Exhibit 10.3


 


FIRST
AMENDMENT TO LEASE


 


THIS FIRST AMENDMENT TO LEASE effective as of July 30, 2008 (“First
Amendment”) between 1444 Partners, Ltd., a California limited partnership (“Landlord”)
and Guess ?, Inc., a Delaware corporation (“Tenant”) amends that
certain Lease dated July 29, 1992 between Landlord and Tenant (“Lease”).  Capitalized terms used but not otherwise
defined in this First Amendment shall have the respective meanings ascribed to
them in the Lease.


 


WHEREAS, Landlord and Tenant entered into the Lease for the property
commonly known as 1444 S. Alameda Street (the “Premises”); and


 


WHEREAS, Landlord and Tenant desire to extend the term of the Lease and
to otherwise amend the Lease on the terms and conditions set forth herein;


 


NOW, THEREFORE, in consideration of the covenants and agreements
contained in this First Amendment, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by the
execution of this First Amendment, the parties to this First Amendment agree as
follows:


 


1.             The Basic Lease Provisions on page (i) of
the Lease are hereby amended as follows:


 


(a)           Lease
Termination Date:  July 31, 2018;


 


(b)           Minimum
Rent:  Two Million Eight Hundred Fifty-Two
Thousand Six Hundred Sixty-Four and 36/100 Dollars ($2,852,664.36) for the
period of August 1, 2008 through July 31, 2009, subject to annual
increases based on the Index (as defined below);


 


(c)           Addresses
for Notices:  All references in the Lease
to:


 


“1444 Partners,
Ltd., a California limited partnership


c/o 1444 Alameda
Street, Suite 100


Los Angeles, CA  90021”


 


are hereby deleted
in their entirety and the following shall be submitted in lieu thereof:


 


“1444 Partners,
Ltd., a California limited partnership


144 S. Beverly
Drive, Suite 600


Beverly Hills,
CA  90212”


 

















 


All references in the Lease to:


 


“Stein & Kahan, a law corporation


429 Santa Monica
Boulevard, Fifth Floor


Santa Monica,
CA  90401


Attn:  William E. Niles, Esq.”


 


are hereby deleted
in their entirety and the following shall be submitted in lieu thereof:


 


“Rutter Hobbs &
Davidoff Incorporated


1901 Avenue of the
Stars, Suite 1700


Los Angeles, CA  90067


Attn:  Marc E. Petas, Esq.”


 


All references in
the Lease to:


 


“Skadden, Arps,
Meagher & Flom


300 S. Grand
Avenue, #3400


Los Angeles, CA  90071


Attn:  Rand S. April, Esq.”


 


are hereby deleted
in their entirety.


 


2.             Section 2.01 (“Length of Term”)
of the Lease is hereby amended by extending the term of the Lease for an
additional ten (10) years and two (2) days; such extended term to commence
on July 30, 2008 and end on July 31, 2018 (“Renewal Term”).


 


3.             The first paragraph of Section 3.01
(“Minimum Rent”) of the Lease is hereby deleted in its entirety and the
following shall be submitted in lieu thereof:


 


“For the period of
July 30, 2008 through July 31, 2008, Tenant shall pay to Landlord an
amount equal to Fifteen Thousand Three Hundred Thirty-Six and 90/100 Dollars
($15,336.90) as Minimum Rent.  The
foregoing amount shall be due and payable by Tenant on July 30, 2008.  Commencing August 1, 2008, Tenant shall
pay to Landlord an amount equal to Two Million Eight Hundred Fifty-Two Thousand
Six Hundred Sixty-Four and 36/100 Dollars ($2,852,664.36) as Minimum Rent for
the period of August 1, 2008 through July 31, 2009, in monthly
installments of Two Hundred Thirty-Seven Thousand Seven Hundred Twenty-Two and
03/100 Dollars ($237,722.03), in advance, on the first (1st) day of
each month of said period.  The Minimum
Rent shall be increased annually on August 1 of each year of the Renewal
Term, beginning with August 1, 2009 (each, an “Adjustment Date”). On each
Adjustment Date, the Minimum Rent (as previously adjusted and then in effect)
shall be increased by a percentage equal to the percentage increase, if any, in
the Index published for the month of May immediately preceding such
Adjustment Date over the Index published for the month of May immediately
preceding (i) the Renewal Term commencement date in the case of the first
Adjustment Date, or


 


2

















 


(ii) the prior
Adjustment Date in the case of each subsequent Adjustment Date.  Notwithstanding any decrease in the Index,
the Minimum Rent payable as of any Adjustment Date shall in no event be less
than the Minimum Rent payable immediately prior to such Adjustment Date.  The term “Index” shall mean the Consumer
Price Index for All Urban Consumers, Los Angeles-Riverside-Orange County, CA,
subgroup “All Items”, (1982-84=100), published by the United States Department
of Labor, Bureau of Labor Statistics.  If
the compilation and/or publication of the Index shall be transferred to any
other governmental department or bureau or agency or shall be discontinued,
then the index most nearly the same as the Index shall be selected and used by
Landlord.  Notwithstanding the foregoing,
in no event shall Minimum Rent be increased by more than four percent (4%) for
any lease year.”


 


4.                                       The
following paragraph shall be added to the end of Section 6.06(c):


 


“Tenant shall
immediately repair all damage resulting from the removal of any such
alterations, improvements, remodeling, additions or fixtures and shall restore
the Premises to a tenantable condition as reasonably determined by
Landlord.  If Tenant shall fail to remove
those items described above, Landlord may (but shall not be obligated to), at
Tenant’s expense, remove any of such property and store, sell or otherwise deal
with such property as permitted by law, at the risk of, expense of and for the
account of Tenant, and the proceeds of any sale shall be applied pursuant to
law.  Landlord shall in no event be
responsible for the value, preservation or safekeeping of any such
property.  Tenant hereby waives all
claims for damages that may be caused by Landlord’s removing or storing Tenant’s
personal property pursuant to this Section, and Tenant hereby indemnifies, and
agrees to defend, protect and hold harmless, Landlord from any and all loss,
claims, demands, actions, expenses, liability and cost (including reasonable
attorneys’ fees and expenses) arising out of or in any way related to such
removal or storage.”


 


5.             Section 15.03 of the Lease (“Refurbish
and Upgrade”) is hereby deleted in its entirety.


 


6.             Landlord hereby grants to Tenant
the option (“Option”) to extend the Renewal Term for one additional period of
five (5) years (“Option Term”). 
Provided Tenant is not then in default, Tenant shall have the right to
exercise the Option no later than twelve (12) months, but not more than fifteen
(15) months, prior to the Renewal Term expiration date.  Should Tenant fail to timely deliver written
notice of the exercise of the Option, then the rights granted herein shall
terminate and be of no further force or effect. 
The Minimum Rent payable during the Option Term shall be the Prevailing
Rent, as defined below.


 


Within thirty (30)
days after Landlord receives written notice of Tenant’s exercise of the Option,
Landlord shall notify Tenant of the prevailing monthly rent for a Triple Net
Lease (as said term is defined in Section 17.01 of the Lease) for
non-sublease, non-expansion space in the city of Los Angeles for lease renewals
comparable in size, location and quality to the Premises (“Prevailing Rent”).  Said Prevailing Rent shall become the monthly
Minimum Rent for the first year of the Option Term and shall increase annually
by a percentage equal to the percentage increase, if any, in the Index (in the
manner set forth in Section 3.01 of the Master Lease, provided that in no
event shall Minimum Rent be increased by more than five percent (5%) 


 


3

















 


for any year in the
Option Term).  However, should Tenant
object to the Prevailing Rent within fifteen (15) days of Landlord’s delivery
of notice thereof, Landlord and Tenant shall attempt, in good faith, to agree
upon the Prevailing Rent.  Failure of
Tenant to timely deliver to Landlord a written notice of objection to the
Prevailing Rent shall conclusively be deemed its approval of Landlord’s
proposed Prevailing Rent.  If Landlord
and Tenant fail to reach an agreement within fifteen (15) days following the
date of Tenant’s objection to the Prevailing Rent, then each party shall set
out its opinion of the Prevailing Rent and the matter of Prevailing Rent for
similar space in Los Angeles shall be submitted to arbitration as set forth in
paragraphs (a) through (g) below:


 


(a)           Landlord and Tenant shall each
appoint one arbitrator who shall by profession be a real estate broker who
shall have been active over the ten (10) year period ending on the date of
such appointment in the leasing of industrial/commercial properties in the Los
Angeles area.  Each such arbitrator shall
be appointed within fifteen (15) days after the parties’ failure to agree on
Prevailing Rent.


 


(b)           The two arbitrators so appointed
shall, within fifteen (15) days of the date the last arbitrator is appointed,
agree upon and appoint a third arbitrator who shall be an MAI appraiser,
associated with a nationally recognized appraisal company, but who otherwise
shall be qualified under the same criteria set forth hereinabove for
qualification of the initial two arbitrators.


 


(c)           Landlord and Tenant shall each submit
its computation of Prevailing Rent to the arbitrators together with evidence
supporting such computation. The three arbitrators shall, within thirty (30)
days of the appointment of the third arbitrator, reach a decision as to whether
the parties shall use Landlord’s or Tenant’s submitted computation of
Prevailing Rent and shall notify Landlord and Tenant of their decision. The
determination of the arbitrators shall be limited solely to the issue of
whether Landlord’s or Tenant’s submitted Prevailing Rent for the Premises is
the closest to the actual Prevailing Rent for the Premises (as determined by
the arbitrators), taking into account the terms of the respective submittals
and the requirements of this Section 6.


 


(d)           The decision of the majority of the
three arbitrators shall be binding upon Landlord and Tenant.


 


(e)           If either Landlord or Tenant fails to
timely appoint an arbitrator, the arbitrator appointed by the other one of them
shall reach a decision, notify Landlord and Tenant thereof, and such arbitrator’s
decision shall be binding upon Landlord and Tenant.


 


(f)            If the two arbitrators fail to agree
upon and appoint a third arbitrator, then the appointment of the third
arbitrator shall be dismissed, and the matter to be decided shall be forthwith
submitted to arbitration under the provisions of the American Arbitration
Association, but subject to the instructions set forth in this Section 6.


 


(g)           The costs of arbitration shall be
paid by Landlord and Tenant equally.


 


7.             Tenant acknowledges that Tenant (i) has
been, and is, in possession of the Premises pursuant to the Lease and (ii) is
fully aware of the condition of the Premises. 
Therefore, 


 


4

















 


Tenant shall continue to
occupy the Premises as of the Renewal Term commencement date in its then
existing “As-Is” condition, and, notwithstanding any provision to the contrary
contained in the Lease, Landlord shall not be obligated to provide or pay for
any improvement work or services related to the improvement of the
Premises.  Tenant also acknowledges that
neither Landlord, nor any agent of Landlord, has made any representation or
warranty regarding the condition of the Premises or the Buildings or with
respect to the suitability of the same for the conduct of Tenant’s business.


 


8.             Notwithstanding anything to the
contrary contained in the Lease, upon any default by Tenant, in addition to any
other remedies available to Landlord at law or in equity or under the Lease, Landlord
shall have the remedy described in California Civil Code Section 1951.4 (Landlord
may continue the Lease in effect after Tenant’s breach and abandonment and
recover rent as it becomes due, if Tenant has the right to sublet or assign,
subject only to reasonable limitations). Accordingly, if Landlord does not
elect to terminate the Lease, Landlord may, from time to time, enforce all of
its rights and remedies under the Lease, including the right to recover all
rent as it becomes due.  Such remedy may
be exercised by Landlord without prejudice to its right thereafter to terminate
the Lease.


 


9.             Notwithstanding any provision to
the contrary contained in the Lease, Landlord and Tenant acknowledge and agree
that the liability of Landlord, for Landlord’s obligations under the Lease,
shall be limited to Landlord’s interest in the Buildings and Tenant shall not
look to any other property or assets of Landlord or the property or assets of
any general or limited partner, member, manager, shareholder, director,
officer, trustee, principal, employee or agent of Landlord (collectively, the “Landlord
Parties”) in seeking either to enforce Landlord’s obligations under the Lease,
or to satisfy a judgment for Landlord’s failure to perform such obligations;
and none of the Landlord Parties shall be personally liable for the performance
of Landlord’s obligations under the Lease. 
In no event shall Landlord be liable for, and Tenant, on behalf of
itself and all other subtenants or occupants of the Premises and their
respective agents, contractors, subcontractors, employees, invitees or
licensees, hereby waives any claim for, any indirect, consequential or punitive
damages, including loss of profits or business opportunity, arising under or in
connection with the Lease.


 


11.           If any lender of Landlord requires a
modification of any of the terms of the Lease, and such modifications will not
increase Tenant’s cost or expense or materially or adversely change Tenant’s
rights and obligations under the Lease, the Lease shall be so modified and Tenant
shall execute such documents as are reasonably required by Landlord’s lender
and shall deliver same to Landlord within ten (10) days after any request
therefor.


 


12.           Effective as of the
date hereof, all references in the Lease to “The Prudential Insurance Company
of America” or “Prudential,” and to all associated information, are hereby
deleted in their entirety and the following is hereby substituted in lieu
thereof:  “Landlord’s lender.”


