the date of such damage, to terminate this Lease by
written notice to Landlord effective as of the date specified in the notice,
which date shall not be less than thirty (30) days nor more than sixty (60) days
after the date such notice is given by Tenant.
11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.
ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE 13
CONDEMNATION
If the whole or any part of the Premises, Building or Project shall be
taken by power of eminent domain or condemned by any competent authority for any
public or quasi-public use or purpose, or if any adjacent property or street
shall be so taken or condemned, or reconfigured or
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vacated by such authority in such manner as to require the use, reconstruction
or remodeling of any part of the Premises, Building or Project, or if Landlord
shall grant a deed or other instrument in lieu of such taking by eminent domain
or condemnation, Landlord shall have the option to terminate this Lease
effective as of the date possession is required to be surrendered to the
authority. If more than twenty-five percent (25%) of the rentable square feet of
the Premises is taken, or if access to the Premises is substantially impaired,
in each case for a period in excess of one hundred eighty (180) days, Tenant
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. Tenant shall not
because of such taking assert any claim against Landlord or the authority for
any compensation because of such taking and Landlord shall be entitled to the
entire award or payment in connection therewith, except that Tenant shall have
the right to file any separate claim available to Tenant for any taking of
Tenant's personal property and fixtures belonging to Tenant and removable by
Tenant upon expiration of the Lease Term pursuant to the terms of this Lease,
and for moving expenses, so long as such claims do not diminish the award
available to Landlord, its ground lessor with respect to the Building or Project
or its mortgagee, and such claim is payable separately to Tenant. All Rent shall
be apportioned as of the date of such termination. If any part of the Premises
shall be taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of The California Code of Civil
Procedure. Notwithstanding anything to the contrary contained in this Article
13, in the event of a temporary taking of all or any portion of the Premises for
a period of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into any
license or concession agreements or otherwise permit the occupancy or use of the
Premises or any part thereof by any persons other than Tenant and its employees
and contractors (all of the foregoing are hereinafter sometimes referred to
collectively as "TRANSFERS" and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a "TRANSFEREE"). If
Tenant desires Landlord's consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the "TRANSFER NOTICE") shall include (i) the proposed
effective date of the Transfer, which shall not be less than thirty (30) days
nor more than one hundred eighty (180) days after the date of delivery of the
Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the "SUBJECT SPACE"), (iii) all of the terms of the proposed
Transfer and the consideration therefor, including calculation of the "Transfer
Premium", as that term is defined in Section 14.3 below, in connection with such
Transfer, the name and address of
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the proposed Transferee, and a copy of all existing executed and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, provided that Landlord shall have the
right to require Tenant to utilize Landlord's standard consent documents in
connection with the documentation of such Transfer and (iv) financial statements
for the prior two (2) fiscal years of the proposed Transferee certified by an
officer, partner or owner thereof, business credit and personal references and
history of the proposed Transferee and any other information reasonably required
by Landlord which will enable Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of
such Transferee's business and proposed use of the Subject Space. Any Transfer
made without Landlord's prior written consent shall, at Landlord's option, be
null, void and of no effect, and shall, at Landlord's option, constitute a
default by Tenant under this Lease. Whether or not Landlord consents to any
proposed Transfer, Tenant shall pay Landlord's review and processing fees, as
well as any reasonable professional fees (including, without limitation,
attorneys', accountants', architects', engineers' and consultants' fees)
incurred by Landlord, within thirty (30) days after written request by Landlord.
14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged
in a business which is not consistent with the quality of the Building or the
Project, or would be a significantly less prestigious occupant of the Building
than Tenant;
14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or
instrumentality thereof;
14.2.4 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
14.2.5 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease;
14.2.6 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right); or
14.2.7 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee,
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(i) occupies space in the Project at the time of the request for consent, or
(ii) is negotiating or has negotiated with Landlord to lease space in the
Project.
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any changes in the terms and conditions from those specified in the Transfer
Notice (i) such that Landlord would initially have been entitled to refuse its
consent to such Transfer under this Section 14.2, or (ii) which would cause the
proposed Transfer to be more favorable to the Transferee than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease). Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be a declaratory judgment and
an injunction for the relief sought without any monetary damages, and Tenant
hereby waives all other remedies, including, without limitation, any right at
law or equity to terminate this Lease, on its own behalf and, to the extent
permitted under all applicable laws, on behalf of the proposed Transferee.
14.3 TRANSFER PREMIUM. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord fifty percent (50%) of any "Transfer Premium," as that term is
defined in this Section 14.3, received by Tenant from such Transferee. "TRANSFER
PREMIUM" shall mean all rent, additional rent or other consideration payable by
such Transferee in connection with the Transfer in excess of the Rent and
Additional Rent payable by Tenant under this Lease during the term of the
Transfer on a per rentable square foot basis if less than all of the Premises is
transferred, after deducting the reasonable expenses incurred by Tenant for (i)
any changes, alterations and improvements to the Premises in connection with the
Transfer, (ii) any free base rent reasonably provided to the Transferee, and
(iii) any brokerage commissions in connection with the Transfer (collectively,
"TENANT'S SUBLEASING COSTS"). "Transfer Premium" shall also include, but not be
limited to, key money, bonus money or other cash consideration paid by
Transferee to Tenant in connection with such Transfer, and any payment in excess
of fair market value for services rendered by Tenant to Transferee or for
assets, fixtures, inventory, equipment, or furniture transferred by Tenant to
Transferee in connection with such Transfer. The determination of the amount of
Landlord's applicable share of the Transfer Premium shall be made on a monthly
basis as rent or other consideration is received by Tenant under the Transfer.
For purposes of calculating the Transfer Premium on a monthly basis, (i)
Tenant's Subleasing Costs shall be deemed to be expended by Tenant in equal
monthly amounts over the entire term of the Transfer and (ii) the Rent paid for
the Subject Space by Tenant shall be computed after adjusting such rent to the
actual effective rent to be paid, taking into consideration any and all
leasehold concessions granted in connection therewith, including, but not
limited to, any rent credit and tenant improvement allowance. For
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purposes of calculating any such effective rent all such concessions shall be
amortized on a straight-line basis over the relevant term.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding anything to
the contrary contained in this Article 14, Landlord shall have the option, by
giving written notice (the "Transfer Response Notice") to Tenant within thirty
(30) days after receipt of any Transfer Notice, to recapture the Subject Space.
Such recapture notice shall cancel and terminate this Lease with respect to the
Subject Space as of the date stated in the Transfer Notice as the effective date
of the proposed Transfer until the last day of the term of the Transfer as set
forth in the Transfer Notice (or at Landlord's option, shall cause the Transfer
to be made to Landlord or its agent, in which case the parties shall execute the
Transfer documentation promptly thereafter), provided, however, that Tenant
shall have the right, upon written notice to Landlord within ten (10) days after
receipt of the Transfer Response Notice to withdraw Tenant's Transfer Notice, in
which event Landlord's rights to recapture or take an assignment or sublease of
the Subject Space hereunder shall have no force and effect as to the subject
Transfer only. In the event of a recapture by Landlord, if this Lease shall be
canceled with respect to less than the entire Premises, the Rent reserved herein
shall be prorated on the basis of the number of rentable square feet retained by
Tenant in proportion to the number of rentable square feet contained in the
Premises, and this Lease as so amended shall continue thereafter in full force
and effect, and upon request of either party, the parties shall execute written
confirmation of the same. If Landlord declines, or fails to elect in a timely
manner to recapture the Subject Space under this Section 14.4, then, provided
Landlord has consented to the proposed Transfer, Tenant shall be entitled to
proceed to transfer the Subject Space to the proposed Transferee, subject to
provisions of this Article 14.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than five percent (5%), Tenant shall pay
Landlord's costs of such audit.
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term
"TRANSFER" shall also include (i) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of fifty percent (50%) or
more of the partners, or transfer of fifty percent (50%) or more of partnership
interests, within a twelve (12)-month period, or the dissolution of the
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partnership without immediate reconstitution thereof, and (ii) if Tenant is a
closely held corporation (i.e., whose stock is not publicly held and not traded
through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant or (B) the sale or other
transfer of an aggregate of fifty percent (50%) or more of the voting shares of
Tenant (other than to immediate family members by reason of gift or death),
within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or
pledge of an aggregate of fifty percent (50%) or more of the value of the
unencumbered assets of Tenant within a twelve (12)-month period.
14.7 OCCURRENCE OF DEFAULT. Any Transfer hereunder shall be subordinate
and subject to the provisions of this Lease, and if this Lease shall be
terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as cancelled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant's agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord's enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord's right to
enforce any term of this Lease against Tenant or any other person. If Tenant's
obligations hereunder have been guaranteed, Landlord's consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.
