BERNARDO REGENCY, LLC,
a Delaware limited liability company,
AS LANDLORD
LIFEVANTAGE CORPORATION
a Colorado corporation,
AS TENANT
FOR THAT PROPERTY LOCATED
AT
11545 W. B ernardo C ourt, S an D iego, C alifornia
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BASIC LEASE
PROVISIONS
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1
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PROJECT
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2
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TERM
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4
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RENT
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5
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USE &
OCCUPANCY
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8
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SERVICES &
UTILITIES
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9
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REPAIRS
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11
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ALTERATIONS
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11
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INSURANCE
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12
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DAMAGE OR
DESTRUCTION
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13
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INDEMNITY
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14
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CONDEMNATION
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15
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TENANT
TRANSFERS
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16
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LANDLORD
TRANSFERS
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17
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DEFAULT AND
REMEDIES
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18
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SECURITY
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19
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MISCELLANEOUS
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20
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OPTION TO
EXTEND
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20
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E
xhibits
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EXHIBIT A
— RULES & REGULATIONS
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A-1
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EXHIBIT B
— PARKING
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B-1
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EXHIBIT C
—NOTICE OF LEASE TERM
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C-1
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EXHIBIT D
— WORK LETTER
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D-1
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EXHIBIT E
— TENANT ESTOPPEL CERTIFICATE
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ED-1
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ii
I ndex of D efined T erms
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12
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Mechanical
Systems
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2
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5
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Month
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4
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15
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NLT
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4
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11
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Notice
Addresses
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1
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6
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Option
Rent
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21
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Approved
Working Drawings
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Exhibit
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D
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Option/Rent/Notice
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21
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Exhibit
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D
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Option
Rent
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21
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2
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Options
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21
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5
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Original
Tenant
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21
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2
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Outside
Agreement Date
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22
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2
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Over-Allowance
Amount
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Exhibit
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D
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1
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Parking
Allotment
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2
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3
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Parking
Facilities
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C-1
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2
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Patron
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C-1
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2
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Permitted
Transferee
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16
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14
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Plans
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Exhibit
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D
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4
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Premises
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1
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2
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Project
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2
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2
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Quality
Expenses
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6
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Exhibit
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D
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Rent
Exhibit D
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8
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6
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Repair
Estimate
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13
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1
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Replacement
Premises
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20
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18
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RSF
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3
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19
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Scheduled
Commencement Date
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1
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11
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Scheduled
Term
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1
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17
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Security
Deposit
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1
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Estimated
Additional Rent
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7
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Standard
Services
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9
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5
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Substantial
Completion
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Exhibit
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D
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4
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Successor
Landlord
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17
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19
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Taking
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15
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9
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Taxes
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5
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4
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Telecommunication Services
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10
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2
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Tenant
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1
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9
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Tenant
Delays
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Exhibit
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D
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21
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Tenant’s
Personal Property
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3
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13
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Tenant’s
Share
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1
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2
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Tenant’s
Wiring
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10
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1
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Tenant’s
Acceptance
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21
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8
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Term
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4
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1
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Transfer
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16
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3
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Untenantable
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13
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2
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Use
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1
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6
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Vehicles
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C-1
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21
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Working
Drawings
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Exhibit
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D
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Year
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4
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iii
Landlord
and Tenant enter into this Lease (“Lease”) as of the
Date on the following terms, covenants, conditions and
provisions:
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1.
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BASIC LEASE
PROVISIONS
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1.1
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Basic Lease
Definitions.
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In this Lease,
the following defined terms have the meanings indicated.
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(a)
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Date:
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May 5,
2008.
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(b)
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Landlord:
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BERNARDO
REGENCY, LLC, a Delaware limited liability company.
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(c)
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Tenant:
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LIFEVANTAGE
CORPORATION, a Colorado corporation.
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(d)
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Building:
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11545 W.
Bernardo Court, San Diego, California, deemed to contain 48,055
RSF
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(e)
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Premises:
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Suites 301 and
302 deemed to contain 3,204 RSF (2,818 USF).
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(f)
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Use:
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General
administrative non-governmental office use consistent with that of
a first-class office building.
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(g)
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Scheduled
Term:
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Five
(5) years and Three (3) months.
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(h)
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Scheduled
Commencement Date:
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July 1,
2008.
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(i)
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Base
Rent:
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The following
amounts, payable in accordance with Article 4:
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Period
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Monthly Rate
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Annual Base Rent
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Monthly Base Rent
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$
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2.45
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$
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94,197.60
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$
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7,849.80
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*
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$
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2.54
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$
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97,494.52
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$
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8,124.54
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$
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2.63
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$
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100,906.79
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$
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8,408.90
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$
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2.72
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$
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104,438.54
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$
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8,703.21
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$
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2.81
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$
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108,093.87
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$
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9,007.82
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*
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subject to
abatement as set forth in Section 4.1, below.
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(j)
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Base
Year;
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The calendar
year 2008.
