EXHIBIT 10.37
C
OFFICE LEASE
BETWEEN
CRESCENT REAL ESTATE
FUNDING VIII, L.P.
(“
LANDLORD ”)
and
GAINSCO, INC.
(“
TENANT” )
TABLE OF
CONTENTS
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PAGE |
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1.
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Basic Lease Information |
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2.
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Lease Grant |
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3.
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Term; Adjustment of Commencement
Date; Possession |
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4.
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Rent |
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5.
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Tenant’s Use of Premises |
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6.
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Security Deposit |
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7.
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Services to be Furnished by
Landlord |
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8.
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Use of Electrical Services by
Tenant |
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9.
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Repairs and Alterations |
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10 |
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10.
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Entry by Landlord |
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11.
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Assignment and Subletting |
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12 |
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12.
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Liens |
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13.
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Indemnity and Waiver of Claims |
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14.
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Insurance |
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15.
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Mutual Waiver of Subrogation |
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16.
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Casualty Damage |
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17.
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Condemnation |
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18.
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Events of Default |
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19.
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Remedies |
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20.
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Limitation of Liability |
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21.
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No Waiver |
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22.
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Tenant’s Right to
Possession |
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23.
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Relocation |
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24.
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Holding Over |
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25.
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Subordination to Mortgages; Estoppel
Certificate |
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26.
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Attorneys’ Fees |
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27.
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Notice |
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28.
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Reserved Rights |
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29.
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Surrender of Premises |
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21 |
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30.
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Hazardous Materials |
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22 |
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31.
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Miscellaneous |
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EXHIBITS AND
RIDERS
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EXHIBIT A-1
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OUTLINE AND LOCATION OF PREMISES |
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EXHIBIT A-2
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LEGAL DESCRIPTION OF PROPERTY |
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EXHIBIT B
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RULES AND REGULATIONS |
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EXHIBIT C
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COMMENCEMENT LETTER |
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EXHIBIT D
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WORK LETTER |
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EXHIBIT E
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PARKING AGREEMENT |
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EXHIBIT F
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SIGNAGE |
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RIDER NO. 1
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OPTION TO EXTEND |
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RIDER NO. 2
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PREFERENTIAL RIGHT TO LEASE |
OFFICE LEASE
This Office Lease (this “
Lease ”) is entered into by and between CRESCENT REAL
ESTATE FUNDING VIII, L.P., a Delaware limited partnership (“
Landlord ”), and GAINSCO, INC., a Texas corporation
(“ Tenant ”), and shall be effective as of the
date set forth below Landlord’s signature (the “
Effective Date ”).
1. Basic Lease
Information . The key business terms used in this Lease are
defined as follows:
A. “
Building ” shall mean the building located at 3333 Lee
Parkway, Dallas, Texas 75219.
B. “ Rentable
Square Footage of the Building ” is agreed and stipulated
to be 233,543 square feet.
C. “
Premises ” shall mean the area shown on
Exhibit A-1 to this Lease. The Premises are located on the 12
th
floor and known as suite number 1200. The “ Rentable
Square Footage of the Premises ” is deemed to be 20,585
square feet. If the Premises include one or more floors in their
entirety, all corridors and restroom facilities located on such
full floor(s) shall be considered part of the Premises. Landlord
and Tenant stipulate and agree that the Rentable Square Footage of
the Building and the Rentable Square Footage of the Premises are
correct and shall not be remeasured.
D. “ Base
Rent ”:
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Annual Rate |
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Monthly |
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Period |
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Per Square Foot |
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Base Rent |
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CD
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through |
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8/31/06 |
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$ |
17.00 |
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$ |
17,330.08 |
* |
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9/01/06
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through |
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ED |
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$ |
17.00 |
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$ |
29,162.08 |
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*calculated on 12,233
rsf
Base Rent on 8,352 rsf is abated
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CD = Commencement
Date
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ED = Expiration Date |
E. “
Tenant’s Pro Rata Share ” is equal to the
Rentable Square Footage of the Premises divided by the Rentable
Square Footage of the Building.
F. “ Base
Year ” for Operating Expenses: 2005.
G. “ Term
”: The period of approximately 120 months starting on
the Commencement Date, subject to the provisions of
Article 3 .
H. “ Estimated
Commencement Date ”: August 1, 2005, subject to
adjustment, if any, as provided in Section 3.A and the
Work Letter, if any.
I. “ Security
Deposit ”: $0.00.
J. “
Guarantor(s) ”: N/A
1
K. “ Notice
Addresses ”:
Tenant : On or after the
Commencement Date, notices shall be sent to Tenant at the Premises
1 .
Prior to the Commencement Date, notices shall be sent to Tenant at
the following address:
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1445 Ross
Avenue
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with a copy to: |
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Suite 5300
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1445 Ross Avenue |
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Dallas, Texas
75202
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Suite 5300 |
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Attn: Glenn W.