 


13.           Each party
represents and warrants to the other that no broker, agent or finder negotiated
or was instrumental in negotiating or consummating this First Amendment.  Each


 


5

















 


party
further agrees to defend, indemnify and hold harmless the other party from and
against any claim for commission or finder’s fee by any entity who claims or
alleges they are entitled to a commission based on the acts of the indemnifying
party.


 


14.           Each party represents
and warrants to the other that, as of the date of this First Amendment, each is
in full compliance with all terms, covenants and conditions of the Lease and
that there are no breaches or defaults under the Lease, and that neither party
knows of any events or circumstances which, given the passage of time or notice
or both, would constitute a default under the Lease.


 


15.           In any action to
enforce the terms of the Lease, including any suit by Landlord for the recovery
of rent or possession of the Premises, the losing party shall pay the
successful party a reasonable sum for attorneys’ fees and costs in such
suit.  Such attorneys’ fees and costs
shall be deemed to have accrued prior to the commencement of such action and
shall be paid whether or not such action is prosecuted to judgment.  Should Landlord, without fault on Landlord’s
part, be made a party to any litigation instituted by Tenant or by any third
party against Tenant, or by or against any person holding under or using the
Premises through Tenant, or for the foreclosure of any lien for labor or
material furnished to or for Tenant or any such other person or otherwise
arising out of or resulting from any act or transaction of Tenant or of any
such other person, Tenant covenants to save and hold Landlord harmless from any
judgment rendered against Landlord or the Premises, or any part thereof, and
from all costs and expenses, including reasonable attorneys’ fees and costs
incurred by Landlord in connection with such litigation.


 


16.           Except as expressly
modified by this First Amendment to Lease, the Lease is confirmed and shall
continue to be and remain in full force and effect in accordance with its
terms.  Any existing or future reference
to the Lease and any document or instrument delivered in connection with the
Lease shall be deemed to be a reference to the Lease as modified by this First
Amendment.  To the extent that anything
in this First Amendment is inconsistent with anything in the Lease, this First
Amendment shall control.


 


17.           This First Amendment
may be executed in any number of counterparts, each of which, when taken
together, shall constitute but one and the same instrument.


 


18.           This First Amendment
shall be governed by and construed in accordance with the laws of the State of
California.


 


[SIGNATURES ON FOLLOWING PAGE]


 


6

















 


IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized representatives to execute this First Amendment as of the date
first above written.


 


 


	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  1444
  Partners, Ltd. 

  	
   

  	
  Guess ?, Inc. 

  
	
  a
  California limited partnership

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  Alameda
  Associates, Inc.  

  	
   

  	
   

  
	
   

  	
  a
  California corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  General
  Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/
  Paul Marciano

  	
   

  	
  BY:

  	
  /s/
  Deborah Siegel

  
	
   

  	
   

  	
   

  
	
  NAME:
    Paul Marciano

  	
   

  	
  NAME:
  Deborah Siegel

  
	
   

  	
   

  	
   

  
	
  ITS:         Member
  

  	
   

  	
  ITS:       Secretary
  

  
						



 
















 


In
consideration of the rents and covenants hereinafter set forth, Landlord hereby
leases to Tenant, and Tenant hereby leases from Landlord the following
described premises upon the following terms and conditions.


 


BASIC LEASE PROVISIONS


 


Lease
Reference Date: July 29, 1992


 


Landlord: 1444
Partners, Ltd. a California limited partnership


 


Tenant: Guess?, Inc.,
a California corporation


 


Premises: 1444 South Alameda, Los Angeles, California


 


Use
of Premises: Any lawful purpose.


 


Lease
Term: Sixteen (16) Years


 


Lease
Commencement Date: July 29, 1992


 


Lease
Termination Date: July 29, 2008


 


Minimum Rent: Two Million Forty Three Thousand
Six Hundred Ninety-Nine Dollars and Eighty-Four Cents ($2,043,699.84) for the
first lease year subject to annual increases based on the consumer price index.


 


	
  Addresses
  for Notices:

  	
  (Section 13.10)

  
	
   

  	
   

  
	
  To
  Landlord:

  	
  To
  Tenant:

  
	
  1444
  Partners, Ltd., a California limited partnership

  	
  Guess?, Inc.

  
	
  c/o
  1444 Alameda St.

  	
  c/o
  1444  Alameda St.

  
	
  Suite 100

  	
  Suite 100

  
	
  Los
  Angeles, Ca 90021

  	
  Los
  Angeles, CA 90021

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  with
  a copy to:

  
	
   

  	
   

  
	
  Stein &
  Kahan, a law corporation

  	
  Skadden,
  Arps, Meagher & Flom

  
	
  429
  Santa Monica Boulevard

  	
  300
  S. Grand Ave., #3400

  
	
  Fifth
  Floor

  	
  Los
  Angeles, CA 90071

  
	
  Santa
  Monica, CA 90401

  	
  Attn:
  Rand S. April, Esq.

  
	
  Attn:
  William E. Niles, Esq.

  	
   

  



 


The
Basic Lease Provisions are an integral part of this lease and each reference in
this lease to any of the Basic Lease Provisions shall be construed to
incorporate all of the terms provided under each such Basic Lease Provision. In
the event of any conflict between any Basic Lease Provisions and the balance of
the lease, the latter shall control. References to specific sections are for
convenience only and designate some of the sections where references to the
particular Basic Lease Provisions appear.


 


	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  1444 Partners, Ltd., a

  	
   

  	
  Guess?, Inc.,
  a

  
	
  California Limited

  	
   

  	
  California
  corporation

  
	
  Partnership

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Alameda
  Associates, Inc.,

  	
   

  	
  By:

  	
  /s/ Paul Marciano

  
	
   

  	
  a California corporation

  	
   

  	
   

  	
  Its

  
	
   

  	
  Its General Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ [Signature]

  	
   

  	
   

  	
   

  
	
   

  	
  Its President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ [Signature]

  	
   

  	
   

  	
   

  
	
   

  	
  Its Secretary

  	
   

  	
   

  	
   

  
						



 


i

















 


TABLE OF CONTENTS


 


	
  ARTICLE

  	
   

  	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  I

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PREMISES

  	
   

  	
  1

  
	
  Section 1.01 - PREMISES DEFINED

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TERM

  	
   

  	
  1

  
	
  Section 2.01 - LENGTH OF TERM

  	
   

  	
  1

  
	
  Section 2.02 - COMMENCEMENT DATE

  	
   

  	
  1

  
	
  Section 2.03 - LEASE YEAR

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RENT

  	
   

  	
  1

  
	
  Section 3.01 - MINIMUM RENT

  	
   

  	
  1

  
	
  Section 3.02 - RENT

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TAXES

  	
   

  	
  2

  
	
  Section 4.01 - TAXES

  	
   

  	
  2

  
	
  Section 4.02 - DEFINITIONS

  	
   

  	
  2

  
	
  Section 4.03 - OTHER TAXES

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONDUCT OF BUSINESS BY TENANT

  	
   

  	
  3

  
	
  Section 5.01 - USE OF PREMISES

  	
   

  	
  3

  
	
  Section 5.02 - RESTRICTIONS ON USE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAINTENANCE, REPAIRS AND
  ALTERATIONS

  	
   

  	
  3

  
	
  Section 6.01 - LANDLORD’S OBLIGATIONS

  	
   

  	
  3

  
	
  Section 6.02 - TENANT’S OBLIGATIONS

  	
   

  	
  4

  
	
  Section 6.03 - SURRENDER

  	
   

  	
  4

  
	
  Section 6.04 - LANDLORD’S RIGHTS

  	
   

  	
  4

  
	
  Section 6.05 - LANDLORD’S OBLIGATIONS

  	
   

  	
  4

  
	
  Section 6.06 - ALTERATIONS AND ADDITIONS

  	
   

  	
  4

  
	
  Section 6.07 - CLEANLINESS: WASTE AND NUISANCE

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INSURANCE AND INDEMNITY

  	
   

  	
  5

  
	
  Section 7.01 - LIABILITY INSURANCE

  	
   

  	
  5

  
	
  Section 7.02 - PROPERTY INSURANCE

  	
   

  	
  6

  
	
  Section 7.03 - PROPERTY INSURANCE - LANDLORD

  	
   

  	
  6

  
	
  Section 7.04 - INSURANCE POLICIES

  	
   

  	
  6

  
	
  Section 7.05 - WAIVER OF SUBROGATION

  	
   

  	
  7

  
	
  Section 7.06 - INDEMNITY

  	
   

  	
  7

  
	
  Section 7.07 - EXEMPTION OF LANDLORD

  	
   

  	
  7

  
	
  Section 7.08 - LANDLORD’S SECURITY

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REPAIRS AND RESTORATION

  	
   

  	
  8

  
	
  Section 8.01 - INSURED
  OR MINOR DAMAGE

  	
   

  	
  8

  
	
  Section 8.02 - SUBSTANTIAL DAMAGE

  	
   

  	
  8

  
	
  Section 8.03 - DAMAGE NEAR END OF TERM

  	
   

  	
  8

  
	
  Section 8.04 - ABATEMENT OF RENT; TENANT’S REMEDIES

  	
   

  	
  9

  
	
  Section 8.05 - DEFINITIONS

  	
   

  	
  9

  
	
  Section 8.05 - SALVAGE RIGHTS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ASSIGNMENT/SUBLETTING/RIGHT OF FIRST OFFER

  	
   

  	
  9

  
	
  Section 9.01 - LANDLORD’S RIGHTS

  	
   

  	
  9

  
	
  Section 9.02 - LANDLORD’S COSTS

  	
   

  	
  11

  
	
  Section 9.03 - NO RELEASE OF TENANT

  	
   

  	
  12

  
	
  Section 9.04 - TENANT’S RIGHT OF FIRST OFFER

  	
   

  	
  12

  
	
  Section 9.05 - EXEMPT TRANSACTIONS FROM RIGHT  OF FIRST OFFER

  	
   

  	
  12

  



 


ii

















 


	
  ARTICLE

  	
   

  	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMINENT DOMAIN

  	
   

  	
  13

  
	
  Section 10.01 - ENTIRE OR SUBSTANTIAL
  TAKING

  	
   

  	
  13

  
	
  Section 10.02 - PARTIAL TAKING

  	
   

  	
  13

  
	
  Section 10.03 - AWARDS

  	
   

  	
  13

  
	
  Section 10.04 - SALE UNDER THREAT OF
  CONDEMNATION

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UTILITY SERVICES

  	
   

  	
  13

  
	
  Section 11.01 - UTILITY CHARGES

  	
   

  	
  13

  
	
  Section 11.02 - INTERRUPTION OF
  SERVICE

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEFAULTS AND REMEDIES

  	
   

  	
  14

  
	
  Section 12.01 - DEFINITIONS

  	
   

  	
  14

  
	
  Section 12.02 - REMEDIES

  	
   

  	
  14

  
	
  Section 12.03 - DEFAULT BY LANDLORD

  	
   

  	
  16

  
	
  Section 12.04 - EXPENSE OF LITIGATION

  	
   

  	
  16

  
	
  Section 12.05 - HOLDING OVER

  	
   

  	
  16

  
	
  Section 12.06 - LANDLORD RIGHTS

  	
   

  	
  17

  
	
  Section 12.07 - TRIAL WITHOUT JURY

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  17

  
	
  Section 13.01 - OFFSET STATEMENT

  	
   

  	
  17

  
	
  Section 13.02 - LANDLORD’S RIGHT OF
  ACCESS

  	
   

  	
  18

  
	
  Section 13.03 - TRANSFER OF LANDLORD’S
  INTEREST/ASSIGNMENT OF LEASE

  	
   

  	
  18

  
	
  Section 13.04 - FLOOR AREA

  	
   

  	
  19

  
	
  Section 13.05 - SEVERABILITY

  	
   

  	
  19

  
	
  Section 13.06 - LATE PAYMENTS

  	
   

  	
  19

  
	
  Section 13.07 - TIME OF ESSENCE

  	
   

  	
  19

  
	
  Section 13.08 - HEADINGS

  	
   

  	
  19

  
	
  Section 13.09 - INCORPORATION OF PRIOR
  AGREEMENTS; AMENDMENTS 

  	
   

  	
  20 

  
	
  Section 13.10 - NOTICES

  	
   

  	
  20

  
	
  Section 13.11 - BROKERS

  	
   

  	
  20

  
	
  Section 13.12 - WAIVERS

  	
   

  	
  20

  
	
  Section 13.13 - RECORDING

  	
   

  	
  20

  
	
  Section 13.14 - LIENS

  	
   

  	
  20

  
	
  Section 13.15 - SUBORDINATION

  	
   

  	
  21

  
	
  Section 13.16 - FORCE MAJEURE

  	
   

  	
  21

  
	
  Section 13.17 - YIELD UP PREMISES

  	
   

  	
  21

  
	
  Section 13.18 - AUTHORITY

  	
   

  	
  22

  
	
  Section 13.19 - SAFETY AND HEALTH

  	
   

  	
  22

  
	
  Section 13.20 - INDEMNITIES

  	
   

  	
  22

  
	
  Section 13.21 - DISCLOSURE

  	
   

  	
  22

  
	
  Section 13.22 - GENDER; TENANTS

  	
   

  	
  22

  
	
  Section 13.23 - QUIET ENJOYMENT

  	
   

  	
  23

  
	
  Section 13.24 - ASSIGNS

  	
   

  	
  23

  
	
  Section 13.25 - NO OPTION

  	
   

  	
  23

  
	
  Section 13.26 - LANDLORD LIABILITY

  	
   

  	
  23

  
	
  Section 13.27 - ACCOUNTS

  	
   

  	
  23

  
	
  Section 13.28 - LEASEHOLD COLLATERAL

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONDITION OF PREMISES

  	
   

  	
  23

  
	
  Section 14.01 - CONDITION OF PREMISES

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OPERATIONAL PROVISIONS

  	
   

  	
  24

  
	
  Section 15.01 - PAYMENT PROVISIONS

  	
   

  	
  24

  
	
  Section 15.02 - TERMINATION

  	
   

  	
  24

  
	
  Section 15.03 - REFURBISH AND UPGRADE

  	
   

  	
  25

  



 


iii

















 


	
  ARTICLE

  	
   

  	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HAZARDOUS WASTE

  	
   

  	
  25

  
	
  SECTION 16.01 - HAZARDOUS WASTE

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NET LEASE

  	
   

  	
  26

  
	
  SECTION 17.01 - EXPENSES

  	
   

  	
  26

  



 


iv

















 


ARTICLE I

PREMISES


 


Section 1.01 - PREMISES DEFINED


 


Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the property
commonly known as 1444 S. Alameda Street located in the City of Los Angeles,
State of California, together with all improvements, fixtures, equipment,
located thereon, including four buildings with an aggregate of approximately
354,809 square feet, a parking area and all rights of way and easements
appurtenant thereto (collectively the “Premises”), for the term, at the rental,
and upon all of the conditions and agreements set forth herein. A more
particular description of the Premises is attached hereto as Exhibit “A”
and by this reference made a part hereof.


