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HomeMy WebLinkAboutFOSTER ASSESSMENT CENTER & TESTING SERVICE (FACTS)PAGE TABLE OF OjaujTS OF LEASE i BASIC LEAVE PROVISIONS ii ARTICLE1. Premises ..................... ................. ARTICLE 2. Term .................... ........... 1 ARTICLE 3. Comple.tion and Acceptarr-e of+ premises ............................... ............ 1 ARTICLE 4. Rent ................ ............. 1 ARTICLE5. Force Nbjeure...........................................................« 2 ARTICLE 6. ...... Security Ih-posit..................... ...................... 2 ARTICLE 7. Use Restrictions .................. ....... ARTICLE 8. Service and Utilities .................... 3 ..................................... 3 ARTICLE9- CCo npliance with Taws and Restrictions ............................ 4 ARTICLE 9. ........... terations, Furniture and Trade Fixtures ................... 5 ARTICLE 11. Coalition of Premises, During Lease Term and Upon Surrender of Premises.....,.., 5 ARTICLE 12. I.lens................................................... 6 ARTICLE 13. Assi,gnwmt and Subletting .......................................... 7 hRTICLE 14. Indemnification and Ibn-Liability of Owner ................. 8 ARTICLE15. Taxes........................................................................... 9 ARTICLE 16. Lioldin, Over ....................................... ARTICLE 17. Rules and Re;ulations........................................................... 9 ARTICLE 18. Re -Entry by Mer................................. .......................... 10 ARTICLE 19. Insolvency or Bankruptcy........................................................ 10 ARTICLE 20. Default; Ri-ltAies.................................... ARTICLE21. Casualty Dawge................................................................. 11 ARTICLE22. Eminent L .................................................. I.............. 14 ARTICLE23. Transfer of Tamer's Interest .................................................... 15 ARTICLE 24. W-o-,r's Right to Perform Tenant Obligations ..................................... 15 ARTICLE 25. Legal Expenses .................................................... ARTICLE 26. Late Payments: Interest and Late Charges ........................................ 15 ARTICLE27. Broker .......................................................................... 16 ARTICLE28. Waiver ..............................«....,.,.,,........,.....,.....,,........... 16 ARTICLE29. Rights of D Aier............... I................................................. 17 ARTICLE30. Substituted Premises ........................... ARTICLE 31. Waivers of Subrogation ................. ..................................... 1.•...- . 17 ARTICLE 32. Estop;xal Certificate............................................................ 18 ARTICLE 33. Notices ........................... 18 ARTICLE 34. Abandorrrent..................................................................... 18 ARTICLE 35. Addenda, Exhibits and Riders .................................................... 19 ARTICLE36. Invalidity...................................................................... 19 ARTICLE37. Interpretation and Governing Taw ................................................ 19 ARTICLE38. Defined Terms and Captions ..................................................... 19 ARTICLE39. Entire Agreement; Amendments.................................................... 20 ARTICLE40. Time of the Essence............................................................. 20 ARTICLE. 41. Execution and Examination of Luse .............................................. 20 ARTICLE42. Covenant of Quiet Enjoyment..................................................... 20 ARTICLE43. Successors and Assigns .......................................................... 21 ARTICLE44. Subordination................................................................... 21 ARTICLE45. Insurance....................................................................... 21 ARTICLE46. CjwLative Rights............................................................... 22 ARTICLE47. Accord and Satisfaction, Receipt of 1bney....................................... 23 ARTICLE. 48. Recording....................................................................... 23 ARTICLE49. Authority....................................................................... 23 ARTICLE50. Parking......................................................................... 24 SICNAZURFS..................................................................... 25 RIDERS EMIBITS MAR 1988 Mc In consideration of the rents and covenants bereinaf ter set forth, Owner hereby leases and demises to Tenant, and Tenant hereby leases and takes from Owner, the premises l-p-reinafter described on the terms and conditions set forth in this Lease Agreement, bereinafter called the "Lease". BASIC LEASE PROVISIONS The words and figures set forth in Paragraphs A to A, both inclusive, are part of this Lease area relate to the ntnbered articles which follow: A. Date of Lease: As of February 3, 19 98 B. Owner; City of Santa Ana, municipal corporation of the State of California. C. Tenant: Foster Assessment Center & Testing Service dba (if any): D. Property: 1000 E. Santa Ana Boulevard, City of Santa Ana, County of orange, State of Califor- nia, herein called the "ProPerty". The Property is shown on the Site Plan attached hereto as Exhibit "D", and shall include the building, laTdscaping, parking facilities, and all other improvemnts and appurtenances to the Property, as well as the underlying land. E. Premises: Suite(s) 107 as generally shown and outlined in red on the Floor Flan(s) attached hereto as Exhibit "A", located on the 1st floor(s). The Premises have a total area of approximately 900 square feet. F. Permitted Use of Premises. General office / testing space See Article 7. O. Period of Term: 1 year with Two 1-year renewal options _ H. Estimated Comm2ncem_=nt Date: June 1, 1998 1. Com)2ncen:nt Date* June 1 , 199'8. _ Expiration Date: The last day of the month of ----May 31 1999 J. Annual Basic Rent: $ 21, 276.00 ($ _ e e.Y.ext-it_ _h ee per month). See Rider No. 1 for adjustment to basic rent. Minimum adjustment aunt shall be N/A K. Broker: N/A See Article 27. L. Security Deposit: $ 1 , 0 0 0 . 0 0 (Does not include rent for first full calendar month). See Article 6. M Owrer`s Phone Nimes and Address for Notices and Payments: _ (714) 64_7-6554; Santa Ana Tonal eor Transtation Center, 1000 E. Santa Ana Boulevard, Onntn Ana, California 42701 — N. Tenant's Address for Notices: 1000 E Santa Ana Blvd. , Suite 107 Santa na, _ 0. Exhibits: The following Exhibits are attached hereto and made a part hereof: Fehhi A`r - F eer-� Exhibit ,B" - Tenant Improvement Schedule, Exhibit "C' - Rules and Regulations, Exhibit "D" - Site Plan __ P. Riders: The following Riders are attached hereto and made a part hereof. Rider(s) No. 1 _ regarding rental adjustment. Q. Late Charge: 10 y of unpaid amounts. See Article 26. R. Miscellaneous: Rider No. 3 Owner's Initials Tenant's Initials MAR 1988 -ii- . AIi1ZC[E 1. PM41SES. Owner hereby leases and demises to Tenant and Tenant hereby leases and takes from Owner those cer- tain premises (the "Premises") described in Paragraph E of the Basic lease Provisions. The location of the Premises is generally sham in the Floor Plan(s) attached hereto as Exhibit "A" (it being understood, truer, that such Floor Plan(s) do(es) not constitute a representation of the rr_asure- ments of the Premises). "Owner" herein is the City of Santa Ana, a municipal corporation of the State of California which is the Lessee of the Property pursuant to tM Tease Agreements and two Site Leases between Owner and the Comity Redevelopment Agency of the City of Santa Ana, all of which lease agreements are dated as of June 1, 1983. This Lase is subject to the terms, covenants and conditions herein set forth, and Tenant covenants to comply with all of such terms, covenants and conditions. ARTICLE 2. Teed. - As used in this lease, the words set forth in quotes below shall have the meanings indicated as fol- lows: A. "Estimated Commencement Date": The date upon which it is presently estimated that the Premises will be ready for Tenant's use pursuant to this Lease, as set forth in Paragraph H of the Basic Tease Provisions. Tenant agrees that Owner shall have no liability, nor shall Tenant be entitled to terminate or cancel this lease, if the lease term does not commence by the Estimated Commencement Date. B. ,Camncenent Date': If the Comencement Date is known upon the execution hereof and agreed between the parties, such date and the Expiration Date are as shown in Paragraph I of the Basic Lease Provisions, and upon the occurrence of the Co®encement Date, the term hereof shall co¢mence. If such dates are not known upon the execution hereof, then the Cauencemant Date shall be the ear- liest of the following three dates: (1) the seventh day following the Beneficial occupancy Date as defined in Section 3B below; or (2) the date upon which Tenant takes possession of the whole or any part of the Premises for occupancy pursuant to this Lease; or (3) the date which the parties agree shall be the Commencement Date. if the Co®encement Date is determined pursuant to Paragraph (1)7 (2) or (3) above, the term shall thereupon commnce, and the parties shall promptly execute such form as shall be required by Owner stating the Commencement Date and the Expiration Date, which dates shall be deemed part of the Basic Lase Provisions. C. "Lease term": The lease term shall be for the amber of years set forth in Paragraph G of the Basic Lease Provisions from and after the Commencement Date, plus any period of less than One month between the Commencement Date and the first day of the next succeeding calendar month. ARTECLE 3. O: MP=ON AND ?DANCE OF PRaTLSES. A. By Estimated Ca=ncement Date. subject to delay occasioned by causes beyond Owner's reasonable control, Owner shall use reasonable speed and diligence to perform its obligations pursuant to Exhibit 'T of this Tease; provided, however, failure to complete same by the Estimated Com2ncement Date shall not affect the terms, validity or commencement of this Lease, and Oomr shall have no liability to Tenant on account thereof. MAR 1988 -1- B. Beneficial occupancy Date. The Premises shall be deemed ready for berrnficial occupancy )herein 1'Beneficial occupancy Date") win Cwoer shell have substantially completed all of its obligations (if any) under Exhibit 'B". owner's sole construction obligation (if any) regarding leasehold improvements for Tit shall be as set forth in Exhibit '+B". If Exhibit "B" states that it has been intentionally omitted from this Lease or if there is no Exhibit "B" attached to this lease, owner shall have no construction obliga- tions whatsoever regarding leasehold improvements for Tenant. By taking possession of the Premises, Tenant acknowledges having inspected same and accepts the Premises as being in good and sanitary order, condition and repair, and accepts the improvements (if any) as having been completed in accordance with the provisions of Exhibit "B" hereof. ARTICLE 4. RENT. Tenant shall pay to Owner annual basic rent for the Premises in the amount set forth in Paragraph J of the Basic Lease Provisions, subject to adjustment as provided in Rider(s) attached hereto. Said annual basic rent shall be paid in advance on or before the first day of each and every calendar month during the term hereof in the amount per month set forth in Paragraph J of the Basic lease Provisions. If the Commencement Date is other than the first day of a calendar month, the rent pay- able hereunder shall be prorated and the rent for the partial month following the Commencement Date shall be payable on the first day of the first full calendar month of the term, together with the regular monthly payment then due. All subsequent monthly rental payments ahll be paid in advance on the first day of each calendar month. All payments requiring proration shall be prorated on the basis of a 30 day month. Any amounts payable by Tenant in addition to the above described basic rent shall be deemed addi tional rent payable by Tenant, and in the event of nonpayment thereof, 0.mer shall have the same rights with respect to such nonpayment as it has with respect to any nonpayment of basic rent - Said rent shall be paid to Owner without reduction or set off, in lawful money of the United States, to Owner or its agent at the address set forth in Paragraph M of the Basic lease Provisions, or to such other person or at such other place as Owner may from time to time designate in writing. ARTICLE 5. FORCE MAJE - If either party, except as otherwise herein specifically provided, shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of poster, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature not the fault of the party delayed in performing work or doing acts required under the terms of this lease, then performance of such act shall be excused for the period of delay and the period of the performance of any such act shall be extended for a period equivalent to the period of such delay. In the event of any incon- sistency between this Article and F. bit "B" of this lease, the provisions of Exhibit "B shall prevail. The provisions of this Article shall not operate to excuse Tenant from the prompt payment of basic rent, additional rent or any other payments required by the terms of this Ipase. Concurrently with the execution of this Tease, Tenant shall deposit with Owner the sum stated in Paragraph L of the Basic lease Provisions, as partial consideration for Owner entering into this MAR 1988 -2- Tense, and as security for the full and faithful performance of every provision of this Lease to be performed by Tenant. If Tenant defaults with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of rent, Daher may (but shall not be obligated to) use, apply or retain all or any part of this security deposit for the payment of any rent or any other amauut which Owner may spend or become obligated to spend by reason of Tenant's default. The fact that Owner is holding or applying such deposit shall not affect Owners remedies upon any breach of this Tease by Tenant. If any portion of said deposit is so used or applied, said applira-- tion of funds shall not constitute liquidated damages for such default by Tenant, and Tenant shall, within five days after written demand therefor, deposit cash with Owner in an amotnut sufficient to restore the security deposit to its original amount, and Tenant's failure to do so shall be a breach of this Tease. Owner shall not be required to keep this security deposit separate from its general funds, and Tenant shall not be entitled to interest on such deposit. If Tenant shall fully and faithfully perform every provision of this lease to be performed by it, the security deposit or any balance thereof shall be returned to Tenant within two weeks following the expiration or earlier termination of the term hereof. However, upon any termination of Owner's interest in the building of which the Premises are a part (herein "Building"), whether by sale, assignment, or otherwise, Owner or its agent shall, within a reasonable time (not to exceed two weeks from the date on which Owner's interest in the Building is terminated), do one of the following acts, either of which shall relieve Owner of further liability with respect to the above described security deposit: (a) Transfer the portion of such security deposit remaining (after any deductions made hereunder) to Owner s successor in interest, and thereafter notify Tenant of such transfer, of any claims made against the security deposit, and of the transferee's nay and address. If the notice to Tenant is made by personal delivery, Tenant shall acknowledge receipt of such notice and sign his name on the Owners copy of such notice; (b) Return to Tenant the portion of such payment or deposit remaining after any deductions made hereunder. A191CfE 7. USE RE=CTIONS. The. Premises shall be occupied and used by Tenant solely for the purpose of conducting therein the business stated in Paragraph F of the Basic Lease Provisions and for no other purpose without the prior written consent of Owner. Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything therein which will in any way increase the existing rate of (or adversely affect the coverage under) any, policy of fire or other insurance upon the Building, the Property and/or any personal property therein or thereon, not shall Tenant obstruct or interfere in any way with the rights of other tenants or occupants of the Property of which the Building is a part (herein "Property") or injure or amoy them, nor shall Tenant use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose. Tenant shall not cause, maintain or permit any nuisance in, on or about the Premises, nor shall Tenant commit, allow or suffer to be camuitted any waste in, on or about the Premises. Tenant shall conduct its business or profession in the manner approved by the generally accepted written or unwritten code of ethics thereof. AFMCM 8. SERVICE AMID UM =- D;,rer agrees to furnish to the Premises, if above the ground floor of the Building on generally accepted business days from 8 a.m. to 6 p.m., and on Saturdays from 8 a.m. to 12 noon, and if on the ground floor of the Building for such greater number of hours during which the ground floor areas are open to the public, subject to the rules and regulations of the Property, water and electricity Suitable for the intended use of the Premises, heat, ventilation and air-conditioning required in Owner's judgment for the comfortable use and occupation of the Premises during such days and hours (subject to any governmental requirements or standards relating to, among other things, energy con- servation), janitorial services and elevator service. Owner shall also maintain the plumbing, air-- conditioning and electrical systems and elevators in the Building, as well as the common areas in the Building and elsewhere on the Property. MAR 1988 -3- Owner may impose a reasonable charge for any utilities and services, including, without limitation, air-conditioning, electric current and water, required to be provided by Owner by reason of any sub- stantial recurrent use of the Premises at any time other than the hours at 8 a.m. to 5 p.m., Monday through Friday and 8 a.m. to 12 noon on Saturday, or any use beyond what Owner agrees to furnish as described above, or special electrical, cooling and ventilating needs created in certain areas by hybrid telephone equipment, computers and other similar equipment or uses. At Owner's option, sepa- rate meters for such utilities and services may be installed for the Premises, and Tenant, upon demand therefor, shall pay Owner for the installation, maintenance and repair of such meters. Tenant agrees to cooperate fully at all times with Owner and to abide by all regulations and requirements which Owner may prescribe for the use of the above utilities and services. Any failure to pay any excess costs as described above shall constitute a breach of the obligation to pay rent under this lease and shall entitle Owner to the rights granted in this Lease for such breach. Owner shall not be in breach of its obligations under this Article unless Owner fails to make repairs or perform maintenance which it is obligated to perform hereunder and such failure persists for an unreasonable time after written notice of the reed for such repairs or maintenance is given to Owner by Tenant. Nor shall Owner be liable for injury to persons or loss of or damage to fix- tures, equipment or other personal property, however occurring, resulting from a failure to repair or maintain, unless caused by such failure having persisted for an unreasonable time (after written notice of the need for such repairs or maintenance is given to Owner by Tenant) and through no fault of Tenant. In no event shall any such failure to rerepair or maintain on the part of Owner be corr- strued as a constructive or actual eviction of Tenant or entitle Tenant to any abatement or redur tion of rent. Owner shall not be liable for (and Tenant shall not be entitled to any abatement or reduction.of rent by reason of) Owner's failure to furnish any of the foregoing when such failure is caused by shortages, black -outs, accidents, breakage, repairs, strikes, lockouts or other labor dis- turbances or labor disputes of any character, or by any other cause, similar or dissimilar, beyond the reasonable control of Owner, nor shall such failure under such circumstances be construed as a constructive or actual eviction of Tenant. Tenant shall not, without the prior written consent of Owner, use any apparatus or device in the Premises (including but not limited to electronic data processing machines, punch card machines and machines using current in excess of 110 volts) which will in any way increase the amount of elec- tricity or water normally furnished or supplied for use of the Premises as general office space, nor shall Tenant connect with electric current (except through existing electrical outlets in the Pre- mises, or water pipes, if there are any) any apparatus or device for the purpose of using electric current or water. If Tenant shall require water or electric current in excess of that usually furor ish d or supplied for use of the Premises as general office space, Tenant shall first procure the written consent of Owner to the use thereof, and Owner may cause a water meter or electric current meter to be installed, so as to measure the amount of water and electric current consumed for any such other use. The cost of any such meters and of installation, maintenance and repair thereof shall be paid for by Tenant, and Tenant agrees to pay Darer, promptly upon demand, for all such water and electric current consumed as shown by said meters, at the rates charged for such services by the jurisdiction in which the Building is located or by the local public utility furnishing the same, whichever the case may be, plus any additional expense incurred in keeping account of the water and electric current so consumed. Notwithstanding anything hereinabove to the contrary, Omer reserves the right from time to time to make reasonable and nondiscriminatory modifications to the above standards for utilities and ser- vices. ARTICLE 9. COMPLIANCE WM LAWS AMID RESTRIMCN5. Tenant shall not use the Premises in any way (or permit or suffer anything to be done on or about the Premises which will conflict with any law, statute, ordinance or governmental rule or regulation or any covenant, condition or restriction {whether or not of public record) affecting the Property, now in force or which may hereafter be enacted or promulgated, Tenant shall, at its sole cost and expense, promptly comply with (a) all laws, statutes, ordinances, and governmental rules and regula- tions now in force or which may hereafter be in force, (b) all requirements, covenants, conditions and restrictions, now in force or which may hereafter be in force, and (c) all requirements (now in force or which may hereafter be in force) or any board or fire underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Pre- mises, excluding structural charges to the Premises not related to or affected by Tenant's improve- ments, acts or use of the Premises. The judgment of any court of competent jurisdiction or the admission by Tenant in any action against Tenant, whether Owner be a party thereto or not, that MAR 1988 -4- Tenant has violated any law, statute, -ordinance, governmental rule or regulation or any requirement, covenant, condition, or restriction shall be conclusive of that fact as between Owner and Tenant. Tenant agrees to fully indemnify Owner against any liability, claims or damages arising as a result of a breach of the provisions of this Article by Tenant, and against all costs, expanses, fines or other charges arising therefrom, including, without limitation, attorneys' fees and related costs incurred by Owner in connection therewith, which indemnity shall survive the expiration or earlier termination of this base. ARTICLE 10. ALTEF TIONS, FURNITURE AND TRADE FIXI M- Tenant shall not make or allow to be made any alterations, additions or improvements to or of the Premises or any part thereof without the prior written consent of Owner, which shall not be unrea- sonable withheld, and any alterations, additions or improvements to or of the Premises, except mov- able furniture, other movable personal property, and trade fixtures, shall at once belong to the Owner. If Owner consents to the making of any alterations, additions or improvements to or of the Premises by Tenant, the same shall be made at Tenant's sole cost and expense and (at the option of Owner) under Owner s-direction. The plans, specifications and contractor(s) being used for such alterations, additions or improvements must first be approved in writing by Owner. Nothing corn tained in this Article shall be interpreted as requiring Tenant to make any alterations, additions or improvements to or of the Premises, or as rendering Tenant an agent of Owner in making any such alterations, additions or improvements. Tenant shall give Owner at least ten business days" prior written notice of the date of crmme=ement of any construction on the Premises. Before commencement of any such work, Tenant shall obtain (or have its contractor obtain) public liabil- ity insurance for personal injury and property damage (with Owner as additional insured) and worker's compensation insurance. The liability policy coverage shall not be less than $500,000 ccur- bined single limit, and the worker's compensation coverage shall not be less than the minim4n required by the State of California. Fach such policy (arid certificate thereof) shall be in full compliance with the provisions of Section 451) of this Lease. Upon the expiration or earlier termination of the lease term, Tenant shall remove from the Premises all movable furniture and other movable personal property, and shall promptly repair any damage caused to the Premises or the Building by such removal. All of such removal and repair shall be entirely, at Tenant's expense. Tenant shall not remove any shelving, cabinet units (whether same are for storage or library purposes or for any other purpose) or other similar improvements to the Pre- mises unless requested to do so by Owner as hereinafter provided. At any time within 15 days prior to the scheduled expiration of the lease term, or immediately upon any termination of this Lease, Owner may demand that Tenant remove from the Premises any alterations, additions, improvements, trade fixtures, equipment, shelving, cabinet units or movable furniture (and otter personal prop- erty) desivnated by Owner to be removed. In such event, Tenant shall complete such removal (includ- ing the repair of any damage caused thereby) entirely at its own expense and within 15 days of Owner s demand. All repairs required of Tenant in this paragraph shall be performed in a manner satisfactory to the Owner, and shall include, but not be limited to, the following: cap all plumb- ing, cap all electrical wiring, repair all holes in walls, restore damaged floor and/ceiling tiles, repair any other cosmetic damage, and clean the Premises. If Tenant fails to remove from the Premises any of its trade fixtures, movable furniture or other movable personal property (or any items requested by Owner to be removed pursuant to the above para- graph) by the expiration or earlier termination of this lease, then Owner may, at its sole option (i) treat Tenant as a holdover, in which event the provisions of Article 16 of this lease shall apply; or (ii) deem any or all such items as abandoned, in which event the provisions of Paragraph 2OB(2) shall apply. ARTICLE 11. CONDITION OF PRaUSFS, DURING LEASE TEEM AND UPON SURRENDER OF PR=SES As part of the consideration for the leasing of the Premises, Tenant covenants and agrees, at Tenant-s sole cost and expense, to keep the Premises as clean and sanitary as the condition of the MAR 1988 -5- Premises permits, and to properly use,and operate all electrical, gas and plumbing fixtures and keep them as clean and sanitary as their condition permits. Neither Tenant nor any subtenant, agent, employee, servant or invitee of Tenant shall destroy, deface, damage, impair or remove any part of the Building or the facilities, equipment or appurtenances of the Building or the Property, nor shall Tenant permit any person to willfully or wantonly do any such thing. Tenant shall make all repairs to the Premises, the Building or the Property which are required, in the opinion of Owner, as a result of any misuse or neglect committed or permitted by Tenant or by any subtenant, agent, employee, servant or invitee of Tenant. Tf Tenant does not make repairs promptly and adequately or fails to maintain the Premises in good order and repair, then, following written notification to Tenant, Owner may, but need not, perform such repairs and/or maintenance, and any amounts paid by Owner (pursuant to Article 24 hereof) in connection with such repairs and/or maintenance shall be reimbursable (plus 20% for overhead) by Tenant to Owner upon demand. if Owner performs any such repairs and/or maintenance on behalf of Tenant, Owner shall not be liable to Tenant for any loss or damage that may accrue to Tenant's merchandise, fixtures, or other property or to Tenant's business by reason thereof, nor shall any such activity be deemed a constructive or actual eviction or entitle Tenant to any abatement or reduction of rent. To the fullest extent permitted by law, Tenant hereby waives all rights under (and the benefits of) Sections 1932, 1933(4) and 1942 of the California Civil Gde (as such sections now exist or may be amended from time to time) and any successor sections or statutes of a similar nature. Except as specifically set forth to the contrary in this leas,, Owner has no obligation to alter, remodel, repair, improve, maintain, decorate or paint the Premises or any part thereof, and no representa- tions or warranties respecting the conditions of the Premises, the Building or the Property (or the suitability of any, of same for the conduct of Tenant's business) have been made by Mier or by any of Owner's agents or employees. Unless Owner demands otherwise pursuant to Article 10 above, Tenant shall, upon the expiration or earlier termination of the tenancy hereby created, surrender to Owner the Premises in the same corn dition as the Premises were in upon delivery of possession thereto under this Lease, broom clean, reasonable war and tear excepted, surrender all keys for the Premises to Owner at the place then fixed for the payment of rent, and inform Owner of all combinations of locks, safes and vaults, if any, on the Premises. Tenant shall perform all obligations referred to in Article 10 regarding the removal of personal property, trade fixtures, etc. (and the repair of any damage caused by such removal) prior -to surrendering the Premises to Owner. If the Premises are not surrendered upon the expiration or earlier termination of the Vase term, either due to the failure by Tenant to timely perform its aforementioned removal and repair obligations under Article 10 or for any other reason, Tenant shall fully indemnify Owner against all loss or liability resulting from delay by Tenant in so surrendering the Premises, including, without limitation, any claims made by any succeeding tenant founded on such delay. Promptly following the expiration or earlier termination of the term of this lease, if requested by Owner, Tenant shall execute, acknowledge and deliver to Owner a recordable written instrument releasing and quitclaiming to Mier all right, title and interest of Tenant in the Premises by reason of this Lease or otherwise. ARTLCCE 12, LIMS. Tenant shall keep the property free from any mechanics" or materialmen's liens and any other liens or a similar nature placed upon the Property by reason of or in connection with any repairs, addi- tions, alterations or improvements contracted for or initiated by Tenant, and shall be solely responsible for making payments for such work and discharging liens for such work. Tenant agrees to fey indemnify Owner with respect to all liability for all such liens, claims and demands, together with reasonable attorneys` fees and all costs and expenses in connection therewith. Owner shall have the right at all times to