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Exhibit 10.27
OFFICE LEASE
BETWEEN
PAC COURT ASSOCIATES, L.P.,
a California limited partnership - "Landlord"
AND
INTEGRATED INFORMATION SYSTEMS,
a Delaware corporation - "Tenant"
Dated May 16, 2000
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TABLE OF CONTENTS
Page
I BASIC LEASE PROVISIONS .......................................... 1
II DEFINITIONS ..................................................... 2
2.1. Certain Definitions ........................................ 2
2.2. Other Definitions .......................................... 4
III PREMISES AND TERM ............................................... 4
3.1. Lease of Premises ....................................... 4
3.2. Term and Commencement ................................... 4
3.3. Early Entry ............................................. 4
3.4. Delay in Possession ..................................... 5
3.5. Tenant Delays ........................................... 5
3.6. Condition of Premises ................................... 5
3.7. No Representations ...................................... 5
IV RENT AND ADJUSTMENTS ............................................ 5
4.1. Monthly Rent ............................................ 5
4.2. Additional Rent ......................................... 5
4.3. Prorations .............................................. 5
4.4. Late Payment Charges .................................... 5
4.5. Security Deposit ........................................ 6
V USE ............................................................. 6
5.1. Tenant's Use ............................................ 6
5.2. Compliance With Applicable Laws ......................... 6
5.3. Restrictions ............................................ 7
5.4. Landlord's Right of Entry ............................... 7
VI HAZARDOUS MATERIALS ............................................. 7
6.1. Definition of Hazardous Materials ....................... 7
6.2. Definition of Hazardous Materials Laws .................. 7
6.3. Use of Hazardous Materials .............................. 8
6.4. Disclosures ............................................. 8
6.5. Inspection; Compliance .................................. 8
6.6. Indemnification ......................................... 8
6.7. Assignment and Subletting ............................... 9
VII OPERATING EXPENSES;TAXES; UTILITIES ............................. 9
7.1. Tenant to Bear Tenant's Share of Excess Project
Expenses .............................................. 9
7.2. Definition of Tenant's Share ............................ 9
7.3. Definition of Operating Expenses ........................ 9
7.4. Definition of Real Property Taxes ....................... 10
7.5. Intentionally Deleted ................................... 10
7.6. Tax on Improvements ..................................... 10
7.7. Utilities and Services .................................. 10
7.8. Security Measures ....................................... 11
VIII ALTERATIONS ..................................................... 11
8.1. Permitted Alterations ................................... 11
8.2. Trade Fixtures .......................................... 11
8.3. Mechanics' Liens ........................................ 11
8.4. Alterations by Landlord ................................. 11
IX MAINTENANCE AND REPAIR .......................................... 12
9.1. Landlord's Maintenance and Repair Obligations ........... 12
9.2. Tenant's Maintenance and Repair Obligations ............. 12
9.3. Waiver .................................................. 12
9.4. Self-Help ............................................... 12
X COMMON AREA AND PARKING ......................................... 12
10.1. Grant of Nonexclusive Common Area License and Right ..... 12
10.2. Use of Common Area ...................................... 12
10.3. Control of Common Area .................................. 13
10.4. Maintenance of Common Area .............................. 13
10.5. Revocation of License ................................... 13
1O.6. Landlord's Reserved Rights .............................. 13
10.7. Parking ................................................. 13
10.8. Satellite Dish .......................................... 13
(i)
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X1 EXCULPATION, INDEMNITY AND INSURANCE ............................ 14
11.1. Indemnification ......................................... 14
11.2. Landlord's Property Insurance ........................... 14
11.3. Tenant's Insurance ...................................... 14
11.4. Deductibles ............................................. 14
11.5. Blanket Coverage ........................................ 14
11.6. Increased Coverage ...................................... 14
11.7. Sufficiency of Coverage ................................. 15
11.8. Insurance Requirements .................................. 15
11.9. Intentionally Deleted ................................... 15
11.10. Landlord's Disclaimer ................................... 15
11.11. Waiver of Subrogation ................................... 15
XII DAMAGE OR DESTRUCTION ........................................... 15
12.1. Landlord's Obligation to Rebuild ........................ 15
12.2. Landlord's Right to Terminate ........................... 15
12.3. Tenant's Right to Terminate ............................. 15
12.4. Effect of Termination ................................... 16
12.5. Limited Obligation to Repair ............................ 16
12.6. Abatement of Monthly Rent ............................... 16
12.7. Landlord's Determination ................................ 16
XIII CONDEMNATION .................................................... 16
13.1. Total Taking - Termination .............................. 16
13.2. Partial Taking .......................................... 16
13.3. No Apportionment of Award ............................... 16
13.4. Temporary Taking ........................................ 17
13.5. Sale Under Threat of Condemnation ....................... 17
XIV ASSIGNMENT AND SUBLETTING ....................................... 17
14.1. Prohibition ............................................. 17
14.2. Landlord's Consent ...................................... 17
14.3. Information ............................................. 17
14.4. Standard for Consent .................................... 17
14.5. Bonus Value ............................................. 18
14.6. Certain Transfers ....................................... 18
14.7. Landlord's Fee and Expenses ............................. 18
14.8. Transfer of the Premises by Landlord .................... 18
XV DEFAULTS AND REMEDIES ........................................... 18
15.1. Tenant's Default ........................................ 18
15.2. Bankruptcy or Insolvency ................................ 19
15.3. Landlord's Remedies ..................................... 19
15.4. No Surrender ............................................ 20
15.5. Interest on Late Payments ............................... 20
15.6. Attorneys' and Other Fees ............................... 20
15.7. Landlord's Default ...................................... 21
15.8. Limitation of Landlord's Liability ...................... 21
15.9. Mortgagee Protection .................................... 21
15.10. Landlord's Right to Perform ............................. 21
15.11. Limitation of Actions Against Landlord .................. 21
15.12. Waiver of Jury Trial .................................... 21
XVI SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS ................. 21
16.1. Subordination, Attornment and Non-Disturbance ........... 21
16.2. Estoppel Certificate .................................... 22
16.3. Financial Information ................................... 22
XVII SIGNS AND GRAPHICS .............................................. 22
XVIII QUIET ENJOYMENT ................................................. 22
XIX SURRENDER; HOLDING OVER ......................................... 23
19.1. Surrender of the Premises ............................... 23
19.2. Holding Over ............................................ 23
XX Intentionally Deleted ........................................... 23
XXI MISCELLANEOUS AND INTERPRETIVE PROVISIONS ....................... 23
21.1. Broker .................................................. 23
21.2. Examination of Lease .................................... 23
21.3. No Recording ............................................ 23
(ii)
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21.4. Quitclaim ............................................... 23
21.5. Modifications for Mortgagees ............................ 23
21.6. Notice .................................................. 23
21.7. Captions ................................................ 24
21.8. Executed Copy ........................................... 24
21.9. Time .................................................... 24
21.10. Severability ............................................ 24
21.11. Survival ................................................ 24
21.12 Choice of Law ........................................... 24
21.13. Gender; Singular, Plural ................................ 24
21.14. Non-Agency .............................................. 24
21.15. Successors .............................................. 24
21.16. Waiver; Remedies Cumulative ............................. 24
21.17. Unavoidable Delay ....................................... 24
21.18. Entire Agreement ........................................ 24
21.19. Authority ............................................... 24
21.20. Guaranty ................................................ 25
21.21. Exhibits; References .................................... 25
21.22. Basic Lease Provisions .................................. 25
21.23. No Merger ............................................... 25
21.24. Joint and Several Obligations ........................... 25
21.25. No Light or Air Easement ................................ 25
21.26. Lease Subject to Matters of Record ...................... 25
21.27. Hazardous Materials Disclosure .......................... 25
21.28. Tenant's and Guarantor's Financial Condition ............. 25
May 2, 2000
(iii)
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OFFICE LEASE
This Office Lease dated May 16, 2000 (this "Lease") is entered into by
and between PAC COURT ASSOCIATES, L.P., a California limited partnership
("Landlord"), and INTEGRATED INFORMATION SYSTEMS, INC., a Delaware corporation
("Tenant").
ARTICLE I
BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean
and refer to the following terms, the application of which shall be governed by
the provisions in the remaining Articles of this Lease:
1. Address of Landlord: c/o Banyan Pacific, LLC
114 Pacifica, Suite 230
Irvine, California 92618-3318
2. Premises Address: 114 Pacifica, Suite 300
Irvine, California 92618-3318
3. Address of Tenant:
(a) Notices: 1560 W. Fountainhead Parkway
Tempe, Arizona 85282
Attention: Corporate Counsel
with a copy to: 114 Pacifica, Suite 300
Irvine, California 92618-3318
(b) Billing: 1560 W. Fountainhead Parkway
Tempe, Arizona 85282
Attention: Accounts Payable
4. Tenant's Trade Name: Integrated Information Systems
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5. Tenant's Contact: Susan Howells Telephone: ( ) _________________
</TABLE>
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6. Premises Rentable Square Feet: 11,109 Square Feet Tenant's Share: 10.36%
Building Rentable Square Feet: 107,199 Square Feet
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7. Anticipated Commencement Date: August 1, 2000
8. Term: Six (6) years
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9. Monthly Rent: Lease Month/Year: Monthly Rent Amount:
1-12 $28,327.95
13-24 $29,438.85
25-36 $30,549.75
37-48 $31,660.65
49-60 $32,771.55
61-72 $33,882.45
</TABLE>
10. Security Deposit: $31,160.75
11. Tenant Improvement Allowance $269,109.00
12. Broker(s): Landlord: CB Richard Ellis
Tenant: Lee & Associates
13. Landlord's Space Planner: H. Hendy Associates
14. Guarantor: None.
15. Project Expense Base: Actual operating expenses for calendar year 2000,
projected to 95% occupancy.
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Exhibits: A Graphic Depiction of Premises D Commencement Date Memorandum
B Project Site Plan E Rules and Regulations
C Work Letter
</TABLE>
Riders: Lease Rider No. 1 - Letter of Credit
Lease Rider No. 2 - Right to Extend Term
Lease Rider No. 3 - Right of First Refusal
Lease Rider No. 4 - Signage Rights
Lease Rider No. 5 - Lease Modifications
May 2, 2000
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ARTICLE II
DEFINITIONS
2.1. CERTAIN DEFINITIONS. The capitalized terms set forth below, unless
the context clearly requires otherwise, shall have the following meanings in
this Lease:
"ADDITIONAL RENT" means any and all sums (whether or not specifically
called "Additional Rent" in this Lease) other than Monthly Rent which Tenant is
or becomes obligated to pay to Landlord under this Lease. See also "Rent."
"ALTERATIONS" means any alterations, decorations, modifications,
additions or improvements made in, on, about, under or contiguous to the
Building or the Premises after the Commencement Date, including, but not limited
to, lighting, HVAC and electrical fixtures, pipes and conduits, fiber-optics and
other telecommunications cabling, transfer, storage and disposal facilities,
partitions, drapery, wall coverings, shelves, cabinetwork, carpeting and other
floor coverings, ceiling tiles, fixtures and carpentry installations.
"APPLICABLE LAWS" means the laws, rules, regulations, ordinances,
restrictions, and practices described in Section 5.2.
"APPLICABLE RATE" means the greater of ten percent (10%) per annum or
five percent (5%) in excess of the discount rate of the Federal Reserve Bank of
San Francisco in effect on the twenty-fifth (25th) day of the calendar month
immediately prior to the event giving rise to the Applicable Rate imposition;
provided, however, the Applicable Rate shall in no event exceed the maximum
interest rate permitted to be charged by applicable law.
"BOMA STANDARD" means the Standard Method for Measuring Floor Area in
Office Buildings, ANSI Z65.1-1996.
"BROKER" means the person or entity identified in Item 12 of the Basic
Lease Provisions.
"BUILDING" means that certain building known as Pacifica Court and
within which the Premises are located.
"CASUALTY" is defined in Section 12.1.
"CITY" means the City of Irvine, California.
"CLAIMS" is defined in Section 11.3.1.
"COMMENCEMENT DATE" means the commencement date of the Term, described
in Section 3.2.
"COMMON AREA" means all interior and exterior areas and facilities
within the Project exclusive of the Premises and other portions of the Project
leased (or to be leased) exclusively to other tenants. The Common Area includes,
but is not limited to lobbies, hallways, restrooms, parking areas, access and
perimeter roads, sidewalks, landscaped areas and similar areas and facilities.
Tenant's use of the Common Area, and its rights and obligations with respect
thereto, are more particularly described in Article X.
"COUNTY" means the County of Orange, California.
"EVENT OF DEFAULT" means the Tenant defaults described in Section 15.1.
"GUARANTOR" means the person(s) or entity identified in Item 14 of the
Basic Lease Provisions.
"HVAC" means the heating, ventilating and air conditioning system
serving the Building.
"HAZARDOUS MATERIALS" is defined in Section 6.1.
"HAZARDOUS MATERIALS LAWS" is defined in Section 6.2.
"LANDLORD'S AGENTS" means Landlord's authorized agents,
representatives, property managers (whether as agents or independent
contractors), consultants, contractors, partners, subsidiaries, affiliates,
directors, officers and employees.
"LANDLORD PARTIES" is defined in Section 11.1.
"LANDLORD'S SPACE PLANNER" means the interior design consultant, space
planner or architect or architectural firm from time to time designated by
Landlord to perform the function of Landlord's Space Planner set forth in this
Lease. Landlord's Space Planner initially shall be the firm designated in Item
13 of the Basic Lease Provisions.
"LEASE" means this instrument together with all exhibits, amendments,
addenda and riders attached hereto and made a part hereof.
"MONTHLY RENT" means the monthly rental which Tenant is to pay to
Landlord pursuant to Section 4.1, as the same may be adjusted from time to time
as set forth in this Lease. See also "Rent."
May 2, 2000
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"MORTGAGE" means any mortgage, deed of trust, or similar lien on or
covering the Project or any part thereof.
"MORTGAGEE" means any mortgagee of a mortgage, beneficiary of a deed of
trust or lender having a lien on or covering the Project or any part thereof.
"NOTICE" means each and every notice, communication, request, demand,
reply or advice, or duplicate thereof, in this Lease provided or permitted to be
given, made or accepted by either party to any other party, which shall be in
writing and given in accordance with the provisions of Section 21.6.
"OPERATING EXPENSES" is defined in Section 7.3.
"PLANS" means the final working drawings for the construction of the
Tenant Improvements to be prepared and approved as set forth in the Work Letter.
"PREMISES" means the premises depicted on the floor plan attached
hereto as Exhibit "A". The Premises are located within and constitute a
portion of the Building at the address set forth in Item 2 of the Basic Lease
Provisions.
"PROJECT" means that certain real property, and all improvements
thereon, including the Building and other buildings, if any, located within the
boundaries of such property, shown on the Project Site Plan.
"PROJECT EXPENSE BASE" means the allowance for Project Expenses that
Landlord will credit to Tenant's Share of Project Expenses under Article VII,
which allowance amount is set forth under Item 15 of the Basic Lease Provisions.
"PROJECT EXPENSES" means, collectively, Operating Expenses and Real
Property Taxes.
"PROJECT SITE PLAN" means the plan attached hereto as EXHIBIT "B".
"REAL PROPERTY TAXES" is defined in Section 7.4.
"RENT" means Monthly Rent and Additional Rent, collectively.
"PREMISES RENTABLE SQUARE FEET" means (a) with respect to the Premises,
the usable area of the Premises determined in accordance with the Method for
Measuring Floor Area in Office Buildings, ANSI Z65.1-1996, plus a pro-rata
portion of the main lobby area on the ground floor and all elevator machine
rooms, electrical and telephone equipment rooms and mail delivery facilities,
janitor rooms and other common areas used by all tenants of the Building, if
any, plus (i) for single tenancy floors, all the area covered by the elevator
lobbies, corridors, special stairways, restrooms, mechanical rooms, electrical
rooms, janitor rooms and telephone closets on such floors, or (ii) for multiple
tenancy floors, a pro-rata portion of all of the area covered by the elevator
lobbies, corridors, special stairways, restrooms, mechanical rooms, electrical
rooms, janitor rooms, telephone closets and any other common areas on such
floor, and (b) with respect to the Building, the total rentable area for all
floors in the Building computed in accordance with the provisions of clause (a)
above. In calculating the "Premises Rentable Square Feet" of the Premises or the
Building, the area contained within the exterior walls of the Building stairs,
fire towers, vertical ducts, elevator shafts, flues, vents, stacks and major
pipe shafts will be excluded. In connection with the initial improvement of the
Premises with Tenant Improvements, if Landlord believes that there is a
discrepancy between the actual Premises Rentable Square Feet and the number set
forth in the Basic Lease Provisions of this Lease, Landlord may require that
Landlord's Space Planner physically measure the Premises prior to occupancy of
the Premises by Tenant in order to verify the Premises Rentable Square Feet,
which determination by Landlord's Space Planner shall be conclusive. If
Landlord's Space Planner discovers a discrepancy, the Premises Rentable Square
Feet shall be adjusted accordingly; provided, however, that any adjustment to
the Premises Rentable Square Feet shall not result in an increase or decrease
greater than two (2) percent of the Premises Rentable Square Feet stated in the
Basic Lease Provisions of this Lease. Upon an adjustment, if any, to the
Premises Rentable Square Feet, there shall also be an appropriate adjustment to
Tenant's Share, the Monthly Rent and the Security Deposit, which adjustments
shall be reflected in the Commencement Date Memorandum or other writing signed
by Landlord and Tenant.
"RESTRICTIONS" means, collectively, the covenants, conditions or
restrictions and all other matters of record affecting the Premises, as the same
may be amended from time to time.
"RULES AND REGULATIONS" means the rules and regulations attached hereto
as EXHIBIT "E" and any modifications thereto promulgated by Landlord or
Landlord's Agents from time to time.
"SECURITY DEPOSIT" means the amount set forth in Item 10 of the Basic
Lease Provisions, which shall be paid to Landlord by Tenant pursuant to Section
4.5.
"SUBSTANTIAL COMPLETION" AND "SUBSTANTIALLY COMPLETED" means the Tenant
Improvements, or repair of the Premises following a Casualty, have been fully
completed except for minor details of construction, mechanical adjustments or
decoration which do not materially interfere with Tenant's use and enjoyment of
the Premises (items normally referred to as "punch list" items).
May 2, 2000
Page 3 of 26
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"TENANT DELAYS" means (i) any and all delays in the construction of the
Tenant Improvements due to the fault of the Tenant, as defined and specified in
the Work Letter, and/or (ii) delays due to Tenant's failure to deliver to
Landlord prior to the Anticipated Commencement Date, executed copies of policies
of insurance or certificates thereof as required under Article XI, or other
deposits or information required under this Lease.
"TENANT IMPROVEMENTS" means those certain improvements, if any, to be
constructed on the Premises as provided in Section 3.6 and in the Work Letter.
"TENANT'S AGENTS" means Tenant's agents, representatives, consultants,
contractors, affiliates, subsidiaries, officers, directors, employees,
subtenants, guests and invitees.
"TENANT PARTIES" is defined in Section 11.1.
"TENANT'S PERSONAL PROPERTY" means Tenant's removable trade fixtures,
furniture, equipment and other personal property located in or on the Premises.
"TENANT'S SHARE" is defined in Section 7.2.
"TERM" means the term of this Lease, as provided in Section 3.2.
"UNAVOIDABLE DELAY" means any delays which are beyond a party's
reasonable control, including, but not limited to, delays due to inclement
weather, strikes, acts of God, inability to obtain labor or materials, inability
to secure governmental approvals or permits, governmental restrictions, civil
commotion, fire, earthquake, explosion, flood, hurricane, the elements, or the
public enemy, action or interference of governmental authorities or agents, war,
invasion, insurrection, rebellion, riots, lockouts, "Y2K"-related problems or
any other cause whether similar or dissimilar to the foregoing which is beyond a
party's reasonable control; provided however, that in no event shall any of the
foregoing ever apply with respect to the payment of any monetary obligation.
"USABLE SQUARE FEET" of the Premises as used in EXHIBIT "C" means the
usable area of the Premises as determined in accordance with the BOMA Standard.
"WORK LETTER" means the work letter between Landlord and Tenant
regarding the construction of the Tenant Improvements, if any, in the form as
attached hereto as EXHIBIT "C".
2.2. OTHER DEFINITIONS. Terms defined elsewhere in this Lease, unless
the context clearly requires otherwise, shall have the meaning as there given.
ARTICLE III
PREMISES AND TERM
3.1. LEASE OF PREMISES. Subject to and upon the terms and conditions
set forth herein, Landlord hereby leases the Premises to Tenant, and Tenant
hereby leases the Premises from Landlord.
3.2. TERM AND COMMENCEMENT. Unless sooner terminated as provided
herein, the Term of this Lease shall be for that period of years and months set
forth in Item 8 of the Basic Lease Provisions, as the same may be extended in
accordance with any option or options to extend the Term granted herein, and
shall commence (the "Commencement Date"), subject to Section 3.5 below, on the
earlier of (i) the date upon which the City or County has approved the Tenant
Improvements in accordance with its building code, as evidenced by its written
approval thereof in accordance with the building permits issued for the Tenant
Improvements, (ii) the date Landlord's Space Planner has certified in writing
that the Tenant Improvements are substantially completed in accordance with the
Plans, or (iii) the date Tenant commences occupancy of the Premises. When the
actual Commencement Date has occurred, Landlord and Tenant shall execute a
Commencement Date Memorandum in the form shown in EXHIBIT "D". Landlord and
Tenant anticipate that the Term will commence on the "Anticipated Commencement
Date" set forth in Item 7 of the Basic Lease Provisions, but the Anticipated
Commencement Date shall in no event affect the actual Commencement Date, which
shall be determined as set forth in this Section 3.2.
3.3. EARLY ENTRY. Tenant and its authorized agents, contractors,
subcontractors and employees shall be granted a license by Landlord to enter
upon the Premises, at Tenant's sole risk and expense, during ordinary business
hours prior to the Commencement Date, for the sole purpose of installing
Tenant's trade fixtures and equipment in the Premises; provided, however, (i)
Tenant shall first make a request to Landlord for access to the Premises, which
request shall be granted if Landlord reasonably determines that Tenant's entry
shall not delay, hinder or complicate the completion of the Tenant Improvements,
(ii) the provisions of this Lease, other than with respect to the payment of
Monthly Rent or Additional Rent, subject to phrase (iv) below, shall apply
during such early entry, including, but not limited to, the provisions of
Article XI relating to Tenant's exculpation and indemnification of Landlord,
(iii) prior to any such entry, Tenant shall pay for and provide evidence of the
insurance to be provided by Tenant pursuant to the provisions of Article XI,
(iv) Tenant shall pay all utility, service and maintenance charges for the
Premises attributable to Tenant's early entry and use of the Premises as
reasonably determined by Landlord, (v) Tenant shall not unreasonably interfere,
delay or hinder Landlord, its agents, contractors or subcontractors in the
construction of the Tenant Improvements in accordance with the provisions of
this Lease, (vi) Tenant shall not use the Premises for the storage of inventory
or otherwise commence the operation of business during the period of such early
entry, and (vii) Tenant shall at all times comply with Landlord's rules and
regulations regarding tenant move-in procedures. Upon Tenant's breach of any of
the foregoing conditions, Landlord may, in addition to exercising any of its
other rights and remedies set forth herein, revoke such license
May 2, 2000
Page 4 of 26
<PAGE> 9
upon written notice to Tenant. Early entry by Tenant in accordance with this
Section 3.3 shall not constitute occupancy of the Premises for purposes of
establishing the Commencement Date.
3.4. DELAY IN POSSESSION. If for any reason Landlord cannot deliver
possession of the Premises to Tenant with the Tenant Improvements substantially
completed on or before the Anticipated Commencement Date, Landlord shall not be
subject to any liability therefor, and such failure shall not affect the
validity of this Lease or the obligations of Tenant hereunder, but in such case,
Tenant shall not be obligated to pay Monthly Rent or Additional Rent other than
as provided in Section 3.3 and Section 3.5 until the Commencement Date has
occurred. If the Commencement Date has not occurred within ninety (90) days
following the Anticipated Commencement Date plus periods attributable to Tenant
Delays or Unavoidable Delay, Tenant may, at its option, by Notice to Landlord
within ten (10) days thereafter, terminate this Lease, in which event the
parties shall be discharged from all further obligations hereunder; provided,
however, if Tenant fails to give such notice to Landlord within such ten-day,
period, Tenant shall no longer have the right to terminate this Lease under this
Section 3.4. Tenant understands that, notwithstanding anything to the contrary
contained herein, Landlord shall have no obligation to deliver possession of the
Premises to Tenant for so long as Tenant fails to deliver to Landlord executed
copies of policies of insurance or certificates thereof as required under
Article XI.
3.5. TENANT DELAYS. The Commencement Date shall not be delayed or
postponed due to Tenant Delays, and the Term, Tenant's obligations to pay Rent
and all of Tenant's other obligations under this Lease shall commence upon the
date which would have been the Commencement Date but for Tenant Delays.
