OFFICE LEASE

Exhibit 10.23

 

OFFICE LEASE

 

BY AND BETWEEN

 

SRI MISSION TOWERS II LLC,

a Delaware limited liability company,

as Landlord

 

and

 

ARTISOFT, INC.,

a Delaware corporation,

(dba “VERTICAL COMMUNICATIONS”)

as Tenant

 

For Suite 400,

3979 Freedom Circle Drive,

Santa Clara, California

 

Dated as of: June 6, 2005

TABLE OF CONTENTS

 

 

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OFFICE LEASE

 

THIS OFFICE LEASE (“Lease”) is entered and dated for reference purposes only as June 6, 2005, by and between “Landlord” and “Tenant” (as such terms are defined below).

 

ARTICLE 1

SALIENT LEASE TERMS

 

 

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2

 

ARTICLE 2

ADDITIONAL DEFINITIONS

 

The terms defined in this Article 2 shall, for all purposes of this Lease and all agreements supplemental hereto, have the meanings herein specified, unless expressly stated otherwise.

 

“ Commencement Date ” shall mean the date on which Landlord shall deliver the Premises to Tenant with the Tenant Improvements Substantially Completed (as such terms are defined in Exhibit C attached hereto) and with Landlord’s Furniture installed in the Premises and the Premises may be legally occupied for general offices purposes.

 

“ Common Areas ” shall mean all areas and facilities outside the Premises within the exterior boundaries of the parcel of land containing the Building of which the Premises form a part, together with the exterior plaza and access areas within the Complex, all as provided and designated by Landlord from time to time for the general use and convenience of Tenant and of other Tenants of Landlord having the common use of such areas, and their respective authorized representatives and invitees. Common Areas include, without limitation, corridors, stairways, elevator shafts, janitor rooms in the Building, the Parking Garage, the driveways and landscaped areas in the Complex as generally outlined on Exhibit A attached hereto. Exhibit A is tentative and Landlord reserves the right to make alterations thereto from time to time.

 

“ Insurance Costs ” shall mean all premiums and costs and expenses for all policies of insurance which may be obtained by Landlord in its discretion for (a) the Premises, the Building, the Parking Garage and the Common Areas of the Complex, and any blanket policies, covering

 

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damage thereto and loss of rents caused by fire and other perils Landlord elects to cover, including, without limitation, coverage for earthquakes and floods, (b) commercial general liability insurance for the benefit of Landlord and its designees, (c) such other coverage Landlord elects to obtain for the Premises, the Building and/or the Common Areas of the Complex, including, without limitation, coverage for environmental liability and losses, and (d) such insurance premiums charged to Landlord under the Reciprocal Easement Agreement.

 

“ Landlord’s Furniture ” means the furniture set forth on Exhibit G attached hereto. Tenant acknowledges that Landlord’s Furniture is and shall remain throughout the Term the property of Landlord. Tenant shall have the right to use Landlord’s Furniture throughout the Term, and upon the expiration or earlier termination of this Lease Tenant shall surrender possession of Landlord’s furniture to Landlord. Tenant shall not remove Landlord’s Furniture from the Premises without the prior written consent of Landlord.

 

“ Lease Year ” means any calendar year, or portion thereof, following the commencement hereof, the whole or any part of which period is included within the term.

 

“ Operating Costs ” means all expenses, costs and disbursements of any kind other than Taxes and Insurance Costs paid, incurred or payable by Landlord, or others on behalf of Landlord, in connection with the ownership, management, operation, maintenance and repair and other related activities in connection with any part of the Building and the Common Areas of the Complex and of the personal property, fixtures, machinery, equipment, systems and apparatus used in connection therewith, in accordance with Landlord’s standard accounting procedures. Operating Costs shall include, but not be limited to, the aggregate of the amount paid for:

 

(1) all gas, electric, water, sewers, oil and other utilities, including any surcharges, imposed, serving the Building and the Common Areas of the Complex;

 

(2) painting for the Building and the Common Areas of the Complex; managerial and administrative expenses;

 

(3) the total charges of any independent contractors employed in the repair, care, operation, maintenance, and cleaning of the Building and/or the Common Areas of the Complex;

 

(4) the amount paid or payable for all supplies occasioned by everyday wear and tear;

 

(5) the costs of window and exterior wall cleaning of the Building and the Common Areas of the Complex; and the cost of landscaping, relamping, and all supplies, tools, equipment and materials used in the operation, repair and maintenance of the Complex, or any portion thereof;

 

(6) the cost of accounting services necessary to compute the rents and charges payable by Tenants and keep the books of the Building and the Common Areas of the Complex;

 

(7) fees for management, including, without limitation, office rent, supplies, equipment, salaries, wages, payroll tax, workers compensation, disability insurance, bonuses and

 

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other compensation (including fringe benefits, vacation, holidays and other paid absence benefits) relating to employees of Landlord or its agents engaged in the management, operation, repair, or maintenance of the Building and/or the Common Areas of the Complex;

 

(8) fees for legal, accounting (including, without limitation, any outside audit as Landlord may elect in its sole and absolute discretion), inspection and consulting services;

 

(9) the cost of porters, guards and other protection services;

 

(10) the cost of establishing and maintaining the Building’s directory board;

 

(11) payments for general maintenance and repairs to the plant and equipment, including supplying climate control to the Building and the Common Areas of the Complex;

 

(12) the cost of supplying all services pursuant to Article 11 hereof to the extent such services are not paid by individual Tenants;

 

(13) the cost for the repair and replacement of all maintenance and cleaning equipment and master utility meters and of the costs incurred for repairing or replacing all other fixtures equipment and facilities serving or comprising the Building and the Common Areas of the Complex;

 

(14) all assessments, costs and charges payable by Landlord under the Reciprocal Easement Agreement, and all community association dues, assessments and charges and property owners’ association dues, assessments and charges which may be imposed upon Landlord by virtue of any recorded instrument affecting title to the Building;

 

(15) all costs to upgrade, improve or change the utility, efficiency or capacity or any utility or telecommunication system serving the Building and the Common Areas of the Complex;

 

(16) the repair and replacement, resurfacing and/or repaving of any paved areas, curbs or gutters within the Building or the Common Areas of the Complex;

 

(17) the repair and replacement of any equipment or facilities serving the Complex; and

 

(18) the cost of any capital repairs, improvements and replacements made by the Landlord to the Building or the Common Areas of the Complex (“ Capital Costs ”). However, certain Capital Costs shall be includable in Operating Costs each year only to the extent of that fraction allocable to the year in question calculated by amortizing such Capital Cost over the reasonably useful life of the improvement resulting therefrom, as determined by Landlord in its good faith discretion, with interest on the unamortized balance at the higher of (i) ten percent (10%) per annum; or (ii) the interest rate as may have been paid by Landlord for the funds borrowed for the purpose of performing the work for which the Capital Costs have been expended, but in no event to exceed the highest rate permissible by law. The Capital Costs subject to such amortization procedure are restricted to the following two categories: (a) those costs for capital improvements to the Building or the Common Areas of the Complex of a type

 

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which do not normally recur more frequently than every five (5) years in the normal course of operation and maintenance of such facilities (specifically excluding painting of all or a portion of the Complex); (b) replacement of capital improvements or Building or Common Area service equipment when required because of normal wear and tear; (c) costs for capital improvements incurred for the purpose of reducing other operating expenses or utility costs, from which Tenant can expect a reasonable benefit, and (d) costs for capital improvements that are required by governmental law, ordinance, regulation or mandate, not applicable to the Complex at the time of the original construction; and

 

(19) the cost of licenses, certificates, permits and inspections and the cost of contesting any governmental enactments which may affect Operating Costs, and the costs incurred in connection with a governmentally mandated transportation system management program or similar program;

 

Operating Costs shall not include the following:

 

(1) legal expenses incurred expressly for negotiating a lease with a particular Tenant, or as a result of a default of a specific Tenant, which negotiations or default does not affect the operation of the Complex;

 

(2) costs of installing leasehold improvements in leaseable space for Tenants or occupants or prospective Tenants or occupants of the Building;

 

(3) real estate brokers’ leasing commissions;

 

(4) legal fees, space planner fees and advertising expenses incurred with regard to leasing the Building or portions thereof;

 

(5) any cost or expenditure to the extent for which Landlord is reimbursed, by insurance proceeds or otherwise, except by a Tenant’s direct or pro rata share of payment;

 

(6) depreciation or amortization of the Building or its contents or components, except to the extent of amortization of Capital Costs as provided above;

 

(7) legal expenses incurred in enforcing the terms of any other lease at the Building; or

 

(8) any bad debt loss, rent loss, or reserve for bad debt or rent loss.