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Tenant’s
Share:
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6.67%
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(k)
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Security
Deposit:
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$7,849.80
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(l)
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Notice
Address:
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For each party,
the following addresses:
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To Landlord
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To Tenant
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Before
the Commencement Date:
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Life Vantage
Corporation
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9911 W. Pico
Boulevard, Suite 1200
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6400 S.
Fiddler’s Green Circle, Suite 1970
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Los Angeles,
California 90035
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Greenwood
Village, CO 80111
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Attn: David
Brown
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(858)
442-4924
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After the
Commencement Date:
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Life Vantage
Corporation
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Attn: 11545 W.
Bernardo Court, Suite 301
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San Diego,
California 92127
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1
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(m)
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Billing
Address:
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For each party,
the following address:
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For Landlord
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For Tenant
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LifeVantage
Corporation
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Attn: 11545 W.
Bernardo Court, Suite 301
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9911 W. Pico
Boulevard, Suite 1200
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San Diego,
California 92127
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Los Angeles,
California 90035
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(n)
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Brokers:
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CB Richard
Ellis, Inc. (for Landlord); and Corporate Real Estate Consultants
(for Tenant). Brokers will be paid by Landlord in accordance with a
separate agreement with Landlord.
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(o)
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Parking
Allotment:
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Twelve
(12) unreserved parking passes, for the use and access to the
Building’s Parking Facility subject to the terms set forth in
Exhibit C to this Lease.
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(p)
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Liability
Limit:
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$3 million
for any one accident or occurrence.
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(q)
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Construction
Allowance:
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None; Landlord
shall construct the Improvements on a “turn key” basis
in accordance with the Work Letter attached to this Lease as
Exhibit E.
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(r)
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Business
Hours:
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From 8:00 a.m.
to 6:00 p.m., Monday through Friday, and from 9:00 a.m. to 1:00
p.m. on Saturdays, except for the days observed for: excepting New
Year’s Day, Martin Luther King Day, President’s Day,
Memorial Day, Independence Day, Labor Day, Veteran’s Day,
Thanksgiving and the day after Thanksgiving and Christmas, and in
Landlord’s reasonable discretion, any other holidays
recognized by landlords of comparable projects to the Building
(“Holidays”).
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2.1 Project. The Land, Building, Common Areas and Premises
(as defined in §1 and below) are collectively referred to as
the “Project.” As of the Date, the Project is named
“Bernardo Regency.”
2.2 Land. “Land” means the real property on
which the Building and Common Areas are located, including
easements and other rights that benefit or encumber the real
property. Landlord’s interest in the Land may be in fee or a
leasehold. The Land may be expanded or reduced after the
Date.
2.3 Base Building. “Base Building” means the
Building Structure and Mechanical Systems, collectively, defined as
follows:
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(a)
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Building Structure.
“Building
Structure” means the structural components in the Building,
including foundations, floor and ceiling slabs, roofs, exterior
walls, exterior glass and mullions, columns, beams, shafts, and
emergency stairwells. The Building Structure excludes the Leasehold
Improvements (and similar improvements to other premises) and the
Mechanical Systems.
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(b)
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Mechanical Systems
. “Mechanical
Systems” means the mechanical, electronic, physical or
informational systems generally serving the Building or Common
Areas, including the sprinkler, plumbing, heating, ventilating, air
conditioning, lighting, communications, security, drainage, sewage,
waste disposal, vertical transportation, and fire/life safety
systems.
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2.4 Common Areas. Tenant will have a non-exclusive right to
use the Common Areas subject to the terms of this Lease.
“Common Areas” means those interior and exterior common
and public areas on the Land (and appurtenant easements) and in the
Building designated by Landlord for the non-exclusive use by Tenant
in common with Landlord, other tenants and occupants, and their
employees, agents and invitees. The Common Areas includes parking
facilities serving the Building that are owned or leased by
Landlord.
2.5 Premises. Landlord leases to Tenant the Premises subject
to the terms of this Lease. If Landlord does not deliver possession
of the Premises to Tenant on or before the estimated Commencement
Date (as set forth above), Landlord
2
shall not be
subject to any liability for its failure to do so, and such failure
shall not affect the validity of this Lease nor the obligations of
Tenant hereunder, provided that Tenant shall have no obligation to
commence paying Rent payments until the Commencement Date.