3.6. CONDITION OF PREMISES. Landlord's sole construction obligations,
if any, regarding Tenant Improvements for the Premises and the obligations of
Tenant with respect to the Tenant Improvements, are set forth in the Work Letter
attached as EXHIBIT "C". It is acknowledged and agreed that all Tenant
Improvements under this Lease are and shall be the property of Landlord from and
after their installation. The taking of possession or use of the Premises by
Tenant for any purpose other than as provided in Section 3.3 shall conclusively
establish that Tenant has inspected the Premises and accepts them as being in
good and sanitary order, condition and repair and that the Tenant Improvements
have been constructed in accordance with the Plans; provided, however, Tenant
shall have a period of thirty (30) days after taking possession of the Premises
in which to notify Landlord in writing of any construction deficiencies or
defects and any uncompleted punch list items (the punch list shall be limited to
items required to be accomplished by Landlord under the Work Letter) and, except
as hereafter provided, Landlord will repair, replace or complete at its expense
all items referenced in such notice within thirty (30) days after receipt of
such notice, subject to Unavoidable Delay, or as soon thereafter as Landlord,
acting in good faith, can repair, replace or complete the same. If Landlord
reasonably contends that a particular item in such notice is not justified, the
parties will refer the issue to Landlord's Space Planner for resolution.
Landlord's Space Planner's determination shall be final and binding upon the
parties. Nothing in this Section 3.6 shall limit or expand Landlord's
maintenance and repair obligations set forth in Article IX. Article XVIII
notwithstanding, Tenant's acceptance of the Premises is with the understanding
that, as other tenants lease space in the Building from time to time, certain
noise, distractions and other inconveniences with respect to the Project
(including the Building and the parking area) may result from the construction
or renovation of tenant improvements or the moving of such other tenants into
their premises.
3.7. NO REPRESENTATIONS. Tenant acknowledges that neither Landlord nor
any of Landlord's Agents has made any representations or warranties as to the
suitability or fitness of the Premises for the conduct of Tenant's business or
for any other purpose other than as general and administrative offices uses,
including, but not limited to, any representations or warranties regarding
zoning or other land use matters, or for any other purpose, and that neither
Landlord nor any of Landlord's Agents has agreed to undertake any alterations or
additions or construct any Tenant Improvements to the Premises except as
expressly provided in this Lease. [SEE RIDER]
ARTICLE IV
RENT AND ADJUSTMENTS
4.1. MONTHLY RENT. From and after the Commencement Date, Tenant shall
pay to the Landlord, for each calendar month of the Term, the Monthly Rent set
forth in Item 9 of the Basic Lease Provisions and in any Riders attached hereto.
Monthly Rent shall be due and payable to Landlord in lawful money of the United
States, in advance, on the first (1st) day of each calendar month of the Term,
without abatement, deduction, claim or offset, and without prior notice, invoice
or demand, at Landlord's address set forth in Item 1 of the Basic Lease
Provisions or at such place as Landlord may from time to time designate.
Tenant's payment of Monthly Rent for the first (1st) month of the Term shall be
delivered to Landlord concurrently with Tenant's execution of this Lease.
4.2. ADDITIONAL RENT. All Additional Rent shall be due and payable to
Landlord in lawful money of the United States, at Landlord's address set forth
in Item 1 of the Basic Lease Provisions or at such other place as Landlord may
from time to time designate, without abatement, withholding, deduction, claim or
offset, within ten (10) days of receipt of Landlord's invoice or statement for
same, or, if this Lease provides another time for the payment of certain items
of Additional Rent, then at such other time.
4.3. PRORATIONS. If the Commencement Date is not the first (1st) day
of a month, or if the expiration of the Term of this Lease is not the last day
of a month, a prorated installment of Monthly Rent based on a thirty (30) day
month shall be paid for the fractional month during which the Term commences or
terminates.
4.4. LATE PAYMENT CHARGES. Tenant acknowledges that late payment by
Tenant to Landlord of Rent under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which is extremely difficult
or impracticable to determine. Such costs include, but are not limited to,
processing and accounting charges, late charges that may be imposed on Landlord
by the terms of any Mortgage, and late charges and penalties that may be imposed
due to late payment of Real Property Taxes or any item of Operating Expenses.
May 2, 2000
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<PAGE> 10
Therefore, if any installment of Monthly Rent or any payment of Additional Rent
due from Tenant is not received by Landlord in good funds by the fifth (5th)
calendar day from the applicable due date, Tenant shall pay to Landlord an
additional sum equal to six percent (6%) of the amount overdue as a late charge
for every month or portion thereof that such amount remains unpaid. The parties
acknowledge that this late charge represents a fair and reasonable estimate of
the costs that Landlord will incur by reason of the late payment by Tenant.
Acceptance of any late Rent and late charge therefor shall not prevent Landlord
from exercising any of the other rights and remedies available to Landlord for
any other Event of Default under this Lease. Notwithstanding the foregoing (i)
should any payment of Rent by personal check be rejected for insufficient funds,
Landlord shall have the right, upon notice to Tenant, to require that all future
payments by Tenant under this Lease be by cashier's check acceptable to
Landlord, and (ii) upon the third (3rd) occurrence during the Term of Tenant's
failure to timely pay Rent when due, Landlord may, upon notice to Tenant,
require that Monthly Rent for the balance of the Term be made in quarterly
installments, in advance, in certified funds, in an amount equal to the sum of
the Monthly Rent amounts payable during such three (3) month period.
4.5. SECURITY DEPOSIT. Tenant has deposited with Landlord the sum set
forth in Item 10 of the Basic Lease Provisions as a Security Deposit for the
full and faithful performance of every provision of this Lease to be performed
by Tenant. Landlord may apply, in its sole discretion at any time during the
Term of this Lease, all or any part of the Security Deposit to the payment of
all prepaid expenses by Landlord for which Tenant would be required to reimburse
Landlord under this Lease, including without limitation for Tenant Improvements
and Broker commissions. Such application of the Security Deposit is not and
shall never be dependent upon an Event of Default. Upon an Event of Default,
and whether or not Landlord is informed of or has knowledge of the Event of
Default, the Security Deposit (if not already applied as hereinabove provided)
shall be deemed to be automatically applied, without waiver of any rights
Landlord may have under this Lease or at law or in equity as a result of an
Event of Default, to the payment of any Rent not paid when due, the repair of
damage to the Premises or the payment of any other amount which Landlord may
spend or become obligated to spend by reason of an Event of Default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of an Event of Default, to the full extent permitted by law. If any
portion of the Security Deposit is so applied, Tenant shall, within fifteen (15)
business days after written demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep the Security Deposit separate from its
general funds. The unused portion of the Security Deposit, if any, shall be
returned to Tenant within thirty (30) days of the expiration of this Lease or
any termination of this Lease not resulting from an Event of Default, so long as
Tenant has (i) vacated the Premises in the manner required by this Lease
(including without limitation the proper and timely removal of Tenant's
telecommunications cabling and facilities from the Premises and Building, if
required by Landlord), (ii) paid all sums required to be paid under this Lease,
(iii) returned all security/access cards and keys to the Premises and Building;
provided, however, Landlord may retain the Security Deposit or a portion thereof
until such time as the amount of any Additional Rent due from Tenant has been
determined and paid in full. Tenant hereby waives the provisions of Section
1950.7(c) of the California Civil Code and any present or future laws otherwise
governing the return of the Security Deposit, to Tenant to the extent of
reasonably anticipated Additional Rent retained by Landlord pursuant to the
previous sentence.
ARTICLE V
USE
5.1. TENANT'S USE. Tenant shall use the Premises solely for general and
administrative office uses and for no other purpose. Tenant shall not employ at
the Premises more employees than normally associated with general office uses,
so as not to over-burden common area facilities (including without limitation,
the parking areas) or cause excessive wear-and-tear on the Premises and
Building. Tenant's use of the Premises shall be subject to all of the terms and
conditions of this Lease, including, but not limited to, all the provisions of
this Article V. Tenant, at Tenant's sole cost and expense, shall procure,
maintain and make available for Landlord's inspection throughout the Term, all
governmental approvals, licenses and permits required for the proper and lawful
conduct of Tenant's permitted use of the Premises. At Landlord's request, Tenant
shall deliver copies of all such approvals, licenses and permits to Landlord.
5.2. COMPLIANCE WITH APPLICABLE LAWS. Throughout the Term, Tenant, at
Tenant's sole cost and expense, shall comply with, and shall not use the
Premises, Building or Common Area, or suffer or permit anything to be done in
or about the same which will in any way conflict with, (i) any and all present
and future laws, statutes, zoning restrictions, ordinances, orders, regulations,
directions, rules and requirements of all governmental or private authorities
having jurisdiction over all or any part of the Premises (including, but not
limited to, state, municipal, county and federal governments and their
departments, bureaus, boards and officials) pertaining to the use or occupancy
of, or applicable to, the Premises or privileges appurtenant to or in
connection with the enjoyment of the Premises, (ii) Hazardous Materials Laws (as
defined in Section 6.2), (iii) any and all applicable federal, state and local
laws, regulations or ordinances pertaining to air and water quality, waste
disposal, air emissions and other environmental or health and safety matters,
zoning, land use and utility availability, which impose any duty upon Landlord
or Tenant directly or with respect to the use or occupation of the Project or
any portion thereof, (iv) the requirements of the Board of Fire Underwriters or
other similar body now or hereafter constituted relating to or affecting the
condition, use or occupancy of the Project or any portion thereof, (v) any
covenants, conditions, easements or restrictions, including but not limited to
the Restrictions, now or hereafter affecting or encumbering the Project or any
portion thereof, regardless of when they become effective, (vi) the Rules and
Regulations, and (vii) good business practices (collectively, (i) through (vi)
above are hereinafter referred to as "Applicable Laws"). Tenant shall not commit
any waste of the Premises, Building or Project, or any public or private
nuisance or any other act or thing which might or would disturb the quiet
enjoyment of any other tenant of Landlord. Tenant shall not place or permit to
be placed any loads upon the floors, walls or ceilings in excess of the maximum
designed load specified by Landlord or which might damage the Premises or the
Building, or place or permit to be placed any harmful liquids in the drainage
systems, and Tenant shall not dump or store, or permit to be dumped or stored,
any
May 2, 2000
Page 6 of 26
<PAGE> 11
inventory, waste materials, refuse or other materials or allow any such
materials to remain outside the Building proper, except in designated enclosed
trash areas. Tenant shall not conduct or permit any auctions, sheriff's sales or
other like activities at the Project or any portion thereof.
5.3. RESTRICTIONS. Tenant agrees that this Lease is subject and
subordinate to the Restrictions, as the same may now or hereafter exist, and
that it will execute and deliver to Landlord within fifteen (15) days of
Landlord's request therefor, any further documentation or instruments which
Landlord deems necessary or desirable to evidence or effect such subordination.
Without limiting the provisions of Section 5.2, Tenant shall throughout the Term
timely comply with all of the terms, provisions, conditions and restrictions of
the Restrictions which pertain to, restrict or affect the Premises or Tenant's
use thereof, or Tenant's use of any other area of the Project permitted
hereunder, including the payment by Tenant of any periodic or special dues or
assessments charged against the Premises or Tenant which may be allocated to the
Premises or Tenant in accordance with the provisions of the Restrictions. Tenant
shall hold Landlord, Landlord's Agents and the Premises harmless and shall
indemnify, protect and defend Landlord and Landlord's Agents from and against
any loss, expense, damage, attorneys' fees and costs or liability arising out of
or in connection with the failure of Tenant to so perform or comply with the
Restrictions. Tenant agrees that it will subordinate this Lease to any other
covenants, conditions and restrictions and any reciprocal easement agreements or
any similar agreements which Landlord may hereafter record against the Premises
and to any amendment or modification to any of the existing Restrictions,
provided that such subordination does not unreasonably interfere with Tenant's
use and employment of the Premises.
5.4. LANDLORD'S RIGHT OF ENTRY. Landlord and Landlord's Agents shall
have the right to enter the Premises at all reasonable times upon reasonable
notice to Tenant, except for emergencies in which case no notice shall be
required, to inspect the Premises, to take samples and conduct environmental
investigations, to post notices of non-responsibility and similar notices and
signs indicating the availability of the Premises for sale and/or lease, to show
the Premises to interested parties such as prospective tenants, consultants,
lenders and purchasers, to make necessary Alterations or maintenance and
repairs, to perform Tenant's obligations as permitted herein when Tenant has
failed to do so and, at any reasonable time after one hundred eighty (180) days
prior to the expiration of the Term, to place upon the Premises reasonable signs
indicating the availability of the Premises for lease and to show the Premises
to prospective tenants, all without being deemed to have caused an eviction of
Tenant and without any liability to Tenant or abatement of Rent. The above
rights are subject to reasonable security regulations of Tenant, and in
exercising its rights set forth herein, Landlord shall endeavor to cause the
least possible interference with Tenant's business. Landlord shall at all times
have the right to retain a key which unlocks all of the doors in the Premises,
and any security codes and/or passwords for any security system installed by
Tenant, but excluding Tenant's vaults and safes, and Landlord and Landlord's
Agents shall have the right to use any and all means which Landlord may deem
proper to open the doors in an emergency to obtain entry to the Premises, and
any entry to the Premises so obtained by Landlord or Landlord's Agents shall not
under any circumstances be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an eviction of Tenant from the Premises.
ARTICLE VI
HAZARDOUS MATERIALS
6.1. DEFINITION OF HAZARDOUS MATERIALS. For purposes of this Lease, the
term "Hazardous Materials" includes (i) any "hazardous materials" as defined in
Section 25501(o) of the California Health and Safety Code unless Tenant
establishes, to the satisfaction of Landlord, that because of the quantity,
concentration, or physical or chemical characteristics, such substance or matter
does not pose a present or potential hazard to human health and safety or to the
environment, (ii) any other substance or matter which results in liability to
any person or entity from exposure to such substance or matter under any
statutory or common law theory, and (iii) any substance or matter which is in
excess of relevant and appropriate levels set forth in any applicable federal,
state or local law or regulation pertaining to any hazardous or toxic substance,
material or waste, or for which any applicable federal, state or local agency
orders or otherwise requires removal, treatment or remediation.
6.2. DEFINITION OF HAZARDOUS MATERIALS LAWS. The term "Hazardous
Materials Law(s)" shall mean any federal, state or local laws, ordinances,
codes, statutes, regulations, administrative rules, policies and orders, and
other authority, existing now or in the future, which classify, regulate, list
or define hazardous substances, materials, wastes, contaminants, pollutants
and/or the Hazardous Materials, including without limitation, the following
statutes and regulations, and any other legal authority, rules, regulations, or
policies relating to or implementing such statues and regulations:
(a) FEDERAL. Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA" or "Superfund"), as
amended by the Superfund Amendments and Reauthorization Act of 1986
("SARA"), 42 U.S.C. Section 9601 et seq.; Resource conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.; Clean
Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; Clean Air Act
("CAA"), 42 U.S.C. Section 78401 et seq.; Toxic Substances Control Act
("TCSA"), 15 U.S.C. Section 2601 et seq.; The Refuse Act of 1899, 33
U.S.C. Section 407; Occupational Safety and Health Act ("OSHA"), 29
U.S.C. Section 651 et seq.; Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq.; United States Department of Transportation
Table (49 CFR 172.101 and amendments thereto) and the Environmental
Protection Agency Table (40 CFR Part 302 and amendments thereto);
(b) CALIFORNIA. Carpenter-Presley-Tanner Hazardous Substance
Account Act ("California Superfund"), Cal. Health & Safety Code
Section 25300 et seq.; California Hazardous Waste Control Act, Cal.
Health & Safety Code Sections 25100 et seq.; Porter-Cologne Water
Quality Control Act ("Porter-Cologne Act"), Cal. Water Code
Section 13000 et seq.; Hazardous Waste Disposal Land Use Law, Cal.
Heath & Safety Code Section 25220 et seq.; Safe Drinking Water and
Toxic Enforcement Act of 1986 ("Proposition 65"), Cal. Health & Safety
Code Section 25280 et seq.; California Hazardous Substance Act, Cal.
Health & Safety Code
May 2, 2000
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<PAGE> 12
Section 28740 et seq.; Air Resources Law, Cal. Health & Safety Code
Section 39000 et seq.; Hazardous Materials Release Response Plans and
Inventory, Cal. Health & Safety Code Sections 25500-25541 et seq.;
Toxic Pits Cleanup Act of 1984 ("TCPA"), Cal. Health & Safety Code
Sections 25208-25208.17 et seq.;
(c) OTHER LAWS AND REGULATIONS. All other rules and
regulations promulgated pursuant to said foregoing laws or any
amendments or replacements thereof, provided such amendments or
replacements shall in no way limit the original scope and/or definition
of Hazardous Materials defined herein as of the execution of this
Lease.
6.3. USE OF HAZARDOUS MATERIALS. Tenant shall not cause or permit any
Hazardous Materials to be brought upon, kept, or used in the Premises or within
the Project by Tenant, its agents, employees, contractors or invitees in a
manner or for a purpose prohibited by or which could result in liability under
any applicable law, regulation, rule or ordinance, including, without
limitation, the Hazardous Materials Laws. Tenant shall, at its own expense, at
all times and in all respects comply with all Hazardous Materials Laws relating
to the industrial hygiene, environmental protection or the use, analysis,
generation, manufacture, storage, presence, disposal or transportation of any
Hazardous Materials. Tenant shall, at its own expense, procure, maintain in
effect and comply with all conditions of any and all permits, licenses and other
governmental and regulatory approvals relating to the presence of Hazardous
Materials within, on, under or about the Premises or required for Tenant's use
of the Premises. Tenant shall cause any and all Hazardous Materials to be
removed from the Premises and transported in accordance with and in compliance
with all Hazardous Materials Laws. Tenant shall in all respects, handle, treat,
deal with, and manage any and all Hazardous Materials in conformance with
Hazardous Materials Laws and prudent industry practices regarding the management
of such Hazardous Materials. Upon expiration or earlier termination of this
Lease, Tenant shall at its own expense, cause all Hazardous Materials (to the
extent such Hazardous Materials are generated, stored, released or disposed of
during the Term of this Lease by Tenant) to be removed from the Premises and
transported for use, storage or disposal in accordance and in compliance with
all applicable Hazardous Materials Laws. Tenant shall not take any remedial
action in response to the presence of any Hazardous Materials in, on, about or
under the Premises or the Project, nor enter into any settlement agreement,
consent, decree or other compromise in respect to any claims relating to or in
any way connected with the Premises or the Project without first notifying
Landlord of Tenant's intention to do so and affording Landlord ample opportunity
to take over the obligation for such remedial action and/or appear, intervene or
otherwise appropriately assert and protect Landlord's interest with respect
thereto.
6.4. DISCLOSURES. Tenant shall promptly notify Landlord of, and shall
promptly provide Landlord with true, correct, complete and legible copies of,
all of the following environmental items relating to the Premises: reports filed
pursuant to any self-reporting requirements; reports filed pursuant to any
Applicable Laws or this Lease; all permit applications, permits, monitoring
reports, workplace exposure and community exposure warnings or notices, and all
other reports, disclosures, plans or documents (even those which may be
characterized as confidential) relating to water discharges, air pollution,
waste generation or disposal, underground storage tanks or Hazardous Materials;
all orders, reports, notices, listings and correspondence (even those which may
be considered confidential) of or concerning the release, investigation,
compliance, clean up, remedial and corrective actions, and abatement of
Hazardous Materials whether or not required by Applicable Laws; and all
complaints, pleadings and other legal documents filed against Tenant related to
Tenant's use, handling, storage or disposal of Hazardous Materials. Tenant shall
also comply with all laws, ordinances and regulations regarding the disclosure
of the presence or danger of Hazardous Materials. Tenant shall be solely
responsible for complying with Hazardous Materials Laws regarding the disclosure
of, the presence or danger of Hazardous Materials, including, without
limitation, all notices or other requirements under California Health and Safety
Code Section 25915 et seq.; and 25249.5 et seq. and California Code of
Regulations Section 12000 et seq.
6.5. INSPECTION; COMPLIANCE. Landlord and Landlord's Agents shall have
the right, but not the obligation, to inspect, investigate, sample and/or
monitor the Premises, including any air, soil, water, groundwater or other
sampling, and any other testing, digging, drilling or analyses, at any time to
determine whether Tenant is complying with the terms of this Article VI, and in
connection therewith, Tenant shall provide Landlord with full access to all
relevant facilities, records and personnel. If Tenant is not in compliance with
any of the provisions of this Article VI, or in the event of a release of any
Hazardous Material on, under, from or about the Premises, Landlord and
Landlord's Agents shall have the right, but not the obligation, without
limitation on any of Landlord's other rights and remedies under this Lease, to
immediately enter upon the Premises and to discharge Tenant's obligations under
this Article VI at Tenant's expense, including without limitation the taking of
emergency or long-term remedial action. Landlord and Landlord's Agents shall
endeavor to minimize interference with Tenant's business but shall not be liable
for any such interference. All sums reasonably disbursed, deposited or incurred
by Landlord in connection herewith, including, but not limited to, all costs,
expenses and actual attorneys fees, shall be due and payable by Tenant to
Landlord, as an item of Additional Rent, on demand by Landlord, together with
interest thereon at the Applicable Rate from the date of such demand until paid
by Tenant.
6.6. INDEMNIFICATION. To the fullest extent permitted by law, Tenant
hereby agrees to indemnify, hold harmless, protect and defend (with attorneys
acceptable to Landlord) Landlord and Landlord's Agents, and any successors to
all or any portion of Landlord's interest in the Premises, the Building and the
Project and their directors, officers, partners, employees, authorized agents,
affiliates, representatives and Mortgagees, from and against any and all
liabilities, losses, damages (including, but not limited to, damages for the
loss or restriction on use of rentable or usable space or any amenity of the
Premises, the Building and the Project or damages arising from any adverse
impact on marketing of space in the Premises, the Building and the Project),
diminution in the value of the Premises, the Building and the Project,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses
(including, but not limited to, reasonable attorneys' fees, disbursements and
court costs and all other professional or consultant's expenses), whether
foreseeable or unforeseeable, arising directly or indirectly out of the
presence, use, generation, storage, treatment, on or off-site disposal or
transportation of Hazardous Materials on,
May 2, 2000
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<PAGE> 13
into, from, under or about the Premises, the Building and the Project by Tenant
or Tenant's Agents, and specifically including the cost of any required or
necessary repair, restoration, clean-up (including, but not limited to, the
costs of investigation and removal of Hazardous Materials) or detoxification of
the Premises, the Building and the Project and the preparation of any closure or
other required plans, whether or not such action is required or necessary during
the Term or after the expiration of this Lease.
6.7. ASSIGNMENT AND SUBLETTING. If (i) any anticipated use of the
Premises by any proposed assignee or subtenant involves the generation, storage,
use, treatment or disposal of Hazardous Materials in a manner or for a purpose
prohibited by any governmental agency or authority, or (ii) the proposed
assignee or subtenant has been required by any prior landlord, lender or
governmental authority to take remedial action in connection with Hazardous
Material contaminating a property if the contamination resulted from such
party's action or use of the property in question, or (iii) the proposed
assignee or subtenant is subject to an enforcement order issued by any
governmental agency in connection with the use, disposal, or storage of
Hazardous Materials, it shall not be unreasonable for Landlord to withhold its
consent to an assignment or subletting to such proposed assignee or subtenant.
[SEE RIDER]
ARTICLE VII
OPERATING EXPENSES; TAXES; UTILITIES
7.1. TENANT TO BEAR TENANT'S SHARE OF EXCESS PROJECT EXPENSES. Tenant
shall pay to Landlord Tenant's Share (as defined in Section 7.2) of Project
Expenses in excess of the Project Expense Base as follows: Prior to the
Commencement Date and thereafter within ninety (90) days of the commencement of
each calendar year during the Term, Landlord shall give Tenant a written
estimate of Tenant's Share of Project Expenses in excess of the Project Expense
Base for the ensuing fiscal year or partial fiscal year, as the case may be.
Tenant shall pay, as an item of Additional Rent, such estimated amount in equal
monthly installments, in advance, on or before the first (1st) day of each
calendar month concurrent with its payment of Monthly Rent. If Landlord has not
furnished its written estimate by the time set forth above, Tenant shall pay
monthly installments of Project Expenses in excess of the Project Expense Base
at the rate established for the prior fiscal year, if any; provided that when
the new estimate is delivered to Tenant, Tenant shall at the next monthly
payment date pay Landlord any accrued deficiency based on the new estimate, or
Landlord shall credit any accrued overpayment based on such estimate toward
Tenant's next installment payment hereunder. Within a reasonable period of time
after the end of each fiscal year (in no event less than one hundred twenty
(120) days after the end of each fiscal year unless sooner completed by
Landlord) Landlord shall furnish Tenant a statement showing in reasonable detail
Tenant's Share of the actual Project Expenses in excess of the Project Expense
Base incurred for the period in question. If Tenant's estimated payments are
less than Tenant's Share of actual Project Expenses in excess of the Project
Expense Base as shown by the applicable statement, Tenant shall pay the
difference to Landlord within thirty (30) days thereafter. If Tenant shall have
overpaid Landlord, Landlord shall credit such overpayment toward Tenant's next
installment payment hereunder. When the final determination is made of Tenant's
Share of the actual Project Expenses in excess of the Project Expense Base for
the fiscal year in which this Lease terminates, Tenant shall, even if this Lease
has terminated, pay to Landlord within fifteen (15) days after notice the excess
of Tenant's Share of such actual Project Expenses in excess of the Project
Expense Base over the estimate of Tenant's Share of such Project Expenses paid.
