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TRIPLE NET SPACE LEASE

Lease Agreement

TRIPLE NET SPACE LEASE | Document Parties: BERNARDO SUMMIT LLC | LIONBRIDGE TECHNOLOGIES, INC You are currently viewing:
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BERNARDO SUMMIT LLC | LIONBRIDGE TECHNOLOGIES, INC

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Title: TRIPLE NET SPACE LEASE
Governing Law: California     Date: 5/8/2009
Industry: Business Services     Sector: Services

TRIPLE NET SPACE LEASE, Parties: bernardo summit llc , lionbridge technologies  inc
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Exhibit 10.1

TRIPLE NET SPACE LEASE

(MULTI-TENANT)

between

BERNARDO SUMMIT LLC,

a California limited liability company,

as

LANDLORD

and

LIONBRIDGE TECHNOLOGIES, INC.,

a Delaware corporation,

as

TENANT

for

PREMISES

At

The Summit

SUITE B, BUILDING 5

SAN DIEGO, CALIFORNIA


TABLE OF CONTENTS

 

 

 

 

 

 

  

Page

ARTICLE I

 

SUMMARY OF BASIC LEASE INFORMATION

  

1

ARTICLE II

 

PREMISES

  

4

 

Section  2.01

 

 

Demise of Premises

  

4

 

Section  2.02

 

 

Common Area

  

4

 

Section  2.03

 

 

Parking

  

5

ARTICLE III

 

TERM

  

5

 

Section  3.01

 

 

Lease Term

  

5

 

Section  3.02

 

 

Option to Extend.

  

5

ARTICLE IV

 

RENT; TRIPLE NET LEASE

  

7

 

Section  4.01

 

 

Base Rent

  

7

 

Section  4.02

 

 

First Payment of Rent

  

8

 

Section  4.03

 

 

Absolute Triple Net Lease

  

8

 

Section  4.04

 

 

Additional Rent

  

8

 

Section  4.05

 

 

Operating Expenses; Insurance Expenses

  

9

 

Section  4.06

 

 

Tenant’s Right to Review Supporting Data

  

12

 

Section  4.07

 

 

Security Deposit

  

14

ARTICLE V

 

USE

  

15

 

Section  5.01

 

 

Permitted Use and Limitations on Use

  

15

 

Section  5.02

 

 

Compliance with Laws

  

15

 

Section  5.03

 

 

Delivery of Premises

  

16

 

Section  5.04

 

 

Building Security

  

17

 

Section  5.05

 

 

Rules and Regulations

  

17

 

Section  5.06

 

 

Defective Condition at Delivery Date

  

17


 

 

 

 

 

 

 

  

Page

ARTICLE VI

 

MAINTENANCE, REPAIRS AND ALTERATIONS

  

18

 

Section  6.01

 

 

Maintenance of Premises and Building

  

18

 

Section  6.02

 

 

Maintenance of Project Common Areas

  

19

 

Section  6.03

 

 

Alterations, Additions and Improvements

  

20

 

Section  6.04

 

 

Covenant Against Liens

  

21

ARTICLE VII

 

INSURANCE

  

21

 

Section  7.01

 

 

Property/Rental Insurance for Premises

  

21

 

Section  7.02

 

 

Property Insurance for Fixtures and Inventory

  

22

 

Section  7.03

 

 

Landlord’s Liability Insurance

  

22

 

Section  7.04

 

 

Tenant’s Liability Insurance

  

22

 

Section  7.05

 

 

Evidence of Insurance

  

23

 

Section  7.06

 

 

Mutual Waiver of Claims and Subrogation Rights

  

23

 

Section  7.07

 

 

Indemnification and Exculpation

  

23

ARTICLE VIII

 

DAMAGE OR DESTRUCTION

  

24

 

Section  8.01

 

 

Destruction of the Premises

  

24

 

Section  8.02

 

 

Waiver of Civil Code Remedies

  

26

 

Section  8.03

 

 

No Abatement of Rentals

  

26

 

Section  8.04

 

 

No Liability for Tenant’s Alterations or Personal Property

  

26

ARTICLE IX

 

REAL PROPERTY TAXES

  

26

 

Section  9.01

 

 

Payment of Taxes

  

26

 

Section  9.02

 

 

Proration for Partial Years

  

28

 

Section  9.03

 

 

Personal Property Taxes

  

28

ARTICLE X

 

UTILITIES

  

