COMMERCIAL OFFICE LEASE

Exhibit 10.29

 

COMMERCIAL OFFICE LEASE

 

BETWEEN

 

USAA STRATUM EXECUTIVE CENTER JOINT VENTURE

 

as Landlord

 

AND

 

SYNPLICITY, INC.

 

as Tenant

 

Dated: June 9, 2003

 

TABLE OF CONTENTS

 

 

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ii

 

iii

LIST OF EXHIBITS

 

 

iv

COMMERCIAL OFFICE

LEASE

 

THIS COMMERCIAL OFFICE LEASE (hereinafter the “ Lease ”) is made as of the 9th day of June, 2003 (“ Date of Lease ”), by and between USAA STRATUM EXECUTIVE CENTER JOINT VENTURE, a Texas joint venture (“ Landlord ”), and SYNPLICITY, INC., a California corporation (“ Tenant ”).

 

Landlord and Tenant, intending legally to be bound, agree as set forth below.

 

ARTICLE I

BASIC LEASE PROVISIONS

 

In addition to the terms which are defined elsewhere in this Lease, the following defined terms are used in this Lease:

 

1.1 Building . The building located at the address indicated below which is on the Land (as hereinafter defined), and all alterations, additions, improvements, restorations or replacements now or hereafter made thereto.

 

1.2 Building Address :         11044 Research Boulevard

                         Building D

                         Austin, Texas 78759

 

1.3 Premises . 1,697 rentable square feet known as Suite 130 and located on the first floor of Building D as outlined on Exhibit A-1 attached hereto and made a part hereof.

 

1.4 Land . The piece or parcel of land which comprises the Project (as hereinafter defined), as more particularly described on Exhibit A-2 attached hereto and made a part hereof, and all rights, easements and appurtenances thereunto belonging or pertaining, or such portion thereof as shall be allocated by Landlord to the Project.

 

1.5 Project . The development known as Stratum Executive Center consisting of the real property and all improvements built thereon including without limitation the Land, Building, Common Area (as hereinafter defined), Parking Facilities (as hereinafter defined), and any other buildings, walkways, driveways, fences and landscaping, containing approximately 243,861 rentable square feet.

 

1.6 Intentionally Deleted .

 

1.7 Permitted Use . The Premises shall be used solely as a general business office for a software company.

 

1.8 Commencement Date . July 1, 2003, subject to adjustment as specified in Article III .

 

1.9 Expiration Date . June 30, 2006, subject to adjustment as specified in Article III .

 

1.10 Term . Thirty-six (36) months, beginning on the Commencement Date and expiring on the Expiration Date, subject to adjustment as specified in Article III .

 

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1.11 Basic Rent . The amount set forth in the following schedule, subject to adjustment as specified in Article IV .

 

 

1.12 Base Year . A period of twelve (12) months comprising calendar year 2003.

 

1.13 Lease Year . Each consecutive twelve (12) month period elapsing after: (i) the Commencement Date if the Commencement Date occurs on the first day of a month; or (ii) the first day of the month following the Commencement Date if the Commencement Date does not occur on the first day of a month. Notwithstanding the foregoing, the first Lease Year shall include the additional days, if any, between the Commencement Date and the first day of the month following the Commencement Date, in the event the Commencement Date does not occur on the first day of a month.

 

1.14 Calendar Year . For the purpose of this Lease, Calendar Year shall be a period of twelve (12) months commencing on each January 1 during the Term, except that the first Calendar Year shall be that period from and including the Commencement Date through December 31 of that same year, and the last Calendar Year shall be that period from and including the last January 1 of the Term through the earlier of the Expiration Date or date of Lease termination.

 

1.15 Tenant’s Proportionate Share . Tenant’s Proportionate Share of the Project is 0.70% (determined by dividing the rentable square feet of the Premises by the rentable square feet of the Project and multiplying the resulting quotient by one hundred and rounding to the second decimal place).

 

1.16 Parking Space Allocation . Tenant shall have the non-exclusive right to seven (7) unreserved parking spaces within the Parking Facilities. Tenant’s Parking Space Allocation shall include Tenant’s Proportionate Share of visitor and handicapped parking, as such may be required by applicable law.

 

1.17 Security Deposit . $2,545.50

 

1.18 Broker (if any) .

 

 

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1.23 Interest Rate : The per annum interest rate listed as the base rate on corporate loans at large U.S. money center commercial banks as published from time to time under “Money Rates” in the Wall Street Journal plus three percent (3%), but in no event greater than the maximum rate permitted by law. In the event the Wall Street Journal ceases to publish such rates, Landlord shall choose, at Landlord’s discretion, a similarly published rate.

 

1.24 Common Area : All areas, improvements, facilities and equipment from time to time designated by Landlord for the general and nonexclusive common use or benefit of Tenant, other tenants of the Project, Landlord and their respective Agents (as hereinafter defined), including, without limitation, roadways, entrances and exits, hallways, stairs, loading areas, landscaped areas, open areas, park areas, exterior lighting, service drives, walkways, sidewalks, atriums, courtyards, concourses, ramps, washrooms, maintenance and utility rooms and closets, exterior utility lines, lobbies, elevators and their housing and rooms, common window areas, common walls, common ceilings, common trash areas, vending or mail areas, common pipes, conduits, ducts and wires, and Parking Facilities.

 

1.25 Agents : Officers, partners, directors, employees, agents, licensees, contractors, customers and invitees; to the extent customers and invitees are under the principal’s control or direction.

 

1.26 Parking Facilities : All parking areas now or hereafter designated by Landlord for use by tenants of the Project and/or their guests and invitees, including, without limitation, surface parking, parking decks, parking structures and parking areas under or within the Project whether reserved, exclusive, non-exclusive or otherwise.