Conversely, any overpayment shall be rebated by Landlord to Tenant. If Landlord
shall determine at any time that the estimate of Tenant's Share of Project
Expenses in excess of the Project Expense Base for the current fiscal year is or
will become inadequate to meet Tenant's Share of all such Project Expenses for
any reason, Landlord shall immediately determine the approximate amount of such
inadequacy and issue a supplemental estimate as to Tenant's Share of such
Project Expenses and Tenant shall pay any increase as reflected by such
supplemental estimate. Landlord shall keep or cause to be kept separate and
complete books of accounting covering all Project Expenses and showing the
method of calculating Tenant's Share of Project Expenses in excess of the
Project Expense Base, and shall preserve for at least twelve (12) months after
the close of each fiscal year all material documents evidencing said Project
Expenses for that fiscal year. Tenant, at its sole cost and expense, through any
certified public accountant designated by it, shall have the right, during
reasonable business hours and not more frequently than once during any fiscal
year, to examine and/or audit the books and documents mentioned above evidencing
such costs and expenses for the previous fiscal year. Any delay or failure by
Landlord in delivering any estimate or statement pursuant to this Section 7.1
shall not constitute a waiver of its right to require Tenant to pay Tenant's
Share of Project Expenses in excess of the Project Expense Base pursuant hereto.
[SEE RIDER)
7.2. DEFINITION OF TENANT'S SHARE. The term "Tenant's Share" means a
fraction, the numerator of which is the Premises Rentable Square Feet of the
Premises and the denominator of which is the Premises Rentable Square Feet of
the Building. For purposes of establishing Tenant's Share as of the date of this
Lease, the number of Premises Rentable Square Feet of the Premises and the
number of Premises Rentable Square Feet of the Building are deemed to be as set
forth in Section 6 of the Basic Lease Provisions. At any time prior to the one
year anniversary of the Commencement Date, at Landlord's option, Landlord's
Space Planner may redetermine the actual number of the Building Rentable Square
Feet, which determination will be conclusive. Upon a redetermination of the
Building Rentable Square Feet, if any, there will be appropriate adjustments to
(i) the Premises Rentable Square Feet, based upon the definition of Premises
Rentable Square Feet set forth in Section 2.1 of this Lease, (ii) Tenant's
Share, (iii) the Monthly Rent and (iv) the Security Deposit. Landlord and Tenant
agree to execute an amendment to this Lease to reflect any such adjustment.
7.3. DEFINITION OF OPERATING EXPENSES. The term "Operating Expenses"
means all costs and expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of the Project as determined by
generally accepted accounting practices consistently applied and shall include
the following costs and expenses by way of illustration but not limitation: the
cost of air conditioning, electricity, heating, mechanical, telephone,
ventilating and elevator systems and all other utilities; janitorial, trash
removal, trash recycling and security services; labor; salaries and benefits, if
any, of on-site property management staff; landscaping, fountains
May 2, 2000
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<PAGE> 14
and other interior and/or exterior water features; operation, maintenance, and
repair of the interior common and exterior areas of the Project, including
without limitation any specialty features such as the ground floor lobby
aquarium, and the operation, maintenance, repair and replacement of all common
area surfaces, carpets, coverings, decorations and art; supplies; materials;
equipment; tools; property management costs and fees, including, without
limitation, the rental value of the on-site management office as determined at
Landlord's sole discretion; the cost of any capital improvements made to the
Project by Landlord which Landlord determines in its reasonable discretion
reduce Operating Expenses and/or are required under any governmental law or
regulation not now applicable to the Project or not in effect at the time it was
constructed, such cost to be amortized over such reasonable period as Landlord
shall determine and to include a return on capital at the rate of the lesser of
ten percent (10%) per annum or the maximum per annum rate permitted by law on
the unamortized balance; fees or other charges incurred by Landlord in
connection with membership in energy conservation associations; water and sewer
charges; insurance premiums for all insurance carried on the Project or in
connection with the use or occupancy thereof, including, without limitation, the
cost of rental interruption insurance, unemployment insurance, fidelity bonds,
errors and omissions insurance and, if available at commercially reasonable
rates as determined by Landlord in its sole discretion, earthquake insurance;
fees, expenses and disbursements for legal, accounting and bookkeeping services;
and license, permit and inspection fees. [SEE RIDER]
7.4. DEFINITION OF REAL PROPERTY TAXES. The term "Real Property Taxes"
means any form of tax, assessment, charge, license, fee, rent tax, levy, penalty
(if a result of Tenant's delinquency), real property or other tax, now or
hereafter imposed with respect to the Project or any part thereof (including any
Alterations), this Lease or any Rent payable under this Lease by any authority
having the direct or indirect power to tax, or by any city, county, state or
federal government or any improvement district or other district or division
thereof, whether such tax or any portion thereof (i) is determined by the area
of the Project or any part thereof or the Rent payable under this Lease by
Tenant including, but not limited to, any gross income or excise tax levied by
any of the foregoing authorities with respect to receipt of the Rent due under
this Lease, (ii) is levied or assessed in lieu of, in substitution for, or in
addition to, existing or additional taxes with respect to the Project or any
part thereof whether or not now customary or within the contemplation of
Landlord or Tenant, or (iii) is based upon any legal or equitable interest of
Landlord in the Project or any part thereof. Real Property taxes shall include,
without limitation, the following: (i) any tax imposed upon the transaction or
based upon a reassessment of the Premises due to a change in ownership or
transfer of all or part of Landlord's interest in the Premises; (ii) any
assessments, taxes, fees, levies or charges in addition to, or in substitution
of, partially or totally, any items previously included within the definition of
Property Taxes; (iii) any assessment, tax or charge for fire protection,
schools, streets, street lighting, sidewalks, area-wide road and landscape
maintenance, transportation management agency membership, refuse collection
and/or management, sewer, water or other services provided to the Premises by
any governmental or quasi-governmental agencies, boards, districts or
associations; (iv) capital levy, sales or use tax, gross receipts tax or other
tax on the rents received therefrom or from Landlord's business of operating the
Building or revenues derived therefrom or on the parking spaces within the
Building, or a franchise tax, or an assessment, levy or charge measured by or
based in whole or in part upon such rents or value, now or an assessment, levy
or charge measured by or based in whole or in part upon such rents or value, now
or hereafter imposed, and (v) any and all costs, including without limitation
the fees for experts, tax consultants and attorneys incurred by Landlord should
Landlord elect to negotiate or contest such Property taxes in formal or informal
proceedings before the governmental authority, it being acknowledged by Landlord
and tenant that Proposition 13 was adopted by the voters of the State of
California in the June, 1978 election and that assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such services as fire
protection, street sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property owners or
occupants. Property Taxes shall also include any and all costs including,
without limitation, the fees of experts, tax consultants and attorneys, incurred
by Landlord should Landlord elect to negotiate or contest the amount of any
Property Taxes in formal or informal proceedings before the taxing governmental
agency. If at any time during the Lease Term the laws concerning the methods of
real property taxation prevailing at the commencement of the Lease Term are
changed so that a tax or excise on rents or any other tax, however described, is
levied or assessed against Tenant as a substitution in whole or in part for any
real property taxes, then, Property Taxes shall include but not be limited to
any such assessment, tax fee, levy, or charge allocable to or measured by the
area of the Premises or the rent payable hereunder, including, without
limitation, any gross income tax with respect to the receipt of such rent, or
upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Building, or
any portion thereof. Property Taxes do not, however, include Landlord's state or
federal income, franchise, estate or inheritance taxes. Any tax reassessment
which results from construction of the Tenant Improvements pursuant to the Work
Letter will be included in the Property Tax component of the Project Expense
Base.
7.5. Intentionally Deleted.
7.6. TAX ON IMPROVEMENTS. Tenant shall, at Landlord's election, be
directly responsible for and shall pay the full amount of any increase in Real
Property Taxes attributable to any and all Tenant Improvements and any other
improvements of any kind whatsoever placed in, on or about the Premises for the
benefit of, at the request of, or by Tenant, to the extent such improvements
cause the value of all improvements in the Premises to exceed (i) the Tenant
Improvement Allowance, if any, specified in EXHIBIT "C" to this Lease, or
(ii) in the case where no Tenant Improvement Allowance is specified, the value
of the improvements existing in the Premises as of the Commencement Date of
this Lease.
7.7. UTILITIES AND SERVICES. Provided that no Event of Default has
occurred and is continuing, Landlord agrees to furnish to the Premises during
reasonable hours of generally recognized business days, subject to the
conditions and in accordance with the standards set forth in the Rules and
Regulations, as may be amended in writing by Landlord from time to time during
the Term of this Lease and delivered to Tenant, reasonable quantities of
electric current for normal lighting and fractional horsepower office machines,
water for lavatory and drinking
May 2, 2000
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<PAGE> 15
purposes, heat and air conditioning required in Landlord's judgment for the
comfortable use and occupation of the Premises, janitorial service, and to the
extent provided in the Building only, elevator service by non-attended automatic
elevators. The cost of all such utilities and services shall be included within
the definition of Project Expenses, and shall be paid by Tenant in the manner
set forth in Section 7.1. Landlord shall not be liable for, and Tenant shall not
be entitled to any abatement or reduction of Rent by reason of Landlord's
failure to furnish any of the foregoing when such failure is caused by accident,
breakage, repairs, Unavoidable Delay or for any other causes. If Tenant requires
or utilizes more water or electrical power than is considered reasonable or
normal by Landlord, Landlord may at its option require Tenant to pay, as
Additional Rent, the cost, as reasonably determined by Landlord, incurred by
such extraordinary usage. In addition, Landlord may install separate meter(s)
for the Premises, at Tenant's sole expense, and Tenant thereafter shall pay all
charges of the metered service. Tenant shall cooperate with any present or
future government conservation requirements and with any conservation practices
established by Landlord. If there is any failure, stoppage or interruption of
any services provided hereunder, Landlord shall use reasonable diligence to
resume services promptly. Landlord shall at all times have free access to all
mechanical installations of the Building and Premises, including but not limited
to air conditioning equipment and vents, fans, ventilating and machine rooms and
electrical closets.
7.8. SECURITY MEASURES. Tenant hereby acknowledges that Landlord shall
have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Project. Tenant assumes all
responsibility for the protection of Tenant, Tenant's Agents and the property of
Tenant and of Tenant's Agents from acts of third parties. Nothing herein
contained shall prevent Landlord, at Landlord's sole option, from providing
security protection for the Project or any part thereof, in which event the cost
thereof shall be included within the definition of Operating Expenses and paid
by Tenant in the manner set forth in Section 7.1.
ARTICLE VIII
ALTERATIONS
8.1. PERMITTED ALTERATIONS. After the Commencement Date, Tenant shall
not make or permit any Alterations in, on or about the Premises without the
prior written consent of Landlord. Notwithstanding the foregoing, in no event
shall any Alterations (i) affect the exterior of the Building or the outside
areas (or be visible from adjoining sites), (ii) affect or penetrate any of the
structural portions of the Building, including, but not limited to, the roof,
(iii) require any change to the basic floor plan of the Premises, any change to
the structural or mechanical components of the Premises, or any governmental
approval or permit as a prerequisite to the construction thereof, (iv) interfere
in any manner with the proper functioning of or Landlord's access to any
mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building, or (v) diminish the value of the Premises.
All Alterations shall be constructed pursuant to plans and specifications
previously provided to and, when applicable, approved in writing by Landlord,
shall be installed by a licensed contractor at Tenant's sole expense in
compliance with all Applicable Laws, and shall be accomplished in a good and
workmanlike manner conforming in quality and design with the Premises existing
as of the Commencement Date. No Hazardous Materials, including, but not limited
to, asbestos or asbestos-containing materials, shall be used by Tenant or
Tenant's Agents in the construction of any Alterations permitted hereunder. All
Alterations made by Tenant shall be and become the property of Landlord upon the
installation thereof and shall not be deemed Tenant's Personal Property;
provided, however, that Landlord may, at its option, require that Tenant, upon
the termination of this Lease, at Tenant's expense, remove any or all
non-structural Alterations installed by or on behalf of Tenant (including
without limitation, telephone, data transmission, fiber-optic and other
telecommunications cabling and related facilities) and return the Premises to
its condition as of the Commencement Date of this Lease, normal wear and tear
excepted. Notwithstanding any other provisions of this Lease, Tenant shall be
solely responsible for the maintenance, repair and replacement of any and all
Alterations made by Tenant to the Premises (except to the extent part of
Landlord's normal maintenance obligations with respect to the Premises). [SEE
RIDER]
8.2. TRADE FIXTURES. Tenant shall, at its own expense, provide, install
and maintain in good condition all of Tenant's Personal Property required in the
conduct of its business in the Premises.
8.3. MECHANICS' LIENS. Tenant shall give Landlord Notice of Tenant's
intention to perform any work on the Premises which might result in any claim of
lien at least twenty (20) days prior to the commencement of such work to enable
Landlord to post and record a notice of non-responsibility or other notice
Landlord deems proper prior to the commencement of any such work. Tenant shall
not permit any mechanic's, materialmen's or other liens to be filed against the
property of which the Premises are a part or against Tenant's leasehold interest
in the Premises. If Tenant fails to cause the release of record of any lien(s)
filed against the Premises or its leasehold estate therein by payment or posting
of a proper bond within ten (10) days from the date of the lien filing(s), then
Landlord may, at Tenant's expense, cause such lien(s) to be released by any
means Landlord deems proper, including, but not limited to, payment of or
defense against the claim giving rise to the lien(s). All sums reasonably
disbursed, deposited or incurred by Landlord in connection with the release of
the lien(s), including, but not limited to, all costs, expenses and actual
attorneys' fees, shall be due and payable by Tenant to Landlord, as an item of
Additional Rent, on demand by Landlord, together with interest thereon at the
Applicable Rate from the date of such demand until paid by Tenant.
8.4. ALTERATIONS BY LANDLORD. Landlord reserves the right at any time
and from time to time without the same constituting an actual or constructive
eviction and without incurring any liability to Tenant therefor or otherwise
affecting Tenant's obligations under this Lease, to make such changes,
alterations, additions, improvements, repairs or replacements in or to the
Building (including the Premises if required to do so by any Applicable Laws)
and the fixtures and equipment thereof, as well as in or to the street
entrances, walls, passages, and stairways thereof, or to change the name by
which the Building is commonly known, as Landlord may deem necessary or
desirable. Nothing contained herein shall be deemed to relieve Tenant of any
duty, obligation or liability of Tenant with respect to making any repair,
replacement or improvement or complying with any
May 2, 2000
Page 11 of 26
<PAGE> 16
Applicable Laws in connection with the Premises, and nothing contained herein
shall be deemed or construed to impose upon Landlord any obligation,
responsibility or liability whatsoever for the care, supervision or repair of
the Building or any part thereof other than as otherwise especially provided in
this Lease.
ARTICLE IX
MAINTENANCE AND REPAIR
9.1. LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS. Landlord shall,
subject to receiving Tenant's Share of Operating Expenses in excess of the
Project Expense Base, and subject to Section 9.2, Article XII and Article XIII,
maintain in good condition and repair the roof (including any skylights, and
including as needed any replacement thereof), exterior walls, exterior entrances
and foundation of the Building, provide normal maintenance services for the HVAC
serving the Building through maintenance contracts or otherwise, and paint the
exterior of the Building and clean the exterior windows of the Building as and
when such painting or window cleaning, as the case may be, becomes necessary in
Landlord's sole discretion. Landlord shall also provide maintenance and repair
services to the automatic and manual fire extinguisher equipment, such as
sprinkler systems and alarms, electrical, plumbing, manual fire extinguishers
and mechanical systems serving the Premises and the interior portions of the
Common Area. Landlord shall not be required to make any unscheduled or
unanticipated repairs to the roof, exterior walls, exterior entrances,
foundation or any systems within the Premises unless and until Tenant has
notified Landlord in writing of the need for such repair and Landlord shall have
a reasonable period of time thereafter to commence and complete said repair, if
warranted. The cost of any maintenance and repairs on the part of Landlord
provided for in this Section 9.1 shall be considered part of Operating Expenses,
except that repairs which Landlord deems arise out of any act or omission of
Tenant or Tenant's Agents shall be made at the expense of Tenant. Landlord's
obligation to so repair and maintain the Premises shall be limited to the cost
of effecting such repair and maintenance and in no event shall Landlord be
liable for any costs or expenses in excess of said amounts, including, but not
limited to, any consequential damages, opportunity costs or lost profits
incurred or suffered by Tenant.
9.2. TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS. Tenant shall at all
times during the Term of this Lease, at Tenant's sole cost and expense, clean,
keep, maintain, repair and make necessary improvements to, the Premises and
every portion thereof and all improvements therein or thereto, in good and
sanitary order and condition to the reasonable satisfaction of Landlord and in
compliance with all Applicable Laws, usual wear and tear excepted. Any damage or
deterioration of the Premises shall not be deemed usual wear and tear if the
same could have been prevented by good maintenance practices by Tenant. Tenant's
repair and maintenance obligations herein shall include, but are not limited to,
all necessary maintenance and repairs to all portions of the Premises, and all
interior glass, windows, window casements, show window moldings, partitions,
doors, doorjambs, door closures, hardware, fixtures, electrical lighting and
outlets, lighting switches, plumbing fixtures, sewage facilities, interior
walls, floors, ceilings, fans and exhaust equipment. Landlord may impose
reasonable restrictions and requirements with respect to repairs by Tenant,
which repairs shall be at least equal in quality to the original work, and the
provisions of Section 8.3 shall apply to all such repairs. Tenant's obligation
to repair includes the obligation to replace, as necessary, regardless of
whether the benefit of such replacement extends beyond the Term. Notwithstanding
the foregoing, Landlord shall have the right, upon notice to Tenant, to
undertake the responsibility for maintenance and repair obligations of Tenant
hereunder which Landlord deems appropriate to undertake that affect the Building
as a whole, in which event the cost thereof shall be included as part of
Operating Expenses and paid by Tenant in the manner set forth in Section 7.1.
Tenant shall not permit or authorize any person to go onto the roof of the
Building without the prior written consent of Landlord.
9.3. WAIVER. Tenant hereby waives all rights provided for by the
provisions of Sections 1941 and 1942 of the California Civil Code and any
present or future laws regarding Tenant's right to make repairs at the expense
of Landlord or to terminate this Lease because of the condition of the Premises.
9.4. SELF-HELP. If Tenant refuses or fails to repair and maintain the
Premises as required hereunder within ten (10) days from the date on which
Landlord makes a written demand on Tenant to effect such repair and maintenance,
Landlord may enter upon the Premises and make such repairs or perform such
maintenance without liability to Tenant for any loss or damage that may accrue
to Tenant or its merchandise, fixtures or other property or to Tenant's business
by reason thereof. All sums reasonably disbursed, deposited or incurred by
Landlord in connection with such repairs or maintenance, plus five percent (5%)
for overhead, shall be due and payable by Tenant to Landlord, as an item of
Additional Rent, on demand by Landlord, together with interest at the Applicable
Rate on such aggregate amount from the date of such demand until paid by Tenant.
ARTICLE X
COMMON AREA AND PARKING
10.1. GRANT OF NONEXCLUSIVE COMMON AREA LICENSE AND RIGHT. Landlord
hereby grants to Tenant and its permitted subtenants, in common with Landlord
and all persons, firms and corporations conducting business in the Project and
their respective customers, guests, licensees, invitees, subtenants, employees
and agents, a nonexclusive license and right to use the interior and exterior
portions of the Common Area within the Project for pedestrian and vehicular
ingress, egress and travel, parking and for such other purposes and for doing
such other things as may be provided for, authorized and/or permitted by the
Restrictions, such nonexclusive license and right to be appurtenant to Tenant's
leasehold estate created by this Lease. The nonexclusive license and rights
granted pursuant to the provisions of this Article X shall be subject to the
provisions of the Restrictions, which pertain in any way to the Common Area
covered by such Restrictions, and the provisions of this Lease.
10.2. USE OF COMMON AREA. Notwithstanding anything to the contrary
herein, Tenant and its successors, assigns, employees, agents and invitees shall
use the Common Area only for the purposes permitted hereby and by the
Restrictions and the Rules and Regulations. All uses permitted within the Common
Area shall be
May 2, 2000
Page 12 of 26
<PAGE> 17
undertaken with reason and judgment so as not to interfere with the primary uses
of the Common Area. In no event shall Tenant obstruct the interior portions of
the Common Area or erect, install, or place, or cause to be erected, installed,
or placed any structure, building, trailer, fence, wall, signs or other
obstructions on the exterior portions of the Common Area. Tenant shall not store
or sell any merchandise, equipment or materials within the interior or exterior
portions of the Common Area.
10.3. CONTROL OF COMMON AREA. Subject to provisions of the
Restrictions, all Common Area and all improvements located from time to time
within the Common Area shall at all times be subject to the exclusive control
and management of the Landlord. Landlord shall have the right to construct,
maintain and operate lighting facilities within the exterior portions of the
Project; to police the interior and exterior portions of the Common Area from
time to time; to change the area, location and arrangement of the parking areas
and other improvements within the Common Area; to restrict parking by tenants,
their officers, agents and employees to employee parking areas; to close all or
any portion of the exterior portions of the Common Area or improvements therein
to such extent as may, in the opinion of counsel for Landlord, be legally
sufficient to prevent a dedication thereof or the accrual of any rights to any
person or to the public therein; to close temporarily all or any portion of the
Common Area and/or the improvements thereon; to discourage unauthorized parking;
and to do and perform such other acts in and to said Common Area and
improvements thereon as, in the use of good business judgment, Landlord shall
determine to be advisable.
10.4. MAINTENANCE OF COMMON AREA. Subject to the provisions of the
Restrictions, Landlord shall operate and maintain (or cause to be operated and
maintained) the Common Area in good condition, in such manner as Landlord in its
sole discretion shall determine from time to time. Without limiting the scope of
such discretion, Landlord shall have the full right and authority to employ or
cause to be employed all personnel and to make or cause to be made all rules and
regulations pertaining to or necessary for the proper operation and maintenance
of the Common Area and the improvements located thereon. The cost of such
maintenance of the Common Area shall be included as part of Operating Expenses.
No part of the Common Area may be used for the storage of any items, including
without limitation, vehicles, materials, inventory and equipment. All trash and
other refuse shall be placed in designated receptacles. No work of any kind,
including, but not limited to, painting, drying, cleaning, repairing,
manufacturing, assembling, cutting, merchandising or displaying shall be
permitted within any portion of the Common Area.
10.5. REVOCATION OF LICENSE. All Common Area and improvements located
thereon which Tenant is permitted to use and occupy pursuant to the provisions
of this Lease are to be used and occupied under a revocable license and right,
and if any such license be revoked, or if the amount of such areas be
diminished, Landlord shall not be subject to any liability nor shall Tenant be
entitled to compensation or diminution or abatement of Rent, and such revocation
or diminution of such areas shall not be deemed constructive or actual eviction.
It is understood and agreed that the condemnation or other taking or
appropriation by any public or quasi-public authority, or sale in lieu of
condemnation, of all or any portion of the Common Area shall not constitute a
violation of Landlord's agreements hereunder, and Tenant shall not be entitled
to participate in or make any claim for any award or other condemnation proceeds
arising from any such taking or appropriation of the Common Area.
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, Landlord shall provide to Tenant the number of vehicle parking
spaces allocated to Tenant under this Lease (subject to the rights of Landlord
under this Article X).
10.6. LANDLORD'S RESERVED RIGHTS. Landlord reserves the right to
install, use, maintain, repair, relocate and replace pipes, ducts, conduits,
wires and appurtenant meters and equipment included in the Premises or outside
the Premises, change the boundary lines of the Project and install, use,
maintain, repair, alter or relocate, expand and replace any Common Area;
provided, however, Landlord shall not unreasonably interfere with Tenant's use
of the Premises. Such rights of Landlord shall include, but are not limited to,
designating from time to time certain portions of the Common Area as exclusively
for the benefit of certain tenants in the Project.
10.7. PARKING. Tenant shall be entitled to use, on a non-exclusive
basis, forty three (43) parking spaces consistent with the permitted uses of the
Premises, which spaces shall be unreserved and unassigned, within those portions
of the exterior Common Area designated by Landlord for parking. Tenant shall not
overly-burden the parking area. All parking of vehicles shall be in strict
accordance with the Rules and Regulations attached hereto AS EXHIBIT "E" and
incorporated herein by reference, and any modifications or supplements thereto.
Landlord reserves the right to institute a paid parking program for building
guests and invitees, and a reserved parking system for Tenants of the Project;
in no event, however, shall Tenant or Tenant's regular employees employed at the
Premises be charged for unreserved parking.