14.8 NON-TRANSFERS. Notwithstanding anything to the contrary contained
in Article 14 of this Lease, provided that Tenant notifies Landlord of any such
assignment or sublease and promptly supplies Landlord with any documents or
information requested by Landlord regarding such assignment or sublease, and
further provided that such assignment or sublease is not a subterfuge by Tenant
to avoid its obligations under this Lease, Tenant may assign this Lease or
sublet all or any portion of the Premises to (i) any entity formed by Tenant,
provided that Tenant owns or beneficially controls a majority of the outstanding
ownership interest in such entity, (ii) any parent or subsidiary entity of
Tenant, (iii) any person or entity that acquires all or substantially all of
Tenant's assets or capital stock, or (iv) any entity with which Tenant merges,
regardless of whether Tenant is the surviving entity, and any such assignment or
subletting shall not be deemed to be a Transfer under this Section 14. In
addition, a Transfer shall not include, and Landlord's consent shall not be
required for, (i) any initial or subsequent public offering by Tenant, (ii) if
Tenant is a public company, any sale or transfer of capital stock of Tenant, or
(iii) if Tenant is a public company, the sale or transfer of Tenant's stock to
take Tenant private.
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ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in writing by Landlord. The delivery of keys
to the Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Landlord, and notwithstanding
such delivery Tenant shall be entitled to the return of such keys at any
reasonable time upon request until this Lease shall have been properly
terminated. The voluntary or other surrender of this Lease by Tenant, whether
accepted by Landlord or not, or a mutual termination hereof, shall not work a
merger, and at the option of Landlord shall operate as an assignment to Landlord
of all subleases or subtenancies affecting the Premises or terminate any or all
such sublessees or subtenancies.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises (i) all
debris and rubbish, (ii) such items of furniture, equipment, business and trade
fixtures, free-standing cabinet work, movable partitions and other articles of
personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises, however, attached, installed or affixed, which shall
remain Tenant's property, (iii) and such similar articles of any other persons
claiming under Tenant, as Landlord may, in its sole discretion, require to be
removed, and Tenant shall repair at its own expense all damage to the Premises
and Building resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to the product of (i) the Rent applicable
during the last rental period of the Lease Term under this Lease, and (ii) a
percentage equal to one hundred fifty percent (150%).. Such month-to-month
tenancy shall be subject to every other applicable term, covenant and agreement
contained herein. Nothing contained in this Article 16 shall be construed as
consent by Landlord to any holding over by Tenant, and Landlord expressly
reserves the right to require Tenant to surrender possession of the Premises to
Landlord as provided in this Lease upon the expiration or other termination of
this Lease. The provisions of
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this Article 16 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all loss, costs
(including reasonable attorneys' fees) and liability resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender and any
lost profits to Landlord resulting therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) days following a request in writing by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an estoppel certificate,
which, as submitted by Landlord, shall be substantially in the form of EXHIBIT
E, attached hereto (or such other form as may be required by any prospective
mortgagee or purchaser of the Project, or any portion thereof), indicating
therein any exceptions thereto that may exist at that time, and shall also
contain any other information reasonably requested by Landlord or Landlord's
mortgagee or prospective mortgagee. Any such certificate may be relied upon by
any prospective mortgagee or purchaser of all or any portion of the Project.
Tenant shall execute and deliver whatever other instruments may be reasonably
required for such purposes within ten (10) days after receipt of a request by
Landlord. At any time during the Lease Term, Landlord may require Tenant to
provide Landlord within ten (10) days after receipt of a request by Landlord
with a current financial statement and financial statements of the two (2) years
prior to the current financial statement year. Such statements shall be prepared
in accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant. Failure of Tenant to timely execute, acknowledge and deliver such
estoppel certificate or other instruments shall constitute an acceptance of the
Premises and an acknowledgment by Tenant that statements included in the
estoppel certificate are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
mortgage, trust deed or other encumbrances now or hereafter in force against the
Building or Project or any part thereof, if any, and to all renewals,
extensions, modifications, consolidations and replacements thereof, and to all
advances made or hereafter to be made upon the security of such mortgages or
trust deeds, unless the holders of such mortgages, trust deeds or other
encumbrances, or the lessors under such ground lease or underlying leases
(collectively, "MORTGAGEES"), require in writing that this Lease be superior
thereto. Landlord shall provide Tenant with a non-disturbance agreement in a
commercially reasonable form from Landlord's presently existing lender holding a
first deed of trust on the Project upon the full execution of this Lease.
Further, Landlord's delivery to Tenant
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of commercially reasonable non-disturbance agreement(s) in favor of Tenant from
any ground lessors, mortgage holders or lien holders of Landlord who later come
into existence at any time prior to the expiration of the Lease Term shall be in
consideration of, and a condition precedent to, Tenant's agreement to be bound
by the terms of this Article 18. Such commercially reasonable non-disturbance
agreement(s) shall include the obligation of any such successor, ground lessor,
mortgage holder or lien holder to recognize Tenant's rights specifically set
forth in this Lease to offset certain amounts against Rent due hereunder, or to
otherwise receive certain credits against Rent as set forth herein. Subject to
the non-disturbance agreements(s) described above, Tenant covenants and agrees
in the event any proceedings are brought for the foreclosure of any such
mortgage or deed in lieu thereof (or if any ground lease is terminated), to
attorn, without any deductions or set-offs whatsoever, to the lienholder or
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof (or to the ground lessor), if so requested to do so by such
purchaser or lienholder or ground lessor, and to recognize such purchaser or
lienholder or ground lessor as the lessor under this Lease, provided such
lienholder or purchaser or ground lessor shall agree to accept this Lease and
not disturb Tenant's occupancy, so long as Tenant timely pays the rent and
observes and performs the terms, covenants and conditions of this Lease to be
observed and performed by Tenant. Landlord's interest herein may be assigned as
security at any time to any lienholder. Tenant shall, within five (5) days of
request by Landlord, execute such further instruments or assurances as Landlord
may reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases. Tenant waives the provisions of any current or future
statute, rule or law which may give or purport to give Tenant any right or
election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due unless such
failure is cured within three (3) days after notice; or
19.1.2 Except where a specific time period is otherwise set forth
for Tenant's performance in this Lease, in which event the failure to perform by
Tenant within such time period shall be a default by Tenant under this Section
19.1.2, any failure by Tenant to observe or perform any other provision,
covenant or condition of this Lease to be observed or performed by Tenant where
such failure continues for ten (10) days after written notice thereof from
Landlord to Tenant; provided that if the nature of such default is such that the
same cannot reasonably be cured within a ten (10) day period, Tenant shall not
be deemed to be in default if it diligently commences such cure within such
period and thereafter diligently proceeds to rectify and cure
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such default, and cures such default within a reasonable period of time,
considering the nature of the default; or
19.1.3 The failure by Tenant to observe or perform according to
the provisions of Articles 5, 14, 17 or 18 of this Lease where such failure
continues for more than five (5) business days after notice from Landlord; or
19.1.4 Tenant's failure to occupy the Premises within sixty (60)
business days after the Lease Commencement Date.
The notice periods provided herein are in lieu of, and not in addition
to, any notice periods provided by law.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default
by Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice
or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of any unpaid rent which has
been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by
which the unpaid rent for the balance of the Lease Term after the time
of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, specifically including but not
limited to, brokerage commissions and advertising expenses incurred,
expenses of remodeling the Premises or any portion thereof for a new
tenant, whether for the same or a different use, and any special
concessions made to obtain a new tenant; and
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(v) At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Paragraphs
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Paragraph 19.2.1(iii) above, the "worth at the time of award" shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). If Landlord
terminates this Lease or Tenant's right to possession, Landlord shall use
reasonable efforts to mitigate Landlord's damages, and Tenant shall be entitled
to submit proof of such failure to mitigate as a defense to Landlord's claims
hereunder, if mitigation of damages by Landlord is required by applicable law.
19.2.2 Landlord shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has the
right to sublet or assign, subject only to reasonable limitations). Accordingly,
if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.
19.2.3 Landlord shall at all times have the rights and remedies
(which shall be cumulative with each other and cumulative and in addition to
those rights and remedies available under Sections 19.2.1 and 19.2.2, above, or
any law or other provision of this Lease), without prior demand or notice except
as required by applicable law, to seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof.
19.3 FORM OF PAYMENT AFTER DEFAULT. Following the second (2nd)
occurrence of an event of default by Tenant, Landlord shall have the right to
require that any or all subsequent amounts paid by Tenant to Landlord hereunder,
whether to cure the default in question or otherwise, be paid in the form of
cash, money order, cashier's or certified check drawn on an institution
acceptable to Landlord, or by other means approved by Landlord, notwithstanding
any prior practice of accepting payments in any different form.
19.4 EFFORTS TO RELET. No re-entry or repossession, repairs,
maintenance, changes, alterations and additions, reletting, appointment of a
receiver to protect Landlord's interests hereunder, or any other action or
omission by Landlord shall be construed as an election by Landlord to terminate
this Lease or Tenant's right to possession, or to accept a surrender of the
Premises, nor shall same operate to release Tenant in whole or in part from any
of Tenant's obligations hereunder, unless express written notice of such
intention is sent by Landlord to Tenant. Tenant hereby irrevocably waives any
right otherwise available under any law to redeem or reinstate this Lease.
