California-Carlsbad-1902 Wright Place Lease - Marco Plaza Enterprises and Rubio's Restaurants Inc.
LEASE AGREEMENT
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LANDLORD
MARCO PLAZA ENTERPRISES,
a California general partnership
TENANT
RUBIO'S RESTAURANTS, INC.
a Delaware corporation
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SUMMARY OF BASIC LEASE INFORMATION . . . . . . . . . . . . . . . . . 1
ARTICLE 1 -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Additional Rent. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Base Annual Rent . . . . . . . . . . . . . . . . . . . . . 1
1.3 Base Monthly Rent. . . . . . . . . . . . . . . . . . . . . 1
1.4 Basic Terms. . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Business Days. . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Commencement of Construction . . . . . . . . . . . . . . . 1
1.7 Common Area. . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Common Area Maintenance Charges. . . . . . . . . . . . . . 1
1.9 CPI. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.10 Declarations . . . . . . . . . . . . . . . . . . . . . . . 1
111 Excess Operating Costs Rent. . . . . . . . . . . . . . . . 2
1.12 Hazardous Materials. . . . . . . . . . . . . . . . . . . . 2
1.13 Hazardous Materials Laws . . . . . . . . . . . . . . . . . 2
1.14 Insurance Charges. . . . . . . . . . . . . . . . . . . . . 2
1.15 Landlord's Indemnitees . . . . . . . . . . . . . . . . . . 2
1.16 Lease Term . . . . . . . . . . . . . . . . . . . . . . . . 2
1.17 Lease Year . . . . . . . . . . . . . . . . . . . . . . . . 2
1.18 Operating Costs. . . . . . . . . . . . . . . . . . . . . . 2
1.19 Premises . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.20 Profit . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.21 Project. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.22 Property Taxes . . . . . . . . . . . . . . . . . . . . . . 2
1.23 Rentable . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.24 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.25 Rules and Regulations. . . . . . . . . . . . . . . . . . . 3
1.26 Site Amenities . . . . . . . . . . . . . . . . . . . . . . 3
1.27 Site Plan. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.28 Target Commencement Date . . . . . . . . . . . . . . . . . 3
1.29 Tenant Improvements. . . . . . . . . . . . . . . . . . . . 3
1.30 Tenant's Indemnitees . . . . . . . . . . . . . . . . . . . 3
1.31 Tenant's Proportional Share. . . . . . . . . . . . . . . . 3
1.32 Usable . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.33 Work Letter. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 -- PREMISES. . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.1 Premises . . . . . . . . . . . . . . . . . . . . . . 3
2.1.2 Site Plan. . . . . . . . . . . . . . . . . . . . . . 4
2.2 Lease of the Premises. . . . . . . . . . . . . . . . . . . 4
2.3 Suitability of Premises. . . . . . . . . . . . . . . . . . 4
2.4 Landlord's Work in the Premises and Project. . . . . . . . 4
2.5 Expansion Right. . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 -- LEASE TERM. . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Lease Term . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Commencement Date. . . . . . . . . . . . . . . . . . . . . 5
3.3 Delay in Commencement; Acceptance Letter . . . . . . . . . 5
3.3.1 Acceptance Letter. . . . . . . . . . . . . . . . . . 5
3.3.2 LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . 5
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3.4 Early Occupancy. . . . . . . . . . . . . . . . . . . . . . 6
3.3 Option(s) to Extend Term . . . . . . . . . . . . . . . . . 6
3.5.1 Extension Notice. . . . . . . . . . . . . . . . . . 6
3.5.2 Base Monthly Rent During Extension. . . . . . . . . 6
ARTICLE 4 -- RENTAL AND OTHER PAYMENTS . . . . . . . . . . . . . . . 7
4.1 Base Monthly Rent. . . . . . . . . . . . . . . . . . . . . 7
4.2 Interest on Past Due Obligations . . . . . . . . . . . . . 8
4.3 Late Charges . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Security Deposit . . . . . . . . . . . . . . . . . . . . . 8
4.4.1 Deposit of Funds. . . . . . . . . . . . . . . . . . 8
4.4.2 Transfer of Security Deposit. . . . . . . . . . . . 8
4.4.3 Return of Security Deposit. . . . . . . . . . . . . 8
ARTICLE 5 -- OTHER CHARGES PAYABLE BY TENANT . . . . . . . . . . . . 8
5.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Common Area Maintenance Charges. . . . . . . . . . . . . . 8
5.2.1 Tenant to Bear Proportional Share of Common
Area Maintenance Charges. . . . . . . . . . . . . . 9
5.2.2 Landlord's Common Area Maintenance Charges. . . . . 9
5.2.3 Exclusions from Common Area Maintenance
Charges . . . . . . . . . . . . . . . . . . . . . . 9
5.2.4 Repairs Due to Misuse . . . . . . . . . . . . . . . 9
5.3 Payment of Excess Operating Costs Rent. . . . . . . . . . 9
5.3.1 Previous Charges. . . . . . . . . . . . . . . . . . 10
5.3.2 Year-End Adjustments. . . . . . . . . . . . . . . . 10
5.3.3 Audit . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Personal Property Taxes. . . . . . . . . . . . . . . . . . 10
ARTICLE 6 -- USE OF PREMISES . . . . . . . . . . . . . . . . . . . . 11
6.1 Permitted Uses . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Manner of Use. . . . . . . . . . . . . . . . . . . . . . . 11
6.2.1 Interference with Use/Nuisance. . . . . . . . . . . 11
6.2.2 Violation of Law/Insurance Provisions . . . . . . . 11
6.2.3 Permits . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Rules and Regulations. . . . . . . . . . . . . . . . . . . 11
6.4 Landlord's Access. . . . . . . . . . . . . . . . . . . . . 12
6.5 Quiet Possession . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 7 -- HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . 12
7.1 Prohibition. . . . . . . . . . . . . . . . . . . . . . . . 13
7.1.1 Use . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1.2 Normal Usage. . . . . . . . . . . . . . . . . . . . 13
7.1.2.1 Tenant's Normal Usage. . . . . . . . . . . 13
7.1.2.2 Landlord's Normal Usage. . . . . . . . . . 13
7.1.3 Existing Conditions . . . . . . . . . . . . . . . . 13
7.2 Disclosure and Warning Obligations . . . . . . . . . . . . 13
7.3 Notice of Actions. . . . . . . . . . . . . . . . . . . . . 13
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7.4 Hazardous Materials Indemnity. . . . . . . . . . . . . . . 14
7.4.1 Tenant. . . . . . . . . . . . . . . . . . . . . . . 14
7.4.2 Landlord. . . . . . . . . . . . . . . . . . . . . . 14
7.5 Assignment and Subletting. . . . . . . . . . . . . . . . . 14
7.6 Environmental Tests and Audits . . . . . . . . . . . . . . 15
7.7 Lease "As Is". . . . . . . . . . . . . . . . . . . . . . . 15
7.8 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 8 -- UTILITIES . . . . . . . . . . . . . . . . . . . . . . . 15
8.1 Payment and Arrangement. . . . . . . . . . . . . . . . . . 15
8.2 Interruption of Services and Utilities . . . . . . . . . . 15
8.3 Operating Hours. . . . . . . . . . . . . . . . . . . . . . 15
8.4 Security System. . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 9 -- PARKING AND CONTROL OF COMMON AREAS . . . . . . . . . . 16
9.1 Control of Common Areas by Landlord. . . . . . . . . . . . 16
9.2 License. . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 10 -- ALTERATIONS, IMPROVEMENTS AND SIGNAGE. . . . . . . . . 16
10.1 Changes/Alterations. . . . . . . . . . . . . . . . . . . . 16
10.2 Manner of Construction . . . . . . . . . . . . . . . . . . 16
10.2.1 Conditions to Consent . . . . . . . . . . . . . . . 16
10.2.2 Cost. . . . . . . . . . . . . . . . . . . . . . . . 16
10.2.3 Good and Workmanlike Manner . . . . . . . . . . . . 17
10.3 Construction Insurance . . . . . . . . . . . . . . . . . . 17
10.4 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.5 Signage. . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 11 -- INSURANCE AND INDEMNITY. . . . . . . . . . . . . . . . 17
11.1 Insurance to be Obtained by Landlord . . . . . . . . . . . 17
11.1.1 Fire and Casualty Insurance . . . . . . . . . . . 18
11.1.2 Liability Insurance. . . . . . . . . . . . . . . . 18
11.2 Insurance to be Obtained by Tenant . . . . . . . . . . . . 18
11.2.1 Liability Insurance. . . . . . . . . . . . . . . . 18
11.2.2 Insurance of Personal Property . . . . . . . . . . 18
11.2.3 Additional Insurance Obligations . . . . . . . . . 18
11.3 Waiver of Subrogation. . . . . . . . . . . . . . . . . . . 18
11.4 Form of Policies . . . . . . . . . . . . . . . . . . . . . 18
11.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . 19
11.5.1 Indemnification of Landlord. . . . . . . . . . . . 19
11.5.2 Landlord's Nonliability. . . . . . . . . . . . . . 19
11.5.3 Indemnification of Tenant. . . . . . . . . . . . . 20
ARTICLE 12 -- ASSIGNMENT AND SUBLETTING. . . . . . . . . . . . . . . 20
12.1 Landlord's Consent Required. . . . . . . . . . . . . . . . 20
12.1.1 Transfer . . . . . . . . . . . . . . . . . . . . . 20
12.1.2 Procedure . . . . . . . . . . . . . . . . . . . . 20
12.1.3 Permitted Transfers. . . . . . . . . . . . . . . . 20
12.1.4 Public Offerings . . . . . . . . . . . . . . . . . 20
12.2 Recapture Right. . . . . . . . . . . . . . . . . . . . . . 20
12.3 Transfer Without Consent . . . . . . . . . . . . . . . . . 21
12.4 No Release of Tenant . . . . . . . . . . . . . . . . . . . 21
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12.5 Effect of a Transfer . . . . . . . . . . . . . . . . . . . 21
12.6 Event of Bankruptcy. . . . . . . . . . . . . . . . . . . . 21
12.7 No Merger. . . . . . . . . . . . . . . . . . . . . . . . . 21
12.8 Assignment Fees and Procedures . . . . . . . . . . . . . . 21
ARTICLE 13 -- DAMAGE OR DESTRUCTION. . . . . . . . . . . . . . . . . 22
13.1 Repair of Damage by Landlord . . . . . . . . . . . . . . . 22
13.2 Rent Abatement Due to Casualty . . . . . . . . . . . . . . 22
13.3 Landlord's Option to Repair. . . . . . . . . . . . . . . . 22
13.4 Damage Near End of Term. . . . . . . . . . . . . . . . . . 23
13.5 Waiver of Statutory Provisions . . . . . . . . . . . . . . 23
ARTICLE 14 -- CONDEMNATION . . . . . . . . . . . . . . . . . . . . . 23
14.1 Total Condemnation . . . . . . . . . . . . . . . . . . . . 23
14.2 Partial Condemnation . . . . . . . . . . . . . . . . . . . 23
14.3 Condemnation of Parking Area . . . . . . . . . . . . . . . 23
14.4 Distribution of Condemnation Award . . . . . . . . . . . . 23
14.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 15 -- DEFAULTS; REMEDIES . . . . . . . . . . . . . . . . . . 24
15.1 Covenants and Conditions . . . . . . . . . . . . . . . . . 24
15.2 Defaults by Tenant . . . . . . . . . . . . . . . . . . . . 24
15.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.4 The Right to Relet the Premises. . . . . . . . . . . . . . 25
15.5 Waiver of Rights of Redemption . . . . . . . . . . . . . . 26
15.6 Cumulative Remedies. . . . . . . . . . . . . . . . . . . . 26
15.7 Additional Remedies Upon Default . . . . . . . . . . . . . 26
15.7.1 Assumption of Rejection of Lease . . . . . . . . . 26
15.7.2 Assignment . . . . . . . . . . . . . . . . . . . . 26
15.7.3 Other Matters. . . . . . . . . . . . . . . . . . . 26
15.8 Default by Landlord . . . . . . . . . . . . . . . . . . . 26
15.9 Landlord's Cure. . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 16 -- PROTECTION OF CREDITORS. . . . . . . . . . . . . . . . 27
16.1 Subordination. . . . . . . . . . . . . . . . . . . . . . . 27
16.2 Attornment . . . . . . . . . . . . . . . . . . . . . . . . 27
16.3 Signing of Documents . . . . . . . . . . . . . . . . . . . 27
16.4 Estoppel Certificates. . . . . . . . . . . . . . . . . . . 28
16.4.1 Request. . . . . . . . . . . . . . . . . . . . . . 28
16.4.2 Failure to Respond . . . . . . . . . . . . . . . . 28
16.5 Tenant's Financial Condition . . . . . . . . . . . . . . . 28
16.6 Mortgagee Protection Clause. . . . . . . . . . . . . . . . 28
ARTICLE 17 -- TERMINATION OF LEASE . . . . . . . . . . . . . . . . . 28
17.1 Condition Upon Termination . . . . . . . . . . . . . . . . 28
17.2 Non-Removal by Tenant. . . . . . . . . . . . . . . . . . . 29
17.3 Abandoned Property . . . . . . . . . . . . . . . . . . . . 29
17.4 Landlord's Actions on Premises . . . . . . . . . . . . . . 29
17.5 Holding Over . . . . . . . . . . . . . . . . . . . . . . . 29
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ARTICLE 18 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . 29
18.1 Successors; No Third Party Beneficiaries . . . . . . . . . 29
18.2 Severability . . . . . . . . . . . . . . . . . . . . . . . 29
18.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 30
18.4 Other Tenancies. . . . . . . . . . . . . . . . . . . . . . 30
18.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 30
18.6 Landlord's Liability . . . . . . . . . . . . . . . . . . . 30
18.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.8 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.9 No Recordation . . . . . . . . . . . . . . . . . . . . . . 31
18.10 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . 31
18.11 Corporate Authority; Partnership Authority . . . . . . . . 31
18.12 No Partnership . . . . . . . . . . . . . . . . . . . . . . 31
18.13 Joint and Several Liability. . . . . . . . . . . . . . . . 31
18.14 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . 31
18.15 Lender Modification. . . . . . . . . . . . . . . . . . . . 32
18.16 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 32
18.17 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . 32
18.18 Tenant Obligations Survive Termination . . . . . . . . . . 32
18.19 Grant of Security Interest . . . . . . . . . . . . . . . . 32
18.20 Tenant's Waiver. . . . . . . . . . . . . . . . . . . . . . 33
18.21 Submission of Lease. . . . . . . . . . . . . . . . . . . . 33
EXHIBITS
Exhibit "A". . . . . . . . . . . . . . . . . . . . . . . . . . . . .Site Plan
Exhibit "B". . . . . . . . . . . . . . . . . . . . . . .Rules and Regulations
Exhibit "C". . . . . . . . . . . . . . . . . . . . . . .Work Letter Agreement
Exhibit "D". . . . . . . . . . . . . . . . . . . . . . . . . . . .Definitions
Exhibit "E". . . . . . . . . . . . . . . . . . . . . Tenant Acceptance Letter
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LEASE AGREEMENT
SUMMARY OF BASIC LEASE INFORMATION
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<S> <C> <C>
1. Lease Date: October 27, 1997
2. Landlord: Marco Plaza Enterprises, a California
general partnership.
3. Address of Landlord: c/o Newport National Corporation
5050 Avenida Encinas, Suite 350
Carlsbad, California 92008
Attn: Mr. Jeffry Bruseau
4. Tenant: Rubio's Restaurants, Inc., a Delaware
corporation
5. Address of Tenant: 5151 Shoreham Place, Suite 260
San Diego, CA 92122
Attn: Mr. Ted Frumken
6. Premises (Section 2.1 of Lease): Improved office space on the third floor.
Project Rentable Area: Approximately
102,000 square feet
Building Rentable Area: Approximately
51,000 square feet.
Premises Rentable Area: Approximately
16,425 square feet.
Premises: Usable Area: Approximately
14,408 square feet.
7. Project: Cornerstone Corporate Centre.
Building: Building "C."
8. Lease Term (Article 3 of Lease): Lease Term: Seven (7) years.
Estimated Commencement Date:
September 1, 1998
Estimated Expiration Date:
August 31, 2005
Options to Extend: One (1) for three (3)
years and two (2) for five (5) years
each.
9. Rent (Article 4 of Lease): Base Monthly Rent: $1.74 per Rentable
square foot of the Premises per month,
which shall be discounted for the first
one and one half months or the First
Lease Year and which shall increase each
Lease Year, as follows:
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Base Monthly Rent
(Per Rentable Sq. Ft.)
Lease Year of Premises)
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<S> <C>
1 (months one and one
half of month two) $0
1 (second half of month
two and months three
through 12) $1.74
2 $1.79
3 $1.84
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Base Monthly Rent
(Per Rentable Sq. Ft.)
Lease Year of Premises)
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<S> <C>
4 $1.89
5 $1.94
6 $1.99
7 $2.04
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<S> <C> <C>
Initial Base Monthly Rent: $28,580
(assumes Premises = 16,425 square feet).
Initial Base Annual Rent: $342,954
(assumes Premises = 16,425 square feet).
Base Monthly Rent During Extensions: At
the commencement of the first Extension
Term, Base Monthly Rent shall be
increased to equal the sum of Base
Monthly Rent in effect immediately
preceding the first Extension Term plus
$0.06 per Rentable square foot of the
Premises. At the commencement of each
Lease Year following the first Lease
Year of the first Extension Term, Base
Monthly Rent During Extension shall be
increased to equal the sum of the Base
Monthly Rent During Extension for the
immediately preceding Lease Year plus
$0.06 per Rentable square foot of the
Premises. At the commencement of each
of the second and third Extension Term,
Base Monthly Rent shall be increased to
equal the sum of Base Monthly Rent in
effect immediately preceding the
applicable Extension Term plus $0.08 per
Rentable square foot of the Premises.
At the commencement of each Lease Year
following the first Lease Year of each
such Extension Term, Base Monthly Rent
During Extension shall be increased to
equal the sum of the Base Monthly Rent
During Extension for the immediately
preceding Lease Year plus $0.08 per
Rentable square foot of the Premises.
First month's Base Monthly Rent due upon
commencement of construction of the
Premises: $28,580.
Late Charge: Seven percent (7%) of the
overdue amount.
Lease Interest Rate: Twelve percent
(12%).
10. Operating Costs Allowance Operating Costs during 1998 operating
expense base year calculated
(Article 5 of Lease): based on a deemed ninety-five Percent
(95%) occupancy and full assessment of
real estate taxes.
11. (Article 5 of Lease): General office in conformance with the
Declarations, and all laws, ordinances
and regulations. Tenant agrees to
operate in accordance with similar
operations in similar Class "A"
buildings in Southern California.
12. Security Deposit
(Article 4 of Lease): $28,580.
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<S> <C> <C>
13. Brokers (Section 18.16 of
Lease): Landlord's Broker: Business Real Estate
Brokerage Company. Tenant's Broker: CB
Commercial Real Estate Group, Inc.
Lease Guarantors: None.
14. Tenant Improvements: Up to $28.60 per Usuable square foot of
the Premises (but in no event less than
$412,000).
16. Tenant Contingency Allowance: Up to $2.00 per Usable square foot of
the Premises.
17. The following exhibits are attached hereto and incorporated into this
Lease:
Exhibit "A" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Site Plan
Exhibit "B" . . . . . . . . . . . . . . . . . . . . . . .Rules and Regulations
Exhibit "C" . . . . . . . . . . . . . . . . . . . . . . . . . . . .Work Letter
Exhibit "D" . . . . . . . . . . . . . . . . . . . . . . . . . . . .Definitions
Exhibit "E" . . . . . . . . . . . . . . . . . . . . . . . . .Acceptance Letter
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The foregoing Summary of Basic Lease Information is hereby incorporated
into and made a part of this Lease. Each reference in this Lease to the Summary
of Basic Lease Information shall mean the information set forth above and shall
be construed to incorporate all of the terms provided under the particular lease
paragraph pertaining to such information. In the event of a conflict between
the Summary of Basic Lease Information and the Lease, the terms of the Lease
shall prevail.
LANDLORD:
MARCO PLAZA ENTERPRISES, a California general partnership
By: /s/ illegible 10-27-97
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Name:
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Title: Partner
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TENANT:
RUBIO'S RESTAURANTS, INC., a Delaware corporation
By: /s/ Rafael R. Rubio 10-24-97
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Name: Rafael R. Rubio
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Title: Chairman
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II-(iii)
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LEASE AGREEMENT
This Lease Agreement, which includes the Basic Terms (as hereinafter
defined) ("Lease"), is made as of the date shown in the Basic Terms, by and
between the Landlord shown in the Basic Terms and the Tenant shown in the Basic
Terms.
ARTICLE 1 -- DEFINITIONS
In addition to the defined terms set forth in the Basic Terms or elsewhere
in this Lease, unless the context otherwise requires, the following terms shall
have the meanings set forth below.
1.1 ADDITIONAL RENT. "Additional Rent" refers collectively to Excess
Operating Costs Rent and any other charges due and payable by Tenant under this
Lease other than Base Monthly Rent.
1.2 BASE ANNUAL RENT. "Base Annual Rent" shall mean the sum of the twelve
(12) Base Monthly Rent amounts due in any Lease Year.
1.3 BASE MONTHLY RENT. "Base Monthly Rent" means the rental specified in
Article 4 of this Lease.
1.4 BASIC TERMS. "Basic Terms" means the Summary of Basic Lease
Information set forth at the beginning hereof.
1.5 BUSINESS DAYS. "Business Days" means any day on which business is
conducted by federal savings bank in San Diego County, California.
1.6 COMMENCEMENT OF CONSTRUCTION. "Commencement of Construction" means
the date on which Landlord's Contractor (as defined in the Work Letter)
commences the foundation for the Building.
1.7 COMMON AREA. "Common Area" means all areas, space, equipment and
special services in the Building and in the Project which are from time-to-time
provided by Landlord for the common or joint use and benefit of the occupants of
the Project and Building, their employees, agents, servants, customers and other
invitees, including without limitation, parking areas, access roads, driveways,
retaining walls, landscaped areas, truck service-ways, stairs, ramps, sidewalks,
pools, patios, hardscapes, electrical rooms, mailrooms, common area restrooms
and locker rooms and hallways.
1.8 COMMON AREA MAINTENANCE CHARGES. "Common Area Maintenance Charges"
means the costs and expenses described in Section 5.2.2 of this Lease.
1.9 CPI. "CPI" shall mean the Consumer Price Index published by the
United States Bureau of Labor Statistics, Los Angeles-Anaheim-Riverside, All
Urban Consumers (1982 - 84 = 100), or a successor or similar statistic selected
by Landlord in the event the present index is no longer published.
1.10 DECLARATION. "Declarations" means any Declaration or Declarations of
Covenants, Conditions and Restrictions which have been or may be recorded
against the Building or all or a portion of the Project, including, but not
limited to, (i) that certain Declaration of Covenants, Conditions, and
Restrictions, Carlsbad Airport Centre, dated September 4, 1986, recorded
September 12, 1986, in the San Diego County Recorder's Office, Document No.
86-401456, as amended by a First Amendment dated January 15, 1987, recorded
January 28, 1987, as Document No. 87-048040, and (ii) that certain Mutual
Easement Agreement between Carlsbad Airport Centre and Opus Southwest
Corporation dated January 27, 1987, recorded in the San Diego County Recorder's
Office on January 28, 1987, as Document No. 87-048043.
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1.11 EXCESS OPERATING COSTS RENT. "Excess Operating Costs Rent" means
Tenant's Proportional Share of the amount by which the Operating Costs for each
calendar year exceeds the Operating Costs Allowance (as set forth in the Basic
Terms).
1.12 HAZARDOUS MATERIALS. The term "Hazardous Material(s)" shall mean any
toxic or hazardous substance, material or waste or any pollutant or containment
or infectious or radioactive material which are, or in the future become,
regulated under applicable local, state or federal law for the protection of
health or the environment, or which are classified as hazardous or toxic
substances, materials or wastes, pollutants or contaminants, as defined, listed
or regulated by any federal, state or local law, regulation or order or by
common law decision, including, without limitation, (i) trichloroethylene,
tetrachloroethylene, perchloroethylene and other chlorinated solvents, (ii) any
petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinated
biphenyls, (v) flammable explosives, (vi) urea formaldehyde and
(vii) radioactive materials and waste.
1.13 HAZARDOUS MATERIALS LAWS. The term "Hazardous Materials Law(s)" shall
mean any federal, state or local laws, ordinances, codes, statutes, regulations,
administrative rules, policies and orders, and other authority, existing now or
in the future, which classify, regulate, list or define hazardous substances,
materials, wastes contaminants, pollutants and/or the Hazardous Materials.
1.14 INSURANCE CHARGES. "Insurance Charges" shall mean any and all
premiums and other costs for insurance policies insuring the Premises,
Building, Project and Common Area, required by this Lease and paid by Landlord.
1.15 LANDLORD'S INDEMNITEES. "Landlord's Indemnitees" shall refer
collectively to Landlord's agents, partners, members, managers, shareholders,
officers, directors, employees, successors and/or assigns.
1.16 LEASE TERM. "Lease Term" means the entire period commencing with the
Commencement Date and continuing for the period specified in Item 8 of the Basic
Terms, plus any extensions, renewals or holding over periods.
1.17 LEASE YEAR. "Lease Year" or "lease year" shall mean a consecutive
twelve (12) month period during the Lease Term commencing on the Commencement
Date; provided that the Lease Year may be adjusted by Landlord to commence on
the first day of a calendar month after the Commencement Date.
1.18 OPERATING COSTS. "Operating Costs" means all of the Common Area
Maintenance Charges, Property Taxes, and Insurance Charges.
1.19 PREMISES. "Premises" means the space described in Section 2.1 and
delineated on the Site Plan.
1.20 PROFIT. "Profit" shall mean rent and all other amounts paid or
payable by a transferee to Tenant pursuant to a Transfer (as defined in Article
12 herein) which is in excess of the scheduled Base Monthly Rent and all other
Rent due hereunder.
1.21 PROJECT. "Project" means the project at the address set forth in the
Basic Terms, and more particularly described in the Site Plan, together with all
fixtures, equipment and personal property owned by Landlord, now or hereafter
situated or located therein or thereupon and used in connection with the
operation and maintenance thereof.
1.22 PROPERTY TAXES. "Property Taxes" means: (i) general real property and
improvements taxes, any form of assessment, special assessment or reassessment,
any fee, licensee fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or other tax imposed by any authority having
the direct or indirect power to tax, including any city, county, state or
federal government, or any school, agriculture, lighting, drainage or other
improvement district thereof, as against any legal or equitable interest of
Landlord in the Project; (ii) any tax on the Landlord's right to receive, or the
receipt of, rent or income from the Project or against Landlord's business of
leasing the Project; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Project by
any governmental agency; (iv) any tax imposed upon this transaction or
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based upon a reassessment of the Project due to a change in ownership, new
conservation or transfer of all or part of Landlord's interest in the Project
(except that (a) no such increase during the first two (2) years of the Lease
Term shall be includable, (b) increases for two (2) such reassessments during
the next eight (8) years of the Lease Term, and (c) one time each five (5)
year option term may be includable); and (v) any charge or fee replacing any
tax previously included within the definition of Property Taxes. "Property
Taxes" does not, however, include Landlord's Federal or State income,
franchise, inheritance or estate taxes.
1.23 RENTABLE. "Rentable" area or "Rentable" square feet shall mean the
square footage determined according to the definitions set forth on Exhibit "D"
attached hereto.
1.24 RENT. "Rent" and/or "rent" shall mean the Base Monthly Rent,
Additional Rent and any other amounts Tenant is required to pay under this
Lease.