10.8. SATELLITE DISH. If Landlord permits Tenant to install a satellite
dish within the Project (which Landlord has the right to condition upon the
payment of additional rent, in an amount to be specified by Landlord), such
installation shall be installed in a manner and location acceptable to Landlord
in its sole discretion. Tenant shall indemnify, protect, defend and hold
Landlord and Landlord's Indemnitees harmless from any and all damages,
liabilities, costs and expenses (including without limitation attorneys' fees
and costs of defense), arising from or attributable to any damages to the roof
or other structures or improvements within the Project resulting from any
permitted installation of the antennae and/or related facilities by Tenant or
any impairment of any roof warranties of Landlord. The location and installation
of the satellite dish antennae shall also be subject to all governmental
regulations, to the approval of the appropriate governing agencies, and to the
Restrictions. Tenant shall not be permitted to enter upon the roof or any
restricted area of the Project to maintain, service, repair, replace or remove
any satellite dish equipment without the prior written consent of Landlord. The
failure of any satellite dish to function or operate as desired by Tenant, for
any reason, shall not constitute interference by Landlord of Tenant's enjoyment
of the Premises or constitute a breach of this Lease by Landlord.
May 2, 2000
Page 13 of 26
<PAGE> 18
ARTICLE XI
EXCULPATION, INDEMNIFICATION AND INSURANCE
11.1. INDEMNIFICATION. To the fullest extent permitted by law, Tenant
hereby agrees to defend (with attorneys acceptable to Landlord), indemnify,
protect and hold harmless Landlord and Landlord's Agents and any successors to
all or any portion of Landlord's interest in the Premises and their directors,
officers, partners, employees, authorized agents, representatives, affiliates
and Mortgagees, from and against any and all damage, loss, claim, liability and
expense including, but not limited to, actual attorneys' fees and legal costs,
incurred directly or indirectly by reason of any claim, suit or judgment brought
by or on behalf of (i) any person or persons for damage, loss or expense due to,
but not limited to, bodily injury or property damage sustained by such person or
persons which arise out of, are occasioned by, or are in any way attributable to
the use or occupancy of the Premises or the acts or omissions of the Tenant or
Tenant's Agents in or about the Premises or the Project (including but not
limited to any Event of Default hereunder), or (ii) Tenant or Tenant's Agents
for damage, loss or expense due to, but not limited to, bodily injury or
property damage which arise out of, are occasioned by, or are in any way
attributable to the use of any of the Common Area, except to the extent caused
by the sole active negligence or willful misconduct of Landlord.
11.2. LANDLORD'S PROPERTY INSURANCE. Landlord shall obtain and keep in
force during the Term of this Lease a policy or policies of insurance, with
deductibles at the sole discretion of Landlord, covering loss or damage to the
Premises and the Building, the Tenant Improvements and objects owned by Landlord
and normally covered under a "Boiler and Machinery" policy (as such term is used
in the insurance industry) at least in the amount of the full replacement cost
thereof, and in no event less than the total amount required by Mortgagees,
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, special extended perils ("all risk" or
"special causes of action," as such terms are used in the insurance industry,
including, at Landlord's option, collapse, earthquake and flood) and other
perils as required by the Mortgagees or deemed necessary by Landlord. A
stipulated value or agreed amount endorsement deleting any co-insurance
provision of said policy or policies shall be procured with said insurance. The
cost of such insurance policies shall be included in the definition of Operating
Expenses, and shall be paid by Tenant in the manner set forth in Section 7.1.
Such insurance policies shall provide for payment of loss thereunder to Landlord
or, at Landlord's election, to the Mortgagees. If the Premises are part of a
larger building, or if the Premises are part of a group of buildings owned by
Landlord which are adjacent to the Premises, then Tenant shall pay for any
increase in the property insurance of the Building or such other building or
buildings within the Project if such increase is caused by Tenant's acts,
omissions, use or occupancy of the Premises. Tenant shall obtain and keep in
force during the Term, at its sole cost and expense, (i) an "all risk" or
"special causes of action" property policy in the amount of the full replacement
cost covering Tenant's Personal Property and any Alterations made by or at the
request of Tenant, with Landlord insured as its interest may appear, and (ii) an
"all risk" or "special causes of action" policy of business interruption and/or
loss of income insurance covering a period of two (2) years, plus such
additional period of time, if any, as will permit Tenant to be in a position to
have the same revenues as were in effect the day before a loss giving rise to a
claim under such insurance occurs, with loss payable to Landlord to the extent
of Monthly Rent and Additional Rent only.
11.3. TENANT'S INSURANCE. Tenant shall maintain in full force and
effect at all times during the Term (plus such earlier and later periods as
Tenant may be in occupancy of the Premises), at its sole cost and expense, for
the protection of Tenant, Landlord and Landlord's Agents and Mortgagees,
policies of insurance issued by a carrier or carriers acceptable to Landlord and
the Mortgagees which afford the following coverages: (i) statutory workers'
compensation, (ii) employer's liability with minimum limits of Five Hundred
Thousand Dollars ($500,000.00), (iii) comprehensive/commercial general liability
insurance including, but not limited to, blanket contractual liability
(including the indemnity set forth in Section 11.1), fire and water legal
liability (having a minimum coverage of $50,000.00), broad form property damage,
personal injury, completed operations, products liability, independent
contractors, warehouser's legal liability and, if alcoholic beverages are
served, manufactured, distributed or sold in the Premises, comprehensive liquor
liability, and owned, non-owned and hired vehicles, on an occurrence basis and
not less than $2,000,000.00, combined single limit (or current limit carried,
whichever is greater), naming Landlord, Landlord's Agents and the Mortgagees as
additional insureds, and including a cross-liability or severability of
interests indorsement, (iv) insurance against fire, vandalism, malicious
mischief and fixtures, furnishings, equipment and items of personal property in
the Premises owned or leased by Tenant, in an amount equal to not less than
ninety percent (90%) of their actual replacement cost (and with a replacement
cost endorsement), income/business interruption/extra expense coverage in an
amount of not less than nine (9) months of loss of income from Tenant's business
in the Premises, and (v) such other insurance in such form and amounts as may be
required by Landlord or the Mortgagees from time to time. Landlord or Landlord's
Agents on behalf of Landlord may, at Landlord's election, obtain liability
insurance in such amounts and on such terms as Landlord shall determine, and the
cost thereof shall be included in Operating Expenses and paid by Tenant in the
manner described in Section 7.1. In no event shall the limits of any policy
obtained by Tenant with respect to the Premises or required to be obtained by
Tenant under this Lease be considered as limiting the liability of Tenant under
this Lease.
11.4. DEDUCTIBLES. Any policy of insurance required pursuant to this
Lease containing a deductible exceeding Five Thousand Dollars ($5,000.00) per
occurrence must be approved in writing by Landlord prior to the issuance of such
policy. Tenant shall be solely responsible for the payment of any deductible.
11.5. BLANKET COVERAGE. Any insurance required of Tenant pursuant to
this Lease may be provided by means of a so-called "blanket policy", so long as
(i) the Premises are specifically covered (by rider, endorsement or otherwise),
(ii) the limits of the policy are applicable on a "per location" basis to the
Premises and provide for restoration of the aggregate limits, and (iii) the
policy otherwise complies with the provisions of this Lease.
11.6. INCREASED COVERAGE. Upon demand, Tenant shall provide Landlord,
at Tenant's expense, with such increased amount of existing insurance, and such
other insurance as the Mortgagees may reasonably require.
May 2, 2000
Page 14 of 26
<PAGE> 19
11.7. SUFFICIENCY OF COVERAGE. Neither Landlord nor any of Landlord's
Agents makes any representation that the types of insurance and limits specified
to be carried by Tenant under this Lease are adequate to protect Tenant. If
Tenant believes that any such insurance coverage is insufficient, Tenant shall
provide, at its own expense, such additional insurance as Tenant deems adequate.
Nothing contained herein shall limit Tenant's liability under this Lease, and
Tenant's liability under any provision of this Lease, including without
limitation under any indemnity provisions, shall not be limited to the amount of
any insurance obtained.
11.8. INSURANCE REQUIREMENTS. Tenant's insurance (i) shall be in a form
satisfactory to Landlord and the Mortgagees and shall be carried with companies
that have a general policyholder's rating of not less than "A" and a Financial
Class Size of "VIII" or higher according to the current version of A.M. Best's
Key Rating Guide or as otherwise approved in writing by Landlord, in its sole
discretion, as financially sound on a current basis, (ii) shall provide that
such policies shall not be subject to material alteration or cancellation except
after at least thirty (30) days prior written notice to Landlord, and (iii)
shall be primary, and any insurance carried by Landlord or Landlord's Agents
shall be non-contributing. Tenant's policy or policies, or duly executed
certificates for them in the form and content reasonably satisfactory to
Landlord, shall be deposited with Landlord prior to the Commencement Date, and
thereafter during the Term not later than thirty (30) days prior to
expiration/renewal date of such policies. If Tenant fails to procure and
maintain the insurance required to be procured by Tenant under this Lease, such
failure shall constitute an "Event of Default" by Tenant under Section 15.1 of
the Lease, and Landlord may, but shall not be required to, without waiver of
such default, order such insurance at Tenant's expense. All sums reasonably
disbursed, deposited or incurred by Landlord in connection therewith, including,
but not limited to, all costs, expenses and actual attorneys' fees, shall be due
and payable by Tenant to Landlord, as an item of Additional Rent, on demand by
Landlord, together with interest thereon at the Applicable Rate from the date of
such demand until paid by Tenant.
11.9. INTENTIONALLY DELETED.
11.10. LANDLORD'S DISCLAIMER. Notwithstanding any other provisions of
this Lease, and to the fullest extent permitted by law, Landlord and Landlord's
Agents shall not be liable for any loss or damage to persons or property
resulting from theft, vandalism, fire, explosion, falling materials, glass, tile
or sheet rock, steam, gas, electricity, water or rain which may leak from any
part of the Premises, or from the pipes, appliances or plumbing works therein or
from the roof, street or subsurface or whatsoever, unless caused by or due to
the sole active negligence or willful misconduct of Landlord. Landlord and
Landlord's Agents shall not be liable for interference with light or air, or for
any latent defect in the Premises except as otherwise expressly provided in this
Lease. Tenant shall give prompt Notice to Landlord in case of a casualty,
accident or repair needed to the Premises.
11.11. WAIVER OF SUBROGATION. Landlord and Tenant agree to cause the
insurance companies issuing their respective property (first party) insurance to
waive any subrogation rights that those companies may have against Tenant or
Landlord, respectively, as long as the insurance is not invalidated by the
waiver. If the waivers of subrogation are contained in their respective
insurance policies, Landlord and Tenant waive any right that either may have
against the other on account of any loss or damage to their respective property
to the extent that the loss or damage is insured under their respective
insurance policies.
ARTICLE XII
DAMAGE OR DESTRUCTION
12.1. LANDLORD'S OBLIGATION TO REBUILD. If the Premises are damaged or
destroyed by fire or other casualty (a "Casualty"), Tenant shall promptly give
notice thereof to Landlord, and Landlord shall thereafter repair the Premises as
set forth in Sections 12.4 and 12.5 unless Landlord has the right to terminate
this Lease as provided in Section 12.2 and Landlord elects to terminate or
Tenant has the right to terminate this Lease as provided in Section 12.3 and
Tenant elects to so terminate.
12.2. LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the right to
terminate this Lease following a Casualty if any of the following occurs: (i)
insurance proceeds (together with any additional amounts Tenant elects, at its
option, to contribute) are not available to Landlord to pay one hundred percent
(100%) of the cost to fully repair the Premises, excluding the deductible (for
which Tenant shall pay Tenant's Share of such deductible); (ii) Landlord's Space
Planner determines that the Premises cannot, with reasonable diligence, be fully
repaired by Landlord (or cannot be safely repaired because of the presence of
hazardous factors, including, but not limited to, Hazardous Materials,
earthquake faults, radiation, chemical waste and other similar dangers) within
one hundred eighty (180) days after the date of such Casualty; (iii) the
Premises are destroyed or damaged during the last twelve (12) months of the
Term; or (iv) an Event of Default has occurred and is continuing at the time of
such Casualty. If Landlord elects to terminate this Lease following a Casualty
pursuant to this Section 12.2, Landlord shall give Tenant Notice of its election
to terminate within fifteen (15) days after Landlord has knowledge of such
Casualty, and this Lease shall terminate fifteen (15) days after the date of
such Notice.
12.3. TENANT'S RIGHT TO TERMINATE. Subject to the later terms hereof,
Tenant shall have the right to terminate this Lease following the destruction of
the Premises (or damage to the Premises so extensive as to reasonably prevent
Tenant's substantial use and enjoyment of the Premises) if any of the following
occurs: (i) the Premises cannot, with reasonable diligence, be fully repaired by
Landlord within one hundred eighty (180) days after the date of the damage or
destruction, as determined by Landlord's Space Planner; (ii) the Premises cannot
safely be repaired because of the presence of hazardous factors, including
Hazardous Materials, earthquake faults, radiation, chemical waste and other
similar dangers; or (iii) the damage or destruction occurs during the last
twelve (12) months of the Term and cannot, with reasonable diligence, be fully
repaired by Landlord within ninety (90) days after the date of the destruction
or damage, as determined by Landlord's Space Planner. Notwithstanding the
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<PAGE> 20
foregoing, Tenant shall not have the right to terminate under this Section 12.3
if (a) an Event of Default has occurred and is continuing at the time of such
damage or destruction or at the time of exercising the right to terminate, or
(b) the damage or destruction was caused, in whole or in part, by the act or
omission of Tenant or Tenant's Agents. If Tenant elects to terminate this Lease
pursuant to this Section 12.3, Tenant shall give Landlord Notice of its election
to terminate within ten (10) days after the date of such damage or destruction,
and this Lease shall terminate thirty (30) days after the date of such Notice.
12.4. EFFECT OF TERMINATION. If this Lease is terminated following a
Casualty pursuant to Section 12.2 or Section 12.3, Landlord shall, subject to
the rights of the Mortgagees, be entitled to receive and retain all the
insurance proceeds resulting from or attributable to such Casualty, except for
those proceeds payable under policies obtained by Tenant which specifically
insure Tenant's Personal Property. If neither party exercises any such right to
terminate this Lease, this Lease will continue in full force and effect, and
Landlord shall, promptly following the tenth (10th) day after the date of such
Casualty and receipt of the amounts set forth in clause (i) of Section 12.2,
commence the process of obtaining necessary permits and approvals for the repair
of the Premises, and shall commence such repair and prosecute the same
diligently to completion as soon thereafter as is practicable. Tenant shall
fully cooperate with Landlord in removing Tenant's Personal Property and any
debris from the Premises to facilitate the making of such repairs.
12.5. LIMITED OBLIGATION TO REPAIR. Landlord's obligation, should it
elect or be obligated to repair the Premises following a Casualty, shall be
limited to the basic Building and Tenant Improvements and Tenant shall, at its
expense, replace or fully repair all Tenant's Personal Property and any
Alterations installed by Tenant existing at the time of such Casualty. If the
Premises are to be repaired in accordance with the foregoing, Tenant shall make
available to Landlord any portion of insurance proceeds it receives which are
allocable to the Tenant Improvements.
12.6. ABATEMENT OF MONTHLY RENT. During any period when there is
substantial interference with Tenant's use of the Premises by reason of a
Casualty, Monthly Rent shall be temporarily abated in proportion to the degree
of such substantial interference, but only to the extent of any business
interruption or loss of income insurance proceeds received by Landlord from
Tenant's insurance described in Section 11.5.4.2. Such abatement shall commence
upon the date Tenant notifies Landlord of such Casualty and shall end upon the
Substantial Completion of the repair of the Premises which Landlord undertakes
or is obligated to undertake hereunder. Tenant shall not be entitled to any
compensation or damages from Landlord for loss of the use of the Premises,
Tenant's Personal Property or other damage or any inconvenience occasioned by a
Casualty or by the repair or restoration of the Premises thereafter, including,
but not limited to, any consequential damages, opportunity costs or lost profits
incurred or suffered by Tenant. Tenant hereby waives the provisions of Section
1932(2) and Section 1933(4) of the California Civil Code, and the provisions of
any similar or successor statutes.
12.7. LANDLORD'S DETERMINATION. The determination in good faith by
Landlord's Space Planner of or relating to the estimated cost of repair of any
damage, replacement cost, the time period required for repair or the
interference with or suitability of the Premises for Tenant's use or occupancy
shall be conclusive for purposes of this Article XII and Article XIII.
ARTICLE XIII
CONDEMNATION
13.1. TOTAL TAKING - TERMINATION. If title to the Premises or so much
thereof is taken for any public or quasi-public use under any statute or by
right of eminent domain so that reconstruction of the Premises will not result
in the Premises being reasonably suitable for Tenant's continued occupancy for
the uses and purposes permitted by this Lease, this Lease shall terminate as of
the date possession of the Premises or part thereof is so taken.
13.2. PARTIAL TAKING. If any part of the Premises is taken for any
public or quasi-public use under any statute or by right of eminent domain and
the remaining part is reasonably suitable for Tenant's continued occupancy for
the uses permitted by this Lease, this Lease shall, as to the part so taken,
terminate as of the date that possession of such part of the Premises is taken
and the Monthly Rent shall be reduced in the same proportion that the floor area
of the portion of the Premises so taken (less any addition thereto by reason of
any reconstruction) bears to the original floor area of the Premises, as
reasonably determined by Landlord or Landlord's Space Planner. Landlord shall,
at its own cost and expense, make all necessary repairs or alterations to the
Premises so as to make the portion of the Premises not taken a complete
architectural unit. Such work shall not, however, exceed the scope of the work
done by Landlord in originally constructing the Premises. If severance damages
from the condemning authority are not available to Landlord in sufficient
amounts to permit such restoration, Landlord may terminate this Lease upon
Notice to Tenant. Monthly Rent due and payable hereunder shall be temporarily
abated during such restoration period in proportion to the degree to which there
is substantial interference with Tenant's use of the Premises, as reasonably
determined by Landlord or Landlord's Space Planner. Each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure and any
present or future law allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking of the Building or
Premises.
13.3. NO APPORTIONMENT OF AWARD. No award for any partial or total
taking shall be apportioned, it being agreed and understood that Landlord shall
be entitled to the entire award for any partial or entire taking. Tenant assigns
to Landlord its interest in any award which may be made in such taking or
condemnation, together with any and all rights of Tenant arising in or to the
same or any part thereof. Nothing contained herein shall be deemed to give
Landlord any interest in or require Tenant to assign to Landlord any separate
award made to Tenant for the taking of Tenant's Personal Property, for the
interruption of Tenant's business or its moving costs, or for the loss of its
goodwill.
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Page 16 of 26
<PAGE> 21
13.4. TEMPORARY TAKING. No temporary taking of the Premises (which for
purposes hereof shall mean a taking of all or any part of the Premises for one
hundred eighty (180) days or less) shall terminate this Lease or give Tenant any
right to any abatement of Rent. Any award made to Tenant by reason of such
temporary taking shall belong entirely to Tenant and Landlord shall not be
entitled to share therein. Each party agrees to execute and deliver to the other
all instruments that may be required to effectuate the provisions of this
Section 13.4.
13.5. SALE UNDER THREAT OF CONDEMNATION. A sale made in good faith to
any authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed a
taking under the power of eminent domain for all purposes of this Article XIII.
ARTICLE XIV
ASSIGNMENT AND SUBLETTING
14.1. PROHIBITION. Tenant shall not directly or indirectly, voluntarily
or by operation of law, assign (which term shall include any transfer,
assignment, pledge, mortgage or hypothecation) this Lease, or any right or
interest hereunder, or sublet the Premises or any part thereof, or allow any
other person or entity to occupy or use all or any part of the Premises without
first obtaining the written consent of Landlord in each instance, which consent
shall not be unreasonably withheld, conditioned or delayed. No assignment,
encumbrance, subletting or other transfer in violation of the terms of this
Article XIV, whether voluntary or involuntary, by operation of law, under legal
process or proceedings, by receivership, in bankruptcy, or otherwise shall be
valid or effective and, at the option of Landlord, shall constitute an Event of
Default under this Lease. To the extent not prohibited by provisions of the
Bankruptcy Code of 1978, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"),
Tenant on behalf of itself, creditors, administrators and assigns waives the
applicability of Sections 541(c) and 365(e) of the Bankruptcy Code unless the
proposed assignee of the trustee for the estate of the bankrupt meets Landlord's
standards for consent as set forth below. Landlord has entered into this Lease
with Tenant in order to obtain for the benefit of the Project the unique
attraction of Tenant's name and business; the foregoing prohibition on
assignment or subletting is expressly agreed to by Tenant in consideration of
such fact. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, any and all monies or other considerations
payable or otherwise to be delivered in connection with such assignment shall be
paid or delivered to Landlord, shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or the estate of Tenant
within the meaning of the Bankruptcy Code. Any and all monies or other
considerations constituting Landlord's property under the preceding sentence not
paid or delivered to Landlord shall be held in trust for the benefit of Landlord
and be promptly paid or delivered to Landlord. Any person or entity to which
this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall
be deemed without further act or deed to have assumed all of the obligations
arising under this Lease on and after the date of such assignment. Any such
assignee shall upon demand execute and deliver to Landlord an instrument
confirming such assumption.
14.2. LANDLORD'S CONSENT. In the event Landlord consents to any
assignment or subletting, such consent shall not constitute a waiver of any of
the restrictions of this Article XIV and the same shall apply to each successive
assignment or subletting hereunder, if any. In no event shall Landlord's consent
to an assignment or subletting affect the continuing primary liability of Tenant
(which, following assignment, shall be joint and several with the assignee), or
relieve Tenant of any of its obligations hereunder without an express written
release being given by Landlord. In the event that Landlord shall consent to an
assignment or subletting under this Article XIV, such assignment or subletting
shall not be effective until the assignee or sublessee shall assume all of the
obligations of this Lease on the part of Tenant to be performed or observed and
whereby the assignee or sublessee shall agree that the provisions contained in
this Lease shall, notwithstanding such assignment or subletting, continue to be
binding upon it with respect to all future assignments and sublettings. Such
assignment or sublease agreement shall be duly executed and a fully executed
copy thereof shall be delivered to Landlord, and Landlord may collect Monthly
Rent and Additional Rent due hereunder directly from the assignee or sublessee.
Collection of Monthly Rent and Additional Rent directly from an assignee or
sublessee shall not constitute a consent or a waiver of the necessity of consent
to such assignment or subletting, nor shall such collection constitute a
recognition of such assignee or sublessee as the Tenant hereunder or a release
of Tenant from the performance of all of its obligations hereunder. Any sign
rights granted to Tenant under this Lease shall not be assignable to or usable
by any assignee or sublessee of Tenant without the prior written consent of
Landlord, in its sole and absolute discretion.
14.3. INFORMATION. Regardless of whether Landlord's consent is required
under this Article XIV, Tenant shall notify Landlord in writing of Tenant's
intent to assign this Lease or any right or interest hereunder, or to sublease
the Premises or any part thereof, and of the name of the proposed assignee or
sublessee, the nature of the proposed assignee's or sublessee's business to be
conducted on the Premises, the terms and provisions of the proposed assignment
or sublease, a copy of the proposed assignment or sublease form, and such other
information as Landlord may reasonably request concerning the proposed assignee
or sublessee, including, but not limited to, a description of the business of
the proposed assignee or sub-tenant, the net worth, income statements and other
financial statements of the proposed assignee or sub-tenant (including
individual principals, if requested by Landlord) for a two-year period preceding
Tenant's request for consent, evidence of insurance complying with the
requirements of Article XI, and the fee described in Section 14.7. Landlord may
require that the sublessee complete and submit an application to Landlord
providing the foregoing information and such additional information as Landlord
may require.
14.4. STANDARD FOR CONSENT. Landlord shall, within fifteen (15) days of
receipt of such Notice and all information requested by Landlord concerning the
proposed assignee or sublessee, elect to take one of the following actions:
(a) consent to such proposed assignment or sublease;
May 2, 2000
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<PAGE> 22
(b) refuse to consent to such proposed assignment or sublease,
which refusal shall be on reasonable grounds; or
(c) if Tenant proposes to sublease all or part of the Premises
for the entire remaining Term, Landlord may, at its option exercised by
fifteen (15) days Notice to Tenant, elect to recapture such portion of
the Premises as Tenant proposes to sublease and as of the fifteenth
(15th) day after Landlord so notifies Tenant of its election to
recapture, this Lease shall terminate as to the portion of the Premises
recaptured and the Monthly Rent payable under this Lease shall be
reduced in the same proportion that the floor area of that portion of
the Premises so recaptured bears to the floor area of the Premises
prior to such recapture.
Tenant agrees, by way of example and without limitation, that
it shall not be unreasonable for Landlord to withhold its consent to a
proposed assignment or subletting if any of the following situations
exist or may exist:
(i) Landlord determines that the proposed assignee's
or sublessee's use of the Premises conflicts with Article V or
Article VI, presents an unacceptable risk, as determined by
Landlord, under Article VI, will overburden the services and
common area facilities of the Project, or conflicts with any
other provision under this Lease;
(ii) Landlord determines that the proposed assignee
or sublessee is not as financially responsible as Tenant as of
the date of Tenant's request for consent or as of the
effective date of such assignment or subletting;
(iii) Landlord determines that the proposed assignee
or sublessee lacks sufficient experience to conduct on the
Premises a business of a type and quality equal to that
conducted by Tenant;
(iv) Landlord determines that the proposed assignment
or subletting would breach a covenant, condition or
restriction in some other lease, financing agreement or other
agreement relating to the Project, the Building, the Premises
or this Lease; or
(v) An Event of Default has occurred and is
continuing at the time of Tenant's request for Landlord's
consent, or as of the effective date of such assignment or
subletting.
