EXHIBIT 10.05
CONFIDENTIAL TREATMENT REQUESTED
OFFICE LEASE
KILROY REALTY
SANTA FE SUMMIT
KILROY REALTY, L.P.,
a Delaware limited partnership
as Landlord,
and
INTUIT INC.,
a Delaware corporation,
as Tenant.
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
TABLE OF CONTENTS
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Page
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ARTICLE 1 PREMISES, BUILDING, PROJECT, AND
COMMON AREAS
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6
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ARTICLE 2 INITIAL LEASE TERM; OPTION
TERM(S)
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19
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ARTICLE 3 BASE RENT; ABATEMENT OF
RENT
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25
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ARTICLE 4 ADDITIONAL RENT
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30
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ARTICLE 5 USE OF PREMISES
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42
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ARTICLE 6 SERVICES AND UTILITIES
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44
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47
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ARTICLE 8 ADDITIONS AND ALTERATIONS
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49
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51
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52
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ARTICLE 11 DAMAGE AND DESTRUCTION
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56
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59
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59
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ARTICLE 14 ASSIGNMENT AND SUBLETTING
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60
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ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
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66
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66
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ARTICLE 17 ESTOPPEL CERTIFICATES
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67
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68
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ARTICLE 19 DEFAULTS; REMEDIES
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68
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ARTICLE 20 COVENANT OF QUIET
ENJOYMENT
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71
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ARTICLE 21 TELECOMMUNICATIONS
EQUIPMENT
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72
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ARTICLE 22 EMERGENCY GENERATOR
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73
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73
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We have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission (SEC). We omitted such
portions from this filing and filed them separately with the
SEC.
(ii)
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Page
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ARTICLE 24 COMPLIANCE WITH LAW
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76
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77
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ARTICLE 26 LANDLORD’S RIGHT TO CURE
DEFAULT; PAYMENTS BY TENANT
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77
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ARTICLE 27 ENTRY BY LANDLORD
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78
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ARTICLE 28 TENANT PARKING; PROJECT
FENCING
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79
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ARTICLE 29 MISCELLANEOUS PROVISIONS
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80
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LIST OF
EXHIBITS
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OUTLINE OF
PREMISES
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PROJECT SITE
PLAN
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TENANT WORK
LETTER
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FORM OF NOTICE
OF LEASE TERM DATES
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BASE RENT
MEMORANDUM
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RULES AND
REGULATIONS; MULTI-TENANT BUILDINGS
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RULES AND
REGULATIONS; SINGLE-TENANT BUILDINGS
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FORM OF
TENANT’S ESTOPPEL CERTIFICATE
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RECOGNITION OF
COVENANTS, CONDITIONS AND RESTRICTIONS
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NET EQUIVALENT
LEASE RATE
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BUILDING
STANDARD SIGNAGE SPECIFICATIONS
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JANITORIAL
SPECIFICATIONS
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COMMISSION
AGREEMENT
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We have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission (SEC). We omitted such
portions from this filing and filed them separately with the
SEC.
(iii)
INDEX
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Page(s)
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12-Month Abatement Period
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30
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91
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31
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43
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74
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31
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50
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77
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42
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92
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91
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91
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25
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78
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26
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29
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29
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9
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86
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48
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Building 4 Expansion Space
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10
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7
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7
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45
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40
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48
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48
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44
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24
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23
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23
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23
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Contemplated Effective Date
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64
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64
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66
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50
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59
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Damage Termination Notice
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59
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31
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19
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19
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13
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31
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89
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We have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission (SEC). We omitted such
portions from this filing and filed them separately with the
SEC.
(iv)
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Page(s)
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53
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39
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39
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Estimated Direct Expenses
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40
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93
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39
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8
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Exclusive Tenant Areas Fixtures and
Equipment
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8
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24
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32
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First Offer Commencement Date
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16
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14
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15
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14
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14
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22
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16
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16
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First Refusal Space Amendment
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18
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First Refusal Space Commencement Date
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18
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First Refusal Space Lease
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18
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84
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13
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89
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45
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45
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47
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Intention to Transfer Notice
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64
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78
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91
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1
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53
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57
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24
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24
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Landlord’s Option Rent
Calculation
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24
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1
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19
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19
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19
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19
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88
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84
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13
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23
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We have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission (SEC). We omitted such
portions from this filing and filed them separately with the
SEC.
(v)
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Page(s)
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13
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65
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69
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Notice of Lease Term Dates
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19
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84
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76
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32
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20
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56
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90
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24
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21
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20
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66
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6
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92
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44
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7
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7
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26
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30
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75
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37
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Proposition 13 Protection Amount
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41
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Proposition 13 Purchase Price
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42
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41
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64
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19
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21
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87
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26
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23
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31
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13
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42,62
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22
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76
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38
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62
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64
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1
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14
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14
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39
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37
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We have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission (SEC). We omitted such
portions from this filing and filed them separately with the
SEC.
(vi)
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Page(s)
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41
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Telecommunications Equipment
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73
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1
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54
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6
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Tenant’s Option Rent
Calculation
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24
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53
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38
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75
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17
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17
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65
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62
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64
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61
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61
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91
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31
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We have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission (SEC). We omitted such
portions from this filing and filed them separately with the
SEC.
(vii)
SANTA FE SUMMIT
OFFICE LEASE
This Office Lease
(the “ Lease ”), dated as of the date set forth
in Section 1 of the Summary of Basic Lease Information
(the “ Summary ”), below, is made by and between
KILROY REALTY, L.P., a Delaware limited partnership (“
Landlord ”), and INTUIT INC., a Delaware corporation
(“ Tenant ”).
SUMMARY OF BASIC LEASE
INFORMATION
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TERMS OF LEASE
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DESCRIPTION
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1.
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Date:
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March 28,
2005.
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2.
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Premises:
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2.1
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Buildings:
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Building
1
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That certain
4-story office building containing approximately 103,802 rentable
square feet of space to be constructed by Landlord in the
approximate location shown on the Project Site Plan, attached
hereto as Exhibit A-1 .
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Building
2
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That certain
4-story office building containing approximately 130,368 rentable
square feet of space to be constructed by Landlord in the
approximate location shown on the Project Site Plan, attached
hereto as Exhibit A-1 .
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Building
3
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That certain
4-story office building containing approximately 130,368 rentable
square feet of space to be constructed by Landlord in the
approximate location shown on the Project Site Plan, attached
hereto as Exhibit A-1 .
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Building
4
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That certain
4-story office building containing approximately 101,062 rentable
square feet of space to be constructed by Landlord in the
approximate location shown on the Project Site
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We have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission (SEC). We omitted such
portions from this filing and filed them separately with the
SEC.
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TERMS OF LEASE
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DESCRIPTION
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Plan, attached
hereto as Exhibit A-1 .
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2.2
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Premises:
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Approximately
364,538 rentable square feet of space, consisting of (i) all
of the approximately 103,802 rentable square feet of space
comprising the entire rentable area of Building 1, (ii) all of
the approximately 130,368 rentable square feet of space comprising
the entire rentable area of Building 2, and (iii) all of the
approximately 130,368 rentable square feet of space comprising the
entire rentable area of Building 3 (collectively, the “
Premises ”), all as further set forth in
Exhibit A to the Office Lease.
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2.3
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Project:
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The Buildings
are part of an office project known as “Santa Fe
Summit,” as further set forth in Section 1.1.2 of
this Lease, and as further set forth on
Exhibit A-1 to this Office Lease.
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3.
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Lease Term
( Article 2 ):
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3.1
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Length of
Term:
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Approximately,
and in no event less than, ten (10) years.
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3.2
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Lease
Commencement Date and Rent Commencement Dates:
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The Lease
Commencement Date with respect to the Premises shall be
September 1, 2007; provided that the date that Tenant shall
pay Base Rent for each Building which is part of the Premises shall
be the later of (i) September 1, 2007, and (ii) the
date which occurs under Section 5.1 of the Tenant Work
Letter, attached hereto as Exhibit B (each a
“ Rent Commencement Date ”). The anticipated
Rent Commencement Date for each Building which is part of the
Premises is September 1, 2007.
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We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-2-
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TERMS OF LEASE
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DESCRIPTION
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3.3
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Lease
Expiration Date:
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The later of
(i) August 31, 2017, and (ii) the date immediately
preceding the tenth (10 th )
anniversary of the last Rent Commencement Date to occur with
respect to the initial Premises.
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3.4
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Option
Term(s):
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Two (2) - five
(5)-year options to renew, as more particularly set forth in
Section 2.2 of this Lease.
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4.
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Base Rent (
Article 3 ):
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See
Article 3 of the Lease.
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5.
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Additional Rent
( Article 4 ):
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See
Article 4 of the Lease.
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6.
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Tenant’s
Share (Article 4):
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6.1
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Building
1
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100.00%
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6.2
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Building
2
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100.00%
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6.3
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Building
3
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100.00%
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7.
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Permitted
Use
( Article 5 ):
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Tenant may use
the Premises for (i) general office use (including corporate
headquarters functions); (ii) research and development of
software and scientific technology and related products, including
engineering laboratories for testing the design and function of
Tenant’s products; (iii) light manufacturing and
assembly; (iv) storage and shipping of both raw and finished
goods; and (v) any other use related thereto, to the extent
the same comply with applicable laws and zoning and are consistent
with the character of the Project as a first-class campus-style
office building Project. Notwithstanding anything to the contrary
set forth hereinabove, and as more particularly set forth in the
Lease, Tenant shall be responsible for operating and maintaining
the Premises pursuant to (A) Landlord’s “Rules and
Regulations,” as that term is set forth in
Section 5.2 of this Lease, (B) all
“Applicable Laws,” as that term is set forth in
Article 24 of this Lease, and (C) all applicable
zoning, building codes and the “CC&Rs,” as that
term is set forth in Section 5.3 of this
Lease.
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We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-3-
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TERMS OF LEASE
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DESCRIPTION
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8.
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Security
Deposit
( Article 21 ):
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None.
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9.
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Parking Space
Ratio
( Article 28 ):
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Four
(4) unreserved parking spaces for every 1,000 rentable square
feet of the Premises, including any area leased by Tenant in
Building 4 as Building 4 Expansion Space (the parking ratio for any
First Offer Space or any First Refusal Space shall be as set forth
in the First Offer Notice or First Refusal Notice, as applicable),
which parking spaces shall be allocated within the Project parking
facility and surface parking area shown on
Exhibit A-1 , among the surface, covered,
reserved (including visitor spaces), and unreserved spaces at the
same ratio as such surface, covered, reserved (including visitor
spaces), and unreserved parking spaces are allocated by Landlord on
a Project-wide basis; provided, however, in no event shall
Tenant’s parking spaces be less than ten percent (10%)
reserved spaces (including visitor spaces).
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10.
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Address of
Tenant
( Section 29.18 ):
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Intuit Inc.
Real Estate Services
2632 Marine Way
Mountain View, California 94043
Attn: Director, Corporate Real Estate
With a copy to:
Intuit Inc.
2700 Coast Avenue
Mountain View, California 94043
Attn: General Counsel, Legal Dept.
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11.
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Address of
Landlord
( Section 29.18 ):
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See
Section 29.18 of the Lease.
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We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-4-
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TERMS OF LEASE
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DESCRIPTION
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12.
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Broker(s)
( Section 29.24 ):
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The Staubach
Company
11988 El Camino Real, Suite 150
San Diego, CA 92130
Attention: Mr. Dennis Hearst and Mr. Buddy Norman
and
Colliers International
4660 La Jolla Village Drive, Suite 200
San Diego, CA 92122
Attention: Mr. Tom Mercer
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13.
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Tenant
Improvement Allowance
( Section 2 of Exhibit B
):
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Approximately
$20,049,590.00 (i.e., $55.00 per rentable square foot of the
Premises), which amount may be increased by the “TIA
Increase” by up to $5,468,070.00 (i.e., $15.00 per rentable
square foot of the Premises) pursuant to the terms and conditions
of Section 2.3 of the Tenant Work Letter.
|
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-5-
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON
AREAS
1.1
Premises, Building, Project and Common Areas
.
1.1.1
The Premises . Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the premises which are to be
constructed by Landlord and are set forth in Section 2.2 of
the Summary (the “ Premises ”). The outline of
the Premises is set forth in Exhibit A attached
hereto and each floor or floors of the Premises shall have
approximately the number of rentable square feet as set forth in
Section 2.2 of the Summary. The parties hereto agree
that the lease of the Premises is upon and subject to the terms,
covenants and conditions (the “ TCCs ”) herein
set forth, and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of
such TCCs by it to be kept and performed and that this Lease is
made upon the condition of such performance. A site plan (the
“ Project Site Plan ”) showing the currently
planned layout of the “Project,” as that term is
defined in Section 1.1.2 , below, is set forth on
Exhibit A-1 , attached hereto. The parties
hereto hereby acknowledge that the purpose of
Exhibit A and Exhibit A-1 are
to show the approximate location of the Premises in the “
Buildings ,” as that term is defined in Section
1.1.2 , below, only, and such exhibit is not meant to
constitute an agreement, representation or warranty as to the
construction of the Premises or the Buildings or Project, the
precise area of the Building or Project or the specific location of
the “ Common Areas ,” as that term is defined in
Section 1.1.3 , below, or the elements thereof or of
the accessways to the Premises or the Project; provided, however,
Landlord shall construct the Project pursuant to the terms of the
Tenant Work Letter, and, during the Lease Term, maintain the
Project, subject to reasonable wear and tear and the terms of this
Lease, in a manner materially consistent with the manner in which
the Project was initially constructed pursuant to the terms of the
Tenant Work Letter; and provided further, however, that Landlord
may make other immaterial changes to the Project which do not
change the location or configuration of the improvements
constructed on the Project pursuant to the Tenant Work Letter, or
otherwise affect Tenant’s access to, or use of, the Project,
including the Premises, Project parking facility and surface
parking areas, Common Areas and the Buildings, and provided that,
notwithstanding anything to the contrary set forth in this Lease,
Landlord shall always be able to make changes to the Project
(i) to comply with “Applicable Laws,” as that term
is defined in Article 24 of this Lease (provided that
Landlord shall not initiate an action to formally and legally
change the scope and application of an Applicable Law in order to
allow Landlord to make a change to the Project), in which case
Landlord shall use commercially reasonable efforts to make any such
changes in a manner which minimizes the interference with the
rights granted to Tenant under this Lease, or (ii) to cause
the Project to comply with the “Pre-Approved Sitework
Changes,” as that term is defined in
Section 1.1.2 of the Tenant Work Letter. Except as
specifically set forth in this Lease and in the Tenant Work Letter
attached hereto as Exhibit B (the “
Tenant Work Letter ”), Landlord shall not be obligated
to provide or pay for any improvement work or services related to
the improvement of the Premises. Tenant also acknowledges that
neither Landlord nor any agent of Landlord has made any
representation or warranty regarding the condition of the Premises,
the Buildings or the Project or with respect to the suitability of
any of the foregoing for the conduct of Tenant’s b usiness,
except as specifically set forth in this Lease and the Tenant Work
Letter. Subject to Landlord’s repair and maintenance
obligations set forth in Article 7.1 of this Lease,
below, and except as set forth to the contrary in
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-6-
Section 1.7
of the Tenant Work Letter, the
taking of possession of the Premises by Tenant shall conclusively
establish that the Premises and the Buildings were at such time in
good and sanitary order, condition and repair.
1.1.2
The Buildings and The Project . The Premises are
contained within the buildings (“ Building 1, ”
“ Building 2 ” and “ Building 3
”) set forth in Section 2.1 of the Summary
(Building 1, Building 2, Building 3 and Building 4 may be referred
to herein individually as a " Building ” and
collectively as the “ Buildings ”). The
Buildings are part of an office project known as “Santa Fe
Summit.” The term “ Project ,” as used in
this Lease, shall mean (i) the Buildings, the Common Areas and
the “Exclusive Tenant Areas,” as that term is defined
in Section 1.1.4 of this Lease, below, (ii) the
land upon which the Buildings, the Common Areas and the Exclusive
Tenant Areas will be constructed in accordance with this Lease,
(iii) any additional real property, areas, land, buildings or
other improvements outside of the Project added thereto by Landlord
(collectively, “ Additional Property ”);
provided, however, the addition of any such Additional Property
shall not increase the “Base Rent” or “Direct
Expenses,” as those terms are defined in
Sections 3.1.1 and 4.2.2 of this Lease, respectively,
payable by Tenant under the terms of this Lease or otherwise
materially increase Tenants’ obligations or materially reduce
Tenant’s rights under this Lease or materially interfere with
Tenant’s access to, and/or use of the Project, including the
Premises, the Project parking facility and surface parking areas,
the Common Areas and the Exclusive Tenant Areas, and
(iv) other appurtenant rights and easements relating to the
land upon which the Buildings and the Common Areas will be
constructed.
1.1.3
Common Areas . Tenant shall have the non-exclusive
right to use in common with other tenants in the Project, and
subject to the rules and regulations referred to in Section
5.2 of this Lease, those portions of the Project which are
provided, from time to time, for use in common by Landlord, Tenant
and any other tenants of the Project (such areas are collectively
referred to herein as the “ Common Areas ”). The
Common Areas shall consist of the “ Project Common
Areas ” and “ Building Common Areas .”
The term “ Building Common Areas ,” as used in
this Lease, shall mean the portions of the Common Areas located
within a particular Building and designated as such by Landlord;
provided, however, no portion of any Building which Tenant leases
in its entirety shall be so designated as Building Common Areas.
The term “ Project Common Areas ,” as used in
this Lease, shall mean any portion of the Common Areas which are
not Building Common Areas; provided, however, in no event shall the
“Exclusive Tenant Areas,” as that term is defined in
Section 1.1.4 , below, or any area designated for the
exclusive use of any other tenant of the Project (which areas may
only be directly adjacent to Building 4 and may not unreasonably
interfere with Tenant’s use, access, or occupancy of the
Project) be deemed Project Common Areas. The manner in which the
Common Areas are maintained and operated shall be at the reasonable
discretion of Landlord and the use thereof shall be subject to such
reasonable and non-discriminatory rules, regulations and
restrictions as Landlord may make from time to time, provided that
such rules, regulations and restrictions do not unreasonably
interfere with the rights granted to Tenant under this Lease and
the permitted use granted under Section 5.1 , below,
and provided further that Landlord shall at all times maintain and
operate the Common Areas in a first class manner materially
consistent with the “Comparable Buildings,” as such
term is defined in Section 2.2.3.2 of this Lease. After
the Lease Commencement Date, Landlord reserves the right to close
temporarily, and, subject to the terms of Section 1.1.1
of this Lease, to make alterations or additions to, or change
the
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-7-
location of elements of the
Project and the Common Areas. Except when and where Tenant’s
right of access is specifically excluded in this Lease, Tenant
shall have the right of access to the Premises, the Buildings, and
the Project parking facilities twenty-four (24) hours per day,
seven (7) days per week during the “Lease Term,”
as that term is defined in Section 2.1.1 ,
below.
