California-Woodland Hills-5901 DeSoto Avenue Lease - Ronald G. Cox and Youbet.com Inc.
[ICON]AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--GROSS
(DO NOT USE THIS FORM FOR MULTI-TENANT PROPERTY)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only,
March 11, 2000, is made by and between RONALD G. COX, Trustee of THE R.G. COX
REVOCABLE TRUST ("LESSOR") AND YOUBET.COM, INC., a Delaware corporation
("Lessee") (collectively the "PARTIES," or individually a "PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this LEASE, and
commonly known by the street address of 5901 DeSoto Avenue, Woodland Hills
located in the County of Los Angeles, State of California and generally
described as (describe briefly the nature of the property) a commercial
building (the "Building") containing approximately 30,039 useable square feet
and related improvements, (including parking areas) and legally described in
Exhibit "A" attached hereto ("PREMISES"). (See Paragraph 2 for further
provisions.)
1.3 TERM: Ten (10) years and no months ("ORIGINAL TERM") commencing on
the "Commencement Date" set forth in Paragraph 72 hereof ("COMMENCEMENT DATE")
and ending on the "Expiration Date" set forth in Paragraph 72 hereof.
("EXPIRATION DATE"). (See Paragraph 3 for further provisions.)
1.4 EARLY POSSESSION: March 15, 2000 ("Early Possession Date"). (SEE
PARAGRAPHS 3.2 and 3.3 FOR FURTHER PROVISIONS.)
1.5 BASE RENT: $60,078.00 per month ("BASE RENT"), payable on the first
(1st) day of each month commencing on the Commencement Date (See Paragraph 4
for further provisions.)
/X/ If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 BASE RENT PAID UPON EXECUTION: $120,156.00 as Base Rent for the
period specified in Paragraph 52 hereof.
1.7 SECURITY DEPOSIT: $60,078.00 ("SECURITY DEPOSIT"). (See Paragraph 5
for further provisions).
1.8 PERMITTED USE: general office purposes and other legal uses
consistent with similar quality office buildings in the immediate area of the
Premises, so long as not prohibited by this Lease or the CC & Rs. (See
Paragraph 6 for further provisions.)
1.9 INSURING PARTY: Lessor is the "INSURING PARTY." $6,353.00 is the
"BASE PREMIUM." (See Paragraph 8 for further provisions.)
1.10 REAL ESTATE BROKERS: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
CB Richard Ellis represents
/X/ Lessor exclusively ("LESSEE'S BROKER"); / / both Lessee and Lessor, and
Lee & Associates represents
/X/ Lessee exclusively ("LESSEE'S BROKER"); / / both Lessee and Lessor. (See
Paragraph 15 for further provisions.)
1.11 Intentionally Omitted
1.12 ADDENDA. Attached hereto is an Addendum or Addenda consisting of
Paragraphs _____ through _____ and Exhibits "A," "B," "C," "D," and "E"
all of which constitute a part of this Lease.
2. PREMISES
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental, is an approximation which
Lessor and Lessee agree is reasonable and the rental based thereon is not
subject to revision whether or not the actual square footage is more or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Early Possession Date and warrants to Lessee that the
existing plumbing, fire sprinkler system, lighting, air conditioning,
heating, and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Early
Possession Date. If a non-compliance with said warranty exists as of the
Early Possession Date, Lessor shall, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within thirty (30) days after the Early
Possession Date, correction of that non-compliance shall be the obligation of
Lessee at Lessee's sole cost and expense.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility installations (as defined in Paragraph 7.3(a)) made or
to be made by Lessee. If the Premises do not comply with said warranty,
Lessor shall, except as otherwise provided in this Lease, promptly after
receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at Lessor's
expense. If Lessee does not give Lessor written notice of a non-compliance
with this warranty within six (6) months following the Commencement Date,
correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that is has
been advised to satisfy itself with respect to the condition of the Premises
(including by not limited to the electrical and fire sprinkler systems,
security, environmental aspects, compliance with Applicable Law, as defined
in Paragraph 6.3) and the present and future suitability of the Premises for
Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and subject to Paragraphs 2.2
and 2.3 assumes all responsibility therefor as the same relate to Lessee's
occupancy of the Premises and/or the term of this Lease, and (c) that neither
Lessor, nor any of Lessor's agents has made any oral or written
representations or warranties with respect to the said matters other than as
set forth in this Lease.
2.5 Intentionally Omitted.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent
shall be abated for the period of such early possession. All other terms of
this Lease, however; shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term. See also the provisions of Paragraph 73 below.
Initials [ILLEGIBLE]
-----------
[ILLEGIBLE]
-----------
PAGE 1
<PAGE>
3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date
is specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease,
or the obligations of Lessee hereunder, or extend the term hereof, but in
such case, Lessee shall not, except as otherwise provided herein, be
obligated to pay rent or perform any other obligation of Lessee under the
terms of this Lease until Lessor delivers possession of the Premises to
Lessee. If possession of the Premises is not delivered to Lessee with fifteen
(15) days after the date that Lessee is entitled to access to the Premises to
commence its demolition work pursuant to Paragraph 73.2, Lessee may, at its
option, by notice in writing to Lessor within ten (10) business days
thereafter, cancel this Lease, in which event the Parties shall be discharged
from all obligations hereunder; provided, however, that if such written notice
by Lessee is not received by Lessor within said ten (10) business day period,
Lessee's right to cancel this Lease shall terminate and be of no further
force or effect. Except as may be otherwise provided, and regardless of when
the term actually commences, if possession is not tendered to Lessee when
required by this Lease and Lessee does not terminate this Lease, as
aforesaid, the period free of the obligation to pay Base Rent, if any, that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by
the acts, changes or omissions of Lessee.
4. RENT.
4.1 BASE RENT. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by
Lessor in lawful money of the Unites States, without offset or deduction
(except as expressly permitted in this Lease), on or before the day on which
it is due under the terms of this Lease. Base Rent and all other rent and
charges for any period during the term hereof which is for less than one (1)
full calendar month shall be prorated based upon the actual number of days of
the calendar month involved. Payment of Base Rent and other charges shall be
made to Lessor at its address stated herein or to such other persons or at
such other addresses as Lessor may from time to time designate in writing to
Lessee.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor at the same time that
Lessee is required, under Paragraph 52.1, to deposit with Lessor the monthly
Base Rent specified in Paragraph 52.1, the Security Deposit set forth in
Paragraph 1.7 as security for Lessee's faithful performance of Lessee's
obligations under this Lease. If Lessee fails to pay Base Rent or other rent
or charges due hereunder, or otherwise is in Breach under this Lease (as
defined in Paragraph 13.1), Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or
to reimburse or compensate Lessor for any liability, cost, expense, loss or
damage (including reasonable attorneys' fees) which Lessor may suffer or
incur by reason thereof. If Lessor uses or applies all or any portion of said
Security Deposit, Lessee shall within ten (10) business days after written
request therefor deposit moneys with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. Any time the Base
Rent increases during the term of this Lease, Lessee shall; upon written
request from Lessor, deposit additional moneys with Lessor sufficient to
maintain the same ratio between the Security Deposit and the Base Rent as
those amounts are specified in the Basic Provisions. Lessor shall not be
required to keep all or any part of the Security Deposit separate from its
general accounts. Lessor shall, at the expiration or earlier termination of
the term hereof and after Lessee has vacated the Premises, return to Lessee
(or, at Lessor's option, to the last assignee, if any, of Lessee's interest
herein), that portion of the Security Deposit not used or applied by Lessor.
Unless otherwise expressly agreed in writing by Lessor, no part of the
Security Deposit shall be considered to be held in trust, to bear interest or
other increment for its use, or to be prepayment for any moneys to be paid by
Lessee under this Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the purposes
set forth in Paragraph 1.8, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that creates waste or a nuissance,
or that unreasonably disturbs owners and/or occupants of, or causes damage
to, neighboring premises or properties.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or
effect, either by itself or in combination with other materials expected to
be on the Premises, is either: (i) potentially injurious to the public
health, safety or welfare, the environment or the Premises, (ii) regulated or
monitored by any governmental authority, or (iii) a basis for liability of
Lessor to any governmental agency or third party under any applicable statute
or common law theory. Hazardous Substance shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products
or fractions thereof. Lessee shall not engage in any activity in, on or about
the Premises which constitutes a Reportable Use (as hereinafter defined) of
Hazardous Substances without the express prior written consent of Lessor and
compliance in a timely manner (at Lessee's sole cost and expense) with all
Applicable Law (as defined in Paragraph 6.3). "REPORTABLE USE" shall mean (i)
the installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with,
any governmental authority and/or (iii) the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable Law
requires that a notice be given to persons entering or occupying the Premises
or neighboring properties. Notwithstanding the foregoing, Lessee may, without
lessor's prior consent, but in compliance with all Applicable Law, use any
ordinary and customary materials reasonably required to be used by Lessee in
the normal course of Lessee's business permitted on the Premises, so long as
such use is not a Reportable Use and does not expose the Premises or
neighboring properties to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. In addition, Lessor may (but without
any obligation to do so) condition its consent to the use or presence of any
Hazardous Substance, activity or storage tank by Lessee upon Lessee's giving
Lessor such additional assurance as Lessor, in its reasonable discretion,
deems necessary to protect itself, the public, the Premises and the
environment against damage, contamination or injury and/or liability
therefrom or therefor, including, but not limited to, the installation (and
removal on or before Lease expiration or earlier termination) of reasonably
necessary protective modifications to the Premises (such as concrete
encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor. If Lessor obtains
actual knowledge that a Hazardous Substance has come to be located in, on,
under or about the Premises, Lessor shall promptly give written notice
thereof to Lessee, and provide Lessee with a copy of any report, notice,
claim or other documentation which Lessor receives concerning the presence of
such Hazardous Substance. Lessee shall also promptly (and in any event within
10 days after Lessee's receipt or delivery thereof) give Lessor a copy of any
statement, report, notice, registration, application, permit, business plan,
license, claim, action or proceeding given to, or received from, any
government authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure
to, any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any,
harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits
and reasonable attorney's and consultant's fees arising out of or involving
any Hazardous Substance or storage tank brought onto the Premises by or for
Lessee or under Lessee's control (provided, however, that Lessee shall have
no liability under this Lease with respect to the underground migration of
any Hazardous Substance under the Premises from adjacent properties not
caused by Lessee, its subtenants or assignees or their respective agents,
employees, contractors, permittees or licensees, nor with respect to
Hazardous Substance contamination existing at the Premises prior to the Early
Possession Date so long as Lessee, its subtenants and assignees, and their
respective agents, employees, contractors, permittees and licensees, have
neither contributed to nor exacerbated such contamination). Lessee's
obligations under this Paragraph 6 shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation (including
consultant's and reasonable attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances or storage tanks, unless specifically so
agreed by Lessor in writing at the time of such agreement.
6.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently
and in a timely manner, comply with all "APPLICABLE LAW," which term is used
in this Lease to include all laws, rules, regulations, ordinances, and
directives of any governmental authority, covenants, easements and
restrictions of record, permits of any governmental authority, and the
reasonable requirements of any applicable fire insurance underwriter or
rating bureau, relating in any manner to the Premises (including but not
limited to matters pertaining to (i) industrial hygiene, (ii) environmental
conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage,
spill or release of any Hazardous Substance or storage tank), now in effect
or which may hereafter come into effect (provided, however, that the term
"Applicable Law" shall not include covenants, easements and restrictions of
record that are first recorded after the execution and delivery of this Lease
unless the same are consented to in writing by Lessee), and whether or not
reflecting a change in policy from any previously existing policy. Lessee
shall, within ten (10) business days after receipt of Lessor's written
request, provide Lessor with copies of all documents and information,
including, but not limited to, permits, registrations, manifests,
applications, reports and certificates, evidencing Lessee's compliance with
any Applicable Law specified by Lessor, and shall immediately upon receipt,
notify Lessor in writing (with copies of any documents involved) of any
written threat of or actual claim, notice, citation, warning, complaint or
report pertaining to or involving failure by Lessee or the Premises to comply
with any Applicable Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's Lendor(s)(as defined in
Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in
the case of an emergency, and otherwise at reasonable times upon reasonable
prior notice for the purpose of inspecting the condition of the Premises and
for verifying compliance by Lessee with this Lease and all Applicable Laws
(as defined in Paragraph 6.3), and to employ experts and/or consultants in
connection therewith and/or to advise Lessor with respect to Lessee's
activities, including but not limited to the installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance or storage
tank on or from the Premises. The costs and expenses of any such inspections
shall be paid by the party requesting same, unless a Default or Breach of
this Lease, violation of Applicable Law, or a contamination, caused or
materially contributed to by Lessee is found to exist or be imminent, or
unless the inspection is requested or ordered by a governmental authority as
the result of any such existing or imminent violation or contamination. In
any such case, Lessee shall upon request reimburse Lessor or Lessor's Lender,
as the case may be, for the reasonable costs and expenses of such
inspections, so long as such inspections are reasonably related to the
Default or Breach of this Lease or such violation or contamination.
Notwithstanding the foregoing, Lessee, at Lessee's sole cost and expense,
shall have the right to contest any such alleged violation of Applicable Law
by available legal process, provided that Lessee first provides to Lessor
adequate security for Lessee's performance as reasonable required by Lessor
and provided further that any such contest shall not result in the Premises
or Lessor being subject to any risk, loss, cost, expense, liability, damages
or obligations of any kind.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS. See also Paragraph 65.2.
(a)
Initials [ILLEGIBLE]
-----------
[ILLEGIBLE]
-----------
PAGE 2
<PAGE>
Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly,
at Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of
any contamination of, and for the maintenance, security and/or monitoring of,
the Premises, the elements surrounding same, or neighboring properties,
that was caused or materially contributed to by Lessee, or pertaining to or
involving any Hazardous Substance and/or storage tank brought onto the
Premises by or for Lessee or under its control.
(b) Intentionally omitted.
7.2 LESSOR'S OBLIGATIONS. See also Paragraph 65.1.
Lessor shall not, in any event, have any obligation to make any repairs until
Lessor receives written notice of the need for such repairs. It is the
intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises.
Lessee and Lessor expressly waive the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this
Lease with respect to, or which affords Lessee the right to make repairs at
the expense of Lessor or to terminate this Lease by reason of, any needed
repairs.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS. As respects the
construction of the "Tenant Improvements" (as defined in Paragraph 67 below),
in the event of conflict between any of the terms and provisions of this
Paragraph 7.3, on the one hand, and any of the terms and provisions of
Paragraphs 60 and 67 through 74 below, on the other hand, the terms and
provisions of Paragraphs 60 and 67 through 74 below shall control.
(a) DEFINITIONS; CONSENT REQUIRED. The term "Utility Installations"
is used in this Lease to refer to all carpeting, window coverings, air lines,
power panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and fencing in, on or about the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery, equipment and
furnishings, including but not limited to Lessee's fire protection system
associated with Lessee's computer and communication systems, Lessee's
security and communications systems and cabling installed by or for Lessee,
and Lessee's work stations that can be removed without doing material damage
to the Premises. The term "Alterations" shall mean any modification of the
improvements on the Premises from that which are provided by Lessor under the
terms of this Lease, other than Utility Installations or Trade Fixtures,
whether by addition or deletion. "Lessee Owned Alterations and/or Utility
Installations" are defined as Alterations and/or Utility Installations made
by lessee that are not yet owned by Lessor as defined in Paragraph 7.4(a).
Lessee shall not make any Alterations or Utility Installations in, on, under
or about the Premises without Lessor's written consent. See additional
provisions of Paragraph 66 hereof.
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All
consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by
subsequent specific consent, shall be deemed conditioned upon: (i) Lessee's
acquiring all applicable permits required by governmental authorities, (ii)
the furnishing of copies of such permits together with a copy of the plans
and specifications for the Alteration or Utility Installation to Lessor prior
to commencement of the work thereon, and (iii) the compliance by Lessee with
all conditions of said permits in a prompt and expeditious manner. Any
Alterations or Utility Installations by Lessee during the term of this Lease
shall be done in a good and workmanlike manner, with good and sufficient
materials, and in compliance with all Applicable Law. Lessee shall promptly
upon completion thereof furnish Lessor with as-built plans and specifications
therefor. Lessor may (but without obligation to do so) condition its consent
to any requested Alteration or Utility Installation that costs $10,000 or
more upon Lessee's providing Lessor with a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such Alteration
or Utility Installation and/or upon Lessee's posting an additional Security
Deposit with Lessor under Paragraph 36 hereof. Notwithstanding the foregoing,
if the estimated cost of such work is less than one month's Base Rent, and
the Security Deposit and the Letter of Credit are both held by Lessor, Lessee
shall not be required to post such bond or additional Security Deposit.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by
any mechanics' or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior
to the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post notices of non-responsibility in or on the
Premises as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof against the Lessor or the Premises. If
Lessor shall require, Lessee shall provide a bond satisfying the requirements
of California Civil Code Section 3143 (or a successor statute) for the
holding of the Premises free from the effect of such lien or claim. In
addition, Lessor may require Lessee to pay Lessor's reasonable attorney's
fees and costs in participating in such action if Lessor shall decide it is
to its best interest to do so.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal or
become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee, but considered a part of the Premises.
Lessor may, at any time and at its option, elect in writing to Lessee to be
the owner of all or any specified part of the Lessee Owned Alterations and
Utility Installations. Unless otherwise instructed per subparagraph 7.4(b)
hereof, all Lessee Owned Alterations and Utility Installations shall, at the
expiration or earlier termination of this Lease, become the property of
Lessor and remain upon and be surrendered by Lessee with the Premises.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed
by the expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Notwithstanding the
foregoing, Lessor may not require Lessee to remove any of the initial Tenant
Improvements, and Lessor may not require that any other Lessee Owned
Alterations or Utility Installations that have been consented to by Lessor in
writing be removed by the expiration or earlier termination of this Lease as
aforesaid unless the same are not typical and customary for general office
operations, and then only if Lessor indicated in writing at the time Lessor
provided Lessor's written consent thereto that Lessor would require such
removal. Lessor may require the removal at any time of all or any part of any
Lessee Owned Alterations or Utility Installations made without the required
consent of Lessor.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date,
with all of the improvements, parts and surfaces thereof clean and free of
debris and in good operating order, condition and state of repair, ordinary
wear and tear excepted. "Ordinary wear and tear" shall not include any damage
or deterioration that would have been prevented by good maintenance practice
or by Lessee performing all of its obligations under this Lease. Except as
otherwise agreed or specified in writing by Lessor, the Premises, as
surrendered, shall include the Utility Installations. The obligation of
Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Alterations and/or Utility Installations, as well as the
removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water
contaminated by Lessee, all as may then be required by Applicable Law and/or
good service practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Premises per this Lease.
8. INSURANCE; INDEMNITY. See also the additional provisions regarding
insurance in Paragraph 54.
8.1 PAYMENT OF PREMIUM INCREASES.
(a) Lessee shall pay to Lessor any insurance cost increase
("Insurance Cost Increase") occurring during the term of this Lease.
"Insurance Cost Increase" is defined as any increase in the actual cost of
the insurance required under Paragraphs 8.2(b), 8.3(a) and 8.3(b). ("Required
Insurance"), over and above the Base Premium, as hereinafter defined,
calculated on an annual basis. "Insurance Cost Increase" shall include, but
not be limited to, increases resulting from the the nature of Lessee's
occupancy, any act or omission of Lessee, requirements of the holder of a
mortgage or deed of trust covering the Premises, increased valuation of the
Premises, and/or a premium rate increase. If the parties insert a dollar
amount in Paragraph 1.9, such amount shall be considered the "Base Premium."
In lieu thereof, if the Premises have been previously occupied, the "Base
Premium" shall be the annual premium applicable to the most recent occupancy.
If the Premises have never been occupied, the "Base Premium" shall be the
lowest annual premium reasonably obtainable for the Required Insurance as of
the commencement of the Original Term, assuming the most nominal use possible
of the Premises. In no event, however, shall Lessee be responsible for any
portion of the premium cost attributable to liability insurance coverage in
excess of $2,000,000 procured under Paragraph 8.2(b) (Liability Insurance
Carried by Lessor).
(b) Lessee shall pay any such Insurance Cost Increase to Lessor
within thirty (30) days after receipt by Lessee of a copy of the premium
statement or other reasonable evidence of the amount due. If the insurance
policies maintained hereunder cover other property besides the Premises,
Lessor shall also deliver to Lessee a statement of the amount of such
Insurance Cost Increase attributable only to the Premises showing in
reasonable detail the manner in which such amount was computed. Premiums for
policy periods commencing prior to, or extending beyond, the term of this
Lease shall be prorated to coincide with the corresponding Commencement or
Expiration of the Lease term.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000
per occurrence with an "Additional Insured-Managers or Lessors of Premises"
See Notes 1, 2 and 3 on Page 3A. Initials
[ILLEGIBLE]
-----------
[ILLEGIBLE]
-----------
PAGE 3
<PAGE>
Endorsement. The policy shall
not contain any intra-insured [ILLEGIBLE] as between insured persons or
organizations, but [ILLEGIBLE] include coverage for liability assumed under
this Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance required by this
Lease or as carried by Lessee shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance to be
carried by Lessee for Lessor as additional insured shall apply as primary
insurance. Any other insurance maintained by Lessor or its officers and
employees shall be excess only and not contributing with the insurance
carried by Lessee, except in the event of sole or contributory negligence on
the part of Lessor.
(b) CARRIED BY LESSOR. In the event Lessor is the insuring Party,
Lessor shall also maintain liability insurance described in Paragraph
8.2(a), above, in addition to, and not in lieu of, the insurance required to
be maintained by Lessee. Lessee shall not be named as an additional insured
therein.
