OFFICE BUILDING LEASE
BETWEEN
KILROY REALTY, L.P.,
a Delaware limited partnership
LANDLORD
AND
THE RYLAND GROUP, INC.,
a Maryland corporation
TENANT
19
TABLE OF CONTENTS
-----------------
1. BASIC LEASE TERMS..........................................1
2. PREMISES AND COMMON AREAS..................................2
3. TERM.......................................................3
4. POSSESSION.................................................5
5. RENT.......................................................6
6. OPERATING EXPENSES.........................................6
7. DELETED....................................................8
8. USE........................................................8
9. NOTICES....................................................9
10. BROKERS....................................................9
11. SURRENDER; HOLDING OVER....................................9
12. TAXES ON TENANT'S PROPERTY................................10
13. ALTERATIONS...............................................10
14. REPAIRS...................................................12
15. LIENS.....................................................13
16. ENTRY BY LANDLORD.........................................13
17. UTILITIES AND SERVICES....................................14
18. ASSUMPTION OF RISK AND INDEMNIFICATION....................14
19. INSURANCE.................................................15
20. DAMAGE OR DESTRUCTION.....................................17
21. EMINENT DOMAIN............................................18
22. DEFAULTS AND REMEDIES.....................................19
23. LANDLORD'S DEFAULT. .....................................22
24. ASSIGNMENT AND SUBLETTING.................................22
25. SUBORDINATION.............................................24
26. ESTOPPEL CERTIFICATE......................................25
27. INTENTIONALLY OMITTED.....................................25
28. RULES AND REGULATIONS.....................................25
29. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND
LESSORS...................................................25
30. DEFINITION OF LANDLORD....................................26
31. WAIVER....................................................26
(i)
20
32. PARKING...................................................26
33. FORCE MAJEURE.............................................27
34. SIGNS.....................................................28
35. LIMITATION ON LIABILITY...................................28
36. FINANCIAL STATEMENTS......................................28
37. QUIET ENJOYMENT...........................................29
38. MISCELLANEOUS.............................................29
39. EXECUTION OF LEASE........................................30
ADDENDUM
EXHIBITS:
A-I Site Plan
A-II Outline of Floor Plan of Premises
B Rentable Square Feet and Usable Square Feet
C Work Letter Agreement
Schedule 1 Description of Base Building
Schedule 2 Work Schedule
D Notice of Lease Term Dates and Tenant's Percentage
E Definition of Operating Expenses
F Standards for Utilities and Services
G Estoppel Certificate
H Rules and Regulations
(ii)
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OFFICE BUILDING LEASE
This OFFICE BUILDING LEASE ("Lease") is entered into as of the _______ day of
December, 1999 by and between Kilroy Realty, L.P., a Delaware limited
partnership ("Landlord"), and The Ryland Group, Inc., a Maryland corporation
("Tenant").
1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have
the following definitions and meanings:
(a) Landlord: Kilroy Realty, L.P., a Delaware limited partnership.
(b) Landlord's Address (For Notices):
2250 East Imperial Highway, Suite 1200
El Segundo, California 90245
Attention: Chief Legal Officer
or such other place as Landlord may from time to time designate by notice to
Tenant.
(c) Tenant: The Ryland Group, Inc., a Maryland corporation.
(d) Tenant's Address (For Notices): Ryland Mortgage, 6300 Canoga Avenue,
14th Floor, Woodland Hills, California 91367, Attention: Bob Cunnion or such
other place as Tenant may from time to time designate by notice to Landlord.
(e) Development: The parcel(s) of real property located within and
consisting of a portion of Calabasas Park Centre, located in the City of
Calabasas (the "City"), County of Los Angeles (the "County"), State of
California ("State"), as shown on the site plan attached hereto as
Exhibit "A-I".
(f) Building: The four (4) story westernmost office building located within the
Development, which Building contains approximately One Hundred Thousand
(100,000) Rentable Square Feet (subject to adjustment as provided in Exhibit
"B"), with the street address of 24025 Park Sorrento, Calabasas, California.
(g) Premises: Collectively, those certain premises known as Suite 400 consisting
of approximately 25,324 Rentable Square Feet and 24,702 Usable Square Feet and
Suite 100 consisting of approximately 7,622 Rentable Square Feet and 6,686
Usable Square Feet as generally shown on the floor plans attached hereto as
Exhibit "A-II".
(h) Tenant's Percentage: Tenant's percentage of the Building on an aggregate
Rentable Square Foot basis, initially is thirty-two and 95/100ths percent
(32.95%), subject to final determination as provided in Exhibit "B" and Exhibit
"D".
(i) Original Term: Six (6) years and four (4) months, subject to Tenant's
right to extend the Term pursuant to the provisions of Paragraph 3 hereof.
(j) (i) Estimated Commencement Date: July 1, 2000
(ii) Estimated Expiration Date: October 31, 2006.
(k) Commencement Date: The date on which the Term of this Lease will
commence as determined in accordance with the provisions of Exhibit "C" and
as stated on Exhibit "D".
(l) Initial Monthly Base Rent: Two Dollars and Fifty Cents ($2.50) times the
Rentable Square Feet contained within the Premises, subject to adjustment as
provided in subparagraph 1(m) below and as otherwise provided in this Lease,
including the Addendum hereto.
(m) Adjustment to Monthly Base Rent: Intentionally omitted.
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(n) Operating Expense Allowance: Operating Expense Allowance means Tenant's
Percentage of Operating Expenses as described in Paragraph 6 below which
Landlord has included in Monthly Base Rent, which, for purposes of this
Lease, will be an amount equal to the Operating Expenses incurred for
calendar year 2000 (the "Base Year").
(o) Security Deposit: None
(p) Tenant Improvements: All tenant improvements installed or to be installed by
Landlord or Tenant within the Premises to prepare the Premises for occupancy
pursuant to the terms of the Work Letter Agreement attached hereto as Exhibit
"C".
(q) Tenant Improvement Allowance: Thirty-Five Dollars ($35) per Usable
Square Foot of the Premises, to be applied as provided in the Work Letter
Agreement attached hereto as Exhibit "C".
(r) Permitted Use: General office uses and no other use without the express
written consent of Landlord, which consent Landlord may withhold in its sole
and absolute discretion.
(s) Parking: Tenant may use a number of parking permits equal to three (3)
permits per each one thousand (1,000) Usable Square Feet within the Premises
during the Original Term, at no cost to Tenant, subject to the terms and
conditions of Paragraph 32 below and the Rules and Regulations regarding parking
contained in Exhibit "H". One-third (1/3) of Tenant's parking permits shall be
for Tenant's use in the parking space locations as depicted on Exhibit "A-I"
attached hereto; all other parking permits shall be unreserved parking permits.
(t) Broker(s): CB Richard Ellis, representing Landlord
Travers Realty, representing Tenant
(u) Guarantor(s): Intentionally omitted.
(v) Interest Rate: shall mean the greater of ten percent (10%) per annum or two
percent (2%) in excess of the prime lending or reference rate of Wells Fargo
Bank N.A. or any successor bank in effect on the twenty-fifth (25th) day of the
calendar month immediately prior to the event giving rise to the Interest Rate
imposition; provided, however, the Interest Rate will in no event exceed the
maximum interest rate permitted to be charged by applicable law.
(w) Exhibits: "A" through "H", inclusive, which Exhibits are attached to this
Lease and incorporated herein by this reference. As provided in Paragraph 3
below, a completed version of Exhibit "D" will be delivered to Tenant after
Landlord delivers possession of the Premises to Tenant.
(x) Addendum Paragraphs:
1 through 3, inclusive, which Addendum Paragraphs are attached to this Lease and
incorporated herein by this reference.
This Paragraph 1 represents a summary of the basic terms and definitions of this
Lease. In the event of any inconsistency between the terms contained in this
Paragraph 1 and any specific provision of this Lease, the terms of the more
specific provision shall prevail.
2. PREMISES AND COMMON AREAS.
(a) Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises as improved or to be improved with the Tenant Improvements
described in the Work Letter Agreement, a copy of which is attached hereto as
Exhibit "C".
(b) Mutual Covenants. Landlord and Tenant agree that the letting and hiring of
the Premises is upon and subject to the terms, covenants and conditions
contained in this Lease and each party covenants as a material part of the
consideration for this Lease to keep and perform their respective obligations
under this Lease.
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(c) Tenant's Use of Common Areas. During the Term of this Lease, Tenant shall
have the nonexclusive right to use in common with Landlord and all persons,
firms and corporations conducting business in the Development and their
respective customers, guests, licensees, invitees, subtenants, employees and
agents (collectively, "Development Occupants"), subject to the terms of this
Lease, the Rules and Regulations referenced in Paragraph 28 below and all
covenants, conditions and restrictions now or hereafter affecting the
Development, the following common areas of the Building and/or the Development
(collectively, the "Common Areas"):
(i) The Building's common entrances, hallways, lobbies, public restrooms on
multi-tenant floors, elevators, stairways and accessways, loading docks, ramps,
drives and platforms and any passageways and serviceways thereto, and the common
pipes, conduits, wires and appurtenant equipment within the Building which serve
the Premises (collectively, "Building Common Areas"); and
(ii) The parking facilities of the Development which serve the Building (subject
to the provisions of Exhibit "H"), loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways, landscaped areas, plaza
areas, fountains and similar areas and facilities situated within the
Development and appurtenant to the Building which are not reserved for the
exclusive use of any Development Occupants (collectively, "Development Common
Areas").
(d) Landlord's Reservation of Rights. Provided Tenant's use of and access to the
Premises and parking to be provided to Tenant under this Lease is not interfered
with in an unreasonable manner, Landlord reserves for itself and for all other
owner(s) and operator(s) of the Development Common Areas and the balance of the
Development, the right from time to time to: (i) install, use, maintain, repair,
replace and relocate pipes, ducts, conduits, wires and appurtenant meters and
equipment above the ceiling surfaces, below the floor surfaces, within the walls
and in the central core areas of the Building; (ii) make changes to the design
and layout of the Development, including, without limitation, changes to
buildings, driveways, entrances, loading and unloading areas, direction of
traffic, landscaped areas and walkways, and, subject to the parking provisions
contained in Paragraph 32 and Exhibit "H", parking permits and parking areas;
and (iii) use or close temporarily the Building Common Areas, the Development
Common Areas and/or other portions of the Development while engaged in making
improvements, repairs or alterations to the Building, the Development, or any
portion thereof.
3. TERM.
(a) Original Term. The term of this Lease ("Original Term") will be for the
period designated in subparagraph 1(i), commencing on the Commencement Date, and
ending on the last day of the month in which the expiration of such period
occurs, including any extensions of the Term pursuant to any provision of this
Lease or written agreement of the parties. Notwithstanding the foregoing, if the
Commencement Date falls on any day other than the first day of a calendar month
then the Term of this Lease will be measured from the first day of the month
following the month in which the Commencement Date occurs. Each consecutive
twelve (12) month period of the Term of this Lease, commencing on the
Commencement Date, will be referred to herein as a "Lease Year". Landlord's
Notice of Lease Term Dates and Tenant's Percentage ("Notice"), in the form of
Exhibit "D" attached hereto, will set forth the Commencement Date, the date upon
which the Term of this Lease shall end, the Rentable Square Feet within the
Premises and the Building, and Tenant's Percentage and will be delivered to
Tenant after Landlord delivers possession of the Premises to Tenant. The Notice
will be binding upon Tenant unless Tenant objects to the Notice in writing
within five (5) days of Tenant's receipt of the Notice.
(b) Extension. Subject to the terms of this Paragraph 3, Landlord hereby grants
to Tenant one (1) option ("Extension Option") to extend the original Term as to
the entire Premises only for an additional period of five (5) years ("Option
Term"), on the same terms, covenants and conditions as provided for in the Lease
for the original Term, except that the economic Lease terms during the Option
Term shall be as set forth in this Paragraph 3.
(c) Rent for Option Term. Monthly Base Rent at the beginning of the Option Term
shall be adjusted to equal the "fair market" determined based on the parameters
described in subparagraph 3(e) below; provided, however, in no event shall the
Monthly Base Rent be decreased after such adjustment to an amount less than the
Monthly Base Rent payable in the month immediately preceding the Option Term.
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(d) Exercise of Option. The Extension Option must be exercised, if at all, by
written notice ("Extension Notice") delivered by Tenant to Landlord no later
than the date which is four hundred twenty-five (425) days prior to the
expiration of the original Term.
(e) Determination of Monthly Base Rent. The "fair market" determination as
described in this Paragraph 3 shall mean the annual amount per square foot,
projected during the Option Term (including any applicable rent increases during
the Option Term), that a willing, comparable, renewal tenant (excluding sublease
and assignment transactions), would pay and that a willing, comparable landlord
would accept for comparable space in a comparable Class "A" building located in
the City of Calabasas or Warner Center (the "Comparison Market Area").
Comparable space shall consist of such space of comparable quality and
improvements as are located within the Building, taking into account the age,
quality, layout of the Premises, the parking rights available to Tenant and
Tenant's Authorized Users, and also taking into account items that professional
real estate brokers customarily consider, such as who is paying for taxes and
insurance, rental rates, availability, tenant size and other factors typically
considered by Landlord or lessors of similar facilities, and shall include
consideration given to tenant improvement allowance, free rent or other
concessions but only to the extent such concessions are generally available to
renewal tenants in the Comparison Market Area.
(f) Tenant Review Period and Election to Cancel Exercise of Extension Option.
Within thirty (30) days following Tenant's due and timely exercise of the
Extension Option as provided herein, Landlord shall provide Tenant with written
notice of Landlord's good faith determination of fair market for the Premises
for the applicable Option Term determined by taking into account the matters
described in subparagraph 3(e) above. Within sixty (60) days ("Negotiation
Period") after receipt of Landlord's notice of the fair market determination,
Landlord and Tenant shall meet in a good faith effort to agree upon the fair
market for the Premises for the Option Term but without any obligation to so
agree. If Landlord and Tenant fail to reach agreement on such fair market
determination prior to the expiration of the Negotiation Period (the "Outside
Agreement Date"), then Tenant, within five (5) days of the expiration of the
Negotiation Period, may cancel and nullify the Extension Option by delivering
written notice of such election to Landlord. In the event of Tenant's failure to
so elect to cancel and nullify the Extension Option within such five (5) day
period, Landlord and Tenant shall submit their respective good faith
determinations of fair market for the Premises for the relevant period of time
to appraisal in accordance with the provisions below.
(g) Appointment of Appraisers. Landlord and Tenant shall each appoint one (1)
independent, unaffiliated appraiser who is by profession a licensed real estate
broker who has been active over the five (5) year period ending on the date of
such appointment in the leasing of office space located in the Comparison Market
Area. Each such appraiser shall be appointed within fifteen (15) days after the
Outside Agreement Date. If the two (2) appraisers so appointed do not within
fifteen (15) days of the date of the appointment of the last appointed appraiser
agree upon whether Landlord's or Tenant's last submitted (on the Outside
Agreement Date) fair market determination, then said appraisers within five (5)
days thereafter shall agree upon and appoint a third appraiser who shall be
qualified under the same criteria for qualification of the initial two (2)
appraisers.
(h) Third Appraiser. The third appraiser shall determine whether the parties
shall use Landlord's or Tenant's last submitted (on the Outside Agreement Date)
fair market determination, and shall notify Landlord and Tenant thereof. The
determination of the third appraiser shall be limited solely to the issue of
whether Landlord's or Tenant's last submitted (on the Outside Agreement Date)
fair market determination is the closest to the actual fair market for such area
as solely determined by the third appraiser, taking into account the
requirements specified above. The decision of the third appraiser shall be final
and binding upon Landlord and Tenant.
(i) Failure to Appoint Appraiser. If either Landlord or Tenant fails to appoint
an appraiser within the time period specified in subparagraph 3(g) hereinabove,
the appraiser appointed by one of them shall, within fifteen (15) days following
the date on which the party failing to appoint an appraiser could have last
appointed such appraiser, reach a decision based upon the procedures set forth
above (i.e., by selecting either Landlord's or Tenant's last submitted [on the
Outside Agreement Date] fair market determination) and shall notify Landlord and
Tenant thereof, and such appraiser's decision shall be final and binding upon
Landlord and Tenant.
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(j) Failure to Appoint Third Appraiser. If the two (2) appraisers selected by
Landlord and Tenant fail to agree upon and timely appoint a third appraiser,
both appraisers shall be dismissed and the matter to be decided shall be
forthwith submitted to arbitration under the provisions of the American
Arbitration Association based upon the procedures set forth above (i.e., by
selecting either Landlord's or Tenant's last submitted [on the Outside Agreement
Date] fair market determination).
(k) Delay In Determination of Fair Market Rent. If the process described in this
Paragraph 3 has not resulted in a selection of Landlord's or Tenant's fair
market determinations by the commencement of the applicable Option Term, then
the average of the fair market determinations estimated by Landlord or Tenant
shall be used until a final decision has been reached by the appropriate
appraiser, with an appropriate rental credit and other adjustments for any
overpayments of Base Rent or other amounts if the appropriate appraiser selects
Tenant's estimate of fair market.
(l) Cost of Appraisers. The cost of each party's appraiser shall be the
responsibility of the party selecting such appraiser, and the cost of the third
appraiser (and, if necessary, arbitration) shall be shared by Landlord and
Tenant equally.
(m) Deleted.
(n) Deleted.
(o) Effect of Default. Tenant shall have no right to exercise the Extension
Option, notwithstanding any provision of the grant of the Extension Option to
the contrary, and Tenant's exercise of the Extension Option may be nullified by
Landlord and deemed of no further force or effect, if (i) Tenant shall be in
default of any monetary obligation or material non-monetary obligation under the
terms of this Lease as of Tenant's exercise of the Extension Option in question
or at any time after the exercise of such Option and prior to the commencement
of the Option Term, or (ii) Landlord has given Tenant two (2) or more notices of
default, whether or not such defaults are subsequently cured, during any twelve
(12) consecutive month period of the Lease.
4. POSSESSION.
(a) Delivery of Possession. Landlord agrees to deliver possession of the
Premises to Tenant in accordance with the terms of the Work Letter Agreement
attached hereto as Exhibit "C". Notwithstanding the foregoing, Landlord will not
be obligated to deliver possession of the Premises to Tenant (but Tenant will be
liable for rent if Landlord can otherwise deliver the Premises to Tenant) until
Landlord has received from Tenant all of the following: (i) a copy of this Lease
fully executed by Tenant and the guaranty of Tenant's obligations under this
Lease, if any, executed by the Guarantor(s); (ii) the first installment of
Monthly Base Rent; (iii) executed copies of policies of insurance or
certificates thereof as required under Paragraph 19 of this Lease; (iv) copies
of all governmental permits and authorizations, if any, required in connection
with Tenant's operation of its business within the Premises; and (v) if Tenant
is a corporation or partnership, such evidence of due formation, valid existence
and authority as Landlord may reasonably require, which may include, without
limitation, a certificate of good standing, certificate of secretary, articles
of incorporation, statement of partnership, or other similar documentation.
(b) Condition of Premises. Prior to the Commencement Date and in accordance with
the Work Letter Agreement attached hereto as Exhibit "C", Landlord and Tenant
will jointly conduct a walk-through inspection of the Premises and will jointly
prepare a punch-list ("Punch-List") of items required to be installed by
Landlord under the Work Letter Agreement which require finishing or correction.
The Punch-List will not include any items of damage to the Premises caused by
Tenant's move-in or early entry, if permitted, which damage will be corrected or
repaired by Landlord, at Tenant's expense or, at Landlord's election, by Tenant,
at Tenant's expense. Other than the items specified in the Punch-List, by taking
possession of the Premises, Tenant will be deemed to have accepted the Premises
in its condition on the date of delivery of possession and to have acknowledged
that the Tenant Improvements have been installed as required by the Work Letter
Agreement and that there are no additional items needing work or repair.
Landlord will cause all items in the Punch-List to be repaired or corrected
within thirty (30) days following the preparation of the Punch-List or as soon
as practicable after the preparation of the Punch-List. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises, the Building, the Development or any
portions thereof or with respect to the suitability of same for the conduct of
Tenant's business and Tenant further acknowledges that Landlord will have no
obligation to construct or complete any additional buildings or improvements
within the Development.
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(c) Representations By Landlord. Landlord hereby represents and warrants as
follows: (i) the Building, as of the Commencement Date shall comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date; provided,
however, this warranty shall not apply to any Tenant Improvements which Tenant
shall cause to be installed within the Premises; and (ii) Landlord has not
caused any Hazardous Materials to be brought upon, stored, used, handled,
generated, released or disposed of on, in, under or about the Premises, the
Building and/or the Common Areas. In the event Tenant does not provide Landlord
with a written notice of a non-compliance with the representations and
warranties set forth in this subparagraph 4(c) within six (6) months of the
Commencement Date, Landlord's representations and warranties set forth in this
subparagraph 4(c) shall be deemed to have no further force or effect.
5. RENT.
(a) Monthly Base Rent. Tenant agrees to pay Landlord the Monthly Base Rent for
the Premises (subject to adjustment as hereinafter provided) in advance on the
first day of each calendar month during the Term without prior notice or demand,
except that Tenant agrees to pay the Monthly Base Rent for the first month of
the Term directly to Landlord concurrently with Tenant's delivery of the
executed Lease to Landlord. If the Term of this Lease commences or ends on a day
other than the first day of a calendar month, then the rent for such period will
be prorated in the proportion that the number of days this Lease is in effect
during such period bears to the number of days in such month. All rent must be
paid to Landlord, without any deduction or offset, in lawful money of the United
States of America, at the address designated by Landlord or to such other person
or at such other place as Landlord may from time to time designate in writing.
Monthly Base Rent will be adjusted during the Term of this Lease as provided in
subparagraph l(m).
(b) Additional Rent. All amounts and charges to be paid by Tenant hereunder,
including, without limitation, payments for Operating Expenses, insurance,
repairs and parking, will be considered additional rent for purposes of this
Lease, and the word "rent" as used in this Lease will include all such
additional rent unless the context specifically or clearly implies that only
Monthly Base Rent is intended.
(c) Late Payments. Late payments of Monthly Base Rent and/or any item of
additional rent will be subject to interest and a late charge as provided in
subparagraph 22(f) below.
6. OPERATING EXPENSES.
(a) Operating Expenses. In addition to Monthly Base Rent, commencing on the
first anniversary of the Commencement Date and continuing throughout the Term of
this Lease, Tenant agrees to pay Landlord as additional rent in accordance with
the terms of this Paragraph 6, Tenant's Percentage of Operating Expenses as
defined in Exhibit "E" attached hereto to the extent Tenant's Percentage of
Operating Expenses exceeds Tenant's Operating Expense Allowance.
(b) Estimate Statement. Prior to the Commencement Date and on or about March 1st
of each subsequent calendar year during the Term of this Lease, Landlord will
endeavor to deliver to Tenant a statement ("Estimate Statement") wherein
Landlord will estimate both the Operating Expenses and Tenant's Percentage of
Operating Expenses for the then current calendar year. If the estimate of
Tenant's Percentage of Operating Expenses in the Estimate Statement exceeds
Tenant's Operating Expense Allowance, Tenant agrees to pay Landlord, as
"Additional Rent", one-twelfth (1/12th) of such excess each month thereafter,
beginning with the next installment of rent due, until such time as Landlord
issues a revised Estimate Statement or the Estimate Statement for the succeeding
calendar year; except that, concurrently with the regular monthly rent payment
next due following the receipt of each such Estimate Statement, Tenant agrees to
pay Landlord an amount equal to one monthly installment of such excess (less any
applicable Operating Expenses already paid) multiplied by the number of months
from January, in the current calendar year, to the month of such rent payment
next due, all months inclusive. If at any time during the Term of this Lease,
but not more often than quarterly, Landlord reasonably determines that Tenant's
Percentage of Operating Expenses for the current calendar year will be greater
than the amount set forth in the then current Estimate Statement, Landlord may
issue a revised Estimate Statement and Tenant agrees to pay Landlord, within ten
(10) days of receipt of the revised Estimate Statement, the difference between
the amount owed by Tenant under such revised Estimate Statement and the amount
owed by Tenant under the original Estimate Statement for the portion of the then
current calendar year which has expired. Thereafter Tenant agrees to pay
Tenant's Percentage of Operating Expenses based on such revised Estimate
Statement until Tenant receives the next calendar year's Estimate Statement or a
new revised Estimate Statement for the current calendar year. In the event
Tenant's Percentage of Operating Expenses for any calendar year is less than
Tenant's Operating Expense Allowance, Tenant will not be entitled to a credit
against any rent, additional rent or Tenant's Percentage of future Operating
Expenses payable hereunder.
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(c) Actual Statement. By March 1st of each calendar year during the Term of this
Lease (commencing March 1 in the calendar year following the base year for
Operating Expenses, if applicable), Landlord will also endeavor to deliver to
Tenant a statement ("Actual Statement") which states the actual Operating
Expenses for the preceding calendar year. If the Actual Statement reveals that
Tenant's Percentage of the actual Operating Expenses is more than the total
Additional Rent paid by Tenant for Operating Expenses on account of the
preceding calendar year, Tenant agrees to pay Landlord the difference in a lump
sum within ten (10) days of receipt of the Actual Statement. If the Actual
Statement reveals that Tenant's Percentage of the actual Operating Expenses is
less than the Additional Rent paid by Tenant for Operating Expenses on account
of the preceding calendar year, Landlord will credit any overpayment toward the
next monthly installment(s) of Tenant's Percentage of the Operating Expenses due
under this Lease.
