EXHIBIT 10.24 CITYPLACE CENTER EAST TOWER OFFICE LEASE AGREEMENT

 

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                                                                   EXHIBIT 10.24

 

                           CITYPLACE CENTER EAST TOWER

 

                             OFFICE LEASE AGREEMENT

 

         ZIX CORPORATION, a Texas corporation ("Lessee"), and 7-ELEVEN, INC., a

Texas corporation ("Lessor"), enter into this Lease Agreement (the "Lease")

dated December 29, 2003, on the following terms:

 

                              ARTICLE I - PROPERTY

 

         1.1 Premises. This is a lease of the Premises (herein so called)

containing a total of approximately 42,912 square feet of Rentable Area, with

approximately 13,781 square feet of Rentable Area located on the south side of

floor twenty-two (22) (the "22nd Floor Space") of Cityplace Center East Tower,

located at 2711 North Haskell Avenue, Dallas, Dallas County, Texas (the

"Building"), and all of floor twenty-three (the "23rd Floor Space") of the

Building containing approximately 29,131 square feet of Rentable Area. As

contemplated in the Work Letter (hereinafter defined), if the 22nd Floor

Commencement Date (as defined in the Work Letter) has not occurred by the

Commencement Date (as defined in Section 2.1), then, beginning on the

Commencement Date until the 22nd Floor Commencement Date occurs, the Premises

shall consist of the 23rd Floor Space and the approximately 9,427 square feet of

Rentable Area occupied by Tenant as of the date of this Lease on floor

twenty-eight (28) (the "Temporary 28th Floor Space") of the Building pursuant to

a sublease with Rosewood Resources, Inc.; it being understood and agreed that

the Temporary 28th Floor Space shall, for such period of time, be considered

part of the Premises for all purposes and directly leased from Lessor to Lessee.

Floorplans of the Premises are attached as Exhibit A.

 

         1.2 Project. The Building is located on the land (herein so called)

described on Exhibit B. The Building is part of the Project known as "Cityplace

Center" located on the Land. The term "Project" refers collectively to all

buildings (including the Building) now or hereafter located on the Land, the

Garage (herein so called) located under the surface of the Land, and all of the

Land owner's other improvements, fixtures, equipment, or other facilities now or

hereafter located on the Land, in the Garage, or in any of the buildings or

other improvements on the Land. The term "Property" refers collectively to the

Project and the Land.

 

         1.3 Improvements. The Work Letter attached hereto as Addendum No. 1

states the terms under which any walls, doors, lights, or other improvements

intended to prepare the Premises for Lessee's occupancy (collectively, the

"Improvements") will be constructed.

 

         1.4 Parking. The Parking Agreement attached hereto as Addendum No. 2

states Lessee's rights to parking in the Garage.

 

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         1.5 Rentable Area. Rentable Area (herein so called) has been or will be

calculated in accordance with the American National Standard Method for

Measuring Floor Area in Office Buildings published by the Building Owners and

Managers Association ("BOMA") (ANSI Z65.1-1980, reaffirmed 1989, approved June

21, 1989, and reprinted August 1990), with usable and rentable area calculations

conforming to 1996 BOMA standards. The Rentable Area in both the 23rd Floor

Space and the Temporary 28th Floor Space have been agreed upon by Lessor and

Lessee and will for all purposes be considered to contain the number of square

feet of Rentable Area specified in Section 1.1. Once final plans and

specifications for the 22nd Floor Space are completed, the Rentable Area in the

22nd Floor Space shall be determined in good faith and in accordance with

provisions of this Section 1.5 by Lessor. If, for any reason, Lessee shall at

any time disagree in writing with Lessor's determination of the Rentable Area of

any space that is to be included within the Premises as contemplated in this

Lease other than the 23rd Floor Space or the Temporary 28th Floor Space, then

the Rentable Area of such space shall be determined in good faith and in

accordance with provisions of this Section 1.5 by Lessor's architect (the

"Architect"), whose determination thereof shall be conclusive upon each of the

parties. Lessee shall pay Architect's fees and expenses in respect of any such

determination if such determination deviates by less than five percent (5%) from

the calculation to which Lessee disagreed; otherwise Lessor shall pay such fees

and expenses.