Notwithstanding the foregoing, if Landlord fails to deliver the
Premises within one hundred eighty (180) days after the
Scheduled Commencement Date (accounting for Tenant Delays, if any
and subject to extension for Force Majeure), Tenant may elect to
either (1) terminate this Lease and receive any amounts
prepaid by Tenant hereunder; or (ii) continue this Lease until
the Premises are so delivered. Landlord and Tenant hereby agree
that the Premises shall be measured in accordance with BOMA ANSI
Z65.1-1996 standards, as modified for the Project pursuant to
Landlord’s standard rentable measurements for the Project,
and in the event that Landlord’s architect/space planner
determines that the amounts thereof shall be different from those
set forth in this Lease, all amounts, percentages and figures
appearing or referred to in this Lease based upon such incorrect
amount (including, without limitation, the amount of the Base Rent
and Tenant’s Share shall be modified in accordance with such
determination. If such determination is made, it will be confirmed
in writing by Landlord to Tenant. Except as provided elsewhere in
this Lease, by taking possession of the Premises, Tenant accepts
the Premises in its “as is” condition and with all
faults, and the Premises is deemed in good order, condition, and
repair. The Premises includes the Leasehold Improvements and
excludes certain areas, facilities and systems, as
follows:
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(a)
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Leasehold Improvements
. “Leasehold
Improvements” means all non-structural improvements in the
Premises or exclusively serving the Premises, and any structural
improvements to the Building made to accommodate Tenant’s
particular use of the Premises. The Leasehold Improvements may
exist in the Premises as of the Date, or be installed by Landlord
or Tenant under this Lease at the cost of either party. The
Leasehold Improvements include: (1) interior walls and
partitions (including those surrounding structural columns entirely
or partly within the Premises); (2) the interior one-half of
walls that separate the Premises from adjacent areas designated for
leasing; (3) the interior drywall on exterior structural
walls, and walls that separate the Premises from the Common Areas;
(4) stairways and stairwells connecting parts of the Premises
on different floors, except those required for emergency exiting;
(5) the frames, casements, doors, windows and openings
installed in or on the improvements described in the foregoing
clauses (1) through (4), or that provide entry/exit to/from
the Premises; (6) all hardware, fixtures, cabinetry, railings,
paneling, woodwork and finishes in the Premises or that are
installed in or on the improvements described in the foregoing
clauses (1) through (5); (7) if any part of the Premises
is on the ground floor, the ground floor exterior windows
(including mullions, frames and glass); (8) integrated ceiling
systems (including grid, panels and lighting); (9) carpeting
and other floor finishes; (10) kitchen, rest room, laboratory
or other similar facilities that exclusively serve the Premises
(including plumbing fixtures, toilets, sinks and built-in
appliances); and (11) the sprinkler, plumbing, heating,
ventilating, air conditioning, electrical, metering, lighting,
communications, security, drainage, sewage, waste disposal,
vertical transportation, fire/life safety, and other mechanical,
electronic, physical or informational systems that exclusively
serve the Premises, including the parts of each system that are
connected to the Mechanical Systems from the common point of
distribution for each system to and throughout the Premises (such
items in this subsection (11) shall be referred to the
“Systems”).
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(b)
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Exclusions from the
Premises .
The Premises does not include: (1) any areas above the
finished ceiling or integrated ceiling systems, or below the
finished floor coverings that are not part of the Leasehold
Improvements, (2) janitor’s closets, (3) stairways and
stairwells to be used for emergency exiting or as Common Areas, (4)
rooms for Mechanical Systems or connection of telecommunication
equipment, (5) vertical transportation shafts,
(6) vertical or horizontal shafts, risers, chases, flues or
ducts, and (7) any easements or rights to natural light, air
or view.
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2.6 Building
Standard. “Building Standard” means the minimum or
exclusive type, brand, quality or quantity of materials Landlord
designates for use in the Building from time to time.
2.7
Tenant’s Personal Property. “Tenant’s
Personal Property” means those trade fixtures, furnishings,
equipment, work product, inventory, stock-in-trade and other
personal property of Tenant that are not permanently affixed to the
Project in a way that they become a part of the Project and will
not, if removed, impair the value of the Leasehold Improvements
that Tenant is required to deliver to Landlord at the end of the
Term under §3.3.
2.8 Rentable
Area. “RSF” means rentable square feet or rentable
square foot, as the case may be, as the same may be reasonably
modified by Landlord in accordance with BOMA ANSI Z65.1-1996
standards.
3
3.1 Term.
“Term” means the period that begins on the Commencement
Date and ends on the Expiration Date, subject to renewal, extension
or earlier termination as may be further provided in this Lease.
“Month” means a full calendar month of the Term.
“Year” means a full calendar year in which all or a
part of the Term occurs.
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(a)
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Commencement Date.
The “Commencement
Date” means the date that is the earlier of:
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(1)
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The
day that Tenant first conducts business in the Premises;
or
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(2)
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The
later of:
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(A)
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The
Scheduled Commencement Date, or
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(B)
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The
day that Landlord tenders the Premises to Tenant with
Landlord’s Work substantially complete or that date that
Landlord would have tendered possession of the Premises but for
delay caused by Tenant.
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(b)
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Expiration Date.
“Expiration
Date” means the date that is the Scheduled Term (plus that
many additional days required for the Expiration Date to be the
last day of a Month) after the later of:
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(1)
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The
Scheduled Commencement Date, or
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(2)
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The
Commencement Date.
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(c)
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Early Occupancy.