 


ARTICLE II

TERM


 


Section 2.01 - LENGTH OF TERM


 


The term of this lease shall be for sixteen (16) years commencing on
the Lease Commencement Date, and ending on July      ,
2008.


 


Section 2.02 - COMMENCEMENT DATE


 


a.        This lease shall
commence on July    , 1992 (the “Lease Commencement Date”).


 


Section 2.03 - LEASE YEAR


 


A
lease year is a period of twelve (12) full calendar months commencing on the
Lease Commencement Date and expiring on the last day of the twelfth (12) month
thereafter.


 


ARTICLE III

RENT


 


Section 3.01 - MINIMUM RENT


 


Tenant
shall pay to Landlord Two Million Forty Three Thousand Six Hundred Ninety-Nine
Dollars and Eighty-Four Cents ($2,043,699.84) for the first lease year, in
monthly installments of One Hundred Seventy Thousand Three Hundred Eight
Dollars and Thirty-Two Cents ($170,308.32), in advance, on the first (1st) day
of each month of said lease year. The Minimum Rent shall thereafter be
increased annually by the percentage increase, (if any,) in the Bureau of Labor
Statistics Consumer Price Index, “All Urban Consumers” (the “Index”), as
published by the United States Department of Labor for the Los Angeles/Long
Beach/Anaheim metropolitan area (all items). The first increase in the Minimum
Rent shall be based on the percentage increase of the Index during the initial
lease year, and each lease year thereafter for subsequent annual adjustments.
The first such increase shall become effective on the first day of the second
lease year and every twelve (12) months thereafter. In no event shall any
percentage increase exceed five percent (5%) for any one lease year.


 


Minimum
Rent shall be payable in advance upon the first day of each calendar month
without any deduction or offset and without notice or demand at Landlord’s
address as set forth in the applicable Basic Lease Provisions or to such other
person or at such other place as Landlord may designate by written notice to
Tenant. The Minimum Rent for any fractional part of a calendar month at the
beginning or end of the lease term shall be a proportionate part of the Minimum
Rent for a full calendar month. All rent and additional rent shall be paid in
lawful money of the United States which shall be legal tender at the time of
payment.


 


1

















 


Section 3.02 - RENT


 


As
used in this lease, the term “rent” shall mean Minimum Rent, and additional
rent, and the term “additional rent” shall mean all amounts payable by Tenant
pursuant to this lease other than Minimum Rent.


 


ARTICLE IV

TAXES


 


Section 4.01 - TAXES


 


Tenant
shall pay directly to the appropriate taxing authority all taxes, as defined
below, with respect to the Premises that accrue on or after the Lease
Commencement Date. Landlord agrees to deliver to Tenant, upon its own receipt
thereof, any tax statement or other notice or official evidence of payment due.
If Tenant has paid such taxes, prior to delinquency, Tenant may with Landlord’s
prior written consent (which shall not be unreasonably withheld), petition any
applicable governmental authority for a reduction in the real property taxes
assessed against the real property and the improvements located thereon. Tenant
shall also have the right to contest taxes before payment thereof provided that
Tenant obtains Landlord’s prior written consent and shall procure and maintain
a stay of all proceedings to enforce any collection thereof and provide
Landlord with collateral (which is acceptable to Landlord in Landlord’s sole
discretion) to secure the payment of the taxes in dispute and any potential
penalties and fees related thereto. Tenant shall pay for all expenses related
to any such petition and shall indemnify, defend and hold Landlord harmless
from and against any expenses or liability arising from Tenant’s actions.


 


Section 4.02 - DEFINITIONS


 


(a)       The term “taxes” shall
include without limitation:


 


(i)         All taxes, assessments
and governmental charges and surcharges levied upon or with respect to the
Premises;


 


(ii)        All other taxes,
assessments and governmental charges and surcharges levied upon or with respect
to the fixtures, equipment and other property of Landlord in or about the
Premises whether real or personal;


 


(iii)       Fees and assessments
for any governmental service(s) to the Premises, including service
payments in lieu of taxes;


 


(iv)       Dues and assessments
payable to any property owners’ association due to Landlord ownership or
operation of the Premises;


 


(v)        Any and all taxes
payable by Landlord: (A) upon, allocable to, or measured by or on the
gross or net rent payable hereunder, including without limitation any gross
receipts or revenues, sales tax or excise tax levied by the State, any
political subdivision thereof, or the Federal Government with respect to the
receipt of such rent; (B) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the
Premises or any portion thereof, including any sales, use or service tax
imposed as a result thereof; (C) upon or measured by Tenant’s gross
receipts or payroll or the value of Tenant’s equipment, furniture, fixtures,
and other personal property of Tenant or leasehold improvements, alterations or
additions located in the Premises; or (D) upon this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises;


 


2

















 


(vi)       All expenses reasonably
incurred in seeking reduction by the taxing authorities of the taxes described
in clauses (i) through (v) above. Provided, however, that the term “taxes”
shall not include any capital gain, franchise, estate, inheritance, succession,
capital levy, net income or excess profits taxes imposed upon Landlord except
that in the event that real property taxes are withdrawn in whole or in part and
any substitute tax is made therefor, such tax shall in any event for the
purpose of this lease be considered a tax included in “taxes” pursuant to this Section 4.02
regardless of how denominated or the source from which it is collected.


 


(b)      Taxes shall include all
items identified or described as included in taxes in subsection (a) above,
whether or not such items are customary and whether or not such items are
within the contemplation of the parties on the date of execution of this lease.


 


Section 4.03 - OTHER TAXES


 


Tenant
shall be responsible for and shall pay before delinquency all municipal, county
or state taxes, levies and fees of every kind and nature, including but not
limited to general or special assessments, assessed during the term of this lease
against any leasehold interest, leasehold improvements or personal property of
any kind, owned by or placed in, upon or about the Premises by Tenant.


 


ARTICLE V

CONDUCT OF BUSINESS BY TENANT


 


Section 5.01 - USE OF PREMISES


 


(a)       Tenant shall use the Premises
for the purposes specified in the applicable Basic Lease Provision.


 


Section 5.02 - RESTRICTIONS ON USE


 


Tenant
shall, at Tenant’s sole cost and expense, promptly comply with all applicable
statutes, ordinances, rules, regulations, orders and requirements, in effect
prior to the date of this lease or promulgated thereafter, affecting the
Premises or regulating the use by Tenant of the Premises and all requirements
of all insurance carriers or underwriters providing coverage on the Premises or
the contents thereof. Tenant shall not use or permit the use of the Premises in
any manner that will tend to create a nuisance or tend to injure the reputation
of the Premises or which will invalidate any property damage or liability
insurance maintained on the Premises. No auction, fire sale, bankruptcy sale,
sidewalk sale, end of lease sale, or going out of business sale may be
conducted from the Premises without the written consent of Landlord, which may
be withheld in Landlord’s sole discretion.


 


ARTICLE VI

MAINTENANCE, REPAIRS AND ALTERATIONS


 


Section 6.01 - LANDLORD’S OBLIGATIONS


 


(a)       Except for the
obligations of Landlord under Section 8 (relating to destruction of the
Premises) and under Section 10 (relating to condemnation of the Premises),
it is intended by the parties hereto that Landlord shall have no obligation, in
any manner whatsoever, to repair and maintain the Premises nor any building or
improvement located thereon nor any equipment, whether structural or
nonstructural, all of which obligations are intended to be that of the Tenant
under this Article 6. Tenant expressly waives the benefit of any statute
now or hereinafter in effect which would otherwise afford Tenant the right to
make repairs at Landlord’s expense or to terminate this lease because of
Landlord’s failure to keep the Premises in good order, condition and repair.


 


3

















 


(b)      Tenant hereby accepts the
Premises in their condition existing as of the Lease Commencement Date or the
date that Tenant takes possession of the Premises, whichever is earlier,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Premises, and any
covenants, easements, restrictions or other matters of record, and accepts this
lease subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto. Tenant acknowledges that neither Landlord nor Landlord’s agent
has made any representation or warranty as to the present or future’s
suitability of the Premises for the conduct of Tenant’s business.


 


Section 6.02 - TENANT’S
OBLIGATIONS


 


Tenant
shall keep in good order,
condition and repair the Premises and every part thereof, structural and
nonstructural (whether or not such portion of the Premises requiring repair, or
the means of repairing the same are reasonably or readily accessible to Tenant,
and whether or not the need for such repairs occurs as a result of Tenant’s
use, any prior use, the elements or the age of such portion of the Premises),
including, without limiting the generality of the foregoing, all plumbing,
heating, air conditioning (Tenant shall procure and maintain, at Tenant’s
expense, an air conditioning system maintenance contract), ventilating,
electrical, lighting facilities and equipment within the Premises, fixtures,
walls (interior and exterior) foundations, ceilings, roofs (interior and
exterior), floors, windows, doors, plate glass and skylights and all
landscaping, driveways, parking lots, fences and signs located on the Premises
and sidewalks and parkways adjacent to the Premises.


 


Section 6.03 - SURRENDER


 


See
Section 13.17.


 


Section 6.04 - LANDLORD’S RIGHTS


 


See
Section 12.06.


 


Section 6.05 - LANDLORD’S
OBLIGATIONS


 


See
Section 6.01.


 


Section 6.06 - ALTERATIONS AND
ADDITIONS


 


(a)       Tenant shall not,
without the prior written consent of Landlord, which consent may be withheld in
Landlord’s reasonable discretion, make any material alterations, improvements,
remodeling or additions to the Premises. The term “material” shall mean any
alteration, improvement, remodeling, or additions, the cost of which exceed
Twenty-five Thousand Dollars ($25,000.00). Landlord may condition any approval
upon such requirements as Landlord reasonably deems appropriate, including requirements
as to the manner in which, the time at which and the contractor(s) by whom
such work shall be done.


 


(b)      If Landlord delivers
written notice to Tenant to remove from record any lien related to work or
materials furnished to or
obligations incurred on behalf of Tenant, then within twenty (20) days after
delivery of such notice, Tenant shall remove from record, by bonding or
otherwise, such lien. Tenant shall discharge any such lien of record
immediately upon its filing. Landlord may keep posted on the Premises any
notices it deems necessary for protection from such liens. If any lien is not
removed from record, by bonding or otherwise, within the twenty (20) day period specified in the first sentence of
this Section 6.06(b), Landlord may cause such liens to be released by any
means it deems proper, including payment, at Tenant’s expense and without
affecting Landlord’s rights.


 


4
















 


(c)  All
alterations, improvements, remodeling, additions or fixtures, other than trade
fixtures not permanently affixed to the Premises, which may be made or
installed in the Premises and which are attached to the floor, walls or ceiling
of the Premises and any floor covering which is cemented or otherwise affixed
to the floor of the Premises shall be the property of Landlord and shall remain
upon and be surrendered with the Premises at the termination of this lease,
unless Landlord shall direct Tenant to remove such items, or some of them, by
written notice given to Tenant not less than thirty (30) days prior to the
expiration of this lease or within ten (10) days after the earlier termination
hereof. Tenant shall remove any such items, at Tenant’s cost, prior to the
expiration of this lease, or in the event of an early termination, within ten (10) days
after Landlord’s notice.


 


Section 6.07 - CLEANLINESS: WASTE
AND NUISANCE


 


Tenant shall keep the Premises at all times in a
neat, clean and sanitary condition, shall neither commit nor permit any waste
or nuisance thereon, and shall keep the walks adjacent thereto and the parking
lot free from Tenant’s waste or debris. Without limiting the foregoing, Tenant
shall keep the Premises free of all graffiti.


