California-Los Angeles-3030 Andrita Street Lease - Kingston Andrita LLC and Playboy Entertainment Group Inc.
AGREEMENT OF LEASE
between
Kingston Andrita LLC,
Landlord
and
Playboy Entertainment Group, Inc.,
Tenant
Dated as of September 20, 2001
Premises
3030 Andrita Street, Los Angeles, California
Neither this draft lease, nor any other draft lease, nor any correspondence,
writings, communications or other documents delivered or exchanged between
Landlord and Tenant shall be deemed to be an offer or agreement to lease or to
enter into a lease, on the terms set forth herein or otherwise and no lease, or
agreement to lease, shall be binding on either party except and until as set
forth in Section 35.15 of this draft.
Page
ARTICLE 1 DEMISE OF PREMISES AND DURATION OF LEASE ........................ 1
Section 1.1. Demise of Premises ................................ 1
Section 1.2. Duration of Lease ................................. 1
Section 1.3. Existing Leases ................................... 2
ARTICLE 2 RENT ............................................................ 4
Section 2.1. Time and Place of Payment ......................... 4
Section 2.2. Base Rent ......................................... 4
Section 2.3. Proration of Base Rent ............................ 8
Section 2.4. Abatement, Deduction, Counterclaim and Offset ..... 8
Section 2.5. All Amounts Deemed Rent ........................... 8
ARTICLE 3 IMPOSITIONS ..................................................... 8
Section 3.1. Payment of Impositions ............................ 8
Section 3.2. Income or Franchise Tax of Landlord ............... 10
Section 3.3. Evidence of Payment ............................... 10
Section 3.4. Apportionment of Impositions ...................... 10
Section 3.5. Contest of Real Property Tax Assessments
and Impositions ................................... 11
ARTICLE 4 Intentionally Omitted ........................................... 12
ARTICLE 5 LATE CHARGES .................................................... 12
ARTICLE 6 INSURANCE ....................................................... 13
Section 6.1. Insurance Requirements ............................ 13
Section 6.2. Additional Insureds ............................... 17
Section 6.3. Policy Limits Review .............................. 17
Section 6.4. Treatment of Proceeds ............................. 17
Section 6.5. Insurance Carriers and Form of Policies ........... 18
Section 6.6. Payment of Premiums ............................... 18
Section 6.7. Cooperation in Collection of Proceeds ............. 18
Section 6.8. Intentionally omitted ............................. 18
Section 6.9. Waiver of Subrogation ............................. 18
Section 6.10. Compliance With Policy Requirements ............... 18
Section 6.11. Required Insurance Policy Clauses ................. 19
Section 6.12. Landlord's Insurance .............................. 19
ARTICLE 7 DAMAGE, DESTRUCTION AND RESTORATION ............................. 19
Section 7.1. Notice to Landlord ................................ 19
Section 7.2. Casualty Restoration .............................. 19
Section 7.3. Termination Options ............................... 20
Section 7.4. Repair Delays ..................................... 21
Section 7.5. Effect of Casualty on this Lease .................. 21
Section 7.6. Waiver of Rights Under Statute .................... 21
ARTICLE 8 CONDEMNATION .................................................... 21
Section 8.1. Substantial Taking ................................ 21
Section 8.2. Less Than A Substantial Taking .................... 22
Section 8.3. Temporary Taking .................................. 23
Section 8.4. Right to Terminate at End of Term ................. 23
Section 8.5. Termination Pursuant to This Article .............. 23
Section 8.6. Disputes .......................................... 23
Section 8.7. Collection of Awards .............................. 23
Section 8.8. Separate Claim .................................... 24
Section 8.9. Waiver by Tenant .................................. 24
Section 8.10. Fee Mortgage ...................................... 24
ARTICLE 9 ASSIGNMENT, TRANSFER AND SUBLETTING ............................. 24
Section 9.1. No Right to Assign, Transfer ...................... 24
Section 9.2. Permitted Assignments and Sublettings ............. 24
Section 9.3. Collection of Rent by Landlord .................... 27
Section 9.4. Permitted Licenses ................................ 27
Section 9.5. Sublease/License Assignment ....................... 28
Section 9.6. Required Sublease Clauses ......................... 28
Section 9.7. Landlord's Sale or Conveyance ..................... 28
ARTICLE 10 MORTGAGES ...................................................... 29
Section 10.1. Tenant's Right to Mortgage ........................ 29
Section 10.2. Landlord's Right to Mortgage ...................... 30
Section 10.3. Subordination ..................................... 31
ARTICLE 11 LANDLORD'S AND TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS;
UTILITIES ...................................................... 32
Section 11.1. Maintenance of the Premises, Etc. ................. 32
Section 11.2. Free of Dirt, Etc. ................................ 33
Section 11.3. No Obligation to Supply Utilities ................. 33
Section 11.4. Window Cleaning ................................... 33
ARTICLE 12 CHANGES, ALTERATIONS AND ADDITIONS ............................. 33
Section 12.1. Tenant's Right to Make Alterations ................ 33
Section 12.2. No Reduction in Value of Premises ................. 33
Section 12.3. Compliance with Governmental Requirements ......... 33
Section 12.4. Insurance Requirements ............................ 33
Section 12.5. Contractor's Bond ................................. 34
Section 12.6. Removal ........................................... 34
Section 12.7. Exterior Signs .................................... 34
ARTICLE 13 REQUIREMENTS OF GOVERNMENTAL AUTHORITIES ....................... 35
Section 13.1. Obligation to Comply With Requirements ............ 35
Section 13.2. Contest of Requirements by Tenant ................. 35
Section 13.3. Sharing of Costs .................................. 36
ARTICLE 14 DISCHARGE OF LIENS; BONDS ...................................... 36
Section 14.1. Creation of Liens ................................. 36
Section 14.2. Discharge of Liens ................................ 37
Section 14.3. No Authority to Contract in Name of Landlord;
Notice of Completion .............................. 37
ARTICLE 15 LANDLORD'S WORK ................................................ 37
Section 15.1. Landlord's Work ................................... 37
Section 15.2. No Representations as to Premises ................. 44
SECTION 15.3.(a) Unused Playboy Allowance .......................... 44
Section 15.4. Landlord's Costs .................................. 48
Section 15.5. Disputes .......................................... 48
ARTICLE 16 LIMITATION OF LANDLORD'S LIABILITY ............................. 48
ARTICLE 17 INDEMNIFICATION OF LANDLORD AND TENANT ......................... 49
Section 17.1. Tenant's Obligation to Indemnify .................. 49
Section 17.2. Contractual Liability ............................. 50
Section 17.3. Landlord's Obligation to Indemnify ................ 50
Section 17.4. Defense of Claim, Etc. ............................ 50
Section 17.5. Survival Clause ................................... 50
ARTICLE 18 RIGHT OF ENTRY AND INSPECTION .................................. 50
Section 18.1. Permission to Enter Premises ...................... 50
Section 18.2. No Liability of Landlord for Disturbance .......... 51
ARTICLE 19 PARTY'S RIGHT TO PERFORM THE OTHER'S COVENANTS ................. 51
Section 19.1. Landlord's Right to Perform Tenant's Obligations .. 51
Section 19.2. Alterations ....................................... 51
Section 19.3. Right to Reimbursement ............................ 52
Section 19.4. Discharge of Liens ................................ 52
Section 19.5. Reimbursement For Amounts Paid by Landlord
Pursuant to this Article .......................... 52
Section 19.6. Waiver, Release and Assumption of Obligations ..... 52
Section 19.7. Proof of Damages .................................. 52
Section 19.8. Tenant's Right to Perform Landlord's Obligations .. 52
Section 19.9. Amounts owed by Landlord to Tenant ................ 53
ARTICLE 20 PERMITTED USE; NO UNLAWFUL OCCUPANCY ........................... 53
Section 20.1. Type of Use ....................................... 53
Section 20.2. Prohibited Uses ................................... 53
Section 20.3. Restriction of Public Use ......................... 53
Section 20.4. Hazardous Materials ............................... 54
ARTICLE 21 EVENTS OF DEFAULT, CONDITIONAL LIMITATIONS, REMEDIES, ETC. ..... 56
Section 21.1. Events of Default ................................. 56
Section 21.2. Enforcement of Performance ........................ 58
Section 21.3. Remedies .......................................... 58
Section 21.4. Intentionally Omitted ............................. 59
Section 21.5. Intentionally Omitted ............................. 59
Section 21.6. Receipt of Monies after Notice or Termination ..... 59
Section 21.7. Waiver of Service ................................. 60
Section 21.8. Strict Performance ................................ 60
Section 21.9. Landlord's Right to Enjoin Defaults or
Threatened Defaults ............................... 60
Section 21.10. Tenant's Payment of All Costs and Expenses ........ 60
Section 21.11. Rights and Remedies Cumulative .................... 61
ARTICLE 22 NOTICES ........................................................ 61
Section 22.1. All Notices, Communications, etc., in Writing ..... 61
Section 22.2. Service ........................................... 61
ARTICLE 23 Intentionally Omitted .......................................... 62
ARTICLE 24 Intentionally Omitted .......................................... 62
ARTICLE 25 EXCAVATIONS AND SHORING ........................................ 62
ARTICLE 26 CERTIFICATE OF TENANT AND LANDLORD ............................. 62
ARTICLE 27 CONSENTS AND APPROVALS ......................................... 62
Section 27.1. Effect of Granting or Failure to Grant
Approvals or Consents ............................. 62
Section 27.2. Remedy for Refusal to Grant Consent or
Approval .......................................... 63
ARTICLE 28 SURRENDER AT END OF TERM ....................................... 63
ARTICLE 29 NO OTHER AGREEMENTS ............................................ 64
ARTICLE 30 QUIET ENJOYMENT ................................................ 64
ARTICLE 31 ARBITRATION .................................................... 64
Section 31.1. Notice ............................................ 64
Section 31.2. Arbitration Procedure ............................. 65
Section 31.3. Article 27 Arbitrations ........................... 65
Section 31.4. Article 15 Arbitrations ........................... 65
Section 31.5. Power of Arbitrators .............................. 65
ARTICLE 32 INVALIDITY OF CERTAIN PROVISIONS ............................... 66
ARTICLE 33 NO RECORDING OF LEASE .......................................... 66
ARTICLE 34 CERTAIN DEFINITIONS ............................................ 66
ARTICLE 35 MISCELLANEOUS .................................................. 68
Section 35.1. Captions .......................................... 68
Section 35.2. Table of Contents ................................. 68
Section 35.3. Reference to Landlord and Tenant .................. 68
Section 35.4. Relationship of Landlord and Tenant ............... 68
Section 35.5. Person Acting on Behalf of a Party ................ 68
Section 35.6. Landlord's Liability .............................. 68
Section 35.7. Landlord's Remedies Cumulative .................... 68
Section 35.8. No Termination .................................... 69
Section 35.9. No Third Party Beneficiary ........................ 69
Section 35.10. Waiver, Modification, Etc. ........................ 69
Section 35.11. Governing Law ..................................... 69
Section 35.12. Successors and Assigns ............................ 69
Section 35.13. Broker ............................................ 69
Section 35.14. Landlord as Contract Vendee ....................... 70
Section 35.15. Submission not an Offer ........................... 70
Section 35.16. Counterparts ...................................... 70
ARTICLE 36 RIGHT OF FIRST OFFER ........................................... 70
Section 36.1. Landlord to Offer Premises to Tenant .............. 70
Section 36.2. Tenant's Exercise of Right ........................ 71
Section 36.3. Tenant's Additional Right ......................... 71
Section 36.4. Certain Transfers Excluded ........................ 71
Section 36.5. Right Terminates .................................. 72
Section 36.6. Release ........................................... 72
Exhibit "A" Description of Land
Exhibit "B" Title Matters
Exhibit "C" Directrix Sublease
Exhibit "D" Directrix SNDA
Exhibit "E" Landlord's Work
Exhibit "E-1" Studio A Operational Condition
Exhibit "E-2" Work in Excess of the Work Letter Standard
Exhibit "E-3" Proposed Construction Contract Provisions
Exhibit "F" Studio A Floor Plan
Exhibit "F-1" Master Control Room Floor Plan
Exhibit "F-2" Dressing Room and Control Room Areas Floor Plan
Exhibit "F-3" Substitute FX Space
Exhibit "F-4" FX Space and Tanna Space
Exhibit "G" License Agreement Form
Exhibit "H" Form of SNDA from Landlord's Mortgagee
Exhibit "I" Article 15 Arbitrators
Exhibit "J" Insurance for Landlord's Work
Exhibit "K" Assignment and Assumption Agreement
Exhibit "L" Property Tenant May Remove
Exhibit "M" Form of Guaranty
AGREEMENT OF LEASE, made as of the 20th day of September, 2001, between
KINGSTON ANDRITA LLC, as landlord ("Landlord"), a Delaware limited liability
company having an office c/o Kingston Investors Corp., 135 East 57th Street, New
York, New York 10021, and PLAYBOY ENTERTAINMENT GROUP, INC., as tenant
("Tenant"), a Delaware corporation, having an office at 9242 Beverly Boulevard,
Beverly Hills, California 90210.
W I T N E S S E T H:
It is hereby mutually covenanted and agreed by and between the parties
that this Lease is made upon the terms, covenants and conditions hereinafter set
forth.
ARTICLE 1
DEMISE OF PREMISES AND DURATION OF LEASE
Section 1.1. Demise of Premises. (a) Landlord hereby demises and leases to
Tenant, and Tenant hereby hires and takes from Landlord all those certain
parcels of land located in Los Angeles, California, more particularly described
in Exhibit "A", annexed hereto and made a part hereof, together with all
buildings, structures and improvements, if any, situate thereon and all
easements, appurtenances and other rights pertaining thereto (collectively, the
"Building") ("Premises") and further subject to those matters affecting title
("Title Matters") set forth in Exhibit "B", annexed hereto and made a part
hereof.
Section 1.2. Duration of Lease.
(a) The term of this Lease ("Term") shall commence on the earliest of (i)
the date on which Tenant or Directrix, Inc. ("Directrix") first takes possession
and uses or occupies all or any portion of the Premises for the conduct of
business (the "First Possession Date"), and (ii) the date (the "Studio A
Delivery Date") on which that certain studio, as more particularly described in
Exhibit F attached hereto, ("Studio A") first is in "operational condition" (as
determined pursuant to Article 15 below), and (iii) the date (the "Substantial
Completion Date") the Premises shall first be available for occupancy as
determined pursuant to Section 1.2(b) below (the earliest of the First
Possession Date, the Studio A Delivery Date and the Substantial Completion Date
being hereinafter referred to as the "Commencement Date"), and shall end on the
day preceding the fifteenth (15th) anniversary of the Substantial Completion
Date (the "Expiration Date") or until such term shall sooner cease and terminate
as herein provided. When the Commencement Date has been determined, at
Landlord's or Tenant's request, Landlord and Tenant shall within ten (10) days
after such request, execute a written agreement, in form reasonably satisfactory
to Landlord and Tenant, confirming the Commencement Date. Any failure of
Landlord or Tenant to send, or Landlord or Tenant to execute, such written
agreement shall not affect the validity of the Commencement Date as fixed and
determined pursuant to the terms and conditions of this Lease.
(b) For the purposes of this Lease, the Premises shall be conclusively
deemed "available for occupancy" on the date upon which Landlord's Work (as
defined in Article 15 hereof) shall be substantially completed (other than with
respect to the Tanna Space and the FX Space), as determined in accordance with
the provisions of Article 15.
(c) Tenant shall accept possession of the Premises in its "as is"
condition, subject only to (i) the completion by Landlord of Landlord's Work
substantially in accordance with the Construction Drawings, (ii) Landlord's
obligation to complete any incomplete or defective work, to the extent provided
in Section 15.1(d) below, (iii) Landlord's correction of latent defects of which
Landlord receives notice within one (1) year following the Commencement Date,
and (iv) subject to the immediately following sentence, Landlord's correction of
defects in Landlord's Work which are covered by any warranty obtained by
Landlord (but only for so long as such defects are covered by such warranty and
for so long as Landlord is entitled to enforce such warranty). To the extent
that the same are assignable to Tenant, Landlord shall require that any
warranties obtainable by Landlord with respect to Landlord's Work be assigned to
Tenant (other than warranties that relate to portions of Landlord's Work that
are covered by Landlord's maintenance and repair obligations under Article 11
below), and Landlord shall use commercially reasonable efforts to cause such
warranties to be assignable to Tenant (if there will be an additional cost in
order to have any of such warranties be assignable to Tenant, Landlord will
advise Tenant of the same, and if Tenant is not willing to either pay such fee
directly or have the same included in the cost of Landlord's Work, then Landlord
shall not be obligated to have the warranty in question made assignable to
Tenant). Except as expressly set forth in this Lease, Landlord shall be under no
obligation to make any changes, improvements, or alterations to the Premises
other than Landlord's Work. The taking of occupancy of the whole or any part of
the Premises by Tenant (other than Studio A only prior to the Substantial
Completion Date) shall be conclusive evidence as against Tenant that Tenant
shall have accepted possession of the Premises and that the Premises shall be in
good and satisfactory condition at the time such occupancy shall be so taken,
subject to the provisions of subsections (ii), (iii) and (iv) above in this
paragraph.
Section 1.3. Existing Leases. (a) (b)Notwithstanding anything in Exhibit
B, Landlord shall not assign to Tenant and Tenant shall not assume the lease
with Tanna Productions, Inc. ("Tanna") which is disclosed on Exhibit B (the
"Tanna Lease"). Landlord represents that the Tanna Lease is on a month-to-month
basis and, to Landlord's knowledge, has been terminated as a result of a default
by Tanna prior to the date hereof. Landlord also represents that, to its
knowledge, its predecessor-in-interest shall have commenced unlawful detainer
proceedings to evict Tanna from the Tanna Space prior to Landlord's acquisition
of fee title to the Premises. Promptly following its acquisition of fee title to
the Premises, Landlord shall continue such proceedings (or commence such
proceedings if the same shall not have been commenced) and shall use
commercially reasonable efforts to cause Tanna to vacate and surrender the Tanna
Space. It is understood that Landlord's Work shall be deemed to be substantially
completed whether or not Landlord shall have succeeded in causing Tanna to
vacate the Tanna Space or shall have substantially completed Landlord's Work, if
any, with respect to the Tanna Space. If Landlord shall not have succeeded in
causing Tanna to vacate and surrender the Tanna Space by the Substantial
Completion Date, then the term of this Lease with respect to the Tanna Space
shall not commence until Landlord delivers possession of the Tanna Space to
Tenant (either vacant or subject to the occupancy of FX as provided in Section
1.3(c) below) with Landlord's Work, if any, with respect thereto substantially
completed, but the terms and conditions of this Lease otherwise shall not be
affected by such later delivery of the Tanna Space.
(c) Tenant acknowledges that it may accept possession of the Premises
subject to the continued occupancy of Creature FX ("FX"), whose lease also is
disclosed in Exhibit B attached hereto (the "FX Lease"), and a copy of which has
been provided to Tenant prior to the date hereof. Tenant acknowledges that a
portion of the Premises which currently is leased to FX under the FX Lease (the
"FX Space") is included in Studio A as the area designated as a dressing room on
Exhibit F-2. Landlord represents that such lease is on a month-to-month basis.
Simultaneously with the execution of this Lease, Landlord and Tenant shall enter
into an assignment and assumption agreement with respect to the lease of such
tenant substantially in the form of Exhibit K attached hereto, which shall
provide for such assignment to be effective as of the Commencement Date.
Notwithstanding the foregoing, Tenant acknowledges that, prior to the
Commencement Date, Landlord shall elect, in its sole discretion, either to
relocate Creature FX to that portion of the Tanna Space that is indicated on
Exhibit F-3 (which may involve a reduction in rent) or to terminate the FX
Lease, all without any liability to Tenant with respect thereto. If Landlord
elects to terminate the FX Lease, Landlord shall use commercially reasonable
efforts to cause FX to vacate and surrender its premises upon such termination,
and if Landlord elects to relocate FX as provided above, Landlord shall use
commercially reasonable efforts to cause FX to relocate to the substituted
space. It is understood that Studio A shall be deemed to be in operational
condition (as determined pursuant to Article 15 below), and Landlord's Work
shall be deemed to be substantially completed, whether or not Landlord shall
have succeeded in causing FX to vacate the FX Space. If Landlord shall not have
succeeded in causing FX to vacate and surrender the FX Space by the date on
which Studio A shall be deemed to be in operational condition, then the term of
this Lease with respect to the FX Space shall not commence until Landlord
delivers vacant possession of the FX Space to Tenant with Landlord's Work, if
any, with respect thereto substantially completed and Landlord shall provide
other temporary space (e.g., a trailer or other space within the Premises) to
Tenant for use as a dressing room as a temporary substitute for the FX Space
until Landlord so delivers vacant possession of the FX Space to Tenant, but the
terms and conditions of this Lease otherwise shall not be affected by such later
delivery of the FX Space. If Landlord elects to use other space within the
Premises as temporary dressing room facilities, the space within the Premises to
be used for such purposes shall be subject to Tenant's prior approval, which
shall not be unreasonably withheld or delayed.
(d) Notwithstanding anything in Exhibit B, Landlord shall not assign to
Tenant and Tenant shall not assume the lease with Home Box Office ("HBO") which
also is disclosed in Exhibit B (the "HBO Lease"), the term of which is scheduled
to expire on September 30, 2001 (the "HBO Lease Expiration Date). If HBO fails
to vacate and surrender the premises demised to it under the HBO Lease on or
before the HBO Lease Expiration Date, Landlord shall use commercially reasonable
efforts to cause HBO to vacate and surrender such premises. Landlord's Work
shall not be deemed substantially complete so long as HBO is in possession of
any portion of the Premises.
(e) To the best of Landlord's knowledge, there are no leases in effect as
of the date hereof with respect to the Premises, except as set forth above in
this Section 1.3. The Tanna Space and the FX Space are as set forth in Exhibit
F-4 attached hereto.
ARTICLE 2
RENT
Section 2.1. Time and Place of Payment. Tenant shall pay, without notice
or demand, all Base Rent (as hereinafter defined) to Landlord in currency of the
United States or other customary commercial manner, at the office of Landlord
set forth above, or by wire transfer to such account as Landlord may from time
to time direct by notice to Tenant, or to such other place or account as
Landlord directs by notice to Tenant, payable in advance on the first day of
each calendar month.
Section 2.2. Base Rent. Tenant shall pay to Landlord an annual rent ("Base
Rent") as follows:
(a) If either (i) the Studio A Delivery Date is the Commencement Date or
(ii) as a result of Tenant's or Directrix' use or occupancy of Studio A (but no
other portion of the Premises) for the conduct of business prior to Studio A
being in operational condition, the First Possession Date is the Commencement
Date, then, for the period commencing thirty (30) days after the Commencement
Date and ending upon the last day of the Office Abatement Period (as defined
below), Tenant shall pay to Landlord Base Rent with respect to Studio A in the
amount of $39,047.63 per month, payable in advance.
(b) Commencing on the earlier to occur of (i) the Substantial Completion
Date and (ii) the date on which Tenant or Directrix commences to occupy any
portion of the Premises (other than Studio A and the Master Control Room, as
defined below) for the conduct of business (such earlier date being the
"Premises Base Rent Commencement Date"), Tenant shall pay Base Rent with respect
to the Premises (including Studio A) as follows:
(i) for the period beginning on the Premises Base Rent Commencement
Date and ending on the day preceding the first anniversary of the Substantial
Completion Date (such period being the first "Lease Year" and each successive
twelve month period thereafter also being referred to herein individually as a
"Lease Year" and collectively as "Lease Years", i.e., the second Lease Year
shall commence on the first anniversary of the Substantial Completion Date, the
third Lease Year shall commence on the second anniversary of the Substantial
Completion Date, etc.), $2,070,249.41 per annum, payable in advance in equal
monthly installments of $172,520.78;
(ii) for the second Lease Year, $2,132,356.89 per annum, payable in
advance in equal monthly installments of $177,696.41;
(iii) for the third Lease Year, $2,196,327.60 per annum, payable in
advance in equal monthly installments of $183,027.30;
(iv) for the fourth Lease Year, $2,262,217.43 per annum, payable in
advance in equal monthly installments $188,518.12;
(v) for the fifth Lease Year, $2,330,083.95 per annum, payable in
advance in equal monthly installments of $194,173.66;
(vi) for the sixth Lease Year, $2,399,986.47 per annum, payable in
advance in equal monthly installments of $199,998.87;
(vii) for the seventh Lease Year, $2,471,986.06 per annum, payable
in advance in equal monthly installments of $205,998.84;
(viii) for the eighth Lease Year, $2,546,145.64 per annum, payable
in advance in equal monthly installments of $212,178.80;
(ix) for the ninth Lease Year, $2,622,530.01 per annum, payable in
advance in equal monthly installments of $218,544.17;
(x) for the tenth Lease Year, $2,701,205.91 per annum, payable in
advance in equal monthly installments of $225,100.49; and
(xi) for the eleventh through fifteenth Lease Years, a rate per
annum equal to $2,971,326.51 per annum, payable in advance in equal monthly
installments of $247,610.54.
Anything to the contrary provided for hereinabove notwithstanding, so long as no
Event of Default shall then be outstanding, Tenant shall not be obligated to pay
the Base Rent provided for above in this Section 2.2(b) for that thirty (30) day
period of time commencing on the Premises Base Rent Commencement Date (such 30
day period being the "Office Abatement Period"). Tenant shall, however, continue
to be obligated during such Office Abatement Period to pay the Base Rent with
respect to Studio A pursuant to paragraph 2.2 (a) above and with respect to the
Master Control Room pursuant to paragraph 2.2(c) below and any and all
Additional Rent and other charges payable by Tenant hereunder in accordance with
the terms of this Lease during such period.
(c) In the event that Tenant commences to use or occupy that portion of
the Premises described in the floor plan attached hereto as Exhibit F-1 (the
"Master Control Room") for any purpose (including any work to be performed by
Tenant or Directrix therein) prior to the Premises Base Rent Commencement Date
(the date on which Tenant so commences to use or occupy the Master Control Room
being the "Master Control Room Rent Start Date", which date may be no earlier
than the Studio A Delivery Date), then for the period beginning thirty (30) days
after the Master Control Room Rent Start Date and ending upon the last day of
the Office Abatement Period, Tenant shall pay Base Rent with respect to the
Master Control Room in an amount equal to $25,000 per month, payable in advance.