Tenant acknowledges that if Tenant has any exterior sign
rights under this Lease, such rights are personal to Tenant and may not
be assigned or transferred to any assignee of this Lease or sublessee
of the Premises without Landlord's prior written consent, which consent
may be withheld in Landlord's sole and absolute discretion.
14.5. BONUS VALUE. Tenant agrees that fifty percent (50%) of any
amounts paid by the assignee or sublessee, however described, in excess of (i)
the Monthly Rent payable by Tenant hereunder (or, in the case of sublease of a
portion of the Premises, in excess of the Monthly Rent reasonably allocable to
such portion), plus (ii) Tenant's direct out-of-pocket costs which Tenant
certifies to Landlord have been paid to provide occupancy related services to
such assignee or sublessee of a nature commonly provided by landlords of similar
space, shall be the property of Landlord and such amounts shall be payable
directly to Landlord by the assignee or sublessee. At Landlord's request, a
written agreement shall be entered into by and among Tenant, Landlord and the
proposed assignee or sublessee confirming the requirements of this Section 14.5.
14.6. CERTAIN TRANSFERS. The sale of all or substantially all of
Tenant's assets (other than bulk sales in the ordinary course of business), or,
if Tenant is a corporation, an unincorporated association, a limited liability
company, or a partnership, the transfer, assignment or hypothecation of any
stock or interest in such corporation, association, limited liability company,
or partnership in the aggregate in excess of twenty-five percent (25%) (except
for publicly traded shares of stock constituting a transfer of twenty-five
percent (25%) or more in the aggregate, so long as no change in the controlling
interests of Tenant occurs as a result thereof) shall be deemed an assignment
within the meaning and provisions of this Article XIV.
14.7. LANDLORD'S FEE AND EXPENSES. If Tenant requests Landlord's
consent to an assignment or subletting by Tenant under this Lease, Tenant shall
pay to Landlord a fee of Five Hundred Dollars ($500.00) and all of Landlord's
out-of-pocket expenses reasonably incurred, including, but not limited to,
attorneys' fees reasonably incurred related to such assignment or subletting by
Tenant, whether or not the assignment or subletting is approved.
14.8. TRANSFER OF THE PREMISES BY LANDLORD. Upon any conveyance of the
Premises and assignment by Landlord of this Lease, Landlord shall and is hereby
entirely released from all liability under any and all of its covenants and
obligations contained in or derived from this Lease occurring after the date of
such conveyance and assignment, and Tenant agrees to attorn to any entity
purchasing or otherwise acquiring the Premises.
ARTICLE XV
DEFAULTS AND REMEDIES
15.1. TENANT'S DEFAULT. At the option of Landlord, a default under this
Lease by Tenant shall exist if any of the following events shall occur (each is
called an "Event of Default"):
<PAGE> 23
(a) Tenant fails to pay the Rent payable hereunder, as and
when due, for a period of three (3) days after Notice by Landlord;
provided, however, the Notice given hereunder shall be in lieu of, and
not in addition to, any notice required under Section 1161, et seq.,
of the California Code of Civil Procedure;
(b) Tenant attempts to make or suffers to be made any
transfer, assignment or subletting, except as provided in Article XIV
hereof;
(c) Any of Tenant's rights under this Lease are sold or
otherwise transferred by or under court order or legal process or
otherwise or if any of the actions described in Section 15.2 are taken
by or against Tenant or any Guarantor;
(d) The Premises are used for any purpose other than as
permitted pursuant to Article V;
(e) Tenant vacates or abandons the Premises or fails to
continuously and uninterruptedly conduct its business in the Premises;
(f) Any representation or warranty given by Tenant under or in
connection with this Lease proves to be materially false or misleading;
(g) Tenant fails to timely comply with the provisions of
Article VI ("Hazardous Materials"), Article XIV ("Assignment and
Subletting"), Article XVI ("Subordination; Estoppel Certificate;
Financials"), Section 21.5 ("Modifications for Mortgagees") or Section
21.19 ("Authority");
(h) Tenant fails to observe, keep, perform or cure within
fifteen (15) days after Notice by Landlord any of the other terms,
covenants, agreements or conditions contained in this Lease or those
set forth in any other agreements or rules or regulations which Tenant
is obligated to observe or perform. In the event such default
reasonably could not be cured or corrected within such fifteen-day
period, but is reasonably susceptible to cure or correction, then
Tenant shall not be in default hereunder if Tenant commences the cure
or correction of such default within such fifteen-day period and
diligently prosecutes the same to completion after commencing such cure
or correction. The Notice required by this Section 15.1(h) shall be in
lieu of, and not in addition to, any notice required under Section
1161, et seq., of the California Code of Civil Procedure; or
(i) Tenant fails to provide to Landlord initial evidence of
all insurance required of Tenant under this Lease, and the renewal
thereof from time to time as required in this Lease.
Notices given under this Section 15.1 shall specify the
alleged default and shall demand that Tenant perform the provisions of
this Lease or pay the Rent that is in arrears, as the case may be,
within the applicable period of time, or quit the Premises. No such
Notice shall be deemed a forfeiture or a termination of this Lease
unless Landlord so elects in the Notice.
15.2. BANKRUPTCY OR INSOLVENCY. In no event shall this Lease be
assigned or assignable by operation of law and in no event shall this Lease be
an asset of Tenant in any receivership, bankruptcy, insolvency or reorganization
proceeding. In the event:
(a) A court makes or enters any decree or order adjudging
Tenant to be insolvent, or approving as properly filed by or against
Tenant a petition seeking reorganization or other arrangement of Tenant
under any provisions of the Bankruptcy Code or any applicable state
law, or directing the winding up or liquidation of Tenant and such
decree or order shall have continued for a period of thirty (30) days;
(b) Tenant makes or suffers any transfer which constitutes a
fraudulent or otherwise avoidable transfer under any provisions of the
Bankruptcy Code or any applicable state law;
(c) Tenant assigns its assets for the benefit of its
creditors; or
(d) The material part of the property of Tenant or any
property essential to Tenant's business or of Tenant's interest in this
Lease is sequestered, attached or executed upon, and Tenant fails to
secure a return or release of such property within ten (10) days
thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier;
then this Lease shall, at Landlord's election, immediately terminate and be of
no further force or effect whatsoever, without the necessity for any further
action by Landlord, except that Tenant shall not be relieved of obligations
which have accrued prior to the date of such termination. Upon such termination,
the provisions herein relating to the expiration or earlier termination of this
Lease shall control and Tenant shall immediately surrender the Premises in the
condition required by the provisions of this Lease. Additionally, Landlord shall
be entitled to all relief, including recovery of damages from Tenant which may
from time to time be permitted, or recoverable, under the Bankruptcy Code or any
other applicable state laws.
15.3. LANDLORD'S REMEDIES. Upon the occurrence of an Event of Default,
then, in addition to and without waiving any other rights and remedies available
to Landlord at law or in equity or otherwise provided in this Lease, Landlord
may, at its option, cumulatively or in the alternative, exercise the following
remedies:
(a) Landlord may terminate Tenant's right to possession of the
Premises, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. No
May 2, 2000
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<PAGE> 24
act by Landlord other than giving Notice to Tenant of Landlord's
election to terminate Tenant's right to possession shall terminate this
Lease. Acts of maintenance, efforts to re-let the Premises, or the
appointment of a receiver on Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession. Termination shall terminate Tenant's
right to possession of the Premises but shall not relieve Tenant of any
obligation under this Lease which has accrued prior to the date of such
termination. Upon such termination, Landlord shall have the right to
re-enter the Premises, and remove all persons and property, and
Landlord shall also be entitled to recover from Tenant:
(i) The worth at the time of award of the unpaid
Monthly Rent and Additional 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 Monthly Rent and Additional Rent which would
have been earned after termination until the time of award
exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided;
(iii) The worth at the time of award of the amount by
which the unpaid Monthly Rent and Additional Rent for the
balance of the Term after the time of award exceeds the amount
of such rental loss that Tenant proves could be reasonably
avoided;
(iv) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result
from Tenant's default, including, but not limited to, the cost
of recovering possession of the Premises, commissions and
other expenses of re-letting, including necessary repair,
demolition and renovation of the Premises to the condition
existing immediately prior to Tenant's occupancy, the
unamortized portion of any Tenant Improvements and brokerage
commissions funded by Landlord in connection with this Lease,
the cost of rectifying any damage to the Premises occasioned
by the act or omission of Tenant, reasonable attorneys' fees,
and any other reasonable costs; and
(v) At Landlord's election, all other amounts in
addition to or in lieu of the foregoing as may be permitted by
law.
As used in Sections (i) and (ii) above, the "worth at the time
of award" shall be computed by allowing interest at the maximum legal
rate permitted by law. As used in Section (iii) above, the "worth at
the time of award" shall be computed by discounting the amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time
of award plus one percent (1%).
(b) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event this Lease will continue in
full force and effect as long as Landlord does not terminate Tenant's
right to possession, and Landlord may continue to enforce all of its
rights and remedies under this Lease, including the right to collect
all Rent as it becomes due. In the event that Landlord elects to avail
itself of the remedy provided by this Section 15.3(b), Landlord shall
not unreasonably withhold its consent to an assignment or subletting of
the Premises subject to the reasonable standards for Landlord's consent
as are contained in this Lease. In addition, in the event Tenant has
entered into a sublease which is valid under the terms of this Lease,
Landlord may also, at its option, cause Tenant to assign to Landlord
the interest of Tenant under said sublease, including, but not limited
to, Tenant's right to payment of Rent as it becomes due. Landlord may
elect to enter the Premises and re-let them, or any part of them, to
third parties for Tenant's account. Tenant shall be liable immediately
to Landlord for all costs Landlord incurs in re-letting the Premises,
including, but not limited to, broker's commissions, expenses of
cleaning and remodeling the Premises required by the re-letting,
attorneys' fees and like costs. Re-letting can be for a period shorter
or longer than the remaining Term of this Lease and for the entire
Premises or any portion thereof. Tenant shall pay to Landlord the
Monthly Rent and Additional Rent due under this Lease on the dates the
Monthly Rent and such Additional Rent are due, less the Rent Landlord
actually collects from any re-letting. Except as provided in the
preceding sentence, if Landlord re-lets the Premises or any portion
thereof, such re-letting shall not relieve Tenant of any obligation
hereunder. Notwithstanding the above, no act by Landlord allowed by
this Section 15.3(b) shall terminate this Lease unless Landlord
notifies Tenant in writing that Landlord elects to terminate this
Lease.
15.4. NO SURRENDER. Tenant waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure Sections 1174 and 1179,
or under any other present or future law in the event Tenant is evicted or
Landlord takes possession of the Premises by reason of an Event of Default. No
act or thing done by Landlord or Landlord's Agents during the Term shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
a surrender shall be valid unless in writing and signed by Landlord. No employee
of Landlord or of Landlord's Agents shall have any power to accept the keys to
the Premises prior to the termination of this Lease, and the delivery of the
keys to any employee shall not operate as a termination of this Lease or a
surrender of the Premises.
15.5. INTEREST ON LATE PAYMENTS. Any Rent due under this Lease that is
not paid to Landlord within three (3) days of the date when due shall commence
to bear interest at the Applicable Rate until fully paid. Neither the accrual
nor the payment of interest shall cure any default by Tenant under this Lease.
15.6. ATTORNEYS' AND OTHER FEES. All sums reasonably incurred by
Landlord in connection with an Event of Default or holding over of possession by
Tenant after the expiration or termination of this Lease, including,
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but not limited to, all costs, expenses and actual accountants', appraisers',
attorneys' and other professional fees, and any collection agency or other
collection charges, shall be due and payable by Tenant to Landlord on demand,
and shall bear interest at the Applicable Rate from the date of such demand
until paid by Tenant. In addition, in the event that any action shall be
instituted by either of the parties hereto for the enforcement of any of its
rights in and under this Lease, the party in whose favor judgment shall be
rendered shall be entitled to recover from the other party all expenses
reasonably incurred by the prevailing party in such action, including actual
costs and reasonable attorneys' fees.
15.7. LANDLORD'S DEFAULT. Landlord shall not be deemed to be in default
in the performance of any obligation required to be performed by it hereunder
unless and until it has failed to perform such obligation within fifteen (15)
days after receipt of Notice by Tenant to Landlord (and the Mortgagees who have
provided Tenant with notice) specifying the nature of such default; provided,
however, that if the nature of Landlord's obligation is such that more than
fifteen (15) days are required for its performance, then Landlord shall not be
deemed to be in default if it shall commence such performance within such
fifteen (15) day period and thereafter diligently prosecutes the same to
completion.
15.8. LIMITATION OF LANDLORD'S LIABILITY. The obligations of Landlord
do not constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or those of its constituent
partners. If Landlord shall fail to perform any covenant, term, or condition of
this Lease upon Landlord's part to be performed, Tenant shall be required to
deliver to Landlord Notice of the same. If, as a consequence of such default,
Tenant shall recover a money judgment against Landlord, such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Building and out of rent or other income from such property receivable by
Landlord or out of consideration received by Landlord from the sale or other
disposition of all or any part of Landlord's right, title or interest in the
Building, and no action for any deficiency may be sought or obtained by Tenant.
15.9. MORTGAGEE PROTECTION. Upon any default on the part of Landlord,
Tenant will give notice by registered or certified mail to any Mortgagee who has
provided Tenant with notice of its interest together with an address for
receiving notice, and shall offer such Mortgagee a reasonable opportunity to
cure the default (which in no event shall be less than sixty [60] days),
including time to obtain possession of the Premises by power of sale or a
judicial foreclosure, if such should prove necessary, to effect a cure. Tenant
agrees that each of the Mortgagees to whom this Lease has been assigned by
Landlord is an express third party beneficiary hereof. Tenant shall not make any
prepayment of Monthly Rent more than one (1) month in advance without the prior
written consent of such Mortgagee. Tenant waives any right under California
Civil Code Section 1950.5 or any other present or future law to the collection
of any deposit from such Mortgagee or any purchaser at a foreclosure sale of
such Mortgagee's interest unless such Mortgagee or such purchaser shall have
actually received and not refunded the deposit. Tenant agrees to make all
payments under this Lease to the Mortgagee with the most senior encumbrance upon
receiving a direction, in writing, to pay said amounts to such Mortgagee. Tenant
shall comply with such written direction to pay without determining whether an
event of default exists under such Mortgagee's loan to Landlord.
15.10. LANDLORD'S RIGHT TO PERFORM. If Tenant shall at any time fail to
make any payment or perform any other act on its part to be made or performed
under this Lease, Landlord may (but shall not be obligated to), at Tenant's
expense, and without waiving or releasing Tenant from any obligation of Tenant
under this Lease, make such payment or perform such other act to the extent
Landlord may deem desirable, and in connection therewith, pay expenses and
employ counsel. All sums paid by Landlord and all penalties, interest and costs,
including, but not limited to, collection costs and attorneys' fees reasonably
incurred in connection therewith, shall be due and payable by Tenant to
Landlord, as an item of Additional Rent, on demand by Landlord, together with
interest thereon at the Applicable Rate from the date of such demand until paid
by Tenant.
15.11. LIMITATION OF ACTIONS AGAINST TENANT AND LANDLORD. [SEE RIDER]
15.12. WAIVER OF JURY TRIAL. To the full extent permitted by law,
Tenant and Landlord hereby waive the right to trial by jury in any action,
proceeding or counterclaim brought by Tenant or Landlord, respectively, on any
matter whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises
and/or any claim of injury or damage.
ARTICLE XVI
SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
16.1. SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE. Without the
necessity of any additional document being executed by Tenant for the purpose of
effecting a subordination, and at the election of Landlord or any Mortgagee or
any ground lessor with respect to the land of which the Premises are a part,
this Lease shall be subject and subordinate at all times to (i) all ground
leases or underlying leases which may now exist or hereafter be executed
affecting the Building, and (ii) the lien of any Mortgage which may now exist or
hereafter be executed in any amount for which the Project, the Building, ground
leases or underlying leases, or Landlord's interest or estate in any of said
items is specified as security. Landlord or any such Mortgagee or ground lessor
shall have the right, at its election, to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such liens to
this Lease. No subordination shall permit material interference with Tenant's
rights hereunder, and any ground lessor or Mortgagee shall recognize Tenant and
its permitted successors and assigns as the tenant of the Premises and shall not
disturb Tenant's right to quiet possession of the Premises during the Term so
long as no Event of Default has occurred and is continuing under this Lease. If
Landlord's interest in the Premises is acquired by any ground lessor or
Mortgagee, or in the event proceedings are brought for the foreclosure of, or in
the event of exercise of the power of sale under, any Mortgage made by Landlord
covering the Premises or any part thereof, or in the event a conveyance in lieu
of foreclosure is made for any reason, Tenant shall, notwithstanding any
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subordination and upon the request of such successor in interest to Landlord,
attorn to and become the Tenant of the successor in interest to Landlord and
recognize such successor in interest as the Landlord under this Lease. Although
this Section 16.1 is self-executing, Tenant covenants and agrees to execute and
deliver, upon demand by Landlord and in the form requested by Landlord, or any
Mortgagee or ground lessor, any additional documents evidencing the priority or
subordination of this Lease with respect to any such ground leases or underlying
leases or the lien of any such Mortgage, or evidencing the attornment of Tenant
to any successor in interest to Landlord as herein provided. Tenant's failure to
timely execute and deliver such additional documents shall, at Landlord's
option, constitute an Event of Default hereunder.
16.2. ESTOPPEL CERTIFICATE. Tenant shall within ten (10) days following
written request by Landlord, execute and deliver to Landlord any documents,
including estoppel certificates, in a form required by Landlord (i) certifying
that this Lease is unmodified and in full force and effect or, if modified,
attaching a copy of such modification and certifying that this Lease, as so
modified, is in full force and effect and the date to which the Rent and other
charges are paid in advance, if any, (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of the Landlord or stating
the nature of any uncured defaults, (iii) evidencing the status of this Lease as
may be required by a Mortgagee or a purchaser of the Premises, (iv) certifying
the current Monthly Rent amount and the amount and form of Security Deposit on
deposit with Landlord, and (v) certifying to such other information as Landlord,
Landlord's Agents, Mortgagees and prospective purchasers may reasonably request,
including, but not limited to, any requested information regarding Hazardous
Materials. Tenant's failure to deliver an estoppel certificate within ten (10)
days after delivery of Landlord's written request therefor shall constitute an
Event of Default hereunder,
16.3. FINANCIAL INFORMATION. Tenant shall deliver to Landlord, prior
to the execution of this Lease, and within ten (10) days following written
request therefor by Landlord at any time during the Term, Tenant's current
financial statements, and Tenant's financial statements for the two (2) years
prior to the current fiscal financial statement's year, certified to be true,
accurate and complete by an authorized officer of Tenant, including a balance
sheet and profit and loss statement for the most recent prior year
(collectively, the "Statements"), which Statements shall accurately and
completely reflect the financial condition of Tenant. Landlord agrees that it
will keep the Statements confidential, except that Landlord shall have the right
to deliver the same to any proposed purchaser of the Premises, the Project or
any portion thereof, and to the Mortgagees of Landlord or such purchaser. Tenant
acknowledges that Landlord is relying on the Statements in its determination to
enter into this Lease, and Tenant represents to Landlord, which representation
shall be deemed made on the date of this Lease and again on the Commencement
Date, that no material change in the financial condition of Tenant, as reflected
in the Statements, has occurred since the date Tenant delivered the Statements
to Landlord. If any material change in Tenant's financial condition, as
reflected in the Statements, occurs prior to the date of this Lease or prior to
the Commencement Date, as the case may be, or if Tenant fails to inform Landlord
of any such material change, Landlord shall have the right, in addition to any
other rights and remedies of Landlord, to terminate this Lease by notice to
Tenant given within thirty (30) days after Landlord learns of such material
change.
ARTICLE XVII
SIGNS AND GRAPHICS
Landlord shall, at Tenant's expense, install a suite identification
plaque next to the door to the entrance to the Premises and install directory
strips in the lobby directory identifying Tenant's trade name. Tenant shall have
no right to maintain identification signs in any other location in, on or about
the Premises and shall not display or erect any other signs, displays or other
advertising materials that are visible from the exterior of the Building, except
as otherwise expressly permitted by Landlord in writing. If any exterior sign
rights are granted to Tenant by Landlord in connection with this Lease, (i) the
size, design, color and other physical aspects of such specially permitted signs
shall be subject to Landlord's written approval prior to installation, which
approval may be withheld in Landlord's discretion, any Restrictions and any
applicable municipal or other governmental permits and approvals, (ii) all such
signs and graphics shall conform to the sign criteria established by Landlord
from time to time in writing, (iii) upon notice from Landlord, Tenant shall
reimburse Landlord for Landlord's costs of installing support bracing for such
exterior signs, (iv) the cost of all such signs and graphics, including the
installation, maintenance and removal thereof, shall be at Tenant's sole cost
and expense, and (v) such sign rights shall not be assignable to any lease
assignee, subtenant or other party and shall automatically terminate on the
assignment by Tenant of its interest in this Lease (whether consented to by
Landlord or not) or the subleasing of a substantial portion of the Premises by
Tenant (whether consented to by Landlord or not). If Tenant fails to maintain
any permitted exterior signs, or if Tenant fails to remove same upon termination
of this Lease and repair any damage caused by such removal (including, but not
limited to, repainting the affected area, if required by Landlord), Landlord may
do so at Tenant's expense. All sums reasonably disbursed, deposited or incurred
by Landlord in connection with such removal, including, but not limited to, all
costs, expenses and actual attorneys' fees, shall be due and payable by Tenant
to Landlord on demand by Landlord, together with interest thereon at the
Applicable Rate from the date of such demand until paid by Tenant.
ARTICLE XVIII
QUIET ENJOYMENT
Landlord covenants that Tenant, upon performing the terms, conditions
and covenants of this Lease, shall have quiet and peaceful possession of the
Premises as against any person claiming the same by, through or under Landlord.
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ARTICLE XIX
SURRENDER; HOLDING OVER
19.1. SURRENDER OF THE PREMISES. Upon the expiration or earlier
termination of this Lease, Tenant shall surrender the Premises to Landlord in
its condition existing as of the Commencement Date, normal wear and tear and
acts of God excepted, with all interior walls in good repair, the HVAC
equipment, plumbing, electrical and other mechanical installations in good
operating order and all floors cleaned, all to the reasonable satisfaction of
Landlord. Tenant shall remove from the Premises all of Tenant's Alterations
which Landlord requires Tenant to remove pursuant to Section 8.1 and all
Tenant's Personal Property and all telephone, data transmission, fiber-optic and
other telecommunications cabling and related facilities installed by Tenant in
the Premises and Building, and shall repair any damage and perform any
restoration work caused by such removal. If Tenant fails to remove such
Alterations and Tenant's Personal Property which Tenant is authorized and
obligated to remove pursuant to the above, and such failure continues after the
termination of this Lease, Landlord may retain such property and all rights of
Tenant with respect to it shall cease, or Landlord may place all or any portion
of such property in public storage for Tenant's account. Tenant shall pay to
Landlord, upon demand, the costs of removal of any such Alterations and Tenant's
Personal Property and storage and transportation costs of same, and the cost of
repairing and restoring the Premises, together with attorneys' fees and interest
on said amounts at the Applicable Rate from the date of expenditure by Landlord.
If the Premises are not so surrendered at the termination of this Lease, Tenant
hereby agrees to indemnify Landlord and Landlord's Agents against all loss or
liability resulting from any delay by Tenant in so surrendering the Premises,
including, but not limited to, any claims made by any succeeding tenant, losses
to Landlord due to lost opportunities to lease to succeeding tenants, and actual
attorneys' fees and costs. Landlord may withhold all or any portion of Tenant's
Security Deposit pending disposition and accounting of expenses Landlord will
incur as a result of Tenant's failure to remove the items specified in this
Section 19. 1.
19.2. HOLDING OVER. If Tenant remains in possession of all or any part
of the Premises after the expiration of the Term with the prior written consent
of Landlord, such possession shall constitute a month-to-month tenancy only and
shall not constitute a renewal or extension for any further term. If Tenant
remains in possession of all or any part of the Premises after the expiration of
the Term without the prior written consent of Landlord, such possession shall
constitute a tenancy at sufferance. In either of such events, Monthly Rent shall
be increased to an amount equal to one hundred fifty percent (150%) of the
Monthly Rent payable during the last month of the Term, and any other sums due
hereunder shall be payable in the amounts and at the times specified in this
Lease. Any such tenancy shall be subject to every other term, condition, and
covenant contained in this Lease.
ARTICLE XX
INTENTIONALLY DELETED
ARTICLE XXI
MISCELLANEOUS AND INTERPRETIVE PROVISIONS
21.1. BROKER. Landlord and Tenant each warrant and represent to the
other that neither has had any dealings with any real estate broker, agent or
finder in connection with the negotiation of this Lease or the introduction of
the parties to this transaction, except for the Broker (whose commission shall
be paid by Landlord), and that it knows of no other real estate broker, agent or
finder who is or might be entitled to a commission or fee in connection with
this Lease. In the event of any additional claims for brokers' or finders' fees
with respect to this Lease, Tenant shall indemnify, hold harmless, protect and
defend Landlord from and against such claims if they shall be based upon any
statement or representation or agreement made by Tenant, and Landlord shall
indemnify, hold harmless, protect and defend Tenant from and against such claims
if they shall be based upon any statement, representation or agreement made by
Landlord.