 


ARTICLE VII

INSURANCE AND INDEMNITY


 


Section 7.01 - LIABILITY INSURANCE


 


Tenant shall at all times during the term hereof and at Tenant’s sole
cost and expense, for the protection of Tenant and Landlord, as their interest
may appear, maintain in full force and effect a policy or policies of insurance
which afford the following coverages:


 


(a)                                     Worker’s Compensation in the statutorily
required amount, together with employer’s liability coverage with a liability
amount not less than One Million Dollars ($1,000,000).


 


(b)                                    Comprehensive General Liability Insurance
with a liability amount not less than Two Million Dollars ($2,000,000) combined
single limit for both bodily injury and property damage, personal injury,
completed operations, products liability, liquor liability, and owned and
non-owned automobile coverage. Tenant shall also maintain umbrella liability
coverage in an amount not less than Five Million Dollars ($5,000,000) and
excess liability insurance in an amount not less than Twenty Million Dollars
($20,000,000).


 


(c)                                     The minimum limit of the coverage provided in
subsection (b) above may be adjusted upward at the expiration of each
third (3rd) lease year as follows: Not less than sixty (60) days prior to the
relevant adjustment date, Landlord may designate [                                                    ]
or select an insurance brokerage firm, the identity of which shall reasonably
acceptable to Tenant (the “Reviewing Broker”), to review Tenant’s then existing
liability insurance coverage, to review the then use of the Premises and the
claims history with respect thereto and to recommend, in writing, the amount of
coverage to be carried by Tenant pursuant to subsection (b). Such
recommendation shall be based upon the then use of the Premises and the liability
claims history with respect to the Premises and shall be consistent with
amounts of coverage generally recommended by such Reviewing Broker for similar
types of tenants or users of property with uses similar to that of the Premises
in the geographical area which includes the Premises. If the Reviewing Broker
shall recommend an increase(s) in the amount of coverage then provided by
Tenant under subsection (b), Tenant shall promptly increase its coverage to the
recommended amount(s). In no event shall there by any reduction in the amount
of coverage provided by Tenant under subsection (b) below the initial
amount set forth 


 


5

















 


herein, notwithstanding any recommendation by the Reviewing Broker.


 


(d)                                    Landlord, each of its general partners, and
any other persons designated by Landlord and having an insurable interest in
the Premises, shall be added as additional insureds pursuant to such policies
(although they shall not have any obligations of “named” insureds therein). The
insurance required by this Section Article VII shall be the primary
insurance as respects Landlord (and any other additional insureds designated by
Landlord) and not contributory with any other available insurance. The policy
or policies providing the coverage required by subsection (b) above shall
contain an endorsement providing, in substance, that “such insurance as
afforded hereby for the benefit of the additional insureds shall be primary and
any insurance carried by the additional insureds shall be excess and not
contributory.” In no event shall the limits of any coverage maintained by Tenant pursuant to this Article VII be considered as limiting the
liability of Tenant pursuant to this lease.


 


Section 7.02 - PROPERTY INSURANCE


 


(a)                                     Tenant shall at all times during the term
hereof, and at its cost and expense, maintain in effect policies of insurance
covering (i) all improvements in or to the Premises, providing protection
against any item included within the classification “All Risk,” including but
not limited to insurance against sprinkler leakage, vandalism and malicious
mischief, such insurance to be in an amount no less than the full replacement
value of such improvements, which shall be determined at the time the policy is
initially obtained, and not less frequently than once every three (3) years
thereafter, and such other insurance as may be required by Landlord’s lender,
if any, (ii) all personal property of Tenant located in or on the
Premises, including but not limited to fixtures, furnishings, equipment,
furniture, inventory and stock in trade, in an amount not less than their full
replacement value, providing protection against any peril included within the
classification “All Risk,” including but not limited to insurance against
sprinkler leakage, vandalism and malicious mischief; and (iii) all plate
glass on the Premises.


 


(b)                                    The proceeds of such insurance, so long as
this lease remains in effect, shall be held in trust by the insurance carriers
and used to repair or replace the parts of the Premises, any improvements
thereto and personal property so insured. Upon any termination of this lease
pursuant to Sections 8.02 or 8.03, Landlord may keep or apply the proceeds of
the insurance required pursuant to clauses (i) and (iii) of
Subsection 7.02(a) above, at its discretion; the remaining proceeds shall
be the property of Tenant.


 


(c)                                     Tenant shall at its cost maintain business
interruption insurance assuring that the rent payable hereunder will be paid to
Landlord for a period of not less than twelve (12) months if the Premises are
destroyed or rendered inaccessible.


 


Section 7.03 - PROPERTY INSURANCE - LANDLORD


 


Landlord may, but shall not be required to, maintain earthquake and
flood insurance insuring the Premises against damage arising from such events.
The cost of maintaining all such insurance including any deductible shall be
paid for by Tenant, as additional rent.


 


Section 7.04 - INSURANCE POLICIES


 


All insurance required to be carried by Tenant hereunder shall be with
companies rated A:XIII, or better, in the then most recent version of Best’s
Insurance Guide. Tenant shall deliver to Landlord at least five (5) days
prior to the time such insurance is first required to be carried by Tenant, and


 


6

















 


thereafter
at least thirty (30) days prior to the expiration or renewal date of any policy
maintained by Tenant, copies of the policies or certificates evidencing such
insurance. All policies and certificates delivered pursuant to this Section shall
contain liability limits not less than those set forth in Sections 7.01 and
7.02, shall list the additional insureds and shall specify all endorsements and
special coverages required by such Sections. Each such policy shall contain a
provision (by endorsement or otherwise) requiring not less than thirty (30)
days written notice to Landlord prior to any cancellation, non-renewal or
material amendment thereof. For the purposes of this Article VII, the
phrase “term of this lease” shall mean the period from the Lease Commencement
Date through the later of the expiration or termination of the lease term. Any
insurance required pursuant to this lease may be provided by means of a
so-called “blanket” policy, so long as the Premises are specifically covered
(by rider, endorsement or otherwise) and the policy otherwise complies with the
provisions of this lease. The cost of all insurance provided for in this Article VII
shall be paid by Tenant directly to the, companies providing the
respective policies of insurance.


 


Section 7.05 - WAIVER OF
SUBROGATION


 


Notwithstanding anything to the contrary contained in this lease,
Landlord and Tenant each hereby waive any and all rights of recovery against
the other, and against any other tenant or occupant of the Premises and against
the officers, employees, agents, representatives, customers and business
visitors of such other party and of such other tenant or occupant of the
Premises, for loss of or damage to such waiving party or its property or
property of others under
its control, arising from any cause insured against under any policy of
insurance required to be carried by such waiving party pursuant to the
provisions of this lease (or any other policy of insurance carried by such
waiving party in lieu thereof) at the time of such loss or damage. Landlord and
Tenant shall, upon obtaining the policies of insurance which they are required
to maintain hereunder, give notice to their respective insurance carrier or
carriers that the foregoing mutual waiver of subrogation is contained in this
lease. Landlord’s notice hereunder may be a general notice with respect to all
leases, including this lease, then or thereafter in effect at the Premises.


 


Section 7.06 - INDEMNITY


 


To the fullest extent permitted by law, Tenant shall indemnify, defend
and hold Landlord harmless from and against any liability or expense (including
attorneys’ fees and costs of defense) for any damage or injury to persons or
property in or about the Premises which may result from the use or occupation
of the Premises by Tenant, its agents, employees, invitees, licensees,
concessionaires or other persons claiming under Tenant or from any breach or
default by Tenant in its obligations pursuant to this lease. It is understood
and agreed that payment shall not be a condition precedent to enforcement of
the foregoing indemnity. If any action or proceeding is brought against
Landlord by reason of any such claim, Tenant, upon Landlord’s request, shall
defend the same by counsel reasonably satisfactory to Landlord and at Tenant’s
expense. The foregoing indemnification shall not extend to damage or injury
which is proximately caused and due solely to the gross negligence or
intentional misconduct or intentional acts of Landlord, its agents, employees
and contractors.


 


Section 7.07 - EXEMPTION OF
LANDLORD


 


Landlord shall not be liable for injury or damage which may be sustained by the person, goods, wares, merchandise or property of Tenant, Tenant’s
employees, invitees or customers or any other person in or about the Premises
caused by or resulting from any peril which may affect the Premises, including
but not limited to fire, theft, steam, electricity, gas, water or rain, which
may


 


7

















 


leak
or flow from or into any part of the Premises, or from the breakage, leakage,
obstruction or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures of the same, whether such
damage or injury results from conditions arising upon or from the Premises or
upon or from adjacent parcels, or from any other source(s). Landlord shall not
be liable for any damages arising from any act or neglect of any other tenant
of the Premises, if any, or any of their officers, employees, agents, representatives,
customers, business visitors or invitees. Provided, however, that the foregoing
shall not apply to any damage or injury which Tenant establishes in a court of
competent jurisdiction was proximately caused by and due solely to the gross negligence
or intentional misconduct of Landlord, its agents or employees.


 


Section 7.08 - LANDLORD’S SECURITY


 


Tenant acknowledges and agrees that Landlord shall have no
responsibility, duty or obligation to provide security for the Premises and the
persons therein. Under no circumstances shall Landlord be liable to Tenant or
to any other person by reason of any theft, burglary, robbery, assault,
trespass, unauthorized entry, vandalism, or any other act of any third person
occurring in or about the Premises, and Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all losses, liabilities, judgments
costs or expenses (including reasonable attorneys’ fees and other costs of
investigation or defense) which Landlord may suffer by reason of any claim
asserted by any person arising out of, or related to, any of the foregoing.


 


ARTICLE VIII

REPAIRS AND RESTORATION


 


Section 8.01 - INSURED OR MINOR DAMAGE


 


Subject to the provisions of Section 8.03 and 8.04, if at any time
during the term hereof the Premises are destroyed or damaged and either (a) such damage is not “substantial” as that term is
hereafter defined, or (b) such damage was caused by a casualty required to
be insured against under Section 7.02, then Landlord shall promptly repair such damage at Tenant’s
expense and this lease shall
continue in full force and effect. Any such repairs shall be performed in
accordance with all applicable laws.


 


Section 8.02 - SUBSTANTIAL DAMAGE


 


Subject to the provisions of Section 8.03 and 8.04, if at any time
during the term hereof the Premises are destroyed or damaged and if such damage
is “substantial” as that term is hereinafter defined, and if such damage was
caused by a casualty not required to be insured against under Section 7.02,
then Landlord may at its option either (a) promptly repair such damage at
Landlord’s expense, in which event this lease shall continue in full force and
effect, or (b) cancel and terminate this lease as of the date of the
occurrence of such damage, by giving Tenant written notice of its election to
do so within thirty (30) days after the date of the occurrence of such damage.


 


Section 8.03 - DAMAGE NEAR END OF TERM


 


If the Premises are destroyed or damaged during the last twelve (12)
months of the term of this lease and the estimated cost of repair exceeds
twenty-five percent (25%) of the Minimum Rent then remaining to be paid by
Tenant for the balance of the term, Landlord may at its option cancel and
terminate this lease as of the date of occurrence of such damage by giving
written notice to Tenant of its election to so terminate within thirty (30)
days after the date Landlord received notice of the occurrence of such damage.
If Landlord shall not so elect to terminate this lease, the repair of such damage shall be governed by Section 8.01 or 8.02, as the case may
be.


 


8

















 


Section 8.04 - ABATEMENT OF RENT; TENANT’S REMEDIES


 


(a)                                     If the Premises are destroyed or damaged and
Landlord repairs or restores the Premises pursuant to the provisions of this
Article, Tenant shall continue the operation of its business in the Premises to
the extent reasonably practicable from the standpoint of prudent business
management, and the Minimum Rent payable hereunder for the period during which
such damage, repair or restoration continues shall be abated in proportion to
the degree to which Tenant’s use of the Premises is impaired. There shall be no
abatement of any additional rent payable hereunder, and Tenant shall have no
claim against Landlord for any damage suffered by Tenant by reason of any such damage, destruction,
repair or restoration. Tenant waives the provision of Civil Code Sections 1932(2) and
1933(4) and any present or future laws or case decisions to the same
effect.


 


(b)                                    If Landlord shall be obligated to repair or
restore the Premises under the provisions of this Article and shall not
commence such repair or restoration within thirty (30) days after such
obligation shall accrue (as described below), Tenant may at its option cancel
and terminate this lease as of the date of occurrence of such damage by giving
Landlord written notice of its election to do so at any time prior to the
commencement of such repair or restoration. Notwithstanding the foregoing, this
lease shall not terminate if, within ten (10) days following receipt of
Tenant’s written notice to terminate the lease Landlord commences repair or
restoration of the Premises. Landlord’s obligation to commence repairs or
restoration shall be deemed to accrue on the later of (i) receipt by
Landlord of any governmental
permit or approval necessary to commence such work or (ii) settlement of
any insurance claim with respect to such casualty.


 


Section 8.05 - DEFINITIONS


 


(a)                                     For the purpose of this Article, “substantial”
damage to the Premises shall be deemed to be damage to the buildings located on
the real property, the estimated cost or repair of which exceeds one fifth
(1/5) of the then estimated replacement cost of such improvements.


