LEASE AGREEMENT

TECHPOINTE COMMONS AT CORNELIUS PASS

LEASE AGREEMENT

S/I TECHPOINTE COMMONS LLC

(Landlord)

and

PLANAR SYSTEMS, INC.

(Tenant)

 

Dated: December 27, 2006

TABLE OF CONTENTS

 

 

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LEASE AGREEMENT

THIS LEASE (“Lease”) dated as of the      day of December 2006, is made by and between S/I TECHPOINTE COMMONS LLC, a Washington limited liability company (“Landlord”), and PLANAR SYSTEMS, INC., an Oregon corporation (“Tenant”).

ARTICLE I: DEFINITIONS

1.1 Defined Terms . The following terms shall have the meanings specified in this Section, unless otherwise specifically provided. Other terms may be defined in other parts of the Lease.

 

 

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ARTICLE II: PREMISES AND COMMON AREAS LEASED

2.1 Premises .

(a) Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, subject to the provisions of this Lease, certain premises as more fully described in Section 3.1 below (“Premises”) located within that certain building (“Building”) owned by Landlord and which is a portion of the “Project” identified in Section 1.1(g). The Site Plan for the Project attached hereto as Exhibit A is attached for location reference purposes only and shall not constitute a representation or warranty by Landlord to be the final plan of the Project, or to require Landlord to build any improvements, or to otherwise comply with the site plan or require Landlord to lease space to a particular tenant or type of tenant.

(b) The rentable areas of the Premises and of the Building specified in Section 1.1 are approximate. Landlord and Tenant are satisfied with such approximations and with the measurement of the rentable areas of the Building and such measurements shall not be changed during the term of this Lease, as may be extended. Tenant acknowledges that, except as otherwise expressly set forth in this Lease, neither Landlord nor any agent, property manager or broker of Landlord has made any representation or warranty with respect to the Building or the Common Areas or their suitability for the conduct of Tenant’s business, and that except only for any improvements that Landlord has expressly agreed herein to construct and install, the Premises is leased in its “As-Is” condition existing at the time of execution of this Lease; provided that nothing contained herein shall be deemed to diminish Landlord’s repair and maintenance obligations expressly set forth in this Lease.

(c) Landlord represents and warrants that: (i) the Building, when built, was built in compliance with all applicable laws, (ii) Landlord has not received written notice from any governmental agency that the Building is not in compliance with any applicable law for which such non-compliance has not been cured, and (iii) Tenant’s use of the Premises for the permitted use allowed by this Lease will not constitute a violation of the CC&Rs (as defined below).

 

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2.2 Common Areas . In addition to the Premises, Tenant shall have the right to use the following areas appurtenant to the Building: parking areas and facilities, roadways, sidewalks, walkways, parkways, plazas, levees, driveways and landscaped areas and similar areas and facilities (collectively, “Common Areas”). Tenant’s right to utilize the Common Areas shall at all times be subject to Landlord’s reserved rights therein as described in Section 17.5 hereof, the Rules and Regulations referred to in Section 17.15 hereof and all encumbrances, easements, ground leases, and covenants, conditions and restrictions (“CC&Rs”) now or hereafter affecting or encumbering the Building. Such right to use the Common Areas shall also include the right to use those portions of the Project that occupants of the Building are entitled to use in common with other occupants of the Project.

ARTICLE III: IMPROVEMENTS

3.1 Construction of Premises .

(a) Landlord’s Work . Attached hereto as Exhibit D is a description of the improvements to be constructed by Landlord at the Premises (“Landlord’s Work”).

(b) Premises Plans . A list of the outline plans and specifications for the tenant improvements (the “Tenant Improvements”) to be constructed by Tenant in the Premises (the “Outline Plans and Specifications for the Tenant Improvements”) is attached hereto and made a part hereof as Exhibit E . Tenant’s architect, in cooperation with Tenant’s consultants, shall prepare final working drawings and specifications for the Tenant Improvements to the Premises (the “Tenant Improvement Plans”) which shall be subject to the prior written approval of Landlord. Such approval shall not be unreasonably withheld, conditioned or delayed. After final written approval of the Tenant Improvement Plans has been provided by Landlord, no changes to such Tenant Improvement Plans shall be made except with the approval of both Landlord and Tenant, which approval shall not be unreasonably withheld, conditioned or delayed.

(c) Construction of Tenant Improvements. The Tenant Improvements shall be constructed by a general contractor selected by Tenant (the “Contractor”) and approved in writing by Landlord prior to the commencement of construction. Such Landlord approval shall not be unreasonably withheld, conditioned or delayed. Landlord hereby approves Tenant’s use of Commercial Contractors, Inc. as Tenant’s general contractor. In constructing the Tenant Improvements, Tenant shall comply with Section 9.3 and the following provisions contained in Section 9.2.

Tenant shall deliver to Landlord the contractor’s name, references and state license number, a certificate of liability insurance naming Landlord and Landlord’s manager and lender(s) as an additional insured, as well as full and complete plans and specifications of all such improvements, and any subsequent modifications or additions to such plans and specifications, and no proposed work shall be commenced or continued by Tenant until Landlord has received and given its written approval of each of the foregoing. Landlord shall either approve or disapprove any proposed alteration, addition or improvement on or before ten (10) days following receipt of all of the foregoing items. Landlord does not expressly or implicitly covenant or warrant that any plans or specifications submitted by Tenant are accurate, safe or sufficient or that the same comply with any applicable laws, ordinances, building codes, or the like. Further, Tenant shall indemnify, protect, defend and hold Landlord and Landlord’s agents, employees and contractors and the Building harmless for, from and against any loss, damage, liability, claims, cost or expense, including attorneys’ fees and costs, incurred as a result of any defects in design, materials or workmanship resulting from Tenant’s improvements to the Premises. All telephone or telecommunications lines, cables, conduits and equipment installed by Tenant shall remain the property of Tenant until termination of the Lease, at which time they shall, unless otherwise elected by Landlord by written notice to Tenant, be and become the property of Landlord. All alterations and additions by Tenant shall be done in a good and workmanlike manner and in compliance with the plans and specifications approved by Landlord and in compliance with all applicable laws and ordinances, building codes, bylaws, regulations and orders of any federal, state, county, municipal or other public authority and of the insurers of the Premises and as-built plans and specifications shall be provided to Landlord by Tenant upon completion of the work. Tenant shall not be required to remove any of the Tenant Improvements from the Premises at the expiration or earlier termination of this Lease other than the following items: (i) all telephone or telecommunications lines, cables, conduits and equipment, (ii) all nitrogen tanks and compressors, and (iii) and such other items for which Landlord notifies Tenant in writing within five (5) business days of Landlord’s receipt of the Tenant Improvement Plans.

The cost of Tenant Improvements shall be paid as provided in Paragraph 3.1(d) below.

(d) Payment of Tenant Improvements Costs .