(d) (i) If for any reason Studio A shall not be in operational condition,
as determined in accordance with the provisions of Article 15, on or prior to
February 15, 2002, then, as Tenant's sole and exclusive remedy therefor (but
subject to Subsection 2.2(d)(iii) below), Tenant may procure (x) the right to
use comparable substitute studio space for its use, and (y) the same services
with respect to such substitute studio space as would be provided to Tenant with
respect to Studio A pursuant to a certain proposed Master Services Agreement
between Tenant and Directrix substantially in the form that was delivered to
Landlord's attorneys by Directrix by email on September 15, 2001 (the "Service
Agreement"). Provided that the charges for such use of such substitute space and
for such services shall be commercially reasonable, Landlord shall, within
fifteen (15) days after its receipt of reasonable evidence of such cost (but not
more often than once in any thirty (30) day period), reimburse Tenant for (1)
the excess cost, if any, for such use of the substitute space over the Rent that
Tenant would have paid with respect to Studio A under this Lease for the same
period had the Studio A Delivery Date occurred on February 15, 2002 and (2) the
excess cost, if any, for such services for the substitute space over the cost
that Tenant would incurred for such services had they been provided by Directrix
pursuant to the Service Agreement with respect to Studio A for the same period
had the Studio A Delivery Date occurred on February 15, 2002 (it being
understood that Landlord's reimbursement obligations pursuant to this paragraph
shall apply with respect to the period from and after February 15, 2002 through
the Studio A Delivery Date only). Notwithstanding the foregoing, the February
15, 2002 date set forth above shall be postponed by one day for each day that
Landlord is prevented from causing Studio A to be in operational condition by
reason of Unavoidable Delay or Tenant Delay (as such terms are defined below).
If for any reason Studio A shall not be in operational condition, as
determined in accordance with the provisions of Article 15, on or prior to June
1, 2002, then, as Tenant's sole and exclusive remedy therefor (but subject to
Subsection 2.2(d)(iii) below), Tenant may terminate this Lease upon written
notice to Landlord ("Tenant's Notice"), which must be given after June 1, 2002
and received by Landlord on or before June 15, 2002, time being of the essence.
If Tenant so elects to terminate this Lease, the same will be deemed cancelled
and terminated upon Landlord's receipt of Tenant's Notice and neither party
shall have any further liability to the other hereunder, except pursuant to
those provisions of this Lease that expressly survive its expiration or sooner
termination and except that Tenant shall surrender that portion of the Premises,
if any, then occupied by Tenant on or before June 30, 2002, in vacant and broom
clean condition with all of its personal property removed, as if such date were
the Expiration Date, and Article 28 below shall apply in the event that Tenant
fails to so surrender possession of the Premises. Notwithstanding the foregoing,
if Landlord causes Studio A to be in operational condition prior to June 15,
2002, Tenant's Notice shall be null and void and of no force or effect and this
Lease shall remain in full force and effect. All of the dates set forth above in
this paragraph, however, shall be postponed by one day for each day that
Landlord is prevented from causing Studio A to be in operational condition by
reason of Unavoidable Delay or Tenant Delay.
(ii) If for any reason Landlord shall not have substantially
completed, as determined in accordance with the provisions of Article 15,
Landlord's Work on or prior to June 15, 2002, then, as Tenant's sole and
exclusive remedy therefor (but subject to Subsection 2.2(d)(iii) below),
notwithstanding anything to the contrary contained in Section 2.4 below, the
Office Abatement Period shall be extended by one (1) day for each day after June
15, 2002 through December 31, 2002 that Landlord's Work is not so substantially
completed; provided, however, that the foregoing dates shall be postponed by one
(1) day for each day that Landlord is prevented from performing such Landlord's
Work by reason of Unavoidable Delay or Tenant Delay.
If for any reason Landlord shall not have substantially completed,
as determined in accordance with the provisions of Article 15, Landlord's Work
on or prior to December 31, 2002, then, as Tenant's sole and exclusive remedy
therefor (but subject to Subsection 2.2(d)(iii) below), Tenant may terminate
this Lease upon written notice to Landlord ("Tenant's Notice"), which must be
given after December 31, 2002 and received by Landlord on or before January 15,
2003, time being of the essence. If Tenant so elects to terminate this Lease,
the same will be deemed cancelled and terminated upon Landlord's receipt of
Tenant's Notice and neither party shall have any further liability to the other
hereunder, except pursuant to those provisions of this Lease that expressly
survive its expiration or sooner termination and except that Tenant shall
surrender that portion of the Premises, if any, then occupied by Tenant on or
before January 31, 2003, in vacant and broom clean condition with all of its
personal property removed, as if such date were the Expiration Date, and Article
28 below shall apply in the event that Tenant fails to so surrender possession
of the Premises. Notwithstanding the foregoing, if Landlord substantially
completes Landlord's Work prior to January 15, 2003, Tenant's Notice shall be
null and void and of no force or effect and this Lease shall remain in full
force and effect. All of the dates set forth above in this paragraph, however,
shall be postponed by one day for each day that Landlord is prevented from
performing such Landlord's Work by reason of Unavoidable Delay or Tenant Delay.
(iii) Notwithstanding the foregoing provisions of this Section
2.2(d), if Landlord willfully refuses to perform Landlord's Work, then Tenant
shall have such remedies as are available to Tenant at law and in equity and
shall not be limited to those remedies specified above in this Section 2.2(d).
This paragraph shall survive the termination of this Lease.
(iv) Reference is made to that certain letter agreement of even date
herewith between Landlord and Tenant (the "Letter Agreement") pursuant to which
Landlord has agreed to indemnify Tenant for certain costs and expenses with
respect to Tenant's occupancy of the Existing Space (as defined in the Letter
Agreement), in accordance with and subject to the terms and conditions set forth
in the Letter Agreement. Notwithstanding the foregoing provisions of this
Section 2.2(d), Landlord shall have such obligations to Tenant as are set forth
in the Letter Agreement in addition to the remedies specified above in this
Section 2.2(d). This paragraph shall survive the termination of this Lease.
(e) Notwithstanding the foregoing, the Base Rent payable pursuant to
Section 2.2(b) shall be increased by as follows:
(i) The Base Rent payable with respect to the first Lease Year only
shall be increased by an amount equal to accrued interest on Landlord's share of
the Shared Excess (as defined in Article 15 below) ("Landlord's Share"), at the
rate of fifteen percent (15%) per annum compounded monthly on any advances of
Landlord's Share from the date of each such advance by Landlord until the day
following the last day of the Office Abatement Period; and
(ii) The Base Rent payable with respect to each Lease Year
(including the first Lease Year) shall be increased by an annual amount equal to
interest on Landlord's Share at the rate of fifteen percent (15%) per annum.
For purposes of the calculations to be made pursuant to this Section 2.2(e)
only, Landlord's share of that portion of the Shared Excess which is
attributable solely to the Playboy Office Space (as defined in Section 15.3(e)
below) shall be deemed to be one-third of such portion of the Shared Excess,
notwithstanding anything in Section 15.3(e) below to the contrary. Tenant
acknowledges that the abatement of Base Rent which is provided for in the last
paragraph of Section 2.2(b) above shall not apply to the Base Rent which is
payable pursuant to this Section 2.2(e). At Landlord's or Tenant's request,
Landlord and Tenant will execute an agreement setting forth the increase in the
Base Rent which is payable pursuant to this Section 2.2(e). Tenant's failure or
refusal to sign such agreement shall in no event affect Landlord's determination
of the same. Any disputes between the parties regarding the increase in Base
Rent payable pursuant to this Section 2.2(e) shall be resolved by arbitration in
accordance with Article 31 below.
Section 2.3. Proration of Base Rent. If the day on which Tenant's
obligation to pay any Base Rent commences is other than the first day of a
calendar month, and if the Expiration Date is other than the last day of the
last calendar month to occur in the Term, Base Rent in question for the calendar
month in which such obligation of Tenant to commence the payment of such Base
Rent commences or the Expiration Date occurs shall be prorated.
Section 2.4. Abatement, Deduction, Counterclaim and Offset. All sums,
costs, expenses or deposits which Tenant is obligated, pursuant to any of the
provisions of this Lease, to pay or deposit (collectively, "additional rent" or
"Additional Rent"), shall be paid by Tenant as additional rent. It is the
purpose and intention of Landlord and Tenant that, except as otherwise expressly
set forth in this Lease to the contrary, there shall be no abatement,
diminution, reduction, deduction, counterclaim, set-off or offset whatsoever.
Section 2.5. All Amounts Deemed Rent. All of the amounts payable by Tenant
pursuant to this Lease, including, without limitation, Base Rent, Impositions
(as defined in Section 3.1) and Additional Rent (collectively, "Rent") shall be
deemed rent under this lease and, in the event of Tenant's failure to pay Rent
or any portion thereof, Landlord (in addition to all other rights and remedies)
shall have all of the rights and remedies provided for herein or by law in the
case of non-payment of Base Rent.
ARTICLE 3
IMPOSITIONS
Section 3.1. Payment of Impositions.
(a) Obligation to Pay Impositions. Tenant shall pay, as Additional Rent,
in the manner provided in Section 3.1(b) hereof, all Impositions (as hereinafter
defined) that at any time (i) are assessed, levied, confirmed, imposed upon, or
grow out of, become due and payable out of, or in respect of, or are charged
with respect to, the Premises or any document to which Tenant is a party
creating or transferring an interest or estate in the use and occupancy thereof
by Tenant, or this transaction, and (ii) are encumbrances or liens on (A) the
Premises or (B) the sidewalks or streets in front of or adjoining the Premises,
or (C) any other appurtenances of the Premises, or (D) any personal property or
other facility located on and used in the operation of the Premises or (E) Rent
(or any portion thereof) payable by Tenant hereunder.
(b) Payments of Impositions. Landlord shall advise Tenant, by a written
statement of any Impositions (the "Statement"), at least thirty (30) days prior
to the date when the same shall be payable by Tenant. Each Imposition or
installment thereof shall be due and payable to Landlord not less than fifteen
(15) days prior to the last date on which Landlord may make such payment(s) to
the appropriate taxing authority (or Landlord's mortgagee, as the case may be)
without the imposition of any fine, penalty or interest, provided that the
Statement shall have been received by Tenant at least thirty (30) days prior to
such fifteen (15) day period. Tenant acknowledges that if Landlord shall not
have received a bill for any Imposition at the time Landlord desires to deliver
the Statement, the Statement shall be based upon the Impositions actually
payable at the time of delivery of such Statement, and when the bill is received
and an updated Statement based on the actual bill is furnished to Tenant, Tenant
shall, within thirty (30) days thereafter, pay to Landlord an amount equal to
the amount of any underpayment of such Imposition and, in the event of any
overpayment, Landlord shall credit against subsequent payments of Base and
Additional Rent under this Lease, the amount of Tenant's overpayment. If there
shall be any increase or decrease in Impositions for any period, whether during
or after such period, Landlord may furnish a revised Statement for such period,
and such Imposition shall be adjusted and paid or credited substantially in the
same manner as provided in the preceding sentence.
At Landlord's option and with prior written notice to Tenant, in lieu of
the foregoing, Impositions shall be paid by Tenant directly to the appropriate
taxing authorities. In such event, each Imposition or installment thereof shall
be paid not later than the date on which any fine, penalty, interest or cost may
be added thereto or imposed by law for the non-payment thereof.
If by law any Imposition, at the taxpayer's option, may be paid in
installments (whether or not interest shall accrue on the unpaid balance of such
Imposition), Tenant may (if Tenant makes such payments directly to the taxing
authority), or may cause Landlord to (if Landlord makes such payments to the
taxing authority), exercise the option to pay the Imposition in such
installments, and in such event Tenant shall be responsible for all interest
thereon.
(c) "Imposition" or "Impositions" shall mean any of the following
assessments and/or charges: any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Landlord
in the Premises, Landlord's right to other income therefrom, and/or Landlord's
business of leasing, by any authority having the direct or indirect power to tax
and where the funds are generated with reference to the Building address and
where the proceeds so generated are to be applied by the city, county or other
local taxing authority of a jurisdiction within which the Premises are located.
The term "Impositions" shall also include tax, fee, levy, assessment or charge,
or any increase therein, imposed by reason of events occurring during the term
of this Lease, including but not limited to, a change in the ownership of the
Premises. "Impositions" shall not include, however, taxes and assessments which
result from the issuance by a governmental entity of bonds solely for the
purpose of providing financing specifically to Landlord for Landlord's private
purposes and which financing is repaid by Landlord through a special tax or
assessment imposed upon Landlord and not on taxpayers generally.
Section 3.2. Income or Franchise Tax of Landlord. Tenant is not required
to pay any municipal, state or federal income, profits, revenue, corporate,
estate or franchise tax imposed upon Landlord.
Section 3.3. Evidence of Payment. To the extent that Tenant is required to
pay any impositions directly to any taxing authority, upon Landlord's prior
written request, Tenant shall furnish Landlord, within thirty (30) days after
the date when an Imposition is due and payable, official receipts of the
appropriate taxing authority or other proof, satisfactory to Landlord,
evidencing the payment thereof.
Section 3.4. Apportionment of Impositions.
(a) Any Imposition relating to the Premises (whether or not such
Imposition shall be assessed, levied, confirmed, imposed upon, or in respect of,
or become a lien upon, the Premises, or become payable, during the Term)
relating to a fiscal period of the taxing authority, a part of which is included
within the Term and a part of which is included in a period of time prior to the
Commencement Date or after the Expiration Date, shall be apportioned between
Landlord and Tenant as of the Commencement Date or the Expiration Date (unless
the Expiration Date has occurred as a result of an Event of Default (as
hereinafter defined), in which case Tenant is not entitled to an apportionment)
so that Landlord shall pay that portion of such Impositions which that part of
such fiscal period included in the period before the Commencement Date bears to
the fiscal period of the taxing authority and Tenant shall pay that portion of
such Imposition which that part of such fiscal period included in the period
before the Expiration Date bears to the fiscal period of the taxing authority.
(b) If either (i) the Studio A Delivery Date is the Commencement Date or
(ii) as a result of Tenant's or Directrix' use or occupancy of Studio A (but no
other portion of the Premises) for the conduct of business prior to Studio A
being in operational condition, the First Possession Date is the Commencement
Date, then Tenant only shall be responsible for 22.72% (the "Prorated Portion")
of Impositions imposed with respect to the Premises which relate to the period
from and after the Commencement Date through the day preceding the Premises Base
Rent Commencement Date, except that beginning on the Master Control Room Rent
Start Date, if applicable, the Prorated Portion shall be increased to 25.34%
through the day preceding the Premises Base Rent Commencement Date.
Section 3.5. Contest of Real Property Tax Assessments and Impositions.
(a) Tax Contest Proceedings. Landlord has the right, at its option, to
seek reductions in the valuation of the Premises assessed for real property tax
purposes and to prosecute any action or proceeding in connection therewith by
appropriate proceedings, in accordance with applicable laws. If Landlord has not
elected to seek any such reduction for any particular tax year, Tenant may elect
to seek such reduction, at Tenant's sole expense. Landlord shall cooperate with
Tenant, at Tenant's expense, in such proceedings (it being understood that
Tenant only shall be responsible for Landlord's actual, out-of-pocket expenses).
In no event, however, shall Landlord have any liability to Tenant with respect
to such proceedings. Notwithstanding the foregoing, Tenant may not elect to seek
reductions in the valuation of the Premises assessed for real property tax
purposes if, at the time of such election, an Event of Default shall have
occurred and be continuing.
(b) Imposition Contest Proceedings. Landlord has the right, at its option,
to contest the amount or validity, in whole or in part, of any Imposition
relating to the Premises by appropriate proceedings. If Landlord has not elected
to so contest any such Imposition, Tenant may elect to contest the same, at
Tenant's sole expense. Landlord shall cooperate with Tenant, at Tenant's
expense, in such proceedings (it being understood that Tenant only shall be
responsible for Landlord's commercially reasonable, out-of-pocket expenses).
Tenant shall not settle any such proceeding without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, Tenant may not elect to contest the amount or validity, in whole or
in part of any Imposition relating to the Premises if, at the time of such
election, an Event of Default shall have occurred and be continuing. In the
event of any such contest by Tenant, and notwithstanding anything to the
contrary contained in this Article 3, payment of such Imposition by Tenant may
be postponed if, and only as long as:
(i) neither the Premises nor any part thereof, would, by reason of
such postponement or deferment, be, in the reasonable judgment of Landlord, in
danger of being forfeited or lost,
(ii) such contest shall not subject Landlord to prosecution of a
criminal offense in connection therewith or constitute a default under any lease
or mortgage under which Landlord may be obligated, and
(iii) Tenant has deposited with Landlord cash or other security
reasonably satisfactory to Landlord in the amount so contested and unpaid,
together with all interest and penalties in connection therewith and all charges
relating to such contested Imposition that may or might be assessed against, or
become a charge on the Premises, or any part thereof, in or during the pendency
of such proceedings. Landlord shall deposit such sums in an interest-bearing
account. Upon the termination of such proceedings, Tenant shall pay the amount
of such Imposition or part thereof as finally determined in such proceedings,
the payment of which was deferred during the prosecution of such proceedings,
together with any costs, fees (including, without limitation, attorneys' fees
and disbursements), interest, penalties or other liabilities in connection
therewith, and upon such payment, Landlord shall return any amount or other
security deposited with it with respect to such Imposition, together with the
interest, if any, earned thereon. If, at any time during the continuance of such
proceedings, Landlord, in its reasonable judgment, shall deem insufficient the
amount deposited, Tenant, upon demand, shall make an additional deposit of such
additional sums or other acceptable security as Landlord reasonably may request,
and upon failure of Tenant to do so, the amount theretofore deposited, together
with the interest, if any, earned thereon, may be applied by Landlord to the
payment, removal and discharge of such Imposition and the interest and penalties
in connection therewith and any costs, fees (including, without limitation,
attorneys' fees and disbursements) or other liability accruing in any such
proceedings, and the balance, if any, remaining thereafter, together with the
interest, if any, earned thereon and remaining after application by Landlord as
aforesaid, shall be returned to Tenant or to the party entitled to receive it.
If there is a deficiency, Tenant shall pay the deficiency to Landlord or to the
party entitled to receive it, on Landlord's demand.
Landlord shall have no liability to Tenant with respect to any contest of any
Imposition made at Tenant's request.
ARTICLE 4
Intentionally Omitted
ARTICLE 5
LATE CHARGES
If any payment of Base Rent or any payment required pursuant to Article 3
above or Article 6 below is not received by Landlord within ten (10) days of the
day on which it first becomes due (or as to any other item of additional rent,
within five (5) days after Landlord gives notice to Tenant of its failure to pay
the same when due), a late charge on the sums so overdue, calculated at the Late
Charge Rate from the due date thereof to the date on which actual payment of the
overdue sums is received by Landlord, shall become due and payable to Landlord
as liquidated damages for the administrative costs and expenses incurred by
Landlord by reason of Tenant's failure to make prompt payment. Tenant shall pay
Landlord, on demand, which may be made from time to time, all accrued late
charges. "Late Charge Rate" shall mean the lesser of (x) three percent (3%) per
annum above the then published prime interest rate upon unsecured loans charged
by The Chase Manhattan Bank on loans of 90 days or (y) the maximum rate
permitted to be charged at law to Tenant.
ARTICLE 6
INSURANCE
Section 6.1. Insurance Requirements.
(a) Basic Insurance Coverage. From the Commencement Date until the
Expiration Date, Landlord shall cause to be maintained for the benefit of
Landlord, at Tenant's expense (the charges for which shall be commercially
reasonable, and which Tenant shall pay as Additional Rent hereunder within
fifteen (15) days after demand therefor, which demand shall be accompanied by
reasonably satisfactory evidence of such costs), insurance coverage of the types
and in minimum limits as follows:
(i) Property Insurance. Insurance on the Building under an "All
Risk" policy or its equivalent (hereinafter referred to as "All Risk") in an
amount which at all times shall be not less than one hundred percent (100%) of
the full replacement value of the Building, including the cost of debris
removal, less the value of foundations and excavations, grading, paving and
landscaping (the "Replacement Value"), as determined from time to time in the
manner hereinafter provided. If not otherwise included within the "All Risk"
coverage specified above, Landlord shall cause to be carried, by endorsement to
such "All Risk" policy, coverage against damage due to water and/or sprinkler
leakage and/or earthquake sprinkler leakage, flood and collapse. Coverage
against damage due to water and/or sprinkler leakage and/or earthquake sprinkler
leakage shall be in an amount not less than 100% of the Replacement Value,
waiving co-insurance. Coverage due to flood and collapse shall be written with
limits of coverage of not less than One Million Dollars ($1,000,000) per
occurrence. Unless mutually agreed upon by Landlord and Tenant, the Replacement
Value shall be determined by Landlord's insurer, and the amount of insurance
provided under this Section 6.1(a)(i) shall be adjusted, if necessary, to
provide coverage in an amount not less than one hundred percent (100%) of the
Replacement Value as determined by agreement of Landlord and Tenant or by
Landlord's insurer. Thereafter, the amount of such insurance shall be adjusted
annually by using the Boeckh Commercial Building Valuation System (or, if such
System is no longer in existence, a similar generally accepted index of
construction costs) to determine whether there has been an increase in the
Replacement Value since the most recent annual adjustment or determination of
the Replacement Value. If there has been such an increase, the amount of
insurance hereunder shall be adjusted accordingly in accordance with the
requirements of this Section. Every three (3) years from and after the
Commencement Date, unless the then Replacement Value is mutually agreed upon by
Landlord and Tenant, Landlord, shall cause an appraisal of the Building to be
made by Landlord's insurer in order to determine the Replacement Value thereof
(such appraisal to be at Tenant's expense if it shall then be customary for
insurers to charge their insureds for such appraisals) and, promptly after each
such appraisal is made, the amount of insurance hereunder shall be adjusted
accordingly in accordance with such appraisal and the requirements of this
Section. Such "All Risk" policy hereunder shall state that the valuation of any
loss to be determined thereunder shall be made on a replacement cost basis and
also shall contain an endorsement whereby the insurer waives all coinsurance
requirements. No coverage provided pursuant to this Section will have a
deductible larger than $10,000, other than flood insurance which will not have a
deductible larger than $25,000. Tenant acknowledges that the insurance to be
maintained by Landlord pursuant to this Section shall not cover any loss as a
result of casualty which Tenant is required to insure pursuant to Section 6.1(b)
below.
(ii) Earthquake Insurance. To the extent required by any future
holder of a superior mortgage, Earthquake Insurance, subject to any then
customary deductible (the "Deductible"), provided that, notwithstanding the
foregoing provisions of this Section 6.1(a), the cost of such insurance shall be
borne equally by Landlord and Tenant. Landlord shall be responsible for two
thirds of the Deductible, and Tenant shall be responsible for one third of the
Deductible.
(iii) Rent Insurance. Rent Insurance ("Rent Insurance") on an "All
Risk" or "Physical Loss" basis in an amount equal to twelve (12) months' current
Base Rent, as well as twelve (12) months' current Additional Rent payable
pursuant to Article 3 above.
(iv) Boiler and Machinery Insurance. Boiler and Machinery Insurance
in an amount not less than the replacement cost of such boilers, if any, and
other machinery located on the Premises.
(v) Increased Cost of Demolition/Regulatory Changes. Insurance
(provided by endorsement) in an amount not less than One Million ($1,000,000)
Dollars against subsequent costs of demolition and against increased costs of
construction in the event that any hazard insured against hereunder results in a
loss.
(vi) Other Insurance. Such other insurance in such amounts as from
time to time reasonably may be required by Landlord against such other insurable
hazards as at the time are commonly insured against in the case of property
similarly situated to the Premises or business operations of a size and nature
similar to the business operations being conducted on the Premises.
(vii) Premiums. Tenant shall be permitted (but not more than once
during any twelve (12) month period), to review the cost of the insurance then
maintained by Landlord pursuant to this Section 6.1. If Tenant is able to
procure at least the same coverages on no less favorable terms from an insurer
that is licensed and admitted in the State of California and that is rated the
same rating as Landlord's then current insurer shall then be rated or better (or
the equivalent of such rating) by Bests Insurance Reports (or any successor
publication of comparable standing) (and that otherwise meets the requirements
of this Article and that otherwise is reasonably acceptable to Landlord) to be
effective immediately upon the expiration of Landlord's then current insurance
coverage at a lower cost than that then maintained by Landlord, and if
Landlord's insurer is unable or unwilling to meet such reduced cost, then
provided such insurer will provide such coverage to Landlord at such lower cost,
Landlord agrees not to renew its then existing coverage and to replace it with
such coverage from such insurer procured by Tenant (it being understood that
Tenant shall be responsible for all out-of-pocket costs incurred by Landlord in
connection therewith), or, at Landlord's option, Landlord may continue its then
existing coverage (or select another insurer of its choice), provided it shall
not charge Tenant an amount in excess of the cost that the insurer procured by
Tenant would have charged for the period in question. Nothing herein shall
prevent Landlord from choosing any one or more insurers in its sole discretion
to provide the insurance required pursuant to this Section 6.1.
(viii) If either (i) the Studio A Delivery Date is the Commencement
Date or (ii) as a result of Tenant's or Directrix' use or occupancy of Studio A
(but no other portion of the Premises) for the conduct of business prior to
Studio A being in operational condition, the First Possession Date is the
Commencement Date, then Tenant only shall be responsible for 22.72% (the
"Prorated Portion") of the cost to Landlord to obtain and maintain the above
insurance coverages which relate to the period from and after the Commencement
Date through the day preceding the Premises Base Rent Commencement Date, except
that beginning on the Master Control Room Rent Start Date, if applicable, the
Prorated Portion shall be increased to 25.34% through the day preceding the
Premises Base Rent Commencement Date.
(b) Tenant's Liability Insurance. Tenant shall at all times during the
Term of this Lease procure and continue in force Commercial General Liability
Insurance with respect to the Premises and the operations related thereto,
whether conducted on or off the Premises, against liability for personal injury,
including bodily injury and death, and property damage. Such comprehensive
public liability insurance shall be on an occurrence basis and specifically
shall include
(A) Sprinkler Leakage Legal Liability;
(B) Contractual Indemnification (covering Tenant's obligation
to indemnify Landlord as required under Article 17 hereof);
(C) Water Damage Legal Liability; and
(D) Products Liability; and
(E) Motor Vehicle Liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles.
