FIRST AMENDMENT TO OFFICE LEASE
FOR 601 SOUTH VALENCIA AVENUE
BY THIS LEASE AMENDMENT NO. 1, the parties hereto hereby amend that
Office Lease for 601 South Valencia Avenue, Brea, California 92621, dated
September 1, 1992, between BREA PARTNERS, as Landlord and SIMULATION SCIENCES,
INC., a California corporation as Tenant.
In consideration of the mutual agreements herein contained, the parties
That Simulation Sciences, Inc., will lease an additional 14,887 square
feet of space at 601 South Valencia.
The additional space will increase Simulation Sciences' proportionate
share of their operating expenses to 89%.
The monthly rent per square foot for the entire 54,339 square feet
shall be changed in accordance with the following formula:
Current rent .683 per square foot
.683 + (TCC) x (.11)
12 x 54,339
"TCC" in the foregoing formula shall refer to the "Tenant's Capitalized
Costs" and shall mean any charges incurred by Tenant to improve the
additional space. That cost is estimated to be $150,000.00. The maximum
amount available for Tenant Improvements shall be $22.00 per usable
square footage of newly occupied space:
(12,996 sq.ft. x $22.00 = $285,912).
The monthly rent for all space shall be adjusted according to the
Standard Office Lease. (The rent for all space, including the
additional 14,887 square feet, shall be increased by 5% on April 26,
1996, and each succeeding year as per the Lease).
All other terms and conditions applied under the present Lease shall
also include the additional space.
The "Commencement Date" of this Lease Amendment shall be September 1,
Tenant shall pay $0.30 per square foot from September 1, 1995 to
December 31, 1995 on the additional space. ($0.30 x 14,887 = $4,466.10
During the construction period starting January 1, 1996, through April
30, 1996, the tenant shall pay no rent on the additional space. If the
tenant takes occupancy on the additional space prior to April 30, 1996,
then the commencement date for the rent shall be the occupancy date,
but in no event shall rent for the additional space start later than
May 1, 1996.
Except as herein modified, the Lease shall remain in full force and
The provisions of this Agreement shall bind and inure to the benefit of
the heirs, representatives, successors and assigns of the parties hereto.
Attached as Exhibit "A" is the Floor Plan for the additional space.
BY: THE BETTY L. HUTTON COMPANY, SIMULATION SCIENCES, Inc., a
a California corporation, General Partner California corporation
BY: /s/ THOMAS C. PARKER BY: /s/ CHARLES R. HARRIS
GRAPHIC DEPICTING PREMISES
STANDARD OFFICE LEASE--NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. BASIC LEASE PROVISIONS ("Basic Lease Provisions")
1.1 PARTIES: This Lease, dated for reference purposes only, September
1, 1992 , is made by and between BREA PARTNERS, (herein called "Lessor") and
SIMULATION SCIENCES INC., a California corporation (herein called "Lessee").
1.2 PREMISES: Suite Number(s) 100, 109, 208, 250, 295 on 2 floors
consisting of approximately 39,452 square feet, more or less, as defined in
paragraph 2 and as shown on Exhibit "A" hereto (the "Premises). That portion of
the Premises located on the First Floor ("First Floor Premises") consists of
approximately 17,044 rentable square feet. That portion of the Premises located
on the second floor ("Second Floor Premises") consists of approximately 22,408
rentable square feet. Suite 250 within the Second Floor Premises which consists
of approximately 15,351 rentable square feet ("Existing Premises") is currently
occupied by Lessee. The First Floor Premises, the Existing Premises and the
Second Floor Premises are depicted on Exhibit "A" attached hereto.
1.3 BUILDING: Commonly described as being located at 601 Valencia
Avenue in the City of Brea, County of Orange, State of California, as more
particularly described in Exhibit A-1 hereto, and as defined in paragraph 2.
1.4 USE: General Office
1.5 TERM: Fifteen (15) years. The "Commencement Date" of this Lease
shall be determined separately for the First Floor Premises and for the Second
Floor Premises and shall be the first to occur of the following:
(a) Five (5) days following issuance of final inspection by
the City of Brea on building permits issued to Lessor for construction of the
Interior Improvements for the First Floor Premises or the Second Floor Premises,
as applicable, in accordance with the Work Letter attached to this Lease; or
(b) Lessee's acceptance of possession of the First Floor
Premises or the Second Floor Premises, as applicable, whether for purposes of
fixturizing and/or conducting business.
Lessee currently occupies the Existing Premises pursuant to that
certain Lease dated December 19, 1989 between Lessor's predecessor in interest,
Five-O-Two Properties/Brea Ltd., a California limited partnership and Lessee
("Existing Lease"). The Existing Lease shall be assigned to Lessor concurrently
with Lessor's purchase of the Office Building Project. Lessee will continue to
occupy the Existing Premises in accordance with the Existing Lease, which shall
remain in full force and effect until the Commencement Date of this Lease as to
the First Floor Premises, at which time the Existing Lease shall terminate, and
all rights and obligations of Lessor
and Lessee under the Existing Lease which arise from and after the Commencement
Date of this Lease as to the First Floor Premises, shall automatically terminate
and be of no further force or effect.
1.5A OPTIONS TO EXTEND. Lessee shall have two (2) options to extend the
term for additional periods of five (5) years each for the rent and on the terms
and conditions hereinafter described. To exercise the options, Lessee shall
notify Lessor in writing not late than six (6) months prior to expiration of the
then current Term. if Lessee fails to notify Lessor in the time and manner
above-provided, Lessee's option(s) to extend the Lease shall be void and of no
further force or effect without notice by Lessor to Lessee. If Lessee timely
exercises its option to extend the Lease, Lessee shall continue to occupy the
Premises on the same terms and conditions as are described herein, except that
(a) no further options to extend shall be granted and (b) the Base Rent payable
hereunder shall be adjusted to the then fair market rental value of the Premises
determined in the manner hereinafter described. The "Fair Market Rental Rate" of
the Premises shall be determined, if possible, by the mutual agreement of Lessor
and Lessee. Lessee shall designate its estimation of the Fair Market Rental Rate
of the Premises in its written notice electing to extend the Lease. Lessor shall
notify Lessee, within fifteen (15) days of receipt of Lessee's notice whether
Lessor accepts the Fair Market Rental Rate
1.6 BASE RENT:
(a) The Base Rent initially payable by Lessee shall be determined
in accordance with the following formula:
[(TC) x (39,452/60,755) x (.11)]
(12) x (39,452)
For example, if the TC is equal to $4,100,000.00, the Monthly
Base Rent per rentable square foot within the Premises would be $.62, i.e.:
[($4,100,000.00) x (.6493) x (.11)]
----------------------------------- = 292,834.3 = .6185
(12) x (39,452) ---------
"TC" in the foregoing formula shall refer to the "Total Costs"
and shall mean all direct and indirect costs incurred by Lessor in acquiring the
Office Building Project and all direct and indirect costs incurred designing and
installing improvements benefitting the Building as a whole and all Interior
Improvements constructed in the Premises pursuant to the Work Letter, which
costs shall include, without limitation, those paid to professional consultants,
including architects, engineers, surveyors, attorneys and accountants; all
permits, non-refunded deposits and fees paid to governmental entities or public
utilities; and all amounts paid for materials, labor and supervision used in the
construction of Building Improvements and the Interior Improvements, but
excluding the cost of specific tenant improvements expended for improvement of
premises of other lessees in the Building. "TC" shall also include all financing
costs including interest, all costs of holding the Building including, without
limitation, property taxes and assessments and insurance incurred by Lessor
prior to the Commencement Date of this Lease as to both the First Floor Premises
and the Second Floor Premises.
(b) Not less than fifteen (15) days prior to the
Commencement Date for the First Floor Premises, Lessor shall notify Lessee, in
writing, of the monthly Base Rent per rentable square foot payable by Lessee for
the first month of the Term, which Base Rent shall be based on the "Total Costs"
incurred by Lessor through the end of the preceding calendar month. So long as
the Total Costs continue to increase, Lessor shall continue to provide to
Lessee, by the fifteenth (15th) day of the month preceding the date on which the
next monthly Base Rent is due, a written statement identifying the Total Costs
and the monthly Base Rent per square foot payable for the next calendar month.
In the event Lessor fails to deliver such written notice by the twentieth (20th)
day of the month, Lessee shall be entitled to continue to pay the monthly Base
Rent last payable; provided, however, that Lessee shall pay any increases in the
monthly Base Rents previously due, on the first day of the calendar month
following the month in which a written notice advising of the increase, is
received by Lessee by the twentieth (20th) day of the month.
(c) Lessee shall commence paying the Base Rent for the
rentable area within the First Floor Premises as of the Commencement Date of the
First Floor Premises. Lessee shall commence paying the Base Rent for the
rentable area of all of the Premises upon the Commencement Date of the Second
1.7 BASE RENT INCREASE: On Monthly Base Rent payable by Lessee
hereunder, as determined in accordance with Paragraph 3 of this Page 1B shall be
increased annually, commencing on the first anniversary of the Commencement Date
for the Second Floor Premises and continuing on each anniversary of such date
throughout the remainder of the term of the Lease ("Adjustment Dates"), to a
sum equal to 105t of the monthly Base Rent payable immediately prior to each
such Adjustment Date.
1.8 RENT PAID UPON EXECUTION: $24,403, which amount shall be applied to
the Base Rent first owing hereunder.
1.9 SECURITY DEPOSIT: -0-
1.10 LESSEE'S SHARE OF OPERATING EXPENSES: 65 % as defined in paragraph
2. PREMISES, PARKING AND COMMON AREAS.
2.1 PREMISES: The Premises are a portion of a building, herein
sometimes referred to as the "Building" identified in paragraph 1.3 of the Basic
Lease Provisions. "Building" shall include adjacent parking structures used in
connection therewith. The Premises, the Building, the Common Areas, the land
upon which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the "Office
Building Project." Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
the real property referred to in the Basic Lease Provisions, paragraph 1.2, as
the "Premises," including rights to the Common Areas as hereinafter specified.
2.2 VEHICLE PARKING: So long as Lessee is not in default and subject to
the rules and regulations attached hereto, and as established by Lessor from
time to time, Lessee shall be entitled to use 156 parking spaces in the Office
2.2.1 If Lessee commits, permits or allows any of the
prohibited activities described in the Lease or the rules then in effect, then
Lessor shall have the right, without notice, in addition to such other rights
and remedies that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which cost shall be immediately payable upon demand
2.2.2 The monthly parking rate per parking space will be $ -0-
during the term of this Lease.