post notices of nonresponsibility on the Premises and record verified copies thereof in connection with all work of any kind done on the Premises. Tenant shall, at the request of Owner, provide Owner with signed and notarized lien releases and paid receipts from any general contractor, subcontractor, materialman or other person furnishing labor and/or materials in connection with such work, as well as any other evidence required by Owner to demonstrate that there shall be no liens affecting Owner or the Property by reason of such work. Any amount paid by Owner (pursuant to Article 24 hereof) to discharge or bond around any such liens shall be payable by Tenant to Owner upon demand. MAR 1988 -6- ARTICLE 13. ASSIGdENTT AND SUBIETTIIT. A. Tenant may not transfer or assign this lease or any right or interest hereunder, or sublet the Premises or any part thereof without first obtaining Owners prior written consent, which shall not be unreasonably withheld, provided that Owner shall not be liable in damages (to Tenant or to the proposed assignee or subtenant) if such consent is adjudicated to have been unreasonably withheld; moreover, in such event, Tenant's sole remedy shall be to have the proposed assignment, subletting or other transfer declared as valid as if Owner's consent had been given, although Tenant shall be entitled to reasonable attorneys fees if it is the prevailing party in such litigation. It shall not be unreasonable for Owner to withhold such consent because it wishes to exercise its rights to recapture all or part of the Premises under Section 13G hereof, or for Owner to condition such corn sent upon Owner's determination that (1) Tenant is not in default in the performance of any of its obligations (monetary or non -monetary) under this lease; (2) the proposed assignee or subtenant is as financially responsible as Tenant; and (3) evidence has been furnished to Owner which shows (to Owner's satisfaction) that the proposed assignee or subtenant is likely to conduct on the Premises a business of a quality substantially equal to that conducted by Tenant. No transfer or assignment (whether voluntary or involuntary, by operation of law, under legal process or proceedings, by receivership, in bankruptcy, or otherwise) or subletting shall be valid or effective without such prior written consent. Should Tenant attempt to make or allow to be made any such transfer, assigrr- ment or subletting, except as aforesaid, or should any of Tenant's rights under this lease be sold or oti'onwise transferred by or under court order or legal process or otherwise, then and in any of the foregoing events, Owner may, at its option, treat such act as a default by Tenant under the pro- visions of this Lease. Should Owner consent to any such transfer, assignment or subletting, such consent shall not constitute a waiver of any of the restrictions of this Article, and the same shall apply to each successive transfer, assign-nt or subletting hereunder, if any. B. If Tenant hereunder is a corporation, a division or subsidiary of a parent corporation, an unirr corporated association, or a partnership, then the transfer, assignment or hypothecation of any stock or interest in such corporation, parent corporation, association or partnership in the aggre- gate in excess of 25% shall be deemed an assignment within the meaning and provisions of this Article. Notwithstanding the foregoing, this Section 13B does not apply to: (i) a transfer or assignment of any such stock or interest by a shareholder or member to his spouse, children or grandchildren, or (ii) any corporation which, under the then current guidelines published by the California Commissioner of Corporations, is deemed a public corporation. C. If Owner consents to an assignment, sublease or other transfer by Tenant of all or a portion of Tenant's interest under this lease, Tenant shall pay, or cause to be paid, a transfer fee of $100.00 to cover administrative, accounting and other related expenses. D. If Owner consents to Tenant assigning its interest under this Lease or subletting all or any portion of the Premises, Tenant shall pay to Owner (in addition to rent and all other amounts pay- able by Tenant under this Lease) one-half of the rents and other considerations payable by such assignee or subtenant in excess of the rent payable by Tenant at the time of such subletting or assignment. For the purposes of this computation, the additional amount payable by Tenant shall be determined by application of the rental rate per square toot for the Premises or portion thereof sublet. Such additional amounts shall be paid to Owner immediately upon receipt by Tenant of such rent or other considerations from the assignee or subtenant. E. owner may collect rent from the Assignee, subtenant, occupant, or other transferee, and apply the amount so collected, first to the basic rent herein reserved, then to any additional rent dune and payable and refund the balance (if any) to the Tenant, but no such assignment, subletting, occur- pancy, transfer or collection shall be deemed a waiver of Owner's rights under this Article or the acceptance of the proposed assignee, subtenant, occupant or transferee, or a release of Tenant from the further performance of the covenants obligating Tenant under this Lease. h3otwithstarding any assignment, sublease or other transfer, Tenant shall remain fully liable under this Lease and shall not be released from performing any of the terms, covenants and conditions of this Lease. F. If Tenant desires at any time to assign this lease or sublet the Premises or any portion the- reof, it shall first notify Owner of its desire to do so and shall submit in writing to Owner (1) the name of the proposed subtenant or assignee; (2) the nature of the proposed subtenant-s or assignee's business to be carried on in the Premises; (3) the tenors and provisions of the proposed sublease or assignment; and (4) such financial information as Owner may reasonable request concern- ing the proposed subtenant or assignee. Tenant's failure to comply with the provisions of this See- tion shall be a breach of this Lease. G. if Tenant proposed to assign its interest in this Lease, Owner may, at its option, upon written notice to Tenant within 30 days after Owners receipt of the information specified in Section 13F hereof, elect to recapture the Premises, and within 60 days after notice of such election has been MAR 1988 -7- given to Tenant, this Lease shall terminate. If Tenant proposes to sublet all or part of the Pre- mises, Owner may, at its option, upon written notice to Tenant within 30 days after Owner's receipt of the information specified in Section 13F hereof, elect to recapture such portion of the Premises as Tenant proposed to sublet, and within 60 days after notice of such election has been given to Tenant, this Lease shall terminate as to the portion of the Premises recaptured; if only a portion of the Premises is recaptured, the rent payable under this lease shall be proportionately reduced. If all or a portion of the Premises is recaptured by Owner pursuant to this Section, Tenant hereby agrees to promptly execute a termination agreement for the purpose of setting forth the termination date with respect to the Premises (or the recaptured portion thereof) and prorating the rent and other charges to such date. Notwithstanding the foregoing, if Owner exercises its right to recapture under this Section, Owner shall not lease any part of the recaptured space to the proposed (by Tenant) assignee or subtenant for any period within the remainder of the term of this Lease. H. If Owner does not elect to recapture pursuant to Section 13G, Tenant may thereafter enter into a valid assignment or sublease with respect to the Premises, provided that Owner consents thereto pur- suant to this Article, and provided further that (1) such assignment or sublease is executed within 90 days after Darer has given its consent to same, (2) Tenant pays (or causes to be paid) all amounts owed to Owner under Sections 13C and 13D of this Lease, (3) Tenant is not in default under this Lease as of the effective date of the assignment or sublease, (4) there have been no material changes (since the date on which Owner's consent was given) with respect to the financial condition of the proposed subtenant or assignee or the business which said party plans to conduct on the Pre- mises, and (5) a fully executed original of such assignment or sublease (either of which shall state that the assignee or subtenant agrees to be bound by all of the terms, covenants, and condi- tions of this Lease) is delivered promptly to Owner. 1. Tenant agrees to fully defend aid indemnify Owner with respect to all costs (including attor- neys' fees expended by Owner in connection with any such claim) and liability for compensation claimed by any broker or agent employed by Tenant in connection with any assignment, subletting or other transfer of Tenant's interest under this Lease. J. The voluntary or other surrender of this Lease by Tenant or a mutual termination hereof shall not wark a merger, and shall, at Owner's option, either terminate all or any existing subleases or subtenancies, or shall operate as an assignment to Owner of Tenant's interest under such subleases or subten>ancies. A=CLE 14. r4VEIUICATION AND NO[,i-LIABIL= OF WIEIL Tenant shall fully indemnify Owner against all claims, damages, losses, costs, liabilities and expenses (including attorneys' fees and related costs), bocA--ver caused, arising in whole or in part from Tenant's use of the Property or the conduct of Tenant's business, or from any activity, work, or thing done, permitted or suffered by Tenant (or by any invitee, servant, agent, employee or subtenant of Tenant) on the Property, and shall further indemnify Owner against all claims arising in whole or in part from any breach or default in the performance of any obligations on Tenant-s part to be performed under the terms of this lease or arising in whole or in part from any act, neglect, fault or omission by Tenant (or by any invitee, servant, agent, employee or subtenant of Tenant) anywhere on the Property; and if any action or proceeding is brought against Owner by reason of any such claim, Tenant (upon notice from Owner) shall fully defend the same at Tenant's expense by counsel reasonably satisfactory to Owner. The foregoing indemnity shall not require payment as a condition precedent to recovery, and shall survive the expiration or earlier termination of the Lease with respect to claims arising from acts or omissions which occurred prior to such expira- tion or earlier termination. Tenant, as a material part of the consideration to Owner, hereby assumes all risk of damage to prop- erty, injury and death of persons, and all claims of any other nature resulting from Tenant's use of the Premises or the Property, and Tenant hereby waives all claims in respect thereof against Owner. Neither Owner nor its agents or employees shall be liable for any damage to property of Tenant entrusted to any employee or agent of Owner, nor for loss of or damage to any property of Tenant by theft or otherwise. Owner shall not be liable for any injury or damage to persons or property resulting from any cause, including but nmt limited to fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak from any part of the Property or from the pipes, appliances or plumbing corks therein or from the roof of any structure on the Property, or from any streets or subsurfaces on or adjacent to the Property, or from any other place, or resulting from MAR 1988 dampness or any other causes whatsoever, unless caused by or due to the failure of Owner to repair such condition(s) within a reasonable time (after written notice of the need for such repair is given to Owner by Tenant) and through no fault of Tenant. Neither Owner nor its employees or agents shall be liable for any latent defect in the Property. Nor shall Owner be liable for the negligence or misconduct, including but not limited to criminal acts, by maintenance or other personnel or con- tractors serving the Property, unless Owner is grossly negligent or guilty of willful misconduct. All property of Tenant kept or stored on the Property shall be so kept or stored at the risk of Tenant only, and Tenant shall hold Owner harmless from any claims arising out of damage to the same, including subrogation claims by Tenant-s insurance carriers, unless such damage shall be caused by the willful act or gross neglect of Owner and through no fault of Tenant. Nor shall any of the events or conditions set forth in this paragraph be deemed a constructive or actual eviction or entitle Tenant to any abatement or reduction of rent. Tenant shall give prompt notice to Owner with respect to any defects, fires or accidents Obach Tenant observes on the Property. ARTICLE 15. TAXES. Tenant shall be liable for any tax (now or hereafter imposed by any governmental entity) applicable to or men ured by or on the rents payable under this Lease, including any gross income tax or excise tax with respect to the receipt of such rent or the possession, leasing or operation, use or occu- pancy of the Premises, but not including any net income, franchise, capital stock, estate or inheri- tance taxes of Owner. if any such tax is required to be paid to the governmental taxing entity directly by Owner, then Owner shall pay the amanit due and, upon demand, shall be fully reimbursed by Tenant for such payment. If such reimbursement is prohibited by law, then Owner shall have the option to terminate this lease in its entirety without having any liability to Tenant. Tenant shall also be liable for all taxes levied against the leasehold held by.Tenant or against any personal property, leasehold improvements, additions, alterations and trade fixtures placed by or for Tenant in, on or about the Premises or constructed by Owner for Tenant in the Premises; and if any such taxes are levied against Owner or Owners property, or if the assessed value of the Prop- erty is increased (whether by special assessment or otherwise) by the inclusion therein of value placed on such leasehold, personal property, leasehold improvements, additions, alterations and trade fixtures, and Owner pays any such taxes, Tenant, upon demand, shall fully reimburse Owner for the taxes so paid by Owner or for the proportion of such taxes resulting from such increase in any assessment, as additional rent hereunder. Tenant recognizes and understands that this Lease may create a possessory interest subject to prop- erty taxation. Tenant hereby agrees to pay property tax levied on such interest before said taxes become delinquent. ARTICLE 16. FO DIW, WFR. If, with 0wner`s written consent, Tenant holds possession of the Premises after the expiration of the term of this Lease, Tenant shall become a tenant from month to month upon the terms herein spe- cified but at a monthly rent equivalent to the higher of (a) rent computed at Owners then prevail- ing monthly rental rate per square foot for the next most comparable space or (b) the then rental (including escalation) paid by Tenant at the expiration of the term of this Lease, payable in advance on or before the first day of each month, and Tenant shall continue in possession and shall remain subject to the terms hereof until such tenancy shall be terminated by Owner, or until 30 days after Tenant shall have given to Owner a written notice of its intention to terminate such tenancy. If Tenant holds over after the expiration or earlier termination of the term hereof without the express written consent of Owner, Tenant shall become a tenant at sufferance only at 150 percent of the Chen prevailing market rate (as reasonably determined by Owner) for the Premises in effect upon the date of such expiration or earlier termination, to be prorated and paid on a daily basis, and otherwise upon the terms, covenants and conditions specified in this lease, so far as applicable. MAR 1988 Acceptancy by Owner of rent after such expiration or earlier termination shall not constitute a coin sent to a holdover hereunder or result in a renewal or extension of this lease. The foregoing pro -- visions of this paragraph are in addition to and do not affect Owners right of re-entry or any other rights of Owner under this lease or as otherwise provided by law. nr w : r :,u C Yl71�:MYU1'L`}1 Tenant shall faithfully observe and comply with the rules and regulations printed on Exhibit "C' to this Tease as well as all modifications thereof and additions thereto from time to time put into effect by Amer, upon reasonable notice to Tenant. Owner shall not be responsible to Tenant for the violation or nonperformance by any other tenant or occupant bn the Property with respect to any such rules and regulations. 