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Home My WebLink About2/20/2002 - STAFF REPORTS (9) DATE: February 20, 2002 TO: City Council FROM: C. Lee Weigel, Chief of Police APPROVAL OF A LEASE FOR A POLICE OFFICE RECOMMENDATION It is recommended that the City Council approve a lease agreement with A&J Palmas Limited Partnership for a police office located at 559 S. Palm Canyon. This office space is in the building directly behind the Warehouse store. SUMMARY The proposal is to lease an office of 846 square feet located at 559 S. Palm Canyon. The property owner has agreed to lease this office space to the Police Department for no cost for one year. The lease can be extended at the end of that time. BACKGROUND The police department does not have an office located in the south part of Palm Springs. This office will be a continuation of the department's community policing efforts. This office will be used by department personnel to write reports, interview victims, witnesses and suspects. The officers would also use this location to conduct meetings with merchants and community members. This office will allow the police department to have an increased "presence" in this busy commercial area. Other City employees can use this office space to conduct City business. FISCAL IMPACT There is no cost to the City for the lease of the office space. There will be some costs for office furniture, signage and new locks. The total estimated cost of these items is $2000. The account number is 3010-42900. GLEE WEIGEL ChietofPdic Approved: ✓' City Manager Attachments: REVIEWED BY DEn OF FINANCE 1. Minute Order 2. Lease Agreement L OR STANDARD MULTI-TENANT OFFICE LEASE - GROSS AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION 1. Basic Provisions("Basic ProvisloW). 1.1 Parties:This Lease("Lease"),dated for reference purposes only December 14, 2001 ,Is made byandbetween A&J Palmas Limited Partnership ("Lessor") and Palm_Springs Police Department ("Lessee"), (collectively the"Partin",or Individually a"Party"). 1.2(a) Premises: That certain portion of the Project(as defined below),known as Suite Numbem(s)B-105 , first floor(s),consisling of approxlmately 846 rentable square feel and approximately 846 useable square feel("Premises'). The Premises are located at:559 S. Palm Canyon Drive in the City of Palm Springs ,County of Riverside ,State of Califomia with zip code 922 64-74 68. In addition to Lessee's rights to use and occupy the Premises as hereinafter specified,Lessee shall have non-exclusive rights to the Common Areas(as defined In Paragraph 2.7 below)as hereinafter specified,but shall not have any rights to the roof,the exterior walls,the area above the dropped callings,or the utility raceways of the bullding containing the Premises("Building") or to any other buildings In the Project. The Premises,the Building,the Common Areas,the land upon which they am located,along with all other buildings and Improvements thereon, are herein collectively referred to as the"Project." The Project consists of approximately 91.000 rentable square feet. (See also Paragraph 2) 1.2(b) Parking:all unreserved and 0 reserved vehicle parking spaces at a monthly cost of$n/a par unreserved spew and$n/a perreservad space. (See Paragraph 2.6) 1.3 ban:one (1) years and zero (0) months("Original Term')commencing January 1, 2002 ("Commencement Date')and ending December 31, 2002 ("Expiration Date"). (See also Paragraph 3) 1.4 Early Possesslon:upon execution of lease by Lessor ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3) 1.5 Bass Rent:$0 per month("Bass Rent)',payable on the n/a day of each month commencing n/a .(See also Paragraph 4) ❑ If this box Is checked,there are provisions in this Lease for the Base Rent to be adjusted. 1.8 Lessees Share of Operating Expense Increase:n/a percent n a%)("Lessee's Share"). Lessee's Share has been calculated by dividing the approximate rentable square footage of the Premises by the total approximate square footage of the rentable space contained In the Project and shall not be subject to revision except In connection with an actual change In the size of the Premises or a change In the space available for lease In the Project. 1.7 Ban Rant and Other Monies Paid Upon Execution: (a) Base Rent:$n/a for the period n/a (b) Security Deposit:$n/a ("Security Deposit"). (See also Paragraph 5) (0) Parking: $-0- for the period (d) Other:$-0- for (a) Total Due Upon Execution of this Lease:$n/a 1.8 Agreed Use:police substation/office . (See also Paragraph 6) 1.9 Bass Year;Insuring Party. The Base Year Is Lessor Is the"Insuring Parry".(See also Paragraphs 4.2 and 8) 1.10 Real Estate Brokers: (Sea also Paragraph 15) (a)Representation: The following real estate brokers(the"Brokers")and brokerage relationships exist In this transaction(check applicable boxes): ❑ represents Lessor exclusively("Lessor's Broker"); ❑ represents Lessee exclusively("Lessee's Broker);or m CB Richard Ellis represents both Lessor and Lessee("Dual Agency"). (b)Payment to Brokers: Upon execution and delivery of this Lease by both Parties,Lessor shall pay to the Brokers the brokerage fee agreed to In a separate written agreement(or If there is no such agreement,the sum of or of the total Base Rent for the brokerage services rendered by the Brokers). 1.11 Guarantor. The obligations of the Lessee under this Lease shall be guaranteed by ("Guarantor"). (See also Paragraph 37) 1.12 Business Hours for the Building:: a.m.to p.m.,Mondays through Fridays(except Building Holidays) and a.m.to p.m.on Saturdays(except Building Holidays). "Building Holidays"shall mean the dates of observation of New Year's Day,President's Day,Momodal Day,Independence Day,Labor Day,Thanksgiving Day,Christmas Day,and 1.13 Lessor Supplied Services. Notwithstanding the provisions of Psmgmph 11.1,Lessor Is NOT obligated to provide the fallowing: m Janitorial services ❑ Elool lclty ❑ Other(specify): 1.14 Attachments. Attached hereto are the following,all of which constitute a part of this Lease: ❑ an Addendum consisting of Paragraphs through , ❑ a plot plan depicting the Premises; ❑ a current set of the Rules and Regulations; Initials Initials Page 1 of 12 //��// n © ('/1999-American Industrial Real Estate Association �. P FORM OF(34-9/99E ❑ aWork Letter, ❑ a janitorial schedule; ❑ other(specify): 2. Promises. 2.1 Letting. Lessor hereby leases to Lessee,and Lessee hereby leases from Lessor,the Premises,for the term,at the rental,and upon all of the terns,covenants and conditions set forth In this Lease. Unless otherwise provided herein,any statement of size set forth In this Lease,or that may have been used In calculating Rent.Is an approximation which the Parries agree Is reasonable and any payments based thereon are not subject to revlSlon whether or not the actual size Is more or less.Note:Lessee Is advised to verify the actual size prior to executing this Lease. 2.2 Condition. Lessor shall deliver the Premises to Lessee In a clean in ntllllon on the Commencement Date or the Early Possession Date, whichever first occurs("Start Date"), and warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems("HVAC'),and all other Items which the Lessor Is obligated to construct pursuant to the Work Letter attached hereto. If any, other than those constructed by Lessee,shall be In good operating condltlon on said date. 2.3 Compliance. Lessor warrants that the Improvements mmpdsing the Premises and the Common Areas comply with the building codes that were In effect at the time that each such Improvement,or portion thereof,was constructed,and also with all applicable laws,covenants or restrictions of record,regulations,and ordinances("Applicable Requirements")In effect on the Start Date. Said warranty does not apply to the use to which Lessee will put the Premises,modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee's use(sea Paragraph 50), or to any Alienations or Utility Installations(as defined in Paragraph 7.3(a))made or ID be made by Lessee. NOTE: Lessee Is responsible for determining whether or not the zoning and other Applicable Requirements are appropriate for Lessee's Intended use,and acknowledges that past uses of the Premises may no longer be slimed. If the Premises do not comply with said warranty,Lessor shall,except as otherwise provided,promptly after receipt of written notice from Lessee salting forth with specificity the nature and extent of such non-compliance,rectify the same. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Premises,the lamentation of any Hazardous Substance,or the reinforcement or other physical modification of the Premises("Capital Expenditure"),Lessor and Lessee shall allocate the coat of such work as follows: (a)Subject to Paragraph 2.3(e)below,If such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants In general,Lessee shell be fully responsible for the cast(hereof,provided,however that If such Capital Expenditure Is required during the last 2 years of this Lease and the cast thereof exceeds 6 months'Base Rent,Lessee may Instead terminate this Lease unless Lessor nolifes Lessee,In writing,within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cast thereof and the amount equal to 6 months'Base Rent. If Lessee elects termination,Lessee shall Immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a ternlnallDn date at least 90 days thereafter. Such termination date shell,however,In no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure. (b)If such Capital Expenditure Is not the result of the specific and unique use of the Premises by Lessee(such as,governmentally mandated seismic modifications),then Lessor and Lessee shall allocate the cost of such Capital Expenditure as follows: Lessor shall advance the funds necessary for such Capital Expenditure but Lessee shall be obligated to pay,each month during the remainder of the term of this Lease,on the data on which Base Rent Is due, an amount equal to the product of multiplying Lessee's share of the cost of such Capital Expenditure (the percentage specified In Paragraph 1.6 by a frecrien,the numerator of which Is one,and the denominator of which Is 144(is.1/144th of the cost per month). Lessee shall pay Interest on the unamortlzed balance of Lessees share at a nate that Is commamlally reasonable In the judgment of Lessor's accountants. Lessee may,however, prepay Its obligation at any time. Provlded,however,that If such Capital Expenditure Is required during the last 2 years of this Lease or If Lessor reasonably delennlnes that It Is not economically feasible to pay Its share thereof,Lessor shall have the option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, In writing,within 10 days after receipt of Lessor's termination notice that Lessee will pay for such Capital Expenditure.If Lessor does not elect to terminate,and falls to tender Its share of any such Capital Expenditure,Lessee may advance such funds and deduct same,with Interest,from Rent until Lessor's share of such costs have been fully paid. If Lessee Is unable to finance Lessors share,or if the balance of the Rent due and payable for the remainder of this Lease Is not sufficient to fully relmbume Lessee on an offset basis,Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor. (c)Notwithstanding the above,the provisions mnceming Capital Expenditures are Intended to apply only to nonvoluntary,unexpected, and new Applicable Requirements. If the Capital Expenditures are Instead triggered by Lessee as a result of an actual or proposed change In use,change in Intensity of use,or modification to the Premises then,and in that event,Lessee shall be fully responsible for the cost[hereof,and Lessee shall not have any right to terminate this Lease. 2.4 Acknowledgements. Lessee acknowledges that: (a)Lessee has been advised by Lessor end/or Brokers to satisfy Itself with respect to the condfigon of the Premises(Including but not limited to the elechical,HVAC and fire sprinkler systems,security,environmental aspects,and compliance with Applicable Requirements),and their suitability for Lessee's Intended use,(b)Lessee has made such Investigation as It deems necessary with reference to such matters and assumes all responsibility therefor as the same relate t0 Its occupancy of the Premises,and(c)neither Lessor,Lessor's agents,nor Brokers have made any oral or written representations or wamantles with respect to said matters other then as set forth In this Lease. In addition,Lesser acknowledges that:(I)Brokers have made no representations,promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises,and(II)it Is Lessors sale responsibility to Investigate the flnanclal capability and/or suitability of all proposed tenants. 2.5 Loses as Prior Owner/Occupant. The warranties made by Lessor In Paragraph 2 shall be of no force or effect If Immediately prior to the Start Dale,Leases was,the owner or occupant of the Premises. In such event,Lessee shall be responsible for any necessary carective work. 2.6 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 rent and use the number of parking spaces specified In Paragraph 1.2(b)at the rental rate applicable from time to time for monthly parking as set by Lessor and/or Its licensee, (a) If Lessee commits,pernits or allows any of the prohibited activities described In the Lease or the miss 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 scat shall be Immediately payable upon demand by Lessor. (b) The monthly rent per parking space specified In Paragraph 1.2(b)Is subject to change upon 30 days prior written notice to Lessee. The rent for the perking Is payable one month In advance prior to the first day of each calendar month. 2.7 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 Project and Interior utility raceways and Installations within the Premises that are provided and designated by the Lessor from time to time for the general nonexclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers,shippers, customers,mnlractom and Invitees,Including,but not limited To,common entrances,lobbies,corridors,stairwells,public restrooms,elevators,parking areas, loading and unloading areas,seen areas,roadways,walkways,driveways and landscaped areas. 2.0 Common Areas - Lessee's Rights. Lessor grants to Lessee, for the benent of Lessee and Its employees, suppllem. shippers, contractors,customers and Invitees,during the term of this Lease,the nonexclusive right to use,In common with others entitled to such use,the Common Areas as they exist from time to time,subject to any rights,powers,and privileges reserved by Lessor under the leans hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to Include the right to store any property,temporarily or permanently,In the Common Areas. Any such storage shall be periltted only by the prior written consent of Lessor or Lessors designated agent,which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor shall have the right,without notice,in addition to such other rights and remedies that It may have,to remove the property and charge(he cost to Lessee,which cost shall be Immediately payable upon demand by Lessor. 