 

ARTICLE II

THE PREMISES

 

2.1 Lease of Premises . In consideration of the agreements contained herein, Landlord hereby leases the Premises to Tenant, and Tenant hereby leases the Premises from Landlord, for the Term and upon the terms and conditions hereinafter provided. It is specifically understood that the rentable square feet of the Premises have been determined by Landlord’s architect and that, for the purpose of any calculations which are based on the rentable square feet of the Premises, the number of rentable square feet stated in Article I shall control. The Premises are leased subject to, and Tenant agrees not to violate, all present and future covenants, conditions and restrictions of record which affect the Land, all of such documents collectively referred to as the “ Restrictions ”. As an appurtenance to the Premises, Tenant shall have the general and nonexclusive right, together with Landlord and the other tenants of the Project and

 

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their respective Agents (as previously defined), to use the Common Area subject to the terms and conditions of this Lease.

 

2.2 Landlord’s Reservations . Landlord shall retain absolute dominion and control over the Common Area and shall operate and maintain the Common Area in such manner as Landlord in its sole discretion, shall determine; provided however, such exclusive right shall not operate to prohibit Tenant from its material benefit and enjoyment of the Premises for the Permitted Use as defined in Section 1.7 . Tenant acknowledges that without advance notice to Tenant and without any liability to Tenant in any respect, Landlord shall have the right to (a) temporarily close any of the Common Area for maintenance, alteration or improvement purposes; and (b) change, alter, add to, temporarily close or otherwise affect the Parking Facilities or the Parking Space Allocation in such manner as Landlord, in its sole discretion, deems appropriate including, without limitation, the right to designate reserved spaces available only for use by one or more tenants (however, in such event, those parking spaces shall still be deemed Common Area for the purpose of the definition of Operating Expenses), provided that, except in emergency situations or situations beyond Landlord’s control, Landlord shall provide alternative Parking Facilities. In addition to the other rights of Landlord under this Lease, Landlord further reserves to itself and its respective successors and assigns the right to use Tenant’s name and the rentable square feet of the Premises in promotional materials relating to the Building or the Project. Landlord may exercise any or all of the foregoing rights without being deemed to be guilty of an eviction, actual or constructive, or a disturbance or interruption of the business of Tenant or Tenant’s use or occupancy of the Premises.

 

ARTICLE III

TERM

 

3.1 Term . The Term shall commence on the Commencement Date and expire at midnight on the Expiration Date. Notwithstanding the foregoing, if Substantial Completion (as defined in the Work Agreement attached hereto and made a part hereof as Exhibit B-1 ) of the Premises occurs on a date earlier or later than the Commencement Date, or if Tenant uses or accepts all or any portion of the Premises before the Commencement Date, then the Commencement Date shall be the earlier of: (i) the date of Substantial Completion; or (ii) the date upon which Tenant uses or accepts all or any portion of the Premises (e.g. by the moving of any furnishings or other personalty into the Premises). In such event, the Expiration Date shall be adjusted accordingly so that the period of the Term is not changed; provided, however, the Term shall be extended by the number of days necessary to provide for an Expiration Date on the last calendar day of the month of expiration.

 

3.2 Early Access . Upon prior written notice from Landlord, such notice to be given to Tenant approximately one week prior to Substantial Completion of the Premises, Tenant shall have non-exclusive reasonable rights of entry to the Premises for the limited purpose of installing data and phone system wiring and equipment and furniture and fixtures (the “Early Access Period”). Tenant will coordinate all early access activities with Landlord so as not to interfere with the Substantial Completion (as defined in the Work Agreement attached hereto as Exhibit B-1 ) of the Premises. No Basic Rent shall be owing and due during the Early Access Period; provided, however, the remaining terms and conditions of the Lease, including, but not limited to, Tenant’s insurance obligations pursuant to Article XVI below, shall be in full force and effect. Furthermore, Tenant agrees to indemnify and hold harmless Landlord from any and all claims, demands, actions, causes of action, damages, expenses, losses or liabilities arising out of Tenant’s entry on, or use of the Premises prior to the Commencement Date.

 

ARTICLE IV

RENT

 

4.1 Basic Rent . Tenant shall pay to Landlord the Basic Rent as specified in Section 1.11 .

 

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4.2 Payment of Basic Rent . Basic Rent shall be payable in monthly installments as specified in Section 1.11 , in advance, without demand, notice, deduction, offset or counterclaim, on or before the first day of each and every calendar month during the Term; provided, however, that the installment of the Basic Rent payable for the first full calendar month of the Term (and, if the Commencement Date occurs on a date other than on the first day of a calendar month, Basic Rent prorated from such date until the first day of the following month) shall be due and payable at the time of execution and delivery of this Lease. Tenant shall pay the Basic Rent and all Additional Rent as hereinafter defined, by good check or in lawful currency of the United States of America, to Landlord at such address as Landlord specifies to Tenant. Any payment made by Tenant to Landlord on account of Basic Rent may be credited by Landlord to the payment of any late charges then due and payable and to any Basic Rent or Additional Rent then past due before being credited to Basic Rent currently due. Notwithstanding the foregoing, Tenant shall pay Basic Rent and all Additional Rent (as hereinafter defined) by one of the following methods:

 

(a) by good check or in lawful currency of the United States of America to Landlord at P. O. Box 200366, Houston, Texas 77216-0366, or such other address that Landlord may hereafter designate in writing to Tenant; or

 

(b) electronically via ACH to the following (or such other account as Landlord may hereafter designate in writing to Tenant):

 

JP Morgan Chase Bank

San Antonio, Texas

ABA # 113000609

To Credit: USAA Real Estate Company

Account # 064-07074115

 

4.3 Additional Rent . All sums payable by Tenant under this Lease, other than Basic Rent, shall be deemed “ Additional Rent ,” and, unless otherwise set forth herein, shall be payable in the same manner as set forth above for Basic Rent.

 

4.4 Rent . Basic Rent as defined in Section 1.11 hereof and Additional Rent as defined in Section 4.3 above shall jointly be referred to as “ Rent ”.