4 AFMCIE 18. RE-ENM BY W ER - Owner and its agents shall at any and all tines have the right to enter the Premises to inspect the same, to determine whether Tenant is complying with its obligations hereunder, to supply janitorial service and any other service to be provided by Owner to Tenant hereunder, to post notices of nonre- sponsibility, to exhibit the Premises to prospective purchasers, lenders of ground lessees of the Property, or to prospective lessees of space in the Building, and to alter, improve or repair the Premises and any portion of the Property, without abatement of rent, and may (in connection with any such work? erect scaffolding and otter necessary structures where reasonably required by the charac- ter of the work to be performed. Tenant hereby waives any claim for damages for any injury to, inconvenience to, or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the aforesaid purposes, Owner shall at all titres have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant's vaults and safes, and Owner shall have the right to use any and all means which Owner may deem proper to open said doors in an emergency, in order to obtain entry to the Premises and/or otherwise, and such entry shall not ceder any circumstances be construed as a forcible or unlawful entry into, or a detainer of the Premises, or an actual or constructive evic- tion of Tenant from the Premises or any portion thereof, or grounds for any abatement or reduction of rent. Niothing in this Article shall be construed as obligating Owner to perform any repairs, alterations or maintenance except as otherwise expressly required elsewhere in this lease to be per- formed by Owner. AMCLE 19. IN )OLVE M OR BAAIIQtUPZC.Y. Tenant agrees that if all or substantially all of the Tenant's assets are placed in the hands of a receiver or trustee, and such receivership or trusteeship continues for a period of 30 days, or sho- uld Tenant make an assignment for the benefit of creditors or be adjudicated a bankrupt, or should Tenant institute any proceedings under the Bankruptcy Act or under any amendment thereof whirl; may hereafter be enacted, or under any other act relating to the subject of bankruptcy wherein Tenant seeks to be adjudicated a bankrupt, or to be discharged of its debts, or to effect a plan of liquid- ation, composition, arrangement or reorganization, or should an involuntary proceeding be filed aga- inst Tenant under such bankruptcy laws and Tenant consents thereto or acquiesces therein by pleading or default, then any such act shall be deemed a breach of this base, and neither this Tease nor any interest in and to the Premises shall become an asset in any of such proceedings ani, in any such event in addition to any and all rights or remedies of Owner hereunder or by law provided, this Tease shall terminate automatically as of the date on which any one or more of the above -described occurrences takes place, and in such event it shall be lawful for Owner to re-enter the Premises and MAR 1988 -10- take possession thereof and remove all persons (and all of Tenant's personal property, fixtures, equipment, alterations, improvements and utility installations in accordance with Paragraph 20b(2) hereof) therefrom, and Tenant shall have no further claim to the Premises or under this lease. Amc[E 20. DEF&U, MMIE5. A. Default. The occurrence of any one or more of the following events shall constitute a default under this lease by Tenant: 1. Non -curable defaults: (a) The vacation or abandonment of the Premises by Tenant. (b) Any attempted or involuntary transfer of Te'hant's interest in this lease without Owner's prior written consent, as set forth more specifically in Article 13. (c) If the leasehold interest of Tenant is levied upon under execution or is attached by process of law. (d) If any lease (other than this lease) made by Tenant for any other space on the Property is terminated or terminable after the r«nnencement of the term of this Lease due to any default by Tenant under such other lease. (e) If Tenant makes (or has made) or furnishes (or bas furnished) any warranty, representation or statement to Owner in eomnection with this Lease (or any assignment of this lease or subletting of all or part of the Premises) or any other agreement to which Owner and Tenant are parties, which is or was false or misleading in any material respect when made or furui shed. (f) Any breach under Article 19. 2. Curable defaults: (a) The failure by Tenant to make any payment of rent, additional rent or any other payment required to be made by Tenant hereunder as and when due. If Tenant does not fully cure such default within three days after Tenant has been served with a notice of such default, this Tease shall be terminable at Owner's option. (b) The failure by Tenant to observe or perform any non, -monetary covenants, conditions or provi sions of this Lease to be observed or performed by Tenant, other than the aforementioned non -curable defaults. If Tenant does not fully cure any such non -monetary default within ten days after Tenant has been served with a notice of such default, this lease shall be terminable at Owner's option; provided, huwever, that if the nature of Tenant's default is such that more than ten days are reasonably required for its cure, then Owner shall not be entitled to terminate this lease on account of such default if Tenant comes such cure within said ten day period and thereafter diligently prosecutes such cure to completion. B. Remedies. 1. In addition to all other rights or remedies it might have, Owner shall have the right to terminate this lease and Tenant's right to possession of the Premises in the event of any mnorr curable default set forth in Section 20A hereof if a curable default is not fully cured within the cure period designated in Paragraph 20A(2) for such default. Termination of Tenant s right to possession of the Premises shall terminate this Tease, and vice -versa. However, if Tenant has abandoned or vacated the Premises, the mere taking of possession of same by Owner in order to per- form acts of maintenance or preservation or to attempt to relet the Premises, or the appointment of a received in order to protect Owners interests under this lease, shall not be deemed a termination of Tenant-s right to possession of the Premises or a termination of this Lease unless Owner has not- ified Tenant in writing that the lease is terminated. The notifieatian provided in Paso aph 20A(2) for curable defaults shall be in lieu of, and met in addition to, any notice required under Section 1161, et. seq., of the California Code of Civil Procedure. If Owner terminates this lease and Tenant's right to possession of the Premises pursuant to this Paragraph 20B(1), Owner may recover the following from Tenant: MAR 1988 -ll- (a) the worth at the time of award of the unpaid rent which was due, owing and unpaid by Tenant to owner at the time of termination; plus (b) the worth at the time of award of the amount by which the unpaid rent which would have come due after termination until the time of award exceeds the amount of rental loss that Tenant proves could have been reasonable avoided; plus (c) the worth at the time of the award of the amount by which the unpaid rent for the balance of the lease term after the time of award exceeds the amount of rental loss which Tenant proves could be reasonably avoided; plus (d) all other amounts necessary to cou>ensate Owner for all of the detriment proximately caused by Tenant's failure to perform its obligations under this lease or which in the ordinary course of things are likely to result therefrom, including, but not limited to, any att- orneys' fees, brokers' commissions or finders' fees (not only in connection with the relet- ing of the Premises, but also that portion of any leasing commission paid by Owner in tour nection with this lease which is applicable to that portion of the lease term which is unexpired as of the date on which this lease is terminated), any costs for alterations, add- itions and renovations, any costs for repairs, clean-up, refurbishing, remlval (including the repair of any damage caused by such removal) and storage (or disposal) of Tenant's per- sonal property, equipment, fixtures, and anything else that Tenant is required (under this lease) to remove but does not remove, and any other costs and egeuses incurred by Owner in regaining possession of and reletting (or attempting to relet) the Premises; plus (e) at Owner's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law. All computations of the 'worth at the time of award" of amounts recoverable by Owner under sub- paragraphs (a) and (b) hereof shall be computed by allowing interest at tle lower of 127 per anrnmm or the highest rate permitted by law. The 'worth at the time of award" recoverable by Owner under sub -paragraph (c) hereof shall be commuted by discounting the amount otherwise recoverable by Owner (less the Unreimbursed leasehold lmprovement Cost) at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award plus 1%. 2. Upon termination of this Lease, whether by lapse of time or otherwise, Tenant shall i:mmed- iately vacate the Premises and deliver possession thereof to Owner. If Tenant has abandoned the Premises (or has vacated same and Owner or any of its agents, after diligent inquiry, has reason to believe that Tenant does not intend to reoccupy the Premises), and current or past rent is unpaid, or if Owner or any of its agents acts pursuant to a court order, then Owner or say of its agents shall have the right, with or without terminating this lease, to re-enter the Premises and reanve all persons therefrom and any or all of Tenant's trade fixtures, equipment, furniture and other per- sona]. property (herein collectively referred to as "property") from the Premises, without being deemed in any manner liable for trespass, eviction or forcible entry or detainer, or conversion of property, and without relinquishing any right given to Owner in this Lease or by operation of law. Tf Owner re-enters the Premises in such a situation, all property removed from the Premises by'Owner or any of its agents may be handled, removed or stored in a commercial warehouse or otherwise by Owner at Tenant's risk and expense, aid Owner shall in no event be responsible for the value, pres- ervation or safekeeping thereof. Before retaking any such property from storage, Tenant shall pay to Owner, upon demand, all expenses incurred in such removal and all storage charges against such property. Any such property of Tenant not so retaken from storage by Tenant within 30 days after such property has been removed from the Premises shall be deemed abandoned and shall be disposed of by Owner pursuant to Section 1988 of the California Civil Code. 3. Notwithstanding Owner's right to terminate this lease pursuant to Paragraph 20B(I), Owner may, at its option, enforce all of its rights and remedies under this lease (including the right to recover the rent as it becomes due hereunder), provided that Owner does not terminate Tenant's right to possession of the Premises. In such event, Owner shall be entitled to recover from Tenant all costs of maintenance and preservation of the Premises, and all costs, including attorneys' fees and receivers' fees, incurred in connection with the appointment of and performance by a received to protect the Premises and Owner's interests under this Lease. No re-entry or taking possession of the Premises by Owner pursuant to this Paragraph 20B(3) shall. be construed as an election to termi- nate this Lease unless a written notice of such intention is given to Tenant or unless it is decreed by a court of competent jurisdiction that Owner has terminated this lease or Tenant's right to possession of the Premises. Notwithstanding any reletting by Owner without a termination of this lease, Owner may at any time after such reletting elect to terminate this lease pursuant to Para- graph 20B(I). [upon and after entry into possession of the Premises without termination of this Lease, Owner may, but need not, relet the Premises or any part thereof for the account of Tenant to any person, firm, corporation or other business entity other than Tenant for such rent, for such time and upon such terms as Owner, in Owners sole discretion, shall determine. Owner shall not be required to accept any substitute tenant offered by Tenant or to observe any instructions given by Tenant regarding such reletting. In any case, Owner may make repairs, alterations and additions in M9R 1988 -12- or to the Premises, remove (and repair any damage caused by such removal) and store (or dispose of) any of Tenant's personal property, equipment, fixtures, and anything else that Tenant is required (under this lease) to remove but does not remove, and Owner may also renovate the Premises to the extent deemed by Owner necessary or desirable in connection with any such attempt to relet. Tenant shall upon demand, pay the cost of such repairs, alterations, additions, removal, storage and rerm vation, together with any attorneys' fees, brokers' commission (or finders' fees) and any other expenses incurred by Owner in regaining possession of an attempting to relet the Premises. If Owner is able to relet the Premises for Tenant's account during any regaining portion of the term of this Vase and if the consideration collected by Owner from any reletting is not sufficient to pay monthly the full amount of the rent payable by Tenant under this le se, together with any attorneys' fees, brokers" commissions (or finders' fees), any costs for repairs, alterations, additions and renovations, and any other costs and expenses incurred by Owner in regaining possession of and reletting the Premises, Tenant shall pay to Owner the amount of each monthly deficiency upon demand. Any rentals received by Owner from any such reletting shall be applied as follows: first, to the payment of any indebtedness other than rent due hereunder from Tenant to Owner; second, to the pay- ment of any cost of regaining possession of and reletting the Premises; third, to the payment of the cost of any such alterations, repairs, additions and renovations to the Premises; fourth, to the payment of rent due and unpaid under this lease, and the residual, if any, shall be held by Owner and applied as payment of future rent as the same may become due and payable hereunder. 4. If Tenant violates any of the terms or provisions of this lease or defaults in any of its obligations hereunder, other than the payment of rent or other sums payable hereunder, such viol— tion may be restrained or such obligation enforced by injunction. 5. Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided at law or in equity. b. No act or thing done by Owner or its agents during the term hereof shall be deemed a. accep- tance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless made in writing and signed by Owner. Neither the reference in this lease to any particular remedy nor the pursuit of any particular remedy shall preclude Owner from any other remedy, Owner might have, either at law or in equity. 7. 