 

“ Parking Garage ” means the parking structure, fixtures and other improvements now located on the Complex as generally depicted in Exhibit A attached hereto. The Parking Garage is located on land not owned by Landlord, but such land and the Parking Garage are subject to the Reciprocal Easement Agreement.

 

“ Proportionate Share ” shall be that fraction (converted to a percentage) the numerator of which is the Rentable Area (hereinafter defined) of the Premises and the denominator of which is the Rentable Area of the Building. Tenant’s Proportionate Share as of the

 

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commencement of the Term hereof is specified in Section 1.12. Said Proportionate Share shall be recalculated by Landlord as may be required effective as at the commencement of any period to which the calculation is applicable in this Lease. Notwithstanding the preceding provisions of this Section, Tenant’s Proportionate Share as to certain expenses may be calculated differently to yield a higher percentage share for Tenant as to certain expenses in the event Landlord permits other Tenants in the Building to directly incur such expenses rather than have Landlord incur the expense in common for the Building (such as, by way of illustration, wherein a Tenant performs its own janitorial services). In such case Tenant’s proportionate share of the applicable expense shall be calculated as having as its denominator the Rentable Area of all floors rentable to Tenants in the Building less the Rentable area of Tenants who have incurred such expense directly. In any case in which Tenant, with Landlord’s consent, incurs such expenses directly, Tenant’s proportionate share will be calculated specifically so that expenses of the same character which are incurred by Landlord for the benefit of other Tenants in the Building shall not be prorated to Tenant. Nothing herein imply that Landlord will permit Tenant or any other Tenant of the Building to incur any Operating Costs. Any such permission shall be in the sole discretion of the Landlord, which Landlord may grant or withhold in its arbitrary judgment.

 

“ Real Estate Taxes ” or “ Taxes ” shall mean and include all general and special taxes, assessments, fees of every kind and nature, duties and levies, charged and levied upon or assessed by any governmental authority against the parcel containing the Building and all other improvements on such parcel, including the various estates in such parcel and the Building and improvements thereon, any leasehold improvements, fixtures, installations, additions and equipment, whether owned by Landlord or Tenant or any other Tenant; except that it shall exclude any taxes of the kind covered by Section 6.1 hereof to the extent Landlord is reimbursed therefore by any Tenant in the Building. Further included in the definition of Taxes herein shall be general and special assessments, license fees, commercial rental tax, levy, or tax (other than inheritance or estate taxes) imposed by any authority having the direct or indirect power to tax, as against any legal or equitable interest of Landlord in the Building, the Common Areas or the Complex, or, as against Landlord’s right to rent or other income therefrom, or as against Landlord’s business of leasing the Premises, the Building, parcel or the Complex, any tax, fee, or charge with respect to the possession, leasing, transfer of interest, operation, management, maintenance, alteration, repair, use, or occupancy by Tenant, of the Premises, the Building, parcel or any portion thereof or the Complex, or any tax imposed in substitution, partially or totally, for any tax previously included within the definition of Taxes herein, or any additional tax, the nature of which may or may not have been previously included within the definition of Taxes.

 

Taxes shall also include the amount of Taxes payable by Landlord under the Reciprocal Easement Agreement for the Parking Garage the parcel of land that contains the Parking Garage.

 

Taxes shall also include the reasonable cost to Landlord of contesting the amount, validity, or the applicability of any Taxes. If at any time during the term of this Lease the method of taxation or assessment of real estate or the income therefrom prevailing at the time of execution hereof shall be, or has been altered so as to cause the whole or any part of the Taxes now or hereafter levied, assessed or imposed on real estate to be levied, assessed or imposed upon Landlord, wholly or partially, as a capital levy, business tax, fee, permit or other charge, or

 

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on or measured by the Rents received therefrom, then such new or altered taxes, regardless of their nature, which are attributable to the land, the Building, the Common Areas or to other improvements on the land shall be deemed to be included within the term Real Estate Taxes or Taxes for purposes of this Section, whether in substitution for, or in addition to any other Real Estate Taxes or Taxes, save and except that such shall not be deemed to include any enhancement of said tax attributable to other income of Landlord. With respect to any general or special assessments which may be levied upon or against the Premises, the Building, the Common Areas or the underlying realty, or which may be evidenced by improvement or other bonds, and may be paid in annual or semi-annual installments, only the amount of such installment, prorated for any partial year, and statutory interest shall be included within the computation of Taxes for which Tenant is responsible hereunder.

 

Notwithstanding anything to the contrary contained in the foregoing definition of Real Estate Taxes, Tenant shall not be responsible or liable for the payment of any state or federal income taxes assessed against Landlord, or any estate, succession or inheritance taxes of Landlord, or corporation franchise taxes imposed upon the corporate owner of the fee of the Building.

 

“ Rent ” means Minimum Monthly Rent and all other sums required to be paid by Tenant pursuant to the terms of this Lease.

 

“ Rent Commencement Date ” means the date that is one hundred eighty (180) days after the Commencement Date. Notwithstanding the foregoing, if the Commencement Date shall have been delayed by reason of Tenant Delay (as defined in Exhibit C attached hereto), then the Rent Commencement Date shall be deemed accelerated by the number of days of such delay.

 

“ Rent Year ” means, as to the Rent Year 1, the period commencing on the Rent Commencement Date and ending on the last day of the twelfth (12 ^th ) full calendar month thereafter, and as to each subsequent Rent Year, the twelve (12) full calendar month period commencing after the expiration of the prior Rent Year, except that the last Rent Year under this Lease shall in any event end on the expiration of this Lease.

 

“ Rentable Area ” as used in the Lease shall be determined as follows:

 

(a) Single Tenant Floor . As to each floor of the Building on which the entire space rentable to Tenants is or will be leased to one Tenant, Rentable Area shall be the entire area bounded by the inside surface of the exterior glass walls on such floor, including all areas used for elevator lobbies, corridors, special stairways, special elevators, restrooms, mechanical rooms, electrical rooms and telephone closets, without deduction for columns and other structural portions of the Building or vertical penetrations that are included for the special use of Tenant, but excluding the area contained within the interior walls of the Building stairs, fire towers, vertical ducts, elevator shafts, flues, vents, stacks, pipe shafts, and the rentable square footage described in Paragraph (c) below.

 

(b) Multi-Tenant Floor . As to each floor of the Building on which space is or will be leased to more than one Tenant, Rentable Area attributable to each such lease shall be the total of (i) the entire area included within the Premises covered by such lease, being the area

 

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bounded by the inside surface of any exterior glass walls, the exterior of all walls separating such Premises from any public corridors or other public areas on such floor, and the centerline of all walls separating such Premises from other areas leased or to be leased to other Tenants on such floors, (ii) a pro rata portion of the area within the elevator lobbies, corridors, restrooms, mechanical rooms, electrical rooms, telephone closets and their enclosing walls situated on such floor and (iii) the rentable square footage described in Paragraph (c) below.