2.3 COMMON AREAS--DEFINITION. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Office Building Project that are provided and designated by the Lessor
from time to time for the general non-exclusive use of Lessor, Lessee and of
other lessees of the Office Building Project and their respective employees,
suppliers, shippers, customers and invitees, including but not limited to common
entrances, lobbies, corridors, stairways and stairwells, public restrooms,
elevators, escalators, parking areas to the extent not otherwise prohibited by
this Lease, loading and unloading areas, trash areas, roadways, sidewalks,
parkways, ramps, driveways, landscaped areas and decorative walls.
2.4 COMMON AREAS--RULES AND REGULATIONS. Lessee agrees to abide by and
conform to the rules and regulations attached hereto as Exhibit B with respect
to the Office Building Project and Common Areas, and to cause its employees,
suppliers, shippers, customers, and invitees to so abide and conform. Lessor or
such other person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right from time to time, to
modify, amend and enforce said rules and regulations. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations by
other lessees, their agents, employees and invitees of the Office Building
2.5 COMMON AREAS--CHANGES. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
(a) To make changes to the Building interior and exterior and
Common Areas, including, without limitation, changes in the location, size,
shape, number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Lessor shall at all times provide the parking facilities
required by applicable law and such changes will not unreasonably interfere with
Lessee's use and occupancy of the Premises.
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
(c) To designate other land and improvements outside the
boundaries of the Office Building Project to be a part of the Common Areas,
provided that such other land and improvements have a reasonable and functional
relationship in the Office Building Project;
(d) To add additional buildings and improvements to the Common
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Office Building Project
as Lessor may, in the exercise of sound business judgment deem to be
3.1 TERM. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease Provisions.
3.2 DELAY IN POSSESSION. Notwithstanding said Commencement Date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date and subject to paragraph 3.2.2, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease or
the obligations of Lessee hereunder or extend the term hereof; but in such case,
Lessee shall not be obligated to pay rent or perform any other obligation of
Lessee under the terms of this Lease, except as may be otherwise provided in
this Lease, until possession of the Premises is tendered to Lessee, as
3.2.1 POSSESSION TENDERED--DEFINED. Possession of the Premises
shall be deemed tendered to Lessee ("Tender of Possession") when (1) the
improvements to be provided by Lessor under this Lease are substantially
completed, (2) the Building utilities are ready for use in the Premises, (3)
Lessee has reasonable access to the Premises, and (4) five (5) days shall have
expired following advance written notice to Lessee of the occurrence of the
matters described in (1), (2) and (3), above of this paragraph 3.2.1.
3.3 EARLY POSSESSION. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Lessee shall
pay rent for such occupancy.
3.4 UNCERTAIN COMMENCEMENT. In the event commencement of the Lease term
is defined as the completion of the improvements, Lessee and Lessor shall
execute an amendment to this Lease establishing the date of Tender of Possession
(as defined in paragraph 3.2.1) or the actual taking of possession by Lessee,
whichever first occurs, as the Commencement Date.
4.1 BASE RENT. Subject to adjustment as hereinafter provided in
paragraph 4.3. and except as may be otherwise expressly provided in this Lease.
Lessee shall pay to Lessor the Base Rent for the Premises set forth in paragraph
1.6 of the Basic Lease Provisions, without offset or deduction. Lessee shall pay
Lessor upon execution hereof the advance Base Rent described in paragraph 1.8 of
the Basic Lease Provisions. Rent for any period during the term hereof which is
for less than one month shall be prorated based upon the actual number of days
of the calendar month involved. Rent shall be payable in lawful money of the
United States to Lessor at the address stated herein or to such other persons or
at such other places as Lessor may designate in writing.
4.2 OPERATING EXPENSES. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent. Lessee's Share as hereinafter defined of
all Operating Expenses, as hereinafter defined, during each calendar year of the
term of this Lease, in accordance with the following provisions:
(a) "Lessee's Share" is deemed, for purposes of this Lease, as
the percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate square footage of the
Premises by the total approximate square footage of the rentable space contained
in the Office Building Project. It is understood and agreed that the square
footage figures set forth in the Basic Lease Provisions are approximations which
Lessor and Lessee agree are reasonable and shall not be subject to revision
except in connection with an actual change in the size of the Premises or a
change in the space available for lease in the Office Building Project.
(b) "Operating Expenses" is defined, for purposes of this
Lease, to include all costs if any, incurred, by Lessor in the exercise of its
reasonable discretion, for:
(i) The operation, repair, maintenance, and
replacement, in neat, clean, safe, good order and condition, of the Office
Building Project, including but not limited to, the following:
(aa) The Common Area, including their
surfaces, coverings, decorative items, carpets, drapes and window coverings, and
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, stairways, parkways, driveways, landscape areas, striping,
bumpers, irrigation systems. Common Area lighting facilities, building exteriors
and roofs, fences and gates.
(bb) All heating, air conditioning,
plumbing, electrical systems, life safety equipment, telecommunication and other
equipment used in common by or for the benefit of, lessees or occupants of the
Office Building Project, including elevators and escalators, tenant directories,
fire detection systems including sprinkler system maintenance and repair.
(ii) Trash disposal, janitorial and security
(iii) Any other service to be provided by Lessor that
is elsewhere in this Lease stated to be an "Operating Expense":
(iv) The cost of the premiums for the liability and
property insurance policies to be maintained by Lessor under paragraph 8 hereof;
(v) The amount of the real property taxes to be paid
by Lessor under paragraph 10.1 hereof;
(vi) The cost of water, sewer, gas, electricity, and
other publicly mandated services to the Office Building Project:
(vii) Labor, salaries and applicable fringe benefits
and costs, materials, supplies and tools, used in maintaining and/or cleaning
the Office Building Project and accounting and a management fee which management
fee shall not exceed five percent (5%) of gross rentals; attributable to the
operation of the Office Building Project;
(viii) Replacing and/or adding improvements mandated
by any governmental agency and any repairs or removals necessitated thereby
amortized over its useful life according to Federal income tax regulations or
guidelines for depreciation thereof (including interest on the unamortized
balance as is then reasonable in the judgement of Lessor's accountants):
(ix) Replacements of equipment or improvements that
have a useful life for depreciation purposes according to Federal income tax
guidelines of five (5) years or less, as amortized over such life.
(c) Operating Expenses shall not include the costs of
replacements of equipment or improvements that have a useful life for Federal
income tax purposes in excess of five (5) years unless it is of the type
described in paragraph 4.2(b)(viii), in which case their cost shall be included
as above provided.
(d) Operating Expenses shall not include any expenses paid by
any lessee directly to third parties, or as to which Lessor is otherwise
reimbursed by any third party, other tenant, or by insurance proceeds.
(e) Lessee's Share of Operating Expenses shall be payable by
Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time of Lessee's Share of annual
Operating Expenses and the same shall be payable monthly or quarterly, as Lessor
shall designate, during each calendar year of the Lease term, on the same day as
the Base Rent is due hereunder in the event that Lessee pays Lessor's estimate
of Lessee's Share of Operating Expenses as aforesaid. Lessor shall deliver to
Lessee within sixty (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual Operating
Expenses incurred during the preceding year. If Lessee's payments under this
paragraph 4.2(e) during said preceding calendar year exceed Lessee's Share as
indicated on said statement. Lessee shall be entitled to credit the amount of
such overpayment less than Lessee's Share as indicated on said statement Lessee
shall pay to Lessor the amount of the deficiency within ten (10) days after
delivery by Lessor to Lessee of said statement.
(f) Lessee shall commence paying Lessee's Share of all
Operating Expenses upon the commencement date of the Lease as to the First Floor
Premises. Notwithstanding anything to the contrary contained in this Lease,
Lessee's Share of Operating Expenses from the Commencement Date of the Lease for
the First Floor Premises until the Commencement Date of the Second Floor
Premises shall be twenty-eight percent (28%) instead of sixty-five percent
6.1 USE. The Premises shall be used and occupied only for the purpose
set forth in paragraph 1.4 of the Basic Lease Provisions or any other use which
is reasonably comparable to that use and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, does not violate any covenants or restrictions of record.
or any applicable building code. regulation or ordinance in effect on such Lease
term Commencement Data. In the event it is determined that this warranty has
been violated. then it shall be the obligation of the Lessor, after written
notice from Lessee, to promptly. at Lessor's sole cost and expense, rectify any
(b) Except as provided in paragraph 6.2(a) Losses shall. at
Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record. and
requirements of any fire insurance underwriters or rating bureaus, now in effect
or which may hereafter come into effect, whether or not they reflect a change in
policy from that now existing, during the term of any part of the term hereof,
relating in any manner to the Premises and the occupation and use by Losses of
the Premises. Lessee shall conduct its business in a lawful manner and shall not
use or permit the use of the Premises of the Common Areas in any manner that
will tend to create waste or a nuisance or shall tend to disturb other occupants
of the Office Building Project.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee in a clean
condition on the Lease Commencement Date (unless Lessee is already in
possession) and Lessor warrants to Lessee that the plumbing, lighting, air
condition, and heating system in the Premises shall be in good operating
condition. In the event that it is determined that this warranty has been
violated, then it shall be the obligation of Lessor, after receipt of written
notice from Lessee setting forth with specificity the nature of the violation to
promptly, at Lessor's sole cost, rectify such violation.
(b) Except as otherwise provided in this Lease, and paragraph
7 of the Work Letter attached hereto, Lessee hereby accepts the Premises and the
Office Building Project in the condition existing as of the Lease Commencement
Date or the date that Lessee takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises, and
any easements, covenants or restrictions of record, and accepts this Lease
subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto. Lessee acknowledges that it has satisfied itself by its won
independent investigation that the Premises are suitable for its intended use,
and that neither Lessor nor Lessor's agent or agents has made any representation
or warranty as to the present or future suitability of the Premises. Common
Area, or Office Building Project for the conduct of Lessee's business.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.
7.1 LESSOR'S OBLIGATIONS. Lessor shall keep the Office Building
Project, including the Premises, interior and exterior walls, roof, and common
areas, and the equipment whether used exclusively for the Premises or in common
with other premises in good condition and repair provided however Lessor shall
not be obligated to paint, repair or replace wall coverings, or to repair or
replace any improvements that are not ordinarily a part of the Building or are
above then Building standards. Except as provided in paragraph 9.5 there shall
be no abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements alterations
or repairs made by Lessor to the Office Building Project or any part thereof.
Lessor shall not be in default in the performance of any obligation required to
be performed by Lessor under the Lease unless Lessor has failed to perform such
obligation within thirty (30) days after the receipt of notice from Lessee
specifying in detail Lessor's failure to perform; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) calendar days
are required for its performance, then Lessor shall not be deemed in default if
it commences such performance within thirty (30) days and thereafter diligently
pursues the same to completion. Upon any such default by Lessor, Lessee may
exercise any of its rights provided in law or at equity.