1.25 RULES AND REGULATIONS. "Rules and Regulations" mean the rules and
regulations set forth in Exhibit "B" attached to this Lease.
1.26 SITE AMENITIES. "Site Amenities" shall mean the sand volleyball
court, barbeque area, lap pool, spa/jacuzzi, lunch patio, jogging trail, and
one-half court for basketball (over portions of the Project parking lot) to be
constructed by Landlord at its sole cost in a location selected by Landlord in
the Common Area, for the non-exclusive use of Tenant and other occupants of the
Project, in accordance with this Lease.
1.27 SITE PLAN. "Site Plan" refers to the Site Plan attached as Exhibit
"A."
1.28 TARGET COMMENCEMENT DATE. "Estimated Commencement Date" means October
1, 1998.
1.29 TENANT IMPROVEMENTS. "Tenant Improvements" shall refer to the Tenant
Improvements as defined in the Work Letter attached hereto as Exhibit "C."
1.30 TENANT'S INDEMNITEES. "Tenant's Indemnitees" shall refer collectively
to Tenant's agent, partners, members, managers, shareholders, officers,
directors, employees, successors and/or assigns.
1.31 TENANT'S PROPORTIONAL SHARE. "Tenant's Proportional Share" shall mean
all of Tenant's Building Proportional Share and Tenant's Project Proportional
Share. Tenant's Building Proportional Share shall be calculated from time to
time as determined by Landlord and shall be the percentage obtained by dividing
the Rentable square footage of the Premises by the total Rentable square footage
of the Building. Tenant's Project Proportional Share shall be calculated from
time to time as determined by Landlord and shall be the percentage obtained by
dividing the Rentable square footage of the Premises by the total Rentable
square footage of the Project as then constructed. Tenant's Building
Proportional Share and Tenant's Project Proportional Share shall initially be
calculated using the numbers set forth in Item 6 of the Basic Terms.
1.32 USABLE. "Usable" square feet shall mean the square footage determined
according to the definitions set forth on Exhibit "D."
1.33 WORK LETTER. "Work Letter" means the Work Letter which is attached to
this Lease as Exhibit "C."
ARTICLE 2 -- PREMISES
2.1 LEASE. Upon and subject to the terms, covenants and conditions
hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises.
2.1.1 PREMISES. The Premises will be approximately 16,425
Rentable square feet on the third floor of the Building. The Building will be,
in turn, located in and constitute a portion of the Project. Landlord reserves
the right to reasonably change the shape, size, location, number and extent of
the improvements shown on
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the Site Plan and reasonably eliminate or add any improvements to any portion
of the Project, provided there is no material adverse impact on access to the
Premises and such change is in a manner consistent with Class A office
buildings in Carlsbad, California. Upon Substantial Completion (as defined
in the Work Letter), the Rentable Area of the Premises shall be determined in
accordance with the Work Letter and Exhibit "D." In the event that Landlord
determines that the Rentable Area of any of the Premises, Building or the
Project differ from the amount set forth in the Basic Terms, all amounts,
percentages and figures appearing or referred to in this Lease, including,
without limitation, Tenant's Proportional Share, based upon such amount shall
be revised accordingly and such revised figures shall be deemed to be the
Rentable Area of the Premises, Building or Project, respectively. In such
case, the Base Monthly Rent and any other payments due hereunder which are
based on a Rentable square footage basis shall be increased or decreased
accordingly.
2.1.2 SITE PLAN. The purpose of the Site Plan is to show the
approximate location of the Premises. Notwithstanding any other provision
contained in this Lease, Landlord reserves the right at any time to vary and
adjust the size of the various buildings (other than the Building), the location
of any other tenant automobile parking areas, the Site Amenities (except in
accordance with this Lease), and other common areas as shown on said Site Plan,
provided, however, that (i) said parking area (including landscaped common
areas) shall at all times provide for not less than the minimum parking required
by the local jurisdiction in which the Project is located; and (ii) such change
is in a manner consistent with Class A office buildings in Carlsbad, California.
2.2 LEASE OF THE PREMISES. Tenant acknowledges that this Lease is
subordinate and subject to the Declarations, all liens, encumbrances, deeds of
trust, reservations, restrictions and other matters affecting the Project or the
Premises and any law, regulation, rule, order or ordinance of any governmental
entity applicable to the Project or the Premises or the use or occupancy
thereof, in effect on the execution of this Lease or thereafter promulgated.
Landlord grants Tenant during the Lease Term the concurrent right to use the
Common Area and the Site Amenities on a nonexclusive basis and subject to the
provisions of this Lease. Easements for light and air are not included in the
leasing of these Premises to Tenant. Landlord further reserves the exclusive
right of access to the roof, except for any rights of access specifically
granted to Tenant under the terms of this Lease or any rights of access approved
by Landlord, in its sole discretion, in writing.
2.3 SUITABILITY OF PREMISES. Tenant acknowledges that, except as
expressly set forth herein, Landlord has made no representation or warranty
regarding the condition of the Premises or the Project or the suitability of
such Premises or the Project for the operation or conduct of Tenant's business
thereon or for any other purpose. The taking of possession of the Premises by
Tenant shall conclusively establish that the Premises and the Project were
acceptable to Tenant and in satisfactory condition to conduct business at such
time.
2.4 LANDLORD'S WORK IN THE PREMISES AND PROJECT. The Premises shall be
completed as set forth in the Work Letter. Except as specifically set forth in
this Lease and the Work Letter, Landlord shall not provide or pay for any
interior improvement work or services related to the improvement of the Premises
or the construction of the Project. Tenant specifically acknowledges that
Landlord is under no obligation to construct all or any portion of the Project
except as set forth in this Lease, and Tenant will have no claim against
Landlord should Landlord decide for any reason or no reason to not build any
improvements or the Project except as set forth herein.
2.5 EXPANSION RIGHT. Commencing with the Lease Date and continuing until
the Lease Term expires or is earlier terminated, Tenant, shall have the right to
lease all or any portion of the available space on the first and second floors
of the Building on the same terms and conditions that Landlord has received in a
bona fide offer for such a lease ("Subordinate Right of Refusal"); provided,
however, that such right to lease is subordinate and secondary to all rights of
expansion, rights of first refusal, rights of first offer and other similar
rights which Landlord has granted to Triteal Corporation, a Delaware corporation
("Superior Leaseholder") in connection with its lease of a portion of the
Project. The rights granted to the Superior Leaseholder in this regard are
personal and, upon expiration or termination of such rights, the Subordinate
Right of Refusal shall no longer be subordinate to any other such rights to
lease space in the Building. Promptly after Landlord's receipt of a written
offer to lease all or any portion of the first or second floors of the Building
and rejection of such offer by the Superior Leaseholder, Landlord shall deliver
to Tenant a copy of such offer. If Tenant elects to exercise its Subordinate
Right of Refusal, Tenant must deliver written notice to Landlord within five (5)
business days after receipt of a copy of such offer to Landlord. In order to
elect to exercise Tenant's Subordinate Right of Refusal, Tenant must deliver
written notice of
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Tenant's election to Landlord within five (5) business days after receipt of
a copy of the offer from Landlord and stating in such notice that Tenant is
unconditionally committed to enter into a lease on the same terms and
conditions as contained in the offer. If Tenant fails to timely exercise its
Subordinate Right of Refusal or fails to timely notify Landlord within such
five (5) business day period, then Tenant shall be deemed to have declined to
exercise its right and Landlord shall be free to enter into a lease of the
portion of the Building specified in the offer. Notwithstanding any other
provision of this Lease, Tenant's Subordinate Right of Refusal is personal to
Rubio's Restaurants, Inc., a California corporation, and may not be assigned
or otherwise transferred to any other person or entity whether by assignment
of this Lease or otherwise except in conjunction with a Transfer to an
Affiliate. If a Transfer to an Affiliate is made, any and all such Affiliates
(or other Affiliates pursuant to future Transfers) shall also be prohibited
from assigning the Subordinate Right of Refusal to any other person or entity
except in conjunction with a Transfer to another Affiliate.
ARTICLE 3 -- LEASE TERM
3.1 LEASE TERM. Subject to the parties' respective rights of earlier
termination as provided in this Lease, the term of this Lease ("Lease Term")
shall be for the period of time specified in the Basic Terms, but shall be
extended to include any fraction of a calendar month between the commencement of
the Lease Term and the first day of the first full calendar month thereafter.
Notwithstanding the Lease Term, this Lease is a binding contract between
Landlord and Tenant from and after the date of full execution and delivery
hereof by both parties, enforceable in accordance with its terms.
3.2 COMMENCEMENT DATE. The commencement date of the Lease Term
("Commencement Date") shall be the earlier of the date of the Substantial
Completion of the Premises or the date Tenant occupies the Premises in
accordance with the Work Letter.
3.3 DELAY IN COMMENCEMENT; ACCEPTANCE LETTER. Landlord will use its
diligent, good faith efforts to Substantial Completion of the Premises by the
Estimated Commencement Date (as such date may be extended due to a Tenant Delay
[as defined in the Work Letter]) or as set forth anywhere in this Lease or the
Work Letter. If Landlord cannot Substantially Complete the Premises by the
Estimated Commencement Date, this Lease shall not be void or voidable, nor shall
Landlord be liable to Tenant for any loss or damage resulting therefrom except
as specifically set forth in Section 3.3.2 below.
3.3.1 ACCEPTANCE LETTER. Upon Substantial Completion of the
Premises, Tenant shall, within five (5) days of request therefor by Landlord,
execute an acceptance letter ("Acceptance Letter") in substantially the form of
the Acceptance Letter attached hereto as Exhibit "E"; provided, however, that
the failure of Tenant to execute such Acceptance Letter shall not affect any
obligation of Tenant hereunder or Landlord's determination of the Commencement
Date. If the Tenant fails to execute and deliver such Acceptance Letter in the
form proposed by Landlord, then Landlord and any prospective purchaser or
encumbrancer may conclusively presume and rely upon the following facts: (i)
that the Premises were in an acceptable condition and were delivered in
compliance with all requirements of the Work Letter and (ii) the Commencement
Date is the date specified in the Acceptance Letter proposed by Landlord.
3.3.2 LIQUIDATED DAMAGES. IF LANDLORD DOES NOT SUBSTANTIALLY
COMPLETE THE PREMISES BY THE ESTIMATED COMMENCEMENT DATE, THEN TENANT, AS ITS
SOLE AND EXCLUSIVE REMEDY, WILL BE ENTITLED TO RECEIVE LIQUIDATED DAMAGES IN AN
AMOUNT EQUAL TO TENANT'S PROXIMATE DAMAGES CAUSED BY SUCH FAILURE BUT NOT TO
EXCEED ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500.00) FOR EACH DAY OF DELAY
BETWEEN THE ESTIMATED COMMENCEMENT DATE AND THE DATE LANDLORD SUBSTANTIALLY
COMPLETES THE PREMISES. IN THE EVENT OF SUCH A DELAY, TENANT WILL BE DAMAGED
AND WILL BE ENTITLED TO COMPENSATION FOR THOSE DAMAGES. SUCH DAMAGES WILL,
HOWEVER, BE EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN BECAUSE THE PROOF
OF THE AMOUNT OF SUCH DAMAGES WILL BE BASED ON OPINIONS OF SUCH DAMAGES, WHICH
CAN VARY IN SIGNIFICANT AMOUNTS, AND IT IS IMPOSSIBLE TO PREDICT AS OF THE DATE
ON WHICH THIS LEASE IS MADE THE AMOUNT OF SUCH DAMAGES. LANDLORD DESIRES TO
LIMIT THE
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AMOUNT OF DAMAGES FOR WHICH LANDLORD MIGHT BE LIABLE SHOULD LANDLORD FAIL TO
SUBSTANTIALLY COMPLETE THE PREMISES AS AFORESAID. LANDLORD AND TENANT WISH
TO AVOID THE COST AND LENGTHY DELAYS WHICH WOULD RESULT IF TENANT FILED A
LAWSUIT TO COLLECT ITS DAMAGES FOR SUCH FAILURE TO TIMELY DELIVER.
THEREFORE, IF LANDLORD FAILS TO TIMELY SUBSTANTIALLY COMPLETE THE PREMISES AS
DESCRIBED ABOVE. THE FOREGOING AMOUNT OF LIQUIDATED DAMAGES SHALL BE DEEMED
TO CONSTITUTE A REASONABLE ESTIMATE OF TENANT'S DAMAGES UNDER THE PROVISIONS
OF SECTION 1671 OF THE CALIFORNIA CIVIL CODE, AND TENANT'S SOLE AND EXCLUSIVE
REMEDY 1N THE EVENT OF A DELAY IN THE SUBSTANTIAL COMPLETION OF THE PREMISES.
IN CONSIDERATION OF THE PAYMENT OF SUCH LIQUIDATED DAMAGES, TENANT WILL BE
DEEMED TO HAVE WAIVED ALL OTHER CLAIMS FOR DAMAGES OR RELIEF AT LAW OR IN
EQUITY INCLUDING ANY RIGHTS TENANT MAY HAVE PURSUANT TO SECTION 1680 OR
SECTION 3389 OF THE CALIFORNIA CIVIL CODE. LANDLORD SHALL PAY SUCH
LIQUIDATED DAMAGES TO TENANT WITHIN TEN (10) DAYS AFTER LANDLORD
SUBSTANTIALLY COMPLETES THE PREMISES IN ACCORDANCE WITH THE WORK LETTER.
3.4 EARLY OCCUPANCY. Tenant shall be permitted to enter the Premises
thirty (30) days prior to the anticipated Commencement Date solely for the
purpose of preparing the Premises for the conduct of business thereon and not
for the purposes of conducting business thereon, Tenant's entry and/or occupancy
of the Premises shall be subject to all of the provisions of this Lease and the
Work Letter with the exception of the payment of Base Monthly Rent and
Additional Rent, which obligations shall commence as of the Commencement Date.
If requested by Landlord, Tenant shall execute a hold harmless agreement in a
form prepared by Landlord. Early occupancy of the Premises shall not advance
the expiration date of this Lease. Landlord shall not charge Tenant for the use
of elevators for move-in or electrical consumption during such early occupancy
period.
3.5 OPTION(S) TO EXTEND TERM. Tenant shall have the option(s) to extend
("Extension Option") the Term as set forth in the Basic Terms (as exercised, in
an "Extension Term"), on the following terms and conditions:
3.5.1 EXTENSION NOTICE. Tenant's option to extend the Term shall
be subject to satisfaction of each of the following conditions precedent, which
are solely for the benefit of Landlord:
3.5.1.1 Each Extension Option shall be exercised by written
notice ("Extension Notice") delivered by Tenant to Landlord not sooner than two
hundred seventy (270) days and not later than two hundred ten (210) days prior
to the then scheduled end of the Term ("Extension Deadline"); and
3.5.1.2 This Lease shall be in effect and Tenant shall not be
in default hereunder both on the day of the Extension Notice and on the last day
of the Term.
3.5.2 BASE MONTHLY RENT DURING EXTENSION. In the event the
Term is extended following exercise by Tenant of an Extension Option, then
all of the terms, covenants and conditions of the Lease shall remain in full
force and effect, except that Base Monthly Rent to be applicable during the
Extension Term shall be adjusted to the Base Monthly Rent During Extension as
described in Item 9 of the Basic Terms.
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ARTICLE 4 -- RENTAL AND OTHER PAYMENTS
4.1 BASE MONTHLY RENT. From and after the Commencement Date, Tenant shall
pay to Landlord, in advance, on the first day of each and every calendar month
during the Lease Term, The Base Monthly Rent; provided, however, that the Base
Monthly Rent for thc first month of the Lease Term shall be paid upon
commencement of the construction of the Premises. The Base Monthly Rent for any
fraction of a month at the beginning of the Lease Term will be prorated.
Payment of the Base Monthly Rent, Additional Rent and all other charges deemed
to be Rent under this Lease shall be without prior notice, deduction, offset or
demand, shall be in lawful money of the United States of America and shall be
made at the address set forth for Landlord in the Basic Terms or at such other
place as Landlord may direct. Base Monthly Rent payable for any period of less
than one (1) month shall be prorated based upon a thirty (30) day month. Tenant
shall pay to Landlord as prepaid Base Monthly Rent, immediately upon execution
of this Lease (in addition to the security deposit required), the amount
specified in the Basic Terms, which sum shall be applied to the first calendar
month of the Lease Term for which payment of Base Monthly Rent is due; provided,
however, that the Option Consideration shall be credited against Tenant's
obligation to deliver such prepaid Base Monthly Rent.
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4.2 INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant to
Landlord which is not paid when due shall bear interest from the date which is
five (5) days after the due date at the Lease Interest Rate but if such Lease
Interest Rate exceeds the maximum interest rate permitted by law, such Lease
Interest Rate shall be reduced to the highest rate allowed by law under the
circumstances. Interest shall not be payable on late charges to be paid by
Tenant under this Lease. The payment of interest on such amounts shall not
excuse or cure any default by Tenant under this Lease and the parties agree that
such amounts are a reasonable estimate of the costs Landlord will incur as a
result of its loss of the use of its money due to such late payment by Tenant.
4.3 LATE CHARGES. Tenant's failure to pay any Rent promptly may cause
Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which may
be imposed on Landlord under any mortgage or trust deed encumbering the
Premises. Therefore, if Landlord does not receive any Rent payment within five
(5) days after it becomes due, Tenant shall pay Landlord a late charge in the
amount specified in the Basic Terms. The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of such late payment. Acceptance of such late charge by Landlord shall,
in no event, constitute a waiver of Tenant's default with respect to such
overdue amount. The late charge shall be deemed Rent and the rights to require
it shall be in addition to all of Landlord's rights and remedies hereunder or at
law and shall not be construed as liquidated damages or as limiting Landlord's
remedies in any manner.
4.4 SECURITY DEPOSIT.
4.4.1 DEPOSIT OF FUNDS. Concurrently with the execution of this
Lease, Tenant shall deposit with Landlord a cash security deposit ("Security
Deposit") in the amount set forth in the Basic Terms. Landlord may, but
shall not be obligated to, apply all or part of the Security Deposit to any
unpaid Rent or other charges due from Tenant or to cure any other defaults of
Tenant. If Landlord uses any part of the Security Deposit, Tenant shall
restore the Security Deposit to its full amount within ten (10) days after
Landlord's written request. Tenant's failure to do so shall be a default
under this Lease. Interest shall accrue on the Security Deposit in Tenant's
favor at a rate equal to the then average rate given by San Diego, California
banks for three-month certificates of deposit, and shall become part of the
Security Deposit. Landlord shall not be required to keep the Security Deposit
separate from its other accounts and no trust relationship is created with
respect to the Security Deposit.
4.4.2 TRANSFER OF SECURITY DEPOSIT. Landlord may deliver the funds
deposited hereunder by Tenant to a purchaser of Landlord's interest in the
Premises, in the event that such interest be sold; and thereupon Landlord shall
be discharged from any further liability with respect to such Security Deposit
and Additional Security.
4.4.3 RETURN OF SECURITY DEPOSIT. Notwithstanding the foregoing
provisions of this Section 4.4, Landlord shall return the Security Deposit to
Tenant within ten (10) business days following the twenty-four (24) month of the
Lease Term, subject to the following conditions precedent: (i) Tenant shall not
have been late more than two (2) times in making Rent payment during such
twenty-fourth (24) month; and (ii) Tenant shall not have been in default under
this Lease at any time during such thirty (30) month period. Unless such
conditions precedent are satisfied (or waived by Landlord, in Landlord's sole
and absolute discretion), then Landlord shall retain the Security Deposit, and
Tenant shall continue to be bound by its Security Deposit restoration
obligations set forth in Section 4.4.1 above.
ARTICLE 5 -- OTHER CHARGES PAYABLE BY TENANT
5.1 RENT. All Rent under this Lease shall, unless this Lease expressly
provides otherwise, be paid with the next installment of Base Monthly Rent
falling due.
5.2 COMMON AREA MAINTENANCE CHARGES. Landlord shall operate, maintain,
manage and repair the Budding, Project and Common Area in a neat, orderly
condition, in a manner consistent with Class A projects in Carlsbad, California.
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5.2.1 TENANT TO BEAR PROPORTIONAL SHARE OF COMMON AREA MAINTENANCE
CHARGES. Tenant agrees to pay to Landlord, as part of Excess Operating Costs
Rent, Tenant's Proportional Share of the Common Area Maintenance Charges and
certain charges for the Site Amenities as set forth below which are allocable to
the Lease Term.
5.2.2 LANDLORD COMMON AREA MAINTENANCE CHARGES. For the purpose
of this Lease, the term "Common Area Maintenance Charges" means the total cost
and expense incurred by Landlord in operating, maintaining, managing and
repairing the Building, Project, the Common Area, and the Site Amenities,
including, without limitation, all costs and expenses for the following:
servicing, maintenance, replacement and repair of heating/ventilation and
air-conditioning systems (amortized over an appropriate industry standard useful
life); gardening and landscaping; maintenance and repair of roof; pest
extermination services; janitorial services for the Premises; utilities, water
and sewer charges (other than with respect to utilities separately metered and
paid directly by Tenant); maintenance of parking areas; fees, charges and other
costs (including, without limitation, consulting, accounting and legal fees, but
excluding legal and accounting fees directly attributable to other terms)
reasonably necessary to manage the Building and the Project, including, but not
limited to, a fee to Landlord for management of the Project; costs of compliance
with any and all governmental laws, ordinances, and regulations applicable to
the Building or Project which were not imposed as of the Commencement Date;
installation, maintenance and replacement of signs identifying the Building and
Project (other than Tenant's signs whose maintenance is paid for by Tenant);
charges under any Declarations; Property Taxes for the Building and Project;
Insurance Charges for the Building and Project; all personal property taxes
levied on or attributable to personal property used in connection with the
Common Area; rental or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance of the Building Common
Area; fees for required licenses and permits (except as set forth in Work
Letter); repairing, resurfacing, repaving, maintaining, painting, lighting,
cleaning, refuse removal, security (if any), and similar items; reasonable and
customary operating reserves; and the amortized costs (as reasonably determined
by Landlord over an appropriate industry standard useful life) to repair,
maintain or install capital improvements. Project Operating Expenses would
include the operating expenses for the Site Amenities. Landlord may cause any
or all of such services to be provided by an independent contractor.
5.2.3 EXCLUSIONS FROM COMMON AREA MAINTENANCE CHARGES.
Notwithstanding anything in this Lease to the contrary, the term "Common Area
Maintenance Charges" (and hence Operating Costs) shall in no event include any
of the following: (i) any ground lease rental; (ii) costs incurred by Landlord
for the repair of damage to the Building or the Common Area, to the extent that
Landlord is reimbursed by insurance proceeds; (iii) advertising and promotional
expenditures for the Building or the Common Area, and marketing costs,
including, without limitation, leasing commissions, attorneys' fees in
connection with the negotiation and preparation of letters of intent, leases,
subleases and/or assignments with present or prospective tenants or other
occupants in the Building; (iv) electric power costs for which any tenant
directly contracts at the local public service company or for which any tenant
is separately metered or submetered and pays Landlord directly; or (v) the cost
of any utility services obtained and paid for by Tenant; (vi) Landlord's income
tax on general corporate overhead, or costs associated with the operation of the
business of the ownership or entity which constitutes Landlord as distinguished
from the costs of maintaining, repairing or replacing the Common Areas; (vii)
costs for items and services for which Tenant reimburses Landlord, or third
parties reimburse Landlord; (viii) costs incurred due to violation by Landlord
or its representatives of the terms and conditions of the Lease, (ix) any costs,
fees, dues, contributions or similar expenses for political or charitable
organizations; or (x) any bad debt loss, rent loss or reserves for bad debt or
rent loss.
5.2.4 REPAIRS DUE TO MISUSE. Notwithstanding any provision of this
Lease to the contrary, Tenant shall be responsible for all of Landlord's
reasonable costs and expenses due to repairs to the Premises, Site Amenities or
Project which are made necessary by any misuse or neglect by (a) Tenant or any
of its agents, employees, contractors, or subtenants or (b) any visitors,
patrons, guests or invitees of Tenant while in or upon the Premises. If
Landlord holds a warranty from a manufacturer or a contractor relating to any
such damages, Landlord will use commercially reasonable efforts to enforce such
warranty and, to the extent Landlord is successful in recovering on such
warranty, Tenant will not be charged.
5.3 PAYMENT OF EXCESS OPERATING COSTS RENT. The parties acknowledge that
Tenant is leasing the Premises on a modified gross (net of utilities) basis.
Tenant shall pay Excess Operating Costs Rent, in advance, in
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monthly installments on the first day of each month during the Lease Term
(prorated for any fractional month). Landlord shall provide to Tenant a
written notice of Landlord's budget showing a reasonable estimate of the
Excess Operating Costs Rent, approximately thirty (30) days prior to the
commencement of each calendar year or portion thereof after the expiration of
the first Lease Year (which amount may be re-estimated by Landlord during the
calendar year not more than two (2) times, unless an extraordinary event
occurs) and an estimate of Tenant's share thereof for the ensuing year or
portion thereof. Tenant shall pay to Landlord, monthly in advance,
one-twelfth (1/12th) of the estimate of Excess Operating Costs Rent (or, if
less than a full calendar year has been estimated, then the monthly pro rata
share).
5.3.1 PREVIOUS CHARGES. If, for any reason, Landlord is unable to
provide to Tenant the estimate of the Excess Operating Costs Rent at least
thirty (30) days prior to the commencement of any calendar year during the Lease
Term, then Tenant shall continue to pay monthly the same amount of Excess
Operating Costs Rent as was applicable for the most recent previous month
("Previous Charges") until thirty (30) days after receipt of such estimate at
which time Tenant shall commence paying as of the first day of the first
calendar month after delivery of such new estimate, the new estimated Excess
Operating Costs Rent. Subject to the foregoing, Tenant shall also pay, together
with its next installment, the difference between the Previous Charges and the
amount of the new estimated Excess Operating Costs Rent for such preceding
months. Any delay by Landlord in delivering the new estimated Excess Operating
Costs Rent shall not be deemed a waiver of any such Excess Operating Costs Rent.
5.3.2 YEAR-END ADJUSTMENTS. Within one hundred twenty (120) days
after the end of each calendar year during the Lease Term, Landlord shall
provide Tenant with a written statement showing in reasonable detail the actual
Excess Operating Costs Rent for such year. Landlord and Tenant shall, within
thirty (30) days thereafter, make any payment or credit necessary to bring
Tenant's previously estimated Excess Operating Costs Rent into conformance with
the actual Excess Operating Costs Rent as determined by Landlord. Any amount
due Tenant as a credit shall be credited against installments next coming due
from Tenant under the Lease and any amounts owed to Landlord shall be paid with
the next installment of Base Monthly Rent; provided, however, that if the Lease
Term has terminated and no other amounts are then owing to Landlord from Tenant
pursuant to this Lease, any such amount due Tenant or Landlord shall be remitted
to the party owed such amount within thirty (30) days of the date Landlord
calculates and notifies Tenant of the amount of such adjustment.