13bthing herein shall be deemed to affect the right of Owner under Article 14 of this lease to indamiification for any liability, attorneys' fees and related expenses. ARTICLE 21. CASUALTY UkdAM. In the event of any damage to the Premises, Tenant shall promptly notify Owner in writing. If the Premises or any other part of the Property are damaged by fire or other casualty, the damage shall be repaired by and at the expense of the owner, unless this Ipase is terminated as provided in this Article. Until such repairs are completed, the rent shall be abated in proportion to the part of the premises which is unusable by Tenant in the conduct of its business and the length of time that such condition persists; haver, there shall be no abatement of rent by reason of the Premises (or any portion thereof) being unusable for a period of five days or less. If the damage is due to the fault or neglect of Tenant or any subtenant of Tenant, or any of their agents, employees, servants, or invitees, there shall be no abatement of rent. Nor shall there be any abatement of rent on account of damage to the Building or any other part of the Property unless it includes damage to the Premises or prevents access to the Premises. Access to the Premises shall not be deemed prevented if Tenant is precluded from using any portion of the parking areas on the Property on account of damage to same. If the damage is not covered by Owners fire and extended coverage insurance, if the Building is damaged to the extent of more than one-third of (groat Owner in good faith determines to be) its then replacement cost, or if Owner has decided in good faith that the required repairs cannot be made within 120 days after the occurrence of such damage without the payment of overtime or other pre- miums, then Omer may, by written notice to Tenant within 30 days of the damage, terminate this lease as of the date of the occurrence of such damage. If (as reasonably determined by Tenant) the Premises have been rendered inaccessible or untenantable by such damage, Tenant may, by written notice to Owner within 30 days of the damage, elect to terminate this lease as of the date of occur- rence of such damage. However, Tenant's election to terminate this Lease shall be ineffective if Owner, within 30 days of its receipt of Tenant's election, notifies Tenant in writing that Owner has decided in good faith that the Premises can be made accessible and tenantable within 120 days of Owner's receipt of Tenant's election. If neither Owner nor Tenant terminate this Lease as provided MAR 1988 -13- above, owner shall, at its own expense, make such repair and restoration, and which such repair and restoration is being performed, the rent shall be abated as provided above. In any situation where owner is required to or has elected to repair damage to the Premises, Owner shall not be obligated to repair or replace any items other than those items and improvements installed by owner or at owner's expanse prior to the commencement of the term of this Lease. Nothing in this Article shall be construed as a limitation of Tenant's liability for any such occurrence, should such liability otherwise exist. A total destruction of the Property shall automatically terminate this Lease as of the date of such destruction. Upon any termination of this lease under any of the provisions of this Article, the parties shall be released thereby, without further obligation to the other, simultaneously with the surrender of possession of the Premises to Owner, except for items which have theretofore accrued and are then unpaid, and Tenant's security deposit shall be returned to Owner, subject to the provisions of Article 6 in this lease. If the whole of the Premises (or so much thereof as to render the balance unusable, as reasonably determined by Tenant) shall be taken under power of eminent domain, or by conveyance in lieu the- reof, this lease shall automatically terminate as of the date on which actual physical possession is taken by the condenior. If Tenant wishes to terminate this lease pursuant to the preceding sentence in the event of a partial taking, Tenant mast exercise such right within 34 days after Tenant has becom aware of the extent of the taking or such right will be deemed to have been waived. lb award for any partial or entire taking shall be apportioned, and Tenant hereby assigns to Owner any award which may be made in such taking or condemnation together with any and all rights of Tenant now of hereafter arising in or to the same or any part thereof; no portion of any such award shall be allowed to or paid to Tenant for any so-called-boruns or excess value of this lease by reason of the relationship between -the rental payable under this lease and what may at the time be fair rental for the Premises. Although all dames in the event of any condemnation are to belong to owner whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, Tenant shall have the right to claim and recover from the condemnor, but not from Owner, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of damsnge to Tenant's business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant's merchandise, personal property, trade fixtures, leasehold improvements and equipment. In the event of a partial taking which does not result in a termination of this Lease, the rent shall be reduced according to the part of the Pre- mises remaining after the taking, and owner shall, within a reasonable time, make a functional unit out of such remaining portion of the Premises. The rent reduction for the month in which the taking (of actual physical possession) by the condemnor occurs shall be prorated. If any part of the Premises or 15 percent or more of the then replacement cost of that part of the Property which does not include the Premises shall be so taken or apportioned, owner shall have the right, at its option, to terminate this lease and shall be entitled to the entire award; however, if Owner does not terminate this lease, there shall be no reduction in rent on account of such taking, nor shall such taking entitle Tenant to terminate this Lease. If this lease is terminated, in whole or in part, pursuant to any of the provisions of this Article, all rentals and other charges payable by Tenant to Owner hereunder and attributable to th-- Premises taken shall be paid up to the date upon which actual physical possession shall be taken by the corn demnor, and (depending on whether this lease is terminated as to all or only part of the Premises) either all or a prorated portion of Tenants security deposit shall be returned by Owner, subject to the provisions of Article 6 hereof. MAP. 1988 -14- ARMCLE 23. TRANSFER OF OW MS IPILF,R - Tn the event of any transfer(s) of Owners interest in the Property, other than a transfer for secu- rity purposes only, the transferor shall be automatically relieved of any covenant of quiet enjoy- ment and any other obligations and liabilities on the part of Owner accruing from and after the date of such transfer, and Tenant agrees to attorn to the transferee. ARTICLE 24. WUI S RICE To FMM TENANT OBLIGATIONS. All covenants and agreements to be performed by Tenant under any of the terms of this lease shall be performed by Tenant at Tenant's sole cost and expense and without any abatement of rent. If Tenant shall fail to pay any scan of money, other than rent, required to be paid by it hereunder or shall fail to perform any other act on its partto be performed hereunder, and such failure shall continue for ten days after notice thereof by Owner, Owner may (but shall not be obligated so to do), without waiving or releasing Tenant from any of Tenant's obligations, make any such payment or perform any such other act on behalf of Tenant. All sums so paid by Owner and all necessary incidental costs, together with interest thereon at the rate of 12% per annum from the date of such payment by Owner until reimbursement in full by Tenant, shall be payable to Owner as additional rent with the next monthly installment of tent, and Tenant covenants to pay any such sums. Owner shall have (in addi- tion to any other right or remedy of Owner) the same rights and remedies in the event of the nonpay- ment of sums due under this Article as in the case of default by Tenant in the payment of rent, except that payments made by Owner hereunder shall not subject Tenant to a late charge unless reim- bursement by Tenant is not made when due. ARTICLE 25. LEGAL EXPENSES. Tenant sball pay to Owner all amounts for costs (including reasonable attorneys' fees) incurred by Owner in connection with any breach or default by Tenant under this Tease. Such amounts shall be payable upon demand. Tn addition, if any action shall be instituted by either of the parties hereto for the enforcement or interpretation of any of its rights or remedies in or under this Lease, the prevailing party shall be entitled to recover from the losing party all costs incurred by the pre- vailing party in said action and any appeal therefrom, including attorneys" fees to be fixed by the court herein. Said costs and attorneys' fees shall be included as part of the judgement in any such action. Further, should Owner be made a party to any litigation between Tenant and any third party, then Tenant shall pay all costs and attorneys' fees incurred by or imposed upon Owner in connection with such litigation. ARTICLE 26, LA E PAYMENTS: INTEREST AND LATE CHARGES. A. Any amount due from Tenant to Caner which is not paid when due shall bear interest at the rate of 12% per annuu from the date such payment is due until paid. lbwever, amounts spent by Owner on behalf of Tenant (e.g., pursuant to Article 24 hereof) shall bear interest at such rate from the date of disbursement by Owner. - B. Tenant hereby acknowledges that in addition to lost interest, the late payment by Tenant to Owner of rent or any additional rent or other sums due hereunder will cause Owner to irncur other costs not contemplated in this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain. Such other costs include, but are not limited to, processing, adminis- trative and accounting costs. Accordingly, if any installment of rent or any additional rent or any other sum due from Tenant shall not be received by Owner within ten days after such amount shall be PEAR 1988 -15- due, Tenant shall pay to Owner a late charge equal to the percentage (of such overdue amount) set forth in Paragraph Q of the Basic Lease Provisions, provided that in no event shall the amount of each such late charge be less than $20. if any instalment of rent or any additional rent or any sum due from Tenant shall not be received within 30 days after such aunt shall be due, Owner shall incur additional processing, administrative and accounting costs. In order to compensate Owner therefor, Tenant shall pay to Owner an additional late charge, computed as set forth above. The parties hereby agree that (i) such late charges represent a fair and reasonable estimate of the costs Owner will incur in processing each delinquent payment by Tenant, (ii) that such late charges shall be paid to Owner as liquidated damages for each delinquent payment pursuant to California Civil Code Section 1671, and (III) that the payment of late charges and the payment of interest are distinct and separate from one another in that the payment of interest is to compensate Owner for the use of Owner's money by Tenant, while the payment of late charges is to compensate Omer for tip additional expense incurred by Owner in handling and processing delinquent payments. C. Neither assessment nor acceptance of interest or late charges by Owner shall constitute a waiver of Tenant's default with respect to such overdue amont, nor prevent Owner from exercising any of its rights and remedies under this Lease. Nothing contained in this Article shall be deemed to corn done, authorize, sanction or grant to Tenant an option for the late payment of rent, additional rent or other sums due hereunder, and Tenant shall be dead in default with regard to any such payments should the same not be paid by the date on which they are due. 4 ARTICLE 27. BROKER. The parties recognize as the broker who negotiated this lease the individual or entity whose name is stated in Paragraph K of the Basic lease Provisions, and agree that Owner shall be solely respon- sible for the payment of brokerage commissions to said broker and that Tenant shall have no resporr sibility therefor unless written provision to the contrary has been made. Tenant represents and warrants thatit has not dealt with or employed any broker or agent as its representative in the negotiation for the obtaining of this lease other than the broker, if any, listed in said Paragraph K, and agrees to indermnify and hold harmless Owner against all costs or liability for competsation claimed by any broker or agent (other than the broker, if any, listed in said Paragraph K) and all attorneys' fees expended in connection therewith. ARTICLE 28. WAIVER The waiver by Owner of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of such term(s), covenant(s) or conditions. The subsequent acceptance of rent hereunder by Owner shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rental so accepted, regardless of Owners knowledge of such preceding breach at the time of acceptance of such rent. No covenant, term or condition of this lease shall be deemed to have been waived by Omer, unless such waiver is in writing by Owner. The fact that Owner performs an act which it is not (by law or under this lease) obligated to perform shall under no circumstances be deemed a waiver of its right not to perform such act(s) or any similar act(s) in the future. If Tenant fails to perform any of its affirmative obligations under this Lease, such unperformed obligation(s) shall survive the expiration or earlier termination of this Lease. In addition, Omer s consent to or approval of any act by Tenant requiring Owner's consent or approval shall not be deemed to render unnecessary the obtaining of Owner's consent to or approval of any subsequent act of Tenant, whether similar or dissimilar to the act which was consented to or approved by Owner. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Owner obtaining possession of the Premises, by reason of the violation by Tenant of any of the cove- nants or conditions of this Lease, or otherwise. MAR 1988 -16- ARTICLE 29. R1= OF MEP - Owner shall have the right to change the name, number or designation of the Building or the Property without notice or liability to Tenant. In addition, Tenant shall not, without Owner`s prior written consent, use the name of the Building or the Property for any purpose other than as the address of the business to be conducted by Tenant in the Premises, and in no event shall Tenant acquire any rights in or to such namo(s). Owner shall have the right at any time to change the arrangement and/or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, toilets, or other public parts of the Building, and Owner hereby reserves the right at any time to make alterations or additions to and to build additional stories an the Building and to building adjoining the same. Owner also reserves the right to construct other buildings or improve ants in the vicinity of the Building from time to time, to make alterations thereof or additions thereto, and to build additional stories on any such building(s) and to build adjoining same. Owner further reserves the exclusive right to the roof of the Building. No easement for light, air or view is included in the leasing of the Premises to Tenant. Accord- ingly, any diminution or shutting off of light, air or view by any structure which may be erected on lands in the vicinity of the Building (regardless of whether or not such structure is on the Prop- erty) shall in no way affect this base or impose any liability upon Owner. ARTICLE 30. SUBSEITUIEO MMISES. If the Premises contain an area of 2,500 square feet or less, Owner shall have the right at any time during the term hereof, upon giving Tenant not less than 30 days- notice in writing, to provide and furnish Tenant with reasonably comparable space elsewhere on the Property of approximately the same size as the Premises, and to remve and place Tenant in such space. Should Tenant refuse to permit Owner to move Tenant to such new space at the end of said 30-da7 period, Owner shall have the right to terminate this Lease, effective 60 days from the date of original modification by Owner. If Owner moves Tenant to such new space, (i) Owner shall pay all reasonable moving expenses of Tenant which are directly attributable to such substitution of Premises, (it) this Lease and all of its terms, covenants and conditions shall remain in full force and effect, and shall be deed applica- ble to such new space, except that a revised Exhibit "A" shall become part of this Lease and shall reflect the location of the new space, (iii) the Basic Lease Provisions shall be amended to include and state all correct data as to the new space, and (iv) such new space shall thereafter be deemed to be the "Premises". ARTICLE 31. WAIVERS OF SUBFDGATION. Owner and Tenant hereby, waive their rights (and, to the extent permitted by law, the subrogation rights of their respective insurer(s) against each other and any other tenant of space on the prop- erty (as well as the officers, employees, agents, authorized representatives, and invitees of same) with respect to any claims (including, but not limited to, claims for injury to any person(s), and/or damage to the Premises or any part of the Property, and/or any fixtures, equipment, personal property, furniture, improvements and/or alterations in or to the Premises or tta Property) which are caused by or result from risks insured against under any valid and collectible insurance con- tract or policy carried by Owner or Tenant (whichever the case may be) and in force at the time or any such injury and/or damage. However, the above waiver shall apply only to the extent that such claim is covered by such insurance contracts or policies. Tenant shall obtain (for Owner), from its insurer(s) under each policy required to be obtained under Section 45A and 45B hereof (i.e., liabil- MAP, 1938 -17- ity insurance and contents insurance), a waiver of all rights of subrogation which such insurer(s) of Tenant might have against Owner. A. Tenant shall, within ten days after any written request from Owner, execute, acknowledge and deliver to Owner a statement in writing certifying (i) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect); (ii) the dates to which the rental and other charges are paid in advance, if any; (iii) that there are not, to Tenant's knowledge, any uncured defaults on the part of Owner hereunder, or specifying such defaults if any are claimed; and (iv) that Tenant has paid to Owner the security deposit as set forth in this Lease. In addition, such statement shall provide whatever other information and facts oaner may reasonably require. Any such statement shall be relied upon by any prospective pgrchaser, ground lessee or encumbrancer of all or any portion of the Property, as well as by any of their assignees. B. Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Owner; (ii) that there are no uncured defaults in Owner's performance; (iii) that Tenant has paid to Owner the security deposit set forth in this lease; and (iv) that not more than one montki s rental has been paid in advance. C. Tenant shall fully indemnify Owner from and against any and all claims, damages, losses, liab- ility and expenses (including attorneys' fees and related costs) attributable to any failure by Tenant to timely comply with the requirements of Section 32A above. ARTICLE 33. NOTICES. Whenever Owner or Tenant is required to or shall desire to give or serve upon the other any notice, demand, request or other communication with respect to this Lease or the Premises, each such notice, demand, request or other coamaiication shall be in writing and shall not be effective for any pur- pose unless the same shall be given or served as follows: A. By personally serving such notice, demand, request or other comainication on Tenant (or any employee or agent of Tenant) and the Premises or by mailing the same to Tenant by United Stated registered or certified mail, postage prepaid, return receipt requested, addressed to Owner at the address set forth in Paragraph M of the Basic Lease Provisions or at such other address(es) as Owner may from time to time designate by notice given in accordance with this Article. Every notice, demand, request or other comumication mailed in accordance with the provisions hereof shall be deemed to have been given or served as of the date of receipt or the third business day following the date of such mailing, whichever date is earlier. ARTICLE 34. ABANDONiKU. Tenant shall not vacate or abandon the Premises at any, time during the term of this Lease, and if Tenant shall abandon, vacate or surrender the Premises, or be dispossessed by process of law or otherwise, such shall be a breach of this Lase, and any personal property belonging to Tenant and left on the Premises shall be deemed to be abandoned and may be removed from the Premises in actor dance with Paragraph 20B(2) hereof. No act or thing done by Owner or by any agent or employee of MAR 1988 -18- Owner during the term of this Tease shall be deemed an acceptance of a surrender of the Premises, unless such acceptance is expressed in writing and duly executed by Owner. The delivery of the key (to the Premises) to any employee or agent of Owner shall not operate as a termination of this lease or a surrender of the Premises. ARTICLE 35. ADDM A, E}L MITS AND RIMRS, Those Exhibits set forth in Paragraph O of the Basic Tease Provisions and those Riders and Addenda, if any, set forth in the Paragraphs p and R, respectively, of the Basic lease Provisions, are made a part hereof by this reference. Any Addenda, Exhibits and Riders to this Lase shall be attached hereto and shall be signed or initialed by Owner and Tenant. 4 ARTICLE 36. INVALIDITY. The parties hereto agree and state that the terms and provisions of this lease express the intent of their agreemnt as fully as possible; h—very the invalidity or unenforceability of any term or provision hereof (except for Tenant-s obligation to pay basic rent under Article 4 hereof) shall not affect or impair any other term or provision hereof, and the remainder of this Lease stall be valid and enforceable to the fullest extent permitted by law. ARTICLE 37. URUF PRSIATION AND GDVEFLNUIS LAW. In all cases the language in all parts of this lease shall be construed simply, according to its fair meaning and not strictly for or against Owner or Tenant. This Lase shall be governed by the laws of the State of California. ARTICLE 38. DEFINED TEW AND CAPTIONS. The word "Tenant" shall be deemed and taken to mean each and every person or party mentioned as a Tenant herein, be th` same one or more; and if there shall be more than one Tenant, any notice required or permitted by the terms of this Lase may be given by or to any one thereof, and shall have the same force and effect as if given by or to all thereof. If Tenant consists of more than one person or entity, they and each thereof shall be bound jointly and severally by the terms, covenants and agreements of this Lase. The word "Owner" as used herein shall mean only the owner or owners at the time in question of the fee title to (or lessee's interest in a ground lease of) the Property. T-ie use of the neuter singular pronoun to refer to Owner or Tenant shall be deemed a proper refer ence even though Owner or Tenant may be an individual, a partnership, an association, a corporation, or a group of two or more individuals, partnerships, associations or corporations. The necessary grammatical changes required to make the provisions of this Vase apply in the plural sense where there is more than one Owner or Tenant and to either corporations, associations, partnerships, or MAR 1988 -14- . individuals, males or females, shall in all instances be assumed as though in each case fully. expressed. The captions, section numbers, article numbers and table of contents appearing in this lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope of intent of such sections or articles of this lease nor in any way affect this lease. This lease and the Exhibits (and Riders and Addenda, if any) attached hereto and forming apart hereof, set forth all the covenants, promises, agreements, conditions and understandings between Neer and Tenant concerning the Premises, and there are no covenants, promises, agreements, condi- tions or understandings, either oral or written, between them otber than are herein set forth. Except as otherwise provided in this Lease, no subsequent alteration, amendment, change or addition to this Lease shall be binding unless it is in writing and signed by Owner and Tenant. ARTICLE 40. = OF THE ESSENCE. Time is of the essence of this Lease and each and every provision hereof. ARTICLE 41. EXECt71`IDN AND EMMIN+'r'TON OF LEASE. TUS Tease may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. However, in the event of any variation or discrepancy between fully executed copies of this Lease (inc11id ,any Addenda, Exhibits and Riders), Owners copy shall control. Submission by Omer of this instrment for examination or signature by Tenant does not constitute a reservation of the Premises or an option to lease same from Owner, and this instrument is not effective as a lease or otherwise until execution acid delivery by both Owner and Tenant. ARTICLE 42. ODVENANT OF QUIET EbII0I24 U- Upon payment by Tenant of the rents herein provided, and upon the observance and performance of all the covenants, terms and conditions on Tenant's part to be observed and performed, Tenant shall peaceably hold the Premises for the term hereby demised without hindrance or interruption by caner or any other person or persons lawfully or equitably claiming by, through or under the Owner, sub- ject, nevertheless, to the terms and conditions of this lease. MAR 1488 -20- ARTICLE 43. SUCCESSORS AND AssIG%. All rights and liabilities herein given to, or imposed upon, the respective parties hereto shall extend to and bind the several respective heirs, executors, administrators, successors, and assigns of the said parties; provided, however, that the obligations contained in this lease to be performed by Owner shall be binding on Owner and Owner's successors and assigns only during their respective periods of ownership. No rights, however, shall inure to the benefit of any assignee or subtenant of Tenant unless the assignment or subletting to such assignee or subtenant has been approved by Qaner in writing as provided in Article 13 hereof. ARTIQE 44. SUBORDIIzMON. At Oaaer-s request, Tenant shall subordinate its interest tinder this Lease to any and all now effective or hereafter executed deed of trust or ground lease which may now or hereafter affect Dwner"s estate in the Property, and to all renewals, modifications, replacements or extensions the- reof. Tenant shall promptly execute any instruments which may be required to evidence such subor- dination; provided, however, that any person or persons purchasing or otherwise acquiring the Pro- perty or any portion thereof at any sale or other proceeding under any such deed of trust, shall (provided that Tenant is not then in default under this Tease) elect to continue this lease in full force and effect in the same manner and with the same effect as if such person(s) had been named as Owner herein, and in such event, this Lease shall continue in full force and effect, and Tenant shall attorn to such person(s). The term "deed of trust" as used herein is defined to include mortgages, security agreements, deeds Of trust and any other instruments providing security for the payment of debts or for the performance of other obligations. Tenant, upon request of any party in interest, shall execute promptly such instruments or certifi- cates to carry out the intent of this Article as shall be requested by O.aaer. If Tenant shall not have executed such instruments or certificates and delivered same to Owner within 15 days after the date of a written request by Rarer for Tenant to execute same:, Tenant hereby irrevocably appoints Owner as Tenant-s attorney in fact, with full power and authority to execute and deliver in the name of Tenant any such instruments or certificates. ARTICLE 45. INSURANM. A. Liability Insurance. Tenant shall, during the term hereof, keep in full force and effect a pol- icy or policies of comprehensive general liability insurance for personal injury (including wrongful death) and damage to property covering (i) any occurrence on the Premises rot caused by Owner, (ii) any act or omission by Tenant, by any subtenant of Tenant, or by any of their invitees, agents, ser- vants or employees anywhere on the property, and (iii) the business(es) operated by Tenant and by any subtenant of Tenant on the Premises, in which the coverage shall not be less than $1,000,000 combined single limit per occurrence. The liability policy or policies shall contain an endorsement gaming Owner, and any persons, firms or corporations designated by Owner (hereinafter called "Owners designees)", as additional insureds, as per insurance industry form 9kf109 (edition July 1966) or any replacement thereof, or an additional insured lessor endorsement forma similar in con- tent thereto. B. Insurance of Improvements and Contents. Tenant shall, during the term hereof, keep in full force and effect a policy or policies of insurance against damage (by fire, theft, vandalism, mali- cious mischief, all risks normally insured against by extended coverage, and, if the Building is sprinklered, the added perils of sprinkler leakage and earthquake sprinkler leakage) to Tenant's stock in trade, furniture, personal property, fixtures and equipment on the Premises, with coverage in an amount equal to the actual cash value thereof. Tenant may, with Owner's prior written corn sent, elect to have a reasonable deductible in connection with such insurance. C. Worker-s Compensation Insurance. Tenant shall, during the term hereof, keep in full force and MAR 1988 -21- effect a policy or policies of Worker's Compensation insurance, with coverage not less than the min- imsn required by the State of California. D. Each insurance policy (and certificate thereof) obtained by Tenant pursuant to this lease shall contain a clause that the insurer will provide Omer and Owners designee(s) with at least 30 days prior written notice of any material change, rnnrenewal or cancellation of the policy. Each such insurance policy shall be with an insurance company authorized to do business in the State of Cali- fornia and rated not less than Bests Financial Class X and Best's Policyholder Rating, B+. A cer- tificate (on the standard ACORD form and issued by an authorized representative of the insurer) evidencing the coverage under each such policy, as well as a certified copy of the aforementioned additional insured lessor endorsement, shall be delivered to Owner and Owners designee(s) prior to cmmaencement of the lease term. Each such policy shall provide that any loss payable thereunder shall be payable notwithstanding-. (1) any act, omission or neglect by Tenant, or by any subtenant of Tenant, or (2) any occupation or use of the Property (or any portion thereof) by Tenant, or by any subte- nant of Tenant, for purposes more hazardous than permitted by the terms of such policy or policies, or (3) any foreclosure or other action or proceeditng taken by any mortgagee(s) or trustee(s) pursu- ant to any provision of any mortgage(s) or deed(s) of trust covering the Property, or (4) any change in title or ownership of the Property. E. Any insurance policies required hereunder shall be written as primary policies, not contributing with or in excess of any coverage which Owner, or Owners designee(s) may carry, with loss payable clauses satisfactory to Owner and in favor of Owner, or at Owner's option, in have of Owner and Owner's designee(s). Tenant shall procure and maintain all policies (that it is required to obtain hereunder) entirely at its own expense and shall, at least 20 days prior to the expiration of any such policies, furnish Owner with renewals or "binders" thereof, or Owner shall have the right (but not the obligation, which shall be solely Tenant's to order such insurance and charge the cost the reof to Tenant. Nb such payment by Owner shall constitute a waiver of any other of Owner's rights under this lease. Tenant shall not do or permit to be done anything which shall invalidate the insurance policies referred to herein or the coverage thereunder. If Tenant (or any subtenant of Tenant) does or permits to be done anything which shall reimburse Owner for any additional premiums attributable to any act or omission or operation of Tenant (or any subtenant of Tenant) causing such increase in the cost of insurance. Any amount owed by Tenant under this paragraph shall be payable as additional rent for the month imDediately succeeding the month in which Tenant received a bill therefor from Owner. E. Tf, on