Exhibit
10.23(a)
LEASE
between
FOCUS
ENHANCEMENTS, INC.
(Tenant)
and
CARRAMERICA REALTY
CORPORATION
(Landlord)
May 31,
2000
TABLE OF
CONTENTS
|
|
|
|
Page
|
|
|
|
|
|
|
1.
|
LEASE AGREEMENT
|
1
|
|
|
|
|
|
|
2.
|
RENT
|
1
|
|
|
|
|
|
|
|
A.
|
Types of Rent
|
1
|
|
|
B.
|
Payment of Operating Cost Share Rent and Tax
Share Rent
|
1
|
|
|
C.
|
Definitions
|
2
|
|
|
D.
|
Computation of Base Rent and Rent
Adjustments
|
4
|
|
|
|
|
|
|
3.
|
PREPARATION AND CONDITION OF PREMISES;
POSSESSION AND SURRENDER OF PREMISES
|
5
|
|
|
|
|
|
|
|
A.
|
Condition of Premises
|
5
|
|
|
B.
|
Tenant’s Possession
|
5
|
|
|
C.
|
Maintenance
|
5
|
|
|
|
|
|
|
4.
|
PROJECT SERVICES
|
5
|
|
|
|
|
|
|
|
A.
|
Heating and Air Conditioning
|
5
|
|
|
B.
|
Elevators
|
6
|
|
|
C.
|
Electricity
|
6
|
|
|
D.
|
Water
|
6
|
|
|
E.
|
Janitorial Service
|
6
|
|
|
F.
|
Interruption of Services
|
6
|
|
|
|
|
|
|
5.
|
ALTERATIONS AND REPAIRS
|
6
|
|
|
|
|
|
|
|
A.
|
Landlord’s Consent and
Conditions
|
6
|
|
|
B.
|
Damage to Systems
|
7
|
|
|
C.
|
No
Liens
|
7
|
|
|
D.
|
Ownership of Improvements
|
8
|
|
|
E.
|
Removal at Termination
|
8
|
|
|
|
|
|
|
6.
|
USE
OF PREMISES
|
8
|
|
|
|
|
|
|
7.
|
GOVERNMENTAL REQUIREMENTS AND BUILDING
RULES
|
9
|
|
|
|
|
|
|
8.
|
WAIVER OF CLAIMS; INDEMNIFICATION;
INSURANCE
|
9
|
|
|
|
|
|
|
|
A.
|
Indemnification
|
9
|
|
|
B.
|
Tenant’s Insurance
|
9
|
|
|
C.
|
Insurance Certificates
|
10
|
|
|
D.
|
Landlord’s Insurance
|
11
|
|
|
E.
|
Waiver of Subrogation
|
11
|
i
|
9.
|
FIRE AND OTHER CASUALTY
|
11
|
|
|
|
|
|
|
|
A.
|
Termination
|
11
|
|
|
B.
|
Restoration
|
11
|
|
|
|
|
|
|
10.
|
EMINENT DOMAIN
|
11
|
|
|
|
|
|
|
11.
|
RIGHTS RESERVED TO LANDLORD
|
11
|
|
|
|
|
|
|
|
A.
|
Name
|
11
|
|
|
B.
|
Signs
|
12
|
|
|
C.
|
Window Treatments
|
12
|
|
|
D.
|
Keys
|
12
|
|
|
E.
|
Access
|
12
|
|
|
F.
|
Preparation for Reoccupancy
|
12
|
|
|
G.
|
Heavy Articles
|
12
|
|
|
H.
|
Show Premises
|
12
|
|
|
I.
|
Relocation of Tenant
|
12
|
|
|
J.
|
Use
of Lockbox
|
12
|
|
|
K.
|
Repairs and Alterations
|
12
|
|
|
L.
|
Landlord’s Agents
|
13
|
|
|
M.
|
Building Services
|
13
|
|
|
N.
|
Other Actions
|
13
|
|
|
|
|
|
|
12.
|
TENANT’S DEFAULT
|
13
|
|
|
|
|
|
|
|
A.
|
Rent Default
|
13
|
|
|
B.
|
Certain Performance Default
|
13
|
|
|
C.
|
Other Performance Default
|
13
|
|
|
D.
|
Credit Default
|
13
|
|
|
E.
|
Vacation or Abandonment Default
|
13
|
|
|
|
|
|
|
13.
|
LANDLORD REMEDIES
|
13
|
|
|
|
|
|
|
|
A.
|
Termination of Lease or Possession
|
13
|
|
|
B.
|
Lease Termination Damages
|
14
|
|
|
C.
|
Possession Termination Damages
|
14
|
|
|
D.
|
Landlord’s Remedies Cumulative
|
14
|
|
|
E.
|
WAIVER OF TRIAL BY JURY
|
14
|
|
|
F.
|
Litigation Costs
|
14
|
|
|
|
|
|
|
14.
|
SURRENDER
|
15
|
|
|
|
|
|
|
15.
|
HOLDOVER
|
15
|
ii
|
16.