All insurance against liability for personal injury,
including bodily injury and death, and property damage
specified in this Section 6.1(b), except those coverages
listed with specific sublimits in the following sentence,
shall be written for a Combined Single Limit of not less than
Five Million ($5,000,000) Dollars. No Liability coverage
provided pursuant to this Section will have a deductible
larger than $0.00 without the prior written agreement of
Landlord. A minimum Combined Single Limit of Five Million
($5,000,000) Dollars shall be written for Water Damage Legal
Liability and Sprinkler Damage Legal Liability.
(c) Tenant's Property Insurance. Tenant, shall at all times during the
Term of this Lease, and at its own cost and expense, procure and continue in
force the following insurance coverage: all risks and earthquake sprinkler
leakage where sprinklers are provided in an amount equal to the full replacement
value new without deduction for depreciation of all (A) Alterations, and (B)
trade fixtures, furniture, equipment and other personal property installed by or
at the expense of Tenant. Tenant shall carry and maintain during the entire
Lease Term, at Tenant's sole cost and expense, such other commercially
reasonable types of insurance coverage and in such commercially reasonable
amounts covering the Premises and Tenant's operations therein, as may be
reasonably required by Landlord.
(d) Statutory Workers' Compensation and Disability Insurance. Throughout
the term of this Lease, Tenant shall carry, or cause to be carried, and
thereafter keep in full force and effect, or cause to be kept in full force and
effect Statutory Workers' Compensation Insurance and California State Disability
Benefits Insurance covering all persons employed in connection with the
operations conducted on the Premises.
(e) Additional Insurance Coverage for Alterations. During the period when
any Alteration (as defined in Article 12) is being performed on the Premises,
Tenant shall carry, or cause to be carried, and thereafter keep in full force
and effect, or cause to be kept in full force and effect, until Tenant's
architect has certified that the Alteration has been substantially completed, to
the extent that such insurance is not duplicative of any insurance carried
pursuant to the provisions of Sections 6.1(b) and (c) hereof, insurance coverage
of the types and in minimum limits as follows:
(i) Contractor's Comprehensive/Motor Vehicle Liability Insurance.
Contractor's Comprehensive and Motor Vehicle Liability Insurance naming Tenant
and Landlord as additional insured, for a Combined Single Limit of not less than
Five Million ($5,000,000) Dollars for personal injury, including bodily injury
and death, and property damage, such insurance to include Operations Premises
Liability, Contractor's Protective Liability on the operations of all
subcontractors, Completed Operations, Contractual Liability (designating the
indemnity provisions of the Construction Agreements), and Motor Vehicle
Liability for all owned and non-owned vehicles, including rented and leased
vehicles, and for all vehicles owned or leased by contractors or subcontractors,
and, if the contractor is undertaking foundation, excavation or demolition work,
an endorsement that such operations are covered and that the "XCU Exclusions"
have been deleted.
(ii) Statutory Workers' Compensation and Disability Insurance.
Statutory Workers' Compensation Insurance and Disability Benefits Insurance
covering all persons employed in connection with the performance of any
Construction Work.
(iii) Builder's Risk. With respect to any so-called "ground-up"
Alterations, Builder's Risk Insurance (standard "All Risk" or equivalent
coverage) written on a completed value (non-reporting) basis, naming Tenant as
an insured and Landlord and the general contractor and construction manager, if
any, and all subcontractors employed by Tenant or the general contractor or
construction manager, if any, as additional named insureds, as their respective
interests may appear. During such time as Tenant shall be constructing any other
Alterations, Tenant shall carry a Special Coverages, Property Policy with
respect to such Alterations, covering all physical loss, in an amount reasonably
satisfactory to Landlord and which shall name Tenant as an insured and Landlord
and the general contractor and construction manager, if any, and all
subcontractors employed by Tenant or the general contractor or construction
manager, if any, as additional insureds, as their respective interests may
appear. Any of the foregoing insurance policies (A) shall contain a written
acknowledgment (annexed to the policy) by the insurance company that its right
of subrogation has been waived with respect to all of the insureds and an
endorsement stating that "permission is granted to complete and occupy", and (B)
if any off-site storage location is used, shall cover, for full insurable value,
all materials and equipment at any such off-site storage location intended for
use with respect to the Premises.
(f) Indemnification. Contractual Indemnification Insurance (covering
Tenant's obligation required under Article 17 hereof).
(g) Other Insurance. Such other insurance in such amounts as from time to
time reasonably may be required by Landlord against such other insurable hazards
as at the time are commonly insured against in the case of property similarly
situated to the Premises or business operations of a size and nature similar to
the business operations being conducted on the Premises.
Section 6.2. Additional Insureds. All insurance required to be obtained by
Tenant pursuant to the provisions of this Article, except for the insurance
provided pursuant to Sections 6.1(d) and 6.1(e)(ii) hereof, and shall name
Landlord and such other parties as Landlord shall designate as additional
insureds or as loss payees, as appropriate.
Section 6.3. Policy Limits Review. The limits of insurance required
pursuant to this Article 6 shall be subject to reasonable review by Landlord. In
connection therewith, and subject to the provisions of this Article, with
respect to insurance which Tenant is obligated to obtain, Tenant shall carry or
cause to be carried such additional amounts of insurance as Landlord may from
time to time reasonably require, and as to insurance which Landlord shall obtain
at Tenant's expense, Tenant shall be responsible for the cost of such additional
amounts of insurance as Landlord may from time to time reasonably require. The
amount of any deductible contained in any insurance policy required pursuant to
the provisions hereof also shall be subject to the reasonable review of
Landlord. If there is any dispute between Landlord and Tenant with respect to
the amount of insurance required to be carried pursuant to the provisions of
this Lease or with respect to the amount of any deductible permitted hereunder,
such dispute shall be resolved by arbitration in accordance with the provisions
of Article 31 hereof. However, during the period of any such dispute, Tenant
shall carry or cause to be carried (or, where Landlord obtains the insurance at
Tenant's expense, shall be responsible for the cost of) insurance or deductible
limits as Landlord has previously approved.
Section 6.4. Treatment of Proceeds.
(a) Proceeds of Insurance in General. Subject to the provisions of any
mortgage encumbering Landlord's fee estate, any proceeds received pursuant to
the insurance coverages obtained by Landlord at Tenant's expense pursuant to
this Article shall be payable to Landlord. If Landlord is obligated pursuant to
Article 7 to restore the Premises in the event of a casualty, then as to any
such proceeds which are payable with respect to such casualty, Landlord shall
apply such proceeds first to the payment in full of the cost of such casualty
restoration before using any part of the same for any other purpose.
(b) Proceeds of Rent Insurance. Rent Insurance referred to in Section
6.1(a)(iii) hereof shall be carried in the name of Landlord as named insured and
shall be payable to Landlord.
Section 6.5. Insurance Carriers and Form of Policies. All insurance
required to be carried pursuant to the provisions of this Article shall be in
such form and shall be issued by such responsible insurance companies licensed
or authorized to do business in the State of California as are approved by
Landlord in its reasonable judgment. Any insurance company rated by Bests
Insurance Reports (or any successor publication of comparable standing) as "A
IX" or better (or the equivalent of such rating) shall be deemed a responsible
company and acceptable to Landlord. All insurance policies required to be
carried pursuant to the provisions of this Article shall be obtained by Tenant
for periods of not less than one (1) year. As to any such insurance which either
party is obligated to obtain, originals of such policies, or certificates
evidencing such policies, shall be delivered to the other party immediately upon
its receipt from the insurance company or companies. Original new or renewal
policies replacing any policies expiring during the Term shall be delivered to
Landlord within thirty (30) days following the expiration of expired policies,
as long as certificates evidencing such renewal policies are delivered to
Landlord not less than thirty (30) days before the expiration dates of any
expiring policies, together with proof reasonably satisfactory to Landlord that
the premiums for at least the first year of the term of each of such policies
(or installment payments then required to have been paid on account of such
premiums) have been paid.
Section 6.6. Payment of Premiums. Tenant may pay the premiums for any of
the insurance required to be obtained by it hereunder in installments in
accordance with the provisions of the applicable policies, provided that Tenant
pays all such installments in full not later than thirty (30) days before the
respective due dates for such installments and provides proof reasonably
satisfactory to Landlord of payment of such installments by such dates.
Section 6.7. Cooperation in Collection of Proceeds. Tenant and Landlord
shall cooperate in connection with the collection of any insurance funds that
may be due in the event of loss and Tenant and Landlord shall execute and
deliver such proofs of loss and other instruments as may be required of Tenant
or Landlord, respectively, for the purpose of obtaining the recovery of any such
insurance funds.
Section 6.8. Intentionally omitted.
Section 6.9. Waiver of Subrogation. Landlord and Tenant each agree to
require their respective insurers issuing the insurance described in Sections
6.1(a)(i) and 6.1(c) to waive any rights of subrogation that such companies may
have against the other party. Tenant hereby releases Landlord and waives any
right that Tenant may have against Landlord and Landlord hereby releases Tenant
and waives any right that Landlord may have against Tenant as a result of any
loss or damage to the extent such loss or damage is insured or insurable under
such policies.
Section 6.10. Compliance With Policy Requirements. Tenant shall not
violate or permit to be violated any of the conditions, provisions or
requirements of any insurance policy required by this Article, and Tenant shall
perform, satisfy and comply with or cause to be performed, satisfied and
complied with the conditions, provisions and requirements of the insurance
policies and the companies writing such policies so that, at all times,
companies reasonably acceptable to Landlord provide the insurance required by
this Article.
Section 6.11. Required Insurance Policy Clauses. Each policy of insurance
required to be carried pursuant to the provisions of this Article shall contain
(a) a provision that no act or omission of the insured shall affect or limit the
obligation of the insurance company to pay the amount of any loss sustained, and
(b) an agreement by the insurer that such policy shall not be canceled, modified
or denied renewal without at least thirty (30) days prior written notice to the
other party.
Section 6.12. Landlord's Insurance. During the period when Landlord's Work
is being performed on the Premises, Landlord shall cause the general contractor
to carry, and thereafter keep in full force and effect, or cause to be kept in
full force and effect, until Landlord's Work has been substantially completed,
insurance coverage(s) of the types and in the minimum limits set forth on
Exhibit J attached hereto as well as such other insurance as the holder of any
Superior Interest may require. The cost, if any, to Landlord of such insurance
shall be included in the cost of Landlord's Work.
ARTICLE 7
DAMAGE, DESTRUCTION AND RESTORATION
Section 7.1. Notice to Landlord. Tenant shall notify Landlord immediately
if the Premises is damaged or destroyed in whole or in part by fire or other
casualty.
Section 7.2. Casualty Restoration. If the Premises shall be damaged by
fire or other casualty, then the Premises shall be repaired and restored to its
condition preceding the damage in accordance with the provisions of this Article
7. Whenever in this Article 7 reference is made to restoration of the Premises,
(i) Tenant's obligation shall be as to all personal property within the Premises
including Tenant's furniture, fixtures, equipment and other personal property,
any and all Alterations, construction or other improvements made to the Premises
by or on behalf of Tenant (including, without limitation, Tenant's and
Directrix' initial Alterations to prepare the Premises for its occupancy, but
excluding Landlord's Work), all of which shall be restored and replaced at
Tenant's sole cost and expense and (ii) Landlord's obligation, if any, shall be
as to the shell, which constitutes the structure of the Building, the
mechanical, electrical, plumbing, air conditioning and other Building-wide
systems which exist immediately prior to the casualty (except to the extent the
same were installed by Tenant or Directrix) and Landlord's Work. Landlord shall
have no liability to Tenant, and Tenant shall not be entitled to terminate this
Lease, if such repairs and restoration are not in fact completed within
Landlord's estimated time period (except as otherwise expressly provided
herein). The Base Rent payable under Article 2, as well as Additional Rent
payable pursuant to Article 3, until thirty (30) days after such repairs which
are Landlord's obligation shall be made, shall be reduced in the proportion
which the area of the part of the Premises which is not usable by Tenant bears
to the total area of the Premises; provided, however, should Tenant reoccupy a
portion of the Premises for the conduct of its business prior to the date such
repairs are made, the Base Rent and such Additional Rent shall be reinstated
with respect to such reoccupied portion of the Premises and shall be payable by
Tenant from the date of such occupancy.
Section 7.3. Termination Options. (i) Anything in Section 7.2 to the
contrary notwithstanding, if the Premises are totally damaged or are rendered
wholly untenantable, or if the Building shall be so damaged by fire or other
casualty that, in Landlord's independent contractor's or architect's opinion,
substantial alteration, demolition or reconstruction of a material portion of
the Building shall be required such that the Building cannot be reasonably
restored within twelve (12) months, or if in Landlord's opinion the Building,
after its proposed repair, alteration or restoration, shall not be economically
viable as a commercial building or if Landlord is advised by any mortgagee that
any insurance proceeds will not be made available to Landlord to cover the cost
of Landlord's obligations under this Article 7, then in any of such events,
Landlord, at Landlord's option, may, not later than sixty (60) days following
the damage, give Tenant a notice in writing terminating this Lease. In addition,
if more than twenty percent (20%) of the Building shall be damaged by fire or
other casualty during the last two (2) years of the Term, Landlord and Tenant
each shall have the option to terminate this Lease by thirty (30) days prior
written notice to the other party. If Landlord or Tenant elects to terminate
this Lease as hereinabove provided, the Term shall expire upon the date set
forth in such notice, and Tenant shall vacate the Premises and surrender the
same to Landlord without prejudice however, to Landlord's or Tenant's rights and
remedies against the other under this Lease in effect prior to such termination
and any Rent owing shall be paid up to such date and any payments of Rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Upon the termination of this Lease under the conditions
provided for in the next preceding sentence, Tenant's liability for Rent
thereafter accruing shall cease as of the day following such damage. If neither
Landlord nor Tenant elects to terminate this Lease pursuant to this paragraph,
Landlord and Tenant shall diligently perform their respective restoration
obligations as provided in Section 7.2 above.
(ii) If the Premises are totally damaged by fire or other casualty
or are rendered wholly untenantable thereby, or if the Premises are partially
damaged by fire or other casualty and the balance of the Premises is unsuitable
for the conduct of Tenant's business therein, or if Tenant shall have no means
of access to the Premises as a result of a fire or other casualty, and if
Landlord shall elect to restore the Premises, Landlord shall, within the
aforesaid sixty (60) day period following the damage, cause an independent
contractor or architect selected by Landlord to give notice to Tenant of the
date by which such contractor or architect believes the restoration of the
Premises which is Landlord's obligation shall be substantially completed (the
"Restoration Date"). If (a) such notice shall indicate that the Restoration Date
shall not occur within twelve (12) months following the casualty or (b) the
restoration of the Premises which is Landlord's obligation shall not be
substantially completed by the date that is twelve (12) months following the
casualty (such twelve (12) month period to be extended to the extent of any of
those delays which are described in Section 7.4 below), then Tenant shall have
the right to terminate this Lease by giving notice to Landlord not later than
thirty (30) days after receiving such notice (or thirty (30) days after the
expiration of the twelve (12) month period (as the same may be extended as
hereinabove provided in the event of those delays described in Section 7.4
below) following the casualty, as the case may be) and in such event this Lease
shall terminate on the later of the date specified in Tenant's notice for the
termination of this Lease (which date shall not be more than thirty (30) days
after the giving of such notice) or the date Tenant vacates the Premises and, to
the extent feasible or safe in light of the condition of the Building, removes
all its property therefrom. If Tenant does not elect to terminate this Lease
pursuant to subsection (a) of this paragraph, Landlord and Tenant shall
diligently perform their respective restoration obligations as provided in
Section 7.2 above.
Section 7.4. Repair Delays. Landlord shall not be liable for reasonable
delays which may arise by reason of the claim adjustment with any insurance
company on the part of Landlord (provided that Landlord shall not have acted
negligently in pursuing such claim adjustment or colluded with the insurance
company to cause delays in adjusting such claim) and/or Tenant, or for
Unavoidable Delays.
Section 7.5. Effect of Casualty on this Lease. Except as expressly
provided in this Article 7, this Lease shall not terminate, be forfeited or be
affected in any manner, nor shall there be a reduction or abatement of Rent by
reason of damage to, or total, substantial or partial destruction of, the
Premises.
Section 7.6. Waiver of Rights Under Statute. The existence of any present
or future law or statute notwithstanding, Tenant waives all rights to quit or
surrender the Premises or any part thereof by reason of any casualty to the
Premises, except as expressly set forth in this Article 7.
ARTICLE 8
CONDEMNATION
Section 8.1. Substantial Taking.
(a) Termination of Lease for Substantial Taking. If all or Substantially
All of the Premises (as hereinafter defined) is taken for any public or
quasi-public purpose by any lawful power or authority by the exercise of the
right of condemnation or eminent domain or by agreement among Landlord, Tenant
and those authorized to exercise this right, this Lease shall terminate on the
Date of Taking (as hereinafter defined) and the Rent payable by Tenant hereunder
shall be apportioned and paid to the Date of Taking.
(b) Disbursement of Award. Subject to the provisions of any mortgage
encumbering Landlord's fee estate, if all or Substantially All of the Premises
is taken or condemned as provided in Section 8.1(a) hereof, the entire award
paid in connection with such taking or condemnation shall be paid to Landlord,
Tenant shall have no claim against Landlord or the condemning authority for the
value of any unexpired portion of the Term and Tenant hereby expressly assigns
to Landlord all of its right in and to any such award.
(c) Substantially All of the Premises. "Substantially All of the Premises"
means such portion of the Premises as, when so taken, would leave a balance of
the Premises that, due either to the area so taken or the location of the part
so taken or the location of the part so taken in relation to the part not so
taken, would not, under economic conditions, zoning laws or building regulations
then existing, and after performance by Tenant of all covenants, agreements,
terms and provisions contained herein or by law required to be observed by
Tenant, readily accommodate a new or reconstructed building or buildings of a
type and size generally similar to the Building existing at the Date of Taking.
If there is any dispute over whether "Substantially All of the Premises" has
been taken, such dispute shall be resolved by arbitration in accordance with the
provisions of Article 31 hereof.
(d) Date of Taking. "Date of Taking" means the date on which title to the
whole or Substantially All of the Premises, or any part thereof, has vested in
any lawful power or authority pursuant to the provisions of applicable law.
Section 8.2. Less Than A Substantial Taking.
(a) If less than Substantially All of the Premises is taken for any public
or quasi-public purpose by any lawful power or authority by the exercise of the
right of condemnation or eminent domain or by agreement among Landlord, Tenant
and those authorized to exercise this right, then, effective as of the date of
vesting of title, the Base Rent hereunder for such part shall be equitably
abated and this Lease shall continue as to such part not so taken. In the event
that only a part of the Premises shall be so condemned or taken, then (a) if
substantial structural alteration or reconstruction of the Premises or the
Building shall, in the reasonable opinion of Landlord, be necessary or
appropriate as a result of such condemnation or taking, Landlord may, at its
option, terminate this Lease and the term and estate hereby granted as of the
date of such vesting of title by notifying Tenant in writing of such termination
within 60 days following the date on which Landlord shall have received notice
of vesting of title, or (b) if it is not economically feasible for Tenant to
continue to use the portion of the Premises not so condemned or taken for the
conduct of business, Tenant may, at its option, terminate this Lease and the
term and estate hereby granted as of the date of such vesting of title by
notifying Landlord in writing of such termination within 60 days following the
date on which Landlord shall have received notice of vesting of title. If
neither Landlord nor Tenant elects to terminate this Lease, as aforesaid, this
Lease shall be and remain unaffected by such condemnation or taking, except that
the Base Rent shall be abated to the extent, if any, hereinbefore provided. In
the event that only a part of the Premises shall be so condemned or taken and
this Lease and the terms and estate hereby granted are not terminated as
hereinbefore provided, Landlord will, at its expense, restore with reasonable
diligence the remaining structural portions of the Premises as nearly as
practicable to the same condition as it was in prior to such condemnation or
taking. If there is any dispute over whether Landlord acted reasonably in
determining that substantial structural alteration or reconstruction of the
Premises or the Building shall be necessary or appropriate as a result of such
condemnation or taking or as to whether it is not economically feasible for
Tenant to continue to use the portion of the Premises not so condemned or taken
for the conduct of business, such dispute shall be resolved by arbitration in
accordance with the provisions of Article 31 hereof.
(b) Disbursement of Award. Subject to the provisions of any mortgage
encumbering Landlord's fee estate, if less than all or Substantially All of the
Premises is taken or condemned as provided in Section 8.2 (a) hereof, the entire
award paid in connection with such taking or condemnation shall be paid to
Landlord, Tenant shall have no claim against Landlord or the condemning
authority for the value of any unexpired portion of the Term and Tenant hereby
expressly assigns to Landlord all of its right in and to any such award.
Section 8.3. Temporary Taking.
(a) If the temporary use of the whole or any portion of the Premises is
taken for a public or quasi-public purpose by a lawful power or authority by the
exercise of the right of condemnation or eminent domain or by agreement between
Tenant and those authorized to exercise this right, Tenant shall give Landlord
notice within five (5) days thereof. The Term shall not be reduced or affected
in any way by reason of such temporary taking and Tenant shall continue to pay
Rent to Landlord without reduction or abatement.
(b) Obligation to Restore for Temporary Taking. If all or any part of the
Premises shall be temporarily taken by eminent domain for any public or quasi
public use or purpose, the term of this Lease and Tenant's obligations hereunder
(including, without limitation, the obligations to pay Base Rent and Additional
Rent) shall be unaffected but Tenant shall be entitled to the portion of the
award for such temporary taking that is allocable to the portion of the Premises
that is subject to the temporary taking and the period of such taking occurring
within the Term and the balance of such award shall be paid to Landlord. If such
temporary taking exceeds twelve (12) months, Tenant may elect to terminate this
Lease if either (a) Tenant shall have no means of access to the Premises or (b)
the remaining area of the Premises shall not be sufficient for Tenant, to
continue its operation as provided for under the terms of this Lease (any
dispute regarding the same to be resolved by arbitration in accordance with the
provisions of Article 31 hereof). Notwithstanding the provisions of clause (b)
to the contrary, Tenant agrees that if twenty percent (20%) or less of the
Building is acquired by a temporary taking, Tenant shall have no right to
terminate this Lease. Tenant shall give notice of such election to Landlord not
later than sixty (60) days after the earlier of (i) notice of such taking is
given by Landlord to Tenant or (ii) the date of such taking. Upon the giving of
such notice by Tenant, this Lease shall terminate on the date of such taking and
the Base Rent and Additional Rent shall be prorated and adjusted as of such
termination date.
Section 8.4. Right to Terminate at End of Term. If more than 15% of the
Premises shall be taken in condemnation during the last two (2) years of the
term of this Lease, Landlord or Tenant may give a 90 day notice to the other
terminating and canceling this Lease as if the date set forth in the notice were
the Expiration Date hereof.
Section 8.5. Termination Pursuant to This Article. In the event of
termination of this Lease as provided in this Article 8, this Lease and the term
and estate hereby granted shall expire as of the date of such termination with
the same effect as if that were the date hereinbefore set for the expiration of
the term of this Lease, and the rent hereunder shall be apportioned as of such
date.
Section 8.6. Disputes. Any disputes between Landlord and Tenant under this
Article 8 shall be resolved by arbitration in accordance with the provisions of
Article 31 hereof.
Section 8.7. Collection of Awards. Each of the parties shall execute
documents that are reasonably required to facilitate collection of any awards
made in connection with any condemnation proceeding referred to in this Article.
Section 8.8. Separate Claim. Nothing contained in this Article 8 shall be
deemed to prevent Tenant from making a separate claim in any condemnation
proceedings for the then value of Tenant's property included in such taking
(including the then unamortized value of Tenant's trade fixtures that cannot be
removed, such amortization to be on a straight line basis in accordance with
generally accepted accounting principles), and for any moving and relocation
expenses, provided (other than as to Tenant's trade fixtures) the same does not
affect the award otherwise payable to Landlord.
Section 8.9. Waiver by Tenant. Tenant hereby waives any and all rights it
might otherwise have pursuant to ss. 1265.130 of the California Code of Civil
Procedure.
Section 8.10. Fee Mortgage. Notwithstanding the foregoing provisions of
this Article 8, the disbursement of any awards made in connection with any
condemnation proceeding referred to in this Article shall be subject to the
terms of any mortgage encumbering Landlord's fee estate in the Premises. If
sufficient proceeds are not available to Landlord to cover the cost of any
condemnation restoration due to any such mortgagee requiring that such award be
paid to it and not made available or treated as restoration funds, Landlord
shall be responsible for the deficiency. If Landlord fails to make up such
deficiency, Tenant, as its sole and exclusive remedy for such failure, may
terminate this Lease on thirty (30) days' written notice to Landlord, in which
event, unless Landlord makes up such deficiency prior to the expiration of such
thirty (30) day period, this Lease shall terminate on the expiration of such
thirty (30) day period and the Rent payable by Tenant hereunder shall be
apportioned and paid to the date of termination.
ARTICLE 9
ASSIGNMENT, TRANSFER AND SUBLETTING
Section 9.1. No Right to Assign, Transfer. Except as otherwise provided in
this Article, Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign this Lease, nor underlet, or suffer or permit
the Premises or any part thereof to be used by others, nor modify, amend, cancel
or surrender any permitted sublease, without the prior written consent of
Landlord in each instance. If this Lease be assigned, or if the Premises or any
part thereof be underlet or occupied by anybody other than Tenant, Landlord may,
after default by Tenant, collect rent from the assignee, under-tenant or
occupant, and apply the net amount collected to the Rent herein reserved, but no
such assignment, underletting, occupancy or collection shall be deemed a waiver
of this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Landlord to an
assignment or underletting shall not in any way be construed to relieve Tenant
from obtaining the express consent in writing of Landlord to any further
assignment or underletting.