21.2. EXAMINATION OF LEASE. Submission of this Lease for examination or
signature by Tenant does not create a reservation of or option to lease. This
Lease shall become effective and binding only upon full execution of this Lease
by both Landlord and Tenant.
21.3. NO RECORDING. Tenant shall not record this Lease or any
memorandum of this Lease without Landlord's prior written consent, but if
Landlord so requests, Tenant agrees to execute, have acknowledged and deliver a
memorandum of this Lease in recordable form which Landlord thereafter may file
for record.
21.4. QUITCLAIM. Upon any termination of this Lease, Tenant shall, at
Landlord's request, execute, have acknowledged and deliver to Landlord an
instrument in writing releasing and quit-claiming to Landlord all right, title
and interest of Tenant in and to the Premises by reason of this Lease or
otherwise.
21.5. MODIFICATIONS FOR MORTGAGEES. If in connection with obtaining
financing for the Premises or any portion thereof, Landlord's Mortgagees shall
request reasonable modifications to this Lease as a condition to such financing,
Tenant shall not unreasonably withhold, delay or defer its consent thereto,
provided such modifications do not adversely affect Tenant's rights hereunder.
Tenant's failure to so consent shall constitute an Event of Default under this
Lease.
21.6. NOTICE. Any Notice required or desired to be given under this
Lease shall be in writing and shall be addressed to the address of the party to
be served. The addresses of Landlord and Tenant are as set forth in Items 1 and
3, respectively, of the Basic Lease Provisions, except that (a) prior to the
Commencement Date, the address for Notices to Tenant shall be as set forth
opposite Tenant's signature on this Lease, and (b) from and after the
Commencement Date, notwithstanding the addresses for Tenant set forth in Item 3
of the Basic Lease Provisions, all Notices regarding the operation and
maintenance of the Project shall be delivered to Tenant at the Premises. Each
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such Notice shall be deemed effective and given (i) upon receipt, if personally
delivered (which shall include delivery by courier or overnight delivery
service), (ii) upon being telephonically confirmed as transmitted, if sent by
telegram, telex or telecopy, (iii) two (2) business days after deposit in the
United States mail in the county in which the Premises are located, certified
and postage prepaid, properly addressed to the party to be served, or (iv) upon
receipt if sent in any other way. Any party hereto may from time to time, by
Notice to the other in accordance with this Section 21.6, designate a different
address than that set forth above for the purposes of Notice.
21.7. CAPTIONS. The captions and headings used in this Lease are for
the purpose of convenience only and shall not be construed to limit or extend
the meaning of any part of this Lease.
21.8. EXECUTED COPY. Any fully executed copy of this Lease shall be
deemed an original for all purposes.
21.9. TIME. Time is of the essence for the performance of each term,
condition and covenant of this Lease.
21.10. SEVERABILITY. If any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality, or un-enforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had not been contained herein.
21.11. SURVIVAL. All covenants and indemnities set forth herein which
contemplate the payment of sums, or the performance by Tenant after the Term or
following an Event of Default, including specifically, but not limited to, the
covenants and indemnities set forth in Section 5.3, Article VI, Article VII,
Section 8.1, Section 9.2, Article XI, Article XV, and Article XIX, and all
representations and warranties of Tenant shall survive the expiration or sooner
termination of this Lease.
21.12. CHOICE OF LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California. The language in all parts
of this Lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Landlord or Tenant.
21.13. GENDER; SINGULAR, PLURAL. When the context of this Lease
requires, the neuter gender includes the masculine, the feminine, a partnership
or corporation or joint venture, the singular includes the plural and the plural
includes the singular.
21.14. NON-AGENCY. It is not the intention of Landlord or Tenant to
create hereby a relationship of master-servant or principal-agent, and under no
circumstance shall Tenant herein be considered the agent of Landlord, it being
the sole purpose and intent of the parties hereto to create a relationship of
landlord and tenant.
21.15. SUCCESSORS. The terms, covenants, conditions and agreements
contained in this Lease shall, subject to the provisions as to assignment,
subletting, and bankruptcy contained herein and any other provisions restricting
successors or assigns, apply to and bind the heirs, successors, legal
representatives and assigns of the parties hereto.
21.16. WAIVER; REMEDIES CUMULATIVE. The waiver by either party of any
term, covenant, agreement or condition herein contained shall not be deemed to
be a waiver of any subsequent breach of the same or any other term, covenant,
agreement or condition herein contained, nor shall any custom or practice which
may grow up between the parties in the administration of this Lease be construed
to waive or to lessen the right of Landlord to insist upon the performance by
Tenant in strict accordance with all of the provisions of this Lease. The
subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any provisions, covenant, agreement
or condition of this Lease, other than the failure of Tenant to pay the
particular Rent payment so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such Rent payment. Landlord's
acceptance of any check, letter or payment shall in no event be deemed an accord
and satisfaction, and Landlord shall accept the check, letter or payment without
prejudice to Landlord's right to recover the balance of the Rent or pursue any
other remedy available to it. The rights and remedies of either party under this
Lease shall be cumulative and in addition to any and all other rights and
remedies which either party has or may have.
21.17. UNAVOIDABLE DELAY. Except for the monetary obligations of Tenant
under this Lease, neither party shall be chargeable with, liable for, or
responsible to the other for anything or in any amount for any Unavoidable Delay
and any Unavoidable Delay shall not be deemed a breach of or default in the
performance of this Lease, it being specifically agreed that any time limit
provision contained in this Lease (other than the scheduled expiration of the
Term) shall be extended for the same period of time lost by Unavoidable Delay.
21.18. ENTIRE AGREEMENT. This Lease is the entire agreement between the
parties, and supersedes any prior agreements, representations, negotiations or
correspondence between the parties except as expressed herein. Except as
otherwise provided herein, no subsequent change or addition to this Lease shall
be binding unless in writing and signed by the parties hereto.
21.19. AUTHORITY. If Tenant is a corporation, limited liability company
or partnership, each individual executing this Lease on behalf of the
corporation, limited liability company or partnership, as the case may be,
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of said entity in accordance with its corporate bylaws,
operating agreement, statement of partnership or certificate of limited
partnership, as the case may be, and that this Lease is binding upon said entity
in accordance with its terms. If
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Tenant is a corporation, Tenant shall, if requested by Landlord, within thirty
(30) days after execution of this Lease and prior to entering into possession of
the Premises, deliver to Landlord a certified copy of a resolution of the Board
of Directors of the corporation or certificate of the Secretary of the
corporation, authorizing, ratifying or confirming the execution of this Lease.
If Tenant is a limited liability company or partnership, Tenant shall, if
requested by Landlord, within thirty (30) days after the execution of this Lease
and prior to entering into possession of the Premises, deliver to Landlord a
certified copy of its operating agreement or partnership agreement, as the case
may be, authorizing such execution.
21.20. GUARANTY. As a condition to the execution of this Lease by
Landlord, the obligations, covenants and performance of the Tenant as herein
provided shall be guaranteed in writing by the Guarantor listed in Item 14 of
the Basic Lease Provisions, if any, on a form of guarantee provided by Landlord.
21.21. EXHIBITS; REFERENCES. All exhibits, amendments, riders and
addenda attached to this Lease are hereby incorporated into and made a part of
this Lease and Tenant acknowledges disclosure of all information therein. In the
event of variation or discrepancy, the duplicate original hereof (including
exhibits, amendments, riders and addenda, if any, specified above) held by
Landlord shall control. All references in this Lease to Articles, Sections,
Exhibits, Riders and clauses are made, respectively, to Articles, Sections,
Exhibits, Riders and clauses of this Lease, unless otherwise specified.
21.22. BASIC LEASE PROVISIONS. The Basic Lease Provisions at the
beginning of this Lease are intended to provide general information only. In the
event of any inconsistency between the Basic Lease Provisions and the specific
provisions of this Lease, the specific provisions of this Lease shall prevail.
21.23. NO MERGER. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall
not work a merger, and shall, at the option of Landlord, terminate all or any
existing sub-tenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all such sub-tenancies.
21.24. JOINT AND SEVERAL OBLIGATIONS. If more than one person or entity
is Tenant, the obligations imposed on each such person or entity shall be joint
and several.
21.25. NO LIGHT OR AIR EASEMENT. Any diminution or shutting off of
light or air by any structure which may be erected on lands adjacent to the
Building shall in no way affect this Lease, abate Rent or otherwise impose any
liability on Landlord. This Lease does not confer any right with regard to the
subsurface below the ground level of the Building.
21.26. LEASE SUBJECT TO MATTERS OF RECORD. Tenant acknowledges that
this Lease is subject to all covenants, conditions, restrictions, liens and
encumbrances of record ("Matters of Record"). To the extent applicable, Tenant
shall be bound by all such Matters of Record.
21.27 HAZARDOUS MATERIALS DISCLOSURE. Tenant acknowledges that the
property on which the Building is located has previously been used for
agricultural purposes. Landlord is not aware of any other uses nor is Landlord
aware of any releases of Hazardous Materials on or beneath the property - with
the following exceptions:
(a) Over the years, various agricultural chemicals have been
applied to the property. Residues of these chemicals may exist in the
upper levels of the soil. Landlord anticipates that any such residues
will decompose over time. The grading and development of the property
will also reduce the potential for exposure. The risks associated with
this previous agricultural chemical use on the property appear to be no
greater than those associated with other similarly used properties in
the area.
(b) The El Toro Marine Corps Air Station, which is located
approximately one mile northeast of the Building, has had several
releases of Hazardous Materials, many of which involved underground
storage tanks. Contaminated ground water emanating from the Air Station
may have migrated beneath portions of the property.
21.28 TENANT'S AND GUARANTOR'S FINANCIAL CONDITION. Tenant represents
to Landlord that any and all applications and financial statements provided to
Landlord regarding Tenant and any Guarantor are true, accurate and complete in
all material respects, and do not fail to omit or misstate any material aspect
of the financial condition of Tenant or any Guarantor. Tenant acknowledges that
the foregoing representation is a material inducement to Landlord in entering
into this Lease and accepting Tenant as a tenant of the Project. Any breach of
the foregoing representation shall constitute an incurable "Event of Default"
under Section 15.1 of this Lease.
[SIGNATURES CONTINUED ON NEXT PAGE]
May 2, 2000
Page 25 of 26
<PAGE> 30
THIS LEASE is effective as of the date the last signatory necessary to
execute this Lease shall have executed this Lease.
"LANDLORD" PAC COURT ASSOCIATES, L.P., a California limited partnership
By: Banyan Pacific, LLC, a California limited liability company,
general partner
By: Banyan Realty Group, LLC, a California
limited liability company, managing member
By: /s/ George W. Ceithaml
George W. Ceithaml, Trustee of the
Ceithaml Living Trust #2 dated April 15,
1989, managing member
ADDRESS FOR NOTICES PRIOR TO COMMENCEMENT DATE:
"TENANT" INTEGRATED INFORMATION SYSTEMS, INC., a Delaware corporation
By: /s/ Jeffrey Frankel
Its: Jeffrey Frankel, Vice President and General Counsel
May 2, 2000
Page 26 of 26
<PAGE> 31
EXHIBIT "A"
GRAPHIC DEPICTION OF PREMISES
[MAP OF THIRD FLOOR GRAPHIC]
<PAGE> 32
EXHIBIT "B"
PROJECT SITE PLAN
[MAP OF PACIFICA COURT SITE]
<PAGE> 33
EXHIBIT "C"
WORK LETTER
This Exhibit is attached to and made a part of that certain Office
Lease dated May 16, 2000, by and between PAC COURT ASSOCIATES, L.P., a
California limited partnership, as "Landlord", and INTEGRATED INFORMATION
SYSTEMS, INC., a Delaware corporation, as "Tenant", for the Premises known as
114 Pacifica, Suite 300, Irvine, California.
1. APPLICATION OF EXHIBIT
Capitalized terms used and not otherwise defined herein shall have the
same definitions as set forth in the Lease. The provisions of this Work Letter
shall apply to the planning and completion of leasehold improvements requested
by Tenant (the "Tenant Improvements") for the fitting out of the initial
Premises, as more fully set forth herein.
2. LANDLORD AND TENANT PRE-CONSTRUCTION OBLIGATIONS
(a) PRELIMINARY SPACE PLAN. Prior to full execution of this Lease by
both Landlord and Tenant, Landlord's Space Planner shall have completed and
Tenant shall have approved a Preliminary Space Plan for Tenant Improvements (the
"Preliminary Space Plan"), also known as a "test fit plan" which shall depict
the general design of the Premises including location and relative sizes of
offices and other enclosed rooms, open work areas as well as entry/exit
locations. Execution of this Lease confirms Tenant Approval of said Preliminary
Space Plan.
(b) PRICING PLAN. Within three (3) days following Tenant approval of
the Preliminary Space Plan, Landlord's Space Planner shall complete a pricing
plan ("Pricing Plan") for the Tenant Improvements which shall include, without
limitation, drawings showing the locations of doors, partitioning, electrical
outlets, lighting, plumbing fixtures, floor loads and other unusual
requirements, and a list of all specialized installations and improvements and
upgrade specifications determined by Tenant as required for its use of the
Premises and which differ from the Building Standard Tenant Improvement
Specifications then in effect. Tenant agrees to and shall promptly and fully
cooperate with Landlord's Space Planner and shall supply all information
Landlord's Space Planner deems necessary for the preparation of the Pricing
Plan. Tenant acknowledges that the Pricing Plan shall be prepared by Landlord's
Space Planner after consultation and cooperation between Tenant and Landlord's
Space Planner regarding the proposed Tenant Improvements and Tenant's
requirements. Landlord and Landlord's Space Planner shall be entitled, in all
respects, to rely upon all information supplied by Tenant regarding the Tenant
Improvements. Tenant shall approve the Pricing Plan within two (2) days
following delivery thereof to Tenant by Landlord. The costs associated with
preparation of the Pricing Plan shall be paid in the manner set forth in
Sections 5 and 6 of the Work Letter.
(c) COST APPROVAL - PRICING PLAN. Within five (5) days following
Tenant's approval of the Pricing Plan, Landlord shall submit to Tenant a
preliminary written estimate ("Preliminary Estimate") of such Tenant Improvement
Costs as hereinafter defined (including the amount to be paid for all plans
referenced in this Exhibit and other non-construction costs). All costing shall
be based on the Building Standard Tenant Improvement Specifications then in
effect, unless otherwise noted. Tenant shall be obligated to bear the excess of
the Tenant Improvement Costs in excess of the amount of the Tenant Improvement
Allowance (as hereinafter defined), provided, however, that Tenant shall have
two (2) days after receipt of the Preliminary Estimate in which to (a) elect to
terminate this Lease by written notice to Landlord, or (b) submit to Landlord's
Space Planner such revisions and modifications of the Pricing Plan, satisfactory
in all respects to Landlord, as will reduce the estimated costs to an amount
acceptable to Tenant. Failure to notify Landlord of Tenant's election to either
cancel this Lease or revise the Pricing Plan shall be deemed Tenant's acceptance
of the Preliminary Estimate and Tenant's agreement to pay the excess of the
Tenant Improvement Costs over the Tenant Improvement Allowance.
(d) WORKING DRAWINGS. Within three (3) weeks following Tenant's
approval of the Preliminary Estimate (whether as originally calculated or
following Tenant's revision of the Pricing Plan), Landlord's Space Planner shall
complete working drawings (the "Working Drawings") for the Tenant Improvements
based upon the approved Pricing Plan. The Working Drawings shall include
architectural, mechanical and electrical construction drawings for the Tenant
Improvements based on the Pricing Plan. Notwithstanding the Pricing Plan, in all
cases the Working Drawings (i) shall be subject to Landlord's final approval,
which approval shall not be unreasonably withheld, (ii) shall not be in conflict
with building codes for the City or County or with insurance requirements, and
(iii) shall be in a form satisfactory to appropriate governmental authorities
responsible for issuing permits and licenses required for construction. The
costs associated with preparation of the Working Drawings shall be paid in the
manner set forth in Sections 5 and 6 of this Work Letter.
May 2, 2000
Page l of 5
<PAGE> 34
(e) APPROVAL OF WORKING DRAWINGS. Landlord or Landlord's Space Planner
shall submit the Working Drawings to Tenant for Tenant's review, and Tenant
shall notify Landlord and Landlord's Space Planner within two (2) days after
delivery thereof of any requested revisions. Within three (3) days after receipt
of Tenant's notice, Landlord's Space Planner shall draft all revisions to the
Working Drawings that are approved by Landlord and shall submit two (2) copies
thereof to Tenant for its final review and approval, which approval shall be
given within two (2) days thereafter. Concurrently with the above review and
approval process, Landlord may submit all plans and specifications to City and
other applicable governmental agencies in an attempt to expedite City approval
and issuance of all necessary permits and licenses to construct the Tenant
Improvements as shown on the Working Drawings. Any changes which are required by
City or other governmental agencies shall be immediately submitted to Landlord
for Landlord's review and reasonable approval, and Landlord shall promptly
notify Tenant of such changes.
(f) SCHEDULE OF CRITICAL DATES. Set forth below is a schedule of
certain critical dates relating to Landlord's and Tenant's respective
obligations for the design, approval, cost and construction of the Tenant
Improvements. Such dates and the respective obligations of Landlord and Tenant
are more fully described elsewhere in this Work Letter. The purpose of the
following schedule is to provide a reference for Landlord and Tenant and to make
certain the Final Approval Date occurs as set forth herein. Following the Final
Approval Date, Tenant shall be deemed to have released Landlord to commence
construction of the Tenant Improvements as set forth in Section 4 below.
<TABLE>
<CAPTION>
REFERENCE DATE DUE RESPONSIBLE
PARTY
<S> <C> <C>
A. "Preliminary Space Plan Prior to full execution of the Lease Tenant and
Completion" Landlord
B. "Pricing Plan Completion" Three (3) days after approval of Landlord
Preliminary Space Plan
C. "Approval of Pricing Plan" Two (2) days after submission to Tenant of Tenant
Pricing Plan
D. Preliminary Cost Five (5) days after Tenant approval of Landlord
Pricing Plan
E. Approval of Preliminary Two (2) days after submission to Tenant of Tenant
Cost Preliminary Cost
F. "Working Drawings Three (3) weeks after Tenant approval of Landlord
Completion" Preliminary Cost to complete Tenant
Improvements
G. "Approval of Working Two (2) days after submission to Tenant of Tenant
Drawings" Working Drawings
H. "Working Drawing Three (3) days after Landlord's receipt of Landlord
Revision Completion" (if Tenant revisions to Working Drawings
applicable)
I. "Final Approval Date" Two (2) days after submission to Tenant of Tenant
Working Drawings Revision or upon
Tenant approval of Working Drawings.
J. Final Cost Estimate Five (5) days from receipt of Tenant Landlord
Approval of Working Drawings
K. Approval of Final Cost Two (2) days after submission to Tenant of Tenant
Estimate Final Cost Estimate
L. City Working Drawings Three (3) days after Landlord's receipt of Landlord
Revision Completion City revisions to Working Drawings
M. Approval of City Working Two (2) days after submission to Tenant of Tenant
Drawings Revisions City Working Drawings Revisions (if
substantial)
</TABLE>
May 2, 2000
Page 2 of 5
<PAGE> 35
3. BUILDING PERMIT
After the Final Approval Date has occurred, Landlord shall, if Landlord
has not already done so, submit the Working Drawings to the appropriate
governmental body or bodies for final plan checking and a building permit.
Landlord, with Tenant's cooperation, shall cause to be made any change in the
Working Drawings necessary to obtain the building permit; provided, however,
after the Final Approval Date, no substantial changes shall be made to the
Working Drawings that will: (i) substantially increase the cost to Tenant; or,
(ii) materially and adversely affect the use of the Premises by Tenant, without
the prior written approval of both Landlord and Tenant to occur within two (2)
days of presentation of said changes and increased costs, and then only after
agreement by Tenant to pay any excess costs resulting from such changes.
4. CONSTRUCTION OF TENANT IMPROVEMENTS
After the Final Approval Date has occurred and a building permit for
the work has been issued, Landlord shall, through a guaranteed maximum cost or
fixed price (at Landlord's sole option) construction contract ("Construction
Contract") with a reputable, licensed contractor selected by Landlord
("Contractor"), cause the construction of the Tenant Improvements to be carried
out in substantial conformance with the Working Drawings in a good and
workmanlike manner using first class materials. The costs associated with the
construction of the Tenant Improvements shall be paid as set forth in Sections 5
and 6 of this Work Letter. Landlord shall see that the construction complies
with all applicable building, fire, health, and sanitary codes and regulations,
the satisfaction of which shall be evidenced by a certificate of occupancy for
the Premises. Upon substantial completion of the Tenant Improvements, Tenant
shall comply with all laws, ordinances, regulations, requirements and other
directives of any federal, state or local governmental or quasi-governmental
authority having or exercising jurisdiction there over. Tenant shall not use or
occupy the Premises, or knowingly permit it to be used or occupied, contrary to
any statute, rule, order, ordinance, requirement or regulation applicable
thereto, or in any manner which would violate any certificate of occupancy
affecting the same, or which would violate any certificate of occupancy
affecting the same, or which would make void or voidable any insurance then in
force with respect thereto or which would cause structural injury to the
improvements or cause the value or usefulness of the Premises, or any portion
thereof, substantially to diminish (reasonable wear and tear excepted), or which
would constitute a public or private nuisance or waste and Tenant agrees that it
will promptly, upon discovery of any such use, take all necessary steps to
compel the discontinuance of such use. Tenant shall obtain and pay for all
permits, required for Tenant's occupancy of the Premises and shall promptly take
all substantial and non-substantial actions necessary to comply with all
applicable statutes, ordinances, rules, regulations, orders and requirements
regulating the use by Tenant of the Premises, including, without limitation, the
Occupational Health and Safety Act and the Americans with Disabilities Act. If
requested by Landlord, Tenant shall provide evidence satisfactory to Landlord of
Tenant's compliance.
5. TENANT IMPROVEMENT ALLOWANCE
Landlord shall provide Tenant with a Tenant Improvement Allowance in
the amount of [$27.00/USF] towards the cost of the design, permitting and
construction of the Tenant Improvements, including without limitation design,
engineering and consulting fees (collectively, the "Tenant Improvement Costs").
The Tenant Improvement Allowance shall be used for payment of the following
Tenant Improvements Costs:
(a) Preparation by Landlord's Space Planner of the Preliminary Space
Plan, Pricing Plan and the Working Drawings and any and all revisions to same as
provided in Section 2 of this Work Letter, including without limitation all fees
charged by City (including without limitation fees for governmental review
including building permits and plan checks) in connection with the Tenant
Improvements work in the Premises;
(b) Construction work for completion of the Tenant Improvements as
reflected in the Construction Contract, as well as the costs of suite and
directory sign identification of Tenant; and
(c) All contractors' charges, general conditions, performance bond
premiums, construction fees, and construction management and supervision fees.
6. COSTS IN EXCESS OF TENANT IMPROVEMENT ALLOWANCE AT TENANT'S EXPENSE
(a) COST APPROVAL. Tenant shall be obligated to bear the excess of the
Tenant Improvement Costs in excess of the amount of the Tenant Improvement
Allowance available to defray such costs. Within five (5) days of the submission
of Working Drawings for plan checking referred to in Section 3 of this Work
May 2, 2000
Page 3 of 5
<PAGE> 36
Letter, Landlord shall prepare and submit to Tenant a written estimate of the
amount of the total Tenant Improvement Costs (the "Final Estimate"). In the
event the Final Estimate exceeds the TI Cost Estimate (defined below) by more
than five percent (5%), Tenant shall either approve or disapprove the Final
Estimate by written notice delivered to Landlord within two (2) days after
Tenant's receipt thereof. If Tenant fails to deliver to Landlord written notice
of its disapproval within such two (2) day period or if the Final Estimate does
not exceed the TI Cost Estimate by more than five percent (5%), Tenant shall be
deemed to have approved the Final Estimate. If the Final Estimate exceeds the TI
Cost Estimate and Tenant approves (or is deemed to have approved) the Final
Estimate, Tenant shall include payment to Landlord for the full amount of such
excess within said two (2) day period. Landlord shall not have any obligation to
commence construction of the Tenant Improvements until Tenant has paid to
Landlord the full amount of any such excess, and any delay in the commencement
of construction of the Tenant Improvements resulting therefrom shall be
chargeable to Tenant as a Tenant Delay (defined below). If Tenant disapproves
the Final Estimate within the two (2) day period, Landlord shall have the right
to instruct Landlord's Space Planner to revise the Working Drawings in a manner
satisfactory to Landlord, after consultation with Tenant, so as to reduce the
estimated costs to an amount not greater than five percent (5%) over the TI Cost
Estimate, and any excess estimated costs remaining after such amendment shall be
paid by Tenant within two (2) days of Tenant's receipt of the revised estimate.
