LEASE
by and between
NORTH CRESCENT REALTY V, LLC,
a Delaware limited liability company
AS LANDLORD
and
GLOBAL CROSSING DEVELOPMENT COMPANY,
a Delaware corporation
AS TENANT
Dated: October 1, 1999
TABLE OF CONTENTS
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1. Lease of Premises........................................................................................1
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1.1 Lease. ........................................................................................1
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1.2 Common Areas, Project and Building Size.........................................................1
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1.3 Construction and Operation of Project...........................................................2
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2. Purpose..................................................................................................2
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2.1 Use.............................................................................................2
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2.2 Limitation on Uses..............................................................................3
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2.3 Compliance with Permits.........................................................................4
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2.4 Payment of Additional Premium...................................................................4
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3. Term.....................................................................................................4
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3.1 Commencement Date...............................................................................4
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3.2 Acceptance of Premises..........................................................................5
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3.3 Commencement Prior to Project Completion........................................................6
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3.4 Renewal Terms...................................................................................6
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3.5 First Floor Cancellation Option.................................................................8
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4. Basic Rent; Security Deposit.............................................................................8
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4.1 Basic Rent......................................................................................8
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4.2 Partial Months..................................................................................9
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4.3 No Offset.......................................................................................9
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4.4 Security Deposit................................................................................9
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4.5 Rental Escalations.............................................................................10
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5. Rent Adjustments........................................................................................10
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5.1 Operating Expenses and Real Property Taxes.....................................................10
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5.2 Real Property Taxes............................................................................16
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5.3 Payment........................................................................................17
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5.4 Lease Year; Proration..........................................................................18
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6. Parking Rights..........................................................................................18
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6.1 Tenant's Parking Rights........................................................................18
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6.2 Off-Site Parking...............................................................................20
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7. Utilities and Services..................................................................................20
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7.1 Landlord Obligations...........................................................................20
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7.2 Access.........................................................................................23
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7.3 Extraordinary Services.........................................................................24
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7.4 Interruption in Utility Services...............................................................24
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8. Alterations.............................................................................................26
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8.1 Restriction on Alterations.....................................................................26
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8.2 Removal and Surrender of Fixtures and Tenant...................................................29
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8.3 Standard Window Covering.......................................................................30
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8.4 Arbitration of Disputes........................................................................30
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9. Maintenance and Repairs.................................................................................30
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9.1 Tenant's Obligations...........................................................................30
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9.2 Landlord's Obligations.........................................................................30
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9.3 Failure to Repair..............................................................................31
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10. Tax on Tenant's Personal Property and Tenant Improvements...............................................31
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10.1 Personal Property Taxes........................................................................31
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10.2 Tax on Leasehold Improvements..................................................................31
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10.3 Exclusion from Real Property Taxes.............................................................32
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11. Insurance; Waiver of Subrogation........................................................................32
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11.1 Liability Insurance............................................................................32
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11.2 Property Insurance.............................................................................32
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11.3 Policy Requirements............................................................................33
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11.4 Landlord's Requirements........................................................................33
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11.5 Waiver of Subrogation..........................................................................34
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12. Damage or Destruction...................................................................................34
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12.1 Damage to Premises.............................................................................34
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12.2 Damage to Project..............................................................................35
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12.3 Abatement; Termination.........................................................................36
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12.4 Limitations....................................................................................37
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12.5 Damage During Last Years.......................................................................37
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12.6 Agreement Governs..............................................................................38
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13. Eminent Domain..........................................................................................38
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13.1 Taking.........................................................................................38
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13.2 Temporary Taking...............................................................................40
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14. Assignment/Subleasing...................................................................................40
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14.1 Limitation.....................................................................................40
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14.2 Notice of Intent to Assign or Sublet...........................................................41
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14.3 Landlord's Options.............................................................................41
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14.4 Conditions for Landlord's Consent to Subleases.................................................41
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14.5 Transfer Premium...............................................................................42
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14.6 No Release of Tenant's Obligations.............................................................43
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14.7 Transfer is Assignment.........................................................................43
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14.8 Assumption of Obligations......................................................................43
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14.9 Recapture Rights...............................................................................43
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14.10 Related Entities...............................................................................44
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14.11 Preapproved Sublease...........................................................................44
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15. Landlord's Reserved Rights..............................................................................44
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15.1 Right of Entry.................................................................................44
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15.2 Building and Common Areas......................................................................45
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15.3 Intentionally Omitted..........................................................................45
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15.4 Excavation.....................................................................................45
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15.5 Development of Other Improvements..............................................................46
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15.6 Incorporation of Other Improvements............................................................46
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16. Indemnification and Limitation on Liability.............................................................47
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16.1 Indemnity of Landlord..........................................................................47
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16.2 Tenant's Assumption of Risk and Waiver.........................................................48
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16.3 Survival; No Release of Insurers...............................................................48
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17. Definitions of Landlord.................................................................................48
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18. Subordination...........................................................................................49
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18.1 Subordination..................................................................................49
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18.2 Attornment.....................................................................................49
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18.3 Notice from Tenant.............................................................................50
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19. Estoppel Certificates...................................................................................50
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20. Surrender of Premises and Removal of Property...........................................................51
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20.1 No Merger......................................................................................51
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20.2 Surrender of Premises..........................................................................51
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20.3 Disposal of Property...........................................................................51
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20.4 Fixtures and Improvements......................................................................51
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21. Holding Over............................................................................................52
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22. Defaults and Remedies...................................................................................52
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22.1 Defaults by Tenant.............................................................................52
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22.2 Landlord's Remedies............................................................................54
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Re-Entry Not Termination.......................................................................56
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22.4 Right of Landlord to Injunction; Cumulative Remedies...........................................56
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22.5 Definition of Tenant...........................................................................56
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22.6 Defaults by Landlord...........................................................................57
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23. Bankruptcy..............................................................................................57
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24. Interest on Tenant's Obligations; Late Charges..........................................................57
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24.1 Interest.......................................................................................57
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24.2 Late Charge....................................................................................58
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25. Quiet Enjoyment.........................................................................................58
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26. Rentable Area...........................................................................................59
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26.1 Computation of Rentable Area...................................................................59
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26.2 Building Common Areas..........................................................................59
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26.3 Premises and Project Rentable Area.............................................................59
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27. Examination of Lease....................................................................................59
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28. Rules and Regulations...................................................................................59
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29. No Directory Board; Signage; Project Identity...........................................................60
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29.1 Directory Board....................................................................................60
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29.2 Signage; Projection Identification.................................................................60
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30. Fair Market Rental Rate Arbitration; Definition.........................................................61
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30.1 Arbitration of Rate............................................................................61
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30.2 Fair Market Rental Rate.......................................................................612
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31. Covenant Against Liens..................................................................................63
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32. Consents; Good Faith....................................................................................63
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32.1 Consents.......................................................................................63
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32.2 Good Faith.....................................................................................64
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33. General Provisions......................................................................................64
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33.1 No Waiver......................................................................................64
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33.2 Landlord's Right to Perform....................................................................65
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33.3 Terms; Headings................................................................................65
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33.4 Entire Agreement...............................................................................65
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33.5 Successors and Assigns.........................................................................65
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33.6 Notices........................................................................................65
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33.7 Severability...................................................................................66
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33.8 Time of Essence................................................................................66
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33.9 Governing Law..................................................................................66
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33.10 Attorneys' Fees................................................................................66
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33.11 Light and Air..................................................................................67
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33.12 Execution by Corporation.......................................................................67
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33.13 Force Majeure..................................................................................67
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33.14 Limitation on Liability........................................................................67
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33.15 Development of Project.........................................................................68
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34. Arbitration.............................................................................................68
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35. Guaranty................................................................................................70
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36. No Brokers..............................................................................................70
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37. Gym and Cafeteria.......................................................................................70
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38. Storage Space; Equipment Room...........................................................................71
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TABLE OF EXHIBITS
Exhibit A Description of Premises
Exhibit B Description of Project
Exhibit C Memorandum of Commencement Date
Exhibit D Intentionally Omitted
Exhibit E Cleaning Specifications
Exhibit F Security Specifications
Exhibit G Non-Disturbance, Attornment and Subordination Agreement
Exhibit H Building and Project Rules and Regulations
Exhibit I Parking Garage Rules and Regulations
Exhibit J Guaranty of Lease
THIS LEASE is made and entered into as of October 1, 1999, by and between
NORTH CRESCENT REALTY V, LLC, a Delaware limited liability company ("Landlord")
and GLOBAL CROSSING DEVELOPMENT COMPANY, a Delaware corporation ("Tenant").
1. Lease of Premises.
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0.1 Lease. Landlord hereby leases to Tenant, and Tenant
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hereby leases from Landlord, those certain premises (the "Premises") shown on
Exhibit "A" attached hereto in Building B at 360 North Crescent Drive, Beverly
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Hills, California (the "Building"). The Building is part of an office campus on
that certain land (the "Land") at 360 North Crescent Drive and 9370 Santa Monica
Boulevard, as more specifically described on Exhibit "B" attached hereto.
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Exhibit "A" attached hereto includes a floor plan for each floor of the Premises
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setting forth the Rentable Area on each floor of the Premises. The parties
estimate that the square footage of the Rentable Area of the Premises is 86,408
square feet. Such estimate is subject to final adjustment pursuant to Article
26. The Land, the Building, a subterranean parking garage located on the Land
and a parking garage located at 375 North Crescent Drive, Beverly Hills,
California (the "Garage"), (the parking facilities on levels B-1 and B-2, and
the Garage, are collectively referred to as the "Parking Garages"), all other
improvements and plazas now or hereafter constructed on the Land, except
improvements which tenants may remove therefrom pursuant to the terms of their
respective leases, and all rights and easements appurtenant to and benefitting
the Land, the Building, the Parking Garages, and the plazas and improvements
constructed on the land, are collectively referred to herein as the "Project."
0.2 Common Areas, Project and Building Size.
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(a) Tenant shall have the non-exclusive right, in common with others,
to use the "Common Areas" (defined in Section 1.2(b) below) in and adjacent to
the Project, subject to subsection (c) below and to such rules and regulations
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as may from time to time be adopted by Landlord in accordance with and subject
to the Rules Requirements. Landlord may, from time to time, increase, decrease,
or change the elements, portions, location and dimension of the Common Areas,
the Project, and/or the Rentable Area of the Project, the Building or any other
structure located within the Project subject to the limitations of Sections 15.5
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and 15.6, provided, however, that Landlord shall maintain the Project at all
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times during the Term in accordance with the highest category of premiere,
first-class office building projects in the Golden Triangle area and on Maple
Drive in Beverly Hills, California.