1.1.4
Exclusive Tenant Areas . Tenant shall have the
exclusive right to use the “Volleyball Court,”
Basketball Court” and “Amphitheater,” as those
terms are defined in this Section 1.1.4 , below
(collectively, the “ Exclusive Tenant Areas ”).
Notwithstanding such exclusive use, except as expressly set forth
in this Section 1.1.4 , the repair and maintenance of
the Exclusive Tenant Areas, but not including the “Exclusive
Tenant Areas Fixtures and Equipment”, as defined below, shall
remain the obligation of Landlord under the terms of Articles
7 and 11 of this Lease. Tenant shall not be charged any
Base Rent for the use of such Exclusive Tenant Areas, nor shall the
Exclusive Tenant Areas be included in “Tenant’s
Share,” as that term is defined in Section 4.2.6
of this Lease, below; provided, however, Tenant shall directly pay
to Landlord, upon billing by Landlord to Tenant, one hundred
percent (100%) of (x) all insurance costs, (y), subject to the
terms of Section 4.7 of this Lease, Tax Expenses
allocable to the Exclusive Tenant Areas, and (z) all repair
and maintenance costs incurred by Landlord in connection with the
repair and maintenance of the Exclusive Tenant Areas, but only to
the extent such repair and maintenance costs would not otherwise be
excluded from “Operating Expenses,” as that term is
defined in Section 4.2.4 of this Lease, below, had
Landlord incurred such costs in connection with the Common Areas.
However, notwithstanding the foregoing, Tenant’s liability
insurance policy required to be carried by Tenant in Article
10 of this Lease shall cover Tenant’s use of the
Exclusive Tenant Areas and the waiver and indemnification
obligations of Tenant set forth in Section 10.1 of the
Lease shall apply to the Exclusive Tenant Areas as though the
Exclusive Tenant Areas were part of the Premises. In the event that
the insurance carried by Tenant in accordance with the terms of
Section 10.3 of this Lease would not cover a particular
event, activity or other use of the Exclusive Tenant Areas by
Tenant, Tenant, at Tenant’s sole cost and expense, shall
procure additional reasonable liability insurance as reasonably
required to cover such event, activity or use to the levels
required with respect to the Premises by such
Section 10.3 . Tenant shall have the right to install
furniture, fixtures and equipment in the Exclusive Tenant Areas
(collectively, the “ Exclusive Tenant Areas Fixtures and
Equipment ”), provided that (i) Tenant, at
Tenant’s sole cost and expense, shall keep the Exclusive
Tenant Areas Fixtures and Equipment in good and clean condition and
repair throughout the Lease Term, including, without limitation,
the replacement, when necessary, of any basketball nets and
volleyball nets, (ii) any such Exclusive Tenant Areas Fixtures
and Equipment shall be subject to the prior approval of Landlord,
which approval shall not be unreasonably withheld, conditioned, or
delayed, and (iii) Tenant shall, if so requested by Landlord
at least six (6) months prior to the Lease Expiration Date (or
to the extent this Lease is terminated early, or to the extent the
Exclusive Tenant Areas cease to be exclusive to Tenant pursuant to
Section 2.2.2(C) , then within ten (10) business days
following such early termination or cessation), remove any
Exclusive Tenant Areas Fixtures and Equipment on or before the
expiration or earlier termination of this Lease (or to the extent
this Lease is terminated early, or to the extent the Exclusive
Tenant Areas cease to be exclusive to Tenant pursuant to
Section 2.2.2(C) , then within sixty (60) days
following Tenant’s receipt of such written removal request
from Landlord), and shall repair any damage to the Project and/or
Buildings caused by the installation or removal of such Exclusive
Tenant Areas Fixtures and Equipment. As used in this
Section 1.1.4 , the term “ Volleyball
Court ” shall mean a full-size volleyball court located
in
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-8-
that area set forth as such on
the Project Site Plan, the term “ Basketball Court
” shall mean a full-size basketball court located in that
area set forth as such on the Project Site Plan, and the term
“ Amphitheater ” shall mean an amphitheater of
at least three hundred (300) seats located in that area set
forth as such on the Project Site Plan. Tenant’s use of the
Exclusive Tenant Areas shall be subject to the TCCs of
Section 5.2 of this Lease, below.
1.2
Verification of Rentable Square Feet of Premises and
Buildings . For purposes of this Lease, “rentable
square feet” shall be calculated pursuant to the Standard
Method for Measuring Floor Area in Office Buildings, ANSI Z65.1
— 1996 – and its accompanying guidelines (“
BOMA Standard ”) for the calculation of rentable
square feet; provided, however, notwithstanding anything to the
contrary in such BOMA Standard guidelines, the calculation of
“rentable square feet” shall expressly exclude vertical
penetrations, balconies and other outdoor areas under the roofline
and upper floor overhangs. Within ninety (90) days after the
date Landlord delivers the last of Building 1, Building 2 and
Building 3 to Tenant in a “Ready for T/Is” condition,
as that term is defined in Section 1.4.2 of the Tenant
Work Letter, Landlord’s space planner/architect shall measure
the rentable square feet of the Premises in accordance with the
provisions of this Section 1.2 and the results thereof
shall be presented to Tenant in writing. Tenant’s space
planner/architect may review Landlord’s space
planner/architect’s determination of the number of rentable
square feet of the Premises and Tenant may, within twenty
(20) business days after Tenant’s receipt of
Landlord’s space planner/architect’s written
determination, object to such determination by written notice to
Landlord. Tenant’s failure to deliver written notice of such
objection within said twenty (20) business day period shall be
deemed to constitute Tenant’s acceptance of Landlord’s
space planner/architect’s determination. If Tenant objects to
such determination, Landlord’s space planner/architect and
Tenant’s space planner/architect shall promptly meet and
attempt to agree upon the rentable square footage of the Premises.
If Landlord’s space planner/architect and Tenant’s
space planner/architect cannot agree on the rentable square footage
of the Premises within thirty (30) days after Tenant’s
objection thereto, Landlord and Tenant shall mutually select an
independent third party space measurement professional to field
measure the Premises under the BOMA Standard. Such third party
independent measurement professional’s determination shall be
conclusive and binding on Landlord and Tenant. Landlord and Tenant
shall each pay one-half ( 1 / 2
) of the fees and expenses of the
independent third party space measurement professional. If such
determination is made, it will be confirmed in writing by Landlord
to Tenant. Notwithstanding anything set forth in this Lease to the
contrary, the rentable square footage of the Premises, as
determined pursuant to this Section 1.2 , shall have no
effect on the terms and conditions of this Lease except in
connection with the following: (i) Tenant’s allocation
of parking spaces pursuant to the terms of Article 28 ,
(ii) the calculation of Tenant’s Share, (iii) the
calculation of the “Tenant Improvement Allowance,” any
“TIA Increase” and the “Modification Cost
Allowance,” as those terms are defined in
Sections 2.1, 2.3 and 1.2.3.1 of the Tenant Work
Letter, respectively, (iv) the determination of the rentable
square footage of “First Offer Space” as that term is
defined in Section 1.5 of this Lease, below,
(v) the determination of the rentable square footage of
“First Refusal Space” as that term is defined in
Section 1.6 of this Lease, below, (vi) to the
extent Tenant exercises its option to lease the “Building 4
Expansion Space” pursuant to the terms of
Section 1.4 of this Lease, below, the determination of
Tenant’s Share applicable to Building 4, (vii) the
determination of “Market Rent,” as that term is defined
in Section 2.2.3.2 of this Lease, below, for
(A) the Premises during the second (2 nd )
“Option Term,” as that term is defined in
Section 2.2.1 of this Lease, below, and (B) any
“First Offer Space,” as that term is defined
in
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-9-
Section 1.5
of this Lease, below, and
(viii) the restatement of the Base Rent for the Premises on a
per rentable square foot basis as set forth in
Article 3 of this Lease.
1.3
Intentionally Omitted .
1.4
Building 4 Expansion Space . Landlord hereby grants
to the originally named Tenant herein (“ Original
Tenant ”), and its “Affiliates,” as that term
is defined in Section 14.8 of this Lease, below, the
one-time right (the “ B4 Expansion Right ”) to
lease one or more full floors of Building 4 (the “
Building 4 Expansion Space ”); provided, however,
(i) to the extent the Building 4 Expansion Space consists of
more than one floor, such floors must be contiguous and must
include either, at Tenant’s option, the first (1
st ) floor of Building 4 or the fourth (4
th ) floor of Building 4, and (ii) to the
extent Tenant elects to exercise its B4 Expansion Right prior to
the date Landlord pulls a grading permit and substantially
commences grading activities for Building 4 (provided that for such
date to remain valid, Landlord must thereafter diligently pursue
the construction of Building 4) (the “ MN Date
”), then Tenant must lease at least two (2) full floors
of Building 4. If Tenant wishes to exercise its B4 Expansion Right,
then Tenant shall exercise such option by delivering written notice
(the “ B4 Expansion Notice ”) thereof to
Landlord on or before (A) the date which occurs six
(6) months following the “B4 Construction Commencement
Date,” as that term is defined in this Section 1.4,
below, to the extent Tenant has not exercised the “B4 Delay
Right” pursuant to the terms of Section 1.8 of
the Tenant Work Letter, and (B) to the extent Tenant has
exercised the B4 Delay Right, then on or before the expiration of
the “B4 Holding Period,” as that term is defined in
Section 1.8.1 of the Tenant Work Letter. If, and only if,
Tenant delivers a B4 Expansion Notice to Landlord prior to the MN
Date, then Tenant must, in order to validly exercise its right to
lease the Building 4 Expansion Space, include with such B4
Expansion Notice, a copy of Tenant’s “Financial
Statements,” as that term is defined in this
Section 1.4 , below, demonstrating that Tenant has met
the “Required Thresholds,” as that term is defined in
Section 1.4.5 , below. As used in this Lease, “
Financial Statements ” shall mean audited financial
statements for Tenant’s then most recently ended fiscal year
and for all fiscal quarters that have ended since the end of Tenant
then most recently ended fiscal year, which statements are
certified by an independent certified public accounting firm. As
used in this Lease, “ B4 Construction Commencement
Date ” shall mean the date upon which Landlord first
commences to pour the concrete foundations for Building
4.
1.4.1
Delivery of the Expansion Space . If Tenant timely
exercises the B4 Expansion Right, then Landlord shall deliver the
Building 4 Expansion Space to Tenant, in Ready for T/Is condition,
pursuant to a commercially reasonable construction schedule for
Building 4, as reasonably determined by Landlord and, to the extent
Tenant delivered a B4 Expansion Notice to Landlord prior to the MN
Date, reasonably approved by Tenant. The remainder of this
Section 1.4.1 shall only apply if Tenant delivered a B4
Expansion Notice to Landlord prior to the MN Date. Landlord shall
present the proposed construction schedule to Tenant within thirty
(30) days following the date Tenant exercises its B4 Expansion
Right and Tenant shall, within five (5) business days, either
approve such construction schedule or disapprove such construction
schedule (in which event Tenant shall provide Landlord with a
detailed description of Tenant’s requested changes to the
proposed construction schedule); provided, however, Tenant may only
disapprove such construction schedule if (i) Tenant’s
requested changes do not increase the total construction time set
forth in Landlord’s proposed construction schedule, and
(ii) Landlord’s proposed construction schedule for
Building 4 is
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-10-
materially inconsistent, taking
into account the date upon which construction of Building 4 shall
commence vis-à-vis the date upon which construction of
Building 1, Building 2 and Building 3 commenced (or is scheduled to
commence), with the “Construction Schedule,” as that
term is defined in Section 1.4.1 of the Tenant Work
Letter. If Tenant disapproves the construction schedule, then
Landlord and Tenant shall meet within five (5) business days
following the date of such disapproval and attempt to mutually and
reasonably agree upon a construction schedule for Building 4. In
the event Landlord and Tenant are unable to mutually and reasonably
agree upon a construction schedule for Building 4, then the
construction schedule shall be determined pursuant to the terms of
Section 29.35 of this Lease, below.
1.4.2
Building 4 Expansion Space Base Rent . If Tenant
timely exercises the B4 Expansion Right, then the Building 4
Expansion Space shall become part of the Premises for all purposes
hereunder, and, except as set forth in this Section 1.4
to the contrary, shall be subject to every term and condition of
this Lease.
1.4.2.1
Base Rent . The annual “Base Rent,” as
that term is defined in Article 3 of this Lease, for the
Building 4 Expansion Space shall initially be equal to the product
of (i) the “B4 Project Costs,” as that term is set
forth hereinbelow, (ii) a fraction, the numerator of which
shall be the rentable square footage of the Building 4 Expansion
Space, and the denominator of which shall be the rentable square
footage of Building 4, and (iii) the greater of (1) the
interest rate applicable to the ten (10) year treasury note
(as of the date Tenant delivers the applicable B4 Expansion Notice
to Landlord) plus 375 basis points, and (2) eight percent
(8%); provided, however, commencing on the first (1
st ) anniversary of the “B4 Commencement
Date,” as that term is defined in Section 1.4.4 ,
below, and continuing on each subsequent anniversary, such annual
base rent shall be increased by three percent (3%).
1.4.2.2
B4 Project Costs . For purposes of this
Section 1.4.2 and this Lease, the “ B4 Project
Costs ” shall equal the sum of the following.
(i) the
“B4 Base Land Cost” in an amount equal to * (which
amount was calculated based upon (A) * [which amount includes the
“Offsite Work,” as that term is set forth in
Section 3.1.2.1(i), which Landlord is required to perform in
connection with the construction of the Project, excepting (
x ) the “FBA Costs,” as that term is defined in
Section 3.1.2.1(ix) of this Lease, and (y) any
“Permitted Offsite Work,” as that term is also set
forth in Section 3.1.2.1(i) of this Lease], and
(B) the 101,062 rentable square feet of Building
4);
(ii) the
amount of the “ B4 Land Cost Carry ” which shall
be calculated in accordance with the TCCs of
Section 3.1.2.1(ii) of this Lease (i.e., using the
exact same calculation formula set forth in such
Section 3.1.2.1(ii), but substituting ( v ) the time
period commencing on July 16, 2005 and ending upon the day
immediately preceding the B4 Construction Commencement Date for the
“Pre-PB Commencement Period,” ( w ) the time
period commencing on such B4 Construction Commencement Date and
ending on day immediately preceding the “B4 Commencement
Date,” as that term is set forth in Section 1.4.4
of this Lease, for the “PB Commencement Period,” (
x ) the B4 Base Land Cost for the “Base Land
Cost,” ( y ) * and ( z ) *;
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-11-
(iii) the
“ B4 Base Building Construction Costs ” which
shall include all costs relating to (A) the design (e.g.,
architectural and engineering fees) of the portions of Building 4
constituting the “Base Building,” as that term is
defined in Section 1.1.1 of the Tenant Work Letter,
(B) the permitting of the Base Building portions of Building
4, (C) construction insurance for such Base Building portions
of Building 4, and (D) the “ B4 HBBC Costs
,” which shall be determined with regard to the Base Building
portions of Building 4 and Building 4’s pro-rata share of the
“Project Sitework,” as that term is set forth in
Section 1.1.1 of the Tenant Work Letter, in the same
manner that “HBBC Costs” are calculated pursuant to the
TCCs of Section 1.3 of the Tenant Work Letter;
provided, however, the “pro-rata share” attributable to
Building 4 shall be calculated as a fraction, the numerator of
which shall be the 101,062 rentable square feet attributable to
such Building 4, and the denominator of which shall be the 465,600
rentable square feet in the entire Project; provided further,
however, in no event shall such B4 Base Building Construction Costs
include the cost relating to the design, permitting and
construction of any off-site improvements to the extent the same do
not constitute Permitted Offsite Work;
(iv) the
“ B4 TIA ” which shall be an amount equal to
$5,558,410.00 (which amount was calculated based upon (A) $55.00
per rentable square foot, and (B) the 101,062 rentable square
feet of Building 4);
(v) the
amount of the “ B4 Development Fee ” which shall
equal the sum of (1) * of the B4 Base Building Construction Costs,
and (2) * per rentable square foot of Building 4; and
(vi) the
“ B4 FBA Costs ” which shall be an amount equal
to the assessments attributable to the Building 4 which are
incurred in connection with the “FBA,” as that term is
set forth in Section 3.1.2.1(ix);
(vii) the
product of (A) the Broker’s commissions, calculated
pursuant to the terms of Section 3.1.2.1(viii) of this Lease,
attributable to the Building 4 Expansion Space, and (B) a
fraction, the numerator of which is four (4) and the
denominator of which is the number of floors including within the
Building 4 Expansion Space; and
(viii) the
“carry costs” of the expenses incurred by Landlord in
connection with those components of B4 Project Costs set forth in
(iii) through (vii), above, which shall otherwise be
calculated in accordance with the TCCs of
Section 3.1.2.1(x) of this Lease.
1.4.3
Improvement of Building 4 Expansion Space . The
Building 4 Expansion Space shall be initially improved pursuant to
the terms of the Tenant Work Letter, and Landlord shall provide
Tenant a tenant improvement allowance equal to the product of
(A) the product of (i) $55.00, and (ii) the rentable
square footage of the Building 4 Expansion Space, and (B) a
fraction, the numerator of which shall be the number of full
monthly Base Rent payments for the Building 4 Expansion Space that
Tenant shall make during the initial term of Tenant ‘s lease
of the Building 4 Expansion Space, and the denominator of which
shall be *.