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19.5. ABATEMENT OF RENT. In the event that Tenant is prevented from
using, and does not use, the Premises or any portion thereof, as a result of (i)
any alteration performed by Landlord after the Lease Commencement Date and
required by the Lease, which substantially interferes with Tenant's use of the
Premises, or (ii) any failure to provide services, utilities or access to the
Premises as required of Landlord pursuant to the terms of hereof (either such
set of circumstances as set forth in items (i) or (ii), above, to be known as an
"Abatement Event"), then Tenant shall, immediately, and in no event later than
two (2) business days after the occurrence of any Abatement Event, give Landlord
notice (the "Abatement Notice") of such Abatement Event, which notice shall
state the date the Abatement Event commenced, and the Rent shall be abated or
reduced, as the case may be, for the period commencing on the date the Abatement
Event commenced and continuing for such further 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; provided, however, in the event that Tenant is prevented from
using, and does not use, a portion of the Premises for a period of time 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 during which Tenant is
so prevented from effectively conducting its business therein, the Rent for the
entire Premises shall be abated for such time as Tenant continues to be so
prevented from using, and does not use, the Premises. If, however, Tenant
reoccupies any portion of the Premises during such period, 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 Tenant reoccupies such
portion of the Premises. Such right to abate Rent shall be Tenant's sole and
exclusive remedy at law or in equity for an Abatement Event. Except as provided
in this Section 19.5, nothing contained herein shall be interpreted to mean that
Tenant is excused from paying Rent due hereunder. Notwithstanding the foregoing,
in the event Tenant fails to give Landlord the Abatement Notice within the time
prescribed in this Section 19.5, Tenant shall not lose its rights to abate rent
for an Abatement Event, provided any such abatement shall commence no sooner
than the date that the Landlord actually receives Tenant's Abatement Notice.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
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ARTICLE 21
INTENTIONALLY DELETED
ARTICLE 22
INTENTIONALLY DELETED
ARTICLE 23
SIGNS
23.1 EXTERIOR SIGNAGE. Subject to Landlord's prior written approval, in
its sole discretion, and provided that any sign is in keeping with the quality,
design and style of the Building and Project and is in compliance with all
covenants, conditions or restrictions affecting the Project, and all applicable
law, Tenant, at its sole cost and expense, may install identification signage on
the Building outside of the entrance to the Premises. In addition, Tenant shall
have the right, at its sole cost and expense, to install and maintain a sign on
the top of the Building, the design, specifications and location of which sign
shall be subject to Landlord's approval, which approval shall not be
unreasonably withheld so long as Tenant's signage complies with Landlord's
signage program and with all requirements of the City of Irvine. Upon the
expiration or earlier termination of this Lease, Tenant shall remove all such
signage, at Tenant's sole cost and expense, and repair any and all damage caused
by such removal. The rights contained in this Section 23.1 shall be personal to
the Original Tenant and may only be exercised by the Original Tenant and not any
assignee, sublessee or transferee of Tenant's interest in this Lease (so long as
the Original Tenant occupies the entire Premises).
23.2 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
separately approved by Landlord may be removed without notice by Landlord at the
sole expense of Tenant. Except as is set forth in Section 23.1, above, Tenant
may not install any signs on the exterior or roof of the Building or the Common
Areas. Any signs, window coverings, or blinds (even if the same are located
behind the Landlord-approved window coverings for the Building), or other items
visible from the exterior of the Premises or Building, shall be subject to the
prior approval of Landlord, in its sole discretion.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises or the Project which will in any way conflict with any law,
statute, ordinance or other governmental rule, regulation or requirement now in
force or which may hereafter be enacted or promulgated. At its sole cost and
expense, Tenant shall promptly comply with all such governmental measures
relating to the Premises, other than the making of changes to the Base Building.
Should any standard or regulation now or hereafter be imposed on Landlord or
Tenant by a state, federal or local
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governmental body charged with the establishment, regulation and enforcement of
occupational, health or safety standards for employers, employees, landlords or
tenants, then Tenant agrees, at its sole cost and expense, to comply promptly
with such standards or regulations. The judgment of any court of competent
jurisdiction or the admission of Tenant in any judicial action, regardless of
whether Landlord is a party thereto, that Tenant has violated any of said
governmental measures, shall be conclusive of that fact as between Landlord and
Tenant.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within ten (10) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of the overdue amount plus any attorneys' fees incurred by Landlord
by reason of Tenant's failure to pay Rent and/or other charges when due
hereunder. The late charge shall be deemed Additional Rent and the right to
require it shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within ten (10) days after the date they are due shall bear interest from the
date when due until paid at a rate per annum equal to the lesser of (i) the
annual "Bank Prime Loan" rate cited in the Federal Reserve Statistical Release
Publication G.13(415), published on the first Tuesday of each calendar month (or
such other comparable index as Landlord and Tenant shall reasonably agree upon
if such rate ceases to be published) plus four (4) percentage points, and (ii)
the highest rate permitted by applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent, except to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant's part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by
Landlord to Tenant of statements therefor: (i) sums equal to expenditures
reasonably made and obligations reasonably incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of Section 26.1; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures reasonably
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made and obligations reasonably incurred by Landlord in collecting or attempting
to collect the Rent or in enforcing or attempting to enforce any rights of
Landlord under this Lease or pursuant to law, including, without limitation, all
legal fees and other amounts so expended. Tenant's obligations under this
Section 26.2 shall survive the expiration or sooner termination of the Lease
Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees
or tenants (but only within the last 9 months with respect to prospective
tenants), or to current or prospective mortgagees, ground or underlying lessors
or insurers; (iii) post notices of nonresponsibility; or (iv) alter, improve or
repair the Premises or the Building, or for structural alterations, repairs or
improvements to the Building or the Building's systems and equipment.
Notwithstanding anything to the contrary contained in this Article 27, Landlord
may enter the Premises at any time to (A) perform services required of Landlord,
including janitorial service; (B) take possession due to any breach of this
Lease in the manner provided herein; and (C) perform any covenants of Tenant
which Tenant fails to perform. Except as otherwise provided in this Lease,
Landlord may make any such entries without the abatement of Rent and may take
such reasonable steps as required to accomplish the stated purposes. Except to
the extent caused by the gross negligence or willful misconduct of any Landlord
Parties, Tenant hereby waives any claims for damages or for any injuries or
inconvenience to or interference with Tenant's business, lost profits, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby. For each of the above purposes, Landlord shall at all times have a key
with which to unlock all the doors in the Premises, excluding Tenant's vaults,
safes and special security areas designated in advance by Tenant. In an
emergency, Landlord shall have the right to use any means that Landlord may deem
proper to open the doors in and to the Premises. Any entry into the Premises by
Landlord in the manner hereinbefore described shall not be deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises. No provision
of this Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decorations except as otherwise expressly agreed to be performed
by Landlord herein.
ARTICLE 28
TENANT PARKING
Tenant shall have the right, during the Lease Term, to use up to the
number of parking spaces in the Project parking areas as set forth in Section 9
of the Summary, of which spaces, Tenant may designate the location of up to six
(6) visitor spaces and up to ten (10) reserved spaces, subject to Landlord's
reasonable approval, provided, the number and location of the reserved spaces
Tenant elects to lease and the location of the visitor spaces shall be
established
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upon the execution of this Lease, as shown on EXHIBIT F attached hereto. Such
use shall be free of charge during the initial Lease Term. Tenant's continued
right to use the parking areas is conditioned upon Tenant abiding by all rules
and regulations which are prescribed from time to time for the orderly operation
and use of such areas, including any sticker or other identification system
established by Landlord, Tenant's cooperation in seeing that Tenant's employees
and visitors also comply with such rules and regulations and Tenant not being in
default under this Lease. Landlord specifically reserves the right to change the
size, configuration, design, layout and all other aspects of the Project parking
areas at any time and Tenant acknowledges and agrees that Landlord may, without
incurring any liability to Tenant and without any abatement of Rent under this
Lease, except as provided in Section 19.5, from time to time, close-off or
restrict access to the Project areas facility for purposes of permitting or
facilitating any such construction, alteration or improvements. Landlord may
delegate its responsibilities hereunder to a parking operator in which case such
parking operator shall have all the rights of control attributed hereby to the
Landlord.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 TERMS; CAPTIONS. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The necessary grammatical
changes required to make the provisions hereof apply either to corporations,
partnerships, limited liability companies, or other similar entities or
individuals, men or women, as the case may require, shall in all cases be
assumed as though in each case fully expressed. The captions of Articles and
Sections are for convenience only and shall not be deemed to limit, construe,
affect or alter the meaning of such Articles and Sections.
29.2 BINDING EFFECT. Subject to all other provisions of this Lease, each
of the covenants, conditions and provisions of this Lease shall extend to and
shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
29.3 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
29.4 MODIFICATION OF LEASE. Should any current or prospective mortgagee
or ground lessor for the Building or Project require a modification of this
Lease, which modification will not cause an increased cost or expense to Tenant
or in any other way materially and adversely change the rights and obligations
of Tenant hereunder, then and in such event, Tenant agrees that this Lease may
be so modified and agrees to execute whatever documents are reasonably required
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therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. At the request of Landlord or any mortgagee or ground lessor,
Tenant agrees to execute a short form of Lease and deliver the same to Landlord
within ten (10) days following the request therefor.
