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LEASE AGREEMENT

Lease Agreement

LEASE AGREEMENT | Document Parties: UCN INC | Raddon Union Heights, LLC | UCN, Inc You are currently viewing:
This Lease Agreement involves

UCN INC | Raddon Union Heights, LLC | UCN, Inc

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Title: LEASE AGREEMENT
Date: 4/1/2008
Industry: Communications Services     Sector: Services

LEASE AGREEMENT, Parties: ucn inc , raddon union heights  llc , ucn  inc
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Exhibit 10.36

U NION H EIGHTS O FFICE B UILDING

Sandy, Utah

L EASE A GREEMENT

Landlord:

RADDON UNION HEIGHTS, LLC

T ENANT :

UCN, INC.

U NION H EIGHTS O FFICE B UILDING

L EASE S UMMARY

 

1. Landlord: Raddon Union Heights, LLC.

 

2. Tenant: UCN, Inc.

 

3. Leased Premises: All of the fourth and fifth floors of the Building.

 

4. Square Footage of Leased Premises: Approximately 49,716 RSF and 46,248 useable square feet.

 

5. Square Footage of Building: Approximately 140,907 RSF.

 

6. Nonexclusive Parking Spaces: In compliance with Legal Requirements; provided that Tenant will have the non-exclusive use of 6.0 parking spaces per 1,000 usable square feet in Leased Premises.

 

7. Term of Lease: 66 consecutive months following the Commencement Date.

 

8. Commencement Date: December 1, 2007 (subject to Section 3.1).

 

9. Monthly Rent: $23.00 per RSF of Leased Premises (approximately $95,289.00 per month, subject to adjustment when completed.).

 

10. Free Rent Period: Monthly Rent is abated for the first six (6) months following the Commencement Date as to all of the Leased Premises, and Monthly Rent is abated thereafter for three (3) additional months but only as to 11,000 rentable square feet of the Leased Premises (i.e., Tenant shall pay Monthly Rent as to the balance of the Leased Premises). Additional Rent shall not be abated during the Free Rent Period.

 

11. Rent Escalations: Three percent (3.00%) per year.

 

12. Tenant’s Proportionate Share: Approximately 35.283% of Operating Expenses.

 

13. Base Year: 2008.

 

14. Tenant Improvement Allowance: $30.00 per Usable Square Foot of Leased Premises or approximately $1,387,440.00.

 

15. Option to Extend: One (1) five (5) year extension (See Section 3.2).

 

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16. Security Deposit: None.

 

17. Notice Addresses:

 

L ANDLORD :

 

Raddon Union Heights, LLC

c/o Raddon Brothers Construction, Inc.

1111 E Draper Parkway, Suite 101

Draper, UT 84020

Phone: 801-576-9451 or 801-576-1553 Fax: 801-576-9452

  

T ENANT :

 

UCN, Inc. 14870 Pony Express Road

Bluffdale, Utah 84065

Phone: 801-320-3200

Fax: 801-320-3531

with a copy to:    with a copy to:

Parr Waddoups Brown Gee & Loveless

185 S State Street, Suite 1300

Salt Lake City, UT 84111-1537

Attn : David E . Gee, Esq .

  

Parsons Behle & Latimer

201 S Main Street, Suite 1800

Salt Lake City, UT 84111

Attn: Jason S. Nichols, Esq.

 

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U NION H EIGHTS O FFICE B UILDING

L EASE A GREEMENT

This Lease Agreement (“ Lease ”) is entered into as of June             , 2007, by and between Raddon Union Heights, LLC, a Utah limited liability company (“ Landlord ”), and UCN, Inc., a Utah corporation (“ Tenant ”) (each, a “ Party ”, collectively, the “ Parties ”).

The Lease Summary above is intended only as a convenient summary of certain terms of this Lease. In the event of a conflict between the Lease Summary and this Lease, this Lease shall govern.

Landlord and Tenant agree as follows:

1. Definitions. As used in this Lease, the terms set forth below shall have the following meanings:

1.1 Additional Rent : Defined in Section 4.2.

1.2 Affiliates : Agents, contractors, employees, invitees, licensees, and/or assignees, as the context requires.

1.3 Appraisal : An unbiased analysis and opinion by an Appraiser as to the Fair Market Rental Value.

1.4 Appraisal Demand Notice : A written notice demanding an Appraisal delivered by a Party pursuant to the terms of Section 3.2.

1.5 Appraiser : A “state certified general appraiser” (as that term is defined in Utah Code Annotated Section 61-2b-2(15)) who has at least ten (10) years of experience in appraising commercial office building projects in Salt Lake County, Utah.