8.3 PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain and keep
in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lender(s)"), insuring loss
or damage to the Premises. The amount of such insurance shall be equal to the
full replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by Lenders, but in no event more than the
commercially reasonable and available insurable value thereof if, by reason
of the unique nature or age of the improvements involved, such latter amount
is less than full replacement cost. Lessee Owned Alterations and Utility
Installations shall be insured by Lessee under Paragraph 8.4. If the coverage
is available and commercially appropriate, such policy or policies shall
insure against all risks of direct physical loss or damage (except the perils
of flood and/or earthquake unless required by a Lender), including coverage
for any additional costs resulting from debris removal and reasonable amounts
of coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Premises
required to be demolished or removed by reason of the enforcement of any
building, zoning, safety or land use laws as the result of a covered cause of
loss, but not including plate glass insurance. Said policy or policies shall
also contain an agreed valuation provision in lieu of any coinsurance clause,
waiver of subrogation, and inflation guard protection causing an increase in
the annual property insurance coverage amount by a factor of not less than
the adjusted U.S. Department of Labor Consumer Price Index for All Urban
Consumers for the city nearest to where the Premises are located.
Notwithstanding the foregoing, Lessor shall not be required to obtain the
aforesaid agreed valuation provision or inflation guard protection, but to
the extent that Lessor does elect to maintain such insurance in effect, such
insurance shall constitute "Required Insurance" pursuant to Paragraph 8.1(a).
(b) RENTAL VALUE. Lessor shall, in addition, obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor,
with loss payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under this Lease for one
(1) year (including all real estate taxes, insurance costs, and any
scheduled rental increases). Said insurance shall provide that in the event
the Lease is terminated by reason of an insured loss, the period of indemnity
for such coverage shall be extended beyond the date of the completion of
repairs or replacement of the Premises, to provide for one full year's loss
of rental revenues from the date of any such loss. Said insurance shall
contain an agreed valuation provision in lieu of any coinsurance clause, and
the amount of coverage shall be adjusted annually to reflect the projected
rental income, property taxes, insurance premium costs and other expenses, if
any, otherwise payable by Lessee, for the next twelve (12) month period.
(c) ADJACENT PREMISES. If the Premises are part of a larger building,
or if the Premises are part of a group of buildings owned by Lessor which are
adjacent to the Premises, the Lessee shall pay for any increase in the
premiums for the property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises for other than normal and customary general office use.
(d) TENANT'S IMPROVEMENTS. Since Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's
option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to
that carried by the Insuring Party under Paragraph 8.3, (except that Lessee
shall not be required to obtain an agreed valuation provision or inflation
guard protection). Such insurance shall be full replacement cost coverage
with a deductible of not to exceed $1,000 per occurrence. The proceeds from
any such insurance shall be used by Lessee for the replacement of personal
property or the restoration of Lessee Owned Alterations and Utility
Installations. Lessee shall be the Insuring Party with respect to the
insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, or such other rating as may be required by a
Lender having a lien on the Premises, as set forth in the most current issue
of "Best's Insurance Guide." Lessee shall not do or permit to be done
anything which shall invalidate the insurance policies referred to in this
Paragraph 8. Lessee shall cause to be delivered to Lessor certified copies
of, or certificates evidencing the existence and amounts of, the insurance,
and with the additional insureds, required under Paragraph 8.2(a) and 8.4. No
such policy shall be cancelable or subject to modification except after
thirty (30) days prior written notice to Lessor. Lessee shall at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or "insurance binders" evidencing renewal thereof, or
Lessor following five (5) business days prior written notice to Lessee may
order such insurance and charge the cost thereof to Lessee, which amount
shall be payable by Lessee to Lessor upon demand.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or remedies,
Lessee and Lessor ("Waiving Party") each hereby release and relieve the
other, and waive their entire right to recover damages (whether in contract
or in tort) against the other, for loss of or damage to the Waiving Party's
property arising out of or incident to the perils required to be insured
against under Paragraph 8. The effect of such releases and waivers of the
right to recover damages shall not be limited by the amount of insurance
carried or required, or by any deductibles applicable thereto.
8.7 INDEMNITY. Except for Lessor's gross negligence, willful misconduct,
and/or breach of express warranties, Lessee shall indemnify, protect, defend
and hold harmless Lessor and its agents, Lessor's master or ground lessor,
partners and Lenders (collectively, the "Lessor Parties") from and against
any and all claims, loss of rents and/or damages, costs, liens, judgments,
penalties, reasonable attorney's and consultant's fees, expenses and/or
liabilities arising out of, involving, or in dealing with, the occupancy of
the Premises by Lessee, the conduct of Lessee's business, any act, omission
or neglect of Lessee, its agents, contractors, employees or invitees, and out
of any Default or Breach by Lessee in the performance in a timely manner of
any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in
case of claims made against Lessor) litigated and/or reduced to judgement,
and whether well founded or not. In case any action or proceeding be brought
against Lessor by reason of any of the foregoing matters, Lessee upon notice
from Lessor shall defend the same at Lessee's expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense. Lessor need not have first paid any such claim in order to be so
indemnified. Except for the gross negligence or willful misconduct by Lessee
or any of its subtenants or assignees or any of their respective officers,
agents, employees, contractors, licensees, permittees and invitees, Lessor
shall indemnify, protect, defend and hold harmless Lessee, its officers,
agents and employees from and against any and all claims, damages, costs,
liens, judgments, penalties, reasonable attorney's and consultant's fees,
expenses and/or liabilities arising from the gross negligence or willful
misconduct of the Lessor Parties in or about the Premises, or from Lessor's
breach of its obligations expressly set forth in this Lease beyond any
applicable cure period, subject in each case, however, to Lessee's waiver set
forth in Paragraph 8.6, and subject to the limitations of Paragraph 8.8. The
obligations of the Parties under this Paragraph 8.7 shall survive the
expiration or termination of this Lease, except as otherwise expressly agreed
in writing by the Parties.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by
or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from
any other cause, whether the said injury or damage results from conditions
arising upon the Premises or upon other portions of the building of which the
Premises are a part, or from other sources or places except to the extent
such damage is caused by Lessor's wilful misconduct or the gross negligence
of Lessor in the performance of its obligations expressly set forth in this
Lease, or other grossly negligent conduct of Lessor while on or about the
Premises, and regardless of whether the cause of such damage or injury or the
means of repairing the same is accessible or not. Lessor shall not be liable
for any damages arising from any act or neglect of any other tenant of
Lessor. Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations where Lessor reasonably estimates that such damage or
destruction will require ten (10) months or less to repair. Lessor shall,
within thirty (30) days of the occurrence of any such damage or destruction,
give Lessee written notice of Lessor's estimate of the time required to
repair such damage or destruction.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations,
where Lessor reasonably estimates that such damage or destruction will
require more than ten (10) months to repair.
(c) "Insured Loss" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility
Installations, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible
amounts or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances
or laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PARTIAL DAMAGE-INSURED LOSS. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly
contribute the shortage in proceeds as and when required to complete said
repairs. In the event, however, the shortage in proceeds was due to the fact
that, by reason of the unique nature of the improvements, full replacement
cost insurance coverage was not commercially reasonable and available, Lessor
shall have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee provides
Lessor with the funds to cover same, or adequate assurance thereof, within
ten (10) business days following receipt of written notice of such shortage
and request therefor. If Lessor receives said funds or adequate assurance
thereof within said ten (10) business day period, the party responsible for
making the repairs shall complete them as soon as reasonably possible and
this Lease shall remain in full force and effect. If Lessor does not receive
such funds or assurance within said period, Lessor may nevertheless elect by
written notice to Lessee within ten (10) days thereafter to make restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect. If
in such case Lessor does not so elect, then this Lease shall terminate sixty
(60) days following the occurrence of the damage or destruction. Unless
otherwise agreed, Lessee shall in no event have any right to reimbursement
from Lessor for any funds contributed by Lessee to repair.
Initials [ILLEGIBLE]
-------
[ILLEGIBLE]
-------
Page 4
<PAGE>
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2,
notwithstanding that there may be more insurance coverage, but the net
proceeds of any such insurance shall be made available for the repairs if
made by either Party.
9.3 PARTIAL DAMAGE-UNINSURED LOSS. If a Premises Partial Damage that is
not an insured Loss occurs, unless caused by a grossly negligent act or
wilful misconduct of Lessee (in which event Lessee shall make the repairs at
Lessee's expense and this Lease shall continue in full force and effect, but
subject to Lessor's right's under Paragraph 13), Lessor may at Lessor's
option, either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such damage of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the
giving of such notice. In the event Lessor elects to give such notice of
Lessor's intention to terminate this Lease, Lessee shall have the right
within ten (10) business days after the receipt of such notice to give
written notice to Lessor of Lessee's commitment to pay for the repair of such
damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said committment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the
funds or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall, at the option of either Party
(to be exercised by written notice to the other Party within forty-five (45)
days following the date of such Premises Total Destruction, or in the event
of a termination by Lessee, within thirty (30) days following Lessee's
receipt of written notice from Lessor of Lessor's estimate of the time
required to repair the Premises Total Destruction pursuant to Paragraph 9.1
above), terminate sixty (60) days following the date of such Premises Total
Destruction, whether or not the damage or destruction is an insured Loss or
was caused by a negligent or willful act of Lessee. In the event, however,
that the damage or destruction was caused by Lessee, Lessor shall have the
right to recover Lessor's damages from Lessee except as released and waived
in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair
exceeds one (1) month's Base Rent, whether or not an Insured Loss, Lessor or
Lessee may terminate this Lease effective sixty (60) days following the date
of occurrence of such damage by giving written notice to the other party of
the terminating party's election to do so within thirty (30) days after the
date of occurrence of such damage. Provided, however, if Lessee at that time
has an exercisable option to extend this Lease or to purchase the Premises,
then Lessee may preserve this Lease by, within twenty (20) days following the
occurrence of the damage, or before the expiration of the time provided in
such option for its exercise, whichever is earlier ("Exercise Period"), (i)
exercising such option and (ii) providing Lessor with any shortage in
insurance proceeds (or adequate assurance thereof) needed to make the
repairs. If Lessee duly exercises such option during said Exercise Period and
provides Lessor with funds (or adequate assurance thereof) to cover any
shortage in insurance proceeds, Lessor shall, at Lessor's expense repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such
funds or assurance during said Exercise Period, then Lessor may at Lessor's
option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the
expiration of the Exercise Period, notwithstanding any term or provision in
the grant of option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraph 9.2 (Partial
Damage-Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at
any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice
of Lessee's election to terminate this Lease on a date not less than sixty
(60) days following the giving of such notice. If Lessee gives such notice to
Lessor and such Lenders and such repair or restoration is not commenced
within thirty (30) days after the receipt of such notice, this Lease shall
terminate as of the date specified in said notice. If Lessor or a Lender
commences the repair or restoration of the Premises within thirty (30) days
after receipt of such notice, this Lease shall continue in full force and
effect. "Commence" as used in this Paragraph shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs. Once
Lessor commences any such repair or restoration that Lessor is obligated to
perform under the provisions of this Paragraph 9, Lessor shall be obligated
to diligently proceed to complete such work.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Law and this Lease shall continue in full force and effect, but subject to
Lessor's rights under Paragraph 13), Lessor may at Lessor's options either
(i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to investigate and remediate such condition exceeds six (6) times the
then monthly Base Rent or $100,000, whichever is greater, and provided such
condition was not caused by Lessor's gross negligence or wilful misconduct,
give written notice to Lessee within thirty (30) days after receipt by Lessor
of knowledge of the occurrence of such Hazardous Substance Condition of
Lessor's desire to terminate this Lease as of the date sixty (60) days
following the giving of such notice. In the event Lessor elects to give such
notice of Lessor's intention to terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's committment to pay for the investigation and
remediation of such Hazardous Substance Condition totally at Lessee's expense
and without reimbursement from Lessor except to the extent of any amount
equal to six (6) times the then monthly Base Rent or $100,000, whichever is
greater. Lessee shall provide Lessor with the funds required of Lessee or
satisfactory assurance thereof within thirty (30) days following Lessee's
said commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such investigation and remediation
as soon as reasonably possible and the required funds are available. If
Lessee does not give such notice and provide the required funds or assurance
thereof within the time specified above, this Lease shall terminate as of the
date specified in Lessor's notice of termination. If a Hazardous Substance
Condition occurs for which Lessee is not legally responsible, there shall be
abatement of Lessee's obligations under this Lease to the same extent as
provided in Paragraph 9.6(a) for a period of not to exceed twelve (12)
months.
9.8 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
Base Rent and any other advance payments made by Lessee to Lessor. Lessor
shall, in addition, return to Lessee so much of Lessee's Security Deposit as
has not been, or is not then required to be, used by Lessor under the terms
of this Lease.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES. See also the additional provisions regarding real
property taxes in Paragraph 57.
10.1 (a) PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises; provided, however,
that Lessee shall pay, in addition to rent, the amount, if any, by which Real
Property Taxes applicable to the Premises increase over the fiscal tax year
during which the Commencement Date occurs ("Tax Increase"). Subject to
Paragraph 10.1(b), payment of any such Tax Increase shall be made by Lessee
within thirty (30) days after receipt of Lessor's written statement setting
forth the amount due and the computation thereof. Lessee shall promptly
furnish Lessor with satisfactory evidence that such taxes have been paid, if
any such taxes to be paid by Lessee shall cover any period of the time prior
to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment after such proration.
(b) ADVANCE PAYMENT. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right, at
Lessor's option, to estimate the current Real Property Taxes applicable to
the Premises, and to require such current year's Tax Increase to be paid in
advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the
amount due, at least twenty (20) days prior to the applicable delinquency
date, or (ii) monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be
that equal monthly amount which, over the number or months remaining before
the month in which the applicable tax installment would become delinquent
(and without interest thereon), would provide a fund large enough to fully
discharge before delinquency the estimated Tax Increase to be paid. When the
actual amount of the applicable Tax Increase is known, the amount of such
equal monthly advance payment shall be adjusted as required to provide the
fund needed to pay the applicable Tax Increase before delinquency. If the
amounts paid to Lessor by Lessee under the provisions of this Paragraph are
insufficient to discharge the obligations of Lessee to pay such Tax Increase
as the same become due, Lessee shall pay to Lessor, upon five (5) business
days prior written demand, such additional sums as are necessary to pay such
obligation. All moneys paid to Lessor under this Paragraph may be
intermingled with other moneys of Lessor and shall not bear interest. In the
event of a Breach by Lessee in the performance of the obligations of Lessee
under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional
Security Deposit under Paragraph 5. Notwithstanding anything to the contrary
contained herein, the provisions of this Paragraph 10.1(b) permitting Lessor
to require Lessee to pay Tax Increases in advance to Lessor shall only be
applicable in the event that Lessee is or has been in Breach of any of its
monetary obligations under this Lease on more than two (2) occasions in any
twelve (12) month period.
(c) ADDITIONAL IMPROVEMENTS. Notwithstanding Paragraph 10.1(a) hereof,
Lessee shall pay to Lessor upon demand therefor the entirety of any increase
in Real Property Taxes assessed by reason of Alterations or Utility
Installations placed upon the Premises by Lessee or at Lessee's request.
10.2 DEFINITION OF "REAL PROPERTY TAXES". As used herein, the term ("REAL
PROPERTY TAXES") shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, levied against any legal or
equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, Lessor's right to rent or other income therefrom,
and/or Lessor's business of leasing the Premises. The term "REAL PROPERTY
TAXES" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring, or changes in
applicable law taking effect, during the term of this Lease, including but
not limited to a change in the ownership of the Premises or in the
improvements thereon, the execution of this Lease, or any modification,
amendment or transfer thereof, and whether or not contemplated by the
Parties, except as otherwise expressly provided in Paragraph 57.
Initials [ILLEGIBLE]
---------
[ILLEGIBLE]
PAGE 5 ---------
<PAGE>
10.3 JOINT ASSESSMENT. [ILLEGIBLE] Premises are not separately assessed,
Lessee's liability [ILLEGIBLE] be an equitable proportion of the Real
Property Taxes for all of the land and improvement [ILLEGIBLE] included
within the tax parcel assessed, such proportion to be determined by Lessor
from the respective valuations assigned in the assessor's work sheets or such
other information as may be reasonably available. Lessor's reasonable
determination thereof, in good faith, shall be conclusive.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations. Utility
installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause its Trade Fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause its Trade Fixtures, furnishings equipment and
all other personal property to be assessed and billed separately from the
real property of Lessor. If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property or, at
Lessor's option, as provided in Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all telephone and telecommunications
services supplied to the Premises, together with any taxes thereon. The cost
of water, gas, electricity and trash disposal services supplied to the
Premises, together with any taxes thereon, shall be paid by Lessor, subject,
however, to Lessee's obligation to pay Operating Expense Increases pursuant
to Paragraph 55. Lessor shall, promptly following receipt of written notice
from Lessee, use commercially reasonable efforts to restore any such utility
service that becomes unavailable; provided, however, that such unavailability
shall not render Lessor liable for any loss, cost, damage, expense or
liability of any kind caused thereby, nor shall such unavailability
constitute a constructive eviction of Lessee, or a breach or default by
Lessor of any obligation set forth in this Lease or of any implied warranty
of any kind, or, except as expressly provided in the next sentence, entitle
Lessee to any abatement of Lessee's obligations hereunder. If, however, such
unavailability was caused by the willful misconduct of Lessor or the gross
negligence of Lessor in the performance of any of its obligations expressly
set forth in this Lease or other grossly negligent conduct of Lessor while on
or about the Premises, and if Lessee is prevented from conducting its
business in the Premises for more than thirty (30) consecutive days because
of the unavailability of such service, and Lessee and its agents, employees,
contractors, licensees and permittees in no way contributed to such
unavailability, then Lessee shall, as its sole and exclusive remedy as a
result thereof, have the right thereafter to abate payment of the Base Rent
and other rent or charges for each day thereafter that Lessee is so prevented
from using the Premises.
12. ASSIGNMENT AND SUBLETTING. See also the additional provisions regarding
assignment and subletting in Paragraphs 49 and 50.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"ASSIGNMENT") or sublet all or any part of Lessee's interest in this Lease or
in the Premises without Lessor's prior written consent given under and
subject to the terms of Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent unless Lessee is a publicly traded corporation.
The transfer, on a cumulative basis, of fifty percent (50%) or more of the
voting control of Lessee shall constitute a change in control for this
purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a
formal assignment or hypothecation of this Lease or Lessee's assets occurs,
which results or will result in a reduction of the Net Worth of Lessee, as
hereinafter defined, by an amount equal to or greater than twenty-five
percent (25%) of such Net Worth of Lessee as it was represented to Lessor at
the time of the execution by Lessor of this Lease or at the time of the most
recent assignment to which Lessor has consented, or as it exists immediately
prior to said transaction or transactions constituting such reduction, at
whichever time said Net Worth of Lessee was or is greater, shall be
considered an assignment of this Lease by Lessee to which Lessor may
reasonably withhold its consent. "Net Worth of Lessee" for purposes of this
Lease shall be the net worth of Lessee (excluding any guarantors) established
under generally accepted accounting principles consistently applied.
Notwithstanding the foregoing, this subparagraph (c) shall not apply so long
as Lessee is a publicly held corporation, nor shall this subparagraph (c)
apply if Lessee is a privately held corporation and at the time of such
transaction or series of transactions (i) Lessee is not in Breach of this
Lease and (ii) the amount of the Security Deposit and Letter of Credit then
held by Lessor is at least equal to six (6) months' Base Rent.
(d) An assignment of subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be
a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to
treat such unconsented to assignment or subletting as a noncurable Breach,
Lessor shall have the right to either: (i) terminate this Lease, or (ii) upon
thirty (30) days written notice ("Lessor's Notice"), increase the monthly
Base rent to fair market rental value or one hundred ten percent (110%) of
the Base Rent then in effect, whichever is greater. Pending determination of
the new fair market rental value, if disputed by Lessee, Lessee shall pay the
amount set forth in Lessor's Notice, with any overpayment credited against
the next installment(s) of Base Rent coming due, and any underpayment for the
period retroactively to the effective date of the adjustment being due and
payable immediately upon the determination thereof. Further, in the event of
such Breach and market value adjustment, (i) the purchase price of any option
to purchase the Premises held by Lessee shall be subject to similar
adjustment to the then fair market value (without the Lease being considered
an encumbrance or any deduction for depreciation or obsolescence, and
considering the Premises at its highest and best use and in good condition),
or one hundred ten percent (110%) of the price previously in effect,
whichever is greater, (ii) any index-oriented rental or price adjustment
formulas contained in this Lease shall be adjusted to require that the base
index be determined with reference to the index applicable to the time of
such adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the
market value adjustment.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligation hereunder, or (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval
of an assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of any rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for the Default
or Breach by Lessee of any of the terms, covenants or conditions of this
Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Lessee
or anyone else liable on the Lease or sublease and without obtaining their
consent, and such action shall not receive such persons from liability under
this Lease or sublease.
(d) In the event of any Breach of Lessee's obligations under this
Lease, Lessor may proceed directly against Lessee, any Guarantors or any one
else responsible for the performance of the Lessee's obligations under this
Lease, including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as
to the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any, together with a
non-refundable deposit of $1000 as reasonable consideration for Lessor's
considering and processing the request for consent. In addition to said
non-refundable $1,000 deposit, Lessee shall pay to Lessor, in accordance with
Paragraph 36, Lessor's actual reasonable out-of-pocket costs and expenses
(including but not limited to reasonable attorney's fees and expenses)
incurred in the consideration of, or response to, Lessee's request for
consent for the proposed assignment or subletting, provided that the total
amount of such costs and expenses (including the prior $1,000 payment) shall
not exceed $2,500, notwithstanding anything contained in Paragraph 36 hereof
to the contrary. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested by
Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, to be deemed,
for the benefit of Lessor, to have assumed and agreed to conform and comply
with each and every term, covenant, condition and obligation herein to be
observed or performed by Lessee during the term of said assignment or
sublease, other than such obligations as are contrary to or inconsistent with
provisions of an assignment or sublease to which Lessor has specifically
consented in writing.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transferS to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a
portion of the Premises heretofore or hereafter made by Lessee, and Lessor
may collect such rent and income and apply same toward Lessee's obligations
under this Lease; provided, however, that until a Breach (as defined in
Paragraph 13.1) shall occur in the performance of Lessee's obligations under
this Lease. Lessee may, except as otherwise provided in this Lease, receive,
collect and enjoy the rents accruing under such sublease. Lessor shall not,
by reason of this or any other assignment of such sublease to Lessor, nor by
reason of the collection of the rents from a sublessee, be deemed liable to
the sublessee for any failure of Lessee to perform and comply with any of
Lessee's obligations to such sublessee under such sublease. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee's obligations under this Lease, to pay to Lessor the rents and other
charges due and to become due under the sublease. Sublessee shall rely upon
any such statement and request from Lessor and shall pay such rents and other
charges to Lessor without any obligation or right to inquire as to whether
such Breach exists and notwithstanding any notice from or claim from Lessee
to the contrary. Lessee shall have no right or claim against said sublessee,
or, until the Breach has been cured, against Lessor, for any such rents and
other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of
such sublease; provided, however, Lessor shall not be liable for any prepaid
rents or security deposit paid by such sublessee to such sublessor or for any
other prior Defaults or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $500.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default.