28

ARTICLE XI

 

ASSIGNMENT AND SUBLETTING

  

29


 

 

 

 

 

 

 

  

Page

 

Section 11.01

 

 

Landlord’s Consent Required

  

29

 

Section 11.02

 

 

Tenant Affiliates

  

29

 

Section 11.03

 

 

No Release of Tenant

  

29

 

Section 11.04

 

 

Excess Rent

  

30

 

Section 11.05

 

 

Information to be Provided

  

30

ARTICLE XII

 

DEFAULTS; REMEDIES

  

30

 

Section 12.01

 

 

Defaults

  

30

 

Section 12.02

 

 

Remedies

  

31

 

Section 12.03

 

 

Default by Landlord

  

32

 

Section 12.04

 

 

Late Charges

  

33

 

Section 12.05

 

 

Landlord’s Right to Perform Tenant’s Obligations

  

33

ARTICLE XIII

 

CONDEMNATION OF PREMISES

  

33

 

Section 13.01

 

 

Total Condemnation

  

33

 

Section 13.02

 

 

Partial Condemnation

  

33

 

Section 13.03

 

 

Award to Tenant

  

34

ARTICLE XIV

 

ENTRY BY LANDLORD

  

34

ARTICLE XV

 

ESTOPPEL CERTIFICATE

  

35

 

Section 15.01

 

 

Tenant’s Statement

  

35

ARTICLE XVI

 

LIMITATIONS ON LANDLORD’S LIABILITY

  

35

ARTICLE XVII

 

GENERAL PROVISIONS

  

36

 

Section 17.01

 

 

Severability

  

36

 

Section 17.02

 

 

Agreed Rate Interest on Past-Due Obligations

  

36

 

Section 17.03

 

 

Time of Essence

  

36

 

Section 17.04

 

 

Submission of Lease

  

36

 

Section 17.05

 

 

Incorporation of Prior Agreements and Exhibits

  

36


 

 

 

 

 

 

 

  

Page

 

Section 17.06

 

 

Notices

  

37

 

Section 17.07

 

 

Waivers

  

37

 

Section 17.08

 

 

Recording

  

37

 

Section 17.09

 

 

Surrender of Possession; Holding Over

  

38

 

Section 17.10

 

 

Cumulative Remedies

  

39

 

Section 17.11

 

 

Covenants and Conditions

  

39

 

Section 17.12

 

 

Binding Effect; Choice of Law

  

39

 

Section 17.13

 

 

Lease to be Subordinate

  

39

 

Section 17.14

 

 

Attorneys’ Fees

  

40

 

Section 17.15

 

 

Signs

  

40

 

Section 17.16

 

 

Merger

  

41

 

Section 17.17

 

 

Quiet Possession

  

41

 

Section 17.18

 

 

Easements

  

41

 

Section 17.19

 

 

Authority

  

42

 

Section 17.20

 

 

Force Majeure Delays

  

42

 

Section 17.21

 

 

Hazardous Materials

  

42

 

Section 17.22

 

 

Modifications Required by Landlord’s Lender.

  

44

 

Section 17.23

 

 

Brokers

  

44

 

Section 17.24

 

 

Survival

  

44

 

Section 17.25

 

 

List of Exhibits

  

44


This Triple Net Space Lease (the “ Lease ”), dated as of the date first written in the Summary of Basic Lease Information set forth in Article I below (the “ Summary ”), is made by and between BERNARDO SUMMIT LLC, a California limited liability company (“ Landlord ”) and LIONBRIDGE TECHNOLOGIES, INC., a Delaware corporation (“ Tenant ”).

ARTICLE I

SUMMARY OF BASIC LEASE INFORMATION

 

TERMS OF LEASE

 

DESCRIPTION

Date:

 

February 25, 2009

Premises

(Article II).

 

Premises:

 

An approximately 43,768 rentable square feet of space comprising of Suite B of the Building, as further set forth in Exhibit A .

Building:

 

That certain Building commonly known as Building 5 located at 16550 West Bernardo Drive in San Diego, California 92127.

Lease Term

(Article III).

 

Initial Term:

 

Thirty-six (36) months, commencing on the Commencement Date and ending on the Expiration Date, unless extended or terminated as provided for herein.

Commencement Date:

 

April 1, 2009.

Expiration Date:

 

The day before the third anniversary of the Commencement Date.