Anderson
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Dallas, Texas 75202 |
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Phone #:
(214) 647-0415
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Attn: John Daniels |
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Fax #:
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Phone #: (214) 647-0415 |
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Fax #:
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Landlord:
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With a copy to: |
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3333 Lee
Parkway
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777 Main Street |
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200 Crescent Court,
Suite 250 |
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Suite 100
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Suite 2100 |
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Dallas, Texas 75201 |
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Dallas, Texas
75219
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Fort Worth, Texas 76102 |
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Attn: Senior Vice President |
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Attn: Property
Manager
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Attn: Legal Department |
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Asset Management and Leasing |
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Phone #:
(214) 559-2424
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Phone #: (817) 321-2100 |
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Phone #: (214) 880-4545 |
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Fax #:
(214) 559-2266
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Fax #: (817) 321-2000 |
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Fax #: (214) 880-4547 |
Rent (defined in
Section 4.A ) is payable to the order of Crescent Real
Estate Funding VIII, L.P. at the following address: P.O. Box
844255, Dallas, Texas 75284-4255 or by wire transfer to Bank of
America, Dallas, Texas, ABA #111-0000-25, for further credit to
Crescent Real Estate Funding VIII, L.P., Account #479-584-8612,
Reference: Gainsco, Inc./3333 Lee Parkway.
L. “ Business
Day(s) ” are Monday through Friday of each week,
exclusive of New Year’s Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, the day after Thanksgiving and
Christmas Day (“ Holidays ”). Landlord may
designate additional Holidays, provided that the additional
Holidays are commonly recognized by other office buildings in the
area where the Building is located.
M. “ Law(s
)” means all applicable statutes, codes, ordinances, orders,
rules and regulations of any municipal or governmental entity, now
or hereafter adopted, including the Americans with Disabilities Act
and any other law pertaining to disabilities and architectural
barriers (collectively, “ ADA ”), and all laws
pertaining to the environment, including the Comprehensive
Environmental Response, Compensation and Liability Act, as amended,
42 U.S.C. §9601 et. seq. (“ CERCLA ”).
N. “ Normal
Business Hours ” for the Building are 7:00 A.M. to 7:00
P.M. on Business Days and 8:00 A.M. to 2:00 P.M. on Saturdays,
exclusive of Holidays.
2. Lease
Grant. Landlord leases the Premises to Tenant and Tenant
leases the Premises from Landlord, together with the right in
common with others to use any portions of the Property (defined
below) that are designated by Landlord for the common use of
tenants and others, such as sidewalks, common corridors, vending
areas, lobby areas and, with respect to multi-tenant floors,
restrooms and elevator foyers (the “ Common Areas
”). “ Property ” means the Building and
the parcel(s) of land on which it is located as more fully
described on Exhibit A-2 , together with all
other buildings and improvements located thereon; and the Building
garage(s) and other improvements serving the Building, if any, and
the parcel(s) of land on which they are located.
3. Term;
Adjustment of Commencement Date; Possession .
A. Term .
This Lease shall govern the relationship between Landlord and
Tenant with respect to the Premises from the Effective Date through
the last day of the Term specified in Section 1.G (the
“ Expiration Date ”), unless terminated early in
accordance with this Lease. The Term of this Lease (as specified in
Section 1.G ) shall commence on the “Commencement
Date”, which shall be the earlier of (1) the date on
which the Landlord Work (defined below) is Substantially Complete,
as determined pursuant to Paragraph 4(c) of the Work Letter
(defined below), or (2) the date on which the Landlord Work
would have been Substantially Complete but for Tenant Delay, as
such term is defined in Paragraph 4(c) of the Work Letter, or
(3) the date Tenant takes possession of any part of the
Premises
1 Attention: Glenn
W. Anderson with a copy to the attention of John Daniels at the
Premises
2
for purposes of conducting
business. 2 If Landlord is
delayed in delivering possession of the Premises or any other space
due to any reason, including Landlord’s failure to
Substantially Complete the Landlord Work by the Estimated
Commencement Date, the holdover or unlawful possession of such
space by any third party, or for any other reason, such delay shall
not be a default by Landlord, render this Lease void or voidable,
or otherwise render Landlord liable for damages. Promptly after the
determination of the Commencement Date, Landlord and Tenant shall
enter into a commencement letter agreement substantially in the
form attached as Exhibit C . Notwithstanding any
other provision of this Lease to the contrary, if the Expiration
Date would otherwise occur on a date other than the last day of a
calendar month, then the Expiration Date shall be automatically
extended to the last day of such calendar month. “
Landlord Work ” means the work, if any, that Landlord
is obligated to perform in the Premises pursuant to a separate work
letter agreement (the “ Work Lette r”), if any,
attached as Exhibit D . If a Work Letter is not
attached to this Lease or if an attached Work Letter does not
require Landlord to perform any work, the occurrence of the
Commencement Date shall not be conditioned upon the performance of
work by Landlord.
B. Acceptance of
Premises . The Premises are accepted by Tenant in “as
is” condition and configuration subject to (1) any
Landlord obligation to perform Landlord Work,
(2) Landlord’s repair obligations under
Section 9.B , and (3) any latent defects (of which
Tenant notifies Landlord within one year after the Commencement
Date) in the Premises or the Landlord Work. By taking possession of the Premises,
Tenant agrees that the Premises are in good order and satisfactory
condition and agrees that 3 there
are no representations or warranties, express or implied, by
Landlord regarding the condition of the Premises or the
Building .
C. Possession of
Premises Prior to Commencement Date . Tenant shall not take
possession of the Premises prior to the Commencement Date except
with the prior written consent of Landlord. If Tenant takes
possession of the Premises or commences business activities at the
Premises before the Commencement Date with Landlord’s
permission, such possession and occupancy shall be subject to the
terms and conditions of this Lease and Tenant shall pay Rent
(defined in Section 4.A ) to Landlord for each day of
possession before the Commencement Date. However, except for the
cost of services requested by Tenant (e.g., freight elevator
usage), Tenant shall not be required to pay Base Rent and
Tenant’s Pro Rata Share of Excess Operating Expenses and
Tenant’s Pro Rata Share of electrical and other costs under
Section 4.H for any days of possession before the
Commencement Date during which Tenant, with the written consent of
Landlord, is in possession of the Premises for the sole purpose of
performing improvements or installing furniture, equipment or other
personal property. 4
4.