Initials [ILLEGIBLE]
PAGE 6 -----
[ILLEGIBLE]
-----
<PAGE>
and that Lessor may include [ILLEGIBLE] of such services and costs in said
notice as rent [ILLEGIBLE] payable to cure said Default. A "Default" is
defined as a failure by the Lessee to [ILLEGIBLE] comply with or perform any of
the terms, covenants, conditions or rules applicable to Lessee under this
Lease. A "Breach" is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is
specified herein, the failure by Lessee to cure such Default prior to the
expiration of the applicable grace period, shall entitle Lessor to pursue the
remedies set forth in Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises, in each case without providing a
commercially reasonable level of security for the Premises, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized
in any manner as a result thereof, or without providing to Lessor reasonable
assurances to minimize potential vandalism.
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor or to a third
party, as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which
endangers or threatens life or property, where such failure continues for a
period of five (5) business days following written notice thereof by or on
behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) the recission of an
unauthorized assignment or subletting per Paragraph 12.1(b), (ii) a Tenancy
Statement per Paragraphs 16 or 37, (iii) the subordination or
non-subordination of this Lease per Paragraph 30, or (iv) the execution of
any document requested under Paragraph 42 (easements), where any such failure
continues for a period of ten (10) business days following written notice by
or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
that are to be observed, complied with or performed by Lessee, other than
those described in subparagraphs (a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or
on behalf of Lessor to Lessee; provided, however, that if the nature of
Lessee's Default is such that more than thirty (30) days are reasonably
required for its cure, then it shall not be deemed to be a Breach of this
Lease by Lessee if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) The making by
lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment
of a trustee or receiver to take possession of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within thirty (30) days;
provided, however, in the event that any provision of this subparagraph (e)
is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false, provided Lessee knew or should have known that such
financial statement was materially false.
13.2 REMEDIES. If Lessee fails to commence to perform any affirmative
duty or obligation of Lessee under this Lease, within ten (10) business days
after written notice to Lessee (or in case of an emergency, without notice),
or fails to diligently prosecute the same to completion as soon as possible
thereafter and in any event prior to expiration of the applicable cure period
specified in Paragraph 13.1 above, Lessor may at its option (but without
obligation to do so), perform such duty or obligation on Lessee's behalf,
including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by
Lessee shall not be honored by the bank upon which it is drawn, on two (2)
separate occasions in any twelve (12) month period, Lessor, at its option,
may require all future payments to be made under this Lease by Lessee to be
made only by cashier's check. In the event of a Breach of this Lease by
Lessee, as defined in Paragraph 13.1, with or without further notice or
demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor.
In such event Lessor shall be entitled to recover from Lessee: (i) the worth
at the time of the award of the unpaid rent which had been earned at the time
of termination; (ii) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that the Lessee proves could
have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee'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 the cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys'
fees, and that portion of the leasing commission paid by Lessor applicable to
the unexpired term of this Lease. The worth at the time of award of the
amount referred to in provision (iii) of the prior sentence shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus one percent (1%). Efforts by
Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease
shall not waive Lessor's right to recover damages under this Paragraph. If
termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such proceeding
the unpaid rent and damages as are recoverable therein, or Lessor may reserve
therein the right to recover all or any part thereof in a separate suit for
such rent and/or damages. If a notice and grace period required under
subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay
rent or quit, or to perform or quit, as the case may be, given to Lessee
under any statute authorizing the forfeiture of leases for unlawful detainer
shall also constitute the applicable notice for grace period purposes
required by subparagraphs 13.1(b), (c) or (d). In such case, the applicable
grace period under subparagraphs 13.1(b), (c) or (d) and under the unlawful
detainer statute shall run concurrently after the one such statutory notice,
and the failure of Lessee to cure the Default within the greater of the two
such grace periods shall constitute both an unlawful detainer and a Breach of
this Lease entitling Lessor to the remedies provided for in this Lease and/or
by said statute.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach
and abandonment and recover the rent as it becomes due, provided Lessee has
the right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver
to protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.
(d) The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3 Intentionally Omitted.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within five (5)
business days after Lessee's receipt of written notice from Lessor that such
amount is due, then, without any additional requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to five percent (5%) of such
overdue amount. Notwithstanding the foregoing, if any installment of rent or
any other sum due from Lessee shall not be received by Lessor or Lessor's
designee on or before the due date thereof on two (2) or more occasions in
any twelve (12) month period, then any subsequent installment of rent or any
other sum thereafter due from Lessee and not received by Lessor or Lessor's
designee within five (5) business days after such amount shall be due shall,
without any requirement for any notice to Lessee, bear and aforesaid late
charge. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent Lessor from exercising any of the other rights
and remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive installments
of Base Rent, then notwithstanding Paragraph 4.1 or any other provision of
this Lease to the contrary, Base Rent shall, at Lessor's option, become due
and payable quarterly in advance.
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt
by Lessor, and by the holders of any ground lease, mortgage or deed of trust
covering the Premises whose name and address shall have been furnished Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; (except that the failure by
Lessor to provide Lessee with a Tenancy Statement per Paragraph 16, where
such failure continues for a period of ten (10) business days following
written notice by or on behalf of Lessee to Lessor, shall constitute a breach
of this Lease by Lessor) provided, however, that if the nature of Lessor's
obligation is such that more than thirty (30) days after such notice are
reasonably required for its performance, then Lessor shall not be in breach
of this Lease if performance is commenced within such thirty (30) day period
and thereafter diligently pursued to completion.
Initials [ILLEGIBLE]
------
[ILLEGIBLE]
------
PAGE 7
<PAGE>
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part, so taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than ten percent
(10%) of the floor area of the Premises, or more than twenty-five percent
(25%) of the land area not occupied by any building, is taken by condemnation.
Lessee may, at Lessee's option, to be exercised in writing within ten (10)
business days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within ten (10) business days after
the condemning authority shall have taken possession) terminate this Lease as
of the date the condemning authority takes such possession. If Lessee does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in the same proportion as the
rentable floor area of the Premises taken (or that cannot be legally occupied
as a result of the taking of parking areas) bears to the total rentable floor
area of the building located on the Premises. No reduction of Base Rent shall
occur if the only portion of the Premises taken is land on which there is no
building except to the extent such taking results in a reduction in the
rentable floor area of the Premises that may be legally occupied as a result
of the taking of parking areas. Any award for the taking of all or any part
of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any compensation separately awarded
to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade
Fixtures. In the event that this Lease is not terminated by reason of such
condemnation, Lessor shall to the extent of its net severance damages
received, over and above the legal and other expenses incurred by Lessor in
the condemnation matter, repair any damage to the Premises caused by such
condemnation, except to the extent that Lessee has been reimbursed therefor
by the condemning authority. Lessee shall be responsible for the payment of
any amount in excess of such net severance damages required to complete such
repair. In the event of a condemnation that results in a reduction in the
number of parking spaces available for parking for the Premises to below
ninety (90) parking spaces, Lessor shall, at its expense, obtain for Lessee
the right to utilize substitute parking spaces sufficient to maintain for the
Premises at least three (3) parking spaces per one thousand (1,000) square
feet of rentable floor area of the Premises, which substitute parking spaces
shall be in a reasonably convenient location in the vicinity of the Premises.
15. BROKER'S FEE.
15.1 THE BROKERS NAMED IN PARAGRAPH 1.10 ARE THE PROCURING CAUSES OF
THIS LEASE. Lessor shall pay to said Brokers a commission in accordance with
the terms and conditions of Lessor's separate written agreement with said
Brokers.
15.2 Intentionally omitted.
15.3 Intentionally omitted.
15.4 Intentionally omitted.
15.5 Lessee and Lessor each represent and warrant to the other that it
has had no dealings with any person, firm, broker or finder (other than the
Brokers, if any named in Paragraph 1.10) in connection with the negotiation of
this Lease and/or the consummation of the transaction contemplated hereby,
and that no broker or other person, firm or entity other than said named
Brokers is entitled to any commission or finder's fee in connection with
said transaction. Lessee and Lessor do each hereby agree to indemnify,
protect, defend and hold the other harmless from and against liability for
compensation or charges which may be claimed by any such unnamed broker,
finder or other similar party by reason of any dealings or actions of the
indemnifying Party, including any costs, expenses, attorneys' fees reasonably
incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. TENANCY STATEMENT.
16.1 Each Party (as "RESPONDING PARTY") shall within ten (10) business
days after written notice from the other Party (the "REQUESTING PARTY")
execute, acknowledge and deliver to the Requesting Party a Tenancy Statement
in substantially the form of Exhibit "B" attached to this Lease, which form
shall be adapted in the event of an estoppel being given by Lessor to make
such changes as are reasonably necessary to reflect that the Tenancy
Statement is being granted and signed by Lessor, rather than Lessee, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises, any
part thereof, or the building of which the Premises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee
and such Guarantors as may be reasonably required by such lender or
purchaser, including but not limited to Lessee's financial statements for the
past three (3) years. All such financial statements shall be received by
Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee's interest in the prior lease. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor at the time of such
transfer or assignment. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid,
the prior Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be performed by
the successor Lessor and upon the written assumption by the transferee or
assignee of all obligations of this Lease to be performed by Lessor which
first accrue or arise after the date of such transfer or assignment. Subject
to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following Lessee's receipt of notice from Lessor that it was due, shall
bear interest from the thirty-first (31st) day after it was due at the rate
of 12% per annum, but not exceeding the maximum rate allowed by law, in
addition to the late charge provided for in Paragraph 13.4. Notwithstanding the
foregoing, if any monetary payment due Lessor hereunder, other than late
charges, is not received by Lessor on or before the due date thereof on two
(2) or more occasions in any twelve (12) month period, then any subsequent
monetary payment due Lessor hereunder, other than late charges, not received
by Lessor within thirty (30) days following the date on which it was due
shall bear interest as aforesaid at the aforesaid rate without the
requirement of notice to Lessee that such payment is due.
20. TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this
Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS, This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and no other
prior or contemporaneous agreement or understanding shall be effective.
23. NOTICES.
23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by hand or by messenger or courier
service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing
of notice purposes. Copies of all notices to Lessee shall also be delivered
or sent to Lessee's attorney at the following address: Peter M. Weil, Esq.,
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 2121 Avenue
of the Stars, 18th Floor, Los Angeles, California 90067, Fax: 310-556-2920.
Either Party may by written notice to the other specify a different address
for notice purposes, except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for the purpose of
mailing or delivering notices to Lessee. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by written notice to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by
regular mail the notice shall be deemed given forty-eight (48) hours after the
same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantees
next day delivery shall be deemed given twenty-four (24) hours after delivery
of the same to the United States Postal Service or courier. If any notice is
transmitted by facsimile transmission or similar means, the same shall be
deemed served or delivered upon telephone confirmation of receipt of the
transmission thereof, provided a copy is also delivered via delivery or mail.
If notice is received on a Sunday or legal holiday, it shall be deemed
received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any
other term, covenant or condition hereof, or of any subsequent Default or
Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor's consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Lessor's knowledge of a Default or Breach at the time
of accepting rent, the acceptance of rent by Lessor shall not be a waiver of
any preceding Default or Breach by Lessee of any provision hereof, other than
the failure of Lessee to pay the particular rent so accepted. Any payment
given Lessor by Lessee may be accepted by Lessor on account of moneys or
damages due Lessor, notwithstanding any qualifying statements or conditions
made by Lessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless specifically
agreed to in writing by Lessor at or before the time of deposit of such
payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
Initials /s/ [ILLEGIBLE]
------------------
/s/ [ILLEGIBLE]
------------------
PAGE 8
<PAGE>
26. NO RIGHT TO HOLDOVER. LESSEE [ILLEGIBLE] no right to retain possession
of the Premises or any part thereof beyond the expiration or earlier
termination of this Lease See also Paragraph 76.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. -Subject to receipt of the "non-disturbance
agreement" pursuant to Paragraph 30.3 below. This Lease and any Option
granted hereby shall be subject and subordinate to any ground lease,
mortgage, deed of trust, or other hypothecation or security device
(collectively, "SECURITY DEVICE"), now or hereafter placed by Lessor upon the
real property of which the Premises are a part, to any and all advances made
on the security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof. Lessee agrees that the Lenders holding
any such Security Device shall have no duty, liability or obligation to
perform any of the obligations of Lessor under this Lease, but that in the
event of Lessor's default with respect to any such obligation, Lessee will
give any Lender whose name and address have been furnished Lessee in writing
for such purpose notice of Lessor's default and allow such Lender thirty (30)
days following receipt of such notice for the cure of said default before
invoking any remedies Lessee may have by reason thereof. If any Lender shall
elect to have this Lease and/or any Option granted hereby superior to the
lien of its Security Device and shall give written notice thereof to Lessee,
this Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation
thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device,
and that in the event of such foreclosure, such new owner shall not: (i) be
liable for any act or omission of any prior lessor except to the extent the
situation warranting such offset or defense continues following the date of
such new owner's acquisition but only to the extent such offset or defense
applies to the new owner's period of ownership and only after written notice
thereof is given to such new owner and then only if such new owner thereafter
does not diligently proceed to remediate the same, or with respect to events
occurring prior to acquisition of ownership, (ii) be subject to any offsets
or defenses which Lessee might have against any prior lessor, or (iii) be
bound by prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices now existing or
entered into by Lessor after the execution of this Lease, Lessee's
subordination of this Lease shall be subject to receiving from the Lender a
non-disturbance agreement in the form of Exhibit "C" hereto or in such other
commercially reasonable form as may be required by the Lender and as may be
reasonably approved by Lessee (a "NON-DISTURBANCE AGREEMENT") providing that
Lessee's possession and this Lease, including any options to extend the term
hereof, will not be disturbed so long as Lessee is not in Breach hereof and
attorns to the record owner of the Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection
with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to
separately document any such subordination or non-subordination, attornment
and/or non-disturbance agreement as is provided for herein.
31. ATTORNEY'S FEES. If any Party brings an action or proceeding to
enforce the terms hereof or declare right hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall
be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, "PREVAILING PARTY"
shall include, without limitation, a Party who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party of its claim or
defense. The attorney's fee award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to reasonable
attorney's fees, costs and expenses incurred in the preparation and service
of notices of Default and consultations in connection therewith, whether or
not a legal action is subsequently commenced in connection with such Default
or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times after reasonable prior notice
for the purpose of showing the same to prospective purchasers, lenders, or
during the last six (6) months of the term, lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part, as Lessor may reasonably deem necessary.
Lessor may not place on or about the Premises or building any "For Sale"
signs, but Lessor may at any time during the last one hundred twenty (120)
days of the term hereof place on or about the Premises any ordinary "For
Lease" signs. All such activities of Lessor shall be without abatement of
rent or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to
the contrary in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such consent.
34. SIGNS. Except as provided in Paragraph 61, Lessee shall not place any
sign upon the Premises, except that Lessee may, with Lessor's prior written
consent, install (but not on the roof) such signs as are reasonably required
to advertise Lessee's own business. The installation of any sign on the
Premises by or for Lessee shall be subject to the provisions of Paragraph 7
(Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations).
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing
by Lessor, the voluntary or other surrender of this Lease by Lessee, the
mutual termination or cancellation hereof, or a termination hereof by Lessor
for Breach by Lessee, shall automatically terminate any sublease or lesser
estate in the Premises; provided, however, Lessor shall, in the event of any
such surrender, termination or cancellation, have the option to continue any
one or all of any existing subtenancies. Lessor's failure within ten (10)
days following any such event to make a written election to the contrary by
written notice to the holder of any such lesser interest, shall constitute
Lessor's election to have such event constitute the termination of such
interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act
by or for the other Party, such consent shall not be unreasonably withheld,
conditioned, or delayed. Lessor's actual reasonable costs and expenses paid
to independent third parties (including but not limited to architects',
attorneys', engineers' or other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent
pertaining to this Lease or the Premises, including but not limited to
consents to an assignment, a subletting or the presence or use of a Hazardous
Substance, practice or storage tank, shall be paid by Lessee to Lessor upon
receipt of an invoice and supporting documentation therefor. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee
deposit with Lessor an amount of money (in addition to the Security Deposit
held under Paragraph 5) reasonably calculated by Lessor to represent the cost
Lessor will incur in considering and responding to Lessee's request. Except
as otherwise provided, any unused portion of said deposit shall be refunded
to Lessee without interest. Lessor's consent to any act, assignment of this
Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgement that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the
time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. Intentionally Omitted.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises
and the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. OPTIONS.
39.1 DEFINITION. As used in this Paragraph 39 the word "OPTION" has
the following meaning; (a) the right to extend the term of this Lease or to
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal to lease the Premises or
the right of first offer to lease the Premises or the right of first refusal
to lease other property of Lessor or the right of first offer to lease other
property of Lessor; (c) the right to purchase the Premises, or the right of
first refusal to purchase the Premises, or the right of first offer to
purchase the Premises, or the right to purchase other property of Lessor, or
the right of first refusal to purchase other property of Lessor, or the right
of first offer to purchase other property of Lessor.
39.2 OPTIONS. Not separately Assignable.
Initials [ILLEGIBLE]
-----------
GROSS PAGE 9 [ILLEGIBLE]
-----------
<PAGE>
The Options, if any herein granted to Lessee are not assignable,
except as a part of an assignment of this Lease, and no Option may be
separated from this Lease in any manner, by reservation or otherwise.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any Multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options to extend or renew this Lease have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i)
during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii)
during the period of time any monetary obligation due Lessor from Lessee is
unpaid (without regard to whether notice thereof is given Lessee), or (iii)
during the time Lessee is in Breach of this Lease.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a).
(c) *All rights of Lessee under the provisions of an Option to
extend the term shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to commencement of the extension term, Lessee commits a
Breach of this Lease.
40. MULTIPLE BUILDINGS. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe
all reasonable rules and regulations which Lessor may make from time to time
for the management, safety, care, and cleanliness of the grounds, the parking
and unloading of vehicles and the preservation of good order, as well as for
the convenience of other occupants or tenants of such other buildings and
their invitees, and that Lessee will pay its fair share of common expenses
incurred in connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide
same. Lessee assumes all responsibility for the protection of the Premises,
Lessee, its agents and invitees and their property from the acts of third
parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of
parcel maps and restrictions, so long as such easements, rights, dedications,
maps and restrictions do not unreasonably interfere with the use of the
Premises by Lessee. Lessee agrees to sign any documents reasonably requested
by Lessor to effectuate any such easement rights, dedication, map or
restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment and there shall survive
the right on the part of said Party to institute suit for recovery of such
sum. If it shall be adjudged that there was no legal obligation on the part
of said Party to pay such sum or any part thereof, said Party shall be
entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.
44. AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute
and deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to Lessee.
This Lease is not intended to be binding until executed by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's rights or obligations hereunder, Lessee agrees to
make such reasonable non-monetary modifications to this Lease as may be
reasonably required by an institutional, insurance company, or pension plan
Lender in connection with the obtaining of normal financing or refinancing of
the property of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
* At Lessor's sole election,
THIS SPACE INTENTIONALLY LEFT BLANK
Initials [ILLEGIBLE]
-----------
[ILLEGIBLE]
-----------
PAGE 10
<PAGE>
49. ADDITIONAL PROVISIONS REGARDING ASSIGNMENT AND SUBLETTING.
49.1 Lessees Other Than Individuals.
(a) If Lessee is a partnership, a transfer of any interest of a
general partner, a withdrawal of any general partner from the partnership, or
the dissolution of the partnership, shall be deemed to be an assignment of this
Lease.
(b) If Lessee is a limited liability company, a transfer of any
interest of a member, a withdrawal of any member, or the dissolution of the
limited liability company, shall be deemed to be an assignment of this Lease.
(c) If Lessee is a corporation, unless Lessee is a public
corporation whose stock is regularly traded on a national stock exchange, or is
regularly traded in the over-the-counter market and quoted on NASDAQ, any sale
or other transfer of a percentage of capital stock of Lessee which results in a
change in the control of Lessee (as defined in Paragraph 12(b) of this Lease),
or the sale or other transfer of substantially all of the assets of Lessee,
shall be deemed to be an assignment of this Lease.
49.2 Conditions To Consent to Assignment or Subletting. Lessee
acknowledges that Lessor's agreement to lease the Premises to Lessee at the rent
and terms stated herein is in material reliance upon Lessor's evaluation of the
original Lessee's background, experience and ability, as well as the nature of
the use of the Premises by the original Lessee as set forth in Paragraph 6. In
the event that Lessee shall request Lessor's written consent to assign or
sublease the Premises as required in Paragraph 12 hereof, then each such request
for consent shall be in writing and accompanied by the following:
(a) Balance sheets, income statements and tax returns for the past
three (3) years for the proposed assignee, or for any proposed sublessee that
proposes to sublease fifty percent (50%) or more of the gross leaseable area of
the Building;
(b) A reasonably detailed description of the business background
of the proposed assignee or sublessee and the identity of its chief principals,
if any;
(c) A statement of the specific uses for which the Premises will
be utilized by the proposed assignee or sublessee;
(d) Unless the proposed assignee or sublessee is a publicly traded
corporation, a list prepared by the proposed assignee or sublessee of all
buildings in which the proposed assignee or sublessee has been a lessee during
the past five (5) years, which list shall include the address of each such
building and the last known name, address and telephone number of the lessor of
each such building; provided, however, that such list shall not be required with
respect to a proposed sublessee that proposes to sublease less than fifty (50%)
percent of the gross leaseable area of the Building;
(e) Unless the proposed assignee or sublessee is a publicly traded
corporation, a list prepared by the proposed assignee or sublessee of all
lawsuits in which the proposed assignee or sublessee has been a named party,
either as plaintiff or defendant, during the past three (3) years, which list
shall include the name and location of the court, the case name and case number
and a brief description of the nature of the action; provided, however, that
such list shall not be required with respect to a proposed sublessee that
proposes to sublease less than fifty percent (50%) of the gross leaseable area
of the Building; and
(f) Written approval of the proposed assignment or sublease and a
reaffirmation of liability, in a form reasonably satisfactory to Lessor's
counsel, from all guarantors and previous assignors of this Lease, not
previously expressly released by Lessor, if any.