5.3.3 AUDIT. Landlord shall retain its records regarding Common
Area Maintenance Charges for a period of at least three (3) years following the
final billing for the calendar year in question. At any time during such three
(3) year period, upon reasonable advance written notice to Landlord, but not
more frequently than once in any calendar year, Tenant shall have the right to
audit all of Landlord's or Landlord's agent's records pertaining to Common Area
Maintenance Charges by a representative of Tenant's choice. If such audit
reveals that Landlord's annual statement was incorrect, any over-billing
discovered in the course of such audit shall be refunded to Tenant within thirty
(30) days of Landlord's receipt of a copy of the audit (with interest from the
date which is thirty (30) days after Landlord's receipt of the copy of such
audit until paid at the Lease Interest Rate), unless Landlord disputes the
audit, and any underbilling shall be paid by Tenant to Landlord within thirty
(30) days of the audit. In the event that any overbilling exceeds the amount
actually due from Tenant for the year by five percent (5%) or more, then
Landlord shall reimburse Tenant for the reasonable costs of the audit. If
Landlord disputes the results of Tenant's audit, Landlord and Tenant shall
attempt to resolve such dispute in good faith. If Landlord and Tenant are
unable to do so within thirty (30) days, then Landlord shall commission a second
audit by an independent accounting firm selected by Landlord. The results of
such second audit shall be deemed conclusive as to any such dispute. Landlord
shall pay the cost of such second audit and Tenant's audit unless such second
audit reveals amounts actually due from Tenant for the year are within the five
percent (5%) noted above, in which event Tenant shall pay for the second audit
as well as Tenant's audit. In any event, Tenant shall continue to pay all Rent
and Excess Operating Costs Rent as otherwise provided by this Lease until the
dispute is resolved or the results of the second audit are available.
5.4 PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency all
taxes charged against trade fixtures, furnishings, equipment or any other
personal property belonging to Tenant. Tenant shall use its best efforts to
have such personal property taxed separately from the Premises. If any of
Tenant's personal property is taxed with the Premises or Project, Tenant shall
pay Landlord the taxes for the personal property within fifteen (15) days after
Tenant receives a written statement from Landlord for such personal property
taxes.
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ARTICLE 6 -- USE OF PREMISES
6.1 PERMITTED USES. Tenant shall use the Premises only for the Permitted
Uses set forth in the Basic Terms and for no other use or purpose without the
prior written consent of Landlord, which consent may be withheld in the sole,
absolute and/or arbitrary discretion of Landlord.
6.2 MANNER OF USE.
6.2.1 INTERFERENCE WITH USE/NUISANCE. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with or infringe on the rights of other occupants or
customers of the Project, or injure or annoy them, or use or allow the Premises
to be used for any improper, immoral, or objectionable purposes; nor shall
Tenant cause, maintain or permit any nuisance in, on or about the Premises or
commit or suffer to be committed any waste in, on or about the Premises. Tenant
shall keep the interior of the Premises (except for Landlord's obligation to
maintain the Common Areas), and every part thereof, in a clean condition, free
from any noises, vibrations, music volumes, lighting (including, without
limitation, strobe lighting), speakers, videos, odors or nuisances deemed
objectionable by Landlord, and shall comply with all health and police
regulations in all respects. Tenant shall not display or sell merchandise, or
place carts, portable signs, devices or any other objects, outside the defined
exterior walls or roof and permanent doorways of the Premises or in corridors,
without the prior written consent of Landlord.
6.2.2 VIOLATION OF LAW/INSURANCE PROVISIONS. Tenant shall not
use or occupy the Premises in violation of any law, ordinance, regulation or
requirement or other directive of any federal, state or local governmental or
quasi-governmental authority having or exercising jurisdiction over the
Project. Subject to Landlord's obligations hereunder, Tenant shall, at its
sole cost and expense, fully comply with all laws, ordinances, regulations,
requirements and other directives of any federal, local, governmental or
quasi-governmental authority having jurisdiction over the Premises and the
Project, including, without limitation, operational and other requirements
imposed upon either owners or operators of any public accommodation under the
Americans with Disabilities Act 42 U.S.C. Section 12101 ET. SEQ., and shall
immediately discontinue any use of the Premises which is declared by any
governmental authority having or exercising jurisdiction thereover to be a
violation of any law, ordinance, regulation or directive. If requested by
Landlord, Tenant shall provide evidence satisfactory to Landlord of Tenant's
compliance. Tenant shall not do or permit to be done anything which will (i)
increase the premium of any insurance policy covering the Premises or the
Project and/or the property located therein; (ii) cause a cancellation of or
be in conflict with any such insurance policies; or (iii) result in a refusal
by insurance companies in good standing to issue or continue any such
insurance in amounts satisfactory to Landlord. Tenant shall, at Tenant's
expense, comply with all rules, orders, regulations and requirements of
insurers and of the American Insurance Association or any other organization
performing a similar function. Tenant shall promptly, upon demand, reimburse
Landlord for any additional premium charges for such policy or policies
caused by reason of Tenant's failure to comply with the provisions of this
Section. Additionally, after Substantial Completion of the Premises pursuant
to the Work Letter, Tenant agrees at its sole cost to install any
improvements, changes or alterations in the Premises authorized in writing by
Landlord and required by any governmental authority as a result of Tenant's
proposed use of the Premises or its manner of operation thereunder, and
Tenant's failure to perform same shall constitute a default by Tenant
hereunder.
6.2.3 PERMITS. Except as set forth in the Work Letter, Tenant
shall obtain and pay for all permits required for Tenant's occupancy of the
Premises and shall promptly take all substantial and non-substantial actions
necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Premises, including the Occupational Health and Safety Act.
6.3 RULES AND REGULATIONS. Tenant shall comply with the Rules and
Regulations and any reasonable amendments, modifications and/or additions
thereto as may hereafter be adopted and published by Landlord. Landlord shall
not be liable to Tenant for any violation of such Rules and Regulations or the
breach in any provision in any lease by any other tenant or other party. In the
event of any inconsistency between the Rules and Regulations and this Lease,
this Lease shall prevail. Landlord will not interfere with Tenant's quiet
enjoyment to which Tenant is entitled under this Lease by virtue of any
inconsistent enforcement of such Rules and Regulations.
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6.4 LANDLORD'S ACCESS. Landlord and its agents, independent contractors
and designated representatives, may enter the Premises at all reasonable times
to post notices of non-responsibility, to make repairs and/or to show the
Premises to holders of any encumbrances, potential buyers, mortgagees, investors
or tenants or other parties, or for any other purpose Landlord deems reasonably
necessary. Landlord shall give Tenant prior notice of such entry, except in the
case of an emergency, in which case no prior notice need be given. Any entry to
the Premises by Landlord in the event of an emergency shall not, under any
circumstances, be construed or deemed to be a forcible or unlawful entry onto
the Premises or to be an eviction of Tenant from the Premises or any part
thereof Landlord may place customary "For Lease" signs on the Premises during
the last nine (9) months of the Lease Term.
6.5 QUIET POSSESSION. If Tenant pays the Rent and complies with all other
terms of this Lease, Landlord assures Tenant that it may occupy and enjoy the
Premises for the full Lease Term, subject to the provisions of this Lease and to
any mortgages or deeds of trust encumbering the Project (as set forth in Section
16.1 below).
ARTICLE 7 -- HAZARDOUS MATERIALS
7.1 PROHIBITION. Tenant shall not cause or permit any Hazardous Materials
to be brought upon, kept, or used in connection with the Premises or Project by
Tenant, its agents, employees, contractors or invitees, in a manner or for a
purpose prohibited by or which could result in liability under any applicable
law, regulation, rule or ordinance, including, without limitation, the Hazardous
Materials Laws. Tenant shall, at its own expense, at all times and in all
respects comply with all Hazardous Materials Laws, including, without
limitation, any Hazardous Materials Laws relating to industrial hygiene,
environmental protection or the use, analysis, generation, manufacture, storage,
disposal or transportation of any Hazardous Materials. In addition, Landlord,
its agents, employees, contractors or invitees, will not cause any Hazardous
Materials to be brought upon, kept, or used in connection with the Project in a
manner or for a purpose prohibited by or which could result in liability under
any applicable law, regulation, rule or ordinance, including without limitation,
the Hazardous Materials Laws. Landlord shall also include in other tenant
leases for the Project a requirement that Hazardous Materials may not be brought
upon, kept, or used in connection with the Premises or Project in a manner or
for a purpose prohibited by or which could result in liability under any
applicable law, regulation, rule or ordinance, including without limitation, the
Hazardous Materials Laws.
7.1.1 USE. Tenant shall, at its own expense, procure, maintain in
effect and comply with all conditions of any and all permits, licenses and other
governmental and regulatory approvals relating to the presence of Hazardous
Materials within, on, under or about the Premises or required for Tenant's use
of any Hazardous Materials in or about the Premises in conformity with all
applicable Hazardous Materials Laws and prudent industry practices regarding
management of such Hazardous Materials. Upon termination or expiration of the
Lease, Tenant shall, at its own expense, cause all Hazardous Materials placed in
or about the Premises or Project by Tenant or at Tenant's direction to be
removed from the Premises and Project and transported for use, storage or
disposal in accordance and compliance with all applicable Hazardous Materials
Laws. Landlord shall, at its own expense, procure, maintain in effect and
comply with all conditions of any and all permits, licenses and other
governmental and regulatory approvals relating to the presence of Hazardous
Materials within, on, under or about the Project or required for Landlord's use
of any Hazardous Materials in or about the Project in conformity with all
applicable Hazardous Materials Laws and prudent industry practices regarding
management of such Hazardous Materials.
7.1.2 NORMAL USAGE.
7.1.2.1 TENANT'S NORMAL USAGE. Landlord recognizes and agrees
that Tenant may use materials in normal quantities that are applicable to
general office use ("Tenant's Normal Usage") and that such use by Tenant shall
not be deemed a violation of this Section, so long as the levels are not in
violation of any Hazardous Materials Laws. Landlord acknowledges that it is not
the intent of this Article 7 to prohibit Tenant from operating its business as
described in this Lease. Tenant may operate its business according to the
custom of the industry so long as the use or presence of Hazardous Materials is
strictly and properly monitored according to all applicable governmental
requirements.
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7.1.2.2 LANDLORD'S NORMAL USAGE. Tenant recognizes and agrees
that Landlord may use materials in normal quantities that are applicable to the
management and operation of the Project, including but not limited to pesticides
and insecticides used for landscaping and chlorine and other chemicals used at
the pool, ("Landlord's Normal Usage") and that such use by Landlord shall not be
deemed a violation of this Section, so long as the levels are not in violation
of any Hazardous Materials Laws. Tenant acknowledges that it is not the intent
of this Article 7 to prohibit Landlord from operating its business as described
in this Lease. Landlord may operate its business according to the custom of the
industry so long as the use or presence of Hazardous Materials is strictly and
properly monitored according to all applicable governmental requirements.
7.1.3 EXISTING CONDITIONS. On the Lease Date, to the best of
Landlord's actual knowledge, there are no Hazardous Materials within, on, under
or about the Premises in violation of any Hazardous Materials laws. As used
herein, Landlord's "knowledge" shall mean the actual knowledge of Scott Brusseau
or James McCann as of the Lease Date, without any duty of investigation or
inquiry.
7.2 DISCLOSURE AND WARNING OBLIGATIONS. Tenant shall comply with all laws,
ordinances and regulations in the State where the Premises is located regarding
the disclosure of the presence or danger of Hazardous Materials. Tenant
acknowledges and agrees that all reporting and warning obligations required
under the Hazardous Materials Laws are the sole responsibility of Tenant,
whether or not such Hazardous Materials Laws permit or require Landlord to
provide such reporting or warnings, and Tenant shall be solely responsible for
complying with Hazardous Materials Laws regarding the disclosure of, the
presence or danger of Hazardous Materials, including without limitation, all
notices or other requirements under California Health and Safety Code Section
25915 ET. SEQ., and 25249.5 ET. SEQ., and California Code of Regulations Section
12000 ET. SEQ.
7.3 NOTICE OF ACTIONS; HAZARDOUS MATERIALS LIST.
7.3.1 TENANT'S OBLIGATIONS. Tenant shall immediately notify Landlord
in writing of (a) any enforcement, cleanup, removal or other governmental or
regulatory action instituted, completed or threatened pursuant to any Hazardous
Materials Laws; (b) any claim made or threatened by any person against Landlord,
or the Premises or the Project, relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from or claimed to result from any
Hazardous Materials; (c) any reports made to any environmental agency arising
out of or in connection with any Hazardous Materials in, on or about the
Premises or with respect to any Hazardous Materials removed from the Premises,
including, any complaints, notices, warnings, reports or asserted violations in
connection therewith; and (d) any release of a Hazardous Material that Tenant
knows or has reason to believe has or will come to be released or located
within, on, under or about the Premises or the Project (except for Tenant's
Normal Usage). Tenant shall also provide to Landlord, as promptly as possible,
and in any event within five (5) Business Days after Tenant first receives or
sends the same, copies of all claims, reports, complaints, notices, warnings or
asserted violations relating in any way to the Premises or Tenant's use thereof,
Upon written request of Landlord (to enable Landlord to defend itself from any
claim or charge related to any Hazardous Materials Law), Tenant shall promptly
deliver to Landlord notices of hazardous waste manifests reflecting the legal
and proper disposal of all such Hazardous Materials removed or to be removed
from the Premises. All such manifests shall list the Tenant or its agent as a
responsible party and in no way shall attribute responsibility for any such
Hazardous Materials to Landlord. As a material inducement to Landlord to allow
Tenant to use Hazardous Materials in connection with its business, Tenant agrees
to deliver to Landlord prior to the Commencement Date, a list identifying each
type of Hazardous Material (except as to Tenant's Normal Usage) to be present on
the Premises and setting forth any and all governmental approvals or permits
required in connection with the presence of Hazardous Materials on the Premises
("Tenant Hazardous Materials List"). Tenant shall deliver to Landlord an
updated Tenant Hazardous Materials List at least once a year and shall also
deliver an updated list before any new Hazardous Materials are brought onto the
Premises or on or before the date Tenant obtains any additional permits or
approvals.
7.3.2 LANDLORD'S OBLIGATIONS. Landlord shall immediately notify
Tenant in writing of (a) any enforcement, cleanup, removal or other governmental
or regulatory action relating to the Premises instituted, completed or
threatened pursuant to any Hazardous Materials Laws; and (b) any release of a
Hazardous Material that Landlord knows or has reason to believe has or will come
to be released or located within, on, under or about the Premises or the Project
(except for Landlord's Normal Usage). Landlord agrees to deliver to Tenant
prior to the Commencement Date, a list identifying each type of Hazardous
Material (except as to Landlord's Normal Usage)
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Landlord caused to be present at the Project and setting forth any and all
governmental approvals or permits required in connection with the presence of
these Hazardous Materials at the Project ("Landlord Hazardous Materials
List"). Landlord shall deliver to Tenant an updated Landlord Hazardous
Materials List at least once a year and shall also deliver an updated list
before Landlord brings any new Hazardous Materials to the Project on or
before the date Landlord obtains any additional permits or approvals.
7.4 HAZARDOUS MATERIALS INDEMNITY.
7.4.1 TENANT. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect, and hold Landlord and each of
Landlord's Indemnitees free and harmless from and against any and all claims,
liabilities, penalties, forfeitures, losses and/or expenses, attorneys' fees,
consultant fees and expert fees, judgments, administrative rulings or orders,
fines, costs for death of or injury to any person or damage to any property
whatsoever (including, without limitation, water tables, sewer systems and
atmosphere), arising from, or caused or resulting, in whole or in part, directly
or indirectly, by the release, presence or discharge in, on, under or about the
Premises or Project of any Hazardous Materials caused by or arising from the
activities of Tenant, Tenant's agents, employees, licensees, or invitees or from
the transportation or disposal of any Hazardous Materials to or from the
Premises or Project by Tenant, Tenant's agents, employees, licensees or invitees
or at Tenant's direction, or by Tenant's failure to comply with any Hazardous
Materials Laws, or from Tenant's failure to provide adequate disclosures or
warnings required by the Hazardous Materials Laws, or from any breach by Tenant
of the obligations in this Article 7. Tenant's indemnification obligations
hereunder shall include, without limitation, and whether foreseeable or
unforeseeable, all costs of any required or necessary Hazardous Materials
management plan, investigation, repairs, cleanup or detoxification or
decontamination of the Premises or Project, and the presence and implementation
of any closure, remedial action or other required plans in connection therewith,
and shall survive the expiration of or early termination of the Lease Term.
7.4.2 LANDLORD. Landlord shall indemnify, defend (by counsel
reasonably acceptable to Tenant), protect, and hold Tenant and each of Tenant's
indemnitees free and harmless from and against any and all claims, liabilities,
penalties, forfeitures, losses and/or expenses, attorneys' fees, consultant's
fees and expert fees, judgments, administrative rulings or orders, fines, costs
for death of or injury to any person or damage to any property whatsoever,
arising from, or caused or resulting, in whole or in part, directly or
indirectly, by the release, presence or discharge in, on, under or about the
Premises of any Hazardous Materials caused by or arising from the activities of
Landlord, Landlord's agents or employees, or by Landlord's failure to comply
with any Hazardous Materials laws. Landlord's indemnification obligations
hereunder shall include, without limitation, and whether foreseeable or
unforeseeable, all costs of any required or necessary Hazardous Materials
management plan, investigation, repairs, cleanup or detoxification or
decontamination of the Premises or Project, and the presence and implementation
of any closure, remedial action or other required plans in connection therewith.
and shall survive the expiration of or early termination of the Lease Term.
7.5 ASSIGNMENT AND SUBLETTING. If (i) any anticipated use of the Premises
by any proposed assignee or sublessee involves the generation, storage, use,
treatment or disposal of Hazardous Materials in a manner or for a purpose
prohibited by any governmental agency or authority, (ii) the proposed assignee
or sublessee 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 party's action
or use of the property in question or (iii) the proposed assignee or sublessee
is subject to an enforcement order issued by any governmental authority in
connection with the use, disposal or storage of a Hazardous Material, it shall
not be unreasonable for Landlord to withhold its consent to an assignment or
subletting to such proposed assignee or sublessee. Landlord may require a
written statement from the proposed assignee or sublessee attesting to such
matters.
7.6 ENVIRONMENTAL TESTS AND AUDITS. Tenant shall not perform or cause to
be performed any Hazardous Materials surveys, studies, reports or inspections,
relating to the Premises or Project, without obtaining Landlord's prior written
consent. At any time prior to the expiration of the Lease Term, if Landlord has
a reasonable basis to believe that Hazardous Materials are present in, on or
about the Premises in violation of any Hazardous Materials Laws, Landlord shall
have the right to enter upon the Premises in order to conduct appropriate tests
and to deliver to Tenant the results of such tests to demonstrate that levels of
any Hazardous Materials in
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excess of permissible levels has occurred as a result of Tenant's use of the
Premises. Such testing shall be at Tenants expense if Landlord has a
reasonable basis for suspecting and confirms the presence of Hazardous
Materials in the soil or surface or ground water in, on, under, or about the
Premises, or the Project which has been caused by or resulted from the
activities of Tenant, its agents, employees, contractors or invitees.
7.7 LEASE "AS IS". Subject to the express provisions of this Lease
(including the Work Letter), Tenant, in entering into this Lease, is leasing the
Premises "As Is" and is relying solely upon its own inspections, investigations
and analyses of the Premises relating to Hazardous Materials. Tenant further
acknowledges Tenant is not relying in any way upon any representations,
statements, warranties, studies, reports, or other information of Landlord or
its representatives, whether oral or written, of any nature whatsoever regarding
any Hazardous Materials.
7.8 SURVIVAL. The respective rights and obligations of Landlord and
Tenant under this Article 7 shall survive the expiration or termination of this
Lease. During any period of time employed by Tenant after the termination of
this Lease to complete the removal from the Premises or Project or remediation
of any such Hazardous Materials, Tenant shall continue to pay the full rental in
accordance with this Lease, which rental shall be prorated daily.
ARTICLE 8 -- UTILITIES
8.1 PAYMENT AND ARRANGEMENT. Tenant shall arrange for and pay, directly to
the appropriate supplier, the cost of all electric power, and telephone supplied
to the Premises. In the event the Premises are less than the entire Building,
and if any utilities to the Premises are jointly metered and such utilities are
not otherwise included as a Common Area Maintenance Charge, Landlord shall
determine, and Tenant shall pay, Tenant's share of the monthly costs of such
utilities. Tenants share shall be determined by the ratio of the Rentable
square footage of the Premises as compared to the Rentable square footage of all
the leased and occupied property within the Project subject to the common
metering. Landlord shall have the right to bill Tenant for such amounts on an
estimated basis, in which case, such estimated statements shall be delivered to
Tenant and Tenant shall pay such amounts to Landlord concurrently with its
payment of Base Monthly Rent. The Tenant shall pay such charges, as Rent,
within five (5) days of notification of the amount by the Landlord. Landlord
reserves the right to require Tenant to install and maintain, at Tenant's sole
expense, separate meters for any public utility servicing the Premises for which
a separate meter is not presently installed.
8.2 INTERRUPTION OF SERVICES AND UTILITIES. Except as set forth in
Articles 11 and 13, Landlord shall not be liable for, and Tenant shall not be
entitled to any reduction of, the Base Monthly Rent, Additional Rent or any
other Rent payable hereunder by reason of Landlord's failure to make available
any of the services or utilities described in this Lease, when such failure or
interruption is caused by acts of God, accident, breakage, repairs, strikes,
lockouts or other labor disturbances or disputes, necessary repairs,
installations, construction and expansion, nonpayment of utility charges due
from Tenant, or by reason of governmental regulation, statute, ordinance,
restriction or decree or any other similar cause. Notwithstanding the
foregoing, Landlord shall be responsible for the consequences of Landlord's own
negligence or intentional misconduct. Furthermore, unless due to Landlord's
negligence or intentional misconduct, Landlord shall not be liable under any
circumstances for a loss of, or injury to, property or for injury to, or
interference with, Tenant's business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the foregoing services or utilities. Tenant, as a
material part of the consideration to be rendered to Landlord, hereby waives all
claims against Landlord for the foregoing damages from any cause arising at any
time.
8.3 OPERATING HOURS. Normal operating hours for the Building and included
within the Operating Costs Allowance are 7:00 a.m. to 6:00 p.m. weekdays and
Saturday from 8:00 a.m. to 12:00 noon. Tenant shall be permitted
heating/ventilation/air conditioning ("HVAC") service at other hours for which
Tenant shall pay at a rate equal to twenty dollars ($20.00) per hour of usage
(subject to a reasonable adjustment based on actual design of the HVAC system
pursuant to the Work Letter), increased in proportion to the increase of the CPI
on each annual anniversary of the Lease Date. Landlord shall meter and Tenant
shall pay for such operation of the HVAC systems beyond the normal sixty hours
weekly usage on a quarterly basis.
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8.4 SECURITY SYSTEM. Landlord is installing as part of the Tenant
Improvements a security system for the Building, which security system shall be
maintained by Landlord as part of the Common Areas.
ARTICLE 9 -- PARKING AND CONTROL OF COMMON AREAS
9.1. CONTROL OF COMMON AREAS BY LANDLORD. All Common Areas, the Site
Amenities, and all automobile parking areas, driveways, entrances and exits
thereto, and other facilities furnished by Landlord in or near the Project shall
at all times be subject to the exclusive control and management of Landlord or
Landlord's designated agent. Landlord shall have the right to construct,
maintain and operate lighting facilities on all said areas and improvements; to
police the same; from time to time to change the area, level, location and
arrangement of parking areas and other facilities hereinabove referred to; to
reasonably restrict parking by tenants, their officers, agents and employees to
parking areas; to close all or any portion of said areas or facilities to such
extent as may, in the reasonable opinion of Landlord, be legally sufficient to
prevent a dedication thereof or the accrual of any rights to any person or the
public therein; to close temporarily all or any portion of the parking areas or
facilities, if necessary so long as reasonable prior arrangements for parking
are made with Tenant; to discourage non-customer parking; to convert such areas
into leasable areas; to construct additional parking facilities and to do and
perform such other acts in and to said areas and improvements as, in the use of
good business judgement, the Landlord shall determine to be advisable with a
view to the improvement of the convenience and use thereof by tenants, their
officers, agents, employees and customers, provided that such changes shall not
reduce the number of parking spaces below the number required as stated below.
No such change shall entitle Tenant to an abatement of Rent. Tenant will have
the nonexclusive use of not less than four (4) parking spaces per one thousand
(1,000) Usable square feet of the Premises in the Project.
9.2 LICENSE. All Common Areas are to be used and occupied under a license
which may be revoked by Landlord in the event of a default by Tenant and
termination of the Lease, and if any such license be revoked, or if the amount
of such areas be diminished, Landlord shall not be subject to any liability nor
shall Tenant be entitled to any compensation or diminution or abatement of Rent,
or shall such revocation or diminution of such areas be deemed constructive or
actual eviction.
ARTICLE 10 -- ALTERATIONS, IMPROVEMENTS AND SIGNAGE
10.1 CHANGES/ALTERATIONS. Tenant shall not make any alterations, additions,
or changes, including, without limitation, installation of any permanently
attached trade fixtures, exterior signs, exterior machinery, floor coverings,
interior or exterior lighting, plumbing fixtures, shades or awnings
(collectively "Alterations") in and to the Premises or any part thereof without
the prior written consent of Landlord which consent may be withheld in
Landlord's sole and absolute discretion; provided, however, that Tenant may make
nonstructural Alterations that do not affect the electrical, plumbing, heating,
ventilation, air conditioning or other systems of the Premises and that cost
less than five thousand dollars ($5,000) in any Lease Year without Landlord's
consent. Landlord shall respond to Tenant's request for approval to make
Alterations which cost up to Ten Thousand Dollars ($10,000.00) within five (5)
Business Days, and for Alterations which cost in excess of Ten Thousand Dollars
($10,000.00), Landlord shall respond within fifteen (15) Business Days. Any
construction undertaken in or to the Premises shall be performed in accordance
with this Article and the other obligations of this Lease
10.2 MANNER OF CONSTRUCTION.
10.2.1 CONDITIONS TO CONSENT. Landlord may impose, as a condition
of its consent to any Alterations or repairs on or about the Premises, such
requirements as Landlord in its reasonable discretion may deem desirable,
including, but not limited to, the requirements that Tenant obtain bonds and
that Tenant utilize for such purposes only contractors, materials, mechanics and
materialmen approved by Landlord, in its sole discretion. Tenant shall
construct such Alterations or repairs in strict conformance with any and all
applicable rules and regulations of Landlord and any federal, state, county or
municipal code or ordinance and pursuant to a valid building permit, issued by
the local government entity, and obtained at Tenant's sole cost and expense.
All fixtures installed by Tenant shall be new.
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10.2.2 COST. In any event, a licensed contractor approved by
Landlord shall perform all mechanical, electrical, plumbing, air conditioning,
permanent partition and ceiling tile work, and such work shall be performed at
Tenant's cost. If Landlord's consent is required, Landlord reserves the right
to approve, in Landlord's reasonable discretion, the contractor selected by
Tenant for the completion of any Alterations. In the event Tenant orders any
construction, alteration, decorating or repair work and fails to pay amounts
when due to the contractor or contractors in connection with such items,
Landlord, without any obligation to do so, may pay any such amounts directly to
such contractor or contractors (with a notice to Tenant of such payment) and the
amounts paid by Landlord shall be deemed Rent under this Lease, payable upon
billing therefor.
10.2.3 GOOD AND WORKMANLIKE MANNER. All work with respect to any
Alterations or repairs must be done in a good and workmanlike manner and
diligently prosecuted to completion to the end that the Premises shall at all
times be a complete unit except during the period of work. Upon completion of
any Alterations, Tenant agrees to deliver to the Landlord's management office a
copy of the "as built" drawings of the Alterations and record any necessary
notices to evidence completion. In performing the work of any such Alterations,
Tenant shall have the work performed in such manner as not interfere with or to
obstruct the access to the Common Area and to any other tenant of the Project.
10.3 CONSTRUCTION INSURANCE. Whether or not Landlord's consent is required,
Tenant agrees to obtain, carry and deliver to Landlord prior to the commencement
of any Alterations and maintain in effect until completion of all Alterations
"Builder's All Risk" insurance in an appropriate amount covering the
construction of such Alterations, and such other insurance as Landlord may
require, it being understood and agreed that all of such Alterations shall be
insured by Tenant pursuant to Section 11.2 of this Lease immediately upon
completion thereof.