(i) Landlord will provide Tenant with up to the sum of $1,885,251.75 (the “Improvement Allowance”) ($30.75 per rentable square foot of the Premises) toward the Tenant Improvements pursuant to the Tenant Improvement Plans. Such amount shall only be used for the costs of construction drawings, construction fees (including, without limitation, construction management fees), engineering and planning fees, architectural fees, reasonable construction oversight fees for Tenant’s construction manager, permits fees and hard costs as reflected in the construction contract and any changes thereto approved in writing by Landlord (collectively “Tenant Improvement Costs”). In no event shall the Improvement Allowance be used to reimburse Tenant for the costs of furniture, fixtures, equipment, inventory, or telecommunication cabling and wiring. A portion of the Improvement Allowance shall be used to pay for Landlord’s internal costs for inspection of the Tenant

 

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Improvements (which internal costs shall not exceed $5,000.00) and all out of pocket third party costs paid by Landlord for third party inspections. Tenant may submit a written request for reimbursement of Tenant Improvement Costs expended by Tenant from the Improvement Allowance not more than once a month. Such disbursement request must contain all of the following documents all in a form and substance acceptable to Landlord: (a) a detailed breakdown of the cost of the completed Tenant Improvements covered by such disbursement request and evidence of payment of all such amounts by Tenant; (b) an affidavit from Tenant’s general contractor stating that all contractors, subcontractors, materialmen, suppliers, and all other persons performing work or supplying materials and/or services on or about the Premises in connection with such portion of the completed Tenant Improvements have been paid in full and have waived all liens and claims arising as a result of such work along with a standard AIA progress payment release request form; (c) approved notarized original unconditional lien waivers for all contractors, subcontractors, materialmen, suppliers, and all other persons performing work or supplying materials on or about the Premises in connection with such portion of the Tenant Improvements, and (d) to the extent such disbursement request includes reimbursement for architects or engineering costs, an affidavit from Tenant stating that all architects and engineers have been paid in full with respect to such costs and have waived all liens and claims arising as a result of such work and approved notarized original unconditional lien waivers from such architects and engineers. Within thirty (30) days of receipt of the satisfaction of such condition and so long as Tenant is not in default of this Lease, Landlord shall release to Tenant, to the extent funds are available in the Improvement Allowance, ninety percent (90%) of the cost of such Tenant Improvement. Landlord shall pay the balance of the Improvement Allowance, if any, within thirty (30) days after Tenant’s compliance with: (i) Tenant shall have furnished Landlord with the following documents all in a form and substance acceptable to Landlord: (A) a detailed breakdown of the cost of the all of the Tenant Improvements; (B) a certificate of occupancy issued by the appropriate governmental authority indicating that Tenant’s construction work was performed in accordance with local and state codes and that the Premises are acceptable for occupancy, which work must be completed in accordance with the plans and specifications approved by Landlord; (C) an affidavit from Tenant’s general contractor stating that all contractors, subcontractors, materialmen, suppliers, architects, engineers, and all other persons performing work or supplying materials and/or services on or about the Premises in connection with all of the Tenant Improvements have been paid in full and have waived all liens and claims arising as a result of such work; and (D) approved notarized original lien waivers for all contractors, subcontractors, materialmen, suppliers and all other persons performing work or supplying materials on or about the Premises in connection with all of the Tenant Improvements; (ii) Tenant shall not be in arrears with regard to any Rent or other charges which may be due or owing, and (iii) Tenant is open for business in the Premises.

(ii) Tenant may reduce its Base Monthly Rent by $0.0055 per rentable square foot per month for each One Dollar ($1.00) per rentable square foot of Improvement Allowance not used by Tenant; provided, that Tenant may not use more than Nine and 25/100 ^ths Dollars ($9.25) of the Improvement Allowance to reduce Tenant’s Base Monthly Rent; and provided, further that Tenant shall make such election not later than ninety (90) days after the Commencement Date.

(iii) Tenant will, at its sole cost and expense, pay for any improvements to the Premises in excess of the Improvement Allowance. To the extent the cost of the Tenant Improvements are contemplated to be in excess of the Improvement Allowance, Tenant must pay such excess amount in full before Landlord is required to reimburse Tenant for any portion of the cost of such Tenant Improvements from the Improvement Allowance. Tenant shall arrange for the installation of all Tenant’s furniture, fixtures and equipment associated with its business at Tenant’s sole cost and expense. Costs associated with Tenant’s equipment, layout, design and construction coordination are also the sole responsibility of Tenant.

3.2 Completion and Delivery . The terms “substantial completion,” “Substantial Completion,” “Substantially Complete,” “Substantially complete” and words of similar import (whether or not spelled with initial capitals) as used in the Lease shall mean the date of substantial completion of Landlord’s Work. Landlord’s Work shall be deemed substantially complete notwithstanding the fact that minor details of construction, mechanical adjustments, landscaping or decorations which do not materially interfere with Tenant’s use and enjoyment of the Premises remain to be performed (items normally referred to as “punch list” items). Certification by Landlord’s architect as to the substantial completion of Landlord’s Work shall be conclusive and binding upon Landlord and Tenant. Landlord shall diligently complete, as soon as reasonably possible, any punch list items of work and adjustment. The Commencement Date shall not be delayed because of the existence of uncorrected punch list items.

ARTICLE IV: TERM

4.1 Term . The Term shall commence on the Commencement Date, as set forth in Section 1.1(j). If the Premises are not Substantially Complete by the Scheduled Commencement Date in Section 1.1(k), Landlord shall not be liable for any claims, damages or liabilities thereof and Tenant shall have no right to terminate this Lease. The Term shall expire upon the date set forth in Section 1.1(j) as may be extended by this Section 4, unless sooner terminated as hereinafter provided.

4.2 Tenant’s Early Possession. One business day after the mutual execution and delivery of this Lease, Landlord shall allow Tenant early access to the Premises for the purpose constructing the Tenant Improvements and installing Tenant’s fixtures in the Premises. Landlord may suspend Tenant’s right to early access to the Premises at any time to the extent that such early access to the Premises materially interferes with Landlord’s performance of the construction and installation of Landlord’s Work. Tenant shall have the right to commence business operations in the Premises prior to the Commencement Date. If Tenant so commences business operations in the Premises prior to the Commencement Date, Tenant shall be obligated to commence the payment of Operating Expenses (but not the payment of Monthly Base Rent) on the date Tenant commences business operations in the Premises.

 

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4.3 Notice of Commencement Date . Upon ascertaining the date of substantial completion of Landlord’s Work and the Commencement Date, Landlord shall deliver to Tenant a written confirmation in the form attached hereto as Exhibit F (“Lease Confirmation”) of said dates of substantial completion of Landlord’s Work and the Commencement Date. The Lease Confirmation shall be binding upon Tenant unless Tenant objects to the notice in writing delivered to Landlord within five (5) days of Tenant’s receipt of said Lease Confirmation.