(d) Miscellaneous. Any delay or failure by Landlord in delivering any Estimate
Statement or Actual Statement pursuant to this Paragraph 6 will not constitute a
waiver of its right to require an increase in rent nor will it relieve Tenant of
its obligations pursuant to this Paragraph 6, except that Tenant will not be
obligated to make any payments based on such Estimate Statement or Actual
Statement until ten (10) days after receipt of such Estimate Statement or Actual
Statement. Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant's Percentage of the actual
Operating Expenses for the year in which this Lease terminates, Tenant agrees to
promptly pay any increase due over the estimated expenses paid and, conversely,
any overpayment made in the event said expenses decrease shall promptly be
rebated by Landlord to Tenant. Such obligation will be a continuing one which
will survive the expiration or earlier termination of this Lease. Prior to the
expiration or sooner termination of the Lease Term and Landlord's acceptance of
Tenant's surrender of the Premises, Landlord will have the right to estimate the
actual Operating Expenses for the then current Lease Year and to collect from
Tenant prior to Tenant's surrender of the Premises, Tenant's Percentage of any
excess of such actual Operating Expenses over the estimated Operating Expenses
paid by Tenant in such Lease Year.
(e) Tenant's Audit Rights. Notwithstanding anything to the contrary contained in
this Lease, if Tenant reasonably disputes any amounts set forth in any Actual
Statement described above in this Paragraph 6, Tenant will have the right no
later than sixty (60) days following receipt of an Actual Statement to cause
Landlord's general ledger of accounts with respect to the immediately preceding
calendar year only to be audited by a nationally recognized firm of certified
public accountants reasonably approved by Landlord, at no cost or expense to
Landlord, by a certified public accountant mutually acceptable to Landlord and
Tenant and which has prior experience in the review of financial statements and
which shall not have provided primary accounting services to Tenant within the
last three (3) years and which shall not be retained by Tenant on a contingency
basis; provided, however, Tenant shall not have the right to perform any such
audit more than one (1) time for any calendar year during the Lease Term,
provided further, if any other tenant(s) shall have already initiated an audit
of the Operating Expenses during such calendar year, Landlord shall have the
right at its option to limit Tenant's audit to a review of such other audit(s)
and any reasonable and specific concerns Tenant may have with any such audit(s)
and Tenant shall not be entitled to reopen Landlord's general ledger of accounts
regarding Operating Expenses for such calendar year except with respect to such
reasonable and specific concerns of Tenant concerning such other audit(s). Any
audit conducted by or on behalf of Tenant shall be performed within ninety (90)
days and shall be conducted at Landlord's office during Landlord's normal
business hours and in the manner so as to minimize interference with Landlord's
business operations. Landlord shall have no obligation and Tenant shall have no
right to make photocopies of any of Landlord's ledgers, invoices or other items.
Tenant's audit shall be limited to an on-site review of Landlord's general
ledger of accounts. The amounts payable under this Paragraph 6 by Landlord to
Tenant or to Tenant to Landlord, as the case may be, will be appropriately
adjusted on the basis of such audit. If such audit discloses an overstatement of
Operating Expenses in excess of five percent (5%) for such calendar year, Tenant
will receive a credit against Tenant's future Operating Expense obligations for
the reasonable costs of such audit; otherwise the cost of such audit including
Landlord's costs incurred in complying with such audit shall be borne by Tenant.
Tenant agrees to keep, and to cause in its account and employee to keep, all
information revealed by any audit of Landlord's books and records strictly
confidential and not to disclose any such information or permit any such
information to be disclosed to anyone other than Landlord, unless compelled to
do so by a court of law.
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7. DELETED.
8. USE.
(a) Tenant's Use of the Premises. The Premises may be used for the use or uses
set forth in subparagraph 1(r) only, and Tenant will not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. Nothing in this Lease will be deemed to give Tenant any exclusive
right to such use in the Building or the Development.
(b) Compliance. At Tenant's sole cost and expense, Tenant agrees to procure,
maintain and hold available for Landlord's inspection, all governmental licenses
and permits required for the proper and lawful conduct of Tenant's business from
the Premises, if any. Tenant agrees not to use, alter or occupy the Premises or
allow the Premises to be used, altered or occupied in violation of, and Tenant,
at its sole cost and expense, agrees to use and occupy the Premises and cause
the Premises to be used and occupied in compliance with: (i) any and all laws,
statutes, zoning restrictions, ordinances, rules, regulations, orders and
rulings now or hereafter in force and any requirements of any insurer, insurance
authority or duly constituted public authority having jurisdiction over the
Premises, the Building or the Development now or hereafter in force, (ii) the
requirements of the Board of Fire Underwriters and any other similar body, (iii)
the Certificate of Occupancy issued for the Building. Tenant shall not use or
permit the Premises to be used for any purpose which would cause a violation of
any recorded covenants, conditions and restrictions and similar regulatory
agreements, if any, which affect the use, occupation or alteration of the
Premises, the Building and/or the Development. Tenant agrees to comply with the
Rules and Regulations referenced in Paragraph 28 below. Tenant agrees not to do
or permit anything to be done in or about the Premises which will in any manner
obstruct or interfere with the rights of other tenants or occupants of the
Development, or injure or unreasonably annoy them, or use or allow the Premises
to be used for any unlawful or unreasonably objectionable purpose. Tenant agrees
not to cause, maintain or permit any nuisance or waste in, on, under or about
the Premises or elsewhere within the Development. Notwithstanding anything
contained in this Lease to the contrary, all transferable development rights
related in any way to the Development are and will remain vested in Landlord,
and Tenant hereby waives any rights thereto.
(c) Hazardous Materials. Except for ordinary and general office supplies
typically used in the ordinary course of business within office buildings, such
as copier toner, liquid paper, glue, ink and common household cleaning materials
(some or all of which may constitute "Hazardous Materials" as defined in this
Lease), Tenant agrees not to cause or permit any Hazardous Materials to be
brought upon, stored, used, handled, generated, released or disposed of on, in,
under or about the Premises, the Building, the Common Areas or any other portion
of the Development by Tenant, its agents, employees, subtenants, assignees,
licensees, contractors or invitees (collectively, "Tenant's Parties"), without
the prior written consent of Landlord, which consent Landlord may withhold in
its sole and absolute discretion. Upon the expiration or earlier termination of
this Lease, Tenant agrees to promptly remove from the Premises, the Building and
the Development, at its sole cost and expense, any and all Hazardous Materials,
including any equipment or systems containing Hazardous Materials which are
installed, brought upon, stored, used, generated or released upon, in, under or
about the Premises, the Building and/or the Development or any portion thereof
by Tenant or any of Tenant's Parties. To the fullest extent permitted by law,
Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord
and Landlord's partners, officers, directors, employees, agents, successors and
assigns (collectively, "Landlord Indemnified Parties") from and against any and
all claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs (including, without limitation, clean-up,
removal, remediation and restoration costs, sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees and court costs) which arise or
result from the presence of Hazardous Materials on, in, under or about the
Premises, the Building or any other portion of the Development and which are
caused or permitted by Tenant or any of Tenant's Parties. Tenant agrees to
promptly notify Landlord of any release of Hazardous Materials at the Premises,
the Building or any other portion of the Development which Tenant becomes aware
of during the Term of this Lease, whether caused by Tenant or any other persons
or entities. In the event of any release of Hazardous Materials caused or
permitted by Tenant or any of Tenant's Parties, Landlord shall have the right,
but not the obligation, to cause Tenant to immediately take all steps Landlord
deems necessary or appropriate to remediate such release and prevent any similar
future release to the satisfaction of Landlord and Landlord's mortgagee(s). As
used in this Lease, the term "Hazardous Materials" shall mean and include any
hazardous or toxic materials, substances or wastes as now or hereafter
designated under any law, statute, ordinance, rule, regulation, order or ruling
of any agency of the State, the United States Government or any local
governmental authority, including, without limitation, asbestos, petroleum,
petroleum hydrocarbons and petroleum based products, urea formaldehyde foam
insulation, polychlorinated biphenyls ("PCBs"), and freon and other
chlorofluorocarbons. The provisions of this subparagraph 8(c) will survive the
expiration or earlier termination of this Lease.
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9. NOTICES. Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery (including delivery by overnight
courier or an express mailing service) or by mail, if sent by registered or
certified mail. Notices to Tenant shall be sufficient if delivered to Tenant at
the address designated in subparagraph 1(d) and notices to Landlord shall be
sufficient if delivered to Landlord at the address designated in subparagraph
1(b). Either party may specify a different address for notice purposes by
written notice to the other, except that the Landlord may in any event use the
Premises as Tenant's address for notice purposes.
10. BROKERS. The parties acknowledge that the broker(s) who negotiated this
Lease are stated in subparagraph 1(t). Each party represents and warrants to the
other, that, to its knowledge, no other broker, agent or finder (a) negotiated
or was instrumental in negotiating or consummating this Lease on its behalf, and
(b) is or might be entitled to a commission or compensation in connection with
this Lease. Landlord and Tenant each agree to promptly indemnify, protect,
defend and hold harmless the other from and against any and all claims, damages,
judgments, suits, causes of action, losses, liabilities, penalties, fines,
expenses and costs (including attorneys' fees and court costs) resulting from
any breach by the indemnifying party of the foregoing representation, including,
without limitation, any claims that may be asserted by any broker, agent or
finder undisclosed by the indemnifying party. The foregoing mutual indemnity
shall survive the expiration or earlier termination of this Lease.
11. SURRENDER; HOLDING OVER.
(a) Surrender. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not constitute a merger, and shall, at the
option of Landlord, operate as an assignment to Landlord of any or all subleases
or subtenancies. Upon the expiration or earlier termination of this Lease,
Tenant agrees to peaceably surrender the Premises to Landlord broom clean and in
a state of first-class order, repair and condition, ordinary wear and tear and
casualty damage (if this Lease is terminated as a result thereof pursuant to
Paragraph 20) excepted, with all of Tenant's personal property and Alterations
(as defined in Paragraph 13) removed from the Premises to the extent required
under Paragraph 13 and all damage caused by such removal repaired as required by
Paragraph 13. Prior to the date Tenant is to actually surrender the Premises to
Landlord, Tenant agrees to give Landlord reasonable prior notice of the exact
date Tenant will surrender the Premises so that Landlord and Tenant can schedule
a walk-through of the Premises to review the condition of the Premises and
identify the Alterations and personal property which are to remain upon the
Premises and which items Tenant is to remove, as well as any repairs Tenant is
to make upon surrender of the Premises. The delivery of keys to any employee of
Landlord or to Landlord's agent or any employee thereof alone will not be
sufficient to constitute a termination of this Lease or a surrender of the
Premises.
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(b) Holding Over. Tenant will not be permitted to hold over possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, which consent Landlord may withhold in its
sole and absolute discretion. If Tenant holds over after the expiration or
earlier termination of the Term, Landlord may, at its option, treat Tenant as a
tenant at sufferance only, and such continued occupancy by Tenant shall be
subject to all of the terms, covenants and conditions of this Lease, so far as
applicable, except that the Monthly Base Rent for any such holdover period shall
be equal to the greater of (i) one hundred twenty-five percent (125%) of the
Monthly Base Rent in effect under this Lease immediately prior to such holdover,
or (ii) the then currently scheduled rental rate for comparable space in the
Building, in either event prorated on a daily basis. Acceptance by Landlord of
rent after such expiration or earlier termination will not result in a renewal
of this Lease. The foregoing provisions of this Paragraph 11 are in addition to
and do not affect Landlord's right of re-entry or any rights of Landlord under
this Lease or as otherwise provided by law. If Tenant fails to surrender the
Premises upon the expiration of this Lease in accordance with the terms of this
Paragraph 11 despite demand to do so by Landlord, Tenant agrees to promptly
indemnify, protect, defend and hold Landlord harmless from all claims, damages,
judgments, suits, causes of action, losses, liabilities, penalties, fines,
expenses and costs (including attorneys' fees and costs), including, without
limitation, costs and expenses incurred by Landlord in returning the Premises to
the condition in which Tenant was to surrender it and claims made by any
succeeding tenant founded on or resulting from Tenant's failure to surrender the
Premises. The provisions of this subparagraph 11(b) will survive the expiration
or earlier termination of this Lease.
12. TAXES ON TENANT'S PROPERTY. Tenant agrees to pay before delinquency, all
taxes and assessments (real and personal) levied against (a) any personal
property or trade fixtures placed by Tenant in or about the Premises (including
any increase in the assessed value of the Premises based upon the value of any
such personal property or trade fixtures); and (b) any Tenant Improvements or
Alterations in the Premises (whether installed and/or paid for by Landlord or
Tenant) to the extent such items are assessed at a valuation higher than the
valuation at which tenant improvements conforming to Landlord's building
standard tenant improvements are assessed. If any such taxes or assessments are
levied against Landlord or Landlord's property, Landlord may, after written
notice to Tenant (and under proper protest if requested by Tenant) pay such
taxes and assessments, in which event Tenant agrees to reimburse Landlord all
amounts paid by Landlord within ten (10) business days after demand by Landlord;
provided, however, Tenant, at its sole cost and expense, will have the right,
with Landlord's cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of any such taxes and assessments so paid
under protest.
13. ALTERATIONS. After installation of the initial Tenant Improvements for the
Premises pursuant to Exhibit "C", Tenant may, at its sole cost and expense, make
alterations, additions, improvements and decorations to the Premises
(collectively, "Alterations") subject to and upon the following terms and
conditions:
(a) Prohibited Alterations. Tenant may not make any Alterations which: (i)
affect any area outside the Premises; (ii) affect the Building's structure,
equipment, services or systems, or the proper functioning thereof, or Landlord's
access thereto; (iii) affect the outside appearance, character or use of the
Building or the Building Common Areas; (iv) in the reasonable opinion of
Landlord, lessen the value of the Building; or (v) will violate or require a
change in any occupancy certificate applicable to the Premises.
(b) Landlord's Approval. Before proceeding with any Alterations which are not
prohibited in subparagraph 13(a) above, Tenant must first obtain Landlord's
written approval of the plans, specifications and working drawings for such
Alterations, which approval Landlord will not unreasonably withhold or delay;
provided, however, Landlord's prior approval will not be required for any such
Alterations which are not prohibited by subparagraph 13(a) above and which cost
less than Fifty Thousand Dollars ($50,000.00) in the aggregate in any calendar
year as long as (i) Tenant delivers to Landlord notice and a copy of any final
plans, specifications and working drawings for any such Alterations at least ten
(10) days prior to commencement of the work thereof, and (ii) the other
conditions of this Paragraph 13 are satisfied, excluding any bonding
requirements, but including, without limitation, conforming to Landlord's rules,
regulations and insurance requirements which govern contractors. Landlord's
approval of plans, specifications and/or working drawings for Alterations will
not create any responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with applicable permits, laws,
rules and regulations of governmental agencies or authorities. In approving any
Alterations, Landlord reserves the right to require Tenant to provide Landlord
with additional reasonable security for the removal of such Alterations by
Tenant as may be required by this Lease. Landlord reserves the right to post
Notices of Non-Responsibility with respect to any Alterations performed by
Tenant.
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(c) Contractors. Alterations may be made or installed only by contractors and
subcontractors which have been approved by Landlord, which approval Landlord
will not unreasonably withhold or delay; provided, however, Landlord reserves
the right to require that Landlord's contractor for the Building be given the
opportunity to bid for any Alteration work. Before proceeding with any
Alterations, Tenant agrees to provide Landlord with ten (10) days prior written
notice and Tenant's contractors must obtain and maintain, on behalf of Tenant
and at Tenant's sole cost and expense: (i) all necessary governmental permits
and approvals for the commencement and completion of such Alterations; and (ii)
if requested by Landlord, a completion and lien indemnity bond, or other surety,
reasonably satisfactory to Landlord for such Alterations. Throughout the
performance of any Alterations, Tenant agrees to obtain, or cause its
contractors to obtain, workers compensation insurance and general liability
insurance in compliance with the provisions of Paragraph 19 of this Lease.
(d) Manner of Performance. All Alterations must be performed: (i) in accordance
with the approved plans, specifications and working drawings; (ii) in a
lien-free and first-class and workmanlike manner; (iii) in compliance with all
applicable permits, laws, statutes, ordinances, rules, regulations, orders and
rulings now or hereafter in effect and imposed by any governmental agencies and
authorities which assert jurisdiction; (iv) in such a manner so as not to
interfere with the occupancy of any other tenant in the Building, nor impose any
additional expense upon nor delay Landlord in the maintenance and operation of
the Building; and (v) at such times, in such manner, and subject to such rules
and regulations as Landlord may from time to time reasonably designate.
(e) Ownership. The Tenant Improvements, including, without limitation, all
affixed sinks, dishwashers, microwave ovens and other fixtures, and all
Alterations will become the property of Landlord and will remain upon and be
surrendered with the Premises at the end of the Term of this Lease; provided,
however, Landlord may, by written notice delivered to Tenant concurrently with
Landlord's approval of the final working drawings for any Alterations, identify
those Alterations which Landlord will require Tenant to remove at the end of the
Term of this Lease. Landlord may also require Tenant to remove Alterations which
Landlord did not have the opportunity to approve as provided in this Paragraph
13. If Landlord requires Tenant to remove any Alterations, Tenant, at its sole
cost and expense, agrees to remove the identified Alterations on or before the
expiration or earlier termination of this Lease and repair any damage to the
Premises caused by such removal (or, at Landlord's option, Tenant agrees to pay
to Landlord all of Landlord's costs of such removal and repair).
(f) Plan Review. Tenant agrees to pay Landlord, as additional rent, the
reasonable costs of professional services and costs for general conditions of
Landlord's third party consultants if utilized by Landlord (but not Landlord's
"in-house" personnel) for review of all plans, specifications and working
drawings for any Alterations, within ten (10) business days after Tenant's
receipt of invoices either from Landlord or such consultants. In addition,
Tenant agrees to pay Landlord, within ten (10) business days after completion of
any Alterations, a fee to cover Landlord's costs of supervising and
administering the installation of any non-structural Alterations, in the amount
of three percent (3%) of the cost of such Alterations, but in no event less than
Two Hundred Fifty Dollars ($250.00).
(g) Personal Property. All articles of personal property owned by Tenant or
installed by Tenant at its expense in the Premises (including Tenant's business
and trade fixtures, furniture, movable partitions and equipment [such as
telephones, copy machines, computer terminals, refrigerators and facsimile
machines]) will be and remain the property of Tenant, and must be removed by
Tenant from the Premises, at Tenant's sole cost and expense, on or before the
expiration or earlier termination of this Lease. Tenant agrees to repair any
damage caused by such removal at its cost on or before the expiration or earlier
termination of this Lease.
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(h) Removal of Alterations. If Tenant fails to remove by the expiration or
earlier termination of this Lease all of its personal property, or any
Alterations identified by Landlord for removal, Landlord may, at its option,
treat such failure as a hold-over pursuant to subparagraph 11(b) above, and/or
Landlord may (without liability to Tenant for loss thereof) treat such personal
property and/or Alterations as abandoned and, at Tenant's sole cost and expense,
and in addition to Landlord's other rights and remedies under this Lease, at law
or in equity: (a remove and store such items; and/or (b) upon ten (10) days
prior notice to Tenant, sell, discard or otherwise dispose of all or any such
items at private or public sale for such price as Landlord may obtain or by
other commercially reasonable means. Tenant shall be liable for all costs of
disposition of Tenant's abandoned property and Landlord shall have no liability
to Tenant with respect to any such abandoned property. Landlord agrees to apply
the proceeds of any sale of any such property to any amounts due to Landlord
under this Lease from Tenant (including Landlord's attorneys' fees and other
costs incurred in the removal, storage and/or sale of such items), with any
remainder to be paid to Tenant.
14. REPAIRS.
(a) Landlord's Obligations. Landlord agrees to repair and maintain the
structural portions of the Building and the plumbing, heating, ventilating, air
conditioning, elevator and electrical systems installed or furnished by
Landlord, unless such maintenance and repairs are (i) attributable to items
installed in Tenant's Premises which are above standard interior improvements
(such as, for example, custom lighting, special HVAC and/or electrical panels or
systems, kitchen or restroom facilities and appliances constructed or installed
within Tenant's Premises) or (ii) caused in part or in whole by the act, neglect
or omission of any duty by Tenant, its agents, servants, employees or invitees,
in which case Tenant will pay to Landlord, as additional rent, the reasonable
cost of such maintenance and repairs. Landlord will not be liable for any
failure to make any such repairs or to perform any maintenance unless such
failure shall persist for an unreasonable time after written notice of the need
of such repairs or maintenance is given to Landlord by Tenant. Except as
provided in Paragraph 20, Tenant will not be entitled to any abatement of rent
and Landlord will not have any liability by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building or the Premises
or in or to fixtures, appurtenances and equipment therein. Tenant waives the
right to make repairs at Landlord's expense under any law, statute, ordinance,
rule, regulation, order or ruling (including, without limitation, to the extent
the Premises are located in California, the provisions of California Civil Code
Sections 1941 and 1942 and any successor statutes or laws of a similar nature).
(b) Tenant's Obligations. Tenant agrees to keep, maintain and preserve the
Premises in first class condition and repair and, when and if needed, at
Tenant's sole cost and expense, to make all repairs to the Premises and every
part thereof. Any such maintenance and repairs will be performed by Landlord's
contractor, or at Landlord's option, by such contractor or contractors as Tenant
may choose from an approved list to be submitted by Landlord. Tenant agrees to
pay all costs and expenses incurred in such maintenance and repair within seven
(7) days after billing by Landlord or such contractor or contractors. Tenant
agrees to cause any mechanics' liens or other liens arising as a result of work
performed by Tenant or at Tenant's direction to be eliminated as provided in
Paragraph 15 below. Except as provided in subparagraph 14(a) above, Landlord has
no obligation to alter, remodel, improve, repair, decorate or paint the Premises
or any part thereof.
(c) Tenant's Failure to Repair. If Tenant refuses or neglects to repair and
maintain the Premises properly as required hereunder to the reasonable
satisfaction of Landlord, Landlord, at any time following thirty (30) days from
the date on which Landlord makes a written demand on Tenant to effect such
repair and maintenance, may enter upon the Premises and make such repairs and/or
maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as
additional rent, Landlord's costs for making such repairs plus an amount not to
exceed ten percent (10%) of such costs for overhead, within thirty (30) days of
receipt from Landlord of a written itemized bill therefor. Any amounts not
reimbursed by Tenant within such thirty (30) day period will bear interest at
the Interest Rate until paid by Tenant.
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(d) Landlord Repairs/Default. Notwithstanding anything to the contrary contained
in Paragraph 14(a) regarding repairs or Landlord's default, if Tenant provides
written notice to Landlord of an event or circumstance relative to the Premises
which requires the action of Landlord with respect to repair and/or maintenance,
and Landlord fails to provide such action within a reasonable period of time,
given the circumstances, after the receipt of such written notice, but in no
event earlier than thirty (30) days after receipt of such written notice, unless
Landlord is specifically required to act in less than thirty (30) days pursuant
to a specific provision of this Lease or because of an emergency by any
provision hereof, then Tenant may proceed to take the required action upon
delivery of an additional written notice to Landlord specifying Tenant is taking
such required action, including the date of such action to be taken, the cost of
such action, and the projected completion date, and if such action was required
under the terms of this Lease to be taken by Landlord, then Tenant shall be
entitled to prompt reimbursement by Landlord of Tenant's reasonable, actual,
documented costs and expenses in taking such action plus interest thereon at the
Interest Rate. In the event Tenant takes such action, and such work in the
Premises will affect the Building's life safety system, heating, ventilating and
air conditioning systems and elevator systems, or the structural integrity of
the Building, Tenant shall use only those contractors used by Landlord in the
Building for work on such systems or other contractors approved by Landlord.
Further, if Landlord does not deliver a detailed written objection to Tenant
within thirty (30) days after receipt of an invoice by Tenant of its costs of
taking action which Tenant claims should have been taken by Landlord, and if
such invoice from Tenant sets forth a reasonably particularized breakdown of its
costs and expenses in connection with taking such action on behalf of Landlord,
then Tenant shall be entitled to deduct from rental payable by Tenant under this
Lease, the amount set forth in such invoice. If, however, Landlord delivers to
Tenant within thirty (30) days after receipt of Tenant's invoice, a written
objection to the payment of such invoice, setting forth with reasonable
particularity Landlord's reasons for its claim that such action did not have to
be taken by Landlord pursuant to the terms of this Lease, then Tenant shall not
be entitled to such deduction from rental, but as Tenant's sole remedy, Tenant
may proceed to claim a default by Landlord or, if elected by either Landlord or
Tenant, the matter shall proceed to resolution by the selection of an arbitrator
to resolve the dispute, which arbitrator shall be selected and qualified
pursuant to the rules of the American Arbitration Association, and whose costs
shall be paid for by the losing party, unless it is not clear that there is a
"losing party," in which event the costs of arbitration shall be shared equally.
Judgment on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.