|
SUBORDINATION TO GROUND LEASES AND
MORTGAGES
|
15
|
|
|
|
|
|
|
|
A.
|
Subordination
|
15
|
|
|
B.
|
Termination of Ground Lease or Foreclosure of
Mortgage
|
15
|
|
|
C.
|
Security Deposit
|
15
|
|
|
D.
|
Notice and Right to Cure
|
16
|
|
|
E.
|
Definitions
|
16
|
|
|
|
|
|
|
17.
|
ASSIGNMENT AND SUBLEASE
|
16
|
|
|
|
|
|
|
|
A.
|
In
General
|
16
|
|
|
B.
|
Landlord’s Consent
|
16
|
|
|
C.
|
Procedure
|
16
|
|
|
D.
|
Change of Management or Ownership
|
17
|
|
|
E.
|
Excess Payments
|
17
|
|
|
F.
|
Recapture
|
17
|
|
|
G.
|
Permitted Transfers
|
17
|
|
|
|
|
|
|
18.
|
CONVEYANCE BY LANDLORD
|
17
|
|
|
|
|
|
|
19.
|
ESTOPPEL CERTIFICATE
|
18
|
|
|
|
|
|
|
20.
|
SECURITY DEPOSIT
|
18
|
|
|
|
|
|
|
21.
|
FORCE MAJEURE
|
19
|
|
|
|
|
|
|
22.
|
TENANT’S PERSONAL PROPERTY AND
FIXTURES
|
19
|
|
|
|
|
|
|
23.
|
NOTICES
|
20
|
|
|
|
|
|
|
|
A.
|
Landlord
|
20
|
|
|
B.
|
Tenant
|
20
|
|
|
|
|
|
|
24.
|
QUIET POSSESSION
|
20
|
|
|
|
|
|
|
25.
|
REAL ESTATE BROKER
|
20
|
|
|
|
|
|
|
26.
|
MISCELLANEOUS
|
20
|
|
|
|
|
|
|
|
A.
|
Successors and Assigns
|
20
|
|
|
B.
|
Date Payments Are Due
|
20
|
|
|
C.
|
Meaning of “Landlord”,
“Re-Entry, “including” and
“Affiliate”
|
21
|
|
|
D.
|
Time of the Essence
|
21
|
|
|
E.
|
No
Option
|
21
|
|
|
F.
|
Severability
|
21
|
|
|
G.
|
Governing Law
|
21
|
|
|
H.
|
Lease Modification
|
21
|
|
|
I.
|
No
Oral Modification
|
21
|
iii
|
|
J.
|
Landlord’s Right to Cure
|
21
|
|
|
K.
|
Captions
|
21
|
|
|
L.
|
Authority
|
21
|
|
|
M.
|
Landlord’s Enforcement of
Remedies
|
21
|
|
|
N.
|
Entire Agreement
|
21
|
|
|
O.
|
Landlord’s Title
|
21
|
|
|
P.
|
Light and Air Rights
|
21
|
|
|
Q.
|
Singular and Plural
|
22
|
|
|
R.
|
No
Recording by Tenant
|
22
|
|
|
S.
|
Exclusivity
|
22
|
|
|
T.
|
No
Construction Against Drafting Party
|
22
|
|
|
U.
|
Survival
|
22
|
|
|
V.
|
Rent Not Based on Income
|
22
|
|
|
W.
|
Building Manager and Service
Providers
|
22
|
|
|
X.
|
Late Charge and Interest on Late
Payments
|
22
|
|
|
Y.
|
Tenant’s Financial Statements
|
22
|
|
|
Z.
|
Parking
|
22
|
|
|
|
|
|
|
27.
|
UNRELATED BUSINESS INCOME
|
22
|
|
|
|
|
|
|
28.
|
HAZARDOUS SUBSTANCES
|
23
|
|
|
|
|
|
|
29.
|
EXCULPATION
|
23
|
|
|
|
|
|
|
30.
|
UTILITY DEREGULATION
|
23
|
|
|
|
|
|
|
|
A.
|
Landlord Controls Selection
|
23
|
|
|
B.
|
Tenant Will Provide Access
|
23
|
|
|
C.
|
Landlord Not Responsible for Change in
Service
|
23
|
|
ATTACHMENTS
|
|
Appendix A
|
–
|
Plan of Premises
|
|
Appendix B
|
–
|
Rules and Regulations
|
|
Appendix C
|
–
|
Tenant Improvement Agreement
|
|
Appendix D
|
–
|
Mortgages Currently Affecting the
Project
|
|
Appendix E
|
–
|
Commencement Date Confirmation
|
|
Appendix F
|
–
|
Legal Description
|
|
Addendum 1
|
–
|
Renewal Option
|
|
Addendum 2
|
–
|
Right of First Offer
|
iv
LEASE
THIS LEASE (the
“ Lease ”) is made as of June 7, 2000 between
CARRAMERICA REALTY CORPORATION , a Maryland corporation (the
“ Landlord ”) and the Tenant as named in the
Schedule below. For purposes of this Lease, the term “
Project ” means the land legally described in Appendix
F hereto (the “Land”) and buildings A, B and C located
thereon. The Project is a portion of the Sunset Corporate
Park, Hillsboro, Oregon. “ Premises ”
means that part of Building A of the Project leased to Tenant
described in the Schedule and outlined on Appendix A .