4.4 Middle of Term Option to Extend . Landlord hereby grants Tenant the right to extend the term of the Lease for one (1) additional period of two (2) years (such extended period is hereinafter referred to as the “Extended Term”) on the same terms and conditions contained in the Lease, except that (i) Base Rent for the Extended Term shall be as set forth hereinbelow, (ii) no additional options to extend shall apply following the expiration of the Extended Term (other than as set forth in Section 4.5 below), and (iii) Landlord shall have no obligation to make any improvements to the Premises or contribute any amounts therefor. Written notice of Tenant’s exercise of its option to extend (“Option to Extend”) the Term of this Lease for the Extended Term must be given to Landlord no less than twenty-four (24) months prior to the date the Term of the Lease would otherwise expire. If Tenant has subleased more than fifty percent (50%) of the Premises to persons or entities that are not Permitted Transferees, Tenant shall have no right to extend the Term of this Lease. In addition, if Tenant is in default under this Lease, Tenant shall have no right to extend the Term of this Lease until such default is cured within the cure period set forth in this Lease for such default, if any; provided, that the period of time within which said Option to Extend may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise said Option to Extend because of a default. In the event Tenant validly exercises its Option to Extend the Term of this Lease as herein provided, Base Rent shall be adjusted as of the commencement date of the Extended Term as follows (but in no event shall it be less than the Base Rent for the month immediately prior to the commencement of the Extended Term):

(a) Not later than six (6) months prior to the commencement of an Extended Term, Landlord shall provide Tenant with Landlord’s determination of the fair market Base Rent for such Extended Term, including periodic increases as dictated by the current market (“Landlord’s Determination of Base Rent for Extended Term”). Tenant shall provide notice to Landlord within ten (10) days after receipt of such notice from Landlord as to whether Tenant accepts Landlord’s Determination of Base Rent for Extended Term. In the event Tenant does not agree to Landlord’s Determination of Base Rent for Extended Term, Landlord and Tenant shall attempt to agree upon Base Rent for the Premises for the Extended Term, such rent to be the fair market rental value of the Premises for the Extended Term, as defined in Subsection (c) below. If the parties are unable to agree upon the Base Rent for the Extended Term by the date three (3) months prior to the commencement of the Extended Term, then within ten (10) days thereafter each party, at its own cost and by giving notice to the other party, shall appoint a real estate appraiser with at least five (5) years full-time commercial real estate appraisal experience in the area in which the Premises are located to appraise and set Base Rent for the Extended Term. If a party does not appoint an appraiser within ten (10) days after the other party has given notice of the name of its appraiser, the single appraiser appointed shall be the sole appraiser and shall set Base Rent for the Extended Term. If each party shall have so appointed an appraiser, the two appraisers shall meet promptly and attempt to set the Base Rent for the Extended Term. If the two appraisers are unable to agree within thirty (30) days after the second appraiser has been appointed, they shall attempt to select a third appraiser meeting the qualifications herein stated within ten (10) days after the last day the two appraisers are given to set Base Rent. If the two appraisers are unable to agree on the third appraiser within such ten (10) day period, either of the parties to this Lease, by giving five (5) days notice to the other party, may apply to the then presiding judge of the Washington County Circuit Court for the selection of a third appraiser meeting the qualifications stated in this paragraph. Each of the parties shall bear one-half (1/2) of the cost of appointing the third appraiser and of paying the third appraiser’s fee. The third appraiser, however selected, shall be a person who has not previously acted in any capacity for either party.

(b) The fair market Base Rent shall be fixed by the three appraisers in accordance with the following procedures. Each party appointed appraiser shall state, in writing, such appraiser’s determination of the fair market Base Rent supported by the reasons therefor and shall make counterpart copies for the other party appointed appraiser and the neutral appraiser. The party appointed appraisers shall arrange for a simultaneous exchange of their proposed fair market Base Rent determinations. The role of the neutral appraiser shall be to select whichever of the two proposed determinations of fair market Base Rent most closely approximates the neutral appraiser’s own determination of fair market Base Rent. The neutral appraiser shall have no right to propose a middle ground or any modification of either of the two proposed determinations of fair market Base Rent. The determination of fair market Base Rent the neutral appraiser chooses as that most closely approximating the neutral appraiser’s determination of the fair market Base Rent shall constitute the decision of the appraisers and shall be final and binding upon the parties. The appraisers shall have no power to modify the provisions of this Lease.

(c) For purposes of the appraisal, the term “-fair market Base Rent-” shall mean the price that a ready and willing tenant would pay, as of the Extended Term commencement date, as a base rent to a ready and willing landlord of premises comparable to the Premises, in terms of size, quality and comparable term (therefore, two (2) years with respect to the option in Section 4.4 and five (5) years with respect to the option in Section 4.5), in their then-improved state, in the Hillsboro, Oregon market, if such premises were exposed for lease on the open market for a reasonable period of time; including any rent increases over the Extended Term. There shall be deducted from such fair market rental the value of any then market concessions such as free rent, tenant improvements, commissions, legal fees and/or “down time” and there shall be added to such fair market rental the value of all costs savings to Tenant by not moving from the Premises, including, without limitation, relocation costs, tenant paid improvement costs, tenant paid cabling and wiring costs, tenant paid legal fees and other miscellaneous costs such as the cost of notifying Tenant’s customers of Tenant’s change of address and the cost of printing new stationary.

(d) The neutral appraiser’s decision shall be made not later than thirty (30) days after the submission by the appraisers of their proposals with respect to the fair market Base Rent. The parties have included these time

 

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limits in order to expedite the proceeding, but they are not jurisdictional, and the neutral appraiser may for good cause allow reasonable extensions or delays, which shall not affect the validity of the award. Absent fraud, collusion or willful misconduct by the neutral appraiser, the award shall be final, and judgment may be entered in any court having jurisdiction thereof. The option privilege granted herein shall not be assigned under any circumstances other than to a Permitted Transferee unless Landlord shall have consented to such assignment in writing, which consent may be withheld by Landlord in its sole discretion.

4.5 End of Term Option to Extend . Landlord hereby grants Tenant the right to extend the term of the Lease for one (1) additional period of five (5) years (such extended period is hereinafter referred to as the “Extended Term”) on the same terms and conditions contained in the Lease, except that (i) Base Rent for the Extended Term shall be as set forth hereinbelow, (ii) no additional options to extend shall apply following the expiration of the Extended Term, and (iii) Landlord shall have no obligation to make any improvements to the Premises or contribute any amounts therefor. Tenant may exercise the option contained in this Section 4.5 whether or not Tenant timely exercises the option contained in Section 4.4. Written notice of Tenant’s exercise of its option to extend (“Option to Extend”) the Term of this Lease for the Extended Term must be given to Landlord no less than twelve (12) months prior to the date the Term of the Lease would otherwise expire. If Tenant has subleased more than fifty percent (50%) of the Premises to persons or entities that are not Permitted Transferees, Tenant shall have no right to extend the Term of this Lease. In addition, if Tenant is in default under this Lease, Tenant shall have no right to extend the Term of this Lease until such default is cured within the cure period set forth in this Lease for such default, if any; provided, that the period of time within which said Option to Extend may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise said Option to Extend because of a default. In the event Tenant validly exercises its Option to Extend the Term of this Lease as herein provided, Base Rent shall be adjusted as of the commencement date of the Extended Term using the procedures in Section 4.4 (but in no event shall it be less than the Base Rent for the month immediately prior to the commencement of the Extended Term).

ARTICLE V: RENT

5.1 Base Rent . The Base Rent (“Base Rent”) shall be as set forth in Section 1.1(l). The Base Rent shall be paid in advance on the first day of each and every month during the Term to Landlord at the address set forth in Section 1.1(c) hereof or at such other place as Landlord may direct in writing, without any prior notice or demand therefor and without any abatement, deduction, offset, or setoff whatsoever except as specifically permitted in this Lease. If the Term commences on any day other than the first day of a calendar month and/or ends on any day other than the last day of a calendar month, Base Rent for the fraction(s) of a month at the commencement and/or upon the expiration of the Term shall be prorated based upon the actual number of days in such fractional month(s). Simultaneously with execution of this Lease, Tenant shall deposit with Landlord the Prepaid Rent identified in Section 1.1(m), which sum shall be applied by Landlord as indicated in said Section 1.1(m). As reflected in Section 1.1(1), Tenant shall have no obligation to pay monthly Base Rent for the first four (4) full months of the Term, commencing with the Commencement Date (the “Free Rent Period”). If this Lease is terminated during such Free Rent Period, Tenant shall not be entitled to any such rent abatement after the date of termination nor shall Tenant be entitled to assert any right to rent abatement after such termination against any sums due Landlord. The rent abatement granted under this Section is solely for the benefit of Planar Systems, Inc., and shall not be transferable to any assignee or subtenant that is not a Permitted Transferee (as defined below).