account of the failure of Tenant to comply with the provisions of this Article, Owner is deemed a co-insurer by its insurance carrier, then any loss or damage which Owner shall sustain by reason thereof shall be borne by Tenant and shall be immediately paid by Tenant upon receipt of a bill therefor and evidence of such loss. G. Owner makes no representation that the limits of liability specified to be carried by Tenant sunder the terms of this Tease are adequate to protect Tenant against Tenant's indemnification obli- gations under this Lease, and if Tenant believes that any such insurance coverage called for under this Tease is insufficient, Tenant small provide, at its own expense, such additional insurance as Tenant deems adequate, because the limits of any insurance coverage required under this Article shin not limit the liability of Tenant under this Tease. IL If the lease term is more than five years, then (not more frequently than each five years) if in Owners opinion the amount of any insurance coverage maintained by Tenant at that time is not ade- quate, Tenant shall increase the insurance coverage as reasonably required by Owner. ARTICLE 46. GL1CIATIVE RIGHTS. All rights, options and remedies of Owner contained in this lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Owner shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law or equity, whether or not stated in this iaase. MAR 1988 -22- ARTICLE 47. ACCORD AMID SATISFACTION, RECEIPT OF HONEY. No payment by Tenant or receipt by Owner of a lesser amount than the basic rent and additional rent (jointly called "rent" in this Article) herein stipulated shall be deemed to be other than on account of the earliest stipulated rent due and not yet paid, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satis— faction, and Owner may accept such check or payment without prejudice to Owner's right to recover the balance of such rent or pursue any other remedy in this lease. It receipt of mxney by Owner from Tenant after the termination of this lease, after the service of any notice relating to the termination of this Lease, after the comMEicerent Of any suit, or after final judgment for possession of the Premises, shall reinstate, continue or extend the term of this lease or affect any such notice, demand, suit or judgment. ARTICLE 48. RfT17R M. Neither Tenant nor Owner shall record this Lease or any memorandum or short form thereof without the prior written consent of the other party. ARTICLE 49. A. if Tenant executes this lease as a partnership, each individual executing this lease on behalf of said partnership represents and warrants that he or she is a general partner of said partnership, and that this Lase is binding upon said partnership in accordance with its terms. B. if Tenant executes this Lease as a division or subsidiary of a corporation: 1) Each of the persons executing this Lease on behalf of Tenant does hereby covenant and war— rant that the parent corporation is a duly authorized and existing corporation, that Tenant or the parent corporation has (and is qualified to do) business in California, that Tenant has full right and authority to enter into this lease on behalf of the parent corporation as well as an it own behalf, and that each person signing this Lease on behalf of Tenant was authorized to do so; and 2) Tenant shall, within 30 days after request by Owner, deliver to Owner a certified copy of a resolution of the Board of Directors of the parent corporation authorizing or ratifying the execu— tion of this Lase. C. If Tenant executes this Lease as a corporation, each of the persons executing this lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing corporation, that Tenant has (and is qualified to do) business in California, that the corporation has full right and authority to enter into this Lease, and that each person signing this Lase on behalf of the corporation is authorized to do so. MAR 1988 —23— AMC[E 50. PARKDU. A. General. Owner agrees to maintain or cause to be maintained ai automobile parking area and to maintain and operate, or cause to be maintained and operated, said automobile parking area during the term of this lease for the benefit and use of the customers, service suppliers and (except as otherwise provided) employees of Tenant and of other tenants and occupants of the Property. Wher- ever the words "automobile parking area' are used in this lease, it is intended that the same shall include, whether In a surface parking area or a parking structure, the automobile parking stalls, driveways, entrances and exits and sidewalks, landscaped areas, pedestrian passageways in conjunr Lion therewith and other areas designed for parking. Owner shall keep said automobile parking area in a neat, clean and orderly condition, properly lighted and landscaped, and shall repair any damage to the facilities thereof. Nothing contained herein shall be deemed to impose liability upon owner for personal injury or theft, for damage to any motor vehicle or for loss to property from within any motor vehicle, which is suffered by Tenant or any of its customers, service suppliers or employees in connection with their use of said parking area. Owner shall also have the right to establish, charge, and enforce (against all users of said automobile parking area) such reasonable rules and regulations (including the exclusion of employee parking therefrom or the establishment of charges for employee parking) as may be deemed necessary and advisable for the proper and efficient operation and maintenance of said automobile parking area. Such rules and regulations may include, without limitation, the hazrs during which the automobile parking area shall be open for use. Owner may, if in its opinion the same be advisable, establish for the automobile parking area, a system or systems of charged validation or other operation, including, but not limited to, a system of charges against nonvalidated parking checks for users. Tenant shall comply with any such system (and all rules and regulations established by Owner in conjunction therewith) in its use of said automobile parking area and the use of same by Tenant's customers, employees and service suppliers; provided, bo%vver, that such system and such rules and regulations shall apply equally and without discrimination to all persons entitled to the use of said automobile parking area. Owner shall at all times during the term hereof have the sole and exclusive control of the autcmc- bile parking area, and may at any time during the term hereof exclude and restrain any person from use or occupancy thereof; excepting, hover, Tenant and employees, customers, and service suppliers of Tenant and other tenants on the Property who make use of said area in accordance with any rules and regulations established by Owner from time to time with respect thereto. The rights of Tenant referred to in this Article shall at all times be subject to the rights of Owner and the other tenants on the Property to use the same in can with Tenant; provided, however, that Owner stall have the option to assign reserved parking spaces in such instances as shall be determined by Owner. It shall be the duty of Tenant to keep the automobile parking area free and clear of any obstruc- tions created or permitted by Tenant or resulting from Tenant's operations, and to permit the use of any of said area only for normal parking and ingress and egress by said employees, customers, and service suppliers to and from the Property. Owner shall at all times have the ri4 t and privilege of determining the nature and extent of the automobile parking area, whether the sam shall be surfaced, underground or other structure, and of making such changes therein and thereto from time to time which in its opinion are deemed to be desirable and for the best interests of all persons using the automobile parking area, the direction and flow of traffic, installation of prohibited areas, landscaped arcs, and all other facilities thereof. B. Fmployee Parking. Fmployees of Tenant and of other tenants on the Property shall not be per- mitted to park their automobiles in the portions of the automobile parking area which may from time to time be designated for customers of the tenants on the Property, and Owner shalLl at all times have the right to establish rules and regulations for employee parking. C. Customer Parking. Omer agrees to provide within the automobile parking area parking spaces for customers of Tenant and of other tenants on the Property, in sufficient number as fromm time to time owner shall deem appropriate. D. Other Parking Users. Owner may authorize persons other than those described above, including occupants of buildings not on the Property, to utilize said automobile parking area. Further, if said automobile parking area is used by such other persons, then such other persons shall pay for said use in accordance with the terms established above; provided, however, that Owner may allow such other persons to use said automobile parking area on weekends, holidays and other nonbusiness hours without such payment. MGM 1988 -24- IN WITNESS WHEREOF, OWNER AND TENANT have executed this Lease as of the day and year reflected in Paragraph A of the Basic Lease Provision. APPROVED AS TO CONTENT: By vid N. Ream Title City Manager WITNESS: Date:— Name: — Address: ATTEST" By ice C. Guy T-tle Clerk of the Counc ] By Title By Title TENANT MAR 1986 -25- Foster Assessment Center and Testing Services (FACTS) will pay for space planning and all tenant improvements. All plans and working drawings for the tenant improvements shall have the approval of Lessor. Approval by Lessor of said plans and work drawings shall not relieve Lessee of the responsibility for complying.with all applicable codes and construction requirements, nor of obtaining necessary permits or approvals from the authorities of proper jurisdiction. Lessor agrees to reimburse Lessee $8,000 if Lessor cancels the agreement after one year, to compensate for the $12,000 in -tenant improvements. If Lessor does not renew the agreement after year two, Lessor will reimburse $4,000 to compensate for tenant improvements. Tazal "s DUITAIS: MAR 1988 SNM ANA REGIONAL TRANSPORTATION CEKIER IMES AND REGULATIONS 1. Tenant will refer all contractors, contractors' representatives and installation technicians rendering any service for Tenant to Omer for Owner's supervision and or approval before performance of any such contractual services. This shall apply to all work performed in the Building, including but not limited to, installation of telephone and telegraph equipment, electrical devices and attachments, and installations of any and every nature affecting floors, walls, woodwork, trim, win- doves, ceilings, equipment or any other physical portion of the Building. None of such work will be done by Tenant without Owners prior written approval. 2. The work of janitorial or cleaning personnel shall not be hindered by Tenant after 5:30 p.m. and such work may be done at any time when the Premises are vacant. The windows, doors, and fixtures in the Premises nay be cleaned at any time. Tenant shall provide whatever waste and rubbish recep- tacles, cabinets and bookcases, etc., are necessary in order to prevent unreasonable hardship to Owner in discharging its obligation regarding cleaning service. 3. tiovement in or out of the Building of furniture or office equipment, or dispatch or receipt by Tenant of any merchandise or materials which require the use of an elevator or stairways or movement through the Building entrances or lobby small be restricted to the hours designated by Owner from time to time. All such movement shall be as directed by Owner in a manner to be agreed upon between Tenant and Owner by prearrannganent before performance. Such prearrangement, to be initiated by Tenant, shall include determination by Owner (arid shall be subject to Owners decision and control) of the time, method, routing of movement, and limitations imposed by safety or other concerns which may prohibit any article, equipment or any other item from being brought into the Building. Tenant expressly assumes all risk of damage to any and all articles so moved, as well as all risk of injury to any person(s) or the public engaged or not engaged in such mpvement, including equipment, prop- erty and personnel of Owner if damaged or injured as a result of any acts in connection with carry- ing out this service of Tenant, from time of entering the Property until completion of the work, and Owner shall not be liable for any act or omission of any person engaged in (or for damage to or loss of any property or injury to any person resulting directly or indirectly from any act or omission in cenunection with) such service performed by or for Tenant. Tenant hereby agrees to defend and indem- nify Owner with respect to any such damage, injury or loss, including all reasonable attorneys' fees and related costs. 4. No sign(s).of Tenant will be allowed in any form on the exterior of the Building or on any win- dow(s) inside or outside the Building, and no siga(s), except in uniform location and uniform style fixed by Owner, will be permitted in the public corridors or on corridor doors or entrances to the Premises. All signs will be contracted for by Owner for Tenant at the rate fixed by Owner from time to time and Tenant will be billed and pay for such service accordingly. Written Consent from Owner is an absolute prerequisite for any such sign(s) which Tenant may be permitted to use. 5- Tenant shall not place, install or operate on the Premises or in any part of the Building, any engine, stove or machinery, or conduct mechanical operations or cook thereon or therein, except that the preparation of coffee, tea, hot chocolate and similar items for tenants and their employees shall be permitted; nor shall Tenant place or use in or about the Premises any explosives, gasoline, kerosene, oil, acid, caustics, or any other inflammable, explosive or hazardous material or firearms without the prior written consent of Owner. - 6. Owner will not be responsible for any lost or stolen personal property, equipment, money or jew- elry from the Premises or from public rooms regardless of whether such loss occurs when the area is locked against entry. 7. No birds or animals shall be brought onto the Property. Any bicycles or vehicles brought onto the property shall be parked only in areas designated by Owner for such purpose, and shall under no circumstances be brought into the Building. 8. Mer may permit entrance to the Premises (by use of passkeys controlled by Owner) by employees, contractors or service personnel supervised or employed by Owner, or by anyone authorized to enter the Premises pursuant to Article 18 of this Lease. No additional locks shall be placed upon any doors of the Premises and Tenant shall not permit any duplicate keys to be made; all necessary keys Will be furnished by Owner, it being understood that a deposit of $5.00 is to be made to Owner by Tenant for each key furnished under this lease. Upon termination of this lease, Tenant shall sum render and deliver to Owner all keys to the Premises which are in Tenant's possession or in the pos- session of Tenant's agents, employees or others permitted by Tenant to occupy the Premises, as well as the receipts for the amours of deposits Tenant has made for such keys, and Owner shall thereupon return to Tenant $5.00 for each such key and receipt so returned. rim 1988 =BlT "C' PAGE 1 of 3 9. ib sidewalks, entrances, passages; courts, elevators, vestibules, stairways, corridors or halls to any structures on the Property shall be obstructed or used for any purpose other than ingress and egress, nor shall any rubbish, litter, trash or material of any nature be placed, emptied or thrown into these areas. The halls, passages, entrances, elevators, stairways, balconies and roof of each such structure are not for the use of the general public, and Owner shall in all cases retain the right to control or prevent access thereto by all persons whose presence (in the judgment of Owner) shall be prejudicial to the safety, character, reputation or interests of the Property and its tenants, provided that nothing herein contained shall be construed to prevent such access by persons with whaa tenants of the Property normally deal in the ordinary course of their business, unless such persons are engaged in illegal activities. No tenant (or subtenant, invitee, agent or employee of any tenant) shall go upon the roof of any structure on the Property without the prior written consent of Owner. 