49.3 Standards For Consent to Assignment or Subletting. Once Lessor has
received the fee referred to in Paragraph 12.2(e) and all of the information, in
reasonably satisfactory form, as required above, together with any additional
information which Lessor may reasonably request, Lessor shall undertake to
review Lessee's request for consent to assign or sublease. In determining
whether to give its consent to such assignment or subletting, Lessor shall
consider all commercially reasonable factors including, but not limited to, the
following:
(a) The financial responsibility of the proposed assignee, or of a
proposed sublessee that proposes to sublease fifty percent (50%) or more of the
gross leaseable area of the Building;
(b) The nature of the occupancy and of the business to be
conducted on the Premises and its suitability for the Premises; and
11
<PAGE>
(c) The business reputation of the proposed assignee or sublessee.
49.4 Certain Permitted Affiliated Transfers. Notwithstanding
anything to the contrary in Paragraphs 12 and 49.1 of this Lease, Lessee
shall have the right to assign its entire interest in this Lease or to sublet
all or any portion of the Premises without Lessor's prior written consent to
(a) any "Qualified Entity" (as defined below) resulting from a merger or
consolidation with Lessee and its entire business, (b) any Qualified Entity
that succeeds to all or substantially all of the business and assets of
Lessee, or (c) any Qualified Entity that is a "Lessee Affiliate" (as defined
below). Any such assignment or subletting shall be subject to all other
applicable provisions of this Lease, including but not limited to those set
forth in Paragraphs 12.2 and 12.3. Within ten (10) business days after the
occurrence of any such assignment or subletting, Lessee shall deliver to
Lessor written notice of such assignment or subletting together with a copy
of the written assumption required under Paragraph 12.2(a). As used herein,
the term "Qualified Entity" means a corporation, partnership or limited
liability company that is duly formed, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization and is
qualified to conduct business in and is in good standing in the State of
California. As used herein, the term "Lessee Affiliate" shall mean any
corporation, partnership or limited liability company of which more than
fifty percent (50%) of the ownership, management and voting rights are held
by Lessee or by an entity that owns and controls more than fifty percent
(50%) of the ownership and voting rights of Lessee, or any corporation,
partnership or limited liability company that owns more than fifty percent
(50%) of the ownership, management and voting control of Lessee.
49.5 Delivery of Assignment and Sublease Documentation. Prior to the
effectiveness of any assignment or sublease, irrespective of whether Lessor's
consent thereto is required under this Lease, Lessee shall deliver to Lessor
true, complete and correct copies of the instrument of assignment or sublease
together with all amendments and modifications thereto, and together with all
other documents, instruments and agreements of any kind between the assignor and
assignee or the sublessor and sublessee, as the case may be, which in any way
pertain to the assignment or subletting or which are in any manner pertinent to,
or contain information that would affect the calculation of, the amount of
excess rent or other consideration that would be payable to Lessor pursuant to
Paragraph 50.5 in connection with such assignment or subletting.
50. LESSOR'S OPTION TO CANCEL - ASSIGNMENT OR SUBLEASE BY LESSEE.
50.1 Each time that Lessee or any sublessee of all or any part of
the Premises or any assignee of Lessee's interest in this Lease (all
hereinafter referred to in this Paragraph 50 as "Lessee"), shall intend to
sublet all or a portion of the Premises or assign its interest under this
Lease or any sublease thereof, then Lessee shall give to Lessor written
notice of such intent, herein referred to as "Lessee's Notice of Intent", in
strict accordance with the procedures hereinafter set forth. Notwithstanding
the foregoing, Lessee shall not be required to give a Lessee's Notice of
Intent in connection with any proposed sublease of less than fifty percent
(50%) of the gross leaseable area of the Building provided that Lessee shall,
upon such subletting, continue to occupy at least fifty percent (50%) of the
gross leaseable area of the Building.
50.2 Lessee's Notice of Intent shall set forth the date, herein
referred to as the "Termination Date", upon which it is intended that a
proposed sublease or assignment would become effective. The Termination Date
shall not be less than ninety (90) days nor more than one hundred twenty
(120) days from the date that Lessor receives Lessee's Notice of Intent.
Within thirty (30) days after Lessor's receipt of Lessee's Notice of Intent
to assign this Lease or sublet all of the Premises, Lessor may give written
notice to Lessee that Lessor elects to terminate this Lease effective as of
the Termination Date. If Lessor shall so elect to terminate this Lease then
neither Lessor nor Lessee shall be liable to the other for any reason having
to do with this Lease from and after the Termination Date, except for matters
which shall have arisen prior to termination and except for the obligations
of Lessor and Lessee that exist upon or expressly survive termination. Within
thirty (30) days after Lessor's receipt of Lessee's Notice of Intent to
sublet a portion of the Premises, Lessor may give written notice to Lessee
that Lessor elects to terminate this Lease with respect to the portion of the
Premises that is the subject of the proposed sublease effective as of the
Termination Date. If Lessor shall so elect to terminate this Lease with
respect to such portion of the Premises, then (a) effective as of the
Termination Date, the Base Rent and Lessee's obligation to pay Insurance Cost
Increases, Tax Increases, Operating Expense Increases and other regular
payments required of Lessee with respect to the period subsequent to the
Termination Date shall be reduced in proportion to the reduction in the gross
leaseable area of the Building demised to Lessee hereunder as a result of
such termination, and (b) from and after the Termination Date, neither Lessor
nor Lessee shall be liable to the other for any reason having to do with this
Lease as to the portion of the Premises that was the subject of the proposed
sublease, except for matters which shall have arisen prior to termination and
except for the obligations of Lessor and Lessee that exist upon or expressly
survive termination.
50.3 In the event that Lessor does not exercise its right to terminate
this Lease following receipt of Lessee's Notice of Intent and in the event that
Lessee does not in fact enter into a final and binding
12
<PAGE>
sublease or assignment within thirty (30) days after the Termination Date set
forth in such Lessee's Notice of Intent, which sublease or assignment term
commences within one hundred twenty (120) days after said Termination Date, then
Lessee shall be obligated to give another Lessee's Notice of Intent to Lessor
before Lessee may assign or sublease and the terms of this Paragraph 50 shall
reapply with respect to the proposed assignment or subletting. The failure of
Lessor to exercise its right to terminate this Lease under this Paragraph 50
shall not be deemed a waiver of Lessor's right to subsequently terminate this
Lease in accordance with the terms hereof, as it is intended that this option to
cancel shall continue to exist with respect to each assignment or subletting
proposed by Lessee or any sublessee of any part of the Premises or any assignee
of Lessee's interest in this Lease at any time during the entire term of this
Lease and any extension thereof.
50.4 In the event that Lessor, from time to time, declines to exercise
its option to cancel this Lease, that decision shall not be deemed a waiver by
Lessor of Lessor's right to approve or disapprove of the proposed assignment or
subletting or any subsequent assignment or subletting, as the same is otherwise
provided for in Paragraph 12.1 of this Lease.
50.5 In the event of any assignment or subletting that does not
result in a termination (or partial termination) of this Lease by Lessor
pursuant to Paragraph 50.2 above (and irrespective of whether or not a
Lessee's Notice of Intent was given or was required to be given to Lessor in
connection therewith), and if any rent or other consideration of any kind
payable to Lessee under or in connection with said assignment or subletting
is greater than the rent to be paid by Lessee to Lessor under this Lease
during the period of time which said assignment or subletting remains in
effect (after first deducting from such rent the amount of reasonable
out-of-pocket costs and expenses paid by Lessee for the following: (i) the
cost of tenant improvements constructed at the expense of Lessee or the
amount of any tenant improvement allowance paid by Lessee in lieu thereof;
(ii) brokerage commissions; (iii) attorneys' fees and expenses; and (iv)
other cash rent concessions, to the extent not already deducted from the rent
payable to Lessee), then Lessee shall pay to Lessor, as additional rent under
this Lease, one-half (1/2) of such remaining excess rent or other
consideration within ten (10) business days after the receipt thereof by
Lessee. In the event of a subletting of only a portion of the Premises, in
calculating whether the rent or other consideration received by Lessee
exceeds the rent payable under this Lease, the rent payable under this Lease
shall be prorated according to the square footage involved in order to
reflect the rent payable under this Lease that is applicable to the space
sublet.
51. CONDITION OF PREMISES.
51.1 Notwithstanding anything herein to the contrary, Lessee hereby
accepts the Premises in its condition existing on the Early Possession Date, AS
IS, without representation or warranty of any kind from Lessor, except for the
warranties of Lessor expressly set forth in Paragraphs 2.2 and 2.3 hereof, and
Lessee further acknowledges and agrees that Lessor has no obligation to make any
repairs, modifications or improvements of any kind or nature to the Premises,
except as otherwise expressly set forth in Paragraphs 2.2, 2.3, 7.2 and 65
hereof. Lessee further acknowledges and agrees that Lessee takes possession of
any and all fixtures, equipment and/or tenant improvements constructed or
installed on the Premises by Lessor and/or prior occupants thereof strictly on
an AS IS basis, without reliance on any representation or warranty whatsoever of
Lessor or any other party regarding the construction, fitness, condition or
suitability for Lessee's purposes thereof.
52. APPLICATION OF BASE RENT PAID UPON EXECUTION.
52.1 Notwithstanding the provisions of Paragraph 1.6 to the contrary,
Lessee shall deposit with Lessor monthly Base Rent in the amount specified in
Paragraph 1.6 (which is One Hundred Twenty Thousand One Hundred Fifty-Six
Dollars ($120,156.00)) within five (5) days after Lessee's receipt of the
non-disturbance agreement pursuant to Paragraph 58.1 from the holder of any
Security Device that encumbers the Premises as of the date of execution of this
Lease (or if such Security Device is sooner reconveyed, then within five (5)
days of Lessee's receipt of notice of such reconveyance), or the waiver of
Lessee's right to terminate this Lease pursuant to Paragraph 58.1 by reason of
the failure of such holder to enter into such non-disturbance agreement with
Lessee, and such Base Rent shall be applied as follows:
(a) $60,078.00 of such amount shall be applied to the Base Rent
payable for the first (1st) month following the Commencement Date; and
(b) The balance of such amount shall be applied toward payment of
the Base Rent due and payable for the last month prior to the expiration of the
Lease Term or earlier termination of this Lease.
52.2 Notwithstanding anything to the contrary in Paragraph 52.1 above,
if Lessee is at any time in Breach of its obligation to pay Base Rent or other
rent or charges due hereunder, or is otherwise in Breach
13
<PAGE>
of this Lease, Lessor may at its option use, apply or retain all or any portion
of the amount deposited with Lessor as set forth in Paragraph 52.1 above for the
payment of any amount due Lessor or to reimburse or compensate Lessor for any
liability, cost, expense, loss or damage (including without limitation
reasonable attorneys' fees) which Lessor may suffer or incur by reason thereof,
and in such event Lessee shall within ten (10) business days after written
request therefor deposit cash funds with Lessor sufficient to restore such
deposit to the full amount. No part of any such amount held by Lessor shall be
considered to be held in trust, or to bear interest or other increment for its
use. Lessor shall not be required to keep all or any part of such amount
separate from its general accounts.
52.3 The failure by Lessee to deliver to Lessor the Security Deposit
within the time specified in Paragraph 5, or the Base Rent payment payable
pursuant to Paragraph 52.1 within the time specified in Paragraph 52.1, or the
original Letter of Credit required under Paragraph 53.1 within the time
specified in Paragraph 53.1, shall constitute an immediate Breach of this Lease,
notwithstanding anything in this Lease to the contrary.
53. LETTER OF CREDIT.
53.1 Within five (5) days after Lessee's receipt of the
non-disturbance agreement pursuant to Paragraph 58.1 from the holder of any
Security Device that encumbers the Premises as of the date of execution of
this Lease (or if such Security Device is sooner reconveyed, then within five
(5) days after Lessee's receipt of notice of such reconveyance), or the
waiver of Lessee's right to terminate this Lease pursuant to Paragraph 58.1
by reason of the failure of such holder to enter into such non-disturbance
agreement with Lessee, Lessee shall provide Lessor with an assignable,
irrevocable and unconditional standby letter of credit (the "Letter of
Credit") in the amount of Nine Hundred Twenty-Three Thousand Six Hundred
Seventy-Two Dollars ($923,672.00). Notwithstanding the foregoing, if the
Tenant Improvements (as defined in Paragraph 67 below) will include the
replacement of the existing roof of the Building as contemplated in Paragraph
67 below, then the Letter of Credit shall be in the amount of Nine Hundred
Seventy-Eight Thousand Six Hundred Seventy-Two Dollars ($978,672.00). Said
Letter of Credit shall be for the benefit of Lessor, shall have an original
expiration date of no sooner than twelve (12) months following the execution
of this Lease, shall be issued by one of the banks listed in Paragraph 53.4
below, shall be such that it may be drawn upon in part or in full,
periodically, or at one time, and in amounts and at times specified by Lessor
in its sole discretion in the event Lessor presents such Letter of Credit for
payment as specified herein, and shall be in the form and content of Exhibit
"D" attached hereto. Lessor may draw upon such Letter of Credit, and the
Letter of Credit shall provide that Lessor may draw upon such Letter of
Credit, in full or in part upon presentation of a draft in the amount to be
drawn, together with the Letter of Credit and Lessor's written statement that
Lessee is in Breach of this Lease. Lessor's drawing upon said Letter of
Credit shall not constitute a waiver of any Default in the performance of any
covenants or conditions on Lessee's part to be performed. If Lessor draws
upon the Letter of Credit, in whole or in part, Lessee shall, within ten (10)
business days after Lessor gives notice thereof to Lessee by personal
delivery or overnight courier, deliver a replacement Letter of Credit to
Lessor in an amount sufficient to restore the Letter of Credit to the amount
then required to be maintained pursuant to Paragraph 53.5.
53.2 Without limiting Lessor's rights under Paragraph 5 or 13 hereof,
if Lessee is in Breach of any of its obligations under this Lease, Lessor shall
have the immediate right without notice to Lessee, to draw upon the Letter of
Credit in such sums as reasonably necessary in Lessor's reasonable opinion to
perform Lessee's obligations hereunder, to pay all sums which may be due and
payable by Lessee hereunder, or for repayment of costs, expenses, liabilities
and damages to Lessor (which, in the event of termination of this Lease
following a Breach by Lessee, shall include without limitation the unamortized
portion of any leasing commissions and Tenant Improvement Allowance paid by
Lessor). Lessor shall not in any way be obligated to perform Lessee's
obligations and such performance by Lessor, if any, shall not be deemed to
relieve Lessee of its obligations hereunder or to waive any of Lessor's rights.
The amount of the Letter of Credit or of the security deposit under Paragraph 5
shall not be deemed or construed to be a limitation on Lessee's liability under
this Lease. If Lessor draws upon the Letter of Credit in an amount which exceeds
the sums to which Lessor is then entitled, then within ten (10) business days
after Lessee delivers to Lessor the replacement Letter of Credit that Lessee is
required to deliver to Lessor pursuant to Paragraph 53.1 above, Lessor shall
deliver the amount of such excess to Lessee.
53.3 Lessee shall provide Lessor with a renewal, extension or
replacement of such Letter of Credit in the amount required to be maintained
pursuant to Paragraph 53.5 below at least thirty (30) days prior to the
expiration date set forth in the then current Letter of Credit (and each such
renewal, extension or replacement shall then constitute the "Letter of
Credit" hereunder). Lessor agrees to surrender each Letter of Credit and
return same to Lessee immediately upon receipt of an extension, renewal or
replacement Letter of Credit, unless such an extension or renewal is
evidenced by a separate instrument to be attached to the existing Letter of
Credit. Upon Lessee's failure to furnish such renewal, extension or
replacement Letter of Credit within said thirty (30) day period, Lessor shall
have the immediate right, without notice to Lessee, to draw upon
14
<PAGE>
the then existing Letter of Credit, and the funds received, to the extent not
applied by Lessor in accordance with Paragraph 53.2 above, shall be retained by
Lessor as an additional security deposit. No such drawing by Lessor shall
relieve or release Lessee from its obligation to furnish such renewal, extension
or replacement Letter of Credit.
53.4 The term of the initial and all extensions or renewal Letters
of Credit shall be for at least one (1) year. Lessee shall provide
replacement, extension or renewal Letters of Credit so that a Letter of
Credit will continuously be in full force and effect during the term hereof,
as extended, and until at least ninety (90) days after the expiration or
earlier termination of this Lease. Any Letter of Credit renewal, extension or
replacement thereof issued under this Lease shall be irrevocable and
unconditional, and shall be in the form and content of Exhibit "D" attached
hereto. Any Letter of Credit issued under this Lease shall be issued by Bank
of America, Wells Fargo Bank or any other state or national bank with an
office in Los Angeles, California which has a net worth at least equal to the
net worth of Bank of America or Wells Fargo Bank, or such other state or
national bank having an office in Los Angeles, California which is acceptable
to Lessor in Lessor's sole and absolute discretion. Lessee shall pay all
costs and expenses in connection with the issuance of the Letter of Credit,
and any renewals, extensions or replacements thereof, except as otherwise
expressly provided in Paragraph 53.6.
53.5 On the first (1st) anniversary of the Commencement Date and on
each subsequent anniversary of the Commencement Date, the amount of the Letter
of Credit required to be maintained hereunder shall be reduced by an amount
equal to ten percent (10%) of the amount of the original Letter of Credit
required to be provided by Lessee under Paragraph 53.1 above.
53.6 Lessee shall, at Lessor's option, cause the Letter of Credit to
be issued to the purchaser of Lessor's interest in the Premises in the event
such interest be sold, or to the holder of any note secured by a deed of
trust which has a lien against the Premises. If the current loan against the
Premises is refinanced with a new lender from time to time, Lessee shall,
upon Lessor's request, furnish such new lender with a substitute Letter of
Credit naming such new lender as beneficiary upon surrender of the then
existing Letter of Credit. Notwithstanding anything to the contrary contained
herein, if the issuer of the Letter of Credit will not agree that the Letter
of Credit may be so transferred without charge, then the words "without
charge" set forth in the fourth (4th) to last paragraph of the form of letter
of credit attached as Exhibit "D" hereto need not be included in the Letter
of Credit required to be maintained by Lessee hereunder, and Lessor shall pay
the charge required by the issuer of the Letter of Credit in connection with
any such transfer of the Letter of Credit required by Lessor.
53.7 If Lessee shall fully and faithfully perform each and every
provision of this Lease to be performed by it, then within sixty (60) days
following the expiration of the Lease term, Lessor shall return to Lessee any
Letter of Credit previously deposited with Lessor by Lessee that is then held by
Lessor and has not expired or been fully drawn upon. No such return of the
Letter of Credit shall constitute a release of Lessee from any of its
liabilities or obligations under this Lease or constitute an acknowledgment by
Lessor of the satisfaction thereof.
54. ADDITIONAL PROVISIONS REGARDING INSURANCE.
54.1 The mutual waiver of subrogation provided in for in Paragraph 8.6
shall apply to perils required by this Lease to be insured against whether or
not said insurance is actually in effect. Lessor and Lessee agree to have their
respective property damage insurance carriers waive any right to subrogation
that such carriers may have against Lessor or Lessee, as the case may be, so
long as the insurance is not invalidated thereby.
54.2 Notwithstanding anything to the contrary in this Lease,
earthquake and flood insurance for up to the full replacement cost of the
improvements on the Premises (excluding coverage for Lessee Owned Alterations
and Utility Installations), but in no event more than the commercially
reasonable and available insurable value thereof, with such deductible
amounts as Lessor shall reasonably require, shall be maintained by Lessor so
long as such insurance is available at commercially reasonable rates, and the
cost of such insurance, if maintained by Lessor, shall be included in the
computation of any Insurance Cost Increase pursuant to Paragraph 8. If in any
year Lessor does not maintain earthquake and/or flood insurance in effect,
then in calculating the Insurance Cost Increase for such year, an amount
equal to the premium for earthquake and/or flood insurance incurred by Lessor
and included in the calculation of the Base Premium (which the parties agree
is Three Thousand Eight Hundred Five Dollars ($3,805.00) as to earthquake
coverage only, and which Lessee hereby acknowledges is a commercially
reasonable premium for such coverage), shall be subtracted from the Base
Premium; provided, however, that if Lessor thereafter elects to reinstate
earthquake and/or flood insurance for the Premises, said amount shall be
added back to the Base Premium for purposes of calculating the Insurance Cost
Increase for the period after Lessor reinstates such earthquake and/or flood
insurance.
Initials [ILLEGIBLE]
-----------
[ILLEGIBLE]
-----------
15
<PAGE>
54.3 Notwithstanding anything to the contrary in this Lease, any
increase in the cost of the insurance coverage for the Premises maintained in
effect by Lessor and described in Exhibit "E" attached hereto (which is the
insurance that Lessor maintains in effect for the Premises as of the date of
execution of this Lease) over and above the Base Premium (which is the cost of
such coverage as of the date of execution of this Lease) shall be deemed an
Insurance Cost Increase, as defined in Paragraph 8.1(a).
55. OPERATING EXPENSE INCREASE.
55.1 Lessee shall pay to Lessor during the term hereof, in addition to
the Base Rent, the amount by which all Operating Expenses, as hereinafter
defined, for each Comparison Year exceeds the amount of all Operating Expenses
for the Base Year, such excess being hereinafter referred to as the "Operating
Expense Increase," in accordance with the provisions of this Paragraph 55.
55.2 "Base Year" is defined as the one (1) year period commencing on
the Commencement Date and continuing through the day before the first (1st)
anniversary of the Commencement Date.