15. LIENS. Tenant agrees not to permit any mechanic's, materialmen's or other
liens to be filed against all or any part of the Development, the Building or
the Premises, nor against Tenant's leasehold interest in the Premises, by reason
of or in connection with any repairs, alterations, improvements or other work
contracted for or undertaken by Tenant or any other act or omission of Tenant or
Tenant's agents, employees, contractors, licensees or invitees. At Landlord's
request, Tenant agrees to provide Landlord with enforceable, conditional and
final lien releases (or other evidence reasonably requested by Landlord to
demonstrate protection from liens) from all persons furnishing labor and/or
materials at the Premises. Landlord will have the right at all reasonable times
to post on the Premises and record any notices of non-responsibility which it
deems necessary for protection from such liens. If any such liens are filed,
Tenant will, at its sole cost, promptly cause such liens to be released of
record or bonded so that it no longer affects title to the Development, the
Building or the Premises. If Tenant fails to cause any such liens to be so
released or bonded within ten (10) days after filing thereof, such failure will
be deemed a material breach by Tenant under this Lease without the benefit of
any additional notice or cure period described in Paragraph 22 below, and
Landlord may, without waiving its rights and remedies based on such breach, and
without releasing Tenant from any of its obligations, cause such liens to be
released by any means it shall deem proper, including payment in satisfaction of
the claims giving rise to such liens. Tenant agrees to pay to Landlord within
ten (10) days after receipt of invoice from Landlord, any sum paid by Landlord
to remove such liens, together with interest at the Interest Rate from the date
of such payment by Landlord.
16. ENTRY BY LANDLORD. Landlord and its employees and agents will at all times
have the right to enter the Premises to inspect the same, to supply janitorial
service and any other service to be provided by Landlord to Tenant hereunder, to
show the Premises to prospective purchasers or tenants, to post notices of
nonresponsibility, and/or to repair the Premises as permitted or required by
this Lease. In exercising such entry rights, Landlord will endeavor to minimize,
as reasonably practicable, the interference with Tenant's business, and will
provide Tenant with reasonable advance notice of any such entry (except in
emergency situations). Landlord may, in order to carry out such purposes, erect
scaffolding and other necessary structures where reasonably required by the
character of the work to be performed. Landlord will at all times have and
retain a key with which to unlock all doors in the Premises, excluding Tenant's
vaults and safes. Landlord will have the right to use any and all means which
Landlord may reasonably deem proper to open said doors in an emergency in order
to obtain entry to the Premises. Any entry to the Premises obtained by Landlord
by any of said means, or otherwise, will not be construed or deemed to be a
forcible or unlawful entry into the Premises, or an eviction of Tenant from the
Premises. Landlord will not be liable to Tenant for any damages or losses for
any entry by Landlord.
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17. UTILITIES AND SERVICES. Throughout the Term of the Lease so long as the
Premises are occupied, Landlord agrees to furnish or cause to be furnished to
the Premises the utilities and services described in the Standards for Utilities
and Services attached hereto as Exhibit "F", subject to the conditions and in
accordance with the standards set forth therein. Landlord may require Tenant
from time to time to provide Landlord with a list of Tenant's employees and/or
agents which are authorized by Tenant to subscribe on behalf of Tenant for any
additional services which may be provided by Landlord. Any such additional
services will be provided to Tenant at Tenant's cost. Landlord will not be
liable to Tenant for any failure to furnish any of the foregoing utilities and
services if such failure is caused by all or any of the following: (i) accident,
breakage or repairs; (ii) strikes, lockouts or other labor disturbance or labor
dispute of any character; (iii) governmental regulation, moratorium or other
governmental action or inaction; (iv) inability despite the exercise of
reasonable diligence to obtain electricity, water or fuel; or (v) any other
cause beyond Landlord's reasonable control. In addition, in the event of any
stoppage or interruption of services or utilities, Tenant shall not be entitled
to any abatement or reduction of rent (except as expressly provided in
subparagraphs 20(f) or 21(b) if such failure results from a damage or taking
described therein), no eviction of Tenant will result from such failure and
Tenant will not be relieved from the performance of any covenant or agreement in
this Lease because of such failure. In the event of any failure, stoppage or
interruption thereof, Landlord agrees to diligently attempt to resume service
promptly. 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 fairly determined by Landlord,
incurred by such extraordinary usage and/or Landlord may install separate
meter(s) for the Premises, at Tenant's sole expense, and Tenant agrees
thereafter to pay all charges of the utility providing service and Landlord will
make an appropriate adjustment to Tenant's Operating Expenses calculation to
account for the fact Tenant is directly paying such metered charges, provided
Tenant will remain obligated to pay its proportionate share of Operating
Expenses subject to such adjustment. Notwithstanding the provisions of this
Paragraph 17, if for more than three (3) consecutive business days following
written notice to Landlord, there is no elevator service to the Premises, or no
HVAC or electricity to the Premises, or such an interruption of other essential
utilities and building services, such as fire protection or water, so that any
portion of the Premises cannot be used by Tenant, in Tenant's judgment
reasonably exercised, then Tenant's rent shall thereafter be abated until the
Premises are again usable by Tenant in proportion to the extent to which
Tenant's use of the Premises is interfered with; provided, however, that if
Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant's purposes,
as for example, bringing in portable air-conditioning equipment, then there
shall not be any abatement of rent. This provision shall not apply in case of
damage to, or destruction of, the Premises, which shall be governed by a
separate provision of this Lease.
18. ASSUMPTION OF RISK AND INDEMNIFICATION.
(a) Assumption of Risk. Tenant, as a material part of the consideration to
Landlord, hereby agrees that neither Landlord nor any Landlord Indemnified
Parties (as defined in subparagraph 8(c) above) will be liable to Tenant for,
and Tenant expressly assumes the risk of and waives any and all claims it may
have against Landlord or any Landlord Indemnified Parties with respect to, (i)
any and all damage to property or injury to persons in, upon or about the
Premises, the Building or the Development resulting from any act or omission
(except for the grossly negligent or intentionally wrongful act or omission) of
Landlord, (ii) any such damage caused by other tenants or persons in or about
the Building or the Development, or caused by quasi-public work, (iii) any
damage to property entrusted to employees of the Building, (iv) any loss of or
damage to property by theft or otherwise, or (v) any injury or damage to persons
or property resulting from any casualty, explosion, falling plaster or other
masonry or glass, steam, gas, electricity, water or rain which may leak from any
part of the Building or any other portion of the Development or from the pipes,
appliances or plumbing works therein or from the roof, street or subsurface or
from any other place, or resulting from dampness. Notwithstanding anything to
the contrary contained in this Lease, neither Landlord nor any Landlord
Indemnified Parties will be liable for consequential damages arising out of any
loss of the use of the Premises or any equipment or facilities therein by Tenant
or any Tenant Parties or for interference with light or other incorporeal
hereditaments. Tenant agrees to give prompt notice to Landlord in case of fire
or accidents in the Premises or the Building, or of defects therein or in the
fixtures or equipment.
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(b) Indemnification. Except to the extent that the Indemnified Claim would be
covered by insurance coverage maintained by Landlord and would not cause an
increase to applicable premiums charged for Landlord's insurance policy(ies),
Tenant will be liable for, and agrees, to the maximum extent permissible under
applicable law, to promptly indemnify, protect, defend and hold harmless
Landlord and all Landlord Indemnified Parties, from and against, any and all
claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs, including attorneys' fees and court costs
(collectively, "Indemnified Claims"), arising or resulting from (i) any act or
omission of Tenant or any Tenant Parties (as defined in subparagraph 8(c)
above); (ii) the use of the Premises and Common Areas and conduct of Tenant's
business by Tenant or any Tenant Parties, or any other activity, work or thing
done, permitted or suffered by Tenant or any Tenant Parties, in or about the
Premises, the Building or elsewhere within the Development; and/or (iii) any
default by Tenant of any obligations on Tenant's part to be performed under the
terms of this Lease. In case any action or proceeding is brought against
Landlord or any Landlord Indemnified Parties by reason of any such Indemnified
Claims, Tenant, upon notice from Landlord, agrees to promptly defend the same at
Tenant's sole cost and expense by counsel approved in writing by Landlord, which
approval Landlord will not unreasonably withhold.
(c) Survival; No Release of Insurers. Tenant's indemnification obligations
under subparagraph 18(b) will survive the expiration or earlier termination
of this Lease. Tenant's covenants, agreements and indemnification obligation
in subparagraphs 18(a) and 18(b) above, are not intended to and will not
relieve any insurance carrier of its obligations under policies required to
be carried by Tenant pursuant to the provisions of this Lease.
19. INSURANCE.
(a) Tenant's Insurance. On or before the earlier to occur of (i) the
Commencement Date, or (ii) the date Tenant commences any work of any type in the
Premises pursuant to this Lease (which may be prior to the Commencement Date),
and continuing throughout the entire Term hereof and any other period of
occupancy, Tenant agrees to keep in full force and effect, at its sole cost and
expense, the following insurance:
(i) "All Risks" property insurance including at least the following perils: fire
and extended coverage, smoke damage, vandalism, malicious mischief, sprinkler
leakage (including earthquake sprinkler leakage). This insurance policy must be
upon all property owned by Tenant, for which Tenant is legally liable, or which
is installed at Tenant's expense, and which is located in the Building
including, without limitation, any Tenant Improvements which satisfy the
foregoing qualification and any Alterations, and all furniture, fittings,
installations, fixtures and any other personal property of Tenant, in an amount
not less than the full replacement cost thereof. If there is a dispute as to
full replacement cost, the decision of Landlord or any mortgagee of Landlord
will be presumptive.
(ii) One (1) year insurance coverage for business interruption and loss of
income and extra expense insuring the same perils described in subparagraph
19(a)(i) above, in such amounts as will reimburse Tenant for any direct or
indirect loss of earnings attributable to any such perils including prevention
of access to the Premises, Tenant's parking areas or the Building as a result of
any such perils.
(iii) Commercial General Liability Insurance or Comprehensive General Liability
Insurance (on an occurrence form) insuring bodily injury, personal injury and
property damage including the following divisions and extensions of coverage:
Premises and Operations; Owners and Contractors protective; blanket contractual
liability (including coverage for Tenant's indemnity obligations under this
Lease); products and completed operations; liquor liability (if Tenant serves
alcohol on the Premises); and fire and water damage legal liability in an amount
sufficient to cover the replacement value of the Premises, including Tenant
Improvements, that are rented under the terms of this Lease. Such insurance must
have the following minimum limits of liability: bodily injury, personal injury
and property damage - $1,000,000 each occurrence, provided that if liability
coverage is provided by a Commercial General Liability policy the general
aggregate limit shall apply separately and in total to this location only (per
location general aggregate), and provided further, such minimum limits of
liability may be adjusted from year to year to reflect increases in coverages as
recommended by Landlord's insurance carrier as being prudent and commercially
reasonable for tenants of first class office buildings comparable to the
Building, rounded to the nearest five hundred thousand dollars.
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(iv) Comprehensive Automobile Liability insuring bodily injury and property
damage arising from all owned, non-owned and hired vehicles, if any, with
minimum limits of liability of $1,000,000 per accident.
(v) Worker's Compensation as required by the laws of the State of California
with the following minimum limits of liability: Coverage A - statutory benefits;
Coverage B - $1,000,000 per accident and disease.
(vi) Any other form or forms of insurance as Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, in
amounts, and for insurance risks against which, a prudent tenant would protect
itself, but only to the extent coverage for such risks and amounts are available
in the insurance market at commercially acceptable rates. Landlord makes no
representation that the limits of liability required to be carried by Tenant
under the terms of this Lease are adequate to protect Tenant's interests and
Tenant should obtain such additional insurance or increased liability limits as
Tenant deems appropriate.
(b) Supplemental Tenant Insurance Requirements.
(i) All policies must be in a form reasonably satisfactory to Landlord and
issued by an insurer admitted to do business in the State of California.
(ii) All policies must be issued by insurers with a policyholder rating of "A"
and a financial rating of "X" in the most recent version of Best's Key Rating
Guide.
(iii) All policies must contain a requirement to notify Landlord (and Landlord's
property manager and any mortgagees or ground lessors of Landlord who are named
as additional insureds, if any) in writing not less than thirty (30) days prior
to any material change, reduction in coverage, cancellation or other termination
thereof. Tenant agrees to deliver to Landlord, as soon as practicable after
placing the required insurance, but in any event within the time frame specified
in subparagraph 19(a) above, certificate(s) of insurance and/or if required by
Landlord, certified copies of each policy evidencing the existence of such
insurance and Tenant's compliance with the provisions of this Paragraph 19.
Tenant agrees to cause replacement policies or certificates to be delivered to
Landlord not less than thirty (30) days prior to the expiration of any such
policy or policies. If any such initial or replacement policies or certificates
are not furnished within the time(s) specified herein, Tenant will be deemed to
be in material default under this Lease without the benefit of any additional
notice or cure period provided in subparagraph 22(a)(ii) below, and Landlord
will have the right, but not the obligation, to procure such insurance as
Landlord deems necessary to protect Landlord's interests at Tenant's expense. If
Landlord obtains any insurance that is the responsibility of Tenant under this
Paragraph 19, Landlord agrees to deliver to Tenant a written statement setting
forth the cost of any such insurance and showing in reasonable detail the manner
in which it has been computed and Tenant agrees to promptly reimburse Landlord
for such costs as additional rent.
(iv) General Liability and Automobile Liability policies under subparagraphs
19(a)(iii) and 19(a)(iv) must name Landlord and Landlord's property manager (and
at Landlord's request, Landlord's mortgagees and ground lessors of which Tenant
has been informed in writing) as additional insureds and must also contain a
provision that the insurance afforded by such policy is primary insurance and
any insurance carried by Landlord and Landlord's property manager or Landlord's
mortgagees or ground lessors, if any, will be excess over and non-contributing
with Tenant's insurance.
(c) Tenant's Use. Tenant will not keep, use, sell or offer for sale in or upon
the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building or the Development Common Areas. If
Tenant's occupancy or business in, or on, the Premises, whether or not Landlord
has consented to the same, results in any increase in premiums for the insurance
periodically carried by Landlord with respect to the Building or the Development
Common Areas or results in the need for Landlord to maintain special or
additional insurance, Tenant agrees to pay Landlord the cost of any such
increase in premiums or special or additional coverage as additional rent within
ten (10) days after being billed therefor by Landlord. In determining whether
increased premiums are a result of Tenant's use of the Premises, a schedule
issued by the organization computing the insurance rate on the Building, the
Development Common Areas or the Tenant Improvements showing the various
components of such rate, will be conclusive evidence of the several items and
charges which make up such rate. Tenant agrees to promptly comply with all
reasonable requirements of the insurance authority or any present or future
insurer relating to the Premises.
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(d) Cancellation of Landlord's Policies. If any of Landlord's insurance policies
are cancelled or cancellation is threatened or the coverage reduced or
threatened to be reduced in any way because of the use of the Premises or any
part thereof by Tenant or any assignee or subtenant of Tenant or by anyone
Tenant permits on the Premises and, if Tenant fails to remedy the condition
giving rise to such cancellation, threatened cancellation, reduction of
coverage, threatened reduction of coverage, increase in premiums, or threatened
increase in premiums, within forty-eight (48) hours after notice thereof, Tenant
will be deemed to be in material default of this Lease and Landlord may, at its
option, either terminate this Lease or enter upon the Premises and attempt to
remedy such condition, and Tenant shall promptly pay Landlord the reasonable
costs of such remedy as additional rent. If Landlord is unable, or elects not to
remedy such condition, then Landlord will have all of the remedies provided for
in this Lease in the event of a default by Tenant.
(e) Waiver of Subrogation. Tenant's property insurance shall contain a clause
whereby the insurer waives all rights of recovery by way of subrogation against
Landlord. Tenant shall also obtain and furnish evidence to Landlord of the
waiver by Tenant's worker's compensation insurance carrier of all rights of
recovery by way of subrogation against Landlord.
20. DAMAGE OR DESTRUCTION.
(a) Partial Destruction. If the Premises or the Building are damaged by fire or
other casualty to an extent not exceeding twenty-five percent (25%) of the full
replacement cost thereof, and Landlord's contractor reasonably estimates in a
writing delivered to Landlord and Tenant that the damage thereto may be
repaired, reconstructed or restored to substantially its condition immediately
prior to such damage within one hundred eighty (180) days from the date of such
casualty, and Landlord will receive insurance proceeds sufficient to cover the
costs of such repairs, reconstruction and restoration (including proceeds from
Tenant and/or Tenant's insurance which Tenant is required to deliver to Landlord
pursuant to subparagraph 20(e) below to cover Tenant's obligation for the costs
of repair, reconstruction and restoration of any portion of the Tenant
Improvements and any Alterations for which Tenant is responsible under this
Lease), then Landlord agrees to commence and proceed diligently with the work of
repair, reconstruction and restoration and this Lease will continue in full
force and effect.
(b) Substantial Destruction. Any damage or destruction to the Premises or the
Building which Landlord is not obligated to repair pursuant to subparagraph
20(a) above will be deemed a substantial destruction. In the event of a
substantial destruction, Landlord may elect to either (i) repair, reconstruct
and restore the portion of the Building or the Premises damaged by such
casualty, in which case this Lease will continue in full force and effect,
subject to Tenant's termination right contained in subparagraph 20(d) below; or
(ii) terminate this Lease effective as of the date which is thirty (30) days
after Tenant's receipt of Landlord's election to so terminate.
(c) Notice. Under any of the conditions of subparagraphs 20(a) or 20(b) above,
Landlord agrees to give written notice to Tenant of its intention to repair or
terminate, as permitted in such paragraphs, within the earlier of thirty (30)
days after the occurrence of such casualty, or fifteen (15) days after
Landlord's receipt of the estimate from Landlord's contractor (the applicable
time period to be referred to herein as the "Notice Period").
(d) Tenant's Termination Rights. If Landlord elects to repair, reconstruct and
restore pursuant to subparagraph 20(b)(i) hereinabove, and if Landlord's
contractor estimates that as a result of such damage, Tenant cannot be given
reasonable use of and access to the Premises within two hundred seventy (270)
days after the date of such damage, then Tenant may terminate this Lease
effective upon delivery of written notice to Landlord within ten (10) days after
Landlord delivers notice to Tenant of its election to so repair, reconstruct or
restore.
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(e) Tenant's Costs and Insurance Proceeds. In the event of any damage or
destruction of all or any part of the Premises, Tenant agrees to immediately (i)
notify Landlord thereof, and (ii) deliver to Landlord all property insurance
proceeds received by Tenant with respect to any Tenant Improvements installed by
or at the cost of Tenant and any Alterations, but excluding proceeds for
Tenant's furniture, fixtures, equipment and other personal property, whether or
not this Lease is terminated as permitted in this Paragraph 20, and Tenant
hereby assigns to Landlord all rights to receive such insurance proceeds. If,
for any reason (including Tenant's failure to obtain insurance for the full
replacement cost of any Tenant Improvements installed by or at the cost of
Tenant and any Alterations from any and all casualties), Tenant fails to receive
insurance proceeds covering the full replacement cost of any Tenant Improvements
installed by or at the cost of Tenant and any Alterations which are damaged,
Tenant will be deemed to have self-insured the replacement cost of such items,
and upon any damage or destruction thereto, Tenant agrees to immediately pay to
Landlord the full replacement cost of such items, less any insurance proceeds
actually received by Landlord from Landlord's or Tenant's insurance with respect
to such items.
(f) Abatement of Rent. In the event of any damage, repair, reconstruction and/or
restoration described in this Paragraph 20, rent will be abated or reduced, as
the case may be, from the date of such casualty, in proportion to the degree to
which Tenant's use of the Premises is impaired during such period of repair
until such use is restored. Except for abatement of rent as provided
hereinabove, Tenant will not be entitled to any compensation or damages for loss
of, or interference with, Tenant's business or use or access of all or any part
of the Premises or for lost profits or any other consequential damages of any
kind or nature, which result from any such damage, repair, reconstruction or
restoration.
(g) Inability to Complete. Notwithstanding anything to the contrary contained in
this Paragraph 20, if Landlord is obligated or elects to repair, reconstruct
and/or restore the damaged portion of the Building or the Premises pursuant to
subparagraphs 20(a) or 20(b)(i) above, but is delayed from completing such
repair, reconstruction and/or restoration beyond the date which is sixty (60)
days after the date estimated by Landlord's contractor for completion thereof by
reason of any causes (other than delays caused by Tenant, its subtenants,
employees, agents or contractors or delays which are beyond the reasonable
control of Landlord as described in Paragraph 33 which delays in no event shall
exceed a total of ninety (90) days), then either Landlord or Tenant may elect to
terminate this Lease upon ten (10) days prior written notice given to the other
after the expiration of such sixty (60) day period.
(h) Damage Near End of Term. Landlord and Tenant shall each have the right to
terminate this Lease if any damage to the Premises occurs during the last twelve
(12) months of the Term of this Lease where Landlord's contractor estimates in a
writing delivered to Landlord and Tenant that the repair, reconstruction or
restoration of such damage cannot be completed within sixty (60) days after the
date of such casualty. If either party desires to terminate this Lease under
this subparagraph 20(h), it shall provide written notice to the other party of
such election within ten (10) days after receipt of Landlord's contractor's
repair estimates.
(i) Waiver of Termination Right. Landlord and Tenant agree that the foregoing
provisions of this Paragraph 20 are to govern their respective rights and
obligations in the event of any damage or destruction and supersede and are in
lieu of the provisions of any applicable law, statute, ordinance, rule,
regulation, order or ruling now or hereafter in force which provide remedies for
damage or destruction of leased premises (including, without limitation, to the
extent the Premises are located in California, the provisions of California
Civil Code Section 1932, Subsection 2, and Section 1933, Subsection 4 and any
successor statute or laws of a similar nature).
(j) Termination. Upon any termination of this Lease under any of the provisions
of this Paragraph 20, the parties will be released without further obligation to
the other from the date possession of the Premises is surrendered to Landlord
except for items which have accrued and are unpaid as of the date of termination
and matters which are to survive any termination of this Lease as provided in
this Lease.
21. EMINENT DOMAIN.
(a) Substantial Taking. If the whole of the Premises, or such part thereof as
shall substantially interfere with Tenant's use and occupancy of the Premises,
as contemplated by this Lease, is taken for any public or quasi-public purpose
by any lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or sold to prevent such taking, either party
will have the right to terminate this Lease effective as of the date possession
is required to be surrendered to such authority. Further, if more than
twenty-five percent (25%) of the parking facilities servicing the Building are
taken for public or quasi-public purposes by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, and
Landlord does not provide reasonable substitute parking within ninety (90) days
of such appropriation, Tenant shall have the right to terminate this Lease
effective as of the expiration of such ninety (90) day period.
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(b) Partial Taking; Abatement of Rent. In the event of a taking of a portion of
the Premises which does not substantially interfere with Tenant's use and
occupancy of the Premises, then, neither party will have the right to terminate
this Lease and Landlord will thereafter proceed to make a functional unit of the
remaining portion of the Premises (but only to the extent Landlord receives
proceeds therefor from the condemning authority), and rent will be abated with
respect to the part of the Premises which Tenant is deprived of on account of
such taking. Notwithstanding the immediately preceding sentence to the contrary,
if any part of the Building or the Development is taken (whether or not such
taking substantially interferes with Tenant's use of the Premises), Landlord may
terminate this Lease upon thirty (30) days prior written notice to Tenant if
Landlord also terminates the leases of the other tenants of the Building which
are leasing comparably sized space for comparable lease terms.
(c) Condemnation Award. In connection with any taking of the Premises or the
Building, Landlord will be entitled to receive the entire amount of any award
which may be made or given in such taking or condemnation, without deduction or
apportionment for any estate or interest of Tenant, it being expressly
understood and agreed by Tenant that no portion of any such award will be
allowed or paid to Tenant for any so-called bonus or excess value of this Lease,
and such bonus or excess value will be the sole property of Landlord. Tenant
agrees not to assert any claim against Landlord or the taking authority for any
compensation because of such taking (including any claim for bonus or excess
value of this Lease); provided, however, if any portion of the Premises is
taken, Tenant will have the right to recover from the condemning authority (but
not from Landlord) any compensation as may be separately awarded or recoverable
by Tenant for the taking of Tenant's furniture, fixtures, equipment and other
personal property within the Premises, for Tenant's relocation expenses, and for
any loss of goodwill or other damage to Tenant's business by reason of such
taking.
(d) Temporary Taking. In the event of taking of the Premises or any part thereof
for temporary use, (i) this Lease will remain unaffected thereby and rent will
abate for the duration of the taking in proportion to the extent Tenant's use of
the Premises is interfered with, and (ii) Landlord will be entitled to receive
such portion or portions of any award made for such use provided that if such
taking remains in force at the expiration or earlier termination of this Lease,
Tenant will then pay to Landlord a sum equal to the reasonable cost of
performing Tenant's obligations under Paragraph 11 with respect to surrender of
the Premises and upon such payment Tenant will be excused from such obligations.
For purpose of this subparagraph 21(d), a temporary taking shall be defined as a
taking for a period of ninety (90) days or less.
22. DEFAULTS AND REMEDIES.
(a) Defaults. The occurrence of any one or more of the following events will be
deemed a default by Tenant:
(i) The failure by Tenant to make any payment of rent or additional rent or any
other payment required to be made by Tenant hereunder, as and when due, where
such failure continues for a period of ten (10) days after written notice
thereof from Landlord to Tenant; provided, however, that any such notice will be
in lieu of, and not in addition to, any notice required under applicable law
(including, without limitation, to the extent the Premises are located in
California, the provisions of California Code of Civil Procedure Section 1161
regarding unlawful detainer actions or any successor statute or law of a similar
nature).