Rent .
A.
Payments . As consideration for this Lease,
commencing on the Commencement Date, Tenant shall pay Landlord,
without any demand, setoff or deduction, the total amount of Base
Rent,
2 Notwithstanding
anything to the contrary in the foregoing, if the Landlord Work is
Substantially Complete prior to the Estimated Commencement Date,
Tenant may elect, by delivering written notice to Landlord, not to
accept possession of the Premises earlier than the Estimated
Commencement Date, in which event the Commencement Date shall be
the Estimated Commencement Date.
3 ,EXCEPT FOR ANY
REMAINING PUNCHLIST ITEMS RELATED TO THE LANDLORD WORK,
4 D.
Early Termination . Tenant shall have the
option to terminate this Lease at the end of the sixtieth (60
th )
full calendar month of the Term (the “ Termination
Date ”), provided Tenant gives notice thereof (the
“Termination Notice”) to Landlord not less than nine
(9) months prior to the Termination Date, and provided Tenant
is not in default under the Lease at the time of the giving of such
notice nor on the Termination Date. Notwithstanding anything to the
contrary contained in the immediately preceding sentence, in the
event Tenant is in default under the Lease on the Termination Date,
Landlord shall notify Tenant in writing of such default, and the
Termination Date shall be extended by an amount of time equal to
the cure period applicable to the default. In the event Tenant
fails to cure such default during the applicable cure period, this
termination option shall be null and void and the Lease shall
continue in full force and effect as if Tenant had not delivered
the Termination Notice to Landlord. In the event Tenant cures such
default during the applicable cure period, the Lease shall
terminate on the Termination Date, as extended pursuant to the
provisions of this Section 3.D . Additionally,
Tenant’s right to terminate hereunder is conditioned upon the
payment in full by Tenant on or before the Termination Date, of
(1) all Rent through and including the Termination Date,
(2) the cash sum equal to four (4) times the Base Rent
payable for the month immediately preceding the Termination Date,
and (3) the unamortized cost (using an amortization rate of
10%) of all tenant improvement allowances and leasing commissions
actually paid or provided by Landlord in connection with the Lease
(collectively, the “ Termination Payment
”). Upon written request by Tenant, Landlord shall provide to
Tenant, Landlord’s then-current calculation of all of such
unamortized costs together with supporting documentation. After
Landlord’s receipt of the full Termination Payment, and so
long as Tenant has surrendered the Premises in the condition
required under this Lease, neither party shall have any rights,
liabilities or obligations under this Lease for the period accruing
after the Termination Date, except those which, by the provisions
of this Lease, expressly survive the termination of this Lease.
3
Tenant’s Pro Rata
Share of Excess Operating Expenses (defined in
Section 4.B ) and any and all other sums payable by
Tenant under this Lease (all of which are sometimes collectively
referred to as “ Rent ”). Tenant shall pay and
be liable for all rental, sales and use taxes (but excluding income
taxes), if any, imposed upon or measured by Rent under applicable
Law. Base Rent and Tenant’s Pro Rata Share of Excess
Operating Expenses shall be due and payable in advance on the first
day of each calendar month without notice or demand, provided that
the installment of Base Rent for the first full calendar month of
the Term shall be payable upon the execution of this Lease by
Tenant. All other items of Rent shall be due and payable by Tenant
on or before 30 days after billing by Landlord. All payments
of Rent shall be by good and sufficient check or by other means
(such as automatic debit or electronic transfer) acceptable to
Landlord. If the Term commences on a day other than the first day
of a calendar month, the monthly Base Rent and Tenant’s Pro
Rata Share of any Excess Operating Expenses for the month shall be
prorated on a daily basis based on a 360 day calendar year.
Landlord’s acceptance of less than the correct amount of Rent
shall be considered a payment on account of the earliest Rent due.
No endorsement or statement on a check or letter accompanying a
check or payment shall be considered an accord and satisfaction,
and either party may accept such check or payment without such
acceptance being considered a waiver of any rights such party may
have under this Lease or applicable Law. Tenant’s covenant to
pay Rent is independent of every other covenant in this Lease.
B. Excess
Operating Expenses . Tenant shall pay Tenant’s Pro
Rata Share of the amount, if any, by which Operating Expenses
(defined in Section 4.D ) for each calendar year during
the Term exceeds Operating Expenses for the Base Year (the “
Excess Operating Expenses ”). 5 If Operating
Expenses in any calendar year decrease below the amount of
Operating Expenses for the Base Year, Tenant’s Pro Rata Share
of Operating Expenses for that calendar year shall be $0. In no
event shall Base Rent be reduced if Operating Expenses for any
calendar year are less than Operating Expenses for the Base Year.