5.2 Additional Rent . In addition to Base Rent, Tenant shall pay to Landlord all sums of money or other charges required to be paid by the Tenant under this Lease (other than Base Rent and the Prepaid Rent), including but not limited to Tenant’s Share of Operating Expenses (as defined in Article VI hereof) (all such sums being herein deemed “Additional Rent”), and whether or not the same are designated “Additional Rent” the same shall be payable in lawful money of the United States of America without deduction, set-off or abatement whatsoever. Any Additional Rent provided for in this Lease shall become due with the next monthly installment of Base Rent unless otherwise provided. The term “Rent”, as used in this Lease, shall refer collectively to “Base Rent” and “Additional Rent.”

5.3 Late Payment . If any payment of Rent is not received by Landlord within five (5) days after the same is due, Tenant shall pay to Landlord a late payment charge equal to three percent (3%) of the amount of such delinquent payment of Rent in addition to the installment of Rent then owing, regardless of whether or not a notice of default has been given by Landlord. In addition, Tenant shall pay interest on such late payment and late charge from the due date of the late payment at an interest rate equal to twelve percent (12%), but in no event higher than the maximum rate permitted by applicable law (hereafter the “Default Rate”), until such amounts are paid; provided, however, Tenant shall not be required to pay interest on a late payment the first time in any twelve (12) consecutive month period that Tenant fails to pay an installment of Rent when due so long as Tenant pays such past due Rent within five (5) days of the date notice is sent to Tenant that such Rent is past due. Landlord and Tenant recognize that the damages which Landlord will suffer as a result of Tenant’s failure to timely pay Rent are difficult or impracticable to ascertain, and agree that said interest and late charge are a reasonable approximation of the damages which Landlord will suffer in the event of Tenant’s late payment. This provision shall not relieve Tenant from payment of Rent at the time and in the manner herein specified. Acceptance by Landlord of any such interest and late charge shall not constitute a waiver of Tenant’s default with respect to said overdue amount, nor shall it prevent Landlord from exercising any other rights or remedies available to Landlord.

5.4 Security Deposit . Tenant will simultaneously with execution of this Lease, deposit with Landlord the sum specified in Section 1.1(n) of this Lease. This sum shall belong to Landlord and shall constitute partial consideration for the execution of this Lease. Landlord shall pay Tenant the remaining balance thereof, without any liability for interest thereon, within thirty (30) days after the expiration or prior termination of the Lease Term, or any extension thereof, if and only if Tenant has fully performed all of its obligations under the terms of this Lease. Landlord shall be entitled to withdraw from the deposit the amount of any unpaid Base Rent, Additional Rent or other charges not paid to Landlord when due, and Tenant shall immediately re-deposit an amount equal to that so withdrawn within three (3) days of demand.

 

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ARTICLE VI: ADDITIONAL RENT AND CHARGES

6.1 Operating Expenses . In addition to Base Rent and other sums payable by Tenant under this Lease, Tenant shall pay to Landlord, as Additional Rent, Tenant’s Share of the Operating Expenses (as such term is defined below). Landlord shall manage and operate the Common Areas in a manner consistent with the manner that common areas of commercial projects in Hillsboro, Oregon similar quality to the Project are operated and managed; provided, in no event shall Landlord be required to have an on-site manager for the Building and Common Areas.

(a) Estimated Expenses .

(i) Upon the Commencement of the Lease Term, and thereafter prior to the commencement of each calendar year occurring wholly or partially within the Term or as soon as practical thereafter, Landlord shall estimate the annual Operating Expenses payable by Tenant pursuant to this provision, and Tenant shall pay to Landlord on the first day of each month in advance, one-twelfth (1/12th) of Tenant’s Share of such estimated amount. In the event that during any calendar year of the Term, Landlord determines that the actual Operating Expenses for such year will exceed the estimated Operating Expenses, Landlord may revise such estimate by written notice to Tenant (which written notice shall specify the basis for such revision), and Tenant shall pay to Landlord, concurrently with the regular monthly rent payment next due following the receipt of the revised estimate, an amount equal to the difference between the initial monthly estimate and the revised monthly estimate multiplied by the number of months expired during such calendar year and shall also pay an amount equal to the revised monthly estimate for the month of such payment. Subsequent installments shall be payable concurrently with the regular monthly Base Rent due for the balance of the calendar year and shall continue until the next calendar year’s estimate is rendered or Landlord next revises its estimate of Operating Expenses, whichever occurs sooner. In no event may Landlord include an item in Operating Expenses for a year in which Tenant has previously paid Operating Expenses unless Landlord did not receive notice of such Operating Expenses during the calendar year applicable to the period for which Tenant has previously paid Operating Expenses. During the Free Rent Period, Tenant shall pay Tenant’s Share of Operating Expenses in monthly payments payable on the first day of each month commencing on the Commencement Date.

(ii) Within one hundred twenty (120) days following the end of each year, Landlord shall provide Tenant with a written statement of the actual total Operating Expenses for such year and there shall be an adjustment made to account for any difference between Tenant’s Share of the actual and the estimated Operating Expenses for the previous year. If Tenant has overpaid the amount of Operating Expenses owing pursuant to this provision, Landlord shall, provided Tenant is not in default hereunder, credit such overpayment to the next month in which Additional Rent is due (and if the amount of such credit exceeds the amount of such Additional Rent next due, Landlord shall pay Tenant the difference within thirty (30) days following delivery of such written statement). If Tenant has underpaid the amount of Operating Expenses owing pursuant to this provision, Tenant shall pay the total amount of such deficiency to Landlord as Additional Rent within thirty (30) days following delivery of written notice of said deficiency from Landlord to Tenant.

(iii) Landlord shall keep its books of account and records concerning Operating Expenses in compliance with generally accepted accounting principles and retain the same for two (2) years after the calendar year for which they were prepared. Unless Tenant requests an audit of Operating Expenses pursuant to Section 6.1(c) or objects in writing regarding specific discrepancies in the Operating Expense calculations for any calendar year within ninety (90) days after receipt of Landlord’s final calculations for such calendar year, Tenant shall be deemed to have approved the same and to have waived the right to object to such calculations.

(b) Defined Terms.

(i) Operating Expenses Inclusions . For purposes of this Lease, “Operating Expenses” means an amount equivalent to the total of all expenses and costs incurred in connection with the ownership, operation, management, maintenance, repair and replacement of components of the Building and the Common Areas, including, but in no way limited to, the following:

A. The costs of operating, maintaining and repairing the Building and the Common Areas (subject to amortization in accordance with the method set forth in Section 6.1(b)(i)(G) with respect to any replacements or improvements of a capital nature), including but not limited to: gardening and landscaping; painting; lighting; sanitary control; personal property taxes; public liability insurance and property damage insurance; utilities for Common Areas; licenses and fees for Common Area facilities; sweeping; removal of snow and ice, trash, rubbish, garbage and other refuse; and repairing, restriping and resurfacing of parking area.