Tenant may not enter the
Premises for any purpose until Landlord tenders the Premises to
Tenant. If Tenant conducts business in any part of the Premises
before the Scheduled Commencement Date, Tenant will pay Base Rent
for that period at the rate for the first Month that Base Rent is
due, without discount or excuse. Notwithstanding anything to the
contrary provided herein, and provided that Tenant and its agents
do not interfere with Landlord’s Contractor’s work in
the Building and the Premises, Landlord shall allow Tenant access
to the Premises ten (10) days prior to the Substantial Completion
of the Premises for the purpose of Tenant installing overstandard
equipment or fixtures (including Tenant’s data and telephone
equipment) in the Premises. Prior to Tenant’s entry into the
Premises as permitted by the terms of this Section, Tenant shall
submit a schedule to Landlord and Contractor, for their approval,
which schedule shall detail the timing and purpose of
Tenant’s entry. Tenant shall hold Landlord harmless from and
indemnify, protect and defend Landlord against any loss or damage
to the Building or Premises and against injury to any persons
caused by Tenant’s actions pursuant to this
Section.
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(d)
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Late Occupancy.
If Landlord fails to
tender possession of the Premises to Tenant by the Scheduled
Commencement Date due to delay caused by Tenant or Force Majeure,
Landlord will not be in default of this Lease.
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(e)
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Confirmation of Term.
If applicable, Landlord
shall notify Tenant of the Commencement Date using a Notice of
Lease Term (“NLT”) in the form attached to this Lease
as Exhibit D. Tenant shall execute and deliver to Landlord the
NLT within 10 business days after its receipt, but Tenant’s
failure to do so will not reduce Tenant’s obligations or
Landlord’s rights under this Lease.
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3.2
Holdover. If Tenant keeps possession of the Premises after the
Expiration Date (or earlier termination of this Lease) without
Landlord’s prior written consent (a “Holdover”),
which may be withheld in its sole discretion, then in addition to
the remedies available elsewhere under this Lease or by law, Tenant
will be a tenant-at-sufferance and must comply with all of
Tenant’s obligations under this Lease (including the payment
of Additional Rent), except that for each Month of Holdover Tenant
will pay 150% of the Base Rent payable for the last Month of the
Term (or that would have been payable but for abatement or excuse),
without prorating for any partial Month of Holdover, plus
Additional Rent for such period. Tenant shall indemnify and defend
Landlord from and against all claims and damages, both
consequential and direct, that Landlord suffers due to
Tenant’s failure to return possession of the Premises to
Landlord at the end of the Term. Landlord’s deposit of
Tenant’s Holdover payment will not constitute
Landlord’s consent to a Holdover, or create or renew any
tenancy.
3.3 Condition
on Expiration.
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(a)
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Return of the Premises.
At the end of the Term,
Tenant will return possession of the Premises to Landlord vacant,
free of Tenant’s Personal Property, in broom-clean condition,
and with all Leasehold Improvements in good working order and
repair (excepting ordinary wear and tear), except that Landlord may
require
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4
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Tenant, by notice at least
10 days before the expiration of the Term, to remove (and
restore the Premises damaged by removal):
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(1)
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(2)
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Any
item of Leasehold Improvements (not part of the original Leasehold
Improvements made by Landlord as outlined in the Work Letter or the
Systems) or Alterations (other than Tenant’s Wiring) if
either:
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(A)
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When Landlord consented to the
installation of the improvement, Landlord reserved Landlord’s
right to have Tenant remove the improvement at the end of the Term;
or
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(B)
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Tenant failed to obtain
Landlord’s written consent under § 8.1 (a) for an
item of Alterations to become part of the Premises.
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(b)
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Correction by Landlord
. If Tenant fails to
return possession of the Premises to Landlord in the condition
required under (a), then Tenant shall reimburse Landlord for the
costs incurred by Landlord to put the Premises in the condition
required under (a), plus Landlord’s standard administration
fee.
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(c)
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Abandoned Property
. Tenant’s
Personal Property left behind in the Premises after the end of the
Term will be considered abandoned and Landlord may move, store,
retain or dispose of these items at Tenant’s cost, including
Landlord’s standard administration fee.
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4.1 Base
Rent. Tenant shall prepay one Month’s installment of Base
Rent by the Date, to be applied against Base Rent first due under
this Lease. During the Term, Tenant shall pay all other Base Rent
in advance, in equal Monthly installments, on the 1
st of each Month. Base Rent for any partial Month
will be prorated based on a 30-day month. Notwithstanding anything
to the contrary contained in the Lease, and provided that Tenant
faithfully performs all of the terms and conditions of the Lease,
Landlord hereby agrees to abate Tenant’s obligation to pay
Monthly Base Rent for the second (2 nd ),
third (3 rd
) and fourth (4
th ) full months of the Term. During such abatement
period, Tenant shall still be responsible for the payment of all of
its other monetary obligations under the Lease.
4.2 Additional
Rent. Tenant’s obligation to pay Taxes and Expenses under
this §4.2 is referred to in this Lease as “Direct
Costs.”