No later than January 1 of each calendar year, Landlord shall
provide Tenant with a good faith estimate of the Excess Operating
Expenses for such calendar year during the Term. On or before the
first day of each month, Tenant shall pay to Landlord a monthly
installment equal to one-twelfth of Tenant’s Pro Rata Share
of Landlord’s estimate of the Excess Operating Expenses. If
Landlord determines that its good faith estimate of the Excess
Operating Expenses was incorrect, Landlord may provide Tenant with
a revised estimate. After its receipt of the revised estimate,
Tenant’s monthly payments shall be based upon the revised
estimate. If Landlord does not provide Tenant with an estimate of
the Excess Operating Expenses by January 1 of a calendar year,
Tenant shall continue to pay monthly installments based on the most
recent estimate(s) until Landlord provides Tenant with the new
estimate. Upon delivery of the new estimate, an adjustment shall be
made for any month for which Tenant paid monthly installments based
on the same year’s prior incorrect estimate(s). Tenant shall
pay Landlord the amount of any underpayment within 30 days
after receipt of the new estimate. Any overpayment shall be
credited against the next sums due and owing by Tenant or, if no
further Rent is due, refunded directly to Tenant within
30 days of determination. The obligation of Tenant to pay for
Excess Operating Expenses as provided herein shall survive the
expiration or earlier termination of this Lease.
C. Reconciliation
of Operating Expenses . Within 120 days after the end
of each calendar year or as soon thereafter as is practicable,
Landlord shall furnish Tenant with a statement of the actual
Operating Expenses and Excess Operating Expenses for such calendar
year. If the most recent estimated Excess Operating Expenses paid
by Tenant for such calendar year are more than the actual Excess
Operating Expenses for such calendar year, Landlord shall apply any
overpayment by Tenant against Rent due or next becoming due;
provided, if the Term expires before the determination of the
overpayment, Landlord shall, within 30 days of determination,
refund any overpayment to Tenant after first deducting the amount
of Rent due. If the most recent estimated Excess Operating Expenses
paid by Tenant for the prior calendar year are less than the actual
Excess Operating Expenses for such year, Tenant shall pay Landlord,
within 30 days after its receipt of the statement of Operating
Expenses, any underpayment for the prior calendar year.
D. Operating
Expenses Defined . “ Operating Expenses
” means all costs and expenses incurred or accrued in each
calendar year in connection with the ownership, operation,
maintenance,
5 Notwithstanding
the foregoing, Tenant’s Pro Rata Share of Controllable
Expenses (defined below) shall not increase by more than 8%
(compounded annually) over Tenant’s Pro Rata Share of
Controllable Expenses in the Base Year. However, any increases in
Excess Operating Expenses not recovered by Landlord due to the
foregoing limitation shall be carried forward into all succeeding
calendar years during the Term (subject to the foregoing
limitation) until fully recouped by Landlord. The term “
Controllable Expenses ” means all Operating Expenses
excluding expenses relating to the cost of utilities, insurance,
real estate taxes and other uncontrollable expenses.
4
management, repair and
protection of the Property which are directly attributable or
reasonably allocable to the Building, including Landlord’s
personal property used in connection with the Property and
including all costs and expenditures relating to the following:
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(1) |
Operation, maintenance, repair and replacements of any part of
the Property, including the mechanical, electrical, plumbing, HVAC,
vertical transportation, fire prevention and warning and security
systems; materials and supplies (such as light bulbs and ballasts);
equipment and tools; floor, wall and window coverings; personal
property; required or beneficial easements; and related service
agreements and rental expenses. |
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(2) |
Administrative and management fees, including accounting,
information and professional services (except for negotiations and
disputes with specific tenants not affecting other parties)
6 ;
management office(s); and wages, salaries, benefits, reimbursable
expenses and taxes (or allocations thereof) for full and part time
personnel involved in operation, maintenance and management
7
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(3) |
Janitorial service; window cleaning; waste disposal; gas, water
and sewer and other utility charges (including add-ons); and
landscaping, including all applicable tools and supplies. |
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(4) |
Property, liability and other insurance coverages carried by
Landlord, including deductibles and risk retention programs and an
allocation of a portion of the cost of blanket insurance policies
maintained by Landlord and/or its affiliates. |
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(5) |
Real estate taxes, assessments, business taxes, excises,
association dues, fees, levies, charges and other taxes of every
kind and nature whatsoever, general and special, extraordinary and
ordinary, foreseen and unforeseen, including interest on
installment payments, which may be levied or assessed against or
arise in connection with ownership, use, occupancy, rental,
operation or possession of the Property (including personal
property taxes for property that is owned by Landlord and used in
connection with the operation, maintenance and repair of the
Property), or substituted, in whole or in part, for a tax
previously in existence by any taxing authority, or assessed in
lieu of a tax increase, or paid as rent under any ground lease.