 

4.5 Sales or Excise Taxes . Tenant shall pay to Landlord as Additional Rent, concurrently with payment of Basic Rent or Additional Rent to Landlord all taxes (including, but not limited to any and all sales, rent or excise taxes) on Basic Rent or Additional Rent or other amounts payable by Tenant to or otherwise benefitting Landlord, as levied or assessed by any governmental or political body or subdivision thereof against Landlord on account of such Basic Rent, Additional Rent or other amounts payable by Tenant to or otherwise benefitting Landlord, or any portion thereof.

 

ARTICLE V

SECURITY DEPOSIT

 

Simultaneously with the execution of this Lease, Tenant shall deposit the Security Deposit (as defined in Section 1.17 ) with Landlord, which Security Deposit shall be held in trust by Landlord until disbursement in accordance with the terms of this Lease. The Security Deposit shall not bear interest to Tenant and shall be security for Tenant’s obligations under this Lease; and, at Landlord’s election, in the event Tenant becomes the subject of a voluntary or involuntary (subject to the cure provisions of Section 21.1 relative to an involuntary petition) petition under Title 11 of the United States Code, the Security Deposit may be first applied to Landlord’s unrecaptured Tenant Improvement Allowance (as that term is defined in Exhibit B ) based on an amortization of such Tenant Improvement Allowance over the Term

 

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(“Unrecaptured Tenant Improvement Allowance”). In the event Landlord so elects to apply the Security Deposit to the Unrecaptured Tenant Improvement Allowance for purposes of 11 U.S.C. Section 502(b)(6), notwithstanding any provisions herein to the contrary, the Unrecaptured Tenant Improvement Allowance shall not be considered Rent, nor shall the Unrecaptured Tenant Improvement Allowance be considered damages resulting from the termination of this Lease but rather as reimbursement for the Tenant Work. Landlord shall be entitled to commingle the Security Deposit with Landlord’s other funds. Within ninety (90) days after the Expiration Date or earlier termination of this Lease, Landlord shall (provided an Event of Default does not then exist) return the Security Deposit to Tenant, less such portion thereof as Landlord shall have applied in accordance with this Article. If an Event of Default (as defined in Section 21.1 hereof) shall occur or if Tenant fails to maintain the Premises in the condition required by this Lease, Landlord shall have the right (but not the obligation), and without prejudice to any other remedy which Landlord may have on account thereof, to apply all or any portion of the Security Deposit to cure such default or to remedy the condition of the Premises. If Landlord so applies the Security Deposit or any portion thereof before the Expiration Date or earlier termination of this Lease, Tenant shall deposit with Landlord, upon demand, the amount necessary to restore the Security Deposit to its original amount. If Landlord shall sell or transfer its interest in the Building, Landlord shall have the right to transfer the Security Deposit to such purchaser or transferee, in which event Tenant shall look solely to the new landlord for the return of the Security Deposit, and Landlord thereupon shall be released from all liability to Tenant for the return of the Security Deposit.

 

ARTICLE VI

OPERATING EXPENSES

 

6.1 Operating Expense Rental . Commencing upon expiration of the Base Year, Tenant shall pay to Landlord throughout the remainder of the Term, as Additional Rent, Tenant’s Proportionate Share (as defined in Section 1.15 ) of the amount by which the Operating Expenses (as hereinafter defined) during each Calendar Year exceed the Operating Expenses for the Base Year (the “ Operating Expense Rental ”). In the event that the Expiration Date is other than the last day of a Calendar Year, then the Operating Expenses for the Base Year and applicable Calendar Year shall be appropriately prorated.

 

6.2 Operating Expenses Defined . As used herein, the term “ Operating Expenses ” shall mean all expenses, costs and disbursements of every kind and nature, except as specifically excluded otherwise herein, which Landlord incurs because of or in connection with the ownership, maintenance, management and operation of the Project, including, if the Project is less than ninety-five percent (95%) occupied, all additional costs and expenses of operation, management and maintenance of the Project which Landlord determines that it would have paid or incurred during any Calendar Year if the Project had been ninety-five percent (95%) occupied. Operating Expenses may include, without limitation, all costs, expenses and disbursements incurred or made in connection with the following:

 

(a) Wages and salaries of all employees, whether employed by Landlord or the Project’s management company, engaged in the operation and maintenance of the Project, and all costs related to or associated with such employees or the carrying out of their duties, including uniforms and their cleaning, taxes, auto allowances and insurance and benefits (including, without limitation, contributions to pension and/or profit sharing plans and vacation or other paid absences);

 

(b) All supplies, tools, equipment and materials, including janitorial and lighting supplies, used directly in the operation and maintenance of the Project, including any lease payments therefor; provided, however, any such equipment which under generally accepted accounting principles should be classified as capital items shall be amortized on a straight-line basis over their useful lives, not to exceed the Project’s useful life, or, at Landlord’s election in the case of capital improvements that lower operating costs, the amortization amount will be the Landlord’s reasonable estimate of annual cost savings together with interest on the unamortized balance of such cost at the Interest Rate, or such higher

 

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rate as may have been paid by Landlord on funds borrowed for the purposes of purchasing such equipment;

 

(c) All utilities, including, without limitation, electricity, telephone, water, sewer, power, gas, heating, lighting and air conditioning for the Project, except to the extent such utilities are charged directly to, or paid directly by, a tenant of the Project other than as a part of the Operating Expenses;

 

(d) All maintenance, operation and service agreements for the Project, and any equipment related thereto, including, without limitation, service and/or maintenance agreements for the Parking Facilities, energy management, HVAC, plumbing and electrical systems, and for window cleaning, elevator maintenance, janitorial service, groundskeeping, interior and exterior landscaping and plant maintenance;

 

(e) All insurance purchased by Landlord or the Project’s management company relating to the Project and any equipment or other property contained therein or located thereon including, without limitation, casualty, liability, earthquake, rental loss, sprinkler and water damage insurance;

 