1.6 Base Year : 2008 (provided that such consists of a full operating and assessed year).

1.7 Building : Defined in Section 2.1(a).

1.8 Commencement Date : The Commencement Date shall be the last to occur of December 1, 2007 or the Delivery Date. The “ Delivery Date ” is ninety (90) days after both of the following are satisfied: (i) the final Plans (as defined on Exhibit “B”) are completed and approved by all governmental authorities; and (ii) bids are approved by UCN. Landlord shall provide Tenant access to the Leased Premises prior to the Commencement Date to perform wiring and other work at such time as Landlord completes the Building in accordance with Exhibit B to a point where it can allow Tenant to safely begin Tenant’s Work; provided, Tenant acknowledges that Landlord and Landlord’s contractor shall be completing Landlord’s Work (as defined on Exhibit “B”), and Tenant’s entry for such purpose shall be subject to the reasonable supervision of Landlord and Landlord’s contractor. If the Delivery Date occurs on or before October 1, 2007 but Tenant is not permitted to occupy the Leased Premises on or before December 31, 2007, and, as a result, Tenant must continue to occupy its existing premises on a “hold-over” basis, then Tenant shall be provided a credit against Rent in the amount of $9,985.20 for month or partial month beyond December 31, 2007 that Tenant is not permitted to occupy the Leased Premises, but only if and to the extent Tenant actually pays such amount to its existing landlord. Tenant’s entry prior to the Commencement Date for the limited purposes described above shall be free of charge; provided, Tenant shall indemnify, hold harmless and defend Landlord against any damage or caused by Tenant or its agents and contractors. If the Commencement Date does not occur on or before 180 days after the Delivery Date then, except if delayed for reasons of force majeure , Tenant shall have the right to terminate this Lease.

1.9 Common Areas : (a) all hallways, corridors, foyers, restrooms, porches, entryways, doorways, walkways, driveways, landscaped areas and other elements of the Property which are for the joint use of the tenants of the Building and their respective customers, employees, and invitees, including those Parking Areas

 

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located on the Property, notwithstanding that a portion of such elements are included in the calculation of the Rentable Square Feet contained within the Leased Premises (hereafter referred to as the “ Property Common Areas ”); and (b) the Parking Areas (except to the extent located on the Property), walkways, driveways, and landscaped areas located in the Project (but excluding any such areas located on the Property), (hereafter referred to as the “ Project Common Areas ”), and the benefits and burdens of any easement, and parking and other rights provided by any declaration of covenants, conditions, and restrictions affecting the Property and the Project, including the Declaration of Covenants, Restrictions and Easements dated February 28, 2005 (the “ Easements Declaration ”). The Property Common Areas and the Project Common Areas are collectively referred to as the “ Common Areas ”.

1.10 Condemnation Proceeding : Any action or proceeding in which an interest in the Leased Premises is taken for any public or quasi-public purpose by any lawful authority through exercise of the power of eminent domain or right of condemnation or by transfer under threat of condemnation.

1.11 Condominium Declaration : Declaration of Condominium for Raddon Union Heights Condominiums recorded March 1, 2005 as Entry No. 9311073 in Book 9100 at Page 1384 of the Official Records of the Salt Lake County Recorder as amended by Supplement Concerning Convertible Land to Declaration of Condominium for Raddon Union Heights Condominiums dated January 5, 2007.

1.12 Fair Market Rental Value : The fair market value of the Leased Premises, determined in comparison to Class A buildings in the Union Heights and Cottonwood market area.

1.13 Free Rent Period : Monthly Rent is abated for the first six (6) months following the Commencement Date as to all of the Leased Premises, and Monthly Rent is abated thereafter for three (3) additional months but only as to 11,000 rentable square feet of the Leased Premises (i.e., Tenant shall pay Monthly Rent as to the balance of the Leased Premises). Additional Rent shall not be abated during the Free Rent Period.

1.14 Hazardous Materials : Any hazardous or toxic substance, material, or waste which now is or at any time hereafter becomes regulated or restricted by any governmental authority having jurisdiction over the Property. “ Hazardous Materials ” includes, without limitation, any petroleum products or byproducts, asbestos (in any form), chemicals, gases, or any other material or substance which upon exposure or ingestion may reasonably be anticipated to pose a hazard to the health or safety of the anticipated occupants of, or visitors to, the Property.

1.15 Initial Term : The Term, but specifically excluding the Extension Term.

1.16 Landlord’s Broker : Greg Gunn and Brandon D. Fugal of Coldwell Banker Commercial NRT.

1.17 Lease Summary . The Lease Summary (at the beginning of this Lease) serves as a convenient location for and summary of certain provisions of this Lease. The Lease Summary is part of this Lease, but must be interpreted in light of the provisions in the body of the Lease.

1.18 Legal Requirement . Any federal, state, or local law, statute, ordinance, code, rule, regulation, order, or decree applicable to a specified matter.

1.19 Monthly Rent : Gross monthly rent in the amount set forth in Section 9 of the Lease Summary. Monthly Rent is subject to a 3% annual increase for each Year of the Term, beginning in 2008.

1.20 Mortgagee : The holder of any mortgage, the beneficiary under any deed of trust, or the holder of any other similar security interest which encumbers the Property or any part thereof.

 

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1.21 Notice Addresses : The addresses listed for Landlord and Tenant on the Lease summary, as modified from time to time by either Party in a writing delivered to the other Party.