55.3 "Comparison Year" is defined as each one (1) year period during
the term of this Lease subsequent to the Base Year; provided, however, that
Lessee shall have no obligation to pay any Operating Expense Increase applicable
to the first twelve (12) months of the Lease Term (other than such as are
mandated by a governmental authority, which government mandated expenses Lessee
shall pay, notwithstanding that they occur during the first twelve (12) months
of the Lease term).
55.4 "Operating Expenses" is defined as all expenses, costs and
amounts of every kind and nature which Lessor pays during the Base Year or any
Comparison Year because of or in connection with the ownership, management,
maintenance, repair, replacement, restoration or operation of the Premises, or
any portion thereof. Without limiting the generality of the foregoing, Operating
Expenses shall specifically include any and all of the following:
(a) The cost of supplying all utilities (except those that are
Lessee's responsibility to pay pursuant to Paragraph 11 hereof) to the Premises
(provided, however, that for purposes of calculating the cost of electricity
supplied to the Premises, the cost of electricity for the Base Year shall be
deemed to be an amount not greater than Seventy-Two Thousand Ninety-Three
Dollars and Sixty Cents ($72,093.60), irrespective of whether the actual cost of
electricity during the Base Year exceeds that amount), the cost of operating,
maintaining, repairing, renovating, complying with conservation measures in
connection with, and managing the utility systems, mechanical systems, and
sanitary and storm drainage systems, and the cost of supplies and equipment and
maintenance and service contracts in connection therewith;
(b) The cost of licenses, certificates, permits and inspections
and the cost of contesting the validity or applicability of any governmental
enactments which may affect Operating Expenses or Real Estate Taxes, and the
costs incurred in connection with the implementation and operation of a
transportation system management program or any municipal, private or public
shuttle service or parking program;
(c) The cost of performing all maintenance, repair and replacement
obligations of Lessor under Paragraph 65 of this Lease (excluding costs incurred
by Lessor prior to the fifth (5th) anniversary of the Commencement Date for the
repair or replacement of any of the air conditioning units serving the Building
or for the maintenance, repair or replacement of the existing roof of the
Building, provided, however, that amortization of the cost to replace such items
(except for the portion of such cost amortized prior to the fifth (5th)
anniversary of the Commencement Date) shall be included as an Operating Expense
commencing as of the fifth (5th) anniversary of the Commencement Date);
(d) The cost of landscaping, relamping, and all supplies, tools,
equipment and materials used in the operation, repair and maintenance of the
Premises, or any portion thereof;
(e) The cost of parking area repair, restoration, and maintenance
including, but not limited to, resurfacing, repainting, restriping, and
cleaning;
(f) Fees, charges and other costs, including without limitation
management fees, consulting fees, legal fees and accounting fees, of all
contractors and consultants (including without limitation those charged by an
outside property manager or property management company, or in lieu thereof, a
reasonable management fee to Lessor or its affiliate) engaged by Lessor or
reasonably incurred by Lessor in connection with the management, operation,
maintenance and repair of the Premises, or any portion thereof;
(g) Intentionally omitted;
16
<PAGE>
(h) Wages, salaries and other compensation and benefits of all
persons engaged in the operation or maintenance of the Premises, or any portion
thereof, including employer's Social Security taxes, unemployment taxes or
insurance, and any other taxes which may be levied on such wages, salaries,
compensation and benefits; provided, that if any employees of Lessor provide
services for more than one project of Lessor, then a prorated portion of such
employees' wages, benefits and taxes shall be included in Operating Expenses
based on the portion of their working time devoted to the Premises, or any
portion thereof;
(i) Payments, assessments, fees or charges under any easement,
license, operating agreement, declaration, restrictive covenant, or instrument
pertaining to the sharing of costs by the Premises, or any portion thereof,
including without limitation the Declaration of Covenants, Conditions and
Restrictions for Warner Center Business Park recorded on December 30, 1993 in
the Official Records of Los Angeles County, California as Instrument No.
93-2546421 and rerecorded on February 16,1994 in the Official Records of Los
Angeles County, California as Instrument No. 94-326128 (the "CC&Rs");
(j) Operation, repair, maintenance and replacement of all
"Systems and Equipment," as that term is defined below, and components
thereof;
(k) The cost of janitorial services, alarm service, window
cleaning, trash removal, maintenance and replacement of curbs and walkways,
repair to roofs and re-roofing;
(l) Amortization (including interest on the unamortized cost) of
the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Premises, or any portion thereof;
(m) The cost of capital improvements or other costs incurred in
connection with the Premises (i) which are intended to effect economies in the
operation or maintenance of the Premises, or any portion thereof, or (ii) that
are required under any governmental law or regulation; provided, however, that
any capital expenditure shall be amortized over its useful life (as such useful
life is specified pursuant to Federal income tax regulations or guidelines for
depreciation thereof), and the unamortized cost of the same shall bear interest
at a rate that is commercially reasonable in the reasonable judgment of Lessor's
accountants but in no event no more than ten percent (10%) per annum, with
Lessee reserving the right to prepay its obligation at any time without penalty;
and
(n) Costs, fees, charges or assessments imposed by any federal,
state or local government for fire and police protection, trash removal,
community services, or other services which do not constitute "Real Property
Taxes" as that term is defined in Paragraph 10.2 above.
55.5 Notwithstanding anything to the contrary contained in this Lease,
for purposes of this Lease, Operating Expenses shall not include any of the
following costs or expenses, except to the extent such costs or expenses are
included in or constitute assessments, fees or charges that are payable by
Lessor under the CC&Rs:
(a) Depreciation, interest and amortization on mortgages, or
ground lease payments, if any;
(b) Costs of any items or services to the extent Lessor receives
reimbursement from insurance proceeds (such proceeds to be credited to the cost
of items that would otherwise constitute Operating Expenses in the year in which
received, except that any deductible amount under any insurance policy shall be
included within Operating Expenses when paid) or from Lessee or any other tenant
or other third person (other than through payment of Operating Expenses or
similar pass-through expenses);
(c) Real Property Taxes (provided Lessee shall pay all Tax
Increases pursuant to Paragraph 10 hereof);
(d) Costs to remediate any Hazardous Substance Condition that is
Lessor's responsibility to remediate under Paragraph 9.7;
(e) Insurance premiums for the insurance that Lessor is required
to carry under Paragraphs 8.2 and 8.3 (provided Lessee shall pay all Insurance
Cost Increases as provided in Paragraph 8);
(f) Costs, fees, expenses, damages, liabilities and losses which
are incurred by Lessor as a result of the failure of Lessee to perform any of
its obligations set forth in this Lease, all of which shall be paid by Lessee;
17
<PAGE>
(g) Estate, inheritance, transfer, gift or franchise taxes of
Lessor or the federal or state net income tax imposed on Lessor's income from
all sources;
(h) Costs (including, but not limited to, attorneys' fees)
associated with the operation of the business of the corporation, partnership or
other entity which constitutes Lessor, as the same are distinguished from the
costs of operation of the Premises, including, without limitation, Lessor's
general corporate overhead, accounting and legal expenses not related to the
operation of the Premises, costs of preparing corporate, partnership or other
tax returns or financial statements not related to the operation of the
Premises, costs of defending any proceedings, lawsuits or arbitration with any
mortgagee (except as the actions of Lessee may be at issue), costs of selling,
syndicating, financing, mortgaging or hypothecating any of Lessor's interest in
the Premises or any part thereof and costs of any disputes between Lessor and
its employees or with employees of Lessor's property manager, or outside fees
paid in connection with disputes with other tenants;
(i) Costs of the initial construction of the Premises (provided,
however, that to the extent any such costs (including but not limited to those
specified in clauses (i), (ii) or (iii) hereinbelow) are included in Real Estate
Taxes under Paragraph 10, Lessee shall be responsible for payment of Tax
Increases pursuant to Paragraph 10 resulting from such costs), including without
limitation, the (i) costs of initial traffic studies, environmental impact
reports and transportation system management plans and reports, (ii) costs or
expenses relating to any provisions of any initial development agreements,
owner's participation agreements, or other agreement relating to the initial
development, entitlement, construction or financing of the Premises, including
any initial payments or costs or ongoing payments or costs made in connection
with any child-care facilities, traffic demand management programs,
transportation impact mitigation fees, water and sewage conservation, recycling,
housing replacement and linkage fees, special assessment districts,
infrastructure and transportation assessments, art programs, or parking
requirements and programs, and (iii) all direct and indirect costs incurred in
connection with the ownership, operation, management, maintenance, repair,
replacement and restoration of any off-site parking areas used by tenants of the
Premises during initial construction of the Premises;
(j) Costs, including, without limitation, permit, license and
inspection costs, and architects', engineers' and space planners' fees and
expenses, incurred with respect to the installation of tenants' (including
Lessee's) or other occupants' improvements in the Premises;
(k) Costs arising from Lessor's failure to make payments required
of Lessor when due and tax penalties incurred as a result of Lessor's failure to
make payments or to file any tax or information returns required of Lessor when
due, unless arising solely as a result of a Lessee Breach or negligent act or
omission by Lessee;
(l) Marketing costs in connection with the negotiation and
preparation of letters, deal memos, letters of intent, leases, subleases and/or
assignments, space planning costs, and other costs and expenses incurred in
connection with lease, sublease and/or assignment negotiations and transactions
with present or prospective tenants or other occupants of the Premises,
including lease concessions, leasing commissions, real estate brokerage
commissions and attorneys' fees;
(m) Interest, principal, points and fees on debt or amortization
payments, and late payment penalties and interest on any mortgages or deeds of
trust and ground lease payments, and other costs of financing or refinancing the
Premises or any part thereof;
(n) Legal, accounting, consulting and other related expenses
associated with the enforcement of leases, disputes with tenants, or the defense
of Lessor's title to the Premises or any portion thereof;
(o) Advertising and promotional expenditures incurred directly
for leasing individual space in the Premises, including, without limitation,
costs of signs in or on the Premises identifying the owner of the Premises or
other tenants' signs;
(p) Compensation to executives, officers or partners of Lessor or
to any other person at or above the level of building or property manager, other
than the property manager or property management company for the Premises or any
portion thereof, and other than any other persons providing on-site services to
the Premises (regardless of job title or level);
(q) Any compensation paid to clerks, attendants or other persons
in commercial concessions operated by Lessor and other costs directly related to
the installation, operation and maintenance thereof, except for parking garages
and parking areas the costs of which will be included in Operating Expenses;
18
<PAGE>
(r) The cost of all items and services supplied selectively to
any other tenants of the Premises (and not to Lessee) without reimbursement,
provided that any item or service supplied selectively to Lessee (and not to
other tenants) shall be paid for by Lessee;
(s) Governmental fines or penalties assessed as a result of
Lessor's failure to comply with Applicable Laws to the extent such compliance is
expressly the obligation of Lessor elsewhere in this Lease, and unless such
failure is a result of a Breach or negligent act or omission of Lessee;
(t) Any costs recovered by Lessor to the extent such cost
recovery allows Lessor to recover more than 100% of Operating Expenses for any
Comparison Year from tenants of the Premises (provided, however, that recovery
of amortization for prior year costs and amounts paid as "reserves" or
allowances for future expenses shall not be excluded from Operating Expenses
under the operation of this subparagraph and shall be included in Operating
Expenses that Lessor shall be entitled to recover);
(u) Liability which (i) is covered by the insurance that is
required to be carried by Lessor under this Lease, or (ii) would have been
covered by insurance required to be carried by Lessor under this Lease but which
was not obtained as a result of Lessor's intentional acts or omissions or gross
negligence (but not as a result of commercial impracticability of obtaining such
insurance or fault of Lessee);
(v) Expenses resulting directly from the willful misconduct of
Lessor or from the gross negligence of Lessor;
(w) Costs of repairs or modifications to the Premises incurred by
Lessor in the performance of Lessor's obligations under Paragraphs 2.2 and 2.3;
(x) Any bad debt loss, rent loss or reserves for bad debts or
rent loss;
(y) Except to the extent specifically provided otherwise in this
Lease, and except as to the management fees payable to Lessor or its affiliate,
or to the property manager or property management company engaged by Lessor to
manage the Property, as provided in Paragraph 55.4 above, the overhead and
profit increments paid to Lessor, or to any affiliate of Lessor, for goods
and/or services supplied to the Premises, to the extent such overhead and profit
increments exceed the costs of comparable, first-class high quality goods and/or
services delivered or rendered by unaffiliated third parties of comparable
reputation, stature, experience and quality to Lessor on a competitive basis;
(z) Costs, penalties, fines or awards and interest incurred by
Lessor as a result of Lessor's gross negligence in the performance of Lessor's
obligations under this Lease;
(bb) Lessor's charitable or political contributions, or any other
costs, fees, dues, contributions or similar expenses for industry associations
or similar organizations;
(cc) Costs for sculpture, paintings or other objects of art or
the insuring, repair or maintenance thereof (provided, however, that
notwithstanding anything to the contrary contained in this Lease, Lessee shall
at all times be solely responsible for the insuring, maintenance, repair and
replacement of any sculpture, paintings or other objects of art that are the
property of Lessee);
(dd) Costs incurred by Lessor in connection with any rooftop
communications equipment of Lessor or other tenants or occupants of the Premises
(other than Lessee) installed after the execution of this Lease that does not
serve the Premises (provided, however, that Lessee shall maintain, repair and
replace as necessary, at Lessee's sole cost and expense, all rooftop
communications equipment installed by or on behalf of or belonging to Lessee);
(ee) If Lessor pays any assessments in fewer than the maximum
number of installments permitted by Applicable Law, such excess payments shall
not be included as Operating Expenses except in the year in which the assessment
installment would otherwise have been due had Lessor paid the same in the
maximum number of permitted installments, in which case Lessor may charge as an
Operating Expense the full amount of the assessment as if Lessor had paid it off
in the maximum number of installments and Lessee shall not receive any benefit
or discount as a result of Lessor's prepayment (and Operating Expenses shall not
be reduced by the amount of any such benefit or discount), notwithstanding any
other provision in this Lease to the contrary;
(ff) Any costs attributable to real property added to the
Premises (unless such property is added with Lessee's consent) to the extent
such costs result in a net increase in Lessee's monetary liability attributable
to common areas; and
19
<PAGE>
(gg) Any costs expressly excluded from Operating Expenses
elsewhere in this Lease.
Notwithstanding anything to the contrary set forth in this
Paragraph 55, when calculating Operating Expenses for the Base Year, Operating
Expenses shall exclude (i) market-wide labor-rate increases due to extraordinary
circumstances, including, but not limited to, boycotts and strikes, (ii) utility
rate increases due to extraordinary circumstances including, but not limited to,
conservation surcharges, boycotts, embargoes or other shortages, and (iii)
amortization and other costs of capital improvement, restoration, and
replacement relating to any portion of the Premises (including the amortization
expenses of any such costs incurred in prior years).
55.6 "Systems and Equipment" is defined as any plant, machinery,
transformers, duct work, conduit, pipe, bus duct, cable, wires, and other
equipment, facilities, and systems designed to supply heat, ventilation, air
conditioning and humidity or any other services or utilities, or comprising or
serving as any component or portion of the electrical, gas, steam, plumbing,
sprinkler, communications, alarm, security, or fire/life safety systems or
equipment, or any other mechanical, electrical, electronic, computer or other
systems or equipment which serve the Premises in whole or in part.
55.7 Each Operating Expense Increase shall be payable to Lessee within
ten (10) business days after a reasonably detailed statement of actual expenses
is presented to Lessee by Lessor. At Lessor's option, however, the amount of the
Operating Expense Increase for any Comparison Year may be estimated by Lessor
from time to time in advance of such Comparison Year, and the same shall be
payable monthly or quarterly, as Lessor shall designate, during such Comparison
Year, on the same day as the Base Rent is due hereunder. In the event that
Lessee pays Lessor's estimate of the Operating Expense Increase for a Comparison
Year as aforesaid, Lessor shall deliver to Lessee within sixty (60) days after
the expiration of such Comparison Year a reasonably detailed statement showing
the actual Operating Expense Increase incurred during such Comparison Year. If
Lessee's payments under this Paragraph 55.7 during said Comparison Year exceed
the actual Operating Expense Increase as indicated on said statement, Lessee
shall be entitled to credit the amount of such overpayment against the Operating
Expense Increase next falling due. If Lessee's payments under this Paragraph
55.7 during said Comparison Year were less than the actual Operating Expense
Increase as indicated on said statement, Lessee shall pay to Lessor the amount
of the deficiency within ten (10) business days after delivery by Lessor to
Lessee of said statement. Lessor and Lessee shall forthwith adjust between them
by cash payment any balance determined to exist with respect to that portion of
the last Comparison Year for which Lessee is responsible as to Operating Expense
Increases, notwithstanding that the Lease term may have terminated before the
end of such Comparison Year.
55.8 Upon reasonable notice to Lessor, Lessee shall have the right to
audit Lessor's determination of each Operating Expense Increase for any
Comparison Year within three (3) years after Lessee's receipt of Lessor's
statement of the Operating Expense Increase for such Comparison Year. Such audit
shall be made during normal business hours at Lessor's or its property manager's
offices by Lessee's employees or certified public accountants (provided such
auditors shall not be employed or compensated on a contingency fee basis). If,
after such audit, Lessee disputes the accuracy of Lessor's determination of an
Operating Expense Increase in reasonable detail, Lessee shall, within thirty
(30) days after commencing said audit, submit to Lessor in writing Lessee's
judgment as to the correct amount of the Operating Expense Increase in
reasonable detail ("Lessee's Judgment"). If Lessee does not elect to audit the
Operating Expense Increase for any Comparison Year by notice to Lessor as
aforesaid within the aforesaid three (3) year period, or if Lessee does not
submit Lessee's Judgment to Lessor within thirty (30) days following the
commencement of an audit, then Lessee shall be deemed to have approved Lessor's
determination of the Operating Expense Increase for the Comparison Year in
question. Unless Lessor disputes Lessee's Judgment, Lessor shall reimburse
Lessee the amount of any overcharge indicated in Lessee's Judgment within thirty
(30) days after receipt of Lessee's Judgment. If Lessor disputes Lessee's
Judgment, then Lessor shall, within thirty (30) days, provide to Lessee the
results of a second audit of the Operating Expense Increase for the Comparison
Year in question in reasonable detail, which second audit shall be conducted by
an independent certified public accountant selected by Lessor who shall be a
member of a nationally or regionally recognized accounting firm, and the written
report of such second auditor shall be final and binding upon the Parties.
Lessee shall pay the cost of any such audit of Operating Expense Increases
(whether by Lessee's auditor or a second auditor selected by Lessor as
aforesaid, or both); provided, however, that if there is an overcharge by Lessor
of more than five percent (5%) of the Operating Expense Increase for the
Comparison Year in question, Lessor shall pay the reasonable cost of the audit
by Lessee's auditor and the actual cost of the second auditor selected by
Lessor.
56. VEHICLE PARKING.
56.1 The Premises are subject to a recorded Reciprocal Grant of
Easements Agreement (the "Reciprocal Parking Agreement") pursuant to which all
driveways and parking areas of the Premises and certain adjacent properties are
available for reciprocal parking by the occupants of the Premises and such
20
<PAGE>
adjacent properties. Lessee and its employees, agents, suppliers, shippers,
customers, contractors and invitees shall be entitled to use up to ninety (90)
unreserved parking spaces within the parking areas available for parking by
occupants of the Premises pursuant to the Reciprocal Parking Agreement without
charge during the term of this Lease and any extension thereof. Lessee shall not
use more parking spaces than said number. Said parking spaces shall be used for
parking by vehicles no larger than full-sized passenger automobiles or pick-up
trucks, herein called "Permitted Size Vehicles". Vehicles other than Permitted
Size Vehicles shall be parked and loaded and unloaded in accordance with the
provisions of Paragraph 59 hereof.
56.2 Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded or parked in areas other than
those designated by Lessor for such activities. If Lessee permits or allows any
of such prohibited activities, then Lessor shall have the right, without notice,
in addition to such other rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor. Lessee shall at all times comply with
all of the provisions of the Reciprocal Parking Agreement.
57. ADDITIONAL PROVISIONS REGARDING REAL PROPERTY TAXES.
57.1 Notwithstanding anything to the contrary contained in Paragraph 10
of this Lease, Lessee shall not be obligated to pay any Tax Increase that
results from a change in ownership of the Premises occurring prior to the third
(3rd) anniversary of the Commencement Date, and Lessee shall be obligated to
pay, pursuant to Paragraph 10 of this Lease, one-half (1/2) of the amount of any
Tax Increase (or portion thereof) resulting solely from a change in ownership of
the Premises occurring during the period commencing on the third (3rd)
anniversary of the Commencement Date and continuing through the expiration of
the Original Term.
57.2 Notwithstanding anything to the contrary contained in Paragraph
10 of this Lease, the entire amount of any increase in Real Property Taxes
levied or assessed against the Premises for any period commencing after the
date of execution of this Lease and continuing thereafter during the term,
over the Real Property Taxes assessed against the Premises as of the date of
execution of this Lease, to the extent such increase results from the
construction of the Tenant Improvements, shall constitute a "Tax Increase"
and shall be paid by Lessee to Lessor in accordance with the provisions of
Paragraph 10.1.
58. ADDITIONAL PROVISIONS REGARDING NON-DISTURBANCE AGREEMENTS.
58.1 If as of the date of execution of this Lease the Premises shall be
subject to any Security Device (as such term is defined in Paragraph 30),
following the execution and delivery of this Lease by the Parties, Lessor shall
request the holder of such Security Device to enter into a "non-disturbance
agreement" (as such term is defined in Paragraph 30.3) with Lessee in the form
prescribed by Paragraph 30.3. If such holder fails or refuses to enter into such
non-disturbance agreement within twenty-one (21) days after the date of
execution and delivery of this Lease by the Parties (unless as a result of the
reconveyance of such Security Device), then Lessee may elect to terminate this
Lease by giving written notice of such election to Lessor within ten (10)
business days thereafter (unless Lessee receives such non-disturbance agreement
or such Security Device is reconveyed prior to the time Lessee gives such
notice), whereupon this Lease shall terminate and neither party shall have any
further liabilities or obligations under this Lease, except those that expressly
survive termination. If Lessee does not give such notice of termination within
said ten (10) business day period, this Lease shall continue in effect and
Lessee's right of termination as aforesaid shall be deemed waived.