 

(c) Building Load . In any event, Rentable Area shall also include Tenant’s Proportionate Share of the lobbies of the Building and Tenant’s Proportionate Share of the area of the emergency equipment, fire pump equipment, electrical switching gear, telephone equipment and mail delivery facilities servicing the Building.

 

(d) Deemed Square Footage . The Rentable Area of the Premises is deemed to be the square footage set forth in Section 1.4 of this Lease as of the date hereof, and Rentable Area of the Building is deemed to be the square footage set forth in Section 1.5 hereof. From time to time at Landlord’s option, Landlord may re-measure the Rentable Area of the Premises and the Building, which determination shall be conclusive and thereon Tenant’s Proportionate Share shall be adjusted accordingly.

 

“ Structural ” as herein used shall mean any portion of the Premises, the Building or the Common Areas of the Complex which provides bearing support to any other integral member of the Premises, the Building or the Common Areas of the Complex such as, by limitations, the roof structure (trusses, joists, beams), posts, load bearing walls, foundations, girders, floor joists, footings, and other load bearing members constructed by Landlord.

 

“ Tenant Improvements ” shall mean the Tenant improvements, if any, to be constructed pursuant to Exhibit C attached hereto.

 

ARTICLE 3

PREMISES AND COMMON AREAS

 

3.1 Demising Clauses . Landlord hereby leases to Tenant, and Tenant hires from Landlord the Premises, consisting of the approximate square footage listed in the Salient Lease Terms, which the parties agree shall be deemed the actual square footage, subject to change by Landlord in connection with changes in the Rentable Area of the floor on which the Premises are located or as otherwise permitted pursuant to this Lease.

 

3.2 Reservation . Landlord reserves the area beneath and above the Building as well as the exterior thereof together with the right to install, maintain, use, repair and replace repairs pipes, ducts, conduits, wires, and structural elements leading through the Premises serving other parts of the Building and the Common Areas of the Complex, so long as such items are concealed by walls, flooring or ceilings. Such reservation in no way affects the maintenance obligations imposed herein. Landlord may change the shape, size, location, number and extent of the improvements to any portion of the Building or the Common Areas of the Complex and/or the address or name of the Building without the consent of Tenant.

 

3.3 Covenants, Conditions and Restrictions . The parties agree that this Lease is subject to effect of (a) any covenants, conditions, restrictions, easements, mortgages or deeds of

 

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trust, ground leases, rights of way of record, and any other matters or documents of record, including, without limitation, the Reciprocal Easement Agreement referred to in the Salient Lease Terms; (b) any zoning laws of the city, county and state where the Complex is situated; and (c) general and special taxes not delinquent. Tenant agrees that as to its leasehold estate, Tenant and all persons in possession or holding under Tenant will conform to and will not violate the terms of any covenants, conditions or restrictions of record which may now or hereafter encumber the Building or the Complex (collectively, the “restrictions”). This Lease is subordinate to the restrictions and any amendments or modifications thereof.

 

3.4 Common Areas . Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Landlord under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Building or the Complex. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Landlord or Landlord’s designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord.

 

(a) Common Areas—Changes . Landlord shall have the right, in Landlord’s sole discretion, from time to time, exercisable without notice and without liability to Tenant for damage or injury to property, person or business and without effecting an eviction, constructive or actual, or disturbance of Tenant’s use or possession of the Premises or giving rise to any claim for rent abatement.

 

(1) To make changes and reductions to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas and walkways;

 

(2) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available;

 

(3) To designate other land outside the boundaries of the Building to be a part of the Common Areas;

 

(4) To add additional improvements to the Common Areas;

 

(5) To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Building or the Complex, or any portion thereof;

 

(6) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas, the Building and the Complex as Landlord may, in the exercise of sound business judgment, deem to be appropriate.

 

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(b) Common Area Maintenance . Landlord shall, in Landlord’s sole discretion, maintain the Common Areas (subject to reimbursement pursuant to this Lease), establish and enforce reasonable rules and regulations concerning such areas, close any of the Common Areas to whatever extent required in the opinion of Landlord’s counsel to prevent a dedication of any of the Common Areas or the accrual of any rights of any person or of the public to the Common Areas, close temporarily any of the Common Areas for maintenance purposes, and make changes to the Common Areas including, without limitation, changes in the location of driveways, corridors, entrances, exists, the designation of areas for the exclusive use of others, the direction of the flow of traffic or construction of additional buildings thereupon. Landlord may provide security for the Common Areas, but is not obligated to do so. Under no circumstances shall Landlord be liable or responsible for any acts or omissions of any party providing any services to the Common Areas, the Building or other improvements, including, without limitation, any security service, notwithstanding anything to the contrary contained in this Lease. As of the date hereof, the owner of the Mission Tower One Building (as defined in Section 3.4(c)(1) below) maintains the Parking Garage.

 

(c) Parking . Provided Tenant is not in default or breach of any term or provision of this Lease or has not vacated the Premises, Tenant is allocated and shall have the non-exclusive right on an unassigned and unreserved basis to use, without charge, not more than the number of parking spaces specified in Section 1.15 hereof for use by Tenant and its directors, officers, employees, contractors, suppliers, agents, subtenants, licensees, occupants and invitees (“ Tenant Parties ”), the location of which may be designated from time to time by Landlord (the “ Parking Spaces ”). At no time, may Tenant or any of Tenant’s Parties use more than the number of Parking Spaces specified above.

 

(1) Operation . The Parking Spaces allocated to Tenant are located in the Parking Garage. The Parking Garage is located on land that is owned by the owner of the adjacent building located at 3975 Freedom Circle Drive, Santa Clara, California (“ Mission Tower One Building ”). The Parking Garage is subject to the Reciprocal Easement Agreement and is operated and maintained by the owner of the Mission Tower One Building. The Parking Garage provides parking for the Building and the Mission Tower One Building.

 

(2) General Procedures . The unreserved parking spaces hereunder may be provided on an unreserved valet parking basis. The Parking Spaces initially will not be separately identified, however Landlord reserves the right in its sole and absolution discretion to separately identify by signs or other markings the area where Tenant’s Parking Spaces will be located. Landlord or the owner of the Mission Tower One Building may arrange for the Parking Garage to be operated by an independent contractor. Tenant acknowledges that Landlord shall have no liability for claims arising through acts or omissions of such operator. Landlord shall have no obligation to monitor the use of such parking facility, nor shall Landlord be responsible for any loss or damage to any vehicle or other property or for any injury to any person. Said Parking Spaces shall be used only for parking of automobiles no longer than full size passenger automobiles, sport utility vehicles or pickup trucks. Tenant shall comply with all rules and regulations which may be adopted by Landlord or the owner of Mission Tower One Building or the operator of the Parking Garage from time to time.

 

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(3) Usage . Tenant shall not at any time use more parking spaces than the number so allocated to Tenant or park its vehicles or the vehicles of others in any portion of the Complex designated as an exclusive parking area. Tenant shall not have the exclusive right to use any specific parking space. All trucks and delivery vehicles shall be (i) parked in area designated for such vehicles, (ii) located and unloaded in a manner which does not interfere with the businesses of other occupants of the Complex, and (iii) permitted to remain on the Complex only so long as is reasonably necessary to complete loading and unloading. In the event Landlord elects or is required by any law to limit or control parking in the Complex, whether by validation of parking tickets or any other method of assessment, Tenant agrees to participate in such validation or assessment program under such reasonable rules and regulations as are from time to time established by Landlord.