Real estate taxes do not include 8 Landlord’s
income, franchise or estate taxes (except to the extent such
excluded taxes are assessed in lieu of taxes included above). |
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(6) |
Compliance with Laws, including license, permit and inspection
fees (but not in duplication of capital expenditures amortized as
provided in Section 4.D(9) ) 9 ; and all
expenses and fees, including attorneys’ fees and court or
other venue of dispute resolution costs, incurred in negotiating or
contesting real estate taxes or the validity and/or applicability
of any governmental enactments which may affect Operating Expenses;
provided Landlord shall credit against Operating Expenses any
refunds received from such negotiations or contests to the extent
originally included in Operating Expenses (less Landlord’s
costs). |
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(7) |
Security services, to the extent provided or contracted for by
Landlord. |
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(8) |
Goods and services purchased from Landlord’s subsidiaries
and affiliates to the extent the cost of same is generally
consistent with rates charged by unaffiliated third parties for
similar goods and services. |
6 , provided that
the management fee shall not exceed 4% of gross revenues for the
Property
7 at or below the
level of regional property manager and regional asset manager
8 (A) any
penalties and interest incurred because of the delinquency by
Landlord in timely paying such taxes (unless such penalties and
interest are incurred as a result of Tenant’s failure to
timely pay its portion of such taxes or as a result of
Landlord’s contesting such taxes in good faith), and (B)
9 (only to the
extent that such compliance relates to Laws which are amended,
become effective, or are interpreted or enforced differently, after
the date of this Lease)
5
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(9) |
Amortization of capital expenditures incurred: (A) to
conform with Laws 10 ; (B) to
provide or maintain building standards (other than building
standard tenant improvements); or (C) with the intention of
promoting safety or reducing or controlling increases in Operating
Expenses, such as lighting retrofit and installation of energy
management systems. Such expenditures shall be amortized uniformly
over a reasonable period of time determined by Landlord, together
with interest on the unamortized balance at the Prime Rate (defined
in Section 19.A(6) ) (as of the date incurred) plus
2%. |
E. Exclusions
from Operating Expenses . Operating Expenses exclude the
following expenditures:
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(1) |
Leasing commissions, attorneys’ fees and other expenses
related to leasing tenant space and constructing improvements for
the sole benefit of an individual tenant. |
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(2) |
Goods and services furnished to an individual tenant of the
Building which are above building standard and which are separately
reimbursable directly to Landlord in addition to Excess Operating
Expenses. |
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(3) |
Repairs, replacements and general maintenance paid by insurance
proceeds or condemnation proceeds. |
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(4) |
Except as provided in Section 4.D(9) ,
depreciation, amortization, interest payments on any encumbrances
on the Building and the cost of capital improvements or
additions. |
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(5) |
Costs of installing any specialty service, such as an
observatory, broadcasting facility, luncheon club, or athletic or
recreational club. |
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(6) |
Expenses for repairs or maintenance related to the Property
which have been reimbursed to Landlord pursuant to warranties or
service contracts. |
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(7) |
Compensation paid to clerks, attendants or other persons in
commercial concessions operated by Landlord which customarily sell
products or services to the public, including tenants of the
Building. |
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(8) |
Costs (other than maintenance costs) of any art work (such as
sculptures or paintings) used to decorate the Building. |
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(9) |
Principal payments on indebtedness secured by liens against the
Building, or costs of refinancing such indebtedness. |
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(10) |
Electrical service costs paid separately pursuant to
Section 4.H . |
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11
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10 which are
amended, become effective, or are interpreted or enforced
differently, after the date of this Lease; provided, however, all
capital expenditures made in order to conform to or comply with ADA
shall be included in Operating Expenses other than ADA compliance
work performed as part of the Landlord Work described in the Work
Letter.
| 11
(11) |
Salaries of officers and executives of Landlord, except as
included in Section 4.D(2) . |
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| (12) |
Interest and penalties due to late payment of any amounts owed
by Landlord, except such as may be incurred as a result of
Tenant’s failure to timely pay its portion of such amounts or
as a result of Landlord’s contesting such amounts in good
faith. |
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| (13) |
Legal, auditing, consulting and professional fees paid or
incurred in connection with negotiations for financings,
refinancings or sales of the Property. |
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| (14) |
Costs relating to disputes between Landlord and a specific
tenant of the Building. |
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| (15) |
Costs incurred as a result of an intentional tort by Landlord
or its agents. |
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| (16) |
Costs, penalties and fines incurred due to the violation by
Landlord or any other tenant of the Building of Laws, or the terms
and conditions of any lease pertaining to the Building, except such
as may be incurred by Landlord in contesting in good faith the
alleged violation. |
6
F. Proration of
Operating Expenses; Adjustments . If Landlord incurs
Operating Expenses for the Property together with one or more other
buildings or properties, whether pursuant to a reciprocal easement
agreement, common area agreement or otherwise, the shared costs and
expenses shall be equitably prorated and apportioned by Landlord
between the Property and the other buildings or properties. If the
Building is not 100% occupied during any calendar year or partial
calendar year or if Landlord is not supplying services to 100% of
the total Rentable Square Footage of the Building at any time
during a calendar year or partial calendar year, Operating Expenses
shall be determined as if the Building had been 100% occupied and
Landlord had been supplying services to 100% of the Rentable Square
Footage of the Building during that calendar year. If Tenant pays
for its Pro Rata Share of Operating Expenses based on increases
over a “ Base Year ” and Operating Expenses for
a calendar year are determined as provided in the prior sentence,
Operating Expenses for the Base Year shall also be determined as if
the Building had been 100% occupied and Landlord had been supplying
services to 100% of the Rentable Square Footage of the Building.
The extrapolation of Operating Expenses under this Section shall be
performed by Landlord by adjusting the cost of those components of
Operating Expenses that are impacted by changes in the occupancy of
the Building.
G. Audit
Rights . Within 60 days (the “ Audit Election
Period ”) after Landlord furnishes its statement of
actual Operating Expenses for any calendar year (including the Base
Year), Tenant may, at its expense during Landlord’s normal
business hours, elect to audit Landlord’s Operating Expenses
for such calendar year only, subject to the following conditions:
(1) there is no uncured event of default under this Lease;
(2) the audit shall be prepared by an independent certified
public accounting firm of recognized national standing; (3) in
no event shall any audit be performed by a firm retained on a
“contingency fee” basis; (4) the audit shall
commence within 30 days after Landlord makes Landlord’s
books and records available to Tenant’s auditor and shall
conclude within 60 days after commencement; (5) the audit
shall be conducted where Landlord maintains its books and records
and shall not unreasonably interfere with the conduct of
Landlord’s business; (6) Tenant and its accounting firm
shall treat any audit in a confidential manner and shall each
execute Landlord’s confidentiality agreement for
Landlord’s benefit prior to commencing the audit; and
(7) the accounting firm’s audit report shall, at no
charge to Landlord, be submitted in draft form for Landlord’s
review and comment before the final approved audit report is
delivered to Landlord, and any reasonable comments by Landlord
shall be incorporated into the final audit report. Notwithstanding
the foregoing, Tenant shall have no right to conduct an audit if
Landlord furnishes to Tenant an audit report for the calendar year
in question prepared by an independent certified public accounting
firm of recognized national standing (whether originally prepared
for Landlord or another party). This paragraph shall not be
construed to limit, suspend, or abate Tenant’s obligation to
pay Rent when due, including estimated Excess Operating Expenses.