59. USE, TRUCK STORAGE.
59.1 No storage of any kind is allowed outside of the building situated
on the Premises, including but not limited to trucks and trailers, and Lessee
shall not use the Premises (or any adjacent parking areas) as a truck storage
facility.
59.2 Trucks and trailers shall be parked only on concrete aprons. The
front legs of any trailers stored on asphalt shall be placed only on an
appropriate support placed between the trailer legs and the asphalt, so as to
protect the asphalt from damage.
60. WORK BY LESSEE.
60.1 Any Alterations (including but not limited to the "Tenant
Improvements", as defined below) or Utility Installations to be constructed or
installed by Lessee at any time shall be installed by Lessee or its contractors
in compliance with the following:
21
<PAGE>
(a) No such work shall proceed without (i) Lessee's contractor
first providing to Lessor payment and performance bonds satisfactory to Lessor,
(ii) Lessor's prior written approval of Lessee's contractor, (iii) the
furnishing to Lessor by Lessee's contractor of a Certificate of Insurance from
an approved company in an amount of not less than $1,000,000 combined single
limits for public liability and automobile liability, endorsed to show Lessor as
an additional insured, and worker's compensation insurance covering all of the
contractor's employees, and (iv) detailed plans and specifications for such work
submitted to and approved by Lessor (provided, however, that Lessee may commence
demolition required to construct the Tenant Improvements in advance of Lessor's
approval of the plans and specifications for the Tenant Improvements to the
extent expressly permitted in Paragraph 73.2 hereof).
(b) All such work shall be done in conformity with a valid
building permit when required, a copy of which shall be furnished to Lessor
before the work is commenced, and any work not acceptable to the applicable
Department of Building and Safety, or not reasonably satisfactory to Lessor,
shall be promptly replaced at Lessee's expense. Notwithstanding any failure by
Lessor to object to any such work, Lessor shall have no responsibility therefor.
(c) Lessee shall give Lessor at least ten (10) days prior notice
of the date of commencement of any such work.
(d) Lessee shall reimburse Lessor for any extra expense actually
incurred by Lessor by reason of faulty work done by Lessee or its contractors,
or by reason of inadequate cleanup.
(e) All work shall be diligently and continuously pursued to its
completion and be done in a good and workmanlike manner of good and sufficient
materials.
60.2 Lessee shall, within thirty (30) days after completion of such
alterations, improvements, additions or Utility Installations, provide Lessor
with as-built plans and specifications for same.
61. ADDITIONAL PROVISIONS REGARDING SIGNS.
61.1 Subject to Lessee's obtaining of all necessary licenses, permits
and approvals required therefor, and subject to any applicable restriction in
the CC&Rs or other Applicable Law, Lessee shall have the right, at Lessee's sole
cost and expense, to install a monument sign (or install its signage on the
existing Xerox monument sign) adjacent to the entrance to the building situated
on the Premises, advertising Lessee's own business conducted on the Premises.
Such monument sign shall be installed in accordance with the provisions of
Paragraphs 7.3 and 60 of this Lease and shall be deemed Alterations for all
purposes under this Lease. The location, design and specifications for such
monument sign shall be subject to Lessor's prior written approval, which shall
not be unreasonably withheld, conditioned or delayed, and shall further be
subject to the requirements of Applicable Law and the CC&Rs. Lessee shall
maintain and repair such monument sign at all times during the term of this
Lease at Lessee's sole cost and expense.
62. LESSEE'S COMMUNICATIONS EQUIPMENT.
62.1 Subject to Lessee's obtaining of all necessary licenses, permits
and approvals required therefor, and subject to any applicable restrictions in
the CC&Rs or other Applicable Law, Lessee shall have the right to install, at
Lessee's sole cost and expense, up to six (6) full-sized ten (10) to twelve
(12) foot satellite dishes on the roof of the building situated on the Premises
or within the parking areas situated on the Premises. The location and
specifications for such satellite dishes shall be subject to Lessor's prior
written approval, which shall not be unreasonably withheld, conditioned or
delayed. Such satellite dishes shall be installed in accordance with the
provisions of Paragraphs 7.3 and 60 of this Lease and shall be deemed Utility
Installations for all purposes under this Lease. Lessee shall, at Lessee's sole
cost and expense, perform all structural reinforcement to the roof or other
portions of the Premises necessary to support such satellite dishes, and shall
install screening of the dishes so that they shall be screened from view within
the parking areas adjacent to the building situated on the Premises or as
otherwise required under the CC&Rs or other Applicable Law. Lessee shall
promptly repair, at Lessee's sole cost and expense, any damage to the roof,
structure or other portions of the Premises at any time during the term of this
Lease resulting from the installation or maintenance of such satellite dishes.
Lessee shall also maintain and repair all such satellite dishes at all times
during the term of this Lease at Lessee's sole cost and expense.
63. RENT ESCALATIONS.
63.1 On the second (2nd) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Sixty-One Thousand
Eight Hundred Eighty Dollars and Thirty-Four Cents ($61,880.34).
22
<PAGE>
63.2 On the third (3rd) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Sixty-Three
Thousand Seven Hundred Thirty-Six Dollars and Seventy-Five Cents ($63,736.75).
63.3 On the fourth (4th) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Sixty-Five Thousand
Six Hundred Forty-Eight Dollars and Eighty-Five Cents ($65,648.85).
63.4 On the fifth (5th) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Sixty-Seven Thousand
Six Hundred Eighteen Dollars and Thirty-Two Cents ($67,618.32).
63.5 On the sixth (6th) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Sixty-Nine Thousand
Six Hundred Forty-Six Dollars and Eighty-Seven Cents ($69,646.87).
63.6 On the seventh (7th) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Seventy-One Thousand
Seven Hundred Thirty-Six Dollars and Twenty-Seven Cents ($71,736.27).
63.7 On the eighth (8th) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Seventy-Three Thousand
Eight Hundred Eighty-Eight Dollars and Thirty-Six Cents ($73,888.36).
63.8 On the ninth (9th) anniversary of the Commencement Date, the
monthly Base Rent payable hereunder shall be increased to Seventy-Six Thousand
One Hundred Five Dollars and One Cent ($76,105.01).
64. OPTION TO EXTEND.
64.1 Grant of Option. Lessor hereby grants to Lessee the option to
extend the term of this Lease for one (1) additional five (5) year period (the
"Option Term") commencing upon the expiration of the Original Term hereof, upon
each and all of the following terms and conditions:
(a) Lessee gives to Lessor, and Lessor actually receives, on a
date that is prior to the date upon which the Option Term would commence (if
such option is exercised) by at least nine (9) and not more than twelve (12)
months, a written notice via personal delivery or certified mail of the exercise
of the option to extend this Lease for said additional term, time being of the
essence. If said notification of the exercise of said option is not so given and
received, this option shall automatically expire;
(b) The provisions of Paragraph 39 of this Lease, including
without limitation the provisions relating to the default of Lessee set forth in
Paragraph 39.4, are conditions of this option;
(c) All of the terms and conditions of this Lease except where
specifically modified by this option shall apply during the Option Term;
(d) Any prior Lessee that has not been expressly released from
liability under this Lease, and any guarantor of the Lessee's performance
hereunder, expressly reaffirms in writing the extension of their liability with
respect to this Lease for the Option Term; and
(e) The monthly Base Rent at the commencement of the Option Term
shall be increased to Seventy-Eight Thousand Three Hundred Eighty-Eight Dollars
and Sixteen Cents ($78,388.16). Thereafter, on the first (1st) anniversary of
the commencement of the Option Term, and on each subsequent anniversary thereof,
the monthly Base Rent payable by Lessee under this Lease shall be increased by
an amount equal to three percent (3%) of the monthly Base Rent in effect
immediately prior to the anniversary on which such increase is to become
effective.
65. ADDITIONAL PROVISIONS REGARDING MAINTENANCE AND REPAIRS.
65.1 Lessor's Obligations. Except as otherwise provided in
Paragraph 65.2 or elsewhere in this Lease, Lessor shall be responsible for the
maintenance, repair and replacement, as necessary, of the Premises, including
the Building and parking areas, and the roof and the heating, ventilating and
air conditioning equipment, and the fire and life safety systems (excluding any
such systems installed by Lessee), shall repaint the exterior of the Premises as
reasonably necessary, and shall provide standard janitorial
23
<PAGE>
services for the Premises after normal business hours on a daily basis
(excluding weekends and holidays). Notwithstanding the foregoing, in no event
shall Lessor be obligated to paint the interior of the Premises. Except as
expressly provided in Paragraphs 9.6 and 11, there shall be no abatement of rent
or liability to Lessee on account of any injury to interference with Lessee's
business with respect to any improvements, alterations, maintenance or repairs
made by Lessor to the Premises or any part thereof; provided, however, that the
foregoing shall not be deemed a limitation upon the liability of Lessor for
injury to persons or damage to personal property or any other property or
improvements situated on the Premises caused by Lessor's gross negligence or
willful misconduct.
65.2 Lessee's Obligations. Notwithstanding the provisions of Paragraph
65.1 above, Lessee shall, at Lessee's sole cost and expense, (a) promptly
commence and complete the repair or replacement (including without limitation
repainting) of any condition, damage or defect caused by any act or omission of
Lessee or any of its agents, employees, contractors, licensees or permittees,
(b) promptly perform all repairs and replacements to the wall coverings and
floor coverings and other furnishings in the Premises, and the replacement of
any other items which become worn out, obsolete or non-functioning as a result
of ordinary wear and tear, provided, however, that if the replacement of any
such other item will cost, as to any single item, more than $2,500.00, and such
item will have a useful life (as such useful life is specified pursuant to
Federal income tax regulations or guidelines for depreciation thereof) that
will extend beyond the term of this Lease by more than one (1) year, then such
item shall be replaced by Lessor, and Lessee shall pay to Lessor, each month
during the remainder of the term of this Lease (including any extension
thereof), on the date on which Base Rent is due, an amount equal to the product
of multiplying the cost of such replacement by a fraction, the numerator of
which is one (1), and the denominator of which is the number of months of the
useful life of such replacement (including interest on the unamortized balance
as is then commercially reasonable in the reasonable judgment of Lessor's
accountants but in no event more than ten percent (10%) per annum), with Lessee
reserving the right to prepay its obligation at any time without penalty, (c)
promptly commence and complete the repair or replacement of any condition,
damage or defect arising as a result of any defective construction of any
Alterations or Utility Installations (including without limitation the Tenant
Improvements) constructed or installed by Lessee, (d) at all times keep all of
Lessee's furnishings, fixtures, equipment and other personal property in the
Premises in a neat, clean and good condition and state of repair, and (e)
maintain and repair any Alterations and Utility Installations made by Lessee
(including without limitation the Tenant Improvements) that are above standard
improvements or that create maintenance or repair costs in excess of those that
would be incurred for standard improvements. Lessor may elect, at Lessor's
option, to perform any of the maintenance, repair and replacement obligations of
Lessee, provided Lessor gives Lessee ten (10) business days prior written
notice of such election (except in the event of emergency), in which event
Lessee shall reimburse Lessor for the reasonable cost thereof incurred by Lessor
within ten (10) business days of Lessor's written request for payment.
66. ADDITIONAL PROVISIONS REGARDING ALTERATIONS AND UTILITY INSTALLATIONS.
66.1 Notwithstanding anything to the contrary in Paragraph 7.3(a)
hereof, Lessee may make nonstructural Alterations and Utility Installations to
the interior of the Premises (excluding the roof) without Lessor's prior written
consent as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof, do not impair the structural
integrity of the Premises, and the cumulative cost thereof in any twelve (12)
month period does not exceed Thirty-Five Thousand Dollars ($35,000.00). All such
Alterations and Utility Installations shall be made in accordance with the
provisions of Paragraph 7.3 and other applicable provisions of this Lease.
Lessee shall give Lessor at least ten (10) days prior written notice of any
such Alterations or Utility Installations proposed by Lessee.
66.2 Lessee shall have the right to install its own security system in
the Premises at Lessee's sole cost and expense and the same shall constitute a
Trade Fixture for all purposes under this Lease; provided, however, that such
security system shall be installed only in accordance with all provisions of
this Lease that are applicable to the installation of Alterations and Utility
Installations, including without limitation Paragraphs 7.3 and 60.
Notwithstanding anything to the contrary contained in this Lease, Lessee shall
at all times be solely responsible for the maintenance, repair and replacement
of such security system, at Lessee's sole cost and expense.
67. TENANT IMPROVEMENTS.
67.1 Lessee, at Lessee's sole cost and expense (except as otherwise
expressly provided herein), agrees to construct or cause the construction of
such improvements to the interior of the Premises as Lessee requires to ready
the Premises for the conduct of its business, and in accordance with the
"Final Plans" therefor described below (the "Tenant Improvements"). As part
of the Tenant Improvements, Lessee may elect to replace the existing roof of
the Building; provided, however, that if as part of the Tenant Improvements,
Lessee proposes to penetrate the existing roof of the Building for the
installation of skylights, Lessee shall be required to replace the existing
roof of the Building. If Lessee proposes or is required to replace the
existing
24
<PAGE>
roof in connection with the performance of the other Tenant Improvements,
such roof replacement shall constitute part of the "Tenant Improvements". In
connection with any such roof replacement, Lessee shall obtain a roof
warranty or guaranty, guaranteeing the new roof for a period of not less than
five (5) years, which warranty or guaranty shall be assignable to Lessor and
its successors and assigns and shall be in form and content reasonably
satisfactory to Lessor. Lessee shall assign such warranty or guaranty to
Lessor upon completion of the Tenant Improvements. The Tenant Improvements
shall be designed and constructed by Tenant as provided hereinbelow.
67.2 Lessee shall cause the Tenant Improvements to be designed and
constructed in compliance with the requirements of all Applicable Law, including
without limitation the Americans with Disabilities Act, and the Tenant
Improvements shall include, without limitation, any modifications to the
Premises required under the Americans with Disabilities Act or other Applicable
Law that are required solely as a result of the Tenant Improvements. The cost
thereof shall be paid by Lessee, subject however to Lessor's obligation to pay
the Tenant Improvement Allowance to Lessee pursuant to Paragraph 74 hereof.
68. PRELIMINARY PLANS.
68.1 Intentionally Omitted.
68.2 Prior to commencement of construction of the Tenant Improvements
(other than demolition), Lessee, at its sole cost and expense, shall have
preliminary plans and specifications prepared by Pugh & Scarpa or another
licensed architect reasonably approved by Lessor ("Lessee's Architect") for the
construction of the Tenant Improvements (the "Preliminary Plans").
68.3 For a period of three (3) business days from the date Lessee
delivers the Preliminary Plans to Lessor, Lessor shall have the right to
accept and approve said Preliminary Plans, as delivered, or reject them. Such
right of rejection or approval by Lessor shall be exercised reasonably.
Acceptance or rejection of said Preliminary Plans shall be signified by
Lessor delivering to Lessee, within said three (3) business day period, said
Preliminary Plans with each page marked "approved" or "rejected", as the case
may be, and signed by Lessor.
68.4 If Lessor shall reject the Preliminary Plans either partially or
totally, Lessee shall cause such Preliminary Plans to be modified by Lessee's
Architect so as to be acceptable to Lessor and shall deliver the modified
Preliminary Plans to Lessor, which Lessor shall again have the right to approve
or disapprove pursuant to Paragraph 68.3 above, and such process shall continue
until said Preliminary Plans have been modified to the reasonable requirements
of Lessor. The Preliminary Plans, when approved by Lessor, shall supersede any
prior agreement concerning the Tenant Improvements.
69. FINAL PLANS.
69.1 Within thirty (30) days after the Preliminary Plans have been
approved by Lessor, Lessee, at Lessee's sole cost and expense, shall have final
plans and specifications for the Tenant Improvements prepared by Lessee's
Architect, which final plans and specifications shall include a
fully-coordinated set of architectural, structural, mechanical, electrical,
roofing (if applicable) and plumbing working drawings and shall be in accordance
with the Preliminary Plans that have been approved by Lessor.
69.2 For a period of three (3) business days following Lessor's receipt
of the final plans and specifications, Lessor shall have the right to accept and
approve said final plans and specifications, as delivered, or reject them. Such
right of rejection or approval by Lessor shall be exercised reasonably.
Acceptance or rejection of said final plans and specifications shall be
signified by Lessor delivering to Lessee, within said three (3) business day
period, said final plans and specifications with each page marked "approved" or
"rejected", as the case may be, and signed by Lessor.
69.3 If Lessor shall reject said final plans and specifications, Lessee
shall cause such final plans and specifications to be modified by Lessee's
Architect so as to be acceptable to Lessor and shall deliver the modified final
plans and specifications to Lessor, which Lessor shall again have the right to
accept or disapprove pursuant to Paragraph 69.2 above, and such process shall
continue until said final plans and specifications have been modified to the
reasonable requirements of Lessor. The final plans and specifications, when
approved by Lessor, are referred to herein as the "Final Plans", and shall
supersede any prior agreements and the Preliminary Plans concerning the Tenant
Improvements.
69.4 Lessor's review of the Preliminary Plans and Final Plans as set
forth in Paragraph 68 and this Paragraph 69 above shall be for its own sole
purpose and shall not imply Lessor's review of the same, or obligate Lessor to
review the same, for quality, design, compliance with Applicable Laws or other
like matters. Accordingly, notwithstanding that any Preliminary Plans or Final
Plans are reviewed by Lessor, and
25
<PAGE>
notwithstanding any advice or assistance which may be rendered to Lessee by
Lessor or Lessor's architect, engineer or other consultant, Lessor shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Preliminary Plans or Final Plans, and
Lessee's waiver and indemnity set forth in this Lease shall specifically apply
to the Preliminary Plans and Final Plans.
70. BIDDING AND CONSTRUCTION OF TENANT IMPROVEMENTS.
70.1 After the Final Plans have been approved by Lessor, Lessee
shall solicit one (1) or more bids for the construction of the Tenant
Improvements for a "fixed price" fee or on a "cost plus" basis, subject to a
guaranteed maximum cost, from at least one (1) licensed, bonded and insured
general contractor mutually pre-approved by Lessor and Lessee; provided,
however, Lessor hereby approves Cromie Construction as Lessee's general
contractor. The approved general contractor selected by Lessee to construct
the Tenant Improvements shall be referred to herein as the "Project
Contractor". Lessee shall enter into the construction contract with the
Project Contractor for the construction of the Tenant Improvements within
five (5) business days after the award is made.
70.2 As soon as possible following Lessor's approval of the Final Plans
and the selection of the Project Contractor, Lessee shall, at Lessee's sole cost
and expense (except as otherwise expressly provided herein), apply for and
obtain all required permits, licenses and approvals required for the
construction of the Tenant Improvements (collectively, "Permits") and construct
the Tenant Improvements with all due diligence, in a good and workmanlike manner
and in accordance with said approved Final Plans and all applicable County and
City ordinances and other Applicable Law. Neither Lessor nor it consultants
shall be responsible for obtaining any of the Permits or a certificate of
occupancy for the Premises, and obtaining the same shall be Lessee's sole
responsibility; provided, however, that Lessor shall reasonably cooperate with
Lessee, at no out-of-pocket cost or expense to Lessor, in executing permit
applications and performing other reasonable ministerial acts as reasonably
necessary to enable Lessee to obtain any such Permit or certificate of
occupancy.
70.3 In addition to the requirement set forth above, the Tenant
Improvements shall be constructed by Lessee in accordance with the requirements
of Paragraph 60 above, including without limitation the requirement that the
Project Contractor provide to Lessor satisfactory payment and performance bonds
and certificates of insurance as specified therein. The Tenant Improvements
shall further be deemed to be "Alterations" and "Utility Installations" (as such
terms are defined in Paragraph 7.3) for all purposes under this Lease.
70.4 Lessee shall be permitted access to the Premises to construct the
Tenant Improvements from and after the Early Possession Date set forth in
Paragraph 1.4, upon and subject to the terms and conditions set forth in
Paragraphs 3.2 and 73.
70.5 Lessor shall have the right to inspect the Tenant Improvements at
all times upon reasonable prior notice, provided, however, that Lessor's failure
to inspect the Tenant Improvements shall in no event constitute a waiver of any
of Lessor's rights hereunder nor shall Lessor's inspection of the Tenant
Improvements constitute Lessor's approval of the same.
71. CHANGE ORDERS.
71.1 No change, addition or alteration to the approved Final Plans may
be made without the prior written consent of Lessor. If Lessee shall request any
change, addition or alteration to the approved Final Plans, Lessee shall submit
such requests in writing to Lessor, and Lessor shall approve or disapprove such
request by written notice to Lessee within three (3) business days thereafter.
Such right of approval or disapproval shall be exercised reasonably. Failure of
Lessor to give written notice to Lessee of Lessor's disapproval of any such
request within said three (3) business day period shall be deemed to constitute
Lessor's approval thereof. Any such change, addition or alteration to the
approved Final Plans, when approved in writing (or deemed approved as aforesaid)
by Lessor, shall become part of the Final Plans.
72. COMPLETION; COMMENCEMENT DATE.
72.1 Lessee shall cause construction of the Tenant Improvements to be
completed as soon as possible following receipt of required Permits.
72.2 For purposes of this Paragraph 72, the Tenant Improvements shall
be deemed completed when the Tenant Improvements per the Final Plans are
substantially completed and the building department of the municipality having
jurisdiction of the Premises shall have made a final inspection and approval
thereof so as to permit occupancy thereof.
26
<PAGE>
72.3 The "Commencement Date" of this Lease shall be the earlier to
occur of (a) the date which is one hundred twenty (120) days after the date
which is the later of (i) the date of Lessee's receipt of the
"non-disturbance agreement" described in Paragraph 58.1 executed by the
holder of any Security Device affecting the Premises as of the date of
execution of this Lease in accordance with the terms of Paragraph 58.1 (or in
lieu thereof, the reconveyance of such Security Device), or (ii) the date of
execution and delivery of this Lease by Parties, or (b) the date on which the
Tenant Improvements have been completed and Lessee has commenced the conduct
of its business in the Premises. The Original Term shall expire at 5:00 p.m.
on the day before the date which is ten (10) years after the Commencement
Date (the applicable date being referred to herein as the "Expiration Date").