 

(4) Identification . Tenant shall furnish Landlord with a list of its employees’ vehicle license numbers within fifteen (15) days after taking possession of the Premises and thereafter shall notify Landlord of any changes within five (5) business days after request by Landlord. Landlord also reserves the right to implement a system requiring that all employees of Tenant attach a parking sticker or parking permit to its vehicle.

 

(5) Remedies . Tenant acknowledges and agrees that a breach of the parking provisions by Tenant or any of Tenant’s Parties may seriously interfere with Landlord’s operation of the Complex and with the rights or occupancy by other tenants of the Complex and in the Mission Tower One Building. Accordingly, Landlord may suffer damages that are not readily ascertainable. Therefore, if Tenant or any of Tenant’s Parties use more than the number of allocated Parking Spaces, or park other than such designated by Landlord for the Parking Spaces, or otherwise fail to comply with any of the foregoing provisions, then Landlord, in addition to any other rights or remedies available at law or in equity or under the Lease, may charge Tenant, as liquidated damages, Twenty-Five Dollars ($25.00) per day for the first such violation and Fifty Dollars ($50.00) per day for each subsequent violation, and Tenant shall pay such charge within thirty (30) days after request by Landlord. Each vehicle parked in violation of the foregoing provisions shall be deemed a separate violation. In addition, Landlord may immobilize and/or tow from the Complex any vehicle parked in violation hereof, and/or attach violation stickers or notices to such vehicle. The cost to remove any such vehicle shall be paid by Tenant within ten (10) days after request by Landlord.

 

ARTICLE 4

TERM OF POSSESSION

 

4.1 Commencement Date . The Term of this Lease shall commence on the Commencement Date and shall be for the term specified in Section 1.8 hereof (which includes as set forth in Section 1.8 any partial month at the commencement of the Term if the Term commences other than on the first day of the calendar month).

 

4.2 Acknowledgment of Commencement . After delivery of the Premises to Tenant, Tenant shall execute a written acknowledgement of the date of commencement in the form attached hereto as Exhibit D , and by this reference it shall be incorporated herein. The failure of Tenant to execute such acknowledgment or the failure of Landlord to request such acknowledgment shall not delay or extent or otherwise affect the start of the Commencement Date or any obligation of Tenant to pay any Rent or perform other obligations under this Lease.

 

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4.3 Pre-Term Possession . If the Premises are to be constructed or remodeled by Landlord, Landlord may notify Tenant when the Premises are ready for Tenant’s fixturing or Tenant’s work, which may be prior to substantial completion of the Premises by Landlord. Tenant may thereupon enter the Premises for such purposes at its own risk, to make such improvements as Tenant shall have the right to make, to install fixtures, supplies, inventory and other property. Tenant agrees that it shall not in any way interfere with the progress of Landlord’s work by such entry. Should such entry prove an impediment to the progress of Landlord’s work, in Landlord’s judgment, Landlord may demand that Tenant forthwith vacate the Premises until such time as Landlord’s work is complete, and Tenant shall immediately comply with this demand. During the course of any pre-term possession, whether such pre-term period arises because of an obligation of construction on the part of Landlord, or otherwise, all terms and conditions of this Lease, except for rent and commencement, shall apply, particularly with reference to indemnity by Tenant of Landlord under section 10.4 and 14.4.

 

4.4 Delay . If Landlord, for any reason whatsoever, cannot deliver possession of the Premises to Tenant with the Tenant Improvements Substantially Completed at the Estimated Commencement Date, this Lease shall not be void or voidable, nor shall Landlord be liable for any loss or damage resulting therefrom, but in that event, there shall be no accrual of Rent for the period between the Estimated Commencement Date and the Commencement Date, except if the delay is due to a Tenant Delay. If Landlord cannot deliver the Premises to Tenant within four (4) months beyond the Estimated Commencement Date, as such four (4) month period shall be extended by reason of fire, flood or other casualty, then Landlord or Tenant may elect to terminate this Lease by notice to the other party given within ten (10) days after the expiration of such four (4) month period, as so extended.

 

4.5 Acceptance of Work . Within fifteen (15) days following the date Tenant takes possession of the Premises, Tenant may provide Landlord with a punch list which sets forth any corrective work to be performed by Landlord with respect to work performed by Landlord; provided, however, that Tenant’s obligation to pay Rent and other sums under this Lease shall not be affected thereby. If Tenant fails to submit a punch list to Landlord within such fifteen (15) day period, Tenant agrees that by taking possession of the Premises it will conclusively be deemed to have inspected the Premises and found the Premises in satisfactory condition, with all work required of Landlord completed. Tenant acknowledges that neither Landlord, nor any agent, employee or servant of Landlord, has made any representation or warranty, expressed or implied, with respect to the Premises, the Building or the Common Areas of the Complex, or with respect to the suitability of them to the conduct of Tenant’s business, nor has Landlord agreed to undertake any modifications, alterations, or improvements of the Premises, the Building or the Common Areas of the Complex, except as specifically provided in this Lease.

 

4.6 Failure to Take Possession . Tenant’s inability or failure to take possession of the Premises when delivery is tendered by Landlord shall not delay the Commencement Date of the Lease or Tenant’s obligation to pay Rent. Tenant acknowledges that Landlord shall incur significant expenses upon the execution of this Lease, even if Tenant never takes possession of

 

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the Premises, including, without limitation, brokerage commissions and fees, legal or other professional fees, the costs of space planning and the costs of construction of Tenant Improvements in the Premises. Tenant acknowledges that all of said expenses, in addition to all other expenses incurred and damages suffered by Landlord, shall be included in measuring Landlord’s damages should Tenant breach the terms of this Lease.

 

ARTICLE 5

MINIMUM MONTHLY RENT

 

5.1 Payment . Tenant shall pay to Landlord at the address specified in Section 1.1, or at such other place as Landlord may otherwise designate, as “Minimum Monthly Rent” for the Premises the amount specified in Section 1.9 hereof, payable in advance commencing on the Rent Commencement Date and continuing thereafter on the first day of each month during the Term of the Lease. If the Term commences on other than the first day of a calendar month, the rent for the first partial month shall be prorated accordingly. All payments of Minimum Monthly Rent and other Rent shall be in lawful money of the United States, and payable without deduction, offset, counterclaim, or, except as expressly provided in this Lease, prior notice or demand.

 

5.2 Advance Rent . The amount specified in Section 1.9(B) hereof is paid herewith to Landlord upon execution of this Lease as advance rent, receipt of which is hereby acknowledged, and such shall be applied by Landlord to the first Minimum Monthly Rent due hereunder; provided, hereunder, that prior to such application such amount shall be held by Landlord as an additional “security deposit” pursuant to this Lease.

 

5.3 Late Payment . If during any twelve (12) month period, Tenant fails to pay Rent within five (5) days after receipt of notice that payment is past due on more than three occasions, then Landlord may, by giving written notice to Tenant, require that Tenant pay the Minimum Monthly Rent and other Rent to Landlord quarterly in advance.

 

ARTICLE 6

ADDITIONAL RENT

 

6.1 Personal Property, Gross Receipts, Leasing Taxes . This section is intended to deal with impositions or taxes directly attributed to Tenant or this transaction, as distinct from taxes attributable to the Building or the Common Areas of the Complex which are to be allocated among various tenants and others. Tenant shall pay before delinquency any and all taxes, assessments, license fees and public charges levied, assessed or imposed against Tenant or Tenant’s estate in this Lease or the property of Tenant situated within the Premises which become due during the Term. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments. If such taxes are included in the bill for the Real Estate Taxes for the Building or the Complex, then Tenant shall pay to Landlord as additional rent the amount of such taxes within thirty (30) days after demand from Landlord.