29.5 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project or
Building and in this Lease, and Tenant agrees that in the event of any such
transfer, Landlord shall automatically be released from all liability under this
Lease arising after such transfer and Tenant agrees to look solely to such
transferee for the performance of Landlord's obligations hereunder arising after
the date of transfer and such transferee shall be deemed to have fully assumed
and be liable for all obligations of this Lease to be performed by Landlord,
including the return of any Security Deposit, and Tenant shall attorn to such
transferee.
29.6 PROHIBITION AGAINST RECORDING. Except as provided in Section 29.4
of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant.
29.7 LANDLORD'S TITLE. Landlord's title is and always shall be paramount
to the title of Tenant. Nothing herein contained shall empower Tenant to do any
act which can, shall or may encumber the title of Landlord.
29.8 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.
29.9 APPLICATION OF PAYMENTS. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.
29.10 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.
29.11 PARTIAL INVALIDITY. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.12 NO WARRANTY. In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
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29.13 LANDLORD EXCULPATION. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the
Premises shall be limited solely and exclusively to an amount which is equal to
the interest of Landlord in the Building, provided that in no event shall such
liability extend to any sales proceeds received by Landlord or the Landlord
Parties in connection with the Project, Building or Premises. Neither Landlord,
nor any of the Landlord Parties shall have any personal liability therefor, and
Tenant hereby expressly waives and releases such personal liability on behalf of
itself and all persons claiming by, through or under Tenant. The limitations of
liability contained in this Section 29.13 shall inure to the benefit of
Landlord's and the Landlord Parties' present and future partners, beneficiaries,
officers, directors, trustees, shareholders, agents and employees, and their
respective partners, heirs, successors and assigns. Under no circumstances shall
any present or future partner of Landlord (if Landlord is a partnership), or
trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have
any liability for the performance of Landlord's obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances for injury or damage to, or
interference with, Tenant's business, including but not limited to, loss of
profits, loss of rents or other revenues, loss of business opportunity, loss of
goodwill or loss of use, in each case, however occurring.
29.14 ENTIRE AGREEMENT. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease constitutes the parties' entire agreement with respect to the leasing of
the Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in writing signed by the parties hereto.
29.15 RIGHT TO LEASE. Landlord reserves the absolute right to effect
such other tenancies in the Project as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building
or Project. Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.
29.16 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, a "FORCE MAJEURE"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.
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29.17 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives, for Tenant
and for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant's right of occupancy of the Premises after any termination of this
Lease.
29.18 NOTICES. All notices, demands, statements, designations, approvals
or other communications (collectively, "NOTICES") given or required to be given
by either party to the other hereunder or by law shall be in writing, shall be
(A) sent by United States certified or registered mail, postage prepaid, return
receipt requested ("MAIL"), (B) transmitted by telecopy, if such telecopy is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
recognized overnight courier, or (D) delivered personally. Any Notice shall be
sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth in Section 11 of the Summary, or to such
other places as Landlord may from time to time designate in a Notice to Tenant.
Any Notice will be deemed given (i) three (3) days after the date it is posted
if sent by Mail, (ii) the date the telecopy is transmitted, (iii) the date the
overnight courier delivery is made, or (iv) the date personal delivery is made
29.19 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.20 AUTHORITY. If Tenant is a corporation, trust or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant's state of
incorporation and (ii) qualification to do business in California.
29.21 ATTORNEYS' FEES. In the event that either Landlord or Tenant
should bring suit for the possession of the Premises, for the recovery of any
sum due under this Lease, or because of the breach of any provision of this
Lease or for any other relief against the other, then all costs and expenses,
including reasonable attorneys' fees, incurred by the prevailing party therein
shall be paid by the other party, which obligation on the part of the other
party shall be deemed to have accrued on the date of the commencement of such
action and shall be enforceable whether or not the action is prosecuted to
judgment.
29.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT
TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA,
(II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN
THE INTEREST OF SAVING TIME AND EXPENSE,
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TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF
LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM
FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN THE EVENT
LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT
OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR
DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING
OR ACTION, BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.
29.23 SUBMISSION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of, option for or
option to lease, and it is not effective as a lease or otherwise until execution
and delivery by both Landlord and Tenant.
29.24 BROKERS. Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, excepting only the real estate brokers or
agents specified in Section 12 of the Summary (the "BROKERS"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. Each party agrees to indemnify and defend the other
party against and hold the other party harmless from any and all claims,
demands, losses, liabilities, lawsuits, judgments, costs and expenses (including
without limitation reasonable attorneys' fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of any
dealings with any real estate broker or agent, other than the Brokers, occurring
by, through, or under the indemnifying party. Landlord shall pay all commissions
due to the Brokers related to the negotiation of this Lease.
29.25 INDEPENDENT COVENANTS. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord, except as provided in Section 7.2, above.
29.26 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord shall have the
right at any time to change the name of the Project or Building and to install,
affix and maintain any and all signs on the exterior and on the interior of the
Project or Building as Landlord may, in Landlord's sole discretion, desire.
Tenant shall not use the words "Irvine Oaks" or the name of the Project or
Building or use pictures or illustrations of the Project or Building in
advertising or other publicity or for any purpose other than as the address of
the business to be conducted by Tenant in the Premises, without the prior
written consent of Landlord.
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29.27 COUNTERPARTS. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.28 CONFIDENTIALITY. Tenant acknowledges that the content of this
Lease and any related documents are confidential information. Tenant shall keep
such confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant's financial,
legal, and space planning consultants.
29.29 DEVELOPMENT OF THE PROJECT.
29.29.1 SUBDIVISION. Landlord reserves the right to further
subdivide all or a portion of the Project. Tenant agrees to execute and deliver,
upon demand by Landlord and in the form requested by Landlord, any additional
documents needed to conform this Lease to the circumstances resulting from such
subdivision, so long as Tenant does not incur any additional cost or expense in
relation thereto.
29.29.2 THE OTHER IMPROVEMENTS. If portions of the Project or
property adjacent to the Project (collectively, the "OTHER IMPROVEMENTS") are
owned by an entity other than Landlord, Landlord, at its option, may enter into
an agreement with the owner or owners of any or all of the Other Improvements to
provide (i) for reciprocal rights of access and/or use of the Project and the
Other Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Project and the Other
Improvements, (iii) for the allocation of a portion of the Direct Expenses to
the Other Improvements and the operating expenses and taxes for the Other
Improvements to the Project, and (iv) for the use or improvement of the Other
Improvements and/or the Project in connection with the improvement,
construction, and/or excavation of the Other Improvements and/or the Project.
Nothing contained herein shall be deemed or construed to limit or otherwise
affect Landlord's right to convey all or any portion of the Project or any other
of Landlord's rights described in this Lease.
29.29.3 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project, provided,
Landlord shall use good faith efforts to minimize any such noise, dust,
obstruction of access, etc., to the extent reasonably practicable. Tenant hereby
waives any and all rent offsets or claims of constructive eviction which may
arise in connection with such construction.
29.30 BUILDING RENOVATIONS. It is specifically understood and agreed
that Landlord has no obligation and has made no promises to alter, remodel,
improve, renovate, repair or decorate the Premises, Building, or any part
thereof and that no representations respecting the condition of the Premises or
the Building have been made by Landlord to Tenant except as specifically set
forth herein or in the Tenant Work Letter. However, Tenant hereby acknowledges
that Landlord is currently renovating or may during the Lease Term renovate,
improve, alter, or modify
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(collectively, the "RENOVATIONS") the Project, the Building and/or the Premises.
Tenant hereby agrees that such Renovations shall in no way constitute a
constructive eviction of Tenant nor entitle Tenant to any abatement of Rent.
Landlord shall have no responsibility and shall not be liable to Tenant for any
injury to or interference with Tenant's business arising from the Renovations,
nor shall Tenant be entitled to any compensation or damages from Landlord for
loss of the use of the whole or any part of the Premises or of Tenant's personal
property or improvements resulting from the Renovations, or for any
inconvenience or annoyance occasioned by such Renovations; provided Landlord
shall not unreasonably obstruct or interfere with the accessibility of the
Premises, the Building or the parking areas or Tenant's use and enjoyment of the
Premises, the Building or the parking areas during such renovations.
29.31 NO VIOLATION. Tenant hereby warrants and represents that neither
its execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys' fees
and costs, arising from Tenant's breach of this warranty and representation.
29.32 LIMITATIONS ON TENANT'S LIABILITY. Tenant shall not have any
responsibility or liability for (i) violations of any law, ordinance, rule or
regulation relating to the Premises existing as of the Lease Commencement Date,
including, but not limited to, violations of any building codes, laws relating
to hazardous or toxic materials or substances ("HAZARDOUS MATERIALS"), and the
Americans with Disabilities Act of 1990, 42 U.S.C. ss.ss. 12101 et seq. and 47
U.S.C. ss.ss. 225 et seq. as amended from time to time, and any similar or
successor federal, state, or local laws (collectively, the "ADA") (all of the
foregoing laws, ordinances, rules and regulations are collectively referred to
herein as "APPLICABLE LAWS"), (ii) any Hazardous Materials present in, on, under
or about any part of the Premises or Project as of the Lease Commencement Date
or that were or are brought into, onto, about, or under any part of the Premises
or Project after the Lease Commencement Date, except for Hazardous Materials
brought onto the Premises or Project by Tenant or Tenant's agents, employees or
contractors, or (iii) without limiting the generality of subparts (i) and (ii)
above, the cleanup, remediation, or removal of any Hazardous Materials present
in, on, under or about any part of the Premises or Project as of the Lease
Commencement Date or that were or are brought into, onto, about, or under any
part of the Premises or Project after the Lease Commencement Date, except for
Hazardous Materials brought onto the Premises or Project by Tenant or Tenant's
agents, employees or contractors.