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-12-
1.4.4
Amendment to Lease . If Tenant timely exercises the
B4 Expansion Right, then, as soon as reasonably possible
thereafter, Landlord and Tenant shall execute an amendment adding
such Building 4 Expansion Space to this Lease upon the same terms
and conditions as the initial Premises, except as otherwise set
forth in this Section 1.4 . For purposes of calculating
Tenant’s obligations under Article 4 of this
Lease, Tenant’s Share of Building Direct Expenses applicable
to the Building 4 Expansion Space shall be equal to the rentable
square footage of the Building 4 Expansion Space divided by the
rentable square footage of Building 4. Except to the extent
inconsistent with the terms of this Section 1.4 , all
provisions of the Lease which vary based upon the rentable square
footage of the Premises shall be adjusted to reflect the addition
of such Building 4 Expansion Space to the Premises. Tenant shall
commence payment of Rent to Landlord for the Building 4 Expansion
Space and the term of the Building 4 Expansion Space shall commence
(the “ B4 Commencement Date ”) eight
(8) months following the date Landlord delivers the Building 4
Expansion Space to Tenant in a Ready for T/Is condition, and shall
expire coterminously with Tenant’s lease of the initial
Premises on the Lease Expiration Date, as the same may be extended
pursuant to Section 2.2 of this Lease, below, unless
sooner terminated as provided in this Lease.
1.4.5
No Defaults . The rights contained in this
Section 1.4 shall be personal to Original Tenant and
its Affiliates, may only be exercised by Original Tenant or an
Affiliate (and not any other assignee, sublessee or
“Transferee,” as that term is defined in Section
14.1 of this Lease, of Tenant’s interest in this Lease)
if this Lease then remains in full force and effect and if Tenant,
as of the date of the attempted exercise of the expansion option by
Tenant, or as of the scheduled date of delivery of such Building 4
Expansion Space to Tenant, is not in “Economic
Default,” as that term is defined in this
Section 1.4.5 , below, under this Lease, beyond any
applicable notice and cure period. In addition, if and only if
Tenant elects to exercise its B4 Expansion Right prior to the MN
Date, the rights granted to Tenant in this Section 1.4
shall be subject to Landlord’s review and approval of the
Financial Statements, provided that Landlord shall not withhold its
approval unless, as of the date Tenant exercises its B4 Expansion
Right, Tenant fails to meet or exceed the “Required
Thresholds” (the “ Financial Conditions Test
”). For purposes of this Lease, the “ Required
Thresholds ” shall mean all of (i) a Market
Capitalization (i.e., market stock price of common shares
multiplied by the number of common shares outstanding) of no less
than* and (ii) annual Net Income of no
less than* and (iii) an annual Gross
Revenuof no less than*. For purposes of this Lease, “
Market Capitalization, ” “ Net Income,
” and “ Gross Revenue ” shall all be
determined in accordance with generally accepted accounting
principles, consistently applied. The term “ Economic
Default ”, as used in this Lease shall mean a default
under Section 19.1.1 of this Lease, below, beyond the
applicable notice and cure period set forth in
Section 19.1.1 . Notwithstanding any contrary provision
in this Lease, the Financial Conditions Test set forth in this
Section 1.4.5 shall only be applicable to Tenant in
connection with the terms of this Section 1.4.5 and,
without limitation, shall have no application with regard to
(x) Tenant’s right of first offer set forth in
Section 1.5 , below, (y) Tenant’s right of
first refusal set forth in Section 1.6 , below, or
(z) Tenant’s right to extend the Lease Term pursuant to
Section 2.2 , below.
1.5
Right of First Offer . The rights granted to Tenant
in this Section 1.5 shall not be applicable until after
the earlier of (i) the exercise of Tenant’s B4 Expansion
Right for less than the entire B4 Expansion Space, and
(ii) the expiration of Tenant’s B4 Expansion Right
without Tenant exercising such right. Provided that Tenant does not
exercise its B4 Expansion Right
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-13-
pursuant to
Section 1.4 of this Lease, above, as to all of the
space in Building 4, then the Original Tenant and its Affiliates
shall have an on-going right of first offer with respect to any
remaining space located in Building 4 which becomes available for
lease to third parties (collectively, the “ First Offer
Space ”). Notwithstanding the foregoing, such right of
first offer shall be subordinate to all leases, renewal and
extension options, and expansion options set forth in “First
Refusal Notices,” as that term is set forth in
Section 1.6 , below, provided that such expansion
options are to expand into specifically delineated space (i.e., so
called “hard” expansion rights similar to those granted
to Tenant in Section 1.4 , above, but not any right of
first offer, right of first refusal, right of negotiation or
similar rights), and provided further that the rentable square
footage of such “hard” expansion space is not greater
than ten percent (10%) of the rentable square footage of the
initial premises leased to such tenant under the terms of such
leases (“ Superior Rights ”), and, as to such
renewal or expansion options, regardless if such rights are
executed strictly in accordance with their respective terms or
pursuant to lease amendments or new leases, provided that such new
leases or lease amendments (A) are executed prior to the expiration
of such applicable Superior Right (i.e., prior to the expiration of
the renewal right or the expansion right), (B) are executed by
the party which originally made the bona fide third party offer
which was the subject of the applicable First Refusal Notice to
Tenant, or by a transferee of such party’s entire interest in
the applicable lease pursuant to the terms of such lease, and
(C) do not, in the case of a renewal, relate to a term longer
than the stated renewal term or terms, and, in the case of an
expansion, do not include the lease of space in addition to the
space provided by the terms of such Superior Right (all tenants
under such leases, collectively, the “ Superior Right
Holders ”).
1.5.1
Procedure for Offer . Within five (5) business
days following Landlord’s receipt of a request from Tenant (a
“ First Offer Request ”) , which request Tenant
shall not have a right to deliver more than four (4) times
during any calendar year, Landlord shall notify Tenant (a “
First Offer Notice ”) of any First Offer Space which,
as of the date Landlord delivers the First Offer Notice to Tenant,
is then “available for lease to third parties,” or
which Landlord anticipates will become available for lease to
third-parties within the following twelve (12) month period,
provided that no Superior Right Holder wishes to lease such space,
and provided further that if at the time of the First Offer Notice,
Landlord is then negotiating for the lease of all or a portion of
the First Offer Space (the portion being so negotiated, the “
Current Negotiations Space ”) with a third party (as
evidenced by an exchange of written communication pre-dating the
date of Landlord’s receipt of such First Offer Request,
between Landlord and such third party), then such five
(5) business day period shall instead become a thirty
(30) day period with respect to the Current Negotiations Space
(but Landlord shall deliver a First Offer Notice to Tenant within
five (5) business days with respect to all other First Offer
Space which is not Current Negotiations Space), provided that
within such five (5) business day period Landlord must deliver
to Tenant reasonable evidence that Landlord had, prior to the date
of Landlord’s receipt of the corresponding First Offer
Request, exchanged written correspondence with regard to the
Current Negotiations Space. With respect to any Current
Negotiations Space, Landlord shall, within thirty (30) days
following Landlord’s receipt of a First Offer Request,
deliver to Tenant either (A) a First Offer Notice, and
Tenant’s response to such First Offer Notice shall be
governed by the TCCs of Section 1.5.2 , below, or
(B) a First Refusal Notice pursuant to the terms of
Section 1.6 , below, and Tenant’s response to
such First Refusal Notice shall be governed by the TCCs of such
Section 1.6 . As used in this Section 1.5 ,
space which is “ available for lease to third parties
” shall mean all space available in Building 4 after the
B4
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-14-
Construction Commencement Date
which is not then subject to (i) a lease, which premises under
such lease was the subject of a “First Refusal Notice,”
as that term is defined in Section 1.6.1 of this Lease,
or (ii) a bona fide third party offer, which was the subject
of a First Refusal Notice. Pursuant to such First Offer Notice,
Landlord shall offer to lease to Tenant the then available First
Offer Space. A First Offer Notice shall describe the space so
offered to Tenant and shall set forth the “First Offer
Rent,” as that term is defined in Section 1.5.3 ,
below, and the other economic terms upon which Landlord is willing
to lease such space to Tenant. The rentable square footage of the
space so offered to Tenant shall be determined in accordance with
the terms of Section 1.2 of this Lease.
1.5.2
Procedure for Acceptance . If Tenant wishes to
exercise Tenant’s right of first offer with respect to the
space described in a First Offer Notice, then within ten
(10) business days of delivery of such First Offer Notice to
Tenant, Tenant shall deliver notice to Landlord of Tenant’s
intention to exercise its right of first offer with respect to all
or any full floor portion of the space described in such First
Offer Notice on the terms contained therein. Notwithstanding
anything to the contrary contained herein, Tenant must elect to
exercise its right of first offer, if at all, on a full floor by
full floor basis; provided, however, to the extent Tenant exercises
its right with respect to less than all of the First Offer Space,
then Landlord shall have the right to designate the particular
floor or floors which shall be applicable to Tenant’s
exercise notice; provided further, however, to the extent Tenant
exercises its right of first offer with respect to more than one
floor, the floors so designated by Landlord shall be contiguous
with each other to the extent possible. If Tenant does not so
notify Landlord within the ten (10) business day period, then
Landlord shall be free to lease the space described in such First
Offer Notice to anyone to whom Landlord desires on any terms
Landlord desires, subject to the terms of Section 1.6
of this Lease and any subsequent First Offer Request delivered to
Landlord pursuant to Section 1.5.1 , above.
1.5.3
First Offer Space Rent . The annual
“Rent,” as that term is defined in
Section 4.1 of this Lease, payable by Tenant for the
First Offer Space (the “ First Offer Rent ”)
shall be equal to the “Market Rent,” as that term is
defined in Section 2.2.3.2 of this Lease, for the First
Offer Space. To the extent Landlord and Tenant cannot agree on the
Market Rent for the First Offer Space, then the Market Rent for the
First Offer Space shall be determined pursuant to
Section 2.2.5 of this Lease, below.
1.5.4
Construction In First Offer Space . Landlord shall
provide the First Offer Space to Tenant in the required condition
as determined as part of the Market Rent determination. The
construction of improvements in the First Offer Space shall comply
with the terms of Article 8 of this Lease.
1.5.5
Amendment to Lease . If Tenant timely exercises
Tenant’s right to lease First Offer Space as set forth
herein, then, as soon as commercially reasonable thereafter,
Landlord and Tenant shall execute an amendment to this Lease for
such First Offer Space upon the terms and conditions as set forth
in the First Offer Notice therefor and this Section 1.5
; provided, however, that if Landlord and Tenant arbitrate the
First Offer Rent pursuant to the terms of Section 2.2.5
of this Lease and, pursuant to such arbitration, the First Offer
Rent is determined to be the First Offer Rent that Tenant submitted
to arbitration, Landlord and Tenant shall, within fifteen
(15) days following the date upon which Landlord and Tenant
receive the
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-15-
final determination of the
arbitrators, execute a second amendment setting forth the
applicable First Offer Rent and reconciling the amount of First
Offer Rent actually paid by Tenant with the amount of First Offer
Rent which should have been paid by Tenant (Landlord and Tenant
hereby agree that Tenant shall be required to pay, and the initial
amendment to the Lease shall be based on, the First Offer Rent
submitted to arbitration by Landlord until such final determination
is made by the arbitrators). Subject to any contrary terms in the
First Offer Notice, Tenant shall commence payment of Rent for such
First Offer Space, and the term of such First Offer Space shall
commence, in a manner as determined as part of the Market Rent (the
“ First Offer Commencement Date ”) and shall
expire coterminously with Tenant’s lease of the initial
Premises on the Lease Expiration Date, as the same may be extended
pursuant to Section 2.2 of this Lease, below, unless
sooner terminated as provided in this Lease.
1.5.6
Termination of Right of First Offer . The rights
contained in this Section 1.5 shall be personal to Original
Tenant and its Affiliates, and may only be exercised by Original
Tenant or an Affiliate (and not by any other assignee, sublessee or
other Transferee of Tenant’s interest in this Lease). Tenant
shall not have the right to lease First Offer Space, as provided in
this Section 1.5 , if, as of the date of the attempted
exercise of any right of first offer by Tenant, or as of the
scheduled date of delivery of such First Offer Space to Tenant,
Tenant is in Economic Default under this Lease. Notwithstanding
anything set forth herein to the contrary, Tenant shall not have
the right to lease First Offer Space if the First Offer
Commencement Date will occur less than two (2) years prior to
the then scheduled Lease Expiration Date; provided, however, to the
extent Tenant then has an unexpired Lease Term renewal option
pursuant to Section 2.2 of this Lease, Tenant shall
have the right to exercise such renewal option simultaneously with
Tenant’s exercise of its first offer right hereunder in order
to cause the Lease Expiration Date to occur more than two years
following the First Offer Commencement Date.
1.6
Right of First Refusal . Provided that Tenant does
not exercise its B4 Expansion Right pursuant to
Section 1.4 of this Lease, above, and subject to the
terms of Section 1.5 , above, with respect to all of the
space in Building 4, then the Original Tenant and its Affiliates
shall have an ongoing right of first refusal with respect to the
remaining space within Building 4 (the “ First Refusal
Space ”).
1.6.1
Procedure for Offer . Landlord shall notify Tenant
(the “ First Refusal Notice ”) whenever Landlord
receives a written “bona-fide third-party offer” for
the First Refusal Space which Landlord desires to accept. Pursuant
to such First Refusal Notice, Landlord shall offer to lease to
Tenant the applicable First Refusal Space. The First Refusal Notice
shall describe the material economic terms upon which Landlord is
willing to lease such space to Tenant (collectively, the “
Economic Terms ”), which Economic Terms shall be
consistent with the terms of the bona-fide third-party offer, and
which Economic Terms shall pertain to the following categories:
(i) the rentable square footage of the applicable space,
(ii) the delivery condition, including any required landlord
work, (iii) the lease commencement and rent commencement
dates, including the construction or improvement build-out time
period, (iv) the length of term, (v) base rent, including
escalations thereto, (vi) monetary concessions (e.g., free
rent, improvement allowances), (vii) any rent stop or base
year protections, (viii) expansion rights and the rent and
terms and conditions upon which such expansion will be based (e.g.,
fair market rent), (ix) renewal rights and the rent and terms
and conditions upon which such renewal will be based (e.g., fair
market rent), (x) parking rights, (xi) parking charges,
(xii) signage rights,
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-16-
(xiii) security deposit or
other credit enhancement, (xiv) the name of the third party
tenant, and (xv) the amount of any brokerage fees or
commissions to be paid by Landlord (except to the extent the Broker
representing Tenant is already earning a commission in connection
with the lease of such First Refusal Space).
1.6.2
Procedure for Acceptance . If Tenant wishes to
exercise Tenant’s right of first refusal with respect to the
First Refusal Space described in the First Refusal Notice, then
within ten (10) business days of delivery of the First Refusal
Notice to Tenant (the “ Exercise Period ”),
Tenant shall deliver notice to Landlord of Tenant’s exercise
of its right of first refusal with respect to all of the First
Refusal Space described in the First Refusal Notice on the terms
contained in such First Refusal Notice. If Tenant does not so
notify Landlord within such ten (10) business day period of
Tenant’s exercise of its first refusal right, then Landlord
shall be free to negotiate and enter into a lease for the First
Refusal Space with the party that made the bona-fide third-party
offer to Landlord, on any terms Landlord desires; provided,
however, that (i) if the Economic Terms of Landlord’s
proposed lease to such third party (as calculated as a Net
Equivalent Lease Rate pursuant to the terms of
Exhibit G , attached hereto) are more than *
more favorable to the third party than those Economic Terms
proposed by Landlord in the First Refusal Notice (as calculated as
a Net Equivalent Lease Rate pursuant to the terms of
Exhibit G , attached hereto), then before
entering into such third party lease, Landlord shall notify Tenant
of such materially more favorable Economic Terms and Tenant shall
have the right to lease the First Refusal Space upon such
materially more favorable Economic Terms by delivering written
notice thereof to Landlord within ten (10) business days after
Tenant’s receipt of Landlord’s notice, (ii) in the
event Landlord fails to lease such First Refusal Space to such
third party within one hundred eighty (180) days following the
expiration of the Exercise Period, Landlord shall again be
obligated to deliver a First Refusal Notice to Tenant, and Tenant
shall again have the right to lease the First Refusal Space, in
accordance with the terms of this Section 1.6.2 , and
(iii) in the event Landlord leases such First Refusal Space to
such third party within one hundred eighty (180) days
following the expiration of the Exercise Period, then Landlord
shall, within thirty (30) days following the expiration of
such 180-day period, deliver written notice to Tenant setting forth
the date of such third party lease and stating that
Landlord’s execution of such third-party lease complies with
the terms of this Section 1.6.2 . After Landlord enters
into any lease of First Refusal Space (“ Third Party
Lease ”) with any such third party (“ Third
Party Tenant ”) in accordance with the foregoing,
Tenant’s rights under this Section 1.6 shall be
subordinate to the rights of the tenant under such Third Party
Lease with respect to the space leased and encumbered pursuant to
the provisions of the Third Party Lease, all extensions and
renewals thereof, and all expansion options contained therein, to
the extent such rights were set forth in the particular First
Refusal Notice, and provided that such expansion options are to
expand into specifically delineated space (i.e., so called
“hard” expansion rights similar to those granted to
Tenant in Section 1.4 , above, but not any right of
first offer, right of first refusal, right of negotiation or
similar rights), and provided further the rentable square footage
of such “hard” expansion space is not greater than ten
percent (10%) of the rentable square footage of initial premises
leased to such tenant under the terms of such Third Party Lease,
and, as to such renewal or expansion options, regardless if such
rights are executed strictly in accordance with their respective
terms or pursuant to lease amendments or new leases, provide d that
such new leases or lease amendments (A) are executed prior to
the expiration of such applicable right (i.e., prior to the
expiration of the renewal right or the expansion right),
(B) the monetary terms of such new lease or amendment are
materially consistent with the monetary terms set forth in the
First
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-17-
Refusal Notice originally
presented to Tenant, and (C) do not, in the case of a renewal,
relate to a term longer than the stated renewal term or terms, and,
in the case of an expansion, do not include the lease of space in
addition to the space provided by the terms of such
right.
1.6.3
Construction In First Refusal Space . Tenant shall
take the First Refusal Space in the condition contemplated by the
First Refusal Notice, and the construction of any improvements in
the First Refusal Space shall be performed by Tenant and shall
comply with the terms of Article 8 of this
Lease.