(ii) The failure by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in subparagraph 22(a)(i) or above, where such failure
continues (where no other period of time is expressly provided) for a period of
thirty (30) days after written notice thereof from Landlord to Tenant. The
provisions of any such notice will be in lieu of, and not in addition to, any
notice required under applicable law (including, without limitation, to the
extent the Premises are located in California, California Code of Civil
Procedure Section 1161 regarding unlawful detainer actions and any successor
statute or similar law). If the nature of Tenant's default is such that more
than ten (10) days are reasonably required for its cure, then Tenant will not be
deemed to be in default if Tenant, with Landlord's concurrence, commences such
cure within such ten (10) day period and thereafter diligently prosecutes such
cure to completion.
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(iii) (A) The making by Tenant of any general assignment for the benefit of
creditors; (B) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days); (C) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where possession
is not restored to Tenant within thirty (30) days; or (D) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease where such seizure
is not discharged within thirty (30) days.
(b) Landlord's Remedies; Termination. In the event of any default by Tenant, in
addition to any other remedies available to Landlord at law or in equity under
applicable law (including, without limitation, to the extent the Premises are
located in California, the remedies of Civil Code Section 1951.4 and any
successor statute or similar law), Landlord will have the immediate right and
option to terminate this Lease and all rights of Tenant hereunder. If Landlord
elects to terminate this Lease then, to the extent permitted under applicable
law, Landlord may recover from Tenant (i) The worth at the time of award of any
unpaid rent which had been earned at the time of such termination; plus (ii) the
worth at the time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount of
such rent loss that Tenant proves could have been reasonably avoided; plus (iii)
the worth at the time of award of the amount by which the unpaid rent for the
balance of the Term after the time of award exceeds the amount of such rent loss
that Tenant proves could be reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which, in the
ordinary course of things, results therefrom including, but not limited to:
attorneys' fees and costs; brokers' commissions; the costs of refurbishment,
alterations, renovation and repair of the Premises, and removal (including the
repair of any damage caused by such removal) and storage (or disposal) of
Tenant's personal property, equipment, fixtures, Alterations, the Tenant
Improvements and any other items which Tenant is required under this Lease to
remove but does not remove, as well as the unamortized value of any reduced rent
(amortized over the Original Term, with interest thereon at the Interest Rate),
reduced rent, free parking, reduced rate parking or other costs or economic
concessions provided, paid, granted or incurred by Landlord pursuant to this
Lease. The unamortized value of such concessions shall be determined by taking
the total value of such concessions and multiplying such value by a fraction,
the numerator of which is the number of months of the Lease Term not yet elapsed
as of the date on which the Lease is terminated, and the denominator of which is
the total number of months of the Lease Term. As used in subparagraphs 22(b)(i)
and 22(b)(ii) above, the "worth at the time of award" is computed by allowing
interest at the Interest Rate. As used in subparagraph 22(b)(iii) above, the
"worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
(c) Landlord's Remedies; Re-Entry Rights. In the event of any default by Tenant,
in addition to any other remedies available to Landlord under this Lease, at law
or in equity, Landlord will also have the right, with or without terminating
this Lease, to re-enter the Premises and remove all persons and property from
the Premises; such property may be removed and stored in a public warehouse or
elsewhere and/or disposed of at the sole cost and expense of and for the account
of Tenant in accordance with the provisions of subparagraph 13(h) of this Lease
or any other procedures permitted by applicable law. No re-entry or taking
possession of the Premises by Landlord pursuant to this subparagraph 22(c) will
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Tenant or unless the termination thereof is decreed
by a court of competent jurisdiction.
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(d) Landlord's Remedies; Re-Letting. In the event of the vacation or abandonment
of the Premises by Tenant or in the event that Landlord elects to re-enter the
Premises or takes possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to
terminate this Lease, Landlord may from time to time, without terminating this
Lease, either recover all rent as it becomes due or relet the Premises or any
part thereof on terms and conditions as Landlord in its sole and absolute
discretion may deem advisable with the right to make alterations and repairs to
the Premises in connection with such reletting. If Landlord elects to relet the
Premises, then rents received by Landlord from such reletting will be applied:
first, to the payment of any indebtedness other than rent due hereunder from
Tenant to Landlord; second, to the payment of any cost of such reletting; third,
to the payment of the cost of any alterations and repairs to the Premises
incurred in connection with such reletting; fourth, to the payment of rent due
and unpaid hereunder and the residue, if any, will be held by Landlord and
applied to payment of future rent as the same may become due and payable
hereunder. Should that portion of such rents received from such reletting during
any month, which is applied to the payment of rent hereunder, be less than the
rent payable during that month by Tenant hereunder, then Tenant agrees to pay
such deficiency to Landlord immediately upon demand therefor by Landlord. Such
deficiency will be calculated and paid monthly.
(e) Landlord's Remedies; Performance for Tenant. All covenants and agreements to
be performed by Tenant under any of the terms of this Lease are to be performed
by Tenant at Tenant's sole cost and expense and without any abatement of rent.
If Tenant fails to pay any sum of money owed to any party other than Landlord,
for which it is liable under this Lease, or if Tenant fails to perform any other
act on its part to be performed hereunder, and such failure continues for ten
(10) days after notice thereof by Landlord, Landlord may, without waiving or
releasing Tenant from its obligations, but shall not be obligated to, make any
such payment or perform any such other act to be made or performed by Tenant.
Tenant agrees to reimburse Landlord upon demand for all sums so paid by Landlord
and all necessary incidental costs, together with interest thereon at the
Interest Rate, from the date of such payment by Landlord until reimbursed by
Tenant. This remedy shall be in addition to any other right or remedy of
Landlord set forth in this Paragraph 22.
(f) Late Payment. If Tenant fails to pay any installment of rent within seven
(7) days of when due or if Tenant fails to make any other payment for which
Tenant is obligated under this Lease within seven (7) days of when due, such
late amount will accrue interest at the Interest Rate and Tenant agrees to pay
Landlord as additional rent such interest on such amount from the date such
amount becomes due until such amount is paid. In addition, Tenant agrees to pay
to Landlord concurrently with such late payment amount, as additional rent, a
late charge equal to three percent (3%) of the amount due to compensate Landlord
for the extra costs Landlord will incur as a result of such late payment.
Notwithstanding the foregoing, Landlord hereby agrees to waive the late charge
applicable to the first instance in which Tenant fails to timely pay any
installment of rent or other payment for which Tenant is obligated under this
Lease during any twelve (12) month period. The parties agree that (i) it would
be impractical and extremely difficult to fix the actual damage Landlord will
suffer in the event of Tenant's late payment, (ii) such interest and late charge
represents a fair and reasonable estimate of the detriment that Landlord will
suffer by reason of late payment by Tenant, and (iii) the payment of interest
and late charges are distinct and separate in that the payment of interest is to
compensate Landlord for the use of Landlord's money by Tenant, while the payment
of late charges is to compensate Landlord for Landlord's processing,
administrative and other costs incurred by Landlord as a result of Tenant's
delinquent payments. Acceptance of any such interest and late charge will not
constitute a waiver of the Tenant's default with respect to the overdue amount,
or prevent Landlord from exercising any of the other rights and remedies
available to Landlord. If Tenant incurs a late charge more than three (3) times
in any period of twelve (12) months during the Lease Term, then, notwithstanding
that Tenant cures the late payments for which such late charges are imposed,
Landlord will have the right to require Tenant thereafter to pay all
installments of Monthly Base Rent quarterly in advance throughout the remainder
of the Lease Term.
(g) Landlord's Security Interest. Tenant hereby grants to Landlord a lien and
security interest on all property of Tenant now or hereafter placed in or upon
the Premises including, but not limited to, all fixtures, machinery, equipment,
furnishings and other articles of personal property, and all proceeds of the
sale or other disposition of such property (collectively, the "Collateral") to
secure the payment of all rent to be paid by Tenant pursuant to this Lease. Such
lien and security interest shall be in addition to any landlord's lien provided
by law. This Lease shall constitute a security agreement under the Commercial
Code of the State so that Landlord shall have and may enforce a security
interest in the Collateral. Tenant agrees to execute as debtor and deliver such
financing statement or statements and any further documents as Landlord may now
or hereafter reasonably request to protect such security interest pursuant to
such code. Landlord may also at any time file a copy of this Lease as a
financing statement. Landlord, as secured party, shall be entitled to all rights
and remedies afforded as secured party under such code, which rights and
remedies shall be in addition to Landlord's liens and rights provided by law or
by the other terms and provisions of this Lease.
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(h) Rights and Remedies Cumulative. All rights, options and remedies of Landlord
contained in this Lease will be construed and held to be cumulative, and no one
of them will be exclusive of the other, and Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law or in equity, whether or not stated in this Lease. Nothing in
this Paragraph 22 will be deemed to limit or otherwise affect Tenant's
indemnification of Landlord pursuant to any provision of this Lease.
23. LANDLORD'S DEFAULT. Landlord will not be in default in the performance of
any obligation required to be performed by Landlord under this Lease unless
Landlord fails to perform such obligation within thirty (30) days after the
receipt of written notice from Tenant specifying in detail Landlord's failure to
perform; provided however, that if the nature of Landlord's obligation is such
that more than thirty (30) days are required for performance, then Landlord will
not be deemed in default if it commences such performance within such thirty
(30) day period and thereafter diligently pursues the same to completion. Upon
any default by Landlord, Tenant may exercise any of its rights provided at law
or in equity, subject to the limitations on liability set forth in Paragraph 35
of this Lease.
24. ASSIGNMENT AND SUBLETTING.
(a) Restriction on Transfer. Except as expressly provided in this Paragraph 24,
Tenant will not, either voluntarily or by operation of law, assign or encumber
this Lease or any interest herein or sublet the Premises or any part thereof, or
permit the use or occupancy of the Premises by any party other than Tenant (any
such assignment, encumbrance, sublease or the like will sometimes be referred to
as a "Transfer"), without the prior written consent of Landlord, which consent
Landlord will not unreasonably withhold.
(b) Corporate and Partnership Transfers. For purposes of this Paragraph 24, if
Tenant is a corporation, partnership or other entity, any transfer, assignment,
encumbrance or hypothecation of twenty-five percent (25%) or more (individually
or in the aggregate) of any stock or other ownership interest in such entity,
and/or any transfer, assignment, hypothecation or encumbrance of any controlling
ownership or voting interest in such entity, will be deemed a Transfer and will
be subject to all of the restrictions and provisions contained in this Paragraph
24. Notwithstanding the foregoing, the immediately preceding sentence will not
apply to any transfers of stock of Tenant if Tenant is a publicly-held
corporation and such stock is transferred publicly over a recognized security
exchange or over-the-counter market.
(c) Permitted Controlled Transfers. Notwithstanding the provisions of this
Paragraph 24 to the contrary, Tenant may assign this Lease or sublet the
Premises or any portion thereof ("Permitted Transfer"), without Landlord's
consent and without extending any sublease termination option to Landlord, to
any parent, subsidiary or affiliate corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from a
merger or consolidation with Tenant, or to any person or entity which acquires
all the assets of Tenant's business as a going concern, provided that: (i) at
least twenty (20) days prior to such assignment or sublease, Tenant delivers to
Landlord the financial statements and other financial and background information
of the assignee or sublessee described in subparagraph 24(d) below; (ii) if an
assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease (or if a sublease, the sublessee of a portion of the Premises or Term
assumes, in full, the obligations of Tenant with respect to such portion); (iii)
the financial net worth of the assignee or sublessee as of the time of the
proposed assignment or sublease equals or exceeds that of Tenant as of the date
of execution of this Lease; (iv) Tenant remains fully liable under this Lease;
and (v) the use of the Premises under Paragraph 8 remains unchanged.
(d) Transfer Notice. If Tenant desires to effect a Transfer, then at least
thirty (30) days prior to the date when Tenant desires the Transfer to be
effective (the "Transfer Date"), Tenant agrees to give Landlord a notice (the
"Transfer Notice"), stating the name, address and business of the proposed
assignee, sublessee or other transferee (sometimes referred to hereinafter as
"Transferee"), reasonable information (including references) concerning the
character, ownership, and financial condition of the proposed Transferee, the
Transfer Date, any ownership or commercial relationship between Tenant and the
proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require. If Landlord reasonably requests additional detail, the
Transfer Notice will not be deemed to have been received until Landlord receives
such additional detail, and Landlord may withhold consent to any Transfer until
such information is provided to it.
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(e) Landlord's Options. Within fifteen (15) days of Landlord's receipt of any
Transfer Notice, and any additional information requested by Landlord concerning
the proposed Transferee's financial responsibility, Landlord will elect to do
one of the following (i) consent to the proposed Transfer; (ii) refuse such
consent, which refusal shall be on reasonable grounds including, without
limitation, those set forth in subparagraph 24(f) below; or (iii) terminate this
Lease in the event of a proposed assignment of this Lease or a subletting as to
the entire Premises for substantially all of the remaining Term, and to
recapture the Premises for reletting by Landlord.
(f) Reasonable Disapproval. Landlord and Tenant hereby acknowledge that
Landlord's disapproval of any proposed Transfer pursuant to subparagraph 24(e)
will be deemed reasonably withheld if based upon any reasonable factor,
including, without limitation, any or all of the following factors: (i) if the
Building is less than seventy percent (70%) occupied, if the net effective rent
payable by the Transferee (adjusted on a rentable square foot basis) is less
than the net effective rent then being quoted by Landlord for new leases in the
Building for comparable size space for a comparable period of time; (ii) the
proposed Transferee is a governmental entity; (iii) the portion of the Premises
to be sublet or assigned is irregular in shape with inadequate means of ingress
and egress; (iv) the use of the Premises by the Transferee (A) is not permitted
by the use provisions in Paragraph 8 hereof, (B) violates any exclusive use
granted by Landlord to another tenant in the Building, or (C) otherwise poses a
risk of increased liability to Landlord; (v) the Transfer would likely result in
a significant and inappropriate increase in the use of the parking areas or
Development Common Areas by the Transferee's employees or visitors, and/or
significantly increase the demand upon utilities and services to be provided by
Landlord to the Premises; (vi) the Transferee does not have the financial
capability to fulfill the obligations imposed by the Transfer and this Lease;
(vii) the Transferee is not in Landlord's reasonable opinion consistent with
Landlord's desired tenant mix; or (viii) the Transferee poses a business or
other economic risk which Landlord deems unacceptable.
(g) Additional Conditions. A condition to Landlord's consent to any Transfer of
this Lease will be the delivery to Landlord of a true copy of the fully executed
instrument of assignment, sublease, transfer or hypothecation, and, in the case
of an assignment, the delivery to Landlord of an agreement executed by the
Transferee in form and substance reasonably satisfactory to Landlord, whereby
the Transferee assumes and agrees to be bound by all of the terms and provisions
of this Lease and to perform all of the obligations of Tenant hereunder. As a
condition for granting its consent to any assignment or sublease, Landlord may
require that the assignee or sublessee remit directly to Landlord on a monthly
basis, all monies due to Tenant by said assignee or sublessee. As a condition to
Landlord's consent to any sublease, such sublease must provide that it is
subject and subordinate to this Lease and to all mortgages; that Landlord may
enforce the provisions of the sublease, including collection of rent; that in
the event of termination of this Lease for any reason, including without
limitation a voluntary surrender by Tenant, or in the event of any reentry or
repossession of the Premises by Landlord, Landlord may, at its option, either
(i) terminate the sublease, or (ii) take over all of the right, title and
interest of Tenant, as sublessor, under such sublease, in which case such
sublessee will attorn to Landlord, but that nevertheless Landlord will not (1)
be liable for any previous act or omission of Tenant under such sublease, (2) be
subject to any defense or offset previously accrued in favor of the sublessee
against Tenant, or (3) be bound by any previous modification of any sublease
made without Landlord's written consent, or by any previous prepayment by
sublessee of more than one month's rent.
(h) Excess Rent. If Landlord consents to any assignment of this Lease, Tenant
agrees to pay to Landlord, as additional rent, fifty percent (50%) of all sums
and other consideration payable to and for the benefit of Tenant by the assignee
on account of the assignment, as and when such sums and other consideration are
due and payable by the assignee to or for the benefit of Tenant (or, if Landlord
so requires, and without any release of Tenant's liability for the same, Tenant
agrees to instruct the assignee to pay such sums and other consideration
directly to Landlord). If for any sublease, Tenant receives rent or other
consideration, either initially or over the term of the sublease, in excess of
the rent fairly allocable to the portion of the Premises which is subleased
based on square footage, Tenant agrees to pay to Landlord as additional rent
fifty percent (50%) of the excess of each such payment of rent or other
consideration received by Tenant promptly after its receipt. In calculating
excess rent or other consideration which may be payable to Landlord under this
paragraph, Tenant will be entitled to deduct commercially reasonable third party
brokerage commissions and attorneys' fees and other amounts reasonably and
actually expended by Tenant in connection with such assignment or subletting if
acceptable written evidence of such expenditures is provided to Landlord.
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(i) Termination Rights. If Tenant requests Landlord's consent to any assignment
of this Lease or a subletting of all the Premises for substantially all of the
remaining Term, Landlord will have the right, as provided in subparagraph 24(e),
to terminate this Lease effective as of the date Tenant proposes to assign this
Lease or sublet the entire Premises. Landlord will exercise such termination
right, if at all, by giving written notice to Tenant within thirty (30) days of
receipt by Landlord of the financial responsibility information required by this
Paragraph 24. Tenant understands and acknowledges that the option, as provided
in this Paragraph 24, to terminate this Lease in the event Tenant proposes to
sublet the entire Premises for substantially all of the remaining Term or
proposes to assign this Lease rather than approve such subletting or assignment
is a material inducement for Landlord's agreeing to lease the Premises to Tenant
upon the terms and conditions herein set forth.
(j) No Release. No Transfer will release Tenant of Tenant's obligations under
this Lease or alter the primary liability of Tenant to pay the rent and to
perform all other obligations to be performed by Tenant hereunder. Landlord may
require that any Transferee remit directly to Landlord on a monthly basis, all
monies due Tenant by said Transferee. However, the acceptance of rent by
Landlord from any other person will not be deemed to be a waiver by Landlord of
any provision hereof. Consent by Landlord to one Transfer will not be deemed
consent to any subsequent Transfer. In the event of default by any Transferee of
Tenant or any successor of Tenant in the performance of any of the terms hereof,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against such Transferee or successor. Landlord may consent to
subsequent assignments of this Lease or sublettings or amendments or
modifications to this Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto
and any such actions will not relieve Tenant of liability under this Lease.
(k) Administrative and Attorneys' Fees. If Tenant effects a Transfer or requests
the consent of Landlord to any Transfer (whether or not such Transfer is
consummated), then, upon demand, Tenant agrees to pay Landlord a non-refundable
administrative fee of Two Hundred Fifty Dollars ($250.00), plus any reasonable
attorneys' and paralegal fees incurred by Landlord in connection with such
Transfer or request for consent (whether attributable to Landlord's in-house
attorneys or paralegals or otherwise) not to exceed One Hundred Dollars
($100.00) for each one thousand (1,000) rentable square feet of area contained
within the Premises or portion thereof to be assigned or sublet. Acceptance of
the Two Hundred Fifty Dollar ($250.00) administrative fee and/or reimbursement
of Landlord's attorneys' and paralegal fees will in no event obligate Landlord
to consent to any proposed Transfer.
25. SUBORDINATION. At the election of Landlord or any mortgagee or beneficiary
with a deed of trust encumbering the Building and/or the Development, or any
lessor of a ground or underlying lease with respect to the Building, this Lease
will 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 or deed of trust which may now exist
or hereafter be executed for which the Building, the Development or any leases
thereof, or Landlord's interest and estate in any of said items, is specified as
security; provided, however, as a condition to the subordination of this Lease
to any ground lease, mortgage or deed of trust, the applicable ground lessor or
mortgagee shall agree that Tenant's right to possession of the Premises will not
be disturbed as long as Tenant is not in default under this Lease.
Notwithstanding the foregoing, Landlord reserves the right to subordinate any
such ground leases or underlying leases or any such liens to this Lease. If any
such ground lease or underlying lease terminates for any reason or any such
mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure
is made for any reason, at the election of Landlord's successor in interest,
Tenant agrees to attorn to and become the tenant of such successor in which
event Tenant's right to possession of the Premises will not be disturbed as long
as Tenant is not in default under this Lease. Tenant hereby waives its rights
under any law which gives or purports to give Tenant any right to terminate or
otherwise adversely affect this Lease and the obligations of Tenant hereunder in
the event of any such foreclosure proceeding or sale. Tenant covenants and
agrees to execute and deliver, upon demand by Landlord and in the form
reasonably required by Landlord, any additional documents evidencing the
priority or subordination of this Lease and Tenant's attornment agreement with
respect to any such ground lease or underlying leases or the lien of any such
mortgage or deed of trust. If Tenant fails to sign and return any such documents
within ten (10) days of receipt, Tenant will be in default hereunder.
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26. ESTOPPEL CERTIFICATE.
(a) Tenant's Obligations. Within ten (10) days following any written request
which Landlord may make from time to time, Tenant agrees to execute and deliver
to Landlord a statement, in a form substantially similar to the form of Exhibit
"G" attached hereto or as may reasonably be required by Landlord's lender,
certifying: (i) the date of commencement of this Lease; (ii) the fact that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect, and stating the date
and nature of such modifications); (iii) the date to which the rent and other
sums payable under this Lease have been paid; (iv) that there are no current
defaults under this Lease by either Landlord or Tenant except as specified in
Tenant's statement; and (v) such other matters reasonably requested by Landlord.
Landlord and Tenant intend that any statement delivered pursuant to this
Paragraph 26 may be relied upon by any mortgagee, beneficiary, purchaser or
prospective purchaser of the Building or any interest therein.
(b) Tenant's Failure to Deliver. Tenant's failure to deliver such statement
within such time will be conclusive upon Tenant (i) that this Lease is in full
force and effect, without modification except as may be represented by Landlord,
(ii) that there are no uncured defaults in Landlord's performance, and (iii)
that not more than one (1) month's rent has been paid in advance. Without
limiting the foregoing, if Tenant fails to deliver any such statement within
such ten (10) day period, Landlord may deliver to Tenant an additional request
for such statement and Tenant's failure to deliver such statement to Landlord
within ten (10) days after delivery of such additional request will constitute a
default under this Lease. Tenant agrees to indemnify and protect Landlord from
and against any and all claims, damages, losses, liabilities and expenses
(including attorneys' fees and costs) attributable to any failure by Tenant to
timely deliver any such estoppel certificate to Landlord as required by this
Paragraph 26.
27. INTENTIONALLY OMITTED.
28. RULES AND REGULATIONS. Tenant agrees to faithfully observe and comply with
the "Rules and Regulations", a copy of which is attached hereto and incorporated
herein by this reference as Exhibit "H", and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord. Landlord agrees to use reasonable efforts (but
shall not be obligated to institute or threaten to institute any litigation) to
cause other tenants of the Building and the Development to comply with the Rules
and Regulations; provided, however, that Landlord will not be responsible to
Tenant for the violation or non-performance by any other tenant or occupant of
the Building or the Development of any of the Rules and Regulations.
29. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS.
(a) Modifications. If, in connection with Landlord's obtaining or entering into
any financing or ground lease for any portion of the Building or the
Development, the lender or ground lessor requests modifications to this Lease,
Tenant, within ten (10) days after request therefor, agrees to execute an
amendment to this Lease incorporating such modifications, provided such
modifications are reasonable and do not increase the obligations of Tenant under
this Lease or adversely affect the leasehold estate created by this Lease and
are otherwise reasonably acceptable to Tenant.
(b) Cure Rights. In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgage covering the Premises or ground lessor of Landlord whose
address has been furnished to Tenant, and Tenant agrees to offer such
beneficiary, mortgagee or ground lessor a reasonable opportunity to cure the
default (including with respect to any such beneficiary or mortgagee, time to
obtain possession of the Premises, subject to this Lease and Tenant's rights
hereunder, by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure).
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30. DEFINITION OF LANDLORD. The term "Landlord" as used in this Lease, so far as
covenants or obligations on the part of Landlord are concerned, means and
includes only the owner or owners, at the time in question, of the fee title of
the Premises or the lessees under any ground lease, if any. In the event of any
transfer, assignment or other conveyance or transfers of any such title (other
than a transfer for security purposes only), Landlord herein named (and in case
of any subsequent transfers or conveyances, the then grantor) will be
automatically relieved from and after the date of such transfer, assignment or
conveyance of all liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed, so long as the transferee assumes in writing all such covenants and
obligations of Landlord arising after the date of such transfer. Landlord and
Landlord's transferees and assignees have the absolute right to transfer all or
any portion of their respective title and interest in the Development, the
Building, the Premises and/or this Lease without the consent of Tenant, and such
transfer or subsequent transfer will not be deemed a violation on Landlord's
part of any of the terms and conditions of this Lease.
31. WAIVER. The waiver by either party of any breach of any term, covenant or
condition herein contained will not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition herein contained,
nor will any custom or practice which may develop between the parties in the
administration of the terms hereof be deemed a waiver of or in any way affect
the right of either party to insist upon performance in strict accordance with
said terms. The subsequent acceptance of rent or any other payment hereunder by
Landlord will not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of Tenant
to pay the particular rent so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent. No acceptance by
Landlord of a lesser sum than the basic rent and additional rent or other sum
then due will be deemed to be other than on account of the earliest installment
of such rent or other amount due, nor will any endorsement or statement on any
check or any letter accompanying any check be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such installment or other amount or pursue any
other remedy provided in this Lease. The consent or approval of Landlord to or
of any act by Tenant requiring Landlord's consent or approval will not be deemed
to waive or render unnecessary Landlord's consent or approval to or of any
subsequent similar acts by Tenant.