Section 9.2. Permitted Assignments and Sublettings. (a) Anything to the
contrary in the foregoing notwithstanding, Tenant may assign this Lease or
sublet all or any portion of the Premises to any Affiliate or successor by
merger or consolidation or a person or entity to whom all or substantially all
of the outstanding stock of Tenant or to whom all or substantially all of
Tenant's assets are transferred (such successor or person being herein called a
"Successor") without the consent of Landlord (but only if (a) the Successor has
a net worth (exclusive of goodwill) equal to or greater than twenty million
dollars ($20,000,000) and (b) such merger, consolidation or transfer of assets
is not effected for the primary purpose of transferring this Lease or subleasing
the Premises). Notwithstanding the foregoing, if Playboy Entertainment Group,
Inc. shall be the Tenant hereunder that is assigning this Lease or subletting
all or part of the Premises as contemplated above in this Section 9.2, the net
worth test set forth in subsection (a) above shall not apply, provided that
Playboy Entertainment Group, Inc. shall not dissolve or otherwise cease to
conduct its business as a result of the transaction giving rise to the
assignment. For purposes of this Section, an "Affiliate" shall mean any
corporation or other entity which, directly or indirectly, controls or is
controlled by, or is under common control with, the Tenant named hereunder. For
this purpose, "control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such corporation or other entity, whether through the ownership of voting
securities or by contract or otherwise. No such assignment or sublease shall be
permitted or effective unless (x) Tenant cures any existing Event of Default
under this Lease, (y) Tenant gives Landlord at least ten (10) days' prior
written notice of such assignment or sublease together with a copy of the
proposed assignment or sublease and reasonably acceptable proof of the
compliance of such transaction with the conditions set forth in this Section and
(z) Tenant gives Landlord a signed copy of the final assignment or sublease
within thirty (30) days after it is executed (notwithstanding the foregoing, if
Tenant shall be prohibited by law from making such disclosures to Landlord in
advance of the effective date of such assignment, in such case such notice and a
copy of the fully executed assignment shall be given to Landlord within ten (10)
business days after the effective date of such assignment). No such assignment
or sublease by Tenant shall be deemed to release Tenant from any of its
obligations and liabilities hereunder, and such assignee shall execute an
agreement, in form and substance reasonably satisfactory to Landlord, assuming
all Tenant's obligations and liabilities hereunder.
Anything herein contained to the contrary notwithstanding, a transfer of
fifty percent (50%) or greater interest (whether stock, partnership or
otherwise) of Tenant, or any permitted subtenant or assignee of this Lease shall
be deemed to be an assignment of this Lease or such sublease, however
accomplished, and whether in a single transaction or in any series of
transactions, related or unrelated, to which the provisions this Article shall
apply, except that the transfer of the outstanding capital stock of any
corporate tenant or subtenant shall be deemed not to include the sale of such
stock by persons or parties, through the "over the counter market" or through
any recognized stock exchange, or to include a public issue of such stock on any
recognized stock exchange.
(b) Anything to the contrary in the foregoing notwithstanding, Tenant may
sublet space in the Premises to Directrix pursuant to the sublease annexed
hereto as Exhibit "C" (the "Directrix Sublease"). If Tenant so sublets the
Premises to Directrix, Landlord shall enter into with Directrix, a
subordination, recognition and non-disturbance agreement substantially in the
form annexed hereto as Exhibit "D" (the "Directrix SNDA"). Tenant shall also
have the right to assign this Lease or sublet space in the Premises to parties
other than Directrix with the consent of Landlord, which consent shall not be
unreasonably withheld or delayed provided that:
(x) each sublease shall:
(i) provide that it is subject and subordinate to this Lease;
(ii) provide that the subtenant will not pay rent or other sums
under its sublease for more than one (1) month in advance;
(iii) provide that on the termination of this Lease, the subtenant
will, at Landlord's option, attorn to, or enter into a direct
lease of its space in the Premises on identical terms as the
sublease with Landlord;
(iv) not have any atypical or skewed rental payments including, but
not limited to, up front rental or other payments, or
declining rental amounts over the term or any other rental
arrangement which would or could diminish the value of this
Lease or Landlord's fee estate;
(v) be with a creditworthy subtenant (which is not an Affiliate of
Tenant) with sufficient assets to satisfy its obligations
under such sublease (and Landlord shall have been provided
with reasonably satisfactory proof thereof), and such sublease
shall not provide for the subtenant to be relieved of
liability upon an assignment of its interest in such sublease
and the terms of such sublease shall be the result of arms'
length negotiations; and
(vi) provide that in no event shall Landlord be liable for any
work, repairs, maintenance or other obligations in respect of
the sublet space or for the payment of any work allowance or
free rent;
(y) each assignment shall be with an assignee having a net worth
(exclusive of good will) equal to or greater than twenty million dollars
($20,000,000) (except that if Playboy Entertainment Group, Inc. shall then be
the Tenant hereunder seeking to assign this Lease, then in lieu of the foregoing
net worth requirement, such assignee must have sufficient assets to satisfy its
obligations under this Lease (and Landlord shall have been provided with
reasonably satisfactory proof thereof);
(z) the assignee or subtenant shall not be a governmental agency or
instrumentality.
Landlord agrees not to unreasonably withhold its consent to any request by
Tenant for a non-disturbance agreement (substantially in the form attached
hereto as Exhibit "D") for any proposed sublease to which Landlord is willing to
grant its consent or as to which Landlord's consent is not required, provided
that all of the following conditions are met to the reasonable satisfaction of
Landlord:
(1) the sublease is for term of at least five (5) years or expires
on the Expiration Date of this Lease,
(2) the sublease is for at least 20,000 rentable square feet,
(3) the fixed rent payable under the sublease is equal to at least
110% of the Base Rent payable under this Lease on a per square foot basis, and
the sublease provides for the payment of additional rent on taxes, operating
expenses and other additional rent on the same proportionate basis as under this
Lease,
(4) the subtenant has a net worth reasonably adequate (in Landlord's
opinion) to meet its obligations under the sublease,
(5) the proposed use of the space by the subtenant will not have a
material adverse effect on any other occupants of the Premises,
(6) the size, location and configuration of the space to be sublet
shall not result in the balance of the space in the Premises becoming
commercially unusable or difficult to lease to others at a reasonable fair
market rental, and
(7) the sublease is in a commercially reasonable form and otherwise
reasonably acceptable to Landlord.
(c) Limitation on Right to Assign or Sublease. Tenant has no right to
enter into an assignment or sublease if on the effective date of such assignment
or sublease there is an Event of Default which will not be cured on such
effective date.
(d) Instruments of Assignment, Transfer. Each permitted assignee or
transferee shall assume and be deemed to have assumed this Lease and shall be
and remain liable jointly and severally with Tenant for the payment of the rent
and additional rent and for the due performance of all the terms, covenants,
conditions and agreement herein contained on Tenant's part to be performed for
the term of this Lease. No assignment shall be effective unless Tenant shall
promptly deliver to Landlord a duplicate original of the instrument of
assignment, in form reasonably satisfactory to Landlord, containing a covenant
of assumption by the assignee of all of the obligations aforesaid and shall
obtain from Landlord the aforesaid written consent, to the extent such consent
is required hereunder, prior thereto.
Section 9.3. Collection of Rent by Landlord. After an Event of Default,
Landlord may collect rent and all other sums due from the assignee, subtenant or
occupant and apply the net amount collected to the Rent payable by Tenant
hereunder. No such collection shall be, or shall be deemed to be, a waiver of
any agreement, term, covenant or condition of this Lease or the recognition by
Landlord of any assignee, subtenant or occupant as a direct Tenant of Landlord,
or a release of Tenant from performance by Tenant of its obligations under this
Lease.
Section 9.4. Permitted Licenses. Notwithstanding the foregoing, upon not
less than ten (10) days' prior written notice from Tenant to Landlord, Tenant
(and Directrix, as the subtenant under the Directrix Sublease) may enter into
one or more license agreements pursuant to which agreements, Tenant and/or
Directrix, as the case may be, shall license not more than ten percent (10%) of
the Building in the aggregate at any one time to clients and professionals or
other business executives who have a business relationship with Tenant or
Directrix, as the case may be, without Landlord's consent, provided that (i)
Tenant's notice shall set forth the names of such party or parties; (ii) Tenant
or Directrix, as the case may be, shall furnish a copy of any written agreement
of such parties regarding such licensing of space to Landlord; (iii) any such
licensing agreement (whether or not in writing) shall be subject and subordinate
to the terms of this Lease; (iv) Tenant (or Directrix) and such licensee shall
enter into and deliver to Landlord the agreement in the form annexed hereto as
Exhibit G prior to the commencement of occupancy of the Premises by such
licensee; (v) there shall be no demising walls or separate entranceways
constructed to accommodate such licensees; and (vi) Tenant (or Directrix) shall
occupy the demised premises simultaneously with such licensee for the conduct of
its business.
Section 9.5. Sublease/License Assignment.
(a) Assignment of Subleases and Licenses to Landlord. As security for
Tenant's obligations hereunder, Tenant hereby assigns, transfers and sets over
unto Landlord all of Tenant's right, title and interest in and to all subleases
and licensees and hereby confers upon Landlord, its agents and representatives,
a right of entry in, and sufficient possession of, the Premises to permit and
insure the collection by Landlord of the rentals and other sums payable under
the subleases and licenses. The exercise of this right of entry and qualified
possession by Landlord shall not constitute an eviction of Tenant from the
Premises or any portion thereof. If such right of entry and possession is denied
Landlord, its agents or representatives, Landlord, in the exercise of this
right, may use any legal means to gain and enjoy the Premises without
responsibility or liability to Tenant, its servants, employees, guests or
invitees, or any parties whatsoever. This assignment, although at present
effective, shall not be exercised prior to the occurrence of an Event of
Default.
(b) Schedule of Subleases and Licenses. At any time upon Landlord's
demand, Tenant shall deliver to Landlord, within ten (10) days of its demand,
(i) a schedule of all subleases and licenses, setting forth the names of all
subtenants and licensees, a description of the space that has been sublet or
licensed, expiration date, rentals, license fees and such other information as
Landlord reasonably may request; and (ii) a photostatic copy of each of the
subleases and licenses. Upon reasonable request of Landlord, Tenant shall permit
Landlord and its agents and representatives to inspect original counterparts of
all subleases and licenses.
Section 9.6. Required Sublease Clauses. Each sublease hereinafter entered
into by Tenant shall provide that: (a) it is subordinate and subject to this
Lease (subject, in the case of the Directrix Sublease, to the provisions of the
Directrix SNDA, or, in the case of any other sublease for which Landlord
provides a non-disturbance agreement, as contemplated above, subject to the
provisions of such non-disturbance agreement); (b) the subtenant shall not pay
rent or other sums payable under the sublease to Tenant for more than one (1)
month in advance; and (c) at Landlord's option, on the termination of this
Lease, the subtenant shall attorn to, or shall enter into a direct lease on
terms identical to its sublease with, Landlord.
Section 9.7. Landlord's Sale or Conveyance. Landlord shall have the right
to sell, transfer, assign or otherwise convey Landlord's fee interest in the
Premises; provided, however, that any such sale, transfer, assignment or other
conveyance shall be subject to this Lease, the Directrix Sublease and any other
permitted sublease, and provided that with respect to covenants and obligations
of Landlord hereunder which accrue prior to the effective date of any such sale,
transfer, assignment or conveyance, Landlord shall be relieved thereof to the
extent that the successor Landlord assumes such covenants and obligations
provided that the successor Landlord shall have an equity interest in the
Premises of not less than twenty percent (20%). In all other cases Landlord's
liability to Tenant for covenants and obligations which accrue prior to the
effective date of any such sale, transfer, assignment or conveyance shall
survive such effective date for a period of two (2) years.
ARTICLE 10
MORTGAGES
Section 10.1. Tenant's Right to Mortgage.
(a) Tenant shall have the right to mortgage this Lease and the leasehold
estate hereby created to any savings bank or commercial bank, trust company,
savings and loan association, insurance company, real estate investment trust or
pension fund authorized to do business in the State of California, whose loans
are regulated by any Federal or State law, agency or department thereof, or any
other lender having a net worth in excess of $100,000,000 (each, an
"Institutional Lender" and such mortgage and any extension, modification,
amendment, replacement and refinancing thereof being a "Leasehold Mortgage", and
the holder of a Leasehold Mortgage being a "Leasehold Mortgagee") and to enter
into any and all extensions, modifications, amendments, replacements and
refinancings of such Leasehold Mortgage as Tenant may desire without the prior
consent of Landlord; provided, however, that the principal amount of such
Leasehold Mortgage shall be limited to the maximum amount which such
Institutional Lender would lend assuming the maximum amount available for debt
service on such loan is 50% of the earnings before income taxes, depreciation
and amortization of Tenant with respect to the Premises at the time of the
making of such loan, and any such Leasehold Mortgage shall be subject to each
and every covenant, condition and restriction of this Lease, and the same shall
be subject and subordinate to all rights and interest of Landlord hereunder,
none of which shall be waived by the foregoing consent. The execution and
delivery of any Leasehold Mortgage shall not be deemed to constitute an
assignment or transfer of this Lease nor shall the Leasehold Mortgagee, as such,
be deemed an assignee or transferee of this Lease so as to require such
Leasehold Mortgagee to assume the performance of any of the terms, covenants or
conditions on the part of Tenant to be performed hereunder. Landlord shall be
given prompt notice of the execution and delivery of a Leasehold Mortgage
together with any extensions, renewals or modifications and be furnished with
conformed copies thereof. Except as expressly permitted pursuant to this Section
10.1, Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it shall
not mortgage or otherwise encumber this Lease and the leasehold estate hereby
created. The provisions of this Section 10.1 do not give any person whatsoever
the right to mortgage, hypothecate or otherwise encumber or to cause any liens
to be placed on the freehold estate of Landlord.
(b) If Tenant shall mortgage its leasehold interest under this Lease,
then, as long as any such Leasehold Mortgage shall remain unsatisfied of record,
the following provisions shall apply:
(i) If the Leasehold Mortgagee shall register with Landlord his or
its name and address in writing, Landlord, on serving on Tenant any notice of
default pursuant to the provisions of this Lease, shall at the same time deliver
a copy of such notice to the Leasehold Mortgagee by registered mail, return
receipt requested or by nationally recognized overnight courier service,
addressed to said Leasehold Mortgagee at the address registered with Landlord.
(ii) The Leasehold Mortgagee, in the event Tenant shall be in
default hereunder, shall have the right, within the same period provided in this
Lease for Tenant to remedy such default, to remedy or cause to be remedied such
default, and Landlord shall accept such performance by or at the instigation of
the Leasehold Mortgagee as if the same had been performed by Tenant. Tenant
constitutes and appoints the Leasehold Mortgagee as Tenant's agent and
attorney-in-fact with full power, in Tenant's name, place, and stead, and at
Tenant's cost and expense, to enter upon the Premises if Tenant shall be in
default hereunder and make repairs thereto, maintain the same, remove any
violations of law, or of the rules or regulations of governing authorities and
to otherwise perform any of Tenant's obligations according to the provisions of
this Lease as to the care, maintenance, or preservation of the Premises.
(c) Upon request of any lender providing financing for Tenant's furniture,
moveable trade fixtures or moveable equipment which may be removed without
damage to the Premises, Landlord agrees to execute a so-called "Landlord's
Waiver and Consent", which will be in form reasonably acceptable to Landlord and
which will (i) provide that Landlord has no interest in or lien against such
items, (ii) provide that Landlord will give such lender copies of any default or
termination notices sent by Landlord to Tenant under this Lease, provided that
the lender's address shall have been provided to Landlord; (iii) provide that
upon a default by Tenant under its agreement with such lender (as well as for a
period of ten (10) days following the termination of this Lease), such lender
may enter upon the Premises and remove such items, provided that such lender
agrees that such entry shall be at its own risk and that Landlord shall have no
liability to such lender with respect thereto and provided that such lender
shall indemnify Landlord against any and all costs, liabilities, damages and
claims arising as a result of such entry by such lender and that such lender
repairs all damage caused by the removal of such items, (iv) require the lender
to acknowledge that if it fails to remove the equipment within ten (10) days
following the expiration or sooner termination of this Lease (time being of the
essence), it shall be conclusively deemed to have waived any and all claims with
respect to such equipment and to have abandoned such equipment to Landlord, and
that Landlord shall have the right to use or dispose of such equipment in any
manner it sees fit in its sole and absolute discretion without any liability
whatsoever to lender, (v) prohibit lender from holding any public sales or
auctions at the Premises and (vi) address such other reasonable matters as are
customarily included in such an agreement and as shall be reasonably acceptable
to Landlord.
Section 10.2. Landlord's Right to Mortgage. (a) Landlord shall have right
to mortgage Landlord's fee estate in the Premises, provided, however, that
Landlord shall be responsible for the payment of all sums due under such
mortgage, and Landlord agrees that no such mortgage shall encumber Tenant's
personal property. Landlord shall make a good faith effort to obtain agreement
from the holders of any such mortgage(s) to (i) give to Tenant copies of any
notices of default delivered to Landlord, and (ii) the right to cure any such
default on the part of Landlord. If Landlord enters into any such mortgage,
Landlord shall provide Tenant with a true and complete copy thereof promptly
following the mortgage closing.
(b) Tenant acknowledges that the Premises is, as of the date hereof,
encumbered as set forth in Exhibit B.
(c) If Landlord hereafter enters into any mortgage(s) wherein the holders
thereof require the escrowing of Impositions and/or insurance premiums, then,
notwithstanding anything to the contrary set forth in this Lease, Tenant shall
pay the amount of such escrow(s) to Landlord not later than ten (10) days prior
to the date(s) that Landlord must pay such escrow(s) to such mortgagee(s). This
paragraph (c) shall not apply to Playboy Entertainment Group, Inc. if, and for
so long as, it shall be the Tenant hereunder or to any other Tenant hereunder so
long as such other Tenant shall have a net worth (exclusive of good will) equal
to or greater than $20,000,000.
(d) If, in connection with Landlord's mortgaging of its fee estate in the
Premises, the mortgagee shall request modifications to this Lease as a condition
to such financing, Tenant will not unreasonably withhold its consent thereto,
provided that such modifications do not materially and adversely affect Tenant's
rights or obligations hereunder.
Section 10.3. Subordination. (a) This Lease and any Leasehold Mortgage
shall be subject and subordinate to each and every existing and future fee
mortgage or lease (each, a "Superior Interest") now or hereafter encumbering or
affecting all or any portion of the Premises, provided that Landlord shall
obtain for the benefit of Tenant a subordination, non-disturbance and attornment
agreement from the holder of each Superior Interest substantially in the form
attached hereto as Exhibit H or otherwise in such holder's form as long as,
substantively, such form contains substantially the same provisions as those in
the agreement attached hereto as Exhibit H. (Landlord's initial mortgagee also
shall provide such an agreement substantially in the form attached hereto as
Exhibit H-1 for Directrix if it shall then be the subtenant under the Directrix
Sublease, if any, and Landlord shall request that any future holder of a
Superior Interest also permit that any such agreement provided to Tenant run to
the benefit of Directrix if it shall then be the subtenant under the Directrix
Sublease, if any). Any failure of Tenant to execute and deliver such
subordination, non-disturbance and attornment agreement shall not affect the
subordination of this Lease and the lien thereof to any such Superior Interest,
nor shall Landlord be in default of its obligation to obtain the same for the
benefit of Tenant as a result thereof. Upon the request of Landlord in writing,
Tenant agrees to execute and deliver any commercially reasonable instrument
which the Superior Interest holder may deem necessary further to effect the
subordination of this Lease and the lien thereof to any such Superior Interest.
The leases and mortgages and deeds of trust which are a Superior Interest and to
which this Lease is, at the time referred to, subject and subordinate pursuant
to this Article are hereinafter sometimes collectively called "superior leases"
and "superior mortgages", respectively.
(b) In the event of any act or omission of Landlord which would give
Tenant the right, immediately or after lapse of a period of time, to cancel or
terminate this Lease, or to claim a partial or total eviction, Tenant shall not
exercise such right (i) until it has given written notice of such act or
omission to the holder of each superior mortgage and the lessor of each superior
lease whose name and address shall previously have been furnished to Tenant in
writing, and (ii) until a reasonable period for remedying such act or omission
shall have elapsed following the giving of such notice and following the time
when such holder or lessor shall have become entitled under such superior
mortgage or superior lease, as the case may be, to remedy the same (which
reasonable period shall in no event be less than the period to which Landlord
would be entitled under this Lease or otherwise, after similar notice, to effect
such remedy), provided such holder or lessor shall with due diligence give
Tenant written notice of its intention to, and commence and continue to, remedy
such act or omission.
(c) If any superior mortgagee or superior lessor or the successors or
assigns of the foregoing (collectively, "Successor Landlord") shall succeed to
the rights of Landlord under this Lease, Tenant agrees, at the election and upon
request of any such Successor Landlord, to fully and completely attorn to and
recognize any such Successor Landlord as Tenant's landlord under this Lease upon
the then executory terms of this Lease; provided, however, that such Successor
Landlord shall not be bound by (i) any payment of Base Rent or Additional Rent
for more than one (1) month in advance, except prepayments in the nature of
security for the performance by Tenant of its obligations under this Lease and
deposits made by Tenant pursuant to Article 4 above, (ii) any amendment or
modification of this Lease made without the consent of such Successor Landlord
which amends or modifies in any substantive way any of the terms of this Lease,
or (iii) any obligation or liability of Landlord hereunder arising prior to the
date the Successor Landlord shall succeed to the interest of Landlord. The
foregoing provisions of this Section shall inure to the benefit of any such
Successor Landlord, shall apply notwithstanding that, as a matter of law, this
Lease may terminate upon the termination of a superior lease, shall be
self-operative upon any such demand, and no further instrument shall be required
to give effect to said provisions.
ARTICLE 11
LANDLORD'S AND TENANT'S
MAINTENANCE AND REPAIR OBLIGATIONS; UTILITIES
Section 11.1. Maintenance of the Premises, Etc. (a) Landlord shall take
good care of the roofs, exterior walls, foundations and load-bearing walls of
the Building, as well as of the structural integrity of the concrete floors of
the Building, and shall keep and maintain the same in good order and safe
condition, and shall make all repairs thereto and replacements thereof, as
necessary. Landlord also shall maintain and make all necessary repairs to, or
shall cause the applicable utility company to maintain and make all necessary
repairs to, the utility lines located on the Premises to the point of entry to
the Building. To the extent that the need for any such maintenance, repair or
replacement is caused by the negligence or willful misconduct of Tenant or its
agents, contractors, invitees or employees, or by any Alterations, then such
maintenance, repair or replacement shall be made at Tenant's expense.
Notwithstanding the foregoing, Landlord shall have no responsibility for (x) any
flooring placed upon the concrete floors of the Building, except as provided in
Section 1.2(c) above with respect to any such flooring which is installed as
part of Landlord's Work, or (y) any Alterations.
(b) Tenant shall take good care of the Premises, (including without
limitation all parking lots which are part of the Premises), the alleys and
curbs in front of or adjacent to the Premises, pipes and mains within the
Premises, and shall keep and maintain the Premises (including all of the
foregoing) in good and safe order and condition, and shall make all
nonstructural repairs therein and thereon, interior and exterior, ordinary and
extraordinary, foreseen and unforeseen, necessary to keep the Premises in good
and safe order and condition, howsoever the necessity or desirability therefor
may occur, except to the extent any such maintenance, repair or replacement is
Landlord's responsibility pursuant to subparagraph 11.1(a) above or pursuant to
any other provisions of this Lease.
(c) Tenant shall not make any change in the use of the Premises that will
in any way increase the likelihood of fire or other hazard arising out of the
operation or maintenance of the Premises, or out of any Alterations. All repairs
made by Tenant or Landlord, as the case may be, shall be equal in quality and
class to the original work and shall be made in compliance with the
Requirements. As used in this Section 11.1 the term "repairs" shall include all
necessary replacements, removals, alterations and additions.
Section 11.2. Free of Dirt, Etc. Tenant, shall keep clean and free from
dirt, rubbish, obstructions and encumbrances, the sidewalks, grounds, plazas,
common areas, railings, gutters, alleys, curbs or any other space, in front of
or adjacent to, the Premises.
Section 11.3. No Obligation to Supply Utilities. Landlord shall not be
required to supply any services, utilities or facilities whatsoever to the
Premises.
Section 11.4. Window Cleaning. Tenant shall not clean nor require, permit,
suffer nor allow any window in the Building to be cleaned from the outside in
violation of any laws, rules or regulations of any Governmental Authority (as
defined in Article 34).
ARTICLE 12
CHANGES, ALTERATIONS AND ADDITIONS
Section 12.1. Tenant's Right to Make Alterations. Tenant has the right to
make nonstructural alterations to the Premises that will not affect the
structural integrity or exterior appearance thereof or adversely affect any of
the building systems (an "Alteration") as long as Tenant complies with the
requirement(s) of this Article and provided that no Event of Default is then
outstanding. Any proposed Alteration which is structural in whole or in part
must first be approved by Landlord (whose consent shall not be unreasonably
withheld provided the other provisions of this Article are complied with).
Section 12.2. No Reduction in Value of Premises. Any Alteration, when
completed, shall be of such a character as not to reduce the value of the
Premises below its value immediately before construction of such Alteration was
commenced.
Section 12.3. Compliance with Governmental Requirements. Any Alteration
shall be made in compliance with all applicable Requirements (as defined in
Article 34).
Section 12.4. Insurance Requirements. No Alterations shall be undertaken
until Tenant has obtained insurance policies for the insurance required under
this Lease with respect thereto. For so long as Playboy Entertainment Group,
Inc. shall be the Tenant hereunder or any other Tenant hereunder shall have a
net worth (exclusive of good will) equal to or greater than $20,000,000, the
foregoing requirement only shall apply to those Alterations reasonably estimated
by Tenant or Tenant's architect to cost more than $50,000.
Section 12.5. Contractor's Bond. Tenant shall cause contractors to obtain
payment and performance bonds from reputable insurance companies licensed to do
business in the State of California and reasonably acceptable to Landlord, which
will ensure lien-free completion of the Alterations in question and deliver a
copy of the bond to Landlord before commencement of such Alterations. Provided
that no Event of Default shall then be outstanding, this requirement shall be
limited to those Alterations, the cost of which is reasonably estimated by
Tenant or Tenant's architect to exceed $250,000. Notwithstanding the foregoing:
for so long as Playboy Entertainment Group, Inc. shall then be the Tenant
hereunder or any other Tenant hereunder shall have a net worth (exclusive of
good will) equal to or greater than $20,000,000, then provided that no Event of
Default shall then exist, such requirement shall be limited to those Alterations
by Tenant the cost of which is reasonably estimated by Tenant or its architect
to exceed $1,000,000.