B. All Real Property Taxes (as defined below) assessed against the Building and/or the Common Areas, as applicable, including land, building(s) (including the Building) and improvements thereon or thereto.

C. All premiums for liability, terrorism, fire, extended coverage and other insurance the Landlord reasonably deems necessary and keeps in force on or with respect to the Building of which the Premises are a part and/or the Common Areas, as the case may be, and commercially reasonable deductibles payable in connection therewith.

 

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D. The cost of operating, maintaining, repairing and replacing (subject to amortization in accordance with the method set forth in Section 6.1(b)(i)(G) with respect to any replacements or improvements of a capital nature) any electrical, mechanical, automatic fire sprinkler and other utilities systems serving the Premises which serve the Premises in common with the entire Building.

E. The cost of maintenance, repair and replacement of the non-structural portions of the roof and roof membrane, and non-structural repairs of exterior walls, foundation, and other exterior portions of the Building.

F. Reasonable property management charges, not to exceed three and one half percent (3  ¹ / 2 %) of the gross rents payable by Tenant under this Lease.

G. Costs of replacements and improvements which are necessary to adequately maintain or protect the Building and/or the Common Areas, as the case may be, and/or which are required by law or governmental regulation enacted after the date of this Lease, which are of a capital nature (as determined by GAAP accounting) to the extent amortization over the useful life thereof is applicable to the periods during the Lease Term.

H. 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 or governmental authority in connection with the use or occupancy of the Building.

I. Assessments made on or with respect to the Building made pursuant to any CC&Rs, Local Improvement District conditions and/or owner’s associations affecting the Building, or any portion thereof.

J. Reasonable allocation of compensation (including wages and employer paid benefits and taxes) of employees and contractors directly engaged in the operation and maintenance (but not management) of the Building.

(ii) Operating Expense Exclusions. Notwithstanding the foregoing, Operating Expenses to be reimbursed by Tenant shall not include:

A. Expenses which are separately metered or calculated for the Premises or other leased area of the Building, as the case may be, which expenses shall be billed separately to Tenant or such other tenant(s), as applicable.

B. Costs incurred in connection with the initial construction or design of the Building or to correct defects in the original construction or design of the Building.

C. Depreciation.

D. Costs, fines or penalties incurred due to violation by Landlord of any applicable law.

E. Expenses incurred by Landlord in respect of individual tenants and/or the improvement or renovation of tenants’ leasehold improvements, including leasing commissions, attorneys’ fees arising from lease disputes arising out of a tenant’s failure to pay rent under its lease and other specific costs incurred for the account of, separately billed to and paid by specific tenants.

F. Repairs or replacements to the extent that the cost of the same is recoverable by the Landlord pursuant to original construction warranties.

G. Interest on debt or capital retirement of debt, and costs of capital improvements except as expressly provided above.

H. Legal fees and disbursements relating to the entity that owns or manages the Building.

I. Cost of constructing or costs of replacing or making capital improvements to structural portions of exterior walls, foundations, roof or other exterior portions of the Building.

J. Costs incurred due to the gross negligence of Landlord or its agents, employees or contractors performing Landlord’s Work or breach by Landlord of its obligations under any lease.

K. Accounting costs, rent for Landlord’s office space, or pro-rations of corporate overhead (except in each instance those costs that are included as part of the property management charges).

Tenant shall only be required to pay Operating Expenses to the extent the payment of such Operating Expenses are generally consistent with: (i) generally accepted property management principles consistently applied, and (ii) the operating expenses payable by tenants leasing space in commercial projects in Hillsboro, Oregon under triple net leases that are similar to the Project. Additional Rent payable by Tenant which would not otherwise be due until after the date of the expiration or earlier termination of the Lease shall, if the exact amount is uncertain at the time this Lease expires or terminates, be paid by Tenant to Landlord upon such expiration or termination in an amount to be determined by Landlord, with an adjustment to be made once the exact amount is known.

 

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(iii) Tenant’s Share . For purposes of this Lease, “Tenant’s Share” means the percentage, as set forth in Section 1.1(o) and obtained by dividing the Rentable Area of the Premises by the aggregate Rentable Area of all premises available for lease, whether leased or not, in the Building, as applicable with respect to any specific Operating Expense.

(iv) Real Property Taxes . For purposes of this Lease, “Real Property Taxes” shall consist of all real estate taxes and all other taxes relating to the Building and/or the Common Areas, as applicable, all other taxes which may be levied in lieu of real estate taxes, all assessments, local improvement districts, assessment bonds, levies, fees and other governmental charges, including, but not limited to, charges for traffic facilities and improvements, water service studies, and improvements or amounts necessary to be expended because of governmental orders, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements, services, benefits, which are assessed, levied, confirmed, imposed or become a lien upon the Building and/or the Common Areas, or become payable during the Term (or which become payable after the expiration or earlier termination hereof and are attributable in whole or in part to any period during the Term hereof), together with all costs and expenses incurred by Landlord in successfully contesting, resisting or appealing any such taxes, rates, duties, levies or assessments; provided, to the extent any assessment is payable by Landlord over time, Tenant shall only be obligated to pay that portion of such assessment that would have been payable during the term of this Lease if Landlord had elected to pay such assessment over the longest time period legally allowed. “Real Property Taxes” shall exclude any assessments for improvements pertaining to the original development of the Building and any franchise, estate, inheritance or succession transfer tax of Landlord, or any federal or state income, profits or revenue tax or charge upon the net income of Landlord from all sources; provided, however, that if at any time during the Term there is levied or assessed against Landlord a federal, state or local tax or excise tax on rent, or any other tax however described on account of rent or gross receipts or any portion thereof, Tenant shall pay one hundred percent (100%) of the Tenant’s Share of any said tax or excise applicable to Tenant’s Rent as Additional Rent.

(c) Audit Rights. So long as Tenant is not in default of this Lease beyond any applicable cure period, Tenant shall have the right, upon thirty (30) days written request, to review Landlord’s records concerning Operating Expenses for the immediately prior calendar year, which request must be delivered within ninety (90) days after the date Landlord’s annual statement of Operating Expenses is delivered to Tenant. Within thirty (30) days after Tenant makes such request, Landlord shall arrange for Tenant to review such records (either by delivery of a copy of such records to Tenant or allowing Tenant to review Landlord’s records during regular business hours in the location where such records are maintained). If Tenant fails to object in writing to specific Operating Expenses within sixty (60) days after the date Tenant is provided with access to such records, Tenant shall be deemed to have approved the same and to have waived the right to object to such calculations. In no event may Tenant review the Operating Expenses more than one time during a calendar year. Should Tenant choose to hire independent auditors, such auditors shall be paid on an hourly or lump sum basis, not on contingency of any potential refund. If Tenant questions any Operating Expenses, Landlord shall provide reasonably satisfactory evidence of the validity of Landlord’s calculation (which evidence may be in summary statement (as opposed to the original invoice)) or adjust the item. Disputes which cannot be resolved after a reasonable period of good faith negotiations between the parties shall be resolved by a nationally recognized accounting firm selected by Landlord and Tenant (the “CPA”), which CPA shall not then be employed by Landlord or Tenant. If such audit discloses that Tenant has overpaid Tenant’s share of Operating Expenses, Landlord shall give Tenant credit on Operating Expenses with respect to such amount, or if the Lease is at the end of the Term, refund such amount to Tenant. Tenant shall pay all costs and expenses of the audit by the CPA unless the audit shows Landlord overstated Operating Expenses by five percent (5%) or more, in which event the costs of such audit shall be paid by Landlord. Tenant hereby agrees to keep the results of any such audit confidential except that Tenant may disclose such information to its accountants, legal advisors or as otherwise required by law, and to require Tenant’s auditor and its employees and each of their respective attorneys and advisors likewise to keep the results of such audit in strictest confidence.