(b) The term "Common Areas" as used herein shall be deemed to mean and
refer to all portions of the Project and the Land which have been improved or
made available by Landlord for
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the use or benefit of more than one tenant of the Project, as may be changed by
Landlord in its sole discretion from time to time subject to Section 1.2(a)
above, and shall include, without limitation, parking areas, ramps and driveways
(including those designated for the exclusive use of tenants of the Project),
courtyards, sidewalks, service corridors, landscaped areas, drinking fountains,
interior public lobbies and corridors, public restrooms, elevators and
stairways, and other similar facilities and areas. Furthermore, the Common Areas
shall include, without limitation, the first floor lobby of the Building, the
freight elevator located on Level B-1 of the Building and the path of travel to
such freight elevator, the path of travel to the gym described in Article 37
hereof and the path of travel to the cafeteria described in Article 37 hereof.
"Common Areas" shall not include any restrooms located on a floor that is not
occupied by Tenant. Further and notwithstanding any of the foregoing, the term
"Common Areas" shall not be deemed to include any of the foregoing described
areas if any such areas are within the Premises as shown on the floor plans
attached hereto as Exhibit "A" or any other tenant's premises.
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(c) Notwithstanding any other provision of this Lease, the term
"Premises" shall not include the exterior faces of exterior walls, elevators and
elevator wells or shafts, Building stairwells, fan rooms, mechanical rooms,
pipes, ducts, conduits, wires and appurtenant fixtures servicing other parts of
the Project either exclusively or in common with the Premises or the roof of any
Building or any access to such roof.
0.3 Construction and Operation of Project. Landlord shall have the sole
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judgment and discretion to determine the architecture, design, appearance,
construction, workmanship, materials and equipment with respect to the
construction and methods of operation of the Project; provided, however, that
Landlord shall operate and maintain the Project at all times during the Term as
a first-class office project in accordance with the standards for the highest
category of premiere, first-class office building projects in the Golden
Triangle area and on Maple Drive in Beverly Hills, California.
1. Purpose
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1.1 Use. Subject to the limitations set forth in Section 2.2, the
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Premises shall be used by Tenant only for general office uses, and services and
storage incidental to such uses, for a network operating center installed and
operated in accordance with the provisions of this Lease, and, to the extent
reflected on the final architectural plans for the Premises prepared by Gensler
& Associates (the "Final Plans"), for computer rooms, all in keeping with the
character of the highest category of premiere first-class office building
projects in the Golden Triangle area and on Maple Drive in Beverly Hills,
California, and for no other purpose without the prior written consent of
Landlord. The Premises shall not be used for filming or production of motion
pictures or television programs, a
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medical practice, modeling, print or film advertising, personnel or counseling
agency (other than firms engaged in high-level executive placement), training
center (except for training of Tenant's employees and customers necessarily
incidental to Tenant's business), retail sales operation, showroom, classroom,
testing center or non-incidental storage.
1.2 Limitation on Uses. Tenant shall not use or occupy the Premises, or
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permit the use or occupancy of the Premises, in any manner or for any purpose
which: (a) would violate any provision of this Lease, or any applicable federal,
state or local law, statute, rule, regulation or ordinance of any governmental
authority, including, without limitation, those with respect to hazardous or
toxic materials ("Laws"); (b) would violate the provisions of any applicable
governmental permit or currently recorded document; (c) except for uses
expressly permitted by Section 2.1, would materially adversely affect or render
more expensive any fire or other insurance maintained by Landlord for the
Building or any of its contents, or cause a cancellation of any insurance
policy; (d) exceeds the floor load capacity of the floor on which the Premises
are located; (e) might impair or interfere with any of the services and systems
of the Building, including without limitation, the Building's electrical,
mechanical, structural, plumbing, sprinkler, fire, life safety, vertical
transportation, security, heating, ventilating and air conditioning systems
(collectively, the "Building Systems and Service Facilities"); (f) would injure
or annoy, or obstruct or materially interfere with the rights of, other tenants
or occupants of the Project or impair the appearance of the Building and/or
Project or be materially prejudicial to the business or reputation of Landlord
or the Project; or (g) is not compatible with a first-class office building.
Further, Tenant's business machines and mechanical equipment shall be installed,
maintained and used by Tenant so as to eliminate unreasonable or unusual
vibration and noise that may be transmitted to the Building structure or beyond
the Premises. If reasonably necessary, Landlord may prescribe the weight and
position of all safes, files and heavy equipment in the Premises or on the
floors of the Premises so as to distribute properly their weight. Tenant shall
reimburse Landlord for the reasonable cost of any structural engineering
required to determine whether the load capacity of each floor accommodates
Tenant's requirements. Tenant covenants and agrees not to suffer, permit,
introduce or maintain in, on or about any portion of the Premises, any asbestos,
polycholorinated biphenyls, or any other hazardous or toxic materials, wastes
and substances which are defined, determined or identified as such (including
petroleum products if they are defined, determined or identified as such) in any
Laws (whether now existing or hereafter enacted or promulgated) or any judicial
or administrative interpretation of any thereof, including any judicial or
administrative orders or judgments, except that Tenant shall be permitted to use
any such regulated substances which are typically and customarily used in the
highest category of premiere, first-class office building projects during the
Term or so long as such use by Tenant is in compliance with all Laws
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and is in compliance with all other provisions of this Lease. The uses of the
Premises expressly permitted under this Lease do not violate any currently
recorded document affecting the Project.
1.3 Compliance with Permits. If any governmental license or permit is
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required by Tenant for the lawful conduct of any business or other activity
carried on by Tenant in the Premises, or the use by Tenant of any balconies, and
if the failure by Tenant to have such license or permit would interfere with
Tenant's right to occupy the Premises or any part thereof, or otherwise
adversely affect Landlord, Tenant shall procure and maintain such license or
permit, and submit a copy of such license or permit for inspection by Landlord,
and comply at all times with all terms and conditions thereof. This Lease shall
be subject to all Laws from time to time governing or regulating the use,
occupancy or possession of the Premises. Without limiting the generality of the
foregoing, Tenant shall be solely responsible for determining whether Tenant's
intended use of the Premises will comply with Laws, including, but not limited
to, those Laws relating to use, occupancy and zoning. Without limiting Tenant's
obligation to pay all business license taxes or fees imposed on Tenant, Landlord
shall reasonably assist Tenant, without having to incur any out-of-pocket costs,
in minimizing any such business license taxes or fees first assessed against
Tenant following the Commencement Date.
1.4 Payment of Additional Premium. Tenant shall, within thirty (30) days
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following demand by Landlord, reimburse Landlord for any additional premium
charged for any insurance policy maintained by Landlord by reason of Tenant's
installation and/or operation of a network operating center or Tenant's failure
to comply with the provisions of Sections 2.2 and 2.3 and for any other costs
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and expenses reasonably incurred by Landlord in enforcing the provisions of this
Article 2; provided, however, that before demanding such reimbursement for
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additional insurance premiums, Landlord shall first give Tenant notice of the
activity by Tenant which violates either Section 2.2 or 2.3 and which may cause
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Landlord to incur such increased insurance premiums, and Tenant shall not be
liable for the payment of such increased insurance premiums if it ceases such
specified activity within thirty (30) days after such notice from Landlord.
Other than possible increases in connection with the installation and/or
operation of a network operating center, Landlord does not presently anticipate
that the uses of the Premises expressly permitted under this Lease will cause
any significant increase in the insurance premiums currently paid by Landlord
for the Project on a per square foot of Rentable Area basis.
2. Term.
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2.1 Commencement Date. The term of this Lease (the "Term") shall
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commence on the date (the "Commencement Date") which is the later of: (a)
October 4, 1999, or (b) the date of issuance of a temporary certificate of
occupancy for the Premises by the City
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of Beverly Hills, and shall terminate one hundred twenty (120) months after the
Commencement Date, unless sooner terminated pursuant hereto or extended pursuant
to Section 3.4. Promptly following the Commencement Date, Landlord and Tenant
shall confirm the Commencement Date and the expiration date of the Term by
executing and delivering a Memorandum of Commencement Date ("Memorandum")
substantially in the form attached hereto as Exhibit "C".
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2.2 Acceptance of Premises.
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(a) By entering into possession of the Premises or any part thereof
and except for such matters as Tenant shall specify to Landlord in writing
within sixty (60) days thereafter, Tenant shall be conclusively deemed to have
accepted the Premises and to have agreed that the Premises are in satisfactory
condition and in full compliance with the requirements of this Lease as of the
date of such possession, except for (i) latent defects and (ii) minor details of
construction, decoration and mechanical adjustments. Landlord shall, promptly
upon receiving notice from Tenant of any defects or deficiencies in the work
conducted pursuant to the Final Plans, repair or correct the same in such manner
as shall not cause unreasonable interference to Tenant in its use of the
Premises, provided that (except in the case of latent defects) Tenant gives such
notice to Landlord within sixty (60) days following Tenant entering into
occupancy. Landlord (a) shall have no responsibility to correct, or liability
with respect to, any defects in any portion of any tenant improvements installed
by a contractor of Tenant, and (b) shall be responsible for repair of and liable
for latent defects in the improvements to the Premises installed by Landlord's
contractors, subject to applicable statutes of limitation. Landlord
acknowledges that Landlord shall pay Tenant the balance of a tenant improvement
allowance in the amount of $40.00 per rentable square foot of Floors 1, 2 and 3
of the Premises and $20.00 per rentable square foot of Level B-1 of the
Premises, a portion of which allowance has been funded by Landlord prior to the
date of this Lease.
(b) If Landlord and Tenant disagree as to the Commencement Date of
this Lease, the date maintained by Landlord to be the Commencement Date shall be
binding on the parties unless and until the matter is resolved by arbitration
pursuant to Article 34. Tenant acknowledges that neither Landlord nor any agent
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of Landlord has made any representation or warranty, except as otherwise
expressly provided in this Lease, with respect to the Project (including the
Premises and the Building), including without limitation, any representation or
warranty with respect to the suitability or fitness of the Project (including
the Premises and the Building), or any portion thereof, for the conduct of
Tenant's business.