2.9 Common Areas-Rules and Regulations. Lessor or such other pamon(e)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 adopt,modify,amend and enforce reasonable miss and regulations("Rules and Regulations")for the management,safety,care,and cleanliness of the grounds,the parking and unloading of vehicles and the preservation of good order,as well as for the convenience of other occupants or tenants of the Building and the Project and their Invitees. The Lessee agrees to abide by and conform to all such Rules and Regulations,and to cause Its employees,suppliers,shippers,customers,contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the noncompliance with sold Rules and Regulations by other tenants of the Project. 2.10 Common Areas-Changes. Lessor shall have the right,In Lessors sale discretion,from time to time: (a) To make changes to The Common Areas,Including,without limitation,changes In the location,size,shape and number of the lobbies,windows,slahways,air shafts,elevators,escalators,restmoms,driveways,entrances,parking spaces,parking areas,loading and unloading areas, Ingress,egress,direction of traffic,landscaped areas,walkways and utility raceways; (b) To close temporadly any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains avallable; (c) To designate other land outside the boundaries of the Project to be a part of the Common Areas; Initials Initials Page 2 of 12 ©1999-American Industrial Real Estate Association � r/3 FORM OFG-1-9199E (d) To add additional buildings and Improvements to the Common Areas; (0) To use the Common Areas while engaged In making additional Improvements,repairs or alterations to the Project,or any potion thereon,and (f) To do and perform such other acts and make such other changes In,to or with respect to the Gammon Areas and Project as Lessor may,In the exercise of sound business Judgment,deem to be appropriate. 3. Tern. 3.1 Term. The Commencement Date,Expiration Data and Original Tenn of this Lease are as specified In Paragraph 1.3. 3.2 Early Possession. If Lessee totally or partially occuples the Premises prior to the Commencement Date,the obligation to pay Base Rent shell be abated for the period of such early possession. All other terms of this Lease(including but not limited to the obligations to pay Lessee's Share of the Operating Expense Increase)shall,however,be In effect during such parted. Any such early possession shall not affect the Expiration Data. 3.3 Delay In Possession. Lessor agrees to use Its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Data. If,despite said efforts,Lessor is unable to deliver possession by such date,Lessor shall not be subject to any liability therefor,nor shall such failure affect the validity of this Lease.Lessee shall not,however,be obligated to pay Rent or perform Its other obligations until Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof,but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days after the Commencement Dale,as the same may be extended under the terms of any Work Letter executed by Parties,Lessee may,at Its option,by notice In writing within 10 days after the end of such 60 day period,cancel this Lease,In which event the Parties shall be discharged from all obligations hereunder. If such written notice Is not received by Lessor within said 10 day period,Lessee's right to cancel shall terminate. If possession of the Premises Is not delivered within 120 days after the Commencement Data,this Lease shall terminate unless other agreements are reached between Lessor and Lessee,In writing. 3.4 Lasses Compliance. Lessor shall not be required to deliver possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of Insurance(Paragraph 0.5). Pending delivery of such evidence,Lessee shall be required to perform all of Its obligations under this Lease from and after the Start Dale,Including the payment of Rent,notwithstanding Lessors election to withhold possession pending receipt of such evidence of Insurance. Further,If Lessee Is required to perform any other conditions prior to or concurrent with the Start Date,the Start Dale shall occur but Lessor may elect to withhold possession until such condltlons are satisfied. 4. Rent. 4.1. Rent Dented. All monetary obligations of Lessee to Lessor under the terms of this Lease(except for the Security Deposit)are deemed to be rent("Rent"). 4.2 Operating Expense Increase. Lessee shall pay to Lessor during the term hereof,In addition to the Base Rent,Lessee's Share of the amount by which all Operating Expenses for each Comparison Year exceeds the amount of all Operating Expenses for the Base Year,such excess being hereinafter referred to as the"Operating Expense Increase",In accordance with the following provisions: (a) "Base Year"Is as specified In Paragraph 1.9. (b) "Comparison Year"is dented as each calendar year during the term of this Lease subsequent to the Base Year,prevlded, however,Lessee shell have no obligation to pay a share of the Operating Expense Increase applicable to the first 12 months of the Lease Term(other than such as are mandated by a governmental authority,as to which government mandated expenses Lessee shall pay Lessee's Share,notwithstanding they occur during the first twelve(12)months). Lessee's Share of the Operating Expense Increase for the first and last Comparison Years of the Lease Term shall be prorated according to that portion of such Comparison Year as to which Lessee Is responsible for a share of such Increase. (c) 'Operating Expenses"Include all costs Incurred by Lessor relating to the ownership and operation of the Project,calculated as If the Project was at least 95%occupied,Including,but not limited to,the following: (I) The operation,repair,and maintenance In neat,clean,safe,good order and condition,but not the replacement(see subparagraph(g)),of the following: (as) The Common Areas,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, landscaped areas,striping,bumpers,In ligation systems,Common Area Ilghling facilities,building exteriors and roofs,fences and gates; (bb) All heating,air conditioning,plumbing,electrical systems,Ilfe safety equipment,communication systems and other equipment used In common by,or for the benefit of,lessees or occupants of the Project,Including elevators and escalators,tenant directories,fire detection systems Including sprinkler system maintenance and repair. (11) Trash disposal,janitorial and security services,pest control services,and the costs of any environmental inspections; (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 Insurance policies maintained by Lesser pursuant to paragraph 6 and any deductible portion of an Insured loss concerning the Building or the Common Areas; (v) The amount of the Real Property Taxes payable by Lessor pursuant to paragraph 10; (A) The cost of water,sewer,gas,electricity,and other publicly mandated services not separately metered; (vii) Labor,salaries,and applicable fringe benefits and costs,materials,supplies and tools,used In maintaining and/or cleaning the Project and accounting and management fees attributable to the operation of the Project; (vlll)The cost of any Capital Expenditure to the Building or the Project not covered under the provisions of Paragraph 2.3 provided;however,that Lessor shall allocate the cost of any such Capital Expenditure over a 12 year period and Lessee shall not be required to pay more than Lessee's Share of Ill 44th of the cost of such Capital Expenditure In any given month; (Ix) Replacement of equipment or Improvements that have a useful life for accounting purposes of 5 years or less. (d) Any Item of Operating Expense that Is specifically attributable to the Premises,the Building or to any other building In the Project or to the operator,repair and maintenance thereof,shall be allocated entirely to such Premises,Building,or other building. However,any such Item that is not specifically attributable to the Building or to any other building or to the operation,repair and maintenance thereof,shall he equitably allocated by Lessor to all buildings In the Project. (a) The Inclusion of the Improvements,facilities and services set forth In Subparagraph 4.2(c)shall not be deemed to Impose an obligation upon Lessor to either have said Improvements or facilities or to provide those services unless the Project already has the same,Lessor already provides the services,or Lessor has agreed elsewhere In this Lease to provide the same or some of(hem. (1) Lessee's Share of Operating Expense Increase shall be payable by Lessee wllhln 10 days after a reasonably detailed statement of actual expenses Is presented to Lessee by Lessor. At Lessors opllon,however,an amount may be estimated by Lessor from lime to time In advance of Lessees Share of the Operating Expense Increase for any Comparison Year,and the same shall be payable monthly dunng each Comparison Year of the Lease tern,on the same day as the Bass Rent Is due hereunder. In the event that Lessee pays Lessors estimate of Lessee's Share of Operating Expense Increase as aforesaid,Lessor shall deliver to Lessee within 60 days after the expiration of each Comparison Year a reasonably detailed statement showing Lessee's Share of the actual Operating Expense Increase Incurred during such year. If Lessee's payments under this paragraph(f)during said Comparison Year exceed Lessee's Share as Indicated on said statement,Lessee shall be entitled to credit the amount of such overpayment against Lessee's Share of Operating Expense Increase next falling due. If Lessee's payments under this paragraph dunng said Comparison Year were less than Lessee's Share as Indicated on said statement,Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of said statement. Lessor and Lessee shall forthwith adjust between(hem by cash payment any balance determined to exist with respect to that portion of the last Comparison Year for which Lessee Is responsible as to Operating Expense Increases,notwithstanding that the Lease term may have terminated before the end of such Comparison Year. (g) Operating Expenses shall not Include the costs of replacement for equipment or capital components such as the roof, foundellons,exterior walls or a Common Area capital Improvement,such as the parking lot paving,elevators,fences that have a useful life for accounting purposes of 5 years or more unless It is of the type described In paragraph 4.2(c)(vlli),In which case their cost shall be Included as above provided. (h) Operating Expenses shall not Include any expenses paid by any tenant directly to third parties, or as to which Lessor is otherwise reimbursed by any third party,other tenant,or by Insurance proceeds. 4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor In lawful money of the United States on or before the day on which It Is due,without offset or deduction(except as specifically permitted In this Lease). Rent for any period during the term hereof which Is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at Its address stated herein or to such other persons or place as Lessor may from time to time designate In writing. Acceptance of a payment which Is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent,regardless of Lessor's endorsement of any check so stating. In the event(hat any check,draft,or other instrument of payment given by Lessee to Lessor Is dishonored for any reason,Lessee agrees to pay to Lessor the sum of$251n addition to any Late Charge. Payments will be applied first to accrued late charges and attorney's fees,second to accrued Interest,then to Base Rent and Operating Expense Increase,and any remaining amount to any other outstanding charges or costs. 5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's falthful performance of Its obligations under this Lease. If Lessee falls to pay Rent,or otherwise Defaults under this Lease,Lessor may use,apply or retain all or any portion of Bald Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability,expense,loss or damage which Lessor Initials Initials Page 3 of 12 9)1999-American Industrial Real Estate Association V FORM OFC4-9199E may suffer or Incur by mason thereof. If Lessor uses or applies ell or any portion of the Security Deposit,Lessee shall within 10 days after wdlten request therefor,deposit monies with Lessor sufficient to restore Bald Security Deposit to the full amount required by this Lease. If the Base Rent Increases during the term of this Lease,Lessee @hall,upon written request from Lessor,deposit additional moneys with Lessor se that the total amount of the Security Deposit shall at all times bear the same proportion to the Inceased Base Rent as the tribal Security Deposit bore to the Initial Base Rent. Should the Agreed Use be amended to accommodate a material change In the business of Lessee or to accommodate a sublessee or assignee,Lessor shall have the right to Increase the Security Deposit to the extent necessary,In Lessor's reasonable judgment,to account for any Increased wear and tear that the Premises may suffer as a result thereof. If a change In control of Lessee occurs during this Lease and folbwing such change the financial condition of Lessee Is, In Lessors reasonable judgment,slgnilmm ly reduced,Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change In financial condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 14 days after the expiration or termination of this Lease,if Lessor elects to apply the Security Deposit only to unpaid Rent,and otherwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4(c)below,Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in husl,to bear Interest or to be prepayment far any monies to be paid by Lessee under this Lease. 6. Use. 6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,or any other legal use which Is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises In a manner that is unlawful,creates damage,waste or a nuisance,or that disturbs occupants of or causes damage to neighboring promises or properties. Lessor shall not unreasonably withhold or delay its consent to any written request for a modlficafon of the Agreed Use,so long as the same will not Impair the structural Integrity of the Improvements of the Building,will not adversely affect the mechanical,electrical,HVAC,and other systems of the Building,and/or will not affect the exterior appearance of the Building. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same,which notice shall Include an explanation of Lessors objections to the change in the Agreed Use. 6.2 Hazardous Substances. (a)Reportable Uses Require Consent. The lam"Hazardous Substance"as used In this Lease shall mean any product,substance,or waste whose presence,use,manufacture,disposal,transportation,or release,either by Itself or In combinatlon with other materials expected to be on the Premises, Is either. (1)potentially injurious to the public health, safety or welfare, the environment or the Premises,(if)regulated or monitored by any governmental authority,or(III)a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include,but not be limited to,hydrocarbons, petroleum, gasoline, end/or crude oil or any products, byproducts or fractions thereof. Lessee shall not engage In any activity In or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express pdor written consent of Lessor and timely compliance(at Lessee's expense)with all Applicable Requirements. "Reportehla Use"shall mean(1)the Installation or use of any above or below ground storage lank,(II)the generation,possession, storage,use,transportation,or disposal of a Hazardous Substance that requires a permit from,or with respect to which a report,notice,registration or business plan Is required to be filed with,any governmental authority,and/or(ill)the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing,Lessee may use any ordinary and customary materials reasonably required to be used In the normal course of the Agreed Use such as ordinary office supplies(copler toner,liquid paper,glue,etc.)and common household cleaning materials,so long as such use Is In compliance with all Applicable Requirements,Is not a Reportable Use,and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition,Lessor may condition Its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect Itself,the public, the Premises andfor the environment against damage,contaminallon,Injury and/or liability,Including,but not limited to,the Installation(and removal on or before Lease expiration or termination)of protective modifications(such as concrete encasements)end/or Increasing the Security Deposit. (b)Duty to Inform Lessor. If Lessee knows,or has reasonable cause to believe,that a Hazardous Substance has come to be located In,on,under or about the Premises,other than as previously consented to by Lessor,Lessee shall Immediately give wdtten notice of such fact to Lessor,and provide Lessor with a copy of any report,notice,claim or other documentation which It has concerning the presence of such Hazardous Substance. (a)Less"Remedlallon. Lessee shell not cause or permit any Hazardous Substance to be spilled or released In,on,under,or about the Premises(Including through the plumbing or sanitary sewer system)and shall promptly,at Lessee's expense,comply with all Applicable Requirements and lake all Investigatory and/or remedial action reasonably recommended,whether or not formally ordered or required,for the cleanup of any contamination of,and for the maintenance,secudty and/or monitoring of the Premises or neighboring properties,that was caused or materially contrlbuted to by Lessee,or pertaining to or Involving any Hazardous Substance brought onto the Premises during the tarts of this Lease,by or for Lessee,or any third party. (d)Lessee Indemnlficallon. Lessee shall Indemnify, defend and hold Lessor,Its agents,employees,lenders and ground lessor,if any, harmless from and against any and all less of rents and/or damages,liabilities,judgments,claims,expenses,penalties,and attorneys'and censultanls'fees arising out of or Involving any Hazardous Substance brought onto the Premises by or for Lessee,or any third party(provided,however,that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed to by Lessee). Lessee's obligations shall Include,but not be limited to.the streets of any contamination or Injury to person,property or the environment created or suffered by Lessee,and the cost of Investigation,removal,remediation,restoration and/or abatement,and shall survive the expladlon or lamination of this Lease. No lamination,cancellation or release agreement entered Into by Lessor and Lessee shall release Lessee from Its obligations under this Lease with respect to Hazardous Substances,unless specifically so agreed by Lessor In writing at the time of such agreement. (a)Lessor Indemnification. Lessor and Its successors and assigns shall Indemnify,defend,reimburse and hold Lessee,Its employees and lenders,hamless from and against any and all environmental damages,Including the cost of remedlation,which result from Hazardous Substances which existed on the Premises pdor to Lessee's occupancy or which are caused by the gross negligence or willful misconduct of Lessor,its agents or employees. Lessors obligations,as and when required by the Applicable Requirements,shall Include,but not be limited to,the cost of Investigation,removal, remedlation,restoration and/or abatement,and shall survive the expiration or lerminatlon of this Lease. (I)Investigations and Remadlallons. Lessor shall retain the responsibility and pay for any Investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to Lessee's occupancy, unless such remedlation measure is required as a result of Lessee's use(Including"Alterations",as defined In paragraph 7.3(a)below)of the Premises,In which event Lessee shall be responsible for such payment. Lessee shall cooperate fully In any such activities at the request of Lessor,Including allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable times In order to carry out Lessors Investigative and remedial responslbllliles. (g)Lessor Termination Option. If a Hazardous Substance Condition(see Paragraph 9.1(e))occurs during the lam of this Lease, unless Lessee Is legally responsible therefor(In which rase Lessee shall make the Investigation and remediation thereof required by the Applicable Requirements and this Lease shall continua in full farce and effect,but subject to Lessors rights under Paragraph 6.2(d)and Paragraph 13).Lessor may,at Lessor's option,either(1)Investigate and remediate such Hazardous Substance Condition,If required,as soon as reasonably possible at Lessors expense,In which event this Lease shall continue In full force and effect,or(II)If the estimated cost to remedlate such condition exceeds 12 times the then monthly Base Rent or$100,000, whichever Is greater, give written notice to Lessee,within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition,of Lessors desire to terminate this Lease as of the date 60 days following the data of such notice. In the event Lessor elects to give a termination notice,Lessee may,within 10 days thereafter,give written notice to Lessor of Lessee's commltment to pay the amount by which the cost of the remedlation of such Hazardous Substance Condition exceeds an amount equal to 12(Imes the then monthly Base Rent or$100,000, whichever Is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such event,[his Lease shall continua In full force and effect,and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided,this Lease shall tam bate as of the data specified In Lessors notice of termination. 6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise provided In this Lease,Lessee shall,at Lessee's sole expense,fully,diligently and In a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire Insurance undewrlter or rating bureau,and the recommendations of Lessors engineers and/or consultants which relate In any manner to the Premises,without regard to whether said requirements are now In affect or become effective after the Start Date. Lessee shall,within 10 days after receipt of Lessor's written request, provide Lessor with copies of all permits and other documents,and other Information evidencing Lessee's compliance with any Applicable Requirements specified by Lessor,and shall Immediately upon receipt,notify Lessor In writing(with copies of any documents Involved)of any threatened or actual claim, notice,citation,warning,complaint or report pertaining to or Involving the failure of Lessee or the Premises to comply with any Applicable Requirements. 6.4 Inspection;Compliance. Lessor and Lessors"Lender"(as defined In Paragraph 30)and censultanls shall have the right to enter into Premises at any time,In the case of an emergency,and otherwise at reasonable limes,for the purpose of Inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor,unless a violation of Applicable Requirements,or a Hazardous Substance Condition(see paragraph 9.1a)Is found to exist or be Imminent,or the Inspection Is requested or ordered by a governmental authority. In such case,Lessee shall upon request reimburse Lessor for the cost of such Inspection,se long as such Inspection Is reasonably related to the violation or contamination. 7. Maintenance;Repairs;Utility Installations;Trade Fixtures and Alterations. 7.1 Lessee's Obligations. Notwithstanding Lessor's obligation to keep the Premises In good condition and repair, Lessee shall be Initials Initials Page 4 of 72 — ©1999-American Industrial Real Estate Association .a� FORM OFG•1-9/99E responsible for payment of the coat thereof to Lessor as additional rend for that portion of the mat of any maintenance and repair of the Premises,or any equipment(wherever located)that serves only Lessee or the Premises,to the extent such coat In attributable to causes beyond normal wear and tear. Lessee shall be responsible for the mat of painting,repairing or replacing wall coverings,and to repair or replace any Improvements with the Premises. Lessor may,at Its option,upon reasonable notice,elect to have Lessee perform any particular such maintenance or repairs the mat of which Is otherwise Lessee's responsibility hereunder. 7.2 Lassoes Obligations. Subject to the provisions of Paragraphs 2.2(Condition),2.3(Compliance),4.2(Operating Expenses),6(Use), 7.1 (Lessee's Obligations),9(Damage or Destruction)and 14(Condemnation),Lessor,subject to reimbursement pursuant to Paragraph 4.2,shall keep In good order,condition and repair the foundations,exterior walls,structural condition of Interior beading walls,exterior roof,fire sprinkler system,fire clams end/or smoke detection systems,lire hydrants,and the Common Areas. Lessee expressly waives the benefit of any statute now or hereafter In effect to the extent It Is Inconsistent with the terms of this Leese. 7.3 Utility Installations;Trade Fixtures;Alterations. (a)Definitions. The term"Utility Installations"refers to all floor and window coverings,air lines.vacuum lines,power panels,eleclriral distribution,semdty and fire protection systems,'communication cabling,lighting fixtures,HVAC equipment,and plumbing In or on the Premises. The term "Trade Fixtures" shell mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises. The term " Alterations'shell mean any modification of the Improvements,other than Utility Installations or Trade Fixtures,whether by addition or deletion. "Lessee Owned Alterations and/or Utility Installations"are defined as Alterations end/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b)Consent. Lessee shall not make any Alterations or Uglily Installations to the Premises without Lessor's prior written consent. Lessee may,however,make non-structural Utility Installations to the Interior of the Premises(excluding the rool)without such consent but upon notice to Lesser,as long as[hey are not visible from the outside,do net Involve puncturing,relocating or removing the roof,ceilings,floors or any existing walls,will not affect the electrical, plumbing, HVAC, and/or life safety systems, and the cumulative mat thereof during this Leese as extended does not exceed $2000. Notwithstanding the foregoing,Lessee shall not make or pernit any roof penetrations and/or Install anything on the mot without the prior written approval of Lessor. Lessor may,as a precondition to granting such approval,require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall he presented to Lessor In written form with detailed plans. Consent shell he deemed conditioned upon Lessee's: (I)acquiring all applicable governments[permits,(Ip furnishing Lesser with copies of both the permits and the plans and specifications prior to commencement of the work,and(III)compliance with all conditions of said permits and other Applicable Requirements In a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed In a workmanlike manner Win good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with asbullt plans and specifications.For work which costs an amount In excess of one month's Base Rent,Lessor may condition Its consent upon Lessee providing a lien and completion bond In an amount equal to 15D%of the estimated mat of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor. (c)Liens;Bonds. Lessee shall pay,when due,all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises,which claims are or may he secured by any mechanic's or materialmen's lien against the Premises or any Interest therein. Lessee shall give Lessor net less then 10 days notice prior to the commencement of any work In,on or about the Premises,and Lessor shall have the right to post notices of non-responsibility. If Lessee shell contest the validity of any such lien,claim or demand,then Lessee shall,at Its sole expense defend and protect Itself,Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require.Lessee shall furnish a surety bend In an amount equal to 150%of the amount of such contested lien, claim or demand,Indemnifying Lessor against liability for the same. If Lessor elects to participate In any such ardor,Lessee shall pay Lessees attorneys' fees and costs. 7.4 Ownership;Removal;Surrender;and Restoration. (a) Ownership. Subject to Lessor's right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall he the property of Lessee,but considered a part of the Premises. Lessor may,at any time,elect In writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise Instructed per paragraph 7.4(b)hereof,ail Lessee Owned Alterations and Utility Installations shall,at the expiration or lamination of this Lease,become the property of Lessor and be surrendered by Lessee with the Premises. (b)Removal. By delivery to Lessee of written notice from Lessor not sariler than 90 and not later than 30 days prior to the and of the term of this Leese,Lessor may require that any or all Lasses Owned Alterations or Utility Installations be removed by the expiration or termination of this Leese. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without[he required consent. (a)Surrender;Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier tennlnatlon date,with all or the improvamenls, parts and surfaces thereof dean and free of debris, and In good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not Include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing,If this Lease Is for 12 months or less,then Lessee shall surrender the Premises In the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the Installation,maintenance or removal of Trade Fixtures,Lessee owned Alterations and/or Utility Installations,furnishings,and equipment as well as the removal of any storage tank Installed by or for Lessee. Lessee shall also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee,or any third party(except Hazardous Substances which were deposited via underground migration from areas outside of the Project)even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall he removed by Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below. 