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(a)
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Taxes . For each full or partial Year
Tenant shall pay as in the manner described below the
Tenant’s Share of the Taxes for such Year in excess of the
Taxes for the Base Year. “Taxes” means the total costs
incurred by Landlord for: (1) real and personal property taxes
and assessments (including ad valorem and special assessments)
levied on the Project and Landlord’s personal property used
in connection with the Project; (2) taxes on rents or other
income derived from the Building; (3) capital and
place-of-business taxes; (4) taxes, assessments or fees in
lieu of the taxes described in the foregoing clauses
(1) through (3); and (5) the reasonable costs incurred to
reduce the taxes described in the foregoing clauses
(1) through (4). Taxes excludes net income taxes and taxes
paid under §4.3.
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(b)
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Expenses . For each full or partial Year,
Tenant shall pay in the manner described below the Tenant’s
Share of the Expenses for such Year in excess of the Expenses for
the Base Year. “Expenses” means the total costs
incurred by Landlord to operate, manage, administer, equip, secure,
protect, repair, replace, refurbish, clean, maintain, decorate and
inspect the Project, including a fee to manage the Project not to
exceed 5% of the gross revenue of the Project. Expenses that vary
with occupancy will be calculated as if the Building is 95%
occupied and operating and all such services are provided to all
tenants.
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(A)
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Standard Services provided under
§6.1 (excluding electrical service pursuant to
Section 6.3);
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(B)
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Repairs and maintenance performed
under §7.2;
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(C)
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Insurance maintained under §9.2
(including deductibles paid);
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(D)
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Wages, salaries and benefits of
personnel to the extent they render services to the
Project;
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5
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(E)
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Costs of operating the Project
management office (including reasonable rent);
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(F)
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Amortization installments of costs
required to be capitalized and incurred:
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(i)
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To
comply with insurance requirements or laws (“Mandated
Expenses”);
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(ii)
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That are reasonably calculated to
reduce other Expenses or the rate of increase in other Expenses
(“Cost-Saving Expenses”); or
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(iii)
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That are reasonably calculated to
improve or maintain the safety, health or access of Project
occupants, and otherwise maintain the quality, appearance, or
integrity of the Project (“Quality
Expenses”).
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(A)
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(B)
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Mortgage payments (principal and
interest), and ground lease rent;
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(C)
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Commissions, advertising costs,
attorney’s fees and costs of improvements in connection with
leasing space in the Building;
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(D)
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Costs reimbursed by insurance
proceeds or tenants of the Building (other than as Direct
Costs);
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(E)
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(F)
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Except for the costs identified in
§4.2(b)(1)(F), costs required to be capitalized according to
sound real estate accounting and management principles,
consistently applied;
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(G)
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Collection costs and legal fees paid
in disputes with tenants; and
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(H)
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Costs to maintain and operate the
entity that is Landlord (as opposed to operation and maintenance of
the Project).
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(I)
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Costs incurred by Landlord due to
the violation by Landlord of the terms and conditions of any lease
of space in the Project or any law, code, regulation, ordinance or
the like;
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(J)
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Landlord’s general corporate
overhead and general and administrative expenses; and
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(K)
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Costs incurred to (i) comply
with laws relating to the removal of any Hazardous Material, unless
caused by Tenant or any Tenant Parties, and (ii) to remove,
remedy, contain, or treat any Hazardous Material, which Hazardous
Material is brought onto the Project after the date hereof by
Landlord or any other tenant of the Project or any other
person.
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(c)
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Amortization and Accounting
Principles.
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(1)
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Each item of Mandated Expenses and
Quality Expenses will be fully amortized in equal annual
installments, with interest on the principal balance at
Amortization Rate, over the number of years, not to exceed 10, that
Landlord projects the item of Expenses will be productive for its
intended use, without replacement, but properly repaired and
maintained.
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(2)
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Each item of Cost-Saving Expenses
will be fully amortized in equal annual installments, with interest
on the principal balance at the Amortization Rate, over the number
of years that Landlord reasonably estimates for the present value
of the projected savings in Expenses (discounted at the
Amortization Rate ) to equal the cost.
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(3)
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Any
item of Expenses of significant cost that is not required to be
capitalized but is unexpected or does not typically recur may, in
Landlord’s discretion, be amortized in equal annual
installments, with interest on the principal balance at the
Amortization Rate, over a number of years determined by
Landlord.
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(4)
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“Amortization Rate”
means the prime rate of Citibank, N.A. (or a comparable financial
institution selected by Landlord), plus 3%.
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6
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(5)
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Landlord may allocate Direct Costs
for the Project to various components of the Project on an
equitable basis.
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(6)
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Subject to the specific provisions
of this Article 4, Landlord will use sound real estate
accounting and management principles, consistently applied, to
determine Direct Costs.
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(d)
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Estimates . Landlord will provide to Tenant a
reasonably detailed itemization of estimated Direct Costs for each
Year. During the Term, if for any Year, Tenant’s Share
exceeds Tenant Share for the Base Year, Tenant will pay an amount
equal to the excess (“Excess”), in equal Monthly
installments, on the first day of each Month. If Landlord has not
provided Tenant with Landlord’s estimate of Direct Costs for
a Year, then Tenant will pay the estimated Excess until the
estimate is revised by Landlord. Landlord may reasonably revise its
estimate of Direct Costs for a Year and after receipt of the
revised estimate, Tenant will pay the monthly installments of
Excess based on the revised estimate for the remainder of the Year
or until the estimate is later revised by Landlord. The aggregate
estimates of Direct Costs paid by Tenant in a Year is the
“Estimated Direct Costs.”