(c) To Landlord's knowledge, as of the date of this Lease, the
Premises are in compliance in all material respects with all existing laws,
rules, regulations, ordinances and orders of all applicable federal, state, city
and other governmental
5
authorities in effect as of the date of this Lease (collectively, "Laws"),
including, without limitation, (i) the Americans' with Disabilities Act, 42
U.S.C. 12102 et seq. and (ii) all Laws with respect to building, fire and health
codes, environmental protection and sanitation and pollution control. Landlord
has received no notice of, and has no knowledge of, any condition currently or
previously existing on the Premises or any portion thereof which may give rise
to any violation of any existing law applicable to the Premises if it were
disclosed to the authorities having jurisdiction over the Premises.
(d) Landlord has not received any communication (written or oral),
whether from a governmental authority or third party that alleges that Landlord
is not in full compliance with any applicable environmental law. To Landlord's
knowledge, there is no environmental claim pending or threatened with regard to
the Premises or the Project.
2.3 Commencement Prior to Project Completion. Tenant agrees that the
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Commencement Date may occur prior to the completion of portions of the Project,
including without limitation, Building A, the plazas and landscaping, prior to
the completion of those portions of the Parking Garages which are not necessary
in order to provide parking rights to Tenant in accordance with Section 6.1, and
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prior to completion of any other portion of the Project.
2.4 Renewal Terms.
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(a) Provided (i) Tenant is not in material default under this Lease
(after any applicable notice and lapse of applicable cure periods), and (ii)
Tenant has not assigned this Lease or subleased any portion of the Premises
(other than to a Related Entity), as of the date of exercise or the commencement
of the renewal term ("Renewal Term Commencement Date"), Tenant shall have the
option to renew this Lease ("Renewal Option") for the entire Premises then
leased by Tenant (but not for a portion of the Premises), for two (2) successive
periods of five (5) years each ("Renewal Terms"), exercisable as follows:
(1) If Tenant is interested in renewing this Lease, Tenant may
deliver written notice thereof ("Renewal Interest Notice") to Landlord at
least twelve (12) months prior to the expiration of the initial Term of
this Lease as to the first Renewal Term or at least twelve (12) months
prior to the expiration of the prior Renewal Term, as to a subsequent
Renewal Option.
(2) Within thirty (30) days following receipt of Tenant's Renewal
Interest Notice, Landlord shall give Tenant notice (the "Rental Notice") of
its determination of the Fair Market Rental Rate for the Premises to be
effective as of the Renewal Term Commencement Date.
(3) (A) If Tenant desires to renew the Lease at
6
the Fair Market Rental Rate set forth in Landlord's Rental Notice,
Tenant shall give Landlord written notice thereof (an "Undisputed
Renewal Notice") before the date (the "Outside Date") that is the
later of: (i) thirty (30) days after the date of Landlord's Rental
Notice, and (ii) ten (10) months prior to the expiration of the Term.
If Tenant timely delivers the Undisputed Renewal Notice, the Term
shall be extended for the period equal to the Renewal Term and as of
the Renewal Term Commencement Date, the rental payable hereunder shall
be the Fair Market Rental Rate set forth in the Rental Notice.
(B) If Tenant desires to renew the Lease but disputes
Landlord's determination of the Fair Market Rental Rate for the
Premises, then Tenant shall give Landlord written notice thereof (a
"Disputed Renewal Notice") before the Outside Date. If Tenant timely
delivers the Disputed Renewal Notice, the Term shall be extended for
the period equal to the Renewal Term and the Fair Market Rental Rate
shall be determined pursuant to the appraisal procedure set forth in
Section 30.1 hereof. In the event that such appraisal procedure has
not resulted in a final determination of the Fair Market Rental Rate
on or before the Renewal Term Commencement Date, then Tenant shall
continue to pay the rent as in effect on the day prior to the Renewal
Term Commencement Date (adjusted in accordance with Section 4.5) until
such final determination is made. Within thirty (30) days after such
final determination, Tenant shall pay to Landlord the positive
difference, or Landlord shall refund to Tenant the negative
difference, between the amount of rent Tenant has actually paid and
the final determination of the Fair Market Rental Rate as applicable
to the period retroactive to the Renewal Term Commencement Date.
(C) If Tenant does not deliver an Undisputed Renewal Notice
or a Disputed Renewal Notice within thirty (30) days after the date of
Landlord's Rental Notice, then Tenant's Renewal Option (and any
subsequent Renewal Options) shall automatically expire as of such
thirtieth day.
Notwithstanding the foregoing subsections (1), (2) and (3), if Tenant fails to
timely deliver the Renewal Interest Notice, Tenant shall have the right,
exercisable at any time prior to the Outside Date for the initial Term or for
the first Renewal Term, as the case may be, to deliver written notice to
Landlord that Tenant desires to renew the Lease for the succeeding Renewal Term.
If Tenant timely delivers such notice, then within thirty (30) days thereafter,
Landlord shall deliver to Tenant Landlord's determination of the Fair Market
Rental Rate for the Premises to be effective as of the Renewal Term Commencement
Date. Upon the expiration of the Term, the Lease shall then be automatically
7
extended for the period equal to the Renewal Term and as of the Renewal Term
Commencement Date, the rental payable hereunder shall automatically be adjusted
to the Fair Market Rental Rate determined by Landlord pursuant to the preceding
sentence.
(b) It is expressly understood that Landlord has the right to commence
marketing and, subject to Section 15.1, showing the Premises or any portion
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thereof to prospective tenants, subject to Section 15.1 hereof, up to twelve
(12) months prior to the expiration of the initial Term of this Lease or twelve
(12) months prior to the expiration of any Renewal Term as to which Tenant has
exercised the Renewal Option (provided that Landlord shall not commit to lease
any portion of the Premises to a third party until the last date for Tenant to
give the Renewal Notice).
(c) The Basic Rent during each Renewal Term shall be adjusted in
accordance with the provisions of Article 5 (subject to any adjustment of the
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Base Operating Expenses and Real Property Taxes as set forth in Landlord's
notice of the Notice Date Rental).
(d) The Renewal Option set forth in this Section 3.4 is personal to
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Tenant and may not be assigned, transferred or conveyed to any party, except in
connection with an assignment of the Lease in its entirety to a Related Entity
of Tenant (as defined in Section 14.10). Nothing in this Section 3.4(d) shall
------------- --------------
require Tenant to be in occupancy of the Premises as a condition to the exercise
of the Renewal Option.
2.5 First Floor Cancellation Option. At any time between the
-------------------------------
Commencement Date and that date which is six (6) months therefrom, provided that
Tenant is not in material default hereunder, Tenant shall have the option (the
"First Floor Cancellation Option") to terminate this Lease with respect to Floor
1 of Building B (the "First Floor") by providing Landlord written notice (the
"First Floor Cancellation Notice") of Tenant's election so to do. Provided that
Tenant properly and timely exercises the First Floor Cancellation Option, then
from and after that date which is thirty (30) days from Landlord's receipt of
the First Floor Cancellation Notice, this Lease shall be deemed amended to
exclude from the definition of Premises the First Floor. From and after such
date, Basic Rent and Tenant's pro rata share of Operating Expenses and Real
Property Taxes and Tenant's share of parking spaces in the Garage and on Level
B-2 of the Building shall be proportionately reduced. Thereafter, Tenant shall
reimburse Landlord, within fifteen (15) days of Tenant's receipt from Landlord
of a statement therefor (the "Cancellation Cost Statement"), for all of the
costs and expenses reasonably incurred by Landlord to prepare the First Floor
for multi-tenant use (the "Cancellation Costs"). Tenant's obligation promptly to
pay the Cancellation Costs shall be deemed rent for all purposes under this
Lease.
30 Basic Rent; Security Deposit.
----------------------------
8
3.1 Basic Rent. Subject to adjustment in accordance with Section 4.5
---------- -----------
hereof, Tenant shall pay to Landlord Basic Rent for the Premises in the
following amounts per square foot of Rentable Area per month, without limiting
the Additional Rent payable by Tenant:
For Floor B-1: $2.00
----
For Floors 1, 2 and 3: $3.50
----
3.2 Partial Months. If the Term begins on a day other than the first
--------------
day of a calendar month, or ends on a day other than the last day of a calendar
month, Basic Rent for such beginning or ending month shall be prorated based
upon a fraction, the numerator of which fraction shall be the number of days in
such month occurring during, or before or after, the Term, and the denominator
of which shall be thirty (30).
3.3 No Offset. The Basic Rent, together with any rent adjustments
---------
pursuant to Article 5 and all other adjustments made or sums due from Tenant
---------
hereunder ("Additional Rent"), shall be paid to Landlord, on the first day of
every month of the Term, without deduction or offset of any kind, in advance and
without demand (except as otherwise herein expressly provided) in lawful money
of the United States of America at the Office of the Building at the Project or
to such other person and/or location as Landlord may from time to time designate
in writing. The Basic Rent and Additional Rent and other amounts due and payable
by Tenant hereunder are sometimes referred to herein collectively as the "rent."
The obligation to pay rent shall commence on the Commencement Date and the first
month's rent, together with the Security Deposit, shall be payable on such date.
3.4 Security Deposit. Tenant will pay Landlord, upon execution of this
----------------
Lease by Tenant, cash or wired funds or in the form of a stand-by letter of
credit, in form and substance reasonably satisfactory to Landlord, in the amount
of Six Hundred Thousand Dollars ($600,000) ("Security Deposit") as security for
the full and faithful performance of each of the terms hereof by Tenant.
Landlord shall keep the Security Deposit separate from its general funds.
Provided that Tenant does not commit a default under this Lease, Tenant shall be
entitled to interest, to the extent actually earned, on the Security Deposit. If
Tenant defaults with respect to any provision of this Lease, including but not
limited to the provisions relating to the payment of rent, Landlord may, but
shall not be required to, following notice thereof to Tenant, use, apply or
retain all or any part of the Security Deposit for the payment of any rent or
any other sum in default, or for the payment of any other amount which Landlord
may spend or become obligated to spend by reason of Tenant's default or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default, including without limitation, reasonable costs and
reasonable attorneys' fees incurred by Landlord to recover possession of the
Premises upon a default by Tenant hereunder. If any portion of said Security
Deposit is so used or applied,
9
Tenant shall, within fifteen (15) days after demand therefor, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its original
amount and Tenant's failure to do so shall constitute a default hereunder by
Tenant. If Tenant shall fully and faithfully perform every provision of this
Lease to be performed by it, the Security Deposit or any balance thereof shall
be returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest hereunder) within thirty (30) days following the later of
expiration of the original Term (or earlier termination of the Term, other than
as a result of Tenant's default), and surrender of possession of the Premises to
Landlord.