8. Insurance;Indemnity. 8.1 Insurance Premiums. The cost of the premiums for the Insurance policies maintained by Lessor pursuant to paragraph 8 are Included as Operating Expenses (see paragraph 4.2 (c)(Iv)). Sold coats shall Include Increases In the premiums resulting from additional coverage related to requirements of the holder of a mortgage or deed of trust covering the Premises,Building and/or Project,Increased valuation of the Premises,Building and/or Project,and/era general premium rate Increase. Said costs shall not,however,Include any premium Increases resulting from the nature of the occupancy of any other tenant of the Building. If the Project was not Insured for the entirety of the Base Year,then the base premium shall be the lowest annual premium reasonably obtainable for the required Insurance as of the Start Date,assuming the most nominal use possible of the Building and/or Project. In no event, however,shall Lessee be responsible for any portion of the premium mat attributable to liability Insurance coverage In excess of$2,000,000 procured under Paragraph 8.2(b). 8.2 Liability Insurance. (a)Carried by Lessee. Lessee shall obtain and keep In farce a Commercial General liability policy of Insurance protecting Lessee and Lessor as an additional Insured against claims for bodily Injury,personal Injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage In an amount not less than$1,000,000 per occurrence with an annual aggregate of not less than$2,000,000,an'Additional Insured-Managers or Lessors of Premises Endorsement"and contaln the"Amendment of the Pollution Exclusion Endorsement"for damage caused by heat,smoke or fumes from a hostile fire. The policy shall not contain any Intro-Insured exclusions as between Insured persons or organizations,but shall Include coverage for liability assumed under this Leese as an"Insured contract"for the performance of Lessee's Indemnity obligations under this Lease. The limits of said Insurance shall not,however,limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All Insurance carded by Lessee shall be primary to and not conlribulorywlth any similar Insurance canted by Lessor,whose Insurance shall be considered excess Insurance only. (b)Carried by Lessor. Lessor shall maintain liability Insurance as described In Paragraph 8.2(a),In addition to,and not in lieu of,the Insurance required to be maintained by Lessee. Lessee shall not be named as an additional Insured therein. 8.3 Property Insurance-Building,Improvements and Rental Value. (a)Building and Improvements. Lessor shall obtain and keep In force a policy or policies of Insurance In the name of Lessor,with loss payable to Lessor,any ground-lessor,and to any Lender Insuring loss or damage to the Building and/or Project. The amount of such Insurance shall be equal to the full replacement cost of the Building and/or Project,as the same shall exist from time to time,or the amount required by any Lender,but In,no event more than the mmmerd Owed ally reasonable and available Insurable value thereof. Lessee Oed Alterations and Utility Installations,Trade Fixtures,and Lessee's personal property shall be Insured by Lessee under Paragraph 8.4. If the coverage Is available and commercially appropriate,such policy or policies shall Insure against all risks of direct physical loss or damage(except the perils of Bond and/or earthquake unless required by a Lender),including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading,demolition,recendruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation prevision In lieu of any coinsurance clause,waiver of subrogallon,and Inflation guard protection causing an Increase In the annual property Insurance coverage amount by a factor of not less than the adjusted U.S.Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such Insurance coverage has a deductible clause,the deductible amount shall not exceed$1,000 per occurrence. (b)Rental Value. Lessor shall also obtain and keep In force a policy or policies In the name of Lessor with less payable to Lessor and any Lender,Insuring the loss of the full Rent for one year with an extended period of Indemnity for an additional 180 days("Rental Value Insurance"). Said Inlllals Initials Page 5 of 12 01999-American Industrial Real Estate Association /7 4 FORM OFG-1-9/99E Insurance shell contain an agreed valuation provision In lieu of any coinsurance clause,and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwlee payable by Lessee,for the next 12 month period. (c)Adjacent Premises. Lessee shell pay for any Increase In the premiums for the property Insurance of the Building and for the Common Areas or other buildings In the Pmjecl If said Increase is caused by Lessee's acts,omissions,use or occupancy of the Promises. (d)Lessee's Improvements. Since Lessor Is the Insuring Party,Lessor shall not be required to Insure Lessee Owned Alterations and UBItty Installations unless the Item In question has become the property of Lessor under the terms of(his Lease. 8.4 Lessee's Property;Business Interruption Insurance. (a)Property Damage. Lessee shall obtain and maintain Insurance coverage on all of Lessee's personal property,Trade Fixtures,and Lessee Owned Alterations and Utility Installations. Such Insurance shall be full replacement cost coverage with a deductible of not to exceed$1,000 per occurrence. The proceeds firm any such Insurance shall be used by Lessee for the replacement of personal property,Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that such Insurance Is In force. fits)Business Interruption. Lessee shall obtain and maintain loss of Income and extra expense Insurance In amounts as will reimburse Lessee for direct or Indirect loss of earnings attributable to all perils commonly Insured against by pendent lessees In the business of Lessee or afiribulable to prevention of access to the Premises as a result of such perils. (c)No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of Insurance specified herein are adequate to cover Lessee's property,business operations or obligations under this Lease. 8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact business In the stale where the Premises ere located,and maintaining during the policy Fenn a"General Policyholders Raling"of at least B+,V,as set forth In the most current Issue of "Bests Insurance Guide",or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which Invalidates the required Insurance policies. Lessee shall,prior to the Start Date,deliver to Lessor certified coples of policies of such Insurance or certificates evidencing the existence and amounts of the required Insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall,at least 30 days prior to the expiration of such policies,furnish Lessor with evidence of renewals or"Insurance binders"evidencing renewal thereof,or Lessor may order such Insurance and charge the coat thereof to Lessee,which amount shell be payable by Lessee to Lessor upon demand. Such policies shell be fora term of at least one year,or the length of the remaining term of this Lease,whichever Is less. If either Party shall fall to procure and maintain the Insurance required to be tamed by It,the other Party may,but shell not be required to,procure and maintain the same. 8.6 Waiver of Subrogation. Wlihoul affecting any other rights or remedies,Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other,for loss of or damage to Its property arising out of or Incident to the perils required to be Insured against hereon. The effect of such releases and walvers is not limited by the amount of Insurance tended or required,or by any deductibles applicable hereto. The Parties agree to have their respective property damage Insurance candera waive any right to submgation that such companies may have against Lessor or Lessee,as the case may be,so long as the insurance Is not Invalidated thereby. 8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct,Lessee shall Indemnity,protect,defend and hold harmless the Premises,Lessor and Its agents,Lessor's master or ground lessor,partners and Lenders,from and against any and all claims,loss of rents and/or damages, Ilene,judgments, penalties, ofiomeys'and consultants'fees, expenses and/or liabilities arising out of, Involving, or In connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding Is brought against Lessor by reason of any of the foregoing matters,Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee In such defense. Lesser need not have first paid any such claim In order to be defended or Indemnified. 8.8 Exemption of Lessor from Liability. Lessor shall not be liable for Injury or damage to the person or goods,wares,merchandise or other property of Lessee.Lessee's employees,contractors,Invitees,customers,or any other person In or about the Premises,whether such damage or Injury Is caused by or results from fire,steam,electricity,gas,water or rain,or from the breakage,leakage,obsbucllon or other defects of pipes,fire sprinklers, wires,appliances,plumbing,HVAC or lighting fixtures,or from any other cause,whether the said Injury or damage results from conditions arising upon the Premises or upon other portions of the Building,or from other sources or places. Lessor shall not be liable for any damages arising ham any act or neglect of any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other lease In the Project.Notwithstanding Lessors negligence or breach of this Leese,Lessor shall under no circumstances be liable for Injury to Lessee's business or for any loss of Income or profit therefrom. 9. Damage or Destruction. 9.1 Definitions. (a)"Premises Partial Damage'shall mean damage or destruction to the Improvements on the Premises,other than Lessee Owned Alterations and Utility Installations,which con reasonably be repaired In 3 months or less from the date of the damage or destruction,and the cost thereof does not exceed a sum equal to 6 month's Base Rent. Lessor shall no0fy Lessee In writing within 30 days from the dale of the damage or destmclion as to whether or not the damage Is Partial or Total. (b)"Premises Total Destruction"shell mean damage or destruction to the Improvements on the Premises,other than Lessee Owned Alterations and Utility Installations and Trade Fixtures,which cannot reasonably be repaired In 3 months or less from the dale of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent Lessor shall notify Lessee In writing within 30 days from the date of the damage or destruction as to whether or not the damage Is Partial or Total. (c)"Insured Loss"shall mean damage or destruction to Improvements on the Premises,other than Lessee Owned Alterations and Utility Installations and Trade Fixtures,which was caused by an event required to be covered by the Insurance described In Paragraph 8.3(a),Iffespecdlve of any deductible amounts or coverage limits Involved. (d)"Replacement Cost"shall mean the cost to repair or rebuild the Improvements awned by Lessor at the time of the occurrence to their condition existing Immediately prior thereto,Including demolition,debris removal and upgrading required by the operation of Applicable Requirements,and without deduction for depreciation. (a) "Hazardous Substance Condition' shall mean the occurrence or discovery of a condition Involving the presence of, or a contamination by,a Hazardous Substance as defined In Paragraph 6.2(a),In,on,or under the Premises which requires repair,remedialion,or restoration. 9.2 Partial Damage-Insured Loss. If a Premises Padlel Damage that Is an Insured Loss occurs,then Lessor shall,at Lessors expense, repair such damage(but not Lessee's Trade Fixtures or Lessee Owned Atteralions and Utility Installations)as soon as reasonably possible and this Lease shall confine In full force and effect;provided,however,that Lessee shall,at Lessor's election,make the repair of any damage or destruction the total cost to repair of which Is$5,000 or less,and,In such event,Lessor shall make any applicable Insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing,If the required Insurance was not In force or the Insurance proceeds are not sufficient to effect such repair,the Insuring Party shall promptly contribute the shortage In proceeds as and when required to complete said repairs. In the event,however,such shortage was due to the fact that,by reason of the unique nature of the Improvements,full replacement cost Insurance coverage was not commercially reasonable and available,Lessor shall have no obligation to pay for the shortage In Insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same,or adequate assurance thereof,within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within sold 10 day period,the party responsible for making the repairs shall complete them as soon as reasonably possible and this Leese shall remain In full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (1)make such restoration and repair as Is commercially reasonable with Lessor paying any shortage In proceeds,In which case this Lease shall remain In full fame and effect,or(II)have this Lease terminate 30 days thereafter. Lessee shall not be en0led to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to Flood or earthquake shall be subject to Paragraph 9.3,notwithstanding that there may be some Insurance coverage,but the net proceeds of any such insurance shall be made available for the repairs If made by either Party. 9.3 Partial Damage-Uninsured Loss. If a Premises Partial Damage(hat Is not an Insured Loss occurs,unless caused by a negligent or willful act of Lessee(in which event Lessee shall make the repairs at Lessees expense),Lessor may either. (I)repair such damage as soon as reasonably possible at Lessors expanse,In which event this Lease shall continue In full force and effect,or(II)terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease.Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said Ponds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue In full force and effect,and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment,this Lease shall terminate as of the date specified In the termination notice. 9.4 Total Destruction. Notwithstanding any other provision hereof,If a Premises Total Destruction occurs,this Lease shall terminate 60 days following such Destmctlon. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee,Lessor shall have the right to recover Lessors damages from Lessee,except as provided In Paragraph 8.6. 