1.6.4
Amendment to Lease . If Tenant timely exercises
Tenant’s right of first refusal to lease First Refusal Space
as set forth herein, Landlord and Tenant shall, as soon as
commercially reasonable thereafter, execute an amendment to this
Lease (the “ First Refusal Space Amendment ”)
for such First Refusal Space upon the terms set forth in the First
Refusal Notice and this Section 1.6 . Notwithstanding
the foregoing, Landlord may, at its sole option, require that a
separate lease be executed by Landlord and Tenant in connection
with Tenant’s lease of the First Refusal Space, in which
event such lease (the “ First Refusal Space Lease
”) shall be on the same TCCs as this Lease, except as
provided in this Section 1.6 and as specifically in
this Lease to the contrary. The First Refusal Lease, if applicable,
shall be executed by Landlord and Tenant within thirty
(30) days following Tenant’s exercise of its right to
lease the First Refusal Space.
1.6.5
No Defaults; Required Financial Condition of Tenant .
The rights contained in this Section 1.6 shall be
personal to the Original Tenant and its Affiliates and may only be
exercised by the Original Tenant or an Affiliate (and not any
assignee, sublessee or other transferee of the Original
Tenant’s interest in this Lease). The right to lease First
Refusal Space as provided in this Section 1.6 may not
be exercised if, as of the date of the attempted exercise of the
expansion option by Tenant, or as of the scheduled date of delivery
of such First Refusal Space to Tenant, Tenant is in Economic
Default pursuant to the terms of this Lease (beyond any applicable
notice and cure periods).
1.6.6
First Refusal Space Commencement Date and Lease Term
.
1.6.6.1
Commencement Date . The commencement date for the
First Refusal Space shall be the date set forth in the bona-fide
third-party offer (the “ First Refusal Space Commencement
Date ”), unless otherwise agreed to by Landlord and
Tenant, and shall expire on the date set forth in the bona-fide
third party offer; provided, however, to the extent that
(i) the then-remaining term of the Lease (as the same may be
extended pursuant to an early renewal election by Tenant for the
entire Premises) is longer than the lease term of the bona-fide
third party offer, or (ii) the then-remaining term of the
Lease (as the same may be extended pursuant to an early renewal
election by Tenant for the entire Premises) is shorter than the
lease term of the bona fide third party offer, but the differential
between the two is twenty percent (20%) or less (e.g., the
difference between a six year term for a bona fide third party
offer and five years remaining on the Lease Term equals 16.7%, and,
therefore, it is less than 20%), then the lease term of the First
Refusal Space shall be coterminous with the Lease Term.
1.6.6.2
Refusal Space Lease Term . If Tenant leases the First
Refusal Space for a term other than for the lease term set forth in
the bona fide third party offer, then the
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-18-
Economic Terms described in the
applicable First Refusal Notice, but only to the extent of the type
of terms described in items (ii), (iii), (iv), (v), (vi), (vii),
(xi) and (xv) of Section 1.6.1 (the "
Monetary Terms ”), above, shall be converted into a
“Net Equivalent Lease Rate,” as calculated pursuant to
Exhibit G , attached hereto, and such Net
Equivalent Lease Rate shall be the Base Rent that Tenant pays
during the term of the First Refusal Space, and the other Economic
Terms (i.e., other than the Monetary Terms) set forth in the First
Refusal Notice shall also apply to the First Refusal Space.
However, following the determination of the Net Equivalent Lease
Rate applicable to the First Refusal Space, Landlord may elect to
increase the Base Rent applicable to the First Refusal Space and at
the same time provide Tenant with a tenant improvement allowance
(provided that the Net Equivalent Lease Rate applicable to
Tenant’s lease of the First Refusal Space shall be
recalculated to reflect any such tenant improvement allowance so
provided to Tenant). The term of Tenant’s occupancy of the
First Refusal Space shall be referred to herein as a “
Refusal Space Lease Term .” Any First Refusal Space
which is coterminous with the initial Premises may be renewed
pursuant to the terms of Section 2.2 of this Lease. Any
First Refusal Space which is not coterminous with the initial
Premises may be renewed pursuant to the corresponding Economic
Terms related to renewal rights.
ARTICLE 2
INITIAL LEASE TERM; OPTION
TERM(S)
2.1
Initial Lease Term .
2.1.1
Lease Term . The terms and provisions of this Lease
shall be effective as of the date of this Lease. The term of this
Lease (the “ Lease Term ”) shall commence on the
“ Lease Commencement Date ” set forth in
Section 3.2 of the Summary. Subject to extension
pursuant to Section 2.2 , below, the Lease Term shall
terminate on the “ Lease Expiration Date ” set
forth in Section 3.3 of the Summary unless this Lease
is sooner terminated. For purposes of this Lease, the term “
Lease Year ” shall mean each consecutive twelve
(12) month period during the Lease Term commencing on the
Lease Commencement Date. After the Lease Commencement Date, either
party may deliver to the other a notice in the form as set forth in
Exhibit C , attached hereto (a “ Notice
of Lease Term Dates ”), as a confirmation only of the
information set forth therein, which the receiving party shall
execute and return to the requesting party within five
(5) business days of receipt thereof (provided that if said
Notice of Lease Term Dates is not factually correct, then the
receiving party shall make such changes as are necessary to make
the Notice of Lease Term Dates factually correct and shall
thereafter execute and return such Notice of Lease Term Dates to
the requesting party within such five (5) business day
period).
2.1.2
Use of Premises Prior to Lease Commencement Date .
Notwithstanding the definition of the Lease Commencement Date for
the Premises set forth in Section 2.1.1 , above, Tenant
shall have the right, prior to the occurrence of the Lease
Commencement Date, to commence business operations (such
operations, the “ Early Operations ”) from any
portion of the Premises (such space, the “ Early-Occupancy
Space ”) during or after any construction and move in
periods for such space, provided that (i) Tenant shall give
Landlord at least ten (10) days prior notice of any such Early
Operations, which shall identify the corresponding
Early–
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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Occupancy Space, (ii) a
temporary certificate of occupancy or its equivalent permitting
occupancy shall have been issued by the appropriate governmental
authorities for the Early-Occupancy Space, and (iii) Tenant
shall reimburse Landlord, within thirty (30) days of its
receipt of an invoice therefor, any “Pre-9/07 Variable
Operating Expenses,” as that term is set forth in
Section 2.1.2.1 , below. If Tenant does commence
business operations from any Early-Occupancy Space prior to the
occurrence of the Lease Commencement Date, all of the terms and
conditions of this Lease shall apply to such Early-Occupancy Space,
except that Tenant shall have no obligation to pay, except as
otherwise expressly set forth in this Section 2.1.2 as
to the Pre-9/07 Variable Operating Expenses, any Rent (including,
without limitation, Base Rent, Direct Expenses, electrical costs,
and HVAC charges under Article 6 of this
Lease).
2.1.2.1
Pre-9/07 Variable Operating Expenses . For purposes
of this Section 2.1.2 , the “ Pre-9/07 Variable
Operating Expenses ” shall be the amount by which
(A) the sum of ( w ) the “Actual Costs,” as
that term is set forth in Section 6.2.2 of this Lease,
of utilities for the Premises incurred by Landlord prior to
September 1, 2007, which are otherwise (i.e., following
September 1, 2007) directly payable by Tenant pursuant to the
TCCs of Section 6.3 of the Lease, ( x ) the
Actual Costs of janitorial services provided by Landlord prior to
September 1, 2007 pursuant to the TCCs of
Section 6.1.4 of the Lease, ( y ) the Actual
Costs of other services provided by Landlord prior to
September 1, 2007 pursuant to the TCCs of Sections 6.1
and 6.2 of the Lease which would otherwise (i.e. “but
for” Tenant’s Early Operations) not have commenced
until September 1, 2007, and ( z ) the Actual Costs
related to any components of Operating Expenses which are incurred
by Landlord prior to September 1, 2007 as a result of
Tenant’s Early Operations (i.e., to the extent the same would
not have, “but for” Tenant’s Early Operations,
been incurred prior to September 1, 2007), exceeds
(B) Landlord’s cost of providing utilities, security and
other corresponding services to the corresponding portions of the
Project, on an unoccupied basis, prior to and including
August 31, 2007 (i.e., during the scheduled period of
construction of the Tenant Improvements); provided, however, that
in no event shall such Pre-9/07 Variable Operating Expenses include
(i) costs which were incurred because of any “Landlord
Caused Delay,” as that term is defined in
Section 5.1 of the Tenant Work Letter, (ii) costs
which Landlord pays to Tenant pursuant to the terms of
Section 29.36 of this Lease, below, or (iii) cost
incurred following the Lease Commencement Date, or (iii) costs
which have otherwise been included in Project Costs.
2.2
Option Terms . Landlord and Tenant hereby acknowledge
that the terms of this Section 2.2 shall not be applicable to
any space added to the Premises as First Refusal Space which is not
coterminous with the initial Lease Term.
2.2.1
Option Right . Landlord hereby grants the Original
Tenant, its Affiliates and any permitted assignee of the Original
Tenant’s interest in this Lease pursuant to Article 14
of this Lease (a “ Permitted Assignee ”), two
(2) options to extend the Lease Term with respect to the
initial Premises, any space which was added to the initial Premises
pursuant to the TCCs of Section 1.4 of this Lease, any
space which was added as First Offer Space, and any space which was
added as First Refusal Space and is coterminous with the initial
Lease Term (collectively, the “ Option Space ”).
Each such option shall be for a period of five (5) years
(each, an “ Option Term ”). Such options shall
be exercisable only by notice delivered by Tenant to Landlord as
provided in Section 2.2.4 , below, provided that, as of
the date of delivery of such notice, (i) Tenant is not then in
Economic Default under this Lease (beyond any applicable notice
and
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-20-
cure periods), and
(ii) Tenant has not been in Economic Default under this Lease
(beyond any applicable notice and cure periods) more than once
during the prior twelve (12) month period. Upon the proper
exercise of such option to extend, and provided that, as of the end
of the then applicable Lease term, Tenant is not in Economic
Default under this Lease (beyond any applicable notice and cure
periods), the Lease Term, as it applies to the Option Space (as
such Option Space may be reduced pursuant to
Section 2.2.2 , below), shall be extended for a period
of five (5) years. The rights contained in this
Section 2.2 shall only be exercised by the Original
Tenant, an Affiliate or a Permitted Assignee (and not any other
assignee, sublessee or other transferee of the Original
Tenant’s interest in this Lease) if Original Tenant and/or
its Affiliate or Permitted Assignee is in occupancy of not less
than one (1) entire Building. In connection with
Tenant’s exercise of its renewal option, Tenant shall have
the right to reduce the size of the Option Space and exercise the
option only as to such reduced portion of the Option Space (the
“ Partial Renewal ”), in accordance with the
terms of Section 2.2.2 below.
2.2.2
Partial Renewal; Non-Renewed Space . In the event
Tenant desires to exercise its Partial Renewal right, the
“Exercise Notice,” as that term is defined in
Section 2.2.4 , below shall describe the area of the
Option Space which Tenant elects to renew the Lease Term (the "
Renewal Space ”). The following conditions shall apply
to Tenant’s exercise of the Partial Renewal right. The
Renewal Space shall be determined by Tenant, subject to the
satisfaction of the following conditions: (i) Tenant must
elect to renew the Lease with respect to, at a minimum, one
(1) entire Building of the Project, (ii) the Renewal
Space must be in adjacent buildings, starting from Building 1 or
Building 4, (iii) the Renewal Space may not consist of more
than one (1) partial Building (i.e., a Building in which
Tenant does not lease the entire Building), (iv) to the extent
the Renewal Space includes a partial Building, then such partial
Building must be on one end or the other of all the Buildings
containing Renewal Space and the Renewal Space within such partial
Building must consist of the lesser of (A) the total amount of
space then leased by Tenant within such Building, and (B) two
(2) full contiguous floors of the Building (and which floors
must include, to the extent possible, either the highest floor in
the Building or the lowest floor in the Building), and
(v) Tenant shall pay to Landlord the reasonable costs incurred
in restoring any internal stairwells (i.e., any stairwells
installed as part of the “Tenant Improvements” or as an
“Alteration,” as those terms are defined in
Section 2.1 of the Tenant Work Letter and
Section 8.1 of this Lease, respectively) in any partial
Building included in the Renewal Space; provided, however, Tenant
shall not be required to restore any such stairwell to the extent
the Renewal Space includes the floors affected by such stairwell.
If Tenant elects to exercise the Partial Renewal right, then
(A) Landlord and Tenant shall be relieved of their respective
obligations under this Lease with respect to the that portion of
the Option Space which Tenant is not renewing the Lease Term (the
“ Non-Renewed Space ”) as of the first (1st) day
of the applicable Option Term, except for those obligations set
forth in this Lease which specifically survive the expiration or
earlier termination of this Lease, including, without limitation,
the payment by Tenant of all amounts owed by Tenant under this
Lease, up to the first (1st) day of the applicable Option Term,
with respect to the Non-Renewed Space, (B) to the extent such
Non-Renewed Space includes any portion of the initial Premises
(i.e., any space within Building 1, Building 2 or Building 3), then
the terms and conditions of Section 1.5 and 1.6 of this
Lease, above, shall immediately be null and void and of no further
force or effect, and (C) to the extent such Non-Renewed Space
includes any portion of Building 1 or Building 2, then the terms
and conditions of Section 1.1.4 of this Lease, above, shall
immediately be null and void and of no further force or effect and
the Exclusive Tenant Areas shall thereafter be deemed
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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Project Common Areas. In the
event that Tenant fails to vacate, and surrender and deliver to
Landlord exclusive possession of the Non-Renewed Space, free of all
subleases, prior to the first (1st) day of the applicable Option
Term in the condition required by this Lease, and such failure
continues for five (5) business days after receipt of notice
from Landlord, then the provisions of Article 16 of
this Lease shall apply to the Non-Renewed Space which is not so
delivered.
2.2.3
Option Rent .
2.2.3.1
Option Rent During First Option Term . The Base Rent
payable by Tenant during the first (1 st )
Option Term (the “ First Option Rent ”) shall be
calculated as follows.
2.2.3.1.1
Initial Premises and Building 4 Expansion Space . As
to any Renewal Space which was part of the initial Premises or was
added to the initial Premises pursuant to the TCCs of
Section 1.4 of this Lease, the First Option Rent shall
be equal to the product of (i) the Project Costs per rentable
square foot of the Renewal Space, as such Project Costs shall be
increased for any commissions payable pursuant to the commission
agreement attached hereto as Exhibit J (provided
that Landlord hereby acknowledges that project Costs shall not
include any amounts disbursed as the TIA Increase or the
Modification Cost Allowance), and as such Project Costs are
allocated based upon (x) the Project Costs per rentable square
foot of the initial Premises calculated pursuant to
Article 3 of this Lease, and (y) the Project Costs
per rentable square foot of the Building 4 Expansion Space
calculated pursuant to Section 1.4 of this Lease, in
either case multiplied by (ii) *.
2.2.3.1.2
First Offer Space . As to any Renewal Space which was
added as First Offer Space, the First Option Rent shall be
calculated pursuant to the renewal terms and renewal rent
applicable to such First Offer Space, provided if such renewal rent
was for “market rent,” then “Market Rent”
shall be used as the First Option Rent applicable thereto and the
terms of Sections 2.2.3.2 and 2.2.5 shall
apply.
2.2.3.1.3
First Refusal Space . As to any Renewal Space which
was added as First Refusal Space and is coterminous with the
initial Lease Term, the First Option Rent shall be calculated
pursuant to the terms of the renewal terms and renewal rent
applicable to such First Refusal Space, provided if such renewal
rent was for “market rent,” then “Market
Rent” shall be used as the First Option Rent applicable
thereto and the terms of Sections 2.2.3.2 and 2.2.5
shall apply.
2.2.3.2
Option Rent During Second Option Term . With regard
to any Renewal Space which (i) was originally part of the
initial Premises, (ii) was added to the initial Premises
pursuant to the TCCs of Section 1.4 of this Lease,
(iii) was added as First Offer Space (regardless of the terms
of the First Offer Rent applicable to a second renewal option), or
(iv) was added as First Refusal Space and is coterminous with
the initial Lease Term (regardless of the Economic Terms applicable
to a second renewal option), the Base Rent payable by Tenant during
the second (2 nd )
Option Term (the “ Second Option Rent ”) shall
be equal to ninety-seven percent (97%) of the Market Rent as set
forth below. With regard to any First Refusal Space which is not
coterminous with the initial Lease Term, the Base Rent payable by
Tenant during the second (2 nd )
renewal term, if any, shall be governed by the applicable renewal
terms of the
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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Economic Terms. For purposes of
this Lease, the term “ Market Rent ” shall be
calculated on a “Net Equivalent Lease Rate” basis, as
set forth on Exhibit G , attached hereto, and
shall mean the Net Equivalent Lease Rate per rentable square foot,
at which tenants, as of the commencement of the second (2
nd ) Option Term (or, with respect to any First
Offer Space, as of the First Offer Commencement Date) are, pursuant
to transactions completed within the twenty-four (24) months
prior to the first day of the second (2 nd )
Option Term (or, with respect to any First Offer Space, twelve
(12) months prior to the First Offer Commencement Date),
leasing non-sublease, non-encumbered, non-synthetic, non-renewal,
non-expansion (to the extent the applicable tenant was
“captive”), non-equity space comparable in size (which,
in the case of the second (2 nd )
Renewal Option, shall mean not less than 100,000 rentable square
feet of space), location and quality to the Premises (or First
Offer Space, as applicable) for a “Comparable Term,” as
that term is defined in this Section 2.2.3.2 (the “
Comparable Deals ”), which comparable space is located
in the “Comparable Buildings,” as that term is defined
in this Section 2.2.3.2 , giving appropriate
consideration to the standard of measurement by which the rentable
square footage is measured, the ratio of rentable square feet to
usable square feet, parking availability (including the ratio of
covered parking to uncovered parking) and related parking charges.