6.2 Tenant’s Personal Property Taxes. Tenant shall pay or cause to be paid, prior to delinquency, any and all taxes and assessments levied upon all trade fixtures, inventories and other real or personal property placed or installed in and upon the Premises by Tenant. If any such taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property or if the assessed value of the Building is increased by the inclusion therein of a value placed upon such real or personal property or trade fixtures of Tenant, and if Landlord pays the taxes based upon such increased assessment, Tenant shall, upon demand, repay to Landlord the taxes so levied or the portion of such taxes resulting from such increase in the assessment.

ARTICLE VII: INSURANCE

7.1 Landlord’s Insurance. During the Term, Landlord shall procure and maintain in full force and effect with respect to the Building (i) a policy or policies of property insurance (including, to the extent required, sprinkler leakage, vandalism and malicious mischief coverage, and any other endorsements required by the holder of any fee or leasehold mortgage and earthquake, terrorism and flood insurance to the extent Landlord reasonably deems prudent and/or to the extent required by any mortgagee); and (ii) a policy of commercial liability insurance, in the form and content acceptable to Landlord, insuring Landlord’s activities with respect to the Premises, and the Common Areas for loss, damage or liability for personal injury or death of any person or loss or damage to property occurring in, upon or about the Premises or Common Areas. If the annual premiums charged Landlord for such casualty and/or liability insurance exceed the standard premium rates because the nature of Tenant’s operations results in increased exposure, then Tenant shall, upon receipt of appropriate premium invoices, reimburse Landlord for such increased amount. Landlord shall have the right, at its option, to keep and maintain in full force and effect

 

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during the Term such other insurance in such amounts and on such terms as Landlord and/or any mortgagees or the beneficiary of any first trust deed against the Building may reasonably require from time to time in form, in amounts and for insurance risks against which a prudent Landlord would protect itself, including but not limited to rental abatement, rental interruption, earthquake, terrorism and flood insurance.

7.2 Tenant’s Public Liability. Tenant shall, at its own cost and expense, keep and maintain in full force during the Term and any other period of occupancy of the Premises by Tenant, a policy or policies of commercial liability insurance, written by a reputable insurance company authorized to do business in the State of Oregon in form and content acceptable to Landlord insuring Tenant’s activities with respect to the Premises and the Common Areas for loss, damage or liability for personal injury or death of any person or loss or damage to property occurring in, upon or about the Premises in an amount of not less than Five Million Dollars ($5,000,000) combined single limit or such larger amounts as may hereafter be reasonably requested by Landlord. The policy shall insure the hazards of the Premises and Tenant’s operations therein, shall include contractual liability coverage (covering the indemnity contained in Section 7.8 hereof) and shall (a) name Landlord, Landlord’s managing agent and the Landlord’s mortgagee under a mortgage or beneficiary under a deed of trust either having a lien against the Building (the “Lender”) as an additional insured; (b) contain a cross-liability provision and; (c) contain a provision that the insurance provided hereunder shall be primary and non-contributing with any other insurance available to Landlord.

7.3 Tenant’s Property and Other Insurance. Tenant shall, at its own cost and expense, keep and maintain in full force during the Term and any other period of occupancy of the Premises, a policy or policies of standard form property insurance insuring against the perils of fire, extended coverage, vandalism, malicious mischief, special extended coverage and sprinkler leakage. This insurance policy shall be upon all property owned by Tenant, for which Tenant is legally liable or that was installed at Tenant’s expense, and which is located in the Premises, including without limitation, furniture, fittings, installations, cabling, fixtures (other than the improvements installed by Landlord), and any other personal property, in the amount of not less than one hundred percent (100%) of the full replacement costs thereof. This insurance policy shall also insure direct or indirect loss of Tenant’s earning attributable to Tenant’s inability to use fully or obtain access to the Premises.

7.4 Form of Insurance/Certificates. All policies shall be written in a form satisfactory to Landlord and shall be taken out with insurance companies licensed in the state in which the Building is located and holding a General Policy Holder’s Rating of “A” and a financial rating of “X” or better, as set forth in the most current issues of Best’s Insurance Guide. Tenant shall furnish to Landlord, prior to Tenant’s entry into the Premises and thereafter within ten (10) days prior to the expiration of each such policy, a certificate of insurance (or renewal thereof) issued by the insurance carrier of each policy of insurance carried by Tenant pursuant hereto and, upon request by Landlord, a copy of each such policy of insurance. Said certificates shall expressly provide that such policies shall not be cancelable or subject to reduction of coverage below the minimum amounts required by this Lease or required by any lender having an interest in the Building or otherwise be subject to modification except after thirty (30) days prior written notice to the parties named as insured in Section 7.2.

7.5 Tenant’s Failure . If Tenant fails to maintain any insurance required in the Lease, Tenant shall be liable for any loss or cost resulting from said failure, and Landlord shall have the right to obtain such insurance on Tenant’s behalf and at Tenant’s sole expense. This Section 7.5 shall not be deemed to be a waiver of any of Landlord’s rights and remedies under any other section of this Lease. If Landlord obtains any insurance which is the responsibility of Tenant to obtain under this Article VII, Landlord shall deliver to Tenant a written statement setting forth the cost of any such insurance and showing in reasonable detail the manner in which it has been computed and Tenant shall promptly remit said amount as Additional Rent to Landlord.

7.6 Waiver of Subrogation . Any all risk policy or policies of fire, extended coverage or similar casualty insurance which either party obtains in connection with the Building, the Premises or Tenant’s personal property therein shall include a clause or endorsement denying the insurer any rights of subrogation against the other party to the extent rights have been waived by the insured prior to the occurrence of injury or loss. Landlord and Tenant waive any rights of recovery against the other for liability, injury or loss due to hazards covered by insurance containing such a waiver of subrogation clause or endorsement to the extent of the liability, injury or loss covered thereby.

7.7 Tenant’s Properties and Fixtures . Tenant assumes the risk of damage to any furniture, equipment, machinery, goods, supplies or fixtures which are or remain the property of Tenant or as to which Tenant retains the right of removal from the Premises, except to the extent due to the gross negligence or willful misconduct of Landlord. Tenant shall not do or keep anything in or about the Premises (except those things Tenant presently does and keeps in connection with the uses set forth in Section 10.1) which will in any way tend to increase insurance rates paid by Landlord and maintained with respect to the Building unless Tenant pays directly to Landlord the increase cost of the premiums. In no event shall Tenant carry on any activities which would invalidate any insurance coverage maintained by Landlord. If at any time Tenant’s occupancy or business in, or on, the Premises, whether or not Landlord has consented to the same, results in any increase in premiums for the insurance carried by Landlord with respect to the Building, Tenant shall pay any such increase in premiums as Additional Rent within ten (10) days after being billed therefore by Landlord. In determining whether increased premiums are a result of Tenant’s use of the Building, a schedule issued by the organization computing the insurance rate on the Building showing the various components of such rate shall be conclusive evidence of the several items and charges which make up such rate. Tenant shall promptly comply with all reasonable requirements of the insurance underwriters and/or any governmental authority having jurisdiction thereover, necessary for the maintenance of reasonable fire and extended insurance for the Building.