9.5 Damage Near End of Term. If at any time during the last 6 months of(his Lease there Is damage for which the cost to repair exceeds one month's Bess Rent,whether or not an Insured Loss,Lessor may terminate this Leese effective 60 days fallowing the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing,If Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises,then Lessee may preserve this Lease by,(a)exercising such option and(b) providing Lessor with any shortage In Insurance proceeds(or adequate assurance thereof)needed to make the repairs on or before the earlier of(1)the date Initials Initlals Page 6 of 12 01999-American Industrial Real Estate Association FORM OFG-1-9/99E which Is 10 days after Lessee's recelpt of Lessor's written notice purporting to terminate this Lease,or(11)the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds(or adequate assurance thereof)to cover any shortage In Insurance proceeds,Lessor shall,at Lessors commercially reasonable expense,repair such damage as soon as reasonably possible and this Lease shall continue In full force and effect. If Lessee falls to exercise such option and provide such funds or assurance during such period,then this Lease shall terminate on the date specified In the termination notice and Lessee's option shall he extinguished. 9.6 Abatement of Rent;Lesseo'a Remedies. (a)Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee Is not responsible under this Lease,the Rent payable by Lessee for the period required for the repair,remedletion or restoration of such damage shall be abated In proportion to the degree to which Lessee's use of the Premises Is Impaired,but not to exceed the proceeds received fmm the Rental Value Insurance. All other obligations of Lessee hereunder shall be performed by Lessee,and Lessor shall have no liability for any such damage,destruction, remedlation,repair or restoration except as provided herein. (b)Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence,In a substantial and meaningful way,such repair or restoration within 90 days,after such obligation shell accrue,Lessee may,at any time prior to the commencement of such repair or restoration,give wriften notice to Lessor and to any Lenders of which Lessee has actual notice,of Lessee's election to terminate this Lease on a data not less than 80 days following the giving of such notice. If Lessee gives such notice and such repair or restoration Is not commenced within 30 days thereafter,this Lease shall terminate as of the dale specified In said notice. If the repair or restoration Is commenced within such 30 days,this Lease shall continue In full force and effect. 'Commence"shall mean either the unconditional authorization of the preparation of the required plans,or the beginning of the actual work on the Premises,whichever first occurs. 9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 8.2(g) or Paragraph 9, an equitable adjustment shell be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall,In addition,return to Lessee so much of Lessee's Severity Deposit as has not been,or Is not then required to be,used by Lessor. 9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shell govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provislons of any present or future statute to the extent Inconsistent herewith. 10. Reel Property Taxes. 10.1 Dofinitions. As used herein,the tern"Real Properly Taxes"shall Include any forth of assessment; real estate, general, special, ordinary or extraordinary,or rental levy or tax(other than Inheritance,personal Income or estate taxes);Improvement bond;and/or license fee Imposed upon or levied against any legal or equitable Interest of Lessor In the Project,Lessors right to other Income therefrom,and/or Lessor's business of leasing,by any authority having the direct or Indirect power to tax and wham the funds ere generated with reference to the Project address and where the proceeds so generated are to be applied by the city,county or other local taxing authority of a judsdlcgon within which the Project Is located. "Real Property Taxes"shall also Include any tax,fee,levy,assessment or charge,or any Increase therein,Imposed by reason of events occurring during the ten of this Lease,Including but not limited to,a change In the ownership of the Project or any portion thereof or a change In the Improvements thereon. 10.2 Payment of Taxes. Except as otherwise provided In Paragraph 10.3.Lessor shall pay the Real Property Taxes applicable to the Project, and said payments shall be Included In the calculation of Operating Expenses In accordance with the provisions of Paragraph 4.2. 10.3 Additional Improvements. Operating Expenses shall not Include Reel Property Taxes specified In the tax assessors records and work sheets as being caused by additional Improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.2 hereof,Lessee shall,however,pay to Lessor at the time Operating Expenses arc payable under Paragraph 4.2,the entirety of any Increase In Real Property Taxes If assessed solely by reason of Alteration,Trade Fixtures or Utlity Installations placed upon the Premises by Lessee or at Lessee's request. 10.4 Joint Assessment. If the Building Is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes far all of the land end Improvements Included within the tax parcel assessed,such proportion to be determined by Lessor from the respective valuations assigned In the assessors work sheets or such other Information as may be reasonably available. Lessors reasonable determination thereof,In goad fallh,shall be conclusive. 10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and UIIIIty,Installations,Trade Fixtures,furnishings,equipment and all personal property of Lessee contained In the Premises. When possible,Lessee shall cause Its Lessee Owned Alterations and Uglily Installations,Trade Fixtures,furnishings,equipment and all other personal property to he assessed and bllled separately from the real property of Lessor. If any of Lessee's said property shall be assessed with Lessors real property.Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property. 11. Utilities and Services. 11.1 Services Provided by Lessor. Lessor shall provide heating,ventilation,air condllloning,reasonable amounts of electricity for normal lighting and office machines,water for reasonable and normal ddnking and lavatory use In connection with an office,and replacement light bulbs and/or fluorescent tube,and ballasts for standard overhead fixtures. Lessor shall also provide janitorial services to the Premises and Common Areas 5 times per week,excluding Building Holidays,or pursuant to the attached janitorial schedule,if any. Lessor shall not,however,be required to provide janitorial services to kitchens or storage areas Included within the Premises. 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 lazes thereon. If a service Is deleted by Paragraph 1.13 and such service Is not separately metered to the Premises, Lessee shall pay at Lessors option, either Lessee's Share or a reasonable proportion to be determined by Lessor of all charges for such jointly metered service. 11.3 Hours of Service. Said services and utilities shall be provided during times set forth In Paragraph 1.12. Utilities and services required at other times shall be subject to advance request and relmbureemenl by Lessee to Lessor of the cost thereof. 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 utillfles or services, Including but not limited to security and(rash services,over standard office usage for the 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. There shall be no abatement of rent and Lessor shall not be liable In any respect whatsoever for the Inadequacy,stoppage, Interruption or dlsconflnuanco of any utility or service due to riot,strike,labor dispute,breakdown,accident,repair or other cause beyond Lessors reasonable control or In cooperation with governments[request or directions. 12. Assignment and Subletting. 12.1 Lassoes Consent Required. (a)Lessee shall not voluntarily or by operation of law assign,transfer,mortgage or encumber(collectively,"assign or assignment")or sublet all or any pert of Lessee's Interest In this Lease or In the Premises without Lessors prior written consent. (b)Unless Lessee Is a corporation and Its stock Is publicly traded on a national stock exchange,a change In the control of Lessee shall constitute an assignment requiring consent. The transfer,on a cumulative basis,of 25%or more of the voting control of Lessee shall constitute a change In control for this purpose. (c)The Involvement of Lessee or Its assets In any transaction,or series of hansactions(by way of merger,sale,acquisition,financing, transfer,leveraged buyout or otherwise),whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs,which results or will result In a reduction of the Net Worth of Lessee by an amount greater then 25%of such Net Worth as It was represented at the time of the execution of this Lease or at the fime of the most recent assignment to.whlch Lessor has consented,or as It exists Immediately prior to said transaction or transactions constituting such reduction,whichever was or is greater,shall be considered an assignment of this Lease to which Lessor may withhold Its consent. "Net Worth of Losses'shall mean the net worth of Lessee(excluding any guarantor)established under generally accepted accounting principles. (d)An assignment or subletting without consent shall,at Lessors option,be a Default curable after notice per Paragraph 13.1(c),or a noncurable Breach without the necessity of any notice and grace pedod. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach,Lessor may either:(p terminate this Lease,or(11)upon 30 days written notice,Increase the monthly Base Rent to 110%of the Base Rent then In effect. Further,In the event of such Breach and rental adjustment,(I)the purchase price of any option to purchase the Premises held by Lessee shah be subjeclto similar adjustment to 110%of the price previously In effect,and(II)all fixed and non-fixed rental adjustments scheduled during the remainder of'Ihe Lees.term shall be Increased to 110%of the scheduled adjusted rent. (a)Lessee's remedy for any breach of Paragraph 12.1 by Lessor shell be limited to compensatory damages and/or Injunctive relief. 122 Terms and Condition.Applicable to Assignment and Subletting. (a)Regardless of Lessors consent,no assignment or subletting shall: (1)be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease,(II)release Lessee of any obligations hereunder,or(III)alter the primary liability of Lessee for the payment of Rent or for the performance of any other obllgeflons to be performed by Lessee. (b)Lessor may accept Rent or performance of Lessees obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay In the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessors right to exercise Its remedies for Lessees Default or Breach. Initials Initials Page 7 of 12 0199B-American Industrial Real Estate Association n �� FORM OFG-0-9/99E (c)Lessors consent.to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting. (d)In the event of any Default or Breach by Lessee,Lessor may proceed directly against Lessee,any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Leese,Including any assignee or sublessee,without first exhausting Lessors remedies against any other person or entity responsible,therefore to Lessor,or any security held by Lessor. (a) Each request for consent to an assignment or subletting shall be In writing, accompanied by Informaton relevant to Lessors determination as to the flnancial and operational responsibility and appropriateness of the proposed assignee or sublessee,Including but not limited to the Intended use and/or required modification of the Premises, If any. Lessee agrees to provide Lessor with such other or additional Information and/or documentation as may be reasonably requested.(See also Paragraph 36) (f)Any assignee of,or sublessee under,this Lease shall,by reason of accepting such assignment or entering Into such sublease,be deemed to have assumed and agreed to conform and comply with each and every tam, covenant condition and obllgallon herein to be observed or performed by Lessee during the term of said assignment or sublease,other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to In wrlUng, (g)Lessors consent to any assignment or subletting shall not Imnefer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer Is specIllully consented to by Lessor In writing.(See Paragraph 39.2) 12.3 Additional Terms end Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shell be deemed Included In all subleases under this Lease whether or not expressly Incorporated therein: (a)Lessee hereby assigns and transfers to Lessor all of Lessee's Interest In all Rent payable on any sublease,and Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease;provided,however,that until a Breach shall occur In the performance of Lessee's obligations,Lessee may collect said Rent. Lessor shall not,by reason of the foregoing or any assignment of such sublease,nor by reason of the collection of Rent,be deemed liable to the subleases for any fallure of Lessee to perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby Irrevocably authorizes and dlraets any such sublessee,upon recelpt of a written notice from Lessor stating that a Breach exists In the performance of Lessee's obligations under this Lease,to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shell pay all Rents to Leaser without any obligation or right to Inquire as to whether such Breach exists,notwithstanding any claim from Lessee to the contrary. (b)In the event of a Breach by Lessee,Lessor may,at Its option,require sublessee to alfom to Lessor,In which event Lesser shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease;provided, however,Lessor shall not be liable for any prepaid rents or security deposit paid by such subleases to such sublessor or for any prior Defaults or Breeches of such sublessor. (c)Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d)No sublessee shall further assign or sublet all or any part of the Premises without Lessors prior wrifien consent. (a)Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,who shell have the right to cure the Default of Lessee within the grace period,If any,specified In such notice. The sublessee shell have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee. 13. Default;Breach;Remedies. 