The terms of the Comparable Deals shall be calculated as a Net
Equivalent Lease Rate pursuant to the terms of Exhibit
G , and shall take into consideration only the following
concessions (provided that if the rent payable in a Comparable Deal
is determined by use of a discounted fair market rate formula, such
rent shall be equitably increased in order that such Comparable
Deal will not reflect a discounted rate) (collectively, the “
Rent Concessions ”): (a) rental abatement
concessions, if any, being granted such tenants in connection with
such comparable spaces; (b) tenant improvements or allowances
provided or to be provided for such comparable space, taking into
account the value of the existing improvements in the Premises in
comparison to the value of any improvements existing in the
Comparison Deals, such value to be based upon the age, quality and
layout of the improvements and the extent to which the same could
be utilized by general office user for its corporate headquarters,
(c) Proposition 13 protection, (d) renewal terms and the
rent and terms and conditions related to such renewals, and
(e) all other monetary concessions, if any, being granted such
tenants in connection with such comparable space; provided,
however, that notwithstanding anything to the contrary herein, no
consideration shall be given to the fact that Landlord is or is not
required to pay a real estate brokerage commission in connection
with the applicable term or the fact that the Comparable Deals do
or do not involve the payment of real estate brokerage commissions.
The term “ Comparable Term ” shall refer to the
length of the lease term, without consideration of options to
extend such term, for the space in question. In addition, the
determination of the Market Rent shall include a determination as
to whether, and if so to what extent, Tenant must provide Landlord
with financial security, such as a letter of credit or guaranty,
for Tenant’s rent obligations during any Option Term. Such
determination shall be made by reviewing the extent of financial
security then generally being imposed in Comparable Deals upon
tenants of comparable financial condition and credit history to the
then existing financial condition and credit history of Tenant
(with appropriate adjustments to accou nt for differences in the
then-existing financial condition of Tenant and such other
tenants). The term “ Comparable Buildings ”
shall mean the Buildings and other first-class office buildings
which are comparable to the Buildings in terms of age (based upon
the date of completion of construction), quality of construction,
building systems, parking availability (including ratio of covered
to uncovered parking), level of services and amenities, size and
appearance, and are located in the “ Comparable Area,
” which is the “Highway 56 Corridor.” The “
Highway 56
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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Corridor
” shall be the area
containing Comparable Buildings which have reasonably comparable
freeway access to the Project along Highway 56 from one Mile West
of I-5 to one mile East of I-15; provided that if there are not
enough Comparable Deals in such Comparable Area to determine Market
Rent, then the Comparable Area shall be expanded on the North side
to two freeway exits North of the I-5 and Highway 56 junction and
the I-15 and Highway 56 junction, and to two freeway exits South of
the I-5 and Highway 56 junction and two exits South of the I-15 and
Highway 56 junction.
2.2.4
Exercise of Option . The options contained in this
Section 2.2 shall be exercised by Tenant, if at all,
only in the manner set forth in this Section 2.2.4 .
Tenant shall deliver notice (the “ Exercise Notice
”) to Landlord not more than fifteen (15) months nor
less than twelve (12) months prior to the expiration of the
then Lease Term, stating that Tenant is exercising its option. The
following terms of this Section 2.2.4, and the terms of
Section 2.2.5 , below, shall apply with regard to
(i) during the first (1 st )
Option Term, any portion of the Renewal Space which was added to
the Premises as (a) First Offer Space, or (b) First
Refusal Space, to the extent the rent for such space during the
first renewal terms is based on “market rent,” and
(ii) during the second (2 nd )
Option Term, all Renewal Space. Concurrently with the delivery of
the Exercise Notice, Tenant shall deliver to Landlord
Tenant’s calculation of the Market Rent (the “
Tenant’s Option Rent Calculation ”). Landlord
shall deliver notice (the “ Landlord Response Notice
”) to Tenant on or before the date which is thirty
(30) days after Landlord’s receipt of the Exercise
Notice and Tenant’s Option Rent Calculation (the “
Landlord Response Date ”), stating that
(A) Landlord is accepting Tenant’s Option Rent
Calculation as the Market Rent, or (B) rejecting
Tenant’s Option Rent Calculation and setting forth
Landlord’s calculation of the Market Rent (the “
Landlord’s Option Rent Calculation ”). If
Landlord accepts Tenant’s Option Rent Calculation as the
Market Rent, then Tenant’s Option Rent Calculation shall be
the Second Option Rent. If Landlord rejects Tenant’s Option
Rent Calculation as the Market Rent, then within ten
(10) business days of its receipt of the Landlord Response
Notice, Tenant may, at its option, accept the Market Rent contained
in the Landlord’s Option Rent Calculation. If Tenant does not
affirmatively accept or Tenant rejects the Market Rent specified in
the Landlord’s Option Rent Calculation, the parties shall
follow the procedure, and the Market Rent shall be determined as
set forth in Section 2.2.5 .
2.2.5
Determination of Market Rent . In the event Tenant
objects or is deemed to have objected to the Market Rent applicable
to any Renewal Space (or if Landlord and Tenant cannot agree on the
Market Rent applicable to the First Offer Space), Landlord and
Tenant shall attempt to agree upon the Market Rent using reasonable
good-faith efforts; provided, however, subject to then-existing
confidentiality agreements bargained for by the applicable tenant
and to which Landlord is a party, Landlord shall disclose to Tenant
all relevant economic terms of Comparable Deals within the Project.
If Landlord and Tenant fail to reach agreement within sixty
(60) days following Tenant’s objection or deemed
objection to the Landlord’s Option Rent Calculation (or
Landlord’s delivery to Tenant of the First Offer Notice with
respect to the First Offer Space) (as applicable, the “
Outside Agreement Date ”), then (i) Landlord and
Tenant shall, on the last day of such sixty (60) day period
(or such other earlier time as Landlord and Tenant shall agree
upon), meet and Landlord shall deliver to Tenant Landlord’s
final Landlord’s Option Rent Calculation (or Landlord’s
final determination of Market Rent applicable to the First Offer
Space, as the case may be) and Tenant shall simultaneously deliver
to Landlord Tenant’s final Tenant’s Option Rent
Calculation (or Tenant’s final
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-24-
determination of Market Rent
applicable to the First Offer Space, as the case may be), and
(ii) in connection with the Option Rent, the final
Landlord’s Option Rent Calculation and the final
Tenant’s Option Rent Calculation, each as previously and
simultaneously delivered to the other party on or before the
expiration of the sixty (60) day discussion period above (or
each party’s final determination of Market Rent applicable to
the First Offer Space, as the case may be), shall be submitted to
the arbitrators pursuant to the TCCs of this
Section 2.2.5 . The submittals shall be made
concurrently with the selection of the arbitrator pursuant to this
Section 2.2.5 and shall be submitted to arbitration in
accordance with Section 2.2.5.1 through 2.2.5.4 of this
Lease, but subject to the conditions, when appropriate, of
Section 2.2.3 .
2.2.5.1
Landlord and Tenant shall mutually appoint one (1) arbitrator,
who shall by profession be a real estate appraiser or attorney who
shall have been active over the five (5)-year period ending on the
date of such appointment in the leasing of first-class office
properties in the Comparable Area (the “ Arbitrator
”) to determine which of Landlord’s or Tenant’s
final submitted Market Rent calculations is the closest to its own
calculation or valuation. The determination of the Arbitrator shall
be limited solely to the issue of whether Landlord’s or
Tenant’s submitted Market Rent, is the closest to the actual
Market Rent as determined by the Arbitrator, taking into account
the requirements of Section 2.2.3 of this
Lease.
2.2.5.2
The Arbitrator shall within thirty (30) days of the
appointment reach a decision as to Market Rent and determine
whether the Landlord’s or Tenant’s determination of
Market Rent as submitted pursuant to Section 2.2.5 and
Section 2.2.3 of this Lease is closest to Market Rent
as determined by the Arbitrator and simultaneously publish a ruling
(“ Award ”) indicating whether Landlord’s
or Tenant’s submitted Market Rent is closest to the Market
Rent as determined by the Arbitrator. Following notification of the
Award, the Landlord’s or Tenant’s submitted Market Rent
determination, whichever is selected by the Arbitrator as being
closest to Market Rent shall become the then applicable Market
Rent.
2.2.5.3
If Landlord and Tenant fail to agree upon and appoint the
Arbitrator, then either party may petition the presiding judge of
the Superior Court of San Diego County to appoint the Arbitrator,
subject to criteria in Section 2.2.5 of this Lease, or
if he or she refuses to act, either party may petition any judge
having jurisdiction over the parties to appoint such
arbitrator.
2.2.5.4
The fees for the Arbitrator shall be paid by the party whose
calculation of Market Rent varied the most from that of the
Arbitrator.
ARTICLE 3
BASE RENT; ABATEMENT OF RENT
3.1
Base Rent .
3.1.1
Generally . Tenant shall pay, without prior notice or
demand, to Landlord or Landlord’s agent at the management
office of the Project, or, at Landlord’s option, at such
other place as Landlord may from time to time designate in writing,
by a check (or, at Tenant’s election, by bank wire transfer)
for currency which, at the time of payment, is legal tender
for
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-25-
private or public debts in the
United States of America, base rent (“ Base Rent
”) as set forth in Section 3.1.2, 3.1.3 and 3.1.4 ,
below, payable in equal monthly installments in advance on or
before the first day of each and every calendar month during the
Lease Term, without any setoff or deduction whatsoever. In the
event Tenant elects to pay Base Rent via bank wire transfer,
Landlord shall, upon request from Tenant, provide Tenant with all
necessary bank wire transfer instructions.
3.1.2
Base Rent for Initial Premises During Lease Years 1-5
. Base Rent shall be paid by Tenant to Landlord for Buildings 1, 2
and 3 on the “ Rent Commencement Date ,” as that
term is defined in Section 3.2 of the Summary, for each
such Building. The Base Rent per rentable square foot of the
initial Premises during the first (1 st )
five (5) Lease Years of the initial Lease Term (the “
Initial Base Rent ”) shall equal, on an annual basis,
(i) the product of (A) the “Project Costs,”
as that term is defined in Section 3.1.2.1 , below, and
(B) * divided by (ii) the number of the rentable square feet
in the initial Premises.
3.1.2.1
Project Costs . For purposes of this Lease, the
“ Project Costs ” shall mean an amount equal to
the sum of the following.
(i)
Base Land Cost . The “ Base Land Cost
” shall equal *, which amount was calculated based upon (A) *
and (B) *. Subject only to recalculation resulting from a
determined change in the *, the components of Base Land Cost may
not be changed, whether by use of contingency amounts or
otherwise.
(ii)
Land Cost Carry . The “ Land Cost Carry
” shall be an amount equal the sum of (A) and (B) as
follows: (A) * (B) *.
(iii)
Base Building Construction Costs . The “
Base Building Construction Costs ” shall include all
costs relating to (A) the design (e.g., architectural and
engineering fees) of the “Base Buildings,” as that term
is defined in Section 1.1.1 of the Tenant Work Letter,
of Building 1, Building 2 and Building 3 (the “ Premises
Buildings ”), the Project Sitework and Permitted Offsite
Work, (B) permitting the Base Building portions of the
Premises Buildings, the Project Sitework and Permitted Offsite
Work, (C) construction insurance for such Base Building
portions of the Premises Buildings, the Project Sitework and
Permitted Offsite Work, and (D) the “HBBC Costs,”
as that term is set forth in Section 1.3 of the Tenant Work
Letter; provided, however, in no event shall such Base Building
Construction Costs include ( x ) any of the “B4
Project Costs,” as that term is defined in
Section 1.4.2 of this Lease, above, which B4 Project
Costs are hereby acknowledged to include Building 4’s
pro-rata share of the Project Sitework as further set forth in such
Section 1.4.2 , ( y ) any “Modification
Cost Increases,” as that term is set forth in
Section 1.2.3 of the Tenant Work Letter, whether the
same is funded through the “Modification Cost
Allowance,” as that term is set forth in
Section 1.2.3.1 of the Tenant Work Letter, or directly
paid by Tenant pursuant to the TCCs of Section 1.2.3 of
the Tenant Work Letter, and/or ( z ) the cost relating to
the design, permitting and construction of any off-site
improvements to the extent the same do not constitute Permitted
Offsite Work.
(iv)
Intentionally Omitted .
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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(v)
Tenant Improvement Allowance . The amount of the
“Tenant Improvement Allowance,” as that term is set
forth in Section 2.1 of the Tenant Work Letter (i.e.,
approximately $20,049,590.00, calculated based upon $55.00 for each
of the anticipated 364,538 rentable square feet of the initial
Premises). Subject only to recalculation resulting from a
determined change in the rentable square footage of the initial
Premises pursuant to the TCCs of Section 1.2 of this
Lease, the Tenant Improvement Allowance may not be changed, whether
by use of contingency or otherwise.
(vi)
Development Fee . The “ Development Fee
” to which Landlord is entitled shall be an amount equal to
the sum of (A) *, and (B) *. Subject only to recalculation
resulting from a determined change in the * of the Development Fee
may not be changed, whether by use of contingency or
otherwise.
(vii)
Supra Construction Soft Costs . The “ Supra
Construction Soft Costs ” shall mean the product of (i) *
and (ii) *
(viii)
Leasing Commissions . All commissions payable to The
Staubach Company (Tenant’s Broker) and Colliers International
(Landlord’s Broker) with regard to Tenant’s leasing of
the initial Premises for the initial Lease Term pursuant to the
TCCs of Section 29.24 of this Lease; provided, however,
in no event shall such leasing commission exceed * per rentable
square foot of the initial Premises multiplied by the *. Subject
only to recalculation resulting from a determined change in the
rentable square footage of the initial Premises pursuant to the
TCCs of Section 1.2 of this Lease, the leasing
commission component of Project Costs may not be changed, by use of
contingency or otherwise.
(ix)
FBA Costs . The “ FBA Costs ” are
those assessments attributable to the Premises Buildings which are
incurred in connection with the Facilities Benefit Assessment to
which the Project is subject (the “ FBA ”). To
the extent the FBA Costs exceed the 2004 level of $317,000 per acre
of the applicable portion of the Project, such increased cost shall
also be included as part of Project Costs (the “ FBA
Increase ”), and the Project Cost Cap shall be increased
by the amount of such FBA Increase; provided, however, in no event
shall the amount of FBA Increase included in Project Costs, and
used to increase the Project Cost Cap, be an amount in excess of
$500,000.00 in the aggregate.
(x)
Carry Costs . The “carry costs” of the
expenses incurred by Landlord in connection with Project Cost
components (iii) through (ix), above (i.e., all costs other
than the Base Land Cost and Land Cost Carry), calculated from the
calendar month in which such expenditure was made, commencing with
July 16, 2005 through August 31, 2007 (as applicable with
regard to any such expenditure, the “ Carry Period
”) based upon the TVM Rate.
3.1.2.2
Base Rent Estimate; Base Rent Memorandum . The annual
installment of Initial Base Rent for the initial Premises is
anticipated to equal approximately * per rentable square foot (the
“ Initial Base Rent Estimate ”). Landlord may
modify the Initial Base Rent Estimate from time to time by notice
to Tenant during the period of construction of the Project. In
addition, within ninety (90) days following the last Rent
Commencement Date applicable to the initial Premises, Landlord
shall deliver to Tenant a notice (a “ Base Rent
Memorandum ”) substantially in the form attached hereto
as Exhibit C-1 , setting forth the
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-27-
Initial Base Rent, which Tenant
shall execute and return to Landlord within ten (10) business
days after receipt thereof.
3.1.2.3
Cap on Project Costs . Excepting only the FBA
Increase and any “Exception Increase,” as that term is
defined in Section 3.1.2.3.1 , below, in no event shall
the Project Costs exceed an amount equal to * (the “
Project Cost Cap ”). Based on the anticipated rentable
square footage of the initial Premises of 364,538 rentable square
feet, (i) the Project Costs per rentable square foot of the
initial Premises shall, therefore, subject to the FBA Increase and
any Exception Increase, not exceed * and (ii) the annual
installment of Initial Base Rent shall, therefore, subject to the
FBA Increase and any Exception Increase, not exceed * per rentable
square foot of the initial Premises.
3.1.2.3.1
Exception Increase . The Project Cost Cap shall be
increased to the extent of either: (i) costs resulting from
labor disputes and/or labor strikes resulting from Tenant Delays,
or (ii) the “BB Contractor’s,” as that term
is defined in Section 1.3.1.1 of the Tenant Work
Letter, payment of any performance bond required and/or elected by
Tenant (such increases, collectively, the “ Exception
Increase ”).
3.1.3
Base Rent for Initial Premises During Lease Years
6-10 . Commencing on the first (1 st )
day of the sixth (6 th )
Lease Year of the initial Lease Term, the Base Rent applicable to
the initial Premises shall be increased to an amount equal to the
product of (i) the Initial Base Rent, and (ii) *.
3.1.4
Pro-Rata Payments of Base Rent . If any Rent payment
date (including any Rent Commencement Date) falls on a day of the
month other than the first day of such month or if any payment of
Rent is for a period which is shorter than one month, the Rent for
any such fractional month shall accrue on a daily basis during such
fractional month in an amount equal to the product of (i) a
fraction, the numerator of which is the number of days in such
fractional month and the denominator of which is the actual number
of days occurring in such calendar month, and (ii) the
applicable monthly Rent. All other payments or adjustments required
to be made under the TCCs of this Lease that require proration on a
time basis shall be prorated on the same basis.
3.1.5
Tenant’s Audit of Landlord’s Project
Costs . On or before ninety (90) days after the last
occurring Rent Commencement Date, Landlord shall deliver to Tenant
a copy of Landlord’s final determination of the Project
Costs. Within thirty (30) days after Tenant receives such
determination by Landlord, if so requested by Tenant, a
determination as to the actual amount of Project Costs shall be
made, at Tenant’s expense, by an independent certified public
accountant or construction management firm (as applicable, the
“ Project Costs Accountant ”) mutually and
reasonably selected by Landlord and Tenant. If the Project Costs
Accountant determines that the Projects Costs were equal to an
amount which is different than the Project Costs amount determined
by Landlord, then Landlord and Tenant shall, within thirty
(30) days following such determination by the Project Costs
Accountant, reconcile the amount of Base Rent paid by Tenant with
the amount of Base Rent which should have been paid by Tenant and
the Project Costs determined by the Project Costs Accountant shall
be used, thereafter, to calculate Base Rent. Notwithstanding the
foregoing, if, following such determination by the Project Costs
Accountant, either Landlord or Tenant dispute the amount of Project
Costs as
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-28-
determined by such Project Costs
Accountant, then Landlord and Tenant shall each have the right,
within thirty (30) days of the determination of the Project
Costs Accountant, to submit the determination of Project Costs to
arbitration pursuant Section 29.35 of this Lease, below. If
neither party timely submits the matter to arbitration, or if
Tenant does not timely submit the matter to a Project Costs
Accountant, then the calculation of Project Costs made by the
Project Costs Accountant (or by Landlord if the matter was not
timely submitted to a Project Costs Accountant) shall be binding on
the parties.