72.4 Once the Commencement Date has been determined, Lessor and Lessee
shall execute an amendment to this Lease confirming the Commencement Date and
Expiration Date.
73. EARLY POSSESSION FOR CONSTRUCTION OF TENANT IMPROVEMENTS.
73.1 Provided that all of the following conditions are first satisfied:
(i) execution of this Lease by both Lessee and Lessor, (ii) payment of rentals
called for in Paragraph 52.1 hereof and the Security Deposit specified in
Paragraph 1.7 hereof, (iii) delivery to Lessor of the certified copies of, or
certificates evidencing the existence and amounts of, the insurance as required
under the third sentence of Paragraph 8.5 hereof, and of the insurance required
to be maintained by Lessee's contractor pursuant to Paragraph 60.1(a) hereof,
(iv) delivery to Lessor of the Letter of Credit in accordance with Paragraph 53,
(v) Lessor's approval of the Final Plans (except as provided in Paragraph 73.2
below), (vi) issuance of all required Permits (except as provided in Paragraph
73.2 below, (vii) satisfaction by Lessee and its contractors of all other
conditions to the commencement of work set forth in Paragraph 60 above
(including but not limited to the delivery to Lessor of satisfactory payment and
performance bonds as provided therein), (viii) Lessee shall have received the
non-disturbance agreement pursuant to Paragraph 58.1 from the holder of any
Security Device that encumbers the Premises as of the date of execution of this
Lease (unless such Security Device is sooner reconveyed), or Lessee's right to
terminate this Lease pursuant to Paragraph 58.1 by reason of the failure of such
holder to enter into such non-disturbance agreement with Lessee shall have been
waived, and (ix) Lessee's written acceptance of the condition of the Premises
upon Lessor's delivery thereof (subject to Paragraphs 2.2 and 2.3 hereof),
Lessee shall be given access to Premises on the Early Possession Date upon the
following conditions, all of which are agreed to by Lessee:
(a) The entry will be only for the construction and/or installation of
the Tenant Improvements;
(b) The entry will be subject to all other terms and provisions of this
Lease (other than Lessee's obligation to pay Base Rent), which Lessor and Lessee
hereby agree shall be in effect during the period of such entry; and
(c) Delivery of possession of the Premises to Lessee prior to the
satisfaction of all of the conditions set forth in Paragraphs 73.1(i) through
(ix) above shall not constitute the waiver by Lessor of the satisfaction of any
such conditions by Lessee. Except as otherwise expressly provided in Paragraph
73.2 below, Lessee shall not commence construction of the Tenant Improvements
until all such conditions have been satisfied. No delay or failure by Lessee to
satisfy any such conditions by the Early Possession Date or thereafter for any
period for any reason shall constitute a delay or failure by Lessor to deliver
possession of the Premises to Lessee, nor permit Lessee to terminate this Lease
pursuant to Paragraph 3.3 above, notwithstanding anything contained in Paragraph
3.3 above to the contrary.
73.2 Notwithstanding anything herein to the contrary, Lessee shall
be given access to the Premises on the Early Possession Date solely for
purposes of the demolition of improvements required in connection with the
construction of the Tenant Improvements, even if, and prior to the Early
Possession Date, Lessee has not obtained Lessor's approval of the Final Plans
pursuant to Paragraph 73.1(v) and Lessee has not obtained all of the Permits
pursuant to Paragraph 73.1(vi), so long as (i) the conditions set forth in
Paragraphs 73.1(i) through (iv) and (vii) through (ix) are first satisfied,
(ii) Lessee shall have obtained all licenses, permits and approvals required
to perform such demolition work (collectively, the "Demolition Permits"), and
(iii) such access shall be upon the conditions set forth in Paragraphs
73.1(a) through (c) above, except that Lessee's entry will be only for
purposes of performing the demolition work in accordance with the Demolition
Permits.
74. TENANT IMPROVEMENT ALLOWANCE.
74.1 Provided that Lessee is not in Default or Breach of this Lease,
Lessor shall pay to Lessee (by joint checks to Lessee and the Project
Contractor) an amount equal to the lesser of (a) the Tenant Improvement Costs
(as hereinafter defined), or (b) the "Maximum Allowance Amount" (as defined
below) (and said lesser amount shall be referred to herein as the "Tenant
Improvement Allowance"). As used herein, the
27
<PAGE>
term "Maximum Allowance Amount" shall mean the sum of Three Hundred Thousand
Three Hundred Ninety Dollars ($300,390.00); provided, however, that if, as
part of the Tenant Improvements, Lessee replaces the existing roof of the
Building, as provided in Paragraph 67, then the "Maximum Allowance Amount"
shall mean the sum of Three Hundred Fifty-Five Thousand Three Hundred Ninety
Dollars ($355,390.00). The Tenant Improvement Allowance shall be utilized
solely for payment of the out-of-pocket costs incurred and paid by Lessee to
the Project Contractor and Lessee's Architect for the design and construction
of the Tenant Improvements (collectively, the "Tenant Improvement Costs").
"Tenant Improvement Costs" shall also include costs of obtaining the Permits.
In no event shall the Tenant Improvement Allowance exceed the Maximum
Allowance Amount.
74.2 The Tenant Improvement Allowance shall be paid in monthly
installments (by joint checks as provided above), and each such installment
shall be in an amount equal to the lesser of (A) the Tenant Improvement Costs
incurred by Lessee since the previous payment request, less a ten percent (10%)
retention, multiplied by a fraction, the numerator of which is the Maximum
Allowance Amount, and the denominator of which is equal to the sum of (i) the
total contract construction price for the construction of the Tenant
Improvements, (ii) the fees of Lessee's Architect, and (iii) the cost of all
Permits, or (B) the balance of any remaining available portion of the Tenant
Improvement Allowance (excluding the required ten percent (10%) retention);
provided, however, that no such installment shall be greater than the Tenant
Improvement Costs incurred by Lessee since the previous payment request, less a
ten percent (10%) retention. Provided that Lessor does not dispute any request
for payment based on non-compliance of any work with the Final Plans or due to
any substandard work or for any other reason, each such installment shall be due
and payable within thirty (30) days after satisfaction by Lessee of all of the
following with respect to each installment:
(a) Lessee shall have submitted to Lessor a completed and signed
request for payment (AIA Document G702), together with copies of invoices marked
"paid" and other reasonably required supporting documentation for the costs
incurred and paid by Lessee since the date of the previous payment request;
(b) Lessee shall have obtained and delivered to Lessor
conditional lien waivers and releases (conditioned only upon receipt of good
funds) in statutorily required form signed by all contractors, subcontractors
and materialmen performing work or supplying materials to the Premises in
connection with the work for which payment is requested; and
(c) Lessee shall have delivered to Lessor the certification of
Lessee's Architect that the work for which payment is requested has been
completed in accordance with the Final Plans in a good and workmanlike manner
and in compliance with Applicable Law.
74.3 An amount equal to the final ten percent (10%) of the Tenant
Improvement Allowance shall be retained by Lessor until thirty (30) days after
satisfaction of the requirements in Paragraphs 74.2(a) through (c) above and all
of the following additional conditions to payment have been satisfied, whereupon
such retention shall be paid to Lessee (by joint checks as provided above)
provided that Lessor does not dispute any request for payment based on
non-compliance of any work with the Final Plans or due to any substandard work
or for any other reason:
(a) Lessee shall have completed construction of the Tenant
Improvements in accordance with the provisions of this Lease applicable to the
design and construction thereof and shall have obtained and delivered to Lessor
the certification of Lessee's Architect that the Tenant Improvements have been
completed in accordance with the Final Plans in a good and workmanlike manner
and in compliance with Applicable Law;
(b) Lessee shall have obtained a permanent certificate of
occupancy or its equivalent for the Tenant Improvements by appropriate
governmental authorities and delivered a copy thereof to Lessor;
(c) Lessee shall have obtained and delivered to Lessor
unconditional lien waivers and releases in statutorily required form signed by
all contractors, subcontractors and materialmen performing work at or supplying
materials to the Premises with respect to the entirety of the Tenant
Improvements; and
(d) The statutory time period within which mechanics' liens may
be recorded against the Premises shall have elapsed and Lessee shall have
delivered to Lessor evidence satisfactory to Lessor that the Premises are not
encumbered by any mechanics' liens relating to the Tenant Improvements. Upon
request of Lessee, Lessor agrees to cooperate with the filing by Lessee of an
appropriate notice of completion of construction of the Tenant Improvements at
Lessee's sole cost.
28
<PAGE>
74.4 Lessor's payment of any installment of the Tenant Improvement
Allowance shall not be deemed Lessor's approval or acceptance of the work
furnished or materials supplied as set forth in Lessee's payment request.
75. ADDITIONAL DAMAGE AND DESTRUCTION PROVISIONS.
75.1 Notwithstanding any obligations Lessor may have to the contrary,
as set forth in Paragraph 9.2, if a Premises Partial Damage that is an Insured
Loss occurs, if the required insurance was in force but insurance proceeds are
not sufficient to effect the repair of the damage to the Premises in accordance
with the requirements of Paragraph 9.2, regardless of the reason for the
shortage in proceeds, and if the cost to repair or restore the Premises exceeds
the available insurance proceeds by $500,000.00 or more, Lessor shall have no
obligation to contribute the shortage in proceeds or to repair or restore the
Premises, but instead Lessor shall have the right to terminate this Lease upon
thirty (30) days prior written notice; provided, however, that if within thirty
(30) days after Lessor gives such notice Lessee provides Lessor with the funds
required to cover the shortage in proceeds, or adequate assurance thereof, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect.
Lessor's right to terminate this Lease pursuant to this Paragraph 75.1 shall be
in addition to, and not in lieu of, Lessor's right to terminate, or permit
termination of, this Lease pursuant to Paragraph 9.2 under the circumstances
described in Paragraph 9.2.
76. ADDITIONAL PROVISIONS REGARDING HOLDOVER.
76.1 If Lessee remains in possession of the Premises after the
expiration of the Lease Term or earlier termination of this Lease, with or
without the consent of Lessor, such tenancy shall be from month-to-month only,
and shall not constitute a renewal hereof or an extension for any further term,
and in such case Base Rent for the first month of any such holdover shall be
equal to one hundred twenty-five percent (125%) of the Base Rent in effect
immediately prior to such holdover, and the monthly Base Rent payable thereafter
during the continuation of any such holdover shall be equal to one hundred fifty
percent (150%) of the monthly Base Rent in effect immediately prior to the
initial holdover. Such month-to-month tenancy shall be subject to every other
applicable term, covenant and agreement contained herein. Nothing contained in
this Paragraph 76 shall be construed as consent by Lessor to any holding over by
Lessee. The provisions of this Paragraph 76 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Lessor provided herein or
at law.
77. HAZARDOUS SUBSTANCES; STORAGE TANKS--LESSEE.
77.1 Acutely Hazardous Substances Prohibited. Notwithstanding
anything to the contrary contained elsewhere in this Lease, Lessee shall not
under any circumstances, and whether or not a governmental permit is
obtainable in connection therewith, have, suffer, permit or create on, in,
under or about the Premises any "Acutely Hazardous Substance," which term is
defined as any asbestos, cyanide, Polychlorinated Biphenyl ("PCB"), Dichloro
Diphenyl Trichloroethane ("DDT"), benzene, dioxin, radioactive, poisonous or
explosive product, substance, chemical, material or waste, or any other
product, substance, chemical, material or waste that, either alone or in
combination with other material or materials, constitutes a similarly acute
hazard to the Premises, the property of which the Premises are a part, other
tenants thereof, or to the environment.
77.2 Storage Tanks. Notwithstanding anything herein to the contrary,
Lessee shall not install storage tanks of any size or shape in or about the
Premises, above or below ground, without the specific prior written consent of
Lessor. Lessee shall, prior to the expiration or earlier termination of this
Lease, at its sole cost and expense, remove any storage tank from the Premises
that was installed by or for Lessee, and remove and replace any contaminated
soil or materials (and compact or treat the same) and repair any damage or
change to the Premises caused by said installation, use and/or removal, all as
required by law.
77.3 Consent May Be Conditional. Lessor shall not be required to
consent to the presence or use by Lessee of any product, substance, chemical,
material or practice that materially increases the risk of damage to or
contamination of any property or the environment, of injury to persons, or of
exposure to liability therefor, or that requires an inordinately expensive or
impractical modification of the Premises. Unless otherwise previously approved
in writing by Lessor, Lessee shall give Lessor at least thirty (30) days prior
written notice of Lessee's intention to use a Hazardous Substance, storage tank,
practice, precaution or location which requires Lessor's prior consent under
this Lease. Lessor's failure to disapprove in writing to Lessee within said
thirty (30) day period shall not, under any circumstances, constitute Lessor's
consent to the permissions requested.
77.4 Spills; Compliance With Law. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on or under the Premises
(including through the plumbing or sanitary sewer
29
<PAGE>
system) and shall at all times comply with any and all applicable laws,
ordinances, rules, restrictions, regulations, and permit and licensing
requirements, as well as the recommendations of Lessor's experts and/or
consultants and board of fire underwriters, pertaining to: (a) Hazardous
Substances and/or industrial hygiene, (b) the environmental conditions on, under
or about the Premises, including but not limited to, soil and groundwater
conditions, (c) the use, generation, manufacture, production, storage or
disposal on, under or about the Premises, or the transfer to or from the
Premises, of any Hazardous Substance or storage tank. Lessee shall promptly, at
Lessee's expense, take all investigatory and/or remedial action recommended,
whether or not formally ordered or required, for the cleanup and/or removal of
any contamination of, and for the maintenance, security and/or monitoring of,
the Premises, the elements surrounding same, or neighboring properties, that was
caused or materially contributed to by Lessee, or pertaining to or involving any
Hazardous Substance and/or storage tank brought onto the Premises by or for
Lessee or under its control.
77.5 Survival of Obligations. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease pertaining to Hazardous Substances or storage tanks
unless said release agreement specifically sets forth Lessor's intention to so
release Lessee with respect thereto.
78. LESSOR'S DISCLOSURES.
78.1 Lessee hereby acknowledges that Lessor has disclosed the following
to Lessee:
(a) In January, 1994 the building on the Premises suffered
minimal damage in the Northridge earthquake (cost to repair did not exceed
$50,000). Such damage was repaired in 1994.
(b) In 1997, G&L Construction, Inc. performed seismic upgrades
required by Los Angeles County to bring the building situated on the Premises to
then current earthquake codes. Minor repairs to the exterior plaster were done
at the same time.
(c) In 1997, the building situated on the Premises also
experienced moisture intrusion through the concrete slab due to landscape
overwatering and inappropriate carpet underlay installed by the tenant, which
resulted in a mildew problem. The overwatering practice has been corrected and
G&L Construction, Inc. was engaged to seal the interior of the concrete slab
where needed and to replace some of the existing carpeting in the building and
install appropriate carpet underlay. Such work was completed and no further
problems have been observed since that time.
79. ADDITIONAL PROVISIONS REGARDING LESSOR'S LIABILITY.
79.1 Lessee agrees that, anything in this Lease to the contrary
notwithstanding (except as provided in Paragraph 79.2 below), subject to prior
rights of any Lender, Lessee shall look solely to Lessor's interest in the land
and improvements within which the Premises are located (or the proceeds from any
sale thereof), and any insurance proceeds applicable thereto, for the collection
of any judgment (or award from any other process) requiring the payment of money
by Lessor in the event of any default or breach by Lessor of the terms,
covenants or conditions of this Lease to be observed and/or performed by Lessor,
and no other assets of any Co-Lessor or, if Lessor is a partnership, of any
partner of Lessor, shall be subject to levy, execution or any procedures for the
satisfaction of Lessee's remedies with respect to the Premises and/or under this
Lease.
79.2 Notwithstanding the provisions of Paragraph 79.2 to the contrary,
Lessor (but not any Lender or any purchaser of the Premises by foreclosure of a
Security Device or deed in lieu of foreclosure) shall be and remain fully and
personally liable to Lessee for any prepaid rent or additional rent paid by
Lessee to Lessor and for any security deposit, cleaning deposit or other sum
that Lessee may have paid in advance to Lessor, to the extent that Lessee is
entitled to the return of such payments and Lessor has not delivered such
payments to its Lender.
80. WAIVER OF LESSEE'S TERMINATION RIGHTS.
80.1 Notwithstanding anything to the contrary contained in this Lease,
Lessee hereby waives any right it may have at law or in equity to terminate this
Lease for any reason whatsoever, except for any termination right of Lessee that
is expressly set forth in this Lease.
81. INTENTIONALLY OMITTED.
30
<PAGE>
82. AMENDMENTS TO LEASE.
82.1 At such times as a rental adjustment is made to this Lease by
virtue of any provision of this Lease (other than the increases in Base Rent
specified in Paragraph 63), the parties shall execute a written amendment to
this Lease to reflect said change.
82.2 Lessee agrees to make any reasonable modifications to this Lease
that may be required by an institutional lender of Lessor so long as such
modifications do not affect Lessee's monetary obligations under this Lease.
83. INTERPRETATION.
83.1 Wherever in this Lease any portion thereof, whether in print or
otherwise, was deleted at or before the execution hereof, and whether or not any
relative provision was added, this Lease shall be read and construed as if the
material deleted were never included herein and no implication shall be drawn
from the text of the deleted material.
83.2 Neither party hereto nor such party's respective attorney shall be
deemed the drafter of this Lease for purposes of interpreting or construing any
of the provisions of this Lease in any judicial proceeding which may hereafter
arise between the parties or their respective assigns or successors-in-interest.
This Lease shall be interpreted in accordance with the fair meaning thereof, and
not strictly for or against any party hereto.
84. FULLY NEGOTIATED.
84.1 It is hereby acknowledged by Lessee that, notwithstanding the fact
that portions of this Lease are pre-printed, and that this Lease was prepared by
or on behalf of Lessor, Lessee has read this Lease in its entirety and has had
the opportunity to freely negotiate any or all of the terms hereof before
executing same.
85. EXECUTION.
85.1 Until this Lease has been executed and delivered by all parties,
this Lease shall constitute an offer by Lessee to lease the Premises on the
terms stated herein, and shall not be binding upon Lessor.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THE PRINTED PORTION OF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN
PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS OR HER APPROVAL. FURTHER,
EXPERTS SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE
POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS, OR HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO
THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THE PRINTED PORTIONS
OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY
SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER
THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD
BE CONSULTED.
LESSEE Lessee's Address:
------ -----------------
YOUBET.COM, INC., Youbet.com, Inc.
a Delaware corporation 1950 Sawtelle Boulevard
Suite 180
By: /s/ Phillip Hermann Los Angeles, CA 90025
----------------------- Telephone: (310) 444-3300
Name: Phillip Hermann Facsimile: (310) 444-3390
---------------------
Title: EVP, CFO & Asst SEC
--------------------
By: /s/ A. L. Halk
-----------------------
Name: A. L. Halk
---------------------
Title: President
---------------------
[Signatures continued on next page]
31
<PAGE>
[Signatures continued from previous page]
LESSOR
------
/s/ Ronald G. Cox
--------------------------------
RONALD G. COX, Trustee of
THE R.G. COX REVOCABLE TRUST
LESSOR'S ADDRESS:
----------------
Ronald Cox, Trustee
L.J. Melody & Co.
4675 McArthur Court
Suite 1425
Newport Beach, CA 92660
Telephone: (949) 797-1106
Facsimile: 949-833-9959
32
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PREMISES
That certain real property situated in the County of Los Angeles, State of
California, described as follows:
PARCEL 1:
Parcel B of Parcel Map L.A. No. 4147, in the City of Los Angeles, as per map
filed in Book 128, Pages 17 and 18 of Parcel Maps, in the Office of the County
Recorder of said County.
PARCEL 2:
An easement for vehicular access and parking over the driveways and parking
areas as set forth in the Instrument entitled "Reciprocal Grant of Easements
Agreement" recorded December 30, 1993 as Instrument No. 93-2546437 and
re-recorded February 16, 1994 as Instrument No. 94-329541.
EXHIBIT "A"
<PAGE>
EXHIBIT "B"
FORM OF TENANCY STATEMENT
The undersigned as Lessee under that certain Standard
Industrial/Commercial Single-Tenant Lease --Gross (the "Lease") made and
entered into as of ____________, 199_ by and between ___________ as Lessor,
and the undersigned as Lessee, for Premises located at ______________,
California certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease
and all amendments and modifications thereto. The documents contained in Exhibit
A represent the entire agreement between the parties as to the Premises.
2. The undersigned currently occupies the Premises described in the
Lease, the Lease Term commenced on __________, and the Lease Term expires on
____________.
3. Base Rent became payable on __________.
4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.
5. Lessee has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:
6. Lessee shall not modify the documents contained in Exhibit A without
the prior written consent of Lessor's mortgagee.
7. All monthly installments of Base Rent have been paid when due
through ____________. The current monthly installment of Base Rent is
$_________.
8. All conditions of the Lease to be performed by Lessor necessary to
the enforceability of the Lease have been satisfied and Lessor is not in default
thereunder, except as follows: ___________________________
9. No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Lessor except as provided in the Lease.
10. As of the date hereof, there are no existing defenses or offsets
that the undersigned has against Lessor, except as follows: __________________
11. If Lessee is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Lessee hereby represents and
warrants that Lessee is a duly formed and existing entity qualified to do
business in California and that Lessee has full right and authority to execute
and deliver this Estoppel Certificate and that each person signing on behalf of
Lessee is authorized to do so.
The undersigned acknowledges that this Estoppel Certificate may be
delivered to Lessor or to a prospective mortgagee or prospective purchaser, and
acknowledges that said prospective mortgagee or prospective purchaser will be
relying upon the statements contained herein in making the loan or acquiring the
property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.
Executed at ________on the __ day of ___, 19___.
"Lessee":
--------------------------,
a
------------------------
By:
-----------------------
Its:
----------------
EXHIBIT "B"
<PAGE>
EXHIBIT "C"
NON-DISTURBANCE AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Peter M. Weil, Esq.