13.1 Default;Breach. A"Default'Is defined as a failure by the Lessee to comply with or perform any of the terms,covenants,condlUons or Rules and Regulations under this Lease. A"Breach'Is defined as the occurrence of one or more of the following Defaults,and the failure of Lessee to cure such Default within any applicable grace period: (a)The abandonment of the Premises;or the vacating of the Premises without providing a commercially reasonable level of security,or where the coverage of the property Insurance described In Paragraph 0.3 Is Jeopardized as a result thereof,or without providing reasonable assurances to minimize poten0al vandalism. (b)The fallure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder,whether to Lessor or to a third party,when due,to provide reasonable evidence of Insurance or surety bond,or to fulfill any obligation under this Lease which endangers or threatens life or property,where such failure continues for a period of 3 business days following wriften notice to Lessee. (c)The failure by Lessee to provide (I) reasonable writen evidence of compliance with Applicable Requirements, (II) the service contracts,(III)the rescission of an unauthorized assignment or subletting,(Iv)an Estoppel Cedlficale,(v)a requested subordination,(VI)evidence concerning any guaranty and/or Guarantor,(vii)any document requested under Paragraph 41(easements),or(vlll)any other documentation or Information which Lessor may reasonably require of Lessee under the terms of this Lease,where any such failure conlnues for a period of 10 days following written notice to Lessee. (d)A Default by Lessee as to the terms,covenants,conditions or provisions of this Lease,or of the rules adopted under Paragraph 2.9 hereof,other than those described In subparagraphs 13.1(s),(b)or(c),above,where such Default continues for a period of 30 days after written notice; provided,however,that If the nature of Lessees Default Is such that more than 30 days are reasonably required for Its cure,then It shall not be deemed to be a Breach If Lessee commences such cure within sold 30 day pedod and thereafter diligently prosecutes such cure to completion. (a)The occurrence of any of the following events: (1)the making of any general arrangement or assignment for the bene0t of creditors; (11)becoming a'debtor'as defined In 11 U.S.C.§101 or any successor statute thereto(unless,In the use of a petition flied against Lessee,the same Is dismissed within 60 days);(ill)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 30 days;or IN)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 30 days; provided,however,In the event that any provision of this subparagraph(a)is contrary to any applicable law,such provision shall he of no force or effect,and not affect the validity of the remaining provisions. (f)The discovery that any financial statement of Lessee or of any Guarantor given to Lesser was materially false. (g)If the performance of Lessee's obligations under this Lease Is guaranteed: (I)the death of a Guarantor, (It)the termination of a Guarantors liability with respect to this Lease other than In accordance with the terms of such guaranty,(III)a Guarantors becoming Insolvent or the subject of a bankruptcy filing,(Iv)a Guarantors refusal to honor the guaranty,or(v)a Guarantors breach of Its guaranty obligation on an anticipatory basis,and Lessee's failure,within 60 days following written notice of any such event,to provide written alternative assurance or security,which,when coupled with the then existing resources of Lessee,equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. 13.2 Remedies. If Lessee falls to perform any of Its affirmative duties or obligations,within 10 days after written notice(or In use of an emergency,without notice), Lessor may,at Its option,perform such duty or obligation on Lessee's behalf, Including but not limited to the obtaining of reasonably required bands,Insurance policies,or governmental licenses,permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee upon receipt of Invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which It Is drawn,Lessor,at Its option,may require all future payments to be made by Lessee to he by cashiers check. In the event of a Breach,Lessor may,with or without further noUce or demand,and without limiting Lesser in the exercise of any right or remedy which Lessor may have by reason of such Breach: (a)Terminate Lessee's right to possession of the Premises by any lawful means,In which use this Lease shall terminate and Lessee shell Immediately surrender Possession to Lessor. In such event Lessor shell be entitled to recover from Lessee: (I)the unpaid Rent which had been earned at the time of termination;(11)the worth at the time of award of the amount by which the unpaid rent which would have been earned after lamination unit the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided;(III)the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided;and(Iv)any other amount necessary to cdmpensate Lessor for all the dealmenl proximately caused by the Lessee's failure to perform Its obligation under this Lease or which In the ordinary course of things would be likely to result therefrom,Including but not limited to the cost of recovering possession of the Premises,expenses of retailing,Including necessary renovation and alteration of the Premises,reasonable attorneys'fees,and that portion of any leasing commission paid by Lessor In connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to In provision(III)of the Immedlately preceding sentence shall be computed by dlscounling such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages reused by Lessee's Breach of this Lease shall not waive Lessors right to recover damages under Paragraph 12. If termination of this Lease is obtained through the provisional remedy of unlawful delainer,Lessor shall have the right to recover In such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof In a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given,a notice to pay rent or quit,or to perform or quit given to Lessee under the unlawful detalner statute shell also constitute the notice required by Paragraph 13.1. In such wee,the applicable grace pedod required by Paragraph 13.1 and the unlawful detalner statute shall run concurrently,and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detalner and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. (b)Continue the Lease and Lessee's right to possession and recover the Rent as It becomes due,In which event Lessee may sublet or assign,subject only to reasonable limitations. Acts of maintenance,efforts to relet,and/or the appointment of a receiver to protect the Lessor's Interests, shall not constitute a termination of the Lessee's right to possession. (c)Pursue any other remedy now or hereafter evallable under the laws or judicial decisions of the state wherein the Premises are located. The expiration or terminatlon of this Lease and/or the tem lratlon of Lessee's right to possession shall not relieve Lessee from liability under any Indemnity Initials Initials Page 6 of 12 _/rr ©1999-American Industrial Real Estate Association �(/,(I�• 77 FORM OFG•1.9/99E pruMalons of rills Lase as to matters occurring or accruing during the term hereof or by reason of Le uree's occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges,or for the giving or paying by Lessor to or for Lessee of any ash of other bonus, Inducement or consWerallon for Lasee's entering Into this Lease, all of which concessions are herslnafter referred to as 'Inducement Provlslona",shall be deemed conditioned upon Lessee's full and faithful performance of all of the terms,covenants and conditions of this Leese. Upon Breach of this Lease by Less",any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect,and any rent,other charge,bonus.Inducement or conslderatcn theretofore abated,given or paid by Lessor under such an Inducement Provision shall be Immediately due and payable by Lessee to Lessor,notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which Initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated In writing by Lessor at the time of such acceptance. 13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will muse Lessor to Incur casts not contemplated by this Lease,the exact amount of which will be extremely difficult to ascertain. Such coats Include,but are not limited to,processing and accounting charges, and late charges which may be Imposed upon Lessor by any Lender. Accordingly,If any Rent shall not be received by Lessor within 5 days after such amount shall be due,then,without any requirement for notice to Less",Lessee shell pay Io Lessor a one-Ome late charge equal to 10%of each such overdue amount or$100,whichever Is greater. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will Incur by reason of such late payment. Acceptance of such late charge by Lessor shall In no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount,nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge Is payable hereunder,whether or not collected,for 3 consecutive Installments of Base Rent,then notwithstanding any provision of this Lease to the contrary, Base Rent shall,at Lassoes option,became due and payable quarterly In advance. 13.5 Interest. Any monetary payment due Lessor hereunder,other then late charges,not received by Lessor,when due as to scheduled payments(such as Base Rent)or withln 30 days following the date on which It was due for nonscheduled payment,shell bear Interest from the date when due,as to scheduled payments,or the 31st day after It was due as to nonscheduled payments.The Interest("Intend")charged shall be computed at the rate of 10%per annum but shall not exceed the maximum rate allowed by law. Interest Is payable In addition to the potential late charge provided for In Paragraph 13.4. 13.6 Breach by Lessor. (a)Notice of Breach. Lessor shall not be deemed In breach of this Lease unless Lessor falls within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph,a reasonable time shall In no event be less than 30 days after receipt by Lessor,and any Lender whose name and address shall have been furnished Lessee In writing for such purpose,of written notice specifying wherein such obligation of Lessor has not been performed;provided,however,that If the nature of Lassoes obligation Is such that more then 30 days are reasonably required for[Is performance,then Lessor shall not be In bream If performance Is commenced within such 30 day period and thereafter diligently pursued to completion. (b)Perfa m it ce by Lasses on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after receipt of sold notice,or if having commenced sold cure they do not diligently pursue It to completion,then Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable coat to perform such cure,provided however,that such offset shall not exceed an amount equal to the greater of one month's Base Rent or the Security Deposit,reserving Lessee's right to seek reimbursement from Lessor. Lessee shall document the cost of said are and supply said documentation to Lessor. 14. Condammalon. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power(collectively"Condemnation'),this Lease shall terminate as to the part taken as of the date the condemning authority takes tie or possession, whichever first occurs. If more then 10%of the rentable floor area of the Premises,or more than 25%of Lessee's Reserved Parking Spaces,If any,are taken by Condemnation,Lessee may,at Lessee's option,to be exercised In writing within 10 days after Lessor shall have given Lessee written notice of such taking(or In the absence of such notice,within 10 days after the condemning authority shall have taken possession)terminate this Lease as of the date the condemning authority lakes such possession. If Lessee does not terminate this Lease In accordance with the foregoing,this Leese shall remain In full force and effect as to the portion of the Premises remaining,except that the Bess Rent shall be reduced In proportion to the reduction In utility of the Premises mused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for dlminullon In value of the leasehold,the value of the pert taken,or for severance damages;provided,however,that Lessee shall be entitled to any compensation for Lessee's formation expenses, loss of business goodwill and/or Trade Fixtures,without regard to whether or not this Lease Is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only,shall be considered the property,of the Less"and Lessee shall be entitled to any and all compensation which Is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation,Lessor shall repair any damage to the Premises mused by such Condom ation. 15. Brokerage Fees. 15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10 above,and unless Lessor and the Brokers otherwise agree In writing,Lessor agrees that: (a)if Lessee exercises any Option,(b)If Lessee acquires from Lessor any rights to the Premises or other premises owned by Lessor and located within the Project,(c)If Lessee remains In possession of the Premises,with the consent of Lessor,after the expiration of this Lease,or(d)If Base Rent Is Increased,whether by agreement or operation of an escalation clause herein,then,Lessor shall pay Brokers a fee In accordance with the schedule of the Brokers In effect at the time of the execution of this Lease. 15.2 . Assumption of Obligations. Any buyer or transferee of Lassoes Interest In this Lease shall be deemed to have assumed Lessors obligation hereunder. Brokers shall be third party beneficlades of the previsions of Paragraphs 1.10,15,22 and 31. If Lessor falls to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lase when due,then such amounts shall accrue Interest. In addlUan,If Lessor fails to pay any amounts to Lessee's Broker when due,Lessee's Broker may send written notice to Lessor and Lessee of such failure and If Lessor fails to pay such amounts within 10 days after said notice.Lessee shall pay said monles to Its Broker and offset such amounts against Rent. In addition,Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered Into by and/or between Lessor and Lassoes Broker for the limited purpose of collecting any brokerage fee owed. 15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that It has had no dealings with any person,flmh,broker or Under(other than the Brokers,If any)In connection with this Lease,and that no one other than said named Brokers Is entitled to any commission or finders fee In connection herewith. Lessee and Lessor do each hereby agree to Indemnify,protect,defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker,finder or other similar party by reason of any dealings or actions of the Indemnifying Party,Including any costs,expenses,attorneys'fees reasonably Incurred with respect thereto. 