1.22 Operating Expenses :

(a) All costs, expenses, and amounts which are incurred by Landlord during the period in question or which are allocable to such period in connection with Landlord’s ownership, operation, management, or maintenance of the Property and Common Areas, including, without limitation: (1) premiums and deductibles for insurance carried with respect to the Property and Common Areas; (2) costs of supplies, materials, equipment, and utilities used in or related to the operation, maintenance, and repair of the Property and Common Areas; (3) labor costs, including without limitation, salaries, wages, payroll and other taxes, unemployment insurance costs, and employee benefits; (4) maintenance, management, janitorial, inspection, legal, accounting, and service agreement costs related to the operation, maintenance, and repair of the Property and Common Areas, including, without limitation, service contracts with independent contractors; (5) costs associated with maintaining office space for a Building manager and security personnel, including overhead and accounting expenses; (6) property taxes associated with ownership of the Property and Common Areas; and (7) costs of capital improvements, maintenance, or repairs made to the Property and Common Areas after the Commencement Date, including, without limitation, costs of: (A) reducing Operating Expenses, (B) improving the operating efficiency of the Building or Common Areas, (C) extending the life of the Building or Common Areas, and (D) bringing the Building or Common Areas into compliance with changing Legal Requirements; provided, such costs shall be either, in Landlord’s sole and reasonable discretion, (i) amortized over the useful economic life of the improvements (without regard to the period over which such improvements may be depreciated for federal income tax purposes), or (ii) recovered in each year to the extent that, in Landlord’s reasonable determination, the improvements reduced Operating Expenses for the applicable year.

(b) “ Operating Expenses ” does not include: (1) leasing commissions; (2) repair costs paid by insurance proceeds or by any tenant or third party; (3) the initial construction cost of the Building and the Common Areas and any depreciation thereof; (4) debt service or costs related to the sale or financing of the Property; (5) the cost of tenant improvements provided for any tenant; (6) the cost of services provided to tenants for which a separate charge is made, including, without limitation, the cost of any service provided by Landlord to specific tenants that is not uniformly available to or performed for substantially all Building tenants (such cost to be allocated equitably among, and billed directly to, the tenants benefiting from the service); (7) costs arising from the gross negligence or willful misconduct of Landlord; (8) capital expenditures (except as provided subsection (a) above or elsewhere in this Lease); (9) costs of repair, restoration or other work occasioned by initial defective construction; (10) costs, fines and penalties due to Landlord’s intentional or grossly negligent violation of Legal Requirements; (11) costs and expenses associated with hazardous materials, waste or toxic substances; or (12) collection costs due to Landlord’s or any other tenant’s violation of terms and conditions of any lease.

1.24 Parking Areas : The areas within the Property or the Project designated by Landlord as suitable for parking by Tenant, other Building tenants, and their Affiliates including, without limitation, the Parking Unit.

1.25 Parking Unit: means the Parking Unit as defined in the Condominium Declaration. The Parking Unit is adjacent to the Property.

1.26 Permitted Assignee : (a) A person or entity that controls Tenant, is controlled by Tenant, or is under common control with Tenant (“ control ” meaning ownership of greater than fifty percent (50%) of the equity interest in the controlled entity); and/or (b) a person or entity that acquires substantially all of the assets or stock of Tenant.

1.27 Project. The larger mixed-use development of which the Property is a part, as described in and governed by the Condominium Declaration.

 

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1.28 Rent : Monthly Rent and Additional Rent collectively.

1.28 Rentable Square Feet (RSF) : Rentable square feet as measured according to ANSI/BOMA Standard Z65.1-1996 (or any successor standard).

1.26 Rules and Regulations : The Rules and Regulations set forth on Exhibit C hereto, as amended from time to time by Landlord.

1.27 Tenant Alterations . Defined in Section 9.1.

1.28 Tenant’s Broker : Brandon D. Fugal of Coldwell Banker Commercial NRT.

1.29 Tenant Improvement Allowance : Defined in Section 5.2.

1.30 Tenant’s Proportionate Share : The percentage determined by dividing the Rentable Square Feet of the Leased Premises (see Lease Summary Section 4) by the aggregate amount of Rentable Square Feet in the Building (see Lease Summary Section 5).

1.31 Term : The Initial Term set forth in Section 7 of the Lease Summary. If Tenant exercises its Option to Extend, “Term” shall include the Extension Term, unless otherwise specified or otherwise required by the context.

1.32 Useable Square Feet (USF) : Usable square feet as measured according to ANSI/BOMA Standard Z65.1-1996 (or any successor standard).

1.33 Year : A calendar year during the Term other than the Base Year.

2. Leased Premises.

2.1 Description of Leased Premises . Landlord does hereby demise, lease, and let unto Tenant, and Tenant does hereby take and receive from Landlord the following:

(a) That certain floor area containing approximately the number of rentable square feet set forth in Section 4 of the Lease Summary (“ Leased Premises ”) on the fourth and fifth floors of the Union Heights Office Building (“ Building ”), located at approximately 7730 South Union Park Avenue, Midvale Utah 84047, on certain real property located in Salt Lake County, Utah, which is referenced in the Condominium Declaration as Convertible Land A or Unit 6, a legal description of which is attached hereto as Exhibit A (“ Property ”). For all purposes of this Lease, the calculation of Rentable Square Feet contained within the Leased Premises and the Building shall be subject to final measurement and verification by Landlord’s architect prior to the Commencement Date, and in the event of any variation, Landlord and Tenant shall amend this Lease accordingly. Tenant shall have the right to independently verify the calculation of rentable square feet contained within the Leased Premises and the Building; provided, any objection to the measurement of Landlord’s architect shall be made in writing within ten (10) business days after Tenant is provided with such measurement and the burden shall be on Tenant to prove the measurement by Landlord’s architect to be clearly incorrect.

(b) In connection with renting and leasing the Leased Premises, Tenant shall have the non-exclusive right to use the Common Areas. Subject to rules and regulations promulgated by Landlord or its successors (“ Rules and Regulations ”), Tenant and its employees and patrons shall have the non-exclusive right to use the number of exclusive parking spaces (located in the Parking Areas) set forth on the Lease Summary. Landlord agrees that the Rules and Regulations shall be reasonable, uniformly applied to all tenants and not

 

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deprive Tenant of any material benefit provided under the Lease. The exact location of Tenant’s parking spaces within the Parking Areas shall be specified by Landlord.