 

         1.6 Reserved Rights. Lessor reserves all rights not expressly granted

to Lessee, including the unrestricted right (a) to change the name or street

address of the Building or of any other part of the Project; provided that

Lessor shall reimburse Lessee for up to Five Thousand and No/100 Dollars

($5,000.00) of Lessee's actual, out-of-pocket costs in reprinting Lessee's

existing stock of written materials affected by such change, including, without

limitation, Lessee's stationery and business cards, (b) so long as the Premises

remain reasonably accessible (when considering the number of elevators, number

and types of Building entrances, and the like), to change the design or

configuration of any part of the Project located outside the Premises, (c) to

control every aspect of parking and of traffic movement in the Garage and

elsewhere on the Property, (d) to prohibit, install, and otherwise control any

interior or exterior signs within the Property, and (e) to grant exclusive

rights to conduct business in, or render services to, the Project, subject to

any then pre-existing service contracts to which Tenant is a party that address

the provision of services to the Premises.

 

                                ARTICLE II - TERM

 

         2.1 Commencement. The term of this Lease shall begin on October 1, 2004

(the "Commencement Date").

 

         2.2 Length of Term. The term of this Lease shall begin on the

Commencement Date and end one hundred twenty (120) months after the Commencement

Date, unless the term is terminated or extended pursuant to other provisions of

this Lease.

 

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         2.3 Grant of Leasehold. Lessor demises the Premises to Lessee for the

term of this Lease, and covenants that except as otherwise provided in this

Lease, Lessee may peaceably have, hold, and enjoy the Premises free of any

superior right or claim arising by, through or under Lessor, but not otherwise.

 

         2.4 Acceptance and Surrender. Lessee (a) leases the Premises from

Lessor, (b) acknowledges that, as of the date of this Lease, Lessee has

possession of the 23rd Floor Space and the Temporary 28th Floor Space, (c)

agrees to take possession of 22nd Floor Space on the 22nd Floor Commencement

Date and (d) agrees to surrender (i) the Temporary 28th Floor Space on the 22nd

Floor Commencement Date, and (ii) the Premises at the end of the term, or

earlier on termination of this Lease or of Lessee's right to possession of the

Premises, free of waste and in as good a condition as on the Commencement Date

(or as on the 22nd Floor Commencement Date with respect to the 22nd Floor

Space), except for reasonable wear and tear and casualty damage that this Lease

does not require Lessee to repair. Lessee's possession of the Premises is hereby

deemed to constitute Lessee's agreement that the Premises are suitable for their

intended purpose and that the Premises and all other parts of the Property are

in good and satisfactory condition and free of defects (except for latent

defects and any "punch-list" items related to the Improvements, which will be

completed in accordance with the Work Letter).

 

         2.5 Holding Over. If Lessee continues to occupy any part of the

Premises after the end of the term, Lessee shall be considered a holdover

tenant, and rent shall automatically increase by fifty percent (50%). During any

holdover period, the increased rent and all other obligations of Lessee under

this Lease shall continue to be payable and performable, but Lessor may at any

time refuse to accept rent or other performance, and may reenter, take

possession of, and change the locks on the doors of the Premises (without making

the keys to the changed locks available to Lessee), all without waiver of any

rental or other obligation of Lessee accrued prior to Lessor's taking possession

of the Premises. If, however, Lessor chooses to accept the increased rent and

other performance due, Lessee may remain in possession as a holdover tenant

during the period for which increased rent has been accepted, but not

thereafter, and acceptance of any rent or other performance on one occasion

shall not obligate Lessor to accept rent or other performance on any subsequent

occasion. No holding over, acceptance of rent, or increase in rent shall extend

the term, which may be extended, if at all, only pursuant to an express option

in this Lease or by a future written agreement of Lessor and Lessee. Lessee

shall indemnify and hold Lessor harmless against any loss, liability, damage,

cost, or expense, or any claim therefor, to the extent incurred by Lessor as a

result of Lessee's holding over, including liabilities to any person to whom

Lessor may have leased any part of the Premises.