7.2 LESSEE'S OBLIGATIONS.
(a) Notwithstanding Lessor's obligation to keep the Premises
in good condition and repair. Lessee shall be responsible for payment of the
cost thereof to Lessor an additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located) that
serves only Lessee or the Premises, to the extent such cost is attributable to
causes beyond normal wear and tear. Lessee shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any
Premises improvements that are not ordinarily a part of the Building or that are
above then Building standards. Lessor may, at its option, upon reasonable
notice, elect to have Lessee perform any particular such maintenance or repairs
the cost of which is otherwise Lessee's responsibility hereunder.
(b) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as received (together with all alterations and improvements installed by Lessee
pursuant to Section 7.3, except as other specifically provided in Section 7.3)
ordinary wear and tear excepted, clean and free of debris. Any damage or
deterioration of the Premises shall not be deemed ordinary wear and tear if the
same could have been prevented by good maintenance practices by Lessee. Lessee
shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, alterations, furnishings and equipment.
Except as otherwise stated in this Lease, Lessee shall leave the air lines,
power panels, electrical distribution systems, lighting fixtures, air
conditioning, window coverings, wall coverings, carpets, wall paneling, ceilings
and plumbing on the Premises and in good operating condition.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent
make any alterations, improvements, additions, Utility Installations or repairs
in, on or about the Premises, or the Office Building Project. As used in this
paragraph 7.3 the term "Utility Installation" shall mean carpeting, window and
wall coverings, power panels, electrical distribution systems, lighting
fixtures, air conditioning, plumbing, and telephone and telecommunication wiring
and equipment. As a condition to Lessor's approval of an alternation,
improvement, addition or Utility Installation, Lessor may require the removal of
any or all of said alterations, improvements, additions or Utility
Installations, and the restoration of the Premises and the Office Building
Project to their prior condition, at Lessee's expense. Should Lessor permit
Lessee to make its own alterations, improvements, additions or Utility
Installations, Lessee shall use only such contractor as has been expressly
approved by Lessor and Lessor may require Lessee to provide Lessor at Lessee's
sole cost and expense either a lien and completion bond in an amount approved by
Lessor and Lessor may require Lessee to provide Lessor, at Lessee's sole cost
and expense either (i) a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such improvements, to insure Lessor against
any liability for mechanic's and materialmen's liens and to insure completion of
the work or (ii) other evidence, reasonably acceptable to Lessor, that Lessee
has adequate funds to pay for all such work and a reasonable builder's control
system to assure the release of all mechanic and material lien rights upon
disbursement of funds to contractors. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior approval of
Lessor, or use a contractor not expressly approved by Lessor, Lessor may, at any
time during the term of this Lease, require that Lessee remove any part of all
of the same.
(b) Any alterations. improvements, additions or Utility
Installations in or about the Premises or the Office Building Project that
Lessee shall desire to make shall be presented to Lessor in written form. with
proposed detailed plans. It Lessor shall give its consent to Lessee's making
such alteration, improvement. addition or Utility Installation, the consent
shall be deemed conditioned upon Lessee acquiring a permit to do so from the
applicable governmental agencies. furnishing a copy thereof to Lessor prior to
the commencement of the work. and compliance by Lessee and all conditions of
said Permit in a prompt and expeditious manner.
(c) Lessee shall pay when due. all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at of for
use in the Premise which claims are or may be secured by any mechanics or
materialmen's lion against the Promises, the Building or the Office Building
Project, or any interest therein.
(d) Lessee shall give Lessor not less than ten (10) days'
notice prior to the commencement of any work in the Premises by Lessee. and
Lessor shall have the right to post notices of non-responsibility in or on the
Premises or the Building as provided by law. If Lessee shall, in good faith,
contest the validity of any such lien, claim or demand, then Lessee shall, at
its sole expense defend itself and Lessor against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises, the Building or the
Office Building Project, upon the condition that if Lessor shall require, Lessee
shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal
to such contested lien claim or demand indemnifying Lessor against liability for
the same and holding the Premises, the Building and the Office Building Project
free from the effect of such lien or claim. In addition, Lessor may require
Lessee to pay Lessor's reasonable attorneys fees and costs in participating in
such action if Lessor shall decide it is to Lessor's best interest so to do.
(e) All alterations, improvements, additions and Utility
installations (whether or not such Utility Installations constitute trade
fixtures of Lessee) which may be made to the Premises by Lessee, including but
not limited to, floor coverings, panelings, doors. drapes, built -ins, moldings,
sound attenuation, and lighting and telephone or communication systems, conduit,
wiring and outlets, shall be made and done in a good and workmanlike manner and
of good and sufficient quality and materials and shall be the Property of Lessor
remain upon and be surrendered with the Premises at the expiration of the Lease
term, unless Lessor requires their removal pursuant to paragraph 7.3(a).
Provided Lessee is not in default, notwithstanding the provisions of this
paragraph 7.3(e), Lessee's personal property and equipment, other than that
which is affixed to the Premises so that it cannot be removed without material
damage to the Premises or the Building, and other than Utility installations,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of paragraph 7.2.
(f) Lessee shall provide Lessor with as-built plans and
specifications for any alterations, improvements, additions or Utility
7.4 UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other lessee of the Office Building Project,
including, but not by way of limitation, such utilities as plumbing, electrical
systems, security systems, communication systems, and fire protection and
detection systems, so long as such installations do not unreasonably interfere
with Lessee's use of the Premises.
8. INSURANCE; INDEMNITY.
8.1 LIABILITY INSURANCE--LESSEE. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease a policy of Comprehensive
General Liability insurance utilizing an insurance Services Office standard form
with Broad Form General Liability Endorsement (GL0404), or equivalent, in an
amount of not less than $1,000,000 per occurrence of bodily injury and property
damage combined or in a greater amount as reasonably determined by Lessor and
shall insure Lessee with Lessor as an additional insured against liability
arising out of the use, occupancy or maintenance of the Premises. Compliance
with the above requirement shall not, however, limit the liability of Lessee
8.2 LIABILITY INSURANCE--LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage insurance, plus coverage against such other risks
Lessor deems advisable from time to time, insuring Lessor, but not Lessee,
against liability arising out of the ownership, use, occupancy or maintenance of
the Office Building Project in an amount not less than 35,000,000.00 per
8.3 PROPERTY INSURANCE--LESSEE. Lessee shall, at Lessee's expense,
obtain and keep in force during eh term of this Lease for the benefit of Lessee,
replacement cost fire and extended coverage insurance, with vandalism and
malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Lessee's
personal property, fixtures, equipment and tenant improvements.
8.4 PROPERTY INSURANCE--LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in the amount of the full
replacement cost thereof, as the same may exist from time to time, utilizing
Insurance Services Office standard form, or equivalent, providing protection
against all perils included within the classification of fire, extended
vandalism, malicious mischief, plate glass, and such other perils as Lessor
deems advisable or may be required by a lender having a lien on the Office
Building Project. In addition, Lessor shall obtain and keep in force, during the
term of this Lease, a policy of rental value insurance covering a period of one
year, with loss payable to Lessor, which insurance shall also cover all
Operating Expenses for said period. Lessee will not be named in any such
policies carried by Lessor and shall have no right to any proceeds therefrom.
The policies required by these paragraphs 8.2 and 8.4 shall contain such
deductibles as Lessor or the aforesaid lender may determine. In the event that
the Premises shall suffer an insured loss as defined in paragraph 9.1(f) hereof.
The deductible amounts under the applicable insurance policies shall be deemed
an Operating Expense. Lessee shall not do or permit to be done anything which
shall invalidate the insurance policies carried by Lessor. Lessee shall pay the
entirety of any increase in the property insurance premium for the Office
Building Project over what it was immediately prior to the commencement of the
term of this Lease if the increase is specified by Lessor's insurance carrier as
being caused by the nature of Lessee's occupancy or any act or omission of
8.5 INSURANCE POLICIES. Lessee shall deliver to Lessor copies of
liability insurance policies required under paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance within seven (7) days
after the Commencement Date of this Lease. No such policy shall be cancelable or
subject to reduction of coverage or other modification except after thirty (30)
days prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with renewals thereof.
8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other,
for direct or consequential loss of damage arising out of or incident to the
perils covered by property insurance carried by such party, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. If necessary all property insurance policies required under this Lease
shall be endorsed to so provide.
8.7 INDEMNITY. Lessee shall indemnify and hold harmless Lessor and its
agents, Lessor's master or ground lessor, partners and lenders, from and against
any and all claims for damage to the person or property of anyone or any entity
arising from Lessee's use of the Office Building Project, or from the conduct of
Lessee's business or from any activity, work or things done, permitted or
suffered by Lessee in or about the Premises or elsewhere and shall further
indemnify and hold harmless Lessor from and against any and all claims, costs
and expenses arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any of Lessee's agents,
contractors, employees or invitees and from and against all costs, attorney's
fees, expenses and liabilities incurred by Lessor as the result of any such use,
conduct, activity, work, things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but not limited to
the defense or pursuit of any claim or any action or proceeding involved
therein; and in case any action or proceeding be brought against Lessor by
reason of any such matter, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to property of Lessee
or injury to persons, in, upon or about the Office Building Project arising from
any cause and Lessee hereby waives all claims in respect thereof against Lessor.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other person
in or about the Premises or the Office Building Project, nor shall Lessor be
liable for injury to the person or Lessee, Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from theft,
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures, or from any other cause, whether said
damage or injury results from conditions arising upon the Premises or upon other
portions of the Office Building Project, or from other sources or places, or
from new construction or the repair, alteration or improvement of any part of
the Office Building Project, or of the equipment, fixtures or appurtenances
applicable thereto, and regardless of whether the cause of such damage or injury
or the means of repairing the same is inaccessible, Lessor shall not be liable
for any damages arising from any act or neglect of any other lessee, occupant or
user of the Office Building Project, nor from the failure of Lessor to enforce
the provisions of any other lease of any other lessee of the Office Building
8.9 NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Lessee's property or obligations under
9. DAMAGE OR DESTRUCTION.
(a) "Premises Damage" shall mean if the Premises are damaged
or destroyed to any extent.
(b) "Premises Building Partial Damage" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
that the cost to repair is less than fifty percent (50%) of the then Replacement
Cost of the Building.
(c) "Premises Building Total Destruction" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
that the cost to repair is fifty percent (50%) or more of the then Replacement
Cost of the Building.
(d) "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.