“ Building ” means Building A of the
Project. “ Common Area ” means the
sidewalks, halls, passageways, exits, entrances, elevators,
corridors, accessways, lobby, and all other public areas of the
Building.
The following
schedule (the “ Schedule ”) is an integral part
of this Lease. Terms defined in this Schedule shall have the
same meaning throughout the Lease.
SCHEDULE
1.
Tenant : Focus Enhancements, Inc., a Delaware
corporation
2.
Premises : Sunset Corporate Park, Building A, 22867,
Suite 120, NW Bennett Street, Hillsboro, Oregon
97124. On the Commencement Date, Landlord shall deliver to
Tenant possession of the entire Premises consisting of
approximately 7,390 Rentable Square Feet (as defined in
Section 3 below). Beginning on the Commencement Date,
Tenant shall pay Operating Cost Share Rent and Tax Share Rent to
Landlord in accordance with Section 2A of the Lease.
3.
Rentable Square Feet of the Premises :
Approximately 7,390 Rentable Square Feet, subject to final space
planning and area calculations. As used herein,
“Rentable Square Feet” or “RSF” shall have
the same definition as “Floor Rentable Area” as defined
in BOMA’s Standard Method for Measuring Floor Area in Office
Buildings (ANSI/BOMA Z651.1-1996).
4.
Tenant’s Proportionate Share : (a) 16.90%
(based upon a total of 43,717 Rentable Square Feet for Building A)
as to all Operating Costs relating to Building A, as defined in
Section 2(c)(1) of the Lease, including, without
limitation, HVAC maintenance and repairs, elevator maintenance and
repairs, building management fee, any janitorial services and
supplies, window cleaning and property insurance;
(b) 5.66% (based upon a total of 130,461 Rentable Square
Feet in the Buildings) of all Operating Costs of the Project,
excluding all Operating Costs attributable to all or any part
of any Building in the Project, including without limitation,
landscape costs, parking lot repair and maintenance,
Landlord’s liability insurance costs; and (c) 5.66% of
all Taxes (provided, however, that should Building A and the land
on which it is located be separately assessed from the remainder of
the Project, Tenant’s Proportionate Share of Taxes shall be
16.90% of Taxes payable with respect to such separately assessed
parcel). Tenant shall also pay an amount fairly and equitably
apportioned by Landlord of the overhead costs relating to
Landlord’s local management office, based on the RSF of the
Premises and the total square footage of the buildings managed by
Landlord’s local management office.
5.
Security Deposit : $20,000. See Section 20 of
this Lease.
6.
Tenant’s Real Estate Broker for this Lease : Hume
Myers Tenant Counsel
7.
Landlord’s Real Estate Broker for this Lease :
Insignia/ESG, Inc.
8.
Tenant Improvements, if any : See the Tenant Improvement
Agreement attached hereto as Appendix C .
9.
Commencement Date : The Commencement Date shall be the
later of (a) May 1, 2000, or (b) the date the Tenant
Improvements (as defined in Appendix C ) are Substantially
Complete (as defined in Appendix C ) and Landlord has
delivered possession of the Premises to the
1
Tenant. The
parties will use best efforts to cause the Commencement Date to
occur on May 1, 2000. Landlord and Tenant shall execute
a Commencement Date Confirmation substantially in the form of
Appendix E promptly following the Commencement
Date.
10.
Termination Date/Term : October 31, 2005
11.
Guarantor : None.
12.
Base Rent :
|
|
|
Square
|
|
Monthly
|
|
Total Monthly
|
|
Annual Base
|
|
|
Period
|
|
Footage
|
|
Base Rent/RSF
|
|
Base Rent
|
|
Rent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
– 6
|
|
7,390
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
7
– 36
|
|
7,390
|
|
$
|
.97
|
|
$
|
7,168.30
|
|
$
|
86,019.60
|
|
|
37
– 66
|
|
7,390
|
|
$
|
1.05
|
|
$
|
7,759.50
|
|
$
|
93,114.00
|
|
2
1.
LEASE AGREEMENT.
On the terms and
conditions stated in this Lease, Landlord leases the Premises to
Tenant, and Tenant leases the Premises from Landlord, for the Term
beginning on the Commencement Date and ending on the Termination
Date unless extended or sooner terminated pursuant to this
Lease.
2.
RENT.
A. Types of
Rent . Tenant shall pay the following Rent in the form of
a check to Landlord at the following address:
CarrAmerica Realty
Corporation
Sunset Corporate Park
P.O. Box 402013
Atlanta, GA 30384-2013
or by wire
transfer as follows:
NationsBank, N.A.
(South)
ABA Number 061-000-052
Account Number 32-6303-9788
or in such other manner
as Landlord may notify Tenant.