 

         2.6 Cancellation Option. Lessee shall have the one time option to

cancel this Lease effective as of the end of the sixtieth (60th) month of the

term of this Lease, by giving written notice to Lessor of its intention to so

terminate this

 

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Lease no later than the end of the forty-eighth (48th) month of the term of this

Lease. If Lessee timely exercises Lessee's cancellation option in accordance

with this Section 2.6, then, on or before any such termination date, Lessee

shall pay Lessor a cancellation fee equal to the sum of (i) Six Hundred

Fifty-Eight Thousand One Hundred Thirty-Five and 46/100 Dollars ($658,135.46),

which consists of the unamortized allowances (including construction,

refurbishment, space planning and decorating) and commissions shown on Exhibit

F, attached hereto and incorporated herein for all purposes, and paid or

incurred by Lessor in connection with this Lease, plus an interest factor on

such amount of eight percent (8%) per annum commencing on the date of payment by

Lessor, with amortization commencing on the Commencement Date, and (ii) a dollar

amount equal to all unamortized allowances, commissions and tenant finish costs

not shown on Exhibit F that are related to any space added to the Premises after

the Commencement Date, plus an interest factor equal to eight percent (8%) per

annum from the date of payment by Lessor, with amortization based on, in each

instance, the ratio of the number of months remaining in the unexpired term of

this Lease from the effective date of the addition of such space to the Premises

until the effective date of such cancellation, to the total number of months

remaining in the unexpired term of this Lease from the effective date of the

addition of such space to the Premises until the end of the stated term, without

regard to such cancellation option. If Lessee fails to make such payment when

due, such failure shall, at Lessor's sole option, nullify Lessee's notice of

cancellation and constitute an event of default under this Lease, entitling

Lessor to all of Lessor's remedies under this Lease, as well as all remedies

otherwise available to Lessor, including, without limitation, any and all rights

for recovery of the cancellation fee, reasonable attorney's fees and expenses

and, if necessary, eviction. The method of calculating the cancellation fee set

out in (i) above is shown on Exhibit F attached hereto and made a part hereof

and such methodology shall be applied to any calculations performed for purposes

of (ii) above. If Lessee does not give Lessor the notice required by this

Section 2.6 in a timely manner, this Lease shall remain in full force and effect

for the remaining sixty (60) months of the term.

 

                               ARTICLE III - RENT

 

         3.1 Base Rent. Base Rent (herein so called) shall be as follows:

 

<TABLE>

<CAPTION>

                   Annual Base Rent        Annual Base Rent

                       Rate/RSF                Rate/RSF                   Total                      Total

  Months                (Floor 22)              (Floor 23)            Annual Base Rent           Monthly Base Rent

-------------------------------------------------------------------------------------------------------------

<S>                 <C>                     <C>                      <C>                        <C>

1 - 60                   $20.35                  $19.35                 $844,128.20                $70,344.02

61 - 120                 $21.35                  $20.35                 $887,040.20                $73,920.02

</TABLE>

 

Base Rent shall be payable, beginning on the Commencement Date and throughout

the term, in the monthly installments shown above. The first full calendar

month's Base Rent installment shall be paid by Lessee on or prior to the

Commencement Date.

 

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For the period, if any, at the beginning of the term of this Lease that the

Premises include the Temporary 28th Floor Space instead of the 22nd Floor Space

as contemplated by Section 1.1, Lessee shall pay Base Rent for the Temporary

28th Floor Space at the rental rate per square foot of Rentable Area applicable

to the 23rd Floor Space for the same period.

 

         3.2 Expense Rent. The rate used in calculating Base Rent includes an

Expense Stop (herein so called) of the dollar amount per square foot of Rentable

Area which is determined by dividing the total amount of Expenses for calendar

year 2005 (as calculated pursuant to Section 3.7 and 3.8) for the Building as

annualized to full occupancy by ninety-five percent (95%) of the number of

square feet of Rentable Area in the Building. Lessee shall pay additional rent

("Expense Rent") beginning as of January 1, 2006, equal to the product of the

number of square feet of Rentable Area in the Premises times a rate each

calendar year (the "Excess Expense Rate") that equals the amount in that year by

which Expenses per square foot of Rentable Area in the Building exceed the

Expense Stop. Expense Rent shall be payable in monthly installments based on

Lessor's then current estimate of the Excess Expense Rate. If such estimate is

not ready at the beginning of a calendar year, then Lessee shall continue to pay

the same amount of monthly Expense Rent as had been required for the preceding

year until Lessee receives Lessor's estimate for the then-current year, and

Lessor shall provide Lessee with written notice of such estimate no later than

July 1 of such calendar year and applied retroactively to January 1 of such

year. As soon as available each calendar year beginning in 2007, but in no event

later than June 1 of each year, Lessor shall furnish Lessee a written

reconciliation statement showing actual Expenses for the prior year and the

amount of any underpayment or overpayment of estimated Expense Rent by Lessee.