3.5 Rental Escalations. Commencing on the first (1st) anniversary of
------------------
the Commencement Date, and every annual anniversary thereafter, the Basic Rent
shall be increased pursuant to the provisions of this Section 4.5 by the lesser
-----------
of (i) the CPI Increase (as hereinafter defined) or (ii) four percent (4%). The
CPI Increase shall mean the percentage by which the CPI Index as of August 1 in
the year the adjustment is made exceeds the CPI Index as of August 1 in the
immediately preceding year. The CPI Index shall mean the Consumer Price Index
for All Urban Consumers for the Los Angeles-Riverside-Orange County Area (1982
to 1984 = 100) as published by the United States Department of Labor, Bureau of
Labor Statistics.
40 Rent Adjustments.
----------------
4.1 Operating Expenses and Real Property Taxes.
------------------------------------------
(a) Tenant shall pay as Additional Rent for each Lease Year (as
defined in Section 5.5) during the Term an amount equal to Tenant's "pro rata
-----------
share" of the excess of the amount of Operating Expenses and Real Property Taxes
for such Lease Year over the Operating Expenses and Real Property Taxes for
calendar year 2000 ("Base Year Amount"). Tenant's "pro rata share" share shall
be determined by a fraction, the numerator of which is the number of square feet
of Rentable Area in the Premises as set forth in Section 26.3 and the
denominator of which is the number of square feet of Rentable Area in the
Project as set forth in Section 26.3, unless otherwise expressly set forth
herein. "Operating Expenses and Real Property Taxes" means the sum of the
Operating Expenses and Real Property Taxes for the relevant Lease Year, as each
such term is defined in this Article 5.
---------
(b) Any costs or expenses for services or utilities in excess of
those required by this Lease to be supplied by Landlord, not otherwise included
in Operating Expenses, and which are attributable directly to Tenant's use or
occupancy of the Premises, shall be paid in full by Tenant as Additional Rent on
the next date for payment of Basic Rent which is at least twenty (20) days after
the date Landlord bills Tenant therefor.
10
(c) "Operating Expenses" shall mean the total of all costs, expenses
and disbursements incurred or paid by Landlord (other than Real Property Taxes)
in connection with the ownership, management, operation, maintenance (including
cleaning, protecting and servicing the Project) and repair, replacement and
restoration of the Project (including, without limitation, the Common Areas and
the Parking Garages). Landlord shall, to the extent Landlord deems necessary or
appropriate, allocate Operating Expenses for the entire Project to different
buildings in the Project in such a manner as Landlord may reasonably determine
to reasonably reflect the actual utilization of utilities, services, and
materials by the tenants in the Project. Operating Expenses shall include,
without limitation, (i) the cost of providing, managing, operating, maintaining
and repairing air conditioning, sprinkler, fire and life safety, electrical,
water, steam, heating, mechanical, ventilation, elevator systems and all
utilities and the cost of supplies, tools and equipment purchased and
maintenance and service contracts entered into in connection therewith; (ii) the
cost of repairs (including but not limited to roof repairs; provided that the
replacement of all or substantially all of the roof shall be a capital
expenditure and not an Operating Expense), general maintenance, cleaning,
landscaping, gardening, trash removal, telephone service and equipment, light
bulbs, tube and ballast replacement, supplies, security and other protection
services; (iii) the cost of fire, extended coverage, boiler, sprinkler,
apparatus, public liability, property damage, rent, earthquake and other
insurance customarily carried by landlords of the highest category of premiere,
first-class office building projects in the Golden Triangle area and on Maple
Drive in Beverly Hills, California; (iv) wages, salaries and other labor costs
including taxes, insurance, retirement, medical and other employment benefits,
including, without limitation, such costs for a parking system manager for the
Project (if any) (provided that if a parking system manager is not employed at
the Project during calendar year 2000 but is employed thereafter, then, with
respect to any year in which the parking system manager is employed at the
Project, the Base Year Amount used for the calculation of Tenant's pro rata
share of Operating Expenses shall be equitably adjusted as if such parking
manager had worked for a comparable period during calendar year 2000); (v) fees,
charges and other costs, including management fees (including the management fee
payable to the Project manager not to exceed three percent (3%) of the gross
receipts of the Project on an annual basis), reasonable consulting fees,
reasonable legal fees and reasonable accounting fees of all independent
contractors engaged by Landlord or reasonably charged by Landlord (at a rate no
higher than that which would be charged by an independent contractor) if
Landlord performs such management services in connection with the Project; (vi)
the cost of supplying, replacing and cleaning employee uniforms; (vii) the fair
market rental value of Landlord's and the property manager's offices and storage
areas in the Building, provided said offices and storage areas are devoted to
the management, operation, maintenance or repair of the Project and shall not
exceed 1,000 square feet of
11
Rentable Area; (viii) the cost of business taxes and licenses relating solely to
the operation of the Project; (ix) fees, charges or assessments imposed by any
federal, state or local government for fire and police protection, trash
removal, community services, or other similar services (whether directly or
through a special assessment district) which do not constitute Real Property
Taxes; (x) any charges which are payable by Landlord pursuant to a service
agreement with the City of Beverly Hills under a special assessment district or
pursuant to any other lawful means; (xi) the costs of contesting the validity or
applicability of any governmental enactment which would increase Operating
Expenses; (xii) depreciation of the cost of acquiring or the rental expense of
personal property used in the maintenance, operation and repair of the Project;
(xiii) all costs of management, operation, maintenance and repair of the Parking
Garages; (xiv) the costs of providing janitorial and life safety alarm services;
and (xv) any other expenses of any kind whatsoever reasonably incurred for
managing, operating, maintaining and repairing the Project. Operating Expenses
shall also include "Capital Improvement Amortization." "Capital Improvement
Amortization" shall mean the amount determined by multiplying the actual cost,
including actual financing costs, of each Capital Improvement acquired by
Landlord by the constant annual percentage required to fully amortize such cost
over the useful life of the Capital Improvement (as reasonably determined by
Landlord at the time of acquisition). The Capital Improvement Amortization shall
be allocated and included in Operating Expenses in accordance with generally
accepted accounting and management practices; provided that the amount of
Capital Improvement Amortization charged to Tenant for Cost Saving Capital
Improvements shall not exceed the amount by which the Operating Expenses
otherwise allocable to Tenant are reduced as a result of such Cost Saving
Capital Improvements. "Capital Improvements" shall mean any equipment, device or
other improvement acquired or installed subsequent to the date of this Lease (i)
to achieve economies in the operation, maintenance and repair of the Building or
such relevant portion of the Project ("Cost Saving Capital Improvement"), (ii)
to comply with any Laws, controls or (to the extent generally complied with by
landlords in comparable projects) guidelines, as more particularly described in
Section 7.4, or (iii) to comply with any other governmental requirement with
-----------
respect to the Buildings or any such relevant portion of the Project, including
without limitation, fire, health, safety or construction requirements, if the
cost thereof is capitalized on the books of Landlord in accordance with
generally accepted accounting and management practices.
For purposes of computing rent adjustments pursuant to this Section 5.1,
-----------
Operating Expenses for the entire Project shall be allocated and charged to
Tenant in accordance with generally accepted accounting and management
practices. Operating Expenses shall be adjusted, including for calendar year
2000, to reflect one hundred percent (100%) occupancy of the Project during any
period in which the Project is not one hundred percent (100%)
12
occupied. Operating Expenses for calendar year 2000 shall be adjusted to reflect
the cost of any repair warranty that is incurred in calendar year 2001 that (A)
was not incurred in calendar year 2000, and (B) would have been incurred in
calendar year 2000 but for contractor's warranties obtained by Landlord in
connection with the buildout of the Project. Landlord shall have the right, from
time to time, to allocate some or all of the Operating Expenses for the Project
among different portions, such as office or retail portions or separate
buildings, of the Project ("Cost Pools"), in accordance with generally accepted
accounting and management practices. The Operating Expenses within each such
Cost Pool shall be allocated and charged to the tenants within such Cost Pool as
an amount per square foot of Rentable Area, based on the total Rentable Area
within such Cost Pool. The Operating Expenses for the Project (or only those
Operating Expenses allocable to the Cost Pool of the Project which includes the
tenants of such space, if such an allocation is made) shall be allocated and
charged to tenants based on the Rentable Area of the Project (or based on the
Rentable Area of such Cost Pool if such an allocation of Operating Expenses is
made). No specific item of expense shall be included more than once in Operating
Expenses, Real Property Taxes, or Capital Improvement Amortization.