16. Estoppel Certificates. (a)Each Party(as"Responding Party")shall within 10 days after written notice from the other Party(the"Requesting Party")execute, acknowledge and deliver to the Requesting Party a statement In writing In farm similar to the then most current"Estoppel Certificate"form published by the American Industrial Real Estate Association, plus such additional Information, confirmation and/or statements as may be reasonably requested by the Requesting Perry. (b)If the Responding Party shall fall to execute or deliver the Estoppel Certificate wllhln such 10 day period,the Requesting Party may execute an Estoppel Certificate staflng that:(1)the Lease Is In full fares and effect without modification except as may be represented by the Requesting Party,(II)there are no uncured defaults In the Requesting Party'a performance,and(III)If Lessor Is the Requesting Party,not more than one months rent has been paid In advance.Prospective purchasers and encumbrsncers may rely upon the Requesting Party's Estoppel Certificate,and the Responding Party shall be estopped from denying the truth of the facts contained In said Certificate. (c)If Lesser desires to Mance,refinance,or sell the Premises,or any part thereof,Lessee and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser,Intruding but not limited to Lessee's financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser In confidenme and shall be used only for the purposes herein set forth, 17. Definition of Lessor. The term"Lessor"as used herein shall mean the owner or owners at the time In question of the fee title to the Premises, or,If this la a sublease,of the Lessee's Interest In the prior lease. In the event of a transfer of Lassoes title or Interest In the Premises or this Lease,Lessor shall deliver to the transferee or assignee(In cash or by credit)any unused Security Deposit held by Lessor. Except as provided In Paragraph 15,upon such transfer or assignment and delivery of the Security Deposit,as aforesaid,the prior Lessor shall be relleved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants In this Lease to:be performed by the Lessor shall be binding only upon the Lessor as herelnabove defined. 16. Severablllty. The Invalidity of any provision of this Lease,as determined by a court of competent judsdictlon,shall In no way affect the validity of any other provision hereof. 19. Days. Unless otherwise speGgcally Indicated to the contrary,the word"days"as used In this Lease shall mean and refer to calendar days. 20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or Its partners,members, directors,officers or shareholders,and Lessee shall look to the Project,and to no other assets of Lessor,for the satisfaction of any liability of Lessor with respect to this Lease,and shall not seek recourse against Lassoes partners,members,directors,officers or shareholders,or any of their personal assets for such satisfaction. 21. Time of Essence. Time Is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this InUlals Initials Page 9 of 12 ®1999-American Industrial Real Estate Association r / P/� 47) FORM OFG-1-9/99E Lease. 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Pertles With respect to any matter mentioned herein,and no other prior or contemporaneous agreement or understanding shall be effective. Lesaor and Lease@ each represents and warrants to the Brokers that It has made,and Is relying solely upon,Its own Investigation as to the nature,quality,character and financial responsibility of the other Party to this Leese and as to the use,nature,quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breech hereof by either Party. The liability(Including court costs and attorneys'fees)of any Broker with respect to negotiation,execullon,delivery or performance by either Lessor or Lessee under this Lease or any amendment or modification hereto shall be limited to an amount up to the fee received by such Broker pursuant to this Leese;provided,however,that the foregoing limitation on each Broker's liability shell not be applicable to any gross negligence or willful misconduct of such Broker. 23. Notices. 23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be In writing and may be delivered In person(try hand or by courier)or may be sent by regular, certified or registered mall or U.S. Postal Service Express Mall,with postage prepaid, or by facslmlle transmission,and shell be deemed sufficiently given If served In a manner specified In this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or malling of notices. Either Party may by written notice to the other specify a different address for notice,except that upon Lessee's taking possession of the Premises,the Premises shall constitute Lessee's address for nonce. A copy of all notices to Lessor shell be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate In writing. 23.2 Date of Notice. Any notice sent by registered or cerOged mall,return receipt requested,shall be deemed given on the date of delivery shown on the receipt card,or If no delivery date Is shown,the postmark thereon. If sent by regular mall the notice shall he deemed given 48 hours after the same Is addressed as required herein and mailed with postage prepaid:Notices delivered by United Stales Express Mall or overnight courier that guarantee next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Bowles or courier. Nollces transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt(confirmation report from fax machine Is suf iclent),provided a copy Is also delivered via delivery or mall. If notice Is received on a Saturday,Sunday or legal holiday,It shall be deemed received on the next business day. 24. Waivers. No waiver by Lessor of the Default or Breech of any[am,covenant or condition hereof by Lessee,shall be deemed a waiver of any other term,covenant or condition hereof,or of any subsequent Default or Breach by Lessee of the same or of any other term,covenant or condition hereof. ' Lessor's consent to,or approval of,any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to,or approval of,any subsequent or slmller act by Lessee,or be construed as the basis of an estoppel to enforce the provision or provlsions of this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor,notwithstanding any qualifying statements or conditions made by Lessee In connection therewith,which such statements and/or condlllons shall be of no farce or effect whatsoever unless speclAcally agreed to In wdting by Lessor at or before the time of deposit of such payment. 25. Disclosures Regarding The Nature of a Real Estate Agency Relationship. (a) When entering Into a discussion with a real estate agent regarding a real estate transaction,a Lessor or Lessee should from the outset understand what type of agency relationship or representation It has with the agent or agents In the transaction. Lessor and Lessee acknowledge being advised by the Brokers In this transaction,as follows: (1) Lessor's Agent. A Lessor's agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessors agent or subagent has the following affirmatva obligations: To the Lessor. A fiduciary duty of utmost care,Integrity,honesty,and loyalty In dealings with the Lessor. Ta tha Lessee and the Lessor: a.Diligent exerolse of reasonable skills and care in performance of the agent's duties. J.A duty of honest and fair dealing and good faith. c.A duty to disclose all facts known to the agent materially affecting the value or desirability of the property,that are not known to,or within the diligent attention and observation of.the Parties. An agent Is not obligated to reveal to elther Party any confidential Information obtained from the other Party which does not Involve the affirmative duties set forth above. (II) Lessee's Agent. An agent can agree to act as agent far the Lessee only. In these situations,the agent Is not the Lessor's agent,even If by agreement the agent may receive compensation for services rendered,either In full or In pert from the Lessor. An agent acting only for a Lessee has the fallowing affirmative obligations. To the Lessee: A fiduciary duty of utmost care.Integrity,honesty,and loyally In dealings with the Lessee. To the Lessee and the Lessor. a.Diligent exercise of reasonable skills and rare In performance of the agent's duties, b.A duty of honest and fair dealing and good faith. c.A duty to disclose all facts known to the agent materially effecting the value or desirability of the property that are not known to,or within the diligent attention and observation of,the Parties. An agent Is not obligated to reveal to elther Party any confidential Information obtained from the other Party which does not Involve the aff nnatve duties set forth above. (III) Anent Representing Both Lessor and Lessee. A real estate agent,either acting directly or through one or more associate licenses,can legally be the agent of both the Lessor and the Lessee In a transaction,but only with the knowledge and consent of both the Lessor and the Lessen.In a dual agency situation,the agent has the following afirmatve obligations to both the Lessor and the Lessee:a.A fiduciary duty of utmost care,Integrity,honesty and loyalty In the dealings with either Lesser or the Lessee. b.Other duties to the Lessor and the Lessee as stated above In subpemgraphs(1)or(II).In representing bath Lessor and Lessee,the agent may not without the express permission of the respective Party,disclose to the other Party that the Lessor will accept rent in an amount less than that Indicated In the listing or that the Lessee Is willing to pay a higher rent than that offered.The above duties of the agent In a real estate transaction do not relieve a Lessor or Lessee from the responslblllty,to protect their own Interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understsnding of the tmnsaction. A real estate agent Is a person qualified to advise about reel estate. If legal or tax advise Is desired,consult a competent professional. (b) Brokers have no responsibility with respect to any default or breach hereof by either Parry. The liability(Including court costs and attorneys'fees),of any Broker with respect to any breach of duty,error or omission relating to this Leese shall not exceed the fee received by such Broker pursuant to this Lease;provided,however,that the foregoing limitation on each Broker's liability shall not be applicable to any gross negligence or Wilful misconduct of such Broker. (c) Buyer and Seller agree to Identify to Brokers as "Confidential" any communication or Information given Brokers that Is considered by such Party to be confidential. 26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any pert thereof beyond the explration or termination of this Lease. In the event that Lessee holds over,then the Base Rent shall be Increased to 150%of the Base Rent applicable Immediately preceding the expiration or termination. Nothing contained herein shell be construed as consent by Lessor to any holding over by Lessee. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall,wherever possible,be cumulative with all other remedies at law or In equity. 28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Leese,all headings and titles are for the convenience of the Parties only and shall not be considered a part of [his Lease. Whenever required by the context,the singular shall Include the plural and vice versa. This Lease shell not be construed as If prepared by one of the Parties,but rather according to Its fair meaning as a whole,as If both Parties had prepared It. 29. Binding Effect;Choice of Law. This Lease shall be binding upon the Parties,their personal representatives,successors and assigns and be governed by the laws of the State In which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be Initiated In the county In which the Premises are located. 30. Subordination;Attornment;Non-Disturbance. 30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease,mortgage,deed of bust,or other hypothecation or security device(collectively,"Security Device"),now or hereafter placed upon the Premises,to any and all advances made on the security thereof,and to all renewals,modifications,and extensions thereof. Lessee agrees that the holders of any such Security Devices(In this Lease together retorted to as"Lander')shall have no liability or obligation to perform any of the obligations of Lessor under this Leese. Any Lender may elect to have this Leese and/or any Option granted hereby superior to the lien of Its Security Device by giving written notice thereof to Lessee,whereupon this Lease and such Options shall be deemed prior to such Security Device,notwithstanding the relative dates of the documentation or recordation thereof. 30.2 Attornment. In the event that Lessor transfers title to the Premises,or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease Is subordinated(I)Lessee shall,subject to the nondlsturbance provisions of Paragraph 30.3,atom to such new owner,and upon request,enter Into a new lease,containing all of the terms and provisions of this Lease,with such new owner for the remainder of the term hereof,or,at the election of such new owner,this Lease shall automatically become a new Lease between Lessee and such new owner,upon aII of the terms and conditions hereof,for the remainder of the term hereof,and(II)Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessors obligations hereunder,except that such new owner shall not: (a)be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership;(b)be subject to any offsets or defenses which Lessee might have against any prior lessor, (c)be bound by prepayment of more than one month's rent,or(d)be liable for the return of any security deposit paid to any pdor lessor. 30.3 Non-Disturbanw. With respect to Security Devices entered Into by Lessor after the execution of this Lease,Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-dlsturbance agreement(a"Non-Disturbance Agreement")from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises,and this Lease,Including any options to extend the term hereof,will not be disturbed so long as Lessee Is not In Breach hereof and affoms to the record owner of the Premises. Further,within fie days after the execution of this Lease,Lessor shall use Its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which Is secured by the Premises. In the event that Lessor is unable to provide the Nan-Dlslurbance Agreement within said 60 days,then Lessee may,at Lessee's Initials Initials Page 10 of 12 / ©1999-American Industrial Real Estate Association _// FORM OFG-0.9199E option,directly contact Lender and attempt to negotiate for the execution and delivery of a Nmn Dislurbence Agreement. 30.4 Self-Exacuting. The agreements contained In this Paragraph 30 shall be effective without the execution of any further documents; provided,however,that.upon written request from Lessor at a Lender in connection with a sale,financing or refinancing of the Premises,Lessee and Lessor shell execute such further writings as may be reasonably required to separately document any subordination,adornment and/or Non-Disturbance Agreement provided for herein. 