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(e)
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Settlement . As soon as practicable after the
end of each Year, Landlord will give Tenant a statement of the
actual Direct Costs for the Year, and which shall indicate the
amount, if any, of the Excess. Direct Costs for any partial Year
will be prorated based on a 365-day calendar year. The statement of
Direct Costs is conclusive, binds Tenant, and Tenant waives all
rights to contest the statement, except for items of Direct Costs
to which Tenant objects by notice to Landlord given within
90 days after receipt of Landlord’s statement; however,
Tenant’s objection will not relieve Tenant from its
obligation to pay Direct Costs pending resolution of any objection.
If the Direct Costs exceed the Estimated Direct Costs for the Year,
then Tenant shall pay any underpayment in Excess to Landlord in a
lump sum as Rent within 30 days after receipt of
Landlord’s statement of Direct Costs. If the Estimated Direct
Costs exceeds the Direct Costs for the Year, then Landlord shall
credit any overpayment in Excess against Rent next due. However, if
the Term ends during a Year, then Landlord may, in Landlord’s
sole discretion, elect either of the following: (1) to forego
the settlement of Excess Direct Costs for the Year that is
otherwise required and accept the payments of estimated Excess for
the final Year in satisfaction of Tenant’s obligations to pay
Excess for the final Year, or (2) to have Landlord’s and
Tenant’s obligations under this §4.2(e) survive the end
of the Term.
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(f)
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Audit . Tenant shall have the right to
review and/or audit Landlord’s books and records regarding
Tenant’s Share of Operating Costs at Landlord’s offices
during normal business hours on ten (10) business days’
prior notice (“Review Notice”) for a period of ninety
(90) days following Tenant’s receipt of the Annual
Statement (the “Review Period”). Within a reasonable
time after receipt of Tenant’s review/audit notice, Landlord
shall make all pertinent records available for inspection that are
reasonably necessary for Tenant to conduct its review. If any
records are maintained at a location other than the office of the
Project, Tenant may either inspect the records at such other
location or pay for the reasonable cost of copying and shipping the
records. Any audit shall be conducted by a reputable firm of
certified public accountants (“Tenant’s CPA”)
which, along with Tenant, agrees to be bound by a confidentiality
agreement, on a noncontingent fee basis. Tenant shall have no right
to contest, review or audit such statement if a Default has
occurred and is continuing, or if Tenant fails to give such written
notice during the Review Period. Within ninety (90) days after
the records are made available to Tenant, Tenant shall have the
right to give Landlord written notice (an “Objection
Notice”) stating in reasonable detail any objection to the
books and records that Tenant has reviewed. If Tenant fails to give
Landlord an Objection Notice within the 90-day period or fails to
provide Landlord with a Review Notice within the 90-day period
described above, Tenant shall be deemed to have approved
Landlord’s statement of Operating Costs for such year and
shall be barred from raising any claims regarding the Operating
Costs for that year. Landlord may elect to contest the conclusion
of Tenant’s auditor in the Objection Notice by giving a
written contest notice (the “Contest Notice”) to Tenant
within sixty (60) days after receipt of the Objection Notice,
such Contest Notice containing the name of a firm of certified
public accountants appointed by Landlord (“Landlord’s
CPA”). Landlord’s CPA and Tenant’s CPA shall meet
and confer within forty-five (45) days after the Contest
Notice is given in an attempt to agree on any disputed items. If
Landlord’s CPA and Tenant’s CPA are unable to agree on
all disputed items within forty-five (45) days after the
Contest Notice, then each of Landlord’s CPA and
Tenant’s CPA shall propose and deliver to each other in
writing an amount to be paid by Tenant to Landlord or Landlord to
Tenant relating to the Operating Costs being audited.
Tenant’s CPA and Landlord’s CPA shall agree on a third
CPA experienced in real estate accounting unaffiliated
with
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7
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Landlord,
Tenant and their respective CPA’s and who has not worked for
Landlord, Tenant or their respective CPA’s in the last ten
(10) years. Such third CPA (the “Deciding CPA”)
shall meet for one day or less with Landlord’s CPA and
Tenant’s CAP within fifteen (15) business days after the
appointment of such Deciding CPA, and at the end of such meeting
the Deciding CPA shall choose in writing either Tenant’s
CPA’s proposal or Landlord’s CPA’s proposal, and
such decision shall be final, binding and nonappealable. If
Landlord and Tenant determine that Operating Costs for the calendar
year are less than reported, Landlord shall provide Tenant with a
credit against the next installment of Rental in the amount of the
overpayment by Tenant. Likewise, if Landlord and Tenant determine
that Operating Costs for the calendar year are greater than
reported, Tenant shall pay Landlord the amount of any underpayment
within thirty (30) days. Landlord shall pay for
Landlord’s CPA, Tenant shall pay for Tenant’s CPA and
the cost of the Deciding CPA shall be divided equally among the
parties. No books and records may be removed from Landlord’s
office. Notwithstanding the foregoing, if it is determined that
Operating Costs reflected in the Annual Statement have been
overstated by five percent (5%) or more, than Landlord shall pay
for the reasonable cost of Tenant’s CPA and the Deciding
CPA.