Option(s) to Extend:

 

Tenant is given one (1) option to extend the Lease Term (“ Option to Extend ”) for a period of thirty-six (36) months (the “ Extended Term ”) immediately following the date on which the initial Lease Term would otherwise expire.

Base Rent

(Section 4.01):

 


Lease Year

  

Annual Base Rent

  

Monthly Installment
of Base Rent

  

Monthly Base Rent
Rate per Square Foot

of Rentable Area

1

  

$

498,955.20

  

$

41,579.60

  

$

0.95

2

  

$

514,711.68

  

$

42,892.64

  

$

0.98

3

  

$

530,468.16

  

$

44,205.68

  

$

1.01

 

Extended Term

 

 

4-6

 

Fair Market Rent (as defined in Section 3.02 below)

Tenant’s Share

(Section 4.05).

 

Tenant’s Building Share: 43.4%

 

Tenant’s Project Share: 8.74%

Security Deposit:

(Section 4.07):

 

$62,150.56

Permitted Use

(Article V):

 

General office and testing use only, consistent with an industrial building.

Parking Spaces

(Section 2.03):

 

Four (4) parking spaces per one thousand (1,000) square feet of Rentable Area within the Premises

Broker(s)

(Section 17.23):

 

Representing Landlord:

 

CBRE.

Representing Tenant:

 

CresaPartners.

Tenant Improvement Allowance

 

(Section 2 of Exhibit C ):

 

Landlord shall provide a Tenant Improvement Allowance of up to $706,520.00 (i.e. $15 per square foot of Rentable Area plus an additional $50,000.00). Subject to the terms of Section 2.2 of the Work Letter Agreement attached hereto as Exhibit C , Tenant may request an “Additional Tenant Improvement Allowance” in the amount of $218,840.00 (i.e. $5 per square foot of Rentable Area in the Premises. This “additional Tenant Improvement Allowance,” together with interest thereon at


 

the rate of seven percent (7%) per annum, shall be amortized over the Lease Term and added to the Base Rent.

Tenant’s Representative

(Section 5.1 of Exhibit C ):

 

Mike Labonte of CresaPartners.

Landlord’s Representative

(Section 5.2 of Exhibit C ):

 

Janette Sammartino.


ARTICLE II

PREMISES

Section 2.01 Demise of Premises

Landlord hereby leases to Tenant and Tenant leases from Landlord for the Lease Term, at the rental, and upon all of the terms and conditions set forth herein, certain space consisting of approximately Forty-Tree Thousand Seven Hundred Sixty-Eight (43,768) rentable square feet of space (“ Premises ”), which Premises, commonly referred to as Suite B, comprise a portion that certain Building sometimes known as “Building 5” located at 16550 West Bernardo Drive, San Diego, California 92127 (“ Building ”) which is one of a number of free standing , office and research and development Project Buildings (“ Project Buildings ”) on real property situated in the City of San Diego, County of San Diego, State of California and commonly known as The Summit. The Premises are more particularly described and depicted herein in Exhibit “A .” Landlord reserves the right to access and use the restrooms and janitor, telephone and electrical closets (as well as the space above any dropped ceilings) for cabling, wiring, pipes and other Building system elements. The rentable square footage of the Premises, Building and other Project Buildings (the “ Rentable Area ”) has been determined and certified by Landlord’s architect pursuant to BOMA standards ANSIZ65.1-1996. The Premises, the Project Buildings and appurtenances described herein, including Common Area (defined below), and all other improvements at The Summit together with the land on which the same are located are together designated as the project (“ Project ”).

Section 2.02 Common Area

During the Lease Term, Tenant shall have the non-exclusive right to use those portions of the Common Area which are provided, from time to time, for use in common by Landlord, Tenant and/or other tenants of the Project. Landlord reserves the right, in its sole discretion, to modify the Common Area (including, without limitation, increasing or reducing the size thereof, adding additional or removing building structures, facilities or other improvements, or changing the use, configuration and elements thereof), to designate certain areas for the exclusive use of Landlord and/or certain tenants of the Project, and to close or restrict access of certain areas from time to time for repair, maintenance or construction or to prevent a dedication thereof; provided that (i) Tenant nevertheless shall have reasonable access to the Premises and to parking areas serving the Building, and (ii) any such modifications, when completed, shall not unreasonably interfere with or restrict Tenant’s access to or possession or use of the Premises. Landlord further reserves the right to establish, repeal and amend from time to time rules and regulations for the use of the Common Area and to grant easements or other rights to use the Common Area to others; provided that no amendment to the rules and regulations shall unreasonably interfere with or restrict Tenant’s access to or possession or use of the Premises or unreasonably and materially increase Tenant’s Share of Operating Expenses; and provided further that, to the extent of any conflict between an express provision of this Lease (other than the attached Rules and Regulations) and such Common Area rules and regulations, this Lease shall control. The “ Common Area ” shall consist of Project Common Area and Building Common Area (as defined below). The “Project Common Area” shall mean all portions of the Project other than the Project Buildings, including landscaping, sidewalks, walkways, driveways, curbs, parking lots (including striping), roadways within the Project, sprinkler systems, lighting, surface water