10.4 LIENS. Tenant shall keep the Premises and the Project free from any
mechanics', materialmen's, designer's or other liens arising out of any work
performed, materials furnished or obligations incurred by or for Tenant or any
person or entity claiming by, through or under Tenant. If any such liens are
filed and are not released of record by payment or posting of a proper bond
within ten (10) days after such filing, Landlord may, without waiving its rights
and remedies based on such breach by Tenant and without releasing Tenant from
any obligations hereunder, cause such liens to be released by any means it shall
deem proper, including payment of the claim giving rise to such lien, in which
event all amounts paid by Landlord shall immediately be due and payable by
Tenant as Rent. Tenant hereby indemnifies, protects, defends (with legal
counsel acceptable to Landlord) and holds Landlord and Landlord's Indemnitees,
the Premises and the Project harmless from any liability, cost, obligation,
expense (including, without limitation, reasonable attorneys' fees and
expenses), or claim of any mechanics', materialmen's, design professional's or
other liens in any manner relating to any work performed, materials furnished or
obligations incurred by or for Tenant or any person or entity claiming by,
through or under Tenant. Whether or not Landlord's consent is required, Tenant
shall notify Landlord in writing within fifteen (15) days prior to commencing
any Alterations so that Landlord shall have the right to record and post notices
of non-responsibility or any other notices deemed necessary by Landlord on the
Premises.
10.5 SIGNAGE. As an Alteration, Tenant may request signage at locations
acceptable to Landlord. Any such signage shall be at Tenant's sole cost and
expense and subject to the requirements of all government agencies with
jurisdiction over the Project, and the Declarations. Tenant shall use a signage
company acceptable to Landlord. Tenant shall pay all costs of Landlord
associated with installing such signage within ten (10) days of receiving an
invoice from Landlord setting forth such costs. All such signage shall be
subject to Landlord's specifications and approval as to size, graphics and
style, which approval may be withheld in Landlord's reasonable discretion.
ARTICLE 11 -- INSURANCE AND INDEMNITY
11.1 INSURANCE TO BE OBTAINED BY LANDLORD.
11.1.1 FIRE AND CASUALTY INSURANCE. Landlord shall maintain during
the Lease Term a policy or policies of insurance insuring the Premises and the
Common Area and, at Landlord's election, other portions of the Project, against
all direct physical loss or damage, whether due to fire or other casualties
covered within the classification of fire and extended coverage, vandalism
coverage and malicious mischief, sprinkler leakage, water damage and special
extended coverage. Such coverage shall be for full replacement value, and may
include, at the
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option of Landlord, the risks of earthquakes and/or flood damage and
additional hazards, a rental loss endorsement and one or more loss payee
endorsements in favor of the holders of any mortgages or deeds of trust
encumbering the interest of Landlord in all or any portion of the Project or
the interest of any ground or underlying lessors in the Project. The costs
of such insurance shall be included as a component of the Common Area
Maintenance Charges.
11.1.2. LIABILITY INSURANCE. Landlord shall maintain a commercial
general liability insurance policy, or an equivalent, written on an occurrence
form that includes personal injury coverage, bodily injury, death, property
damage, and advertising injury coverage, insuring against liability arising out
of the ownership, use, or maintenance of the Common Area or the Project. The
initial amount of such insurance shall be two million dollars ($2,000,000) each
occurrence/three million dollars ($3,000,000) general aggregate on a per
location basis and two million dollars ($2,000,000) for personal injury and
advertising injury coverage. Landlord may also obtain umbrella coverage up to
ten million dollars ($10,000,000). The costs of all such insurance shall be
included as part of the Common Area Maintenance Charges.
11.2 INSURANCE TO BE OBTAINED BY TENANT.
11.2.1 LIABILITY INSURANCE. During the Lease Term, Tenant shall,
at Tenant's expense, maintain a commercial general liability insurance policy,
or an equivalent, written on an occurrence form that includes personal injury
coverage, bodily injury, death, property damage, advertising injury coverage and
contractual liability coverage including Tenant's indemnity obligations under
this Lease, insuring against liability arising out of the ownership, use,
occupancy or maintenance of the Premises, and the business operated by Tenant
and any subtenants or licensees of Tenant in the Premises. The initial amount
of such insurance shall be three million dollars ($3,000,000.00) each
occurrence/five million dollars ($5,000,000.00) general aggregate on a per
location basis and three million dollars ($3,000,000.00) for personal injury and
advertising injury coverage. If alcohol will be served from or in the Premises,
such coverage shall contain endorsements deleting any liquor liability exclusion
and adding a liquor liability endorsement.
11.2.2 INSURANCE OF PERSONAL PROPERTY. Tenant shall at all times
during the Lease Term, and at its own expense, maintain a policy or policies of
standard fire, extended coverage and special extended coverage insurance ("All
Risks") with extended coverage in the name of the Tenant, and naming Landlord as
an additional insured, in an amount adequate to cover the cost of replacement of
all trade fixtures, alterations, decorations, inventory additions or
improvements, and all plate and tempered glass within the Premises, made to the
Premises by Tenant or by Landlord on Tenant's behalf in the event of fire or
extended coverage loss in an amount equal to the full replacement value.
Notwithstanding such insurance coverage by Tenant for plate glass, Landlord may
replace, at the expense of Tenant, any and all plate and other glass, frames or
glazing damaged or broken from any cause whatsoever in and about the Premises.
11.2.3. ADDITIONAL INSURANCE OBLIGATIONS. Landlord may reasonably
require Tenant to increase the amounts of coverage and/or to maintain additional
coverage based on insurance coverages and amounts maintained by lessees of
similar space in San Diego County.
11.3 WAIVER OF SUBROGATION. Landlord and Tenant each hereby waive any and
all rights of recovery against the other or against the officers, employees,
agents and representatives of the other, on account of loss or damage occasioned
to such waiving parry or its property or the property of others under its
control, to the extent that such loss or damage is insured against under any
fire and extended coverage insurance policy which either may have in force at
the time of such loss or damage or under the insurance policies required to be
maintained under this Article. Landlord and Tenant shall, if required, for each
of the policies of insurance required under this Lease, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.
11.4 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall: (i) be an occurrence policy (or
policies); (ii) name Landlord, the Project or Building manager or managers, and
any other party having an interest in the Project as an additional insured;
(iii) be issued by an insurance company having a General Policyholders Rating of
B+ or better and a financial size of "VI" or better, as set forth in the most
current issue of Best's Rating Guide, or which is otherwise acceptable to
Landlord and licensed to do business in California; (iv) be
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primary insurance as to all claims thereunder and provide that any insurance
carried by Landlord is excess and noncontributing with any insurance required
of Tenant, (v) provide that said insurance shall not be canceled or coverage
changed unless thirty (30) days prior written notice shall have been given
to Landlord and any mortgagee of Landlord's; and (vi) with respect to the
liability insurance described in Section 11.2.1, contain a cross-liability
endorsement or severability of interest clause reasonably acceptable to
Landlord. Any insurance policies required hereunder may be part of a blanket
policy with a "per project, per location" endorsement so long as such blanket
policy contains all provisions required hereby and does not reduce the
coverage, impair the rights of either party or negate the requirements of
this Lease. Tenant shall deliver said policy or policies or certificates
thereof (at Tenant's election), together with any endorsements reflecting the
changes to the policy required to comply with the requirements of this Lease,
to Landlord on or before the Commencement Date and at least ten (10) days
before the expiration date of such policies. In the event Tenant shall fail
to procure such insurance, or to deliver such policies or certificates (at
Tenant's election) and appropriate endorsements, Landlord may, at its option,
procure such policies for the account of Tenant, and the cost thereof plus a
ten percent (10%) handling charge shall be paid by Tenant to Landlord as
Additional Rent within five (5) days after delivery to Tenant of bills
therefor.
11.5 INDEMNIFICATION.
11.5.1 INDEMNIFICATION OF LANDLORD. To the fullest extent permitted
by law, Tenant shall indemnify, protect, defend (with legal counsel acceptable
to Landlord) and save Landlord and Landlord's Indemnitees harmless from and
against any and all claims, actions, damages, liabilities and expenses,
including attorneys' fees, in connection with loss of life, personal injury,
bodily injury and/or damage to property arising from or out of any occurrence
in, upon or about the Premises, and/or the Project or any part thereof, or the
occupancy or use by Tenant of the Premises and/or Project or any part thereof,
or occasioned wholly or in part by any act or omission of Tenant, its agents,
contractors, employees, servants, tenants or concessionaires, except to the
extent caused by Landlord's negligence or willful misconduct. Tenant shall
further indemnify, defend, protect and hold Landlord and Landlord's Indemnitees
harmless from and against any and all claims arising from any breach or default
in performance of any obligation on Tenant's part to be performed under the
terms of this Lease, or arising from any act, neglect, fault or omission of
Tenant or its agents, contractors, employees, servants, tenants or
concessionaires, and from and against all costs, attorneys' fees, expenses and
liabilities incurred in connection with such claim or any action or proceeding
brought thereon. In case any action or proceeding shall be brought against
Landlord by reason of any such claim, Tenant, upon notice from Landlord, shall
defend the same at Tenant's expense by counsel approved in writing by Landlord.
Tenant, as a material part of the consideration to Landlord, hereby assumes all
risk of damage to property or injury to persons in, upon or about the Premises
from any cause whatsoever except Landlord's negligence or intentional
misconduct. Subject to the terms hereof, Tenant hereby waives all its claims in
respect thereof against Landlord.
11.5.2 LANDLORD'S NONLIABILITY. Landlord shall not be liable for
injury or damage which may be sustained by a person, goods, wares, merchandise,
or other property of Tenant, or Tenant's employees, invitees, customers, or of
any other person in or about the Premises caused by or resulting from any peril
which may affect the Premises, including, without limitation, fire, steam,
electricity, gas, water, or rain which may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction, or other defects of
the pipes, sprinklers, wires, appliances, plumbing, air conditioning, or
lighting fixtures of the Premises, whether such damage or injury results from
conditions arising upon the Premises or upon other portions of the Project or
from other sources. Landlord shall not be liable for any damages arising from
any act or neglect of: (a) any other tenant or occupant of the Project; or (b)
any officer, employee, agent, representative, customer, business visitor, or
invitee of any such tenant. Notwithstanding the foregoing, nothing contained in
this Lease shall operate to relieve Landlord of the consequences of its own
negligence or willful misconduct or the negligence or willful misconduct of its
agents or employees. Also notwithstanding the foregoing, in the event of any
interruption of the services and utilities described in Section 8.2 above or the
services described hereinabove, where such interruption is caused by the gross
negligence or the willful misconduct of Landlord, Tenant shall be entitled to an
abatement of Rent in proportion to the reasonable denial of use caused by such
interruption. Such abatement of Rent shall be begin on the later of (i) the
third (3rd) day after Tenant provides Landlord notice of such interruption, or
(ii) the date Tenant stops using the affective portion of the Premises because
of such interruption. Such abatement of Rent shall continue until the
restoration of the interrupted service. Tenant acknowledges that any and all
such services supplied by Landlord may be interrupted because of accidents,
repairs alterations, improvements or other reasons beyond the reasonable
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control of Landlord. No such interruption shall be consideredan eviction or
disturbance of Tenant's use or possession of the Premises, make Landlord
liable to Tenant for damages, abate Rent (except as aforesaid), or relieve
Tenant from performing its obligations under this Lease.
11.5.3 INDEMNIFICATION OF TENANT. To the fullest extent permitted
by law, Landlord shall indemnify, protect, defend (with legal counsel acceptable
to Tenant) and save Tenant and Tenant's Indemnitees harmless from and against
any and all claims, actions, damages, liabilities and expenses, including
attorneys' fees, in connection with loss of life, personal injury, bodily injury
and/or damage to property arising from or out of any occurrence in, upon or
about the Premises, Building and/or Project and due to the negligence or willful
misconduct of Landlord. Except as otherwise set forth in this Lease, and
subject to Section 11.5.2 above, Landlord shall further indemnify, defend,
protect and hold Tenant and Tenant's Indemnitees harmless from and against any
and all losses, expenses and damages arising from any breach or default in
performance of any obligation on Landlord's part to be performed under the terms
of this Lease.
ARTICLE 12 -- ASSIGNMENT AND SUBLETTING
12.1 LANDLORD'S CONSENT REQUIRED.
12.1.1 TRANSFER. Tenant shall not either voluntarily or by
operation of law, assign, mortgage, pledge, hypothecate or encumber this Lease
or the leasehold interest created hereby or any interest herein, or sublet the
Premises or any portion thereof, or license the use of all or any portion of the
Premises or permit any other person to occupy or use the Premises or any portion
thereof (collectively referred to herein as a "Transfer"), without the prior
written consent of Landlord, which consent is subject to the following
conditions: (i) the proposed transferee's use of the Premises must be consistent
with Article 6 hereof; (ii) the transferee is of a character and engaged in a
business which is in keeping with the Landlord's standards for the Project;
(iii) the proposed Transfer must not breach any financing agreement or any other
agreement relating to the Project; (iv) the net worth of the proposed transferee
must be sufficient to discharge the obligation under this Lease (in Landlord's
reasonable judgment); and (v) subject to Landlord not having available space in
the Project for such proposed transferee, the proposed transferee must not be an
existing tenant in the Project.
12.1.2 PROCEDURE. Prior to a Transfer, Tenant shall request
Landlord's consent in writing, and shall include with such request a copy of
all proposed contracts, agreements, subleases, or other documents describing
the Transfer between Tenant and the proposed transferee. Landlord shall
respond to Tenant's request for consent to a proposed Transfer within thirty
(30) days after receipt of all information described above and reasonably
necessary to allow Landlord to evaluate all the conditions set forth in
Section 12.1.1 above. If Tenant hereunder is a corporation or is an
unincorporated association or partnership, then the transfer, assignment or
hypothecation of any stock or interest in such corporation, association or
partnership in the aggregate in excess of twenty-five percent (25%) shall be
deemed a Transfer under the meaning of this Article 12 (other than normal
bulk transactions of publicly held stock).
12.1.3 PERMITTED TRANSFERS. Notwithstanding the foregoing,
Landlord's prior written consent shall not be required for a Transfer to a
wholly owned subsidiary or a parent of Tenant or to a new entity created by
merger or consolidation (collectively, "Affiliate") or to an entity which
acquires all or substantially of Tenant's assets. Any such transfer is a
"Permitted Transfer" provided, however, that in all events all requirements
of this Lease (including, but not limited to Section 16.5) shall remain
applicable. Promptly upon a Permitted Transfer, Tenant shall deliver written
notice to Landlord thereof
12.1.4 PUBLIC OFFERINGS. Notwithstanding the foregoing, Landlord's
prior written consent shall not be required for a Transfer in connection with
any public offering of Tenant's stock or any other Transfer to any entity that
is a public company. Promptly upon a Transfer in connection with a public
offering of Tenant's stock or a transfer to an entity that is a public company,
Tenant shall deliver written notice to Landlord thereof.
12.2 RECAPTURE RIGHT. In lieu of giving or withholding consent pursuant to
Section 12.1, Landlord may, at its option, terminate this Lease (or in the case
of a proposed subletting or assignment of a portion of the Premises, elect to
terminate this Lease as respects that portion) upon thirty (30) days' prior
notice. Thereafter
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Landlord may enter into a lease agreement with such proposed transferee and
shall be entitled to all of the Profit related thereto. If Landlord does
elect to terminate this Lease as set forth in this Section 12.2 such
termination shall not in and of itself require Tenant to deliver the Tenant's
Termination Payment (as described in Section 3.6.2 above). If Landlord has
terminated the Lease as to a portion of the Premises and thereafter Tenant
elects to terminate this Lease pursuant to the terms of Section 3.6, Tenant's
Termination Payment shall be proportionate to the Rentable Square Footage of
the Premises still occupied by Tenant and subject to this Lease at the time
Tenant delivers the Tenant's Termination Notice. In consideration for
Landlord's right and election to terminate this Lease as set forth above,
Landlord will release Tenant from liability under this Lease for Base Monthly
Rent and Additional Rent with respect to the Premises (or the portion of the
Premises subject to the proposed Transfer) accruing after termination of this
Lease resulting from Landlord's exercise of such right. Landlord and Tenant
agree and acknowledge that Landlord's right to recapture as set forth above
is intended to permit Landlord to maintain control over the leasing of space
in the Project to protect its interest in the Project and the interest of any
lenders and to prevent such interest from being impaired. Tenant understands
the nature of this right and has approved the recapture provisions in
consideration for Landlord's agreement to release Tenant from liability for
future Rent due with respect to the recaptured portion of the Premises
pursuant to the provisions of this Section.
12.3 TRANSFER WITHOUT CONSENT. Any Transfer without Landlord's prior
written consent shall, at the option of the Landlord, constitute a non-curable
breach of this Lease.
12.4 NO RELEASE OF TENANT. No Transfer shall release Tenant or any
guarantor or change Tenant's primary liability to pay the Rent and to perform
all other obligations of Tenant under this Lease. Landlord's acceptance of Rent
from any other person is not a waiver of any provision of this Article 12.
Consent to one Transfer is not a consent to any subsequent Transfer. If
Tenant's transferee defaults under this Lease, Landlord may proceed directly
against Tenant without pursuing remedies against the transferee and without
releasing such transferee from its obligations under this Lease. Landlord may
consent to subsequent assignments or modifications of this Lease by Tenant's
transferee, without notifying Tenant or obtaining its consent. Such action
shall not relieve Tenant's liability under this Lease.
12.5 EFFECT OF A TRANSFER. Whether or not Landlord's consent is required,
the transferee shall agree to comply with and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease to the extent or
the space transferred, assigned or sublet; and Tenant shall deliver to Landlord
promptly after execution an executed copy of each such Transfer document between
Tenant and the transferee. In addition, any sublease shall provide that it
shall be subject and subordinate to this Lease and to all mortgages; that
Landlord may enforce the provisions of the sublease, including collection of
rents and that in the event of termination of this Lease for any reason,
including without limitation, a voluntary surrender by Tenant, or in the event
of any reentry or repossession of the Premises by Landlord, Landlord may, at its
option, either (i) terminate the sublease, or (ii) take over all of the right,
title and interest of Tenant, as sublessor, under such sublease, in which case
such sublessee shall attorn to Landlord but in such event Landlord shall not (a)
be liable for any previous act or omission of Tenant under such sublease, (b) be
subject to any defense or offset previously accrued in favor of the sublessee
against Tenant, or (c) be bound by any previous modification of any sublease
made without Landlord's written consent, or by any previous prepayment by
sublessee of more than one month's rent.
12.6 EVENT OF BANKRUPTCY. If this Lease is assigned to any person or entity
pursuant to the provisions of the United States Bankruptcy Code, 11 U.S.C.
Section 101, et. seq. (the "Bankruptcy Code"), any and all monies or other
consideration payable or otherwise to be delivered in connection with such
assignment shall be paid or delivered to Landlord, shall be and remain the
exclusive property of Landlord, and shall not constitute the property of Tenant
or of the estate of Tenant within the meaning of the Bankruptcy Code. Any and
all monies or other considerations constituting Landlord's property under this
Section not paid or delivered to Landlord shall be held in trust for the benefit
of Landlord and shall be promptly paid or delivered to Landlord. Any person or
entity to which this Lease is assigned pursuant to the provisions of the
Bankruptcy Code shall be deemed without further act or deed to have assumed all
of the obligations arising under this Lease on and after the date of such
assignment.
12.7 NO MERGER. No merger shall result from Tenant's sublease of the
Premises under this Article l2, Tenant's surrender of this Lease or the
termination of this Lease in any other manner.
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12.8 ASSIGNMENT FEES AND PROCEDURES. In the event Landlord shall be
requested to consent to a Transfer, Tenant shall pay Landlord a reasonable fee
to reimburse Landlord for costs and expenses, including attorneys' fees,
incurred in connection with reviewing Tenant's request for consent.
ARTICLE 13 -- DAMAGE OR DESTRUCTION
13.1 REPAIR OF DAMAGE BY LANDLORD. Tenant agrees to promptly notify
Landlord in writing of any damage to the Premises resulting from fire,
earthquake or any other casualty (such events referred to collectively as
"Casualty"). If the Premises, or any common areas of the Building providing
access to the Premises (such that Tenant does not have reasonable access to the
Premises) shall be damaged by a Casualty, Landlord shall, as soon as possible
using diligent efforts but in no event later than sixty (60) days after the date
of the Casualty, provide written notice to Tenant indicating the anticipated
time period for repairing the Casualty (the "Repair Period Notice"). In the
event the Repair Period Notice indicates that the time period for repairing the
Casualty is estimated to exceed two hundred seventy (270) days from the date of
the Repair Period Notice, Landlord (pursuant to the provisions of Section 13.3
below) or Tenant may elect to terminate this Lease ("Tenant's Termination
Election"). Such election must be made by Tenant within sixty (60) days after
the receipt of the Repair Period Notice or will be deemed waived by Tenant. If
Tenant elects to terminate the Lease, the termination shall be effective thirty
(30) days after Landlord's receipt of Tenant's Termination Election. If the
Repair Period Notice indicates that the time period for repairing the Casualty
is estimated to not exceed two hundred seventy (270) days from the date of the
Repair Period Notice, or if Tenant does not exercise Tenant's Termination
Election as provided above, then subject to the other provisions of this
Article, Landlord will repair the damage pursuant to the provisions hereof. If
Landlord is obligated to or elects to repair the Casualty as provided herein,
Landlord agrees to promptly and diligently, subject to reasonable delays for
insurance adjustment and other matters beyond Landlord's reasonable control, and
subject to the other provisions of this Article, restore the Premises and the
Tenant Improvements originally constructed by Landlord to substantially the same
condition as existed prior to the Casualty, except for modifications required by
building codes and other laws, and any other modifications to the common areas
deemed desirable by Landlord provided that access to the Premises shall not
thereby be materially impaired. If Tenant requests that Landlord make any
modifications to the Tenant Improvements in connection with the rebuilding,
Landlord may condition its consent to such modifications on (i) Tenant's payment
to Landlord prior to commencement of construction of any sums necessary to
complete the Tenant Improvements in excess of the amount of insurance proceeds
received by Landlord and (ii) confirmation by Landlord's architect that the
modifications will not increase the scope of work or time period necessary to
complete the Tenant Improvements.
13.2 RENT ABATEMENT DUE TO CASUALTY. Landlord and Tenant agree and
acknowledge that Tenant shall be provided with full abatement of Rent during the
time period commencing on the last to occur of (i) the date of the Casualty or
(ii) the date Tenant ceases to enjoy the substantial benefit of the Premises,
and continuing until Substantial Completion of Landlord's restoration
obligations as provided herein ("Abatement Period"), provided that if Tenant is
only able to occupy a portion of the Premises and receive the substantial
benefit of such portion for Tenant's uses of the Premises, Rent shall be abated
during the Abatement Period for the portion of the Premises not occupied by
Tenant. Landlord and Tenant acknowledge and agree that the Rent abatement as
provided in this Section is Tenant's sole remedy due to the occurrence of the
Casualty and that Landlord shall not be liable to Tenant or any other person for
any direct, indirect or consequential damage (including, but not limited to,
lost profits of Tenant or loss of or interference with Tenant's business, or
otherwise), whether or not caused by the negligence of Landlord or Landlord's
employees, contractors, licensees, or invitees, due to or arising out of or as a
result of the Casualty (including but not limited to the termination of the
Lease in connection therewith). Tenant acknowledges and agrees that Tenant
shall maintain adequate business interruption insurance to provide coverage as
to such matters.
13.3 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section 13.1
of this Lease, Landlord may elect not to rebuild and/or restore the Premises
and/or Building and to instead terminate this Lease by notifying Tenant in
writing of such termination within sixty (60) days after the date of the
Casualty in the event the Building shall be damaged by Casualty (whether or not
the Premises are affected) when one or more of the following conditions exists:
(i) Landlord determines that the time period for repair will exceed two hundred
seventy (270) days as provided in Section 13.1 above; (ii) the damage is not
fully covered, except for deductible amounts, by insurance required to be
carried by Landlord under the terms of this Lease; (iii) the holder of the
mortgage on the Building or
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ground lessor with respect to the Project requires that the insurance
proceeds or a portion thereof be used to retire the mortgage debt, or
terminates the ground Lease, as the case may be; or (iv) Landlord elects not
to rebuild the Building for any reason, provided that in connection with such
election Landlord also terminates all other leases in the Building.
13.4 DAMAGE NEAR END OF TERM. In the event that the Premises or more than
twenty-five percent (25%) of the rentable area of the Building is destroyed or
damaged by a Casualty during the last two (2) years of the Lease Term,
notwithstanding anything else contained in this Article, Landlord shall have the
option to terminate this Lease by giving written notice to Tenant of the
exercise of such option within thirty (30) days after such damage or
destruction, in which event this Lease shall cease and terminate as of the date
of the notice. In such event or in the event of a termination pursuant to the
other provisions of this Article, Tenant shall pay Rent, properly apportioned up
to the date of the Casualty, and both parties shall thereafter be freed and
discharged of all future obligations hereunder, except for any provisions of
this Lease which by their terms survive the expiration or earlier termination of
the Lease Term.
13.5 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 13, constitute an express agreement between Landlord and
Tenant with respect to the occurrence of any Casualty to the Premises and/or
Building or any other portion of the Project and Tenant therefore fully waives
the provisions of any statute or regulation, including, without limitation,
Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any
rights or obligations concerning a Casualty.
ARTICLE 14 CONDEMNATION
14.1 TOTAL CONDEMNATION. If the whole of the Premises shall be acquired or
condemned by eminent domain for any public or quasi-public use or purpose, then
the Lease Term shall cease and terminate as of the date of title vesting in such
proceeding and all rentals shall be paid up to that date.
14.2 PARTIAL CONDEMNATION. If any part of the Premises shall be acquired or
condemned by eminent domain for any public or quasi-public use or purpose, and
if such partial taking or condemnation renders the Premises reasonably
unsuitable for the business of the Tenant, then Tenant shall have the right to
terminate the Lease Term as of the date of title vesting in such proceeding by
delivering written notice thereof to Landlord within thirty (30) days after
Tenant becomes aware of the proposed condemnation. In the event of a partial
taking or condemnation which is not extensive enough to render the Premises
unsuitable for the business of the Tenant then this Lease shall continue in full
force and effect.
14.3 CONDEMNATION OF PARKING AREA. If the whole or any part of the parking
area in the Project shall be acquired or condemned by eminent domain for any
public or quasi-public use or purpose and if, as the result of such partial
taking, the ratio of the number of parking stalls does not conform to the
parking requirements of this Lease ("Parking Restrictions"), in effect at the
time that title to such parking area is acquired through such condemnation
process, then at Tenant's option the Lease Term shall cease and terminate from
the date of title vesting in such proceeding unless Landlord provides
substantially equal parking facilities in the vicinity of the Project within
sixty (60) days after the date of acquisition and such alternative parking
satisfies the requirements of the Parking Restrictions. If the Lease is not
terminated as aforesaid, the Lease shall be deemed amended to conform to the
Project remaining after such condemnation.
14.4 DISTRIBUTION OF CONDEMNATION AWARD. Any condemnation award or payment
shall be distributed in the following order: (a) first, to any ground lessor,
mortgagee or beneficiary under a deed of trust encumbering the Premises, the
amount of its interest in the Premises; (b) second, to Tenant, only the amount,
if any, of any award specifically designated for loss of or damage to Tenant's
movable trade fixtures or removable personal property and/or Tenant Work, and
the Tenant hereby assigns any other rights which the Tenant may have now or in
the future to any other award to the Landlord; and (c) third, to Landlord, the
remainder of such award, whether as compensation for reduction in the value of
the leasehold, the taking of the fee, or otherwise. In no event shall Tenant
have any claim against Landlord for the value of any unexpired term of this
Lease. If this Lease is not terminated, Tenant shall be entitled to abatement
of rent in same manner as set forth in Section 13.2 above and
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Landlord shall repair any damage to the Premises caused by the condemnation,
except that Landlord shall not be obligated to repair any damage for which
Tenant has been reimbursed by the condemning authority.