 

6.2 Operating Costs, Taxes and Insurance.

 

(a) Adjustment . Operating Costs, Insurance Costs and Taxes for any Lease Year shall be calculated on the basis of the greater of (i) actual Operating Costs, Taxes and

 

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Insurance Costs; or (ii) what Operating Costs, Insurance Costs and Taxes would have been if the Building were at least one hundred percent (100%) occupied and operational for the whole of such Lease Year to take into consideration any such costs that may fluctuate with occupancy. Operating Costs, Insurance Costs and Taxes shall be calculated separately for each such category of costs.

 

(b) Partial Year . If any Lease Year of less than twelve (12) months is included within the Term, the amount payable by Tenant for such period shall be prorated on a per diem basis (utilizing a thirty (30) day month, three hundred sixty (360) day year).

 

6.3 Method of Payment . Any additional Rent payable by Tenant under Sections 6.1 and 6.2 hereof shall be paid as follows, unless otherwise provided:

 

(a) Tenant Payment . Commencing as of the Rent Commencement Date, and continuing thereafter during the Term, Tenant shall pay to Landlord Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes, as additional Rent as hereinafter provided. Tenant shall pay to Landlord monthly in advance with its payment of Minimum Monthly Rent, one-twelfth (1/12 ^th ) of the amount of such additional Rent as estimated by Landlord in advance, in good faith, to be due from Tenant. If at any time during the course of the fiscal year, Landlord determines that Operating Costs, Insurance Costs and/or Taxes are projected to vary from the then estimated respective costs for such items by more than five percent (5%) or there is a special or non-reoccurring charge under the Reciprocal Easement Agreement, Landlord may, by written notice to Tenant, revise the estimated Operating Costs, Insurance Costs and/or Taxes for the balance of such fiscal year, and Tenant’s monthly installments for the remainder of such year shall be adjusted so that by the end of such fiscal year Tenant will have paid to Landlord, Tenant’s Proportionate Share of the such revised expenses for such year.

 

(b) Annual Reconciliation . Annually, as soon as is reasonably possible after the expiration of each Lease Year, Landlord shall prepare in good faith and deliver to Tenant a comparative statement, which statement shall be conclusive between the parties hereto, setting forth (1) the Operating Costs, Taxes and Insurance Costs for such Lease Year, and (2) the amount of additional Rent as determined in accordance with the provisions of this Article 6.

 

(c) Adjustment . If the aggregate amount of such estimated additional Rent payments made by Tenant in any Lease Year should be less than the additional Rent due for such year, then Tenant shall pay to Landlord as additional Rent upon demand the amount of such deficiency. If the aggregate amount of such additional Rent payments made by Tenant in any Lease Year of the Term should be greater than the additional Rent due for such year, then should Tenant not be otherwise in default hereunder, the amount of such excess will be applied by Landlord to the next succeeding installments of such additional Rent due hereunder, and if there is any such excess for the last year of the Term, the amount thereof will be refunded by Landlord to Tenant within sixty (60) days of the last day of the Term, provided Tenant is not otherwise in default under the terms of this Lease.

 

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ARTICLE 7

ACCORD AND SATISFACTION

 

7.1 Acceptance of Payment . No payment by Tenant or receipt by Landlord of a lesser amount of Minimum Monthly Rent or any other sum due hereunder, shall be deemed to be other than on account of the earliest due rent or payment, nor shall any endorsement or statement on any check or any letter accompanying any such check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or payment or pursue any other remedy available in this Lease, at law or in equity. Landlord may accept any partial payment from Tenant without invalidation of any contractual notice required to be given herein (to the extent such contractual notice is required) and without invalidation of any notice required to be given pursuant to California Code of Civil Procedure Section 1161 et seq. , or of any successor statute thereto.

 

ARTICLE 8

LETTER OF CREDIT

 

8.1 Letter of Credit . Tenant shall deliver to Landlord concurrently with its execution of this Lease, as security for the performance of Tenant’s covenants and obligations under this Lease, an original irrevocable standby letter of credit (the “Letter of Credit”) in the amount specified in the Salient Lease Terms above, naming Landlord as beneficiary, which Landlord may draw upon to cure any default under this Lease (or any breach under this Lease where there exist circumstances under which Landlord is enjoined or otherwise prevented by operation of law from giving to Tenant a written notice which would be necessary for such failure of performance to constitute a default under this Lease), or to compensate Landlord for any damage Landlord incurs as a result of Tenant’s failure to perform any of its obligations hereunder. Any such draw on the Letter of Credit shall not constitute a waiver of any other rights of Landlord with respect to such default or failure to perform. The Letter of Credit shall be issued by a major commercial bank reasonably acceptable to landlord, with a San Francisco, California, service and claim point for the Letter of Credit, have an expiration date not earlier than the sixtieth (60 ^th ) day after the Expiration Date (or, in the alternative, have a term of not less than one (1) year and be automatically renewable for an additional one (1) year period unless notice of non-renewal is given by the issuer to Landlord not later than sixty (60) days prior to the expiration thereof) and shall provide that Landlord may make partial and multiple draws thereunder, up to the face amount thereof. In addition, the Letter of Credit shall provide that, in the event of Landlord’s assignment or other transfer of its interest in this Lease, the Letter of Credit shall be freely transferable by Landlord, without charge and without recourse, to the assignee or transferee of such interest and the bank shall confirm the same to Landlord and such assignee or transferee. The Letter of Credit shall provide for payment to Landlord upon the issuer’s receipt of a sight draft from Landlord together with a statement by Landlord that the requested sum is due and payable from Tenant to Landlord in accordance with the provisions of this Lease, shall be in the form attached here to as Exhibit F , and otherwise be in form and content satisfactory to Landlord. If the Letter of Credit has an expiration date earlier than sixty (60) days after the Expiration Date, then throughout the term hereof (including any renewal or extension of the term) Tenant shall provide evidence of renewal of the Letter of Credit to Landlord at least sixty (60) days prior to the date the Letter of Credit expires. If Landlord draws on the Letter of Credit pursuant to the terms hereof, Tenant shall immediately replenish the Letter of Credit or provide

 

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Landlord with an additional letter of credit conforming to the requirement of this paragraph so that the amount available to Landlord from the Letter of Credit(s) provided hereunder is the amount specified above. Tenant’s failure to deliver any replacement, additional or extension of the Letter of Credit, or evidence of renewal of the Letter of Credit, within the time specified under this Lease shall entitle Landlord to draw upon the Letter of Credit then in effect. If Landlord liquidates the Letter of Credit as provided in the preceding sentence, Landlord shall hold the funds received from the Letter of Credit as security for Tenant’s performance under this Lease, this Paragraph 6 shall be deemed a security agreement for such purposes and for purposes of Division 9 of the California Uniform Commercial Code, Landlord shall be deemed to hold a perfected, first priority security interest in such funds, and Tenant does herby authorize Landlord to file such financing statements or other instruments as Landlord shall deem advisable to further evidence and/or perfect such security interest. Landlord shall not be required to segregate such security deposit from its other funds and no interest shall accrue or be payable to Tenant with respect thereto. No holder of a mortgage, deed of trust or other security instrument affecting the Complex, nor any purchaser at any judicial or private foreclosure sale of the Complex or any portion thereof, shall be responsible to Tenant for such security deposit unless and only to the extent such holder or purchaser shall have actually received the same. If Tenant is not in default at the expiration or termination of this Lease, within sixty (60) days thereafter Landlord shall return to Tenant the Letter of Credit or the balance of the security deposit then held by Landlord, as applicable; provided, however, that in no event shall any such return be construed as an admission by landlord that Tenant has performed all of its covenants and obligations hereunder. Tenant hereby unconditionally and irrevocably waives the benefits and protections of California Civil Code Section 1950.7, and, without limitation of the scope of such waiver, acknowledges that Landlord may use all or any part of the Letter of Credit or the proceeds thereof to compensate Landlord for damages resulting from termination of this Lease and the tenancy created hereunder (including, without limitation, damages recoverable under California Civil Code Section 1951.2).