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4.3 Other
Taxes. Upon demand, Tenant will reimburse Landlord for taxes
paid by Landlord on (a) Tenant’s Personal Property,
(b) Rent, (c) Tenant’s occupancy of the Premises,
or (d) this Lease. If Tenant cannot lawfully reimburse
Landlord for these taxes, then the Base Rent will be increased to
yield to Landlord the same amount after these taxes were imposed as
Landlord would have received before these taxes were
imposed.
4.4 Terms of
Payment. “Rent” means all amounts payable by Tenant
under this Lease and the exhibits, including Base Rent and
Additional Rent. If a time for payment of an item of Rent is not
specified in this Lease, then Tenant will pay Rent within
30 days after receipt of Landlord’s statement or
invoice. Unless otherwise provided in this Lease, Tenant shall pay
Rent without notice, demand, deduction, abatement or setoff, in
lawful U.S. currency, at Landlord’s Billing Address. Landlord
will send invoices payable by Tenant to Tenant’s Billing
Address; however, neither Landlord’s failure to send an
invoice nor Tenant’s failure to receive an invoice for Base
Rent (and installments of Estimated Direct Costs) will relieve
Tenant of its obligation to timely pay Base Rent (and installments
of Estimated Direct Costs). Any partial payment of Rent by Tenant
will be considered a payment on account. No endorsement or
statement on any Rent check or any letter accompanying Rent will be
deemed an accord and satisfaction, affect Landlord’s right to
collect the full Rent due, or require Landlord to apply any payment
to any Rent other than Rent earliest due. No payment by Tenant to
Landlord will be deemed to extend the Term or render any notice,
pending suit or judgement ineffective. By notice to the other, each
party may change its Billing Address.
4.5 Late
Payment. If Landlord does not receive all or part of any item
of Rent when due, then Tenant shall pay Landlord 5% of the overdue
Rent (“Late Charge”) as Additional Rent. Tenant agrees
that the Late Charge is not a penalty, and will compensate Landlord
for costs not contemplated under this Lease that are impracticable
or extremely difficult to fix. Landlord’s acceptance of a
Late Charge does not waive Tenant’s default.
5.1 Use.
Tenant shall use and occupy the Premises only for the Use. Landlord
does not represent or warrant that the Project is suitable for the
conduct of Tenant’s particular business.
5.2 Compliance
with Laws and Directives.
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(a)
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Tenant’s Compliance
. Subject to the
remaining terms of this Lease, Tenant shall comply at
Tenant’s expense with all laws and directives of
Landlord’s insurers concerning:
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(1)
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The
Leasehold Improvements and Alterations,
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(2)
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Tenant’s use or occupancy of
the Premises,
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(3)
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Tenant’s employer/employee
obligations,
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(4)
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A
condition created by Tenant, its Affiliates or their contractors or
invitees,
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(5)
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Tenant’s failure to comply
with this Lease,
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(6)
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The
negligence of Tenant or its Affiliates or contractors,
or
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(7)
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Any
chemical wastes, contaminants, pollutants or substances that are
hazardous, toxic, infectious, flammable or dangerous, or regulated
by any local, state or federal statute, rule, regulation
or
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8
ordinance for
the protection of health or the environment (“Hazardous
Materials”) that are introduced to the Project, handled or
disposed by Tenant or its Affiliates, or any of their
contractors.
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Notwithstanding the foregoing,
nothing in this Paragraph 5.2(a) shall require Tenant to bear
any expenses for any structural changes, modifications or
Alterations to the Premises or the Project or any changes to the
Systems unless such changes are necessitated by Tenant’s
particular use of, or improvement to, the Premises or the
Project.
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(b)
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Landlord’s
Compliance. The cost of Landlord’s
compliance with laws or directives of Landlord’s insurers
concerning the Project, other than those that are Tenant’s
obligation under subsection (a), will be included in Expenses to
the extent allowed under §4.2.
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5.3
Occupancy. Tenant shall not interfere with Building services or
other tenants’ rights to quietly enjoy their respective
premises or the Common Areas. Tenant shall not make or continue a
nuisance, including any objectionable odor, noise, fire hazard,
vibration, or wireless or electromagnetic transmission. Tenant will
not maintain any Leasehold Improvements or use the Premises in a
way that increases the cost of insurance required under §9.2,
or requires insurance in addition to the coverage required under
§9.2.
5.4 OFAC
Certification. Tenant represents that: (a) Tenant is not
now and has never been listed or named as a Blocked Person, or
(b) Tenant is not now and has never been acting directly or
indirectly for, or on behalf of, any Blocked Person. “Blocked
Person” means any person, group, entity or nation designated
by the United States Treasury Department as a terrorist or a
“Specially Designated National and Blocked Person,” or
that is a banned or blocked person, entity, nation under any law,
order, rule or regulation that is enforced or administered by the
Office of Foreign Assets Control.