(1)
Base Rent in monthly installments in advance, the monthly
installment for the seventh (7 th ) month payable
concurrently with the execution of this Lease and thereafter on or
before the first day of each month of the Term in the amount set
forth on the Schedule.
(2)
Operating Cost Share Rent in an amount equal to the Tenant’s
Proportionate Share of the Operating Costs for the applicable
fiscal year of the Lease, paid monthly in advance in an amount
reasonably estimated by Landlord. Definitions of Operating
Costs and Tenant’s Proportionate Share, and the method for
billing and payment of Operating Cost Share Rent are set forth in
Sections 2B, 2C and 2D.
(3)
Tax Share Rent in an amount equal to the Tenant’s
Proportionate Share of the Taxes for the applicable fiscal year of
this Lease, paid monthly in advance in an amount reasonably
estimated by Landlord. A definition of Taxes and the method
for billing and payment of Tax Share Rent are set forth in Sections
2B, 2C and 2D.
(4)
Additional Rent in
the amount of all costs, expenses, liabilities, and amounts which
Tenant is required to pay under this Lease, excluding Base Rent,
Operating Cost Share Rent, and Tax Share Rent, but including any
interest for late payment of any item of Rent.
(5)
Rent as used in this
Lease means Base Rent, Operating Cost Share Rent, Tax Share Rent
and Additional Rent. Tenant’s agreement to pay Rent is
an independent covenant, with no right of setoff, deduction or
counterclaim of any kind.
B.
Payment of Operating Cost
Share Rent and Tax Share Rent.
(1)
Payment of Estimated
Operating Cost Share Rent and Tax Share Rent. Landlord shall
estimate the Operating Costs and Taxes of the Project by
April 1 of each fiscal year, or as soon as reasonably possible
thereafter. Landlord may revise these estimates whenever it
obtains more accurate information, such as the final real estate
tax assessment or tax rate for the Project.
Within ten (10) days
after receiving the original or revised estimate from Landlord,
Tenant shall pay Landlord one-twelfth (1/12th) of Tenant’s
Proportionate Share of this estimate, multiplied by the number of
months that have elapsed in the applicable fiscal year
1
to the date of such payment
including the current month, minus payments previously made by
Tenant for the months elapsed. On the first day of each month
thereafter, Tenant shall pay Landlord one-twelfth (1/12th) of
Tenant’s Proportionate Share of this estimate, until a new
estimate becomes applicable.
(2)
Correction of
Operating Cost Share Rent. Landlord shall deliver to Tenant a
report for the previous fiscal year (the “Operating Cost
Report”) by May 15 of each year, or as soon as
reasonably possible thereafter, setting forth (a) the actual
Operating Costs incurred, (b) the amount of Operating Cost
Share Rent due from Tenant, and (c) the amount of Operating
Cost Share Rent paid by Tenant. Within twenty (20) days after
such delivery, Tenant shall pay to Landlord the amount due minus
the amount paid. If the amount paid exceeds the amount due,
Landlord shall apply the excess to Tenant’s payments of
Operating Cost Share Rent next coming due or, if no additional
payments of Operating Cost Share Rent are due, the excess will be
credited against Rent or refunded to Tenant, at Tenant’s
option.
(3)
Correction of Tax
Share Rent. Landlord shall deliver to Tenant a report for the
previous fiscal year (the “Tax Report”) by May 15
of each year, or as soon as reasonably possible thereafter, setting
forth (a) the actual Taxes, (b) the amount of Tax Share
Rent due from Tenant, and (c) the amount of Tax Share Rent
paid by Tenant. Within twenty (20) days after such delivery,
Tenant shall pay to Landlord the amount due from Tenant minus the
amount paid by Tenant. If the amount paid exceeds the amount
due, Landlord shall apply the excess to Tenant’s payments of
Tax Share Rent next coming due or, if no additional payments of Tax
Share Rent are due, the excess will be credited against Rent or
refunded to Tenant, at Tenant’s option.
C.
Definitions.
(1)
Included Operating
Costs. “Operating Costs” means any expenses,
costs and disbursements of any kind other than Taxes, paid or
incurred by Landlord in connection with the management,
maintenance, operation, insurance, repair and other related
activities in connection with any part of the Project (including,
without limitation, all costs, charges, and expenses incurred by
Landlord in connection with any change in the Electric Service
Provider or Alternate Service Provider (as defined in
Section 30A) then providing electrical services, and the
maintenance, repair, installation and service costs associated
therewith) and of the personal property, fixtures, machinery,
equipment, systems and apparatus used in connection therewith,
including the cost of providing those services required to be
furnished by Landlord under this Lease. Operating Costs shall
also include the cost of any capital improvements which are
intended to reduce Operating Costs or improve safety, and those
made to keep the Project in compliance with governmental
requirements applicable from time to time (collectively, the
“Included Capital Items”); provided, that the costs of
any Included Capital Item shall be amortized by Landlord, together
with an amount equal to interest at ten percent (10%) per annum,
over the estimated useful life of such item and such amortized
costs will be included in Operating Costs for that portion of the
useful life of the Included Capital Item which falls within the
Term.