Landlord shall credit any overpayment determined by the final
approved audit report against the next Rent due and owing by Tenant
or, if no further Rent is due, refund such overpayment directly to
Tenant within 30 days of determination. Likewise, Tenant shall
pay Landlord any underpayment determined by the final approved
audit report within 30 days of determination. The foregoing
obligations shall survive the Expiration Date. If Tenant does not
give written notice of its election to audit Landlord’s
Operating Expenses during the Audit Election Period,
Landlord’s Operating Expenses for the applicable calendar
year shall be deemed approved for all purposes, and Tenant shall
have no further right to review or contest the same. 12
H. Electrical
Costs. In addition to the Excess Operating Expenses, and as
a separate obligation, Tenant shall pay Landlord Tenant’s Pro
Rata Share of the following costs incurred by Landlord which are
directly attributable or reasonably allocable to the Building:
(1) electrical services used in the operation, maintenance and
use of the Property; (2) sales, use, excise and other taxes
assessed by governmental authorities on electrical services
supplied to the Property; and (3) other costs of providing
electrical services to the Property. Tenant shall, with each
monthly payment of Base Rent,
| (17) |
Costs relating to or arising, directly or indirectly, from the
handling, removal, treatment, disposal or replacement of Hazardous
Materials in the Property, which were not caused by the actions of
Tenant, its agents, employees, contractors, subtenants, assignees
or invitees. |
12 If the audit
proves that Landlord’s calculation of Operating Expenses and
electrical costs for the calendar year under inspection was
overstated by more than five percent (5%), then, after
verification, Landlord shall pay Tenant’s actual reasonable
out-of-pocket audit and inspection fees applicable to the review of
said calendar year statement within thirty (30) days after
receipt of Tenant’s invoice therefor.
7
pay Landlord’s
estimate of Tenant’s Pro Rata Share of such electrical
service costs in the same manner as provided for Operating Expenses
in Section 4.B 13
.
5. Tenant’s
Use of Premises .
A. Permitted
Uses . The Premises shall be used only for general office
use (the “ Permitted Use ”) and for no other use
whatsoever. Tenant shall not use or permit the use of the Premises
for any purpose which is illegal, creates obnoxious odors
(including tobacco smoke), noises or vibrations, is dangerous to
persons or property, could increase Landlord’s insurance
costs, or which, in Landlord’s reasonable opinion,
unreasonably disturbs any other tenants of the Building or
interferes with the operation of the Building. Except as provided
below, the following uses are expressly prohibited in the Premises:
schools, government offices or agencies; personnel agencies;
collection agencies; credit unions; data processing, telemarketing
or reservation centers; medical treatment and health care; radio,
television or other telecommunications broadcasting; restaurants
and other retail; customer service offices of a public utility
company; or any other purpose which would, in Landlord’s
reasonable opinion, impair the reputation or quality of the
Building, overburden any of the Building systems, Common Areas or
parking facilities (including any use which would create a
population density in the Premises which is in excess of the
density which is standard for the Building), impair
Landlord’s efforts to lease space or otherwise interfere with
the operation of the Property. Notwithstanding the foregoing, the
following ancillary uses are permitted in the Premises only so long
as they do not, in the aggregate, occupy more than 10% of the
Rentable Square Footage of the Premises or any single floor
(whichever is less): (A) the following services provided by
Tenant exclusively to its employees: schools, training and other
educational services; credit unions; and similar employee services;
and (B) the following services directly and exclusively
supporting Tenant’s business: telemarketing; reservations;
storage; data processing; debt collection; and similar support
services.
B. Compliance
with Laws . Tenant shall comply with all Laws regarding the
operation of Tenant’s business and the use, condition,
configuration and occupancy of the Premises and the use of the
Common Areas. Tenant, within 10 days after receipt, shall
provide Landlord with copies of any notices Tenant receives
regarding a violation or alleged or potential violation of any
Laws. Tenant shall comply with the rules and regulations of the
Building attached as Exhibit B and such other
reasonable rules and regulations (or modifications thereto) adopted
by Landlord from time to time. Such rules and regulations will be
applied in an equitable manner as determined by Landlord. Tenant
shall also cause its agents, contractors, subcontractors,
employees, customers, and subtenants to comply with all rules and
regulations.
C. Tenant’s
Security . Tenant shall (1) lock the doors to the
Premises and take other reasonable steps to secure the Premises and
the personal property of all Tenant Parties (defined in
Section 13.A ) and any of Tenant’s transferees,
contractors or licensees in the Common Areas and parking facilities
of the Building and Property, from unlawful intrusion, theft, fire
and other hazards; (2) keep and maintain in good working order
all security devices installed in the Premises by or for the
benefit of Tenant (such as locks, smoke detectors and burglar
alarms); and (3) cooperate with Landlord and other tenants in the
Building on security matters. Tenant acknowledges that any security
measures employed by Landlord are for Landlord’s own
protection; that Landlord is not a guarantor of the security or
safety of the Tenant Parties or their property; and that such
security matters are the responsibility of Tenant and the local law
enforcement authorities.