Any underpayment shall be payable within ten (10) days after delivery of the

reconciliation statement. Any overpayment shall be applied in a lump sum against

the next installment(s) of rent due from Lessee, or if Lessor chooses, shall be

refunded to Lessee.

 

         3.3 Electrical Charges. Lessor shall periodically invoice Lessee (but

no more often than monthly) for Lessee's electrical consumption in the Premises

at the then-prevailing rate charged to Lessor by the utility company, which

shall include (i) a common area charge calculated in the manner set forth below,

plus (ii) actual electrical consumption for the Premises (which shall be

separately metered for each floor and, at Lessor's option, for Lessee's computer

room or other portions of the Premises in which above-Building standard

electrical consumption is reasonably anticipated by Lessor), and such invoice

shall separately show the common area electrical charge and the charges for

electrical consumption as determined by metered usage in the Premises. The

monthly common area electrical charge shall be calculated by multiplying the

annual Building Hours (3120 hours) by 5.75 watts per square foot of Rentable

Area in the Premises and dividing that amount by twelve (12) to reach watts per

square foot per month allocation of common area electrical charges. That amount

will be converted to kilowatt hours and then be multiplied by the average

utility company

 

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kilowatt hour rate for the specific month to arrive at the common area

electrical charge for that month. Lessor and Lessee acknowledge and agree that

the intent of the formula for calculating the monthly common area electrical

charge is for Lessor to be reimbursed based on Lessor's actual common area

electrical charges and for Lessor to not profit as to same. Each monthly

electricity bill shall include a five percent (5%) administrative processing

fee.

 

         3.4 Security Deposit. On or before the date by which Lessee is to

deliver Lessee's preliminary "Space Plans" to Lessor in accordance with Section

1.2 of the Work Letter (hereinafter defined), Lessee shall deposit a cash sum of

$74,453.77 with Lessor as security for the performance of Lessee's obligations

under this Lease. The security deposit shall never be considered an advance

payment of rent or liquidated damages. Should Lessee be in default of Lessee's

obligations under this Lease beyond any applicable notice and cure periods, then

Lessor may, if Lessor chooses and without prejudice to any other remedy, apply

the security deposit to the extent necessary to satisfy any and all current,

accrued, but unperformed or unpaid, obligations of Lessee under this Lease.

Following the application of any part of the security deposit, Lessee shall pay

Lessor, within three (3) days after written demand from Lessor, a sum sufficient

to restore the security deposit to its full amount. If Lessee is not in default

at the end of the term and if all amounts owed by Lessee have been paid

(including electrical charges, bills for any required repairs to the Premises,

and any final reconciliation of actual and estimated Expense Rent), the balance

of the security deposit shall be returned to Lessee in accordance with any

requirements of Section 93.005(a) of the Texas Property Code, as the same may be

amended. The security deposit shall be held without interest.

 

         3.5 Time, Place, and Manner of Paying Rent. Installments of Base Rent

and estimated Expense Rent shall be due and payable in advance on the first day

of each calendar month without notice or demand, and shall be prorated on a

monthly basis and paid in advance for any partial calendar month. All sums

payable to Lessor by Lessee under any provision of this Lease, even if not

specifically referred to as "rent" or "additional rent," constitute rent for all

purposes. Unless otherwise specified in this Lease, all other monetary

obligations of Lessee shall be payable within ten (10) days after written demand

by Lessor, as evidenced by delivery of demand, bill, invoice, or other written

notice. All rent shall be payable by cash (or other immediately available United

States funds) or check, without offset or deduction (except only to the extent

otherwise expressly provided in this Lease), at the address of Lessor specified

in this Lease or such other address Lessor may designate; provided that if

Lessor has customarily accepted checks, Lessor may nonetheless require payments

to be in cash at any time following Lessee's failure to make (a) Base Rent or

Expense Rent payments within ten (10) days after the date due, or (b) any other

payment to Lessor when due during the term of this Lease. No rent for which

Lessor accepts a check shall be

 

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considered paid until cash funds are actually paid and credited to Lessor's bank

account.