(f) All repairs to the Project (excluding to the extent repairs are paid for by the proceeds of insurance or by Tenant or other third parties other than as a part of the Operating Expenses), including interior, exterior, structural or nonstructural repairs, and regardless of whether foreseen or unforeseen; provided, however, any such repairs which under generally accepted accounting principles should be classified as capital improvements shall be amortized on a straight-line basis over their useful lives, not to exceed the Project’s useful life, or, at Landlord’s election in the case of capital improvements that lower operating costs, the amortization amount will be the Landlord’s reasonable estimate of annual cost savings together with interest on the unamortized balance of such cost at the Interest Rate, or such higher rate as may have been paid by Landlord on funds borrowed for the purposes of constructing such capital improvements;

 

(g) All maintenance of the Project, including, without limitation, repainting, replacement of wall coverings and window coverings, replacement of carpeting, ice and snow removal, window washing, landscaping, groundskeeping, trash removal and the patching, painting, resealing and complete resurfacing of roads, driveways and parking lots; provided, however, any such maintenance, repairs or replacements which under generally accepted accounting principles should be classified as capital improvements shall be amortized on a straight-line basis over their useful lives, not to exceed the Project’s useful life, or, at Landlord’s election in the case of capital improvements that lower operating costs, the amortization amount will be the Landlord’s reasonable estimate of annual cost savings together with interest on the unamortized balance of such cost at the Interest Rate, or such higher rate as may have been paid by Landlord on funds borrowed for the purposes of constructing such capital improvements;

 

(h) A management fee payable to Landlord or the company or companies managing the Project, if any;

 

(i) That part of office rent or rental value of space used or furnished by Landlord to enhance, manage, operate and maintain the Project;

 

(j) Accounting and legal fees incurred in connection with the operation and maintenance of the Project, or related thereto;

 

(k) Any additional services not provided to the Project at the Commencement Date but thereafter provided by Landlord which Landlord reasonably deems necessary or desirable in connection with the management or operation of the Project;

 

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(l) Any capital improvements made to the Project for the purpose of reducing Operating Expenses or which are required under any governmental law or regulation that was not applicable to the Project as of the Date of Lease (which are not a result of the nature of Tenant’s specific use of the Premises, which capital improvements shall be the responsibility of Tenant), the cost of which shall be amortized on a straight-line basis over the improvement’s useful life, not to exceed the Project’s useful life, or, at Landlord’s election in the case of capital improvements that lower operating costs, the amortization amount will be the Landlord’s reasonable estimate of annual cost savings together with interest on the unamortized balance of such cost at the Interest Rate, or such higher rate as may have been paid by Landlord on funds borrowed for the purposes of constructing such capital improvements; and

 

(m) Other expenses and costs reasonably necessary for operating and maintaining the Project.

 

Operating Expenses shall not include: (i) depreciation on the Project (other than as provided in subsections (b), (f), (g) and (l) above); (ii) costs of tenant improvements incurred in renovating leased space for the exclusive use of a particular tenant of the Project; (iii) finders’ fees and real estate brokers’ commissions; (iv) Project mortgage principal or interest; (v) capital items other than those referred to in subsections (b), (f), (g) and (l) above; (vi) costs of compliance with the ADA to the extent Landlord is responsible for such costs pursuant to Section 9.4 (a) herein; and (vii) Impositions as hereinafter defined in Article VII .

 

6.3 Adjustments to Operating Expense Rental . Landlord shall submit to Tenant, before the expiration of the Base Year and the beginning of each Calendar Year thereafter or as soon thereafter as reasonably possible, a statement of Landlord’s estimate of Tenant’s Proportionate Share of the increase in Operating Expenses over Operating Expenses for the Base Year payable by Tenant during such Calendar Year. Commencing upon expiration of the Base Year and in addition to the Basic Rent, Tenant shall pay to Landlord on or before the first day of each month during such Calendar Year an amount equal to one-twelfth (1/12) of Tenant’s Proportionate Share of the estimated increase in Operating Expenses over Operating Expenses for the Base Year payable by Tenant for such Calendar Year as set forth in Landlord’s statement. If Landlord fails to give Tenant notice of its estimated payments due under this section for any Calendar Year, then Tenant shall continue making monthly estimated payments in accordance with the estimate for the previous Calendar Year until a new estimate is provided. If Landlord determines that, because of unexpected increases in Operating Expenses or other reasons, Landlord’s estimate of the Operating Expenses was too low, then Landlord shall have the right to give a new statement of the estimated Operating Expenses due from Tenant for such Calendar Year or the balance thereof and to bill Tenant for any deficiency which may have accrued during such Calendar Year, and Tenant shall thereafter pay monthly estimated payments based on such new statement.

 

Within ninety (90) days after the expiration of each Calendar Year following expiration of the Base Year, or as soon thereafter as is practicable, Landlord shall submit a statement to Tenant showing the actual Operating Expenses for such Calendar Year and Tenant’s Proportionate Share of the amount by which such Operating Expenses exceed the Operating Expenses for the Base Year. If for any Calendar Year, Tenant’s estimated monthly payments exceed Tenant’s Proportionate Share of the amount by which the actual Operating Expenses for such Calendar Year exceed the Operating Expenses for the Base Year, then Landlord shall give Tenant a credit in the amount of the overpayment toward Tenant’s next monthly payments of estimated Operating Expenses. If for any Calendar Year Tenant’s estimated monthly payments are less than Tenant’s Proportionate Share of the amount by which the actual Operating Expenses for such Calendar Year exceed the Operating Expenses for the Base Year, then Tenant shall pay the total amount of such deficiency to Landlord within fifteen (15) days after receipt of the statement from Landlord. Landlord’s and Tenant’s obligations with respect to any overpayment or underpayment of Operating Expenses shall survive the expiration or termination of this Lease.