(e) "Office Building Project Buildings total Destruction"
shall mean if the Office Building Project Buildings are damaged or destroyed to
the extent that the cost of repair is fifty percent (50%) or more of the then
Replacement Cost of the Office Building Project Buildings.
(f) "Insured Loss" shall mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8. The fact that an Insured Loss has a deductible amount shall not
make the loss an uninsured loss.
(g) "Replacement Cost" shall mean the amount of money
necessary to be spent in order to repair or rebuild the damaged area to the
condition that existed immediately prior to the damage occurring, excluding all
improvements made by lessees, other than those installed by Lessor at Lessee's
9.2 PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.
(a) Insured Loss: Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the term of this Lease there is damage which is
an Insured Loss and which falls into the classification of either Premises
Damage or Premises Building Partial Damage, then Lessor shall, as soon as
reasonably possible and to the extent the required materials and labor are
readily available through usual commercial channels, at Lessor's expense, repair
such damage (but not Lessee's fixtures, equipment or tenant improvements
originally paid for by Lessee) to its condition existing at the time of the
damage, and this Lease shall continue in full force and effect.
(b) Uninsured Loss: Subject to the provisions of paragraph 9.4
and 9.5, if at any time during the term of this Lease there is damage which is
not an Insured Loss and which falls within the classification of Premises damage
or Premises Building Partial Damage, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
which damage prevents Lessee from making any substantial use of the Premises,
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.
9.3 PREMISES BUILDING TOTAL DESTRUCTION; OFFICE BUILDING PROJECT TOTAL
DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time
during the term of this Lease there is damage, whether or not it is an Insured
Loss, which falls into the classifications of either (i) Premises Building Total
Destruction, or (ii) Office Building Project Total Destruction, then Lessor may
at Lessor's option either (i) repair such damage or destruction as soon as
reasonably possible at Lessor's expense (to the extent the required materials
are readily available through usual commercial channels) to its condition
existing at the time of the damage, but not Lessee's fixtures, equipment or
tenant improvements, and this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after the date of the
occurrence of such damage of Lessor's intention to cancel and terminate this
Lease, in which case this Lease shall terminate as of the date of the occurrence
of such damage.
9.4 DAMAGE NEAR END OF TERM.
(a) Subject to paragraph 9.4(b), if at any time during the
last twelve (12) months of the term of this Lease there is substantial damage to
the Premises, Lessor may at Lessor's option cancel and terminate this Lease as
of the date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within 30 days after the date of occurrence of such
(b) Notwithstanding paragraph 9.4(a), in the event that Lessee
has an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such option,
if it is to be exercised at all, no later than twenty (20) days after the
occurrence of an Insured Loss falling within the classification of Premises
Damage during the last twelve (12) months of the term of this Lease. If Lessee
duly exercises such option during said twenty (20) day period, Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option
during said twenty (20) day period, then Lessor may at Lessor's option terminate
and cancel this Lease as of the expiration
of said twenty (20) day period by giving written notice to Lessee of Lessor's
election to do so within ten (10) days after the expiration of said twenty (20)
day period, notwithstanding any term or provision in the grant of option to the
9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event Lessor repairs or restores the Building or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Lessee's Share of
Operating Expenses) for the period during which such damage, repair or
restoration continues shall be abated, provide (1) the damage was not the result
of the negligence of Lessee, and (2) such abatement shall only be to the extent
the operation and profitability of Lessee's business as operated from the
Premises is adversely affected. Except for said abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises or the Building under the provisions of this Paragraph 9 and shall not
commence such repair or restoration within ninety (90) days after such
occurrence, or if Lessor shall not complete the restoration and repair within
six (6) months after such occurrence, Lessee may at Lessee's option cancel and
terminate this Lease by giving Lessor written notice of Lessee's election to do
so at any time prior to the commencement or completion, respectively, of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
(c) Lessee agrees to cooperate with Lessor in connection with
any such restoration and repair, including but not limited to the approval
and/or execution of plans and specifications required.
9.6 TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7 WAIVER. Lessor and Lessee waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax, as
defined in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2
10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for
paying any increase in real property tax specified in the tax assessor's records
and work sheets as being caused by additional improvements placed upon the
Office Building Project by other leases or by Lessor for the exclusive enjoyment
of any other lessee. Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under
paragraph 4.2(c) the entirety of any increase in real property tax if assessed
solely by reason of additional improvements placed upon the Premises by Lessee
or at Lessee's request.
10.3 DEFINITION OF "REAL PROPERTY TAX." As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Office Building Project or any portion thereof
by any authority having the direct or indirect power to tax, including any city,
county, state or federal government, or any school, agricultural, sanitary,
fire, street, drainage or other improvement district thereof, as against any
legal or equitable interest of Lessor in the Office Building Project or in any
portion thereof, as against Lessor's right to rent or other income therefrom,
and as against Lessor's business of leasing the Office Building Project. The
term "real property tax" shall also include any tax, fee, levy, assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax," or (iii) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a change
of ownership, as defined by applicable local statutes for property tax purposes,
of the Office Building Project or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason of such change of
ownership, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.
10.4 JOINT ASSESSMENT. If the improvements or property, the taxes for
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
separately assessed, Lessee's portion of that tax shall equitably determined by
Lessor from the respective valuations assigned in the assessor's work sheets or
such other information (which may include the cost of construction) as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere.
(b) If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay to Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written statement
setting forth the taxes applicable to Lessee's property.
11.1 SERVICES PROVIDED BY LESSOR. Lessor shall provide heating,
ventilation, air conditioning, and janitorial service as reasonably required,
reasonable amounts of electricity for normal lighting and office machines, water
for reasonable and normal drinking and lavatory use, and replacement light bulbs
and/or fluorescent tubes and ballasts for standard overhead fixtures.
11.2 SERVICES EXCLUSIVE TO LESSEE. Lessee shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon. If any such services are not separately metered
to the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises in the Building.
11.3 HOURS OF SERVICE. Said services and utilities shall be provided
during generally accepted business days and hours of such other days or hours as
may hereafter be set forth. Utilities and services required at other times shall
be subject to advance request and reimbursement by Lessee to Lessor of the cost
11.4 EXCESS USAGE BY LESSEE. Lessee shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water, lighting
or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including but not limited to security services, over
standard office usage for the Office Building Project. Lessor shall require
Lessee to reimburse Lessor for any excess expenses or costs that may arise out
of a breach of this subparagraph by Lessee. Lessor may, in its sole discretion,
install at Lessee's expense supplemental equipment and/or separate metering
applicable to Lessee's excess usage or loading.
11.5 INTERRUPTIONS. Thee shall be no abatement of rent and Lessor shall
not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor's
reasonable control or in cooperation with governmental request or directions.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a material
default and breach of this Lease without the need for notice to Lessee under
paragraph 13.1 "Transfer" within the meaning of this paragraph 12 shall include
the transfer or transfers aggregating: (a) if Lessee is a corporation, more than
fifty percent (50%) of the voting stock of such corporation, or (b) if Lessee is
a partnership, more than fifty percent (50%) of the profit and loss
participation in such partnership.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, all of which are referred to as "Lessee Affiliate";
provided that before such assignment shall be effective, (a) said assignee shall
assume, in full, the obligations of Lessee under this Lease and (b) Lessor shall
be given written notice of such assignment and assumption. Any such assignment
shall not, in any way, affect or limit the liability of Lessee under the terms
of this Lease even if
after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
12.3 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, no assignment or
subletting shall release Lessee of Lessee's obligations hereunder or alter the
primary liability of Lessee to pay the rent and other sums due Lessor hereunder
including Lessee's Share of Operating Expenses, and to perform all other
obligations to be performed by Lessee hereunder.
(b) Lessor may accept rent from any person other than Lessee
pending approval or disapproval of such assignment.
(c) Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a waiver
or estoppel of Lessor's right to exercise its remedies for the breach of any of
the terms or conditions of this paragraph 12 or this Lease.
(d) If Lessee's obligations under this Lease have been
guaranteed by third parties, then an assignment or sublease, and Lessor's
consent thereto, shall not be effective unless said guarantors give their
written consent to such sublease and the terms thereof.
(e) The consent by lessor to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by the
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable on the Lease or sublease and without obtaining
their consent and such action shall not relieve such persons from liability
under this Lease or said sublease; provided, however, such persons shall not be
responsible to the extent any such amendment or modification enlarges or
increases the obligations of the Lessee or sublessee under this Lease or such
(f) In the event of any default under this Lease, Lessor may
proceed directly against Lessee, any guarantors or any one else responsible for
the performance of this Lease, including the subleases, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(g) Lessor's written consent to any assignment or subletting
of the Premises by Lessee shall not constitute an acknowledgment that no default
then exists under this Lease of the obligations to be performed by Lessee nor
shall such consent be deemed a waiver of any then existing default, except as
may be otherwise stated by Lessor at the time.
(h) The discovery of the fact that any financial statement
relied upon by Lessor in giving its consent to an assignment or subletting was
materially false shall, at Lessor's election, render Lessor's said consent null
12.4 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING.
Regardless of Lessor's consent, the following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease heretofore
or hereafter made by Lessee, and Lessor may collect such rent and income and
apply same toward Lessee's obligations under this Lease; provided, however, that
until a default shall occur in the performance of Lessee's obligations under
this Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease, Lessor shall not, by reason of this or any other assignment of such
sublease to Lessor nor by reason of the collection of the rents from a
sublessee, be deemed liable to the sublessee for any failure of Lessee to
perform and comply with any of the Lessee's obligations to such sublease under
such sublease, Lessee hereby irrevocably, authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a default
exists in the performance of Lessee's obligations under this Lease to pay to
Lessor the rents due and to become due under the sublease. Lessee agrees that
such sublessee shall have the right to rely upon any such statement and request
from Lessor, and that such sublease shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from lessee to the contrary. Lessee
shall have no right or claim against said sublessee or Lessor for any such rents
so paid by said sublessee to Lessor.
(b) No sublease entered into by Lessee shall be effective
unless and until it has been approved in writing by Lessor. In entering into any
sublease, Lessee shall use only such form of sublease as is satisfactory to
Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent. Any sublessee shall, by reason
of entering into a sublease under this Lease, be deemed, for the benefit of
Lessor, to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Lessor has expressly consented in writing.
(c) In the event Lessee shall default in the performance of
its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublease to attorn to Lessor, in which
event Lessor shall undertake the obligations of Lessee under such sublease from
the time of the exercise of said option to the termination of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to Lessee or for any other prior defaults of
Lessee under such sublease.
(d) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written consent.