 

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7.8 Indemnification .

(a) Tenant, as a material part of the consideration to be rendered to Landlord, hereby indemnifies and agrees to defend and hold Landlord, Landlord’s managing agent and Lender harmless for, from and against (i) any and all liability, penalties, losses, damages, costs and expenses, demands, causes of action, claims, judgments or appeals arising from any injury to any person or persons or any damage to any property to the extent as a result of Tenant’s or Tenants’ officers, employees, agents, assignees, subtenants, concessionaires, licensees, contractors or invitees’ use, maintenance, occupation, operation or control of the Premises during the Term, or resulting from any breach or default in the performance of any obligation to be performed by Tenant hereunder or for which Tenant is responsible under the terms of the Lease or pursuant to any governmental or insurance requirement, or to the extent arising from any act, neglect, fault or omission of Tenant or any of Tenant’s officers, employees, agents, servants, subtenants, concessionaires, licensees, contractors or invitees, and (ii) from and against all reasonable legal costs and charges, including reasonable attorneys’ and other reasonable professional fees, incurred in and about any of such matters and the defense of any action arising out of the same or in discharging the Building or any part thereof from any and all liens, charges or judgments which may accrue or be placed thereon by reason of any act or omission of the Tenant, except and to the extent as may arise out of the gross negligence or willful misconduct of Landlord and/or its agents, employees or contractors.

(b) Landlord, as a material part of the consideration to be rendered to Tenant, hereby indemnifies and agrees to defend and hold Tenant and the Premises harmless from and against (i) any and all liability, penalties, losses, damages, costs and expenses, demands, causes of action, claims, judgments or appeals arising from any injury to any person or persons or any damage to any property to the extent as a result of Landlord’s or Landlord’s employees, agents, or contractors gross negligence or willful misconduct, or resulting from any breach or default in the performance of any obligation to be performed by Landlord hereunder or for which Landlord is responsible under the terms of the Lease or pursuant to any governmental or insurance requirement, and (ii) from and against all reasonable legal costs and charges, including reasonable attorneys’ and other reasonable professional fees, incurred in and about any of such matters and the defense of any action arising out of the same or in discharging Tenant and/or Premises or any part thereof from any and all liens, charges or judgments which may accrue or be placed thereon by reason of any act or omission of the Landlord, except and to the extent as may arise out of the negligence or willful misconduct of Tenant and/or its officers, agents, employees, assignees, subtenants, concessionaires, licensees, contractors, or invitees.

(c) In no event shall Landlord, its agents, employees and/or contractors be liable for any personal injury or death or property damage to the extent caused by persons in or about the Building (other than arising out of a default by Landlord of its obligations under this Lease or the gross negligence or willful misconduct of Landlord or Landlord’s agents, employees or contractors), as the case may be, or caused by public or quasi-public work, or for consequential damages arising out of any loss of the use of the Premises or any equipment or facilities therein by Tenant or any person claiming through or under Tenant.

7.9 Damage to Tenant’s Property . Notwithstanding the provisions of Section 7.8 to the contrary, except to the extent due to the gross negligence or willful misconduct of Landlord or to the extent arising out of a default by Landlord of its obligations under this Lease, Landlord, its agents, employees and/or contractors shall not be liable for (i) any damage to property entrusted to employees or security officers of the Building, (ii) loss or damage to any property by theft or otherwise, or (iii) any injury or damage to persons or property resulting from fire, explosion, falling substances or materials, steam, gas, electricity, water or rain which may leak from any part of the Building or the Common Areas, or from the pipes, appliances or plumbing work therein or from the roof, street, or subsurface or from any other place or resulting from dampness or any other cause, except to the extent Landlord receives consideration for such damage or injury from a third party. Neither Landlord nor its agents, employees or contractors shall be liable for interference with light or incorporeal hereditaments. Tenant shall give prompt notice to Landlord and appropriate emergency response officials if Tenant is or becomes aware of fire or accidents in the Building or the Common Areas or of defects therein in the fixtures or equipment.

ARTICLE VIII: REPAIRS AND MAINTENANCE

8.1 Landlord Repairs and Maintenance .

(a) Subject to Landlord’s right to reimbursement from Tenant pursuant to Sections 6.1 and 8.3, Landlord shall at its expense maintain in good condition and repair the structural portions of the Building including without limitation the foundation, roof and membrane and shall maintain in good condition the exterior of the Building, utilities to their point of connection to the Building and the Common Areas. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need for such repairs or maintenance is given to Landlord by Tenant. Except as provided in Section 8.1(b) below, there shall be no abatement of Rent and, except for the gross negligence or willful misconduct of Landlord or its employees, no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvement in or to any portion of the Premises or in or to fixtures, appurtenances and equipment therein; provided, that Landlord, its employees, agents and contractors use reasonable efforts not to unreasonably interfere with Tenant’s business in exercise of Landlord’s rights or obligations hereunder. Except as may otherwise be expressly set forth herein, Tenant affirms that (i) neither Landlord nor any agent, employee or officer of Landlord has made any representation regarding the condition of the Building or the Common Areas, and (ii) Landlord shall not be obligated to undertake any repair, alteration, remodel, improvement, painting or decorating.

(b) If Tenant believes that Landlord has not performed a repair that Landlord is obligated to repair under Section 8.1(a), Tenant shall give Landlord written notice of such repair required to be performed by

 

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Landlord and Landlord shall within thirty (30) days of the date of such notice either: (i) complete such repair within thirty (30) days of the date of Tenant’s notice, (ii) notify Tenant in writing that Landlord disputes the need for Landlord to make such repair, or (iii) notify Tenant in writing that Landlord will commence such repairs and diligently pursue the completion of such repairs to completion if such repairs will not be completed within thirty (30) days of the date of Tenant’s notice. If within such thirty (30) day period after the date of Tenant’s written notice to Landlord, Landlord does not take any of the actions described in clauses (i), (ii) or (iii) in the immediately preceding sentence, Tenant may send Landlord a second notice specifying the actions in reasonable detail that Tenant intends to take to perform such repair and the date Tenant intends to commence such actions, which date shall be not less than five (5) business days after the date Landlord receives such notice. If during such five (5) business day period Landlord does not notify Tenant that Landlord has commenced either the repairs that Tenant proposes to undertake or such other repairs as Landlord determines appropriate in Landlord’s reasonable business judgment, Tenant may undertake repairs which would be Landlord’s responsibility and Landlord shall reimburse Tenant for the reasonable costs so incurred within thirty (30) days after notice, which notice shall be accompanied by paid receipts. If Landlord does not timely pay Tenant for such repairs, Tenant may deduct the cost thereof from the Monthly Base Rent next coming due, up to twenty-five percent (25%) of Tenant’s Monthly Base Rent, until the cost thereof is fully accounted for; provided, however, if at the time Tenant is entitled to commence such abatement of Monthly Base Rent the remaining term of this Lease is not sufficiently long enough for a full recovery of such abatement, Tenant may increase the percentage of such abatement (and, if necessary abate Additional Rent) so as to enable Tenant to fully recover such amount during the Term of this Lease. In no event shall Tenant’s repair and maintenance self-help remedies include any right to rebuild or repair the Building or Common Areas following any damage or destruction to the Building or Common Areas, it being agreed that Tenant’s sole remedy with respect to any such damage or destruction is contained in Article XI of this Lease.