10. Owner shall have the right to determine and prescribe the weight and proper position of any unusually heavy equipment (including safes, large files, etc.) that is to be placed in the Building, and only that which in the opinion of Owner might not with reasonable probability do damage to the floors, stricture and/or elevator, may be moved into the Building. Any damage occasioned in connec— tion with the moving or installing of such aforementioned articles in the Building or the existence of same in the Building shall be repaired promptly by Tenant at its own expense. 11. The Premises shall not be used for lodging, slaeping, or cooking or for any immoral or illegal purpose, or for any purpose that will damage the Property or the reputation thereof, or for any pur- pose other than that specified in this lease. 12. Except for Owner's Building Standard blinds, no draperies, shutters, or window covering shall be installed on exterior windows or on windows or doors facing public corridors. All electrical ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent and of a quality, type, design and bulb color approved by Owner. 13. Employees of Owner shall not receive or carry messages for or to any tenant or other occupant on the Property, nor shall they contract to reader free or paid services to any tenant or any tenant's agents, employees or invitees; if any of Owner's employees perform any such services, such employee(s) shall be deemd the agent of the tenant for wlnm the services are being performed, regardless of whether or boa payment is arranged for services, and Owner is expressly relieved from any and all liability for any injury to persons or damage to property (and any other damages) is connection with any, such services. 14. Tenant and its employees, agents and invitees shall observe and comply with the driving and parking signs and markers on the Property. 15. No nails, hooks or screws shall be driven or inserted into any part of the Premises or any other part of the Property, except by Owner's maintenance personnel. 16. Directories will be placed by Owner, at its own expense, in conspicuous places in the Building. tb other directories shall be permitted unless previously consented to by Owner in writing. The total nxiber of identification strips for each tenant shall be reasonably determined by Owner. 17. Plumbing fixtures and appliances shall be used only for purposes for which constructed, and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed therein. Damage resulting to any such fixtures or appliances from misuse by Tenant (or by any subtenant, employee, agent or invitee of Tenant) shall be promptly repaired by Tenant, entirely at Tenant's own expense. 18. No tenant shall make (or permit to be made) any loud or otherwise disturbing noises, semis or vibrations, or disturb or interfere with other occupants of the Property or of buildings on neigh- boring property, or those having business with them, whether by the use of any musical instrument, radio, phonograph, unusual noise, or in any other way. 19. No tenant shall purchase (or otherwise obtain for use in the Premises) any water, ice, towel, vending machine, janitorial, maintenance or other similar services, or accept barbering or shoe shining services, except from persons authorized in writing by Owner, and at hours and under regula— tions fixed by Owner. MAR 1988 IDMU IICI pAcE 2 of 3 20. Owner reserves the right to exclude from above the ground floor of the Property between the lours of 11:00 p.m. and 6:00 a.m. (ard at all hours on Sundays and legal holidays) and from the ground floor of the Property during such hours during which the ground floor areas are not open to the public, ail persons who. do not present a pass to the Property signed by Owner. Owner shall fur- nish passes to persons for wtom any tenant requests the same in writing. Each tenant shall be responsible for all persons for whom he requests passes and shall be liable to Owner for all acts of such persons. Owner shall in no case be liable for any error with regard to the admission to or exclusion from the Property of any person. 21. All doors opening into public corridors in any, structure on the Property shall be kept closed, except when in use for ingress and egress. 22. Oar reserves the right to make such other and further rules and regulations as in its judo went may from time to time be needful for the safety, care and cleanliness of the Property, and for the preservation of good order thereon. Qi,TIE s IriITIAiS g WX-S DuriAT S MAR 1988 FffUBi2 "C' PAGE 3 OF 3 _ a 1� ■I � I n ICI Apt j , x I I 3 x >< _ , u- A t r x EXHIBIT "F" GPI REUAL ADJUSDENIS The monthly installments of rental, as provided for in Paragraph J of the Basic Lase Provisions, shall be adjusted upward at the commencement of every 30th month of the term (the "Adjustment Hate") to the greater of (i) the minimum adjustment amount, if any, specified in Paragraph J of the Basic lease Provisions, or (ii) an increase based upon a Consumer Price index formala as follows: The base for computing the adjustment is a revised Consumer Price Index, all items (1967 = 100) for Urban Wage Earners and Clerical Workers, for the Los Angeles/Long Beach/Anaheim Metropolitan area, as published monthly by the United States Department of labor, Bureau of Labor Statistics ("Ind&'), which is published for the third month prior to the date on which the term of this Lease commences as deter- mined by Article 2 of this lease ("Beginning Index!'). If the Index published for the third month prior to the Adjustment Date ("Comparison Ind&') has increased over the Beginning Index, the monthly install- ments of rental for the lease year immediately succeeding the Adjust- ment Date shall be set by multiplying the monthly rental, as set forth in Paragraph J of the Basic lease Provisions, by a fraction, the mmm- erator of which is the Comparison Index and the denominator of which is the Beginning Index. In no case shall the adjusted monthly installment of rental ever be less than the installment of basic rent for the month immediately preceding each Adjustment Date. Upon adjustment of the monthly rental as provided in this Article, Owner shall give Tenant written notice of the new monthly rental. if the Index is changed so that the base is changed from 1967 = 100, the Index shall be converted in accordance with the conversion factor published by the United states Department of labor, Bureau of labor Statistics. If the Index is discontinued or revised during the lease term or any extension thereof, such other governmental index or compu- tation with which it is replaced.shall be used in order to obtain sub- stantially the same result as would be obtained if the Index had not been discontinued or revised. if there is no such replacement, then Owner and Tenant shall mutually select another price index which is satisfactory to both. If the parties cannot agree, then such index shall be selected by three arbitrators in accordance with the rules of the American Arbitration Association, and such determination shall be final and binding upon the parties. UzER's INITIALS: TIRMI-S INITIALS* MAR 1988 RIDER M. 1 OPTION TO RENEW LEASE Tenant shall have the right, at its option, to extend the term of this lease for one a r provided that (i) no default under this Lease has occurred and is conti- nuing as of the date of the exercise of the option or as of the actual comencement date of the renewal term, and (ii) Tenant gives Owner written notice of its intent to extend the term of this Lease for an additional onp year period not less than six months before the end of the ini- tial Ise term. The renewal term s611 be governed by all of the provisions of this Lease applica- ble to the initial term, except that the annual basic rent for such renewal term shall be the cur- rent market rent for comparable space in the Building or in similar buildings in the Santa Ana area as of commencement of the renewal term. Annual basic rent during the renewal term shall be subject to the CPI Rental Adjustment as set forth in Rider No. 1, on the first day of the 31st month of the renewal term. Owner shall inform Tenant of the current market rental by giving Tenant 60 days prior written notice. Unless Tenant objects in writing to Owners statement of current market rental. within 15 days after receipt thereof, the amount in Owners statement shall be the basis for competing mural basic rent for the renewal term. If Tenant objects to Owners statement of current market rental, Owner and Tenant shall use their best efforts to agree upon the market rents. If Owner and Tenant are unable to reach agreement as to market rents prior to the expiration of the initial term of this lease, Tenant my either pay the market rental amount initially proposed by Owner, or may terminate this Lease notwithstanding that Tenant has given notice of its intent to exercise its option to extend. Upon the eoaHtion that Tenant shall have exercised its option to renew as described above, and further subject to all the conditions above described, including the provisions for the establish- ment of market rent and rental. increases, Tenant shall have the further right, at its option, to extend the term of this lease for one additional period of nTip vQar OWIER-S INITIALS: TENANT'S rRTIAIS: MAR 1988 RIM N0. 2 The basic rent set forth in Paragraph J of the Basic Lease Provisions shall be increased by the amomts computed as follows: A. An amxmt equal to the cost of maintenance (including repairs and janitorial costs), utili- ties, heating and cooling distribution system, labor and supplies, and any other expenses applicable to the Premises, as described in Paragraph E of the Basic Lease Provisions; B. An amount equal to Tenant's pro-rata share of the cost of maintenance (including repairs and janitorial costs), utilities, heating and cooling distribution system, labor and supplies, and sect- rity applicable to the public common areas of the first floor of the Building. For purposes of this Paragraph B, Tenant's prop -rats share shall be competed by dividing the square footage of Tenant's premises, as defined in Paragraph E of the Basic lease Provisions (or such other figure as is the revised square footage of the Premises if the size of sane is subsequently increased or decreased), by the total square footage of Useable Area on the irotnnd floor of the Building; and C. An amount equal. to Tenant's pm-rata share of all costs of building repair, maintenance and operation not included in Paragraphs A and B, above. Items of building repair, maintenance and operation shall consist of (a) all expenses and charges which, in accordance with generally accepted accounting and management principles, would be considered a cost of maintaining, operating, managing or repairing the Property, and shall include, by way of illustration but not limitation, all expenses paid or incurred for crater and sewer charges, insurance premiums, utilities, hearing and cooling mechanical equipment, labor and supplies, license, permit and inspection fees, all assess- ments and special assessments due to deed restrictions, declarations and/or owners' associations which accrue against the Property, the cost of maintenance and service contracts, or in lieu the- reof, compensation (including employment taxes, similar governmental charges, and fringe benefits) with respect to all persons who perform duties in connection with landscaping and general cleaning directly related to the operation, maintenance or repair of the Property (as well as the cost of all equipment used in conjunction therewith), real and personal property taxes (as herein defined), cus- tomary management fees, legal expenses and accounting expenses, as well as (b) an administrative fee of 57 of Qaner's operating costs (exclusive of real and personal property taxes). Operating costs shall not include depreciation of, or capital expenditures in connection with, the Property or any, equipment therein or thereon, payments of principal and interest on any mortgage or other encumbrance upon the Property, commissions paid for leasing, or the cost of alterations to the Property. Inver, operating costs shall include amortization and payments of interest with respect to any capital improvements made to the Property for the purpose of reducing operating costs or pur- suant to the requirements of any governmental entity. Charges for any services, goods or materials furnished by Owner at Tenant's request, and all other sums payable by Tenant under the Lease, shall not ha deemed operating costs, but rather shall be payable by Tenant pursuant to the provisions of the Lease, or (if not provided for in the Lease) within ten days after Owner renders a statement therefor. "Real and personal property taxes" shall mean and include (a) all real property taxes and personal property taxes, charges, and general and special assessments, foreseen as well as unforseen, which are levied or assessed upon or with respect to -the Property and any improvements, fixtures, equip- ment and all other personal property of Owner located on the Property and used in connection with the operation of the Property, (b) any tax, surcharge or assessment which shall be levied or assessed in addition to or in lieu of such real or personal property taxes (but shall not include any net income, franchise, capital stock, estate or inheritance taxes of Owner, or any taxes paid by Tenant pursuant to Article 15 of the Lease, and (c) any expenses incurred by Omer in contesting the amount or validity of any real and/or personal property taxes. For purposes of this Paragraph C, Tenant's pro-rata share shall be calculated by dividing the square footage of Tenant's Premises, as defined in Paragraph E of the Basic Lease Provisions (or such other figure as is the revised square footage of the Premises if the size of same is subsequently increased or decreased), by the total Useable Area in the Building. For the purposes of this Rider the term "useable Area" shall not include lobbies, public corridors, public restrooms, mechanical rooms, electrical rooms, telephone closets or other common areas, nor shall it include vertical penetrations which are not included for the special use of Tenant. D. Prior to the beginning of the term of the Lease and prior to the first day of each calendar year thereafter, Owner shall furnish Tenant with an estimate of the per square foot costs for such calendar year (or portion thereof) pursuant to the items and pro -ration calculations for each of Paragraph A, B and C, above. The basic rent payable each month in such calendar year shall be increased by 1/12th of the product of the square footage of the Premises, as set forth in Paragraph MAR 1988 RIDER W. 3 PAGE 1 OF 2 E of the Basic Izase Provisions (or such other figure as is the revised square footage of the Pre- mises if the size of same is subsequently increased or decreased), multiplied by the estimate of such per square foot costs. After the expiration of each calendar year, Owner shall furnish Tenant with a statement of the actual per square foot costs calculated pursuant to Paragraphs A, B and C, above the preceding year, and if the actual per square foot costs for the preceding calendar year are more or less than the estimate, a proper adjustment shall be made. Any excess paid by Tenant shall be refunded to Tenant within 120 days after the end of such calendar year or at Owner's option, may be applied to any awunts then due by Tenant to Owner or to the next maturing installment of basic rent or additional rent. Pxry deficiency between the actual per square foot costs shall be paid by Tenant to Owner, concurn:ntly with the regular monthly rent payment next due following Tenant's receipt of ttr- afore- mentiomu d statement. Any fractional tax year in the first or final year of the term of this lease shall be treated proportionately on a 360-day year basis. OW t'S INITIAIS: TE wrs TNP=: MAR 1998 IfI)ER M. 3 PAm2OF2