Section 12.6. Removal. All improvements and alterations made or installed
by Tenant (other than movable trade fixtures and furnishings) shall immediately
upon completion or installation be and become the property of Landlord without
payment therefor by Landlord and shall be surrendered to Landlord upon the
Expiration Date or sooner termination of this Lease. Tenant may, from time to
time, remove and dispose of any building equipment not deemed necessary by
Tenant in the operations of the improvements on the Premises; provided, however,
that such removal, when completed, shall not adversely affect the value or
utility of the Premises. Tenant shall not have any obligation to remove any
Alteration unless Landlord, as a condition of its approval of any such
Alteration required the removal thereof, in which event, Tenant shall restore
the Premises to its condition existing prior to the performance of any such
Alterations, at its own cost and expense, at or prior to the expiration of the
term. Notwithstanding the foregoing, however, Landlord, upon notice given at
least thirty (30) days prior to the Expiration Date or upon such shorter notice
as is reasonable under the circumstances upon the earlier expiration of the
Term, may prohibit Tenant from removing any Alteration that constitutes a
building system specified by Landlord in such notice (including, without
limitation, elevators, escalators, raised floors and attached kitchen appliances
(such as dishwashers and cabinets and HVAC systems). Notwithstanding anything in
this Section 12.6 to the contrary, Tenant shall be permitted at the expiration
of the Term to remove from the Premises those items which are set forth on
Exhibit L attached hereto, provided that such items were purchased and installed
by Tenant at its expense and provided that Tenant shall repair any and all
damage caused by such removal.
Section 12.7. Exterior Signs. Provided Tenant otherwise complies with all
of the terms and conditions of this Article with respect to Alterations, Tenant
shall have the right to install and affix to the exterior of the Building one or
more signs that are compatible with the exterior appearance of the Building
identifying only the Building, Tenant, Directrix or any other permitted
subtenant of the Premises provided and upon the condition that: (i)
architectural drawings (showing at least the location, size, method of
installation, dimensions, materials, finishes, method of illumination, if any,
and size of lettering, colors and design) for such exterior signage to be placed
on the Building shall be prepared by Tenant and submitted to Landlord for
Landlord's approval, which approval shall not be unreasonably withheld or
delayed, prior to Tenant's installation thereof; (ii) such exterior signage
shall at all times comply with all applicable Requirements; and (iii) upon the
expiration or other termination of this Lease, Tenant, at Tenant's sole cost and
expense, shall promptly remove all such exterior signage and repair all damage
and injury to the Building because of such removal.
ARTICLE 13
REQUIREMENTS OF GOVERNMENTAL AUTHORITIES
Section 13.1. Obligation to Comply With Requirements. (a) Tenant shall, at
its expense, comply with all Requirements which shall, with respect to the
manner of use of the Premises by Tenant or to any abatement of nuisance, impose
any violation, order or duty upon Landlord or Tenant arising from Tenant's
manner of use of the Premises or any Alterations made therein by or at Tenant's
request or required by reason of a breach of any of Tenant's covenants or
agreements hereunder. Nothing herein shall require Tenant to cure any violation
of a Requirement that is caused by Landlord's failure to perform Landlord's Work
substantially in accordance with the Construction Drawings or by the failure of
the Construction Drawings to comply with applicable Requirements in effect at
the time a final certificate of occupancy (or equivalent final sign-off from the
applicable Governmental Authority) is issued with respect to Landlord's Work.
(b) If Tenant receives written notice of any violation of law, ordinance,
rule, order or regulation applicable to the Premises, it shall give prompt
notice thereof to Landlord.
(c) Except as aforesaid, Landlord shall comply with or cause to be
complied with, all Requirements which shall impose any violation, order or duty
upon Landlord or Tenant and with respect to which Tenant is not obligated by
Section 13.1(a) to comply. Landlord also shall be responsible for curing any
violation of a Requirement that is caused by Landlord's failure to perform
Landlord's Work substantially in accordance with the Construction Drawings or by
the failure of the Construction Drawings to comply with applicable Requirements
in effect at the time of performance of Landlord's Work. Landlord may at its
expense contest the validity of any such law, ordinance, rule, order or
regulation; provided that any non-compliance by Landlord during the pendency of
such contest shall not materially adversely affect Tenant's use of the Premises
for the purposes permitted in this Lease or the ability of Tenant to perform
permitted alterations to the Premises.
Section 13.2. Contest of Requirements by Tenant.
(a) Tenant shall have the right to contest the validity of any Requirement
or the application thereof, if the compliance with such Requirement is Tenant's
responsibility under paragraph 13.1(a) above. During such contest, compliance
with any such contested Requirement may be deferred by Tenant on the condition
that, before instituting any such proceeding, Tenant shall furnish Landlord with
a surety company bond, a cash deposit or other security in form and amount
reasonably satisfactory to Landlord, securing compliance with the contested
Requirement and payment of all interest, penalties, fines, civil liabilities,
fees and expenses in connection therewith. Any such proceeding instituted by
Tenant shall be commenced as soon as is reasonably possible after the issuance
of any such contested Requirement and shall be prosecuted with diligence to
final adjudication, settlement, compliance or other mutually acceptable
disposition of the Requirement so contested. The furnishing of any bond, deposit
or other security notwithstanding, Tenant shall comply with any such Requirement
if the Premises, or part thereof, is in danger of being forfeited or if Landlord
is in danger of being subjected to criminal liability or penalty, or civil
liability in excess of the amount for which Tenant shall have furnished security
as hereinabove provided by reason of noncompliance therewith.
(b) Landlord shall not be required to join in any action or proceeding
referred to in this Article unless the provisions of any law, rule or regulation
at the time in effect require that such action or proceeding be brought by
and/or in the name of Landlord. If so required, Landlord shall join and
cooperate in such proceedings or permit them to be brought by Tenant in
Landlord's name, in which case Tenant shall pay all commercially reasonable
costs and expenses incurred by Landlord in connection therewith.
Section 13.3. Sharing of Costs. Notwithstanding anything contained in this
Lease to the contrary, if at any time during the term of this Lease Landlord
expends any sums in the performance of its obligations pursuant to Section
13.1(c) (except to the extent any such obligation results from a violation of a
Requirement that is caused by Landlord's failure to perform Landlord's Work
substantially in accordance with the Construction Drawings or by the failure of
the Construction Drawings to comply with applicable Requirements in effect at
the time a final certificate of occupancy for the Premises (or equivalent final
sign-off from the applicable Governmental Authority) is issued with respect to
Landlord's Work, Tenant shall pay to Landlord, as Additional Rent, a portion of
such cost within thirty (30) days after demand therefor in accordance with the
following schedule:
(i) If Landlord expends such sums prior to the first Lease Year, Tenant
shall be responsible for 22.72% of such cost, except that from and
after the Master Control Room/Technical Areas Rent Start Date, such
percentage shall be increased to 25.34%;
(ii) if Landlord expends such sums during the first Lease Year, Tenant
shall be responsible for 100% of such cost; and
(iii) Tenant's share of such cost shall be reduced as of the first day of
each Lease Year thereafter beginning with the second Lease Year by
6.5% (e.g., Tenant's share of such cost for the second Lease Year
shall be 93.5% and for the third Lease Year shall be 87%).
ARTICLE 14
DISCHARGE OF LIENS; BONDS
Section 14.1. Creation of Liens. Tenant shall not create nor cause to be
created (a) except as expressly permitted pursuant to Section 10.1, any lien,
encumbrance or charge upon the Premises, this Lease, the leasehold estate
created hereby, the income therefrom, or any part thereof, or (b) any other
matter or thing whereby the estate, rights or interest of Landlord in the
Premises or any part thereof, might be impaired.
Section 14.2. Discharge of Liens. If any vendor's, mechanic's, laborer's,
materialman's or similar statutory lien is filed against the Premises or any
part thereof (unless such lien is filed with respect to work performed by
Landlord, the cost of which is not Tenant's responsibility under this Lease),
Tenant shall, within thirty (30) days after the filing thereof, cause the same
to be discharged of record by payment, deposit, bond, order of a court of
competent jurisdiction or otherwise.
Section 14.3. No Authority to Contract in Name of Landlord; Notice of
Completion. Tenant shall notify Landlord at least fifteen (15) days prior to the
commencement of any Alterations at the Premises so that Landlord may post
notices of non-responsibility; and Tenant hereby grants Landlord a right of
entry onto the Premises for purposes of posting such notices. Upon completion of
any Alterations, Tenant shall cause a notice of completion to be filed and
recorded with the County Recorder's Office in the County where the Premises is
located, and shall provide a copy of the recorded notice of completion to
Landlord.
ARTICLE 15
LANDLORD'S WORK
Section 15.1. Landlord's Work.
(a) Landlord shall perform the work set forth in the Construction Drawings
(as hereinafter defined) (collectively, "Landlord's Work"), in and to the
Premises in order to prepare the same for Tenant's occupancy. Landlord shall
file with the Governmental Authorities having jurisdiction any required plans
and obtain all permits and approvals required. Landlord's Work shall be
performed in a good and workmanlike manner substantially in accordance with the
Construction Drawings and in compliance with all applicable Requirements. Except
as expressly set forth in this Lease, Landlord shall not be required to perform
any work to the Premises other than Landlord's Work. All other installations,
facilities, materials and work which may be undertaken by or for the account of
Tenant to prepare, equip, decorate and furnish the Premises for Tenant's
occupancy shall be at Tenant's expense. Landlord shall not be required to do any
of Landlord's Work which does not conform to any Requirement.
(b) The parties hereto acknowledge that attached hereto as Exhibit E is a
Work Letter setting forth the scope of Landlord's Work and approved by Landlord
and Tenant (the "Work Letter"). Tenant further acknowledges that the dollar
amounts set forth in the Work Letter are estimates only and that the cost of
Landlord's Work as described in the Work Letter and/or any portions thereof may
exceed the estimates set forth in the Work Letter. Immediately upon the
execution hereof, Landlord's architect shall prepare construction plans and
related specifications with respect to Landlord's Work (such plans and
specifications, as finally approved by Landlord, Tenant and all Government
Authorities having jurisdiction thereover shall be referred to herein
collectively as the "Construction Drawings"). Any work, materials, equipment,
finishes and improvements set forth on the Construction Drawings which are in
excess of the Work Letter Standard, as defined below (including, without
limitation, any work, materials, equipment, finishes and improvements that
require additional time to perform or lead time to obtain than any work,
materials, equipment, finishes and improvements set forth in the Work Letter)
shall be referred to herein as "Above-Standard Work." The "Work Letter Standard"
shall mean only work, materials, equipment, finishes and improvements that are
substantially the same in every respect (including, without limitation,
workmanship, quality, nature, type, cost and quantity) to the work, materials,
equipment, finishes and improvements that are set forth in the Work Letter. The
Construction Drawings shall (i) be engineering and architecturally complete and
contain all information necessary for the construction and completion of the
Landlord's Work; (ii) be coordinated with existing Building conditions and
facilities; (iii) conform in all respects with all applicable Requirements; (iv)
be based on, and consistent with, the Work Letter; and (v) conform to the Work
Letter Standard, except that the Construction Drawings may include
Above-Standard Work requested by Tenant, the cost of which, and delays caused by
which, shall be borne by Tenant as provided below.
Landlord's architect shall prepare the Construction Drawings. Tenant shall
furnish Landlord's architect with all information requested by the architect in
connection with its preparation of the Construction Drawings within five (5)
business days after the architect's delivery of a request therefor, which
request shall be in writing and shall be given to Tenant in accordance with
Article 22 hereof. Tenant represents that it has provided to Landlord's
architect all information requested by the architect to date.
Landlord shall cause its architect to simultaneously deliver the initial
draft of the Construction Drawings to Landlord and Tenant.
Tenant shall review and approve or disapprove the initial and any revised
draft of the Construction Drawings by the delivery of notice thereof to Landlord
and Landlord's architect, which notice ("Tenant's Plan Notice") must be received
by Landlord within five (5) business days following Tenant's receipt of such
draft of the Construction Drawings, time being of the essence. If Tenant fails
to give such Tenant's Plan Notice in a timely manner, Tenant shall be deemed to
have approved such Construction Drawings. If Tenant disapproves of such
Construction Drawings, Tenant's Plan Notice must set forth in reasonable detail
the grounds therefor, and Tenant acknowledges that it may only disapprove of any
draft of the Construction Drawings if Tenant believes that such Construction
Drawings fail to comply with the Work Letter Standard or include Above-Standard
Work not requested by Tenant or Directrix. Tenant may also in Tenant's Plan
Notice request changes to the Construction Drawings, provided that Tenant's Plan
Notice shall set forth in reasonable detail the nature and scope of such work,
materials, equipment, finishes or improvements requested by Tenant (the
"Construction Drawings Changes").
Following Landlord's receipt of Tenant's Plan Notice, Landlord shall
review and approve or disapprove the draft of the Construction Drawings and any
Construction Drawings Changes requested by Tenant by the delivery of notice
thereof to Tenant and Landlord's architect, which approval shall not be
unreasonably withheld. In the event Landlord shall not approve such draft of the
Construction Drawings and/or any Construction Drawings Changes requested by
Tenant, it shall indicate in writing to Tenant and Landlord's architect
("Landlord's Plan Notice") in reasonable detail (i) any corrections,
modifications and/or clarifications thereto that are required (collectively, the
"Corrections"), (ii) those item(s) of work, materials, equipment, finishes or
improvements (collectively, the "Items") set forth on such draft of the
Construction Drawings at Tenant's request or in the requested Construction
Drawings Changes (if any) which is (are) in excess of the Work Letter Standard,
and (iii) the number of days, if any, reasonably estimated by Landlord by which
performance, installation or completion (as the case may be) of the Items shall
delay (x) the substantial completion of Landlord's Work and/or (y) Studio A
being in operational condition. If Tenant agrees with Landlord that the Items
are in excess of the Work Letter Standard, Tenant shall within five (5) business
days after the giving of Landlord's Plan Notice deliver a notice to Landlord
either (i) directing Landlord to cause its architect to revise and resubmit to
Landlord and Tenant a revised draft of the Construction Drawings eliminating the
Items and incorporating the Corrections and/or (ii) acknowledging that (a) the
Items are in excess of the Work Letter Standard (and accordingly that Tenant
shall be responsible for the cost thereof and any such Items which constitute
Construction Drawings Changes shall be incorporated into the Construction
Drawings together with the Corrections), and (b) the Substantial Completion Date
(and also the Studio A Delivery Date, to the extent that such Items shall cause
a delay in Studio A being in operational condition) shall be deemed accelerated
by one (1) day for each day of any delay in the substantial completion of
Landlord's Work, or in Studio A being placed in operational condition, as the
case may be, caused thereby.
If Tenant in good faith disagrees with Landlord as to whether (i) the
Construction Drawings comply with the Work Letter Standard or (ii) all or any of
the Items are in excess of the Work Letter Standard, and the parties are unable
to negotiate in good faith a resolution of such dispute within two (2) business
days of Tenant's receipt of Landlord's Plan Notice, either party may submit the
dispute for resolution by arbitration pursuant to the terms of Article 31
hereof. Notwithstanding anything herein to the contrary, the parties hereto
acknowledge that the Studio A Delivery Date and the Substantial Completion Date
each shall be deemed accelerated by one (1) day for each business day that
Tenant fails to comply with the time periods set forth in this Section. Landlord
shall be responsible for the conformance of the Construction Drawings and
Landlord's Work to applicable Requirements.
(c) Landlord shall use commercially reasonable diligent efforts to
complete Landlord's Work promptly and to minimize any interference with Tenant's
use of the Premises as a result thereof (subject to Unavoidable Delays and to
Tenant Delays, and without being obligated to employ overtime labor or to incur
any extraordinary costs in connection therewith). Tenant acknowledges that such
work may interfere with Tenant's quiet enjoyment, as well as access, use and
occupancy, of the Premises, however, and, except as expressly provided in
Section 2.2(c) above, Tenant hereby waives any and all claims against Landlord
as a result thereof, including, without limitation, for damages to its property
or its business. Landlord and Tenant shall cooperate with each other to endeavor
to cause Landlord's Work to be performed in such manner as shall minimize any
objectionable noise caused by Landlord's Work which may be heard within Studio A
once Tenant commences to use Studio A for film production purposes (the "Noise
Reduction Work"), provided that all additional costs incurred by Landlord in
connection therewith shall be included in the cost of Landlord's Work and all
delays caused by such efforts to minimize noise shall be deemed to be
Unavoidable Delays. All proposed Noise Reduction Work that may result in an
increase in the cost of Landlord's Work or that may cause delays in Landlord's
Work shall be treated in the same manner as is any proposed change in Landlord's
Work requested by Tenant (i.e., if such Noise Reduction Work is proposed prior
to the approval by Landlord and Tenant of the final Construction Drawings, the
same shall be dealt with in the same manner as is a Construction Drawings Change
requested by Tenant pursuant to Section 15.1(b) above, and if such Noise
Reduction Work is proposed after the approval by Landlord and Tenant of the
final Construction Drawings, the same shall be dealt with in the same manner as
is any change in Landlord's Work requested by Tenant to which Section 15.1(e)
above applies), except that any delays caused by any Noise Reduction Work shall
be deemed to be Unavoidable Delays, and not Tenant Delays.
(d) Landlord's Work shall be deemed substantially completed when it is
completed to such an extent that the Premises shall be legally occupiable for
the conduct of a film production business and general office use associated
therewith and only minor or insubstantial details of construction, mechanical
adjustment or decoration shall remain to be performed, the completion of which
shall not materially interfere with the use of the Premises as a film production
business and general office use associated therewith; Landlord's Work shall be
deemed substantially completed whether or not it has been performed or completed
with respect to the Tanna Space and/or the FX Space. If substantial completion
of Landlord's Work or the causing of Studio A to be in operational condition
shall have been delayed by reason of Tenant Delay, Landlord's Work shall be
deemed to have been substantially completed on the day it would have been
completed if not for any such delay (or, as to Studio A, it shall be deemed to
be in operational condition on the day it would have been in such condition, but
for such delay). Not later than ten (10) days prior to substantial completion of
Landlord's Work, Landlord shall provide Tenant with a notice for Tenant's
architect to prepare a list which identifies (a) incomplete construction and (b)
construction completed which is inconsistent with the Construction Drawings.
Within five (5) days after receipt of such notice by Tenant, Tenant's architect
shall provide Landlord with said list. Tenant may from time to time during the
120-day period following the Substantial Completion Date submit to Landlord
supplemental statements specifying any incomplete or defective Landlord's Work
and Landlord shall thereafter complete the same with reasonable diligence. In
the event of any dispute between Landlord and Tenant as to whether or not
Landlord has substantially completed Landlord's Work (or any part thereof) or as
to whether Studio A is in "operational condition", then, such dispute shall be
resolved by arbitration in accordance with Article 31 hereof.
(e) At any time during the performance by Landlord of Landlord's Work
(after Landlord and Tenant have approved the final Construction Drawings),
Tenant or Directrix may deliver notice to Landlord requesting that Landlord
perform, install or complete (as the case may be) additional item(s) of work,
materials, equipment, finishes or improvements that is (are) not set forth on
the Construction Drawings, which notice shall set forth in reasonable detail the
nature and scope of such work, materials, equipment, finishes or improvements.
Provided that such notice contains all information reasonably required by
Landlord with respect thereto, Landlord, within five (5) business days of its
receipt of such notice (or as promptly as reasonably possible where such task
cannot reasonably be accomplished within such five (5) business day period),
shall deliver notice to Tenant or Directrix, if Directrix made the request,
setting forth its reasonable estimate of (i) the additional cost of such work,
materials, equipment, finishes or improvements (which may, in Landlord's sole
discretion, be based upon one or more bids obtained by Landlord) and (ii) the
estimated number of days (if any) by which the performance, installation or
completion (as the case may be) of such work, materials, equipment, finishes or
improvements shall delay the substantial completion of Landlord's Work or
Landlord's causing of Studio A to be in operational condition.
If Tenant or Directrix (if Directrix made the request) agrees with such
cost estimate, Tenant shall (and Directrix shall, if such proposed change was at
Directrix' request), within two (2) business days of its receipt of such notice
from Landlord, execute a written change order ("Change Order") with respect to
such item(s) reasonably acceptable to Landlord and Tenant (and Directrix, if
Directrix will also be signing such Change Order), it being agreed that (i) any
delay in the substantial completion of Landlord's Work or in Landlord's causing
of Studio A to be in operational condition caused thereby (not to exceed,
however, the estimated number of days of such delay which were set forth in
Landlord's notice given to Tenant or Directrix pursuant to the last sentence of
the immediately preceding paragraph) shall constitute a Tenant Delay in
accordance with the terms hereof and (ii) the agreed-upon cost of such item(s)
shall be deemed to be a Playboy Office Work Change Cost (as defined below) if
such requested change was at Tenant's request; otherwise such cost shall be
deemed to be an Other Work Change Cost (as defined below). If Tenant (or
Directrix) disagrees with such cost estimate, Tenant or Directrix, as the case
may be, shall deliver notice to Landlord with respect thereto within two (2)
business days of its receipt of such notice from Landlord. The parties shall
negotiate in good faith a resolution of such dispute. If resolution of such
dispute is not reached within three (3) business days of Landlord's receipt of
such notice (and Tenant or Directrix, as the case may be, has not delivered
notice to Landlord advising Landlord that it no longer wishes to have such
additional item(s) of work, materials, equipment, finishes or improvements
performed or installed (as the case may be), it being agreed that in the event
Tenant or Directrix, as the case may be, delivers such aforementioned notice to
Landlord, any delay in the substantial completion of Landlord's Work or in
Landlord's causing of Studio A to be in operational condition caused by Tenant's
or Directrix' request with respect to the performance of such item(s) shall
constitute a Tenant Delay in accordance with the terms hereof), either party may
submit such dispute for resolution by arbitration pursuant to the terms of
Article 31 hereof. Notwithstanding anything herein to the contrary, if (i) the
arbitrator resolves such dispute with respect to the cost of such item(s) in
favor of Landlord, any delay in the substantial completion of Landlord's Work or
in Landlord's causing of Studio A to be in operational condition caused thereby
(including, without limitation, on account of (a) any stoppage in the
performance of all or any part of Landlord's Work (Landlord hereby acknowledges
that in connection with any request by Tenant for the performance of additional
work, Landlord shall only cease or delay in proceeding with any segment or part
of the Landlord's Work if such stoppage or delay is, in the reasonable
discretion of Landlord, necessary or consistent with good construction
practices), (b) the prosecution of an arbitration proceeding or bidding and/or
(c) the execution of a Change Order), shall constitute a Tenant Delay in
accordance with the terms hereof and (ii) the arbitrator resolves such dispute
with respect to the cost of such item(s) in favor of Tenant or Directrix, as the
case may be, any delay in the substantial completion of Landlord's Work or in
Landlord's causing of Studio A to be in operational condition caused by such
dispute and the resolution thereof (including, without limitation, on account of
(a) any stoppage in the performance of Landlord's Work and/or (b) the
prosecution of an arbitration proceeding or bidding), shall constitute an
Unavoidable Delay in accordance with the terms hereof. In either event, Tenant
(and Directrix, if applicable) shall immediately execute a Change Order with
respect to such item(s) in the amount decided by the arbitrator in the manner
(and with the consequences) set forth above. Any dispute hereunder between
Landlord and Tenant (or Directrix) with respect to the length of any delay in
the substantial completion of Landlord's Work or in Landlord's causing of Studio
A to be in operational condition shall be resolved by arbitration pursuant to
the terms of Article 31 hereof.
(f) In the event that at any time after Landlord has approved the final
Construction Drawings and has entered into a construction contract or
construction management agreement with a general contractor or construction
manager to perform Landlord's Work, Landlord determines in its reasonable
discretion that a particular change in Landlord's Work is necessary (a "Landlord
Change"), and if either (i) such particular proposed Landlord Change, as
reasonably estimated by Landlord's architect, is estimated to cause the Shared
Excess to increase by more than $25,000, or (ii) the estimated cost of such
particular proposed Landlord Change, as reasonably estimated by Landlord's
architect, in the aggregate with all prior implemented Landlord Changes shall
cause the Shared Excess to increase by more than $100,000, or (iii) once all
prior implemented Landlord Changes in the aggregate shall have caused the Shared
Excess to increase by more than $100,000, such particular proposed Landlord
Change, as reasonably estimated by Landlord's architect, is estimated to cause
the Shared Excess to increase by more than $5,000, Landlord shall deliver notice
to Tenant of such proposed Landlord Change, which notice shall set forth in
reasonable detail: (1) the nature and scope of such work, materials, equipment,
finishes or improvements, (2) the estimated cost thereof (which may, in
Landlord's sole discretion, be based upon one or more bids obtained by
Landlord), and (3) Landlord's reasonable estimate of the number of days (if any)
by which the performance, installation or completion (as the case may be) of
such work, materials, equipment, finishes or improvements shall delay the
substantial completion of Landlord's Work or Landlord's causing of Studio A to
be in operational condition.