If
the Project is not fully occupied during any portion of any fiscal
year, Landlord may adjust (an “Equitable Adjustment”)
Operating Costs to equal what would have been incurred by Landlord
had the Project been fully occupied. This Equitable
Adjustment shall apply only to Operating Costs which are variable
and therefore increase as occupancy of the Project increases.
Landlord may incorporate the Equitable Adjustment in its estimates
of Operating Costs.
2
If
Landlord does not furnish any particular service whose cost would
have constituted an Operating Cost to a tenant other than Tenant
who has undertaken to perform such service itself, Operating Costs
shall be increased by the amount which Landlord would have incurred
if it had furnished the service to such tenant.
(2)
Excluded Operating
Costs. Operating Costs shall not include:
(a)
costs of alterations
of tenant premises;
(b)
costs of capital
improvements other than Included Capital Items;
(c)
interest and
principal payments on mortgages or any other debt costs, or rental
payments on any ground lease of the Project;
(d)
real estate
brokers’ leasing commissions;
(e)
legal fees, space
planner fees and advertising expenses incurred with regard to
leasing the Building or portions thereof;
(f)
any cost or
expenditure for which Landlord is reimbursed, by insurance proceeds
or otherwise, except by Operating Cost Share Rent;
(g)
the cost of any
service furnished to any office tenant of the Project which
Landlord does not make available to Tenant;
(h)
depreciation (except
on any Included Capital Items);
(i)
franchise or income
taxes imposed upon Landlord, except to the extent imposed in lieu
of all or any part of Taxes;
(j)
costs of correcting
defects in construction of the Building (as opposed to the cost of
normal repair, maintenance and replacement expected with the
construction materials and equipment installed in the Building in
light of their specifications);
(k)
legal and auditing
fees which are for the benefit of Landlord such as collecting
delinquent rents, preparing tax returns and other financial
statements, and audits other than those incurred in connection with
the preparation of reports required pursuant to Section 2B
above;
(l)
the wages of any
employee for services not related directly to the management,
maintenance, operation and repair of the Building; and
(m)
fines, penalties and
interest.
(3)
Taxes.
“Taxes” means any and all taxes, assessments and
charges of any kind, general or special, ordinary or extraordinary,
levied against the Project, which Landlord shall pay or become
obligated to pay in connection with the ownership, leasing,
renting, management, use, occupancy, control or operation of the
Project or of the personal property, fixtures, machinery,
equipment, systems and apparatus used in connection
therewith. Taxes shall include real estate taxes, personal
property taxes, sewer rents, water rents, special or general
assessments, transit taxes, ad valorem taxes, and any tax levied on
the rents hereunder or the interest of Landlord under this Lease
(the “Rent Tax”). Taxes shall also include all
fees and other costs and expenses paid by Landlord in reviewing any
tax and in seeking a refund or reduction of any Taxes, whether or
not the Landlord is ultimately successful.
3
For any year, the amount to be
included in Taxes (a) from taxes or assessments payable in
installments, shall be the amount of the installments (with any
interest) due and payable during such year, and (b) from all
other Taxes, shall at Landlord’s election be the amount
accrued, assessed, or otherwise imposed for such year or the amount
due and payable in such year. Any refund or other adjustment
to any Taxes by the taxing authority, shall apply during the year
in which the adjustment is made.
Taxes shall not include any
net income (except Rent Tax), capital, stock, succession, transfer,
franchise, gift, estate or inheritance tax, except to the extent
that such tax shall be imposed in lieu of any portion of
Taxes.
(4)
Lease Year.
“Lease Year” means each consecutive twelve-month period
beginning with the Commencement Date, except that if the
Commencement Date is not the first day of a calendar month, then
the first Lease Year shall be the period from the Commencement Date
through the final day of the twelve months after the first day of
the following month, and each subsequent Lease Year shall be the
twelve months following the prior Lease Year.
(5)
Fiscal Year.
“Fiscal Year” means the calendar year, except that the
first fiscal year and the last fiscal year of the Term may be a
partial calendar year.
D.
Computation of Base Rent and
Rent Adjustments.
(1)
Prorations.
If this Lease begins
on a day other than the first day of a month, the Operating Cost
Share Rent and Tax Share Rent shall be prorated for such partial
month based on the actual number of days in such month. If
this Lease begins on a day other than the first day, or ends on a
day other than the last day, of the fiscal year, Operating Cost
Share Rent and Tax Share Rent shall be prorated for the applicable
fiscal year.
(2)
Default
Interest. Any sum due from Tenant to Landlord not paid when
due shall bear interest from the date due until paid at twelve
percent (12%) per annum.
(3)
Rent
Adjustments. The square footage of the Premises and the
Building set forth in the Schedule are conclusively deemed to be
the actual square footage thereof, without regard to any subsequent
remeasurement of the Premises or the Building. If any
Operating Cost paid in one fiscal year relates to more than one
fiscal year, Landlord may proportionately allocate such Operating
Cost among the related fiscal years.