drainage systems, as well as additional or different facilities as Landlord in its sold discretion may from time to time designate or install or make available for the use by Tenant in common with others. The “Building Common Area” shall mean those portions of the Building designated as such from time to time by Landlord in its sole discretion, including, without limitation, all mechanical areas, pipe, cabling and wiring shafts, together with their respective enclosing walls, as well as, to the extent not leased to any tenant or occupant of the Building, all entrances, other lobbies, common corridors and hallways, restrooms, janitor closets, telephone closets, electric closets and other public or common areas located in the Building.

Section 2.03 Parking

Landlord shall provide Tenant with the number of parking spaces set forth in the Summary at no additional charge, except to the extent included in Operating Expenses pursuant to Section 4.05 below. The parties acknowledge that the parking spaces shall not be designated for Tenant’s use but shall instead be available to Tenant and Tenant’s customers on an unreserved, non-designated non-exclusive first come-first serve basis. Landlord shall have no liability for the use of any such parking spaces by anyone (besides Landlord) other than Tenant or Tenant’s visitors. In the event Landlord elects or is required by any law to limit or control parking at the Building or the Project, whether by validation of parking tickets or any other method of assessment, Tenant, at its cost, agrees to participate in such validation or assessment program under such reasonable rules and regulations as are from time to time established by Landlord. Except as otherwise expressly provided herein, all costs and expenses associated with parking areas serving the Project shall be included in Operating Expenses.

ARTICLE III

TERM

Section 3.01 Lease Term

The term of this Lease (the “ Lease Term ”) shall commence on the Commencement Date set forth in the Summary (the “ Commencement Date ”), and shall expire, unless sooner terminated as provided for herein, on the Expiration Date set forth in the Summary (the “ Expiration Date ”). At any time following the Commencement Date, Landlord may deliver to Tenant a Memorandum of Commencement of Lease Term substantially in the form attached hereto as Exhibit B as a confirmation of the information set forth therein, which Tenant shall execute and return to Landlord within fifteen (15) business days after receipt thereof.

Section 3.02 Option to Extend.

(a) Exercise

The Option(s) to Extend set forth in the Basic Lease Information, if any, may be exercised by Tenant, if at all, only by delivery of irrevocable written notice (the “ Option Notice ”) to Landlord given not more than twelve (12) months nor less than six (6) months prior to the end of the initial Lease Term; provided, however, if, as of the date of delivery of the Option Notice or any day thereafter on or before the last day of the initial Lease Term, Tenant (i) is in default under this Lease (beyond the expiration of any applicable notice period provided under this Lease), (ii) has assigned this Lease to anyone other than an Affiliate (as defined in


Section 11.02 below) or (iii) has sublet more than fifty percent (50%) of the Premises to anyone other than an Affiliate, then, at the sole option of Landlord, the Option Notice shall be totally ineffective, and this Lease shall expire on the last day of the initial Lease Term, if not sooner terminated.