 


(b)                                    The determination in good faith by Landlord
of the estimated cost of repair of any damage and/or of the estimated
replacement cost of any building shall be conclusive for the purpose of this
Article.


 


Section 8.05 - SALVAGE RIGHTS


 


If the Premises are destroyed or damaged, Landlord shall have the sole
and exclusive right to salvage any and all materials (except for Tenant’s
personal property) located on the Premises and the sole and exclusive right to
any proceeds derived from the sale of any such items.


 


ARTICLE IX

ASSIGNMENT/SUBLETTING/RIGHT OF
FIRST OFFER


 


Section 9.01 - LANDLORD’S RIGHTS


 


(a)  Tenant shall not, either voluntarily or by operation of
law, assign, sell, encumber, pledge or otherwise transfer all or any part of
Tenant’s leasehold estate hereunder, or permit the Premises to be occupied by
anyone other than Tenant or Tenant’s employees or sublet the Premises or any
portion thereof, without Landlord’s prior written consent in each instance. In
exercising such right of consent Landlord’s consent shall not be unreasonably
withheld and, in exercising such right of consent, Landlord shall be entitled
to take into account any fact or factor which Landlord deems relevant to such
decision including but not necessarily limited to any or all of the following:


 


9

















 


(i)                                    The financial strength of the proposed
assignee or subtenant.


 


(ii)                                 The experience of the proposed assignee or
subtenant with respect to business of the type and size which such assignee or
subtenant proposes to conduct in the Premises.


 


(iv)                             Whether there then exists any default by
Tenant pursuant to this lease or any non-payment or non-performance by Tenant
under this lease which, with the passage of time and/or the giving of notice
would constitute a default under this lease.


 


The foregoing restrictions shall be binding upon any assignee or
subtenant to which Landlord has consented, and consent by Landlord to one or
more assignments of this lease or to one or more subletting of the Premises
shall not operate to exhaust Landlord’s rights under this paragraph. The
voluntary or other surrender of this lease by Tenant or a mutual cancellation
hereof shall not work a merger, and shall at the option of Landlord, terminate
all or any existing subleases or subtenancies or shall operate as an assignment
to Landlord of such subleases or subtenancies. If Tenant is a corporation which
is not deemed a public corporation, or is an unincorporated association or
partnership, the transfer, assignment or hypothecation of any stock or interest
in such corporation, association or partnership in the aggregate excess of
fifty percent (50%) shall be deemed an assignment within the meaning and
provisions of this Article.


 


(b)  In the event Tenant desires to sublet the Premises, or
any portion thereof, or assign its interest in this lease, Tenant shall give
written notice thereof to Landlord with a copy to The Prudential Insurance
Company of America (“Prudential”) at 2029 Century Park East, Suite 3600,
Los Angeles, California 90067, Attn: Carol Weiss, at least sixty (60) days but
not more than ninety (90) days prior to the proposed effective date of such
subletting or assignment, which notice shall set forth or be accompanied by the
name of the proposed subtenant or assignee, the relevant terms of any sublease
or assignment, the proposed effective date thereof, the nature of the proposed
subtenant’s or assignee’s business to be carried on in the Premises and such
reasonable financial information as Landlord may request concerning the
proposed subtenant or assignee, including but not limited to a balance sheet of
the proposed subtenant or assignee for the two year period preceding the
request for Landlord’s consent and a written statement in reasonable detail as
to the business and experience of the proposed subtenant or assignee during the
five years preceding the request for Landlord’s consent.


 


(c) (i)                      At any time within thirty (30) days after Landlord’s receipt of the
information specified in Section 9.01(b), Landlord may by written notice
to Tenant elect to (i) consent to the subletting or assignment upon the
terms and to the subtenant or assignee proposed; (ii) refuse to give
its consent, specifying in reasonable detail the reason(s) therefor; or (iii) sublet
from Tenant that portion of the Premises which is the subject of the assignment
or sublease sought by Tenant at the rental and on the other terms proposed by
Tenant.


 


(c) (ii)                   Notwithstanding the consent of Landlord pursuant to 9.01(c)(i) above,
Tenant’s right to sublet the Premises or assign the lease on the terms
specified in its notice to Landlord pursuant to 9.01(b), will be terminated,
and Tenant shall have no right to assign the lease or sublet the Premises upon
such terms, if Prudential delivers written notice to Landlord at any time
within thirty (30) days after Landlord’s receipt of the information specified
in Section 9.01(b). Such notice must provide that Prudential has elected
to refuse to give its consent to such assignment or sublease, specifying in
reasonable detail the reasons thereof. If Prudential does not deliver such
notice within said thirty (30) day period, its consent shall be deemed


 


10

















 


given.
Prudential’s objection to any assignment or sublease must not be arbitrary and
must be based on reasonable and material considerations which, in Prudential’s
reasonable judgment, may adversely affect Prudential’s interest in the
Premises. Prudential shall only have the right to prohibit a sublease or
assignment so long as Prudential is a beneficiary under a duly recorded and
valid deed of trust encumbering the Premises.


 


(d)                                 Any sale, assignment, mortgage, transfer of
this lease or subletting which does not comply with the provisions of this Article shall
be void.


 


(e)                                  As a condition to Landlord’s consent to any
assignment or subletting, Landlord shall be entitled to receive, fifty percent
(50%) of all “consideration” paid, directly or indirectly (however denominated
and paid) by the subtenant or assignee to Tenant in excess of the rent payable
by Tenant to Landlord pursuant to this lease. The term “consideration” shall
mean and include money, services, property or any other thing of value such as
payment of costs, cancellation of indebtedness, discounts, rebates and the like
less any brokerage commissions, tenant improvements, free rent concessions or
any other monetary concession granted by Tenant to the respective subtenant or
assignee as an inducement to assign or sublet the Premises (collectively the “Concessions”).
All such Concessions shall be reasonably approved by Landlord prior to granting
same to the prospective subtenant or assignee as the case may be. Any rent or
other consideration which is to be passed through to Landlord by Tenant
pursuant to this subsection shall be paid to Landlord promptly upon receipt by
Tenant and shall be paid in cash or check, irrespective of the form in which
received by Tenant from any subtenant or assignee. In the event that any rent
or other consideration received by Tenant from a subtenant or assignee is in a form
other than cash, Tenant shall pay to Landlord in cash the fair value of such
consideration.


 


(f)                                    If Landlord consents to such assignment or
subletting or does not exercise any option set forth in this Section 9.01
within said thirty (30) day period, Tenant may thereafter within sixty (60)
days after the expiration of said period enter into a valid assignment or
sublease of the Premises or portion thereof, upon terms and conditions
consistent with the terms and conditions described in the information required
to be furnished by Tenant to Landlord pursuant to subsection (b), or upon other
terms not less favorable to Tenant; provided, however that any material change
in such terms shall be subject to Landlord’s consent as provided in this Section and
provided further, that any amount to be paid to Landlord by Tenant in
connection therewith pursuant to subsection (e) above shall be paid to
Landlord upon the later of consummation of such transaction or receipt by
Tenant of such consideration.


 


(g)                                 Provided Landlord receives the notice
provided in Section 9.01(b) and subject to the consent of Prudential
as provided for in Section 9.01(c), the Landlord hereby consents to the
assignment of the Tenant’s leasehold estate to an affiliate of Tenant provided
that there will be no substantial change in the nature and quality of the
business conducted on the Premises and such affiliate executes and delivers to
Landlord a written assumption of the obligations of Tenant pursuant to this
lease in form and substance reasonably acceptable to Landlord. The term “affiliate”
shall mean any entity or individual (“Parent”) which directly or indirectly
controls the right to elect a majority of the members of Tenant’s board of
directors or any entity (“Subsidiary”) which is controlled by Tenant or under
the control of Tenant’s Parent (i.e., Tenant or Tenant’s Parent has the right,
directly or indirectly, to elect a majority of the Subsidiary’s board of
directors).


 


Section 9.02 - LANDLORD’S COSTS


 


Tenant
shall pay to Landlord on demand a sum equal to all of Landlord’s reasonable
costs, including attorney’s and


 


11

















 


accountant’s
fees, incurred in connection with processing, reviewing and documenting any
proposed assignment or sublease.


 


Section 9.03 - NO RELEASE OF
TENANT


 


Notwithstanding any assignment or subletting (including any assignment
or subletting to an affiliate), even with the consent of Landlord, Tenant shall
at all times remain directly and primarily responsible and liable for the
payment of the rent herein specified and for compliance with all of its other
obligations under this lease. Upon the occurrence of an “event of default” (as
hereinafter defined), if the Premises or any part thereof are then sublet,
Landlord, in addition to any other remedies provided herein or by law, may
collect directly from any subtenant all rents due and becoming due to Tenant
under such sublease and apply such rent against any sums due to Landlord from
Tenant hereunder. No such collection directly from an assignee or subtenant
shall be construed to constitute a novation or a release of Tenant from the
further performance of Tenant’s obligations hereunder. The acceptance by
Landlord of any payment due hereunder from any other person shall not be deemed
to be a waiver by Landlord of any provision of this lease or to be a consent to
any assignment or subletting.


 


Section 9.04 - TENANT’S RIGHT OF
FIRST OFFER


 


If, at any time during the term of this lease, Landlord desires to sell
all or any portion of its interest in the Premises (“Landlord’s Interest”),
Landlord shall deliver a written notice thereof to Tenant, which notice shall
indicate the sale price and the other terms and conditions upon which Landlord
is willing to sell Landlord’s Interest (the “Sale Notice”). The Sale Notice
shall constitute an offer to sell Landlord’s Interest to Tenant at the price
and upon the terms and conditions contained therein. Tenant shall have thirty
(30) calendar days after its receipt of the Sale Notice within which to deliver
an executed counterpart of the Sale Notice to Landlord, which shall then
constitute the purchase and sale agreement between the parties. If Tenant fails
to deliver an executed Sale Notice to Landlord as provided herein or fails to
close the purchase of Landlord’s Interest in accordance with the terms and
conditions set forth in the Sale Notice, then Landlord shall be relieved of its
obligations under this Section 9.04 and may freely sell Landlord’s
Interest to any person or entity, provided that (i) such sale is
consummated within eight (8) months following the date the Sale Notice was
delivered to Tenant, (ii) the purchase price for such sale is not less
than ninety-five percent (95%) of the price set forth in the Sale Notice and (iii) the
material terms of such sale are substantially the same as the terms set forth
in the Sale Notice. After the consummation of such sale or if Tenant fails to
close the purchase of Landlord’s Interest in accordance with the terms and
conditions set forth in the Sale Notice, Landlord’s Interest shall no longer be
subject to this Article 9.04.


 


Section 9.05 - EXEMPT TRANSACTIONS
FROM RIGHT OF FIRST OFFER


 


Nothing contained in this Article IX shall require any notice by
Landlord or give Tenant any right in the event of (i) a sale to an “affiliate”
of Landlord (as such term is defined in Section 9.01(g)), (ii) any
transaction by which Landlord borrows any funds or obtains any credit or
allowance, the repayment of which is secured by Landlord’s Interest or this
lease or (iii) a judicial foreclosure, foreclosure through the exercise of
a power of sale or a deed given in lieu of foreclosure.


 


12
















 


ARTICLE X

EMINENT DOMAIN


 


Section 10.01 - ENTIRE OR SUBSTANTIAL TAKING


 


If
the entire Premises, or so much thereof as to make the balance not reasonably
adequate for the conduct of Tenant’s business notwithstanding restoration by
Landlord as hereinafter provided, shall be taken permanently, or temporarily
for not less than six (6) months, under the power of eminent domain, this
lease shall automatically terminate as of the date on which the condemning
authority takes possession.


 


Section 10.02 -  PARTIAL
TAKING


 


In
the event of any taking under the power of eminent domain which does not so
result in a termination of this lease, the Minimum Rent and all additional rent
payable hereunder shall be reduced, effective as of the date on
which the condemning authority takes possession, equitably and proportionately
in relation to the amount of the Premises taken.


 


Section 10.03 - AWARDS


 


Any
award for any taking of all or any part of the Premises under the power of
eminent domain shall be the property of Landlord, whether such award shall be
made as compensation for diminution in value of the leasehold or for taking of
the fee. Nothing contained herein, however, shall be deemed to preclude Tenant
from obtaining, or to give Landlord any interest in, any award to Tenant for
loss of or damage to Tenant’s trade fixtures and removable personal property or
for damages for cessation or interruption of Tenant’s business.


 


Section 10.04 - SALE UNDER THREAT OF
CONDEMNATION


 


A
sale by Landlord to any authority having the power of eminent domain, either
under threat of condemnation or while condemnation proceedings are pending,
shall be deemed a taking under the power of eminent domain for all purposes
under this Article. In such event, Tenant shall not be entitled to any portion
of the sale proceeds.