3.2
Abated Base Rent . During the period commencing on
the Rent Commencement Date applicable to Building 3 and ending on
the first Anniversary of the Rent Commencement Date applicable to
Building 3 (the “ 12-Month Abatement Period ”),
Tenant shall have no obligation to pay any Base Rent otherwise
attributable to the first (1 st )
floor of Building 3 (based on the rentable square footage of the
first floor of Building 3 vis-à-vis the rentable square
footage of the Premises) during such 12-Month Abatement Period.
Landlord and Tenant hereby acknowledge that the foregoing Base Rent
abatement right shall not be applicable to any Additional Rent
which Tenant shall be obligated to pay during such 12-Month
Abatement Period, and, therefore, Tenant shall pay, in addition to
all other amounts required to be paid by Tenant pursuant to the
TCCs of this Lease, all Additional Rent attributable to the first
(1 st
) floor of Building 3 during such
12-Month Abatement Period.
3.3
Abatement of Rent . In the event that Tenant is
prevented from using, and does not use, the Premises or any portion
thereof, as a result of (i) any repair, maintenance or
alteration performed by Landlord, or which Landlord failed to
perform, after the Lease Commencement Date and required by this
Lease, which substantially interferes with Tenant’s use of or
ingress to or egress from the Project (including the Project Common
Areas) or Premises (including the Project parking areas to the
extent reasonable replacement spaces are not provided); or
(ii) any failure by Landlord to provide services, utilities or
ingress to and egress from the Project (including the Project
Common Areas) or Premises as required pursuant to the TCCs of this
Lease; or (iii) the presence of Hazardous Materials not
brought on the Premises by “Tenant Parties,” as that
term is set forth in Section 10.1 of this Lease to the
extent such presence substantially interferes with Tenant’s
use of or ingress to or egress from the Project (including the
Project Common Areas), or Premises (including the Project parking
areas to the extent reasonable replacement spaces are not provided)
(any such set of circumstances as set forth in items (i) through
(iii), above, to be known as an “ Abatement Event
”), then Tenant shall give Landlord Notice of such Abatement
Event, and if such Abatement Event continues for five
(5) consecutive business days after Landlord’s receipt
of any such Notice, or for more than a total of ten
(10) business days in any twelve (12) month period (as
applicable, the “ Eligibility Period ”), then,
as Tenant’s sole remedy vis-à-vis such Abatement Event,
the Base Rent and Tenant’s Share of Direct Expenses shall be
abated or reduced, as the case may be, after expiration of the
Eligibility Period for such time that Tenant continues to be so
prevented from using, and does not use, the Premises, or a portion
thereof, in the proportion that the rentable area of the portion of
the Premises that Tenant is prevented from using, and does not use
(“ Unusable Area ”), bears to the total rentable
area of the Premises. Notwithstanding the foregoing, in the event
that Tenant is prevented (from an objective, general office tenant
perspective) from conducting, and does not conduct, its business
from any portion of the Premises for a period of time in excess of
the Eligibility Period, and the remaining portion of the Premises
is not sufficient to allow Tenant to effectively conduct its
business therein, and if Tenant does not conduct its business from
such
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-29-
remaining portion, then for such
time after expiration of the Eligibility Period during which Tenant
is so prevented (again, from an objective, general office tenant
perspective) from effectively conducting its business therein, the
Base Rent and Tenant’s Share of Direct Expenses for the
entire Premises shall be abated. Landlord and Tenant hereby
acknowledge that, in addition to the abatement rights set forth in
this Section 3.3 , Tenant’s abatement rights
following an event of damage and destruction or condemnation is
provided pursuant to the TCCs of Articles 11 and 13 of this
Lease. Except as set forth in the immediately preceding sentence,
Tenant’s right to abate Base Rent pursuant to this
Section 3.3 shall be Tenant’s sole and exclusive
remedy at law or in equity for an Abatement Event.
ARTICLE 4
ADDITIONAL RENT
4.1
General Terms . In addition to paying the Base Rent
specified in Article 3 of this Lease, Tenant shall pay
“ Tenant’s Share ” of the annual “
Direct Expenses ,” as those terms are defined in
Sections 4.2.6 and 4.2.2 , respectively, of this Lease.
Such payments by Tenant, together with any and all other amounts
payable by Tenant to Landlord pursuant to the TCCs of this Lease,
including without limitation, the monthly amortization payment of
any TIA Increase or any Modification Cost Allowance, are
hereinafter collectively referred to as the “ Additional
Rent, ” and the Base Rent and the Additional Rent are
herein collectively referred to as “ Rent .” All
amounts due under this Article 4 as Additional Rent
shall be payable for the same periods and in the same manner as the
Base Rent. Without limitation on other obligations of Tenant which
survive the expiration of the Lease Term, the obligations of Tenant
to pay the Additional Rent provided for in this
Article 4 shall survive the expiration of the Lease
Term.
4.2
Definitions of Key Terms Relating to Additional Rent
. As used in this Article 4 , the following terms shall have
the meanings hereinafter set forth:
4.2.1
Intentionally Omitted.
4.2.2
“ Direct Expenses ” shall mean “Operating
Expenses” and “Tax Expenses.”
4.2.3
“ Expense Year ” shall mean each calendar year
in which any portion of the Lease Term falls, through and including
the calendar year in which the Lease Term expires.
4.2.4
“ Operating Expenses ” shall mean all expenses,
costs and amounts which Landlord pays or accrues during any Expense
Year because of or in connection with the ownership, management,
maintenance, security, repair or operation of the Project, or any
portion thereof, in accordance with sound real estate management
and accounting principles, consistently applied. Without limiting
the generality of the foregoing, Operating Expenses shall
specifically include any and all of the following: (i) the
cost of supplying all utilities, the cost of operating, repairing,
maintaining, and renovating the utility, telephone, mechanical,
sanitary, storm drainage, and elevator systems, and the cost of
maintenance and service contracts in connection therewith;
(ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting any governmental enactments
which may affect Operating Expenses, and the costs incurred in
connection with a governmentally mandated transportation system
management program or
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-30-
similar program; (iii) the
cost of all insurance carried by Landlord pursuant to the TCCs of
Section 10.2 of this Lease, below; (iv) the cost
of landscaping, relamping, and all supplies, tools, equipment and
materials used in the operation, repair and maintenance of the
Project, or any portion thereof; (v) costs incurred in
connection with the parking areas servicing the Project;
(vi) fees and other costs, including management fees (provided
that Tenant’s Share of such annual management fee shall equal
* of the then annual Base Rent for the Premises, as the same may be
increased upon an expansion of the initial Premises to include all
or any portion of Building 4, or decreased upon a renewal pursuant
to the TCCs of Section 2.2.2 ), consulting fees, legal
fees and accounting fees, of all contractors and consultants in
connection with the management, operation, maintenance and repair
of the Project; (vii) payments under any equipment rental
agreements, and payment of the fair rental value of any on-site
management office space, to the extent the rental rate and size of
the management office are materially consistent with the practices
of the landlords of the Comparable Buildings; provided that to the
extent the personnel employed in such on-site management office
also support other projects of Landlord, then the fair rental value
of any on-site management office space shall be equitably pro-rated
(based on the amount of time spent managing the Project as compared
to the amount of time spent managing such other projects) among the
applicable projects; (viii) wages, salaries and other
compensation and benefits, including taxes levied thereon, of all
persons (other than persons generally considered to be higher in
rank than the position of Project manager) engaged in the
operation, maintenance and security of the Project; (ix) costs
under any instrument pertaining to the sharing of costs by the
Project (but only to the extent such costs would have been
includable as an Operating Expense pursuant to the TCCs of this
Lease had Landlord incurred the costs directly);
(x) operation, repair and maintenance of all systems and
equipment and components thereof of the Buildings; (xi) the
cost of (A) janitorial, alarm, security and other services,
(B) replacement of wall and floor coverings, ceiling tiles and
fixtures in Common Areas, and (C) maintenance and repair of
curbs, walkways, and roofs; (xii) amortization of the cost of
acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion
thereof (which amortization calculation shall include interest at
the “Interest Rate,” as that term is set forth in
Article 25 of this Lease); (xiii) subject to Operating
Expenses exclusion “R”, below, the cost of capital
improvements; (xiv) 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 “Tax Expenses” as that term is
defined in Section 4.2.5 , below; and
(xv) payments under any easement, license, operating
agreement, declaration, restrictive covenant, or instrument
pertaining to the sharing of costs by the Buildings.
Notwithstanding the foregoing, for purposes of this Lease,
Operating Expenses shall not, however, include (in the case of any
conflict between the provisions of subparagraphs (i) through
(xv), above, and subparagraphs (A) through (KK), below, the
provisions of (A) through (KK), below, shall
control):
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A.
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Costs incurred in connection with
the original construction of the Buildings or in connection with
any major change in the Buildings such as adding or deleting
floors, or any costs included as a Project Cost;
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B.
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Costs of alterations or improvements
to the Premises or to space constituting the premises of other
Project tenants or available for lease to prospective
tenants;
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We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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C.
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Depreciation, interest and principal
payments on mortgages and other debt costs, if any;
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D.
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Legal fees, space planners’
fees, real estate brokers’ leasing commissions, and
advertising expenses incurred in connection with the original
development or original leasing of the Project or future leasing of
the Project;
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E.
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Costs for which Landlord is
reimbursed, or would have been reimbursed if Landlord had used
commercially reasonable efforts to collect such amounts, by any
Project tenant or occupant of the Buildings or by insurance by its
carrier or any tenant’s carrier or anyone else;
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F.
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Any
bad debt loss, rent loss, or reserves for bad debts or rent
loss;
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G.
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Costs associated with the operation
of the business of the partnership or entity which constitutes the
Landlord, as the same are distinguished from the costs of operation
of the Buildings, including partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee (except
as the actions of Tenant may be in issue and are a violation of the
Lease), costs of selling, syndicating, financing, mortgaging or
hypothecating any of Landlord’s interest in the Project,
costs (including attorneys’ fees and costs of settlement
judgments and payments in lieu thereof) arising from claims,
disputes or potential disputes in connection with potential or
actual claims, litigation or arbitrations pertaining to Landlord
and/or the Buildings and/or the site upon which the Buildings are
situated;
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H.
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The
wages and benefits of any employee who does not devote
substantially all of his or her time to the Project unless such
wages and benefits are prorated to reflect time spent on operating
and managing the Project vis-à-vis time spent on matters
unrelated to operating and managing the Project;
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I.
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Fines, penalties, and
interest;
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J.
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Amounts paid as ground rental by
Landlord;
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K.
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Wages, fees, operating expenses and
taxes incurred in connection with the ownership, management and
operation of commercial concessions operated by
Landlord;
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L.
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Any
Operating Expenses in excess of those for office buildings in
connection with the ground floor and mezzanine levels, or any other
floor in the Project to the extent that they are devoted to retail
operation;
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M.
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Any
recalculation of or additional Operating Expenses actually incurred
more than two (2) years prior to the year in which Landlord
proposes that such costs be included (except expenses levied by any
governmental authority or by any public utility
companies);
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We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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N.
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Expenditures to comply with
Applicable Laws, including costs arising from handicap, Americans
with Disabilities Act, or other government code regulations in
effect or adopted and enforced prior to the Lease Commencement Date
(including statues, laws, rules, regulations or orders [adopted
following the Lease Commencement Date] carrying out or implementing
laws adopted and enforced prior to the Lease Commencement Date) and
expenditures relating to the presence of hazardous materials or
substances in or about the Project, or the site upon which the
Buildings, including, without limitation, hazardous substances in
the ground water or soil;
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O.
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Costs incurred by Landlord with
respect to goods and services (including utilities sold and
supplied to tenants and occupants of the Project) to the extent
that Landlord would be entitled to reimbursement for such costs if
incurred by Tenant pursuant to this Lease;
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P.
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Costs, including permit, license and
inspection costs, incurred with respect to the installation of
tenant improvements made for new tenants in the Project or incurred
in renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants of the
Project;
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Q.
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Except as set forth in exclusion
“R” below, costs incurred by landlord for alterations
which are considered capital improvements and replacements, as
determined in accordance with generally accepted accounting
principles consistently applied;
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R.
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Costs of a capital nature,
including, without limitation, capital improvements, capital
repairs, capital equipment and capital tools, all as determined in
accordance with sound real estate management and accounting
principles, consistently applied, except (i) to the extent
required under any governmental law or regulation enacted and
enforced after the Lease Commencement Date, and (ii) costs
incurred with respect to devices to reduce Operating Expenses, to
the extent such costs do not exceed the anticipated net reduction
of Operating Expenses, provided that the costs set forth in items
(i) and (ii), above, shall be amortized over their reasonable
useful life as determined in accordance with generally accepted
accounting principles as and to the extent consistently applied by
institutional ownership in the office building real estate
industry; provided further that, in connection with the costs set
forth in items (ii) above, Landlord shall, upon Tenant’s
request, provide Tenant with reasonable evidence that the annual
cost of the capital improvement will be equal to or less than the
reasonably anticipated savings in Direct Expenses caused by such
capital improvement, and Tenant shall have the right to approve
such calculations as being materially accurate, which approval
shall not be unreasonably withheld;
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S.
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Expenses in connection with services
or other benefits which are not provided to Tenant or for which
Tenant is charged directly but which are provided to another tenant
or occupant of the Project without a separate charge;
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We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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T.
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Payments to Landlord or to
subsidiaries or affiliates of Landlord for comparable services in
the Buildings to the extent the same exceeds the costs of such
services rendered by unaffiliated comparable third parties on a
competitive basis;
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U.
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Rentals and other related expenses
incurred in leasing air conditioning systems, elevators or other
equipment ordinarily considered to be of a capital nature if
purchased, except equipment not affixed to the Buildings which is
used in providing janitorial or similar services;
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V.
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All
items and services for which Tenant or any other tenant in the
Project reimburses Landlord or which Landlord provides selectively
to one or more tenants (other than Tenant) without
reimbursement;
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W.
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Electric power costs for which any
tenant directly contracts with the local public service
company;
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X.
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Costs arising from Landlord’s
political or charitable contributions;
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Y.
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Costs arising from latent defects in
the Base Buildings or other Project improvements constructed by
Landlord pursuant to the Tenant Work Letter, or subsequent
improvements thereto constructed by Landlord;
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Z.
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Tax
or other penalties incurred as a result of Landlord’s
negligence, inability or unwillingness to make payments when
due;
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AA.
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Costs arising from the negligence or
fault of Landlord or its agents, or any vendors, contractors, or
providers of materials or services selected, hired or engaged by
Landlord or its agents;
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BB.
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Landlord’s general corporate
overhead and general and administrative expenses;
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CC.
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Costs incurred by Landlord due to
the violation by Landlord or any tenant of the terms and conditions
of any lease of space in the Project, or in connection with a
dispute between Landlord and any tenant in the Project (including
Tenant);
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DD.
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Any
costs of acquisition or maintenance of signs in or on the Buildings
or Project (other than the building directory) identifying the
owner of the Buildings or Project or other tenants;
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EE.
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Any
reserves of any kind, including, without limitation, replacement
reserves, operating reserves, reserves required by lenders or
partners, reserves for bad debts or lost rent or any similar
charge;
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FF.
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Any
costs related to any governmental, quasi-governmental, utility
company or similar program or plan for water, traffic, hazardous
waste, environmental or handicapped access management, mitigation,
enhancement or remediation in which participation is
voluntary;
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We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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GG.
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Any
advertising or promotional expenditures;
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HH.
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Any
entertainment or travel expenses of Landlord, any Affiliate of
Landlord, any management agent of Landlord and their respective
employees, agents, partners, and affiliates;
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II.
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Any
costs of any parties, ceremonies or other events for tenants,
Landlord, Landlord’s affiliates or other third
parties;
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JJ.
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Any
costs or expenses incurred by Landlord in connection with satellite
dishes or similar specialized communications equipment of Landlord
or of other persons, tenants or occupants in or about the Buildings
or Project; and
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KK.
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To
the extent that the Project is damaged as a result of earthquakes
and related aftershocks (“ Earthquake Damage ”)
and the cost of repairing the Earthquake Damage is not covered by
insurance or falls within the deductible, then Tenant’s Share
of Direct Expenses for Earthquake Damage repairs in any Expense
Year shall not exceed $2.00 per rentable square foot of the
Premises.
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If
Landlord is not furnishing any particular work or service (the cost
of which, if performed by Landlord, would be included in Operating
Expenses) to a tenant who has undertaken to perform such work or
service in lieu of the performance thereof by Landlord, Operating
Expenses shall be deemed to be increased by an amount equal to the
additional Operating Expenses which would reasonably have been
incurred during such period by Landlord if it had at its own
expense furnished such work or service to such tenant; provided,
however, the foregoing shall not be applicable with respect to any
Building which is leased, in its entirety, by Landlord to Tenant.
If the Project is not at least one hundred percent (100%) occupied
during all or a portion of any Expense Year, Landlord may elect to
make an appropriate adjustment to the variable components of
Operating Expenses (i.e., the components or Operating Expenses
which vary based on the occupancy of the Project) for such year to
determine the amount of Operating Expenses that would have been
incurred had the Project been one hundred percent (100%) occupied;
and the amount so determined shall be deemed to have been the
amount of Operating Expenses for such year; provided, however, the
Operating Expenses with respect to a particular Building shall not
be adjusted to the extent Tenant occupies one hundred percent
(100%) of such Building. Landlord shall not (i) make a profit
by charging items to Operating Expenses that are otherwise also
charged separately to others, (ii) subject to Landlord’s
right to adjust the components of Operating Expenses described
above in this paragraph, collect Operating Expenses from Tenant and
all other tenants in the Project in an amount in excess of what
Landlord incurs for the items included in Operating Expenses, and
(iii) charge any single expense to Operating Expenses more
than once. Operating Expenses shall be reduced by all cash
discounts, trade discounts, or quantity discounts received by
Landlord or Landlord’s managing agent in the purchase of any
goods, utilities, or services in connection with the operation of
the Project, and, to the extent commercially reasonable, Landlord
shall make payments for goods, utilities, or services in a timely
manner in order to maximize any applicable discount.