(b) Extended Term Rent

In the event Tenant exercises its Option to Extend set forth herein, all the terms and conditions of this Lease shall continue to apply during the Extended Term, except that the Base Rent payable by Tenant during the Extended Term shall be equal to one hundred percent (100%) of Fair Market Rent (as defined below), as determined pursuant to Section 3.03(c) below. “ Fair Market Rent ” shall mean the effective rental rate, determined on a per rentable square foot basis, being charged (including periodic adjustments thereto as applicable during the period of the Extended Term, to the extent such adjustments are determined to be part of the Fair Market Rent) in transactions entered into within the twelve (12) month period immediately preceding the Negotiation Period, for comparable space in similar buildings in the vicinity of the Building in the Rancho Bernardo/Carmel Mountain Ranch market area (i.e., building s of a similar age and quality considering any recent renovations or modernization), with similar floor plate size and with similar amenities, or, if such comparable space is not available, then making adjustments in the determination of Fair Market Rent to reflect the age, quality, layout and amenities of the Premises and the Building, as contrasted to spaces in other buildings used for comparison purposes, in all instances taking into consideration: size; location; floor level; leasehold improvements or allowances provided or to be provided; lease term; extent of services to be provided; the time that the particular rate under consideration became or is to become effective; and any other relevant terms or conditions applicable to both new and renewing tenants, including tenant concessions and inducements such as (i) the amount of protection received by tenants in connection with the payment of operating and tax expenses (i.e., base year or expense stop), (ii) rental abatement concessions being given such tenants, if any, in connection with such comparable space and in connection with the period of construction of such space, and (iii) all other tenant inducements and landlord concessions and payments including, but not limited to, lease takeover payments, if any, being granted such tenants in connection with such comparable space, and real estate brokerage commissions (which shall be paid to the applicable broker or to Tenant if Tenant does not utilize the services of a broker in connection with such extension). The intent of the parties is that Tenant will obtain the same rent and other economic benefits that landlords would otherwise give in comparable transactions and that Landlord will make and receive the same economic payments and concessions that landlords would otherwise make and receive in comparable transactions.

(c) Determination of Fair Market Rent

(i) Negotiation . If Tenant timely and properly exercises the Option to Extend, then, within the first thirty (30) days following the date of delivery of the Option Notice (the “ Negotiation Period ”), the parties shall meet in good faith to negotiate the Base Rent for the Premises during the Extended Term. If, during the Negotiation Period, the parties agree on the Base Rent for the Premises during the Extended Term, then such agreed amount shall be the Base Rent payable by Tenant during the Extended Term.


(ii) Arbitration . In the event that Tenant exercises Tenant’s Option to Extend in accordance with this Lease and if the parties are unable to agree on the Base Rent for the Premises within the Negotiation Period, then within ten (10) days after the expiration of the Negotiation Period, each party shall separately designate to the other in writing an appraiser to make this determination. Each appraiser designated shall be a member of the Appraisal Institute and shall have at least ten (10) years experience in appraising commercial real property in San Diego County. The failure of either party to appoint an appraiser within the time allowed shall be deemed equivalent to appointing the appraiser appointed by the other party, who shall then determine the Fair Market Rent for the Premises for the Extended Term. Within five (5) business days of their appointment, the two designated appraisers shall jointly designate a third similarly qualified appraiser. The third similarly qualified appraiser will not have worked in any capacity for either party over the immediately preceding five (5) full years. Within thirty (30) days after their appointment, each of the two appointed appraisers shall submit to the third appraiser a sealed envelope containing such appointed appraiser’s good faith determination of the Fair Market Rent for the Premises for the Extended Term; concurrently with such delivery, each such appraiser shall deliver a copy of his or her determination to the other appraiser. The third appraiser shall within ten (10) days following receipt of such submissions, then determine which of the two appraisers’ determinations most closely reflects Fair Market Rent. The determination most closely reflecting the third appraiser’s determination shall be deemed to be the Fair Market Rent for the Premises during the Extended Term; the third appraiser shall have no rights to adjust, amend or otherwise alter the determinations made by the appraisers selected by the parties, but must select one or the other of such appraisers’ submissions. The determination by such third appraiser shall be final and binding upon the parties. Said third appraiser shall, upon selecting the determination which most closely resembles Fair Market Rent, concurrently notify both parties hereto in writing. The parties shall share the appraisal expenses equally. If the Extended Term begins prior to the determination of Fair Market Rent, Tenant shall pay monthly installments of Base Rent equal to one hundred percent (100%) of the monthly installment of Base Rent in effect for the last year of the initial Lease Term. Once a determination is made, any over payment or under payment shall be reimbursed as a credit against, or paid by adding to, the monthly installment of Base Rent next falling due.

ARTICLE IV

RENT; TRIPLE NET LEASE

Section 4.01 Base Rent

(a) Monthly Base Rent .