8.2 Utilities and Services . Subject to reimbursement pursuant to Sections 6.1 and 8.3, Landlord shall furnish or cause to be furnished to the Premises lines for water, electricity, sewage and telephone. Tenant shall pay before delinquency, at its sole cost and expense, all charges for water, heat, electricity, power, telephone service, sewer service charges and other utilities or services charged or attributable to the Premises; provided, however, that if any such services or utilities shall be billed to Landlord and are not separately billed to the Premises, Tenant shall pay to Landlord as Additional Rent, an amount equal to the total charges therefor. Tenant shall provide such janitorial service to the Premises at Tenant’s sole cost and expense as Tenant determines appropriate. If Landlord is provided with written notice that any utility service to the Building will be suspended for any material period of time, Landlord shall use commercially reasonable efforts to provide Tenant with a copy of such notice.

8.3 Tenant Repairs and Maintenance . Tenant shall, at Tenant’s sole cost and expense, keep, maintain and, to the extent reasonably required, replace any applicable portions of the Premises (other than those portions of the Premises that Landlord is required to maintain under Sections 8.1 and 8.2) , including but not by way of limitation, all interior walls, doors, ceiling, light bulbs, starters and ballasts, carpets and floor coverings, and heating, ventilation, air-conditioning and other utility and mechanical systems within the Premises to the extent serving the Premises exclusively, in good repair and in a clean and safe condition; provided, that Landlord shall have the right to perform such work on behalf of Tenant in which event Tenant shall reimburse Landlord for the cost thereof promptly upon demand therefor. In addition, if any repair or maintenance is necessary or prudent under Section 8.1 or 8.2 as a result of an act or omission of Tenant or its agents, employees or contractors, Tenant shall reimburse Landlord for the entire cost of any such repair or maintenance immediately upon written demand therefor. Except in an emergency or to the extent required to comply with applicable laws, Landlord shall not commence such repairs or maintenance prior to providing Tenant with a notice and opportunity to make such repairs consistent with the notice procedures contained in Section 8.1(b). Upon expiration or earlier termination of the Term, Tenant shall surrender the Premises to Landlord in the same condition as when leased, reasonable wear and tear and damage by fire or other casualty not required to be repaired by Tenant pursuant to this Lease excepted. Tenant shall not be required to replace the carpets and floor coverings at the expiration of the Term of this Lease.

8.4 Non-liability of Landlord . Notwithstanding anything to the contrary contained in Sections 8.1 or 8.2 above or elsewhere in this Lease (except to the extent such failure or delay is caused by accident or any condition created by Landlord’s active negligence), Landlord shall not be in default hereunder or be liable for any damages directly or indirectly resulting from, nor shall the Rent herein reserved be abated or rebated (except as otherwise expressly provided in this Lease) by reason of (a) the interruption or curtailment of the use of the Premises as a result of the installation of any equipment in connection with the Building; or (b) any failure to furnish or delay in furnishing any services required to be provided by Landlord, unless and to the extent such failure or delay is caused by accident or any condition created by Landlord’s active negligence or by a default by Landlord of its obligations under this Lease; or (c) the limitation, curtailment, rationing or restriction of the use of water or electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises.

8.5 Inspection of Premises . Upon reasonably prior notice to Tenant, Landlord may enter the Premises to complete construction undertaken by Landlord on the Premises, to inspect, clean, improve or repair the same, to inspect the performance by Tenant of the terms and conditions hereof, show the Premises to prospective purchasers, tenants and lenders and for all other purposes as Landlord shall reasonably deem necessary or appropriate; provided, that Landlord shall use reasonable efforts not to interfere with Tenant’s business in exercise of Landlord’s rights hereunder. If requested by Tenant, Landlord shall allow a representative of Tenant to accompany Landlord during such entry; provided that Landlord shall not be refused entry if Tenant fails to provide such representative of Tenant to accompany Landlord. In an emergency, Landlord may enter at any time without prior notice to Tenant and without being accompanied by a representative of Tenant. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises and any other loss in, upon or about the Premises, arising from exercise by Landlord of its rights hereunder except as otherwise provided in Article XI hereof. Landlord and Landlord’s agents, employees and contractors shall keep confidential any non-public information regarding Tenant obtained from such entry onto the Premises.

 

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ARTICLE IX: FIXTURES, PERSONAL PROPERTY AND ALTERATIONS

9.1 Fixtures and Personal Property . Tenant, at Tenant’s expense, may install any necessary trade fixtures, equipment and furniture in the Premises, provided that such items are installed and are removable without damage to the structure of the Premises, including, but not limited to, damage to drywall, doors, door frames and floors. Landlord reserves the right to approve or disapprove of any interior improvements which violate the CC&Rs. Such improvements must be submitted for Landlord’s written approval prior to installation, or Landlord may remove or replace such items at Tenant’s sole expense. Said trade fixtures, equipment, personal property and furniture shall remain Tenant’s property and shall be maintained in good condition while on the Premises and, subject to Section 3.1(c), shall be removed by Tenant upon the expiration or earlier termination of the Lease unless otherwise agreed to by Landlord in writing prior to installation. As a covenant which shall survive the expiration or earlier termination of the Lease, Tenant shall repair, at Tenant’s sole expense, or at Landlord’s election, reimburse Landlord for the cost to repair all damage caused by the installation or removal of said trade fixtures, equipment, furniture, personal property or temporary improvements. If Tenant fails to remove the foregoing items prior to or upon the expiration or earlier termination of this Lease (to the extent Tenant is required under this Lease to do so), Landlord, at its option and without liability to Tenant for loss thereof, may keep and use them or remove any or all of them and cause them to be stored or sold in accordance with applicable law, and Tenant shall, upon demand of Landlord, pay to Landlord as Additional Rent hereunder all costs and expenses incurred by Landlord in so storing and/or selling said items. In the event any such fixtures, equipment, and/or furniture of Tenant are sold by Landlord, the proceeds of such sale shall be applied, first, to all expenses of Landlord incurred in connection with storage and sale; second, to any amounts owed by Tenant to Landlord under this Lease or otherwise, and, third, the remainder, if any, shall be paid to Tenant.

9.2 Alterations . Tenant shall not make or allow to be made any material alterations, additions or improvements to the Premises (defined as alterations, additions or improvements costing in excess of $10,000.00 individually or in the aggregate with respect to separate items relating to the same improvement or alteration or any alterations, additions or improvements that affect the structure or exterior of the Building or any building, mechanical, electrical or life safety system), other than the Tenant Improvements during the Term, without obtaining the prior written consent of Landlord which consent shall not be unreasonably withheld, conditioned or delayed, provided that such consent may be withheld in