If the revised estimated costs remain greater than five percent (5%) over the TI
Cost Estimate, then Landlord may, at its sole option, either (i) proceed with
the construction of the Tenant Improvements in accordance with the revised
Working Drawings, and absorb the cost in excess of five percent (5%) over the TI
Cost Estimate, or (ii) terminate this Lease by written notice to Tenant. The
term "TI Cost Estimate" shall refer to the greater of the Preliminary Estimate
or the Tenant Improvement Allowance, but, in any case, "TI Cost Estimate" shall
exclude all costs associated with change orders requested by Tenant.
(b) FINAL COSTS. Within ninety (90) days after completion by Landlord
of the Tenant Improvements, Landlord shall determine the actual final Tenant
Improvements Costs and shall submit a written statement of such amount to
Tenant. If any estimate previously paid by Tenant exceeds the amount due
hereunder from Tenant for such work, such excess shall be refunded to Tenant. If
any amount is still due from Tenant for such work, then Tenant shall pay such
amount in full within ten (10) days of receipt of Landlord's statement.
7. CHANGE ORDERS
Tenant may from time to time request and obtain change orders during
the course of construction provided that: (a) each such request shall be
reasonable, shall be in writing and signed by or on behalf of Tenant, and shall
not result in any structural change in the Building, as reasonably determined by
Landlord; (b) all additional charges and costs, including without limitation
architectural and engineering costs, construction and material costs, delay
costs resulting from such change orders, processing costs of any governmental
entity, and increased construction, construction management and supervision
fees, together with an administrative fee to Landlord to cover its change order
processing costs of One Hundred Dollars ($ 100.00) per occurrence, shall be the
sole and exclusive obligation of Tenant; and (c) any resulting delay in the
completion of the Tenant Improvements shall be deemed a Tenant Delay and in no
event shall extend the Commencement Date of the Lease. Upon Tenant's request for
a change order, Landlord shall as soon as reasonably possible submit to Tenant a
written estimate of the increased or decreased cost and anticipated delay, if
any, attributable to such requested change. Within two (2) days of the date such
estimated cost adjustment and delay are delivered to Tenant, Tenant shall advise
Landlord whether it wishes to proceed with the change order, and if Tenant
elects to proceed with the change order, Tenant shall remit, concurrently with
Tenant's notice to proceed, the amount of the increased cost, if any,
attributable to such change order. Election by Tenant to not proceed with any
change order shall not relieve Tenant from its obligation to pay to Landlord its
administration processing charge of One Hundred Dollars ($100.00). Unless Tenant
includes in its initial change order request that the work in process at the
time such request is made be halted pending approval and execution of a change
order, landlord shall not be obligated to stop construction of the Tenant
Improvements, whether or not the change order relates to the work then in
process or about to be started.
8. TENANT DELAYS
In no event shall the Commencement Date of the Lease be extended or
delayed due or attributable to delays due to the fault of Tenant ("Tenant
Delays"). Tenant Delays shall include, but are not limited to, delays caused by
or resulting from any one or more of the following:
(a) Tenant's failure to timely review and reasonably approve the
Preliminary Space Plan, Pricing Plan or Working Drawings or to promptly
cooperate with Landlord's Space Planner and furnish information to Landlord for
the preparation of the Preliminary Plan, Pricing Plan and Working Drawings;
May 2, 2000
PAGE 4 OF 5
<PAGE> 37
(b) Tenant's request for or use of special materials, finishes or
installations which are not readily available, provided that Landlord shall
notify Tenant in writing that the particular material, finish,' or installation
is not readily available promptly upon Landlord's discovery of same;
(c) Change orders requested by Tenant;
(d) Interference by Tenant or by Tenant's Agents with Landlord's
construction activities;
(e) Tenant's failure to approve any other item or perform any other
obligation in accordance with and by the dates specified herein or in the
Construction Contract;
(f) Tenant's requested changes in the Preliminary Space Plan, Pricing
Plan, Working Drawings or any other plans and specifications after the approval
thereof by Tenant or submission thereof by Tenant to Landlord;
(g) Tenant's failure to approve written estimates of costs in
accordance with this Work Letter; and
(h) Tenant's obtaining or failure to obtain any necessary governmental
approvals or permits for Tenant's intended use of the Premises.
If the Commencement Date of the Lease is delayed by any Tenant Delays,
whether or not within the control of Tenant, then the Commencement Date of the
Lease and the payment of Rent shall be accelerated by the number of days of such
delay. Landlord shall give Tenant written notice within a reasonable time of any
circumstance that Landlord believes constitutes a Tenant Delay.
9. TRADE FIXTURES AND EQUIPMENT
Tenant acknowledges and agrees that Tenant is solely responsible for
obtaining, delivering and installing in the Premises all necessary and desired
furniture, trade fixtures, equipment and other similar items, and that Landlord
shall have no responsibility whatsoever with regard thereto. Tenant further
acknowledges and agrees that neither the Commencement Date of the Lease nor the
payment of Rent shall be delayed for any period of time whatsoever due to any
delay in the furnishing of the Premises with such items.
10. FAILURE OF TENANT TO COMPLY
Any failure of Tenant to comply with any of the provisions contained in
this Work Letter within the times for compliance herein set forth shall be
deemed a default under the Lease. In addition to the remedies provided to
Landlord in this Work Letter upon the occurrence of such a default by Tenant,
Landlord shall have all remedies available at law or equity to a landlord
against a defaulting tenant pursuant to a written lease, including but not
limited to those set forth in the Lease.
May 2, 2000
Page 5 of 5
<PAGE> 38
EXHIBIT "D"
COMMENCEMENT DATE MEMORANDUM
DATE:____________________, 2000
RE: Office Lease dated May _, 2000, by and between Pac Court Associates,
L.P., a California limited partnership, as "Landlord", and Integrated
Information Systems, Inc., a Delaware corporation, as "Tenant", for
the Premises known as 114 Pacifica, Suite 300, Irvine, California.
AGREEMENT
The undersigned hereby agree as follows:
1. The Tenant Improvements (as defined in the Lease) to the Premises
have been substantially completed in accordance with the terms and conditions of
the Lease, subject only to "punch list" items agreed to by Landlord and Tenant
pursuant to the terms of the Lease.
2. The Commencement Date, as defined in and determined in accordance
with the Lease, is hereby stipulated for all purposes to be
3. In accordance with the Lease, Monthly Rent (as defined in the Lease)
in tile amount of $_________________________, subject to adjustment in
accordance with the terms of the Lease, commences to accrue on
_____________________________ and is due and payable in advance on the first day
of each and every month during the Term (as defined in the Lease). Unless and
until notified by Landlord to the contrary, Tenant shall make its Rent checks
payable to ____________________________.
"LANDLORD" PAC COURT ASSOCIATES, L.P., a California limited partnership
By: Banyan Pacific, LLC, a California limited liability company,
general partner
By: Banyan Realty Group, LLC, a California
limited liability company, managing member
By: ________________________________________
George W. Ceithaml, Trustee of the
Ceithaml Living Trust #2 dated April 15,
1989, managing member
"TENANT" INTEGRATED INFORMATION SYSTEMS, INC., a Delaware corporation
By: ___________________________________________________
Its: Jeffrey Frankel, Vice President and General Counsel
May 2, 2000
<PAGE> 39
EXHIBIT "E"
RULES AND REGULATIONS
1. Landlord shall furnish to the Premises during the hours of 8:00 a.m.
and 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on Saturday,
generally recognized national holidays excepted, reasonable air conditioning,
heating and ventilation services. Landlord shall also furnish the Building with
elevator service, reasonable amounts of electricity for normal lighting and
office equipment, and water for lavatory and drinking purposes.
2. Landlord shall have the right from time to time to establish
reasonable rules pertaining to elevator usage, including the allocation and
reservation of such usage for Tenant' initial move-in to the Premises,
subsequent deliveries to or removal of items from the Premises, and vacation of
the Premises.
3. Landlord shall provide janitorial services five (5) days per week,
Sunday through Thursday. The cleaning services provided by Landlord shall
exclude refrigerators, microwave ovens and eating utensils (plates, drinking
containers and silverware), and interior glass partitions. Should Tenant require
any additional or unusual janitorial services necessitated by any nonstandard
improvements to the Premises, including, without limitation, wall coverings and
upgraded floor coverings installed by or for Tenant, or by reason of any use of
the Premises which is in violation of the Lease (and nothing herein shall be
deemed a waiver of any such violation), Tenant shall pay to Landlord the cost of
any such additional services. Tenant shall pay Landlord for the cost of removal
of any of Tenant's refuse and rubbish to the extent that they exceed the amounts
usually generated by normal office usage, in Landlord's sole discretion. Any
person employed by Tenant to provide janitorial or security services shall,
while in the Project and outside of the Premises, be subject to and under the
control and direction of Landlord or its designated representative (but not as
an agent or servant of Landlord, and the Tenant shall be responsible for all
acts of such persons).
4. No sign, advertisement or notice shall be displayed, printed or
affixed on or to the Premises or to the outside or inside of the Project or so
as to be visible from outside the Premises or Project without Landlord's prior
written consent. Landlord shall have the right to remove any non-approved sign,
advertisement or notice, without notice to and at the expense of Tenant, and
Landlord shall not be liable in damages for such removal. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant by Landlord or by a person selected by Landlord and in a
manner and style acceptable to Landlord.
5. Tenant shall not obtain for use on the Premises ice, waxing,
cleaning, interior glass polishing, rubbish removal, towel or other similar
services, or accept barbering or bootblackening, or coffee cart services, milk,
soft drinks or other like services on the Premises, except from persons
authorized by Landlord and at the hours and under regulations fixed by Landlord.
No vending machines or machines of any description shall be installed,
maintained or operated upon the Premises without Landlord's prior written
consent.
6. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose other than
for ingress and egress from Tenant's Premises. Under no circumstances is trash
to be stored in the corridors. Written notice must be given to Landlord prior to
Tenant's move-in, move-out and prior to any subsequent deliveries, including
deliveries of furniture, freight and other large or heavy articles. These and
all other deliveries may be brought into the Project only at times and in the
manner designated by Landlord, as designated in a set of sub-rules and
regulations prepared from time to time by Landlord and delivered to Tenant prior
to any such move-in, move-out or delivery. These sub-rules and regulations may
include, without limitation, a designation of the building door or doors which
Tenant may utilize for deliveries, a designation of those sections of the Common
Area which may be utilized by delivery vehicles for the purpose of loading or
unloading, a requirement of the use of elevator pads, or temporary masonite or
plywood floorings, and other protective measures to prevent damage to elevators,
floors and walls, and a designation of the days and hours during which
deliveries may be made. All deliveries shall always at Tenant's sole
responsibility and risk. Tenant shall, prior to any move-in, move-out or
delivery activity, obtain and comply with Landlord's current rules relating to
such activities. All damage done to the Project by moving or maintaining such
furniture, freight or articles shall be repaired by Landlord at Tenant's
expense. Tenant shall move all supplies, furniture and equipment as soon as
received directly to the Premises, and shall move all waste that is at any time
being taken from the Premises directly to the areas designated for disposal.
7. Toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein.
8. Tenant shall not overload the floor of the Premises or mark, drive
nails, screw or drill into the partitions, ceilings or floor or in any way
deface the Premises. Tenant shall not place typed, handwritten or computer
generated signs in the corridors or any other common areas.
9. In no event shall Tenant place a load upon any floor of the Premises
or portion of any such flooring exceeding the floor load per square foot of area
for which such floor is designed to carry and which is allowed by law, or any
machinery or equipment which shall cause excessive vibration to the Premises or
noticeable vibration to any other part of the Project. Prior to bringing any
heavy safes, vaults, large computers or similarly heavy equipment into the
Project, Tenant shall inform Landlord in writing of the dimensions and weights
thereof and shall obtain Landlord's consent thereto. Such consent shall not
constitute a representation or warranty by Landlord that the safe, vault or
other equipment complies, with regard to distribution of weight and/or
vibration, with the provisions of this Rule 8 nor relieve Tenant from
responsibility for the consequences of such noncompliance, and any such safe,
vault or other equipment which Landlord determines to constitute a danger of
damage to the Project or a nuisance to other tenants, either alone or in
combination with other heavy and/or
May 2, 2000
Page 1 of 4
<PAGE> 40
vibrating objects and equipment, shall be promptly removed by Tenant, at
Tenant's cost, upon Landlord's written notice of such determination and demand
for removal thereof.
10. Tenant shall not use or keep in the Premises or Project any
kerosene, gasoline or inflammable, explosive or combustible fluid or material,
or use any method of heating or air-conditioning other than that supplied by
Landlord.
11. Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord.
12. Tenant shall not install or use any blinds, shades, awnings or
screens in connection with any window or door of the Premises and shall not use
any drape or window covering facing any exterior glass surface other than the
standard drapes, blinds or other window covering established by Landlord.
13. Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing window coverings when the sun's
rays fall directly on windows of the Premises. Tenant shall not obstruct, alter,
or in any way impair the efficient operation of Landlord's heating, ventilating
and air-conditioning system. Tenant shall not tamper with or change the setting
of any thermostats or control valves. If any lights, machines or equipment are
used by Tenant in the Premises which materially affect the temperature otherwise
maintained by the air conditioning system, or generate substantially more heat
in the Premises than would be generated by the building standard lights and
usual office equipment, Landlord shall have the right, at its election, to
install or modify any machinery and equipment to the extent Landlord deems
necessary to restore temperature balance. The cost of installation, and any
additional cost of operation and maintenance, shall be paid by Tenant to
Landlord promptly upon demand.
14. The Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the permitted use of
the Premises. Tenant shall not, without Landlord's prior written consent, occupy
or permit any portion of the Premises to be occupied or used for the manufacture
or sale of liquor or tobacco in any form, or a barber or manicure shop, or as an
employment bureau. The Premises shall not be used for lodging or sleeping or for
any improper, objectionable or immoral purpose. No auction shall be conducted on
the Premises.
15. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises, or disturb or interfere with occupants of Project or
neighboring buildings or premises or those having business with it by the use of
any musical instrument, radio, phonographs or unusual noise, or in any other
way.
16. No bicycles, vehicles or animals of any kind shall be brought into
or kept in or about the Premises, and no cooking shall be done or permitted by
any tenant in the Premises, except that the preparation of coffee, tea, hot
chocolate and similar items for Tenant and its employees and visitors shall be
permitted. Tenant not shall cause or permit any unusual or objectionable odors
to be produced in or permeate from or throughout the Premises. The foregoing
notwithstanding, Tenant shall have the right to use a microwave and to heat
microwavable items typically heated in an office. No hot plates, toasters,
toaster ovens or similar open element cooking apparatus shall be permitted in
the Premises. Tenant shall maintain all parts of the Premises, including without
limitation all cooking and eating areas, in a neat and sanitary condition and
free of crumbs, spills, spoilage, and any other condition which may attract
insects, rodents or other vermin.
17. The sashes, sash doors, skylights, windows and doors that reflect
or admit light and air into the halls, passageways or other public places in the
Project shall not be covered or obstructed by Tenant, nor shall any bottles,
parcels or other articles be placed on the window sills.
18. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by Tenant, nor shall any changes be made in existing
locks or the mechanisms thereof unless Landlord is first notified thereof, gives
written approval, and is furnished a key therefor. Tenant must, upon the
termination of its tenancy, give to Landlord all keys and key cards of stores,
offices, or toilets or toilet rooms, either furnished to or otherwise procured
by Tenant, and in the event of the loss of any keys so furnished, Tenant shall
pay Landlord the cost of replacing the same or of changing the lock or locks
opened by such lost key if Landlord shall deem it necessary to make such change.
If more than two keys for one lock are desired, Landlord will provide them upon
payment therefor by Tenant. Tenant shall not key or re-key any locks. All locks
shall be keyed by Landlord's locksmith only.
19. Landlord shall have the right to prohibit any advertising by Tenant
which, in Landlord's opinion, tends to impair the reputation of the Project or
its desirability as an office building and upon written notice from Landlord
Tenant shall refrain from and discontinue such advertising.
20. Tenant shall have access to the Building 24 hours per day, 7 days
per week, 52 weeks per year, provided that Landlord may, but shall not be
obligated to, install such access control systems as it deems advisable for the
Building. Such systems may, but need not, include a card identification system,
tenant access control system, fire stairwell exit door alarm system, elevator
control system or any other access controls, in Landlord's discretion. In the
event that Landlord elects to provide any or all of such systems or services,
Landlord may, discontinue providing them, or any of them, at any time with or
without notice and in Landlord's sole and absolute discretion. Landlord may
require a deposit as security against the loss of access control cards and/or
keys issued to a Tenant and/or require a fee for the replacement of lost keys
and/or access control cards. Landlord shall have no liability to Tenant for the
provision by Landlord of improper or inadequate access control services, for any
breakdown in service, or for the failure by Landlord to provide access control
services or any particular access control service. Tenant further acknowledges
that Landlord's access control systems may be temporarily inoperative during
building
May 2, 2000
Page 2 of 4
<PAGE> 41
emergencies or system repairs. Tenant agrees to assume responsibility for
compliance by its employees with any regulations established by Landlord with
respect to any access control cards or any other system of building access as
Landlord may establish, and further agrees to supply Landlord with, and update
as necessary, a list of employees who have been provided with any access control
cards, keys, or any other means of building access. In addition, upon any
termination of employment of any employee formerly provided with any such means
of access, Tenant agrees to require the return of any access control cards,
keys, and any other devices, and to immediately notify Landlord of such
termination and of any failure by Tenant to secure the return of any access
control card or other device. Returned access control cards or other
computer-encoded devices must be turned in to Landlord for reprogramming prior
to any transfer to a new employee. If Tenant utilizes the services of outside
vendors or service personnel, such as water delivery or plant maintenance,
Tenant shall provide Landlord with a list of such persons or companies whether
or not they have been provided with any access control cards or other means of
access. Tenant shall be responsible for all persons to whom it allows
after-hours access and shall be liable to Landlord for all acts of such persons.
Tenant shall provide Landlord with the name and telephone numbers (including any
mobile phone numbers) of an after-hours emergency contact on behalf of Tenant
and the name and phone numbers of any security company providing security to the
Premises. Should Tenant elect to provide its own security system with respect to
the Premises, Tenant shall provide Landlord with advance notice of the
installation of such system, a brief description of the operation of such
system, the security code or codes to be used, and the names and telephone
numbers (home and mobile) of two (2) emergency contacts on behalf of Tenant.
21. All doors opening on to public corridors shall be kept closed,
except when being used for ingress and egress. Tenant shall cooperate and comply
with any reasonable safety or security programs, including fire drills and air
raid drills, and the appointment of "fire wardens" developed by Landlord for the
Project, or required by law. Before leaving the Premises unattended, Tenant
shall close and securely lock all doors or other means of entry to the Premises
and shut off all lights and water faucets in the Premises.
22. The maintenance and service requirements of Tenant will be attended
to only in response to inquiries made to Landlord's designated representatives.
23. Canvassing, soliciting and peddling in, at or around the Project
are prohibited and Tenant shall cooperate to prevent the same.
24. All office equipment of any electrical or mechanical nature shall
be placed by Tenant in the Premises in settings approved by Landlord, to absorb
or prevent any vibration, noise or annoyance. Tenant shall furnish and utilize
plastic or wood floor mats so as to minimize carpet damage resulting from the
use of rollers on chairs.
25. No air-conditioning unit or other similar apparatus shall be
installed or used by Tenant without the prior written consent of Landlord.
Tenant shall pay the cost of all electricity used for air-conditioning in the
Premises if such electrical consumption exceeds normal office requirements,
regardless of whether additional apparatus is installed pursuant to the
preceding sentence.
26. There shall not be used in any space, or in the public halls of the
Project, either by or on behalf of Tenant, any hand trucks except those equipped
with rubber tires and side guards.
27. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Project must be fluorescent and/or of a quality, type, design
and bulb color approved by Landlord. Tenant shall not permit the consumption in
the Premises of more than 2 1/2 watts per net usable square foot in the Premises
in respect of office lighting nor shall Tenant permit the consumption in the
Premises of more than 1 1/2 watts per net usable square foot of space in the
Premises in respect of the power outlets therein, at any one time. In the event
that such limits are exceeded, Landlord shall have the right to require Tenant
to remove lighting fixtures and equipment and/or to charge Tenant for the cost
of the additional electricity consumed.
28. Parking.
a) Landlord agrees to maintain, or cause to be maintained, an area
specially designated as automobile parking (the "Parking Area"). The Parking
Area shall be for the use of Tenant, employees of Tenant, and other tenants or
occupants of the Building, as well as patrons, visitors and other invitees of
the Building. The Parking Area shall not be used to park large trucks or
recreational vehicles.
b) All vehicles must observe all directional signs and arrows and any
posted speed limits. Unless otherwise posted, in no event shall the speed limit
exceed five (5) miles per hour.
c) All vehicles shall park in one (1) stall only. No vehicles shall be
parked in areas which are posted or marked as "no parking" or on or in ramps,
driveways, aisles or any other area not striped or otherwise designated for
parking. Tenant and its employees shall not park in areas designated as "Guest
Parking", "Visitor Parking" or as being time-limited, such as "I Hour Parking".
Any vehicle parked for any length of time deemed excess by Landlord shall be
subject to towing without notice and at the vehicle owner's expense. In no event
shall Tenant or its employees interfere with the use and enjoyment of the
Parking Area by other tenants of the Building or their employees or invitees.
d) Washing, waxing, cleaning or servicing of vehicles is prohibited
unless authorized by Landlord.
May 2, 2000
Page 3 of 4
<PAGE> 42
e) Landlord shall not be liable for any damage to a vehicle and all
persons parking in the Parking Area are instructed to lock their vehicles. All
responsibility for any loss or damage to any vehicle or any personal property
therein is assumed by the parker.
f) Overnight parking is prohibited unless authorized in advance by
Landlord.
g) Tenant agrees to furnish to Landlord, upon request, a list of its
employees' names and of Tenant's and its employees' vehicle license numbers.
h) Tenant shall not use more parking spaces than specifically allocated
to it under Section 10.7 of the Lease; nor shall Tenant assign nor sublet any of
such spaces, either voluntarily or by operation of law, without the prior
written consent of Landlord, except in connection with an authorized assignment
of Tenant's Lease or an authorized subletting of the Premises.
29. The Project is a non-smoking Project. Smoking or carrying lighted
cigars or cigarettes in the Premises or the Project, including the elevators in
the Project, is prohibited.
30. Landlord shall have the right to control access to the telephone
and telecommunications rooms and facilities within the Project for the privacy,
security and benefit of all Project tenants and Landlord, and may specify from
time to time the manner in which connections to such facilities are performed.
31. If Tenant has the right to use a balcony adjacent to the Premises
(the "Balcony"), the foregoing Rules and Regulations shall apply to Tenant's use
of the Balcony and, where applicable and only with respect to this Exhibit "E",
the Premises shall be deemed to include the Balcony. In addition, there shall be
no smoking, cooking or barbecues, and Tenant shall not play or allowed to be
played any live or recorded music, on the Balcony. Tenant shall not place or
allow any storage of materials of any kind or any signs, banners or
advertisements on the Balcony. Tenant shall not place or allow any furniture or
plants on the Balcony without the prior written consent of Landlord which shall
not be unreasonably withheld.
Tenant agrees to comply with all such Rules and Regulations and to
cause such compliance by its employees and, to the extent applicable, its
invitees. Should Tenant not comply with any of the Rules and Regulations set
forth above, Landlord or any "Operator", "Association" or "Declarant" under any
Restrictions may serve a three (3) day notice to correct the deficiencies. If
Tenant does not comply with the correction notice by the end of the notice
period, Tenant will be in default under the Lease, and Landlord and/or its
designee shall have the right, without further notice, to cure the violation at
Tenant's expense.
Landlord reserves the right to amend or supplement the foregoing Rules
and Regulations and to adopt additional rules and regulations applicable to the
Premises. Notice of any such amendments and supplements shall be given to
Tenant.
<PAGE> 43
EXHIBIT "F"
IDENTIFICATION OF RESTRICTIONS
1. Irvine Center Development Agreement recorded January 23, 1984 as
Instrument No. 84-030968 of Official Records of Orange County.
2. Covenants, conditions and restrictions in instruments recorded in the
Official Records of Orange County as follows: (i) Instrument No.
85-351938, (ii) Instrument No. 86-047979 (amended by Instrument No.
86-063943), (iii) Instrument No. 87-677156 (amended by Instrument No.
88-000363); (iv) Instrument No. 88-206912, and (v) Instrument No.
88-206911 (as amended by Instrument Nos. 89-605650 and 19980598732)
3. Aircraft Notification for Irvine Center (Irvine Spectrum 1) recorded as
Instrument No. 85-351939.
<PAGE> 44
LEASE RIDER NO. 1
LETTER OF CREDIT
THIS LEASE RIDER is attached to and made a part of that
certain Office Lease dated May 16, 2000, by and between PAC COURT ASSOCIATES,
L.P. a California limited partnership, as "Landlord", and INTEGRATED INFORMATION
SYSTEMS, INC., a Delaware corporation, as "Tenant", for the Premises known as
114 Pacifica, Suite 300, Irvine, California 92618.
The capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Lease. The provisions of this Lease
Rider shall supersede any inconsistent or conflicting provisions of the Lease.
THE FOLLOWING IS HEREBY ADDED TO THE END OF SECTION 4.5:
LETTER OF CREDIT.