Commencing on the Commencement Date and continuing throughout the Lease Term, Tenant shall pay to Landlord, without prior notice or demand, base rent (“ Base Rent ”) as set forth in the Summary, which shall be payable in monthly installments, in advance, on or before the first day of each calendar month of the Lease Term in which Base Rent is due. For purposes hereof, “ Lease Year ” shall mean each consecutive twelve (12) month period during the Lease Term; provided, however, the first Lease Year shall commence on the Commencement Date and end on the last day of the calendar month immediately preceding the first anniversary of the Commencement Date, and the second and each succeeding Lease Year shall commence on the first day of the next calendar month. In the event that any Lease Year


contains more or less than twelve (12) full calendar months, the annual Base Rent for such Lease Year shall be multiplied by a fraction, the numerator of which shall be the number of months in such Lease Year and the denominator of which shall be twelve (12). In the event that any month in any Lease Year is less than a full calendar month, the Base Rent and Additional Rent for such month shall be multiplied by a fraction, the numerator of which shall be the number of days in such month during the Lease Term and the denominator of which shall be number of days in such calendar month (e.g., if the Lease Term commences September 14, the fraction for such month shall be 14/30).

Section 4.02 First Payment of Rent

Tenant shall pay to Landlord Base Rent for the first full calendar month of the Lease Term, together with Landlord’s estimate of Additional Rent due hereunder for the first full calendar month of the Lease Term, upon Tenant’s execution of this Lease.

Section 4.03 Absolute Triple Net Lease

This Lease is what is commonly called an “Absolute Triple Net Lease,” it being understood that Landlord shall receive the Base Rent set forth in Section 4.01 free and clear of, and in addition to, any and all expenses, costs, impositions, taxes, assessments, liens or charges of any nature whatsoever, subject to the exclusions set forth in Section 4.05 below. Tenant shall pay all Rent in lawful money of the United States of America to Landlord at the notice address stated herein or to such other persons or at such other places as Landlord may designate in writing on or before the due date specified for same without prior demand, set-off or deduction of any nature whatsoever. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by Tenant, except as expressly set forth in this Lease, and that Tenant shall in no event be entitled to any abatement of or reduction in Rent payable under this Lease, except as herein expressly provided in Articles VIII and XIII. Any present or future law to the contrary shall not alter this agreement of the parties.

Section 4.04 Additional Rent

In addition to the Base Rent reserved by Section 4.01, commencing on the Commencement Date and continuing throughout the Lease Term, Tenant shall pay (i) Tenant’s Share of Operating Expenses; (ii) Tenant’s Share of Insurance Expenses; (iii) Tenant’s Share of Real Estate Taxes; and (iv) a management fee (the “ Management Fee ”), payable on a monthly basis, in advance, at the same time and in the same manner applicable to monthly installments of Base Rent, in an amount equal to three percent (3%) of the then applicable monthly installment of Base Rent. All of the foregoing payments, together with any and all other amounts (other than Base Rent), whether or not contemplated, payable by Tenant pursuant to the terms of this Lease are referred to herein, collectively, as “ Additional Rent ,” and Base Rent and Additional Rent are referred to herein, collectively, as “ Rent .”