Notwithstanding any other provision hereof, Operating Expenses shall not
include the following:
(1) The cost of repair to the Buildings, including the Premises, to
the extent Landlord is entitled to be, and is, reimbursed for the cost of the
repairs by insurance carried by Landlord or any third party or by a warranty or
service contract;
(2) Marketing costs including leasing commissions, attorneys' fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases and/or assignments, space planning costs, and other
costs and expenses incurred in connection with the lease, sublease and/or
assignment negotiations and transactions with present or prospective tenants
(including Tenant) or other occupants of the Buildings;
(3) Costs, including permit, license and inspection costs, incurred
with respect to the installation of improvements made for other tenants or
occupants in the Buildings or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for other tenants or occupants
of the Buildings;
(4) The cost of utilities charged directly to individual tenants
(including Tenant) and costs of other services charged to tenants (including
Tenant);
13
(5) The cost of painting and decorating or otherwise improving the
Premises, any vacant space, or premises of other tenants;
(6) Except as specifically provided otherwise in this Article 5,
---------
amortization and depreciation of the Buildings and other real property
structures in the Project;
(7) Interest, points and fees on debt or amortization payments on any
real property mortgages or deeds of trust and ground lease payments;
(8) Legal and other related expenses associated with the enforcement
of leases or the securing or defense of Landlord's title to the Land, the
Buildings or other portions of the Project;
(9) Advertising and public relations costs (such as promotional
events) incurred directly for leasing individual space in the Buildings or other
portions of the Project;
(10) Landlord's general corporate overhead and general administrative
expenses not related to the operation of the Project (such as fees and costs in
connection with the sale or refinancing of the Project) and all compensation to
executives, officers or partners of Landlord or to persons who are executives or
officers of partners of Landlord or to any other person at or above the level of
building manager, other than the building manager of the Buildings or Project;
(11) Any compensation paid to clerks, attendants or other persons in
commercial concessions operated by Landlord or by others;
(12) All items and services for which Tenant or any other tenant in
the Buildings is obligated to reimburse Landlord and all items and services
supplied selectively to any tenant without reimbursement, provided that, any
item or service supplied selectively to Tenant at Tenant's request shall be paid
for by Tenant;
(13) The costs of (i) payroll for clerks, attendants and other
persons, (ii) bookkeeping, (iii) parking insurance, (iv) parking management
fees, (v) Parking Garage restriping, (vi) tickets, and (vii) uniforms, for the
Parking Garages and any off-site parking facility made a part of the Project
pursuant to Section 6.2;
-----------
(14) Costs of capital improvements to the Buildings and other portions
of the Project in excess of $5,000 or other capital expenditures in excess of
$5,000 other than the Capital Improvement Amortization;
(15) Costs of repairs or modifications to the Buildings or Premises
due to Landlord's failure, if any, to
14
construct the Buildings and Premises in full compliance with all governmental
regulations, ordinance and laws effective at the time of construction;
(16) The cost of any political or charitable donations or
contributions, and trade association dues and Landlord's convention costs;
(17) Interest, fines or penalties assessed as a result of Landlord's
failure to make payments in a timely manner, unless such failure is reasonable
under the circumstances except to the extent any such payment is deferred by
Landlord to avoid being paid in 2000 as part of the Base Year Amount;
(18) Costs of complying with Laws in effect on the date hereof
relating to hazardous materials or substances ("Hazardous Materials") which are
incurred (A) to remove or remediate Hazardous Materials used or released on the
Project in the course of the original construction of the Project, or (B) as a
result of the presence of Hazardous Materials in the soil or groundwater under
the Project on or before the date of execution of this Lease or (C) as a result
of the violation of any such Laws by any other tenant in the Project. All other
costs and expenses associated with the compliance with Laws relating to all
Hazardous Materials shall be included as Operating Expenses, or to the extent
that such compliance constitutes a Capital Improvement, such costs shall be
payable by Tenant to Landlord as Capital Improvement Amortization under this
Lease, amortized over the remaining useful life of the Building;
(19) Costs of purchasing, installing and replacing art work in the
Building or elsewhere in the Project;
(20) Except for making repairs or keeping permanent systems in
operation while repairs are being made, rentals and other related expenses
incurred in leasing air conditioning systems, elevators or other equipment
ordinarily considered to be of a capital nature, except equipment not affixed to
the Buildings which is used in providing janitorial or similar services;
(21) Any bad debt loss, rent loss or reserves for bad debts or rent
loss;
(22) Except to the extent specifically provided otherwise in the
Lease, and except as to the management fees payable to Landlord or its
subdivisions or affiliates, the overhead and profit increments paid to Landlord,
or to any subdivision or affiliate of Landlord, for goods and/or services in the
Building, to the extent such overhead and profit increments exceed the costs of
comparable, first-class, high quality goods and/or services, delivered or
rendered by unaffiliated third parties of comparable reputation, stature,
experience and quality to Landlord, on a competitive basis;
15
(23) Costs for which Landlord has been compensated by a management
fee;
(24) Increase in premiums for insurance carried by Landlord pursuant
to this Lease, which such increase is caused by use of the Project by Landlord
or any other tenant of Landlord which is hazardous on account of fire or
otherwise or premiums for any insurance carried by Landlord which is not
customarily carried by other reasonably prudent landlords in comparable first-
class office buildings;
(25) Any costs, fines or penalties incurred directly as a result of
violations by Landlord of any Laws or other requirement of any governmental
authority.
In light of the fact that a portion of the Base Operating Expense and Real
Property Taxes is the Base Year Amount, Landlord shall not reduce insurance
coverages in 2000 (to the extent the costs thereof are charged to Tenant as
Operating Expenses) for the purpose of reducing the insurance costs included in
the Operating Expenses for calendar year 2000 below the amount that such
expenses are projected by Landlord to be in 2001. Furthermore, Landlord shall
not intentionally or knowingly reduce any Operating Expenses in calendar year
2000 for the purpose of artificially inflating Tenant's pro rata share of
Operating Expense increases in subsequent years.
4.2 Real Property Taxes. "Real Property Taxes" means all taxes,
-------------------
assessments (special or otherwise) and charges levied upon or with respect to
the Project and ad valorem taxes on personal property used in connection
-- -------
therewith. Real Property Taxes shall include, without limitation, any tax, fee
or excise on the act of entering into this Lease or any other lease of space in
the Project, on the occupancy of Tenant or any other tenant of the Project, the
rent hereunder or in connection with the business of owning and/or renting space
in the Project which are now or hereafter levied, assessed or imposed against
Landlord by the United States of America, the State of California or any
political subdivision, public corporation, district or other political or public
entity, and shall also include any other tax, assessment, fee or excise, however
described (whether general or special, ordinary or extraordinary, foreseen or
unforeseen), to the extent it may be levied, assessed or imposed in lieu of, as
a substitute, in whole or in part, for or as an addition to, any other Real
Property Taxes. Landlord may pay any such special assessments in installments
when allowed by law, in which case Real Property Taxes shall include any
interest charged thereon. In recognition of the decrease in the level and
quality of governmental services and amenities as a result of Proposition 13,
Real Property Taxes shall also include any private assessments or the Building's
contribution towards a private cost-sharing agreement for the purpose of
augmenting or improving the quality of service and amenities normally provided
by governmental agencies, provided that Tenant shall not be responsible for any
share of any such assessments or contribution
16
voluntarily assumed by Landlord unless Tenant has given its prior approval
thereof, such approval not to be unreasonably withheld in light of Landlord's
obligation and desire to operate the Project in a manner consistent with the
highest category of premiere, first class office building projects in the Golden
Triangle area and on Maple Drive in Beverly Hills, California. Real Property
Taxes shall also include reasonable legal fees, costs and disbursements incurred
in connection with proceedings to contest, determine or reduce Real Property
Taxes, but shall exclude any such costs otherwise included in Operating
Expenses, any taxes paid directly by Tenant pursuant to Sections 10.1 and 10.2
----------------------
and any penalties assessed against the Project or Landlord as a result of
Landlord's failure to timely pay any installment of Real Property Taxes when due
(except where such failure is caused by the failure of Tenant to pay timely its
share of such Real Property Taxes in accordance with this Lease). Real Property
Taxes shall not include income, franchise, transfer, inheritance, estate, or
capital stock taxes, unless and, to the extent, due to a change in the method of
taxation, any of such taxes are levied, assessed or imposed against Landlord in
lieu of, as a substitute, in whole or in part, for or as an addition to, any
other tax which would otherwise constitute a Real Property Tax. At all times
(including calendar year 2000 if applicable) prior to the assessment of the
Project on a fully completed basis, Real Property Taxes shall be adjusted to
reflect the amount which Real Property Taxes would be if the Project were
assessed on a fully completed and occupied basis. For purposes of computing
rent adjustments pursuant to this Article 5, Real Property Taxes shall be
---------
allocated and charged to Tenant in accordance with generally accepted accounting
and management practices and expressed as an amount per square foot of Rentable
Area, provided that at all times all Real Property Taxes are allocated to all
portions of the Rentable Area of the Project. Notwithstanding any other
provision hereof, parking revenue taxes shall not be included in Real Property
Taxes or Operating Expenses.
4.3 Payment. Prior to the commencement of each Lease Year, or as soon
-------
thereafter as possible (except for the first Lease Year), Landlord shall furnish
to Tenant a statement ("Landlord's Statement") containing Landlord's reasonable
estimate of the Operating Expenses and Real Property Taxes and Capital
Improvement Amortization (collectively, "Project Expenses") for such Lease Year
and a calculation of the Additional Rent, if any, payable by Tenant for such
Lease Year pursuant to this Article 5 on the basis of such estimate. If the
---------
Lease Year is a full year, Tenant shall pay to Landlord one-twelfth (1/12th) of
the amount of said Additional Rent on each monthly rent payment date during such
year (commencing on January 1) until further adjustment pursuant to this Section
-------
5.3. If the Lease Year is a partial year, Tenant shall pay to Landlord on each
---
monthly rent payment date in such partial year an amount equal to said
Additional Rent (for such partial Lease Year) divided by the number of months in
said partial Lease Year. If Landlord's Statement is furnished after the start of
the Lease Year, then on the next monthly rent
17
payment date which is at least thirty (30) days after Tenant's receipt of
Landlord's Statement, Tenant shall pay the entire portion of the Additional Rent
attributable to portions of the Lease Year prior to such date. Landlord may
reasonably adjust Tenant's monthly rent payments under this Article 5 up to one
---------
time during the Lease Year to reflect the then current or estimated Project
Expenses and actual expenditures made during the elapsed portion of the Lease
Year. Within 180 days following each Lease Year, Landlord shall furnish to
Tenant a statement prepared or attested by an independent public accountant
selected by Landlord showing the actual Project Expenses during the previous
Lease Year, and Landlord shall compute any charge or credit to Tenant necessary
to adjust rent previously paid by Tenant to reflect the actual Project Expenses.
If such statement and computation reveal an underpayment, Tenant shall pay to
Landlord an amount equal to such underpayment (whether or not this Lease has
expired or been terminated) on the next date for payment of Basic Rent which is
at least twenty (20) days after Landlord's Statement, and if such statement and
computation show an overpayment, Landlord shall credit the next monthly rental
payment of Tenant, or, if the Term has expired, refund the overpayment to Tenant
within thirty (30) days after expiration of the Term. Tenant shall have the
right, at its expense, to cause a firm of certified public accountants or a firm
that provides operating expense review services selected by Tenant (or Tenant's
own in-house certified public accountant, who may be assisted by other advisors
of Tenant) (provided that in no event may any such firm or advisor be
compensated on any basis determined by a percentage of the savings effectuated
by such accountant or advisor) to conduct an audit of Landlord's Statement of
Project Expenses and the calculation of Tenant's Additional Rent for each Lease
Year provided that such audit must be commenced within two (2) years after
receipt of Landlord's reconciliation statement for the relevant Lease Year; if
such audit reveals that the Project Expenses were overstated in Landlord's
Statement, Landlord shall promptly refund the overcharge revealed by the audit
to Tenant and if the audit reveals an overstatement of Project Expenses in
Landlord's Statement by more than three percent (3%), then Landlord shall also
reimburse Tenant for the actual reasonable out-of-pocket costs of the audit paid
by Tenant within thirty (30) days after presentation of a statement therefor by
Tenant.