(a) Letter of Credit Requirement. As additional security for
the full and faithful performance of every provision of this Lease to
be performed by Tenant, Tenant shall deposit with Landlord on or before
the commencement of construction of Tenant Improvements, an
unconditional, irrevocable sight draft letter of credit ("LETTER OF
CREDIT") with the stated amount set forth in subparagraph (b) in form
and content acceptable to Landlord and drawn on a commercial lender
acceptable to Landlord, having a term not shorter than the Lease Term.
Tenant shall deliver its proposed form of letter of credit to Landlord
no later than ten (10) days after the date of this Lease. Landlord
shall not have any obligation to commence construction of the Tenant
Improvements until Tenant has delivered the Letter of Credit, and any
delay in the commencement of construction of the Tenant Improvements
resulting therefrom shall be chargeable to Tenant as a Tenant Delay (as
defined in the Work Letter). Tenant shall pay all expenses, points
and/or fees incurred in obtaining, renewing or replacing the Letter of
Credit.
(b) Stated Amount. The initial stated amount of the Letter of
Credit shall be the sum of Three Hundred Thousand Dollars ($300,000)
("ORIGINAL STATED AMOUNT"). Provided no Event of Default has occurred,
upon the fifth and sixth anniversary of the Commencement Date, the
stated amount of the Letter of Credit shall be reduced by $100,000.
Upon the occurrence of an Event of Default, Landlord shall have the
right to prevent the reduction of the stated amount of the Letter of
Credit described in the preceding sentence and reinstate the Original
Stated Amount of the Letter of Credit.
(c) Landlord Rights upon Default. Upon any Event of Default,
without waiver of any rights Landlord may have under this Lease or at
law or in equity as a result of an Event of Default, Landlord shall
have the right, in Landlord's sole and absolute discretion, to draw
upon the Letter of Credit in whole or in part. Landlord may use the
proceeds drawn from the Letter of Credit for one or any combination of
the following: (1) the payment of any Rent not paid when due, (2) the
repair of damage to the Premises, (3) the payment of any other amount
which Landlord may spend by reason of an Event of Default, (4)
compensation of Landlord for any other loss or damage which Landlord
may suffer by reason of an Event of Default to the full extent
permitted by law, and/or (5) be retained by Landlord as security ("L/C
SECURITY DEPOSIT") for the full and faithful performance of every
provision of this Lease to be performed by Tenant. The use,
application, retention of or draw on the Letter of Credit, by Landlord
shall not prevent Landlord from exercising any other right or remedy
provided by this Lease or by law, it being intended that Landlord shall
not be required to proceed against the Letter of Credit and shall not
operate as a limitation on any recovery to which Landlord may otherwise
be entitled.
(d) Landlord Options upon Cure of Default. If an Event of
Default is properly cured by Tenant, and such cure is acknowledged by
Landlord, the Landlord may, but is not required to, elect one or any of
combination of the following options: (1) retain all or any part of
amounts drawn on any Letter of Credit as an L/C Security Deposit,
and/or (2) return to Tenant all or any part of amounts drawn, minus
such amounts already applied by Landlord as provided in subparagraph
(c) above, provided that Tenant has satisfied the provisions of
subparagraph (e).
(e) Restoration and Delivery of Letters of Credit. If all or
any portion of the Letter of Credit is drawn upon by Landlord
hereunder, Tenant shall, within five (5) days after written demand
therefore, deposit with Landlord (1) additional cash as part of the L/C
Security Deposit such that the sum of the L/C Security Deposit and any
undrawn amounts under a valid and enforceable Letter of Credit is not
less than the Original Stated Amount; or (2) a replacement Letter of
Credit with a
May 2, 2000
Page 1 of 2
<PAGE> 45
sufficient stated amount such that said stated amount plus any L/C Security
Deposit is not less than the Original Stated Amount. Tenant's failure to (i)
comply with the preceding sentence, or (ii) keep the Letter of Credit in full
force and effect as required hereunder shall constitute an Event of Default
under this Lease.
(f) Right to Assign Letters of Credit. Tenant acknowledges that
Landlord has the right to transfer or mortgage its interest in the Property and
in this Lease and Tenant agrees that in the event of any such transfer or
mortgage, Landlord shall have the right to transfer or assign the Letter of
Credit or the L/C Security Deposit to the transferee or mortgagee, and in the
event of such transfer, Tenant shall look solely to such transferee or mortgagee
for the return of the L/C Security Deposit and/or the Letter of Credit.
"LANDLORD" PAC COURT ASSOCIATES, L.P., a California limited partnership
By: Banyan Pacific, LLC, a California limited liability company,
general partner
By: Banyan Realty Group, LLC, a California
limited liability company, managing member
By: /s/ George W. Ceithaml
George W. Ceithaml, Trustee of the
Ceithaml Living Trust #2 dated April 15,
1989, managing member
"TENANT" INTEGRATED INFORMATION SYSTEMS, INC., a California
corporation
By: /s/ Jeffrey Frankel
Its: Jeffrey Frankel, Vice President and General Counsel
May 2, 2000
Page 2 of 2
<PAGE> 46
LEASE RIDER NO. 2
OPTION TO EXTEND TERM
(Fair Market Value Adjustment)
THIS LEASE RIDER is attached to and made a part of that certain Office
Lease dated May 16, 2000, by and between PAC COURT ASSOCIATES, L.P. a California
limited partnership, as "Landlord", and INTEGRATED INFORMATION SYSTEMS, INC., a
Delaware corporation, as "Tenant", for the Premises known as 114 Pacifica, Suite
300, Irvine, California 92618.
The capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Lease. The provisions of this Lease
Rider shall supersede any inconsistent or conflicting provisions of the Lease.
A. OPTION TO EXTEND TERM.
1. GRANT OF OPTION. Landlord hereby grants to Tenant one (1)
option (the "Option") to extend the Term of the Lease for an additional
consecutive term of five (5) years ("Extension Term"). The Option shall
be exercised only by written notice delivered to Landlord not later
than nine (9) months before the expiration of the initial Term of the
Lease. If Tenant fails to deliver to Landlord written notice of the
exercise of the Option within the time period prescribed above, such
Option shall lapse, and there shall be no further right to extend the
Term of the Lease. This Option shall be forfeited by Tenant if at any
time during the Term an Event of Default has occurred. If Tenant
properly exercises the Option, "Term", as used herein and in the Lease,
shall be deemed to include the Extension Term, unless specified
otherwise herein or in the Lease.
2. PERSONAL OPTION. The Option is personal to Tenant. If
Tenant assigns or otherwise transfers any interest under the Lease
prior to the exercise of the Option, the Option shall lapse. If Tenant
assigns or otherwise transfers any interest of Tenant under the Lease
after the exercise of the Option but prior to the commencement of the
Extension Term, the Option shall lapse and the Term of the Lease shall
expire as if the Option were not exercised.
3. CALCULATION OF MONTHLY RENT. The Monthly Rent during the
Extension Term shall be determined, as of the commencement of the
Extension Term to the greater of (a) the "Fair Market Value" of the
Premises or (b) the last Monthly Rent paid at the end of the initial
Term. The "Fair Market Value" shall be determined in the following
manner: Not later than one hundred eighty (180) days prior to the
commencement of the Extension Term, Landlord and Tenant shall meet in
an effort to negotiate, in good faith, the Fair Market Value of the
Premises as of commencement of the Extension Term. If Landlord and
Tenant have not mutually agreed in writing upon the Fair Market Value
of the Premises at least one hundred fifty (150) days prior to the
applicable commencement of the Extension Term, the Fair Market Value
shall be determined by the following appraisal method:
a. PROCEDURE. If Landlord and Tenant are not able to
agree upon the Fair Market Value of the Premises within the
time period described above, then Landlord and Tenant shall
attempt to agree in good faith upon a single appraiser not
later than one hundred twenty (120) days prior to the
commencement date of the Extension Term. If Landlord and
Tenant are unable to agree upon a single appraiser within such
time period, then Landlord and Tenant shall each appoint one
appraiser not later than one hundred fifteen (115) days prior
to the commencement of the Extension Term, and Landlord and
Tenant shall each give written notice to the other of such
appointment at the time of such appointment. Within five (5)
days thereafter, the two appointed appraisers shall appoint a
third appraiser. If either Landlord or Tenant fails to appoint
its appraiser and to give written notice thereof to the other
party within the prescribed time period, the single appraiser
appointed shall determine the Fair Market Value of the
Premises. If both parties fail to appoint appraisers within
the prescribed time periods, then the first appraiser
thereafter selected by a party (such selection to be by
written notice thereof to such appraiser and the other party)
shall determine the Fair Market Value of the Premises. Each
party shall bear the cost of its own appraiser and the parties
shall share equally the cost of the single or third appraiser
if applicable. All appraisers shall have at least five (5)
years' experience in the appraisal of commercial/industrial
real property in the area in which the Premises are located
and shall be members of professional organizations such as MAI
or its equivalent. If a single appraiser is chosen, then such
appraiser shall determine the Fair Market Value of the
Premises. Otherwise, the Fair Market Value of the Premises
shall be the arithmetic average of the two (2) of the three
(3) appraisals which are closest in amount, and the third
appraisal shall be disregarded. Landlord and
May 2, 2000
Page 1 of 2
<PAGE> 47
Tenant shall instruct the appraiser(s) to complete their determination of the
Fair Market Value not later than eighty (80) days prior to the commencement of
the Extension Term.
b. DEFINITION OF FAIR MARKET VALUE. For the purposes of such
appraisal, the term "Fair Market Value" shall mean the price that a ready and
willing tenant would pay, as of the commencement of the Extension Term, as
monthly rent, to a ready and willing landlord of Property comparable to the
Premises if such property were exposed for lease on the open market for a
reasonable period of time and taking into account all of the purposes for which
such property may be used. The Fair Market Value may include periodic increases
in Rent during the Extension Term as determined by the appraiser. As used
herein, "Property comparable to the Premises" shall mean property located in a
Class A office building within the Irvine Center. In no event shall the Monthly
Rent be reduced below the Monthly Rent applicable to the Premises just prior to
the end of the initial Lease Term
"LANDLORD" PAC COURT ASSOCIATES, L.P., a California limited partnership
By: Banyan Pacific, LLC, a California limited liability company,
general partner
By: Banyan Realty Group, LLC, a California
limited liability company, managing member
By: /s/ George W. Ceithaml
George W. Ceithaml, Trustee of the
Ceithaml Living Trust #2 dated April 15,
1989, managing member
"TENANT" INTEGRATED INFORMATION SYSTEMS, INC., a Delaware
corporation
By: /s/ Jeffrey Frankel
Its: Jeffrey Frankel, Vice President and General Counsel
May 2, 2000
Page 2 of 2
<PAGE> 48
LEASE RIDER NO. 3
RIGHT OF FIRST REFUSAL TO LEASE CONTIGUOUS SPACE
THIS LEASE RIDER is attached to and made a part of that certain Office
Lease dated May 16, 2000, by and between PAC COURT ASSOCIATES, L.P. a California
limited partnership, as "Landlord", and INTEGRATED INFORMATION SYSTEMS, INC., a
Delaware corporation, as "Tenant", for the Premises known as 114 Pacifica, Suite
300, Irvine, California 92618.
The capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Lease. The provisions of this Lease
Rider shall supersede any inconsistent or conflicting provisions of the Lease.
A. Tenant shall have a one-time right of first refusal ("Right of First
Refusal") during the Term of the Lease with respect to any intended lease
between Landlord and any third party for already existing improved office space
on the third floor of the Building contiguous to the initially leased Premises
("Expansion Space"). If at any time during the Term of the Lease, Landlord
receives a bona fide offer to lease all or any portion of such Expansion Space
to a third party under terms acceptable to Landlord, Landlord shall first
deliver written notice thereof to Tenant ("Landlord's Notice"). For a period of
seven (7) business days following Tenant's receipt of Landlord's Notice, Tenant
shall have the right to lease the space covered by such offer upon the terms and
conditions set forth in such offer to the extent such terms as set forth in the
offer are acceptable to Landlord by delivering to Landlord within said seven (7)
business day period written notice ("Election Notice") of its election to
exercise its Right of First Refusal. If Tenant fails or elects not to exercise
its Right of First Refusal granted pursuant to this Paragraph within said seven
(7) business day period, the Right of First Refusal shall automatically
terminate without further action of the parties, and Landlord shall be free to
lease the space covered by such offer, or any other space in the Project, to the
third party offeror or any subsequent offeror. This Right of First Refusal shall
be exercisable by Tenant on the express condition that at no time prior to the
exercise of the Right of First Refusal shall there have occurred an Event of
Default, and that at the time of the exercise of such Right of First Refusal no
Event of Default shall have occurred and be continuing under the Lease. Further,
if following the valid exercise of the Right of First Refusal and prior the
execution of a formal lease for the Expansion Space, an Event of Default occurs,
then at Landlord's option, the Right of First Refusal shall lapse as if it were
never exercised.
B. Tenant's Right of First Refusal shall be subject and subordinate to all
rights which have been granted by Landlord prior to the execution of the Lease
to other tenants of the Project, including without limitation, rights of first
opportunity, options and/or rights of first offer or refusal with respect to the
Expansion Space. The Right of First Refusal is personal to Tenant and may not be
exercised by or be assigned to any person or entity other than Tenant and shall
terminate and be of no further force or effect upon the assignment of the Lease
or subletting of the Premises to any person or entity, whether or not consented
to by Landlord.
C. Should Tenant properly exercise its Right of First Refusal, subject to
Landlord's rights with respect to the design and construction of the Expansion
Space, Tenant shall be permitted access and use of then existing
telecommunication conduits between the Premises and the Expansion Space for the
purposes of telecommunications cabling, provided that said conduits have
sufficient capacity for Tenant's telecommunications cabling. Such use shall be
at no additional cost to Tenant during the Term.
"LANDLORD" PAC COURT ASSOCIATES, L.P., a California limited partnership
By: Banyan Pacific, LLC, a California limited liability company,
general partner
By: Banyan Realty Group, LLC, a California
limited liability company, managing member
By: /s/ George W. Ceithaml
George W. Ceithaml, Trustee of the
Ceithaml Living Trust #2 dated April 15,
1989, managing member
"TENANT" INTEGRATED INFORMATION SYSTEMS, INC., a Delaware
corporation
By: /s/ Jeffrey Frankel
Its: Jeffrey Frankel, Vice President and General Counsel
May 2, 2000
<PAGE> 49
LEASE RIDER NO. 4
SIGNAGE RIGHT
THIS LEASE RIDER is attached to and made a part of that certain Office
Lease dated May 16, 2000, by and between PAC COURT ASSOCIATES, L.P. a California
limited partnership, as "Landlord", and INTEGRATED INFORMATION SYSTEMS, INC., a
Delaware corporation, as "Tenant", for the Premises known as 114 Pacifica, Suite
300, Irvine, California 92618.
The capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Lease. The provisions of this Lease
Rider shall supersede any inconsistent or conflicting provisions of the Lease.
A. In addition to the rights granted under the Lease, Tenant shall be entitled
to identification signage, together with two other tenants of the Project, on a
monument sign to be constructed in the Common Area of the Project, in accordance
with the Project's sign criteria. In consideration of such sign rights, Tenant
shall pay a fee to Landlord equal to one third (a) of the costs incurred by
Landlord in constructing the monument sign (including without limitation,
design, permitting and hard construction costs). Tenant shall also be obligated
to pay for the cost of Tenant's own signage to be placed on the monument sign
and for the installation, maintenance, repair, and, upon termination or
expiration of the Lease, the removal, of Tenant's sign.
"LANDLORD" PAC COURT ASSOCIATES, L.P., a California limited partnership
By: Banyan Pacific, LLC, a California limited liability company,
general partner
By: Banyan Realty Group, LLC, a California
limited liability company, managing member
By: /s/ George W. Ceithaml
George W. Ceithaml, Trustee of the
Ceithaml Living Trust #2 dated April 15,
1989, managing member
"TENANT" INTEGRATED INFORMATION SYSTEMS, INC., a Delaware
corporation
By: /s/ Jeffrey Frankel
Its: Jeffrey Frankel, Vice President and General Counsel
May 2, 2000
<PAGE> 50
LEASE RIDER NO. 5
LEASE MODIFICATIONS
THIS LEASE RIDER is attached to and made a part of that certain Office
Lease dated May 16, 2000, by and between PAC COURT ASSOCIATES, L.P. a California
limited partnership, as "Landlord", and INTEGRATED INFORMATION SYSTEMS, INC., a
Delaware corporation, as "Tenant", for the Premises known as 114 Pacifica, Suite
300, Irvine, California 92618.
The capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Lease. The provisions of this Lease
Rider shall supersede any inconsistent or conflicting provisions of the Lease.
A. Section 3.7: No Representations. The following sentence is added after
Section 3.7:
Landlord hereby represents and warrants to Tenant as follows:
(a) To the best of Landlord's knowledge based on its
receipt of a certificate of occupancy (the "C of O") for the
Building from the City, Landlord represents that the base,
core and shell elements of the Building were in compliance
with all Applicable Laws as of the date of the C of O.
(b) To the best of Landlord's knowledge, the
Restrictions do not prohibit the use of the Premises for
general and administrative office uses.
B. Section 6.8: Hazardous Materials. The following new provision is added
after Section 6.7:
6.8 Landlord hereby represents that, prior to the date of this
Lease, to Landlord's actual knowledge without duty of independent
investigation, no Hazardous Materials existed in the Premises or
Building in violation of any Hazardous Materials Laws, except that
Landlord makes no representation with respect to the portions of the
Building which have been leased to other tenants.
C. Section 7.1: Tenant to Bear Tenant's Share of Excess Project Expenses:
The following sentence is added after Section 7.1:
If, as a result of Tenant's examination, Tenant claims that Operating
Expenses and Property Taxes, in the aggregate, for any fiscal year were
overstated by five percent (5%) or more, Tenant shall promptly give
written notice to Landlord after the audit and provide a complete copy
of the audit report to Landlord. Said notice shall clearly reflect the
reasons for the disagreement and the amount claimed by Tenant as due to
Landlord. Tenant and Landlord shall then meet in an effort to resolve
the differences in their respective findings. If a resolution is not
reached within twenty (20) days of Tenant's written notice, then the
parties shall refer the issue to an independent certified public
accountant, chosen by Landlord and approved by Tenant, to audit the
Operating Expenses for the period in question. The findings of the
independent certified public accountant shall be binding on both
Landlord and Tenant. To the extent that the independent certified
public accountant's determination of Operating Expenses indicates that
the expenses reflected on Landlord's statement were overstated by more
than five percent (5%) of the actual Operating Expenses for the subject
year, then Landlord shall bear the cost of the audit and shall refund
all amount of over payment made by Tenant within ten (10) days
following receipt of the independent certified public accountant's
determination. If the independent certified public accountant's
determination of Operating Expenses indicates that the expenses
reflected on Landlord's statement were not overstated by more than five
percent (5%) of the actual Operating Expenses for the subject year,
then Tenant shall bear the cost of the audit.
D. Section 7.3: Definition of Operating Expenses. The following sentence
is added after Section 7.3:
Notwithstanding the foregoing, Operating Expenses shall not include the
following:
(a) Costs for which Landlord is reimbursed by
individual tenants of the Building, except for costs
represented by Operating Expenses.
May 2, 2000
Page 1 of 4
<PAGE> 51
(b) Expenses for repairs and other work occasioned by
fire, windstorm or other casualty to the extent the Landlord
is reimbursed by insurance proceeds or condemnation award.
(c) Overhead and administrative costs of Landlord not
directly incurred in the operation and maintenance of the
Building, unless otherwise provided in this Lease;
(d) Depreciation or amortization of the Building or
its contents or components.
(e) Cost for alteration and additions that are in the
nature of capital improvements (determined in accordance with
generally accepted accounting principles) but, notwithstanding
the foregoing, Operating Expenses shall include the cost of
compliance with any change in any statute, ordinance,
regulation, order or other law applicable to the Project
coming into effect after the Commencement Date, provided
however, any such cost shall be amortized in a commercially
reasonable manner, and Operating Expenses shall include such
allocable portion for each year included within the Term.
(f) Rentals and other related expenses incurred in
leasing a heating, ventilation and air conditioning system,
elevators, or other items (except equipment not affixed to the
Building which is used in providing janitorial or similar
services to the Building and, further excepting from this
exclusion such equipment rented or leased to remedy or
ameliorate an emergency condition in the Building) which if
purchased, rather than rented, would constitute a capital
improvement not included in Operating Expenses pursuant to
this Lease;
(g) Expenses incurred in obtaining new tenants or
retaining existing tenants, including leasing commissions,
legal expenses, advertising, entertaining or promotion,
excluding, however, expenses for promotions which benefit all
tenants of the Building.
(h) Interest, amortization or other costs, including
legal fees, associated with any mortgage, loan or refinancing
of the Building or any Common Areas, transfer or recordation
taxes and other charges in connection with the transfer of
ownership in the Building, and rental due under any ground
lease relating to the property on which the Building is
located.
(i) The cost of any item or service which Tenant
separately reimburses Landlord or pays to third parties, or
which Landlord provides selectively to one or more tenants of
the Building, other than Tenant, for which Landlord is
reimbursed by such other tenant(s).
(j) Any interest or penalty incurred due to the late
payment of any operating expense and/or real estate tax.
(k) Any personal property taxes of Landlord for
equipment or items not used directly in the operation or
maintenance of the Building, nor connected therewith.
(l) Fees payable by Landlord for management of the
Building to the extent such fees are in excess of the greater
of three percent (3%) or fees charged by a majority of
landlords of comparable buildings in the Irvine Spectrum
Center area.
(m) Payroll, payroll related and other expenses
related to any employees of Landlord above the Building
Manager or equivalent operational level, or not working
full-time on the management or operation of the Building,
provided that such expenses of persons working part-time on
the management or operation of the Building may be included if
equitably allocated to reflect actual time spent on the
Building.
May 2, 2000
Page 2 of 4
<PAGE> 52
(n) The cost of overtime or other expense to Landlord
in performing work expressly provided in this Lease to be
borne at Landlord's expense.
(o) All expenses directly resulting from the sole
active negligence or willful misconduct of Landlord or
Landlord's Agents.
(p) All bad debt loss, rent loss or reserve for bad
debt or rent loss.
(q) Payroll and payroll related expenses for any
employees in commercial concessions operated by Landlord.
(r) Costs associated with the remediation, as
required by applicable Hazardous Materials Laws, of Hazardous
Materials released by Landlord or Landlord's Agents.
E. Section 8.1: Permitted Alterations. The following sentences are added
at the end of Section 8.1:
Notwithstanding the foregoing, Tenant shall have the right, without
Landlord's consent, to make strictly cosmetic, non-structural additions
and alterations to the interior portions of the Premises which do not
create a Design Problem and do not cost more than $1,000 ("Cosmetic
Alterations"), provided that Tenant has given five (5) business days
prior notice to Landlord and delivered accurate plans and
specifications. Tenant shall also have the right to install phone,
computer and telecommunications lines and cabling that do not affect
the Building's systems and are located entirely within the Premises.
Upon the termination of this Lease, Tenant shall, at Tenant's expense,
remove any or all non-structural Alterations installed by or on behalf
of Tenant (including without limitation, telephone, data transmission,
fiber-optic and other telecommunications cabling and related
facilities) and return the Premises to its condition as of the
Commencement Date of this Lease, normal wear and tear excepted.
Landlord may, by giving Tenant written notice ninety (90) days before
the termination of this Lease, require that Tenant refrain from
removing any or all of the Alterations.
F. Section 15.11: Limitation of Actions Against Tenant and Landlord. The
following sentences are added to Section 15.11:
Any claim, demand or right of any kind by Tenant which is based upon or
arises in connection with this Lease shall be barred unless Tenant
commences an action thereon within one (1) year after the date that the
act, omission, event or default upon which the claim, demand or right
arises, is actually discovered by Tenant. Tenant waives all statutes of
limitations providing for a greater period of time for the bringing of
such action. Any claim, demand or right of any kind by Landlord which
is based upon or arises in connection with this Lease shall be barred
unless Landlord commences an action thereon within one (1) year after
the date that the act, omission, event or default upon which the claim,
demand or right arises, is actually discovered by Landlord. Landlord
waives all statutes of limitations providing for a greater period of
time for the bringing of such action. In no event shall this Section
15.11 be construed to extend existing statutes of limitations. In
addition, nothing in this Section 15.11 shall limit the ability of
Landlord or Tenant to bring an action for contribution or indemnity
against the other party for tort claims brought by third parties,
subject to applicable statutes of limitations provisions of Applicable
Laws.
May 2, 2000
Page 3 of 4
<PAGE> 53
"LANDLORD" PAC COURT ASSOCIATES, L.P., a California limited partnership
By: Banyan Pacific, LLC, a California limited liability company,
general partner
By: Banyan Realty Group, LLC, a California
limited liability company, managing member
By: /s/ George W. Ceithaml
George W. Ceithaml, Trustee of the
Ceithaml Living Trust #2 dated April 15,
1989, managing member
"TENANT" INTEGRATED INFORMATION SYSTEMS, INC., a Delaware
corporation
By: /s/ Jeffrey Frankel
Its: Jeffrey Frankel, Vice President and General Counsel
May 2, 2000
Page 4 of 4