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"LANDLORD":
MAGELLAN IRVINE OAKS LIMITED PARTNERSHIP,
an Arizona limited partnership
By: /s/ David C. Dewar
-----------------------------------------
Its: Secretary/Treasurer
-----------------------------------------
"TENANT":
KOFAX IMAGE PRODUCTS, INC.,
a Delaware corporation
By: /s/ [SIG]
-----------------------------------------
Its: President/CEO
------------------------------------
By: /s/ [SIG]
-----------------------------------------
Its: Secretary
------------------------------------
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EXHIBIT A
---------
IRVINE OAKS EXECUTIVE PARK
--------------------------
OUTLINE OF PREMISES
-------------------
ATTACHED
--------
EXHIBIT A
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[MAP]
EXHIBIT A - Page 1
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EXHIBIT B
---------
IRVINE OAKS EXECUTIVE PARK
--------------------------
TENANT WORK LETTER
------------------
This Tenant Work Letter shall set forth the terms and conditions
relating to the construction of the tenant improvements in the Premises. This
Tenant Work Letter is essentially organized chronologically and addresses the
issues of the construction of the Premises, in sequence, as such issues will
arise during the actual construction of the Premises. All references in this
Tenant Work Letter to Articles or Sections of "this Lease" shall mean the
relevant portion of Articles 1 through 29 of the Office Lease to which this
Tenant Work Letter is attached as Exhibit B and of which this Tenant Work Letter
forms a part, and all references in this Tenant Work Letter to Sections of "this
Tenant Work Letter" shall mean the relevant portion of Sections 1 through 6 of
this Tenant Work Letter.
SECTION 1
---------
LANDLORD'S INITIAL CONSTRUCTION IN THE PREMISES
-----------------------------------------------
Landlord shall construct, at its sole cost and expense, the base, shell,
and core (i) of the Premises and (ii) of the Building (collectively, the "BASE,
SHELL, AND CORE" or "Base Building") in accordance with the plans and
specifications described on Schedule 2 attached hereto (the "DESIGN PLANS"),
provided that Landlord may make changes to the Design Plans as reasonably deemed
necessary or desirable by Landlord, or as required by law. Landlord agrees that,
as of the date of substantial completion of the Base Building, the same shall be
in material compliance with applicable building codes, and other governmental
laws, ordinances and regulations, including handicap access and Title 24
(collectively, "CODE"), applicable to the Building as of such date on an
unoccupied basis.
SECTION 2
---------
TENANT IMPROVEMENTS
-------------------
2.1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time
tenant improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount
of $1,416,175.00 based upon an estimated 56,647 usable square feet of the
Premises, which amount is subject to adjustment based on verification of the
useable square feet of the Premises as provided in Section 1.2 of the Lease, for
the costs relating to the initial design and construction of Tenant's
improvements which are permanently affixed to the Premises (the "TENANT
IMPROVEMENTS"). In no event shall Landlord be obligated to make disbursements
pursuant to this Tenant Work Letter in a total amount which exceeds the Tenant
Improvement Allowance. All Tenant Improvements for which the Tenant Improvement
Allowance has been made available shall be deemed Landlord's property under the
terms of the Lease.
2.2 Disbursement of the Tenant Improvement Allowance. Except as
otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance
shall be disbursed by
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Landlord (each of which disbursements shall be made pursuant to Landlord's
disbursement process) for costs related to the construction of the Tenant
Improvements and for the following items and costs (collectively, the "TENANT
IMPROVEMENT ALLOWANCE ITEMS"): (i) payment of the fees of the "Tenant's
Architect", "Architect" and the "Engineers," as those terms are defined in
Section 3.1 of this Tenant Work Letter, and payment of the fees incurred by, and
the cost of documents and materials supplied by, Landlord and Landlord's
consultants in connection with the preparation and review of the "CONSTRUCTION
DRAWINGS," as that term is defined in Section 3.1 of this Tenant Work Letter;
(ii) the cost of any changes in the Base, Shell and Core when such changes are
required by the Construction Drawings; (iii) the cost of any changes to the
Construction Drawings or Tenant Improvements required by Code; (iv) the cost of
Tenant's relocation into the Premises, up to a maximum amount equal to $1.00 per
rentable square foot of the Premises; and (v) the "LANDLORD SUPERVISION FEE", as
that term is defined in Section 4.3.2 of this Tenant Work Letter.
2.3 Standard Tenant Improvement Package. Landlord has established
specifications (the "SPECIFICATIONS") for the Building standard components to be
used in the construction of the Tenant Improvements in the Premises
(collectively, the "STANDARD IMPROVEMENT Package"), which Specifications are set
forth on Schedule 3 attached hereto. The quality of Tenant Improvements shall be
equal to or of greater quality than the quality of the Specifications, provided
that Landlord may, at Landlord's option, require the Tenant Improvements to
comply with certain Specifications. Landlord may make changes to the
Specifications for the Standard Improvement Package from time to time.
SECTION 3
---------
CONSTRUCTION DRAWINGS
---------------------
3.1 Selection of Architect/Construction Drawings. Tenant has retained
RLB Associates ("TENANT'S ARCHITECT") to prepare the "Final Space Plan," as that
term is defined in Section 3.2, below Landlord shall retain Datum Architects
(the "ARCHITECT") to prepare the "CONSTRUCTION DRAWINGS," as that term is
defined in this Section 3.1, and engineering consultants selected by Landlord
(the "ENGINEERS") to prepare all plans and engineering working drawings relating
to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and
sprinkler work of the Tenant Improvements, based on the Final Space Plan. The
plans and drawings to be prepared by Architect and the Engineers hereunder shall
be known collectively as the "Construction Drawings."
3.2 Final Space Plan. On or before the date set forth in Schedule 1,
attached hereto, Tenant and the Tenant's Architect shall prepare the final space
plan for Tenant Improvements in the Premises (collectively, the "FINAL SPACE
PLAN"), which Final Space Plan shall include a layout, in compliance with
applicable Code, and designation of all offices, rooms and other partitioning,
their intended use, and equipment to be contained therein, and shall deliver the
Final Space Plan to Landlord for Landlord's approval.
3.3 Final Working Drawings. The Architect and the Engineers shall
complete the architectural and engineering drawings for the Premises, and the
final architectural working
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drawings in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the "FINAL WORKING
DRAWINGS") and shall submit the same to Tenant on or before the date specified
in Schedule 1 to this Tenant Work Letter for Tenant's reasonable approval, which
approval shall be given within five (5) business days after Landlord's delivery
of the same to Tenant. Landlord agrees that the Tenant's Architect may be
involved in such approval, and that any costs relating to such involvement may,
at Tenant's option, be deducted from the Tenant Improvement Allowance.
3.4 Permits. Landlord shall submit the Final Working Drawing as approved
by Tenant (the "APPROVED WORKING DRAWINGS") to the appropriate municipal
authorities for all applicable building permits necessary to allow "Contractor,"
as that term is defined in Section 4.1, below, to commence and fully complete
the construction of the Tenant Improvements (the "PERMITS").
3.5 Time Deadlines. Tenant shall use good faith efforts and all due
diligence to cooperate with the Architect, the Engineers, and Landlord to
complete all phases of the Construction Drawings and the permitting process and
to receive the permits, and with Contractor for approval of the "COST PROPOSAL,"
as that term is defined in Section 4.2 of this Tenant Work Letter, as soon as
possible after the execution of the Lease, and, in that regard, shall meet with
Landlord on a scheduled basis to be determined by Landlord and acceptable to
Tenant, to discuss Tenant's progress in connection with the same. The applicable
dates for approval of items, plans and drawings as described in this Section 3,
Section 4, below, and in this Tenant Work Letter are set forth and further
elaborated upon in Schedule 1 (the "TIME DEADLINES"), attached hereto. Tenant
agrees to comply with the Time Deadlines.
SECTION 4
---------
CONSTRUCTION OF THE TENANT IMPROVEMENTS
---------------------------------------
4.1 Contractor. A contractor selected by Landlord and reasonably
acceptable to Tenant ("CONTRACTOR") shall construct the Tenant Improvements.
Landlord and Tenant agree that one (1) contractor designated by Tenant will be
considered for selection by Landlord as the Contractor, and that the Contractor
may be an affiliate of Landlord provided the fees paid by Landlord to any such
affiliated Contractor shall not be in excess of commercially competitive
contractor fees paid by Landlords of Comparable Buildings.