4.4 Lease Year; Proration. "Lease Year" shall mean the whole or partial
---------------------
calendar year commencing on the Commencement Date and ending on December 31 of
the year in which the Commencement Date occurs, and all subsequent calendar
years within the Term. The amount of Additional Rent payable by Tenant under
this Article 5 for any partial month shall be prorated on a daily basis within
that month.
50 Parking Rights.
--------------
5.1 Tenant's Parking Rights.
-----------------------
18
(a) Tenant shall be provided with and shall rent, subject to Section
-------
6.1(b), for the entire Term of this Lease, ten (10) passes for parking spaces on
------
level B-1 of the Building and Tenant's pro rata share of the parking spaces on
level B-2 of the Building. Further, Tenant shall be entitled to rent passes for
its pro rata share of the parking spaces in the Garage. The services of any
parking attendant or valet requested by Tenant in connection with such parking
and reasonable direct enforcement costs (including costs of barriers and signs
and any changes thereto caused by Tenant's election under subsection (b) to
increase or decrease the number of parking passes it rents) shall be paid for
directly by Tenant as Additional Rent and not as part of Operating Expenses.
(b) Upon giving at least sixty (60) days prior notice to Landlord at
any time during the Term, Tenant shall have the option to adjust upward (up to
the limits set forth in Paragraph 6.1(a) above) or downward the number of
----------------
parking passes it rents hereunder. In no event shall Landlord be required to
make any modifications to the Parking Garage or other portions of the Project as
a result of the existence of any Laws governing Tenant or its use of the Project
or the parking rights of Tenant's employees.
(c) Initially, Tenant shall pay as Additional Rent for the parking
passes the following amounts:
(i) For parking spaces on level B-1: One Hundred Seventy-Five
Dollars ($175.00) per month;
(ii) For parking spaces on level B-2, as well as reserved spaces
in the Garage: One Hundred Fifty-Five Dollars ($155.00) per month;
(iii) For unreserved parking spaces in the Garage: One Hundred
Twenty-Five Dollars ($125.00) per month;
From and after the first anniversary of the Commencement Date, Landlord may
increase the monthly rental rate for the parking passes, no more frequently than
once a year, so that such rate is consistent with prevailing market rates in the
area. At Tenant's written request, Landlord shall provide Tenant with what
Landlord in good faith believes to be substantiation for such rate increases.
(d) To the extent available, Tenant shall have the right to validate
parking for Tenant's invitees upon reasonable, nondiscriminatory terms and
conditions and subject to reasonable, nondiscriminatory rules and regulations
established from time to time by Landlord or Landlord's operator or licensee
subject to and in accordance with the Rules Requirements. Tenant shall pay the
current prevailing rate charged by Landlord to other tenants in the Project for
validation parking.
19
(e) The parking passes rented by Tenant pursuant to this Article 6 are
---------
provided to Tenant solely for use by Tenant's own personnel and visitors, and
such passes may not be transferred, assigned, subleased or otherwise alienated
by Tenant without Landlord's prior approval except to a Permitted Transferee or
to a permitted Sublessee or Assignee.
(f) Landlord may, at Landlord's option, rent parking passes (or
parking spaces) in the Garage to individuals or entities who or which are not
tenants of the Project. Landlord agrees to implement a system reasonably
designed to ensure that tenants of the Project have a preference over non-
tenants for the more desirable (i.e. covered) parking spaces. Landlord further
agrees that at all times during the Term, Landlord shall make available to
Tenant, on the terms and conditions set forth above, no less than the number of
parking spaces indicated in Section 6.1(a), subject to adjustment as provided in
Section 15.2. If adjusted pursuant to Section 15.2, in no event shall the total
number of parking spaces made available to Tenant be less than 3.5 spaces per
each 1,000 square feet of Rentable Area of the Premises.
5.2 Off-Site Parking. Without changing or reducing Tenant's parking
----------------
rights under Section 6.1, Landlord shall have the right to provide parking for
-----------
tenants of the Project other than Tenant at off-site locations other than the
Parking Garage, in which event, said off-site locations other than the Parking
Garage shall be deemed part of the Project for purposes of this Lease provided
that such parking at off-site locations shall not increase the Operating
Expenses, Real Property Taxes or Capital Improvement Amortization otherwise
allocable to Tenant hereunder. Nothing in this Lease shall be deemed to prohibit
or limit Landlord's right to change, delete or modify any such off-site parking
areas.
60 Utilities and Services.
----------------------
6.1 Landlord Obligations. Landlord shall furnish the services and
--------------------
utilities described in this Section 7.1 to the Premises during the periods from
8:00 a.m. to 6:00 p.m., Monday through Friday and 9:00 a.m. to 12:00 Noon
Saturday, except on New Year's Day, Martin Luther King Day, President's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
other holidays on which the New York Stock Exchange is closed, and subject to
rules and regulations from time to time established by Landlord in compliance
with the Rules Requirements (such hours and days of operation are herein called
"Normal Working Hours"). The cost of providing such services and utilities shall
be included in Operating Expenses except as specifically provided otherwise
herein.
(a) HVAC. Landlord shall furnish heating, ventilation and air
----
conditioning ("HVAC") in amounts required for the use and occupancy of the
Premises for normal office purposes consistent with the highest category of
premiere, first-class office
20
building projects in the Golden Triangle area and on Maple Drive in Beverly
Hills, California. Tenant shall not, without Landlord's prior written consent,
use heat-generating machines (other than normal fractional horsepower office
machines) or other machinery or equipment (including but not limited to "space
heaters") which may affect the temperature otherwise maintained in any portion
of the Premises by the HVAC system, and if such temperature is affected as a
result of: (i) any lights, machines or equipment (including without limitation,
computers, telephone switches, photocopiers and electronic data processing
machines) used by Tenant in the Premises in excess of normal office use; (ii)
the occupancy of the Premises by more than one person per one hundred fifty
(150) square feet of Rentable Area therein; or (iii) an electrical demand in
excess of four and one-half (4.5) watts (connected load) per square foot of
Rentable Area of the Premises, Landlord shall have the right to install, after
notice to Tenant and a thirty (30) day opportunity for Tenant to restore the
required temperature balance in the Premises, any supplemental machinery or
equipment which Landlord reasonably deems necessary to restore temperature
balance, including without limitation, modifications or additions to the
standard air conditioning equipment, and the cost thereof including the
reasonable cost of equipment and installation and any additional reasonable cost
of operation and maintenance incurred thereby, shall be paid by Tenant to
Landlord within thirty (30) days following demand therefor by Landlord. Landlord
makes no representation with respect to the adequacy or fitness of the HVAC
system or equipment in the Building to maintain temperatures which may be
required for, or because of, any equipment of Tenant except with respect to the
equipment specifically shown on the Final Plans or which is typically used in
similar locations and densities by other tenants in first-class office buildings
comparable to the Building, and Landlord shall have no liability for loss or
damage in connection therewith. Tenant hereby agrees to indemnify, defend,
protect and hold Landlord harmless from and against any and all loss, damage,
claim, liability, expense or costs, including attorneys' fees, incurred by
Landlord to any other tenant in the Project as a material result of the use by
Tenant of electric current, HVAC or other services in excess of the capacity of
the Building Systems set forth in this subsection (a).
21
(b) Electricity. Landlord shall furnish sufficient electric power at
-----------
277 volts, single phase, to supply tenant lighting load permitted by the State
of California, Title 24 energy code (1.5 watts per square foot of Usable Area)
and sufficient power at 120/208 volts, three phase, four wire, for 3 watts
connected load per square foot of Usable Area for office power. If specifically
approved by Landlord, either pursuant to Article 8 or otherwise, additional
---------
power may be made available at 480 volts, three phase, for additional power
and/or air-conditioning requirements up to the limit of available building power
taking into account potential needs of other tenants and a reasonable safety
factor. The cost of equipment and installation for transformers, panel boards,
bus duct taps, feeders, and other items required for the utilization of such
additional power shall be paid by Tenant. Tenant shall not install or operate
in the Premises any electrically operated machinery, appliances or equipment
(including without limitation, computers, telephone switches, electronic data
processing machines, word processors, photocopiers, and punch card machines, and
machines using in excess of 110 volts) which would exceed the capacity of the
Building Systems as determined by Landlord, except as specifically shown on the
Final Plans. Without the prior written consent of Landlord, which Landlord may
refuse in its reasonable discretion, Tenant shall not install or operate any
apparatus, device, machinery, appliances or equipment in the Premises, which
will in any way increase the amount of electricity usually furnished or supplied
for use of the Premises as general office space; nor connect any apparatus,
device, machinery, appliances or equipment (except through existing electrical
outlets in the Premises), for the purpose of using electric current.
Notwithstanding the above, Tenant may install computers, word processing and
duplicating machines and office equipment typically found in buildings in the
highest category of premiere, first-class office building projects in the Golden
Triangle area and on Maple Drive in Beverly Hills, California as long as the
electrical capacity limits set forth above are not exceeded. Tenant agrees to
pay Landlord directly (instead of as part of Operating Expenses and in addition
to Operating Expense payments pursuant to Section 5.1) for the cost of
-----------
electrical power (at rates no higher than the applicable rates charged to the
Project by the public utility providing similar service) used by Tenant which
exceeds the amount of such power typically used by other tenants in the Project
such that the allocation of electricity costs to all tenants in the Project
through Operating Expenses would otherwise be distorted or unfair (and Landlord
shall not enforce this sentence in a discriminatory manner as to Tenant). If
Landlord determines at any time during the Term that Tenant is using such excess
amount of electric power, Landlord shall have the right to install a submeter on
any floor or floors, or portion of any floor or floors, of the Premises to
determine the actual amount of electric power which Tenant is utilizing from
time to time. If such submeter indicates that Tenant's usage of electric power
exceeds the amount of such electric power typically used by other tenants in the
Project and that the allocation of electricity costs to all tenants in the
22
Project through Operating Expenses is, therefore, materially distorted or
unfair, then Tenant shall pay Landlord the actual cost of equipment and
installation for such submeter and shall pay directly (instead of as part of
Operating Expenses) for the actual cost of such excess electric power usage plus
any additional expense incurred in keeping account of the electric power so
consumed. Landlord shall have the right to install such submeter at any time and
from time to time during the Term or any Renewal Term, after notice to Tenant
and without unreasonable interference with Tenant's conduct of its business.