 


ARTICLE XI

UTILITY SERVICES


 


Section 11.01 - UTILITY CHARGES


 


Tenant
shall pay all charges for gas, water, sewer, electricity, telephone and other
utility services used in the Premises during the lease term. If any such
charges are not paid when due Landlord may pay the same, after providing Tenant
with five days prior written notice, and any amount so paid by Landlord shall
thereupon become due to Landlord from Tenant as additional rent. As to any
utility services not separately metered to the Premises at the Commencement
Date of this lease, Landlord reserves the right to require Tenant, at Tenant’s
cost, to install a separate meter or submeter to monitor the usage of such
utility service in the Premises. The foregoing provisions shall also apply to
any utility service used by Tenant to operate the heating, ventilating and air
conditioning unit serving the Premises.


 


Section 11.02 - INTERRUPTION OF SERVICE


 


Except
as otherwise expressly provided for herein, Landlord shall not be liable
in damages or otherwise for any failure or interruption of any utility service
being furnished to the Premises and no such failure or interruption shall
entitle Tenant to terminate this lease, or to an abatement of the Minimum
Rent, additional rent or other charges due hereunder.


 


13

















 


ARTICLE XII

DEFAULTS AND REMEDIES


 


Section 12.01 - DEFINITIONS


 


The
occurrence of any one or more of the following events shall constitute a
default hereunder by Tenant:


 


(a)          The abandonment of the Premises by
Tenant. Abandonment is herein defined to include, but is not limited to, any
absence by Tenant from the Premises for twenty (20) successive days or longer
while in default of any provision of this lease.


 


(b)         The failure by Tenant to make any
payment of rent or additional rent required to be made by Tenant hereunder, as
and when due, where such failure shall continue for a period of ten (10) days
after written notice thereof from Landlord to Tenant; provided, however, that
any such notice shall be in lieu of, and not in addition to, any notice
required under California Code of Civil Procedure Section 1161 et  seq., as amended.


 


(c)          The failure by Tenant to observe or
perform any of the express or implied covenants or provisions of this lease to
be observed or performed by Tenant, other than as specified in (a) or (b) above,
where such failure shall continue for a period of fifteen (15) days after
written notice thereof from Landlord to Tenant; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 et  seq., as amended,
and provided further, that if the nature of Tenant’s default is such that more
than fifteen (15) days are reasonably required for its cure then Tenant shall
not be deemed to be in default if Tenant shall commence such cure within said
fifteen (15) day period and thereafter diligently prosecute such cure to
completion.


 


(d)         (i)          The making by Tenant of any general
assignment for the benefit of creditors; (ii) the filing by or against
Tenant of a petition to have Tenant adjudged a debtor in any proceeding under
the Federal Bankruptcy Code or a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, the same is dismissed within thirty (30) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this lease,
where possession is not restored to Tenant within thirty (30) days; (iv) the
attachment, execution or other judicial seizure of substantially all of Tenant’s
assets located at the Premises or of Tenant’s interest in this lease, where
such seizure is not discharged within thirty (30) days; or (v) Tenant’s
convening of a meeting of its creditors or any class thereof for the purpose of
effecting a moratorium upon or composition of its debts, or any class thereof.


 


Section 12.02 - REMEDIES


 


(a)          In the event of any default by Tenant
as defined herein, Landlord may exercise the following remedies:


 


(1)          Terminate Tenant’s right to possession
of the Premises by any lawful means, in which case this lease shall terminate
and Tenant shall immediately surrender possession of the Premises to Landlord.
In such event Landlord shall be entitled to recover from Tenant:


 


(i)               The worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination;


 


(ii)              The worth at the time of award of the amount by which
the unpaid rent and additional rent which would have been earned after
termination until the time of award


 


14

















 


exceeds the amount of such loss that Tenant proves
could have been reasonably avoided;


 


(iii)             The worth at the time of award of the amount by which
the unpaid rent and additional rent for the balance of the term after the time
of award exceeds the amount of such loss that Tenant proves could be reasonably
avoided; and


 


(iv)             Any other amount necessary to compensate Landlord for
all the detriment related to Tenant’s failure to perform it obligations under
this lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, the cost of recovering possession of
the Premises, expenses of reletting, including necessary repair, renovation and
alteration of the Premises, brokers’ commissions, attorneys’ fees, and any
other costs.


 


The
“worth at the time of award” of the amounts referred to in subparagraphs (i) and
(ii) above shall be computed by allowing interest at the rate per annum
determined pursuant to Section 13.06 from the date such amounts accrue to
Landlord. The worth at the time of award of the amount referred to in
subparagraph (iii) above shall be computed by discounting such amount at
one (1) percentage point above the discount rate of the Federal Reserve
Bank of San Francisco at the time of award.


 


(2)          Without terminating or effecting a
forfeiture of this lease or otherwise relieving Tenant of any obligation
hereunder in the absence of express written notice of Landlord’s election to do
so, Landlord may, but need not, relet the Premises or any portion thereof at
any time or from time to time and for such terms and upon such conditions and
rental as Landlord in its sole discretion may deem proper. Whether or not the
Premises are relet Tenant shall pay to Landlord all amounts required by Tenant
hereunder up to the date that Landlord terminates Tenant’s right to possession
of the Premises. Such payments by Tenant shall be due at the times provided in
this lease, and Landlord need not wait until the termination of the lease to
recover them by legal action or in any other manner. If Landlord relets the
Premises or any portion thereof, such reletting shall not relieve Tenant of any
obligation hereunder, except that Landlord shall apply the rent or other
proceeds actually collected by it for such reletting against amounts due from
Tenant hereunder to the extent such proceeds compensate Landlord for
non-performance of any obligation of Tenant hereunder. Landlord may execute any
lease made pursuant hereto in its own name, and the lessee thereunder shall be
under no obligation to see to the application by Landlord of any proceeds to
Landlord, nor shall Tenant have any right to collect any such proceeds.
Landlord shall not by any re-entry or other act be deemed to have accepted any
surrender by Tenant of the Premises or Tenant’s interest therein, or be deemed
to have terminated this lease, or to have relieved Tenant of any obligation
hereunder, unless Landlord shall have given Tenant express written notice of
Landlord’s election to do so as set forth herein.


 


(3)          Landlord may terminate this lease by
express written notice to Tenant of its election to do so. Such termination
shall not relieve Tenant of any obligation hereunder which has accrued prior to
the date of such termination. In the event of such termination, Landlord shall
be entitled to recover from Tenant the amounts determined pursuant to paragraph
(1) above.


 


(b)         Landlord shall be under no obligation
to observe or perform any covenant of this lease on its part to be observed or
performed which accrues after the date of any default by Tenant hereunder.


 


(c)          In any action for unlawful detainer
commenced by Landlord against Tenant by reason of any default hereunder, the
reasonable rental value of the Premises for the period of the unlawful detainer
shall be deemed to be the amount of rent and additional rent reserved in this
lease for such period, unless


 


15

















 


Landlord
or Tenant shall prove to the contrary by competent evidence.


 


(d)         The rights and remedies reserved to
Landlord herein, including those not specifically described, shall be
cumulative, and, except as provided by California statutory law in effect at
the time, Landlord may pursue any or all of such rights and remedies, at the
same time or otherwise.


 


(e)          No delay or omission of Landlord to
exercise any right or remedy shall be construed as a waiver of any such right
or remedy or of any default by Tenant hereunder. The acceptance by Landlord of
any rent hereunder shall not be a waiver of any preceding breach or default by
Tenant of any provision hereof other than the failure of Tenant to pay the
particular rent accepted, regardless of Landlord’s knowledge of such preceding
breach or default at the time of acceptance of such rent, or a waiver of
Landlord’s right to exercise any remedy available to Landlord by virtue of such
breach or default. The acceptance of any payment from a debtor in possession, a
trustee, a receiver or any other person acting on behalf of Tenant or Tenant’s
estate shall not waive or cure a default under Section 12.01(d).


 


(f)          Tenant hereby waives any right of
redemption or relief from forfeiture under Code of Civil Procedure Sections
1174 and 1179, and under any present or future statutes or case decisions to
the same effect, in the event Tenant is evicted or Landlord takes possession of
the Premises by reason of any default by Tenant hereunder.


 


Section 12.03 - DEFAULT BY LANDLORD


 


Except
as otherwise provided for hereunder, Landlord shall not be deemed to be in
default in the performance of any obligation required to be performed by it
hereunder unless and until it has failed to perform such obligation within
twenty (20) days after written notice by Tenant to Landlord specifying wherein
Landlord has failed to perform such obligation; provided, however, that if the
nature of Landlord’s obligation is such that more than twenty (20) days are
required for its performance then Landlord shall not be deemed to be in default
if it shall commence such performance within such twenty (20) day period and
thereafter diligently prosecute the same to completion. Tenant’s remedies for
Landlord’s default shall be limited to suit or action and shall not extend to
withholding or offsetting rent.


 


Section 12.04 - EXPENSE OF LITIGATION


 


If
either party incurs any expense, including attorneys’ fees, in connection with
any action or proceeding instituted by either party by reason of any default or
alleged default of the other party hereunder, the party prevailing in such
action or proceeding shall be entitled to recover its expenses, costs, fees,
and disbursements, including attorneys fees, from the other party.


 


Section 12.05 - HOLDING OVER


 


If
Tenant or anyone claiming under Tenant shall remain in possession of the
Premises or any part thereof after expiration of the lease term or earlier
termination thereof without any agreement in writing between Landlord and
Tenant with respect thereto, Tenant shall (a) occupy upon all of the terms
and conditions of this lease except that the monthly Minimum Rent due from
Tenant shall be one hundred fifty percent (150%) of the monthly Minimum Rent in
effect at the end of the lease term, (b) pay all damages sustained by
Landlord by reason of such retention and (c) indemnify, defend, and hold
Landlord harmless from and against any loss or liability resulting from such
holding over. Landlord’s acceptance of rent shall create only a month-to-month
tenancy, in either case upon the terms set forth in this Section. Any such
month-to-month tenancy shall be terminable at the end of any calendar month by
either party by written notice to the other


 


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party
given not less than thirty (30) days prior to the end of such month. Nothing
contained in this Section shall be deemed or construed to waive Landlord’s
right of re-entry or any other right of Landlord hereunder or at law.


 


Section 12.06 -  LANDLORD RIGHTS


 


All
covenants and agreements to be performed by Tenant under this lease shall be
performed by Tenant at Tenant’s sole cost and expense and without any abatement
of rent. If Tenant fails to pay any sum of money, other than rent, required to
be paid by it or fails to perform any other act on its part to be performed,
and such failure continues beyond any applicable grace period set forth in this
Article, then in addition to any other remedies provided herein Landlord may,
but shall not be obligated so to do, without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such other act
on Tenant’s part. Landlord’s election to make any such payment or perform any
such act on Tenant’s part shall not give rise to any responsibility of Landlord
to continue making the same or similar payments or performing the same or
similar acts. Tenant shall, within ten (10) days after written demand
therefor by Landlord, reimburse Landlord for all sums paid by Landlord and all
necessary incidental costs, together with interest thereon at the rate
determined under Section 13.06, accruing from the date of such payment by
Landlord; and Landlord shall have the same rights and remedies in the event of
failure by Tenant to pay such amounts as Landlord would have in the event of a
default by Tenant in payment of rent.


 


Section 12.07 - TRIAL WITHOUT JURY


 


LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF
COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE
CONSTITUTIONS OF THE UNITED STATES AND THE STATE OF CALIFORNIA. EACH PARTY
EXPRESSLY AND KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE
OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS EASE,
TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR
DAMAGE.


 


	
   

  	
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ARTICLE XIII

MISCELLANEOUS


 


Section 13.01 - OFFSET STATEMENT


 


(a)                Tenant shall at
any time and from time to time upon not less than ten (10) days prior
written notice from Landlord execute, acknowledge and deliver to Landlord a statement
in writing (i) certifying that this lease is unmodified and in full force
and effect (or, if modified, stating the nature of such modification and
certifying that this lease, as so modified, is in full force and effect) and
the dates to which the Minimum Rent and additional rent are paid in advance, if
any, (ii) indicating whether there are to Tenant’s knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed and (iii) indicating whether such other facts as are included
in such statement by Landlord are accurate. Any such statement may be relied
upon by any prospective purchaser or encumbrancer of the Premises or of all or
any portion of the Premises.


 


(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 Landlord, (ii) that
there are no uncured defaults in Landlord’s performance, (iii) that not
more than one month’s Minimum Rent has been paid in advance and (iv) that
any other


 


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statements
of fact included by Landlord in the statement are correct.


 


(c)             Tenant shall be
liable for all loss, cost or expense resulting from the failure of any sale or
funding of any loan caused by any intentional material misstatement contained
in any estoppel certificate supplied by Tenant. Tenant irrevocably appoints
Landlord as attorney-in-fact for Tenant with full power and authority to
execute and deliver in the name of Tenant an estoppel certificate if Tenant
fails to deliver the same within such ten (10) day period, and such
certificate as signed by Landlord, shall be binding on Tenant.


 


(d)              In the event this
lease will be used as collateral for a loan made to Tenant, Landlord shall upon
not less than ten (10) days prior written notice from Tenant execute,
acknowledge and deliver to Tenant a statement in writing (1) certifying
that this lease is unmodified and in full force and effect (or, is modified,
stating the nature of such modification and certifying that this lease, as so
modified, is in full force and effect) and the dates to which the Minimum Rent
and additional rent have been paid in advance, if any, (ii) indicating
whether there are to Landlord’s knowledge, any uncured defaults on the part of
Tenant hereunder, or specifying such defaults, if any, are claimed and (iii) indicating
whether such other facts as are included in such statement by Tenant are
accurate.