Section 4.05 Operating Expenses; Insurance Expenses

(a) Definitions

Operating Expenses ” shall mean all expenses, costs and amounts of every kind and nature which Landlord pays or accrues (whether obligated to do so or undertaken at Landlord’s discretion) during any calendar year during the Lease Term because of or in connection with the ownership, operation, management, maintenance, security, repair, replacement and restoration of the Project, the Building, or any portion thereof, other than Insurance Expenses and Real Property Taxes. Without limiting the generality of the foregoing, Operating Expenses shall specifically include any and all of the following: costs and expenses of cleaning, lighting, maintaining, repairing and replacing all Project Common Area improvements and elements (including, without limitation, light poles and fixtures, storm and sanitary sewers, parking lots, driveways and roads) and all Building Common Area improvements and elements (including, without limitation, elevators, stairways, floors, exterior and interior walls, roof, roof membrane and other elements of the Building which are the responsibility of Landlord to maintain, repair and replace under this Lease); costs of snow removal; costs of parking lot striping; costs of removal of trash, rubbish, garbage and other refuse; costs of painting of exterior and interior walls; costs of removal of graffiti; costs of landscaping; costs of providing security systems and personnel to the extent Landlord determines in its sole discretion to do so; fire protection and fire hydrant charges (including fire protection system signaling devices now or hereafter required, and the costs of maintaining of same); water and sewer charges; utility charges; license and permit fees necessary to operate and maintain the Building and the Project; costs of supplies, tools and materials used in the operation and maintenance of the Building, the Project and the Common Area; the cost (or the reasonable depreciation of the cost) of equipment used in the operation and maintenance of the Building, the Project and the Common Area (which shall be expensed or amortized, respectively, by Landlord in its good faith discretion using commercial real estate management principles, consistently applied) and rent paid for leasing any such equipment; reasonable cost of on-site or off-site space for the storage of any and all items used in conjunction with the operation, management, maintenance and repair of the Project (including, without limitation, tools, machinery, records, decorations, tables, benches, supplies and meters); the cost of making all improvements which are intended to reduce Operating Expenses or to increase public safety, or which may be then required by governmental authority, laws, statutes, ordinances and/or regulations; the cost of all licenses, certificates, permits and inspections; the cost of contesting any governmental enactments which may affect Operating Expenses; costs incurred to comply with any transportation system management program, any present or anticipated conservation program or any other governmental program; payments under any easement, license, operating agreement, declaration, restrictive covenant, or instrument pertaining to the sharing of costs by the Building or the Project; costs, fees, charges or assessments imposed by, or resulting from any mandate imposed on Landlord by, any federal, state or local government for fire and police protection, trash removal, community services, or other services which do not constitute Real Property Taxes hereunder; total compensation and benefits (including premiums for workers’ compensation and other insurance, except to the extent such premiums are included in Insurance Expenses) paid to or on behalf of Landlord’s employees, agents, consultants and contractors, including, without limitation, full or part time on-site management or maintenance personnel. In addition, if, during any Lease Year, (i) Landlord is not furnishing a particular service or work (the costs of which, if furnished by


Landlord, would be included in Operating Expenses) to a tenant (other than Tenant) that has undertaken to perform such service or work in lieu of receiving it from Landlord, or (ii) in Landlord’s commercially reasonable judgment, Tenant is using a disproportionate amount of any particular service or work (the cost of which is included in Operating Expenses), then Operating Expenses for that Lease Year shall be considered to be increased by an amount equal to the additional Operating Expenses that Landlord would reasonably have incurred during this period if Landlord had furnished such service or work to that tenant, or an amount equal to the cost of such increased, disproportionate by Tenant, as relevant Notwithstanding the above, if Tenant’s Share of the cost of any particular capital expenditure to the Building or Common Area exceeds Fifteen Thousand Dollars ($15,000), then such cost, together with interest thereon at the rate actually charged Landlord by any lender or, if no such interest is relevant, with interest thereon at an interest rate equal to the Agreed Rate (as defined in Section 17.02 below), shall be amortized over its useful life, and the amount includible in Operating Expenses shall be limited to the monthly amortized cost thereof. The determination of what constitutes a capital expenditure and the useful life applicable thereto shall be made by Landlord in its good faith discretion using accounting practices commonly utilized in the commercial real estate industry, consistently applied.

Insurance Expenses ” shall mean all expenses, costs and amounts of every kind and nature which Landlord pays or accrues (whether obligated to do so or undertaken at Landlord’s discretion) during any calendar year during the Lease Term because of or with respect to insurance carried by Landlord in connection with the Building or the Project, including, without limitation, all insurance described in Sections 7.01 and 7.03 below.

(b) Exclusions

For purposes of this Lease, the term Operating Expenses shall not include (and Tenant shall have no liability for) any of the following:

(i) Landlord’s non-cash charges, such as depreciation (except for the amortization of capital items as described in Section 4.05(a) above),

(ii) any payments of points, interest or principal relating to any debt secured by the Premises,

(iii) costs associated with the operation of the business of the ownership or entity which constitutes “Landlord,” as distinguished from the costs of Premises operations, including, but not limited to, partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Tenant may be in issue), costs of selling syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Premises, costs of any disputes between Landlord and its employee (if any) not engaged in Premises operation, or outside fees paid in connection with disputes with other tenants,

(iv) legal fees, space planners’ fees, real estate brokers’ leasing commissions, and advertising expenses incurred in connection with leasing of the Premises,

(v) costs for which Landlord has been reimbursed by its insurance carrier or any tenant’s insurance carrier,


(vi) any bad debt loss, rent loss or reserves for bad debts or rent loss,

(vii) any interest or late fee resulting from any failure of Landlord to pay any item of Operating Expense when it would have been due without such interest or late fee, provided, however, that nothing herein shall be deemed from precluding Landlord from passing through to Tenant as an Operating Expense any cost associated with paying Operating Expenses on any permitted installment or other periodic basis, even if such payment basis results in an increase in the Operating Expense in question,