(c) Elevators. Subject to the requirements of Building security,
---------
Landlord shall furnish freight and passenger elevator services to the Premises
twenty-four hours per day. Landlord's actual, out of pocket costs for Tenant's
use of non-standard freight elevator service, including elevator service
requiring the use of the top of the "cab" of the elevator, shall be paid by
Tenant within ten (10) days after receipt of an invoice. In addition, if Tenant
requires extended and uninterrupted use of the freight elevator for other than
normal deliveries to the Premises (such as for a special move or alterations),
then Landlord shall provide such freight elevator service by prior arrangement
with the manager of the Building the cost of which shall be charged to Tenant in
accordance with Section 7.3.
-----------
(d) Water. Landlord shall make available water for lavatory and
-----
drinking purposes in the Premises and in the cafeteria and gym on a seven (7)
day, twenty-four (24) hour per day basis to be drawn from the public lavatory in
the core of the floors on which the Premises are located. Tenant shall not make
any use of the Premises which would increase the amount of water typically
furnished for office use, nor connect any appliance directly to the water pipes
other than in connection with kitchens, pantries and similar uses expressly
shown on the Final Plans. If unreasonable or unusual amounts of water are
consumed by Tenant, then, at Landlord's option, water meters shall be installed
at Tenant's sole cost and expense and Tenant shall pay for its additional
consumption at the Building's average cost.
(e) Janitorial. Landlord shall provide janitorial service consistent
----------
with the standards of the highest category of premiere, first-class office
building projects in the Golden Triangle area and on Maple Drive in Beverly
Hills, California and in accordance with the Cleaning Specifications set forth
on Exhibit "E" attached hereto. Landlord shall not be required to provide
-----------
janitorial services for portions of the Premises used for storage, storage room
or similar purposes, preparing or consuming food or beverages (except for floors
and counters where food and dishes are not present and such cleaning is
practical), or areas secured, obstructed or locked by Tenant. Any and all
additional or specialized janitorial services not described on Exhibit "E" which
-----------
are required by Tenant shall, at Tenant's request, be contracted for by Landlord
with Landlord's janitorial agent on behalf of Tenant, in which case Tenant shall
pay, as Additional
23
Rent hereunder, all costs and expenses of such additional or specialized
janitorial services within fifteen (15) days after delivery of the statement
therefor by Landlord.
(f) Building Security. Landlord and Tenant shall provide building
-----------------
security equipment, procedures and personnel for the Project (but not within the
Premises) twenty-four (24) hours per day, seven (7) days per week in accordance
with the Security Specifications set forth on Exhibit "F" attached hereto;
-----------
provided, however, Landlord does not guaranty or make any warranty with respect
to the safety of Tenant's personnel or property. The cost of such security
service shall be allocated between Landlord and Tenant as set forth in Exhibit
F. Tenant shall have the right, at Tenant's expense, to provide additional
security equipment or personnel in the Premises, provided that Landlord is given
reasonable access to the Premises (subject to Tenant's right to maintain secured
areas) and that any such security system installed by Tenant complies with all
applicable codes and shall not create any security risk to the Project, or
adversely impact Landlord's security system or adversely affect the rights of
other tenants to the Project.
6.2 Access. Landlord shall furnish to Tenant's employees and agents
------
access to the Premises and the Parking Garage on a seven (7) day per week,
twenty-four (24) hour per day basis, subject to compliance with such security
measures as shall from time to time be in effect for the Building and/or the
Project, subject to interruptions in access required by applicable Laws or
governmental authorities or as reasonably required for Landlord in the case of
emergencies or to perform its obligations of repair and maintenance under this
Lease or to make required or permitted alterations in the Project, and subject
to the Rules and Regulations and any future rules and regulations from time to
time established by Landlord subject to and in compliance with the Rules
Requirements.
6.3 Extraordinary Services. Freight and passenger elevator services,
----------------------
HVAC, electricity, and access to and use of the loading dock facilities (if any)
will be available twenty-four (24) hours a day, subject to the provisions of
this Article 7. Landlord may impose a reasonable direct charge and establish
---------
reasonable rules and regulations for any of the following:
(a) The use of any HVAC or electricity by Tenant at any time other
than during Normal Working Hours. Such usage shall be charged to Tenant at the
standard rates for the Project, which initially shall be $35.00 per hour and
shall be subject to adjustment from time to time based on Landlord's reasonable
estimate of actual costs;
(b) The usage of any services provided to Tenant (including without
limitation, freight elevator service, or use of the loading dock facilities by
Tenant) at any time other than during Normal Working Hours. Such usage shall be
charged to Tenant at the standard rates for the Project which shall be based
24
upon Landlord's reasonable estimate of actual costs. Nothing contained in this
subsection (b) shall limit subsections (a), (c) or (d). Notwithstanding the
foregoing, provided Tenant obtains the appropriate permits therefor, Tenant
shall be entitled to use the freight elevators in the Building in connection
with Tenant's initial moves into each floor of the Premises without charge to
Tenant;
(c) Additional or unusual janitorial services required because of any
non-building standard improvements in the Premises, the carelessness of Tenant,
the nature of Tenant's business (including the extensive operation of Tenant's
business other than during Normal Working Hours);
(d) The removal of any refuse and rubbish from the Premises except
for discarded material placed in wastepaper baskets and left for emptying as is
customary in the highest category of premiere, first class office building
projects located in the Golden Triangle area and on Maple Drive in Beverly
Hills, California. Landlord will cause the Premises to be cleaned after
Tenant's initial move into the Premises (excluding removal of large packing
cartons or moving materials, the breakdown and disposal of which shall be the
responsibility of Tenant) without charge to Tenant.
The foregoing direct charges shall be payable by Tenant as Additional Rent
on the next rent payment date at least twenty (20) days following submission of
an invoice therefor by Landlord.
6.4 Interruption in Utility Services. Landlord shall not be liable for
--------------------------------
damages or otherwise for failure, stoppage or interruption of any services or
utilities, nor shall the same be construed either as an eviction of Tenant, or
result in an abatement of rent, when such failure is caused by acts of God,
accidents, breakage, strikes, lockouts, other reasonably unavoidable labor
disputes, or by the making of repairs, alterations or improvements to the
Premises or the Building, or the limitation, curtailment, rationing or
restriction on supply of natural gas, water, electricity, labor or other
supplies or for any other condition beyond Landlord's reasonable control,
including without limitation, any mandatory governmental energy conservation
program or legal requirement; provided, however, that Tenant shall have the
right to an abatement of any rent paid in proportion to the portion of the
Premises which is rendered untenantable and unusable by Tenant if such portion
of the Premises is determined to be untenantable and is not used by Tenant for a
period of more than three (3) consecutive business days as a result of a failure
in the services or utilities to be provided by Landlord described in Section
-------
7.1, other than any such failure caused by the negligent or willful acts of
---
Tenant or its contractors, employees, licensees or invitees (acting within the
scope of their relationship with Tenant). Notwithstanding any abatement of rent
under this Lease, Tenant shall remain obligated to pay Landlord for all
Additional Rent owed under
25
Article 5 for services and utilities provided to and used by Tenant during the
---------
period of such rent abatement. If any governmental entity imposes mandatory
controls or guidelines on Landlord or the Project relating to the services
provided by Landlord, or the reduction of automobile or other emissions,
Landlord may make such alterations to the Buildings or any other part of the
Project related thereto and take such other steps as are necessary to comply
with such controls and guidelines, the cost of such compliance and alterations
shall be included in Operating Expenses or deemed to be a Capital Improvement,
and Landlord shall not be liable therefor, for damages or otherwise, nor shall
the same be construed either as an eviction of Tenant, or result in an abatement
of rent except to the extent abatement of rent is otherwise provided for in this
Lease; provided that if the Premises as a whole are untenantable and unusable by
Tenant and are not used by Tenant, as a result of such alterations by Landlord,
for a period of over 180 consecutive days (other than a de minimus number of
days during which such services and utilities are restored to the Premises),
then Tenant shall have the right to cancel this Lease by giving notice thereof
to Landlord within ten (10) days after the expiration of said 180-day period and
this Lease shall terminate ten (10) days after delivery of such notice if the
Premises are not again made tenantable and usable for Tenant within said second
ten (10) day period. The foregoing 180-day period shall be extended on a day for
day basis by the number of days of any delay in providing such utilities and
services which is caused by force majeure events which also affect other owners
----- -------
of real estate projects in the greater Los Angeles metropolitan area. Landlord
will minimize the interference with Tenant's use and occupancy of the Premises
and restore all services and utilities to the Premises as soon as possible.
Nothing contained in this Section 7.4 shall limit any provision of Article 12.
7. Alterations.
-----------
7.1 Restriction on Alterations.
--------------------------
(a) Tenant may make alterations, additions or improvements to the
Premises after the Commencement Date (collectively, "Tenant Alterations") which
do not, individually or cumulatively, materially and adversely affect the
Building Systems or Service Facilities provided Tenant submits its plans,
including floor load calculations in the event heavy equipment is part of such
plans, for such alterations to Landlord at least thirty (30) days prior to
commencement of construction of such Tenant Alterations (except as to decorative
items, minor repairs or installations of trade fixtures and furniture for which
plans are not required). Without limiting the foregoing, any Tenant Alterations
which increase the floor load, electrical, plumbing or HVAC requirements over
the capacities of such Building Systems
26
provided as of the Commencement Date shall be deemed to materially and adversely
affect the Building Systems for purposes of this Article 8 only, and such Tenant
---------
Alterations shall only be made, if at all, by Tenant if Tenant complies with
the requirements of Section 8.1(b). Within fifteen (15) days after receipt of
--------------
the plans for alterations, Landlord shall inform Tenant, in good faith, whether
such Tenant Alterations will (for purposes of this Article 8) materially and
---------
adversely affect the Building Systems or Service Facilities. If Landlord
indicates that such Tenant Alterations will so affect the Building Systems or
Service Facilities, Landlord will have five (5) additional business days to
inform Tenant of its approval or disapproval thereof, and if disapproved,
Landlord will detail specific conditions of Landlord's disapproval.