32. PARKING.
(a) Grant of Parking Rights. So long as this Lease is in effect and provided
Tenant is not in default hereunder, Landlord grants to Tenant and Tenant's
Authorized Users (as defined below) a license to use the number and type of
parking permits designated in subparagraph 1(s) subject to the terms and
conditions of this Paragraph 32 and the Rules and Regulations regarding parking
contained in Exhibit "H" attached hereto. Tenant agrees to submit to Landlord
or, at Landlord's election, directly to Landlord's parking operator with a copy
to Landlord, written notice in a form reasonably specified by Landlord
containing the names, home and office addresses and telephone numbers of those
persons who are authorized by Tenant to use Tenant's parking permits on a
monthly basis ("Tenant's Authorized Users") and shall use its best efforts to
identify each vehicle of Tenant's Authorized Users by make, model and license
number. Tenant agrees to deliver such notice prior to the beginning of the Term
of this Lease and to periodically update such notice as well as upon specific
request by Landlord or Landlord's parking operator to reflect changes to
Tenant's Authorized Users or their vehicles.
(b) Visitor Parking. So long as this Lease is in effect, Tenant's visitors and
guests will be entitled to use those specific parking areas which are designated
for short term visitor parking and which are located within the surface parking
area(s), if any, and/or within the parking structure(s) which serve the
Building. During the Original Term of this Lease, visitor parking will be made
available at no charge to Tenant's visitors and guests. Tenant, at its sole cost
and expense, may elect to validate such parking for its visitors and guests. All
such visitor parking will be on a non-exclusive, in common basis with all other
visitors and guests of the Development.
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(c) Use of Parking Permits. Tenant will not use or allow any of Tenant's
Authorized Users to use any parking permits which have been specifically
assigned by Landlord to other tenants or occupants or for other uses such as
visitor parking or which have been designated by any governmental entity as
being restricted to certain uses. Tenant will not be entitled to increase or
reduce its parking privileges applicable to the Premises during the Term of the
Lease except as follows: If at any time Tenant desires to increase or reduce the
number of parking permits allocated to it under the terms of this Lease, Tenant
must notify Landlord in writing of such desire and Landlord will have the right,
in its sole and absolute discretion, to either (a) approve such requested
increase in the number of parking permits allocated to Tenant (with an
appropriate increase to the additional rent payable by Tenant for such
additional permits based on the then prevailing parking rates), (b) approve such
requested decrease in the number of parking permits allocated to Tenant (with an
appropriate reduction in the additional rent payable by Tenant for such
eliminated parking permits based on the then prevailing parking rates), or (c)
disapprove such requested increase or decrease in the number of parking permits
allocated to Tenant. Promptly following receipt of Tenant's written request,
Landlord will provide Tenant with written notice of its decision including a
statement of any adjustments to the additional rent payable by Tenant for
parking under the Lease, if applicable.
(d) General Provisions. Except as otherwise expressly set forth in subparagraph
1(s), Landlord reserves the right to set and increase monthly fees and/or daily
and hourly rates for parking privileges from time to time during the Term of the
Lease. Landlord may assign any unreserved and unassigned parking permits and/or
make all or any portion of such spaces reserved, if Landlord reasonably
determines that it is necessary for orderly and efficient parking or for any
other reasonable reason. Failure to pay the rent for any particular parking
permits or failure to comply with any terms and conditions of this Lease
applicable to parking may be treated by Landlord as a default under this Lease
and, in addition to all other remedies available to Landlord under the Lease, at
law or in equity, Landlord may elect to recapture such parking permits for the
balance of the Term of this Lease if Tenant does not cure such failure within
the applicable cure period set forth in Paragraph 22 of this Lease. In such
event, Tenant and Tenant's Authorized Users will be deemed visitors for purposes
of parking space use and will be entitled to use only those parking areas
specifically designated for visitor parking subject to all provisions of this
Lease applicable to such visitor parking use. Except in connection with an
assignment or sublease expressly permitted under the terms of this Lease,
Tenant's parking rights and privileges described herein are personal to Tenant
and may not be assigned or transferred, or otherwise conveyed, without
Landlord's prior written consent, which consent Landlord may withhold in its
sole and absolute discretion. In any event, under no circumstances may Tenant's
parking rights and privileges be transferred, assigned or otherwise conveyed
separate and apart from Tenant's interest in this Lease.
(e) Cooperation with Traffic Mitigation Measures. Tenant agrees to use its
reasonable, good faith efforts to cooperate in traffic mitigation programs which
may be undertaken by Landlord independently, or in cooperation with local
municipalities or governmental agencies or other property owners in the vicinity
of the Building. Such programs may include, but will not be limited to,
carpools, vanpools and other ridesharing programs, public and private transit,
flexible work hours, preferential assigned parking programs and programs to
coordinate tenants within the Development with existing or proposed traffic
mitigation programs.
(f) Parking Rules and Regulations. Tenant and Tenant's Authorized Users shall
comply with all rules and regulations regarding parking set forth in Exhibit "H"
attached hereto and Tenant agrees to cause its employees, subtenants, assignees,
contractors, suppliers, customers and invitees to comply with such rules and
regulations. Landlord reserves the right from time to time to modify and/or
adopt such other reasonable and non-discriminatory rules and regulations for the
parking facilities as it deems reasonably necessary for the operation of the
parking facilities.
33. FORCE MAJEURE. If either Landlord or Tenant is delayed, hindered in or
prevented from the performance of any act required under this Lease by reason of
strikes, lock-outs, labor troubles, inability to procure standard materials,
failure of power, restrictive governmental laws, regulations or orders or
governmental action or inaction (including failure, refusal or delay in issuing
permits, approvals and/or authorizations which is not the result of the action
or inaction of the party claiming such delay), riots, civil unrest or
insurrection, war, fire, earthquake, flood or other natural disaster, unusual
and unforeseeable delay which results from an interruption of any public
utilities (e.g., electricity, gas, water, telephone) or other unusual and
unforeseeable delay not within the reasonable control of the party delayed in
performing work or doing acts required under the provisions of this Lease, then
performance of such act will be excused for the period of the delay and the
period for the performance of any such act will be extended for a period
equivalent to the period of such delay. The provisions of this Paragraph 33 will
not operate to excuse Tenant from prompt payment of rent or any other payments
required under the provisions of this Lease.
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34. SIGNS. Prior to the Commencement Date, Landlord will designate the location
on the Premises for one "eyebrow" Tenant identification sign and one additional
Tenant identification sign on the monument sign adjacent to the Building.
Tenant's rights to such signage shall be subject to all applicable governmental
approvals. Tenant agrees to have Landlord install and maintain Tenant's
identification sign in such designated location in accordance with this
Paragraph 34 at Tenant's sole cost and expense. Tenant has no right to install
Tenant identification signs in any other location in, on or about the Premises
or the Development and will not display or erect any other signs, displays or
other advertising materials that are visible from the exterior of the Building
or from within the Building in any interior or exterior common areas. The size,
design, color and other physical aspects of any and all permitted sign(s) will
be subject to (i) Landlord's written approval prior to installation, which
approval may be withheld in Landlord's discretion, (ii) any covenants,
conditions or restrictions governing the Premises, and (iii) any applicable
municipal or governmental permits and approvals. Tenant will be solely
responsible for all costs for installation, maintenance, repair and removal of
any Tenant identification sign(s). If Tenant fails to remove Tenant's sign(s)
upon termination of this Lease and repair any damage caused by such removal,
Landlord may do so at Tenant's sole cost and expense. Tenant agrees to reimburse
Landlord for all costs incurred by Landlord to effect any installation,
maintenance or removal on Tenant's account, which amount will be deemed
additional rent, and may include, without limitation, all sums disbursed,
incurred or deposited by Landlord including Landlord's costs, expenses and
actual attorneys' fees with interest thereon at the Interest Rate from the date
of Landlord's demand until paid by Tenant. At no cost to Tenant, Landlord shall
appropriately include the name of Tenant and its principal employees on the
Building directory. Any maintenance costs of Building Directory shall constitute
an Operating Expense. Any sign rights granted to Tenant under this Lease are
personal to Tenant and may not be assigned, transferred or otherwise conveyed to
any assignee or subtenant of Tenant without Landlord's prior written consent,
which consent Landlord may withhold in its sole and absolute discretion.
35. LIMITATION ON LIABILITY. Notwithstanding anything to the contrary contained
in this Lease, in consideration of the benefits accruing hereunder, Tenant on
behalf of itself and all successors and assigns of Tenant covenants and agrees
that, in the event of any actual or alleged failure, breach or default hereunder
by Landlord: (a) Tenant's recourse against Landlord for monetary damages will be
limited to Landlord's interest in the Building, subject to the prior rights of
any Mortgagee, including, Landlord's interest in the rents of the Building and
any insurance proceeds payable to Landlord; (b) except as may be necessary to
secure jurisdiction of the partnership or company, no partner or member of
Landlord shall be sued or named as a party in any suit or action and no service
of process shall be made against any partner or member of Landlord; (c) no
partner or member of Landlord shall be required to answer or otherwise plead to
any service of process; (d) no judgment will be taken against any partner or
member of Landlord and any judgment taken against any partner or member of
Landlord may be vacated and set aside at any time after the fact; (e) no writ of
execution will be levied against the assets of any partner or member of
Landlord; (f) the obligations under this Lease do not constitute personal
obligations of the individual members, partners, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse against the
individual members, partners, directors, officers or shareholders of Landlord or
any of their personal assets for satisfaction of any liability in respect to
this Lease; and (g) these covenants and agreements are enforceable both by
Landlord and also by any partner or member of Landlord.
36. FINANCIAL STATEMENTS. Prior to the execution of this Lease by Landlord and
at any time during the Term of this Lease upon ten (10) days prior written
notice from Landlord, Tenant agrees to provide Landlord with a current financial
statement for Tenant and any guarantors of Tenant and financial statements for
the two (2) years prior to the current financial statement year for Tenant and
any guarantors of Tenant. Such statements are to be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, audited by an independent certified public accountant.
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37. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that upon
Tenant paying the rent required under this Lease and paying all other charges
and performing all of the covenants and provisions on Tenant's part to be
observed and performed under this Lease, Tenant may peaceably and quietly
have, hold and enjoy the Premises in accordance with this Lease without
hindrance or molestation by Landlord or its employees or agents.
38. MISCELLANEOUS.
(a) Conflict of Laws. This Lease shall be governed by and construed solely
pursuant to the laws of the State of California, without giving effect to choice
of law principles thereunder.
(b) Successors and Assigns. Except as otherwise provided in this Lease, all of
the covenants, conditions and provisions of this Lease shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
(c) Professional Fees and Costs. If either Landlord or Tenant should bring suit
against the other with respect to this Lease, then all costs and expenses,
including without limitation, actual professional fees and costs such as
appraisers', accountants' and attorneys' fees and costs, incurred by the party
which prevails in such action, whether by final judgment or out of court
settlement, shall be paid by the other party, which obligation on the part of
the other party shall be deemed to have accrued on the date of the commencement
of such action and shall be enforceable whether or not the action is prosecuted
to judgment. As used herein, attorneys' fees and costs shall include, without
limitation, attorneys' fees, costs and expenses incurred in connection with any
(i) postjudgment motions; (ii) contempt proceedings; (iii) garnishment, levy,
and debtor and third party examination; (iv) discovery; and (v) bankruptcy
litigation.
(d) Terms and Headings. The words "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular. Words used in any gender include
other genders. The paragraph headings of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof.
(e) Time. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor.
(f) Prior Agreement; Amendments. This Lease constitutes and is intended by the
parties to be a final, complete and exclusive statement of their entire
agreement with respect to the subject matter of this Lease. This Lease
supersedes any and all prior and contemporaneous agreements and understandings
of any kind relating to the subject matter of this Lease. There are no other
agreements, understandings, representations, warranties, or statements, either
oral or in written form, concerning the subject matter of this Lease. No
alteration, modification, amendment or interpretation of this Lease shall be
binding on the parties unless contained in a writing which is signed by both
parties.
(g) Separability. The provisions of this Lease shall be considered separable
such that if any provision or part of this Lease is ever held to be invalid,
void or illegal under any law or ruling, all remaining provisions of this Lease
shall remain in full force and effect to the maximum extent permitted by law.
(h) Recording. Neither Landlord nor Tenant shall record this Lease nor a short
form memorandum thereof without the consent of the other.
(i) Counterparts. This Lease may be executed in one or more counterparts, each
of which shall constitute an original and all of which shall be one and the same
agreement.
(j) Nondisclosure of Lease Terms. Tenant acknowledges and agrees that the terms
of this Lease are confidential and constitute proprietary information of
Landlord. Disclosure of the terms could adversely affect the ability of Landlord
to negotiate other leases and impair Landlord's relationship with other tenants.
Accordingly, Tenant agrees that it, and its partners, officers, directors,
employees, agents and attorneys, shall not intentionally and voluntarily
disclose the terms and conditions of this Lease to any newspaper or other
publication or any other tenant or apparent prospective tenant of the Building
or other portion of the Development, or real estate agent, either directly or
indirectly, without the prior written consent of Landlord, provided, however,
that Tenant may disclose the terms to prospective subtenants or assignees under
this Lease.
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(k) Non-Discrimination. Tenant acknowledges and agrees that there shall be no
discrimination against, or segregation of, any person, group of persons, or
entity on the basis of race, color, creed, religion, age, sex, marital status,
national origin, or ancestry in the leasing, subleasing, transferring,
assignment, occupancy, tenure, use, or enjoyment of the Premises, or any portion
thereof.
39. EXECUTION OF LEASE.
(a) Joint and Several Obligations. If more than one person executes this Lease
as Tenant, their execution of this Lease will constitute their covenant and
agreement that (i) each of them is jointly and severally liable for the keeping,
observing and performing of all of the terms, covenants, conditions, provisions
and agreements of this Lease to be kept, observed and performed by Tenant, and
(ii) the term "Tenant" as used in this Lease means and includes each of them
jointly and severally. The act of or notice from, or notice or refund to, or the
signature of any one or more of them, with respect to the tenancy of this Lease,
including, but not limited to, any renewal, extension, expiration, termination
or modification of this Lease, will be binding upon each and all of the persons
executing this Lease as Tenant with the same force and effect as if each and all
of them had so acted or so given or received such notice or refund or so signed.
(b) Tenant as Corporation or Partnership. If Tenant executes this Lease as a
corporation or partnership, then Tenant and the persons executing this Lease on
behalf of Tenant represent and warrant that such entity is duly qualified and in
good standing to do business in California and that the individuals executing
this Lease on Tenant's behalf are duly authorized to execute and deliver this
Lease on its behalf, and in the case of a corporation, in accordance with a duly
adopted resolution of the board of directors of Tenant, a copy of which is to be
delivered to Landlord on execution hereof, if requested by Landlord, and in
accordance with the by-laws of Tenant, and, in the case of a partnership, in
accordance with the partnership agreement and the most current amendments
thereto, if any, copies of which are to be delivered to Landlord on execution
hereof, if requested by Landlord, and that this Lease is binding upon Tenant in
accordance with its terms.
(c) Examination of Lease. Submission of this instrument by Landlord to Tenant
for examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by
their duly authorized representatives as of the date first above written.
TENANT: LANDLORD:
THE RYLAND GROUP, INC., KILROY REALTY, L.P.,
a Maryland corporation a Delaware limited partnership
By: KILROY REALTY CORPORATION,
By: /s/ Robert J. Cunnion III a Maryland corporation
------------------------- Its: General Partner
Print Name: Robert J. Cunnion III
---------------------
Print Title: Senior Vice President By: /s/ Jeffrey C. Hawken
--------------------- --------------------------------
Print Name: Jeffrey C. Hawken
By: /s/ Frank J. Scardina ------------------------
-------------------------
Print Title: Chief Operating Officer
Print Name: Frank J. Scardina -----------------------
---------------------
Print Title: Senior Vice President
---------------------
By:/s/ C. Hugh Greenup
--------------------------------
Print Name: C. Hugh Greenup
------------------------
Print Title: Executive Vice-President
------------------------
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ADDENDUM
This LEASE ADDENDUM ("Addendum") is attached to, incorporated into and amends
and supplements that certain Office Building Lease (the "Lease") entered into as
of the _____ day of December, 1999, by and between Kilroy Realty, L.P., a
Delaware limited partnership ("Landlord"), and The Ryland Group, Inc., a
Maryland corporation ("Tenant"). Landlord and Tenant agree that notwithstanding
anything contained in the Lease to the contrary, the Lease as modified by the
provisions set forth in this Addendum represents the full negotiated agreement
of the parties, and the provisions of this Addendum will be deemed to be a part
of the Lease and will supersede any contrary or conflicting provision in the
Lease and prevail and control for all purposes. This Addendum, together with the
Lease itself, and all other Exhibits, Riders and Addenda attached thereto
represents the fully integrated and binding agreement of the parties. All
references in the Lease and in this Addendum to "Lease" are to be construed to
mean the Lease as amended and supplemented by this Addendum. All terms used in
this Addendum, unless specifically defined in this Addendum, have the same
meaning as such terms have in the Lease.
1. BUILDING. Prior to the Commencement Date, Landlord shall cause the
Building to be constructed pursuant to the specifications attached as
Schedule "1" to the Work Letter Agreement attached hereto as Exhibit "C".
2. RIGHT OF FIRST OFFER TO LEASE ADDITIONAL SPACE.
(a) Exercise of Right. Provided Tenant is not in default under this Lease at the
time Tenant attempts to exercise Tenant's right of First Offer, Tenant shall
have a continuing right of first offer to lease ("Tenant's Right of First
Offer"), any space in the first (1st) or second (2nd) floors of the Building, to
the extent such space is available, or becomes available for lease to third
parties after the expiration of any existing lease for such space during the
Lease Term, including the expiration of all renewal or extension options, and
after the existing tenant or occupant vacates such space ("First Offer Space").
Tenant's Right of First Offer is subject and subordinate to the rights of all
other existing tenants of the Building with prior expansion or lease rights
relative to any such First Offer Space.
(b) Tenant Request. Promptly following written request ("Tenant Request") by
Tenant (which may not be given more than twice in any twelve (12) consecutive
month period), Landlord will give Tenant written notice of the availability of
any First Offer Space and the date the existing tenant or occupant, if any, is
expected to vacate such space ("Landlord's Availability Notice"). Within five
(5) days following delivery of Landlord's Availability Notice, Tenant will have
the right to request from Landlord in writing a written statement setting forth
the basic economic terms, including, but not limited to, Landlord's
determination of the Monthly Base Rent, tenant improvement allowance, if any,
and all other economic terms and conditions (collectively, the "Economic
Terms"), upon which Landlord is willing to lease the First Offer Space desired
by Tenant, either to Tenant or to a third party. Such Economic Terms will
represent Landlord's reasonable determination of the fair market rental rate for
such First Offer Space. Such fair market rental rate will mean the annual amount
per rentable square foot, projected during the relevant period, that a willing,
comparable, non-equity tenant (excluding sublease and assignment transactions)
would pay, and a willing, comparable landlord of a comparable Class "A" quality
office building located in the Calabasas area would accept, at arm's length
(what Landlord is accepting in current transactions for the Building may be
considered), for space of comparable size, quality and floor height as the
leased area at issue taking into account the age, quality and layout of the
existing improvements in the leased area at issue and taking into account items
that professional real estate brokers customarily consider, including, but not
limited to, rental rates, office space availability, tenant size, tenant
improvement allowances, operating expenses and allowance, parking charges, free
rent, reduced rent, free parking, reduced parking, and any other lease
concessions, if any, then being charged or granted by Landlord or the lessors of
such similar office buildings.
(c) Within ten (10) business days after receipt of the Economic Terms from
Landlord, Tenant must give Landlord written notice pursuant to which Tenant
shall elect to either: (i) lease such First Offer Space upon such Economic Terms
and the same non-Economic Terms as set forth in the Lease with respect to the
Premises; (ii) refuse to lease such First Offer Space, specifying that such
refusal is not based upon the Economic Terms, but upon Tenant's lack of need for
such First Offer Space, in which event Landlord may at any time thereafter lease
such First Offer Space to any party upon any terms Landlord deems appropriate;
or (iii) refuse to lease the First Offer Space, specifying that such refusal is
based upon the Economic Terms, in which event Tenant will also specify revised
Economic Terms upon which Tenant is willing to lease such First Offer Space
(provided that Tenant may not specify a different lease term for the First Offer
Space). Tenant's failure to timely choose either clause 2(c)(i), clause 2(c)(ii)
or clause 2(c)(iii) above will be deemed to be Tenant's choice of clause
2(c)(ii) above.
ADDENDUM
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52
(d) If Tenant gives Landlord notice pursuant to clause 2(c)(iii) above, Landlord
may elect, within five (5) days following receipt of such notice from Tenant,
either to: (i) lease such First Offer Space to Tenant upon such revised Economic
Terms proposed by Tenant, and the same other non-Economic Terms as set forth in
this Lease; or (ii) lease the First Offer Space at any time thereafter to any
third party upon terms which are not substantially more favorable to said party
than the Economic Terms originally proposed by Landlord. Landlord's failure to
timely choose either clause 2(d)(i) or clause 2(d)(ii) above will be deemed to
be Landlord's choice of clause 2(d)(ii) above.
(e) If Tenant chooses (or is deemed to have chosen) clause 2(c)(ii) above, or if
Landlord chooses (or is deemed to have chosen) clause 2(d)(ii) above, Tenant's
Right to Lease any First Offer Space will be null and void until Tenant once
again validly delivers to Landlord a Tenant Request, in which event, the
procedures and sequences set forth above will be followed. If Tenant exercises
its Right of First Offer as provided herein, the parties will promptly
thereafter execute an amendment to the Lease to include the First Offer Space in
the Premises and to document the lease terms thereof.
3. BENEFICIAL OCCUPANCY. Notwithstanding the provisions of the Lease regarding
the payment of Monthly Base Rent, Landlord hereby agrees that Tenant shall have
the beneficial use of the Premises with a fifty percent (50%) abatement of
Monthly Base Rent for a period of one hundred twenty (120) days from the
Commencement Date (the "Beneficial Occupancy Period"); provided, however, in the
event that Tenant defaults under the terms of the Lease at any time during the
Term of the Lease, and such default remains uncured following the expiration of
any applicable curative periods under the Lease, all such abated Monthly Base
Rent for the Beneficial Occupancy Period shall become immediately due and
payable by Tenant to Landlord.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the day
and year of execution of the Lease.
TENANT: LANDLORD:
THE RYLAND GROUP, INC., KILROY REALTY, L.P.,
a Maryland corporation a Delaware limited partnership
By: KILROY REALTY CORPORATION,
By: /s/ Robert J. Cunnion III a Maryland corporation
------------------------- Its: General Partner
Print Name: Robert J. Cunnion III
---------------------
Print Title: Senior Vice President By: /s/ Jeffrey C. Hawken
--------------------- --------------------------------
Print Name: Jeffrey C. Hawken
By: /s/ Frank J. Scardina ------------------------
-------------------------
Print Title: Chief Operating Officer
Print Name: Frank J. Scardina -----------------------
---------------------
Print Title: Senior Vice President
---------------------
By:/s/ C. Hugh Greenup
--------------------------------
Print Name: C. Hugh Greenup
------------------------
Print Title: Executive Vice-President
------------------------
ADDENDUM
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EXHIBIT "A-1" SITE PLAN
[Legend to Calabasas Park Centre Parking here]
EXHIBIT "A-1"
54
EXHIBIT "A-1" SITE PLAN
[Site Plan here]
EXHIBIT "A-1"
55
EXHIBIT "A-II" OUTLINE OF FLOOR PLAN OF PREMISES
[Outline of Floor Plan of Premises here]
EXHIBIT "A-II"
56
RENTABLE SQUARE FEET AND USABLE SQUARE FEET
1. The term "Rentable Square Feet" as used in the Lease will be deemed to
include: (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 (the "BOMA Standard"), 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 and other 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 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 and telephone closets 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 subparagraph 1(a) above.
In calculating the "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.
2. The term "Usable Square Feet" as used in Exhibit "C" with respect to the
Premises will be deemed to include the usable area of the Premises as determined
in accordance with the BOMA Standard.
3. For purposes of establishing Tenant's Percentage, Tenant's Operating Expense
Allowance, and Monthly Base Rent as shown in Paragraph 1 of the Lease, the
number of Rentable Square Feet of the Premises is deemed to be as set forth in
subparagraph 1(g) of the Lease, and the number of Rentable Square Feet of the
Building is deemed to be as set forth in subparagraph 1(f) of the Lease. For
purposes of establishing the amount of the Tenant Improvement Allowance in
Exhibit "C", the number of Usable Square Feet of the Premises is deemed to be as
set forth in subparagraph 1(g). Following the completion of the "Tenant
Improvement Work" (as defined in the Work Letter Agreement), Landlord shall
cause Landlord's architect to determine the actual number of Rentable Square
Feet of the Premises, and the Building, and the actual number of Usable Square
Feet of the Premises respectively, based upon the criteria set forth in
Paragraph 1 and Paragraph 2 above, and thereupon Tenant's Percentage, Monthly
Base Rent and the Tenant Improvement Allowance will be adjusted accordingly.