 

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ARTICLE VII

IMPOSITIONS RENTAL

 

7.1 Impositions Rental . Commencing upon expiration of the Base Year, Tenant shall pay to Landlord, throughout the remainder of the Term as Additional Rent, Tenant’s Proportionate Share (as defined in Section 1.15 ) of the amount by which the Impositions (as hereinafter defined) during each Calendar Year exceed the Impositions for the Base Year (“ Impositions Rental ”). In the event that the Expiration Date is other than the last day of a Calendar Year, then Impositions for the Base Year and applicable Calendar Year shall be appropriately prorated.

 

7.2 Impositions Defined . Impositions shall be defined as all real property taxes and assessments levied against the Project and the various estates therein and the underlying Land, all personal property taxes levied on personal property of Landlord used in the management, operation, maintenance and repair of the Project, all taxes, assessments and reassessments of every kind and nature whatsoever levied or assessed in lieu of or in substitution for existing or additional real or personal property taxes and assessments on the Project or the sale, conveyance, assignment, ground lease or other transfer thereof, service payments in lieu of taxes, excises, transit charges and fees, housing, park and child care assessments, development and other assessments, reassessments, levies, fees or charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind which are assessed, levied, charged, confirmed or imposed by any public authority upon the Project, its operations or the Rent provided for in this Lease, 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 or any other purposes which are assessed, levied, confirmed, imposed or become a lien upon the Premises or Project or become payable during the Term. Further, for the purposes of this Article, Impositions shall include the reasonable expenses (including, without limitation, attorneys’ fees) incurred by Landlord in challenging or obtaining or attempting to obtain a reduction of such Impositions, regardless of the outcome of such challenge. Notwithstanding the foregoing, Landlord shall have no obligation to challenge Impositions. If as a result of any such challenge, a tax refund is made to Landlord, then provided no uncured Event of Default exists under this Lease, the amount of such refund less the expenses of the challenge shall be deducted from Impositions due in the Lease Year such refund is received. In the case of any Impositions which may be evidenced by improvement or other bonds or which may be paid in annual or other periodic installments, Landlord shall elect to cause such bonds to be issued or cause such assessment to be paid in installments over the maximum period permitted by law. Nothing contained in this Lease shall require Tenant to pay any franchise, estate, inheritance or succession transfer tax of Landlord, or any 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 under the laws of the United States Government or the state, or any political subdivision thereof, a tax (including, but not limited to any sales tax) or excise on Rent or other amounts payable by Tenant to Landlord, or any other tax however described, is levied or assessed by any such political body against Landlord on account of Rent, or a portion thereof, Tenant shall pay one hundred percent (100%) of any such tax or excise as Additional Rent as provided in Section 4.5 above.

 

7.3 Adjustments to Impositions Rental . Landlord shall submit to Tenant, before the expiration of the Base Year and the beginning of each Calendar Year thereafter or as soon thereafter as reasonably possible, a statement of Landlord’s estimate of Tenant’s Proportionate Share of the increase in Impositions over Impositions for the Base Year payable by Tenant during such Calendar Year. Commencing upon expiration of the Base Year and in addition to the Basic Rent, Tenant shall pay to Landlord on or before the first day of each month during such Calendar Year an amount equal to one-twelfth (1/12) of Tenant’s Proportionate Share of the estimated increase in Impositions over Impositions for the Base Year payable by Tenant for such Calendar Year as set forth in Landlord’s statement. If Landlord fails to give Tenant notice of its estimated payments due under this section for any Calendar

 

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Year, then Tenant shall continue making monthly estimated payments in accordance with the estimate for the previous Calendar Year until a new estimate is provided. If Landlord determines that, because of unexpected increases in Impositions or other reasons, Landlord’s estimate of the Impositions was too low, then Landlord shall have the right to give a new statement of the Impositions due from Tenant for such Calendar Year or the balance thereof and to bill Tenant for any deficiency which may have accrued during such Calendar Year, and Tenant shall thereafter pay monthly estimated payments based on such new statement.

 

Within ninety (90) days after the expiration of each Calendar Year following expiration of the Base Year, or as soon thereafter as is practicable, Landlord shall submit a statement to Tenant showing the actual Impositions for such Calendar Year and Tenant’s Proportionate Share of the amount by which such Impositions exceed the Impositions for the Base Year. If for any Calendar Year, Tenant’s estimated monthly payments exceed Tenant’s Proportionate Share of the amount by which the actual Impositions for such Calendar Year exceed the Impositions for the Base Year, then Landlord shall give Tenant a credit in the amount of the overpayment toward Tenant’s next monthly payments of estimated Impositions. If for any Calendar Year Tenant’s estimated monthly payments are less than Tenant’s Proportionate Share of the amount by which the actual Impositions for such Calendar Year exceed the Impositions for the Base Year, then Tenant shall pay the total amount of such deficiency to Landlord within fifteen (15) days after receipt of the statement from Landlord. Landlord’s and Tenant’s obligations with respect to any overpayment or underpayment of Impositions shall survive the expiration or termination of this Lease.

 

ARTICLE VIII

PARKING

 

During the Term and subject to the Rules and Regulations (as defined in Article XIX ) promulgated by Landlord from time to time, Tenant shall have the right to use the Parking Space Allocation (as defined in Section 1.16 ).

 

ARTICLE IX

USE AND REQUIREMENTS OF LAW

 

9.1 Use . The Premises will be used only for the Permitted Use (as defined in Section 1.7 ). Tenant will not: (i) do or permit to be done in or about the Premises, nor bring to, keep or permit to be brought or kept in the Premises, anything which is prohibited by or will in any way conflict with any law, statute, ordinance or governmental rule or regulation which is now in force or which may be enacted or promulgated after the Date of Lease; (ii) do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants of the Building or Project, or injure or annoy them; (iii) use or allow the Premises to be used for any improper, unlawful or objectionable purpose; (iv) cause, maintain or permit any nuisance in, on or about the Premises or commit or allow to be committed any waste in, on or about the Premises; or (v) subject the Premises to any use which would increase the existing rate of insurance on the Project or any portion thereof or cause any cancellation of any insurance policy covering the Project or any portion thereof.