Tenant shall not unreasonably withhold or delay its approval of the
proposed Landlord Change. If Tenant desires to approve the proposed Landlord
Change, Tenant shall, within two (2) business days of its receipt of such notice
from Landlord, give notice of such approval to Landlord, it being agreed that
(i) any delay in the substantial completion of Landlord's Work or in Landlord's
causing of Studio A to be in operational condition caused by such Landlord
Change (including without limitation, on account of (a) any stoppage in the
performance of all or any part of Landlord's Work (Landlord hereby acknowledges
that in connection with any request by Landlord for approval of a proposed
Landlord Change Landlord shall only cease or delay in proceeding with any
segment or part of the Landlord's Work if such stoppage or delay is, in the
reasonable discretion of Landlord, necessary or consistent with good
construction practices), (b) the prosecution of bidding and/or (c) the execution
of a Change Order) shall constitute an Unavoidable Delay (except to the extent
otherwise expressly provided below in this Section 15.1(f) and (ii) the cost of
such Landlord Change shall be included in the Shared Excess and the parties'
respective responsibility for such cost shall be determined in accordance with
Section 15.3(e) below. If Tenant desires to disapprove the proposed Landlord
Change, Tenant shall deliver notice to Landlord with respect thereto within two
(2) business days of its receipt of such notice from Landlord, which notice
shall be accompanied by a reasonably detailed explanation of the reason(s) for
such disapproval, it being understood that the only grounds therefor may be (a)
that the Landlord Change is not necessary or (b) that the issue to be resolved
by the proposed Landlord Change could be resolved in an alternate manner at a
lower cost or with less delay (such alternate resolution being an "Alternate
Change"). If Tenant fails to give Landlord notice of its approval or disapproval
of the proposed Landlord Change as required above within the two (2) business
day period referred to above (time being of the essence), Tenant shall be deemed
to have approved the proposed Landlord Change.
If Tenant disapproves any proposed Landlord Change and Landlord
nevertheless implements such Landlord Change, then promptly following the
substantial completion of Landlord's Work the parties shall negotiate in good
faith a resolution of such dispute. If resolution of all such disputes regarding
Landlord Changes are not reached within ten (10) business days following the
substantial completion of Landlord's Work, either party may submit such disputes
for resolution by arbitration pursuant to the terms of Article 31 hereof. The
parties hereby agree that:
(i) If the arbitrator resolves any such disputed Landlord Change in
favor of Landlord, the cost of such Landlord Change shall be included in the
Shared Excess, and any delay in the substantial completion of Landlord's Work or
in Landlord's causing of Studio A to be in operational condition caused by the
implementation of such Landlord Change shall constitute an Unavoidable Delay.
(ii) If the arbitrator determines that any Landlord Change was not
necessary, any delay in the substantial completion of Landlord's Work or in
Landlord's causing of Studio A to be in operational condition caused by the
implementation of such Landlord Change, shall constitute neither a Tenant Delay
nor an Unavoidable Delay, and the cost of such Landlord Change shall be
Landlord's responsibility and shall not be included in the Shared Excess.
(iii) If the arbitrator determines that the Alternate Change should
have been implemented in lieu of any Landlord Change, only that delay that the
arbitrator reasonably determines would have been caused by the implementation of
the Alternate Change in lieu of the Landlord Change in the substantial
completion of Landlord's Work or in Landlord's causing of Studio A to be in
operational condition shall be deemed to be an Unavoidable Delay, and only the
additional cost that the arbitrator reasonably determines would have been caused
by the implementation of the Alternate Change in lieu of the Landlord Change
shall be included in the Shared Excess.
Notwithstanding anything herein to the contrary, no approval by Tenant
shall be required of any particular Landlord Change which is necessitated due to
an emergency or which is reasonably estimated by Landlord's architect to cause
the Shared Excess to increase by less than $25,000 (provided that the estimated
cost of such particular proposed Landlord Change, as reasonably estimated by
Landlord's architect, in the aggregate with all prior implemented Landlord
Changes or Alternate Changes shall not cause the Shared Excess to increase by
more than $100,000; and, once all prior implemented Landlord Changes in the
aggregate shall cause the Shared Excess to increase by more than $100,000, such
particular proposed Landlord Change, as reasonably estimated by Landlord's
architect, is estimated to cause the Shared Excess to increase by less than
$5,000). Any additional cost as a result of any such Landlord Change described
in the preceding sentence shall be included in the Shared Excess (and the
parties' respective responsibility for such cost shall be determined in
accordance with section 15.3(e) below), and any delay in the substantial
completion of Landlord's Work or in Landlord's causing of Studio A to be in
operational condition caused by such Landlord Change shall be deemed to be an
Unavoidable Delay.
The parties' respective responsibility for any Shared Excess resulting
from any Landlord Change or Alternate Change shall be determined in accordance
with Section 15.3(e) below.
Any dispute hereunder between Landlord and Tenant with respect to any
delay in the substantial completion of Landlord's Work or in Landlord's causing
of Studio A to be in operational condition as a result of any Landlord Change or
Alternate Change shall be resolved by arbitration pursuant to the terms of
Article 31 hereof, it being understood that the arbitrator(s) shall be bound by
the provisions of this Section 15.1(f).
(g) Studio A shall be deemed to be in "operational condition" when it
meets the criteria set forth in Exhibit E-1 attached hereto. Notwithstanding
that the control room area and the dressing room (as indicated on Exhibit F-2)
are deemed to be part of Studio A, for purposes of determining the Landlord's
Work to be performed with respect thereto pursuant to the Work Letter, such
areas shall be deemed to be part of the Playboy Office Space.
(h) Landlord represents that upon substantial completion of Landlord's
Work: the then existing electrical, plumbing, fire sprinkler, lighting and
heating, ventilating and air conditioning systems shall be in good working order
and the parking lot, as well as the structural elements of the roof, load
bearing walls and foundations, shall be free of material defects.
Section 15.2. No Representations as to Premises. Tenant acknowledges that
Tenant is familiar with the Premises, the physical condition thereof and the
leases and occupancies affecting the Premises. Except as otherwise expressly set
forth in this Lease, Tenant accepts the Premises in the existing condition and
state of repair, "as is", and Tenant agrees that, except as otherwise expressly
provided in this Lease, no representations, statements or warranties, express or
implied, have been made by or on behalf of Landlord with respect to the
Premises, the status of title to the Premises, the physical condition thereof,
the tenants and occupants thereof, the zoning or other laws, regulations, rules
and orders applicable thereto, or the use that may be made of the Premises.
Section 15.3. (a) Unused Playboy Allowance. To the extent that the cost to
Landlord to fully complete the Playboy Office Work (as defined below) shall be
less than $1,862,200 in the aggregate ($40 per square foot times the number of
square feet with respect to which such work shall be performed being set forth
in Sections A and B of Work Group 1 of the Work Letter, and such difference
between such cost and $1,862,200 being the "Unused Playboy Allowance"), the
Unused Playboy Allowance shall be credited against the first installments of
Base Rent and Additional Rent payable by Tenant under this Lease. The "Playboy
Office Work" shall mean that work which is described in Sections A and B of Work
Group 1 of the Work Letter. Notwithstanding anything in this Lease to the
contrary, if (x) Tenant requests Above-Standard Work with respect to the areas
of the Premises where the Playboy Office Work is being performed and/or changes
to the Playboy Office Work which exceed the Work Letter Standard, Tenant shall
be entirely responsible for the increase in the cost of the Playboy Office Work
which results from such Above-Standard Work and/or changes to the extent that
such Above-Standard Work and/or changes cause the cost of Landlord's Work to
exceed the Landlord Work Allowance (as defined below) and/or (y) subject to the
immediately succeeding sentence, Tenant requests a floor finish which costs in
excess of $2.00 per square foot (as contemplated by Sections A.3 and B.3 of Work
Group 1 of the Work Letter), Tenant shall be entirely responsible for the cost
of such floor finish to the extent that such cost exceeds $2.00 per square foot
(the aggregate of the costs to be borne by Tenant pursuant to (x) and (y) above
in this paragraph being the "Playboy Office Work Change Costs"). Notwithstanding
the foregoing provisions of this Section 15.3(a), to the extent that there is an
Unused Playboy Allowance following the completion and payment in full for the
Playboy Office Work, such Unused Playboy Allowance may be applied toward the
Playboy Office Work Change Costs.
(b) Other Work. The "Other Work" shall mean those portions of Landlord's
Work other than the Playboy Office Work and other than the work set forth in
Work Group 3-Base Building Work of the Work Letter. Notwithstanding anything in
this Lease to the contrary, if (x) Tenant (or Directrix) requests Above-Standard
Work with respect to the areas of the Premises where the Other Work is being
performed and/or changes to the Other Work which exceed the Work Letter
Standard, Directrix shall be entirely responsible for the increase in the cost
of the Other Work which results from such Above-Standard Work and/or changes
and/or (y) Tenant (or Directrix) requests a floor finish which costs in excess
of $2.00 per square foot (as contemplated by Sections D.3 and E.3 of Work Group
2 of the Work Letter), Directrix shall be entirely responsible for the cost of
such floor finish to the extent that such cost exceeds $2.00 per square foot
(the aggregate of the costs to be borne by Directrix pursuant to (x) and (y)
above in this paragraph being the "Other Work Change Costs").
(c) Base Building Work. The "Base Building Work" shall mean those portions
of Landlord's Work set forth in Work Group 3-Base Building Work of the Work
Letter. Notwithstanding anything in this Lease to the contrary, if Tenant (or
Directrix) requests Above-Standard Work with respect to the Base Building Work
and/or changes to the Base Building Work which exceed the Work Letter Standard,
the requesting party (i.e., Tenant or Directrix, as the case may be) shall be
entirely responsible for the increase in the cost of the Base Building Work
which results from such Above-Standard Work and/or changes (if Directrix is the
requesting party, such costs shall be included in the Other Work Change Costs,
and if Tenant is the requesting party, such costs shall be included in the
Playboy Office Work Change Costs).
(d) Provided no Event of Default shall then be outstanding, Landlord shall
fund the first $4,000,000 worth (the "Landlord Work Allowance") of Landlord's
Work (other than the Playboy Office Work Change Costs and the Other Work Change
Costs) at its expense. The Landlord Work Allowance shall be applied toward the
following: the payment of architectural, engineering, construction management
and other consultant's fees incurred by Landlord (including without limitation
fees for supervision of Landlord's Work charged by outside consultants retained
by Landlord, but excluding fees for such supervision by Landlord or its own
employees), as well as the cost of preparing and filing any plans (to the extent
such fees and costs are incurred by Landlord); insurance with respect to
Landlord's Work; as well as for the general contractor's overhead, general
conditions and profit and all "hard costs" which hard costs shall include all
forms of construction, alterations and decoration work permanently included in
the Premises as part of Landlord's Work (it is understood that all of the
foregoing costs are included in the cost of Landlord's Work). The Unused Playboy
Allowance, if any, shall be included in the cost of Landlord's Work, and except
as expressly permitted in the last sentence of Section 15.3(a) as to the Playboy
Office Work Change Costs only, the Landlord Work Allowance shall not be applied
toward the Playboy Office Work Change Costs or the Other Work Change Costs.
(e) If (1) the aggregate cost of Landlord's Work (exclusive of the Playboy
Office Work Change Costs and the Other Work Change Costs) shall exceed (2) an
amount equal to the difference between the Landlord Work Allowance and the
Unused Playboy Allowance (if there shall be no Unused Playboy Allowance then for
purposes of this calculation the Unused Playboy Allowance shall be deemed to be
$0.00), such excess of (1) over (2) (the "Shared Excess") shall be borne by
Landlord, Tenant and Directrix as follows: (x) Directrix shall be responsible
for two thirds of the Shared Excess which is attributable solely to those
portions of the Premises where the Other Work is being performed (such portions
being the "Other Work Space", and Landlord shall be responsible for one third of
the Shared Excess which is attributable solely to the Other Work Space; (y)
Tenant shall be responsible for one-half of the Shared Excess which is
attributable solely to those portions of the Premises where the Playboy Office
Work is being performed (such portions being the "Playboy Office Space"), and
Landlord shall be responsible for one-half of the Shared Excess which is
attributable solely to the Playboy Office Space; and (z) that portion of the
Shared Excess which is not attributable solely to either the Other Work Space or
the Playboy Office Space (e.g., those portions of Landlord's Work which are set
forth in Work Group 3 of the Work Letter) shall be borne equally by Landlord,
Tenant and Directrix (i.e., each party shall be responsible for one third of the
Shared Excess). Once the Accepted Bid (as defined below) has been determined by
Landlord, Landlord shall give notice of the same to Tenant and to Directrix,
which notice shall set forth each party's share of the Shared Excess based upon
such Accepted Bid. Landlord shall be permitted from time to time to revise its
determination of the Shared Excess.
(f) Notwithstanding anything in this Lease to the contrary (including
without limitation any provisions of this Article 15 that deem any portion of
the cost of Landlord's Work to be Directrix' responsibility), Landlord shall
bill Tenant from time to time (but not more often than monthly) for the Playboy
Office Work Change Costs, the Other Work Change Costs and for Tenant's and
Directrix' shares of the Shared Excess as and when such costs are incurred by
Landlord, and Tenant shall pay such amounts to Landlord as Additional Rent
within ten (10) days after Landlord's demand therefor, which demand shall be
accompanied by invoices or other reasonably satisfactory evidence of such
amounts and which will set forth which of the amounts constitute the Playboy
Office Work Change Costs, the Other Work Change Costs, Tenant's share of the
Shared Excess and Directrix' share of the Shared Excess. Notwithstanding
anything in this Lease to the contrary (including without limitation any
provisions of this Article 15 that deem any portion of the cost of Landlord's
Work to be Directrix' responsibility), Tenant shall be liable to Landlord for
all of such costs and all such costs shall be deemed to be Additional Rent under
this Lease, and Landlord shall have no obligation to seek payment of such costs
from Directrix.
(g) The parties acknowledge that, at Tenant's request, Landlord shall
obtain bids on the work set forth in Exhibit E-2 attached hereto as part of
Landlord's bidding process for Landlord's Work. Tenant acknowledges that should
Tenant direct Landlord to perform any of such work, such work shall be deemed to
be Above-Standard Work (accordingly, any delays caused thereby shall be deemed
to be Tenant Delays), and the cost of such work shall be included in the Playboy
Office Work Change Costs. The cost of any Above-Standard Work which is not
attributable solely to either the Other Work Space or the Playboy Office Space
(e.g., those portions of Landlord's Work which are set forth in Work Group 3 of
the Work Letter) shall be borne by the party who requested such Above-Standard
Work (i.e., if Directrix requested such work, the cost thereof shall be included
in the Other Work Change Costs, and if Tenant requested such work, the cost
thereof shall be included in the Playboy Office Work Change Costs).
(h) If the aggregate cost of Landlord's Work (inclusive of the Playboy
Office Work Change Costs and the Other Work Change Costs) shall be less than
$4,000,000, then notwithstanding anything herein to the contrary, to the extent
of the difference between (x) $4,000,000 and (y) the aggregate cost of
Landlord's Work (inclusive of the Playboy Office Work Change Costs and the Other
Work Change Costs, but after first deducting therefrom an amount equal to the
Unused Playboy Allowance, if any) (such difference being the "Difference"),
Landlord shall be solely responsible for any increases in the cost of Landlord's
Work which are caused by any necessary variation in the Construction Drawings
from the Work Letter Standard (1) due to the field dimensions and conditions
being at variance from information available at the time of the execution and
delivery of this Lease by Landlord and Tenant; or (2) in order to comply with
any Requirements, provided that Landlord may apply any unused portions of the
Landlord Work Allowance to such costs. Tenant acknowledges that its right to the
Unused Playboy Allowance pursuant to Section 15.3(a) above is subject to
Landlord's right to apply the same as set forth above in this paragraph.
(i) Upon receipt of the final Construction Drawings, Landlord shall
solicit bids to perform Landlord's Work for, at Landlord's option, either a
stipulated sum or a guaranteed maximum price from a list of independent
reputable general contractors which list shall include up to three (3)
contractors selected by Tenant and reasonably approved by Landlord (provided
that Tenant submitted such contractors to Landlord for its approval on or before
July 21, 2001). Landlord's bid proposal shall require that such bids be received
simultaneously by Landlord and Tenant within the period (the "Bid Period")
ending 15 days after delivery by Landlord to the contractors of the bid
proposal. Landlord may, at its option, disregard any bids not submitted in a
timely manner. Landlord shall accept one of such bids within ten (10) days after
the end of the Bid Period, and Landlord may, in its reasonable discretion,
accept either one of the two lowest of such bids. Tenant acknowledges, however,
that Landlord also may consider in its reasonable discretion any relevant
factors other than price in determining which bid to accept, such as factors
which may affect Landlord's ability to perform Landlord's Work in a timely
manner (including without limitation the time proposed by the contractor to
complete the work and whether union labor will be employed), and the expected
quality of the work; and Tenant further acknowledges that Landlord may in good
faith select a higher bid in the event that Landlord reasonably determines that
any one or more other factors affecting Landlord's Work outweighs any savings in
cost that would result from Landlord's selection of one of the two lowest bids.
Landlord shall require any general contractor retained by it to perform
Landlord's Work to provide customary warranties with respect thereto, and
Landlord shall endeavor to cause provisions substantially similar to those set
forth in Exhibit E-3 to be included in its contract with the general contractor
retained by Landlord to perform Landlord's Work, provided that Landlord shall
have no liability whatsoever if the general contractor is not willing to agree
to any of such provisions or similar provisions, nor shall Landlord be obligated
to incur any additional costs in order to cause the general contractor to be
willing to agree to any of such provisions. Landlord shall permit Tenant to
review and comment upon any proposed construction contract with respect to
Landlord's Work between Landlord and its general contractor, and Landlord agrees
to consider such comments in good faith; however, Tenant acknowledges that
Landlord shall be under no obligation to accept such comments and that the terms
of any such contract shall be determined by Landlord in its sole discretion. The
bid accepted by Landlord pursuant to this Section 15.3(f) shall be the "Accepted
Bid".
(j) Tenant shall have the right, upon reasonable notice to Landlord, to
inspect Landlord's Work at reasonable times; provided however, that Tenant shall
have no authority to advise any contractor that it is rejecting any work nor
interfere with Landlord's Work and Tenant's failure to inspect Landlord's Work
shall in no event constitute a waiver of any of Tenant's rights under this
Article 15 nor shall Tenant's inspection of the Landlord's Work constitute
Tenant's approval of the same. Any delays in Landlord's Work caused by any such
inspection by Tenant shall be deemed to be Tenant Delays.
Section 15.4. Landlord's Costs. Notwithstanding anything herein to the
contrary, the following costs shall be borne solely by Landlord (i.e., the
Landlord Work Allowance shall not be applied to such costs and they shall not be
included in the Shared Excess):
(a) any corrections or changes that need to be made to Landlord's Work due
to either the failure by the Construction Drawings or Landlord's Work to conform
to applicable Requirements in effect at the time a final sign-off from the
applicable Governmental Authority with respect to Landlord's Work is issued;
(b) all costs incurred by Landlord in order to cause the Premises to
comply with applicable Requirements, if any, relating to earthquakes in order to
procure a final sign-off from the applicable Governmental Authority with respect
to Landlord's Work; and
(c) all costs incurred by Landlord in excess of the estimated amounts
allocated thereto in Sections A.3, B.3, D.3 and E.3 of the Work Letter in order
to cause the floors to be level and in industry appropriate condition for the
applicable floor finishes to be placed thereon.
Section 15.5. Disputes. Any dispute between the parties as to any of the
matters set forth in this Article 15 shall be resolved by arbitration in
accordance with Article 31 below.
ARTICLE 16
LIMITATION OF LANDLORD'S LIABILITY
Landlord is not liable for any injury or damage to Tenant or to any party
happening on, in or about the Premises and its appurtenances, nor for any injury
or damage to the Premises or to any property belonging to Tenant or to any other
party that may be caused by fire, breakage, or by the use, misuse or abuse of
any portion of the Premises (including, but not limited to, any of the common
areas within the Premises, elevators, hatches, openings, installations,
stairways or hallways), nor the streets or sidewalk areas within the Premises,
or which may arise from any other cause whatsoever, unless caused by the
negligence or intentionally tortious acts of Landlord, its agents or employees.
In no event shall Landlord be liable to Tenant for consequential damages.
ARTICLE 17
INDEMNIFICATION OF LANDLORD AND TENANT
Section 17.1. Tenant's Obligation to Indemnify. To the fullest extent
permitted by law (but subject to the release and waiver of subrogation set forth
in Section 6.9 above), Tenant shall indemnify Landlord (which, for purposes of
this Article, shall include the directors, officers, managers, employees,
shareholders, partners, members, agents and servants of Landlord) and hold
Landlord harmless from and against any and all liabilities, suits, obligations,
fines, damages, penalties, claims, costs, charges and expenses, including,
without limitation, architects' and attorneys' fees and disbursements, which may
be imposed upon or incurred by or asserted against Landlord by reason of any of
the following occurring during the Term, except to the extent caused by
Landlord's breach of the provisions of this Lease, or the negligence or
intentionally tortious acts of Landlord, its agents or employees and provided
that in no event shall Tenant be liable to Landlord for consequential damages:
(a) Alterations. Alterations or any other work or act (other than any work
or act of Landlord) done in, on or about the Premises or any part thereof;
(b) Use. The use, non-use, possession, occupation, alteration, condition,
operation, maintenance or management of the Premises or any part thereof or of
any street, alley, sidewalk, curb, passageway, gutter, or space comprising a
part thereof or adjacent thereto;
(c) Act or Failure to Act of Tenant/Subtenant. Any act or failure to act
on the part of Tenant or any subtenant or any of its or their respective
officers, agents, contractors, servants, employees, licensees or invitees;
(d) Accidents, Injury to Person or Premises. Any accident, injury
(including death) or damage to any Person or property occurring in, on or about
the Premises or any part thereof or in, on or about any street, alley, sidewalk,
curb, passageway, gutter, space comprising a part thereof or adjacent thereto;
(e) Rent Obligations. Any failure on the part of Tenant to pay Rent or to
perform or comply with any of the covenants, agreements, terms or conditions
contained in this Lease on its part to be performed or complied with and the
exercise by Landlord of any remedy provided in this Lease with respect thereto;
(f) Liens, Claims. Any lien or claim which may be alleged to have arisen
against or on the Premises, or any part thereof, or against any of the assets
of, or funds appropriated to, Landlord or any liability which may be asserted
against Landlord with respect thereto, which lien or claim arising out of any
work done by or for Tenant or any person claiming under or through Tenant (other
than Landlord's Work to the extent that Landlord bears the cost of the same);
(g) Default of Tenant. Any failure on the part of Tenant to keep, observe,
comply with and perform any of the terms, covenants, agreements, provisions,
conditions or limitations contained in the Subleases or other contracts and
agreements affecting the Premises or any part thereof, on Tenant's part to be
kept, observed or performed; and
(h) Contests and Proceedings. Any contest undertaken by Tenant permitted
pursuant to the provisions of this Lease.
Section 17.2. Contractual Liability. The obligations of Tenant under this
Article shall not be affected in any way by the absence of insurance coverage or
by the failure or refusal of any insurance carrier to perform any obligation on
its part to be performed under insurance policies affecting the Premises.
Section 17.3. Landlord's Obligation to Indemnify. Subject to the waiver of
subrogation set forth in Section 6.9 above, Landlord shall indemnify and save
harmless Tenant against and from all liabilities, obligations, damages, costs
and expenses for which Tenant shall not be reimbursed by insurance (including
reasonable attorneys' fees, paid, suffered or incurred), but only to the extent
the same (a) is caused by a breach by Landlord, Landlord's agents, contractors,
employees, invitees, or licensees, of any covenant or condition of this Lease,
or the carelessness, negligence or improper conduct of the Landlord, Landlord's
agents, contractors or employees or (b) arises out of the performance by
Landlord of Landlord's Work (except to the extent of any payments toward the
cost of the same for which Tenant or Directrix is responsible under Article 15
above). In no event, however, shall Landlord be liable for any consequential
damages.
Section 17.4. Defense of Claim, Etc. If any claim, action or proceeding is
made or brought against Landlord by reason of any event to which reference is
made in Section 17.1 hereof, or against Tenant, by reason of any event to which
reference is made in Section 17.3 hereof, then, upon demand by the indemnified
party, the indemnifying party shall resist, defend or satisfy such claim, action
or proceeding in the indemnified party's name, if necessary, by the attorneys
for the indemnifying party's insurance carrier (if such claim, action or
proceeding is covered by insurance), or by such other attorneys as the
indemnified party shall approve, which approval shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, the indemnified party may
engage its own attorneys to defend it or to assist in its defense and the
indemnifying party shall pay the reasonable fees and disbursements of such
attorneys of the indemnified party.
Section 17.5. Survival Clause. The provisions of this Article shall
survive the Expiration Date.
ARTICLE 18
RIGHT OF ENTRY AND INSPECTION
Section 18.1. Permission to Enter Premises. Tenant shall permit Landlord
and its agents, employees and representatives to enter the Premises at all
reasonable times for the purpose of (a) inspecting it to determine whether
Tenant is in compliance with its obligations hereunder, (b) making in the case
of an Emergency, or following an Event of Default, any necessary repairs to the
Premises and performing any other work therein that may be necessary by reason
of Tenant's failure to make any such repairs or perform any such work and (c)
exhibiting the Premises to prospective purchasers or to prospective lenders or
mortgagees or to prospective assignees of any such lenders or mortgagees or,
during the last eighteen (18) months of the Term, to prospective tenants.
Landlord shall give Tenant not less than twenty-four (24) hours notice of such
entry and such entry shall be limited to business hours on business days, except
in the case of an Emergency, in which event no notice shall be required and such
entry shall not be limited to business hours on business days. Tenant may, at
its option, have a representative of Tenant accompany Landlord during such entry
into the Premises. "Emergency" shall mean a condition presenting, in the
judgment of Landlord, imminent danger to the health or safety of persons or
damage to property. Notwithstanding the foregoing, Landlord shall have no access
to any studios located within the Premises during their regular hours of
operation provided that Landlord shall have been given reasonable prior notice
of such regular hours, except (i) with the prior permission of Tenant, which
shall not be unreasonably withheld or delayed, and (ii) in the event of an
Emergency. In the event any access to Tenant's studios is required, (a) Tenant
shall act reasonably in coordinating such access at no additional cost to
Landlord and (b) Landlord and its representatives shall use reasonable efforts
to minimize any interference with the operation of the studios, which reasonable
efforts shall include, to the extent reasonably necessary, the employment of
overtime labor at Landlord's expense in connection therewith.
Section 18.2. No Liability of Landlord for Disturbance. Except to the
extent caused by the negligence or intentionally tortious acts of Landlord, its
agents or employees, or by the breach by Landlord of its obligations under
Section 18.1 above, Landlord shall not be liable for any inconvenience,
annoyance, disturbance, or other damage of Tenant or any subtenant by reason of
the making of such repairs or the performance of any such work, or on account of
bringing materials, tools, supplies and equipment into the Premises during the
course thereof, and the obligations of Tenant under this Lease shall not be
affected thereby. In no event, however, shall Landlord be liable for
consequential damages.