2.2 Limitation . The Leased Premises do not include, and Landlord reserves, the exterior walls and roof of the Leased Premises, the land and other area beneath the floor of the Leased Premises, the pipes, ducts, conduits, wires, fixtures and equipment above the suspended ceiling of the Leased Premises, and the structural elements that serve the Leased Premises or comprise the Building. Landlord’s reservation includes the right with reasonable notice in the circumstance to install, inspect, maintain, use, repair, alter, and replace the foregoing areas and items and to enter the Leased Premises at any and all times in order to do so. If the rights of Landlord exercised pursuant to this Section materially and adversely interfere for a period of more than six (6) consecutive business days with the conduct of Tenant’s business in the Leased Premises and such interference is reasonably avoidable by Landlord, then the Monthly Rent payable under this Lease shall abate, from such sixth (6 th ) day until such material adverse interference terminates, in proportion to the extent of such interference, as the same may vary from time to time.

2.3 Right of First Offer . During the Term, Tenant shall have a right of first offer to lease all space on the third and sixth floors of the Building (“ Right of First Offer Space ”) as and when the same becomes available for lease. If such space becomes available during the Term, Landlord shall notify Tenant of the availability and the proposed Monthly Rent therefore, and Tenant shall have seven (7) business days from the receipt of such notification to elect to lease such Right of First Offer Space on the same terms and conditions set forth herein except Monthly Rent which shall be the Fair Market Rental Value (but as determined for the Right of First Offer Space). The tenant improvement allowance applicable to the Right of First Offer Space shall be determined by prorating the Tenant Improvement Allowance over the remainder of the Initial Term. The term for all Right of First Offer Space shall be coterminous with the Term of this Lease. Notwithstanding the foregoing:

(a) This Right of First Offer is subject to prior rights granted to tenants with respect to leases covering the sixth floor (Coldwell Banker) and the third floor (Ameriprise Financial Services, Inc.).

(b) In addition, this Right of First Offer shall not initially apply to any space on the third floor as to which Landlord has executed a lease or letter of intent prior to December 1, 2007. On or before December 1, 2007, Landlord shall provide Tenant with a written notice of any space on the third floor as to which a lease or letter of intent has been executed which shall identify the space being taken and the proposed tenant. If the proposed tenant under the lease or letter of intent does not take occupancy, the space will become subject to Tenant’s right of first offer set forth in this Section. Likewise, upon the expiration or earlier termination of the initial lease with said proposed tenant, absent said tenant’s renewal or extension of its lease for said space, said space will become subject to Tenant’s right of first offer granted herein.

(c) The maximum parking spaces that shall be available for the third and sixth floors shall be four spaces per 1,000 usable square feet.

3. Term.

3.1 Commencement Date and Obligation to Pay Rent . The Term of this Lease and, subject to Section 4.3, Tenant’s obligation to pay Monthly Rent hereunder shall begin on the Commencement Date and shall continue for the period set forth in Section 7 of the Lease Summary.

3.2 Option to Extend .

(a) Tenant shall have one option to extend the Lease (“Option to Extend”) for a period of five (5) years (“Extension Term”). Tenant must notify Landlord at least one hundred twenty (120) days before the expiration of the Initial Term of its intent to exercise its Option to Extend. The Extension Term shall begin immediately after the expiration of the Initial Term. The Extension Term shall be subject to all the terms of

 

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this Lease (other than the length of the term), except that Monthly Rent shall be set at Fair Market Rental Value, determined as of the commencement of the Extension Term.

(b) If Tenant exercises its Option to Extend, Landlord and Tenant shall negotiate in good faith to reach agreement on the Fair Market Rental Value of the Leased Premises for the Extension Term. If Landlord and Tenant do not agree on the Fair Market Rental Value by one hundred eighty (180) days before the commencement of the Extension Term, then either Landlord or Tenant may deliver the Appraisal Demand Notice, in which event the Fair Market Rental Value shall be determined pursuant to Section 3.2(c).

(c) Within five (5) business days after delivery of an Appraisal Demand Notice, Landlord and Tenant shall designate one (1) Appraiser by written notice to the other party. Each appointed Appraiser shall then, within five (5) business days, select a third Appraiser who shall determine the Fair Market Rental Value. Each Party shall pay the fees and costs of its selected Appraiser and one-half (2) of the fees and costs of the third Appraiser.

3.3 Tenant’s Certificate . Tenant shall, from time to time, within twenty (20) days after receipt of Landlord’s written request, execute and deliver to Landlord a written certificate in recordable form: (a) ratifying this Lease; (a) setting forth the Commencement Date and termination date hereof; (b) certifying that this Lease is in full force and effect and has not been assigned, modified, supplemented, or amended (except by such writings as shall be stated); (c) stating that, to the best of Tenant’s knowledge, all conditions under this Lease to be performed by Landlord have been satisfied (or stating which conditions remain unsatisfied); (d) stating that, to the best of Tenant’s knowledge, there are no defenses or offsets against the enforcement of this Lease by Landlord (or stating those claimed by Tenant); (e) verifying the amount of advance rental, if any, paid by Tenant; (f) stating the date through which rental has been paid; and (g) setting forth such other information as Landlord may reasonably request. Landlord, Landlord’s mortgage lenders, and any purchasers of all or a portion of the Building shall be entitled to rely upon such certificate.