 

8.2 Reduction of Letter of Credit Amount . Notwithstanding the foregoing, the amount of the Letter of Credit required hereunder shall reduce by the amount of Seventy Thousand Dollars ($70,000.00) on the first day of the thirtieth (30 ^th ) full calendar month after the Rent Commencement Date (the “Reduction Date”). Notwithstanding the foregoing, if a default by Tenant under this Lease shall have occurred and be continuing as of the Reduction Date (or any breach under this Lease where there exist circumstances under which Landlord is enjoined or otherwise prevented by operation of law from giving to Tenant a written notice which would be necessary for such failure of performance to constitute a default under this Lease), the required amount of the Letter of Credit shall not reduce on the Reduction Date and shall not thereafter reduce until thirty (30) days after such default or breach is timely cured in accordance with the provisions of this Lease. If Tenant is entitled to any such reduction, Landlord shall cooperate with Tenant upon Tenant’s request to replace or amend the then existing Letter of Credit to reflect such reduced amount required hereunder.

 

ARTICLE 9

USE

 

9.1 Permitted Use . The Premises shall be used and occupied only for the purposes specified in Section 1.11 hereof, and for no other purpose or purposes. Tenant shall promptly

 

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comply with all laws, ordinances, orders and regulations affecting the Premises, their cleanliness, safety, occupation and use. Tenant shall not use, or permit to be used, the Premises in any manner which in Landlord’s reasonable judgment would: (a) cause damage to the Building or any equipment, facilities or other systems therein; (b) impair the appearance of the Building; (c) interfere with the efficient and economical maintenance, operation and repair of the Premises or the Building or the equipment, facilities or systems thereof; (d) adversely affect any service provided to, and/or the use and occupancy by, any Building tenant or occupants; (e) violate the certificate of occupancy issued for the Premises or the Building; (f) materially and adversely affect the first-class image of the Building; or (g) result in protests or civil disorder or commotions at, or other disruptions of the normal business activities in, the Building. In addition, the Premises or any portion thereof may not be used for (i) a restaurant or bar; (ii) the preparation, consumption, storage, manufacture or sale of food or beverages (except in connection with vending machines (provided that each machine, where necessary, shall have a water proof pan thereunder and be connected to a drain) and/or warming kitchens installed for the use of Tenant’s employees only), liquor, tobacco or drugs; (iii) the business of photocopying, Multilith or offset printing (except photocopying in connection with Tenant’s own business); (iv) a school or classroom; (v) lodging or sleeping; (vi) the operation of retail facilities (meaning a business whose primary patronage arises from the generalized solicitation of the general public to visit Tenant’s offices in person without a prior appointment) of a savings and loan association or retail facilities of any financial, lending, securities brokerage or investment activity; (vii) a payroll office; (viii) a barber, beauty or manicure shop; (ix) an employment agency or similar enterprise; (x) offices of any governmental authority or agency, any foreign government, the United Nations, or any agency or department of the foregoing; (xi) the rendering of medical, dental or other therapeutic or diagnostic services; (xii) the operation of any non-profit or charitable organization, or (xiii) any illegal purposes or any activity constituting a nuisance.

 

9.2 Safes, Heavy Equipment . Tenant shall not place a load upon any floor of the Premises which exceeds the lesser of fifty (50) pounds per square foot live load or such other amount specified in writing by Landlord from time to time. Landlord reserves the right to prescribe the weight and position of all safes and heavy installations which Tenant wishes to place in the Premises so as properly to distribute the weight thereof, or to require plans prepared by a qualified structural engineer at Tenant’s sole cost and expense for such heavy objects. Notwithstanding the foregoing, Landlord shall have no liability for any damage caused by the installation of such heavy equipment or safes.

 

9.3 Machinery . Business machines and mechanical equipment belonging to Tenant which cause noise and/or vibration that may be transmitted to the structure of the Building or to any other leased space to such a degree as to be objectionable to Landlord or to any tenants in the Complex shall be placed and maintained by the party possessing the machines or equipment, at such party’s expense, in settings of cork, rubber or spring type noise and/or vibration eliminators, and Tenant shall take such other measures as needed to eliminate vibration and/or noise. If the noise or vibrations cannot be eliminated, Tenant must remove such equipment within ten (10) days following written notice from Landlord.

 

9.4 Waste or Nuisance . Tenant shall not commit, or suffer to be committed, any waste upon the Premises, or any nuisance, or other act or thing which may disturb the quiet enjoyment of any other tenant or occupant of the Complex in which the Premises are located.

 

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9.5 Operation . Tenant shall continuously during the entire Term, conduct and carry on Tenant’s business in the Premises during normal business hours, and shall keep the Premises open for business and cause Tenant’s business to be conducted therein during such business hours of each and every business day; provided, however, that this provision shall not apply if Tenant’s business shall be temporarily shut down on account of strikes, lockouts or causes beyond the control of Tenant (financial inability excepted). If Tenant shall abandon, vacate or surrender the Premises, or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and remaining on the Premises after such event shall, at the option of Landlord, be deemed abandoned.

 

ARTICLE 10

COMPLIANCE WITH LAWS AND REGULATIONS

 

10.1 Compliance Obligations . Tenant shall, at its sole cost and expense, comply with all of the requirements of all municipal, state and federal authorities now in force, or which may hereafter be in force, pertaining to the Premises, and shall faithfully observe in the use or occupancy of the Premises all municipal ordinances and state and federal statutes, laws and regulations now or hereafter in force, including, without limitation, the “Environmental Laws” (as hereinafter defined), and the Americans with Disabilities Act, 42 U.S.C. §§12101-12213 (and any rules, regulations, restrictions, guidelines, requirements or publications promulgated or published pursuant thereto), whether or not any of the foregoing were foreseeable or unforeseeable at the time of the execution of this Lease. Tenant’s obligation to comply with and observe such requirements, ordinances, statutes and regulations shall apply regardless of whether such requirements, ordinances, statutes and regulations regulate or relate to Tenant’s particular use of the Premises or regulate or relate to the use of premises in general, and regardless of the cost thereof. The judgment of any court of competent jurisdiction, or the admission of Tenant in any action or proceeding against Tenant, whether Landlord be a party thereto or not, that any such requirement, ordinance, statute or regulation pertaining to the Premises has been violated, shall be conclusive of that fact as between Landlord and Tenant.

 

10.2 Condition of Premises . Subject to Landlord’s work, if any, as referred to in Exhibit C to this Lease, Tenant hereby accepts the Premises in the condition existing as of the date of occupancy, subject to all applicable zoning, municipal, county and state laws, ordinances, rules, regulations, orders, restrictions of record, and requirements in effect during the Term or any part of the Term hereof regulating the Premises, and without representation, warranty or covenant by landlord, express or implied, as to the condition, habitability of safety of the Premises, the suitability or fitness thereof for their intended purposes, or any other matter.

 

10.3 Hazardous Materials.

 

(a) Hazardous Materials . As used herein, the term “ Hazardous Materials ” shall mean any wastes, materials or substances (whether in the form of liquids, solids or gases, and whether or not airborne), which are or are deemed to be (i) pollutants or contaminants, or which are or are deemed to be hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or injurious, or which present a risk to public health or to the environment, or which are or may become regulated by or under the authority of any applicable local, state or federal laws, judgments, ordinances, orders, rules, regulations, codes or other governmental restrictions,

 

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guidelines or requirements, any amendments or successor(s) thereto, replacements thereof or publications promulgated pursuant thereto, including, without limitation, any such items or substances which are or may become regulated by any of the Environmental Laws (as hereinafter defined); (ii) listed as a chemical known to the State of California to cause cancer or reproductive toxicity pursuant to Section 25249.8 of the California Health and Safety Code, Division 20, Chapter 6.6 (Safe Drinking Water and Toxic Enforcement Act of 1986); or (iii) a pesticide, petroleum, including crude oil or any fraction thereof, asbestos or an asbestos-containing material, a polychlorinated biphenyl, radioactive material, or urea formaldehyde.