EXHIBIT "B"
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57
WORK LETTER AGREEMENT
[ALLOWANCE]
This WORK LETTER AGREEMENT ("Work Letter Agreement") is entered into as of
the___ day of ___________, 1999 by and between Kilroy Realty, L.P., a
Delaware limited partnership ("Landlord"), and The Ryland Group, Inc., a
Maryland corporation ("Tenant").
R E C I T A L S :
- - - - - - - -
A. Concurrently with the execution of this Work Letter Agreement, Landlord
and Tenant have entered into that certain Office Building Lease (the "Lease")
covering certain premises (the "Premises") more particularly described in
Exhibit "A" attached to the Lease. All terms not defined herein have the same
meaning as set forth in the Lease. To the extent applicable, the provisions of
the Lease are incorporated herein by this reference.
B. In order to induce Tenant to enter into the Lease, Landlord and
Tenant hereby agree as follows:
A G R E E M E N T :
- - - - - - - - -
1. BASE BUILDING; TENANT IMPROVEMENTS. The Base Building shall be
completed by Landlord in accordance with the specifications set forth in
Schedule "1" attached hereto, on or before the date shown on the Work Schedule
attached hereto as Schedule "2", subject to Force Majeure Delays and any Tenant
Delays, and in accordance with the Work Schedule described in Paragraph 2. As
used in the Lease and this Work Letter Agreement, the term "Tenant Improvements"
or "Tenant Improvement Work" means those items of general tenant improvement
construction shown on the Final Plans (described in Paragraph 4 below).
2. WORK SCHEDULE. Attached hereto as Schedule "2" is a schedule ("Work
Schedule") which will set forth the timetable for the planning and completion of
the installation of the Base Building and Tenant Improvements. The Work Schedule
will set forth each of the various items of work to be done by Landlord for the
completion of the Base Building and shall further provide for the various items
to be done or approval to be given by Landlord and Tenant in connection with the
completion of the Tenant Improvements. The Work Schedule will become the basis
for completing the Base Building and the Tenant Improvements. All plans and
drawings required by this Work Letter Agreement and all work performed pursuant
thereto are to be prepared and performed in accordance with the Work Schedule.
3. CONSTRUCTION REPRESENTATIVES. Landlord hereby appoints the following
person(s) as Landlord's representative ("Landlord's Representative") to act for
Landlord in all matters covered by this Work Letter Agreement: Stephen Stock.
Tenant hereby appoints the following person(s) as Tenant's representative
("Tenant's Representative") to act for Tenant in all matters covered by this
Work Letter Agreement: Maggie Mandel.
All communications with respect to the matters covered by this Work Letter
Agreement are to be made to Landlord's Representative or Tenant's
Representative, as the case may be, in writing in compliance with the notice
provisions of the Lease. Either party may change its representative under this
Work Letter Agreement at any time by written notice to the other party in
compliance with the notice provisions of the Lease.
4. TENANT IMPROVEMENT PLANS
(a) Preparation of Space Plans. In accordance with the Work Schedule,
Tenant agrees to meet with Tenant's architect and/or space planner (the
"Tenant's Architect") for the purpose of promptly preparing preliminary
space plans for the layout of Premises ("Space Plans"). The Space Plans
are to be sufficient to convey the architectural design of the Premises
and layout of the Tenant Improvements therein and are to be submitted to
Landlord in accordance with the Work Schedule for Landlord's approval. If
Landlord reasonably disapproves any aspect of the Space Plans, Landlord
will advise Tenant in writing of such disapproval and the reasons therefor
in accordance with the Work Schedule. Tenant will then submit to Landlord
for Landlord's approval, in accordance with the Work Schedule, a redesign
of the Space Plans incorporating the revisions reasonably required by
Landlord.
EXHIBIT "C"
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58
(b) Preparation of Final Plans. Based on the approved Space Plans,
and in accordance with the Work Schedule, Tenant's Architect will prepare
and complete architectural plans, drawings and specifications and complete
engineered mechanical, structural and electrical working drawings for all
of the Tenant Improvements for the Premises (collectively, the "Final
Plans"). The Final Plans will show: (a) the subdivision (including
partitions and walls), layout, lighting, finish and decoration work
(including carpeting and other floor coverings) for the Premises; (b) all
internal and external communications and utility facilities which will
require conduiting or other improvements from the Base Building shell work
and/or within common areas; and (c) all other specifications for the
Tenant Improvements. The Final Plans will be submitted to Landlord for
signature to confirm that they are consistent with the Space Plans. If
Landlord reasonably disapproves any aspect of the Final Plans based on any
inconsistency with the Space Plans, Landlord agrees to advise Tenant in
writing of such disapproval and the reasons therefor within the time frame
set forth in the Work Schedule. In accordance with the Work Schedule,
Tenant will then cause Tenant's Architect to redesign the Final Plans
incorporating the revisions reasonably requested by Landlord so as to make
the Final Plans consistent with the Space Plans.
(c) Requirements of Tenant's Final Plans. Tenant's Final Plans will
include locations and complete dimensions, and the Tenant Improvements, as
shown on the Final Plans, will: (i) be compatible with the Base Building
and with the design, construction and equipment of the Building; (ii) if
not comprised of the Landlord's Building standards set forth those certain
Outline Specifications for Calabasas Park Centre dated January 29, 1999
(the "Standards"), then compatible with and of at least equal quality as
the Standards and approved by Landlord; (iii) comply with all applicable
laws, ordinances, rules and regulations of all governmental authorities
having jurisdiction, and all applicable insurance regulations; (iv) not
require Building service beyond the level normally provided to other
tenants in the Building and will not overload the Building floors; and (v)
be of a nature and quality consistent with the overall objectives of
Landlord for the Building, as determined by Landlord in its reasonable but
subjective discretion.
(d) Submittal of Final Plans. Once approved by Landlord and Tenant,
Tenant's Architect will submit the Final Plans to the appropriate
governmental agencies for plan checking and the issuance of a building
permit. Tenant's architect, with Tenant's cooperation, will make any
changes to the Final Plans which are requested by the applicable
governmental authorities to obtain the building permit. After approval of
the Final Plans no further changes may be made without the prior written
approval of both Landlord and Tenant. Tenant shall pay any excess costs
resulting from the design and/or construction of such changes.
(e) Changes to Shell of Building. If the Final Plans or any amendment
thereof or supplement thereto shall require changes in the Base Building,
the increased cost of the Base Building work caused by such changes will
be paid for by Tenant or charged against the "Allowance" described in
Paragraph 5 below.
(f) Work Cost Estimate and Statement. Prior to the commencement of
construction of any of the Tenant Improvements shown on the Final Plans,
Tenant will submit to Landlord a written estimate of the cost to complete
the Tenant Improvement Work, which written estimate will be based on the
Final Plans taking into account any modifications which may be required to
reflect changes in the Final Plans required by the City or County in which
the Premises are located and based on the lowest bid submitted by
reputable tenant improvement contractors selected by Tenant and reasonably
approved by Landlord (the "Work Cost Estimate"). Submission and approval
of the Work Cost Estimate will proceed in accordance with the Work
Schedule. Upon Landlord's approval of the Work Cost Estimate (such
approved Work Cost Estimate to be hereinafter known as the "Work Cost
Statement"), Tenant will have the right to purchase materials and to
commence the construction of the items included in the Work Cost Statement
pursuant to Paragraph 6 hereof. If the total costs reflected in the Work
Cost Statement exceed the Allowance described in Paragraph 5 below, Tenant
agrees to pay such excess to Tenant's Contractor (defined below). The
contractor selected by Landlord and Tenant through the competitive bidding
process is referred to herein as "Tenant's Contractor". Tenant's written
construction agreement with Tenant's Contractor shall be subject to
Landlord's prior review and approval.
EXHIBIT "C"
-2-
59
5. PAYMENT FOR THE TENANT IMPROVEMENTS
(a) Allowance. Landlord hereby grants to Tenant a tenant improvement
allowance of Thirty-Five Dollars ($35) per Usable Square Foot of the
Premises (the "Allowance"). The Allowance shall be paid to Tenant in
accordance with Paragraph 12 below and the Allowance is to be used only
for:
(i) Payment of the cost of preparing the Space Plans and the
Final Plans, including mechanical, electrical, plumbing and
structural drawings and of all other aspects necessary to complete
the Final Plans.
(ii) The payment of plan check, permit and license fees relating
to construction of the Tenant Improvements.
(iii)Construction of the Tenant Improvements, including, without
limitation, the following:
(aa) Installation within the Premises of all partitioning,
doors, floor coverings, ceilings, wall coverings and painting,
millwork and similar items;
(bb) All electrical wiring, lighting fixtures, outlets
and switches, and other electrical work necessary for the
Premises;
(cc) The furnishing and installation of all duct work,
terminal boxes, diffusers and accessories necessary for the
heating, ventilation and air conditioning systems within the
Premises, including the cost of meter and key control for
after-hour air conditioning;
(dd) Any additional improvements to the Premises required
for Tenant's use of the Premises including, but not limited to,
odor control, special heating, ventilation and air conditioning,
noise or vibration control or other special systems or
improvements;
(ee) All fire and life safety control systems such as fire
walls, sprinklers, halon, fire alarms, including piping, wiring
and accessories, necessary for the Premises;
(ff) All plumbing, fixtures, pipes and accessories
necessary for the Premises;
(gg) Testing and inspection costs; and
(hh) Fees for Landlord's supervising of the completion of
the Tenant Improvement Work in the amount of one and one-half (1
1/2%) of the Allowance, and the cost and fees of the Tenant's
Contractor including, but not limited to, fees and costs
attributable to general conditions. Tenant may secure the
representation of third party professionals (whose fees shall be
deducted from the Allowance) to assist with project planning,
construction management, coordination of third-party
professionals and design. Parking, utilities and other building
services shall not be charged during Tenant's construction of
the Tenant Improvements or during the Beneficial Occupancy
Period (as defined in Paragraph 7 of the Addendum to the Lease).
EXHIBIT "C"
-3-
60
(b) Excess Costs. The cost of each item referenced in Paragraph 5(a)
above shall be charged against the Allowance. If the Work Cost exceeds the
Allowance, Tenant agrees to timely pay to Tenant's Contractor such excess.
In no event will the Allowance be used to pay for Tenant's furniture,
artifacts, equipment, telephone systems or any other item of personal
property which is not affixed to the Premises.
(c) Changes. If, after the Final Plans have been prepared and the
Work Cost Statement has been established, Tenant requires any changes or
substitutions to the Final Plans, any additional costs related thereto
including fees for Tenant's Contractor are to be paid by Tenant to
Tenant's Contractor prior to the commencement of construction of the
changed or substituted Tenant Improvements. Any changes to the Final Plans
will be subject to the review and approval of Landlord and Tenant in the
manner set forth in Paragraph 4 above and will, if necessary, require the
Work Cost Statement to be revised and agreed upon between Landlord and
Tenant in the manner set forth in subparagraph 4(f) above. Landlord will
have the right to decline Tenant's request for a change to the Final Plans
if such changes are inconsistent with the provisions of Paragraph 4 above,
or if the change would unreasonably delay construction of the Tenant
Improvements and the Commencement Date of the Lease. Landlord hereby
agrees to respond to Tenant's request for changes or substitutions to the
Final Plans within five (5) business days of Tenant's written request
therefor.
(d) Governmental Cost Increases. If increases in the cost of the
Tenant Improvements as set forth in the Work Cost Statement are due to
requirements of any governmental agency, Tenant agrees to pay the amount
of such increase; provided, however, that Landlord will first apply toward
any such increase any remaining balance of the Allowance.
(e) Unused Allowance Amounts. Any unused portion of the Allowance
upon completion of the Tenant Improvements will not be refunded to Tenant
or be available to Tenant as a credit against any obligations of Tenant
under the Lease unless Tenant has paid for excess costs as described in
subparagraphs 5(b), 5(c) or 5(d), in which case the unused Allowance may
be applied toward such excess cost amounts and paid to Tenant.
(f) Additional Payment By Landlord. In addition to the "Allowance"
Landlord shall reimburse Tenant for reasonable out-of-pocket costs and
expenses incurred by Tenant directly in connection with the preparation of
the Space Plans, including but not limited to, any preliminary space plans
for the Premises Tenant may have caused to be professionally prepared
prior to execution of the Lease; provided, however, Tenant must deliver to
Landlord written evidence of such costs and expenses no later than the
Commencement Date and provided further that, in no event shall Landlord's
obligation to reimburse Tenant exceed Ten One Hundredths Dollars ($0.10)
per Usable Square Foot of the Premises.
6. CONSTRUCTION OF TENANT IMPROVEMENTS. In accordance with the Work
Schedule, Tenant's Contractor will commence and diligently proceed with the
construction of the Tenant Improvements, subject to Tenant Delays (as described
in Paragraph 9 below) and Force Majeure Delays (as described in Paragraph 10
below). Tenant shall cause Tenant's Contractor to coordinate at all times with
Landlord's Contractor with respect to the completion of the Base Building.
Tenant or Tenant's Contractor's failure to do so shall constitute a Tenant Delay
for purposes of Paragraph 9 hereinbelow.
7. DELIVERY OF MATERIALS TO THE PREMISES; UTILITIES. Tenant shall cause
Tenant's Contractor to deliver construction materials to the Premises located on
the fourth (4th) floor through the Building windows which shall be "popped out"
by Landlord's contractor. Construction materials for the Premises located on the
first (1st) floor shall be delivered through the back door of the Building.
Tenant hereby acknowledges that Tenant shall be required to provide temporary
restroom facilities, and temporary power for the construction of the Tenant
Improvements, at Tenant's sole cost and expense.
EXHIBIT "C"
-4-
61
8. COMMENCEMENT DATE AND SUBSTANTIAL COMPLETION
(a) Commencement Date. The Term of the Lease will commence on the
date (the "Commencement Date") which is the earlier of: (i) July 1, 2000;
(ii) the date Tenant moves into the Premises to commence operation of its
business in all or any portion of the Premises; or (iii) the date the
Tenant Improvements have been "substantially completed" (as defined
below). If substantial completion of the Tenant Improvements is delayed as
a result of Landlord's failure to deliver the Premises on or before the
date set forth in the Work Schedule (other than by reason of any Tenant
Delays), then the Commencement Date as otherwise established pursuant to
subparagraph 8(a)(i) will be extended by the number of days of such
delays. Notwithstanding the foregoing, the Commencement Date shall not be
deemed to have occurred until all parking areas to be made available for
Tenant's use as of the Commencement Date, have been completed and all
landscaping required for the issuance of a temporary Certificate of
Occupancy or equivalent approval from the local government authority
permitting Tenant's occupancy of the Premises shall have been completed.
(b) Substantial Completion; Punch-List. For purposes of subparagraph
8(a) above, the Tenant Improvements will be deemed to be "substantially
completed" when Tenant's Contractor certifies in writing to Landlord and
Tenant that : (a) Tenant has reasonable access to the Premises; (b)
Tenant's Contractor has substantially performed all of the Tenant
Improvement Work required to be performed by Tenant under this Work Letter
Agreement, other than decoration and minor "punch-list" type items and
adjustments which do not materially interfere with Tenant's access to or
use of the Premises; and (c) a temporary certificate of occupancy or other
required equivalent approval from the local governmental authority
permitting occupancy of the Premises has been issued. Tenant's
construction contract with Tenant's Contractor shall require Tenant's
Contractor to timely issue the foregoing certification. Within ten (10)
days after receipt of such certificate from Tenant's Contractor, Landlord
and Tenant will conduct a walk-through inspection of the Premises with
Tenant's Contractor and provide to Tenant's Contractor a written
punch-list specifying those decoration and other punch-list items which
require completion, which items Tenant's Contractor will thereafter
diligently complete.
(c) Delivery of Possession. Landlord agrees to deliver possession of
the Premises to Tenant to permit Tenant's Contractor to commence the
construction of the Tenant Improvements in accordance with the Work
Schedule attached hereto as "Schedule 2", subject to Force Majeure Delays
(not to exceed one hundred eighty (180) days) and any Tenant Delays. On
the date that the Premises shall be delivered to Tenant's Contractor, the
Building shall be closed in and secured.
9. TENANT DELAYS. For purposes of this Work Letter Agreement, "Tenant
Delays" means any delay in the completion of the Tenant Improvements resulting
from any or all of the following: (a) Tenant's failure or the failure of
Tenant's Architect or Tenant's Contractor to timely perform any of their
respective obligations pursuant to this Work Letter Agreement, including any
failure to complete, on or before the due date therefor, any action item which
is Tenant's responsibility pursuant to the Work Schedule delivered by Landlord
to Tenant pursuant to this Work Letter Agreement; (b) Tenant's changes to Space
Plans or Final Plans after Landlord's approval thereof; (c) Tenant's request for
materials, finishes, or installations which are not readily available or which
are incompatible with the Standards; (d) any delay of Tenant in making payment
to Landlord for Tenant's share of the Work Cost; or (e) any other act or failure
to act by Tenant, Tenant's employees, agents, Tenant's Architect, Tenant's
Contractor, independent contractors, consultants and/or any other person
performing or required to perform services on behalf of Tenant.
10. FORCE MAJEURE DELAYS. For purposes of this Work Letter, "Force Majeure
Delays" means any actual delay in the construction of the Tenant Improvements,
which is beyond the reasonable control of Landlord or Tenant, as the case may
be, as described in Paragraph 33 of the Lease.
EXHIBIT "C"
-5-
62
11. OTHER CONSTRUCTION PROVISIONS.
(a) Compliance With Paragraph 13. Tenant shall comply with the
applicable provisions of Paragraph 13 of the Lease which do not conflict
with this Work Letter Agreement, as if the Tenant Improvement Work were an
"Alteration" under Paragraph 13 of the Lease, including but not limited
to, contractor's insurance requirements and lien-free work requirements.
(b) Good and Workmanlike Construction. Tenant shall use its best
efforts to cause the Tenant Improvement Work to be constructed in a good
and workmanlike manner in substantial conformity with the Final Plans, and
in substantial compliance with all applicable laws, regulations, building
codes and governmental orders pertaining thereto.
(c) Entry For Inspection. At all times during the course of
constructing the Tenant Improvement Work, Landlord shall have the right
to enter the Premises to inspect Tenant's construction activities.
(d) Indemnity. Tenant hereby indemnifies and agrees to defend and
hold Landlord harmless from and against any and all suits, claims,
actions, losses, costs or expenses of any nature whatsoever, together with
reasonable attorneys' fees for counsel of Landlord's choice, arising out
of or in connection with the Tenant Improvement Work or the performance of
the Tenant Improvement Work (including, but not limited to, claims for
breach of warranty, personal injury or property damage).
(e) Defects. Landlord shall have no responsibility for the Tenant
Improvement Work and Tenant will remedy, at Tenant's own expense, and be
responsible for any and all defects in the Tenant Improvement Work whether
the same shall affect the Tenant Improvement Work in particular or any
parts of the Building in general.
(f) No Interference. All of Tenant's contractors, subcontractors,
employees, servants and agents must work in harmony with and shall not
interfere with any labor employed by Landlord, or Landlord's contractors
with respect to any portion of the Building.
12. DISBURSEMENT OF ALLOWANCE. Provided Tenant is not in default under the
Lease, Landlord shall disburse the Allowance (or the unexpended portion of the
Allowance as of the date of this Amendment), to Tenant to reimburse Tenant for
the actual Tenant Improvement Work Cost which Tenant incurs in connection with
the construction of the Tenant Improvements in accordance with the following:
(a) Initial Disbursements. Ninety percent (90%) of the portion of the
Allowance requested in the Draw Request (defined below) shall be disbursed
to Tenant not more frequently than monthly when Landlord has received the
following "Evidence of Completion and Payment":
(i) Tenant has delivered to Landlord a draw request ("Draw
Request") in a form satisfactory to Landlord and Landlord's lender
with respect to the Tenant Improvements specifying that the requisite
portion of the Tenant Improvement Work has been completed, together
with invoices, receipts and bills evidencing the costs and expenses
set forth in such Draw Request and evidence of payment by Tenant for
all costs which are payable in connection with such Tenant
Improvement Work covered by the Draw Request. The Draw Request shall
constitute a representation by Tenant that the Tenant Improvement
Work identified therein has been completed in a good and workmanlike
manner and in accordance with the Final Plans and the Work Schedule
and has been paid for;
(ii) The architect for the Tenant Improvements has certified to
Landlord that the Tenant Improvements have been completed to the
level indicated in the Draw Request in accordance with the Final
Plans;
(iii)Tenant has delivered to Landlord such other evidence of
Tenant's payment of Tenant's contractor and subcontractors for the
portions of the Tenant Improvement Work covered by the Draw Request
and the absence of any liens generated by such portions of the Tenant
Improvement Work as may be required by Landlord (i.e., either
unconditional lien releases in accordance with California Civil Code
Section 3262 or release bond(s) in accordance with California Civil
Code Sections 3143 and 3171);
EXHIBIT "C"
-6-
63
(iv) Landlord or Landlord's architect or construction
representative has inspected the Tenant Improvements and determined
that the portion of Tenant Improvement Work covered by the Draw
Request has been completed in a good and workmanlike manner;
(b) Final Disbursement. The final disbursement of the balance of the
Allowance shall be disbursed to Tenant only when Landlord has received
Evidence of Completion and Payment as to all of Tenant Improvement Work as
provided hereinabove and the following conditions have been satisfied:
(i) Thirty-five (35) days shall have elapsed following the
filing of a valid notice of completion by Tenant for the Tenant
Improvements, or Tenant shall have delivered to Landlord
unconditional lien releases from Tenant's Contractor and all
subcontractors, satisfactory to cause Landlord's title insurance
company to deliver an endorsement to Landlord's owner's title policy
insuring against the existence of any mechanics' liens arising from
the completion of the Tenant Improvement Work;
(ii) A certificate of occupancy for the Tenant Improvements and
the Premises has been issued by the appropriate governmental body and
such certificate of occupancy is in Landlord's possession;
(iii)Tenant shall have delivered to Landlord one set of
reproducible "As Built" plans for the Tenant Improvements;
(iv) Tenant shall have accepted possession of the Premises and
commenced business operations in the Premises in accordance with the
provisions of the Lease; and
(v) The satisfaction of any other requirements or conditions
which may be required or imposed by Landlord's lender with respect to
the construction of the Tenant Improvements.
(c) Excess Costs. All Work Costs in excess of the Allowance shall
be paid by Tenant.
EXHIBIT "C"
-7-
64
IN WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this Work
Letter Agreement to be duly executed by their duly authorized representatives as
of the date of the Lease.
TENANT: LANDLORD:
THE RYLAND GROUP, INC., KILROY REALTY, L.P.,
a Maryland corporation a Delaware limited partnership
By: KILROY REALTY CORPORATION,
By: /s/ Robert J. Cunnion III a Maryland corporation
------------------------- Its: General Partner
Print Name: Robert J. Cunnion III
---------------------
Print Title: Senior Vice President By: /s/ Jeffrey C. Hawken
--------------------- --------------------------------
Print Name: Jeffrey C. Hawken
By: /s/ Frank J. Scardina ------------------------
-------------------------
Print Title: Chief Operating Officer
Print Name: Frank J. Scardina -----------------------
---------------------
Print Title: Senior Vice President
---------------------
By:/s/ C. Hugh Greenup
--------------------------------
Print Name: C. Hugh Greenup
------------------------
Print Title: Executive Vice-President
------------------------
EXHIBIT "C"
-8-
65
SCHEDULE "1"
DESCRIPTION OF BASE BUILDING
The following is a description of the Base Improvements for the Premises. Any
items not specifically identified are intended to be included with the Tenant
Improvements.
The Building shall be a four (4) story steel frame building with an exterior
finish insulation system (EFIS) providing a combination of "punched" window
openings and synthetic or lime plaster stucco wall to include the following
items:
1) Completed men's and women's restrooms to include full height ceramic tile on
wet walls and complete tile on the entire floor with a floor drain that will
coordinate with tenant's finish plans. The restrooms shall contain high
quality fixtures and mirrors, adequately sized, the countertops shall be of
man-made stone" material provided at Landlord's expense. Restrooms shall
conform to all applicable code requirements and shall include toilet
partitions, accessories (waste paper receptacles, toilet paper dispensers).
All restroom signage required by applicable building codes shall be provided
at Landlord's expense. To the extent Tenant elects to up-grade restroom
countertop material, Tenant shall receive a credit to the Allowance in the
amount of the cost attributable to the Base Building restroom countertop
material.
2) Completed telephone/electrical closets on each floor, properly vented and
lighted. Tenant's telephone and communication equipment to be located in
Tenant's lease space. Provisions for fiber optic cable brought to main
building telephone room with distribution by Tenant. Tenant electrical
panels will be located on each floor with distribution to Tenant's space by
Tenant.
3) Completed and painted stairwells to include any required lighting, excluding
exit lighting within the Premises.
4) Completed package variable volume mechanical system on the roof of the
Building, properly installed with all electrical and plumbing completed,
noise and vibration attenuated cooling capacity of approximately three (3)
tons of refrigeration for every 1,000 rentable square feet in the Building
which will enable the inside temperature to be consistent with the
mechanical design. The roof shall be penetrated with supply and return ducts
(properly insulated with sound boots or other methods where required to
attenuate noise and vibration) and the main supply duct installed on each
floor in the building shell.
5) The main building lobby shall be complete and finished with stone or tile
floor, fabric wall covering and drywall ceiling with downlights.