3.4 Landlord’s Certificate . Within twenty (20) days after the request by Tenant, Landlord agrees to deliver to Tenant and to any potential mortgagee, assignee or purchaser of Tenant’s interest in the Leased Premises an estoppel certificate, in form and substance reasonably satisfactory to both parties, certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, whether same is in full force and effect as modified, and stating the modifications); that, to Landlord’s actual knowledge and belief, there are no defenses or offsets thereto (or stating those claimed by Landlord); that there are no defaults by Landlord or, to the actual knowledge and belief of Landlord, on the part of Tenant (or, if such defaults exist, stating their nature). No estoppel certificate provided pursuant to this provision shall amend or modify this Lease.

4. Rent.

4.1 Monthly Rent . Tenant agrees to pay to Landlord at Landlord’s Notice Address, without prior demand therefor and without any deduction or offset whatsoever, the Monthly Rent set forth in Section 9 of the Lease Summary. Monthly Rent is due in advance on the first day of each calendar month during the Term of this Lease. Monthly Rent for any partial month shall be prorated on a per diem basis. Monthly Rent, as previously adjusted, shall automatically be increased by three percent (3%) each Year, beginning in 2008.

4.2 Additional Rent .

(a) Yearly Statement . After the end of each calendar year of the Term following the Base Year, including the last year of the Term (“ Year ”), Landlord shall provide to Tenant a statement (“ Yearly Statement ”) detailing the Operating Expenses for the Year and billing Tenant for Tenant’s Proportionate Share of the Operating Expenses which are in excess of Base Year Operating Expenses (“ Excess Operating Expenses ”). Within thirty (30) days after its receipt of the Yearly Statement, including the Yearly Statement delivered after the end of the Term for the last Year of the Term, Tenant shall pay Tenant’s Proportionate Share of the Excess Operating Expenses (“ Additional Rent ”).

 

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(b) Gross-Up . Notwithstanding Section 4.2(a), if the Building is less than 95% occupied during any Year, Operating Expenses shall be calculated as if the Building were 95% occupied during such Year.

(c) Partial Year . Landlord shall prorate Tenant’s Proportionate Share of Excess Operating Expenses for any partial Year during the Term based on the number of days in such partial Year occurring during the Term.

(d) Monthly Payment of Additional Rent . Notwithstanding Section 4.2(a), Landlord may at any time require Tenant to pay Additional Rent on a monthly basis (in addition to Monthly Rent), based on Landlord’s reasonable estimate of the Operating Expenses for the applicable Year or portion thereof. Such monthly payments shall prorated based on the number of months covered by the period of Landlord’s estimate. After the end of each Year during which Tenant has paid to Landlord such estimated monthly payments of Additional Rent, Landlord shall indicate in the Yearly Statement the difference between Tenant’s actual Proportionate Share of Excess Operating Expenses for that Year (or portion thereof) and the aggregate amount of monthly estimated Additional Rent payments made by Tenant for that Year (or portion thereof). Tenant shall pay any shortage to Landlord within ten (10) days after Tenant’s receipt of such Yearly Statement. Correspondingly, Tenant shall receive a credit in the amount of any overpayment, which credit may be applied toward Rent.

(e) Statements Final . Each of the final Yearly Statements and other statements and determinations provided for above shall become binding on Tenant (and no longer subject to challenge by Tenant) fifteen (15) months after the date the statement in question is delivered to Tenant, unless Tenant appeals such statement or determination to Landlord in writing within such fifteen (15) month period. Within fifteen (15) months of the issuance of any statement under this Lease, Tenant or its authorized representatives may, at any reasonable time, upon seven (7) days prior written notice to Landlord, have the right to audit the Landlord’s business records relating to any statement issued by Landlord for the period covered by the statement. In the event the audit discloses an overpayment of more than ten percent (10%), which payment was made in accordance with an over-billing, Landlord shall reimburse Tenant for the cost of the audit. In addition, the amount of overpayment disclosed by the audit shall be paid to Tenant by Landlord regardless of amount. In the event the audit discloses an underpayment by Tenant, Tenant shall promptly reimburse Landlord for the amount of such underpayment.

4.3 Free Rent Period . Notwithstanding Sections 4.1 and 4.2, Rent shall be abated during the Free Rent Period.

5. Landlord’s Work.

5.1 Obligations of the Parties . Landlord shall construct the Building shell (“ Landlord’s Work ”), and Tenant shall build out the Leased Premises (“ Tenant’s Work ”) in accordance with Exhibit B.

5.2 Tenant Improvement Allowance . Landlord shall provide Tenant with a Tenant Improvement Allowance in the amount listed in Section 14 of the Lease Summary, to be used for Tenant’s Work. Any costs and expenses associated with Tenant’s Work which are in excess of the amount of the Tenant Improvement Allowance shall be borne by Tenant. Any unused portion of the Tenant Improvement Allowance shall, at Landlord’s option, be applied toward Rent or refunded to Tenant.