(e) With respect to any subletting to which Lessor has
consent, Lessor agrees to deliver a copy of any notice of default by Lessee to
the sublessee. Such sublessee shall have the right to cure a default of Lessee
within three (3) days after service of said notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset from
and against Lessee for any such defaults cured by the sublessee.
12.5 LESSOR'S EXPENSES. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee
proposes to do then Lessee shall pay Lessor's reasonable costs and expenses
incurred in connection therewith, including attorneys', architects', engineers'
or other consultants' fees.
12.6 CONDITIONS TO CONSENT. Lessor reserves the right to condition any
approval to assign or sublet upon Lessor's determination that (a) the proposed
assignee or sublessee shall conduct a business on the Premises of a quality
substantially equal to that of Lessee and consistent with the general character
of the other occupants of the Office Building Project and not in violation of
any exclusives or rights then held by other tenants, and (b) the proposed
assignee or sublessee be at least as financially responsible as Lessee was
expected to be at the time of the execution of this Lease or of such assignment
of subletting, whichever is greater.
13. DEFAULT; REMEDIES.
13.1 DEFAULT. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Lessee:
(a) The vacation of abandonment of the Premises by Lessee.
Vacation of the Premises shall include the failure to occupy the Premises for a
continuous period of sixty (60) days or more, whether or not the rent is paid.
(b) The breach of Lessee of any of the covenants, conditions
or provisions of paragraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment
or subletting), 13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f)
(false statement), 16(a) (estoppel certificate), 30(b) (subordination), 33
(auctions), or 4.1 (easements), all of which are hereby deemed to be material,
non-curable defaults without the necessity of any notice by Lessor to Lessee
(c) The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also constitute the notice required by
(d) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee other than those referenced in subparagraphs (b) and (c), above, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Lessor to Lessee; provided, however, that if the nature of
Lessee's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given to Lessee under applicable Unlawful Detainer statutes.
(e) (i) The making by lessee of any general arrangement or
general assignment for the benefit of creditors; (ii) Lessee becoming a "debtor"
as defined in 11 U.S.C. Section101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days; (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days. In the event that any
provision of this paragraph 13.1(e) is contrary to any applicable law, such
provision shall be of no force or effect.
(f) The discovery by Lessor that any financial statement given
to Lessor by Lessee, or its successor in interest or by any guarantor of
Lessee's obligation hereunder, was materially false.
13.2 REMEDIES. In the event of any material default or breach of this
Lease by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender, possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee all damages incurred
by Lessor by reason of Lessee's default including, but not limited to, the cost
of recovering possession of the Premises; expenses of reletting, including
necessary renovation and alternation of the Premises, reasonable attorneys'
fees, and any real estate commission actually paid; the worth at the time of
award by the court having jurisdiction thereof the amount by which the unpaid
rent for the balance of the term after the time of such award exceeds the amount
of such rental loss for the same period that Lessee proves could be reasonably
avoided; that portion of the leasing commission paid by Lessor pursuant to
paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have vacated or
abandoned the Premises. In such event Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to recover
the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located. Unpaid installments of rent and other unpaid monetary obligations
of Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event no later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation,
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently pursues the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of Base Rent, Lessee's Share of Operating Expenses or other
sums due hereunder will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges, and
late charges which may be imposed on Lessor by the terms of any mortgage or
trust deed covering the Office Building Project. Accordingly, if any installment
of Base Rent, Operating Expenses, or any other sum due from Lessee shall not be
received by Lessor or Lessor's designee within ten (10) days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a late charge equal to 6% of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Lessor will incur by reason of late payment by lessee. Acceptance of
such late charge by Lessor shall in no event constitute a waiver of Lessee's
default with respect to such overdue amount, nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder.
14. CONDEMNATION. If the Premises or any portion thereof or the Office Building
Project are taken under the power of eminent domain, or sold under the threat of
the exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date of the condemning
authority takes title or possession, whichever first occurs; provided that if so
much of the Premises or the Office Building Project are taken by such
condemnation as would substantially and adversely affect the operation and
profitability of Lessee's business conducted from the Premises, Lessee shall
have the option, to be exercised only in writing within thirty (30) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within thirty (30) days after the condemning authority shall
have taken possession), to terminate this Lease as of the date of the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the rent and Lessee's
Share of Operating Expenses shall be reduced in the proportion that the floor
area of the Premises taken bears to the total floor area of the Premises. Common
areas taken shall be excluded from the Common Areas usable by Lessee and no
reduction of rent shall occur with respect thereto or by reason thereof. Lessor
shall have the option in its sole discretion to terminate this Lease as of the
taking of possession by the condemning authority, by giving written notice to
Lessee of such election within thirty (30) days after receipt of notice of a
taking by condemnation of any part of the Premises or the Office Building
Project. Any award for the taking of all or any part of the Premises or the
Office Building Project under the power of eminent domain or any payment made
under threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided
however, that Lessee shall be entitled to any separate award for loss of or
damage to Lessee's trade fixtures, removable personal property and unamortized
tenant improvements that have been paid for by Lessee. For that purpose the cost
of such improvements shall be amortized over the original term of this Lease
excluding any options. In the event that this Lease is not terminated by reason
of such condemnation, Lessor shall to the extent of severance damages received
by Lessor in connection with such condemnation, repair any damage to the
premises caused by such condemnation except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall pay any amount in
excess of such severance damages required to complete such repair.
16. ESTOPPEL CERTIFICATE.
(a) Each party (as "responding party") shall at any time upon not less
than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Office Building Project or
of the business of Lessee.
(b) At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has been paid
(c) If Lessor desires to finance, refinance. or sell the Office
Building Project, or any pan thereof, Lessee hereby agrees to deliver to any
lender or purchaser designated by Lessor such financial statements of Lessee as
any be reasonably required by such lender or purchaser. Such statements shall
include in past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
owner or owners, at the time in question, of the fee title or a Lessee's
interest in a ground lease of the Office Building Project, and except as
expressly provided in paragraph 15, in the event of any transfer of such title
or interest. Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Lessor shall subject
as aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
18. SEVERABILITY. The invalidity of any provision of this Lease as determined by
a court of competent jurisdiction shall in no way affect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law or judgments from the data due. Payment of such interest
shall not excuse or cure any default by Lessee under this Lease; provide,
however, that interest shall not be payable an late charges incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.
20. TIME OF ESSENCE. Time is of the essence with respect to the obligations to
be performed under this Lease.
21. ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expense and any other expenses payable by Lessee hereunder shall be deemed to be
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges that neither the real estate broker
listed in paragraph 15 hereof nor any cooperating broker on this transaction nor
the Lessor or any employee or agents of any of said persons has made any oral or
written warranties or representations to Lessee relative to the condition or use
by Lessee of the Premises or the Office Building Project and Lessee acknowledges
that Lessee assumes all responsibility regarding the Occupational Safety Health
Act, the legal use and adaptability of the Premises and the compliance thereof
with all applicable laws and regulations in effect during the term of this
23. NOTICES. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given if delivered or addressed to Lessee
or to Lessor at the address noted below or adjacent to the signature of the
respective parties, as the case may be. Mailed notices shall be deemed given
upon actual receipt at the address required, or forty-eight hours following
deposit in the mail, postage prepaid, whichever first occurs. Either party may
by notice to the other specify a different address for notice purposes except
that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice purposes. A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses Lessor may from time to time
hereafter designate by notice to Lessee
24. WAIVERS. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to or approval of any
subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall not
be a waiver of any preceding breach by Lessee of any provision hereof, other
than the failure of Lessee to pay the particular rent so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. HOLDING OVER. It Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof,. such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, except that the rent payable
shall be two hundred percent (200%) of the rent payable immediately preceding
the termination data of this Lease, and all Options,. it any, granted under the
terms of this Lease shall be deemed terminated and be of no further effort
during said month to month tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shell, whenever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by Lessee
shall be deemed a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAWS. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors or assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning this
Lease between the parties hereto shall be initiated in the county in which the
Office Building Project is located.
(a) This Lease, and any Option or right of first refusal granted
hereby, at Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed
upon the Office Building Project and to any and all advances made on security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding such subordination, Lessee's right to quiet
possession of the Premises shall not be disturbed if Lessee is not in default
and so long as Lessee shall pay the rent and serve and perform all of the
provisions of this Lease, unless this Lease is otherwise terminated pursuant to
its terms. If any mortgagee, trustee or ground Lessor shall elect to have this
Lease and any Options granted hereby prior to the lien of its mortgage, deed of
trust or ground lease, and shall give written notice thereof to Lessee, this
Lease and such Options shall be deemed prior to such mortgage, deed of trust or
ground lease, whether this Lease or such Options are dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination, or to make this Lease or any Option granted herein
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be, Lessee's failure to execute such documents within ten (10) days after
written demand shall constitute a material default by Lessee hereunder without
further notice to Lessee or, at Lessor's option, Lessee shall execute such
documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does hereby
make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and
in Lessee's name, place and stead, to execute such documents in accordance with
this paragraph 28(b).
31. Attorney's Fees.
31.1 If either party or the broker(s) named herein bring on action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to his reasonable
attorneys' fees to be paid by the losing party as fixed by the court in the
same or a separate suit, and whether or not such action is pursued to decision
or judgment. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
31.2 The attorneys' fee award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all attorneys'
fees reasonably incurred in good faith.
31.3 Lessor shall be entitled to reasonable attorneys' fees and all
other costs and expense incurred in the preparation and service of notices of
fault and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such default.
32. LESSOR'S ACCESS.
32.1 Lessor and Lessor's agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same, performing
the services required of Lessor, showing the same to prospective purchasers,
lenders, or Lessees, taking such safety measures, erecting such scaffolding or
other necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project Lessor, may
reasonably deemed necessary or desirable and the erecting, using and maintaining
of utilities, services, pipes and conduits through the premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises. Lessor may at any time place on or about the Premises or the Building
any ordinary "For Sale" signs and Lessor may at any time during the last 120
days of the term hereof place on or about the Premises any ordinary "For Lease"
32.2 All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for the
32.3 Lessor shall have the right to retain keys to the Premises and to
unlock all doors in or upon the Premises other than to file, vaults and safes,
in the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forceable or lawful entry or
detainer of the Premises or an eviction. Lessee waives any charges for damages
or injuries or interference with Lessee's property business in connection
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
without first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated exercise
any standard of reasonableness in determining whether to grant such consent. The
holding of any auction on the Premises or Common Areas in violation of this
paragraph shall constitute a material default of this Lease.