6) The core and stairwell vestibules and the elevator lobbies shall be
sheet-rocked throughout the Building. All sheet-rock shall be properly
taped, mudded, sanded to a smooth finish, paint ready. The perimeter of the
inside exterior walls shall have completed studs with insulation installed
prior to Tenant Improvements at Landlord's expense. Interior columns in
lease space will be left exposed. Required corridor walls will be finished
on corridor side only. 1/2 the cost of corridor and demising partitions will
be charged against the Allowance.
7) All floors shall be delivered finished smooth (wall to wall) and shall be
flat to a level of one-quarter (1/4) inch over ten (10) feet in any
direction (noncumulative). The floors shall be ready to accept floor
covering, with only minor floor-floating required.
8) The Premises shall be provided with pagers, smoke detectors, sprinkler
risers, mainlines, branch lines and heads as required by local codes for
unoccupied space. The cost of any modifications to base system shall be
deducted from the Tenant Improvement Allowance.
9) An electrical system shall be properly installed in each Building using high
quality components of between 1600 and 3000 amps, 480/277 volt, 3 phase, 4
wire service located in properly completed electrical rooms. Primary
electrical service to the Building shall be installed and wired with pad
mounted transformer in an acceptable location. Adequate power shall be
transformed for house power (to include but not be limited to exterior
lighting, landscaping controls, parking lot lighting, etc.)
SCHEDULE "1"
to
EXHIBIT "C"
-1-
66
10) The loading capacity of all "upper" floors shall be a minimum live load of
eighty (80) pounds per square foot and a minimum dead load of twenty (20)
pounds per square foot.
11) A minimum of two (2), four (4) inch empty conduits shall be installed
between the Building and the adjacent building to be developed within the
Development, for future voice and data communication connections.
12) Three (3) elevators of adequate size and capacity to serve the building will
be provided to service all four (4) floors.
SCHEDULE "1"
to
EXHIBIT "C"
-2-
67
Schedule "2"
WORK SCHEDULE
Preparation and approval of the Space Plans, Final Plans and the Work Cost
Statement shall proceed as indicated below.
ACTION RESPONSIBILITY DUE DATE
------ -------------- --------
(i) Submission of the Space Tenant 30 days after
Plans Lease execution
(ii) Delivery of written Landlord 3 days after (i)
notice approving or
disapproving Space Plans
(iii) Submission, if Tenant 5 days after (ii)
necessary, of redesign
of Space Plans
(iv) Delivery of written Landlord 1 day after (iii)
notice of final approval
of Space Plans (if (iii)
is necessary)
(v) Submission of Final Tenant 35 days after (iv)
Plans to Landlord
(vi) Delivery of written Landlord 3 days after (v)
notice approving or
disapproving Final Plans
(vii) Submission, if Tenant 5 days after (vi)
necessary, of redesign
of Final Plans
(viii) Delivery of written Landlord 1 day after (vii)
notice of final approval
of Final Plans (if (vii)
is necessary)
(ix) Submission of Work Cost Tenant 15 days after
estimate to Landlord Final Plans
submitted
(x) Delivery of written Landlord 3 days after (ix)
notice of final approval
of Work Cost Statement.
(xi) Submit for permit Tenant At time Plans
approval submitted to
Landlord
(xii) Delivery of space to Landlord 04/01/00
Tenant for commencement
of Tenant Improvements
(xiii) Completion of Base Landlord 05/18/00
Building
(xiv) Completion of Tenant Tenant 07/01/00
Improvements
SCHEDULE "2"
to
EXHIBIT "C"
-1-
68
NOTICE OF LEASE TERM DATES
AND TENANT'S PERCENTAGE
To:___________________________________
___________________________________
___________________________________
Date:_________________________________
Re: Lease dated __________________________________, 19___ (the "Lease"),
between ______________________________, Landlord, and
__________________________, Tenant, concerning Suite _________ located
at ________________________________ (the "Premises").
To Whom It May Concern:
In accordance with the subject Lease, we wish to advise and/or confirm as
follows:
1. That the Premises have been accepted by the Tenant as being substantially
complete in accordance with the subject Lease and that there is no deficiency in
construction except as may be indicated on the "Punch-List" prepared by Landlord
and Tenant, a copy of which is attached hereto.
2. That the Tenant has possession of the subject Premises and acknowledges
that under the provisions of the Lease the Commencement Date is
____________________, and the Term of the Lease will expire on
________________.
3. That in accordance with the Lease, rent commenced to accrue on __________.
4. If the Commencement Date of the Lease is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter will be for the full amount of the monthly installment as provided
for in the Lease.
5. Rent is due and payable in advance on the first day of each and every
month during the Term of the Lease. Your rent checks should be made payable
to ____________________________________ at___________________________________.
6. The number of Rentable Square Feet within the Premises is ____________ square
feet as determined by Landlord's architect in accordance with the terms of the
Lease.
7. The number of Rentable Square Feet within the Building is ____________ square
feet as determined by Landlord's architect in accordance with the terms of the
Lease.
8. Tenant's Percentage, as adjusted based upon the number of Rentable
Square Feet within the Premises, is _______%.
LANDLORD:
____________________________________,
a __________________________________
By: ________________________________
Print Name: ____________________
Print Title: ___________________
By: ________________________________
Print Name: ____________________
Print Title: ___________________
SAMPLE ONLY
[NOT FOR EXECUTION]
EXHIBIT "D"
-1-
69
DEFINITION OF OPERATING EXPENSES
1. Items Included in Operating Expenses. The term "Operating Expenses" as used
in the Lease to which this Exhibit "E" is attached means: all costs and expenses
of operation and maintenance of the Building and the Common Areas (as such terms
are defined in the Lease), calculated assuming the Building is ninety-five
percent (95%) occupied, including the following costs by way of illustration but
not limitation, but excluding those items specifically set forth in Paragraph 3
below:
(a) Real Property Taxes and Assessments (as defined in Paragraph 2 below)
and any taxes or assessments imposed in lieu thereof;
(b) any and all assessments imposed with respect to the Building pursuant to any
covenants, conditions and restrictions affecting the Development, the Common
Areas or the Building;
(c) water and sewer charges and the costs of electricity, heating,
ventilating, air conditioning and other utilities;
(d) utilities surcharges and any other costs, levies or assessments resulting
from statutes or regulations promulgated by any government or quasi-government
authority in connection with the use, occupancy or alteration of the Building or
the Premises or the parking facilities serving the Building or the Premises;
(e) costs of insurance obtained by Landlord;
(f) waste disposal and janitorial services;
(g) labor;
(h) costs incurred in the management of the Building, including, without
limitation: (i) supplies, (ii) wages and salaries (and payroll taxes and similar
governmental charges related thereto) of employees used in the management,
operation and maintenance of the Building, (iii) Building management office
rental, supplies, equipment and related operating expenses, and (iv) a
management/administrative fee (not to exceed prevailing market rates for
comparable buildings and developments) determined as a percentage of the annual
gross revenues of the Building exclusive of the proceeds of financing or a sale
of the Building and an administrative fee for the management of the Development
Common Area determined as a percentage of Development Common Area Operating
Expenses;
(i) supplies, materials, equipment and tools including rental of personal
property used for maintenance;
(j) repair and maintenance of the elevators and the structural portions of the
Building, including the plumbing, heating, ventilating, air-conditioning and
electrical systems installed or furnished by Landlord;
(k) maintenance, costs and upkeep of all parking and Development Common
Areas;
(l) depreciation of personal property used in maintenance;
(m) amortization of all capitalized expenditures which are: (i) reasonably
intended to produce a reduction in operating charges or energy consumption; or
(ii) required under any governmental law or regulation that was not applicable
to the Building at the time it was originally constructed; or (iii) for
replacement of any Building equipment needed to operate the Building at the same
quality levels as prior to the replacement. All such costs shall be amortized
over such reasonable period as Landlord shall determine, on a consistent basis
and in accordance with multi-story office building industry standards of
competing first-class office buildings, with a return on capital at the then
current market rate per annum on the unamortized balance, or at such higher rate
as may have reasonably been paid by Landlord on funds borrowed for the purpose
of constructing such capital improvements.
(n) costs and expenses of gardening and landscaping;
EXHIBIT "E"
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70
(o) maintenance of signs;
(p) personal property taxes levied on or attributable to personal property
used in connection with the Building or the Common Areas;
(q) reasonable accounting, audit, verification, legal and other consulting
fees;
(r) costs and expenses of repairs, resurfacing, repairing, maintenance,
painting, lighting, cleaning, refuse removal, security and similar items,
including appropriate reserves; and
(s) any other costs or expenses applicable to the ownership, leasing and/or
management of the Building and/or the Development.
When calculating Operating Expenses for purposes of establishing Tenant's
Operating Expense Allowance, Operating Expenses shall not include Real Property
Taxes and Assessments attributable to special assessments, charges, costs, or
fees or due to modifications or changes in governmental laws or regulations
including, but not limited to, the institution of a split tax roll, and shall
exclude market-wide labor-rate increases due to extraordinary circumstances
including, but not limited to, boycotts and strikes and utility increases due to
extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages. Landlord shall keep books
and records showing the Operating Expenses in accordance with a system of
accounts and accounting practices consistently maintained by Landlord on a
year-to-year basis in compliance with such provisions of this Lease as may
affect such accounts (the "Accounting Practices"). Operating Expenses applicable
to Common Areas servicing the Building and other buildings in the Development
shall be allocated to the Building on a straight pro-rata basis with the
Building bearing its share in the proportion that the Rentable Square Foot of
the Building bears to the total Rentable Square Footage of all buildings sharing
such Common Areas.
2. Real Property Taxes and Assessments. The term "Real Property Taxes and
Assessments", as used in this Exhibit "E", means: any form of assessment,
license fee, license tax, business license fee, commercial rental tax, levy,
charge, improvement bond, tax or similar imposition imposed by any authority
having the direct power to tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
or special assessment district thereof, as against any legal or equitable
interest of Landlord in the Premises, Building, Common Areas or the Development
(as such terms are defined in the Lease), adjusted to reflect an assumption that
the Building is fully assessed for real property tax purposes as a completed
building ready for occupancy, including the following by way of illustration but
not limitation:
(a) any tax on Landlord's "right" to rent or "right" to other income from
the Premises or as against Landlord's business of leasing the Premises;
(b) any assessment, tax, fee, levy or charge in substitution, partially or
totally, of any assessment, tax, fee, levy or charge previously included within
the definition of real property tax, it being acknowledged by Tenant and
Landlord that Proposition 13 was adopted by the voters of the State of
California in the June, 1978 election 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. It is the intention of Tenant and Landlord that all such new and
increased assessments, taxes, fees, levies and charges be included within the
definition of "real property taxes" for the purposes of this Lease;
(c) any assessment, tax, fee, levy or charge allocable to or measured by the
area of the Premises or other premises in the Building or the rent payable by
Tenant hereunder or other tenants of the Building, including, without
limitation, any gross receipts tax or excise tax levied by state, city or
federal government, or any political subdivision thereof, with respect to the
receipt of such rent, or upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof but not on Landlord's other
operations;
(d) any assessment, tax, fee, levy or charge upon this transaction or any
document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises; and/or
EXHIBIT "E"
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71
(e) any assessment, tax, fee, levy or charge by any governmental agency related
to any transportation plan, fund or system (including assessment districts)
instituted within the geographic area of which the Building is a part.
Notwithstanding the foregoing, if at any time after the Commencement Date, the
amount of Real Property Taxes and Assessments decreases, then for purposes of
all subsequent Lease Years, including the Lease Year in which such decrease in
Real Property Taxes and Assessments occurs, Tenant's Operating Expense Allowance
shall be decreased by an amount equal to such decrease in Real Property Taxes
and Assessments. Further, notwithstanding the foregoing, in the event Landlord
obtains earthquake insurance coverage following the Base Year causing an
increase to Operating Expenses, then the Operating Expenses for the Base Year
shall be deemed to have been increased by the amount of the applicable premiums
attributable to such coverage.
Conversely, in the event that the amount of Operating Expenses decreases due to
Landlord's subsequent election to eliminate earthquake coverage, or in the event
of a reduction in the cost of providing utilities, security and/or other
services to the Building and/or Development for any reason, Operating Expenses
for Base Year shall be deemed to have been decreased by the amount equal to any
such decrease.
3. Items Excluded From Operating Expenses. Notwithstanding the provisions
of Paragraphs 1 and 2 above to the contrary, "Operating Expenses" will not
include:
(a) Landlord's federal or state income, franchise, inheritance or estate
taxes;
(b) any ground lease rental;
(c) costs incurred by Landlord for the repair of damage to the Building to the
extent that Landlord is reimbursed by insurance (and for this purpose Landlord
shall not be deemed to have been reimbursed with respect to any deductible), or
condemnation proceeds or by tenants, warrantors or other third persons;
(d) depreciation, amortization and interest payments, except as specifically
provided herein, and except on materials, tools, supplies and vendor-type
equipment purchased by Landlord to enable Landlord to supply services Landlord
might otherwise contract for with a third party, where such depreciation,
amortization and interest payments would otherwise have been included in the
charge for such third party's services, all as determined in accordance with the
Accounting Practices;
(e) brokerage commissions, finders' fees, attorneys' fees, space planning costs
and other costs incurred by Landlord in leasing or attempting to lease space in
the Building;
(f) costs of a capital nature, including, without limitation, capital
improvements, capital replacements, capital repairs, capital equipment and
capital tools, all as determined in accordance with the Accounting Practices;
provided, however, the capital expenditures set forth in subparagraph 1(m) above
will in any event be included in the definition of Operating Expenses;
(g) interest, principal, points and fees on debt or amortization on any
mortgage, deed of trust or other debt encumbering the Building or the
Development;
(h) costs, including permit, license and inspection costs, incurred with respect
to the installation of tenant improvements for tenants in the Building
(including the original Tenant Improvements for the Premises), or incurred in
renovating or otherwise improving, decorating, painting or redecorating space
for tenants or other occupants of the Building, including space planning and
interior design costs and fees;
(i) attorneys' fees and other costs and expenses incurred in connection with
negotiations or disputes with present or prospective tenants or other occupants
of the Building; provided, however, that Operating Expenses will include those
attorneys' fees and other costs and expenses incurred in connection with
negotiations, disputes or claims relating to items of Operating Expenses,
enforcement of rules and regulations of the Building, and such other matters
relating to the maintenance of standards required of Landlord under the Lease;
(j) except for the administrative/management fees described in
subparagraph 1(h) above, costs of Landlord's general corporate overhead;
EXHIBIT "E"
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72
(k) all items and services for which Tenant or any other tenant in the Building
reimburses Landlord (other than through operating expense pass-through
provisions);
(l) electric power costs for which any tenant directly contracts with the local
public service company; provided, however, for purposes of this subparagraph
3(l), in calculating the cost of electrical power consumed by tenants of the
Building, the applicable rentable square feet occupied by tenants who separately
contract for electrical power shall be excluded from the denominator when
determining all other tenants' pro-rata share of the costs of such electrical
power.
(m) costs arising from Landlord's charitable or political contributions.
EXHIBIT "E"
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73
STANDARDS FOR UTILITIES AND SERVICES
The following standards for utilities and services are in effect. Landlord
reserves the right to adopt nondiscriminatory modifications and additions
hereto.
Subject to the terms and conditions of the Lease and provided Tenant remains in
occupancy of the Premises, Landlord will provide or make available the following
utilities and services:
1. Provide non-attended automatic elevator facilities Monday through
Friday, except holidays, from 8 a.m. to 6 p.m., and have one elevator
available for Tenant's use at all other times.
2. On Monday through Friday, except holidays, from 8 a.m. to 6 p.m. and on
Saturday from 8 a.m. to 12 Noon (and other times for a reasonable additional
charge to be fixed by Landlord), ventilate the Premises and furnish air
conditioning or heating on such days and hours, when in the reasonable judgment
of Landlord it may be required for the comfortable occupancy of the Premises.
The air conditioning system achieves maximum cooling when the window coverings
are extended to the full length of the window opening and adjusted to a 45o
angle upwards. Landlord will not be responsible for room temperatures if Tenant
does not keep all window coverings in the Premises extended to the full length
of the window opening and adjusted to a 45o angle upwards whenever the system is
in operation. Tenant agrees to cooperate fully at all times with Landlord, and
to abide by all reasonable regulations and requirements which Landlord may
prescribe for the proper function and protection of said air conditioning
system. Tenant agrees not to connect any apparatus, device, conduit or pipe to
the chilled and hot water air conditioning supply lines of the Building. Tenant
further agrees that neither Tenant nor its servants, employees, agents,
visitors, licensees or contractors shall at any time enter the mechanical
installations or facilities of the Building or the Development or adjust, tamper
with, touch or otherwise in any manner affect said installations or facilities.
The cost of maintenance and service calls to adjust and regulate the air
conditioning system will be charged to Tenant if the need for maintenance work
results from either Tenant's adjustment of room thermostats or Tenant's failure
to comply with its obligations under this Exhibit, including keeping window
coverings extended to the full length of the window opening and adjusted to a
45o angle upwards. Such work will be charged at hourly rates equal to
then-current journeyman's wages for air conditioning mechanics. During the
Original Term, Landlord shall provide "after-hours" HVAC service to the Premises
at a cost equal to Thirty-Five Dollars ($35.00) per hour, per floor, subject to
adjustment based on actual increases or decreases in Landlord's applicable
rates.
3. Landlord will make available to the Premises, 24 hours per day, seven days a
week, electric current as required by the Building standard office lighting and
fractional horsepower office business machines including copiers, personal
computers and word processing equipment in an amount not to exceed four (4)
watts per square foot per normal business day. Tenant agrees, should its
electrical installation or electrical consumption be in excess of the aforesaid
quantity or extend beyond normal business hours, to reimburse Landlord monthly
for the measured consumption at the average cost per kilowatt hour charged to
the Building during the period. If a separate meter is not installed at Tenant's
cost, such excess cost will be established by an estimate agreed upon by
Landlord and Tenant, and if the parties fail to agree, such cost will be
established by an independent licensed engineer selected by Landlord and
approved by Tenant (such approval not to be unreasonably withheld, conditioned
or delayed), , whose fee shall be shared equally by Landlord and Tenant. Tenant
agrees not to use any apparatus or device in, upon or about the Premises (other
than standard office business machines, personal computers and word processing
equipment) which may in any way increase the amount of such services usually
furnished or supplied to said Premises, and Tenant further agrees not to connect
any apparatus or device with wires, conduits or pipes, or other means by which
such services are supplied, for the purpose of using additional or unusual
amounts of such services without the written consent of Landlord. Should Tenant
use the same to excess, the refusal on the part of Tenant to pay upon demand of
Landlord the amount established by Landlord for such excess charge will
constitute a breach of the obligation to pay rent under this Lease and will
entitle Landlord to the rights therein granted for such breach. Tenant's use of
electric current will never exceed the capacity of the feeders to the Building,
or the risers or wiring installation and Tenants will not install or use or
permit the installation or use of any computer or electronic data processing
equipment in the Premises (except standard office business machines, personal
computers and word processing equipment) without the prior written consent of
Landlord.
EXHIBIT "F"
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74
4. Water will be available in public areas for drinking and lavatory purposes
only, but if Tenant requires, uses or consumes water for any purpose in addition
to ordinary drinking and lavatory purposes, Landlord may install a water meter
and thereby measure Tenant's water consumption for all purposes. Tenant agrees
to pay Landlord for the cost of the meter and the cost of the installation
thereof and throughout the duration of Tenant's occupancy Tenant will keep said
meter and installation equipment in good working order and repair at Tenant's
own cost and expense, in default of which Landlord may cause such meter and
equipment to be replaced or repaired and collect the cost thereof from Tenant.
Tenant agrees to pay for water consumed, as shown on such meter, as and when
bills are rendered, and on default in making such payment, Landlord may pay such
charges and collect the same from Tenant. Any such costs or expenses incurred,
or payments made by Landlord for any of the reasons or purposes hereinabove
stated will be deemed to be additional rent payable by Tenant and collectible by
Landlord as such.
5. Landlord will provide cleaning and janitorial services to the Premises Monday
through Friday in accordance with the specifications attached hereto as Schedule
1.
6. Landlord reserves the right to stop service of the elevator, plumbing,
ventilation, air conditioning and electrical systems, when necessary, by reason
of accident or emergency or for repairs, alterations or improvements, when in
the judgment of Landlord such actions are desirable or necessary to be made,
until said repairs, alterations or improvements shall have been completed.
Landlord shall use commercially reasonable efforts to minimize disruptions to
Tenant's use of the Premises, subject to the limitations hereinafter set forth.
Landlord will have no responsibility or liability for failure to supply elevator
facilities, plumbing, ventilating, air conditioning or electric service, when
prevented from so doing by strike or accident or by any cause beyond Landlord's
reasonable control, or by laws, rules, orders, ordinances, directions,
regulations or by reason of the requirements of any federal, state, county or
municipal authority or failure of gas, oil or other suitable fuel supply or
inability by exercise of reasonable diligence to obtain gas, oil or other
suitable fuel supply. It is expressly understood and agreed that any covenants
on Landlord's part to furnish any services pursuant to any of the terms,
covenants, conditions, provisions or agreements of this Lease, or to perform any
act or thing for the benefit of Tenant, will not be deemed breached if Landlord
is unable to furnish or perform the same by virtue of a strike or labor trouble
or any other cause whatsoever beyond Landlord's control.
EXHIBIT "F"
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75
SCHEDULE 1 TO
STANDARDS FOR UTILITIES AND SERVICES
Landlord will provide janitor service to the Premises, provided the same are
used exclusively as offices, and are kept reasonably in order by Tenant, and
unless otherwise agreed to by Landlord and Tenant no one other than persons
approved by Landlord shall be permitted to enter the Premises for such purposes.
If the Premises are not used exclusively as offices, they will be kept clean and
in order by Tenant, at Tenant's expense, and to the satisfaction of Landlord,
and by persons approved by Landlord. Tenant agrees to pay to Landlord the cost
of removal of any of Tenant's refuse and rubbish to the extent that the same
exceeds the refuse and rubbish usually attendant upon the use of the Premises as
offices. Landlord shall perform the herein-specified cleaning and janitorial
services for the Premises, which services shall be performed under the following
terms and general conditions:
1) Keep employed skilled and competent employees to perform the services set
forth herein and provide all manpower required to maintain the Building in
a neat and clean condition. Provide that any employee who causes any
breach of peace or other disturbance or who is otherwise found to be
unacceptable to Manager shall be immediately discharged or transferred and
thereafter replaced by Contractor.
2) Require that all employees present a clean and neat appearance at all
times.
3) Report all damage, breakage and/or apparent plumbing or electrical
problems to Manager immediately.
4) Report any evidence of security breaches to Manager immediately.
5) Maintain all janitors' closets, mop sinks and storerooms in a safe and
clean condition at all times.
6) Work behind locked doors (unless otherwise requested by Manager) during
the entire cleaning operation. Only the cleaning person assigned to clean
an area and the janitorial supervisory staff shall be admitted to such
areas. The janitorial staff shall not admit anyone into such premises.
7) Turn off all lighting as soon as possible each night, lock doors and set
alarm, if such alarm is provided by Tenant.
8) All nightly services will be performed Monday through Friday, after 6:00
p.m., (52) weeks per year, except on those holidays listed below:
New Year's Day
President's Day
Martin Luther King's Birthday
Memorial Day
Independence Day
Labor Day
Thanksgiving
Christmas
Main Entrance Lobbies (Five Nights Per Week)
a. Sweep and wet mop all interior hard floor surfaces (stone, ceramic,
tile, granite, etc.). All carpeted areas to be vacuumed.
b. All glass at entry doors and fixed glass panels surrounding entry
ways shall be cleaned three (3) times per day at a minimum (once
before 8:30 a.m., the second between 10:30 a.m. and 11:00 a.m. and
the third after 1:00 p.m.).
c. Wipe down nightly with an approved chemically treated cloth all
metal surfaces within the lobby areas.
SCHEDULE "1" to
EXHIBIT "F"
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76
d. All painted or vinyl covered wall surfaces are to be dusted nightly
using an approved chemically treated cloth. Remove all finger marks
and smudges nightly.
e. High dust all painted or vinyl covered wall surfaces and soots,
electrical fixtures, air conditioning outlets (supply and return)
with an approved chemically treated cloth, quarterly.
f. All trash receptacles (inside and outside) and cigarette urns
(interior and exterior) shall be cleaned nightly.
g. Contractor is responsible to install plastic liners in receptacles
(daily, nightly as required), and replace sand in cigarette urns with
clean sand (daily, nightly as required).
h. All rain mats are to be thoroughly cleaned nightly when used during
the day. Mats are to be shampooed as directed by Manager, as
required. Wet floor caution signage and rain mats will be put out on
all non-carpeted main entrances lobby areas at the first indication
of a wet condition. Floors will be constantly monitored until wet
condition no longer exists at which time mats and signs will be
removed and floors cleaned as needed.
i. Daytime staff shall continuously monitor these areas to insure that
they are clean and neat at all times. Spillage shall be cleaned as
soon as possible, cigarette urns and trash receptacles to be checked
continuously to insure no large accumulations occur, elevators shall
be vacuumed, finger marks and smudges removed.
j. Remove gum and foreign matter and mop spillage on sight as required.
k. Public telephone stations are to be damp wiped; remove all finger
marks and smudges daily.
l. Brush with a lint brush and/or detail vacuum all fabric covered
chairs, if applicable.
m. Dust all mailbox faces and remove any smudges.
n. Dust all baseboards.