4.2 Cost Proposal. After the Approved Working Drawings are signed by
Landlord and Tenant, Tenant shall submit a list of subcontractors to be provided
by Tenant within ten (10) business days following full execution of the Lease,
which list shall be reasonably approved by Landlord, and which shall be included
in the list of subcontractors to be considered by Landlord for construction of
the Tenant Improvements. For those subcontractors which Landlord has approved,
Landlord shall solicit bids from at least three (3) subcontractors (at least two
(2) of which shall be from Tenant's list approved by Landlord) for each item in
connection with the construction of the Tenant Improvements. Landlord shall
select the lowest qualified (in Landlord's sole discretion) bid for purposes of
the Cost Proposal (defined below). Within five (5) business days after Landlord
receives such bids from said subcontractors, Landlord shall provide Tenant with
a cost proposal in accordance with the Approved Working Drawings, which cost
EXHIBIT B - Page 3
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[Kofax Image Products, Inc.]
<PAGE> 66
proposal shall include, as nearly as possible, the cost of all Tenant
Improvement Allowance Items to be incurred by Tenant in connection with the
design and construction of the Tenant Improvements (the "COST Proposal"). Tenant
shall approve and deliver the Cost Proposal to Landlord within fifteen (15) days
of the receipt of the same, and upon receipt of the same by Landlord, Landlord
shall be released by Tenant to purchase the items set forth in the Cost Proposal
and to commence the construction relating to such items. The date by which
Tenant must approve and deliver the Cost Proposal to Landlord shall be known
hereafter as the "Cost Proposal Delivery Date".
4.3 Construction of Tenant Improvements by Contractor under the
Supervision of Landlord.
4.3.1 Over-Allowance Amount. If the Cost Proposal shows
costs greater than the amount of the Tenant Improvement Allowance (the
"OVER-ALLOWANCE AMOUNT"), then Tenant shall pay the Over-Allowance Amount as
follows. Once the Cost Proposal is approved and the Over-Allowance Amount, if
any, is determined, a construction budget shall be prepared which will allocate,
on a monthly basis, over the entire completion schedule for the Tenant
Improvements, the disbursement of the Tenant Improvement Allowance and the
Over-Allowance Amount, on a pro-rata basis, based on the ratio of the total Cost
Proposal to the total Over-Allowance Amount. Tenant shall pay the monthly
allocation of the Over-Allowance Amount each month, over the completion schedule
for the Tenant Improvements, until the Over-Allowance Amount is paid in full.
Such payment by Tenant shall be a condition to Landlord's obligation to pay any
amounts of Tenant Improvements Allowance hereunder. In the event that, after the
Cost Proposal Delivery Date, any revisions, changes, or substitutions shall be
made to the Construction Drawings or the Tenant Improvements, which are the
result of changes or additions required by Tenant, any additional costs which
arise in connection with such revisions, changes or substitutions or any other
additional costs shall be added to the Over-Allowance Amount and paid by Tenant
in accordance with the foregoing provision.
4.3.2 Landlord's Retention of Contractor. Landlord shall
independently retain Contractor, on behalf of Tenant, to construct the Tenant
Improvements in accordance with the Approved Working Drawings and the Cost
Proposal and Landlord shall supervise the construction by Contractor, and Tenant
shall pay a construction supervision and management fee (the "LANDLORD
SUPERVISION FEE") to Landlord in an amount equal to the product of (i) three
percent (3%) and (ii) an amount equal to the Tenant Improvement Allowance plus
the Over-Allowance Amount (as such Over-Allowance Amount may increase pursuant
to the terms of this Tenant Work Letter), but not including reimbursable amounts
payable to the Architects or Engineers.
4.3.3 Contractor's Warranties and Guaranties. Landlord
hereby assigns to Tenant all warranties and guaranties by Contractor relating to
the Tenant Improvements, and Tenant hereby waives all claims against Landlord
relating to, or arising out of the construction of, the Tenant Improvements.
EXHIBIT B - Page 4
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 67
SECTION 5
---------
COMPLETION OF THE TENANT IMPROVEMENTS;
--------------------------------------
LEASE COMMENCEMENT DATE
-----------------------
5.1 Ready for Occupancy. Subject to the terms of Section 6.1, below, the
Premises shall be deemed "Ready for Occupancy" upon the Substantial Completion
of the Premises and issuance of a certificate of occupancy or its legal
equivalent. For purposes of this Lease, "Substantial Completion" of the Premises
shall occur upon the completion of construction of the Tenant Improvements in
the Premises pursuant to the Approved Working Drawings, with the exception of
any punch list items identified by Tenant and any tenant fixtures,
work-stations, built-in furniture, or equipment to be installed by Tenant. With
respect to any punch list items identified by Tenant, Landlord shall complete or
repair such items to the specifications required by this Tenant Work Letter
within sixty (60) days, unless prevented by delays beyond control of Landlord.
5.2 Delay of the Substantial Completion of the Premises. Except as
provided in this Section 5.2, the Lease Commencement Date shall occur as set
forth in the Lease and Section 5.1, above. If there shall be a delay or there
are delays in the Substantial Completion of the Premises or in the occurrence of
any of the other conditions precedent to the Lease Commencement Date, as set
forth in the Lease, as a direct, indirect, partial, or total result of:
5.2.1 Tenant's failure to comply with the Time Deadlines;
5.2.2 Tenant's failure to timely approve any matter
requiring Tenant's approval;
5.2.3 A breach by Tenant of the terms of this Tenant Work
Letter or the Lease;
5.2.4 Changes in any of the Construction Drawings after
disapproval of the same by Landlord or because the same do not comply with Code
or other applicable laws;
5.2.5 Tenant's request for changes in the Approved Working
Drawings;
5.2.6 Tenant's requirement for materials, components,
finishes or improvements which are not available in a commercially reasonable
time given the anticipated date of Substantial Completion of the Premises, as
set forth in the Lease, or which are different from, or not included in, the
Standard Improvement Package;
5.2.7 Changes to the Base, Shell and Core required by the
Approved Working Drawings as a result of changes requested by Tenant or required
by any work requested by Tenant; or
5.2.8 Any other acts or omissions of Tenant, or its
agents, or employees;
EXHIBIT B - Page 5
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 68
then, notwithstanding anything to the contrary set forth in the Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Premises, the Lease Commencement Date shall be deemed to be
the date the Lease Commencement Date would have occurred if no Tenant delay or
delays, as set forth above, had occurred.
SECTION 6
---------
MISCELLANEOUS
-------------
6.1 Tenant's Entry Into the Premises Prior to Substantial Completion.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Building and the Premises, Contractor shall allow Tenant access to the
Premises prior to the Substantial Completion of the Premises for the purpose of
Tenant installing overstandard equipment or fixtures (including Tenant's data
and telephone equipment) in the Premises, and, furthermore, Landlord agrees that
in no event shall the Premises be deemed Ready for Occupancy prior to the date
which is thirty (30) days after the date Tenant is granted such access. Prior to
Tenant's entry into the Premises as permitted by the terms of this Section 6.1,
Tenant shall submit a schedule to Landlord and Contractor, for their approval,
which schedule shall detail the timing and purpose of Tenant's entry. Tenant
shall hold Landlord harmless from and indemnify, protect and defend Landlord
against any loss or damage to the Building or Premises, or damage to Tenant's
furniture, fixtures or equipment, or personal property, and against injury to
any persons caused by Tenant's actions pursuant to this Section 6.1.
6.2 Elevators. To the extent the same have been installed and completed
by such date, Landlord shall make the freight elevator and building elevators,
reasonably available to Tenant fourteen (14) days prior to the time the premises
are ready for Occupancy, in connection with initial decorating, furnishing and
moving into the Premises.
6.3 Tenant's Representative. Tenant has designated Ms. Pat Johnson as
its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Landlord, shall have full authority
and responsibility to act on behalf of the Tenant as required in this Tenant
Work Letter.
6.4 Landlord's Representative. Landlord has designated Mr. Dave Welling
as its sole representatives with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.
6.5 Time of the Essence in This Tenant Work Letter. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Tenant is required to approve or deliver
an item, if no written notice of approval is given or the item is not delivered
within the stated time period, at Landlord's sole option, at the end of such
period the item shall automatically be deemed approved or delivered by Tenant
and the next succeeding time period shall commence.
EXHIBIT B - Page 6
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 69
6.6 Tenant's Lease Default. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in the
Lease, or a default by Tenant under this Tenant Work Letter, has occurred at any
time on or before the Substantial Completion of the Premises, then (i) in
addition to all other rights and remedies granted to Landlord pursuant to the
Lease, Landlord shall have the right to withhold payment of all or any portion
of the Tenant Improvement Allowance and/or Landlord may cause Contractor to
cease the construction of the Premises (in which case, Tenant shall be
responsible for any delay in the Substantial Completion of the Premises caused
by such work stoppage as set forth in Section 5 of this Tenant Work Letter), and
(ii) all other obligations of Landlord under the terms of this Tenant Work
Letter shall be forgiven until such time as such default is cured pursuant to
the terms of the Lease.
EXHIBIT B - Page 7
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 70
SCHEDULE 1 TO EXHIBIT B
-----------------------
TIME DEADLINES
--------------
<CAPTION>
Dates Actions to be Performed
----- -----------------------
1. June 1, 1998 Tenants retention of Architect and
Engineers.