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-35-
4.2.5
Taxes .
4.2.5.1
Subject to the exclusions set forth in Section 4.2.5.3
, below, “ Tax Expenses ” shall mean all
federal, state, county, or local governmental or municipal taxes,
fees, charges or other impositions of every kind and nature,
whether general, special, ordinary or extraordinary, (including,
without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the
receipt of rent, including gross receipts or sales taxes applicable
to the receipt of rent, unless required to be paid by Tenant,
personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the
Project, or any portion thereof), which shall be paid or accrued
during any Expense Year (without regard to any different fiscal
year used by such governmental or municipal authority) because of
or in connection with the ownership, leasing and operation of the
Project, or any portion thereof.
4.2.5.2
Tax Expenses shall include, without limitation: (i) Any tax on
the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project,
or any portion thereof; (ii) Any assessment, tax, fee, levy or
charge in addition to, or in substitution, partially or totally, of
any assessment, tax, fee, levy or charge previously included within
the definition of real property tax, it being acknowledged by
Tenant and Landlord that Proposition 13 was adopted by the voters
of the State of California in the June 1978 election (“
Proposition 13 ”) and that assessments, taxes, fees,
levies and charges may be imposed by governmental agencies for such
services as fire protection, street, sidewalk and road maintenance,
refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in
further recognition of the decrease in the level and quality of
governmental services and amenities as a result of Proposition 13,
Tax Expenses shall also include any governmental or private
assessments or the Project’s contribution towards a
governmental or private cost-sharing agreement for the purpose of
augmenting or improving the quality of services and amenities
normally provided by governmental agencies; (iii) Any
assessment, tax, fee, levy, or charge allocable to or measured by
the area of the Premises or the Rent payable hereunder, including,
without limitation, any business or gross income tax or excise tax
with respect to the receipt of such rent, or upon or with respect
to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or
any portion thereof; and (iv) Any assessment, tax, fee, levy
or charge, upon this transaction or any document to which Tenant is
a party, creating or transferring an interest or an estate in the
Premises.
4.2.5.3
Any costs and expenses (including, without limitation, reasonable
attorneys’ fees) incurred in attempting to protest, reduce or
minimize Tax Expenses shall be included in Tax Expenses in the
Expense Year such expenses are paid. Refunds of Tax Expenses shall
be credited against Tax Expenses and refunded to Tenant regardless
of when received, based on the Expense Year to which the refund is
applicable. If Tax Expenses for any period during the Lease Term or
any extension thereof are increased after payment thereof for any
reason, including, without limitation, error or reassessment by
applicable governmental or municipal authorities, Tenant shall pay
Landlord upon demand Tenant’s Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to
the TCCs of this Lease. Notwithstanding anything to the contrary
contained in this Section 4.2.5 , there
shall
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-36-
be excluded from Tax Expenses
(i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate
taxes, federal and state income taxes, and other taxes to the
extent applicable to Landlord’s general or net income (as
opposed to rents, receipts or income attributable to operations at
the Project), (ii) any items included as Operating Expenses,
(iii) any items paid by Tenant under Section 4.5
of this Lease, and (iv) any special assessments or special
taxes initiated by Landlord as a means of financing improvements to
the Buildings or Project.
4.2.6
“ Tenant’s Share ” shall, with respect to
Buildings 1, 2 and 3, mean the percentage set forth in
Section 6 of the Summary. To the extent Tenant leases
space in Building 4 from Landlord, then Tenant’s Share with
respect to Building 4 shall be calculated by multiplying the number
of rentable square feet of the applicable space leased by Tenant in
Building, by 100, and dividing the product by the total number of
rentable square feet in Building 4, as set forth in
Section 2.1 of the Summary.
4.3
Allocation of Direct Expenses . The parties
acknowledge that each Building is a part of a multi-building
project and that the costs and expenses incurred in connection with
the Project ( i.e. the Direct Expenses) should be shared
between the tenants of a particular Building and the tenants of the
other Buildings in the Project. Accordingly, as set forth in
Section 4.2 above, Direct Expenses (which consists of
Operating Expenses and Tax Expenses) are determined annually for
the Project as a whole, and a portion of the Direct Expenses, which
portion shall be determined by Landlord on a rentable square
footage basis, shall be allocated to each particular Building (as
opposed to any other Buildings in the Project) and such portion
shall be the Direct Expenses for the tenants of such Building. Such
portion of Direct Expenses allocated to the tenants of each
Building shall include all Direct Expenses attributable solely to
that particular Building and a reasonable and equitable portion of
the Direct Expenses attributable to the Project as a
whole.
4.4
Calculation and Payment of Additional Rent . Tenant
shall pay to Landlord, in the manner set forth in
Section 4.4.1 , below, and as Additional Rent,
Tenant’s Share of Direct Expenses for each Expense
Year.
4.4.1
Statement of Actual Building Direct Expenses and Payment by
Tenant . Landlord shall use commercially reasonable efforts
to give to Tenant within one hundred twenty (120) days
following the end of each Expense Year (and in any event within one
hundred fifty (150) days following the end of each Expense
Year), a detailed, statement (the “ Statement
”), itemized on a line-item by line-item basis, which shall
state in general major categories the Building Direct Expenses
incurred or accrued for such preceding Expense Year, and which
shall indicate the amount of Tenant’s Share of Direct
Expenses. In addition, Landlord shall provide Tenant, within thirty
(30) business days following Tenant’s written request
therefor, reasonable supporting documentation applicable to a
reasonable number of specific expenses incurred by Landlord, which
documentation shall allow Tenant to verify such expenses; provided,
however, that (i) Landlord may require Tenant to sign a
commercially reasonable confidentiality agreement as a condition
precedent to Landlord’s obligation to deliver any such
supporting documentation to Tenant, (ii) the foregoing right
is not meant to replace Tenant’s right to audit Landlord
books and records pursuant to Section 4.8 of this
Lease, below, and, therefore, to the extent Tenant desires to
verify more than a reasonable number of expenses, then
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-37-
Landlord may require Tenant to
audit Landlord’s books and records pursuant to
Section 4.8 of this Lease, below. Upon receipt of the
Statement for each Expense Year commencing or ending during the
Lease Term, Tenant shall pay, within thirty (30) days after
receipt of the Statement, the full amount of Tenant’s Share
of Direct Expenses for such Expense Year, less the amounts, if any,
paid during such Expense Year as “Estimated Direct
Expenses,” as that term is defined in
Section 4.4.2 , below, and if Tenant paid more as
Estimated Direct Expenses than the actual Tenant’s Share of
Direct Expenses (an “ Excess ”), Tenant shall
receive a credit in the amount of such Excess against Rent next due
under this Lease; provided, however, any such payment by Tenant
shall not be deemed a waiver of any rights Tenant may have pursuant
to Section 4.8 of this Lease, below. The failure of Landlord
to timely furnish the Statement for any Expense Year shall not
prejudice Landlord (provided that in the event that such failure
continues for a period of six (6) months following receipt of
Notice from Tenant, Tenant may elect to seek specific performance)
or Tenant from enforcing its rights under this
Article 4 . Even though the Lease Term has expired and
Tenant has vacated the Premises, when the final determination is
made of Tenant’s Share of Direct Expenses for the Expense
Year in which this Lease terminates, if Tenant’s Share of
Direct Expenses is greater than the amount of Estimated Direct
Expenses previously paid by Tenant to Landlord, Tenant shall,
within thirty (30) days after receipt of the Statement, pay to
Landlord such amount, and if Tenant paid more as Estimated Direct
Expenses than the actual Tenant’s Share of Direct Expenses
(again, an Excess), Landlord shall, within thirty (30) days,
deliver a check payable to Tenant in the amount of such Excess. The
provisions of this Section 4.4.1 shall survive the
expiration or earlier termination of the Lease Term.
Notwithstanding the immediately preceding sentence, Tenant shall
not be responsible for Tenant’s Share of any Building Direct
Expenses attributable to any Expense Year which are first billed to
Tenant more than two (2) calendar years after the Lease
Expiration Date, provided that in any event Tenant shall be
responsible for Tenant’s Share of Direct Expenses levied by
any governmental authority or by any public utility companies at
any time following the Lease Expiration Date which are attributable
to any Expense Year (provided that Landlord delivers Tenant a bill
(a “ Supplemental Statement ”) for such amounts
within one (1) year following Landlord’s receipt of the
bill therefor).
4.4.2
Statement of Estimated Building Direct Expenses . In
addition, Landlord shall use commercially reasonable efforts to
give Tenant within one hundred twenty (120) days following the
end of each Expense Year (and in any event within one hundred fifty
(150) days following the end of each Expense Year), a detailed
yearly expense estimate statement (the “ Estimate
Statement ”), itemized on a line-item by line-item basis,
which shall set forth Landlord’s reasonable estimate (the
“ Estimate ”) of what the total amount of Direct
Expenses for the then-current Expense Year shall be and the
estimated Tenant’s Share of Direct Expenses (the “
Estimated Direct Expenses ”). The failure of Landlord
to timely furnish the Estimate Statement for any Expense Year shall
not preclude Landlord from enforcing its rights to collect any
Estimated Direct Expenses under this Article 4
(provided that in the event that such failure continues for a
period of six (6) months following receipt of Notice from Tenant,
Tenant may elect to seek specific performance), nor shall Landlord
be prohibited from revising any Estimate Statement or Estimated
Direct Expenses theretofore delivered to the extent reasonably
necessary; provided however, any such subsequent revision shall set
forth on a reasonably specific basis any particular expense
increase. Thereafter, Tenant shall pay, within thirty
(30) days after receipt of the Estimate Statement, a fraction
of the Estimated Direct Expenses for the then-current Expense Year
(reduced by any amounts paid pursuant to the third to last sentence
of
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-38-
this Section 4.4.2 ).
Such fraction shall have as its numerator the number of months
which have elapsed in such current Expense Year, including the
month of such payment, and twelve (12) as its denominator.
Until a new Estimate Statement is furnished (which Landlord shall
have the right to deliver to Tenant at any time, subject to the
TCCs of this Section 4.4.2 ), Tenant shall pay monthly,
with the monthly Base Rent installments, an amount equal to
one-twelfth (1/12) of the total Estimated Direct Expenses set forth
in the previous Estimate Statement delivered by Landlord to Tenant.
Throughout the Lease Term Landlord shall maintain books and records
with respect to Building Direct Expenses in accordance with
generally accepted real estate accounting and management practices,
consistently applied. With regard to prior Expenses Years, Landlord
shall keep such books and records for at least two (2) years
following the date upon which Landlord delivers the applicable
Statement for such Expense Year.
4.5
Taxes and Other Charges for Which Tenant Is Directly
Responsible .
4.5.1
Tenant shall be liable for and shall pay before delinquency, taxes
levied against Tenant’s equipment, furniture, fixtures and
any other personal property located in or about the Premises. If
any such taxes on Tenant’s equipment, furniture, fixtures and
any other personal property are levied against Landlord or
Landlord’s property or if the assessed value of
Landlord’s property is increased by the inclusion therein of
a value placed upon such equipment, furniture, fixtures or any
other personal property and if Landlord pays the taxes based upon
such increased assessment, which Landlord shall have the right to
do regardless of the validity thereof but only under proper protest
if requested by Tenant (it being acknowledged that Landlord shall
use commercially reasonable efforts to provide prior written notice
to Tenant in connection therewith), Tenant shall upon demand repay
to Landlord the taxes so levied against Landlord or the proportion
of such taxes resulting from such increase in the assessment, as
the case may be.
4.5.2
If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for
real property tax purposes at a valuation higher than the valuation
at which tenant improvements conforming to Landlord’s “
building standard ” in other space in the Building are
assessed, then the Tax Expenses levied against Landlord or the
property by reason of such excess assessed valuation shall be
deemed to be taxes levied against personal property of Tenant and
shall be governed by the provisions of Section 4.5.1 ,
above. For this purpose Landlord and Tenant agree that the value of
building standard improvements is Forty-Five and No/100 Dollars
($45.00) per rentable square foot. To the extent that Landlord
enforces the TCCs of this Section 4.5.2 against Tenant,
then Landlord shall not include in Tax Expenses, taxes assessed
against any other tenant improvements in the Project to the extent
such taxes relate to the value of such tenant improvements in
excess of Forty-Five and No/100 Dollars ($45.00) per rentable
square foot. The TCCs of this Section 4.5.2 shall not be
applicable with respect to any Building which is leased, in its
entirety, by Landlord to Tenant.
4.5.3
Notwithstanding any contrary provision herein, Tenant shall pay
prior to delinquency any (i) rent tax or sales tax, service
tax, transfer tax or value added tax, or any other applicable tax
on the rent or services herein or otherwise respecting this Lease,
(ii) taxes assessed upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises or any portion of the
Project, including the
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-39-
Project parking facility; or
(iii) taxes assessed upon this transaction or any document to
which Tenant is a party creating or transferring an interest or an
estate in the Premises.
4.6
Tenant’s Payment of Certain Tax Expenses .
Notwithstanding anything to the contrary contained in this lease,
in the event that, at any time during the first five (5) years
of the initial Lease Term, any single-asset sale of a Building or
the Project to an independent third party is consummated
(specifically excluding, however, a change in ownership to a lender
resulting from a foreclosure or a deed-in-lieu of foreclosure), and
as a result thereof, and to the extent that in connection
therewith, a Building or the Project is reassessed (the “
Reassessment ”) for real estate tax purposes by the
appropriate governmental authority pursuant to the terms of
Proposition 13, then the TCCs of this Section 4.6 shall
apply to such Reassessment of the Building or Project.
4.6.1
The Tax Increase . For purposes of this
Article 4 , the term “ Tax Increase
” shall mean that portion of the Tax Expenses, as calculated
immediately following the Reassessment, which is attributable
solely to the Reassessment. Accordingly, the term Tax Increase
shall not include any portion of the Tax Expenses, as calculated
immediately following the Reassessment, which (i) is
attributable to the initial assessment of the value of the Project,
the base, shell and core of the Building or the tenant improvements
located in the Building; (ii) is attributable to assessments
which were pending immediately prior to the Reassessment which
assessments were conducted during, and included in, such
Reassessment, or which assessments were otherwise rendered
unnecessary following the Reassessment; or (iii) is
attributable to the annual inflationary increase of real estate
taxes, but not in excess of two percent (2.0%) per
annum.
4.6.2
Protection . During the first five (5) years of
the initial Lease Term, Tenant shall not be obligated to pay any
portion of the Tax Increase relating to any Reassessment of a
Building or the Project.
4.6.3
Landlord’s Right to Purchase the Proposition 13
Protection Amount Attributable to a Particular Reassessment
. The amount of Tax Expenses which Tenant is not obligated to pay
or will not be obligated to pay during the Lease Term in connection
with a particular Reassessment pursuant to the TCCs of
Section 4.6 , shall be sometimes referred to hereafter
as a " Proposition 13 Protection Amount .” If the
occurrence of a Reassessment is reasonably foreseeable by Landlord
and the Proposition 13 Protection Amount attributable to such
Reassessment can be reasonably quantified or estimated for each
Lease Year commencing with the Lease Year in which the Reassessment
will occur, the TCCs of this Section 4.6.3 shall apply
to each such Reassessment. Upon Notice of such Reassessment to
Tenant, Landlord shall have the right to purchase the Proposition
13 Protection Amount relating to the applicable Reassessment (the "
Applicable Reassessment ”), at any time during the
Lease Term, by paying to Tenant an amount equal to the
“Proposition 13 Purchase Price,” as that term is
defined in this Section 4.6.3 , provided that the right
of any successor of Landlord to exercise its right of repurchase
hereunder shall not apply to any Reassessment which results from
the event pursuant to which such successor of Landlord became the
Landlord under this Lease. As used herein, “ Proposition
13 Purchase Price ” shall mean the present value of the
Proposition 13 Protection Amount remaining during the Lease Term,
as of the date of payment of the Proposition 13 Purchase Price by
Landlord. Such present value shall be calculated (i) by using
the portion of
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-40-
the Proposition 13 Protection
Amount attributable to each remaining Lease Year (as though the
portion of such Proposition 13 Protection Amount benefited Tenant
at the end of each Lease Year), as the amounts to be discounted,
and (ii) by using discount rates for each amount to be discounted
equal to (A) the floating commercial loan rate announced from
time-to-time by Bank of America, a national banking association, or
its successor, as its prime rate, plus (B) two percent (2%)
per annum. Upon such payment of the Proposition 13 Purchase Price,
the provisions of Section 4.6.2 of this Lease shall not
apply to any Tax Increase attributable to the Applicable
Reassessment. Since Landlord is estimating the Proposition 13
Purchase Price because a Reassessment has not yet occurred, then
when such Reassessment occurs, if Landlord has underestimated the
Proposition 13 Purchase Price, then upon Notice by Tenant to
Landlord, Landlord shall promptly pay to Tenant the amount of such
underestimation, and if Landlord overestimates the Proposition 13
Purchase Price, then upon Notice by Landlord to Tenant, Rent next
due shall be increased by the amount of such
overestimation.
4.7
Payment of Taxes and Insurance . Notwithstanding any
TCCs of this Lease to the contrary, Tenant shall not be required to
pay Tenant’s Share of real property taxes or insurance
premiums includable in Direct Expenses on the basis of estimates or
in monthly installments (unless, with respect to insurance
premiums, such amounts are actually paid by Landlord more
frequently than twice each Expense Year or on a monthly basis, or,
with respect to insurance premiums and/or real property taxes,
Landlord is required by its then current lender to impound or
escrow such amounts on a more frequent or monthly basis); instead,
Tenant shall only be required to pay Tenant’s Share of such
real property taxes or insurance premiums upon the later to occur
of (i) thirty (30) days after receipt of Landlord’s
invoice for the same, or (ii) five (5) business days
prior to the date Landlord is required to pay such taxes or
insurance premiums.