Public Corridors and Elevator Lobbies (Five nights per week)
a. All painted or vinyl covered wall surfaces are to be dusted
nightly. Remove all fingerprints and smudges nightly.
b. Sweep and damp mop all hard floor surfaces (stone, terrazzo,
ceramic tile, granite pavers, etc.) and other unwaxed flooring
nightly. Sweep and dust mop all interior wood floor surfaces.
c. Resilient floor surfaces are to be damp mopped and spray buffed
nightly.
d. Resilient floor surfaces are to be machine stripped and refinished
with a non-slip floor finish monthly.
e. Stairwells, landings, handrails, and exit enclosures will be swept,
damp mopped and dusted once per week. Police nightly. Wash landings
and treads monthly.
f. Carpeted areas are to be vacuumed nightly and spot cleaned weekly,
or as necessary.
g. High dust and/or damp wash all electrical fixtures, doorframes and
air conditioning fixtures quarterly.
h. Drinking fountains are to be cleaned, sanitized and polished
nightly.
i. Public telephones are to be dusted and sanitized nightly.
SCHEDULE "1" to
EXHIBIT "F"
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77
j. Cigarette urns (inside and outside) are to be cleaned nightly.
Contractor is responsible to provide clean sand, as required.
k. Fire hose and/or extinguisher cabinets are to be damp wiped (inside)
and glass polished (inside and outside) once per month.
1. Wash walls in corridors annually as directed by Manager.
m. Dust all baseboards weekly.
Elevators (Five nights per week)
a. Clean all saddles, hatch and cab doors, doorframes and
directional lights at main entry lobbies nightly. Saddles
shall be polished nightly.
b. Interior wall surfaces of cab, selector panels, bases, rails and
floor indicator panel are to be cleaned nightly with an
approved, chemically treated cloth.
c. Interior carpets (if installed) are to be vacuumed nightly and
spot cleaned as required. Carpets are to be dry shampooed
every two weeks, including spares as requested.
d. Elevator cabs, with resilient floor surfaces, are to e swept,
wet mopped and spray buffed nightly. Floors are to be machine
stripped and refinished once per month, at a minimum.
e. Clean and polish saddles and door frames on floors above main
lobby level once per week. Door tracks are to be vacuumed
nightly on floors above the main lobby level, and smudges and
hand marks removed from doors and frames.
General Office (Five nights per week)
a. Sweep and damp mop all hard floor surfaces (stone, ceramic, tile,
granite pavers, etc.), uncarpeted raised floors and other types of
unwaxed flooring. Sweep and dust mop all interior wood floor
surfaces.
b. Sweep and damp mop all vinyl, asphalt, rubber and similar types of
flooring using an approved, chemically treated cloth.
c. Vacuum all rugs and carpeted areas (including carpeted raised
floors). Sweep or vacuum all internal stairways.
d. Hand dust and wipe clean with damp or chemically treated cloth all
furniture, file cabinets, equipment and windowsills.
e. Dust and sanitize all telephones.
f. Dust all chair rails, trim, etc.
g. Remove all gum and foreign matter on sight.
h. Empty and clean all waste receptacles and remove wastepaper and
waste materials to be designated area.
i. Damp dust interiors of all waste disposal receptacles, wash as
necessary.
j. Wash clean, sanitize and polish dry all water fountains and water
coolers. Wash clean and rinse dry all chalkboards.
k. Clean all glass furniture tops. Brush with a lint brush and/or
detail vacuum all fabric-covered chairs.
l. Remove hand marks on elevator hatchway doors.
SCHEDULE "1" to
EXHIBIT "F"
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78
m. Spot wash interior partition glass and door glass to remove smudge
marks weekly.
n. Wash all interior glass, both sides, monthly.
o. Adjust all window treatment to uniform standard as directed by
Manager.
p. Stairs, landings, and handrails will be dusted and swept nightly
and damp mopped once per week at night.
q. Cleaning of kitchen and serving areas excluding clean out of
refrigerators, dishwashers or washing of dishes.
r. Any area designated, as a vending area will be kept free from
spillage and damp mopped.
s. Cleaning operations are to be scheduled so that an absolute minimum
of lights are to be left on at all times. Upon completion of the
cleaning, all lights must be turned off.
t. Remove finger marks from all painted or vinyl covered surfaces near
light switches, entrance doors, etc., nightly.
u. Dust all lampshades nightly.
v. Dust all picture frames, charts, similar hangings that were not
reached in nightly cleaning, quarterly. Vacuum or dust all books in
place, quarterly.
w. Dust all vertical surfaces, such as walls, partitions, doors and
other surfaces not reached in nightly cleaning quarterly.
x. Dust exterior lighting fixtures semi-annually. Wash and dry
thoroughly all light fixtures (including reflectors, globes,
diffusers and trim) annually.
y. Dust all window treatment monthly.
z. Dust clothes closets, shelving and coat racks once per month. Dust
all storage areas (including shelves and contents in place) and damp
mop floor areas, semi-annually.
aa. Damp wash and dry thoroughly all air conditioning louvers, grills,
etc. not reach nightly cleaning, annually.
Lavatories (Five nights per week)
a. Wet mop floors using germicidal detergent, and rinse dry, being
careful to leave bases in a clean, dry condition.
b. Clean and polish mirrors.
c. Clean and polish all bright work, using non-abrasive, non
tarnishing, non-corrosive cleaners.
d. Clean all bowls and urinals using a germicide, non-injurious cleaner,
taking care to clean all surfaces of toilet seats and cleaning deep
into traps under rims.
e. Clean all basins and vanities using non-abrasive, non-tarnishing,
non-corrosive cleaners and polishing vanities dry.
f. Empty and clean sanitary disposal receptacles and provide waste
paper bag in receptacles.
g. Clean and wash waste receptacles and dispensers. Remove all waste
products to a designated area and provide plastic bag in
receptacles.
SCHEDULE "1" to
EXHIBIT "F"
-4-
79
h. Dust and clean partitions and walls, removing all finger marks and
graffiti using non-abrasive cleaners.
i. Inspect all restrooms during day and keep same in neat and clean
condition at all times. Replenish paper products and soap as
necessary.
j. Restock soap, toilet tissue, sanitary products, paper towels and
liners for receptacles.
k. Night supervisor to collect coins from all sanitary product machines
on a biweekly schedule and file a written report as to date, location
and amount of collection. Coins and report shall be delivered to
Manager as collected.
1. All lights are to be turned off when cleaning is complete.
m. Clean and wash all partitions every two (2) months.
n. Wax floors once per month.
o. Hand dust and clean all tile walls once each month, more often if
necessary or directed. Wash walls annually.
p. High dust all pipes, light fixtures and door frames quarterly. Damp
wash and dry thoroughly all louvers, grilles, etc. Quarterly. Wash
and dry thoroughly all light fixtures (including reflectors,
globes, diffusers and trim) annually.
Building Service Areas (Five nights per week)
a. Janitorial closets and other such service areas will be wet mopped
and rinsed dry once per week.
b. Janitor's sink, including bright work, will be cleaned using a
non-abrasive, non-corrosive, non-tarnishing cleaner once per week.
c. Floors in janitor's closets and other such service areas will be
swept clean nightly.
d. All service corridors, fire control room, engineering closets shall
be swept, damp mopped, spray buffed or vacuumed nightly or as
directed by Manager.
e. Trash, paper, or refuse of any kind is not to be stored or left in
janitor's closets at any time but in a designated location as
directed by Manager.
f. Mops, sponges, or washing cloths are to be rinsed thoroughly and
stored neatly. Supplies and other cleaning equipment are to be stored
neatly in designated storage areas as directed by Manager.
Lighting
Landlord shall replace building standard light bulbs which are burned out,
upon request by Tenant.
SCHEDULE "1" to
EXHIBIT "F"
-5-
80
ESTOPPEL CERTIFICATE
The undersigned, __________________________________________ ("Tenant"), hereby
certifies to___________________________________________________________________,
as follows:
1. Attached hereto is a true, correct and complete copy of that certain lease
dated _____________________, 199_, between___________________________ , a
__________________________ ("Landlord") and Tenant (the "Lease"), regarding the
premises located at _________________________________________ (the "Premises").
The Lease is now in full force and effect and has not been amended, modified or
supplemented, except as set forth in Paragraph 4 below.
2. The Term of the Lease commenced on ____________________________, 19__
3. The Term of the Lease will expire on __________________________, 19__.
4. The Lease has: (Initial one)
(____) not been amended, modified, supplemented, extended, renewed or assigned.
(____) been amended, modified, supplemented, extended, renewed or assigned by
the following described terms or agreements, copies of which are attached
hereto:
______________________________________________________________________________
______________________________________________________________________________
5. Tenant has accepted and is now in possession of the Premises.
6. Tenant and Landlord acknowledge that Landlord's interest in the Lease will be
assigned to ________________________________________________ and that no
modification, adjustment, revision or cancellation of the Lease or amendments
thereto shall be effective unless written consent of is obtained, and that until
further notice, payments under the Lease may continue as heretofore.
7. The amount of Monthly Base Rent is $_________________________.
8. The amount of Security Deposit (if any) is $___________________. No other
security deposits have been made except as follows:___________________________.
9. Tenant is paying the full lease rental which has been paid in full as of the
date hereof. No rent or other charges under the Lease have been paid for more
than thirty (30) days in advance of its due date except as follows:
____________________________________________________________________________.
10. All work required to be performed by Landlord under the Lease has been
completed except as follows:
____________________________________________________________________________.
11. There are no defaults on the part of the Landlord or Tenant under the Lease
except as follows:
____________________________________________________________________________.
12. Neither Landlord nor Tenant has any defense as to its obligations under the
Lease and claims no set-off or counterclaim against the other party except as
follows:
____________________________________________________________________________.
13. Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies other than as
provided in the Lease except as follows:
____________________________________________________________________________.
EXHIBIT "G"
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81
All provisions of the Lease and the amendments thereto (if any) referred to
above are hereby ratified.
The foregoing certification is made with the knowledge that__________________
___________ is relying upon the representations herein made in funding a loan to
Landlord in purchasing the Premises.
IN WITNESS WHEREOF, this certificate has been duly executed and delivered by
the authorized officers of the undersigned as of________________, 19__.
TENANT:
_____________________________,
a _____________________________
By:____________________________
Print Name: _______________ SAMPLE ONLY
Title: ____________________ [NOT FOR EXECUTION]
By:____________________________
Print Name: _______________
Title: ____________________
EXHIBIT "G"
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82
RULES AND REGULATIONS
A. General Rules and Regulations. The following rules and regulations
govern the use of the Building and the Development Common Areas. Tenant will
be bound by such rules and regulations and agrees to cause Tenant's
Authorized Users, its employees, subtenants, assignees, contractors,
suppliers, customers and invitees to observe the same.
1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice may be installed or displayed on any part of the outside or inside of the
Building or the Development without the prior written consent of Landlord.
Landlord will have the right to remove, at Tenant's expense and without notice,
any sign installed or displayed in violation of this rule. All approved signs or
lettering on doors and walls are to be printed, painted, affixed or inscribed at
the expense of Tenant and under the direction of Landlord by a person or company
designated or approved by Landlord.
2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection with
any window or door of the Premises, or placed on any windowsill, which is
visible from the exterior of the Premises, Tenant will immediately discontinue
such use. Tenant agrees not to place anything against or near glass partitions
or doors or windows which may appear unsightly from outside the Premises
including from within any interior common areas.
3. Tenant will not obstruct any sidewalks, halls, passages, exits, entrances,
elevators, escalators, or stairways of the Development. The halls, passages,
exits, entrances, elevators and stairways are not open to the general public,
but are open, subject to reasonable regulations, to Tenant's business invitees.
Landlord will in all cases retain the right to control and prevent access
thereto of all persons whose presence in the reasonable judgment of Landlord
would be prejudicial to the safety, character, reputation and interest of the
Development and its tenants, provided that nothing herein contained will be
construed to prevent such access to persons with whom any tenant normally deals
in the ordinary course of its business, unless such persons are engaged in
illegal or unlawful activities. No tenant and no employee or invitee of any
tenant will go upon the roof of the Building.
4. Landlord expressly reserves the right to absolutely prohibit solicitation,
canvassing, distribution of handbills or any other written material, peddling,
sales and displays of products, goods and wares in all portions of the
Development except as may be expressly permitted under the Lease. Landlord
reserves the right to restrict and regulate the use of the common areas of the
Development and Building by invitees of tenants providing services to tenants on
a periodic or daily basis including food and beverage vendors. Such restrictions
may include limitations on time, place, manner and duration of access to a
tenant's premises for such purposes. Without limiting the foregoing, Landlord
may require that such parties use service elevators, halls, passageways and
stairways for such purposes to preserve access within the Building for tenants
and the general public.
5. Landlord reserves the right to require tenants to periodically provide
Landlord with a written list of any and all business invitees which periodically
or regularly provide goods and services to such tenants at the premises.
Landlord reserves the right to preclude all vendors from entering or conducting
business within the Building and the Development if such vendors are not listed
on a tenant's list of requested vendors.
6. Landlord reserves the right to exclude from the Building between the hours of
6 p.m. and 8 a.m. the following business day, or such other hours as may be
established from time to time by Landlord, and on Sundays and legal holidays,
any person unless that person is known to the person or employee in charge of
the Building or has a pass or is properly identified. Tenant will be responsible
for all persons for whom it requests passes and will be liable to Landlord for
all acts of such persons. Landlord will not be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person.
Landlord reserves the right to prevent access to the Building in case of
invasion, mob, riot, public excitement or other commotion by closing the doors
or by other appropriate action.
EXHIBIT "H"
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83
7. The directory of the Building or the Development will be provided exclusively
for the display of the name and location of tenants only and Landlord reserves
the right to exclude any other names therefrom.
8. All cleaning and janitorial services for the Development and the Premises
will be provided exclusively through Landlord, and except with the written
consent of Landlord, no person or persons other than those approved by Landlord
will be employed by Tenant or permitted to enter the Development for the purpose
of cleaning the same. Tenant will not cause any unnecessary labor by
carelessness or indifference to the good order and cleanliness of the Premises.
9. Landlord will furnish Tenant, free of charge, with two keys to each entry
door lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and Tenant
shall not alter any lock or install any new additional lock or bolt on any door
of the Premises. Tenant, upon the termination of its tenancy, will deliver to
Landlord the keys to all doors which have been furnished to Tenant, and in the
event of loss of any keys so furnished, will pay Landlord therefor.
10. If Tenant requires telegraphic, telephonic, burglar alarm, satellite dishes,
antennae or similar services, it will first obtain Landlord's approval, and
comply with, Landlord's reasonable rules and requirements applicable to such
services, which may include separate licensing by, Landlord.
11. Freight elevator(s) will be available for use by all tenants in the
Building, subject to such reasonable scheduling as Landlord, in its discretion,
deems appropriate. No equipment, materials, furniture, packages, supplies,
merchandise or other property will be received in the Building or carried in the
elevators except between such hours and in such elevators as may be designated
by Landlord. Tenant's initial move in and subsequent deliveries of bulky items,
such as furniture, safes and similar items will, unless otherwise agreed in
writing by Landlord, be made during the hours of 6:00 p.m. to 6:00 a.m. or on
Saturday or Sunday. Deliveries during normal office hours shall be limited to
normal office supplies and other small items. No deliveries will be made which
impede or interfere with other tenants or the operation of the Building.
12. Tenant will not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by law. Landlord will have the right to reasonably prescribe the weight,
size and position of all safes, heavy equipment, files, materials, furniture or
other property brought into the Building. Heavy objects will, if considered
necessary by Landlord, stand on such platforms as determined by Landlord to be
necessary to properly distribute the weight, which platforms will be provided at
Tenant's expense. Business machines and mechanical equipment belonging to
Tenant, which cause noise or vibration that may be transmitted to the structure
of the Building or to any space therein to such a degree as to be objectionable
to any tenants in the Building or Landlord, are to be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devises
sufficient to eliminate noise or vibration. Tenant will be responsible for all
structural engineering required to determine structural load, as well as the
expense thereof. The persons employed to move such equipment in or out of the
Building must be reasonably acceptable to Landlord. Landlord will not be
responsible for loss of, or damage to, any such equipment or other property from
any cause, and all damage done to the Building by maintaining or moving such
equipment or other property will be repaired at the expense of Tenant.
13. Tenant will not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited quantities
necessary for the operation or maintenance of office equipment. Tenant will not
use or permit to be used in the Premises any foul or noxious gas or substance,
or permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors or vibrations, nor will Tenant bring into or keep in or about the Premises
any birds or animals.
14. Tenant will not use any method of heating or air conditioning other than
that supplied by Landlord without Landlord's prior written consent.
EXHIBIT "H"
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84
15. Tenant will not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice, and
will refrain from attempting to adjust controls. Tenant will keep corridor doors
closed, and shall keep all window coverings pulled down.
16. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
Without the prior written consent of Landlord, which Landlord may deny with or
without cause, Tenant will not use the name, photograph or likeness of the
Building or the Development in connection with or in promoting or advertising
the business of Tenant except as Tenant's address.
17. Tenant will close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and lighting or gas before Tenant
and its employees leave the Premises. Tenant will be responsible for any damage
or injuries sustained by other tenants or occupants of the Building or by
Landlord for noncompliance with this rule.
18. The toilet rooms, toilets, urinals, wash bowls and other apparatus will not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from any violation of this rule will
be borne by the tenant who, or whose employees or invitees, break this rule.
Cleaning of equipment of any type is prohibited. Shaving is prohibited.
19. Tenant will not sell, or permit the sale at retail of newspapers, magazines,
periodicals, theater tickets or any other goods or merchandise to the general
public in or on the Premises. Tenant will not use the Premises for any business
or activity other than that specifically provided for in this Lease. Tenant will
not conduct, nor permit to be conducted, either voluntarily or involuntarily,
any auction upon the Premises without first having obtained Landlord's prior
written consent, which consent Landlord may withhold in its sole and absolute
discretion.
20. Tenant will not install any radio or television antenna, loudspeaker, or
other devices on the roof(s) or exterior walls of the Building or the
Development. Tenant will not interfere with radio or television broadcasting or
reception from or in the Development or elsewhere. Tenant may install a
satellite dish on the roof of the Building in a location reasonably designated
by Landlord and in conformity with conditions as Landlord may reasonably impose,
provided that Tenant complies with Landlord's reasonable rules and requirements
therefor, repairs all damages caused by the installation, servicing and/or
repair of such satellite dish and complies with all applicable governmental
requirements with respect thereto.
21. Except for the ordinary hanging of pictures and wall decorations, Tenant
will not mark, drive nails, screw or drill into the partitions, woodwork or
plaster or in any way deface the Premises or any part thereof, except in
accordance with the provisions of the Lease pertaining to alterations. Landlord
reserves the right to direct electricians as to where and how telephone and
telegraph wires are to be introduced to the Premises. Tenant will not cut or
bore holes for wires. Tenant will not affix any floor covering to the floor of
the Premises in any manner except as approved by Landlord. Tenant shall repair
any damage resulting from noncompliance with this rule.
22. Deleted.
23. Landlord reserves the right to exclude or expel from the Development any
person who, in Landlord's judgment, is intoxicated or under the influence of
liquor or drugs or who is in violation of any of the Rules and Regulations of
the Building.
24. Tenant will store all its trash and garbage within its Premises or in other
facilities provided by Landlord. Tenant will not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
is to be made in accordance with directions issued from time to time by
Landlord.
25. The Premises will not be used for lodging or for the storage of merchandise
held for sale to the general public, or for lodging or for manufacturing of any
kind, nor shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking will be done or permitted on the Premises without Landlord's
consent, except the use by Tenant of Underwriters' Laboratory approved equipment
for brewing coffee, tea, hot chocolate and similar beverages shall be permitted,
and the use of a microwave oven for employees use will be permitted, provided
that such equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.
EXHIBIT "H"
-3-
85
26. Neither Tenant nor any of its employees, agents, customers and invitees may
use in any space or in the public halls of the Building or the Development any
hand truck except those equipped with rubber tires and side guards or such other
material-handling equipment as Landlord may approve. Tenant will not bring any
other vehicles of any kind into the Building.
27. Tenant agrees to comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
28. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
29. To the extent Landlord reasonably deems it necessary to exercise exclusive
control over any portions of the Common Areas for the mutual benefit of the
tenants in the Building or the Development, Landlord may do so subject to
reasonable, non-discriminatory additional rules and regulations.
30. Landlord may prohibit smoking in the Building and may require Tenant and any
of its employees, agents, clients, customers, invitees and guests who desire to
smoke, to smoke within designated smoking areas within the Development.
31. Tenant's requirements will be attended to only upon appropriate application
to Landlord's asset management office for the Development by an authorized
individual of Tenant. Employees of Landlord will not perform any work or do
anything outside of their regular duties unless under special instructions from
Landlord, and no employee of Landlord will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.
32. These Rules and Regulations are in addition to, and will not be construed to
in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of the Lease. Landlord may waive any one or more of
these Rules and Regulations for the benefit of Tenant or any other tenant, but
no such waiver by Landlord will be construed as a waiver of such Rules and
Regulations in favor of Tenant or any other tenant, nor prevent Landlord from
thereafter enforcing any such Rules and Regulations against any or all of the
tenants of the Development.
33. Landlord reserves the right to make such other and reasonable and
non-discriminatory Rules and Regulations as, in its judgment, may from time to
time be needed for safety and security, for care and cleanliness of the
Development and for the preservation of good order therein. Tenant agrees to
abide by all such Rules and Regulations herein above stated and any additional
reasonable and non-discriminatory rules and regulations which are adopted.
Tenant is responsible for the observance of all of the foregoing rules by
Tenant's employees, agents, clients, customers, invitees and guests.
B. Parking Rules and Regulations. The following rules and regulations
govern the use of the parking facilities which serve the Building. Tenant
will be bound by such rules and regulations and agrees to cause its
employees, subtenants, assignees, contractors, suppliers, customers and
invitees to observe the same:
1. Tenant will not permit or allow any vehicles that belong to or are controlled
by Tenant or Tenant's employees, subtenants, customers or invitees to be loaded,
unloaded or parked in areas other than those designated by Landlord for such
activities. No vehicles are to be left in the parking areas overnight and no
vehicles are to be parked in the parking areas other than normally sized
passenger automobiles, motorcycles and pick-up trucks. No extended term storage
of vehicles is permitted.
2. Vehicles must be parked entirely within painted stall lines of a single
parking stall.
3. All directional signs and arrows must be observed.
EXHIBIT "H"
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86
4. The speed limit within all parking areas shall be five (5) miles per
hour.
5. Parking is prohibited: (a) in areas not striped for parking; (b) in aisles or
on ramps; (c) where "no parking" signs are posted; (d) in cross-hatched areas;
and (e) in such other areas as may be designated from time to time by Landlord
or Landlord's parking operator.
6. Landlord reserves the right, without cost or liability to Landlord, to tow
any vehicle if such vehicle's audio theft alarm system remains engaged for an
unreasonable period of time.
7. Washing, waxing, cleaning or servicing of any vehicle in any area not
specifically reserved for such purpose is prohibited.
8. Landlord may refuse to permit any person to park in the parking facilities
who violates these rules with unreasonable frequency, and any violation of these
rules shall subject the violator's car to removal, at such car owner's expense.
Tenant agrees to use its best efforts to acquaint its employees, subtenants,
assignees, contractors, suppliers, customers and invitees with these parking
provisions, rules and regulations.
9. Parking stickers, access cards, or any other device or form of identification
supplied by Landlord as a condition of use of the parking facilities shall
remain the property of Landlord. Parking identification devices, if utilized by
Landlord, must be displayed as requested and may not be mutilated in any manner.
The serial number of the parking identification device may not be obliterated.
Parking identification devices, if any, are not transferable and any device in
the possession of an unauthorized holder will be void. Landlord reserves the
right to refuse the sale of monthly stickers or other parking identification
devices to Tenant or any of its agents, employees or representatives who
willfully refuse to comply with these rules and regulations and all unposted
city, state or federal ordinances, laws or agreements.
10. Loss or theft of parking identification devices or access cards must be
reported to the management office in the Development immediately, and a lost or
stolen report must be filed by the Tenant or user of such parking identification
device or access card at the time. Landlord has the right to exclude any vehicle
from the parking facilities that does not have a parking identification device
or valid access card. Any parking identification device or access card which is
reported lost or stolen and which is subsequently found in the possession of an
unauthorized person will be confiscated and the illegal holder will be subject
to prosecution.
11. All damage or loss claimed to be the responsibility of Landlord must be
reported, itemized in writing and delivered to the management office located
within the Development within ten (10) business days after any claimed damage or
loss occurs. Any claim not so made is waived. Landlord is not responsible for
damage by water or fire, or for the acts or omissions of others, or for articles
left in vehicles. In any event, the total liability of Landlord, if any, is
limited to Two Hundred Fifty Dollars ($250.00) for all damages or loss to any
car. Landlord is not responsible for loss of use.
12. The parking operators, managers or attendants are not authorized to make or
allow any exceptions to these rules and regulations, without the express written
consent of Landlord. Any exceptions to these rules and regulations made by the
parking operators, managers or attendants without the express written consent of
Landlord will not be deemed to have been approved by Landlord.
13. Landlord reserves the right, without cost or liability to Landlord, to tow
any vehicles which are used or parked in violation of these rules and
regulations.
14. Landlord reserves the right from time to time to modify and/or adopt such
other reasonable and non-discriminatory rules and regulations for the parking
facilities as it deems reasonably necessary for the operation of the parking
facilities.
EXHIBIT "H"
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87