14.5 WAIVER. Tenant hereby waives any statutory rights of termination
which may arise by reason of any taking of the Premises under the power of
eminent domain including, without limitation, the provisions of Section 1265.130
of the California Code of Civil Procedure.
ARTICLE 15 -- DEFAULTS; REMEDIES
15.1 COVENANTS AND CONDITIONS. Tenant's performance of each of Tenant's
obligations under this Lease is a condition as well as a covenant. Tenant's
right to continue in possession of the Premises is conditioned upon such
performance. Time is of the essence in the performance of all covenants and
conditions.
15.2 DEFAULT BY TENANT. Tenant shall be in default under this Lease if
Tenant breaches its obligations hereunder and fails to cure such breach within
the period set forth herein, except that there shall be no cure period for
breaches of Sections 15.2.3 and 15.2.4, and the cure period for breaches of
Section 15.2.2 shall be the minimum mandated by California statute. Tenant
shall be in breach of its obligations under this Lease:
15.2.1 If Tenant abandons or vacates the Premises;
15.2.2 If Tenant fails to pay Base Monthly Rent, Additional Rent or
any Rent required to be paid by Tenant, for a period of five (5) days after
written notice from Landlord (such notice required by this subsection is
intended to satisfy any and all notice requirements imposed by law on Landlord
prior to the commencement of an unlawful detainer action and is not in addition
to any such requirement);
15.2.3 If Tenant fails or refuses to occupy and operate the
Premises in accordance with Article 6 for a period of ten (10) days after
written notice from Landlord (such notice required by this subsection is
intended to satisfy any and all notice requirements imposed by law on Landlord
prior to the commencement of an unlawful detainer action and is not in addition
to any such requirement),
15.2.4 If (i) Tenant's use of the Premises involves the generation
or storage, use, treatment or disposal of Hazardous Material in a manner or for
a purpose prohibited by any Hazardous Materials Law; (ii) Tenant has been
required by any lender or governmental authority to take remedial action in
connection with Hazardous Material contaminating the Premises if the
contamination resulted from Tenant's action or use of the Premises; or (iii)
Tenant is subject to an enforcement order issued by any governmental authority
in connection with the use, disposal or storage of a Hazardous Material on the
Premises.
15.2.5 If Tenant fails to perform any of Tenants nonmonetary
obligations under this Lease (other than Tenant's obligations under Sections
15.2.3, 15.2.4 and 15.2.6 for which there will be no additional cure periods)
for a period of ten (10) days after written notice from Landlord; provided that
if such cure is not reasonably susceptible of being cured within such ten (10)
day period, Tenant shall not be in default if Tenant commences such performance
within the ten (10) day period and uses its best efforts and due diligence to
promptly cure the default. However, Landlord shall not be required to give such
notice if Tenant's failure to perform constitutes a non-curable breach of this
Lease. The notice required by this Section is intended to satisfy any and all
notice requirements imposed by law on Landlord prior to the commencement of an
unlawful detainer action and is not in addition to any such requirement;
15.2.6 If (i) Tenant makes a general assignment or general
arrangement for the benefit of creditors; (ii) Tenant files a petition for
adjudication of bankruptcy or for reorganization or rearrangement or any similar
proceeding; (iii) a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed against Tenant and is not dismissed
within forty-five (45) days; (iv) a trustee or receiver is appointed to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease and possession is not restored to Tenant within
forty-five (45) days; or (v) substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease is subjected to attachment,
execution or other judicial seizure which is not discharged within forty-five
(45) days. If a court of competent jurisdiction determines that any of the
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acts described in this subsection is not a default under this Lease, and a
trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the difference between the
Rent (or any other consideration) paid in connection with such assignment or
sublease and the Rent payable by Tenant hereunder.
15.3 REMEDIES. On the occurrence of any default by Tenant, Landlord may,
at any time thereafter, with or without notice or demand and without limiting
Landlord in the exercise of any right or remedy which Landlord may have:
15.3.1 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 event
Landlord shall have the immediate right to re-enter the Premises and remove all
persons and property and such property may be removed and stored in a public
warehouse or elsewhere at the cost of, and for the account of Tenant; and
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including (i) the worth at the time of
the award of all Base Monthly Rent, Additional Rent and other charges which were
earned or were payable at the time of the termination; (ii) the worth at the
time of the award of the amount by which the unpaid Base Monthly Rent,
Additional Rent and other charges which would have been earned or were 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 Base Monthly Rent,
Additional Rent and other charges which would have been payable for the balance
of the term after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; and (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, including, but
not limited to, any costs or expenses incurred by Landlord in maintaining or
preserving the Premises after such default, the cost of recovering possession of
the Premises, expenses of resetting, including, without limitation, necessary
renovation or alteration of the Premises, Landlord's reasonable attorneys' fees,
and any real estate commissions or other such fees paid or payable. Any such
sums which are based on percentages of income, increased costs or other data
shall be reasonable estimates or projections computed by Landlord on the basis
of the amounts thereof accruing during the twenty-four (24) month period
immediately prior to the default, except that if it becomes necessary to compute
such sums before a twenty-four (24) month period has expired, then the
computation shall be made on the basis of the amounts accruing during such
shorter period. As used in subsections (i) and (ii) above, the "worth at the
time of the award" is computed by allowing interest on unpaid amounts at the
rate of fifteen percent (15%) per annum, but if such rate exceeds the maximum
interest rate permitted by law, such rate shall be reduced to the highest rate
allowed by law under the circumstances. As used in subsection (iii) above, the
"worth at the 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 shall have abandoned the Premises,
Landlord shall have the option of (a) retaking possession of the Premises and
recovering from Tenant the amount specified in this Section 15.3.1, or (b)
proceeding under Section 15.3.2 below;
15.3.2 Maintain Tenant's right to possession, in which case this
Lease shall continue in effect whether or not Tenant shall have abandoned the
Premises. This remedy is intended to be that remedy described in California
Code of Civil Procedure Section 1951.4. In such event, Landlord shall be
entitled to enforce all of Landlord's rights and remedies under this Lease,
including the right to recover the Rent as it becomes due hereunder; and/or
15.3.3 Whether or not Landlord elects to terminate this Lease on
account of any default by Tenant, Landlord shall have all rights and remedies at
law or in equity including, but not limited to, the right to re-enter the
Premises, and Landlord shall have the right to terminate any and all subleases,
licenses, concessions or other arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the Rent or other consideration receivable thereunder.
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15.4 THE RIGHT TO RELET THE PREMISES. Should Landlord elect to re-enter,
as herein provided, or should take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either terminate this Lease
or it may from time to time without terminating this Lease, make such
alterations and repairs as may be necessary in order to relet the Premises, and
relet said Premises or any part thereof for such term or terms (which may be for
a term extending beyond the Lease Term) and at such rental or rentals and upon
such other terms and conditions as Landlord in its sole discretion may deem
advisable; upon each such reletting all rentals received by the Landlord from
such reletting shall be applied, first, to the repayment of any indebtedness
other than Rent due hereunder from Tenant to Landlord; second, to the payment of
any costs and expenses of such reletting, including brokerage fees and
attorneys' fees and of costs of such alterations and repairs; third, to the
payment of Rent due and unpaid hereunder, and the residue, if any, shall be held
by Landlord and applied in payment of future Rent as the same may become due and
payable hereunder. If such rentals received from such reletting during any
month are less than that to be paid during that month by Tenant hereunder,
Tenant shall pay any such deficiency to Landlord. Such deficiency shall be
calculated and paid monthly. No such re-entry or taking possession of said
Premises by Landlord shall be construed as an election on its part to terminate
this Lease unless a written notice of such intention be given to Tenant or
unless the termination thereof be decreed by a court of competent jurisdiction.
15.5 WAIVER OF RIGHTS OF REDEMPTION. Tenant hereby expressly waives any
and all rights of redemption granted by or under any present or future laws in
the event of Tenant being evicted or dispossessed for any cause, or in the event
of Landlord obtaining possession of the Premises, by reason of the violation by
Tenant of any of the covenants or conditions of this Lease, or otherwise.
15.6 CUMULATIVE REMEDIES. Landlord's exercise of any right or remedy stated
or set forth anywhere in this Lease shall not prevent Landlord from exercising
any other right or remedy which may be provided by law, in equity or this Lease,
whether or not stated in this Lease. The termination of this Lease under this
Article 15 shall not release Tenant from obligations arising as a result of any
acts or omissions occurring prior to such expiration or termination, including,
without limitation, any indemnity obligations of Tenant and any obligations of
Tenant under Article 7 of this Lease and all such obligations shall survive such
termination.
15.7 ADDITIONAL REMEDIES UPON DEFAULT. In addition to any rights or
remedies hereinbefore or hereinafter conferred upon Landlord under the terms of
this Lease, the following remedies and provisions shall specifically apply in
the event Tenant engages in any one or more of the acts contemplated by the
provisions of Section 15.2.6 of this Lease:
15.7.1 ASSUMPTION OR REJECTION OF LEASE. In all events, any
receiver or trustee in bankruptcy shall either expressly assume or reject this
Lease within sixty (60) days following the entry of an "Order for Relief" or
within such earlier time as may be provided by applicable law. In the event of
an assumption of this Lease by a debtor or by a trustee, such debtor or trustee
shall within fifteen (15) days after such assumption (i) cure any default or
provide adequate assurance that defaults will be promptly cured; (ii) compensate
Landlord for actual monetary loss or provide adequate assurance that
compensation will be made for actual monetary loss, including, but not limited
to, all attorneys' fees and costs incurred by Landlord resulting from any such
proceedings; and (iii) provide adequate assurance of future performance. Where
a default exists under this Lease, the trustee or debtor assuming this Lease may
not require Landlord to provide services or supplies incidental to this Lease
before its assumption by such trustee or debtor, unless Landlord is compensated
under the terms of this Lease for such services and supplies provided before the
assumption of such Lease;
15.7.2 ASSIGNMENT. The debtor or trustee may only assign this Lease
if (i) it is assumed and assignee agrees to be bound by this Lease, (ii)
adequate assurance of future performance by the assignee is provided, whether or
not there has been a default under this Lease, and (iii) the debtor or trustee
has received Landlord's prior written consent pursuant to the provisions of
Section 12.1 of this Lease. Any consideration paid by any assignee in excess
of the rental reserved in this Lease shall be the sole property of, and paid to,
Landlord. Landlord shall be entitled to the fair market value for the Premises
and the services provided by Landlord (but in no event less than the Rent
reserved in this Lease) subsequent to the commencement of a bankruptcy event;
15.7.3 OTHER MATTERS. Any Security Deposit given by Tenant to
Landlord or Landlord's construction lender to secure the future performance by
Tenant of all or any of the terms and conditions of this
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Lease shall be automatically transferred to Landlord upon the entry of an
"Order of Relief." The parties agree that Landlord is entitled to adequate
assurance of future performance of the terms and provisions of this Lease in
the event of an assignment under the provisions of the Bankruptcy Code. For
purposes of any such assumption or assignment of this Lease, the parties
agree that the term "adequate assurance" shall include, without limitation,
at least the following: (a) any proposed assignee must have, as demonstrated
to Landlord's satisfaction, a net worth (as defined in accordance with
generally accepted accounting principles consistently applied) in an amount
sufficient to assure that the proposed assignee will have the resources to
meet the financial responsibilities under this Lease, including the payment
of all Rent. The financial condition and resources of Tenant are material
inducements to Landlord entering into this Lease; (b) any proposed assignee
must not be engaged in any business or activity which it will conduct on the
Premises and which will subject the Premises to contamination by any
Hazardous Materials; (c) any proposed assignee must agree in writing to be
bound by all the terms and provisions of this Lease.
15.8 DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
falls to perform obligations required of Landlord within a reasonable time, but
in no event later than thirty (30) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord's obligation is such that more
than thirty (30) days are required for performance, then Landlord shall not be
in default if Landlord commences performance within such thirty (30) day period
and thereafter diligently prosecutes the same to completion.
15.9 LANDLORD'S CURE. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction or abatement of Base Monthly Rent,
Additional Rent or any other Rent payable under the Lease except for any
abatement specifically permitted under this Lease. If Tenant shall default in
the performance of its obligations under this Lease, Landlord may, but shall not
be obligated to, make any such payment or perform any such act on Tenant's part
without waiving its right based upon any default of Tenant and without releasing
Tenant from any obligations hereunder and Tenant shall, within fifteen (15) days
after delivery by Landlord to Tenant of statements therefor reimburse Landlord
for all such expenditures, losses, costs, liabilities, damages and expenses.
All sums so paid by Landlord and all necessary incidental costs, and interest
thereon at the Lease Interest Rate accruing from the date paid or incurred by
Landlord until reimbursed to Landlord by Tenant, shall be payable to Landlord by
Tenant as Rent on demand and Tenant covenants to pay all such sums. Tenant's
obligations under this Section shall survive the expiration or sooner
termination of the Lease Term.
ARTICLE 16 -- PROTECTION OF CREDITORS
16.1 SUBORDINATION. Landlord shall have the right to require Tenant to
subordinate this Lease to any ground lease, deed of trust, mortgage or the
Declarations encumbering the Premises, any advances made on the security thereof
and any renewals, modifications, consolidations, replacements or extensions
thereof, whenever made or recorded. Landlord may, by written notice to Tenant,
subordinate this Lease to any new Declarations. If any beneficiary under a deed
of trust or mortgagee under a mortgage elects to have this Lease prior to the
lien of its deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such deed of trust or mortgage
whether this Lease is dated prior or subsequent to the date of said deed of
trust or mortgage or the date of recording thereof. As a condition to any such
subordination, Landlord's lender shall provide to Tenant a commercially
reasonable nondisturbance agreement signed by the party requesting such
subordination (which may be part of a subordination and attornment agreement)
recognizing Tenant's right to possession of the Premises so long as Tenant is
not in default under this Lease beyond any applicable cure period.
16.2 ATTORNMENT. If Landlord's interest in the Premises is acquired by any
ground lessor, beneficiary under a deed of trust, mortgagee, or purchaser at a
foreclosure sale, or by any other person or entity, as a result of any other
transfer by Landlord, Tenant shall attorn to the transferee of or successor to
Landlord's interest in the Premises and recognize such transferee or successor
as Landlord under this Lease so long as such other person or entity agrees in
writing to recognize Tenant's rights to possession and occupancy of the Premises
pursuant to this Lease.
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16.3 SIGNING OF DOCUMENTS. Tenant shall sign and deliver any instrument or
documents necessary or appropriate to effectuate or evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten
(10) days after written request, such failure shall constitute a default under
this Lease entitling Landlord to terminate this Lease.
16.4 ESTOPPEL CERTIFICATES.
16.4.1 REQUEST. Upon either party's written request ("Requesting
Party"), the other party ("Responding Party") shall execute, acknowledge and
deliver to the Requesting Party a written statement certifying: (i) that none of
the terms or provisions of this Lease have been changed (or if they have been
changed, stating how they have been changed); (ii) that this Lease has not been
canceled or terminated and is in full force and effect; (iii) the last date of
payment of the Base Monthly Rent, and other charges and the time period covered
by such payment; (iv) than the Requesting Party is not in default under this
Lease (or, if the Requesting Party is claimed to be in default, stating why) and
(v) such other statements as required by the Requesting Party, or any lender or
prospective lender, investor or purchaser. The Responding Party shall deliver
such statement to the Requesting Party within ten (10) days after the Requesting
Party's request. Any such statement by the Responding Party may be given by the
Requesting Party to any prospective purchaser or encumbrancer of the Premises.
Such purchaser or encumbrancer may rely conclusively upon such statement as true
and correct.
16.4.2 FAILURE TO RESPOND. If the Responding Party does not
deliver such statement to the Requesting Party within such ten (10) day period,
such failure shall constitute a default under this Lease. Further, the
Requesting Party and any prospective purchaser or encumbrancer, may conclusively
presume and rely upon the following facts: (i) that the terms and provisions of
this Lease have not been changed except as otherwise represented by the
Requesting Party; (ii) that this Lease has not been canceled or terminated
except as otherwise represented by the Requesting Party; (iii) that not more
than one month's Base Monthly Rent or other charges have been paid in advance;
and (iv) that Landlord is not in default under this Lease. In such event, the
Requesting Party shall be estopped from denying the truth of such facts.
16.5 TENANT'S FINANCIAL CONDITION. Within ten (10) days after written
request from Landlord, Tenant shall deliver to Landlord such financial
statements as are reasonably required by Landlord and are available to the
public to verify the net worth of Tenant, or any assignee, subtenant, or
guarantor of Tenant. Tenant covenants that during the term of this Lease Tenant
shall maintain a minimum net worth of five million dollars ($5,000,000.00). In
addition, Tenant shall deliver to any lender or proposed purchaser of the
Premises or any portion of the Project designated by Landlord any financial
statements required by such lender or purchaser (which are available to the
public) to facilitate the sale, financing or refinancing of the Premises or any
portion of the Project. Tenant represents and warrants to Landlord that each
such financial statement is a true and accurate statement as of the date of such
statement. All financial statements shall be confidential and shall be used
only for the purposes set forth herein. Each such financial statement shall be
executed by Tenant and shall be certified by Tenant to be true and correct.
16.6 MORTGAGEE PROTECTION CLAUSE. Tenant agrees to give any mortgagees
and/or trust deed holders, by registered mail, a copy of any notice of default
served upon the Landlord, provided that prior to such notice Tenant has been
notified in writing of the addresses of such mortgagees and/or trust deed
holders. Tenant further agrees that if Landlord shall have failed to cure such
default within the time provided for in this Lease, then the mortgagees and/or
trust deed holders shall have an additional thirty (30) days within which to
cure such default or if such default cannot be cured within that time, then such
additional time as may be necessary if within such thirty (30) days any
mortgagee and/or trust deed holder has commenced and. is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.
ARTICLE 17 -- TERMINATION OF LEASE
17.1 CONDITION UPON TERMINATION. Upon the termination of this Lease,
Tenant shall surrender the Premises to Landlord, broom clean and in the same
condition as received except for ordinary wear and tear which Tenant was not
otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be
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obligated to repair any damage which Landlord is required to repair under
Article 14 of this Lease. No act done by Landlord or any agent or employee
of Landlord during the Lease Term shall be deemed to constitute an acceptance
by Landlord of a surrender of the Premises unless such intent is specifically
acknowledged in writing and signed by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Landlord and,
notwithstanding such delivery, Tenant shall be entitled to the return of such
keys at any reasonable time upon request until this Lease shall have been
properly terminated. The voluntary or other surrender of this Lease by
Tenant, whether accepted by Landlord or not, or a mutual termination hereof,
shall not work a merger, and, at the option of Landlord, shall operate as an
assignment to Landlord of all subleases or subtenancies affecting the
Premises.
17.2 NON-REMOVAL BY TENANT. All alterations, including signs and sign
cases, made by Tenant, or made by the Landlord on the Tenant's behalf and for
which Tenant has paid Landlord in accordance with this Lease, shall remain the
property of the Tenant for the Lease Term. Such Alterations (not including
Tenant's trade fixtures) shall not be removed from the Premises. At the
expiration or termination of this Lease Term, all such Alterations become the
property of the Landlord; provided, however, Landlord may require that Tenant,
at Tenant's sole cost, remove any such Alterations or utility installations at
the expiration of the Lease Term and to restore the Premises to their prior
condition. In removing any such Alterations as may be required by the Landlord,
the Tenant shall remove any of its personal property and shall repair any damage
to the Premises caused by such removal and, prior to such removal, Tenant shall
post a bond or other security as may be required by the Landlord in order to
insure the Landlord that the Premises will be repaired in a prompt and
workmanlike manner. If Tenant fails promptly to commence and diligently pursue
to completion such removal and restoration required by the provisions of this
Article 17, Tenant shall pay to Landlord the cost of such removal and
restoration, such cost to include a reasonable charge for Landlord's overhead.
Tenant shall continue to pay Rent for the portion of the Premises not completely
vacated during such time together with all costs and expenses incurred by
Landlord in removing, storing and disposing of such property together with all
costs and expenses of repair to and clean up of the Premises. Thereafter,
Landlord may retain or dispose of in any manner the personal property not so
removed, without liability to Tenant.
17.3 ABANDONED PROPERTY. Any property of Tenant not removed by Tenant upon
the expiration of the Lease Term (or within five (5) Business Days after a
termination by reason of Tenant's default) shall be considered abandoned, and
Landlord may remove any or all such items and dispose of the same in any manner
or store the same in a public warehouse or elsewhere for the account of and at
the expense and risk of Tenant. If Tenant shall fail to pay the cost of storing
any such property after it has been stored for a period of thirty (30) days or
more, Landlord may sell any or all of such property at public or private sale,
in such manner and at such times and places as Landlord, in its sole discretion,
may deem proper, without notice to or demand upon Tenant. Landlord shall apply
the proceeds of such sale (a) first, to the costs and expenses of such sale,
including reasonable attorneys' fees actually incurred; (b) second, to the
payment of the expense of or charges for removing and storing any such property;
and (c) the balance to Landlord.
17.4 LANDLORD'S ACTIONS ON PREMISES. Tenant hereby waives all claims for
damages or other liability in connection with Landlord's re-entering and taking
possession of the Premises or removing, retaining, storing or selling the
property of Tenant as herein provided, and Tenant hereby indemnifies and holds
Landlord and Landlord's Indemnitees harmless from any such damages or other
liability, and no such re-entry shall be considered or construed to be a
forcible entry.
17.5 HOLDING OVER. Tenant shall vacate the Premises upon the expiration or
earlier termination of this Lease. Tenant shall reimburse Landlord for and
indemnify Landlord and Landlord's Indemnitees against all damages incurred by
Landlord from any delay by Tenant in vacating the Premises. If Tenant remains
in possession of all or any part of the Premises after the expiration of the
Lease Term with or without the express or implied consent of Landlord, such
tenancy shall be from month-to-month only and not a renewal hereof or an
extension for any further term, and in such case, Base Monthly Rent then in
effect shall be increased by fifty percent (50%) and other monetary sums due
hereunder shall be payable in the amount and at the time specified in this
Lease, and such month-to-month tenancy shall be subject to every other term,
covenant and agreement contained herein, except that the month-to-month tenancy
will be terminable on thirty (30) days notice given at any time by either party.
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ARTICLE 18 -- MISCELLANEOUS PROVISIONS
18.1 SUCCESSORS; NO THIRD PARTY BENEFICIARIES. Subject to limitations
expressed elsewhere in this Lease, all rights and liabilities herein given to,
or imposed upon, the respective parties hereto shall extend to and bind the
several respective heirs, executors, administrators, successors, and assigns of
the said parties; and if there shall be more than one Tenant, they shall all be
bound jointly and severally by the terms, covenants and agreements herein. No
rights, however, shall inure to the benefit of any assignee of Tenant unless the
assignment to such assignee has been approved by Landlord in writing as provided
in Article 12 hereof. This Lease grants certain rights and imposes certain
obligations by and between Landlord and Tenant only, and there are no third
party beneficiaries of the agreement contained herein.
18.2 SEVERABILITY. A determination by a court of competent jurisdiction
that any provision of this Lease or any part thereof is illegal or unenforceable
shall not cancel or invalidate the remainder of such provision or this Lease,
which shall remain in full force and effect.
18.3 INTERPRETATION. The captions of the Articles or Sections of this
Lease are to assist the parties in reading this Lease and are not a part of the
terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Premises with Tenant's expressed or
implied permission.
18.4 OTHER TENANCIES. Landlord reserves the absolute right to effect such
other tenancies in the Project as Landlord, in the exercise of its sole business
judgment, shall determine to best promote the interest of the Project. Tenant
does not rely on the fact, nor does Landlord represent, that any specific tenant
or type or number of tenants shall, during the term of this Lease, either (i)
enter into a lease for any space in the Project or (ii) continue to lease any
space in the Project under any lease which is in effect as of the date of this
Lease, or that any tenant under any lease in effect as of the date of this Lease
will not assign or transfer its interest under its lease or change the use of
the premises under such lease. By executing this Lease, Tenant acknowledges
that Landlord has not made any representations, warranties or statements as to
any of the foregoing and agrees that the occurrence of any of the foregoing or
any similar event shall not affect Tenant's obligations under this Lease.
Notwithstanding the foregoing, Landlord agrees not to lease any space in the
Building for a term which falls with in the Lease Term to any tenant whose
primary use will consist of (a) the operation of any executive suite service,
excluding any office suite service for doctors, dentists or medical-related
professionals and practitioners, or (b) providing to the general business
community and the tenants in the Building of any of the following services (as
opposed to the sale or servicing of equipment: (i) telephone answering services,
(ii) secretarial services, (iii) word processing services (excluding temporary
employment services), (iv) electronic mail services, (v) facsimile transmission
services, and (vi) video conferencing services. Landlord further agrees not to
lease any space within the Building consisting of less than 500 Rentable square
feet except as may be used for retail purposes, such as, but not limited to, a
delicatessen.
18.5 ENTIRE AGREEMENT. Any Exhibits attached hereto shall be incorporated
herein as though fully set forth herein. This Lease and the Exhibits, if any,
attached hereto and forming a part hereof, set forth all the covenants,
promises, agreements, conditions and understandings, either oral or written,
between Landlord and Tenant concerning the Premises and there are no covenants,
promises, agreements, conditions or understandings, either oral, or written,
between them other than are herein set forth, including the Option to Lease.
Except as herein otherwise provided, no subsequent alteration, amendment, change
or addition to this Lease shall be binding upon Landlord or Tenant unless
reduced to writing and signed by the party to be charged with their performance.
18.6 LANDLORD'S LIABILITY. As used in this Lease, the term "Landlord"
means only the current owner or owners of the fee title to the Premises or the
leasehold estate under a ground lease of the Premises at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer, provided the transferee assumes the obligations in
writing and a copy of such writing is delivered to Tenant. However, each
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Landlord shall deliver to its transferee all funds previously paid by Tenant if
such funds have not yet been applied under the terms of this Lease. The
obligations of Landlord under this Lease do not constitute personal obligations
of Landlord, or its partners, directors, employees, officers, members, managers
or shareholders and Tenant shall look solely to the Project and to no other
assets of Landlord for satisfaction of any liability with respect to this Lease
and will not seek recourse against the partners, directors, officers, members,
managers or shareholders of Landlord herein, nor against any of their personal
assets for such satisfaction.
18.7 NOTICES. All notices required or permitted under this Lease shall be
in writing and shall be personally delivered or sent by certified mail, return
receipt requested, postage prepaid or by overnight courier marked for delivery
next Business Day. Notices to Tenant shall be delivered to the address
specified in Item 5 of the Basic Terms, except that upon Tenant's taking
possession of the Premises, the Premises shall be Tenant's address for notice
purposes. Notices to Landlord shall be delivered to the address specified in
Item 3 of the Basic Terms or such other address as may be instructed by
Landlord. All notices shall be effective upon personal delivery or three (3)
Business Days after deposit in the U.S. Mail or one (1) Business Day after
deposit with an overnight courier.
18.8 WAIVERS. All waivers must be in writing and signed by the waiving
party. Landlord's failure to enforce any provision of this Lease or its
acceptance of Rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
18.9 NO RECORDATION. Tenant shall not record this Lease or a memorandum
hereof without prior written consent from Landlord. However, Landlord may
require that a "Short Form" memorandum of this Lease be executed by both parties
and recorded.
18.10 CHOICE OF LAW. The internal laws without regard to choice of law
rules of the State of California shall govern this Lease.