2. June 30, 1998 Preliminary space plan to be completed
by tenant and delivered to landlord.
3. July 15, 1998 Contractor to submit cost proposal to
tenant and delivered to landlord.
4. July 15, 1998 Architect and Engineers commence working
drawings.
5. July 15, 1998 Information concerning structural or
underground utilities which need to be
installed during shell construction.
6. August 10, 1998 Submittal of final working drawings to
landlord for approval.
7. August 14, 1998 Submittal of landlord approved working
drawings to City for plan check.
8. October 30, 1998 Receipt of all required permits.
9. November 23, 1998 Approval of bids from all primary
subcontractors.
10. November 30, 1998 Commencement of T. I. construction.
11. March 1, 1999 Delivery by contractor to landlord and
tenant Certificate of Substantial Completion.
SCHEDULE 1 TO EXHIBIT B - Page 1
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 71
SCHEDULE 2 TO EXHIBIT B
-----------------------
DESIGN PLANS
------------
ATTACHED
--------
SCHEDULE 2 TO EXHIBIT B
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 72
[MAP]
SCHEDULE 2 TO EXHIBIT B - Page 1
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 73
[MAP]
SCHEDULE 2 TO EXHIBIT B - Page 2
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 74
[MAP]
SCHEDULE 2 TO EXHIBIT B - Page 3
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 75
[MAP]
SCHEDULE 2 TO EXHIBIT B - Page 4
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 76
SCHEDULE 3 TO EXHIBIT B
-----------------------
SPECIFICATIONS
--------------
ATTACHED
--------
SCHEDULE 3 TO EXHIBIT B
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 77
SECTION 1
SITE WORK
--------------------------------------------------------------------------------
PAVING AND CURBS
All parking areas are to be finished in asphaltic concrete paving installed
in accordance with the recommendations of the soils investigation report.
All exterior pedestrian walkways abutting the building are to be finished in
concrete paving. All transitions between pedestrian walkways, landscaping
and parking/ shipping and receiving areas are to be separated by concrete
curbs.
All pavement markings and signage required by all applicable codes and
ordinances will be provided.
UNDERGROUND UTILITIES
The following underground utilities will be extended where necessary from
the current location and brought to within 5 feet of the building limit:
-- water;
-- storm sewer;
-- sanitary sewer;
-- electrical;
-- telephone.
These services will then be connected to the building system by the relevant
trade.
LANDSCAPING AND IRRIGATION
Exterior building perimeter and parking areas to be landscaped and lit in a
manner consistent with the balance of the Executive Park.
All exterior landscaping will be served by an automatic irrigation system.
--------------------------------------------------------------------------------
Page 1 Outline Specification
Irvine Oaks Executive Park
Irvine, California
SCHEDULE 3 TO EXHIBIT B -- PAGE 1
<PAGE> 78
SECTION 2
BUILDING INTERIORS
--------------------------------------------------------------------------------
The following areas will be built-out and equipped as set out below, as part of
the shell building.
WASHROOMS
One (4) compartment men's and one (4) compartment women's washroom will be
provided per floor. They will be lit, sprinklered, ventilated, provided with
hot and cold water and finished as per the following:
-- sound insulated gypsum board walls and ceilings;
-- ceramic tile floors and base;
-- ceramic tile walls, (4 ft. high on wet walls only);
-- painted ceiling and balance of walls;
-- pre-finished steel toilet partitions and urinal screens;
-- chrome, stainless steel or aluminum washroom accessories;
-- plastic laminate vanities;
-- above vanity mirrors; china fixtures.
ELECTRICAL/ TELEPHONE ROOMS
One electrical/ telephone room will be provided per floor for the
distribution of these services. It will be lit, sprinklered, ventilated and
finished as per the following:
-- painted gypsum board walls;
-- painted concrete or vinyl composite tile floor;
-- vinyl base.
-- telephone equipment backboard
JANITORIAL ROOM
One janitorial room will be provided. It will be lit, sprinklered,
ventilated, provided with a janitor's sink with hot and cold water and
finished as per the electrical/ telephone rooms identified above.
ELEVATOR MACHINE ROOM
One elevator machine room will be provided. It will be lit, sprinklered,
ventilated and finished as per the electrical/ telephone rooms identified
above.
--------------------------------------------------------------------------------
Page 2 Outline Specification
Irvine Oaks Executive Park
Irvine, California
SCHEDULE 3 TO EXHIBIT B -- PAGE 2
<PAGE> 79
SECTION 2
BUILDING INTERIORS
--------------------------------------------------------------------------------
STAIRS AND SHELL BUILDING CORRIDORS
Shell building stairs and corridors will be lit and sprinklered, however,
ventilation of these areas will become part of the tenant improvement
package. These areas will be enclosed with gypsum board or suspended lay-in
tile. All gypsum board and railings will be painted. Floors and stairs will
be wood and concrete, ready to receive tenant flooring.
ELEVATOR
One 2500 pound, 150 foot per minute, hydraulic elevator shall be provided
serving two stops. Elevator doors, frames and front return panels shall be
finished in baked enamel. The elevator walls shall be clad in plastic
laminate covered panels and the floor finished in carpet. The ceiling will
have an egg-crate louver with recessed lighting and a stainless steel wall
rail will be provided in accordance with ADA requirements.
DOORS AND FRAMES
All shell building doors and frames will be plain sliced red oak doors with
Timely hollow metal frames excluding those occurring in aluminum and glass
storefronts, which will be provided as part of the storefront system.
The balance of the interior of the building will be unfinished.
--------------------------------------------------------------------------------
Page 3 Outline Specification
Irvine Oaks Executive Park
Irvine, California
SCHEDULE 3 TO EXHIBIT B -- PAGE 3
<PAGE> 80
SECTION 3
BUILDING EXTERIOR
--------------------------------------------------------------------------------
CLADDING
The exterior cladding of the building will be comprised of painted tilt-up
concrete panels, in-filled with aluminum and glass windows and storefront
sections. Glass will be single glazed blue reflective; to match the glass
currently installed in the balance of the Executive Park. All aluminum will
be finished in a high performance colored coating.
ROOFING
The roof will be finished in a 4 ply built-up system or equivalent with
industry standard flashings and trims.
SPECIALTIES
All building finish hardware exposed to the exterior shall be stainless
steel and all interior finish hardware shall generally be chrome plated or
aluminum.
The building roof shall be accessible from a roof hatch and ladder from the
inside.
--------------------------------------------------------------------------------
Page 4 Outline Specification
Irvine Oaks Executive Park
Irvine, California
SCHEDULE 3 TO EXHIBIT B -- PAGE 4
<PAGE> 81
SECTION 4
BUILDING STRUCTURE
--------------------------------------------------------------------------------
FOUNDATION
Building foundations and slab on grade are to be constructed of reinforced,
cast-in-place concrete, on surfaces prepared in accordance with the
recommendations of the soils investigation report.
BUILDING FRAME
The building will be constructed based on the tilt-up concrete approach with
a steel and timber frame.
The second floor structure is to consist of a steel and timber framed floor
system covered with a plywood and lightweight concrete or gypsum topping.
--------------------------------------------------------------------------------
Page 5 Outline Specification
Irvine Oaks Executive Park
Irvine, California
SCHEDULE 3 TO EXHIBIT B -- PAGE 5
<PAGE> 82
SECTION 5
MECHANICAL
--------------------------------------------------------------------------------
PLUMBING
A complete roof drainage system will be provided. Complete plumbing services
will be provided to the washrooms and janitors closet as defined in Section
2 - Building Interiors.
FIRE PROTECTION
A complete automatic fire sprinkler system will be provided in accordance
with local codes and ordinances. Sprinkler piping will be sized for one head
per 168 square feet per N.F.P.A. 13 with 1" tees and plugs installed to
accommodate future tenant improvement.
HVAC
The shell building will be provided with rooftop heat pump packaged A/C
units sized to provide an average of (1) ton per 350 actual s.f. They will
be provided complete with supply fans, cooling and heating sections,
filters, and fresh air intakes. An electronic programmable thermostat will
be provided for each A/C unit. The shell building will include the
mechanical shafts and vertical members; the tenant improvement will be all
the distribution and horizontal members. All roof top equipment shall be
installed within the limits of the shell buildings' mechanical screen.
--------------------------------------------------------------------------------
Page 6 Outline Specification
Irvine Oaks Executive Park
Irvine, California
SCHEDULE 3 TO EXHIBIT B -- PAGE 6
<PAGE> 83
SECTION 6
ELECTRICAL
--------------------------------------------------------------------------------
MAIN SERVICE
A 1200 amp. 277/ 480-volt service will be installed in the 40,000 s.f.
buildings and a 1600 amp. 277/ 480-volt service will be installed in the
60,000 s.f. building. Power will then be distributed to the two electrical/
telephone rooms. Complete lighting and power services will be provided to
the building areas defined in Section 2 - Building Interiors.
TELEPHONE
The conduit system from the local telephone utility will be brought to the
building and distributed to the main electrical/ telephone room via a system
of conduits and floor sleeves. 2- 4" diameter conduits/ sleeves will be
provided to each of the electrical/ telephone rooms.