6. Security
Deposit . 14 Landlord may,
from time to time while an event of default remains uncured,
without prejudice to any other remedy, use all or a portion of the
Security Deposit to satisfy past due Rent or to cure any uncured
default by Tenant. If Landlord uses the Security Deposit, Tenant
shall on demand restore the Security Deposit to its original
amount. Provided that Tenant has performed all of its obligations
hereunder, Landlord shall return any unapplied portion of the
Security Deposit to
13 , C ,
and F . Any reference in this paragraph to
Section 4.F shall not apply to the gross-up provision
described in Section 4.F . Electrical service costs charged
to Tenant shall not be grossed up, but will instead be charged
based on the method described in this Section 4.H .
Tenant’s Pro Rata Share of electrical service costs shall be
calculated by excluding from the costs described above in this
Section 4.H any services furnished to an individual
tenant of the Building which are above building standard and which
are separately reimbursable directly to Landlord.
14 The parties
have agreed that no Security Deposit will be required of Tenant at
the outset of this Lease. However, if Tenant is thirty
(30) days late paying monthly rentals more than two
(2) times in any twelve (12) month period, then upon
written demand by Landlord, a Security Deposit in an amount equal
to one monthly rental payment shall be delivered by Tenant to
Landlord and retained by Landlord for the remainder of the
Term.
8
Tenant within 30 days
after the later to occur of: (A) the determination of
Tenant’s Pro Rata Share of any Excess Operating Expenses for
the final year of the Term; (B) the date Tenant surrenders
possession of the Premises to Landlord in accordance with this
Lease; or (C) the Expiration Date. If Landlord transfers its
interest in the Premises, Landlord shall assign the Security
Deposit to the transferee and, following the assignment, Landlord
shall have no further liability for the return of the Security
Deposit. Landlord shall not be required to keep the Security
Deposit separate from its other accounts.
7. Services to
be Furnished by Landlord .
A. Standard
Services . Landlord agrees to furnish Tenant with the
following services during the Term:
| |
(1) |
Water service for use in the lavatories on each floor on which
the Premises are located. |
| |
| |
(2) |
Heat and air conditioning in season during Normal Business
Hours, at such temperatures and in such amounts as required by
governmental authority or as Landlord 15 determines are
standard for the Building. Tenant, upon such notice as is
reasonably required by Landlord, and subject to the capacity of the
Building systems, may request HVAC service during hours other than
Normal Business Hours. Tenant shall pay Landlord the standard
charge for the additional service as determined by Landlord from
time to time. |
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(3) |
Maintenance and repair of the Property as described in
Section 9.B . |
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(4) |
Janitorial service five days per week (excluding Holidays), as
determined by Landlord. If Tenant’s use of the Premises,
floor covering or other improvements require special services in
excess of the standard services for the Building, Tenant shall pay
the additional cost attributable to the special services. |
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(5) |
Elevator service, subject to proper authorization and
Landlord’s policies and procedures for use of the elevator(s)
in the Building. |
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(6) |
Exterior window washing at such intervals as determined by
Landlord. |
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(7) |
Electricity to the Premises for general office use, in
accordance with and subject to the terms and conditions in
Article 8 . |
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16 |
B. Service
Interruptions . Landlord’s failure to furnish, or any
interruption or termination of, services due to the application of
Laws, the failure of any equipment, the performance of repairs,
improvements or alterations, or the occurrence of any other event
or cause whether or not within the reasonable control of Landlord
(a “ Service Failure ”), shall not render
Landlord liable to Tenant, constitute a constructive eviction of
Tenant, give rise to an abatement of Rent, or relieve Tenant from
the obligation to fulfill any covenant or agreement. 17 In no event
shall Landlord be liable to Tenant for any loss or damage,
including the theft of Tenant’s Property (defined in
Article 14 ), arising out of or in connection with the
failure of any security services, personnel or equipment.
C. Third Party
Services . If Tenant desires any service which Landlord has
not specifically agreed to provide in this Lease, such as private
security systems or telecommunications services serving the
Premises, Tenant shall procure such service directly from a
reputable third party service provider (“ Provider
”) for Tenant’s own account. Tenant shall require each
Provider to comply with the
15
reasonably
16
(8) Subject to (a) the Building limited access system
being operative, (b) there being no Event of Default for which
Tenant’s time to cure has elapsed, and (c) events of
Force Majeure, Tenant shall have the right of access to the
Premises twenty-four (24) hours per day, seven days per week
during the Term of this Lease.
17 Notwithstanding
the foregoing, commencing on the 11 th consecutive
Business Day of a Service Failure which is beyond the control of
Landlord (unless the Service Failure is caused by a fire or other
casualty, in which event Section 16 controls), Tenant
shall, as its sole remedy, be entitled to an equitable diminution
of Base Rent based upon the pro rata portion of the Premises which
is rendered unfit for occupancy for the Permitted Use, except to
the extent such Service Failure is caused by a Tenant Party.
Commencing on the 6th consecutive Business Day of any Service
Failure within Landlord’s control, (unless the Service
Failure is caused by a fire or other casualty, in which event
Section 16 controls), Tenant shall, as its sole remedy,
be entitled to an equitable diminution of Base Rent based upon the
pro rata portion of the Premises which is rendered unfit for
occupancy for the Permitted Use, except to the extent such Service
Failure is caused by a Tenant Party.