18.11 CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he or she has full authority to do so and that this Lease binds
the corporation. Concurrently with execution of this Lease, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person signing this Lease for Tenant represents and warrants that he or she :is
a general partner of the partnership, that he or she has full authority to sign
for the partnership and that this Lease binds the partnership and all general
partners of the partnership. Tenant shall give written notice to Landlord of
any general partner's withdrawal or addition. Concurrently with execution of
this Lease, Tenant shall deliver to Landlord a copy of Tenant's recorded
statement of partnership or certificate of limited partnership.
18.12 NO PARTNERSHIP. Landlord shall not by virtue of this Lease, in
any way or for any purpose, be deemed to have become a partner of Tenant in the
conduct of its business, or otherwise, or joint venturer or a merger of a joint
enterprise with Tenant, nor is Tenant an agent of Landlord for any reason
whatsoever.
18.13 JOINT AND SEVERAL LIABILITY. All parties signing this Lease as
Tenant shall be jointly and severally liable for all obligations of Tenant.
18.14 ATTORNEYS' FEES. If either party commences litigation against the
other for the specific performance of this Lease, the interpretation of this
Lease, for damages for breach hereof or otherwise for enforcement of any remedy
hereunder, the parties hereto agree to and hereby do waive any right to a trial
by jury and, in the event of any such commencement of litigation, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred. Further, if Landlord is
named as a defendant in any suit brought against Tenant in connection with or
arising out of Tenant's occupancy hereunder, Tenant shall be obligated to pay to
Landlord, in addition to all other amounts for which Tenant is obligated
hereunder, all of Landlord's reasonable costs and expenses incurred in
connection with any such acts, including
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reasonable attorneys' fees. Any attorneys' fees incurred in enforcing any
right of indemnity set forth in this Lease shall be recoverable and deemed to
be within the scope of such indemnity and/or this attorneys' fees provision.
18.15 LENDER MODIFICATION. If, in connection with obtaining any loans
including but not limited to a construction loan, permanent financing or
refinancing for the Project, a lender shall request reasonable modifications to
this Lease as a condition to such financing, Tenant will not unreasonably
withhold, delay or defer its consent thereto, provided that such modifications
do not increase the obligations of Tenant hereunder or materially adversely
affect the leasehold interest hereby created or Tenant's rights hereunder.
18.16 BROKERS. Except as specifically set forth herein, nothing
contained herein shall impose upon Landlord any obligation to pay any commission
or payment to Tenant's Broker specified in Item 13 of the Basic Terms. Landlord
shall pay Landlord's Broker pursuant to a separate agreement. Landlord shall be
responsible for paying a commission to Tenant's Broker in an amount equal to
three percent (3%) of the Base Monthly Rent for the first two (2) Lease Years;
two and one-half percent (2.5%) of the Base Monthly Rent for the third Lease
Year; two percent (2%) of Base Monthly Rent for the fourth and fifth Lease
Years; and one and one-half percent (1.5%) of the Base Monthly Rent for the
sixth, seventh, eighth, ninth and tenth Lease Years of the Lease Term; provided,
however, that in no event shall the total commission payable by Landlord exceed
three and one-quarter percent (3.25%) of the Base Monthly Rent for Lease Years 1
through 10. Such commission payable to Tenant's broker shall be deemed earned
only at the rate of fifty percent (50%) upon mutual execution of the Lease, and
fifty percent (50%) upon the Commencement Date. If and to the extent Landlord
owes a commission to Tenant's broker as aforesaid, Landlord shall pay such
commission fifty percent (50%) upon Landlord's obtaining a construction loan for
construction of the Building (and actual receipt of the proceeds thereof), and
fifty percent (50%) upon the Commencement Date, it being agreed that Landlord's
responsibility to pay any commission to Tenant's broker is contingent upon
Landlord's obtaining such construction loan and actual receipt of the proceeds
thereof. Landlord and Tenant hereby warrant to each other that they have had no
dealings with any real estate broker or agent in connection with the negotiation
of this Lease, excepting only the real estate brokers or agents specified in
Item 13 of the Basic Terms, and that they know of no other real estate broker or
agent who may be entitled to a commission in connection with this Lease. Each
party agrees to indemnify and defend the other party against and hold the other
party harmless from any and all claims, demands, losses, liabilities, lawsuits,
judgments, and costs and expenses (including, without limitation, reasonable
attorneys' fees) with respect to any leasing commission or equivalent
compensation alleged to be owing on account of the indemnifying party's dealings
with any real estate broker or agent other than that specified herein.
18.17 FORCE MAJEURE. If Landlord or Tenant cannot perform any of their
obligations due to events beyond their reasonable control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions. Notwithstanding any provision in this
Lease to the contrary, Tenant shall be required to make each and every payment
of Rent in a timely fashion, and the due date for such payment shall not be
extended for events of force majeure or otherwise.
18.18 TENANT OBLIGATIONS SURVIVE TERMINATION. All obligations of
Tenant hereunder not fully performed as of the expiration or earlier termination
of the Lease Term shall, survive the expiration or earlier termination of the
Lease Term, including, without limitation, all payment obligations and all
obligations concerning the condition of the Premises.
18.19 GRANT OF SECURITY INTEREST. In addition to any and all statutory
liens granted to landlords under the laws of California, Landlord shall have, at
all times, and Tenant hereby grants and agrees to grant Landlord a valid
security interest to secure payment of all sums payable under this Lease as Rent
becoming due hereunder from Tenant, and to secure payment of any damages or loss
which Landlord may suffer by reason of the breach by Tenant of any covenant,
agreement or condition contained herein, upon all goods, equipment, furniture,
improvements, inventory, chattel, and other personal property of Tenant
presently, or which may hereafter be situated within the Premises or used in
connection therewith wherever located, whether now owned or hereafter acquired,
and all proceeds therefrom, including, without limitation, insurance proceeds
(collectively "Personal Property"), and such Personal Property shall not be
removed from the Premises without the prior consent of Landlord, which consent
may
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be withheld in Landlord's sole discretion, until all arrearages in Rent, as
well as any and all other sums of money then due to Landlord hereunder, shall
first have been paid and discharged and all the covenants, agreements and
conditions hereof have been fully complied with and performed by Tenant. In
the event of a default by Tenant hereunder, Landlord may, in addition to any
other remedies provided elsewhere herein or allowed by law, all of which are
cumulative, enter upon the Premises and take possession of any and all
Personal Property of Tenant situated within the Premises without liability
for trespass or conversion, and sell the same at public or private sale, with
or without having such property at the sale, after giving Tenant reasonable
notice of the time and place of any public sale or of the time after which
any private sale is to be made, at which sale the Landlord or its assigns may
purchase such Personal Property unless otherwise prohibited by law. Unless
otherwise provided by law, and without intending to exclude any other manner
of giving Tenant reasonable notice, the requirement of reasonable notice
shall be met if such notice is given in the manner prescribed in this Lease
at least five (5) days before the time of sale. The proceeds from any such
disposition, less any and all expenses connected with the taking of
possession, holding and selling of the Personal Property (including, without
limitation, reasonable attorneys' fees and legal expenses) shall be applied
as a credit against the indebtedness secured by the security interest granted
in this Section. Any surplus shall be paid to Tenant or as otherwise
required by law, and Tenant shall pay any deficiencies forthwith.
Contemporaneous with the execution of this Lease, and, at any other time
during the Lease Term if requested by Landlord, Tenant shall execute and
deliver to Landlord uniform commercial code financing statements in
sufficient form so that when properly filed, the security interest hereby
given shall thereupon be perfected. If requested hereafter by Landlord,
Tenant shall also execute and deliver to Landlord uniform commercial code
financing statement change instruments in sufficient form to reflect any
proper amendment or modification in or extension of the aforesaid contract
lien and security interest hereby granted. Landlord is hereby granted by
Tenant, Tenant's power of attorney to execute said financing statements and
change instruments in Tenant's name, place, and stead. Said power is coupled
with an interest and is irrevocable. Landlord shall, in addition to all of
its rights hereunder, also have all of the rights and remedies of a secured
party under the uniform commercial code as adopted in California.
18.20 TENANT'S WAIVER. Any claim which Tenant may have against
Landlord for default in performance of any of the obligations herein contained
to be kept and performed by Landlord shall be deemed waived unless such claim is
asserted by written notice thereof to Lessor within forty-five (45) days of
Tenant's knowledge of the alleged default or of accrual of the cause of action
and unless suit be brought thereon within six (6) months subsequent to the
accrual of such cause of action.
18.21 SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or an
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
LANDLORD:
Dated: 10-27-97 MARCO PLAZA ENTERPRISES, a California general partnership
--------
By: /s/ illegible
--------------------------------
Name: illegible
--------------------------------
Title: Partner
--------------------------------
TENANT:
Dated: 10/24/97 RUBIO'S RESTAURANTS, INC., a Delaware corporation
--------
By: /s/ Rafael R. Rubio
--------------------------------
Name: Rafael R. Rubio
--------------------------------
Title:
--------------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
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EXHIBIT A
SITE PLAN
CORNERSTONE CORPORATE CENTER
[PICTURE]
<PAGE>
EXHIBIT "B"
RULES AND REGULATIONS
1. WALKWAYS. The sidewalks, roadways, and other public portions in the
Project shall be used by the Tenant for the purpose solely of ingress and egress
to and from the Premises of the Tenant. Tenant, its employees and agents, shall
not loiter in the entrances or corridors, nor in any way obstruct the sidewalks,
halls, stairways or elevators, and shall use the same only as a means of ingress
and egress for the Premises.
2. CONDITIONS OF PREMISES. The Tenant shall keep the interior portion of
the Premises, to include all windows, doors, and all other glass, plate
fixtures, and trim in a clean condition. No improvements, additions, or
materials of any kind are permitted to be placed on the outside of any of the
Premises by Tenant.
3. STORAGE OF REFUSE. All waste paper, garbage and refuse shall be kept
in the kind of container specified by Landlord, and shall be placed outside of
the Premises in specified trash containers prepared for collection in the manner
and at the times and places specified by Landlord. Landlord may implement a
recycling program and in such case, Tenant shall deposit refuse in accordance
with any requirements of such recycling program. If Landlord shall provide or
designate a service for picking up refuse and garbage, Tenant shall use same at
Tenant's cost whether billed directly or as part of Common Area Maintenance
Charges.
4. AERIALS. No aerial shall be erected on the roof or exterior walls of
the Premises, or within the Project, without in each instance, the written
consent of the Landlord, which may be withheld in Landlord's sole discretion.
Any aerial so installed without such written consent shall be subject to removal
without notice at any time.
5. CONDUCT. Tenant shall conduct its business in an orderly manner in the
best interests of the Project. No loudspeakers, televisions, phonographs,
radios, or other devices shall be used in a manner so as to be heard or seen
outside of the Premises without the prior written consent of the Landlord, which
may be withheld in Landlord's sole discretion.
6. OUTSIDE AREAS. Tenant shall not place or permit any dirt or rubbish
in any Common Area or any obstruction or materials in such areas, including,
without limitation, inventory, costs or signage of any type or kind. No
exterior storage shall be allowed without permission in writing from Landlord.
7. PARKING. Subject to the terms of the Lease, Tenant and Tenant's
employees shall park only in those portions of the parking area designated for
that purpose by Landlord. Landlord has the right to make changes in the parking
procedures and guidelines from time-to-time, to benefit the Project, in
Landlord's sole opinion.
8. PLUMBING. The plumbing facilities shall not be used for any purpose
other than that for which they are constructed, and no foreign substance of any
kind shall be thrown therein, and the expense of any breakage, stoppage, or
damage resulting from a violation of this provision shall be borne by Tenant,
who shall, or whose employees, agents or invitees shall have caused it.
9. FLAMMABLE MATERIALS. The Tenant shall not keep or permit to be kept
on the Premises any flammable or combustible fluid, chemical, or explosive
material of any kind. Tenant shall not burn any trash or garbage of any kind in
or about the Premises, or the Project.
10. AUCTIONS. Tenant shall not hold any auction, fire, or bankruptcy sale
in the Premises.
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11. NO ANIMALS. Tenant shall not bring into the Premises at the Project
any animals of any type or kind, except animals necessary to assist persons with
disabilities.
12. SAFES. Landlord shall have the right to prescribe the weight, size
and position of all safes and other heavy property brought into the Project and
also the times and manner of moving the same in and out of the Project. Safes
and other heavy objects shall, if considered necessary by Landlord, stand on
supports of such thickness as is necessary to properly distribute the weight.
Landlord will not be responsible for loss of or damage to any such safe or
property in any case. All damage done to any part of the Project, its contents,
occupants or visitors by moving or maintaining any such safe or other property
shall be the sole responsibility of Tenant and any expense of said damage or
injury shall be borne by Tenant.
13. SAFETY PROCEDURES. Tenant shall comply with all safety, fire
protection and evacuation procedures and regulations established by Landlord or
any governmental agency.
14. PROTECTION FROM THEFT. Tenant acknowledges that Landlord may not
provide any guard service or other security measures. In any event, Tenant
shall assume any and all responsibility for protecting the Premises from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed.
15. WAIVER BY LANDLORD. Landlord may waive any one or more of these Rules
and Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall (i) be effective unless in writing, or (ii) be
construed as a waiver of such Rules and Regulations in favor of any other tenant
or tenants, or (iii) prevent Landlord from thereafter enforcing any such Rules
and Regulations against any or all tenants of the Project.
16. CHANGES TO RULES. Landlord reserves the right from time to time to
amend or supplement the foregoing rules and regulations, and to adopt and
promulgate additional rules and regulations applicable to the Premises. Notice
of such rules and regulations and amendments and supplements thereto, if any,
shall be given to the Tenant and Tenant agrees to comply with all such rules and
regulations upon receipt of notice. Landlord shall not be liable in any way to
Tenant for any damage or inconvenience caused by any other tenant's
noncompliance with these rules and regulations.
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EXHIBIT "C"
WORK LETTER AGREEMENT
MARCO PLAZA ENTERPRISES, a California general partnership ("Landlord') and
RUBIO'S RESTAURANTS, INC., a Delaware corporation ("Tenant") as of this 24th day
of October, 1997, are executing simultaneously with this Work Letter Agreement
("Work Letter"), a written lease (the "Lease") covering the Premises described
in the Lease.
This Work Letter defines the scope of Improvements (as defined below) which
Landlord shall be obligated to construct or install. If there is a conflict
between the terms and provisions of thus Work Letter and the Lease, this Work
Letter shall control. Terms which have initial capital letters and are not
otherwise defined in this Work Letter shall have the meaning set forth in the
Lease.
This Work Letter is a part of the Lease and shall be subject to all of its
terms and conditions, including all definitions contained therein. In
consideration of the mutual covenants hereinafter contained, Landlord and Tenant
mutually agree as set forth below.
SECTION I - IMPROVEMENTS; PLANNING AND DOCUMENTS
1.1 CONSTRUCTION. Landlord agrees to furnish all of the material, labor
and equipment as may be reasonably necessary for the construction of the
Improvements (as defined below) in a good and workmanlike manner in substantial
conformance with the Shell Plans and Specifications (as defined below) and the
T.I. Plans and Specifications (as defined below) and in compliance with all
covenants, conditions and restrictions to which the Land is subject and all
applicable building laws, ordinances, orders, rules, regulations and
requirements of any governmental agency having jurisdiction over the development
of the Land. Landlord shall use its reasonable efforts to achieve Substantial
Completion of the Improvements by the Estimated Commencement Date.
1.1.1 IMPROVEMENTS. "Improvements" shall mean the Building and
all improvements, machinery, equipment, fixtures and other property, real,
personal or mixed (excepting Tenant's trade fixtures, machinery, and
equipment) installed or constructed on the Land or in the Building by
Landlord (including, without limitation, Common Area, Site Amenities, and
other site improvements and landscaping), together with all additions,
alterations and replacements thereof. Improvements shall include the Shell
Improvements (as defined below) and Tenant Improvements (as defined below)
constructed by Landlord.
1.1.2 LAND. "Land" shall mean that portion of the Project upon
which Landlord shall construct the Building and the portions of the Common Area
as required pursuant to this Lease.
1.2 SHELL IMPROVEMENTS.
1.2.1 SHELL DEFINITIONS.
1.2.1.1 PRELIMINARY PLANS AND SPECIFICATIONS. "Preliminary
Plans and Specifications" shall mean those preliminary plans and specifications
for the Shell Improvements, prepared by Brian Paul and Associates, Architects
and Planners ("Building Architect"), which describe and depict the site plan and
Common Area within the Building and certain preliminary exterior elevation
improvements, and which are referenced and/or described on Schedule 2 attached
hereto.
1.2.1.2 SHELL CONSTRUCTION DRAWINGS. "Shell Construction
Drawings" shall mean 1/4 or 1/8 scale construction drawings for the Shell
Improvements containing all information reasonably necessary to construct the
Shell Improvements, which drawings shall be reasonably consistent with the
Preliminary Plans and Specifications and shall incorporate the selected Exterior
Building Finishes.
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1.2.1.3 SHELL IMPROVEMENTS. "Shell improvements" shall mean a
three-story office building of steel frame construction, including two finished
elevators, fire sprinkler systems (distributed with heads required for building
shell final inspection by the City of Carlsbad), emergency stairway exits,
central plant for HVAC system and an HVAC water loop for each floor, finished
restrooms on each floor, finished Common Area for fire existing on the ground
floor and finished lobby of the ground floor from the front of the Building
entrance to the Building core, all such improvements to be reasonably comparable
to "Class A" standards of a suburban office building, and substantially in
conformance with the office Building-Outline Specifications dated May 28, 1997,
attached hereto as Schedule 1. Shell Improvements shall include the Site
Amenities and those components of the Premises which are identified in the
Preliminary Plans and Specifications as elements of the basic Building shell, or
more specifically as "Shell Improvements," land, land preparation, landscaping
and all necessary utilities stubbed to the Building, or as otherwise mutually
identified by Landlord and Tenant, in writing.
1.2.1.4 SHELL PLANS AND SPECIFICATIONS. "Shell Plans and
Specifications" shall mean collectively the Preliminary Plans and
Specifications, the Exterior Building Finishes Plans, the Shell Construction
Drawings, and all related plans, drawings, specifications and notes developed or
prepared in connection therewith.
1.2.2 PREPARATION OF SHELL IMPROVEMENT DOCUMENTS. Landlord and
Tenant have approved the Preliminary Plans and Specifications, including the
size, location and design of the Site Amenities.
1.2.2.1 SHELL CONSTRUCTION DRAWINGS. As soon as is reasonably
practicable, Landlord shall prepare the Shell Construction Drawings in
substantial conformance with the Preliminary Plans and Specifications.
1.3 TENANT IMPROVEMENTS.
1.3.1 TENANT DEFINITIONS.
1.3.1.1 DESIGN DEVELOPMENT DRAWINGS. "Design Development
Drawings" shall mean reasonably detailed preliminary construction drawings for
the Tenant Improvements, which drawings shall be reasonably consistent with the
approved Schematic Design Drawings.
1.3.1.2 SCHEMATIC DESIGN DRAWINGS. "Schematic Design Drawings"
shall mean reasonably detailed and dimensioned 1/8 scale preliminary schematic
design drawings for the Tenant Improvements, which drawings are reasonably
consistent with the approved Space Plan.
1.3.1.3 SPACE PLAN. "Space Plan" shall mean a floor by floor
layout designation of all counters, fixtures, demising walls and partitions, and
other equipment to be included in the Building as the Tenant Improvements. The
Space Plan shall be prepared by the Tenant's space planner or as otherwise
selected by Tenant in its reasonable discretion.
1.3.1.4 TENANT IMPROVEMENTS. "Tenant improvements" shall mean
all those portions of the Premises which are identified in the Space Plan and
which are the responsibility of Landlord's Contractor, or as otherwise mutually
identified by Landlord and Tenant, in writing. The Tenant Improvements shall be
based on the approved Space Plan.
1.3.1.5 T.I. CONSTRUCTION DRAWINGS. "T.I. Construction
Drawings" shall mean 1/4 or 1/8 scale construction drawings for the Tenant
Improvements containing all information reasonably necessary to construct the
Tenant Improvements, which drawing shall be reasonably consistent with the
approved Design Development Drawings.
1.3.1.6 T.I. PLANS AND SPECIFICATIONS. "T.I. Plans and
Specifications" shall mean collectively the Space Plan, Schematic Design
Drawings, Design Development Drawings, and T.I. Construction Drawings, and all
related plans, drawings, specifications and notes developed or prepared in
connection therewith.
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1.3.2 PLANNING: PREPARATION OF TENANT IMPROVEMENT DOCUMENTS.
1.3.2.1 SPACE PLAN. Concurrently with the execution of this
Work Letter, Tenant shall cause the Space Plan to be prepared in accordance with
this Work Letter. Landlord will have the right to reasonably review and approve
the draft Space Plan. Tenant shall submit the proposed Space Plan to Landlord
for Landlord's review and approval, which approval shall not be unreasonably
withheld or delayed. Landlord shall respond in writing to Tenant within ten
(10) days of receipt of any portion of the Space Plan specifying its approval or
reasonable changes to the plans submitted, if any. Failure of Landlord to
respond within said ten (10) day period shall be deemed Landlord's approval of
the Space Plan so submitted. If Landlord requests reasonable revisions to the
Space Plan in conformance with the terms of this Lease, Tenant shall revise said
documents and resubmit them to Landlord for its review and approval. Failure of
Landlord to respond within ten (10) days shall be deemed Landlord's approval on
the revised Space Plan so submitted. The foregoing process shall continue until
the Space Plan is approved. Notwithstanding any provision in this Work Letter
to the contrary, Tenant shall be responsible for producing a final Space Plan
approved by Landlord no later than December 1, 1997. Tenant acknowledges that
Landlord is relying on Tenant's timely delivery of the final approved Space Plan
in order to allow Landlord to Substantially Complete the Premises by the
Estimated Commencement Date. Accordingly, for each day which passes after the
foregoing date and before an approved Space Plan is delivered to Landlord, the
Estimated Commencement Date shall be delayed the same number of days.
1.3.2.2 SCHEMATIC DESIGN DRAWING. As soon as is reasonably
practicable following Landlord's approval of the Space Plan, Tenant shall submit
to Landlord proposed Schematic Design Drawings. The Schematic Design Drawings
shall be subject to the approval of Landlord, which approval shall not be
unreasonably withheld or delayed. Landlord shall respond in writing to Tenant
within ten (10) days of receipt of any portion of the Schematic Design Drawings
specifying its approval or disapproval thereof. Landlord may only disapproved
proposed Schematic Design Drawings if they do not substantially conform to the
approved Space Plan. If Landlord disapproves any portion of the Schematic
Design Drawings, then Landlord shall, timely and specifically and in writing,
(a) approve those portions which are acceptable to Landlord, and (b) disapprove
those portions which are not acceptable to Landlord, specifying the reasons for
such disapproval and describing in detail the change Landlord requests for each
item disapproved. Failure of Landlord to respond within said ten (10) day
period shall be deemed Landlord's approval of the Schematic Design Drawings so
submitted. In the event the Schematic Design Drawings have been disapproved by
Landlord, and Tenant and Landlord are unable to resolve Landlord's disapproval
after good faith efforts to do so over a period of ten (10) Business Days after
delivery of Landlords notice disapproving Schematic Design Drawings, Landlord
and Tenant shall submit their disagreement to the dispute resolution procedure
described in Section 1.3.2.5 below.
1.3.2.3 DESIGN DEVELOPMENT DRAWING. As soon as is reasonably
practicable following approval of the Schematic Design Drawings, Tenant shall
submit to Landlord proposed Design Development Drawing. The Design Development
Drawings shall be subject to the approval of Landlord, which approval shall not
be unreasonably withheld or delayed. Landlord shall respond in writing to
Tenant within ten (10) days of receipt of any portion of the Design Development
Drawings. Landlord may only disapprove proposed Design Development Drawings if
they do not substantially conform to the approved Schematic Design Drawings. If
Landlord disapproves any portion of the Design Development Drawings, then
Landlord shall, timely and specifically and in writing, (a) approve those
portions which are acceptable to Landlord, and (b) disapprove those portions
which are not acceptable to Landlord, specifying the reasons for such
disapproval and describing in detail the change Landlord requests for each item
disapproved. Failure of Landlord to respond within said ten (10) day period
shall be deemed Landlord's approval of the Design Development Drawings so
submitted. In the event the Design Development Drawings have been disapproved
by Landlord, and Tenant and Landlord are unable to resolve Landlord's
disapproval after good faith efforts to do so over a period of ten (10) Business
Days after delivery of Landlord's notice disapproving the Design Development
Drawings, Landlord and Tenant shall submit the disagreement to the dispute
resolution procedure described in Section 1.3.2.5 below.
1.3.2.4 T.I. CONSTRUCTION DRAWINGS. As soon as is reasonably
practicable following approval of the Design Development Drawings, Tenant shall
submit to Landlord proposed T.I. Construction Drawings. The T.I. Construction
Drawings shall be subject to the approval of Landlord, which approval shall not
be
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unreasonably withheld or delayed. Landlord shall respond in writing to
Tenant within ten (10) days of receipt of any portion of the T.I.
Construction Drawings. Landlord may only disapprove the T.I. Construction
Drawings if they do not substantially conform to the approved Design
Development Drawings. If Landlord disapproves any portion of the T.I.
Construction Drawings, then Landlord shall, timely and specifically and in
writing, (a) approve those portions which are acceptable to Landlord, and (b)
disapprove those portions which are not acceptable to Landlord, specifying
the reasons for such disapproval and describing in detail the change Landlord
requests for each item disapproved. The failure of Landlord to respond
within said ten (10) day period shall be deemed Landlord's approval of the
T.I. Construction Drawings so submitted. In the event the T.I. Construction
Drawings have been disapproved by Landlord, and Tenant and Landlord are
unable to resolve Landlord's disapproval after good faith efforts to do so
over a period of ten (10) Business Days after delivery of Landlord's notice
disapproving the T.I. Construction Drawings, Landlord and Tenant shall submit
their disagreement to the dispute resolution procedure described in Section
1.3.2.5 below. Notwithstanding any provision of this Work Letter to the
contrary, Tenant shall be responsible for delivering final T.I. Construction
Drawings approved by Landlord no later than February 15, 1998. Tenant
acknowledges that Landlord is relying on Tenant's timely delivery of the
final approved T.I. Construction Drawings in order to allow Landlord to
timely deliver the Premises on the Estimated Commencement Date. Accordingly,
for each day which passes after the foregoing date and before approved T.I.
Construction Drawings are delivered to Landlord, the Estimated Commencement
Date shall be delayed the same number of days.
1.3.2.5 DESIGN DISPUTES. In the event Landlord and Tenant are
unable to resolve Landlord's disapproval of a phase of the development of the
T.I. Plans and Specifications as described in Sections 1.3.2.2, 1.3.2.3, and
1.3.2.4 above (a "Design Dispute"), they shall resolve those differences through
the binding arbitration of a neutral third party in accordance with this
provision. In the event of a Design Dispute, Landlord and Tenant shall meet
within three (3) days to make a good faith attempt to mutually appoint a single
party who shall be a licensed architect ("Arbitrating Architect"), with not less
than ten (10) years experience in commercial and industrial architecture and who
is not then employed or otherwise previously affiliated with either party, to
arbitrate their differences and resolve the Design Dispute. If Landlord and
Tenant are unable to agree upon a single Arbitrating Architect, then each shall,
within two (2) Business Days after the meeting, select an architect that meets
the foregoing qualifications. The two (2) architects so appointed shall, within
two (2) Business Days after their appointment, appoint a third architect meeting
the foregoing qualifications who shall serve as the Arbitrating Architect. If
the two (2) architects so selected cannot agree on the selection of the
Arbitrating Architect within the time above specified, then either party, on
behalf of both parties, may request appointment of the Arbitrating Architect by
the Presiding Judge of the San Diego Superior Court. The procedures for
arbitrating and resolving the Design Dispute shall be established by the
Arbitrating Architect in a mariner designed to promptly resolve the Design
Dispute. The determination of the Arbitrating Architect shall be limited solely
to the issue of the Design Dispute and shall be made within ten (10) Business
Days of its submission by the parties for arbitration. The decision of the
Arbitrating Architect shall be binding on both parties. The cost of the
arbitration, including, without limitation, attorneys' fees and costs, witness
fees, expert witness fees, and costs of the arbitration proceeding, may be
awarded by the Arbitrating Architect to the prevailing party. The
non-prevailing party shall be charged with any time delays caused by the Design
Dispute. In the event of army judicial enforcement or confirmation proceeding
relating to an arbitration award or a Design Dispute, the prevailing party shall
be entitled to recover from the other party all related costs, including
reasonable attorneys' fees and costs.