5.3 Avoidance of Labor Disputes . During Tenant’s construction of Tenant’s Work, Tenant agrees to conduct its labor relations so as to minimize the chances of strikes, picketing, and boycotts which could delay completion of Tenant’s Work or affect any other construction then occurring in the Building or on the Property. Tenant shall ensure that any pickets or boycotts resulting from such labor disputes are sufficiently contained within the Leased Premises so as to avoid a secondary boycott or picket line which could affect other construction then occurring in the Building or on the Property. Tenant also agrees to include within any

 

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construction contract it may execute, language requiring the general contractor to, in the event of a labor dispute: (a) find alternative labor to complete Tenant’s Work on schedule; or (b) terminate the construction contract and cease its activities as general contractor for Tenant’s Work. This Section shall also apply to Tenant’s construction of any Tenant Alterations.

5.4 Changes to Building . Landlord reserves the right to at any time: (a) make changes, alterations, or additions to the Building; (b) lease additional commercial space in the Building; and (c) change or withdraw areas from the Common Areas; provided such changes, alterations, additions, leases, or withdrawals do not materially interfere with Tenant’s business operations or Tenant’s right to quiet enjoyment of the Leased Premises or materially diminish Tenant’s parking rights hereunder. Except as provided below, Tenant shall have no claim for damages or right to terminate this Lease for injury or inconvenience occasioned thereby. If the rights of Landlord exercised pursuant to this Section materially and adversely interfere for a period of more than six (6) business days with the conduct of Tenant’s business in the Leased Premises and such interference is reasonably avoidable by Landlord, then the Monthly Rent payable under this Lease shall abate after said sixth (6 th ) consecutive business day in proportion to the extent of the interference (as the same may vary from time to time) until the interference ceases.

6. Use.

6.1 Single-Purpose Use . Tenant shall use the Leased Premises solely for the purpose of conducting the software development and call services business, including incidental office and storage use. Tenant shall not use or permit the Leased Premises to be used for any other purpose, including, without limitation, for the purpose of delivering or receiving financial deposits, except with the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed if the use is permitted by Applicable Law and does not violate the provisions of any other Lease affecting the Property or the surrounding multi-use project.

6.2 Orderly Operation . Tenant further agrees to abide by the following provisions, which are designed to insure the attractiveness and orderly operation of the Building and the Property:

(a) Tenant shall keep the Leased Premises free of objectionable noise, odors, or nuisances.

(b) Tenant shall not overload the floors or permit or allow any waste, abuse, deterioration, or destructive use of the Leased Premises.

(c) Tenant shall not cause or permit any Hazardous Materials to be brought upon, kept, or used in or about the Leased Premises.

(d) The loading and unloading of merchandise, supplies, and fixtures shall be done only at such times as do not unreasonably interfere with other tenants and customers of the Building and the Property, and only in the areas and through the entrances designated for such purposes.

(e) Tenant shall store all trash and garbage within the Leased Premises or within areas specifically designated by Landlord for such purpose.

(f) Plumbing facilities within the Building shall not be used for any purpose other than that for which they are constructed, and no foreign substance of any kind shall be thrown therein. The cost of repairing any breakage, stoppage, or damage to plumbing facilities within the Common Areas resulting from a violation of this provision by Tenant or Tenant’s Affiliates shall be borne by Tenant.

(g) Without the prior consent of Landlord, no portion of the Leased Premises or the Property shall be used to distribute handbills, circulars, or other political, charitable, or similar material, or to seek members for any organization, or to solicit contributions, or to carry on a parade or demonstration or other conduct which may tend to interfere with or impede the use of the Property by Landlord, other Building tenants, permanent occupants of the Building, or their respective Affiliates.

(h) The Leased Premises shall not be used for lodging purposes.

 

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7. Signs, Awnings, Roof.

Landlord shall, at Landlord’s expense, provide Tenant with Building-standard lobby directory, suite entrance, and the basic monument signage (but not Tenant’s separate sign on the monument sign, the cost of which shall be paid by Tenant). The cost of all other signage shall be at Tenant’s expense. Tenant may, at Tenant’s sole cost and expense (including, without limitation, payment of all fees and charges of governments having jurisdiction), install “crown” exterior building signage of a size and in a location set forth on Exhibit “D” which signage shall comply with the Building standards applicable to all tenants and all Legal Requirements. Tenant shall not, without Landlord’s prior written consent: (a) make any changes to the exterior of the Leased Premises or the Common Areas; (b) install any exterior decorations or paintings; (c) install any drapes, blinds, shades, or other coverings on exterior windows and doors; or (d) except as set forth above, erect or install any sign, window, or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior of the Leased Premises. In no event shall Tenant erect or install “banner”- or “help wanted”-type signs, or other temporary signs which can be seen from the exterior of the Leased Premises. All signs, lettering, or other items approved by Landlord and installed by Tenant shall be kept in good repair and in proper operating condition at all times and shall be removed upon the termination of the Lease. Any damage caused by such items or their removal shall be promptly repaired at Tenant’s expense. All items installed in violation of this Section may be promptly removed by Landlord at Tenant’s expense. Use of the roof is reserved to Landlord, and Landlord may install upon the roof such equipment, signs, and antennae as Landlord deems appropriate.