 

          3.6 Administrative Fee. If Lessee fails to pay any sum within ten (10)

days after the date payment is due, or if a check delivered by Lessee to Lessor

in payment of any sum has not been paid and credited to Lessor's bank account

within ten (10) days after the date payment is due, an administrative fee of

five percent (5%) of the amount past due shall be payable. This fee is intended

only to compensate Lessor for extra administrative and other expenses and

difficulties resulting from late payment, and shall never be construed as

liquidated damages or as consideration for any waiver or forbearance by Lessor.

 

         3.7 Expenses Defined. The term "Expenses" means all costs and expenses

related to the operation, maintenance, or ownership of the Property (whether

incurred by Lessor or by the owner of the Property). Expenses include the

following: (a) wages, salaries, employee benefits, and other costs for

operation, maintenance, engineering, management, security, or other types of

personnel; (b) cost of supplies, materials, and equipment used or rented; (c)

utility costs (exclusive of electrical costs which shall be paid in accordance

with Section 3.3); (d) property management fees and expenses, including

management office occupancy costs; (e) sums payable under any landscaping,

janitorial, maintenance, trash removal, security, or other service contract; (f)

repair and maintenance costs, including replacement costs other than those that

are capital in nature [which capital expenses shall be governed by item (i)

below]; (g) insurance premiums; (h) taxes, assessments, and other similar

charges levied or assessed against the Property, including sales taxes and

assessments by any property owners' association; (i) amortization of capital

expenditures required by code or law, incurred with Lessor's reasonable

expectation that other Expenses will be reduced, or to enhance the Project for

the general benefit of tenants or occupants thereof, or which are for

replacement of Building equipment needed to operate the Project at the same

quality levels as prior to the replacement; and (j) legal, accounting, auditing,

and other professional fees and expenses for the general use or benefit of the

Building. Expenses do not include the following: (1) leasing commissions,

marketing expenses, attorney's fees and other costs incurred in connection with

lease negotiations or disputes with other tenants or prospective tenants in the

Building or similar costs incurred in connection with Lessor's consultants,

management agents, purchasers or mortgagees of the Building; (2) capital

expenditures other than those described above; (3) depreciation; (4) principal,

interest or finance charges on any loan or with respect to the Master Lease,

except to the extent for ad valorem/real estate taxes, insurance premiums or

other items to be included within the term "Expenses" as described above; (5)

taxes on net income or franchise taxes; (6) electrical consumption charges or

any other expenses separately billed to any tenant; (7) expenses actually paid

by insurance proceeds or, if Lessor is not in compliance with Lessor's insurance

obligations under Section 6.1(b), expenses that would be payable by insurance

required to be so

 

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carried by Lessor; (8) trustee's fees, partnership organizational expenses and

accounting fees to the extent relating to Lessor's general corporate overhead

charges and general administrative expenses; (9) amounts paid to affiliates in

excess of the cost for comparable goods or services provided by unaffiliated

parties; (10) allowances, concessions and other costs incurred in completing

tenant leasehold improvements; (11) costs incurred in connection with the sale,

financing, refinancing, mortgaging, selling or change of ownership of the

Building; (12) costs, fines, interest, penalties, legal fees or costs of

litigation incurred due to Lessor's late payments of taxes, utility bills and

other costs to the extent arising from Lessor's failure to make such payments

when due, unless a result of Lessor's good faith and reasonable efforts in

contesting the amount of such payments; (13) costs of utilities directly metered

to tenants of the Building and payable separately by such tenants; or (14) costs

incurred to correct any violation by Lessor that exists as of the date of this

Lease of any law, rule, order or regulation that is applicable to the Building.