34. SIGNS. Lessee shall be entitled to install an illuminated sign, at its sole
cost and expense, on the exterior of the Building provided that (a) the size,
design, materials and color are all reasonably acceptable to Lessor and are
consistent with exterior signage found on other first class office buildings;
and (b) any such signage complies with all applicable governmental rules,
regulations and restrictions. Lessee shall not place any other sign upon the
exterior of the Premises or the Office Building Project without Lessor's prior
written consent. Under no circumstances shall Lessee place a sign on any roof of
the Office Building Project.
35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or any, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. CONSENTS. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in this Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder. Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Office Building Project.
39.1 DEFINITION. As used in this paragraph the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessees has on other
property of Lessor; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Office Building Project or other
property of Lessor or the right of first offer to lease other space within the
Office Building Project or other property of Lessor; (3) the right or option to
purchase the Premises or the Office Building Project, or the right of first
refusal to purchase the Premises or the Office Building Project or the right of
first offer to purchase the Premises or the Office Building Project, or the
right or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 OPTIONS PERSONAL. Each Option granted to Lessee in this Lease is
personal to the original Lessee and may be exercised only by the original Lessee
while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than Lessee; provided, however, that an Option may be
exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of
this Lease. The Options, if any, herein granted to Lessee are not assignable
separate and apart from this Lease, nor may any Option be separated from this
Lease in any manner, either by reservation or otherwise.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i) during
the time commencing from the date Lessor gives to Lome a notice of default
pursuant to paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance
alleged in said notice of default is cured, or (ii) during the period of time
commencing on the day after a monetary obligation to Lessor is due from Lessee
and unpaid (without any necessity for notice thereof to Lessee) and continuing
until the obligation is paid, or (iii) in the event that Lessor has given to
Lessee three or more notices of default under paragraph 13.1(c), or paragraph
13.1(d), whether or not the defaults are cured, during the 12 month period of
time immediately prior to the time that Lessee attempts to exercise the subject
Option, (iv) if Lessee has committed any non-curable breach, including without
limitation those described in paragraph 13.1(b), or is otherwise in default of
any of the terms, covenants or conditions of this Lease.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of paragraph 13.1(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation at Lessee
for a period of thirty (30) days after such obligation becomes due without any
necessity of Lessor to give notice thereof to Lessee), or Lessee fails to
commence to cure a default specified in paragraph 13.1(d) within thirty (30)
days after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, (iii)
Lessor gives to Lessee three or more notices of default under paragraph 13.1(c),
or paragraph 13.1(d), whether or not the defaults are cured, or (iv) if Lessee
committed any non-curable breach, including without limitation those described
in paragraph 13.1(b), or is otherwise in default of any of the terms, covenants
and conditions of this Lease.
40. SECURITY MEASURES - LESSOR'S RESERVATIONS.
40.1 Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole
discretion, from providing security protection for the Office Building Project
or any part thereof, in which event the cost thereof shall be included within
definition of Operating Expenses, as set forth in paragraph 4.2(b).
40.2 Lessor shall have the following rights:
(a) To change the name, address or title of the Office
Building Project or building in which the Premises are located upon not less
than 90 days prior written notice;
(b) To, all Lessee's expense, provide and install Building
standard graphics on the door of the Premises and such portions of the Common
Areas as Lessor shall reasonably deem appropriate;
(c) To permit any Lessee the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights expressly
(d) To place such signs, notices or displays as Lessor
reasonably deems necessary or advisable upon the roof, exterior of the buildings
or Office Building Project or on pole signs in the Common Areas.
40.3 Lessee shall not:
(a) Use a representation (photographic or otherwise) of the
Building or the Office Building Project or their name(s) in connection with
(b) Suffer or permit anyone, except in emergency, to go upon
the roof of the Building.
41.1 Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and are to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
41.2 The obstruction of Lessee's view, air, or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon
42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
43. AUTHORITY. It Lessee is a corporation, trust, or general or limited
partnership, Lessee, and each individual executing this Lease on behalf of such
entity, represent and warrant that such individual is duly authorized to execute
and deliver this Lease on behalf of said entity. If Lessee is a corporation,
trust or partnership, Lessee shall, within thirty (30) days after execution of
this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
44. CONFLICT. Any conflict between the printed provisions, Exhibits or Addenda
of this Lease and the typewritten provisions, it any, shall be controlled by the
typewritten or handwritten provisions.
45. NO OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully executed
by both parties.
46. LENDER MODIFICATION. Lessee agrees to make such reasonable modifications to
this Lease as may be reasonably required by an institutional lender in
connection with the obtaining of normal financing or refinancing of the Office
47. MULTIPLE PARTIES. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein,
obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee,
48. WORK LETTER. This Lease is supplement by that certain Work Letter of even
date executed by Lessor and Lessee attached hereto as Exhibit C incorporated
herein by this reference.
49. HAZARDOUS WASTE AND MATERIALS. Lessee shall not engage in any activity on or
about the Building or the Premises that violates any Environmental Law and shall
promptly, at Lessee's sole cost and expense, take all investigatory and/or
remedial action required or ordered by any governmental agency or Environmental
Law for cleanup and removal of any contamination involving any Hazardous
Materials created or caused directly or indirectly by Lessee. All costs of the
cleanup and removal of contamination within the Office Building Project created
or caused directly or indirectly by Lessor shall be paid for by Lessor. No cost
of cleanup and removal of contamination by Lessor, Lessee or any third party
shall be included as an Operating Expense. The term "Environmental Law" shall
mean any federal, state or local law, statute, ordinance or regulation
pertaining to health, industrial hygiene or the environmental conditions on,
under or about the Premises, including without limitation (i) the Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLAR"), 42
U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and Recovery Act of
1976 ("RCRA") , 42 U.S.C. Sections 6901 et seq.; (iv) the Safe Drinking Water &
Toxic Enforcement Act of 1986, California Health & Safety Code Section 25249.5
et seq.; (v) The Federal Water Pollution Control Act, 33 U.S.C. Sections 1317 et
seq.; (vi) California Water Code Section 1300 et seq.; and (vii) California
Civil Code Section 3479 et seq., as such laws are amended and supplemented and
the regulations and administrative codes applicable thereto. The term "Hazardous
Materials" includes, without limitation, any material or substance which is (i)
defined or listed as a "hazardous waste", "extremely hazardous waste",
"restrictive hazardous waste" or "hazardous substance or considered a waste,
condition or pollution or nuisance under the Environmental Law; (ii) petroleum
or a petroleum product or fraction thereof; (iii) asbestos; and/or (iv)
substances known by the State of California to cause cancer and/or reproductive
toxicity. It is the intent of the parties hereto to construe the term "hazardous
materials" and "Environmental Laws" in their broadest sense. Lessee shall
provide all notices required pursuant to the Safe Drinking Water and Toxic
Enforcement Act of 1986, California Health & Safety Code Section 25249.5 et seq.
Lessee shall provide prompt written notice to Lessor of the existence of
hazardous substances on the Building or the Premises and all notices of
violation of the Environmental Laws received by Lessee.
50. GUARANTEES. Lessee's performance under this Lease shall be guaranteed by the
following individuals: Dr. Y.L. Wang, N. Fred Brannock and Vincent S. Verneuil.
Guarantees shall be executed in the form of Guaranty of Lease attached hereto as
51. EXHIBITS. The following exhibits are attached hereto and made a part hereof:
Exhibit "A" - Floor Plans Depicting Premises
Exhibit "A-1" - Legal Description of Premises
Exhibit "B" - Rules and Regulations
Exhibit "C" - Work Letter
Exhibit "D" - Guaranty of Lease
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THE
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR
SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL NO REPRESENTATION
OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS
OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING
THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF
THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES
OF THIS LEASE.
A PARTNERS, a joint venture
The Betty L. Hutton Company, a SIMULATION SCIENCES, INC.
- -------------------------------------------- ----------------------------------------
California corporation general partner a California corporation
By: /s/ THOMAS C. PARKER By: /s/ N. FRED BRANNOCK
Its: PRESIDENT Its: VICE PRESIDENT
- -------------------------------------------- -------------------------------------
Executed at The Betty L. Hutton Company Executed at Simulation Sciences, Inc.
September 28, 1992 on September 24, 1992
- ------------------------------------------ -------------------------------
Address: 2524 N. Santiago Boulevard Address: 1051 W. Bastanchury Rd.
Orange, CA 92667 Fullerton, CA
4 American Industrial Real Estate Association
FULL SERVICE - NET
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are
utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION, 345 So. Figueroa St., M-1, Los Angeles, CA 90071, (212)
FLOOR PLANS DEPICTING PREMISES
LEGAL DESCRIPTION OF PREMISES
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
ORANGE, CITY OF BREA, DESCRIBED AS FOLLOWS:
PARCEL 1, AS SHOWN ON A MAP FILED IN BOOK 188, PAGES 34 TO 36 INCLUSIVE
OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT ALL MATERIALS, OIL, NATURAL GAS AND OTHER HYDROCARBON
SUBSTANCES, BUT WITHOUT THE RIGHT OF SURFACE ENTRY UPON THE TOP 500 FEET
THEREOF, AS RESERVED IN THE DEED FROM TIDEWATER OIL COMPANY, A CORPORATION,
RECORDED JULY 31, 1993 IN BOOK 6655, PAGE 397, OFFICIAL RECORDS.
RULES AND REGULATIONS FOR
STANDARD OFFICE LEASE
Dated , 1992
By and Between BREA PARTNERS AND SIMULATION SCIENCES INC.
1. Lessee shall not suffer or permit the obstruction of any Common Areas,
including driveway and walkways and stairways.
2. Lessor reserves the right to refuse access to any persons Lessor in good
faith judges to be a threat to the safety, reputation, or property of the Office
Building Project and its occupants.
3. Lessee shall not make or permit any noise or odors that annoy or interfere
with other issues or persons having business within the Office Building Project.
4. Lessee shall not keep animals or birds within the Office Building Project,
and shall not bring bicycles, motorcycles or other vehicles into are not
designated as authorized for same.
5. Lessee shall not make, suffer or permit lifter except in appropriate
receptacles for that purpose.
6. Lessee shall not alter any lock or install new or additional locks or bolls.
7. Lessee shalt be responsible for the inappropriate use of any toilet rooms.
plumbing or other utilities. No foreign substances of any kind are to be
8. Lessee shall not deface the wells, partitions or other surfaces of the
Premises or Office Building Project.
9. Lessee shall not suffer or permit any thing in or around the Premises or
Building that causes excessive vibration or floor loading in any part of the
Office Building Project.
10. Furniture, significant freight and equipment shall be moved into or out of
the building only with the Lessor's knowledge and consent, and subject to such
reasonable limitations, techniques and timing, as may be designated by Lessor.
Lessee shall be responsible for any damage to the Office Building Project
arising from any such activity.