 

9.2 Requirements of Law . At its sole cost and expense, Tenant will promptly comply with: (i) all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or in force after the Commencement Date of the Lease; (ii) the requirements of any board of fire underwriters or other similar body constituted now or after the Commencement Date of the Lease; (iii) any direction or occupancy certificate issued pursuant to any law by any public officer or officers; and (iv) all Restrictions, insofar as (i) - (iv) above relate to the condition, use or occupancy of the Premises, excluding requirements of structural changes or changes outside the Premises unless related to (a) Tenant’s acts, (b) Tenant’s business, (c) Tenant’s use of the Premises, or (d) improvements made by or for Tenant.

 

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9.3 Hazardous Materials . Tenant shall not bring or permit to remain on the Premises or the Project, or allow any of Tenant’s Agents to bring or permit to remain on the Premises or the Project, any asbestos, petroleum or petroleum products, used oil, explosives, toxic materials or substances defined as hazardous wastes, hazardous materials or hazardous substances under any federal, state or local law or regulation (“ Hazardous Materials ”), except for routine office and janitorial supplies used on the Premises and stored in the usual and customary manner and quantities, and in compliance with all applicable environmental laws and regulations. Tenant shall not install or operate any underground storage tanks on or under the Premises or the Project. Tenant’s violation of the foregoing prohibitions shall constitute a material breach and default hereunder and Tenant shall indemnify, protect, hold harmless and defend (by counsel acceptable to Landlord) Landlord, and its Agents and each of their respective successors and assigns, from and against any and all claims, damages, penalties, fines, liabilities and cost (including reasonable attorneys’ fees and court costs) caused by or arising out of (i) a violation of the foregoing prohibition or (ii) the presence or release of any Hazardous Materials on, from, under or about the Premises, the Project or other properties as the direct or indirect result of Tenant’s occupancy of the Premises. Tenant, at its sole cost and expense, shall clean up, remove, remediate and repair any soil or groundwater contamination or other damage or contamination in conformance with the requirements of applicable law caused by the presence or any release of any Hazardous Materials in, on, from, under or about the Premises during the term of this Lease. Neither the written consent of Landlord to the presence of the Hazardous Materials, nor Tenant’s compliance with all laws applicable to such Hazardous Materials, shall relieve Tenant of its indemnification obligation under this Lease. Tenant shall immediately give Landlord written notice (i) of any suspected breach of this section, (ii) upon learning of the presence or any release of any Hazardous Materials, or (iii) upon receiving any notices from governmental agencies or other parties pertaining to Hazardous Materials which may affect the Premises. Landlord shall have the right from time to time, but not the obligation, to enter upon the Premises to conduct such inspections and undertake such sampling and testing activities as Landlord deems necessary or desirable to determine whether Tenant is in compliance with this provision. The obligations of Tenant hereunder shall survive the expiration or earlier termination, for any reason, of this Lease.

 

9.4 ADA Compliance . Notwithstanding any other statement in this Lease, the following provisions shall govern the parties’ compliance with the Americans With Disabilities Act of 1990, as amended from time to time, Public Law 101-336; 42 U.S.C. §§12101, et seq. (the “ ADA ”):

 

(a) To the extent governmentally required as of the Commencement Date of this Lease, Landlord shall be responsible for compliance with Title III of the ADA, at its expense, and such expense shall not be included as an Operating Expense of the Project, with respect to any repairs, replacements or alterations to the Common Area of the Project.

 

(b) To the extent governmentally required subsequent to the Commencement Date of this Lease as a result of an amendment to Title III of the ADA subsequent to the Commencement Date of this Lease, Landlord shall be responsible for compliance with Title III of the ADA with respect to any repairs, replacements or alterations to the Common Area of the Project, and such expense shall be included as an Operating Expense of the Project.

 

(c) Landlord shall indemnify, defend and hold harmless Tenant and its Agents from all fines, suits, procedures, penalties, claims, liability, losses, expenses and actions of every kind, and all costs associated therewith (including, without limitation, reasonable attorneys’ and consultants’ fees) arising out of or in any way connected with Landlord’s failure to comply with Title III of the ADA as required above.

 

(d) To the extent governmentally required, Tenant shall be responsible for compliance, at its expense, with Titles I and III of the ADA with respect to the Premises.

 

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(e) Tenant shall indemnify, defend and hold harmless Landlord and its Agents from all fines, suits, procedures, penalties, claims, liability, losses, expenses and actions of every kind, and all costs associated therewith (including, without limitation, reasonable attorneys’ and consultants’ fees) arising out of or in any way connected with Tenant’s failure to comply with Titles I and III of the ADA as required above.

 

ARTICLE X

ASSIGNMENT AND SUBLETTING

 

10.1 Landlord’s Consent .

 

(a) Tenant shall not assign, transfer, mortgage or otherwise encumber this Lease or sublet or rent (or permit a third party to occupy or use) the Premises, or any part thereof, nor shall any assignment or transfer of this Lease or the right of occupancy hereunder be effected by operation of law or otherwise, without the prior written consent of Landlord. A transfer at any one time or from time to time of twenty percent (20%) or more of an interest in Tenant (whether stock, partnership interest or other form of ownership or control) by any person(s) or entity(ties) having an interest in ownership or control of Tenant shall be deemed to be an assignment of this Lease. Within thirty (30) days following Landlord’s receipt of Tenant’s request for Landlord’s consent to a proposed assignment, sublease, or other encumbrance, together with all information required to be delivered by Tenant pursuant to the provisions of Section 10.2 hereof, Landlord shall: (i) consent to such proposed transaction; (ii) refuse such consent; or (iii) elect to terminate this Lease in the event of an assignment, or in the case of a sublease, terminate this Lease as to the portion of the Premises proposed to be sublet in accordance with the provisions of Section 10.4 below. Any assignment, sublease or other encumbrance without Landlord’s written consent shall be voidable by Landlord and, at Landlord’s election, constitute an Event of Default hereunder.