 

         3.8 Expense Accounting. Accrual, cash, or other methods may be used in

accounting for Expenses, at Lessor's sole option. The fiscal year for expense

accounting shall be the calendar year. If there are other occupied buildings on

the Property, Expenses which relate exclusively to the Building shall be shared

pro rata by all lessees of the Building on the basis of relative floor area. If

there are other occupied buildings on the Land, Expenses of the Property that

relate to the common areas of the Land and Garage shall be allocated between the

Building and any other occupied buildings on the Land on a basis selected by

Lessor (such as relative floor area) that, in Lessor's reasonable judgment,

fairly reflects each building's share of such Expenses. If any Expenses are

incurred for a partial year or vary depending on occupancy, those Expenses shall

be adjusted on a basis selected by Lessor that reasonably approximates what each

of the Expenses would have been for the entire year at full occupancy. To

determine the Excess Expense Rate, Expenses as annualized to full occupancy

shall be divided by ninety-five (95%) of the Rentable Area of the Building.

Lessee may, at any time during Lessor's or Lessor's management company's normal

business hours between the sixth (6th) and the sixteenth (16th) day of any

month, audit and/or inspect Lessor's Expense accounting records for a calendar

year within ninety (90) days after receipt from Lessor of the annual statement

reconciling actual and estimated Expenses, or in lieu thereof, Lessor may, at

Lessor's option, furnish an audit of Expenses prepared by an independent

certified public accountant of Lessor's selection. If the final result of the

audit/inspection establishes that Lessee (a) overpaid for Expenses, then Lessee

shall be entitled to a credit against Lessee's subsequent monetary obligations

arising under this Lease in the amount of such overpayment (or, if no further

 

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monetary obligations are to arise, Lessor shall reimburse Lessee the amount of

such overpayment in the form of a check within 30 days after the completion of

such audit/inspection), or (b) underpaid for Expenses, then Lessee shall pay

Lessor the amount of such underpayment at the same time as Lessee's

next-accruing monetary obligation under this Lease becomes due (or, if no

further monetary obligations are to arise, Lessee shall pay Lessor the amount of

such underpayment in the form of a check within 30 days after the completion of

such audit/inspection). All expenses relating to such audit and/or inspection

shall be borne solely by Lessee, unless the results thereof establish that

Lessor overstated actual Expenses by more than five percent (5%), in which event

Lessor shall pay Lessee's actual reasonable audit/inspection out-of-pocket fees

applicable to the audit/inspection.

 

         3.9 Tax Protests. TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAWS,

LESSEE WAIVES ALL RIGHTS PURSUANT TO ALL LAWS TO PROTEST APPRAISED VALUES OR

RECEIVE NOTICE OF REAPPRAISAL REGARDING THE BUILDING OR OTHER PROPERTY OF

LESSOR, INCLUDING, WITHOUT LIMITATION, ANY ARISING UNDER PROP. TAX CODE SECTIONS

41.413 OR 42.015, AS SUCH SECTION NOW EXISTS OR AS MAY BE HEREAFTER AMENDED OR

SUCCEEDED.

 

         3.10 Reasonable Methods to Determine Charges. Lessor and Lessee

acknowledge and agree that the provisions set forth in this Lease for

determining Expenses and all additional rent and other charges and amounts

payable by Lessee under this Lease are commercially reasonable and valid even

though such methods may not state a precise mathematical formula for determining

such charges. ACCORDINGLY, LESSEE HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ALL

RIGHTS AND BENEFITS OF LESSEE UNDER TEXAS PROPERTY CODE SECTION 93.004, AS SUCH

SECTION NOW EXISTS OR AS MAY BE HEREAFTER AMENDED OR SUCCEEDED.

 

                         ARTICLE IV - USE AND OPERATION

 