(4)
Books and
Records. Landlord shall maintain books and records reflecting
the Operating Costs and Taxes in accordance with sound accounting
and management practices. Tenant and its certified public
accountant may inspect Landlord’s records at Landlord’s
office upon at least seventy-two (72) hours’ prior notice
during normal business hours during the ninety (90) days following
the respective delivery of the Operating Cost Report or the Tax
Report. The results of any such inspection shall be kept
strictly confidential by Tenant and its agents, and Tenant and its
certified public accountant must agree, in their contract for such
services, to such confidentiality restrictions and shall
specifically agree that the results shall not be made available to
any other tenant of the Building. Unless Tenant sends to
Landlord any written exception to either such report within said
ninety (90) day period, such report shall be deemed final and
accepted by Tenant. Tenant shall pay the amount shown on both
reports in the manner prescribed in this Lease, whether or not
Tenant takes any such written exception, without any prejudice to
such exception. If Tenant makes a timely exception, Landlord
shall cause its independent certified public accountant to issue a
final and conclusive resolution of Tenant’s exception.
Tenant shall pay the cost of such certification unless
Landlord’s original determination of annual Operating Costs
or Taxes
4
overstated the amounts thereof
by more than five percent (5%). Tenant shall then have 30 days to
review such certification.
(5)
Miscellaneous.
So long as Tenant is in default of any obligation under this Lease,
Tenant shall not be entitled to any refund of any amount from
Landlord. If this Lease is terminated for any reason prior to
the annual determination of Operating Cost Share Rent or Tax Share
Rent, either party shall pay the full amount due to the other
within thirty (30) days after the earlier of
(i) Landlord’s notice to Tenant of the amount when it is
determined, or (ii) Tenant’s demand for such
refund. Landlord may commingle any payments made with respect
to Operating Cost Share Rent or Tax Share Rent, without payment of
interest.
3.
PREPARATION AND CONDITION OF
PREMISES; POSSESSION AND SURRENDER OF PREMISES.
A.
Condition of Premises . Except to the extent of the
Tenant Improvements identified in Appendix C , Landlord is
leasing the Premises to Tenant “as is”, without any
obligation to alter, remodel, improve, repair or decorate any part
of the Premises.
B.
Tenant’s Possession . Tenant’s taking
possession of any portion of the Premises shall be conclusive
evidence that the entire Premises was in good order, repair and
condition, except that Tenant shall (a) have thirty (30) days
to identify “punch list” items to Landlord in writing
for which Tenant shall have no liability; (b) identify any
latent defects to Landlord in writing within one (1) year of
the date Tenant takes possession. If Landlord authorizes
Tenant to take possession of any part of the Premises prior to the
Commencement Date for purposes of doing business, all terms of this
Lease shall apply to such pre-Term possession, including Base Rent
at the rate set forth for the First Lease Year in the Schedule,
prorated for any partial month.
C.
Maintenance . Throughout the Term, Tenant shall
maintain the Premises in good condition, loss or damage caused by
the elements, ordinary wear and tear, and fire and other casualty
excepted, and at the termination of this Lease, or Tenant’s
right to possession, Tenant shall return the Premises to Landlord
in broom-clean condition. To the extent Tenant fails to
perform its obligations, Landlord may, but need not, after written
notice to Tenant informing Tenant of such intent and providing
Tenant the opportunity to dispute the allegation or perform repairs
themselves, restore the Premises to such condition and Tenant shall
pay the cost thereof. The cost of any repairs made by
Landlord on account of Tenant’s default, or on the account of
the misuse or neglect by Tenant or its employees, agents, invitees
or Contractor’s anywhere in the Project, shall become
Additional Rent, payable by Tenant immediately upon
Landlord’s demand.
4.
PROJECT SERVICES.
So long as Tenant
is not in default under this Lease, Landlord shall furnish services
as follows:
A.
Heating and Air Conditioning . During the normal
business hours of 6:00 a.m. to 9:00 p.m., Monday through
Friday, and 9:00 a.m. to 4:00 p.m. on Saturday, Landlord
shall furnish heating and air conditioning to provide a comfortable
temperature, in Landlord’s judgment, for normal business
operations, except to the extent Tenant installs equipment which
adversely affects the temperature maintained by the air
conditioning system. If Tenant installs such equipment,
Landlord may install supplementary air conditioning units in the
Premises, and Tenant shall pay to Landlord upon demand as
Additional Rent the cost of installation, operation and maintenance
thereof. Landlord shall furnish heating and air conditioning
after business hours if Tenant provides Landlord reasonable prior
notice, and pays Landlord all then current charges for such
additional heating or air conditioning.
5
B.
Elevators . Landlord shall provide passenger elevator
service during normal business hours to Tenant in common with
Landlord and all other tenants. Landlord shall provide
limited passenger service at other times, except in case of an
emergency.
C.
Electricity . Landlord shall provide sufficient
electricity to operate normal office lighting and equipment.