1.3.2.6 OWNERSHIP. Notwithstanding the fact that Tenant is
responsible for developing all phases of the approved T.I. Plans and
Specifications, the parties have agreed that, by execution hereof, Tenant is
assigning to Landlord all of Tenant's right, title and interest in and to the
ownership of the T.I. Plans and Specifications.
1.4 BUILDING PERMITS. Landlord shall be responsible for obtaining from
any relevant and jurisdictional governmental authority all governmental
approvals necessary for the construction of the Shell Improvements, including a
building permit. Tenant shall be responsible for obtaining from any relevant
and jurisdictional governmental authority all governmental approvals necessary
for the construction of the Tenant Improvements, including a building permit.
Landlord shall be responsible for the payment of the building permit fees for
the Shell Improvements and, pursuant to the Tenant Improvement Allowance and/or
the Tenant Contingency Allowance, Landlord shall also be responsible for the
payment of the building permit fees for the
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Tenant Improvements. If a change to the approved Shell Plans and
Specifications or T.I. Plans and Specifications is required by any
governmental authority as a condition to obtaining a building permit, such
change shall be made to the Shell Plans and Specifications and/or T.I. Plans
and Specifications and deemed to have been approved by Landlord and/or
Tenant, as appropriate. Tenant shall negotiate in good faith for the
allocation of any increase in construction costs due to such a change. The
costs associated with any such changes related to the Shell Improvements
shall be Landlord's responsibility and related to the Tenant Improvements
shall be Tenant's responsibility. The parties shall cooperate with each
other as may be reasonably necessary to obtain the building permit and any
and all other permits, as appropriate. Notwithstanding any provision of this
Work Letter or the Lease to the contrary, Tenant shall obtain the necessary
building permits for the approved T.I. Plans and Specifications no later than
April 1, 1998. Tenant acknowledges that Landlord is relying upon Tenant's
timely acquisition of the Tenant Improvements building permits so that
Landlord may Substantially Complete the Premises by the Estimated
Commencement Date. Accordingly, for each day which passes after the
foregoing date and before all building permits for the Tenant Improvements
are obtained and delivered to Landlord, the Estimated Commencement Date shall
be delayed the same number of days.
1.5 CONDITION OF PREMISES; LIMITATION. Except as specifically provided in
this section, Landlord makes no warranties or representations with regard to the
Premises or the Improvements, or any portion thereof, and Tenant shall accept
the Premises in the condition in which they are delivered on the Commencement
Date; provided, however, that the Premises shall be constructed in substantial
conformance with the approved T.I. Plans and Specifications and in accordance
with all applicable laws then in effect. Landlord makes no warranty to Tenant
regarding any other aspect of the Improvements or the Premises, including but
not limited to, any patent or latent defects, which Tenant expressly waives any
rights to make claims therefore; provided, however, that Landlord hereby assigns
to Tenant on a nonexclusive basis all guarantees and warranties from any
contractors, subcontractors, materialmen and suppliers which provide
construction, labor or materials to the Premises.
1.6 APPROVALS. After Landlord's approval of any of the T.I. Plans and
Specifications, no significant changes, modifications or alterations may be made
without the prior written consent of both Landlord and Tenant; provided,
however, if any changes are required (i) by any governmental agency with
jurisdiction over the Project, (ii) as a result of field conditions, or (iii) to
substitute reasonably equivalent materials to avoid unanticipated delays,
strikes or shortages, then Landlord shall be authorized to make such changes.
The costs of any such changes to the T.I. Plans and Specifications are to be
included within the Total Cost (as hereinafter defined). Any changes to the
T.I. Plans and Specifications after approval thereof, other than any changes
required under Subsections (i), (ii) and (iii) above, shall constitute a Change
Order (as hereinafter defined).
1.7 COSTS. All costs and fees associated with the preparation of the
Shell Plans and Specifications, including, without limitation, all consultant or
subcontractor design fees, and all costs of constructing the Shell Improvements
shall be borne solely by Landlord, except as expressly set forth herein. Shell
Plans and Specifications shall be prepared by the Budding Architect and other
consultants selected by Landlord in its sole discretion. T.I. Plans and
Specifications shall be prepared by Tenant's space planner and other consultants
selected by Tenant and reasonably approved by Landlord.
SECTION 2 - TENANT IMPROVEMENTS
2.1 TENANT IMPROVEMENTS. The Tenant Improvements and shall remain
Landlord's property and shall be surrendered to Landlord upon expiration or
earlier termination of the Lease in accordance with the provisions of the Lease.
2.2 PREMISES FURNISHINGS. It is expressly understood that Landlord's
obligation to construct Tenant Improvements in the Premises is limited to
construction of the Tenant Improvements specifically contemplated by the T.I.
Plans and Specifications. Tenant shall be solely responsible for the
performance and expense of the design, layout, provision, delivery and
installation of any furniture, furnishings, equipment, and any other personal
property Tenant will use at the Premises. In arranging for the performance of
any of the work referred to in the preceding sentence, Tenant shall be permitted
to enter the Premises only upon the prior consent of Landlord and shall adopt a
schedule in conformance with the schedule(s) of Landlord's Contractor (as
hereinafter defined) and conduct its work
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in such a manner as to maintain harmonious labor relations so as not to
interfere unreasonably with or delay the work of Landlord's contractors in
substantially completing the Tenant Improvements.
SECTION 3 - TENANT IMPROVEMENT ALLOWANCE
3.1 TENANT IMPROVEMENT ALLOWANCE. Landlord has agreed to contribute a
one-time tenant improvement allowance for the cost of preparing the T.I. Plans
and Specifications related to Tenant Improvements and toward the cost of
constructing the Tenant Improvements, including any necessary permits and
demolition work in an amount up to the amount specified in Item 15 of the Basic
Terms of the Lease ("Tenant Improvement Allowance"). The Tenant Improvement
Allowance is based on the Usable square feet of the Premises, and the
calculation of Usable square feet for the Premises shall be mutually agreed to
by the Building Architect and Tenant's space planner. Tenant shall be solely
responsible for any and all costs of constructing the Tenant Improvements in
excess of the Tenant Improvement Allowance pursuant to the provisions of Section
3.2 and Section 3.3 below. The total of all costs incurred by Landlord in
connection with the design and construction of the Tenant Improvements shall be
referred to as the "Total Costs."
3.1.1 ALLOCATION. Notwithstanding Section 3.1 above, the parties
have agreed that certain portions of Tenant Improvement Allowance may only be
used for certain portions of the Tenant Improvements. Such allocations are as
follows: (a) a minimum of twenty-two dollars and fifty cents ($22.50) per Usable
square foot (as defined in the Lease) of the Tenant Improvement Allowance shall
be used for building standard tenant improvements as described on Schedule 3
attached hereto and incorporated herein; (b) a maximum of two dollars fifty
cents ($2.50) per Usable square foot of the Tenant Improvement Allowance shall
be used for Tenant's space planner, architecture and engineering fees; (c) a
maximum of one dollar fifty cents ($1.50) per Usable square foot of the Tenant
Improvement Allowance shall be used for fees and permits related to the Tenant
Improvements; and (d) the remainder of the Tenant Improvement Allowance shall be
used for Tenant Improvement which are more expensive than building standard, as
Tenant requests in its sole discretion. Portions of the Tenant Improvement
Allowance may be utilized for nonbuilding standard Tenant Improvements if and
only if Tenant incorporates such requests into the Space Plan, as appropriate,
prior to their initial approval.
3.2 TENANT CONTINGENCY ALLOWANCE. In the event Tenant elects to exceed
the Tenant Improvement Allowance, and Tenant elects to not pay such excess in a
cash lump sum to Landlord upon Substantial Completion of the Premises, and/or
the actual cost of the Tenant Improvements exceeds either the total Tenant
Improvement Allowance or the specific allocations set forth in Section 3.1.1
above (collectively, the "Excess Costs"), Landlord has agreed to advance payment
towards the Excess Costs in an amount up to the amount of the Tenant Contingency
Allowance specified in Item 16 of the Basic Terms of the Lease. In such event,
Tenant shall repay to Landlord as Additional Rent the amount of the Tenant
Contingency Allowance paid by Landlord. Such repayment of the Tenant
Contingency Allowance shall be at the rate of one and thirty-two hundredths
cents ($0.0132) per Rentable square foot per month in the Premises for each one
dollar ($1.00) per Rentable square foot in the Premises of Excess Cost paid by
Landlord, and adding the resulting monthly amount to the Base Monthly Rent due
hereunder. For example, and not by way of limitation, if the Tenant Improvement
costs exceeded the Tenant Improvement Allowance by sixteen thousand four hundred
twenty-five dollars ($16,425), which sixteen thousand four hundred twenty-five
dollars ($16,425) were the total Excess Cost, then the Base Monthly Rent due
hereunder would be increased by one and thirty-two hundredths cents ($0.0132)
per Rentable square foot per month (because such Excess Cost is equal to one
dollar ($l.00) per Rentable square foot of Premises).
3.3 COST OF TENANT IMPROVEMENT WORK.
3.3.1 OBTAINING COST QUOTATION. Landlord shall retain a
contractor, acceptable to Landlord in its reasonable discretion ("Contractor"),
as contractor for the Tenant Improvements. The Contractor may be an affiliate
of Landlord or any of its partners. Within ten (10) days after Landlord's
approval of the T.I. Construction Documents, Landlord shall provide to Tenant
the cost of the Tenant Improvements ("Cost Quotation") based upon the approved
T.I. Construction Documents. Landlord will require the Contractor to
competitively bid all major subtrades for the Tenant Improvements construction.
EXHIBIT "C"
Page 6 of 12
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<PAGE>
3.3.2 APPROVAL OF COST QUOTATION BY TENANT. Tenant shall, within
five (5) Business Days of receipt thereof, either: (i) agree in writing to pay
the cost by which the Cost Quotation exceeds the sum of the Tenant Improvement
Allowance and the Tenant Contingency Allowance ("Additional Cost"), or (ii)
revise the T.I. Construction Documents or Space Plan so that the Cost Quotation
is either (a) no more than the Tenant Improvement Allowance plus Tenant
Contingency Allowance, or (b) in excess of the Tenant Improvement Allowance plus
Tenant Contingency Allowance by the amount of Additional Cost which Tenant
agrees to pay. If Tenant elects to revise the T.I. Construction Documents in
order to reduce the Cost Quotation, the period of time between Tenant's election
to revise the T.I. Construction Documents and the approval of the revised T.I.
Construction Documents by Tenant shall constitute a Tenant Delay (as defined
below). If the sum of the Cost Quotation plus the amounts described in Section
3.1.I (b) and 3.1.1 (c) is less than the maximum Tenant Improvement Allowance
set forth in the Basic Terms, the Tenant Improvement Allowance shall be deemed
to be an amount equal to such sum. The failure of Tenant to respond within the
five (5) Business Day period shall be a Tenant Delay. Upon approval by Tenant,
Landlord shall be authorized to proceed with the Improvements in accordance with
the approved T.I. Construction Documents. All costs of revising the T.I.
Construction Documents, including, without limitation, re-engineering,
estimating, printing of drawings, costs of any space planner, architect,
engineering consultants and other consultants and any other incidental expenses
shall be chargeable against the Tenant Improvement Allowance and includable in
the Total Cost.
3.4 LANDLORD COSTS FOR TENANT IMPROVEMENTS. All costs incurred by
Landlord in connection with (a) the design, construction and installation of the
Tenant Improvements, (b) any demolition or modification of any existing
improvements as may be necessary to accomplish construction of the Tenant
Improvements in conformance with the T.I. Construction Documents, or (c) any
other measures taken by Landlord which may be reasonably required to accomplish
Landlord's construction of the Tenant Improvements, including but not limited to
Landlord's procurement of bonds, insurance policies and governmental permits,
and shall be charged against the Tenant Improvement Allowance and included with
the Total Cost.
3.5 TENANT COSTS FOR TENANT IMPROVEMENTS. Tenant shall deliver to
Landlord at least twenty (20) days prior to the commencement of construction of
the Tenant Improvements cash equal to one hundred percent (100%) of the amount
of the Additional Costs. Tenant shall be solely responsible for all Additional
Costs.
SECTION 4 - CONSTRUCTION OF TENANT IMPROVEMENTS
4.1 COMMENCEMENT OF CONSTRUCTION. Landlord intends to arrange for the
Commencement of Construction to occur on or before February 15, 1998. If
Commencement of Construction does not occur on or before February 15, 1998,
Landlord shall not in any event be liable to Tenant for damages as a result
thereof but Tenant shall have the right, as its sole and exclusive remedy, to
terminate this Lease by delivering written notice thereof to Landlord by on or
before February 20, 1998. If Tenant fails to deliver such notice of termination
by on or before February 20, 1998, such right to terminate shall be deemed
waived and the Lease shall continue in full force and effect.
4.2 CONSTRUCTION OF TENANT IMPROVEMENTS. After approval of the T.I.
Construction Documents, Landlord's Contractor shall use its diligent efforts to
Substantially Complete (as defined below) the Tenant Improvements on or before
the Estimated Commencement Date set forth in the Lease. Landlord shall enter
into a construction contract with Contractor which contains a guaranteed
delivery date for the Tenant Improvements, including a liquidated damage penalty
provision, such date of delivery to be established after approval of the final
T.I. Construction Drawings and subject to events of force majeure.
4.3 COMPLETION OF TENANT IMPROVEMENTS. Landlord shall be responsible for
the construction of the Tenant Improvements in substantial conformance with the
approved T.I. Construction Documents. Landlord shall use its good faith efforts
to estimate when the Premises will be Substantially Complete and deliver to
Tenant written notice sixty (60) days prior to such estimated date. Upon
Substantial Completion (as defined below) of the Tenant Improvements, Landlord
shall provide a "punchlist" identifying the corrective work of the type commonly
found on an architectural punchlist with respect to the Tenant Improvements,
which list shall be in Landlord's reasonable discretion based on whether such
items were required by the approved T.I. Construction Documents. Within ten
EXHIBIT "C"
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<PAGE>
(10) Business Days after delivery of the punchlist, Landlord shall commence the
correction of punchlist items and diligently pursue such work to completion
within thirty (30) days after Substantial Completion. The punchlist procedure
to be followed by Landlord and Tenant shall in no way limit Tenant's obligation
to occupy the Premises under the Lease nor shall it in any way excuse Tenant's
obligation to pay Rent as provided under the Lease, unless such punchlist items
reasonably precludes Tenant from occupying the Premises, as reasonably
determined by Landlord and Tenant.
4.4 PROGRESS REPORTS; SITE MEETINGS. Landlord shall provide to Tenant
monthly progress reports describing the condition and estimated schedule for
completing the Tenant Improvements ("Progress Reports"). Landlord shall include
in the Progress Report a comparison of then-known actual costs of the Tenant
Improvements compared to the estimated cost as reflected in the approved Cost
Quotation. In no event shall the Progress Reports be deemed to be a
representation, warranty or an assurance by Landlord of the date of Substantial
Completion or the Total Cost of the Tenant Improvements and Tenant specifically
acknowledges that the Progress Report is only an estimate by Landlord based on
information provided to Landlord. Landlord shall have no liability or
responsibility for any errors or inaccuracies in a Progress Report. In
addition, Landlord and Tenant shall coordinate on-site meetings of construction
personnel as reasonably appropriate in order to implement the construction
described in this Work Letter.
4.5 SUBSTANTIAL COMPLETION. 'Substantial Completion" or "Substantially
Completed" as used herein shall mean both (a) delivery of written notice to
Tenant of the completion of construction of the Tenant Improvements in the
Premises pursuant to the approved T.I. Construction Documents with the exception
of minor details of construction installation, decoration, or mechanical
adjustments and punchlist items as certified to by Landlord, and (b) the
issuance by the City of Carlsbad of a final inspection approval, certificate of
occupancy, a temporary certificate of occupancy or some other authorization or
Tenant has occupied and obtained the beneficial use of the Premises.
Substantial Completion shall be deemed to have occurred notwithstanding the
requirement to complete "punchlist" items or similar corrective work. Tenant
agrees that if Landlord shall be delayed in causing such work to be
Substantially Completed as a result of any of the events as defined below
(referred to herein as a "Tenant Delay"), then such delay shall be the
responsibility of Tenant, and will result in the Commencement Date of the Term
being the earlier of: (i) Tenant's opening of the Premises for business; (ii)
the date of Substantial Completion or (iii) the date when Substantial Completion
would have occurred if there had been no Tenant Delay, providing that Landlord
shall not be required to work on an overtime basis in order to bring the
Premises to Substantial Completion. For the purposes of this Work Letter, a
Tenant Delay is defined as follows: (a) Tenant's failure to comply with any time
frames set forth herein or in the Lease, (b) any changes in any stage of the
T.I. Plans and Specifications requested by Tenant after Landlord's and Tenant's
final approval of such stage, including, without limitation, any changes made to
reduce the Cost Quotation pursuant to this Work Letter, (c) tenant's failure to
furnish any documents required herein or approve any item or any cost estimates
as required herein, (d) Tenant's request for materials, finishes, or
installations other than Landlord's Building Standard items, (e) Tenant's
failure to perform any act or obligation imposed on Tenant by the Lease or this
Work Letter as and when requested thereunder or hereunder, or any other delay
otherwise caused by Tenant, its agents, employees or contractors which operates
to delay Landlord's Substantial Completion of the Tenant Improvements, as
reasonably determined by Landlord.
SECTION 5 - TENANT WORK
5.1 FINISH WORK. All finish work and decoration and other work desired by
Tenant and not included within the Improvements as set forth in the approved
Shell Construction Documents or T.I. Construction Documents, including
specifically, without limitation, all computer systems, cabling, telephone
systems, telecommunications systems and other items (the "Tenant Work") shall be
finished and installed by Tenant at Tenant's sole expense and shall not be
chargeable against the Tenant Improvement Allowance. If any Tenant Work is not
set forth on the approved T.I. Construction Documents, Tenant shall secure
Landlord's prior consent for such Tenant Work in the same manner and following
the same procedures provided for in the Lease. Tenant shall not commence the
construction or installation of any improvements on the Premises, including,
specifically, the Tenant Work, without Landlord's prior written approval (which
shall not be unreasonably withheld) of: (i) Tenant's contractor, (ii) detailed
plans and specifications for the Tenant Work, and (iii) a certificate(s) of
insurance accurately showing that Tenant's contractor maintains insurance
coverage in amounts, types, form and with companies
EXHIBIT "C"
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<PAGE>
reasonably acceptable to Landlord. All such certificates or policies shall
be endorsed to show Landlord as an additional insured and insurance shall be
maintained by Tenant or Tenant's contractor at all times during the
performance of the Tenant Work.
5.2 LANDLORD'S OBLIGATIONS. Landlord is under no obligation to construct
or supervise construction of any of the Tenant Work and any inspection by
Landlord shall not be construed as a representation that the Tenant Work is in
compliance with the final plans and specifications therefor or that the
construction will be free from faulty material or workmanship or that the Tenant
Work is in conformance with any building codes or other applicable regulations.
All of the Tenant Work shall be undertaken and performed in strict accordance
with the provisions of the Lease and this Work Letter.
SECTION 6 - CHANGE ORDERS
Tenant may request changes in the Tenant Improvements during construction
only by written instructions to Landlord, or its designated representative, on a
form approved by Landlord. All such changes will be subject to Landlord's prior
written approval, which shall be approved or disapproved by Landlord in its
reasonable discretion, within three (3) Business Days of receipt. Prior to
commencing any change, Landlord will prepare and deliver to Tenant, for Tenant's
approval, a change order (the "Change Order") setting forth the additional time,
if any, needed for such change and the total costs of such change which will
include associated architectural, engineering and construction contractor's
fees. If a Change Order requires additional time to construct, the Estimated
Commencement Date shall be extended by a similar number of days. Within two (2)
Business Days after delivery to Tenant of the total costs of the Change Order,
Tenant shall deliver notice of approval, together with a cash payment equal to
one hundred percent (100%) of the cost of the Change Order if and to the extent
such cost exceeds the sum of the Tenant Improvement Allowance and the Tenant
Contingency Allowance ("Payment"). If Tenant fails to approve such Change Order
and deliver the Payment within five (5) days after delivery by Landlord, Tenant
will be deemed to have withdrawn the proposed Change Order and Landlord will not
proceed to perform the change. Upon Landlord's receipt of Tenant's approval and
Payment, Contractor will proceed to perform the change.
SECTION 7 - RESPONSIBILITY FOR FUNCTION
Tenant will be responsible for the function of all Tenant Improvements
whether or not approved by Landlord or installed by Landlord at Tenant's
request. Landlord's preparation and/or approval of any design or constriction
documents will not constitute any representation or warranty as to the adequacy,
efficiency, performance or desirability of the improvements.
SECTION 8 - TENANT AND LANDLORD OBLIGATIONS
8.1 ACCESS AND ENTRY. During Landlord's construction of the Premises,
Landlord agrees to provide reasonable access as described herein to the Premises
to Tenant and :Its agents, for the purpose of installing Tenant's fixtures,
Tenant Work and furniture, so long as such access does not unreasonably
interfere with the conduct of Landlord's construction activities or affect
Landlord's ability to diligently bring the Premises to Substantial Completion by
the Estimated Commencement Date. Landlord acknowledges that access during the
construction of the Tenant Improvements for purpose of performing Tenant Work is
important to Tenant. If Landlord, in its reasonable discretion, determines that
the providing of such access may affect its ability to bring the Premises to
Substantial Completion on the Estimated Lease Term Commencement Date as set
forth in this Lease, Landlord shall have the right to deny or otherwise restrict
such access to Tenant and its agents until Substantial Completion of the Tenant
Improvements. The terms of such access may require that Tenant and Tenant's
agents perform work at times and in the manner designated by Landlord, including
nights, weekends, and holidays. Also, Tenant and its agents may be required to
utilize only certain access areas at certain times, designated by Landlord.
With respect to any approved Tenant Work, Tenant shall adopt a schedule in
conformance with the schedule of Landlord's Contractor and conduct its work in
such a manner as to maintain harmonious labor relations so as not to interfere
unreasonably with or delay the work of Landlord's Contractor. Tenant's
contractors and agents shall be subject to the supervision of Landlord's
construction supervisor.
EXHIBIT "C"
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<PAGE>
8.2 RISK OF LOSS. All materials, work, installations and decorations of
any nature brought upon or installed in the Premises before the Commencement
Date shall be at the risk of the party who brought such materials or items onto
the Premises. Neither Landlord nor any party acting on Landlord's behalf shall
be responsible for any damage or loss or destruction of such items brought to or
installed in the Premises by Tenant prior to such date, except in the event of
Landlord's negligence or willful misconduct. As a condition to such early
entry, Landlord may require Tenant to execute a hold harmless agreement, in a
form acceptable to Landlord. Such early occupancy shall be subject to the terms
and provisions of the Lease.
8.3 CONFORMANCE WITH LAWS. All Tenant Work shall be done in conformity
with applicable codes and regulations of governmental authorities having
jurisdiction over the Project and the Premises and valid building permits and
other necessary authorization from appropriate governmental agencies when
required, shall be obtained by Tenant for the Tenant Work at Tenant's expense.
Any Tenant Work not acceptable to the applicable governmental authority or not
reasonably satisfactory to Landlord in accordance with the standard in the
preceding sentence (unless previously approved by Landlord), shall be promptly
corrected, replaced, or brought into compliance with such applicable codes and
regulations at Tenant's expense. Notwithstanding any failure by Landlord to
object to any such Tenant Work, Landlord shall have no responsibility therefor.
8.4 LIENS. Tenant shall keep the Premises and Project free from any
mechanics', materialmen's or other liens arising out of any work performed upon
or materials or furniture, fixtures or improvements delivered to the Premises
including but not limited to any Tenant Work performed, materials furnished or
obligations incurred by or for Tenant or any person or entity claiming by,
through or under Tenant. Landlord shall have the right at all times to post and
keep posted on the Premises any notices which it deems necessary for its
protection from such liens. If any such liens are filed and are not released of
record by payment or posting of a proper bond within ten (10) days after such
filing, Landlord, may, without waiving its rights and remedies based on such
breach by Tenant and without releasing Tenant from any obligations hereunder or
under the Lease, cause such liens to be released by any means it shall deem
proper, including payment of the claim giving rise to such lien in which event
all amounts paid by Landlord shall immediately be due and payable by Tenant.
SECTION 9 - TENANT'S REPRESENTATIVE
Tenant has designated Richard Rubio as its sole representative with respect
to the matters set forth in this Work Letter, who shall have full authority and
responsibility to act on behalf of Tenant as required in this Work Letter.
Tenant may change its representative under this Work Letter at any time by
providing five (5) days prior written notice to Landlord. All inquiries,
requests, instructions, authorizations and other communications with respect to
matters covered by this Work Letter from Landlord will be made to Tenant's
Representative.
SECTION 10 - LANDLORD'S REPRESENTATIVE
Landlord has designated James McCann as its sole representative with
respect to the matters set forth in this Work Letter, who shall have full
authority and responsibility to act on behalf of Landlord as required in this
Work Letter. Landlord may change its representative under this Work Letter at
any time by providing five (5) days prior written notice to Tenant. All
inquiries, requests, instructions, authorizations and other communications with
respect to the matters covered by this Work Letter from Landlord will be made to
Tenant's representative. Tenant will communicate solely with Landlord's
Representative and will not make any inquiries of or requests to, and will not
give any instructions or authorizations to, any other employee or agent of
Landlord, including Landlord's architect, engineers, and contractors or any of
their agents or employees, with regard to matters covered by this Work Letter.
SECTION 11 - MISCELLANEOUS
11.1 SOLE OBLIGATIONS. Except as herein expressly set forth with respect
to the Improvements or in the Lease. Landlord has no agreement with Tenant and
has no obligation to do any work with respect to the Premises. Any other work
in the Premises which may be permitted by, Landlord pursuant to the terms and
conditions of the
EXHIBIT "C"
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Lease, including any alteration or improvements as contemplated in the Lease,
shall be done at Tenant's sole cost and expense and in accordance with the
terms and conditions of the Lease.
11.2 APPLICABILITY. This Work Letter shall not be deemed applicable to:
(a) any additional space added to the original Premises at any time, whether by
the exercise of the Right of First Refusal or any options under the Lease or
otherwise, or (b) any portion of the original Premises or any additions thereto
In the event of a renewal or extension of the original Lease Term, whether by
the exercise of any options under the Lease or any amendment or supplement
thereto. The construction of any additions or improvements to the Premises not
contemplated by this Work Letter shall be effected pursuant to a separate work
letter agreement, in the form then being used by Landlord and specifically
addressed to the allocation of costs relating to such construction.