4.8
Landlord’s Books and Records . Within two
(2) years after receipt of a Statement by Tenant (the “
Review Period ”), if Tenant disputes the amount of
Additional Rent set forth in such Statement, provided that Tenant
is not then in Economic Default under this Lease beyond the
applicable cure period provided in this Lease, an independent
certified public accountant or operating expense audit firm,
selected and paid for by Tenant, subject to Landlord prior
approval, which approval shall not be unreasonably withheld to the
extent such accountant or audit firm (i) is a reputable independent
nationally or regionally recognized certified public accounting
firm, or a reputable independent nationally or regionally
recognized operating expenses audit firm, which has previous
experience in reviewing financial operating records of landlords of
office buildings in California (which firm may be retained on a
contingency fee basis), (ii) is not then providing accounting
or audit services to another tenant in the Project in connection
with a review or audit by such other tenant of operating expenses,
and (iii) executes (together with Tenant) a commercially
reasonable confidentiality agreement prepared by Landlord, which
confidentiality agreement shall include a commercially reasonable
restriction on such firm’s solicitation of business from
other tenants in the Project, may, after reasonable notice to
Landlord and at reasonable times, inspect Landlord’s records
with respect to the Statement at Landlord’s offices, provided
that Tenant is not then in Economic Default under this Lease
(beyond any applicable notice and cure periods) and Tenant has paid
all amounts required to be paid under the applicable Estimate
Statement and Statement, as the case may be. In connection with
such inspection, Tenant and Tenant’s agents must agree in
advance to follow Landlord’s reasonable rules and procedures
regarding inspections of Landlord’s records. Tenant’s
failure to
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-41-
dispute the amount of Additional
Rent set forth in any Statement within the Review Period shall be
deemed to be Tenant’s approval of such Statement and Tenant,
thereafter, waives the right or ability to dispute the amounts set
forth in such Statement; provided, however, to the extent Landlord
delivers to Tenant a Supplemental Statement, then the Review Period
with respect to the corrected items set forth in such Supplemental
Statement shall be deemed to be the two (2) year following the
date Landlord delivered such Supplemental Statement to Tenant. If
after such inspection, Tenant still disputes such Additional Rent,
Landlord and Tenant shall meet and attempt to resolve the dispute.
If Landlord and Tenant are unable to resolve the dispute within
sixty (60) days following the completion of Tenant’s
audit, then a determination as to the proper amount shall be made,
at Tenant’s expense, by an independent certified public
accountant (the “ Accountant ”) mutually and
reasonably selected by Landlord and Tenant; provided that if such
determination by the Accountant proves that Direct Expenses were
overstated by more than * or if Landlord otherwise agrees or admits
that Direct Expenses were overstated by more than * then the
reasonable cost of Tenant’s initial audit of Operating
Expenses and the cost of the Accountant shall be paid for by
Landlord; provided, however, to the extent such initial audit of
Operating Expenses was performed by a firm retained on a
contingency fee basis, then Landlord shall only be obligated to pay
the out-of-pocket fees and costs reasonably equivalent to those in
non-contingency fee audits. Upon the resolution of the
parties’ dispute with regard to the Additional Rent shown on
the Statement, the parties shall make appropriate payments or
reimbursements, as the case may be, to each other as are determined
to be owing. Any such payments shall be made within thirty
(30) days following the resolution of such dispute, and, to
the extent any such payment is not paid within the foregoing thirty
(30) day time period, then the amount so owed shall be subject
to interest, at the Interest Rate, until paid. Tenant hereby
acknowledges that Tenant’s sole right to inspect
Landlord’s books and records and to contest the amount of
Direct Expenses payable by Tenant shall be as set forth in this
Section 4.8 , and Tenant hereby waives any and all other
rights pursuant to applicable law to inspect such books and records
and/or to contest the amount of Direct Expenses payable by
Tenant.
ARTICLE 5
USE OF PREMISES
5.1
Permitted Use . Tenant shall use the Premises solely
for the Permitted Use set forth in Section 7 of the
Summary and Tenant shall not use or permit the Premises or the
Project to be used for any other purpose or purposes whatsoever
without the prior written consent of Landlord, which may be
withheld in Landlord’s sole discretion.
5.2
Prohibited Uses . The uses prohibited under this
Lease shall include, without limitation, use of the Premises or a
portion thereof for (i) offices of any agency or bureau of the
United States or any state or political subdivision thereof;
(ii) offices or agencies of any foreign governmental or
political subdivision thereof; (iii) offices of any health
care professionals or service organization; (iv) schools or
other training facilities which are not ancillary to corporate,
executive or professional office use; (v) retail or restaurant
uses (other than an on-site cafeteria for use by Tenant’s
employees); or (vi) communications firms such as radio and/or
television stations (collectively (i) through (vi) are
the “ Prohibited Uses ”); provided, however,
that to the extent Landlord permits the Prohibited Uses set forth
in item (i) through (iv), above, to be conducted at the Project on
a significant basis, then Tenant shall be permitted to conduct
such
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-42-
uses in a comparable manner and
to a comparable extent. Tenant further covenants and agrees that
Tenant shall not use, or suffer or permit any person or persons to
use, the Premises or any part thereof for any use or purpose
contrary to the provisions of the rules and regulations set forth
in Exhibits D and D-1 , attached hereto (
Exhibit D shall be applicable to multi-tenant
Buildings, Exhibit D-1 shall be applicable to
single-tenant Buildings, and such rules and regulations, as
applicable, shall be the “ Rules and Regulations
”), or in violation of the laws of the United States of
America, the State of California, or the ordinances, regulations or
requirements of the local municipal or county governing body or
other lawful authorities having jurisdiction over the Project
including, without limitation, any such laws, ordinances,
regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or
hereafter in effect; provided, however, Landlord shall not enforce,
change or modify the Rules and Regulations in a discriminatory
manner vis-a-vis other tenants of the Project and Landlord agrees
that the Rules and Regulations shall not be unreasonably modified
or enforced in a manner which will unreasonably interfere with the
normal and customary conduct of Tenant’s business. Tenant
shall not do or permit anything to be done in or about the Premises
or the Exclusive Tenant Areas which will in any way damage the
reputation of the Project or obstruct or interfere with the rights
of other tenants or occupants of the Project, or injure or annoy
them or use or allow the Premises or the Exclusive Tenant Areas to
be used for any improper, unlawful or objectionable purpose, nor
shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises or the Exclusive Tenant Areas.
5.3
CC&Rs . Tenant shall comply (provided that such
compliance shall not require Tenant to assume any development
responsibilities of Landlord) with the following covenants,
conditions, and restrictions currently affecting the Project:
(i) that certain Planned Residential Development/Planned
Industrial Development/Resource Protection Ordinance Permit
No. 98-0292, recorded February 25, 2000 as document
No. 2000-0095511, as amended by that certain Amendment to
Planned Industrial Development Permit No. 98-0292, recorded on
February 21, 2003 as document number 2003-0198865
(collectively, “ PID 98-0292 ”), and
(ii) that certain Declaration of Development Covenants Running
with the Land for Santa Fe Summit Corporate Center, recorded as
document 2001-0949318. Additionally, Tenant acknowledges that the
Project may be subject to future covenants, conditions, and
restrictions which are recorded against the Project, including
amendments to PID No. 98-0292 (the “ CC&Rs
”), and Tenant agrees that this Lease shall be subject and
subordinate to such CC&Rs. Landlord shall have the right to
require Tenant to execute and acknowledge, within fifteen
(15) business days of a request by Landlord, a
“Recognition of Covenants, Conditions, and
Restriction,” in a form substantially similar to that
attached hereto as Exhibit F , agreeing to and
acknowledging the CC&Rs. Notwithstanding anything set forth in
this Article 5 to the contrary, to the extent any
CC&Rs relate to Project specific programs (e.g.,
CC&R’s, Rules and Regulations, PID 98-0292, etc.) and are
within Landlord’s control (i.e., Landlord has the ability,
either directly or indirectly, to cause the disapproval of such
covenant, condition, and restriction, or amendment thereto), then
such specific programs shall be subject to Tenant’s
reasonable review and prior approval. Landlord shall not enforce
the CC&Rs in a discriminatory manner vis-à-vis other
tenants of the Project.
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
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ARTICLE 6
SERVICES AND UTILITIES
6.1
Standard Tenant Services . Landlord shall provide the
following services at all times (unless otherwise stated below)
during the Lease Term.
6.1.1
Subject to limitations imposed by all governmental rules,
regulations and guidelines applicable thereto, Landlord shall
provide heating and air conditioning (“ HVAC ”)
when necessary for normal comfort for normal office use in the
Premises from 7:00 A.M. to 6:00 P.M. Monday through Friday, and on
Saturdays from 9:00 A.M. to 1:00 P.M. (collectively, the “
Building Hours ”), except for the date of observation
of New Year’s Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day and, at Landlord’s
discretion, other locally or nationally recognized holidays
(collectively, the “ Holidays ”).
Notwithstanding such Building Hours, HVAC shall be available for
Tenant use on a twenty-four (24) hours per day, seven
(7) days per week, basis.
6.1.2
Landlord shall provide adequate electrical wiring and facilities
for connection to Tenant’s lighting fixtures and incidental
use equipment, provided that (i) the connected electrical load
of the incidental use equipment, and (ii) the connected
electrical load of Tenant’s lighting fixtures, does not
exceed the electrical capacity of the Buildings, as such capacity
shall be determined pursuant to the Tenant Work Letter. Tenant will
design Tenant’s electrical system serving any equipment
producing nonlinear electrical loads to accommodate such nonlinear
electrical loads, including, but not limited to, oversizing neutral
conductors, derating transformers and/or providing power-line
filters. Engineering plans shall include a calculation of
Tenant’s fully connected electrical design load with and
without demand factors and shall indicate the number of watts of
unmetered and submetered loads. Tenant shall bear the cost of
replacement of lamps, starters and ballasts for non-Building
standard lighting fixtures within the Premises.
6.1.3
Landlord shall provide city water from the regular Building outlets
for (i) drinking, lavatory and toilet purposes in the Building
Common Areas, and (ii) domestic and food service water
needs.
6.1.4
Landlord shall provide janitorial services to the Premises, except
the date of observation of the Holidays, in and about the Premises
and window washing services in a manner consistent with other
comparable buildings in the vicinity of the Building (but in no
event shall such janitorial services be less than the janitorial
services set forth on Exhibit I , attached
hereto). Notwithstanding the foregoing, Tenant shall have the
right, at Tenant’s sole cost and expense, and only upon first
providing at least sixty (60) days prior written notice to
Landlord, to elect to provide its own janitorial services within
any Building that Tenant leases in its entirety by using a
third-party janitorial company, provided that such services shall
be rendered by Tenant to at least the standards set forth in
Exhibit I , and Tenant’s janitorial
company shall be subject to the reasonable approval of Landlord and
shall follow Landlord’s reasonable rules and
regulations.
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-44-
6.1.5
Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service within each Building during the Building
Hours, shall have one elevator within each Building available at
all other times.
6.1.6
Landlord shall provide nonexclusive freight elevator service (i.e.,
a swing-door elevator) for multi-tenant Buildings, which shall be
subject to scheduling by Landlord, and exclusive freight elevator
service for Tenant-only Buildings.
6.1.7
Landlord shall supply access control services 24-hours per day,
7-days per week, every day of the year, and on-site Project access
control equipment, personnel, procedures and systems, in a manner
materially consistent with those provided in the Comparable
Buildings; provided, however, Landlord shall reasonably cooperate
with Tenant in order to ensure that Landlord access control
equipment and personnel are consistent with any security systems
and/or personnel supplied by Tenant. Landlord shall in no case be
liable for personal injury or property damage for any error with
regard to the admission to or exclusion from the Buildings or
Project of any person. Subject to Landlord’s reasonable
approval, Tenant shall be entitled, at its sole cost, to install
and maintain its own separate security systems for the Premises and
the Exclusive Tenant Areas which system shall be compatible with
the Project security systems supplied by Landlord. Tenant hereby
assumes all responsibility for the protection of Tenant and its
Tenant Parties, and the property thereof, from acts of third
parties within the Premises, including keeping doors locked and
other means of entry to the Premises closed, even though Landlord
shall provide security services in accordance with the TCCs of this
Lease. Tenant further assumes the risk that any safety and security
devices, services and programs which Landlord provides may not be
effective, or may malfunction or be circumvented by an unauthorized
third party, and Tenant shall, in addition to its other insurance
obligations under this Lease, obtain its own insurance coverage to
the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or
security program developed by Landlord or required by Applicable
Law.
Tenant shall
cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe
for the proper functioning and protection of the HVAC, electrical,
mechanical and plumbing systems, to the extent the same do not
materially and adversely affect Tenant’s use of occupancy of
the Premises for the Permitted Use.
6.2
Overstandard Tenant Use; Actual Costs .
6.2.1
Overstandard Tenant Use . Tenant’s use of
electricity shall never exceed the capacity of the feeders to the
Project or the risers or wiring installation. If Tenant desires to
use heat, ventilation or air conditioning during hours other than
those for which Landlord is obligated to supply such utilities
pursuant to the terms of Section 6.1 of this Lease
(“ After-Hours HVAC ”), Tenant shall follow the
reasonable procedures, if any, as Landlord shall from time to time
establish as appropriate, and Landlord shall supply such equipment
to Tenant at such hourly cost to Tenant (which shall be treated as
Additional Rent) as Landlord shall reasonably determine is equal
solely to the increased depreciation of such heat, ventilation or
air conditioning equipment. In the event Tenant disputes the Actual
Costs, as determined by Landlord, for increased depreciation of
such heat, ventilation or air conditioning equipment, then a
determination as to the proper amount of Actual Costs shall be
made, at Tenant’s expense, by
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-45-
an independent HVAC engineer (the
“ HVAC Engineer ”) mutually and reasonably
selected by Landlord and Tenant.
6.2.2
Actual Costs . Landlord shall charge Tenant, and
Tenant shall pay Landlord, for any additional services, an amount
equal to the actual out-of-pocket incremental extra costs to
Landlord to provide the additional services, without markup for
profit, overhead or administrative costs, but including, to the
extent applicable, depreciation pertaining to increased use of
certain equipment (“ Actual Costs ”). Landlord
shall, within ten (10) business days of receipt of a written
request from Tenant, disclose to Tenant in writing the basis for
the determination of the Actual Cost applicable to any such
additional service provided by Landlord to Tenant. In the event
such disclosure by Landlord demonstrates that Landlord’s
determination of Actual Costs was done unreasonably, then Actual
Costs shall be adjusted to reflect what they should have been if
Landlord had reasonable determined Actual Costs. In the case of an
increase in Actual costs resulting from such adjustment, Tenant
shall pay Landlord the difference within thirty (30) days of
demand therefor. In the case of a decrease in Actual costs
resulting from such adjustment, Landlord shall pay to Tenant the
difference within thirty (30) days of demand. In the event
that more than one tenant orders extra services or utilities in the
Project, or if any cost item is applicable to more than one tenant,
such cost shall, to the extent reasonably practical, be apportioned
among such tenants in accordance with the ratios of the square
footage in their respective premises.
6.3
Direct Payment of Premises Utility Costs .
Notwithstanding anything to the contrary set forth in
Section 4.2.4 or this Article 6 , Tenant
shall pay one hundred percent (100%) of the cost of all utilities
(including without limitation, electricity, gas, sewer and water)
attributable to its use of the Premises. Such utility use shall
include electricity, water, and gas use for lighting, incidental
use and HVAC. All such utility payments shall be excluded from
Operating Expenses and shall be paid directly by Tenant prior to
the date on which the same are due to the utility provider.
Landlord hereby agrees that the entire initial Premises (i.e.,
Building 1, Building 2 and Building 3 and any full floor leased by
Tenant in Building 4) shall be separately metered on a
floor-by-floor basis, and the separate metering as to the initial
Premises shall be performed by Landlord as part of the construction
of the “Base Building,” as that term is defined in
Section 1.1.1 of the Tenant work Letter, pursuant to
the Tenant Work Letter.
6.4
Communications Vendors . Tenant shall have the right
to select, and contract directly with, communications vendors to
the extent required to support Tenant’s business operation
from the Premises, subject to Landlord’s approval (which
shall not be unreasonably withheld, conditioned or delayed). Such
communications vendors shall be allowed reasonable access to the
Project site (including commercially reasonable access easements to
the extent necessary) and Premises free of any separate cost for
access. Landlord and Tenant shall, as part of the “Final Base
Buildings Construction Documents,” as that term is defined in
Section 1.1.1 of the Tenant Work Letter, mutually and
reasonably develop an overall communications plan for the Project,
which plan shall anticipate reasonably required infrastructure
required to allow multiple vendors and access points as reasonably
required by Tenant.
6.5
Interruption of Use . Except as otherwise expressly,
provided in this Lease, including, without limitation,
Section 3.3 , above, Tenant agrees that Landlord shall
not be liable for damages, by abatement of Rent or otherwise, for
failure to furnish or delay in furnishing any
We have requested confidential
treatment for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and
Exchange Commission (SEC). We omitted such portions from this
filing and filed them separately with the SEC.
-46-
service (including telephone and
telecommunication services), or for any diminution in the quality
or quantity thereof, when such failure or delay or diminution is
occasioned, in whole or in part, by breakage, repairs,
replacements, or improvements, by any strike, lockout or other
labor trouble, by inability to secure electricity, gas, water, or
other fuel at the Building or Project after reasonable effort to do
so, by any riot or other dangerous condition, emergency, accident
or casualty whatsoever, by act or default of Tenant or other
parties, or by any other cause beyond Landlord’s reasonable
control; and such failures or delays or diminution shall never be
deemed to constitute an eviction or disturbance of Tenant’s
use and possession of the Premises or relieve Tenant from paying
Rent or performing any of its obligations under this Lease, except
as otherwise provided in this Lease. Furthermore, Landlord shall
not be liable under any circumstances for a loss of, or injury to,
property or for injury to, or interference with, Tenant’s
business, including, without limitation, loss of profits, however
occurring, through or in connection with or incidental to a failure
to furnish any of the services or utilities as set forth in this
Article 6 .
ARTICLE 7
REPAIRS
7.1
In General . Landlord shall maintain in first-class
condition and operating orde |