8. Maintenance, Services, and Utilities.

8.1 Maintenance by Tenant . By taking possession of the Leased Premises, Tenant shall be deemed to have accepted the Leased Premises as being in good order, condition, and repair except for any punchlist items identified at that time to be corrected by Landlord within thirty (30) days. Tenant shall, at Tenant’s expense: (a) maintain the Leased Premises in a clean and sanitary condition (but Landlord shall furnish the janitorial services described in Section 8.3 below); and (b) maintain the Leased Premises in as good condition and repair as they were in at the Commencement Date, reasonable wear and tear and damage from fire and other casualty excepted. Unless covered by insurance maintained by Landlord, Tenant shall in a good and workmanlike manner repair or replace any damage to the Property occasioned by the willful or negligent acts of Tenant or its Affiliates.

8.2 Maintenance by Landlord .

(a) Subject to any right of reimbursement or recovery hereunder, Landlord shall maintain the Building, the Common Areas, and the structural components of the Leased Premises, including the roof, load-bearing walls, foundations, and floor slabs, and systems such as plumbing and water, electrical, and HVAC (but not floor and wall coverings); provided, if Landlord is required to make structural repairs by reason of the negligent acts or omissions of Tenant or Tenant’s Affiliates (and such is not covered by insurance maintained by Landlord), Tenant shall pay Landlord’s costs for making such repairs plus twenty percent (20%) for overhead immediately upon presentation of a bill therefor. Failure of Tenant to pay such amount immediately shall constitute a default by Tenant hereunder. Landlord shall be responsible for latent defects in the original construction of the Leased Premises.

(b) Landlord shall perform its maintenance and repair obligations in a reasonable and efficient manner and in way that reasonably minimizes interference with Tenant’s business operations. Landlord shall initiate and complete repairs of an emergency nature (including, without limitation, roof leaks and failure of the HVAC) as soon as reasonably possible after receipt of Tenant’s notice thereof, and in any event shall commence such repair no later than two (2) business days after receipt of Tenant’s written notice thereof unless prevented from doing so for reasons beyond Landlord’s control. Tenant shall endeavor to give Landlord written notice of the need for such repair(s), but may do so initially by telephone followed up by written notice in the event of an emergency.

 

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8.3 Janitorial Services and Utilities . Landlord shall provide to the Leased Premises janitorial services no less often than five (5) days per week (emptying of wastebaskets, dusting, cleaning of glass, cleaning of bathrooms, and vacuuming). Landlord shall furnish electricity for normal lighting and fractional horsepower office machines and for heating and air conditioning required (in Landlord’s reasonable judgment) for the comfortable use and occupancy of the Leased Premises. Landlord shall also maintain and keep lighted and maintained the common stairs, common entries, and toilet rooms in the Building. Except as may be caused by the gross negligence or willful misconduct of Landlord, Landlord shall not be liable for, and Tenant shall not be entitled to, any damages or reduction of Rent by reason of Landlord’s failure to furnish any of the foregoing when such failure is caused by accident, breakage, repairs, strikes, labor disturbances, or labor disputes of any character, or by any other cause beyond the reasonable control of Landlord. Tenant shall be charged twenty dollars ($20.00) per hour per approximate 8,000 rentable square foot area for any HVAC use other than between the hours of 7:00 a.m. and 6:00 p.m. on weekdays, and 8:00 a.m. and 1:00 p.m. on Saturdays, excluding holidays (“ after-hours ”). Tenant shall pay Landlord five dollars ($5.00) per hour per approximate 8,000 rentable square foot area for any after-hours use of electricity. All such charges shall be adjusted from time to time to reflect the market rate for utilities. Back-up power will be available on the fourth and fifth floors in sufficient capacity to operate Tenant’s business in the ordinary course subject to first supplying the life-safety requirements of the remainder of the Building.

8.4 Landlord’s Right to Cure . If Tenant refuses or neglects to repair property as required hereunder to the reasonable satisfaction of Landlord within the time periods set forth in Section 18.1(d), Landlord may make such repairs without liability on its part to Tenant for any loss or damage that may occur to Tenant’s merchandise, fixtures, or other property, or to Tenant’s business by reason thereof, and upon completion, Tenant shall reimburse Landlord for the cost of making such repairs, plus twenty percent (20%) for overhead, immediately upon presentation of a bill therefor. Failure of Tenant to pay such amount immediately shall constitute a default by Tenant hereunder.

8.5 Maintenance Firm . Landlord may elect to engage a maintenance firm to service the heating, ventilating, cooling, air-handling, and control systems serving Landlord’s tenants.

9. Tenant Alterations and Improvements.

9.1 Additional Improvements . Except as set forth on Exhibit B, Tenant shall not make any alterations, additions, or improvements to the Leased Premises, or install any exterior signs or lettering, interior or exterior lighting, or plumbing or mechanical fixtures (“ Tenant Alterations ”) without first obtaining Landlord’s written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall present to Landlord plans and specifications for any Tenant Alterations at the time approval is sought. Any Tenant Alterations approved by Landlord shall be performed by Tenant at Tenant’s sole cost and expense. All Tenant Alterations shall be performed only by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld. All Tenant Alterations shall be done in a good and workmanlike manner and diligently prosecuted to completion so that the Leased Premises operates as a complete unit at all times. All Tenant Alterations shall be performed in strict compliance with applicable Legal Requirements. Tenant shall have Tenant Alterations performed in such a manner as not to obstruct access to any portion of the Building. All Tenant Alterations, including, but not limited to, wall and floor coverings, paneling, HVAC, electrical and plumbing systems, cabinet portions of any exterior signs, and built-in cabinet work (but excepting movable furniture, equipment, sign fascia, and individual sign lettering and trade fixtures), shall at once become a part of the realty and shall be surrendered with the Leased Premises. Notwithstanding the foregoing, however, for tax purposes, Tenant shall be deemed to be the owner (without removal rights) of such permanent alterations, additions, or improvements until the expiration or earlier termination of this Lease. Notwithstanding the foregoing, Tenant shall be permitted to make Tenant Alterations (without the consent of Landlord) that (i) are nonstructural, (ii) do not affect the exterior appearance of the Leased Premises; and (iii) do not exceed $10,000.00. At the request of Landlord, Tenant shall be obligated to remove the Tenant Alterations upon termination of the Lease and to restore the Leased Premises to its previous state.