ARTICLE 19
PARTY'S RIGHT TO PERFORM THE OTHER'S COVENANTS
Section 19.1. Landlord's Right to Perform Tenant's Obligations. If there
is an Event of Default or an Emergency, Landlord may, but shall be under no
obligation to, at Tenant's expense and upon not less than ten (10) days' prior
notice (except in the event of an Emergency, in which case no notice shall be
required) perform the obligation, the breach of which gave rise to such Event of
Default, or make a necessary repair or perform necessary work in the case of an
Emergency, without waiving or releasing Tenant from any of its obligations
contained herein.
Section 19.2. Alterations. If having commenced any Alteration, Tenant
fails to complete it or fails diligently and continuously to perform any
Alteration to completion, Landlord may commence or complete such Alteration at
Tenant's expense, and without any liability to any person, including Tenant, by
reason thereof.
Section 19.3. Right to Reimbursement. If Landlord elects to complete any
such Alteration, Tenant, on Landlord's demand, shall pay to Landlord the
commercially reasonable costs incurred by Landlord to complete the Alteration.
Section 19.4. Discharge of Liens. If Tenant fails to cause any mechanic's
laborer's, vendor's, materialman's or similar statutory lien to be discharged or
bonded in accordance with the provisions hereof, Landlord may, but is not
obligated to, discharge those of record either by paying the amount claimed to
be due or by procuring the discharge of such lien by deposit or by bonding
proceedings. Landlord may also compel the prosecution of an action for the
foreclosure of such lien by the lienor and to pay the amount of the judgment in
favor of the lienor with interest, costs and allowances.
Section 19.5. Reimbursement For Amounts Paid by Landlord Pursuant to this
Article. Any amounts paid by Landlord in performing Tenant's obligations under
this Lease, including all costs and expenses incurred by Landlord in connection
therewith, shall be paid to Landlord on Landlord's demand and shall bear
interest at the Late Charge Rate until paid. All such items payable to Landlord
shall be deemed Additional Rent under this Lease.
Section 19.6. Waiver, Release and Assumption of Obligations. Landlord's
payment or performance pursuant to the provisions of this Article shall not be,
nor be deemed to be (a) a waiver or release of the any Event of Default with
respect thereto (or any past or future Events of Default of the same nature) or
of Landlord's right to terminate this Lease and/or to take such other action as
may be permissible hereunder, or (b) Landlord's assumption of Tenant's
obligations to pay or perform any of Tenant's past, present or future
obligations hereunder.
Section 19.7. Proof of Damages. Landlord is not limited, in the proof of
any damages that it may claim against Tenant arising out of, or by reason of,
Tenant's failure to provide and keep insurance in force in accordance with the
provisions of this Lease, to the amount of the insurance premium or premiums not
paid. However, Landlord is entitled to recover, as damages for such Event of
Default, the uninsured amount of any loss and damage sustained or incurred by it
and the costs and expenses of any suit in connection therewith, including,
without limitation, attorneys' fees and disbursements.
Section 19.8. Tenant's Right to Perform Landlord's Obligations. If
Landlord defaults in the observance or performance of any term or covenant on
its part to be performed under this Lease, then Tenant, in addition to any other
remedy it may have, may give notice thereof to Landlord, which notice shall
specifically state that if Landlord fails to cure such default, Tenant shall
seek to cure such default and exercise the remedies available to it pursuant to
this Section 19.8. If, within ten (10) business days after Landlord's receipt of
such notice, Landlord does not commence to cure such default, Tenant may give a
second notice to Landlord, which notice shall specifically state that it is the
second notice being given with respect to such default pursuant to this Section
19.8 and also shall specifically state that if Landlord fails to cure such
default, Tenant shall seek to cure such default and exercise the remedies
available to it pursuant to this Section 19.8. If within five (5) business days
after Landlord's receipt of Tenant's second notice Landlord still shall not have
commenced to cure such default, Tenant may undertake to cure the same (provided
that Tenant complies with the requirements of Article 12 (other than any
required approval by Landlord) and any other applicable provisions of this Lease
with respect thereto) and, provided that Landlord had been in default of the
obligation in question, may recover the reasonable cost thereof from Landlord.
Notwithstanding the foregoing, Tenant shall not be obligated to give either of
the notices set forth above in the event of an emergency (i.e., threat of
imminent damage to property or bodily injury), provided that Tenant shall use
reasonable efforts to contact by telephone Landlord's representative whose name
and telephone number shall have been provided to Tenant to advise such
representative of such situation and Tenant's intention to take action to remedy
the same. As of the date hereof, Landlord's representative for such purposes is
David Moson, (212) 644-8611. If Landlord disputes Tenant's entitlement to
reimbursement of such cost for any reason, then the dispute shall be resolved by
arbitration in accordance with Article 31 hereof, it being understood that if
Tenant's position is sustained in such arbitration, in addition to any other
remedy that Tenant may have, Tenant may elect to offset such unpaid sum against
ensuing installments of Base Rent and Additional Rent due under this Lease.
Tenant acknowledges that it may not elect such offset right unless and until
Tenant's position is sustained in such arbitration. It is understood that
Landlord's failure to respond to any notice given by Tenant pursuant to this
Section 19.8 shall not be construed as an admission by Landlord as to any
alleged default.
Section 19.9. Amounts owed by Landlord to Tenant. Any amounts owed by
Landlord to Tenant pursuant to this Lease shall bear interest at the Late Charge
Rate from the date due until paid (or, but only to the extent permitted in
Section 19.8 above, offset by Tenant).
ARTICLE 20
PERMITTED USE; NO UNLAWFUL OCCUPANCY
Section 20.1. Type of Use. Tenant shall use and operate the Premises
throughout the Term for any lawful use provided that Tenant shall, at its sole
cost and expense, procure any necessary permits, certificates, licenses or other
authorizations required for any such use and such use must comply with the
certificate of occupancy for the Premises. Without limiting the generality of
the foregoing, Landlord acknowledges that the named Tenant (i.e., Playboy
Entertainment Group, Inc.) intends to use portions of the Premises for the
production of adult entertainment, which will include the filming, taping,
photography and other recording and imaging of explicit sexual content.
Section 20.2. Prohibited Uses. Tenant shall not use or occupy, nor permit
or suffer the Premises or any part thereof, to be used or occupied for any
unlawful or illegal business, use or purpose, or in any way in violation of any
applicable Requirements or the certificate of occupancy for the Premises.
Immediately upon its discovery of any such unlawful or illegal business or use,
Tenant shall take all necessary steps, legal and equitable, to compel the
discontinuance of such business or use, including, if necessary, the removal
from the Premises of any subtenants using any portion of the Premises for any
unlawful or illegal business, use or purpose.
Section 20.3. Restriction of Public Use. Tenant shall not suffer or permit
the Premises or any portion thereof to be used by the public without restriction
or in such manner as might reasonably tend to impair title to the Premises or
any portion thereof, or in such manner as might reasonably make possible a claim
or claims of adverse usage or adverse possession by the public, as such, or of
implied dedication of the Premises or any portion thereof.
Section 20.4. Hazardous Materials. (a) Tenant may cause or permit
"Hazardous Materials" (as defined in Section 20.5(d) below) to be brought, kept
or used in or about the Premises by Tenant, its agents, employees, contractors,
or invitees, provided that Tenant complies with all Laws with respect thereto
and provided that Tenant shall be solely responsible for any increase in the
cost of any insurance maintained pursuant to Article 6, as well as of any
increase in any other cost with respect to the operation of the Building, which
is caused thereby. Tenant shall not be responsible for the presence of Hazardous
Material in or about the Premises which result from the underground migration of
Hazardous Materials to the Premises after the Commencement Date from other
sites, which is not caused by Tenant, or its agents, contractors, invitees or
employees. Tenant hereby indemnifies Landlord, agrees to defend Landlord and
hold Landlord harmless from and against any and all claims, judgments, damages,
penalties, fines, costs, liabilities, or losses including, without limitation,
sums paid in settlement of claims, attorneys' fees and costs, consultant fees,
and expert fees) which arise as a result of Hazardous Materials being be
brought, kept or used in or about the Premises by Tenant, its agents, employees,
contractors, or invitees, and/or as a result of the underground migration of
Hazardous Materials to the Premises after the Commencement Date from other
sites, which is caused by Tenant, or its agents, contractors, invitees or
employees. This indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work required by
any federal, state, or local governmental agency or political subdivision
because of Hazardous Material present in the soil or ground water on or under
the Premises, which Hazardous Material was caused or permitted to be brought,
kept or used in or about the Premises by Tenant, its agents, employees,
contractors, or invitees. Without limiting the foregoing, if the presence of any
Hazardous Material on the Premises caused or permitted by Tenant results in any
contamination of the Premises, Tenant shall promptly take all actions at its
sole expense as are necessary to return the Premises to the condition existing
prior to the introduction of any such Hazardous Material and the contractors to
be used by Tenant for such work must be approved by Landlord, which approval
shall not be unreasonably withheld so long as such actions would not potentially
have any material adverse long-term or short-term effect on the Premises.
(b) Landlord represents that, to its knowledge, except as disclosed in the
following reports: Phase I Environmental Site Assessment Update Dated April 24,
2001; Tank Removal and Remedial Excavation Report Dated November 24, 1998;
Underground Storage Tank Investigation Dated April 1, 1998; and Phase I
Environmental Site Assessment Dated February 16, 1999, receipt of which is
acknowledged by Tenant, Landlord is not aware of the existence of any Hazardous
Material at the Premises. Landlord hereby indemnifies Tenant, agrees to defend
Tenant and hold Tenant harmless from and against any and all claims, judgments,
damages, penalties, fines, costs, liabilities, or losses including, without
limitation, sums paid in settlement of claims, attorneys' fees and costs,
consultant fees, and expert fees) which arise during the Term of this Lease as a
result of the presence, prior to the Commencement Date, of materials at the
Premises, which constitute "Hazardous Material," as well as which result from
the underground migration of Hazardous Materials to the Premises after the
Commencement Date from other sites, which is not caused by Tenant, or its
agents, contractors, invitees or employees. This indemnification of Tenant by
Landlord includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state, or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Premises and is subject to Tenant using
commercially reasonable efforts not to disturb any Hazardous Material. Provided
that Tenant uses its commercially reasonable efforts not to disturb any such
asbestos, if any asbestos which is present at the Premises as of the date hereof
must be abated at any time during the Term in order to comply with any Laws,
Landlord at its expense shall encapsulate or otherwise abate the same to the
extent necessary in order to comply with such Laws.
(c) It shall not be unreasonable for Landlord to withhold its consent to
any proposed assignment or sublease if (i) the proposed assignee's or
subtenant's anticipated use of the Premises involves the generation, storage,
use, treatment, or disposal of Hazardous Material in excess of ordinary office
or studio/film production use (and it being understood that any such permitted
use must comply with all Laws); (ii) the proposed assignee or subtenant has been
required by any prior landlord, lender, or governmental authority to take
remedial action in connection with Hazardous Material contaminating a property
if the contamination resulted from such assignee's or subtenant's actions or use
of the property in question; or (iii) the proposed assignee or subtenant is
subject to an enforcement order issued by any governmental authority in
connection with the use, disposal, or storage of a Hazardous Material.
(d) As used herein, the term "Hazardous Material" means any hazardous or
toxic substance, material, or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term "Hazardous Material" includes, without limitation, any material or
substance which is (i) defined as "Hazardous Waste," "Extremely Hazardous
Waste," or "Restricted Hazardous Waste" under Sections 25115, 25117 or 25122.7,
or listed pursuant to Section 25140 of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a
"Hazardous Substance" under Section 25316 of the California Health and Safety
Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance
Account Act), (iii) defined as a "Hazardous Material," "Hazardous Substance," or
"Hazardous Waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory), (iv) defined as "Hazardous Substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage
of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under
Article 9 or defined as "Hazardous" or "Extremely Hazardous" pursuant to Article
11 of Title 22 of the California Administrative Code, Division 4, Chapter 20,
(viii) designated as a "Hazardous Substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C.ss.1317), (ix) defined as a
"Hazardous Waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C.ss. 6901 et seq. (42 -- --- U.S.C.ss.6903), or (x)
defined as a "Hazardous Substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S. C.ss.9601 et
seq. (42 U.S.C.ss.9601).
(e) As used herein, the term "Laws" means any applicable federal, state or
local laws, ordinances or regulations relating to any Hazardous Material
affecting the Premises, including, without limitation, the laws, ordinances, and
regulations referred to in Section 20.5(d) above.
(f) The indemnities by each party pursuant to this Article 20 shall
survive the expiration or sooner termination of this Lease.
ARTICLE 21
EVENTS OF DEFAULT, CONDITIONAL LIMITATIONS, REMEDIES, ETC.
Section 21.1. Events of Default. Each of the following events shall
constitute an "Event of Default" hereunder:
(a) if Tenant shall default in the payment of Base Rent and such default
shall continue for a period of five (5) days after notice from Landlord of such
default, or if Tenant shall default in the payment of any other Rent or other
sums required to be paid by Tenant hereunder on the due date thereof, and such
default shall continue for a period of five (5) days after notice from Landlord
of such default;
(b) if Tenant enters into an assignment, sublease or other transfer
without compliance with the provisions of this Lease and such assignment,
sublease or other transfer is not made to comply with the provisions of this
Lease, or canceled, within thirty (30) calendar days after Landlord's notice
thereof to Tenant;
(c) if Tenant fails to observe or perform one or more of the other terms,
conditions, covenants or agreements of this Lease and such failure continues for
a period of thirty (30) calendar days after notice thereof by Landlord to Tenant
specifying such failure (unless such failure requires work to be performed, acts
to be done or conditions to be removed which cannot by their nature reasonably
be performed, done or removed, as the case may be, within such thirty (30)
calendar day period, in which case no Event of Default shall be deemed to exist
as long as Tenant has commenced curing the same within such thirty (30) calendar
day period and shall diligently and continuously prosecutes the same to
completion); any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure 1161 (regarding
unlawful detainer) or any successor statute;
(d) to the extent permitted by law, if Tenant is generally not paying its
debts as they become due, or admits, in writing, that it is unable to pay its
debts as they become due;
(e) to the extent permitted by law, if Tenant makes an assignment for the
benefit of creditors;
(f) to the extent permitted by law, if Tenant files a voluntary petition
under Title 11 of the United States Code or if such petition is filed against
Tenant and an order for relief is entered, or files any petition or answer
seeking, consenting to or acquiescing in, any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future Federal bankruptcy code or any other present or future
applicable Federal, State or other statute or law (any of the foregoing being a
"Bankruptcy Event"), or shall seek or consent to or acquiesce in or suffer the
appointment of any trustee, receiver, custodian, assignee, sequestrator,
liquidator or other similar official of Tenant or of all or any substantial part
of its properties or of the Premises or any interest of Tenant therein;
(g) to the extent permitted by law, if within thirty (30) days after the
commencement of any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the present or any future Federal bankruptcy code or any other
present or future applicable Federal, State or other statute or law, such
proceeding is not dismissed, or if, within thirty (30) days after the
appointment, without the consent or acquiescence of Tenant, or of any trustee,
receiver, custodian, assignee, sequestrator, liquidator or other similar
official of Tenant or of all or any substantial part of its properties or of the
Premises or any interest of Tenant therein, such appointment is not vacated or
stayed on appeal or otherwise, or if, within thirty (30) days after the
expiration of any such stay, such appointment is not vacated;
(h) if a levy under execution or attachment shall be made against the
Premises or any part thereof, the income therefrom, the Lease or the leasehold
estate created thereby and such execution or attachment shall not be vacated or
removed by court order, bonding or otherwise within a period of thirty (30)
days;
(i) intentionally omitted;
(j) if Tenant fails to observe or perform one or more of the terms,
conditions, covenants or agreements of any Leasehold Mortgage beyond any
applicable notice and/or cure period;
(k) abandonment of the Premises, or Tenant's failure to accept tender of
possession of the Premises;
(l) the taking in execution or by similar process or law (other than by
eminent domain) of the leasehold estate hereby created;
(m) Tenant's failure to cause to be released or discharged by bonding any
mechanics' liens filed against the Premises, the land, the improvements or
structures thereon or any part thereof, within thirty (30) days after notice
that same have been filed or recorded;
(n) Tenant's failure to deliver the certificate required under Article 26
or any written instrument required under Section 10.2 (d) within the time
required, which failure continues for five (5) days after notice; or
(o) Tenant's failure to maintain the insurance policies required pursuant
to this Lease, which failure continues for a period of five (5) business days
after notice.
All defaults by Tenant of any covenant or condition of this Lease shall be
deemed by the parties hereto to be material.
Section 21.2. Enforcement of Performance. If an Event of Default occurs,
Landlord may elect, by appropriate judicial proceedings, either at law or in
equity, to enforce performance or observance by Tenant of the applicable
provisions of this Lease and/or to recover damages for breach thereof.
Section 21.3. Remedies.
(a) In the event of any Event of Default, Landlord may at any time
thereafter, with or without notice or demand:
(i) Terminate Tenant's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such case,
Landlord may enter into and repossess the Premises by summary proceeding,
unlawful detainer, ejectment or otherwise, and remove all occupants thereof and,
at Landlord's option, any property therein without being liable for any damages
therefor. In such event Landlord shall be entitled to recover from Tenant all
liabilities, damages, costs and expenses incurred by Landlord by reason of
Tenant's default, including but not limited to: (i) the worth at the time of the
award of the unpaid rent which had been earned or was payable at the time of
termination; (ii) the worth at the time of the award of the amount by which the
unpaid rent which would have been earned or payable after termination until the
time of the award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; (iii) the worth at the time of the 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 rent loss that Tenant proves could be
reasonably avoided; (iv) any other amount necessary to compensate Landlord for
all damages, liabilities, costs and expenses proximately caused by Tenant's
failure to perform its obligations under the Lease or which in the ordinary
course of things would be likely to result therefrom, including, but not limited
to, any costs or expenses incurred by Landlord in maintaining or preserving the
Premises after such default, refurbishment, repair, the cost of recovering
possession of the Premises and making any necessary refurbishment and repairs;
the cost of removing (and repairing any damage caused by such removal) and
storage or disposal of Tenant's personal property, equipment, fixtures,
alterations and tenant improvements, and expenses of reletting (including
necessary refurbishment, repair, renovation or alteration of the Premises,
Landlord's attorneys' fees and costs incurred in connection therewith, and any
real estate commissions paid or payable); and (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 Requirements. As used in subparts (i) and (ii)
above, the "worth at the time of the award" is computed by allowing interest on
unpaid amounts at the prime rate of The Chase Manhattan Bank plus three percent
(3%) per annum, or such lesser amount as may then be the maximum lawful rate. As
used in subparagraph (iii) above, the "worth at time of the award" is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of the award, plus one percent (1%). If Tenant
abandons the Premises, Landlord shall have the option of (x) taking possession
of the Premises and recovering from Tenant the amount specified in this
subparagraph, or (y) proceeding under the provisions of subparagraph (ii) below.
(ii) Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant shall have abandoned the
Premises. In such event Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease and at law or in equity, including the
right to recover rent as it becomes due hereunder.
(iii) Re-enter the Premises with or without terminating this Lease
and remove all persons and property from the Premises. Such property may be
removed and stored in a public warehouse or elsewhere or disposed of at the cost
of and for the account of Tenant in accordance with the provisions of this Lease
or any other procedures permitted by applicable law. No re-entry or taking
possession of the Premises by Landlord pursuant to this subsection (iii) shall
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Tenant or unless the termination thereof is decreed
by a court of competent jurisdiction.
(iv) In the event of the abandonment of the Premises by Tenant or in
the event that Landlord shall elect to re-enter as provided above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided above, Landlord may from time to time, without terminating this
Lease, either recover all rent as it becomes due or relet the Premises or any
part thereof for all or any portion of the Lease Term of this Lease on terms and
conditions as Landlord in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises. If Landlord shall elect to so
relet, then rents received by Landlord from such reletting shall be applied:
first, to the payment of any indebtedness other than rent due hereunder from
Tenant to Landlord; second to the payment of any cost of such reletting; third,
to the payment of the cost of any alterations and repairs to the Premises;
fourth, to the payment of rent due and unpaid hereunder and the balance, if any,
shall be held by Landlord and applied to payment of future rent as the same may
become due and payable hereunder. Should that portion of such rents received
from such reletting during any month, which is applied to the payment of rent
hereunder, be less than the rent payable during that month by Tenant hereunder,
then Tenant shall pay such deficiency to Landlord immediately upon demand
therefor by Landlord. Such deficiency shall be calculated and paid monthly.
Tenant shall also pay to Landlord, as soon as ascertained, any costs' and
expenses incurred by Landlord in such reletting or in making such alterations
and repairs not covered by the rents received from such reletting.
(v) Pursue any other right or remedy now or hereafter available to
Landlord hereunder or at law or in equity.
Section 21.4. Intentionally Omitted.
Section 21.5. Intentionally Omitted.
Section 21.6. Receipt of Monies after Notice or Termination. No receipt of
monies by Landlord from Tenant after termination of this Lease, or after the
giving of any notice of termination of this Lease (unless, before the
termination of this Lease, such receipt cures the Event of Default which was the
basis for the notice) shall reinstate, continue or extend the Term or affect any
notice theretofore given to Tenant, or operate as a waiver of the right of
Landlord to enforce the payment of Rent payable by Tenant hereunder or
thereafter falling due, or operate as a waiver of the right of Landlord to
recover possession of the Premises by proper remedy. After the service of notice
to terminate this Lease or the commencement of any suit or summary proceedings,
or after a final order or judgment for the possession of the Premises, Landlord
may demand, receive and collect any monies due or thereafter falling due without
in any manner affecting such notice, proceeding, order, suit or judgment, all
such monies collected being deemed payments on account of the use and occupation
of the Premises or, at the election of Landlord, on account of Tenant's
liability hereunder.
Section 21.7. Waiver of Service. Tenant hereby expressly waives the
service of any notice of intention to re-enter provided for in any statute or of
the institution of legal proceedings in connection therewith and Tenant, for and
on behalf of itself and all parties claiming through or under Tenant, also
waives any and all rights (a) of redemption provided by any law or statute now
in force or hereafter enacted or otherwise, or (b) of re-entry or (c) of
repossession or (d) to restore the operation of this Lease, if Tenant is
dispossessed by a judgment or by warrant of any court or judge or in case of
re-entry or repossession by Landlord or in case of any expiration or termination
of this Lease. The terms "enter", "re-enter", "entry" or "re-entry", as used in
this Lease, are not restricted to their technical legal meanings.
Section 21.8. Strict Performance. No failure by Landlord to insist upon
Tenant's strict performance of any covenant, agreement, term or condition of
this Lease or to exercise any right or remedy available to Landlord by reason of
an Event of Default, and no payment or acceptance of full or partial Rent during
the continuance of any Event of Default, constitutes a waiver of any such Event
of Default or of such covenant, agreement, term or condition. No failure by
Tenant to insist upon Landlord's strict performance of any covenant, agreement,
term or condition of this Lease, and no payment of full or partial Rent by
Tenant during the continuance of any default by Landlord under this Lease,
constitutes a waiver of any such default or of such covenant, agreement, term or
condition.
Section 21.9. Landlord's Right to Enjoin Defaults or Threatened Defaults.
In the event that Tenant commits, threatens to commit, acquiesces or threatens
in acquiesce to any act or occurrence which, with the passage of time and/or the
giving of notice, would constitute an Event of Default, Landlord is entitled to
enjoin such act or acquiescence and has the right to invoke any rights and
remedies allowed at law or in equity or by statute or otherwise, other remedies
that may be available to Landlord notwithstanding. In the event that Landlord
commits, threatens to commit, acquiesces or threatens in acquiesce to any act or
occurrence which, with the passage of time and/or the giving of notice, would
constitute a default by Landlord under this Lease, Tenant is entitled to enjoin
such act or acquiescence and has the right to invoke any rights and remedies
allowed at law or in equity or by statute or otherwise, other remedies that may
be available to Tenant notwithstanding.
Section 21.10. Tenant's Payment of All Costs and Expenses. Tenant shall
pay to Landlord all costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, incurred by Landlord in any action
or proceeding to which Landlord may be made a party by reason of any act or
omission of Tenant. All of the sums paid or obligations incurred by Landlord,
with costs and interest at the Late Charge Rate, shall be paid by Tenant to
Landlord on demand.
If Landlord or Tenant litigate any provision of this Lease or the subject
matter thereof, the unsuccessful litigant shall pay to the successful litigant
all reasonable attorneys' fees, disbursements and court costs incurred by the
successful litigant at trial and on appeal.
Section 21.11. Rights and Remedies Cumulative. Except to the extent
expressly provided in this Lease, all rights and remedies of Landlord and Tenant
provided in this Lease are cumulative and are not exclusive, and except as
otherwise provided in this Lease, Landlord or Tenant may pursue any one or all
of such remedies or any other remedy or relief which may be provided by law or
in equity, whether or not stated in this Lease. Nothing in this Article 21 shall
limit or otherwise affect the obligation of either party hereto to indemnify,
defend, protect and hold harmless the other party pursuant to any provision of
this Lease.
ARTICLE 22
NOTICES
Section 22.1. All Notices, Communications, etc., in Writing. Whenever it
is provided herein that notice, demand, request, consent, approval or other
communication shall or may be given to, or served upon, either of the parties by
the or whenever either of the parties desires to give or serve upon the other
any notice, demand, request, consent, approval or other communication with
respect hereto or to the Premises, each such notice, demand, request, consent,
approval or other communication shall be in writing and shall be effective for
any purpose if given or served as follows:
(a) If by Landlord, by nationally recognized overnight courier service or
by mailing to Tenant by certified mail, postage prepaid, return receipt
requested, addressed to Tenant, at the address set forth above, with a copy
thereof to Greenberg Glusker Fields Claman Machtinger & Kinsella LLP, 1900
avenue of the Stars, Suite 2100, Los Angeles, California 90067, Attn: Dennis B.
Ellman, Esq., or to such other address(es) and attorney(s) as Tenant may from
time to time designate by notice given to Landlord by certified mail.