11 Lessee shall not employ any service or contractor for services or work to be
performed in the Building. except as approved by Lessor.
12. Lessor reserves the right lo close and lock the Building on Saturdays,
Sundays and legal holidays. and on other days between the hours of 6:00 PM. and
8:00 A.M. of the following day. If Lessee uses the Premises during such periods,
Lessee shall be responsible for securely locking any doors it may have opened
13. Lessee shall return all keys at the termination of its tenancy and shall be
responsible for the cost of replacing any keys that are lost.
14. NO window coverings, shades or awnings shall be installed or used by Lessee
on the exterior of the Building.
15. No Lessee, employee or invites shall go upon the roof of the Building.
16. Lessee shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Lessor or by applicable
governmental agencies as non-smoking areas.
17. Lessee shall not use any method of heating or air conditioning other than as
provided by Lessor.
18. Lessee shall not install, maintain or operate any vending machines upon the
Premises without Lessor's written Consent.
19. The Premises shall not be used for lodging or manufacturing, cooking or food
preparation, except for kitchen areas incidental to the primary office use.
20. Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.
21. Lessor reserves the right to waive any one of these rules or regulations,
and/or as to any particular Lome, and any such waiver shall not constitute a
waiver of any other rule or regulation or any subsequent application thereof to
22. Lessee assumes all risks from them or vandalism and agrees to keep its
Premises locked as may be required.
23. Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Lessee
agrees to abide by these and such rules and regulations.
1. Parking areas shall be used only for parking by vehicles no longer than full
size, passenger automobiles herein called "Permitted Size Vehicles". Vehicles
other than Permitted Size Vehicles are herein referred to as "Oversized
2. Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employee, suppliers, shippers, customers, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.
3. Parking stickers or identification devices shall be the property of Lessor
and be returned to Lessor by the holder thereof upon termination of the holder's
parking privileges. Lessee will pay such replacement charge as is reasonably
established by Lessor for the loss of such devices.
4. Lessor reserves the right to refuse the sale of monthly identification
devices to any person or entity that willfully refuses to comply with the
applicable rules. regulations, laws and/or agreements.
5. Users of the parking area will obey all posted signs and park only in the
areas designated for vehicle parking.
6. Unless otherwise instructed, every person using the parking area is required
to park and lock his own vehicle. Lessor will not be responsible for any damage
to vehicles, injury to persons or loss of property, all of which risks are
assumed by the party using the parking area.
7. Validation, if established, will be permissible only by such method or
methods as Lessor and/or its licensee may establish at rates generally
applicable to visitor parking.
8. The maintenance, washing, waiting or cleaning of vehicles in the parking
structure or Common Areas is prohibited.
9. Lessee shall be responsible for seeing that all of its employees, agents and
invitees comply with the applicable parking rules and regulations as it may deem
necessary for the proper operation of the parking area.
10. Lessor reserves the right to modify these rules and/or adopt such other
reasonable and non-discriminatory rules and regulations as it may deem necessary
for the proper operation of the parking area.
11. Such parking use as is herein provided is intended merely as a license only
and no bailment is intended or shall be created hereby
This Agreement supplements the Lease dated September 1, 1992, executed
concurrently herewith by BREA PARTNERS, a joint venture, as Lessor and
SIMULATION SCIENCES INC., a California corporation, as Lessee. Capitalized terms
used in this Work Letter that are defined in the Lease shall have the same
definition as that provided for in the Lease.
1. Within sixty (60) days of the date of this Lease, Lessee shall
submit to Lessor's architect two (2) sets of working plans and specifications
prepared by Lessee's licensed architect, at Lessee's expense, setting forth the
improvements (the "Interior Improvements") which Lessee desires to have made to
the interior of the First Floor Premises and the Second Floor Premises. The
Interior Improvements shall include, without limitation, all utility
installations, partitions, heating, ventilation and air conditioning ducts and
outlets, telephone and electrical wall outlets, dropped ceilings, light
fixtures, floor coverings, window coverings, dry wall on perimeter walls, doors
and frames, fire sprinkler system, hardware and other fixtures reasonably
required for Lessee's use and occupancy of the Premises for office purposes.
Lessee represents that said plans and specifications for the Interior
Improvements shall comply with all applicable building laws and all laws,
ordinances, orders, rules, regulations and requirements of all governmental
authorities having jurisdiction thereof. Lessor agrees to indicate its approval
or disapproval of the plans and specifications for the Interior improvements
within ten (10) days of its architect's receipt of the same and further agrees
not to unreasonably withhold its approval. Such approval by Lessor shall not be
deemed to constitute approval as to compliance of such plans and specifications
with governmental laws, ordinances, orders, rules, regulations and requirements
or as to structural integrity or suitability for Lessee's intended purposes. In
the event that Lessor disapproves of the said plans and specifications, Lessor
shall provide Lessee with a specification of the modifications required by
Lessor for Lessor's approval, within said ten (10) day period, and Lessee shall
cause the plans and specifications to be appropriately modified, and resubmit
the same to Lessor within ten (10) days of its receipt of the required
modifications, for approval by Lessor. The provisions of this paragraph with
respect to notice, time for and method of performance shall also apply to any
revised plans and specifications. Neither Lessor nor Lessee shall act
arbitrarily or unreasonably in connection with the approval and/or revision of
the said plans and specifications.
2. Upon approval of the plans and specifications for the Interior
Improvements, Lessor agrees to obtain at least two (2) bids from reputable
general contractors for the construction of the interior improvements, unless
Lessee approves of a negotiated bid, which approval shall not unreasonable be
withheld. Lessee shall have the right, for a period of fifteen (15) days
following the approval of the plans and specifications for the Interior
Improvements, to suggest up to two (2) additional general contractors to be
added to Lessor's bid list, by giving written notice of such contractors to
Lessor within said fifteen (15) day period. Any such general contractor
suggested by Lessee shall be added to Lessor's bid list, provided that the
contractor is a reputable contractor with a bonding capacity sufficient for the
proposed work of improvement. Except for good cause, Lessor shall award the
contract to the low bidder, pursuant to a construction contract, in a form
approved by Lessor, which contract shall require the contractor to provide a
standard performance labor and material bond in a penal sum equal to the
contract sum. Upon request from Lessor, Lessee shall provide copies of the
approved plans and specifications sufficient for bidding and construction
3. In the event that the "costs of construction", as defined
hereinbelow, exceed or will exceed the sum of EIGHT HUNDRED THOUSAND DOLLARS
($800,000.00), Lessee agrees to pay to Lessor a sum in cash equal to such excess
amount as is hereinafter provided. The "costs of construction" shall include
costs for all of the following items:
(a) All sums paid or to be paid by Lessor to the general
contractor selected pursuant to Paragraph 3 above for the construction
of the Interior improvements;
(b) Fees, permits, licenses, inspections and certificates,
including, without limitation, building and plan check fees required in
connection with the construction of the Interior Improvements by any
governmental authority, not included in (a) above;
(c) Changes in the approved plans and specifications of the
Interior Improvements if requested by either party and approved by the
other party, or required by governmental authorities or to conform to
the drawings and specifications described in the attached Exhibit "1",
including architect's fees and additional costs resulting from change
(d) Architect's fees incurred by Lessor in connection with the
review of the plans and specifications for and the supervision of
construction of the interior improvements; and
(e) A sum equal to Lessee's architectural fees for the
preparation of the plans and specifications for the Interior
Improvements and copies of plans and specifications provided for
bidding and construction purposes, which sum shall be paid to Lessee or
to Lessee's architect upon the commencement of the construction of the
Interior Improvements and receipt from Lessee of reasonable supportive
evidence of the amount of such costs and, unless payment is made to
Lessee's architect, of payment thereof by Lessee, Lessor may require an
unconditional final mechanic's lien release from Lessee's architect as
a condition to any such payment.
Prior to letting the construction contract for the Interior Improvements
pursuant to Paragraph 3 above, Lessor may, in the event that the costs of
construction described in (d) above theretofore incurred by Lessor, plus those
to be incurred or reasonably estimated to be incurred under (a), (b) and (e)
above exceed EIGHT HUNDRED THOUSAND DOLLARS ($800,000.00), require that Lessee
pay to Lessor a sum equal to the amount of such excess. Any additional excess of
the costs of construction over said sum resulting from Lessor's incurring or
having to incur other costs of construction shall be paid to Lessor upon demand.
4. If Lessee shall request any change, addition or alteration in
approved plans and specifications for the Interior Improvements prior to the
completion of the Interior improvements and such change, addition or alteration
is approved by Lessor (which approval shall not be unreasonably withheld),
Lessor shall promptly give Lessee a written estimate of the maximum cost of
engineering and design services to prepare working drawings in accordance with
such request. If Lessee approves such estimate in writing, Lessor shall have
such working drawings prepared, at Lessee's expense, as provided in Paragraph 3
above. Promptly upon completion of such working drawings, Lessor shall notify
Lessee in writing of the cost which will be chargeable to Lessee by reason of
such change, addition or alteration. Lessee shall within three (3) business days
notify Lessor in writing
whether it desires to proceed with such change, addition or alteration. Lessee
shall be deemed to have elected not to proceed with such change, addition or
alteration if such written authorization is not received by Lessor within such
three (3) day period. If Lessee elects to proceed with such change, alteration
or addition, Lessee notice of such election shall be accompanied by the payment
of any sums payable under Paragraph 3 above by reason of such change, alteration
or addition. Lessor shall not be obligated to postpone or delay work on the
Interior Improvements by reason of any such request by Lessee for a change,
alteration or addition to the, work, but Lessor may do so, at Lessor's option,
while such request is being processed for approval, if Lessee so requests, but,
in such event, Lessee shall be charged with any damages incurred by Lessor
resulting from such delay, including, without limitation, rental loss resulting
from such delay.
5. Following the award of the construction contract for the Interior
Improvements, Lessor shall commence and shall thereafter diligently prosecute to
completion the construction of the Interior Improvements pursuant to the
approved plans and specifications. Lessor's commencement and completion of such
construction shall be subject to delays resulting from the acts of Lessee, Acts
of God, action of the elements, war, invasion, insurrection, acts of a public
enemy, riot, mob violence, civil commotion, sabotage, labor disputes, inability
to procure or general shortage of labor, materials, facilities, equipment or
supplies on the open market, failure of or delay in transportation, laws, rules,
regulations or orders of governmental or military authorities, or any other
causes beyond the reasonable control of Lessor, whether similar or dissimilar to
the foregoing, financial liability excepted.