--------------------------------------------------------------------------------
Page 7 Outline Specification
Irvine Oaks Executive Park
Irvine, California
SCHEDULE 3 TO EXHIBIT B -- PAGE 7
<PAGE> 84
EXHIBIT C
---------
IRVINE OAKS EXECUTIVE PARK
--------------------------
NOTICE OF LEASE TERM DATES
--------------------------
To: ___________________________
___________________________
___________________________
___________________________
Re: Office Lease dated ____________, 19__ between
____________________, a _____________________ ("Landlord"), and
_______________________, a _______________________ ("Tenant")
concerning Suite ______ on floor(s) __________ of the office
building located at ____________________________, Los Angeles,
California.
Gentlemen:
In accordance with the Office Lease (the "Lease"), we wish to advise you
and/or confirm as follows:
1. The Lease Term shall commence on or has commenced on
______________ for a term of __________________ ending on
__________________.
2. Rent commenced to accrue on __________________, in the amount of
__________________.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each
billing thereafter, with the exception of the final billing,
shall be for the full amount of the monthly installment as
provided for in the Lease.
4. Your rent checks should be made payable to __________________ at
__________________.
5. The exact number of rentable/usable square feet within the
Premises is ____________ square feet.
EXHIBIT C - Page 1
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
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6. Tenant's Share as adjusted based upon the exact number of usable
square feet within the Premises is ________%.
"Landlord":
---------------------------------------,
a
-------------------------------------
By:
-------------------------------------
Its:
---------------------------------
Agreed to and Accepted
as of ____________, 19___.
"Tenant":
---------------------------------------
a
-------------------------------------
By:
------------------------------------
Its:
--------------------------------
EXHIBIT C - Page 2
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
<PAGE> 86
EXHIBIT D
---------
IRVINE OAKS EXECUTIVE PARK
--------------------------
RULES AND REGULATIONS
---------------------
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors or windows of the Premises without obtaining
Landlord's prior written consent. Tenant shall bear the cost of any lock changes
or repairs required by Tenant. Two keys will be furnished by Landlord for the
Premises, and any additional keys required by Tenant may be obtained by Tenant
at its sole cost, provided in the event any keys or locks obtained by Tenant
differ from those initially provided by Landlord, Tenant shall provide, at its
sole costs, duplicate keys to Landlord. Upon the termination of this Lease,
Tenant shall restore to Landlord all keys of stores, offices, and toilet rooms,
either furnished to, or otherwise procured by, Tenant and in the event of the
loss of keys so furnished, Tenant shall pay to Landlord the cost of replacing
same or of changing the lock or locks opened by such lost key if Landlord shall
deem it necessary to make such changes.
2. All doors opening to public corridors shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. In case of invasion, mob, riot, public excitement, or other
commotion, Landlord reserves the right to prevent access to the Building or the
Project during the continuance thereof by any means it deems appropriate for the
safety and protection of life and property.
4. The requirements of Tenant will be attended to only upon application
at the management office for the Project or at such office location designated
by Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.
5. No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on any part of the Premises or the
Building without the prior written consent of the Landlord. Tenant shall not
disturb, solicit, peddle, or canvass any occupant of the Project and shall
cooperate with Landlord and its agents of Landlord to prevent same.
6. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from the violation of this rule shall
be borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.
EXHIBIT D - Page 1
IRVINE OAKS EXECUTIVE PARK
[Kofax Image Products, Inc.]
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7. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machine or machines other than fractional
horsepower office machines shall be installed, maintained or operated upon the
Premises without the written consent of Landlord.
8. Subject to Section 5.3 of this Lease, Tenant shall not use or keep in
or on the Premises, the Building, or the Project any kerosene, gasoline or other
inflammable or combustible fluid, chemical, substance or material.
9. Tenant shall not without the prior written consent of Landlord use
any method of heating or air conditioning other than that supplied by Landlord.
10. Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in or on the Premises, or permit or allow the Premises
to be occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Project by reason of noise, odors, or vibrations, or
interfere with other tenants or those having business therein, whether by the
use of any musical instrument, radio, phonograph, or in any other way. Tenant
shall not throw anything out of doors, windows or skylights or down passageways.
11. Tenant shall not bring into or keep within the Project, the Building
or the Premises any animals, birds, aquariums, or, except in areas designated by
Landlord, bicycles or other vehicles.
12. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances,
rules and regulations.
13. The Premises shall not be used for manufacturing or for the storage
of merchandise except as permitted in the Summary.
14. Landlord reserves the right to exclude or expel from the Project any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.
15. Tenant, its employees and agents shall not loiter in or on the
entrances, corridors, sidewalks, lobbies, courts, halls, stairways, elevators,
vestibules or any Common Areas for the purpose of smoking tobacco products or
for any other purpose, nor in any way obstruct such areas, and shall use them
only as a means of ingress and egress for the Premises.
16. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of trash and garbage in Irvine,
California without violation of any law or ordinance governing such
EXHIBIT D - Page 2
IRVINE OAKS EXECUTIVE PARK
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disposal. All trash, garbage and refuse disposal shall be made only through
entry-ways and elevators provided for such purposes at such times as Landlord
shall designate.
17. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
18. Any persons employed by Tenant to do janitorial work shall be
subject to the prior written approval of Landlord, and while in the Building and
outside of the Premises, shall be subject to and under the control and direction
of the Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.
19. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord, and no
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises other than Landlord standard
drapes. All electrical ceiling fixtures hung in the Premises or spaces along the
perimeter of the Building must be fluorescent and/or of a quality, type, design
and a warm white bulb color approved in advance in writing by Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the prior written consent of Landlord. Tenant shall abide by
Landlord's regulations concerning the opening and closing of window coverings
which are attached to the windows in the Premises, if any, which have a view of
any interior portion of the Building or Building Common Areas.
20. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in the
Building shall not be covered or obstructed by Tenant, nor shall any bottles,
parcels or other articles be placed on the windowsills.
21. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.
22. Tenant hereby acknowledges that Landlord shall have no obligation to
provide guard service or other security measures for the benefit of the
Premises, the Building or the Project. Tenant hereby assumes all responsibility
for the protection of Tenant and its agents, employees, contractors, invitees
and guests, and the property thereof, from acts of third parties, including
keeping doors locked and other means of entry to the Premises closed, whether or
not Landlord, at its option, elects to provide security protection for the
Project or any portion thereof. Tenant further assumes the risk that any safety
and security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.
23. All office equipment of any electrical or mechanical nature shall be
placed by Tenant in the Premises in settings approved by Landlord, to absorb or
prevent any vibration, noise and annoyance.
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24. No auction, liquidation, fire sale, going-out-of-business or
bankruptcy sale shall be conducted in the Premises without the prior written
consent of Landlord.
25. No tenant shall use or permit the use of any portion of the Premises
for living quarters, sleeping apartments or lodging rooms.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Premises,
Building, the Common Areas and the Project, and for the preservation of good
order therein, as well as for the convenience of other occupants and tenants
therein. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenants, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of any other
tenant, nor prevent Landlord from thereafter enforcing any such Rules or
Regulations against any or all tenants of the Project. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as a
condition of its occupancy of the Premises.
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EXHIBIT E
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IRVINE OAKS EXECUTIVE PARK
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FORM OF TENANT'S ESTOPPEL CERTIFICATE
-------------------------------------
The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of ___________, 199 by and between _______________ as
Landlord, and the undersigned as Tenant, for Premises on the ______________
floor(s) of the office building located at ______________, Irvine, California
____________, certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease
and all amendments and modifications thereto. The documents contained in Exhibit
A represent the entire agreement between the parties as to the Premises.
2. The undersigned currently occupies the Premises described in the
Lease, the Lease Term commenced on __________, and the Lease Term expires on
___________.
3. Base Rent became payable on ____________.
4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.
5. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:
6. Tenant shall not modify the documents contained in Exhibit A without
the prior written consent of Landlord's mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through ___________. The current monthly installment of Base Rent is
$_____________________.
8. To Tenant's actual knowledge, All conditions of the Lease to be
performed by Landlord necessary to the enforceability of the Lease have been
satisfied and Landlord is not in default thereunder.
9. No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Landlord except as provided in the Lease.
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10. To Tenant's actual knowledge, As of the date hereof, there are no
existing defenses or offsets that the undersigned has against Landlord.
11. If Tenant is a corporation or partnership, each individual executing
this Estoppel Certificate on behalf of Tenant hereby represents and warrants
that Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.
The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee or prospective purchaser,
and acknowledges that said prospective mortgagee or prospective purchaser will
be relying upon the statements contained herein in making the loan or acquiring
the property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.
Executed at on the day of , 19 .
-------------- ---- ----------- --
"Tenant":
---------------------------------------,
a
--------------------------------------
By:
--------------------------------------
Its:
----------------------------------
By:
--------------------------------------
Its:
----------------------------------
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EXHIBIT F
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RESERVED AND VISITORS PARKING SPACES
------------------------------------
[MAP]
EXHIBIT F - Page 1
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[Kofax Image Products, Inc.]