(viii) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for such services in the Premises to the extent the same exceeds the costs of such services rendered by unaffiliated third parties on a competitive basis,

(ix) costs of repairs or rebuilding necessitated by condemnation,

(x) expenses for repairs, replacements or improvements to the extent such expenses have been reimbursed to Landlord through warranties from contractors or suppliers,

(xi) costs incurred due to Landlord’s violation of any terms and conditions of this Lease or of any law,

(xiv) costs of repairs or other work occasioned by fire, earthquake, windstorm or other casualty, except for a reasonable deductible under any insurance policy, and costs of remediating Hazardous Materials (except to the extent that any such costs arise in the course of ordinary maintenance or result from Tenant’s acts or omissions), provided that nothing herein shall be deemed to release Tenant from any of Tenant’s obligations pursuant to Section 17.21 of this Lease,

(xv) reserves of any kind,

(xvi) ground lease rents,

(xvii) transfer taxes, brokerage commissions, title insurance premiums and escrow fees associated with the sale of the Project,

(xviii) any management fee other than the Management Fee, and

(xix) any costs which are otherwise charged to Tenant as an Insurance Expense or a Real Property Tax pursuant to the terms of this Lease.

(xx) any costs associated with correcting any improvements at the Premises which were in violation of any law in effect as of the date such improvement was built.

(c) Tenant’s Share

For purposes hereof, “ Tenant’s Building Share ” shall mean the percentage derived by the quotient of the Rentable Area of the Premises divided by the Rentable Area of the Building, which Landlord and Tenant acknowledge and agree shall be the percentage


set forth in the Summary. “ Tenant’s Project Share ” shall mean the percentage derived by the quotient of the Rentable Area of the Premises divided by the Rentable Area of the Project Buildings, which Landlord and Tenant acknowledge and agree shall be the percentage set forth in the Summary. The term “ Tenant’s Share ” shall refer to either Tenant’s Building Share or Tenant’s Project Share, as applicable. Notwithstanding the foregoing, Tenant’s Share shall be subject to increase or reduction (in an amount Landlord shall, in good faith, determine), based upon any increase or reduction in the Rentable Area of the Building or Project Buildings.

(d) Payment

Commencing on the Commencement Date, and continuing through the Lease Term, Tenant shall pay, on the first day of each calendar month, monthly installments of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Property Taxes in amounts set forth in a written estimate by Landlord. Landlord shall have the right to revise its estimate from time to time during a particular calendar year, in which event, commencing with Tenant’s next installment of Base Rent due, Tenant thereafter shall pay such amounts set forth in such revised estimate (which may include an additional monthly amount based upon any shortfall in Landlord’s previous estimate). Landlord shall furnish to Tenant a statement (hereinafter referred to as “ Landlord’s Statement ”), within ninety (90) days after the end of each calendar year, which shall set forth the actual amounts of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Property Taxes for such preceding calendar year. In the event that the actual amounts of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Property Taxes for such preceding calendar year, in the aggregate, exceed the estimated amounts paid by Tenant with respect thereto during such preceding calendar year, then Tenant shall pay to Landlord, as Additional Rent, the entire amount of such excess within thirty (30) days after receipt of Landlord’s Statement. In the event that the actual amounts of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Property Taxes for such preceding calendar year, in the aggregate, are less than the estimated amounts paid by Tenant with respect thereto during such preceding calendar year, then Landlord shall apply such difference as a credit to Additional Rent next falling due (or if the Lease Term has expired or terminated and there remains no money due to Landlord, then Landlord shall remit to Tenant the amount of such difference within thirty (30) days after the date of the Landlord’s Statement). Tenant’s Share of Operating Expenses for the ensuing estimation period shall be adjusted upward or downward based upon Landlord’s Statement.

Section 4.06 Tenant’s Right to Review Supporting Data

(a) Exercise of Right by Tenant

Provided that Tenant is not in default under this Lease, and provided further that Tenant strictly complies with the provisions of this Section 4.06, Tenant shall have the right upon thirty (30) days written notice to Landlord to reasonably review supporting data for any portion of a Landlord’s Statement that Tenant claims is incorrect. Landlord shall maintain at all times duri


 
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