Tenant shall not install or operate in the Premises any
electrically operated equipment or other machinery, other than
business machines and equipment normally employed for general
office use which do not require high electricity consumption for
operation, without obtaining the prior written consent of
Landlord. If any or all of Tenant’s equipment requires
electricity consumption in excess of that which is necessary to
operate normal office equipment, such consumption (including
consumption for computer or telephone rooms and special HVAC
equipment) shall be submetered by Landlord at Tenant’s
expense, and Tenant shall reimburse Landlord as Additional Rent for
the cost of its submetered consumption based upon Landlord’s
average cost of electricity. Such Additional Rent shall be in
addition to Tenant’s obligations pursuant to
Section 2A(2) to pay its Proportionate Share of Operating
Costs.
D.
Water . Landlord shall furnish hot and cold tap water
for drinking and toilet purposes. Tenant shall pay Landlord
for water furnished for any other purpose as Additional Rent at
rates fixed by Landlord. Tenant shall use reasonable efforts
not to permit water to be wasted.
E.
Janitorial Service . None.
F.
Interruption of Services . If any of the Building
equipment or machinery ceases to function properly for any cause
Landlord shall use reasonable diligence to repair the same
promptly. Landlord’s inability to furnish, to any
extent, the Project services set forth in this Section 4, or
any cessation thereof resulting from any causes, including any
entry for repairs pursuant to this Lease, and any renovation,
redecoration or rehabilitation of any area of the Building shall
not render Landlord liable for damages to either person or property
or for interruption or loss to Tenant’s business, nor be
construed as an eviction of Tenant, nor work an abatement of any
portion of Rent, nor relieve Tenant from fulfillment of any
covenant or agreement hereof. However, in the event that an
interruption of the Project services set forth in this
Section 4 causes the Premises to be untenantable for a period
of at least five (5) consecutive business days, monthly Rent
shall thereafter be abated.
5.
ALTERATIONS AND
REPAIRS.
A.
Landlord’s Consent and Conditions . Tenant shall
not make any improvements or alterations to the Premises (the
“Work”) without in each instance submitting in advance
plans and specifications for the Work to Landlord, and without
obtaining Landlord’s prior written consent which shall not be
unreasonably withheld or delayed, except that Landlord’s
consent shall not be required for interior, nonstructural
alterations that do not exceed Five Thousand Dollars ($5,000) in
cost per project so long as (a) such Work does not impact the
base structural components or systems of the Building and
(b) such work will not impact any other tenant’s
premises, and (c) such Work is not visible from outside the
Premises. Notwithstanding the foregoing, Landlord may
withhold its consent in its sole discretion for any Work which
(a) impacts the base structural components or the Building
systems, (b) impacts any other tenant’s premises, or
(c) is visible from outside the Premises. All
improvements or alterations greater than Five Thousand Dollars
($5,000) shall be performed by a contractor approved in writing by
Landlord prior to commencing such construction, such approval not
being unreasonably withheld, conditioned or delayed.
Tenant shall
reimburse Landlord for actual costs incurred for review of the
plans and all other items submitted by Tenant. Tenant shall
pay for the cost of all Work as and when such payment is first
due. All Work shall become the property of Landlord upon its
installation, except for Tenant’s
6
trade fixtures and for
items which Landlord requires Tenant to remove at Tenant’s
cost at the termination of the Lease pursuant to
Section 5E. Notwithstanding the foregoing, unless Tenant
is in default under this Lease, Tenant shall retain ownership of
any and all telephone systems, computer systems, air filtration
systems and other such systems which are installed at the Premises
but are reasonably removable.
The following
requirements shall apply to all Work:
(1)
Prior to commencement, Tenant shall furnish to Landlord building
permits, certificates of insurance satisfactory to Landlord, and,
at Landlord’s request, security for payment of all costs that
are incurred by Landlord.
(2)
Tenant shall use reasonable efforts to perform all Work so as to
maintain peace and harmony among other contractors serving the
Project and shall avoid interference with other work to be
performed or services to be rendered in the Project.
(3)
The Work shall be performed in a good and workmanlike manner,
meeting the standard for construction and quality of materials in
the Building, and shall comply with all insurance requirements and
all applicable governmental laws, ordinances and regulations
(“Governmental Requirements”).
(4)
Tenant shall use reasonable efforts to perform all Work so as to
minimize or prevent disruption to other tenants, and Tenant shall
comply with all reasonable requests of Landlord in response to
complaints from other tenants.
(5)
Tenant shall perform all Work in compliance with Landlord’s
“Policies, Rules and Procedures for Construction
Projects” in effect at the time the Work is performed,
provided that such “Policies, Rules and Procedures for
Construction Projects” are provided in writing to Tenant at
least thirty (30) days prior to initiation of such Work.
(6)
Tenant shall permit Landlord to supervise all Work. Landlord
may charge a supervisory fee not to exceed fifteen percent (15%) of
labor, material, and all other costs of the Work, if
Landlord’s employees or contractors perform the Work.