 

(b) Environmental Laws . In addition to the laws referred to in Section 10.3(a) above, the term “ Environmental Laws ” shall be deemed to include, without limitation, 33 U.S.C. Section 1251 et seq. , 42 U.S.C. Section 6901 et seq. , 42 U.S.C. Section 7401 et seq. , 42 U.S.C. Section 9601 et seq. , and California Health and Safety Code Section 25100 et seq. , and 25300 et seq. , California Water Code, Section 13020 et seq. , or any successor(s) thereto, all local, state and federal laws, judgments, ordinances, orders, rules, regulations, codes and other governmental restrictions, guidelines and requirements, any amendments and successors thereto, replacements thereof and publications promulgated pursuant thereto, which deal with or otherwise in any manner relate to, air or water quality, air emissions, soil or ground conditions or other environmental matters of any kind.

 

(c) Use of Hazardous Materials . Tenant agrees that during the Term of this Lease, there shall be no use, presence, disposal, storage, generation, leakage, treatment, manufacture, import, handling, processing, release, or threatened release of Hazardous Materials on, from or under the Premises (individually and collectively, “Hazardous Use”) except to the extent that, and in accordance with such conditions as, Landlord may have previously approved in writing in its sole and absolute discretion. However, without the necessity of obtaining such prior written consent, Tenant shall be entitled to use and store only those hazardous Materials which are (i) typically used in the ordinary course of business in an office for use in the manner for which they were designed and in such limited amounts as may be normal, customary and necessary for Tenant’s business in the Premises, and (ii) in full compliance with Environmental Laws, and all judicial and administrative decisions pertaining thereto. For the purposes of this Section 10.3(c), the term Hazardous Use shall include Hazardous Use(s) on, from or under the Premises by Tenant or any of Tenant’s Parties (as defined in Section 3.4(c) hereof), whether known or unknown to Tenant, and whether occurring and/or existing during or prior to the commencement of the Term of this Lease.

 

(d) Compliance . Tenant agrees that during the Term of this Lease Tenant shall not be in violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene, soil, water, or environmental conditions on, under or about the Premises including, but no limited to, the Environmental Laws.

 

(e) Inspection and Testing by Landlord . Landlord shall have the right at all times during the term of this Lease to (i) inspect the Premises and to (ii) conduct tests and investigations to determine whether Tenant is in compliance with the provisions of this Section. Except in case of emergency, Landlord shall give reasonable notice to Tenant before conducting any inspections, tests, or investigations. The cost of all such inspections, tests and investigations shall be borne by Tenant, if Tenant is in breach of Section 10.3 of this Lease. Neither any action

 

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nor inaction on the part of Landlord pursuant to this Section 10.3(e) shall be deemed in any way to release Tenant from, or in any way modify or alter, Tenant’s responsibilities, obligations, and/or liabilities incurred pursuant to Section 10.3 hereof.

 

(f) Indemnity . Tenant shall indemnify, hold harmless, and, at Landlord’s option (with such attorneys as Landlord may approve in advance and in writing), defend Landlord and Landlord’s officers, directors, shareholders, partners, members, managers, employees, contractors, property managers, agents and mortgagees and other lien holders, from and against any and all “Losses” (hereinafter defined) arising from or related to: (a) any violation or alleged violation by Tenant or any of Tenant’s Parties of any of the requirements, ordinances, statutes, regulations or other laws referred to in this Article 10, including, without limitation, the Environmental Laws; (b) any breach of the provisions of this Article 10 by Tenant or any of Tenant’s Parties; or (c) any Hazardous Use on, about or from the Premises of any Hazardous Material approved by Landlord under this Lease. The term “ Losses ” shall mean all claims, demands, expenses, actions, judgments, damages (whether consequential, direct or indirect, known or unknown, foreseen or unforeseen), penalties, fines, liabilities, losses of every kind and nature (including, without limitation, property damage, diminution in value of Landlord’s interest in the Premises or the Complex, damages for the loss or restriction on use of any space or amenity within the Building or the Complex, damages arising from any adverse impact on marketing space in the Complex, sums paid in settlement of claims and any costs and expenses associated with injury, illness or death to or of any person), suits, administrative proceedings, costs and fees, including, but not limited to, attorneys’ and consultants’ fees and expenses, and the costs of cleanup, remediation, removal and restoration, that are in any way related to any matter covered by the foregoing indemnity.

 

ARTICLE 11

SERVICE AND EQUIPMENT

 

11.1 Climate Control . So long as Tenant is not in default under any of the covenants of this Lease, Landlord shall provide climate control to the Premises from 8:00 a.m. to 7:00 p.m. (the “ Climate Control Hours ”) on weekdays (Saturdays, Sundays and holidays excepted) to maintain a temperature adequate for comfortable occupancy, provided that Landlord shall have no responsibility or liability for failure to supply climate control service when making repairs, alterations or improvements or when prevented from so doing by strikes or any cause beyond Landlord’s reasonable control. Any climate control furnished for periods not within the Climate Control Hours pursuant to Tenant’s request shall be at Tenant’s sole cost and expense in accordance with rate schedules promulgated by Landlord from time to time. Upon request, Landlord shall advise Tenant of the then current rate schedule and the basis for its calculation. Tenant acknowledges that Landlord has installed in the Building a system for the purpose of climate control. Any use of the Premises not in accordance with the design standards or any arrangement of partitioning which interferes with the normal operation of such system may require changes or alterations in the system or ducts through which the climate control system operates. Any changes or alterations so occasioned, if such changes can be accommodated by Landlord’s equipment, shall be made by Tenant at its cost and expense but only with the written consent of Landlord first had and obtained, and in accordance with drawings and specifications and by a contractor first approved in writing by Landlord. If installation of partitions, equipment or fixtures by Tenant necessitates the re-balancing of the climate control equipment in the

 

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Premises, the same will be performed by Landlord at Tenant’s expense. Tenant acknowledges that up to one (1) year may be required after Tenant has fully occupied the Premises in order to adjust and balance the climate control systems. Any charges to be paid by Tenant hereunder shall be due within thirty (30) days of receipt of an invoice from Landlord, which invoice may precede Landlord’s expenditure for the benefit of Tenant.

 

11.2 Elevator Service . Landlord shall provide elevator service (which may be with or without operator at Landlord’s option) provided that Tenant, its employees, and all other persons using such services shall do so at their own risk. If the Building is equipped with a freight elevator, Landlord shall provide freight elevator service at reasonable business hours at Tenant’s request, subject to scheduling by Landlord and payment for the service by Tenant.

 

11.3 Cleaning Public Areas . Landlord shall maintain and keep clean the street level lobbies, sidewalks, truck dock, public corridors and other public portions of the Building.

 

11.4 Refuse Disposal . Tenant shall pay Landlord, within thirty (30) days of being billed therefor, for the removal from the Premises and the Building of such refuse and rubbish of Tenant as shall exceed that ordinarily accumulated daily in the routine of a reasonable office.

 

11.5 Janitorial Service . Landlord shall provide cleaning and janitorial service in and about the Complex and the Premises five days a week (which is currently scheduled for Sunday through Thursday, holidays excepted, subject to change by Landlord) in accordance with commercially reasonable standards in an office building in the city in which the Building is located.