11.3 AUTHORITY; COUNTERPARTS. Any person signing this Work Letter on
behalf of Tenant warrants and represents that such person has authority to do
so. This Work Letter may be executed in counterparts, each of which shall be
deemed an original, but all of which together constitute one instrument.
11.4 BINDING ON SUCCESSORS. Subject to the limitations on assignment and
subletting contained in the Lease, this Work Letter shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11.5 LANDLORD'S APPROVAL RIGHTS. Landlord may withhold its approval of the
Space Plan, including any revisions requested by Tenant, the T.I. Construction
Documents, Change Orders or other work requested by Tenant which require work
which: (i) exceeds or affects the structural integrity of the Project, or any
part of the heating, ventilating, air conditioning, plumbing, mechanical,
electrical, communication or other systems of the Project; (ii) is not approved
by the holder of any mortgage or deed of trust encumbering the Project at the
time the work is proposed; (iii) would not be approved by a prudent owner of
property similar to the Project; (iv) violates any agreement which affects the
Project or binds Landlord; (v) Landlord reasonably believes will increase the
cost of operation or maintenance of the common areas within or any of the
systems of the Project; (vi) Landlord reasonably believes will reduce the market
value of the Premises or Project at the end of the Lease Term; (vii) does not
conform to applicable building codes or is not approved by any governmental
authority with jurisdiction over the Premises; (viii) is not a Building Standard
item or an item of equal or higher quality; (ix) in Landlord's determination
detrimentally affects the uniform exterior appearance of the Project; or (x) is
reasonably disapproved by Landlord for any other reason not set forth herein.
11.6 TIME OF THE ESSENCE. Time is of the essence as to each and every term
and provision of this Work Letter. In all instances where Tenant is required to
approve an item, if no written notice of disapproval is given within the stated
time period at the end of said period the item shall automatically be deemed
approved and the next succeeding time period shall commence. Except as
otherwise provided, all references herein to a "number of days" shall mean and
refer to calendar days.
11.7 FORCE MAJEURE. If either party cannot perform any of its obligations
due to events beyond such party's control, the time provided for performing such
obligations shall be extended by a period of time equal to the duration of such
events; provided, however, that in no event shall the due date for the payment
of any money be extended.
11.8 ATTORNEY'S FEES. In any action to enforce or interpret the terms of
this Work Letter, the party prevailing in that action shall be entitled to
recover its reasonable attorneys' fees and costs of suit, both at trial and on
appeal.
11.9 INCORPORATION. This Work Letter is and shall be incorporated by
reference in the Lease and all of the terms and provisions of the Lease are
incorporated herein for all purposes. Any default by Tenant hereunder also
constitutes a default under the Lease.
EXHIBIT "C"
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IN WITNESS WHEREOF, the Work Letter has been made and executed as of the
date set forth below.
LANDLORD
Dated: 10/27/97 MARCO PLAZA ENTERPRISES, a
--------------------- California general partnership
By: /s/ illegible
----------------------------
Name: illegible
----------------------------
Title: Partner
----------------------------
TENANT:
Dated: 10/27/97
-------------------- RUBIO'S RESTAURANTS, INC., a
Delaware corporation
By: /s/
----------------------------
Name: Rafael R. Rubio
----------------------------
Title: Chairman
----------------------------
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
EXHIBIT "C"
Page 12 of 12
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9/30/97
<PAGE>
SCHEDULE 1 TO EXHIBIT "C"
CORNERSTONE CORPORATE CENTRE
OFFICE BUILDING OUTLINE SPECIFICATIONS
-----------------------------------------------
MAY 28, 1997
<TABLE>
<S> <C>
Project Name: CornerStone Corporate Center Number of buildings: Four (4)
-------------------------------
Project Location: Carlsbad Airport Centre Gross Building: 52,000 SF
--------------------------- ---------------
Lot 8 Rentable Building (GLA) 50,506 SF
--------------------------------------------- ---------
Building Address: to be determined Rentable floor plate size: 16,425 SF
--------------------------- ---------
Core factor 14.0 %
--------------------------------------------- -------
Gross Site Area: 3.31 Acres GLA building coverage 48 % (GLA/NetSite Area)
------- ------
Net Site Area: 2.5 Acres
-------
Parking Spaces Provided 208 Ea.
-------
Parking Ratio per GLA 4.0 / 1000 SF
-----
</TABLE>
BUILDING SHELL DESCRIPTION
1. UBC Construction Type: III 1 hour.
2. Foundations: Typical pad/spread footings at bearing columns. Excludes any
caisson or pile footings.
3. Slab on Grade: 4" concrete slab on grade, 2500 PSI, with #3 bars 24" on
center each way over 2" coarse sand over vapor barrier over 2" coarse sand.
4. Structural System: Structural steel framing system of columns and beams
with wood floor joists, plywood subdeck with 11/2" lightweight concrete.
5. Floor loading: Designed for 100 lb. per square foot, which includes 80 lb.
per square foot of live load (i.e.: fixtures and furnishings) and 20 lb. per
square foot of dead/partition load.
6. Bay Depth Spacing: 34 feet to 48 feet.
7. Exit Stairs: 2 exit stairwells, one on each end of the building with steel
pan concrete filled landings and treads and painted round steel pipe
handrails.
8. Typical Floor ceiling height: Finished ceiling height of 9' within 13' 4"
floor to floor structural system.
SCHEDULE 1 TO EXHIBIT "C"
Page 1 of 3
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<PAGE>
9. Building Exterior: A composition system of applied stone (slate and
limestone) over stucco and high performance vision glass in an anodized
aluminum frame.
10. Roofing: 4-ply built up roof with mineral cap sheet, 10 year bondable.
11. Elevators: 2 hydraulic elevators to service each of the floors with 3,000
lb. load capacity.
12. Common Area Restrooms: Men's and women's restrooms on each floor designed
to meet Title 24 and ADA requirements and shall include flush valve toilets,
wall hung urinals, ceiling hung plastic laminate toilet partitions, and 2
sinks with stone countertops.
13. Common Area Showers/Lockers: Men's and women's shower and locker
facilities shall be provided to service the building.
14. Automatic Fire Sprinklers: The fire sprinkler system will be designated to
provide coverage for the shell building with provisions for standard office
type tenant improvements.
15. Heating, Ventilating and Air Conditioning System (HVAC): Cooling tower and
boiler together with piped water loops on each floor and central make-up air
shafts (and/or soffits supply) throughout shell building.
16. Electrical System: The building will provide with a 1200 amp 277/480 volt,
3 phase, 4 wire main electrical system including conduit only distribution
to electrical rooms on each floor. Metering will be provided in the main
electrical room for the Building Shell.
17. Security System: The building will be equipped with a card key access
system. Each tenant must provide their own security system for their
premises.
INTERIOR OFFICE IMPROVEMENTS
1. Deleted
2. Deleted
3. Deleted
4. Deleted
5. Deleted
6. Deleted
7. Deleted
8. Deleted
SCHEDULE 1 TO EXHIBIT "C"
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<PAGE>
9. Fire Sprinklers - The fire sprinkler system will be modified for complete
coverage utilizing semi-recessed heads.
10. HVAC - Provide supply and return conditioned air distribution from the
shell building package unit system to the office space at approximately 1
ton per 400 SF.
SCHEDULE 1 TO EXHIBIT "C"
Page 3 of 3
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<PAGE>
SCHEDULE 2 TO EXHIBIT "C"
[PICTURE]
CORNERSTONE CORPORATE CENTRE
SCHEDULE 2 TO EXHIBIT "C"
Page 1 of 3
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<PAGE>
SCHEDULE 2
[PICTURE]
SCHEDULE 2 TO EXHIBIT "C"
Page 2 of 3
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<PAGE>
SCHEDULE 2
[PICTURE]
SCHEDULE 2 TO EXHIBIT "C"
Page 3 of 3
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<PAGE>
SCHEDULE 3 TO EXHIBIT "C"
NEWPORT NATIONAL CONSTRUCTION CO
PRELIMINARY TENANT IMPROVEMENT COST ESTIMATE
<TABLE>
<S> <C> <C> <C>
PROJECT: RUBIO'S
Cornerstone Corporate Center Estimate based on Maggetti Elam preliminary
Bldg 3rd Flr Usable TI S.F.: 14.719 space plan dated 3/4/97, Excld's corridor S.F. & cost
</TABLE>
<TABLE>
<CAPTION>
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
COST DESCRIPTION QTY UNIT UNIT UNIT TOTAL
CODES PRICE TOTAL LINE ITEM
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
1-000 GENERAL REQUIREMENTS
1-200 Final Clean up 14,719 $0.10 SF $1,472
1-100 Progress Clean up 14,719 $0.07 SF $1,030
$2,502
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
3-000 CONCRETE
$0.00 SF $0
$0
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
6-000 ROUGH CARPENTRY
$0.00 EA $0
$0
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
8-235 MILLWORK
P-lam base cabinet 10 $175.00 LF $1,750
P-lam uppers & lowers 32 $275.00 LF $8,800
P-lam worksurface 36" 75 $75.00 LF $5,625
P-lam reco desk 28 $300.00 LF $8,400
$24,575
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
7-000 INSULATION
Walls - ????? 1,647 $0.30 SF $494
$0.00 SF $0
$494
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
7-011 ROOFING
$0.00 LS $0
$0
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
8-000 DOORS/FRMS/HRDW
Sngl 1 rh 3086 sc maple dr/frm/hrdw $895.00 EA $0
Dbl 1 rh 3086 sc maple dr/frm/hrdw $1,740.00 EA $0
Sngl unrtd 3086 sc maple dr/frm/hrd 32 $700.00 EA $22,400 1 DrFrJrdw per 400 sf
Dbl unrtd 3086 ac maple dr/frm/hrdw 1 $1,375.00 EA $1,375
By-pass closet drs 2 $450.00 EA $900
Cypher locks $450.00 EA $0
Locksets $50.00 EA $0
Card key proximity reader $1,500.00 EA $0
$24,675
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
<CAPTION>
------------- ---------------- --------- ------------- --------- ---------- ------
COST TOTAL STD STANDARD NON-STD
CODES COST PSF UNIT TI COST TI COST
------------- ---------------- --------- ------------- --------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
1-000
1-200 $1,472 $0
1-100 $1,030 $0
0.17
------------- ---------------- --------- ------------- --------- ---------- ------
3-000
$0 $0
0.00
------------- ---------------- --------- ------------- --------- ---------- ------
6-000
$0
0.00
------------- ---------------- --------- ------------- --------- ---------- ------
8-235
$0 $1,750
$0 $8,800
$0 $5,625
$0 $8,400
1.67
------------- ---------------- --------- ------------- --------- ---------- ------
7-000
$0 $494
$0 $0
0.03
------------- ---------------- --------- ------------- --------- ---------- ------
7-011
$0 $0
0.00
------------- ---------------- --------- ------------- --------- ---------- ------
8-000
$0 $0
$0 $0
$22,400 $0
$1,375 $0
$0 $900
$0 $0
$0 $0
$0 $0
1.68
------------- ---------------- --------- ------------- --------- ---------- ------
</TABLE>
SCHEDULE 3 TO EXHIBIT "C"
Page 1 of 4
Landlord Initials: EC JN
-------------
Tenant Initials: RR
-------------
<PAGE>
<TABLE>
<CAPTION>
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
COST DESCRIPTION QTY UNIT UNIT UNIT TOTAL
CODES PRICE TOTAL LINE ITEM
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
8-030 GLASS & GLAZING
Interior Window Coverings 3,409 $2.25 SF $7,871
2' clerestory windows $20.00 SF $0
9' interior windows 495 $20.00 SF $9,900
9' mirror @ gym & showers $10.50 SF $0
Shower doors 1 $275.00 EA $275
Storefront doors balconies 4 $750.00 EA $3,000
$21,046
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
9-930 DRYWALL
Perimeter drywall 2,503 $1.50 SF $3,755
Full hgt wall 13' high to structure 195 $35.00 LF $6,825
Interior part 9'-0" high 748 $25.00 LF $18,700
Gyp board ceilings 612 $2.65 SF $1,622
Bracing @ folding part 29 $25.00 LF $725
$31,626
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
??? ACOUSTICAL CEILINGS
2'X2' regular 14,107 $1.50 SF $21,161
Open ceiling $1.10 SF $0
Total ceiling area excluding gyp clgs 14,107 $21,161
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
??? CERAMIC TILE
Ceramic tile flr @ exec restroom 112 $7.50 SF $840
Ceramic tile walls @ exec restroom 164 $9.50 SF $1,558
$2,398
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
9-090 CARPETING
Carpet-Allowance 14,161 $1.78 SF $25,207
$25,207
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
9-080 RESILIENT FLOORING/BASE
VCT-Armstrong 446 $1.60 SF $714
Base-Roppe 2-1/2" 2,420 $1.10 LF $2,662
$3,376
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
9-100 PAINTING/WALLCOVERING
Walls 20,089 $0.27 SF $5,424
Doors-Stain grade 33 $50.00 EA $1,650
Vinyl wallcovering 1,269 $1.75 SF $2,221
$9,295
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
10-000 SPECIALTIES
$0
$0
$0
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
<CAPTION>
------------- ---------------- --------- ------------- --------- ---------- ------
COST TOTAL STD STANDARD NON-STD
CODES COST PSF UNIT TI COST TI COST
------------- ---------------- --------- ------------- --------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
8-030
$7,871 $0
$0 $0
$0 $9,900
$0 $0
$0 $275
$0 $3,000
1.43
------------- ---------------- --------- ------------- --------- ---------- ------
9-930
$3,755 $0
$6,825 $0
1 LF per 10 sf $18,700 $0
$0 $1,622
$0 $725
2.15
------------- ---------------- --------- ------------- --------- ---------- ------
??? 2.15
$21,161 $0
$0 $0
1.44
------------- ---------------- --------- ------------- --------- ---------- ------
???
$0 $840
$0 $1,558
$0 $0
0.16
------------- ---------------- --------- ------------- --------- ---------- ------
9-090
1.78 $25,207 $0
1.71
------------- ---------------- --------- ------------- --------- ---------- ------
9-080
$0 $714
$2,662 $0
0.23
------------- ---------------- --------- ------------- --------- ---------- ------
9-100
$5,424 $0
$1,650 $0
0.63
------------- ---------------- --------- ------------- --------- ---------- ------
10-000
$0 $0
$0 $0
------------- ---------------- --------- ------------- --------- ---------- ------
</TABLE>
SCHEDULE 3 TO EXHIBIT "C"
Page 2 of 4
Landlord Initials: EC JN
-------------
Tenant Initials: RR
-------------
<PAGE>
<TABLE>
<CAPTION>
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
COST DESCRIPTION QTY UNIT UNIT UNIT TOTAL
CODES PRICE TOTAL LINE ITEM
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
10-010 Toilet Accessories/partitions
Toilet accessories 1 $375.00 EA $375
EA $0
$375
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
EQUIPMENT
Folding Partition 29 $250.00 LF $7,250
Dishwashers 1 $350.00 EA $350
Microwaves 2 $150.00 EA $300
Stove/oven 1 $750.00 EA $750
$8,650
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
15-000 MECHANICAL
15-010 Plumbing:
Insta-Hot Water heater 1 $300.00 EA $300
Sink @coffee rms & showers 3 $750.00 EA $2,250
Drain line 200 $15.00 EA $3,000
Hot/Cold waterline 200 $10.00 LF $2,000
Floor drains 1 $350.00 EA $350
Garbage disposal 2 $175.00 EA $350
Water heaters 2 $450.00 EA $900
$9,150
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
15- Heating/Air Conditioning:
Title 24/Engineering 14,719 $0.18 SF $2,649
Watersource heat pumps: 37 $1,125,00 TON $41,397 1 ton per 400 sf
$44,047
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
15-030 Fire Protection:
Fire sprinklers 98 $80.00 EA $7,850
$7,850
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
16-000 ELECTRICAL
Duplex 2 outlets 146 $40.00 EA $5,840
Dedicated duplex outlet 12 $105.00 EA $1,260
GFIC outlet 4 $60.00 EA $240
208 volt outlet copy machine 2 $185.00 EA $370
Floor outlet 2 $210.00 EA $420
Floor data/tele outlet 2 $180.00 EA $360
System furn power (4 cluster) 5 $320.00 EA $1,600
System furn 1-1/4" tele conduit (4 5 $150.00 EA $750
clst
System furn 1-1/4" data conduit (4 5 $150.00 EA $750
cls
2-Gang Switch 36 $49.00 EA $1,764
2-Gang 3 way Switch 6 $72.00 EA $432
2 x 4 2 Lamp Parabolic Fixtures 168 $140.00 EA $23,520
Incandsnt dwn lts in brd rm 12 $155.00 EA $1,860
Incandsnt wall wshr lts in brd rm 16 $176.00 EA $2,816
<CAPTION>
------------- ---------------- --------- ------------- --------- ---------- ------
COST TOTAL STD STANDARD NON-STD
CODES COST PSF UNIT TI COST TI COST
------------- ---------------- --------- ------------- --------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
10-010
$0 $375
$0 $0
0.03
------------- ---------------- --------- ------------- --------- ---------- ------
$0 $7,250
$0 $350
$0 $300
$0 $750
0.59
------------- ---------------- --------- ------------- --------- ---------- ------
15-000
15-010
$0 $300
$0 $2,250
$0 $3,000
$0 $2,000
$0 $350
$0 $350
$0 $900
0.62
------------- ---------------- --------- ------------- --------- ---------- ------
15-
$2,649 $0
$41,397 $0
2.99
------------- ---------------- --------- ------------- --------- ---------- ------
15-030
$7,850 $0
0.53
------------- ---------------- --------- ------------- --------- ---------- ------
16-000
1 per 10 LF $5,840 $0
wall
$0 $1,260
$0 $240
$370 $0
$0 $420
$0 $360
$0 $1,600
$0 $750
$0 $750
1 per 10 LF $1,764 $0
wall
$0 $432
1 per 90 sf $23,520 $0
$0 $1,860
$0 $2,816
</TABLE>
SCHEDULE 3 TO EXHIBIT "C"
Page 3 of 4
Landlord Initials: EC JN
-------------
Tenant Initials: RR
-------------
<PAGE>
<TABLE>
<CAPTION>
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
COST DESCRIPTION QTY UNIT UNIT UNIT TOTAL
CODES PRICE TOTAL LINE ITEM
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
shower lts 1 $220.00 EA $220
Exit lights 10 $200.00 EA $2,000
Emergency batteries 10 $110.00 EA $1,100
Title 24 Load ???? 14,719 $0.10 SF $1,1472
Package Heat pumps 15 $600.00 EA $8,831
Telephone backboards 1 $150.00 EA $150
Panel Transformers/elc 2 $3,500,00 EA $7,000
Subtotal $62,755
------------- -------------------------------------- --------- ----------- -------------------- ------------------
SUBTOTAL $299,181
17-005 Contingency 5% $299,181 $14,959
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
19-000 General Conditions 4% $314,140 $12,566
SUBTOTAL $326,705
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
23-005 CONTRACTOR FEE 4% $326,705 $13,068
SUBTOTAL $339,773
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
24-200 INSURANCE 1.00% $339,773 $3,398
------------- -------------------------------------- --------- ----------- -------- ----------- ------------------
TOTAL PRIME CONTRACT $343,171
------------- ====================================== ========= =========== ======== =========== ==================
ALLOWANCE 14,719 $0.00 SF $0
A&E 14,719 $.075 SF $11,039
Permits 14,719 $1.50 SF $22,079
------------- ====================================== ========= =========== ======== =========== ==================
TOTAL T.I. ESTIMATED COST $376,289
------------- ====================================== ========= =========== ======== =========== ==================
<CAPTION>
------------- ---------------- --------- ------------- --------- ---------- ------
COST TOTAL STD STANDARD NON-STD
CODES COST PSF UNIT TI COST TI COST
------------- ---------------- --------- ------------- --------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
$0 $220
$2,000 $0
$1,100 $0
$1,1472 $0
$8,831 $0
$150 $0
$7,000 $0
4.26
------------- ---------------- --------- ------------- --------- ---------- ------
20.33 $220,972 15.01 $78,208 5.31
17-005 1.02 $11,049 0.75 $3,910 0.27
------------- ---------------- --------- ------------- --------- ---------- ------
19-000 0.85 $9,281 0.63 $3,285 0.22
22.20 $241,302 16.39 $85,404 5.80
------------- ---------------- --------- ------------- --------- ---------- ------
23-005 0.89 $9,652 0.66 $3,416 0.23
23.08 $250,954 17.05 $88,820 6.03
------------- ---------------- --------- ------------- --------- ---------- ------
24-200 0.23 $2,510 0.17 $888 0.06
------------- ---------------- --------- ------------- --------- ---------- ------
23.21 $253,463 17.22 $89,708 6.09
------------- ================ ========= ============= ========= ========== ======
0.00 0.00 $0 0.00 $0 0.00
0.75 0.75 11,309 0.75 $0 0.00
1.50 1.50 $22,709 1.50 $0 0.00
------------- ================ ========= ============= ========= ========== ======
25.56 $285,581 19.47 $89,708 6.09
------------- ================ ========= ============= ========= ========== ======
</TABLE>
SCHEDULE 3 TO EXHIBIT "C"
Page 4 of 4
Landlord Initials: EC JN
-------------
Tenant Initials: RR
-------------
<PAGE>
EXHIBIT "D"
DEFINITIONS
1. BUILDING COMMON AREA shall mean the areas of the buildings that provide
services to building tenants but which are not included in the OFFICE AREA of
any specific tenant. These area may include, but shall not be limited to, main
and auxiliary lobbies, atrium spaces, concierge areas or security desks,
conference rooms, lounges or vending areas, food service facilities, health or
fitness centers, daycare facilities, locker or shower facilities, mail rooms,
fire control rooms, fully enclosed courtyards outside the exterior walls, and
building core and service areas such as fully enclosed mechanical or equipment
rooms. Specifically excluded from BUILDING COMMON AREA are FLOOR COMMON AREA,
parking space, portions of loading docks outside the building line, and MAJOR
VERTICAL PENETRATION.
2. FLOOR USABLE AREA shall mean the sum of USABLE AREAs of OFFICE AREAs and
BUILDING COMMON AREAs of a floor. The amount of FLOOR USABLE AREA can vary over
the life of a building as corridors expand and contract and as floors are
remodeled.
3. FLOOR COMMON AREA shall mean the areas on a floor such as but shall not be
limited to washrooms, janitorial closets, electrical rooms, telephone rooms,
mechanical rooms, elevator lobbies, and public corridors which are available
primarily for the use of tenants on that floor.
4. FLOOR R/U RATIO shall mean the conversion factor that, when applied to
USABLE AREA, give the BASIC RENTABLE AREA of the OFFICE AREA or BUILDING COMMON
AREA.
5. BASIC RENTABLE AREA of an OFFICE AREA or BUILDING COMMON AREA shall mean
the USABLE AREA of that OFFICE AREA or BUILDING COMMON AREA and its share of the
FLOOR COMMON AREA on that floor. BASIC RENTABLE AREA is determined by
multiplying the USABLE AREA of that OFFICE AREA or BUILDING COMMON AREA by the
FLOOR R/U RATIO. The total BASIC RENTABLE AREA of a tenant occupying more than
one floor shall be the sum of its BASIC RENTABLE AREAs on each floor. The total
of all BASIC RENTABLE AREAs on a floor shall equal the FLOOR RENTABLE AREA of
that same floor.
6. BUILDING RENTABLE AREA shall equal the sum of all the FLOOR RENTABLE AREAs.
7. BUILDING R/U RATIO shall mean the conversion factor that distributes the
BUILDING COMMON AREA of a building.
8. RENTABLE AREA shall mean the USABLE AREA of an OFFICE AREA with its
associated share of FLOOR COMMON AREAs and BUILDING COMMON AREAS. RENTABLE
AREA is determined by multiplying the USABLE AREA of an OFFICE AREA by the
R/U RATIO. The total of all RENTABLE AREAS equals the BUILDING RENTABLE AREA
for the building.
9. R/U RATIO shall mean the conversion factor that, when applied to USABLE
AREA, gives the RENTABLE AREA of the OFFICE AREA.
10. FINISHED SURFACE shall mean a wall, ceiling or floor surface, including
glass, as prepared for tenant use, excluding the thickness of any special
surfacing materials such as paneling, furring strips and/or carpet.
11. DOMINANT PORTION shall mean the portion of the inside FINISHED SURFACE of
the permanent center building wall which is 50% or more of the vertical
floor-to-ceiling dimension, at the given point being measured as one moves
horizontally along the wall. DOMINANT PORTION itself is a vertical measurement
between FINISHED SURFACEs (or a series of vertical measurements), with the
number of measurements needed based upon the conditions found along the wall.
If, for instance, a window system is 4'-6' (1.372 meters) high and the floor to
ceiling dimension is 9'-0" (2.743 meters), the DOMINANT PORTION is the inside
surface of the glass
EXHIBIT "D"
Page 1 of 2
Landlord Initials: EC JN
-------------
Tenant Initials: RR
-------------
9/30/97
<PAGE>
for the full width of the window system. If, however, the window system is
4'-5" (1.346 meters), the DOMINANT PORTION is the inside surface of the wall.
In designs of alternating window systems and wall sections, the DOMINANT
PORTION will move in and out as often as conditions dictate. If no FINISHED
SURFACE of the permanent outer building wall is 50% or more of the vertical
floor-to-ceiling dimension, or if the permanent outer building wall is not
vertical, the DOMINANT PORTION shall be the inside finished surface of the
wall where it intersects the finished floor.
12. GROSS MEASURED AREA shall mean the total constructed area of a building.
It is generally not used for leasing purposes.
13. GROSS MEASURED AREA shall mean the total area of a building enclosed by the
DOMINANT PORTION, excluding parking areas and loading docks (or portions of
same) outside the building line. It is generally not used for leasing purposes
and is calculated on a floor by floor basis.
14. MAJOR VERTICAL PENETRATION shall mean stairs, elevator shafts, flues, pipe
shafts, vertical ducts, and the like, and their enclosing walls. Not included,
however, are vertical penetrations built for the private use of a tenant
occupying OFFICE AREA on more than one floor. Structural columns, openings for
vertical electric cable or telephone distribution, and openings for plumbing
lines are not considered to be MAJOR VERTICAL PENETRATION.
15. FLOOR RENTABLE AREA shall mean the result of subtracting from the GROSS
MEASURED AREA of a floor the MAJOR VERTICAL PENETRATION on the same floor. It
is generally fixed for the life of the building and is rarely affected by
changes in corridor size or configuration.
16. USABLE AREA shall mean the measured area of an OFFICE AREA or BUILDING
COMMON AREA on a floor. The total of all the USABLE AREA for a floor shall
equal FLOOR USABLE AREA of that same floor.
17. OFFICE AREA shall mean the area where a tenant normally houses personnel
and/or furniture, for which a measurement is to be computed.
EXHIBIT "D"
Page 2 of 2
Landlord Initials: EC JN
-------------
Tenant Initials: RR
-------------
9/30/97
<PAGE>
EXHIBIT "E"
TENANT ACCEPTANCE LETTER
[DATE]
[TENANT'S NAME]
[ADDRESS]
Re: [ADDRESS AND SPACE LEASED]
Dear [TENANT'S NAME]:
Please sign below to confirm that you accept the Premises as Substantially
Complete but for punchlist items described in Section 4.5 of Exhibit C to that
certain Lease Agreement dated ________________________, by and between
________________________, and ________________________, [AS AMENDED BY
_____________,] and that the Commencement Date is _________________ and the
expiration date is ______________.
Sincerely,
___________________________________
By:________________________________
Acknowledged and Agreed:
Tenant:______________________________ Date:____________________
By:__________________________________
Name:________________________________
Title:_______________________________
EXHIBIT "E"
Landlord Initials: EC JN
-------------
Tenant Initials: RR
-------------
9/30/97