Christensen, Miller, Fink, Jacobs, Glaser,
Weil & Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
SUBORDINATION,
NONDISTURBANCE
AND ATTORNMENT AGREEMENT
EXHIBIT "C"
1
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Peter M. Weil, Esq.
Christensen, Miller, Fink, Jacobs, Glaser,
Weil & Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
SUBORDINATION,
NONDISTURBANCE
AND ATTORNMENT AGREEMENT
NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN
YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.
DEFINED TERMS
EXECUTION DATE: MARCH __, 2000
BENEFICIARY & ADDRESS:
Metropolitan Life Insurance Company, a New York corporation
400 South El Camino Real, Eighth Floor
San Mateo, CA 94402
Attn: Assistant Vice President
with a copy to:
-----------------------
-----------------------
-----------------------
TENANT & ADDRESS:
Youbet.com, Inc., a Delaware corporation
1950 Sawtelle Boulevard, Suite 180
Los Angeles, CA 90025
Attn: Phillip Hermann
LANDLORD & ADDRESS:
Ronald G. Cox, Trustee of the R.G. Cox Revocable Trust
4675 MacArthur Court
Suite 710
Newport Beach, CA 92660
LOAN: A first mortgage loan in the original principal amount of $1,465,000.00
from Beneficiary to Landlord.
NOTE: A Promissory Note executed by Warner Properties I (predecessor-in-interest
to Landlord) in favor of New England Mutual Life Insurance Company
(predecessor-in-interest to Beneficiary) in the amount of the Loan dated as of
December 22, 1993.
DEED OF TRUST: A Deed of Trust, Security Agreement and Fixture Filing dated as
of December 22, 1993 executed by Warner Properties I (predecessor-in-interest to
Landlord) to First American Title Insurance Company, as Trustee for the benefit
of New England Mutual Life Insurance Company (predecessor-in-interest to
Beneficiary) securing repayment of the Note and recorded in the records of the
County in which the Property is located.
EXHIBIT "C"
2
<PAGE>
LEASE AND LEASE DATE: The lease entered into by Landlord and Tenant dated as of
March 10, 2000 covering the Premises.
PROPERTY:
5901 De Soto Avenue
Woodland Hills, CA
The Property is more particularly described on EXHIBIT A.
THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made by and among Tenant, Landlord, and Beneficiary and affects
the Property described in EXHIBIT A. Certain terms used in this Agreement are
defined in the Defined Terms. This Agreement is entered into as of the Execution
Date with reference to the following facts:
A. Landlord and Tenant have entered into the Lease covering certain
space in the improvements located in and upon the Property (the "Premises").
B. Beneficiary has made or is making the Loan to Landlord evidenced by
the Note. The Note is secured, among other documents, by the Deed of Trust.
C. Landlord, Tenant and Beneficiary all wish to subordinate the Lease
to the lien of the Deed of Trust.
D. Tenant has requested that Beneficiary agree not to disturb Tenant's
rights in the Premises pursuant to the Lease in the event Beneficiary forecloses
the Deed of Trust, or acquires the Property pursuant to the trustee's power of
sale contained in the Deed of Trust or receives a transfer of the Property by a
conveyance in lieu of foreclosure of the Property (collectively, a "Foreclosure
Sale") but only if Tenant is not then in default under the Lease and Tenant
attorns to Beneficiary or a third party purchaser at the Foreclosure Sale (a
"Foreclosure Purchaser").
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. SUBORDINATION. The Lease and the leasehold estate created by the
Lease and all of Tenant's rights under the Lease are and shall remain
subordinate to the Deed of Trust and the lien of the Deed of Trust, to all
rights of Beneficiary under the Deed of Trust and to all renewals, amendments,
modifications and extensions of the Deed of Trust.
2. ACKNOWLEDGMENTS BY TENANT. Tenant agrees that: (a) Tenant has notice
that the Lease and the rent and all other sums due under the Lease have been or
are to be assigned to Beneficiary as security for the Loan. In the event that
Beneficiary notifies Tenant of a default under the Deed of Trust and requests
Tenant to pay its rent and all other sums due under the Lease to Beneficiary,
Tenant shall pay such sums directly to Beneficiary or as Beneficiary may
otherwise request; (b) Tenant shall send a copy of any notice or statement under
the Lease to Beneficiary at the same time Tenant sends such notice or statement
to Landlord; (c) this Agreement satisfies any condition or requirement in the
Lease relating to the granting of a nondisturbance agreement with respect to the
Deed of Trust.
3. FORECLOSURE AND SALE. In the event of a Foreclosure Sale,
(a) So long as Tenant complies with this Agreement and is not in
default under any of the provisions of the Lease, the Lease shall continue in
full force and effect as a direct lease between Beneficiary and Tenant, and
Beneficiary will not disturb the possession of Tenant, subject to this
Agreement. To the extent that the Lease is extinguished as a result of a
Foreclosure Sale, a new lease shall automatically go into effect upon the same
provisions as contained in the Lease between Landlord and Tenant, except as set
forth in this Agreement, for the unexpired term of the Lease (as such term may
be extended by the exercise of any options). Tenant agrees to attorn to and
accept Beneficiary as landlord under the Lease and to be bound by and perform
all of the obligations imposed by the Lease, or, as the case may be, under the
new lease, in the event that the Lease is extinguished by a Foreclosure Sale.
Upon Beneficiary's acquisition of title to the Property, Beneficiary will
perform all of the obligations imposed on the Landlord by the Lease except as
set forth in this Agreement; provided, however, that Beneficiary shall not be:
(i) liable for any act or omission of a prior landlord (including Landlord); or
(ii) subject to any offsets or defenses that Tenant might
EXHIBIT "C"
3
<PAGE>
have against any prior landlord (including Landlord); or (iii) bound by any rent
or additional rent which Tenant might have paid in advance to any prior landlord
(including Landlord) for a period in excess of one month or by any security
deposit, cleaning deposit or other sum that Tenant may have paid in advance to
any prior landlord (including Landlord), except to the extent such payments are
received by Beneficiary; or (iv) bound by any amendment, modification,
assignment or termination of the Lease made without the written consent of
Beneficiary; (v) obligated or liable with respect to any representations,
warranties or indemnities contained in the Lease; or (vi) liable to Tenant or
any other party for any conflict between the provisions of the Lease and the
provisions of any other lease affecting the Property which is not entered into
by Beneficiary.
(b) Upon the written request of Beneficiary after a Foreclosure
Sale, the parties shall execute a lease of the Premises upon the same provisions
as contained in the Lease between Landlord and Tenant, except as set forth in
this Agreement, for the unexpired term of the Lease (as such terms may be
extended by the exercise of any options).
(c) Notwithstanding any provisions of the Lease to the contrary,
from and after the date that Beneficiary acquires title to the Property as a
result of a Foreclosure Sale, (i) Beneficiary will not be obligated to expend
any monies to restore casualty damage in excess of available insurance proceeds;
(ii) Tenant shall not have the right to make repairs and deduct the cost of such
repairs from the rent without a judicial determination that Beneficiary is in
default of its obligations under the Lease; (iii) Beneficiary shall not be
required to grant nondisturbance to any subtenants of Tenant; (iv) in no event
will Beneficiary be obligated to indemnify Tenant, except where Beneficiary is
in breach of its obligations under the Lease or where Beneficiary has been
actively negligent in the performance of its obligations as landlord; and (v)
other than determination of fair market value, no disputes under the Lease shall
be subject to arbitration unless Beneficiary and Tenant agree to submit a
particular dispute to arbitration.
4. SUBORDINATION AND RELEASE OF PURCHASE OPTIONS. Tenant represents
that it has no right or option of any nature to purchase the Property or any
portion of the Property or any interest in the Borrower. To the extent Tenant
has or acquires any such right or option, these rights or options are
acknowledged to be subject and subordinate to the Mortgage and are waived and
released as to Beneficiary and any Foreclosure Purchaser.
5. ACKNOWLEDGMENT BY LANDLORD. In the event of a default under the Deed
of Trust, at the election of Beneficiary, Tenant shall and is directed to pay
all rent and all other sums due under the Lease to Beneficiary.
6. CONSTRUCTION OF IMPROVEMENTS. Beneficiary shall not have any
obligation or incur any liability with respect to the completion of the tenant
improvements located in the Premises at the commencement of the term of the
Lease.
7. NOTICE. All notices under this Agreement shall be deemed to have
been properly given if delivered by overnight courier service or mailed by
United States certified mail, with return receipt requested, postage prepaid to
the party receiving the notice at its address set forth in the Defined Terms (or
at such other address as shall be given in writing by such party to the other
parties) and shall be deemed complete upon receipt or refusal of delivery.
8. MISCELLANEOUS. Beneficiary shall not be subject to any provision of
the Lease that is inconsistent with this Agreement. Nothing contained in this
Agreement shall be construed to derogate from or in any way impair or affect the
lien or the provisions of the Deed of Trust. This Agreement shall be governed by
and construed in accordance with the laws of the State of in which the Property
is located.
9. LIABILITY AND SUCCESSORS AND ASSIGNS. In the event that Beneficiary
acquires title to the Premises or the Property, Beneficiary shall have no
obligation nor incur any liability beyond Beneficiary's then equity interest in
the Premises and Tenant shall look solely to Beneficiary's then equity interest
for the payment and performance of any obligations imposed upon Beneficiary
under this Agreement or under the Lease. This Agreement shall run with the land
and shall inure to the benefit of the parties and, their respective successors
and permitted assigns including a Foreclosure Purchaser. If a Foreclosure
Purchaser acquires the Property or if Beneficiary assigns or transfers its
interest in the Note and Deed of Trust or the Property, all obligations and
liabilities of Beneficiary under this Agreement shall terminate and be the
responsibility of the Foreclosure Purchaser or other party to whom Beneficiary's
interest is assigned or transferred. The interest of Tenant under this Agreement
may not be assigned or transferred except in connection with an assignment of
its interest in the Lease that is permitted under the Lease.
EXHIBIT "C"
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Subordination,
Non-disturbance and Attornment Agreement as of the Execution Date.
IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE
EXECUTION OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.
BENEFICIARY: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By
-----------------------
Name
-----------------------
Title
-----------------------
TENANT: YOUBET.COM, INC.,
a Delaware corporation
By
-----------------------
Name
-----------------------
Title
-----------------------
By
-----------------------
Name
-----------------------
Title
-----------------------
LESSOR:
----------------------------
RONALD G. COX, Trustee of
THE R.G. COX REVOCABLE TRUST
EXHIBIT "C"
5
<PAGE>
State of ______________
County of _____________
On ____________, 2000 before me, ___________, personally appeared
____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ____________________________ (Seal)
State of ______________
County of _____________
On _______________, 2000 before me, ______________, personally appeared
____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ____________________________ (Seal)
State of ______________
County of _____________
On __________________, 2000 before me, _____________, personally appeared
______________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ____________________________ (Seal)
6
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
That certain real property situated in the County of Los Angeles, State of
California, described as follows:
PARCEL 1:
Parcel B of Parcel Map L.A. No. 4147, in the City of Los Angeles, as per map
filed in Book 128, Pages 17 and 18 of Parcel Maps, in the Office of the County
Recorder of said County.
PARCEL 2:
An easement for vehicular access and parking over the driveways and parking
areas as set forth in the Instrument entitled "Reciprocal Grant of Easements
Agreement" recorded December 30, 1993 as Instrument No. 93-2546437 and
re-recorded February 16, 1994 as Instrument No. 94-329541.
7
<PAGE>
EXHIBIT "D"
FORM OF LETTER OF CREDIT
[Letterhead of Issuing Bank]
Irrevocable Standby Letter of Credit No.________ Dated _________
Beneficiary: Applicant:
Ronald G. Cox, Youbet.com, Inc.
Trustee of the R.G. Cox Revocable [Insert address of Applicant]
Trust
[Insert address of Beneficiary]
Amount:
Expiration Date: US$[Insert required dollar amount]
[Insert expiry date of one year after (_________________U.S. Dollars)
issuance]
Dear Sirs:
We hereby issue this Irrevocable Standby Letter of Credit in favor of the
Beneficiary which is available by payment of the Beneficiary's sight draft(s)
for the whole amount stated herein or any part thereof drawn on our bank and
accompanied by a statement executed by the Beneficiary stating the following:
A) The Applicant is in default in the performance of its
obligation under its Lease with the Beneficiary;
B) The Beneficiary has given written notice to the Applicant of
the default as required by the Lease and the default has not
been cured within the applicable cure period; and
C) The monetary amount owing to the Beneficiary by reason of the
Applicant's default as of the date of the sight draft drawn on
bank by the Beneficiary.
Partial drawings on this Irrevocable Standby Letter of Credit may be
made by the Beneficiary.
We will honor a drawing that complies with the terms of this
Irrevocable Standby Letter of Credit regardless of any claims received by us
from the Applicant with respect to defenses, claims, credits or off-sets held by
or due to the Applicant under the Lease or otherwise.
The amount of each draft must be endorsed on the reverse of this credit
by the Beneficiary. All drafts must be presented to this bank by or before the
Expiration Date.
This Letter of Credit is irrevocable and shall inure to the benefit of
all assigns and successors in interest of the Beneficiary.
This credit is irrevocable, unconditional and transferable. This credit
may be transferred without charge one or more times upon receipt of your written
instructions submitted in accordance with the Bank's standard transfer form.
This Credit sets forth in full the terms of our obligation to you, and
such undertaking shall not in any way be modified or amplified by any agreement
in which this Credit is referred to or to which this Credit relates, and any
such reference shall not be deemed to incorporate herein by reference any
agreement.
We hereby engage with drawer and/or bona fide holders that drafts drawn
and negotiated in conformity with the terms of this Irrevocable Standby Letter
of Credit will be duly honored on presentation.
This Irrevocable Standby Letter of Credit is issued subject to The
Uniform Customs and Practice for Documentary Credit (1993 Revision, ICC, Paris,
France, Publication No. 500) and engages us in accordance with all the
applicable provisions thereof. The number and date of this credit and the name
of the issuing bank must be quoted on your draft(s) required.
EXHIBIT "D"
<PAGE>
[Insert Name of Issuing Bank and
Signature of its Authorized Signatory]
EXHIBIT "D"
<PAGE>
EXHIBIT "E"
LESSOR'S CURRENT INSURANCE COVERAGE
ACORD [Illegible] DATE (MM/DD/YY)
12/08/1999
-------------------------------------------------------------------------------
PRODUCER Serial # 501513 THIS CERTIFICATE IS ISSUED AS A
MATTER OF INFORMATION ONLY AND
Aon Risk Services of Texas, Inc. CONFERS NO RIGHTS UPON THE
2711 North Haskell Avenue CERTIFICATE HOLDER. THIS
Suite 800 CERTIFICATE DOES NOT AMEND, EXTEND
Dallas, TX 06204 OR ALTER THE COVERAGE AFFORDED BY
THE POLICIES BELOW.
-----------------------------------
COMPANIES AFFORDING COVERAGE
-----------------------------------
COMPANY
A ROYAL INSURANCE COMPANY OF
AMERICA
--------------------------------------- -----------------------------------
COMPANY
INSURED B SAFEGUARD INSURANCE COMPANY
-----------------------------------
RONALD G. COX COMPANY
C/O TRANSWESTERN VOIT C ILLINOIS NATIONAL INSURANCE
725 SOUTH FIGUEROA STREET, CO./GULF INSURANCE CO.
SUITE 3050 -----------------------------------
LOS ANGELES, CA 90017 COMPANY
D
------------------------------------------------------------------------------
[Illegible]
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN
ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR
OTHER DOCUMENT WITH RESPECT TO WHICH THE CERTIFICATE MAY BE ISSUED OR MAY
PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS
SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.
LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CO POLICY EFFECTIVE POLICY EXPIRATION
LTR TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS
--- ------------------------- ------------- --------------- ----------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
A GENERAL LIABILITY TS460374 11/15/1999 07/05/2000 GENERAL AGGREGATE $2,000,000
x COMMERCIAL GENERAL PRODUCTS - COMPROP AGG $2,000,000
-- LIABILITY
PERSONAL & ADV INJURY $1,000,000
CLAIMS MADE X OCCUR
-- -- EACH OCCURRENCE $1,000,000
OWNERS & CONTRACTOR'S FIRE DAMAGE (Any one
fire) $ 50,000
PROT
-- MED EXP (Any one person) $ 5,000
B AUTOMOBILE LIABILITY TX-TS460372
O/S-TS460373 11/15/1999 07/05/2000 COMBINED SINGLE LIMIT $1,000,000
X ANY AUTO
-- BODILY INJURY
(Per person) $
ALL OWNED AUTOS
-- BODILY INJURY
(Per accident) $
SCHEDULED AUTOS
-- PROPERTY DAMAGE $
X HIRED AUTOS
--
X NON-OWNED AUTOS
--
B GARAGE LIABILITY TX-TS460372 11/15/1999 07/05/2000 AUTO ONLY - EA ACCIDENT $1,000,000
O/S-TS460373
ANY AUTO OTHER THAN AUTO ONLY:
-- EACH ACCIDENT $
X GKLL AGGREGATE $
--
C EXCESS LIABILITY BE7016413 11/15/1999 07/05/2000 EACH OCCURRENCE $100,000,000
/GA0430571
X UMBRELLA FORM AGGREGATE $100,000,000
--
OTHER THAN UMBRELLA
FORM
A WORKER'S COMPENSATION AND TC460371 11/15/1999 07/05/2000 X A/C STATU- OTH-
EMPLOYERS' LIABILITY -- TORY LIMITS ER
THE PROPRIETOR/ EL EACH ACCIDENT $ 1,000,000
PARTNERS/EXECUTIVE X INCL
OFFICERS ARE: EXCL EL DISEASE - POLICY
LIMIT $ 1,000,000
EL DISEASE - EA
EMPLOYEE $ 1,000,000
OTHER
</TABLE>
DESCRIPTION OF OPERATIONS [ILLEGIBLE] ITEMS
RE: WARNER CENTER -RON COX: BUILDING A-4 - XEROX, 5901 DE SOTO, WOODLAND
HILLS, CA 91367
TRANSWESTERN PROPERTY COMPANY WEST, L.L.C. DBA TRANSWESTERN VOIT IS NAMED AS AN
ADDITIONAL INSURED AS THEIR INTERESTS MAY APPEAR.
CERTIFICATE HOLDER
TRANSWESTERN PROPERTY COMPANY WEST, L.L.C.
DBA TRANSWESTERN-VOIT
150 NORTH WACKER DRIVE, SUITE 800
CHICAGO, IL 60606
ACORD 25-0-XXXXXXX
CANCELLATION
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS
WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO
MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON
THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
AUTHORIZED REPRESENTATIVE
/s/ [ILLEGIBLE]
<PAGE>
ACORD EVIDENCE [Illegible] DATE (MM/DD/YY)
12/08/1999
THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN
FORCE, AND CONVEYS ALL THE RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY.
PRODUCER 214-989-0000 COMPANY Serial #600222
Aon Risk Services of Texas, Inc. 1) SEE ATTACHMENT
2711 North Haskell Avenue 2) TRAVELERS INDEMNITY
Suite 800 COMPANY
Dallas, TX 76204
CODE: SUB CODE:
AGENCY
CUSTOMER ID #:
INSURED LOAN NUMBER POLICY NUMBER
SEE ATTACHED
RON G. COX
C/O TRANSWESTERN VOIT EFFECTIVE DATE EXPIRATION DATE
725 SOUTH FIGUEROA STREET, 11/15/1999 07/05/2000
SUITE 3050
LOS ANGELES, CA 90017 / / CONTINUED UNTIL TERMINATED IF
CHECKED
THIS REPLACES PRIOR EVIDENCE DATED:
LOCATION/DESCRIPTION
LOCATION: WARNER CENTER - RON COX, BUILDING A4-XEROX, 5901 DE SOTO, WOODLAND
HILLS, CA 91367
NAMED INSURED: RON G. COX C/O TRANSWESTERN VOIT
COVERAGE INFORMATION
<TABLE>
<CAPTION>
COVERAGE/PERILS/FORMS AMOUNT OF INSURANCE DEDUCTIBLE
------------------------------------------------------------- ------------------- ----------
<S> <C> <C>
1) "ALL RISK" OF DIRECT PHYSICAL LOSS OR DAMAGE INCLUDING FLOOD AND
EARTHQUAKE, REPLACEMENT COST. ACTUAL LOSS SUSTAINED (RENTS), NO
CO-INSURANCE. SUBJECT TO POLICY CONDITIONS AND EXCLUSIONS. SEE
ATTACHED FOR LIMITS AND DEDUCTIBLES. BUILDING AND ORDINANCE COVERAGE
INCLUDED.
2) BOILER & MACHINERY (PROPERTY DAMAGE AND BUSINESS INTERRUPTION)
POLICY NO. BMG303D0354. DEDUCTIBLE - 24 HOUR BI & EE/$25,000 FLOOD
AND EARTHQUAKE. 100,000,000
</TABLE>
REMARKS (INCLUDING SPECIAL CONDITIONS)
MORTGAGEE/LOSS PAYEE.
METROPOLITAN LIFE INSURANCE COMPANY
ATTN: RISK MANAGEMENT AREA 3E
(LOAN NO. 80047)
ONE MADISON AVENUE
NEW YORK, NY 10010
CANCELLATIONS
THE POLICY IS SUBJECT TO THE PREMIUMS, FORMS, AND RULES IN EFFECT FOR EACH
POLICY PERIOD. SHOULD THE POLICY BE TERMINATED, THE COMPANY WILL GIVE THE
ADDITIONAL INTEREST IDENTIFIED BELOW 30 DAYS WRITTEN NOTICE, AND WILL SEND
NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD AFFECT THAT INTEREST,
IN ACCORDANCE WITH THE POLICY PROVISIONS OR AS REQUIRED BY LAW.
ADDITIONAL INTEREST
NAME AND ADDRESS MORTGAGEE X ADDITIONAL INSURED
---- -----
LOSS PAYEE
LOAN #
TRANSWESTERN PROPERTY COMPANY WEST, L.L.C.
DBA TRANSWESTERN VOIT
150 WACKER DRIVE, SUITE 800
CHICAGO, IL 60606
AUTHORIZED REPRESENTATIVE
/s/ [Illegible]
ACORD
2