(b) If by Tenant, by nationally recognized overnight courier service or by
mailing to Landlord by certified mail, postage prepaid, return receipt
requested, addressed to Landlord at the address first set forth above, with a
copy thereof to Bingham Dana LLP, 399 Park Avenue, New York, New York 10022,
Attn: Robert M. Safron, Esq., or to such other address(es) and attorney(s) as
Landlord may from time to time designate by notice given to Tenant by certified
mail.
Section 22.2. Service. Every notice, demand, request, consent, approval or
other communication hereunder shall be deemed to have been given or served (i)
three (3) business days after the same shall be deposited in the United States
mails, postage prepaid, return receipt requested, as aforesaid, or (ii) one (1)
business day after being deposited with a nationally recognized overnight
courier service. Notices given by the parties' attorneys shall be valid,
provided the same are given in accordance with the terms of this Article.
ARTICLE 23
Intentionally Omitted
ARTICLE 24
Intentionally Omitted
ARTICLE 25
EXCAVATIONS AND SHORING
If any excavation is made or contemplated for construction or other
purposes upon property adjacent to the Premises, Tenant shall afford to Landlord
or the party or parties causing or authorized to cause such excavation the right
to enter upon the Premises in a reasonable manner for the purpose of doing such
work as may be necessary to preserve any of the walls or structures of the
Premises from injury or damage and to support the same by proper foundations.
Tenant shall not, by reason of any such excavation or work, have any claim
against Landlord for damages or for indemnity or for suspension, diminution,
abatement, or reduction of Rent payable by Tenant hereunder.
ARTICLE 26
CERTIFICATE OF TENANT AND LANDLORD
Each of Landlord and Tenant shall, within fifteen (15) days after notice
from the other, execute, acknowledge and deliver to the other or any other party
specified by such party, a statement in writing a certifying (i) that this Lease
is unmodified and in full force and effect (or if there are modifications, that
this Lease, is in full force and effect as modified, and stating the
modifications) and (ii) the date to which the Rent payable by Tenant hereunder
has been paid, and (b) stating whether or not to the best knowledge of Landlord
or Tenant, as the case may be, the other party, is in default in performance of
any covenant, agreement or condition contained in this Lease and, if so,
specifying in detail each such default.
ARTICLE 27
CONSENTS AND APPROVALS
Section 27.1. Effect of Granting or Failure to Grant Approvals or
Consents. The granting of any consent or approval by a party to perform any act
requiring consent or approval under the terms of this Lease, or the failure on
the part of a party to object to any such action taken without the required
consent or approval, shall not be deemed a waiver by the party whose consent was
required, of its right to require such consent or approval for any further
similar act. Each party hereby expressly covenants and warrants that, concerning
matters requiring the other party's consent or approval under the terms of this
Lease, the party seeking such consent or approval shall secure it for each and
every happening for the event requiring such consent or approval, and shall not
claim any waiver, on the part of the party whose consent was required, of the
requirement to secure such consent or approval.
Section 27.2. Remedy for Refusal to Grant Consent or Approval. Each party
hereby waives any claim against the other party which it may have based upon any
assertion that the other party has unreasonably withheld or unreasonably delayed
any consent or approval, and each party agrees that its sole remedy shall be (i)
an action or proceeding to enforce any such provision or for specific
performance, injunction or declaratory judgment or (ii) to submit the dispute to
arbitration in accordance with Article 31 below. In the event of a determination
favorable to the party who requested the consent or approval in any of the
proceedings set forth in (i) or (ii) of the preceding sentence, the requested
consent or approval shall be deemed to have been granted; however, the other
party shall have no personal or other liability to the requesting party for its
refusal to give such consent or approval. The sole remedy for either party's
unreasonably withholding or delaying of consent or approval shall be as set
forth in this Section. Notwithstanding the foregoing, each party shall be
entitled to such other remedies as shall be available to it at law or in equity
in the event that the other party's unreasonable withholding of consent is
determined to be arbitrary and capricious by a final judgment of a court of
competent jurisdiction or by the arbitrator in any arbitration proceeding
pursuant to Article 31 below.
ARTICLE 28
SURRENDER AT END OF TERM
(a) Upon the expiration of the Term, or upon a re-entry by Landlord upon
the Premises pursuant to Article 21 hereof, Tenant, without any payment or
allowance whatsoever by Landlord, shall surrender the Premises to Landlord in
good order, condition and repair, reasonable wear and tear and damage caused by
casualty which is the responsibility of Landlord to repair excepted, free and
clear of all subleases, licenses and other occupancies, liens and encumbrances
created by Tenant or by anyone claiming by or through Tenant. Tenant hereby
waives any notice now or hereafter required by law with respect to vacating the
Premises on the Expiration of the Term.
(b) Tenant acknowledges that possession of the entire Premises must be
surrendered to Landlord at the Expiration or sooner termination of the Term. The
parties recognize and agree that the damage to Landlord resulting from any
failure by Tenant timely to surrender possession of the entire Premises as
aforesaid will be substantial, will exceed the amount of annual Base Rent and
Additional Rent theretofore payable hereunder, and will be impossible to measure
accurately. Tenant therefore agrees that if possession of the entire Premises is
not surrendered to Landlord upon the expiration or sooner termination of the
Term, then notwithstanding anything to the contrary contained in this Lease,
Tenant shall pay to Landlord for each month and for each portion of any month
during which Tenant holds over in the Premises after the expiration or sooner
termination of the Term, for use and occupancy, Base Rent at (i) 125% of the
final monthly rate specified in Section 2.2 for the first sixty (60) days that
Tenant thus remains in possession, (ii) 150% of the final monthly rate specified
in Section 2.2 for the next sixty (60) days that Tenant thus remains in
possession and (iii) 200% thereafter, together with all Additional Rent payable
hereunder (and Landlord may accept such amounts without in any way waiving its
rights to require Tenant to vacate the Premises) and, in addition thereto,
Tenant shall pay Landlord for all damages, consequential as well as direct,
sustained by reason of Tenant's retention of possession for more than sixty (60)
days following the expiration or sooner termination of the Term.
ARTICLE 29
NO OTHER AGREEMENTS
This Lease contains all the promises, agreements, conditions, inducements
and understandings between Landlord and Tenant concerning the Premises and there
are no promises, agreements, conditions, understandings, inducements, warranties
or representations, oral or written, expressed or implied, between them
concerning the Premises other than the Consent to Sublet with respect to the
Directrix Sublease of even date herewith among Landlord, Tenant and Directrix
(the "Consent to Sublet"), and as expressly set forth herein.
ARTICLE 30
QUIET ENJOYMENT
Landlord covenants that, as long as Tenant shall faithfully perform the
agreements, terms, covenants and conditions hereof, Tenant shall and may
(subject to the exceptions, reservations, terms and conditions of this Lease)
peaceably and quietly have, hold and enjoy the Premises for the Term without
molestation or disturbance by or from Landlord or any party claiming through
Landlord.
ARTICLE 31
ARBITRATION
Section 31.1. Notice. In cases where this Lease expressly provides for the
settlement of a dispute or question by arbitration, and only in such cases, such
dispute or question shall be determined by arbitration conducted in Los Angeles,
California, before, and in accordance with, the applicable rules of the American
Arbitration Association (the "AAA"), and judgment upon the award rendered may be
entered in any court having jurisdiction thereof. In addition to any applicable
requirements of the American Arbitration Association, the party desiring
arbitration shall give notice to the other party (the "Arbitration Notice"), and
in such Arbitration Notice such party shall set forth with particularity the
dispute or question sought to be arbitrated, including the applicable lease
provisions, as well as the requesting party's proposed resolution of the matter
being arbitrated. Within ten (10) days after its receipt of the Arbitration
Notice, the other party shall give a response notice to the requesting party
(the "Response Notice"), setting forth such other party's proposed resolution of
the matter being arbitrated.
Section 31.2. Arbitration Procedure. (a) Each party shall, within ten (10)
days after the giving of the Response Notice appoint an arbitrator and such
party shall notify the other party of the name and address of the arbitrator so
appointed; (b) if either party shall fail to make such appointment and to serve
notice thereof within the time prescribed, then the appointment of an arbitrator
on behalf of such party shall be made in the same manner as provided in clause
(c) below for the appointment of a third arbitrator in the case where the two
arbitrators shall fail to agree upon such third arbitrator; (c) the arbitrators
so appointed shall meet within ten (10) days after the second arbitrator is
appointed and shall appoint a third arbitrator, and in the event of their
failure to agree upon such third arbitrator within ten (10) days after the time
prescribed, either party on behalf of both may request such appointment by the
AAA, or, either party may apply to the Presiding Justice of the highest court in
Los Angeles County for the appointment; and (d) within ten (10) after the
appointment of the third arbitrator, the arbitrators shall by majority vote
select the resolution proposed by the requesting party in the Arbitration Notice
or the resolution proposed by the other party in the Response Notice. If any
arbitrator shall die, become disqualified or incapacitated, or shall fail or
refuse to act, before such matter shall have been determined, then, in place of
such arbitrator, an arbitrator shall promptly be appointed in the same manner as
the arbitrator who shall have died or become disqualified or incapacitated, or
who shall have failed or refused to act. The fees and expenses of the
arbitrators shall be borne by the party whose position shall not be sustained in
the arbitration proceeding.
Each arbitrator shall be a fit and impartial person having not less than
ten (10) years' experience (during the immediately preceding ten (10) year
period) in Los Angeles in the area which is the subject of the dispute.
Section 31.3. Article 27 Arbitrations. In the event of an arbitration
pursuant to Section 27.2, this Article 31 shall apply, except that the dispute
shall be resolved by a single arbitrator jointly selected by the parties within
five (5) business days after the giving of notice of arbitration by the party
requesting arbitration to the other party, or if the parties are unable to agree
on an arbitrator within such five (5) business day period, either party may
request such appointment by the AAA or may apply to the Presiding Justice of the
highest court in Los Angeles County for the appointment.
Section 31.4. Article 15 Arbitrations. In the event of an arbitration
pursuant to Article 15, this Article 31 shall apply, except that: (a) the
dispute shall be resolved by a single arbitrator selected from the list attached
hereto as Exhibit I, such selection to be made in the order set forth in such
list, starting with the first person listed until an available arbitrator is
appointed; and (b) each ten day time period set forth in Sections 31.1 and 31.2
shall be reduced to five (5) days.
Section 31.5. Power of Arbitrators. The arbitrators shall have no power to
vary or modify any of the provisions of this Lease.
ARTICLE 32
INVALIDITY OF CERTAIN PROVISIONS
If any term or provision of this Lease or the application thereof to any
party or circumstance is, to any extent, invalid or unenforceable, the remainder
of this Lease, or the application of such term or provision to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
ARTICLE 33
NO RECORDING OF LEASE
Neither this Lease, nor any amendments hereto, may be recorded and any
attempt by Tenant to record same shall, at Landlord's option, constitute a
default hereunder; however, either party may, at its expense, record a
short-form memorandum of lease, provided that the same discloses only the
premises leased, the term of the Lease and Tenant's rights pursuant to Article
36 below.
ARTICLE 34
CERTAIN DEFINITIONS
Unless otherwise defined in this Lease, the terms defined in this Article
shall, for all purposes of this Lease and all agreements supplemental hereto,
have the following meanings.
"Architect" shall mean any registered architect or
architectural firm selected and paid by Tenant and approved by
Landlord.
"Equipment" shall mean all fixtures and personal property
incorporated in or attached to and used or usable in the operation
of the Premises and shall include, but shall not be limited to, all
machinery, apparatus, devices, motors, engines, dynamos,
compressors, pumps, boilers and burners, heating, lighting,
plumbing, ventilating, air cooling and air conditioning equipment;
chutes, ducts, pipes, tanks, fittings, conduits and wiring;
incinerating equipment; elevators, escalators and hoists;
partitions, doors, cabinets, hardware; floor, wall and ceiling
coverings of the public areas only; wash rooms, toilet and lavatory
equipment; lobby decorations; windows, window washing hoists and
equipment; communication equipment; and all additions or
replacements thereof, excluding, however, any of the foregoing which
are owned by occupants of the Premises or contractors engaged in
maintaining same.
"Expiration Date" shall mean the date of the actual expiration
of the Term as set forth in Article 1 hereof.
"Governmental Authority or Authorities" means the United
States of America, the State of California, the City of Los Angeles
and any agency, department, commission, board, bureau,
instrumentality or political subdivision of any of the foregoing,
now existing or hereafter created, having jurisdiction over the
Premises or any portion thereof or any street, road, avenue or
sidewalk comprising a part of, or in front of, the Premises.
"Landlord" on the Commencement Date, shall mean Kingston
Andrita LLC, and thereafter, Landlord shall mean the fee owner of
the Premises at the time in question.
"Lease" means this Agreement of Lease and all exhibits and
schedules hereto and all amendments, modifications and supplements
thereof.
"Requirements" shall mean any and all applicable present and
future laws, rules, regulations or dues, ordinances, statutes,
codes, executive orderse and requirements of all Governmental
Authorities applicable to the Premises or any street, road, avenue
or sidewalk comprising a part of, or in front of, the Premises
(including, without limitation, the building codes and ordinances of
the City of Los Angeles and the laws, rules, regulations, orders,
ordinances, statutes, codes and requirements of any applicable Fire
Rating Bureau or other body exercising similar functions).
"Tenant," on the Commencement Date, shall mean Playboy
Entertainment Group, Inc., and thereafter, Tenant shall mean the
holder of the leasehold interest created by this Lease at the time
in question.
"Tenant Delay" means a delay incurred by Landlord due to
changes to the Work Letter or Construction Drawings or any other
plans required by Tenant or Directrix, the performance of any work
by Tenant or Directrix or any other act or omission of Tenant or
Directrix or any of their respective agents, servants, contractors
or employees, of which Landlord shall have notified Tenant by notice
given not later than seven (7) days after the occurrence thereof and
which has the effect of delaying Landlord's performance of its
obligations hereunder.
"Unavoidable Delay" means a delay incurred by Landlord or
Tenant due to an act of God, an inability to obtain labor,
equipment, supplies or materials due to governmental action, an
enemy action, a civil commotion, an earthquake, a flood, a fire or
other casualty, a war, hostilities, an invasion, an insurrection, a
riot, mob violence, malicious mischief, sabotage, a strike of any
labor union, a lockout, or other similar cause beyond the reasonable
control of Landlord or Tenant (not including such party's insolvency
or financial condition) of which the party affected by such
Unavoidable Delay (the "affected party") shall have notified the
other party by notice given not later than seven (7) days after the
occurrence thereof and which has the effect of delaying the affected
party's performance of its obligations hereunder, which Unavoidable
Delay shall be deemed to continue only as long as the affected party
shall be using reasonable efforts to minimize the effects thereof.
ARTICLE 35
MISCELLANEOUS
Section 35.1. Captions. The captions of this Lease are for convenience of
reference only, and in no way define, limit or describe the scope or intent of
this Lease or in any way affect this Lease.
Section 35.2. Table of Contents. The Table of Contents is for the purpose
of convenience of reference only, and is not to be deemed or construed in any
way as part of this Lease or as supplemental hereto or amendatory hereof.
Section 35.3. Reference to Landlord and Tenant. The use herein of the
neuter pronoun in any reference to Landlord or Tenant shall be deemed to include
any individual Landlord or Tenant, and the use herein of the words "successors
and assigns" or "successors or assigns" of Landlord or Tenant shall be deemed to
include the heirs, legal representatives and assigns of any individual Landlord
or Tenant.
Section 35.4. Relationship of Landlord and Tenant. This Lease is not to be
construed as creating a partnership or joint venture between the parties, it
being the intention of the parties only to create a landlord and tenant
relationship.
Section 35.5. Person Acting on Behalf of a Party. If more than one party
is named as or becomes Tenant hereunder, Landlord may require the signatures of
all such parties in connection with any notice to be given or action to be taken
hereunder by Tenant hereunder. Each party named as Tenant is fully liable for
all of Tenant's obligations hereunder. Any notice by Landlord to any party named
as Tenant is sufficient and has the same force and effect as though given to all
parties named as Tenant.
Section 35.6. Landlord's Liability. The liability of Landlord hereunder
("Landlord", for purposes of this Section, shall include any disclosed or
undisclosed principal of Landlord, or any officer, director, manager,
stockholder, partner, member or agent of Landlord or of any such principal) for
damages or otherwise shall be limited to Landlord's interest in the Premises
(and the proceeds of any sale of Landlord's interest in the Premises, as well as
insurance and condemnation proceeds received by Landlord with respect to the
Premises) and this Lease. Landlord shall not have any liability (personal or
otherwise) hereunder beyond Landlord's interest in the Premises (and the
proceeds of any sale of Landlord's interest in the Premises, as well as
insurance and condemnation proceeds received by Landlord with respect to the
Premises). No other property or assets of Landlord are subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies hereunder. The provisions of this Section shall survive the Expiration
of the Term.
Section 35.7. Landlord's Remedies Cumulative. Each right and remedy of
Landlord provided for in this Lease is cumulative and is in addition to every
other right or remedy provided for in this Lease, or how or hereafter existing
at law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Landlord of any one or more of the rights or remedies provided
for in this Lease, or now or hereafter existing at law or in equity or by
statute or otherwise, shall not preclude the simultaneous or later exercise by
Landlord of any or all other rights or remedies provided for in this Lease or
now or hereafter existing at law or in equity or by statute or otherwise.
Section 35.8. No Termination. Except as expressly provided in this Lease,
this Lease shall not terminate, be forfeited or be affected in any manner, nor
shall there be a reduction or abatement of Rent for any reason or cause
whatsoever, except that nothing in this Section 35.8 shall be deemed to
constitute a waiver by Tenant of its right to claim a constructive eviction.
Section 35.9. No Third Party Beneficiary. Nothing contained herein is
intended to be for, or to inure to, the benefit of any party other than Landlord
and Tenant and their successors and assigns, other than Directrix under the
Directrix Sublease. No such other party is entitled, as a consequence of any
term, condition, covenant or agreement contained in this Lease or of Landlord's
or Tenant's failure to observe or perform the same, to seek, claim or recover
damages or any other legal or equitable remedy against Landlord or Tenant.
Section 35.10. Waiver, Modification, Etc. No covenant, agreement, term or
condition of this Lease to be performed or complied with by either party, shall
be changed, modified, altered, waived or terminated except by written instrument
of change, modification, alteration, waiver or termination executed by the party
against which enforcement of such covenant, agreement term or condition is
sought. No waiver of any act which might constitute a default affects or alters
this Lease, but each and every covenant, agreement, term and condition of this
Lease continues in full force and effect with respect to any other then existing
or subsequent default.
Section 35.11. Governing Law. This Lease shall be governed, construed and
interpreted in accordance with the internal laws of the State of California,
without giving effect to the principles of conflicts of laws.
Section 35.12. Successors and Assigns. The agreements, terms, covenants
and conditions herein are binding upon, and inure to the benefit of, Landlord
and Tenant and, except as otherwise provided herein, their respective successors
and assigns.
Section 35.13. Broker. Landlord represents that it dealt with First
Property Realty Corporation and Lee & Associates (the "Brokers") in connection
with its proposed acquisition of the Premises. Each party represents and
warrants to the other that it has not dealt with the Brokers or with any other
broker or person in connection with this Lease. The execution and delivery of
this Lease by each party shall be conclusive evidence that such party has relied
upon the foregoing representation and warranty. Tenant shall indemnify and hold
Landlord harmless from and against any and all claims for commission, fee or
other compensation by any person who shall claim to have dealt with Tenant in
connection with this Lease and for any and all costs incurred by Landlord in
connection with such claims, including, without limitation, reasonable
attorneys' fees and disbursements. Landlord shall indemnify and hold Tenant
harmless from and against any and all claims for commission, fee or other
compensation and any person who shall claim to have dealt with Landlord in
connection with this Lease and for any and all costs incurred by Tenant in
connection with such claims, including, without limitation, reasonable
attorneys' fees and disbursements. The provisions of this Article shall survive
the Expiration Date.
Section 35.14. Landlord as Contract Vendee. Tenant acknowledges that, on
the date hereof, Landlord is the contract vendee of the Premises. If such
contract is cancelled or terminated, Landlord shall give Tenant written notice
thereof and, in such event, this Lease shall terminate immediately upon such
cancellation or termination.
Section 35.15. Submission not an Offer. Notwithstanding anything herein to
the contrary, it is to be strictly understood and agreed that (X) the submission
by Landlord to Tenant of any drafts of this Lease or any correspondence with
respect thereto shall (i) be deemed submission solely for Tenant's consideration
and not for acceptance and execution, (ii) have no binding force or effect,
(iii) not constitute an option for the leasing of the Premises or a lease or
conveyance of the Premises by Landlord to Tenant and (iv) not confer upon Tenant
or any other party any title or estate in the Premises, (Y) the terms and
conditions of this Lease shall not be binding upon either party hereto in any
way unless and until it is unconditionally executed and delivered by both
parties in their respective sole and absolute discretion and all conditions
precedent to the effectiveness thereof shall have been fulfilled or waived, and
(Z) if this Lease is not so executed and delivered for any reason whatsoever
(including, without limitation, either party's willful or other refusal to do so
or bad faith), neither party shall be liable to the other with respect to this
Lease on account of any written or parol representations, negotiations, any
legal or equitable theory (including, without limitation, part performance,
promissory estoppel, or undue enrichment) or otherwise.
Section 35.16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute but one and the same agreement.
Section 35.17. Guaranty. As a material inducement to Landlord to enter
into this Lease, simultaneously with the execution and delivery of this Lease by
Tenant, Tenant shall deliver to Landlord a guaranty of Tenant's obligations
under this Lease from Playboy Enterprises, Inc. in the form of Exhibit M
attached hereto.
ARTICLE 36
RIGHT OF FIRST OFFER
Section 36.1. Landlord to Offer Premises to Tenant. If at any time during
the term of this Lease, Landlord shall desire to sell the entire Premises to an
unrelated third party and provided that at the time that Landlord is obligated
to deliver the Offer Notice no Event of Default shall then exist, Landlord shall
first offer said Premises to Tenant for purchase by giving to Tenant a written
notice specifying the purchase price and other material terms upon which
Landlord desires to sell the Premises as well as the name of the title insurance
company that will be designated by Landlord to hold the down payment in escrow
to be applied toward the purchase price at closing (the "Escrow Holder") (such
notice being the "Offer Notice"), and provided that Directrix shall then be the
subtenant under the Sublease, Landlord shall simultaneously send a copy of the
Offer Notice to Directrix at its then current address for notices under the
Consent to Sublet.
Section 36.2. Tenant's Exercise of Right. Provided that no Event of
Default shall then exist, Tenant shall then have the right to purchase the
Premises on the terms set forth in the Offer Notice by giving written notice of
its exercise of such right to Landlord (the "Election Notice"), which notice
must be received by Landlord within thirty (30) days after Tenant's receipt of
the Offer Notice from Landlord, time being of the essence, and must be
accompanied by a down payment equal to five percent (5%) of the purchase price,
such down payment to be payable to the Escrow Holder. If Tenant shall give the
Election Notice in a timely manner together with such down payment, the closing
of the sale on the terms set forth in the Offer Notice shall take place no later
than sixty (60) days after Landlord's receipt of the Election Notice and down
payment (time being of the essence), except that Landlord shall have the right
to extend such date in order to effect any tax free exchange which Landlord
wishes to accomplish. In addition, as a condition to closing, all Base Rent and
additional rent payable hereunder by Tenant through the date of closing must be
paid in full at or before the closing. If Tenant fails to deliver the Election
Notice or the down payment in a timely manner, Tenant shall be deemed to have
rejected the offer to purchase the Premises. If Tenant properly and timely
delivers the Election Notice and the down payment, but at the time of such
delivery an Event of Default shall exist, Tenant shall be deemed to have
rejected the offer to purchase the Premises. If Tenant properly and timely
delivers the Election Notice and down payment but fails to close as required,
Tenant's down payment shall be forfeited as liquidated damages and this Article
36 shall be null and void and of no further force or effect, and Landlord shall
be free to transfer the Premises to any third party on any terms it desires
without having to first offer the Premises for sale to Tenant.
Section 36.3. Tenant's Additional Right. If after Tenant either rejects,
or is deemed to have rejected, the offer set forth in the Offer Notice, Landlord
desires to offer the Premises for sale at a purchase price that is more than
five percent (5%) less than the purchase price stated in the Offer Notice, then
Landlord must first give Tenant an additional Offer Notice in accordance with
the procedures set forth above in this Article 37, and all of the above
provisions shall apply with respect to such additional Offer Notice, except that
if the new Offer Notice to Tenant is given not more than ninety (90) days after
the previous Offer Notice to Tenant, then Tenant's time to deliver its Election
Notice and down payment pursuant to such new Offer Notice shall be reduced to
ten (10) days, time being of the essence.
Section 36.4. Certain Transfers Excluded. Tenant's right of first offer
set forth in this Article shall not apply to:
(i) any sale or transfer of the Premises to a partnership,
corporation, limited liability company, or other business entity or trust in
which Landlord or any principal of Landlord has an interest of at least ten
percent (10%);
(ii) any sale or transfer of the Premises to the spouse or a
relative of a principal of Landlord, or to a trust for the benefit of the spouse
or a relative of a principal of Landlord;
(iii) any sale or transfer which includes a real property or
properties in addition to the Premises;
(iv) any sale or transfer pursuant to a superior mortgage (including
without limitation by foreclosure or deed in lieu of foreclosure); or
(v) any transfer without consideration.
Section 36.5. Right Terminates. Upon any sale of the Premises by Landlord
to a third-party person or entity, or the transfer by Tenant of its interest in
this Lease to a party other than an Affiliate of, or Successor to, Playboy
Entertainment Group, Inc., Tenant's rights pursuant to this Article shall
forever terminate.
Section 36.6. Release. Upon the transfer of Landlord's interest in the
Premises to Tenant pursuant to this Article 36, Landlord and Tenant each
automatically shall be released from any and all liability under, or with
respect to, this Lease and the Premises which first arises from and after the
effective date of such transfer.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
day and year first above written.
Landlord:
KINGSTON ANDRITA LLC
By: /s/ E. Peter Krulewitch
------------------------------------
E. Peter Krulewitch
Tenant:
PLAYBOY ENTERTAINMENT GROUP, INC.
By: /s/ James L. English
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James L. English