 

11.6 Special Cleaning Service . To the extent that Tenant shall require special or more frequent cleaning and/or janitorial service (hereinafter referred to as “ Special Cleaning Service ”) Landlord may, upon reasonable advance notice from Tenant, elect to furnish such Special Cleaning Service and Tenant agrees to pay Landlord, within thirty (30) days of being billed therefor, Landlord’s charge for providing such additional service. Special Cleaning Service shall include but shall not be limited to the following to the extent such services are beyond those typically provided pursuant to Section 11.5 above:

 

(a) The cleaning and maintenance of Tenant eating facilities other than the normal and ordinary cleaning and removal of garbage, which special cleaning service shall include, without limitation, the removal of dishes, utensils and excess garbage; it being acknowledged that normal and ordinary cleaning service does not involve placing dishes, glasses and utensils in the dishwasher, cleaning any coffee pot or other cooking mechanism or cleaning the refrigerator or any appliances;

 

(b) The cleaning and maintenance of Tenant computer centers, including peripheral areas other than the normal and ordinary cleaning and removal of garbage if Tenant so desires;

 

(c) The cleaning and maintenance of special equipment areas, locker rooms, and medical centers;

 

(d) The cleaning and maintenance in areas of special security; and

 

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(e) The provision of consumable supplies for private toilet rooms.

 

11.7 Electrical . During the Term of this Lease, there shall be available to the Premises electrical facilities comparable to those supplied in other comparable Class A office buildings in the vicinity of the Building to provide sufficient power for normal lighting and office machines of similar low electrical consumption, and one personal computer for each desk station, but not for any additional computers or extraordinary data processing equipment, special lighting and any other item of electrical equipment which requires a voltage other than one hundred ten (110) volts single phase, as determined by Landlord in its sole and absolute discretion. If the installation of such electrical equipment requires additional air conditioning capacity above that normally provided to tenants of the Building or above standard usage of existing capacity as determined by Landlord in its sole and absolute discretion, then the additional air conditioning installation and/or operating costs attributable thereto shall be paid by Tenant. Tenant agrees not to use any equipment, apparatus or device in, upon or about the Premises which may in any way increase the amount of such electricity usually furnished or supplied to the Premises, and Tenant further agrees not to connect any equipment, apparatus or device to the wires, conduits or pipes or other means by which such electricity is supplied, for the purpose of using additional or unusual amounts of electricity, without the prior written consent of Landlord. Tenant shall at all times comply with the rules and regulations of the utility company supplying electricity to the Building.

 

At all times, Tenant’s use of electric current shall never exceed Tenant’s share of the capacity of the feeders to the Building or the risers or wiring installation. Tenant shall not install or use or permit the installation or use in the Premises of any computer or electronic data processing or ancillary equipment or any other electrical apparatus designed to operate on electrical current in excess of 110 volts and 5 amps per machine, without the prior written consent of Landlord, which may be exercised in Landlord’s sole and absolute discretion. If Tenant shall require electrical current in excess of that usually furnished or supplied for use of the Premises as general office space, Tenant shall first procure the written consent of Landlord (which may be exercised in Landlord’s sole and absolute discretion) to the use thereof and Landlord or Tenant may (i) cause a meter to be installed in or for the Premises, or (ii) if Tenant elects not to install said meter, Landlord may reasonably estimate such excess electrical current. The cost of any meters (including, without limitation, the cost of any installation) or surveys to estimate such excess electrical current shall be paid by Tenant. Landlord’s approval of any space plan, floor plan, construction plans, specifications, or other drawings or materials regarding the construction of the Tenant Improvements or any alternations shall not be deemed or construed as consent by Landlord under this paragraph to Tenant’s use of such excess electrical current as provided above. Tenant agrees to pay to Landlord, promptly upon demand therefor, all costs of such electrical current consumed as well as an additional use charge calculated by said meters (at the rates charged for such services to the Building by the municipality or the local public utility) or the amount specified in said estimate, as the case may be, plus any additional expense incurred in keeping account of the electrical current so consumed, which additional expense Landlord shall advise Tenant within a reasonable time after request by Tenant.

 

If Landlord determines that Tenant’s electrical requirements necessitate installation of any additional risers, feeders or other electrical distribution equipment (collectively, “ Electrical Equipment ”), or if Tenant provides Landlord with evidence

 

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reasonably satisfactory to Landlord of Tenant’s need for excess electricity and requests that additional Electrical Equipment be installed, Landlord shall, at Tenant’s expense, install such additional Electrical Equipment, provided that Landlord, in its sole and absolute discretion, determines that (a) such installation is practicable and necessary and the additional utility service available without limit any capacity to the Building, (b) such additional Electrical Equipment is permissible under applicable laws and regulations, including any utility regulation or requirement, and (c) the installation of such Electrical Equipment will not cause damage to the Building or the Premises, cause or creat a hazardous condition, entail excessive or unreasonable alternations, interfere with or limit electrical usage by other tenants or occupants of the Building or exceed the limits of the switchgear or other facilities serving the Building, or require power in excess of that available from the utility company serving the Building. Any costs incurred by Landlord in connection therewith shall be paid by Tenant within thirty (30) days after the rendition of a bill therefor.

 

11.8 Water . During the Terms of this Lease, if water is made available to the Premises, then water shall be used for drinking, lavatory and office kitchen purposes only as applicable. If Tenant requires, uses or consumes water for any purpose in addition to ordinary drinking, lavatory, and office kitchen purposes (as determined by Landlord in its sole and absolute discretion), as applicable, Landlord may reasonably estimate such excess and Tenant shall pay for same. At Tenant’s sole cost and expense, Landlord may also install a water meter and thereby measure Tenant’s water consumption for all purposes, and Tenant shall keep said meter and installation equipment in good working order and repair at Tenant’s own cost and expense. Tenant agrees to pay for water consumed, as shown in said meter, as and when bill are rendered.

 

11.9 Interruptions . It is understood that Landlord does not warrant that any of the services referred to above or any other services which Landlord may supply will be free from interruption. Tenant acknowledges that any one or more such services may be suspended or reduced by reason of repairs, alternations or improvements necessary to be made, by strikes or accidents, by and cause beyond the reasonable control of Landlord, or by orders or regulations of any federal, state, county or municipal authority. Any such interruption or suspension of services shall not be deemed an eviction or disturbance of Tenant’s use and possession of the Premises or any part thereof, nor render Landlord liable to Tenant obligations under this Lease.

 

11.10 Conservation . Tenant agrees to comply with the conservation, use and recycling policies and practices from time to time established by Landlord for the use of utilities and services supplied by Landlord, and the utility charges payable by Tenant hereunder may include such excess usage penalties or surcharges as may from time to time be established by Landlord for the Building. Landlord may reduce the utilities supplied to the Premises and the Common Areas as required or permitted by any mandatory or voluntary water, energy or other conversation statute, regulation, order or allocation or other program.

 

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ARTICLE 12

ALTERATIONS

 

12.1 Consent of Landlord: Ownership . Tenant shall not make, or suffer to be made, any alternations, additions or improvements, including, without limitation, any alternations, additions or improvements that result in increased telecommunication demands or require the addition of new communication lines dedicated to the Premises by the Building’s telecommunication design (individually, an “ alternation ” and collectively, “ alterations ”) to the Premises, or any part thereof, without the written consent of Landlord first had and obtained. Any alternations, except trade fixtures, shall upon expiration or termination of this Lease become a part of the realty and belong to Landlord. Except as otherwise provided in this Lease, Tenant shall have the right to remove its trade fixtures placed upon the Premises provided that Tenant restores the Premises as indicated below.

 

12.2 Requirements . Any alternation performed by Tenant shall be subject to strict conformity with the following re