 

(b) Without limiting other instances in which Landlord may withhold consent to an assignment or sublease, Landlord and Tenant acknowledge that Landlord may withhold consent in the following instances:

 

(i) If the proposed use of the Premises by the assignee or sublessee conflicts with Section 1.7 , requires alterations that would decrease the value of the leasehold improvements in the Premises, requires substantially increased services by Landlord, or would result in more than a reasonable number of occupants per floor;

 

(ii) If the proposed assignee or sublessee is: a governmental entity; a person or entity with whom Landlord has negotiated for space in the Project during the prior twelve (12) months; a present tenant in the Project; a person or entity whose tenancy in the Project would violate any exclusivity arrangement which Landlord has with any other tenant; a person or entity of a character or reputation or engaged in a business which is not consistent with the quality of the Project; or not a party of reasonable financial worth and/or financial stability in light of the responsibilities involved under this Lease on the date consent is requested;

 

(iii) If the rent for the proposed assignee or sublessee is less than the prevailing market rental rate for the Premises or comparable premises in the Project;

 

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(iv) If an Event of Default has occurred under this Lease or if an Event of Default would occur but for the pendency of any cure periods provided under Section 21.1 .

 

(c) Notwithstanding that the prior express written permission of Landlord to any of the aforesaid transactions may have been obtained, the following shall apply:

 

(i) In the event of an assignment, contemporaneously with the granting of Landlord’s aforesaid consent, Tenant shall cause the assignee to expressly assume in writing and agree to perform all of the covenants, duties, and obligations of Tenant hereunder and such assignee shall be jointly and severally liable therefore along with Tenant.

 

(ii) All terms and provisions of the Lease shall continue to apply after any such transaction.

 

(iii) In any case where Landlord consents to an assignment, transfer, encumbrance or subletting, the undersigned Tenant and any Guarantor shall nevertheless remain directly and primarily liable for the performance of all of the covenants, duties, and obligations of Tenant hereunder (including, without limitation, the obligation to pay all Rent and other sums herein provided to be paid), and Landlord shall be permitted to enforce the provisions of this instrument against the undersigned Tenant, any Guarantor and/or any assignee without demand upon or proceeding in any way against any other person. Neither the consent by Landlord to any assignment, transfer, encumbrance or subletting nor the collection or acceptance by Landlord of rent from any assignee, subtenant or occupant shall be construed as a waiver or release of the initial Tenant or any Guarantor from the terms and conditions of this Lease or relieve Tenant or any subtenant, assignee or other party from obtaining the consent in writing of Landlord to any further assignment, transfer, encumbrance or subletting.

 

(iv) Tenant hereby assigns to Landlord the rent and other sums due from any subtenant, assignee or other occupant of the Premises and hereby authorizes and directs each such subtenant, assignee or other occupant to pay such rent or other sums directly to Landlord; provided however, that until the occurrence of an Event of Default, Tenant shall have the license to continue collecting such rent and other sums. Notwithstanding the foregoing, in the event that the rent due and payable by a sublessee under any such permitted sublease (or a combination of the rent payable under such sublease plus any bonus or other consideration therefor or incident thereto) exceeds the hereinabove provided Rent payable under this Lease, or if with respect to a permitted assignment, permitted license, or other transfer by Tenant permitted by Landlord, the consideration payable to Tenant by the assignee, licensee, or other transferee exceeds the Rent payable under this Lease, then Tenant shall be bound and obligated to pay Landlord such excess rent and other excess consideration within ten (10) days following receipt thereof by Tenant from such sublessee, assignee, licensee, or other transferee, as the case may be.

 

(v) Tenant shall pay Landlord a fee in the amount of ONE THOUSAND AND NO/100 DOLLARS ($1,000.00) to reimburse Landlord for all its expenses including, without limitation, reasonable attorney fees associated with Tenant’s request to assign, sublet or otherwise encumber the Premises under the terms of the Lease.

 

10.2 Submission of Information . If Tenant requests Landlord’s consent to a specific assignment or subletting, Tenant will submit in writing to Landlord: (i) the name and address of the proposed assignee or subtenant; (ii) a counterpart of the proposed agreement of assignment or sublease; (iii) reasonably satisfactory information as to the nature and character of the business of the proposed assignee or subtenant, and as to the nature of its proposed use of the space; (iv) banking, financial or other credit information reasonably sufficient to enable Landlord to determine the financial responsibility and character of the proposed assignee or subtenant; (v) executed estoppel certificates from Tenant containing

 

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such information as provided in Section 25.4 herein; and (vi) any other information reasonably requested by Landlord.

 

10.3 Consent of Mortgagee . Any transfer for which consent is required pursuant to any mortgage, deed of trust, security interest, or title retention interest affecting the Land, Building or Project (the “Mortgage”) shall not be effective unless and until such consent is given by the holder of any note or obligation secured by a Mortgage (the “Mortgagee”).

 

10.4 Landlord’s Option to Recapture Premises . If Tenant proposes to assign this Lease, Landlord may, at its option, upon written notice to Tenant given within thirty (30) days after its receipt of Tenant’s notice of proposed assignment, together with all other necessary information, elect to recapture the Premises and terminate this Lease. If Tenant proposes to sublease all or part of the Premises, Landlord may, at its option upon written notice to Tenant given within thirty (30) days after its receipt of Tenant’s notice of proposed subletting, together with all other necessary information, elect to recapture such portion of the Premises as Tenant proposes to sublease and upon such election by Landlord, this Lease shall terminate as to the portion of the Premises recaptured. If a portion of the Premises is recaptured, the Rent payable under this Lease shall be proportionately reduced based on the square footage of the rentable square feet retained by Tenant and the square footage of the rentable square feet leased by Tenant immediately prior to such recapture and termination, and Landlord and Tenant shall thereupon execute an amendment to this Lease in accordance therewith. Landlord may thereafter, without limitation, lease the recaptured portion of the Premises to the proposed assignee or subtenant without liability to Tenant. Upon any such termination, Landlord and Tenant shall have no further obligations or liabilities to each other under this Lease with respect to the recaptured portion of the Premises, except with respect to obligations or liabilities which accrue or have accrued hereunder as of the date of such termination (in the same manner as if the date of such termination were the date originally fixed for the expiration of the term hereof).