9
Building’s rules and
regulations, all Laws, and Landlord’s reasonable policies and
practices for the Building. Tenant acknowledges Landlord’s
current policy that requires all Providers utilizing any area of
the Building outside the Premises to be approved by Landlord and to
enter into a written agreement acceptable to Landlord prior to
gaining access to, or making any installations in or through, such
area. Accordingly, Tenant shall give Landlord written notice
sufficient for such purposes.
8. Use of
Electrical Services by Tenant .
A.
Landlord’s Electrical Service . Landlord shall
furnish building standard electrical service to the Premises
sufficient to operate customary lighting, office machines and other
equipment of similar low electrical consumption. Landlord may, at
any time and from time to time, calculate Tenant’s actual
electrical consumption in the Premises either by a survey conducted
by a reputable consultant selected by Landlord, or through separate
meters installed, maintained and read by Landlord, all at
Tenant’s expense. The cost of any electrical consumption in
excess of that which Landlord determines is standard for the
Building 18 shall be paid
by Tenant in accordance with Section 8.D . The
furnishing of electrical services to the Premises shall be subject
to the rules, regulations and practices of the supplier of such
electricity and of any municipal or other governmental authority
regulating the business of providing electrical utility service.
Landlord shall not be liable or responsible to Tenant for any loss,
damage or expense which Tenant may sustain or incur if either the
quantity or character of the electrical service is changed or is no
longer available or no longer suitable for Tenant’s
requirements.
B. Selection of
Electrical Service Provider . Landlord reserves the right
to select the provider of electrical services to the Building
and/or the Property. To the fullest extent permitted by Law,
Landlord shall have the continuing right, upon 30 days written
notice, to change such utility provider. All charges and expenses
incurred by Landlord due to any such changes in electrical
services, including maintenance, repairs, installation and related
costs, shall be included in the electrical services costs
referenced in Section 4.H , unless paid directly by
Tenant.
C.
Submetering . Landlord shall have the continuing
right, upon 30 days written notice, to install a submeter for
the Premises at Tenant’s expense 19 . If
submetering is installed for the Premises, Landlord may charge for
Tenant’s actual electrical consumption monthly in arrears at
commercially reasonable rates determined by Landlord (plus, to the
fullest extent permitted by applicable Laws, Landlord’s then
quoted administrative fee for such submetering), except as to
electricity directly purchased by Tenant from third party providers
after obtaining Landlord’s consent to the same. Even if the
Premises are submetered, Tenant shall remain obligated to pay
Tenant’s Pro Rata Share of the cost of electrical services as
provided in Section 4.H , except that Tenant shall be
entitled to a credit against electrical services costs equal to
that portion of the amounts actually paid by Tenant separately and
directly to Landlord which are attributable to building standard
electrical services submetered to the Premises.
D. Excess
Electrical Service . Tenant’s use of electrical
service shall not exceed, in voltage, rated capacity, use beyond
Normal Business Hours or overall load, that which Landlord deems to
be standard for the Building 20 . If Tenant
requests permission to consume excess electrical service, Landlord
may refuse to consent or may condition consent upon conditions that
Landlord reasonably elects (including the installation of utility
service upgrades, meters, submeters, air handlers or cooling
units). The costs of any approved additional consumption (to the
extent permitted by Law), installation and maintenance shall be
paid by Tenant.
9. Repairs and
Alterations .
A. Tenant’s
Repair Obligations . Tenant shall, at its sole cost and
expense, promptly perform all maintenance and repairs to the
Premises that are not Landlord’s express responsibility under
this Lease, and shall keep the Premises in good condition and
repair, ordinary wear and tear excepted.
18 (which standard
shall be set by comparison of the Tenant’s electrical
consumption with the electrical consumption of other general office
use tenants in the Building that do not have submeters)
19 , but only if
Landlord is installing submeters for all tenants or has a
reasonable belief that Tenant’s electrical consumption is
above Building standard
20 (which standard
shall be set by comparison of the Tenant’s overall usage,
voltage rated capacity, use beyond Normal Business Hours, and
overall electrical load with the overall usage, voltage rated
capacity, use beyond Normal Business Hours and overall electrical
load of other general office use tenants in the Building that do
not have submeters)
10
Tenant’s repair
obligations include, without limitation, repairs to: (1) floor
covering and/or raised flooring; (2) interior partitions;
(3) doors; (4) the interior side of demising walls;
(5) electronic, phone and data cabling and related equipment
(collectively, “ Cable ”) that is installed by
or for the benefit of Tenant and located in the Premises or other
portions of the Building; (6) supplemental air conditioning
units, private showers and kitchens, including hot water heaters,
plumbing, dishwashers, ice machines and similar facilities serving
Tenant exclusively; (7) phone rooms used exclusively by
Tenant; (8) Alterations (defined below) performed by
contractors retained by Tenant, including related HVAC balancing;
and (9) all of Tenant’s furnishings, trade fixtures,
equipment and inventory. Landlord reserves the right to perform any
of the foregoing maintenance or repair obligations or require that
such obligations be performed by a contractor approved by Landlord,
all at Tenant’s expense. All work shall be performed in
accordance with the rules and procedures described in
Section 9.C below. If Tenant fails to make any repairs
to the Premises for more than 15 days after notice from
Landlord (although notice shall not be required if there is an
emergency), Landlord may, in addition to any other remedy available
to Landlord, make the repairs, and Tenant shall pay the reasonable
cost of the
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