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6.1
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Standard Services.
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(a)
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Standard Services
Defined. “Standard Services”
means:
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(1)
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Heating, ventilation and
air-conditioning (“HVAC”) during Business Hours as
reasonably required to comfortably use and occupy the Premises and
interior Common Areas;
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(2)
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Tempered water from the public
utility for use in Common Areas rest rooms, and water from the
public utility for use in customary kitchen facilities located in
the Premises;
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(3)
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Janitorial services to the Premises
and interior Common Areas 5 days a week, except Holidays, and pest
control services in the Common Areas as needed to keep the Common
Areas free from infestation;
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(4)
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Access to the Premises (by at least
1 passenger elevator if not on the ground floor);
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(5)
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Labor to replace fluorescent tubes
and ballasts in Building Standard light fixtures in the
Premises;
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(6)
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Access control services;
and
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(7)
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Electricity from Landlord’s
selected provider(s) for Common Areas lighting;
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(b)
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Standard Services
Provided .
During the Term, Landlord shall provide the Standard Services to
Tenant. The cost of the Standard Services is included in Expenses.
Landlord is not responsible for any inability to provide Standard
Services due to either the concentration of personnel or equipment
in the Premises; or Tenant’s use of equipment in the Premises
that is not customary office equipment or has special cooling
requirements.
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6.2 Additional
Services. Landlord will provide utilities and services in
excess of the Standard Services subject to the
following:
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(a)
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HVAC. If Tenant requests HVAC service to
the Premises during non-Business Hours, Tenant will pay as Rent
Landlord’s scheduled rate for this service.
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(b)
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Lighting . Landlord will furnish Building
Standard lamps, bulbs, ballasts and starters that are part of the
Leasehold Improvements at no cost to Tenant (but shall be included
in Direct Costs), and non Building standard lamps, bulbs, ballasts
and starters that are part of the Leasehold Improvements for
purchase by
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Tenant at Landlord’s cost,
plus Landlord’s standard administration fee. Landlord will
install non-Building Standard items at Landlord’s scheduled
rate for this service.
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(c)
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Other Utilities and
Services. Tenant will pay as Rent the actual
cost of utilities or services (other than HVAC and lighting
addressed in (a) and (b), and subject to Section 6.3
below) either used by Tenant or provided at Tenant’s request
in excess of that provided as part of the Standard Services, plus
Landlord’s standard administration fee. Tenant’s excess
consumption may be estimated by Landlord unless either Landlord
requires or Tenant elects to install Building Standard meters to
measure Tenant’s consumption.
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(d)
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Additional Systems and
Metering. Landlord may require Tenant, at
Tenant’s expense, to upgrade or modify existing Mechanical
Systems serving the Premises or the Leasehold Improvements to the
extent necessary to meet Tenant’s excess requirements
(including installation of Building Standard meters to measure the
same).
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6.3 Separate
Metering and Electrical Billing. Notwithstanding anything to
the contrary in this Article 6, Tenant shall contract directly
with San Diego Gas and Electric Company (“Electric
Provider”) for all electrical power and services in the
Premises. Such services shall not be included in Landlord’s
Standard Services. Tenant’s total consumption of electricity
in the Premises, including lighting and convenience outlets, shall
be separately metered and Tenant shall be solely responsible for
the costs thereof. Landlord shall be responsible for (as part of
Direct Costs) the installation of any meters in, on or about the
Premises. Tenant shall pay all costs associated with electrical
consumption directly to the Electric Provider or pay as Rent the
actual cost of Tenant’s electricity consumption, plus
Landlord’s standard administrative fee, at Landlord’s
election. Notwithstanding the foregoing, the total connected load
shall not exceed 4 watts per RSF of the Premises.
6.4
Telecommunication Services. Tenant will contract directly with
third party providers and will be solely responsible for paying for
all telephone, data transmission, video and other telecommunication
services (“Telecommunication Services”) subject to the
following:
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(a)
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Providers . Each Telecommunication Services
provider that does not already provide service to the Building
shall be subject to Landlord’s approval, which Landlord may
withhold in Landlord’s sole discretion. Without liability to
Tenant, the license of any Telecommunication Services provider
servicing the Building may be terminated under the terms of the
license, or not renewed upon the expiration of the
license.
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(b)
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Tenant’s Wiring.
Landlord may, in its
sole discretion, designate the location of all wires, cables,
fibers, equipment, and connections (“Tenant’s
Wiring”) for Tenant’s Telecommunication Services,
restrict and control access to telephone cabinets and rooms. Tenant
may not use or access the Base Building, Common Areas or roof for
Tenant’s Wiring without Landlord’s prior written
consent, which Landlord may withhold in Landlord’s sole
discretion. Tenant’s Wiring will be subject to removal in
accordance with §3.3.
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(c)
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No Beneficiaries
. This §6.4 is
solely for Tenant’s ben
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