(b) Tenant shall make no Tenant Alterations which, individually or
cumulatively, may have a material and adverse effect on the Building Systems or
Service Facilities without the prior written consent of Landlord, and Landlord
may impose as a condition to such consent such requirements as Landlord, in its
reasonable discretion, may deem necessary or desirable, including without
limitation, (i) the right to approve the plans and specifications for any work
to insure, among other things, that such work will not materially and adversely
affect the Building Systems, (ii) the right to require supplemental insurance
reasonably satisfactory to Landlord and naming Landlord as an additional
insured, (iii) the right to require reasonable security (including assurance of
the availability of sufficient funds of Tenant) for the full payment for any
work which costs in excess of $100,000, and (iv) reasonable requirements as to
the manner in which or the time or times at which work may be performed. Tenant
acknowledges that Landlord shall have the sole right to perform all Tenant
Alterations required to be approved by Landlord. In the event that Landlord
acts as general contractor, Tenant shall pay Landlord a fee equal to ten percent
(10%) of the construction costs of such Tenant Alterations. In the event that
Landlord does not act as general contractor, Tenant shall pay Landlord a
supervisory fee equal to three percent (3%) of the construction costs of such
Tenant Alterations. Landlord agrees that all contracts for Tenant Alterations
shall be subject to a reasonably implemented competitive bidding process. All
Tenant Alterations shall be compatible with a first-class office building
complex and completed in accordance with Landlord's requirements as set forth
herein and all applicable rules, regulations and requirements of governmental
authorities and insurance carriers. In addition to general contractor or
supervisory fees, Tenant shall pay to Landlord all out-of-pocket costs and fees
reasonably incurred by Landlord together with reasonable allocations of in-house
staff costs for reviewing and inspecting all Tenant Alterations to assure full
compliance with all of Landlord's requirements, which charges shall not, in the
aggregate, exceed three percent (3%) of the total design and construction costs
of the Tenant Alterations being reviewed (provided that such limitation on
Landlord's charges shall apply only if the plans for such Tenant Alterations
27
submitted by Tenant are reasonably precise and suitable for final review for
both engineering and design). Landlord does not expressly or implicitly
covenant or warrant that any plans or specifications submitted by Tenant are
safe or that the same comply with any applicable laws, ordinances, codes, rules
or regulations. Further, Tenant shall indemnify, protect, defend and hold
Landlord harmless from any loss, cost or expense, including attorneys' fees and
costs, incurred by Landlord as a result of any defects in design, materials or
workmanship resulting from Tenant Alterations, except to the extent such defects
are caused by Landlord, its agents, contractors, servants or employees. If
Tenant desires to install any rooftop equipment, Tenant may submit, and the
parties shall process, such request as a Tenant Alteration requiring Landlord
consent pursuant to this Article 8.
(c) Landlord shall provide Tenant with copies of all material
contracts, receipts, paid vouchers, and any other documentation (including,
without limitation, "as-built" drawings to the extent such drawings are
reasonably available to Landlord, air/water balancing reports, permits and
inspection certificates) in connection with the construction of such Tenant
Alterations. Tenant shall promptly pay all costs incurred in connection with
all Tenant Alterations and shall not permit the filing of any mechanic's lien or
other lien in connection with any Tenant Alterations. Tenant shall be
responsible for paying the general contractor's overhead and fee in connection
with the work performed pursuant to this Article 8. If a mechanic's lien or
---------
other lien is filed against the Building or the Project as a result of Tenant
Alterations made by or on behalf of Tenant, Tenant shall discharge or cause to
be discharged (by bond or otherwise) such lien within ten (10) days after Tenant
receives notice of the filing thereof and shall not allow any such lien to be
foreclosed upon, although Tenant shall otherwise be entitled to contest the
validity of any such lien. If a mechanic's lien or other lien is filed against
the Land, the Building or the Project as a result of Tenant Alterations made by
or on behalf of Tenant and Tenant fails to timely discharge such lien, Landlord
may, without waiving its rights and remedies based on such breach of Tenant 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 claim giving rise to such lien. Tenant shall pay to Landlord within fifteen
(15) days following notice by Landlord, any sum paid by Landlord to remove such
liens, together with interest at Landlord's cost of money from the date of such
payment by Landlord. The parties acknowledge that the filing of a preliminary
notice is not in and of itself the filing of a mechanic's lien. Notwithstanding
the foregoing, if Tenant has made payment to Landlord for the cost of any Tenant
Alterations or portion thereof, and Landlord fails to forward such payment to a
contractor or subcontractor, Landlord shall be solely responsible for a
mechanics' lien filed as a result of such nonpayment. Any increase in any tax,
assessment or charge levied
28
or assessed as a result of any Tenant Alterations shall be payable by Tenant in
accordance with Article 10.
----------
(d) Notwithstanding anything in the foregoing to the contrary (i) the
outside appearance, character or use of the Building shall not be adversely
affected by any Tenant Alteration, and no Tenant Alteration shall materially
weaken or impair the structural strength or, in the reasonable opinion of
Landlord, materially lessen the value of the Building or create the potential
for unusual expenses to be incurred upon the removal of the Tenant Alterations
and the restoration of the Premises upon the termination of this Lease (unless
Tenant agrees to pay therefor); (ii) no part of the Building outside of the
Premises shall be materially, adversely, physically affected by any Tenant
Alteration; and (iii) the proper functioning of the Building Systems and Service
Facilities shall not be materially, adversely affected by any Tenant Alteration
and there shall be no Tenant Alteration which materially, adversely interferes
with Landlord's free access to the Building Systems or materially, adversely
interferes with the moving of Landlord's equipment to or from the enclosures
containing the Building Systems; (iv) in performing the work involved in making
such Tenant Alterations, Tenant shall be bound by and observe all of the
conditions and covenants contained in this Article 8; (v) all work shall be done
---------
at such times and in such manner as Landlord from time to time may reasonably
designate; and (vi) Tenant shall not be permitted to install and make part of
the Premises any materials, fixtures or articles which are subject to liens,
conditional sales contracts or chattel mortgages other than trade fixtures,
furniture and equipment. In connection with Landlord's approval of any Tenant
Alteration, Landlord shall have the right to advise Tenant that such Tenant
Alteration must be removed by Tenant upon the expiration or termination of this
Lease, provided that Landlord agrees not to impose such requirement if Landlord
determines that such Tenant Alterations do not impair the functionality of the
Premises or the portion thereof affected. If Tenant proceeds to implement such
Tenant Alteration, Tenant shall be obligation to remove such Tenant Alteration
in accordance with Section 8.2 below.
(e) Tenant acknowledges that the exterior rooftop areas on the third
floor of the Premises are not intended to be used as balconies. Should Tenant
desire to use such areas as balconies, Tenant shall be solely responsible for
seeking and obtaining all necessary permits and approvals. Any Tenant
Alterations in connection with converting such areas to usable balconies shall
be subject to the provisions of this Article 8. The completion of any such
conversion shall not cause an increase in Basic Rent or in Tenant's share of
Operating Expenses.
7.2 Removal and Surrender of Fixtures and Tenant Alterations. All
--------------------------------------------------------
Tenant Alterations and tenant improvements installed in the Premises by Landlord
which are attached to, or built into, the Premises, including without
limitation, floor coverings, window coverings, wall coverings, paneling,
molding,
29
doors, vaults (excluding vault doors), plumbing systems, electrical systems,
mechanical systems, structural systems, lighting systems, sound equipment,
communication systems and outlets for the systems mentioned above and for all
telephone, computer, radio, telegraph and television purposes, and any special
flooring or ceiling installations, shall become the property of Landlord and
shall be surrendered with the Premises, as a part thereof, at the end of the
Term; provided, however, (i) Landlord may, by notice to Tenant at least thirty
(30) days prior to the end of the Term, require Tenant to remove any Tenant
Alterations designated by Landlord to be removed at the time of Landlord's
approval thereof (with respect to such Tenant Alterations as to which Landlord
has a right of approval hereunder) or designated in such notice (for all Tenant
Alterations as to which Landlord does not have a right of approval hereunder) if
such improvements are not generally found in the highest category of premiere,
first-class office building in the Golden Triangle area and on Maple Drive in
Beverly Hills, California, and to repair any damage to the Premises, the
Building and any other part of the Project caused by such removal, all at
Tenant's sole expense and to the reasonable satisfaction of Landlord and (ii)
Tenant shall promptly remove from the Premises all signs and graphics and any
other items containing Tenant's name and/or logo and shall repair any damage to
the Premises or the Project caused by such removal, all at Tenant's sole expense
and to the reasonable satisfaction of Landlord. Any articles of Tenant's
personal property including business and trade fixtures not attached to, or
built into, the Premises, machinery and equipment, free-standing cabinet work,
and movable partitions as well as all equipment for Tenant's network operating
center, if any, shall be and remain the property of Tenant and may be removed by
Tenant at any time during the Term as long as Tenant is not in default hereunder
and provided that Tenant repairs to Landlord's satisfaction any damage to the
Premises, the Building and any other part of the Project caused by such removal.
For purposes of the insurance requirements of Section 11.2, Tenant shall be
------------
deemed to have an insurable interest in all of the tenant improvements and
Tenant Alterations in the Premises, as between Landlord and Tenant, but the same
shall be surrendered with the Premises on termination of this Lease, as set
forth above.
7.3 Standard Window Covering. Tenant shall use the Building standard
------------------------
window covering as specified by Landlord and Landlord reserves the right to
approve or disapprove of interior improvements visible from outside the Building
on wholly aesthetic grounds, which approval shall not be unreasonably withheld
in light of the quality and reputation of the Project. Such improvements must be
submitted for Landlord's written approval prior to installation, or Landlord may
remove or replace such items at Tenant's sole expense.
7.4 Arbitration of Disputes. Any dispute concerning whether the
-----------------------
provisions of Sections 8.1 through 8.3 have been
------------------------