         4.1 Use. The Premises shall be used and occupied solely for office

purposes and all lawful related and consistent uses, including, without

limitation, the operation of Lessee's data center existing as of the date of

this Lease, and any permitted future expansion thereof. Except for supplies used

in the Premises, no goods or other merchandise may be stored in, or held for

sale at, the Premises. Lessee shall not use the Premises or any other part of

the Property for any activity that violates any law or ordinance, that violates

any private covenants or restrictions applicable to the Property and recorded as

of the Commencement Date, that is disreputable, that creates a nuisance, or that

unreasonably interferes with the use and enjoyment of the Property by Lessor or

others. Lessee shall not commit any waste to the Property. Lessee shall not

engage in any activity in the Premises or in any other part of the Property that

Lessor reasonably believes could increase premiums for fire, liability, or other

insurance coverage on the Property, or that Lessor reasonably believes could

void or make any such insurance coverage unobtainable. Lessee shall comply with

all laws and ordinances applicable to the use and occupancy of the Premises and

the conduct of Lessee's business therein, and shall obtain and keep in force all

permits and licenses related thereto. Lessee shall comply with the Project Rules

attached as Exhibit C and with any future amendments to the Project Rules that

Lessor reasonably deems are necessary for the safe, efficient and effective

operation of the Project; provided, however, that Lessor shall use commercially

reasonable

 

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efforts to enforce the Project Rules and any future amendments uniformly as to

all tenants in the Building. Lessee shall cause its Personnel to comply with

each of the provisions of this Section, and shall be liable for any violation of

any provision of this Section by its Personnel. The term "Personnel" means,

collectively, employees, officers, agents, contractors, vendors, suppliers,

customers, licensees, invitees, visitors, or other persons with whom a party has

any legal or business relationship.

 

         4.2 Building Services. As long as Lessee is entitled to possession of

the Premises (but not thereafter), the following services shall be furnished to

those parts of the Premises that have not been abandoned by Lessee:

 

                  (a) Electricity at points of supply selected by Lessor at such

voltage and power, and kilowatt-hour consumption levels as are "building

standard" for the Building as of the date of this Lease, and, except as

contemplated in "Exhibit G - Additional Generator Usage" attached hereto,

Lessee's use of electricity shall not exceed Building standard circuit

capacities or KWH consumption. Lessor may direct that submeters be installed in

portions of the Premises, as part of the Improvements, as defined in the Work

Letter. If Lessee requests electrical services in excess of Building standard,

Lessor may choose to consent only upon conditions that Lessor considers

reasonably appropriate (including the condition that additional submeters and/or

any additional risers, wiring, or other equipment be installed by Lessor at

Lessee's cost payable in advance).

 

                  (b) Central heating and air conditioning in season to provide

temperatures in the Premises during Building Hours that Lessor reasonably

considers suitable for an office environment at normal occupant densities under

normal outside weather conditions. Building Hours (herein so called) are 7:00

a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on

Saturday, exclusive of Building Holidays, and such hours may be amended from

time to time by Lessor upon notice to the tenants in the Building. Building

Holidays (herein so called) shall be the days which are listed on Exhibit D

attached hereto as amended from time to time by Lessor upon notice to all

lessees of the Building. If Lessee desires to have heating and air conditioning

service in the Premises during other than Building Hours, Lessee must request

that service in advance from the Building manager during Building Hours. By

requesting such service, Lessee agrees to pay Lessor's Building standard charge

based on the actual time used (including any Building standard minimum charge)

for the smallest heating or air conditioning zone that can accommodate the

requested service area in the Premises (as of the date of this Lease, Lessor's

charge for heating and air conditioning service during non-Building Hours is

$35.00 per hour, and Lessor shall provide Lessee with written notice of any

future increases in Lessor's charge therefor). If Lessee's computers or other

equipment generate heat or vapors that Lessor reasonably considers excessive or

require the maintenance of a range of temperatures or ventilation that Lessor

reasonably believes cannot be provided by Building

 

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standard heating, ventilating and air conditioning, Lessor may prohibit the

operation of such computers or other equipment, until such time as Lessor elects

to install supplemental heating, ventilating and air conditioning equipment. If

Lessor elects to install supplemental heating, ventilating and air conditioning

equipment, Lessee shall pay all costs of acquiring, installing, maintaining, and

operating the supplemental equipment, including electrical and chilled water

consumption costs. Lessee may continue to maintain Lessee's supplemental

heating, ventilating and air conditioning equipment that exist within the

Premises as of the date of this Lease.

 

                  (c) Toilet facilities, hot and cold water as appropriate for

toilet and lavatory purposes, and cold water for drinking, all at points of

supply for the general use of Building occupants.

 

                  (d) Passenger and freight elevator service. The number of

passenger elevators operating after Building Hours may be restricted, and

dedicated freight elevator service shall be available only when reserved in

advance through the Building manager.