 

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10. Discharge of Liens.

If any mechanic’s lien or other lien is filed against the Leased Premises or the Property, or any part thereof, because of Tenant’s Work, Tenant’s acts or omissions, or a claim against Tenant, Tenant shall, within ten (10) days following receipt of notice of the existence of such lien, cause the same to be canceled and discharged of record. If Tenant desires to contest any claim or lien, Tenant shall furnish Landlord with a bond of a responsible corporate surety containing such terms and having a face amount sufficient to discharge the lien, including interest and costs, or, if requested by Landlord, having a face amount sufficient to induce a responsible title insurance company to insure title to the Building, the Property, or the Leased Premises without showing such lien as an exception to title. If a final judgment establishing the validity or existence of any contested lien is entered, Tenant shall pay and satisfy the same at once.

11. Utilities.

Landlord shall not be liable in the event of an interruption in the supply of any utility services to the Leased Premises or Building from causes arising from the gross negligence or willful acts of Landlord, its agents or employees. Tenant agrees that it will not install any equipment which is likely to exceed or overload the capacity of any utility facilities, and that if any equipment installed by Tenant requires additional utility facilities; the same shall be installed at Tenant’s expense in accordance with plans and specifications to be approved in writing by Landlord.

12. Common Areas; Parking.

12.1 Common Areas . All Common Areas and other facilities in or about the Building or the Property shall be subject to the exclusive control and management of Landlord. Landlord shall have the right to: (a) construct, maintain, and operate lighting and other facilities on all Common Areas; (b) police the Common Areas; (c) change the area, level, location, and arrangement of the Parking Areas and other facilities; (d) temporarily close all or any portion of the Parking Areas or other facilities to prevent a dedication thereof or the accrual of any right therein to any person or the public. Landlord shall operate and maintain the Common Areas in such manner as Landlord in its discretion shall determine, shall have full right and authority to employ and discharge all personnel with respect thereto, and shall have the right, through reasonable Rules and Regulations and/or restrictive covenants promulgated by it from time to time, to regulate the use and operation of the Common Areas.

12.2 Parking . Tenant shall have the number of non-exclusive, non-reserved parking spaces indicated on the Lease Summary. Within thirty (30) days of a request by Landlord, Tenant shall furnish Landlord with the vehicle license plate numbers of Tenant’s employees and shall thereafter notify Landlord of any change thereto within thirty (30) days after such change occurs. Landlord reserves the right to set aside and make available reserved parking spaces for the use of Building tenants and their Affiliates, and in such event shall use commercially reasonable efforts to make reserved parking spaces available to Tenant for a fee.

13. Assignment.

13.1 Assignment and Subletting . Tenant shall have the right to transfer, assign, mortgage, or hypothecate this Lease (“ Transfer ”), or sublet the Leased Premises, subject to Landlord’s consent, which shall not be unreasonably withheld. Reasonable justification for Landlord to withhold consent to a Transfer includes, without limitation: (a) the proposed Transferee has a financial net worth, managerial skills, or an operational or business history inferior to that of Tenant; (b) the character and reputation of the proposed Transferee is not satisfactory to Landlord; or (c) the occupancy of the Leased Premises by the proposed Transferee would likely violate a provision of this Lease or any other lease or agreement then in effect concerning the Building or the Property. As a condition of Landlord’s consent, Landlord may require Transferee to enter into a new lease directly with Landlord, or may require reasonable modifications to this Lease. Any assignment from Tenant by merger,

 

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consolidation, transfer of assets, or liquidation shall constitute a Transfer. If Tenant is a corporation, a limited liability company, an unincorporated association, or a partnership, the Transfer of any stock or interest in such corporation, limited liability company, association, or partnership that exceeds an aggregate of forty-nine percent (49%) shall be deemed a Transfer. A merger, consolidation, reorganization, or sale of stock or other equity interests in Tenant on a public stock exchange (e.g., NYSE or NASDAQ), whether in connection with an initial public offering or thereafter, shall not be deemed a Transfer.

13.2 Permitted Assignees . Notwithstanding Section 13.1, Tenant may Transfer its interest in this Lease or sublet the Leased Premises to a Permitted Assignee without Landlord’s prior written consent; provided, Tenant shall not be relieved of its obligations under this Lease.

13.3 Prohibited Transfer Void . Any attempted Transfer or subletting without Landlord’s consent shall be void, shall confer no benefit on any third party, and shall constitute a default hereunder. Landlord’s consent to a Transfer or sublease shall not operate as a waiver of the necessity for consent to any subsequent Transfer or sublease, and the terms of such consent shall be binding upon any person holding by, under, or through Tenant.

13.4 Request for Consent . Should Tenant desire Landlord’s consent to a proposed Transfer or sublease, Tenant shall request such consent in writing and provide Landlord with


 
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