 

ARTICLE XI

MAINTENANCE AND REPAIR

 

11.1 Landlord’s Obligation . Landlord will maintain, repair and restore in reasonably good order and condition (i) the Common Area (including lobbies, stairs, elevators, corridors, restrooms, walkways, driveways, grounds and Parking Facilities); (ii) the mechanical, plumbing, electrical and HVAC (as hereinafter defined) equipment serving the Building; and (iii) the structure of the Building (including roof, exterior walls, foundation, windows and Building standard lighting). The cost of such maintenance and repairs to the Building, the Common Area and said equipment shall be included in the Operating Expenses and paid by Tenant as provided in Article VI herein; provided, however, Tenant shall bear the full cost, plus ten percent (10%) of such cost for Landlord’s overhead, of any maintenance, repair or restoration necessitated by the acts or omissions of Tenant or its Agents. Tenant waives all rights to make repairs at the expense of Landlord, to deduct the cost of such repairs from any payment owed to Landlord under this Lease or to vacate the Premises.

 

11.2 Tenant’s Obligation . Subject to Landlord’s express obligations set forth in Section 11.1 above, Tenant, at its expense, shall maintain the Premises (including Tenant’s leasehold improvements, equipment, personal property and trade fixtures located in the Premises) in their condition at the time they were delivered to Tenant, reasonable wear and tear excepted. Tenant’s obligation shall include without limitation the obligation to maintain and repair all interior walls, floors, ceilings, doors, entrances to the Premises, supplemental HVAC systems within the Premises and plumbing systems and fixtures (including restrooms) within the Premises. Tenant will immediately advise Landlord of any damage to the Premises or the Project. All damage or injury to the Premises (excluding Tenant’s equipment, personal property and trade fixtures), may be repaired, restored or replaced by Landlord, at the expense of Tenant and such expense (plus ten percent (10%) of such expense for Landlord’s overhead) will be

 

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collectible as Additional Rent and will be paid by Tenant upon demand. Neither Tenant nor its Agents shall repair, restore or replace any damage or injury to the Premises or the Project without the prior written consent of Landlord. Tenant and Tenant’s telecommunications companies, including but not limited to, local exchange telecommunications companies and alternative access vendor services companies shall have no right of access to the Land, Building or the Project for the installation and operation of telecommunications systems, including but not limited to, voice, video, data, and any other telecommunications services provided over wire, fiber optic, microwave, wireless, and any other transmission systems, for part or all of Tenant’s telecommunications within the Building without Landlord’s prior written consent.

 

11.3 Landlord’s Right to Maintain or Repair . If Tenant fails to maintain the Premises or if Landlord agrees to allow Tenant to repair, restore or replace any damage or injury as provided in Section 11.2 and Tenant fails within five (5) days following notice to Tenant, to commence to maintain or to repair, restore or replace any damage to the Premises or Project caused by Tenant or its Agents and diligently pursue to completion such maintenance or repair, restoration or replacement, Landlord may, at its option, cause all required maintenance or repairs, restorations or replacements to be made and Tenant shall pay Landlord pursuant to Section 11.2 .

 

ARTICLE XII

INITIAL CONSTRUCTION; ALTERATIONS

 

12.1 Initial Construction . Landlord and Tenant agree that the construction of the Tenant Work (as defined in the Work Agreement) shall be performed in accordance with Exhibits B-l and B-2 . Subject to the construction of the Tenant Work, TENANT ACCEPTS THE PREMISES “AS IS”, “WHERE IS” AND WITH ANY AND ALL FAULTS, AND LANDLORD NEITHER MAKES NOR HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE QUALITY, SUITABILITY OR FITNESS THEREOF OF THE PREMISES, OR THE CONDITION OR REPAIR THEREOF. TENANT TAKING POSSESSION OF THE PREMISES SHALL BE CONCLUSIVE EVIDENCE FOR ALL PURPOSES OF TENANT’S ACCEPTANCE OF THE PREMISES IN GOOD ORDER AND SATISFACTORY CONDITION, AND IN A STATE AND CONDITION SATISFACTORY, ACCEPTABLE AND SUITABLE FOR THE TENANT’S USE PURSUANT TO THIS LEASE.

 

12.2 Alterations . Tenant shall not make or permit any alterations, decorations, additions or improvements of any kind or nature to the Premises or the Project, whether structural or nonstructural, interior, exterior or otherwise (“ Alterations ”) without the prior written consent of Landlord, said consent not to be unreasonably withheld. Landlord may impose any reasonable conditions to its consent, including, without limitation: (i) delivery to Landlord of written and unconditional waivers of mechanic’s and materialmen’s liens as to the Project for all work, labor and services to be performed and materials to be furnished, signed by all contractors, subcontractors, materialmen and laborers participating in the Alterations; (ii) prior approval of the plans and specifications and contractor(s) with respect to the Alterations and any other documents and information reasonably requested by Landlord; (iii) supervision by Landlord’s representative, at Tenant’s expense, of the Alterations; (iv) delivery to Landlord of payment and performance bonds naming Landlord and Mortgagee as obligees; and (v) proof of worker’s compensation insurance and commercial general liability insurance in such amounts and meeting such requirements as requested by Landlord. The Alterations shall conform to the requirements of Landlord’s and Tenant’s insurers and of the federal, state and local governments having jurisdiction over the Premises, including, without limitation, the Americans with Disabilities Act of 1990 (42 U.S.C. Section 12101, et seq.), the OSHA General Industry Standard (29 C.F.R. Section 1910.1001, et seq.), and the OSHA Construction Standard (29 C.F.R. Section 1926.1001, et seq.) and shall be performed in accordance with the terms and provisions of this Lease and in a good an