(7)
Upon completion, Tenant shall furnish Landlord with
contractor’s affidavits and full and final statutory waivers
of liens, as-built plans and specifications, and receipted bills
covering all labor and materials, and all other close-out
documentation required in Landlord’s “Policies,
Rules and Procedures for Construction Projects” which
Tenant acknowledges has been delivered to Tenant with this
Lease.
B. Damage to
Systems . If any part of the mechanical, electrical or
other systems in the Premises are damaged, Tenant shall promptly
notify Landlord, and Landlord shall repair such damage.
Landlord may also at any reasonable time make any repairs or
alterations which Landlord deems necessary for the safety or
protection of the Project, or which Landlord is required to make by
any court or pursuant to any Governmental Requirement. Tenant
shall at its expense make all other repairs necessary to keep the
Premises, and Tenant’s fixtures and personal property, in
good order, condition and repair; to the extent Tenant fails to do
so after notification in writing and a reasonable period thereafter
to cure, Landlord may make such repairs itself. The cost of
any repairs made by Landlord on account of Tenant’s default,
or on account of the misuse or neglect by Tenant or its invitees,
contractors or agents anywhere in the Project, shall become
Additional Rent payable by Tenant on demand unless such invitees,
contractors or agents are employees or agents or Landlord in which
case such costs shall be waived.
C. No Liens
. Tenant has no authority to cause or permit any lien or
encumbrance of any kind to affect Landlord’s interest in the
Project; any such lien or encumbrance shall attach to
7
Tenant’s interest
only. If any mechanic’s lien is filed or claim of lien
made for work or materials furnished to Tenant, then Tenant shall
at its expense within ten (10) days thereafter either
discharge or contest the lien or claim. If Tenant contests
the lien or claim, then Tenant shall (i) within such ten
(10) day period, provide Landlord adequate security for the
lien or claim, (ii) promptly contest the lien or claim in good
faith by appropriate proceedings that operate to stay its
enforcement, and (iii) pay promptly any final adverse judgment
entered in any such proceeding. If Tenant does not comply
with these requirements, Landlord may discharge the lien or claim,
and the amount paid, as well as reasonable attorney’s fees
and other reasonable expenses incurred by Landlord, shall become
Additional Rent payable by Tenant on demand.
D.
Ownership of Improvements . All Work as defined in
this Section 5, and all partitions, hardware, equipment,
machinery, and all other improvements and all fixtures except trade
fixtures, constructed in the Premises by either Landlord or Tenant
(collectively, “Additions”), shall become
Landlord’s property upon installation without compensation to
Tenant, unless Landlord consents otherwise in writing prior to
installation. At Landlord’s option, all Additions will
either be (a) surrendered to Landlord with the Premises at the
termination of the Lease or of Tenant’s right to possession,
or (b) removed in accordance with Subsection 5E below (unless
Landlord at the time it gives its consent to the performance of
such construction expressly waives in writing the right to require
such removal).
E.
Removal at Termination . Upon the termination of this
Lease or Tenant’s right of possession, Tenant shall remove
from the Project its trade fixtures, furniture, moveable equipment
and other personal property, any Additions which Landlord elects
shall be removed by Tenant pursuant to Section 5D, and any
Additions to any portion of the Project other than the
Premises. Tenant shall repair all damage caused by the
installation or removal of any of the foregoing items. If
Tenant does not timely remove such property, then Tenant shall be
conclusively presumed to have, at Landlord’s election
(i) conveyed such property to Landlord without compensation or
(ii) abandoned such property, and Landlord may dispose of or
store any part thereof in any manner at Tenant’s sole cost,
without waiving Landlord’s right to claim from Tenant all
expenses arising out of Tenant’s failure to remove the
property, and without liability to Tenant or any other
person. Landlord shall not be a bailee of any such personal
property. If Landlord elects abandonment, Tenant shall pay to
Landlord, upon demand, any reasonable expenses incurred for
disposition.
6.
USE OF PREMISES.
Tenant shall use
the Premises only for general office purposes. Tenant shall
not allow any use of the Premises which will negatively affect the
cost of coverage of Landlord’s insurance on the
Project. Tenant shall not allow any inflammable or explosive
liquids or materials to be kept on the Premises. Tenant shall
not allow any use of the Premises which would cause the value or
utility of any part of the Premises to diminish or would interfere
with any other tenant or with the operation of the Project by
Landlord. Tenant shall not permit any nuisance or waste upon
the Premises, or allow any offensive noise or odor in or around the
Premises.
If any
governmental authority deems the Premises to be a “place of
public accommodation” under the Americans with Disabilities
Act or any other comparable law as a result of Tenant’s use,
then Tenant shall either modify its use and cause such authority to
rescind its designation or be responsible for any alterations,
structural or otherwise, required to be made to the Building or the
Premises under such laws. Landlord represents to Tenant that,
to Landlord’s commercially reasonable knowledge, on the
Commencement Date the Project will comply with applicable building
codes, including the Americans with Disabilities Act.
8
|