6. If the substantial completion of the Interior Improvements is
delayed by Lessee's failure to comply with the foregoing provisions
(notwithstanding Lessor's election to extend any time for the performance of any
act by Lessee), or by changes to the Interior Improvements ordered by Lessee,
then Lessee shall be chargeable with any loss incurred by Lessor resulting from
such delay, including, without limitation, rental loss resulting from a delay in
the commencement of the term of this Lease. The work to be done by Lessor
pursuant to this Work Letter shall be deemed to have been substantially
completed when the Interior Improvements and the public areas of the Building
reasonably required for Lessee's use of Lessee's Premises are suitable for
occupancy for their intended purposes, notwithstanding that minor corrections or
additions remain to be completed which will not interfere with the reasonable
use and occupancy of Lessee's Premises.
7. Lessor shall notify Lessee, upon Lessee's request, of the then
current estimated completion date for Lessor's construction of any Interior
improvements within the Premises. Lessor shall notify Lessee, immediately prior
to substantial completion of the Interior Improvements to arrange a walk-through
by Lessee to identify any additional work (hereinafter "Punchlist Items") which
may need to be completed for final completion of the Interior Improvements in
accordance with the approved plans. Lessee may also notify Lessor up to thirty
(30) days following the Commencement Date for the affected portion of the
Premises, of any additional Punchlist Items. Lessor shall cause the contractor
to promptly complete all Punchlist Items timely identified by Lessee.
Thereafter, Lessor shall repair, at its expense, only those defects, if any, in
the Building or the Premises which constitute latent defects.
8. If the costs of construction of the initial Interior Improvements
are less than EIGHT HUNDRED THOUSAND DOLLARS ($800,000.00), then Lessor agrees
to make the balance of such allowance available to Lessee, from time to time, to
pay the costs of construction of additional Interior Improvements to the
in general accordance with the process outlined in this Work Letter. The Base
Rent shall be adjusted in accordance with Section 1.6 following each subsequent
expenditure by Lessor pursuant to this Paragraph 8.
IN WITNESS WHEREOF, the undersigned have executed this Work Letter
concurrently with the execution of the said Lease.
SIMULATION SCIENCES INC., BREA PARTNERS,
a California corporation a joint venture
By: /s/ N. Fred Brannock By: The Betty L. Hutton Company
------------------------- a California corporation,
Its: Vice President general partner
By: By: /s/ Thomas C. Parke
Its: Its: General Partner, President
DRAWINGS AND SPECIFICATIONS
[To be attached]
GUARANTY OF LEASE
THIS GUARANTY OF LEASE (this "Guaranty") dated for reference purposes
as of September _, 1992, is entered into by DR. Y.L. WANG, N. FRED BRANNOCK and
VINCENT S. VERNEUIL (collectively "Guarantor") in favor of BREA PARTNERS, a
joint venture ("Lessor"), with reference to the following facts:
A. Lessor and Simulation Sciences Inc., a California corporation
("Lessee") have or will be entering into that certain Lease of even date
herewith ("Lease") wherein Lessor will lease to Lessee those certain premises in
the City of Brea, County of Orange, State of California, commonly known as 601
South Valencia Avenue, Suites 100, 109, 208, 250 and 295, Brea, California
B. Lessor requires as a condition to its execution of the Lease that
Guarantor guarantees the full performance of the obligations of Lessee under the
Lease, and Guarantor acknowledges that Lessor would not execute the Lease if
Guarantor did not execute and deliver to Lessor this Guaranty.
C. Guarantor has a financial interest in Lessee and is desirous that
Lessor enter into the Lease with Lessee.
NOW, THEREFORE, in consideration of the execution by Lessor of the
Lease, the performance of the terms thereof by Lessor, the reliance of Lessor in
this Guaranty, and as a material inducement to Lessor to execute the Lease,
Guarantor does hereby, jointly and severally, independently of the obligations
of Lessee, unconditionally and irrevocably guarantee the prompt performance by
Lessee of each and every term, condition and covenant of the Lease to be
performed by Lessee, including but not limited to, the prompt payment of all
rentals and other sums payable by Lessee under the Lease.
Guarantor further agrees as follows:
1. This is a continuing guaranty which shall remain in effect
throughout the term of the Lease, including the period of any renewals,
extensions or holding over, except as otherwise specifically provided in
Paragraph 9 below. This Guaranty shall continue in favor of Lessor
notwithstanding any extension, modification, or alteration of the Lease entered
into by and between Lessor and Lessee, or their successors or assigns, or
notwithstanding any assignment of the Lease, with or without the consent of
Lessor, and no extension, modification, alteration or assignment of the Lease
shall in any manner release or discharge Guarantor hereunder. Guarantor
authorizes Lessor, without notice or demand, from time to time, in its absolute
discretion, and without prejudice to or in any way affecting, limiting or
lessening the liability of Guarantor hereunder, to (a) modify, amend,
supplement, or renew the Lease even where such action shall increase the
liability of Guarantor hereunder; (b) compromise, grant extensions of time or
other indulgences, accelerate, modify, discharge, release any party or parties,
or otherwise change the time for payment of any rents or other sum due by the
terms of the Lease, or any of the other obligations of Lessee as provided
therein, (c) take and hold security for the performance of the Lease or this
Guaranty, and exchange, enforce, waive and release any such security; and (d)
apply such security and direct the order of manner of sale thereof as Lessor in
its discretion may determine. This Guaranty shall not be released, modified or
affected by the failure or delay on the part of Lessor to enforce any of the
rights or remedies of the Lessor under the Lease, whether pursuant to the terms
thereof or at law or in equity.
2. Guarantor waives (a) notice of any demand by Lessor; (b) any notice
of default by Lessee in the payment of rent or other sums under the Lease or in
the performance of any other obligations contained or reserved in the Lease; (c)
all presentments, demands for performance, notices of non-performance, protests,
notices of protest, notices of dishonor, notice of sales; (d) notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness; and (e) all right to assert or plead any statute of
limitations as to or relating to this Guaranty and the Lease.
3. The liability of Guarantor under this Guaranty shall be primary.
Guarantor waives any right to require Lessor, in any right of action which may
accrue to Lessor under the Lease, or otherwise, to (a) proceed against Lessee,
its successor, assignee or subtenant; (b) proceed against or exhaust any
security held from Lessee, its successor, assignee or subtenant; or (c) pursue
any other remedy in Lessor's power whatsoever.
4. Separate action or actions may be brought and prosecuted against
Guarantor whether action is brought and prosecuted against Lessee or any
successor or assignee of Lessee, or whether Lessee, or any successor or assignee
be joined in any such action or actions. Guarantor may be joined in any action
with any of the foregoing parties.
5. This Guaranty will continue unchanged by any bankruptcy,
reorganization or insolvency of Lessee or any successor assignee thereof or by
any disaffirmance or abandonment by a trustee of Lessee. Guarantor waives any
defense arising by reason of any disability or other defense of Lessee or by
reason of the cessation from any cause whatsoever of the liability of Lessee.
6. Until all indebtedness or other obligations of Lessee to Lessor
shall have been paid in full, Guarantor shall have no right of subrogation, and
waives any right to enforce any remedy which Lessor now has or may hereafter
have against Lessee, and waives any benefit of, and any right to participate in
any security now or hereafter held by Lessor.
7. The terms and provisions of this Guaranty shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
herein named. Lessor may without notice assign this Guaranty in whole or in
part, and no assignment or transfer of the Lease shall operate to extinguish or
diminish the liability of Guarantor hereunder. Upon any transfer or sale of the
subject real property, or the assignment of the Lease, or upon the transfer of
the Lease by will or inheritance or otherwise by law, this Guaranty shall pass
to and may be enforced by any such transferee, it being the intention of Lessor
that this Guaranty has a marked effect on the future value of the Lease.
8. Within ten (10) days after request therefor by Lessor, or in the
event that upon any sale, assignment or hypothecation of the Premises or the
land thereunder by Lessor, an estoppel certificate and/or financial statement
shall be requested of Guarantor, Guarantor agrees to deliver such financial
statement and such
estoppel certificate (in recordable form if required by Lessor) addressed to any
such proposed mortgagee or purchaser and/or to the Lessor certifying the
requested information, including among other things the date of commencement and
termination of the Lease, the amounts of security deposits thereunder, if any,
and that the Lease and this Guaranty are in full force and effect (if such be
the case) and that there are no defaults, off sets or defaults of Lessor or
Lessee, or noting such defaults, of sets or defaults as actually exist.
Guarantor shall be liable for any loss or liability resulting from any incorrect
information certified, and such mortgagee and purchaser shall have the right to
rely on such estoppel certificate and financial statement.
9. Notwithstanding anything to the contrary contained in this Guaranty,
the maximum liability of Guarantor under this Guaranty (exclusive of costs of
collection, including, without limitation, attorneys' fees) shall be the amount
("Maximum Liability") by which the "Unreturned Contributed Capital" invested by
the Betty L. Hutton Company as a joint venture partner of Lessor exceeds
$3,100,000.00 on the date when Lessee has failed to cure a material default
under the Lease following receipt of written notice of such default from Lessor
and the lapse of the applicable grace period, if any. Guarantor's liability for
payment of attorneys' fees and costs of collecting any amounts owing under this
Guaranty shall not be limited by this provision.
10. If Lessee is a corporation, it is not necessary for Lessor to
inquire into the corporate powers of Lessee or the officers, directors or agents
acting or purporting to act on Lessee's behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
11. Guarantor agrees to pay attorneys' fees and all other costs and
expenses which may be incurred by Lessor in the enforcement of or attempt to
enforce this Guaranty or the obligations guaranteed hereby, whether by action at
law or otherwise. If Lessor shall retain an attorney as a result of a default
hereunder or under the Lease, even if legal proceedings are not commenced,
Lessor shall be entitled to recover its reasonable attorneys, fees and all other
costs and expenses from Guarantor.
12. Guarantor hereby agrees that the State of California is the proper
jurisdiction for litigation of any matters relating to said Lease and Guaranty,
and service mailed to the address of Lessee set forth in said Lease shall be
adequate service for such litigation.
13. All married persons who sign as Guarantor hereby expressly agree
recourse may be had against his or her separate property for all obligations
under this Guaranty.
14. In all cases where there is more than one (1) Guarantor, the word
Guarantor shall mean all and any one or more of them. If there is more than one
Guarantor, the liability of each Guarantor under this Guaranty is joint and
several. , In such event Lessor may in its sole and absolute discretion proceed
against any one or more Guarantor without any obligation to proceed against all
IN WITNESS WHEREOF, Guarantor has caused this Guaranty of Lease to be
executed as of the date set forth on Page 1 of this Guaranty.
DR. Y. L. WANG
N. FRED BRANNOCK
VINCENT S. VERNEUIL