 


Section 13.02 - LANDLORD’S RIGHT OF ACCESS


 


Landlord
and its agents shall have the right, after providing Tenant with twenty-four
(24) hours advance notice, to (a) enter the Premises at all reasonable
times for the purpose of examining or inspecting the same to ascertain if they
are in good repair, making such alterations, repairs, improvements or additions
to the Premises as Landlord may be permitted to make hereunder, exhibiting the
same to prospective purchasers and posting notices which Landlord may deem necessary
for its protection and (b) at any time in an emergency. During the six (6) months
prior to the end of the term of this lease (and during any period during which
Tenant is holding over with or without the consent of Landlord), Landlord may
post the usual “for rent” or “for lease” signs provided that the placement of
such signs does not interfere with Tenant’s reasonable use of the Premises.
Tenant shall not disturb such signs and shall cooperate with Landlord in
exhibiting the Premises to prospective tenants. Access by Landlord hereunder
shall not, under the circumstances, unreasonably interfere with Tenant’s use
and enjoyment of the Premises and Tenant waives any claim for damages for any
injury or inconvenience to or interference with Tenant’s business, occupancy or
quiet enjoyment arising out of any permitted entry by Landlord. Tenant
acknowledges that Landlord may retain a key to the Premises and may, in any
emergency, enter the Premises in any manner which Landlord reasonably
determines to be necessary, without liability therefor to Tenant. No entry by
Landlord pursuant to the Section shall be deemed to constitute an eviction
of Tenant or a forcible detainer of the Premises.


 


Section 13.03 -
TRANSFER OF LANDLORD’S INTEREST/ ASSIGNMENT OF LEASE


 


In
the event of any transfer or transfers of Landlord’s interest in the Premises,
the transferor shall be automatically relieved of any and all obligations
arising under this lease (as may be amended), accruing from and after the date
of such transfer. Notwithstanding anything to the contrary set forth herein,
Landlord may, without the consent of Tenant, assign all of its rights,
liabilities and obligations under this lease and Tenant hereby agrees to attorn
to any such assignee. Any transfer of Landlord’s interest hereunder shall be
evidenced by written notice delivered to Tenant.


 


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Section 13.04 - FLOOR AREA


 


“Floor
area” as used in this lease means, with respect to the Premises, the number of
square feet set forth in the Basic Lease Provisions.


 


Section 13.05 - SEVERABILITY


 


Any
provision of this lease which shall prove to be invalid, void or illegal shall
in no way affect, impair or invalidate any other provision hereof, and such
remaining provisions shall remain in full force and effect.


 


Section 13.06 - LATE PAYMENTS


 


(a)             Any amount due
from Tenant to Landlord hereunder which is not paid to Landlord when due shall
bear interest at the maximum rate of interest then permitted by the applicable
usury law, accruing from the date due until the same is fully paid. Payment of
such interest shall not excuse or cure any default by Tenant pursuant to this
lease.


 


(b)            TENANT ACKNOWLEDGES
THAT THE LATE PAYMENT BY TENANT TO LANDLORD OF RENT AND OTHER SUMS DUE
HEREUNDER WILL CAUSE LANDLORD TO INCUR COSTS NOT CONTEMPLATED BY THIS LEASE,
THE EXACT AMOUNT OF WHICH WILL BE EXTREMELY DIFFICULT TO ASCERTAIN. SUCH COSTS MAY INCLUDE,
BUT ARE NOT LIMITED TO, ADMINISTRATIVE, PROCESSING AND ACCOUNTING CHARGES, AND
LATE CHARGES WHICH MAY BE IMPOSED ON LANDLORD BY THE TERMS OF ANY
ENCUMBRANCE COVERING THE PREMISES. ACCORDINGLY, IF ANY SUM DUE FROM TENANT
SHALL NOT BE RECEIVED BY LANDLORD OR LANDLORD’S DESIGNEE WITHIN TEN (10) DAYS
AFTER THE DATE DUE, TENANT SHALL PAY TO LANDLORD, IN ADDITION TO THE INTEREST
PROVIDED ABOVE, A LATE CHARGE IN THE AMOUNT OF FIVE PERCENT (5%) OF THE
DELINQUENT AMOUNT, AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT SUCH LATE
CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COST LANDLORD WILL
INCUR BY REASON OF THE LATE PAYMENT BY TENANT. ACCEPTANCE OF SUCH LATE CHARGE
SHALL NOT CONSTITUTE A WAIVER OF TENANT’S DEFAULT WITH RESPECT TO SUCH OVERDUE
AMOUNT, NOR PREVENT LANDLORD FROM EXERCISING ANY OTHER RIGHTS AND REMEDIES GRANTED
HEREUNDER OR BY LAW TO LANDLORD.


 


	
   

  	
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(c)             If Tenant shall,
during any six (6) month period, be more than ten (10) days
delinquent in the payment of any rent or other amount payable by Tenant
hereunder on three (3) or more occasions then, notwithstanding anything
herein to the contrary, Landlord may, by written notice to Tenant, elect to
require Tenant to pay all Minimum Rent and additional rent payable hereunder
quarterly in advance during the remaining term of the applicable lease year and
during the next full lease year. Such right of Landlord shall be in addition to
and not in lieu of any other right or remedy available to Landlord hereunder or
at law on account of Tenant’s default hereunder.


 


Section 13.07 - TIME OF ESSENCE


 


Time
is of the essence with respect to the performance of every provision of this
lease in which time of performance is a factor.


 


Section 13.08 - HEADINGS


 


The article and section captions
contained in this lease are for convenience only and shall not be considered in
the construction or interpretation of any provision hereof.


 


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Section 13.09 - INCORPORATION OF PRIOR
AGREEMENTS; AMENDMENTS


 


This
lease and the exhibits hereto cover in full each and every agreement of every
kind or nature whatsoever between the parties hereto concerning the Premises,
and all preliminary negotiations and agreements of whatsoever kind with respect
to the Premises, except those contained herein, are superseded and of no
further force or effect. No person, firm or corporation has at any time had any
authority from Landlord to make any representations or promises on behalf of
Landlord, and Tenant expressly agrees that if any such representations or
promises have been made by Landlord or others, Tenant hereby waives all right
to rely thereon. No verbal agreement or implied covenant shall be held to vary
the provisions hereof, any statute, law, or custom to the contrary
notwithstanding. No provision of this lease may be amended or added to except
by an agreement in writing signed by the parties hereto or their respective
successors in interest.


 


Section 13.10 - NOTICES


 


Any
notice, consent or approval (“notice”) required or permitted to be given
hereunder shall be in writing and may be served personally or by mail; if
served by mail it shall be addressed as specified in the applicable Basic Lease
Provision. Any notice to Tenant may, after Tenant opens the Premises for
business be sent instead to Tenant at the Premises. Any notice which is
personally served shall be effective upon service, any notice given by mail
shall be deemed effectively given three (3) days after deposit in the
United States mail, registered or certified, postage prepaid and addressed to
the Premises (for Tenant) or as specified in the applicable Basic Lease
Provision. Either party may by written notice to the other from time to time
specify a different address for notice purposes.


 


Section 13.11 - BROKERS


 


With
the exception of the Broker referenced in the Basic Lease Provisions, if any,
Tenant and Landlord, each for themselves, warrants to the other that it has had
no dealings with any real estate broker or agent in connection with the
negotiation of this lease, except as specifically stated to the contrary in the
applicable Basic Lease Provision, and each expressly agrees and
covenants to hold the other harmless and to defend the other from any claims,
threatened or asserted, by any broker, finder or agent claiming under or
through the respective party in connection with the negotiations and execution of
this lease.


 


Section 13.12 - WAIVERS


 


No
waiver of any provision hereof shall be deemed a waiver of any other provision
hereof. Consent or approval of any act by one of the parties hereto shall not be
deemed to render unnecessary the obtaining of such party’s consent to or
approval of any subsequent act.


 


Section 13.13 -  RECORDING


 


Tenant
shall not record this lease without the prior written consent of Landlord.
Tenant, upon the request of Landlord, shall execute and acknowledge a “short
form” memorandum of this lease for recording purposes.


 


Section 13.14 - LIENS


 


Notwithstanding
Section 6.06 (b), Tenant shall do all things necessary to prevent the
filing of any mechanics’ or other liens against the Premises or any part
thereof by reason of work, labor, services or materials supplied or claimed to
have been supplied to Tenant, or anyone holding the Premises, or any
part thereof, through or under Tenant.


 


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Section 13.15 - SUBORDINATION


 


This
lease and all rights of Tenant under this lease are subject and subordinate to
any of the following, and any modifications thereof, which may now or hereafter
affect any portion of the Premises: (a) any mortgage, or any ground or
underlying lease covering any part of the Premises, provided that a condition
of this subordination for any future mortgage holder or ground lessor shall be
the delivery to Tenant of a commercially reasonable non-disturbance and
attornment agreement which shall indicate that Tenant’s peaceable possession of
the Premises will not be disturbed as a result of such subordination, (b) any
applicable laws, rules, statutes and ordinances of any governmental authority
having jurisdiction, and (c) all utility easements and agreements. On sale
by foreclosure of a mortgage or sale in lieu of foreclosure, Tenant will attorn
to the purchaser if requested by such purchaser, and recognize the purchaser as
the Landlord under this lease provided Tenant has received a commercially
reasonable non-disturbance and attornment agreement indicating that Tenant’s
(or its Affiliate) peaceful possession of the Premises will not be
disturbed. These provisions are self-operative and except as provided above no
further instrument is required to effect them; however, upon demand from time
to time, Tenant shall execute, acknowledge and deliver to Landlord any
instruments and certificates necessary or proper to evidence such subordination
and/or attornment or, if Landlord so elects, to render any of the foregoing
subordinate to this Lease or to any or all rights of Tenant hereunder. Tenant
further waives the provisions of any current or future statutes, rule or
law which may give or purport to give Tenant any right or election to terminate
or otherwise adversely affect this lease and the obligations of Tenant
hereunder in the event of any such foreclosure proceeding or sale, and agrees
that this Lease shall not be affected in any way whatsoever by any such
proceeding or sale unless the mortgagee, or the purchaser, shall declare
otherwise.


 


Section 13.16 - FORCE MAJEURE


 


In
the event that either Landlord or Tenant is delayed in performing any
obligation of Landlord or Tenant pursuant to this lease by any cause beyond the
reasonable control of the party required to perform such obligation, the time
period for performing such obligation shall be extended by  a period of time equal to the period of the delay.
For the purpose of this Section:


 


(a)   A cause shall be beyond the
reasonable control of a party to this lease when such cause would affect any
person similarly situated (such as power outage, labor strike or truckers’
strike) but shall not be beyond the reasonable control of such party when
peculiar to such party (such as financial inability or ordering long lead time
materials).


 


(b)   This Section shall not
apply to any obligation to pay money or delay the Lease Commencement Date.


 


(c)   In the event of any
occurrence which a party believes constitutes a cause beyond the reasonable
control of such party and which will delay any performance by such party
hereunder, such party shall promptly in writing notify the other party of the
occurrence and nature of such cause, the anticipated period of delay and the
steps being taken by such party to mitigate the effects of such delay.


 


Section 13.17 - YIELD UP PREMISES


 


At
the expiration or earlier termination of this lease, Tenant shall peaceably
yield up the Premises to Landlord in the same condition as when received,
ordinary wear and tear excepted, and all additions made upon the same to
Landlord, in first class condition (free and clear of debris) and shall execute,
acknowledge and deliver to Landlord, within five (5) days after


 


21

















 


written
demand from Landlord to Tenant, any quitclaim deed or other document, in
recordable form, which may be reasonably requested by any reputable title
company to remove the lease as a matter affecting title to the Premises.


 


Notwithstanding
anything to the contrary otherwise stated in this lease, Tenant shall leave the
air lines, power panels, electrical distribution systems, lighting fixtures,
air conditioning, plumbing and fencing on the Premises in good operating
condition and shall repair any damage to the Premises occasioned by the removal
of any personal property.


 


Section 13.18 - AUTHORITY


 


Each
individual executing this lease on behalf of the respective parties hereto
represents and warrants that the execution and delivery of this lease on behalf
of the party executing this lease is duly authorized and that he or she is
authorized to execute and deliver this lease on behalf of the respective party.
If Tenant is a corporation, Tenant shall, concurrently with the execution of
this lease, deliver to Landlord a certified copy of a resolution of Tenant’s
board of directors authorizing or ratifying the execution of this lease.


 


Section 13.19 -  SAFETY AND HEALTH


 


Tenant
covenants at all times during the term of this lease to comply with the
requirements of the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651
et  seq. and any analogous legislation in California (collectively
the “Act”), to the extent that the Act applies to the Premises and any
activities therein. Without limiting the generality of the foregoing, Tenant
covenants to maintain all working areas, all machinery, structures, electrical
facilities and the like upon the Premises in a condition that fully complies
with the requirements of the Act, including such requirements as would be
applicable with respect to agents, employees or contractors of Landlord who may
from time to time be present upon the Premises, and Tenant agrees to indemnify
and hold harmless Landlord from any liabilities, claims or damages arising as a
result of a breach of the foregoing covenant and from all costs, expenses and
charges arising therefrom including, without limitation, attorneys’ fees and
court costs incurred by Landlord in connection therewith.