 

                  (e) Building standard routine maintenance of all public and

service areas of the Building and of the elevators, mechanical, electrical,

plumbing, and other standard component systems and equipment of the Building.

 

                  (f) Janitorial service, Monday through Friday, exclusive of

Building Holidays. If Lessee's floor coverings or other fixtures or improvements

require other than Building standard janitorial service, or if Lessee maintains

a lunchroom, coffee bar, or similar facility for its employees, Lessee shall pay

any additional cleaning costs. If at any time janitorial personnel cannot obtain

access to any part of the Premises when normally scheduled because of Lessee's

activities in that part of the Premises after Building Hours or because Lessee

has failed to comply with the provisions of this Lease relating to locks or

access to the Premises, Lessor shall not be required to furnish janitorial

service to that part of the Premises until the next normally scheduled time for

janitorial service at which janitorial personnel are able to obtain access.

 

                  (g) Replacement of Building standard bulbs in the public areas

of the Building and in the Premises.

 

                  (h) Security in the form of limited access to the Building

during other than Building Hours, regulated in the manner Lessor considers

appropriate. Lessor shall not be responsible for any other types of security.

Lessee shall cooperate fully with Lessor's efforts to maintain security in the

Building and elsewhere on the Property, and shall follow and cause its Personnel

to follow all security regulations established by Lessor. If Lessor regulates

access to the Building during other than Building Hours by use of key cards

issued to Lessee, Lessor may require payment of the Building standard deposit

for each card issued, and Lessee shall not make or permit any duplicate key

cards to be made. When Lessee's

 

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right to possession of the Premises comes to an end, whether at the end of the

term or earlier, Lessee shall surrender all key cards to the Building. If Lessee

fails to surrender all key cards to the Building when required, or if Lessor

reasonably believes that Lessee has made or permitted duplicate key cards to be

made, Lessor may change the access system to the Building at Lessee's expense.

 

Lessor shall use reasonable diligence to restore any interrupted or terminated

service, or correct any fluctuations, as promptly as reasonably possible. In no

event shall the interruption, fluctuation, or termination of any of these

services resulting from causes beyond Lessor's reasonable control make Lessor

liable in any respect, be construed as an eviction of Lessee, work an abatement

of rent, or relieve Lessee from any obligation; provided, however, that, in the

event such interruption, fluctuation, or termination is within Lessor's

reasonable control and causes all or any material portion of the Premises to be

untenantable for a period of at least five (5) consecutive business days, then

Base Rent and Expense Rent shall be abated to the extent, and for so long as,

the Premises, or any material portion thereof, are so untenantable.

 

         4.3 Improvements. Lessor shall have no obligation to construct or pay

for any improvements to the Premises other than as described in the Work Letter.

Lessee shall reimburse Lessor for any excessive or nonstandard operating,

maintenance, or other expenses (as reasonably determined by Lessor) attributable

to any future alterations, additions, or improvements to the Premises. To the

extent possible, Lessee shall cause any future alterations, additions, or

improvements to the Premises to be separately rendered and assessed for ad

valorem taxation, and in any event, Lessee shall pay or reimburse Lessor for any

ad valorem taxes thereon. Lessee shall reimburse Lessor for any insurance

premiums attributable to any future alterations, additions, or improvements to

the Premises.

 

         4.4 Alterations and Additions by Lessee. Lessee shall not install or

allow the installation of any of the following in the Premises without Lessor's

prior written consent (which consent may not be unreasonably withheld and, if

given, may be conditioned on such conditions as Lessor reasonably chooses,

including conditions relating to approval of plans and specifications,

employment and bonding of contractors, insurance, aesthetic considerations, and

other matters as reasonably determined by Lessor): (a) any alterations,

additions, or improvements other than the Improvements; (b) any vending

machines, refrigerators, microwave ovens, or other food or drink preparation,

storage, or dispensing equipment; (c) any sign, window covering, decoration,

advertising media, or lighting that is visible from outside the Building or from

lobbies or other public areas within the Building, or (d) any safes, filing

cabinets, or other heavy items. Approval by Lessor of any of Lessee's drawings

and plans and specifications prepared in connection with any improvem