31. Affomsys'Fees. If any Party or Broker brings an action or proceeding Involving the Premises whether founded in tort,contract or equity,or to declare rights hereunder, the Prevailing Party(as hereafter defined)In any such proceeding,action,or appeal thereon,shell be entitled to reasonable attorneys'fees. Such fees may be awarded In the same suit or recovered In a separate suit,whether or not such action or proceeding Is pursued to decision or Judgment. The tarts,"Prevailing Party"shell Include,without limitation,a Party or Broker who aubstantlally obtalna or defeat.the relief sought,as the case maybe,whether by compromise,settlement,judgment,or the abandonment by the other Party or Broker of Its claim or defense. The attorneys'fees award shall not be computed In accordance with any court fee schedule,but shall be such as to fully reimburse all attameys'fees reasonably Incurred. In addition,Lessor shall be entitled to attorneys'fees,costs and expenses Incurred In the preparation and service of notices of Default and consultations In connection therewith,whether or not a legal action Is subsequently commenced In connection with such Default or resulting Breach($200 Is a reasonable minimum per occurrence for such services and consultation). 32. Lassoes Access;Showing Premises;Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time,In the case of an emergency,and otherwise at reasonable times for the purpose of showing the same to prospective purchasers,lenders,or tenants,and making such alterations,repels, Improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting,using and maintaining of utilities,services,pipes and condults through the Premises end/or other premises as long as them Is no material adverse effect to Lessee's use of the Premises. All such activities shall be without abatement of rent or liability to Lessee. Lesser may at any time place on the Premises any ordinary'For Sale" signs and Lessor may during the last fi months of the term hereof place on the Premises any ordinary"For Lease'signs. In addition,Lessor shall have the right to retain keys to the Premises and to unlock all doom In or upon the Premises other than to(Iles,vaults and safes,and In the case of emergency to enter the Premises by any reasonably appropriate means,and any such entry shell not be deemed a forcible or unlawful entry or detainer of the Premises or an eviction. Lessee wolves any charges for damages or Injuries or Interference with Lessee's property or business In connection therewith. 33. Auctions. Lessee shall not conduct,nor permit to be conducted,any auction upon the Premises without Lessors prior written consent. Lessor shall not be obligated to exerolse any standard of reasonableness In determining whether to permit an auction. 34. Signs. Lessee shall not place any sign upon the Project without Lessors pdorwdlten consent. 35, Termination;Merger. Unless specifically stated otherwise In writing by Lessor,the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof,or a termination hereof by Lessor for Breach by Lessee,shall automatically terminate any sublease or lesser estate In the Premises;provided,however,[het Lessor may elect to confinue anyone or all existing subtemancies. Lessors failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser Interest,shall constitute Lessors elecfion to have such event constitute the termination of such Interest. 36. Consents. Except as othervlse provided herein,wherever In this Lease the consent of a Party Is required to an act by or for the other Party,such consent shell not be unreasonably withheld or delayed. Lessors actual reasonable costs and expenses(Including but not limited to architects',attorneys', englneere'and other consultants'fees)Incurred In the consideration of,or response to,a request by Lessee for any Lessor consent,Including but not limited to consents to an assignment,a subletting or the presence or use of a Hazardous Substance,shall be paid by Lessee upon receipt of an Invoice and supporting documentation,therefor. Lessors consent to any act,assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists,nor shall such consent be deemed a waiver of any then existing Default or Breach,except as may be otherwise specifically stated In writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessors consent shall not preclude the Imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent Is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination,the deterrnlning party shall furnish Its reasons In writing and In reasonable detail within 10 business days following such request. 37. Guarantor. 37.1 Execution. The Guarantors,If any,shall each execute a guaranty In the form most recently published by the American Industrial Real Estate Assocleticn. 37.2 Default. It shall constitute a Default of the Lessee If any Guarantor fails or refuses,upon request to provide: (a)evidence of the execution of the guaranty,including the authority of the party signing on Guarantors behalf to obligate Guarantor,and In the case of a corporate Guarantor,a certified copy of a resolution of Its board of directors authorizing the making of such guaranty,(h)current financial statements,(c)an Estoppel Certificate,or (d)written confirmation that the guaranty Is still In effect. 38. ' Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants,conditions and provisions on Lessee's part to be observed and performed under this Lease,Lessee shall have quiet possession end quiet enjoyment of the Premises during the tans hereof. 39. Options. If Lessee Is granted an Option,as defined below,then the following provisions shall apply. 39.1 Definition. "Option'shall mean: (a)the right to extend the term of or renew this Lease or to extend or renew any lease that Lessee has on other property of Leeson,(b)the right of first refusal or Most offer to lease either the Premises or other property of Lessor;(a)the right to purchase or the right of first refusal to purchase the Premises or other property of Lessor. 39.2 Options Personal To Original Lesssa. Any Option granted to Lessee In thls Lease Is pemonal to the original Lessee,and connol be assigned or exercised by anyone other than said original Lessee and only while the original Lessee Is in full possession of the Premises and,if requested by Lessor,with Lessee certifying that Lessee has no Intention of thereafter assigning or subletting. 39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease,a later Option cannot he exercised unless the prior Options have been validly exercised. 39.4 Effect of Default on Options., (a)Lessee shell have no right to exercise an Option: (I)during the period commencing with the giving of any notice of Default and continuing until said Default Is cured,(11)during the period of time any Rent Is unpaid(without regard to whether notice thereof Is given Lessee),(III)during the time Lessee Is In Breach of this Lease,or(Iv)In the event that Lessee has been given 3 or more notices of separate Default,whether or not the Defaults are cured,during the 12 month period Immediately preceding the exercise of the Option. (b)The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's Inability to exercise an Option because of the provisions of Paragraph 39.4(a). (c)An Option shall terminate end be of no further force or effect,notwithstanding Lessee's due and timely exercise of the Option,If,after such exercise and prior to the commencement of the extended tarts or completion of the purchase,(I)Lessee falls to pay Rent for a period of 30 days after such Rent becomes due(without any necessity of Lessor to give notice lhereol),or(II) If Lessee commits a Breach of[his Lease. 40. Security Measures. Lessee hereby acknowledges[hat the Rent payable to Lessor hereunder does not Include the cost of guard service or other security measures,and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises,Lessee,Its agents and Invitees and their property,from the acts of third parties. In the event,however,that Lessor should elect to provide security services,than the cost thereof shall be an Operating Expense. 41. Re.matters. (a) Lessor reserves the right:(1)to grant,without the consent or joinder of Lessee,such easements,rights and dedications that Lessor deems necessary,(II)to cause the recordation of parcel maps and restrictions,(III)to create and/or Install new utility raceways,so long as such easements, rights,dedications,maps,restrictions,and utility raceways do not unreasonably Interfere with the use of the Premises by Lessee. Lessor may also:change the name,address or title of the Building or Project upon at least 90 days prior written notice;provide and Install,at Lessees expense,Building standard graphics on the door of the Premises and such portions of the Common Areas as Lessor shall reasonably deem appropriate;grant to any lessee the exclusive right to conduct any business as long as such exclusive right does not conflict with any rights expressly given herein;and to place such signs, notices or displays as Lessor reasonably deems necessary or advisable upon the roof,exterior of the Building or the Project or on pole signs In the Common Areas. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate such rights. 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 Lessor. (b) Lessor also reserves the right to move Lessee to other space of comparable size In the Building or Project. Lessor must provide at least 45 prior written notice of such move,and the new space must contain improvements of comparable quality to those contained within the Premises. Lessor shall pay the reasonable out of pocket costs that Lessee Incurs with regard to such relocation,Including the expenses of moving and necessary stationary revision costs. In no event,however,shall Lessor he required to pay an amount In excess of two months Base Rent. Lessee may not be relocated more than once during the term of[his Lease. (c) Lessee shall not: (I)use a representation(photographic or otherwise)of the Building or Project or their name(s)In connection with Lessee's business;or(II)suffer or permit anyone,except In emergency,to go upon the roof of the Building. 42. Performance Under Protest. If at any time a dispute shell arise as to any amount or sum of money to he paid by one Party to the other under the previsions hereof,the Perry 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 an the part of said Party to pay such sum or any part thereof,said Party shall be entitled to recover such Initials Initials Page 11 of 12 01999-American Induslrlal Real Estate Association �� FORM OFG-0.9199E sum or as much thereof as It was not legally required to pay. 43. Authority. (a) If either Party hereto Is a corporation,trust,limited liability company, partnership,or similar entity,each Individual executing this Lease on behalf of such entity represents and warrants that he or she Is duly authorized to execute and deliver this Lease on Its behalf.Each party shall, within 30 days after request,deliver to the other party satisfactory evidence of such authority. (b) If this Lease Is executed by more then one person or entity as"Lessee",each such person or entity shall be jointly and severally liable hereunder. It Is agreed that any one of the named Lessees shell be empowered to execute any amendment to this Lease,or other document ancillary thereto and bind all of the named Lessees,and Lessor may rely on the same as If all of the named Lessees had executed such document. 44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 45. Offer. Preparation of this Lease by either party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease Is not Intended to be binding unit executed and delivered by all Parties hereto. 46. Amendments. This Lease may he modified only In writing,signed by the Parties In Interest at the time of the modiflcaticn. As long as they do not materially change Lessee's obligations hereunder,Lessee agrees to make such reasonable nonmonetary modifications to this Lease as may be reasonably required by a Lender In connection with the obtaining of normal financing or refinancing of the Premises. 47. Multiple Parties. If more than one person or entity Is named herein as either Lessor or Lessee,such multiple Parties shall have joint and several responsibility to comply with the terms of this Leese. 48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease ❑ Ia❑ Is not attached to this Lease. 50. Americans with Disabilities Act. In the event that as a result or Lessee's use,or Intended use,of the Premises the Americans with Disabilities Act or any similar low requires modifications or the construction or Installation of Improvements In or to the Premises,Building,Project and/or Common Areas, the Parties agree that such modifications,construction or Improvements shall be made at:❑ Lessor's expense ❑ Lessee's expanse. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN,AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT,AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,LEGAL EFFECT,OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE, 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING AND SIZE OF THE PREMISES,THE STRUCTURAL INTEGRITY,THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE. WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA,CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED. The parties hereto have executed this Lease at the place and on the dales specified above their respective signatures. Executed at: Executed at: on: on: By LESSOR: By LESSEE: A&J Palmas Limited Partnership Palm Sprincia Police Department By: By: Name Printed: Name Printed:Lee Weigel Title: Tire:Chief of Police By: By: Name Printed: Name Printed: TRW Title: Address:18980 Ventura Blvd., #200 Address:559 S. Palm Canyon #BIOS Tarzana, CA 91356 Palm Springs, CA 92264-7468 818-996-9666 760-323-8119 Telephone/Facsimile Telephone/Facsimile Federal ID No. Federal ID No. LESSOR'S LESSEE'S BROKER: BROKER: CB Richard Ellie Alin:Vincent Battaglia Alin: Address: 74-770 Hwy. 111, #101 Address: Indian Wells, CA 92210 760-773-3555/ FAX: 760-341-8602 Telephone/Facsimile No. Telephone/Facsimile No. These forms are often modified to most changing requirements of law and needs of the Industry.Always write or call to make sure you are utilizing the most current forth:American industrial Real Estate Association,700 South Flower Street,Suite 600,Los Angeles,CA 90017. (213)687.8777. @Copyright 1999-By American Industrial Real Estate Association. All rights reserved. No part of these works may be reproduced In any form without permission In writing. Initials Initials Page 12 of 12 01999-American Industrial Real Estate Association " / —13 FORM OFG-1-9199E MINUTE ORDER NO. APPROVING A LEASE AGREEMENT WITH A&J PALMAS LIMITED PARTNERSHIP FOR A POLICE OFFICE LOCATED AT 559 SOUTH PALM CANYON, IN A FORM APPROVED BY THE CITY ATTORNEY. ------------------ I HEREBY CERTIFY that this Minute Order, approving a lease agreement with A&J Palmas Limited Partnership for a police office located at 559 South Palm Canyon, in a form approved by the City Attorney, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the day of , 2002. PATRICIA A. SANDERS City Clerk