 


Section 13.20 -  INDEMNITIES


 


The
obligations of the indemnifying party under each and every indemnification and
hold harmless provision contained in this lease shall survive the expiration or
earlier termination of this lease to and until the
last to occur of (a) the last date permitted by law for the bringing of
any claim or action with respect to which indemnification may be claimed by the
indemnified party against the indemnifying party under such provision or (b) the
date on which any claim or action for which indemnification may be claimed
under such provision is fully and finally resolved and, if applicable, any
compromise thereof or judgment or award thereon is paid in full by the indemnifying
party and the indemnified party is reimbursed by the indemnifying party for any
amounts paid by the indemnified party in compromise thereof or upon judgment or
award thereon and in defense of such action or claim, including reasonable
attorneys’ fees incurred.


 


Section 13.21 - DISCLOSURE


 


Landlord
and Tenant agree that the terms of this lease are not confidential.


 


Section 13.22 - GENDER; TENANTS


 


The
use of the masculine pronoun includes the feminine and neuter genders; the use
of the singular form of a pronoun includes the plural and vice-versa. If there
be more than one


 


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person
or entity indicated as Tenant herein, each person or entity subscribing as
Tenant shall be jointly and severally liable for all obligations of Tenant
hereunder.


 


Section 13.23 - QUIET ENJOYMENT


 


Landlord
represents and warrants that it has full right and authority to enter into this
lease and that Tenant, so long as it pays the rent and performs its other
covenants and agreements herein set forth, shall peaceably and quietly have,
hold and enjoy the Premises for the term without hindrance or molestation from
Landlord. Landlord shall not be liable for any interference or disturbance of
other tenants, if any, or third persons, nor shall Tenant be released from any
of its obligations under this lease because of such interference or
disturbance.


 


Section 13.24 -  ASSIGNS


 


Subject
to the provisions of Article IX, the terms, covenants and conditions
contained herein shall be binding upon and inure to the benefit of the heirs,
successors, executors, administrators, marital communities, if any, and assigns
of the parties hereto.


 


Section 13.25 -  NO OPTION


 


Submission
of this lease shall not be deemed to be a reservation of the Premises. Landlord
shall not be bound hereby until its delivery to Tenant of an executed copy
hereof signed by Landlord, already having been signed by Tenant, and until such
delivery Landlord reserves the right to exhibit the Premises to other
prospective tenants.


 


Section 13.26 -  LANDLORD LIABILITY


 


The
obligations of Landlord herein are intended to be binding only on the Premises
of the entity acting as Landlord and shall not be personally binding, nor shall
any resort be had to the private properties of, any of its trustees, general
partners, limited partners, or board of directors and officers, as the case may
be, or any employees or agents of Landlord.


 


Section 13.27 -  ACCOUNTS


 


Tenant’s
failure to object to any statement, invoice or billing by Landlord within sixty
(60) days after receipt thereof shall constitute Tenant’s acquiescence with
respect thereto and shall conclusively establish such statement, invoice or
billing as an account stated between Landlord and Tenant.


 


ARTICLE XIV


CONDITION OF PREMISES


 


Section 14.01 - CONDITION OF PREMISES


 


Tenant
accepts the Premises “as is” and after inspection by Tenant. Tenant
acknowledges that neither Landlord nor any agent


 


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of
Landlord has made any representation or warranty with respect to the Premises or the
suitability of either for the conduct of Tenant’s business except as may be
expressly provided for hereunder.


 


ARTICLE XV

OPERATIONAL PROVISIONS


 


Section 15.01 - PAYMENT PROVISIONS


 


Tenant
agrees to pay all amounts due under this lease including, without limitation,
taxes, utilities, rent, insurance premiums, etc., prior to delinquency and,
upon Landlord’s request, to furnish Landlord with satisfactory written evidence
of such payment. Notwithstanding the foregoing, any amount payable by Tenant
pursuant to this lease shall be due and payable within ten (10) days after
the date of Landlord’s invoice therefor unless a different time for payment
thereof is elsewhere provided in this lease.


 


Section 15.02 - TERMINATION


 


If
this lease is terminated by Landlord under any provision hereof, and upon the
expiration of the term of this lease (collectively, the “termination date”),
the following shall pertain:


 


(a)      Tenant shall, within ten (10) days
after the date of termination, remove from the Premises all merchandise,
furniture, furnishings, equipment and movable trade fixtures and shall
surrender the Premises to Landlord in the condition required by Section 13.17.
Tenant shall, at Tenant’s cost, repair any damage to the Premises caused by
such removal. Any items which Tenant is permitted to remove but fails to remove
prior to the surrender of the Premises to Landlord shall be deemed abandoned by
Tenant, and Landlord may retain or dispose of the same as Landlord sees fit without
claim by Tenant thereto or to any proceeds thereof. Tenant shall pay all
amounts payable by it through the date of termination, each of the parties
shall bear their own costs and fees incurred (including all costs incurred in
performing their respective obligations hereunder) through the termination date
and from and after the termination date neither party shall have any further
obligations to the other, except for those obligations set forth in this
subsection, in Section 13.17, and in subsection (b) below.


 


(b)      Notwithstanding the
provisions of subsection (a), upon any such termination or expiration the
following shall pertain:


 


(i)      Landlord agrees to
defend, indemnify and hold harmless Tenant from and against any and all claims,
costs, expenses, losses, damages, actions and causes of action for which
Landlord is responsible under this lease and which accrue on or before the
termination date.


 


(ii)     Tenant agrees to defend,
indemnify and hold harmless Landlord from and against any and all claims, costs,
losses, expenses, damages, actions and causes of action for which Tenant is
responsible under this lease and which accrue on or before the termination
date.


 


(iii)    Tenant shall remain
liable for the cost of all utilities used in or at the Premises through the
termination date accrued and unpaid, whether or not then billed, as of the
termination date until full payment thereof by Tenant. Tenant shall attempt to
obtain directly from the companies providing such services closing statements
for all services rendered through the termination date and shall promptly pay
the same. In the event that any utility statement with respect to the Premises
includes charges for a period partially prior to and partially subsequent to
the termination date, such charges shall be prorated as between Landlord and
Tenant, with Tenant responsible for the portion thereof (based upon a fraction
whose numerator is


 


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the
number of days of service on such statement through the termination date and
whose denominator is the total number of days of service on such statement)
through the termination date and Landlord shall be responsible for the balance.
The party receiving any such statement which requires proration hereunder shall
promptly pay such statement and the other party shall, within ten (10) days
after receipt of a copy of such statement, remit to the party paying the
statement any amount for which such other party is responsible hereunder.


 


(iv)    Tenant shall remain
responsible for all accrued taxes of the type described in Article IV and
assessed against the Premises and the personal property located therein or
thereon with a lien date prior to the termination date, irrespective of the
date of the billing therefor, and shall indemnify and hold Landlord harmless
with respect to any claims for such taxes or resulting form non-payment
thereof.


 


Section 15.03 - REFURBISH AND UPGRADE


 


Tenant
shall at Tenant’s sole cost and expense, renovate and refurbish the Premises,
from time to time, as may be reasonably necessary to maintain the Premises in
good order and condition. Failure of Tenant to perform its obligations pursuant
to this Section shall be a default pursuant to this lease entitling
Landlord to exercise all remedies available to a landlord against a defaulting
tenant.


 


ARTICLE XVI

HAZARDOUS WASTE


 


SECTION 16.01 - HAZARDOUS WASTE


 


(a)      Tenant agrees that
Tenant, its agents and contractors, licensees, or invitees shall not handle,
use, manufacture, store or dispose of any flammables, explosives, radioactive
materials, or other similar substances, petroleum products or derivatives (collectively
“Hazardous Materials”) on, under, or about the Premises, without Landlord’s
prior written consent (which consent may be given or withheld in
Landlord’s sole discretion), provided that Tenant may handle, store, use or
dispose of products containing small quantities of Hazardous Materials, which
products are of a type customarily found in offices and households (such as
aerosol cans containing insecticides, toner for copies, paints, paint remover,
and the like), provided further that Tenant shall handle, store, use and
dispose of any such Hazardous Materials in a safe and lawful manner and shall
not allow such Hazardous Materials to contaminate the Premises or the
environment.


 


(b)      Without limiting the
above, Tenant shall reimburse, defend, indemnify and hold Landlord harmless
from and against any and all claims, losses, liabilities, damages, costs and
expenses, including without limitation, loss of rental income, loss due to
business interruption, and attorneys fees and costs, arising out of or in any
way connected with the use, manufacture, storage, or disposal of Hazardous
Materials by Tenant, its agents or contractors on, under or about the Premises
including, without limitation, the costs of any required or necessary
investigation, repair, cleanup or detoxification and the preparation of any
closure or other required plans in connection herewith, whether voluntary or
compelled by governmental authority. The indemnity obligations of Tenant under
this clause shall survive any termination of the lease.


 


(c)      Notwithstanding anything
set forth in this lease, Tenant shall only be responsible for contamination of
Hazardous Materials or any cleanup resulting directly therefrom, resulting
directly from matters occurring or Hazardous Materials deposited (other than by
contractors, agents or representatives controlled by Landlord) during the lease
term, and any other period of time during which Tenant is in actual or
constructive occupancy of the


 


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Premises.
Tenant shall take reasonable precautions to prevent the contamination of the
Premises with Hazardous Materials by third parties.


 


(d)      It shall not be unreasonable
for Landlord to withhold its consent to any proposed Assignment or Sublease if (i) the
proposed Assignee’s or Sublessee’s anticipated use of the Premises involves the
generation, storage, use, treatment or disposal of Hazardous Materials; (ii) the
proposed Assignee or Sublessee has been required by any prior landlord, lender,
or governmental authority to take remedial action in connection with Hazardous
Materials contaminating a property if the contamination resulted from such
Assignee’s or Sublessee’s actions or use of the property in question; or (iii) the
proposed Assignee or Sublessee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
hazardous material.


 


ARTICLE XVII

NET LEASE


 


SECTION 17.01 - EXPENSES


 


Without
limiting the Tenant’s obligations under this lease, Tenant hereby acknowledges
that this is a “Triple Net Lease” (as such term is commonly used). Without
limiting Tenant’s obligation to pay all taxes, insurance, maintenance charges,
and any other amount due under the lease, Tenant shall pay all “Operating
Expenses” related to the Premises. The term “Operating Expenses” shall mean any
and all costs, expenses and disbursements of every kind and character which
Landlord incurs, pays or becomes obligated to pay in connection with the
operation, maintenance, management, repair, replacement, and security of the
Premises. Operating Expenses include, without limitation, any and all water and
sewer charges; accounting, legal and other consulting fees; the net cost and
expense of insurance, including loss of rents coverage, (including losses borne by
Landlord as a result of deductibles carried by Landlord under any insurance
policy); utilities; labor; parking charges; utilities surcharges, or any other
costs levied, assessed or imposed by, or at the direction of, or resulting from
statutes or regulations or interpretations thereof, promulgated by any federal,
state, regional, municipal or local government authority in connection with the
use or occupancy of the Premises or the parking facilities serving it
(if any); the cost of any equipment used to operate the improvements located on
the Premises, and the cost of any capital improvements that may be incurred
or which are made or installed in order to comply with any statutes, rules,
regulations or directives hereafter promulgated by any governmental authority;
air conditioning; waste disposal; heating, ventilating, supplies; materials;
equipment; tools; repair and maintenance of the Premises, including the
structural portion of the improvements located on the Premises, and the
plumbing, heating, ventilating, air conditioning, and electrical; maintenance
costs, including utilities, rental of personal property used in maintenance,
and all other upkeep of all parking areas; costs and expenses of gardening and
landscaping, maintenance of signs; reasonable audit or verification fees; costs
and expenses of repairs, resurfacing, repairing, maintenance, painting,
lighting, cleaning, refuse removal, and similar items for the Premises; and
costs reasonably incurred to reduce or contest taxes and other Operating
Expenses.


 


Operating Expenses shall not include any of
the items described below:


 


a)           Brokerage commissions and fees and advertisements for
rentals;


 


b)          Debt service points on any mortgages or deeds of trust or
any rent payable under the terms of a ground lease;


 


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c)           Tax
penalties incurred as a result of Landlord’s failure to make payments when due
as a result of Landlord’s negligence;


 


IN WITNESS WHEREOF,
this Agreement has been entered into by the parties as of the day and
year first above written.


 


	
  LANDLORD:
  

  	
  TENANT:

  
	
   

  	
   

  
	
  1444
  Partners, Ltd., a California 

  	
  Guess?
  Inc., a

  
	
  Limited
  Partnership 

  	
  California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Alameda
  Associates, Inc., 

  	
  By:

  	
  /s/ Paul Marciano

  
	
   

  	
  a
  California Corporation 

  	
   

  	
  Its

  
	
  Its:

  	
  General
  Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ [SIGNATURE]

  	
   

  
	
   

  	
  Its
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ [SIGNATURE]

  	
   

  
	
   

  	
  Its
  Secretary

  	
   

  
					



 


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