STANDARD INDUSTRIAL LEASE

Exhibit 10.14

 

LEASE

 

BETWEEN

 

WB MURPHY RANCH, L.L.C.

 

(“LANDLORD”)

 

AND

 

PHOENIX TECHNOLOGIES LTD.

 

(“TENANT”)

TABLE OF CONTENTS

 

 

i

 

 

ii

LIST OF EXHIBITS

 

 

The exhibits attached hereto are incorporated into and made a part of this Lease.

 

iii

LEASE

 

THIS LEASE is made as of May 16, 2003, by and between WB MURPHY RANCH, L.L.C., a Delaware limited liability company (“Landlord”), and PHOENIX TECHNOLOGIES LTD., a Delaware corporation (“Tenant”).

 

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord that certain office building located at 911 Murphy Ranch Road, Milpitas, California (the “Premises”) outlined on the floor plan attached hereto and marked EXHIBIT A , the Premises being agreed, for the purposes of this Lease, to have an area of approximately 86,452 rentable square feet, and part of a 5 building complex (the “Project”) more particularly described in EXHIBIT B attached hereto. Landlord represents that the Project currently contains approximately 352,358 rentable square feet of space. Tenant acknowledges and agrees that Landlord may elect to sell one or more of the buildings within the Project and that upon any such sale Tenant’s pro-rata share of those Direct Expenses allocated to the outside areas of the Project may be adjusted accordingly by Landlord, subject to the provisions of Section 4.1(a)(i) below. Landlord shall use reasonable efforts to obtain approval from the City of Milpitas (the “City”) to change the street address from 911 Murphy Ranch Road to 915 Murphy Ranch Road and shall keep Tenant informed about the status of such change. Landlord shall have no liability hereunder and shall not be in default if, despite using its reasonable efforts, the City refuses to grant permission. If the City grants permission, then from and after the City’s approval, the Premises shall be known as 915 Murphy Ranch Road and this Lease shall be deemed automatically amended as such.

 

Landlord and Tenant agree that said letting and hiring is upon and subject to the terms, covenants and conditions herein set forth. Tenant covenants, as a material part of the consideration for this Lease, to keep and perform each and all of said terms, covenants and conditions for which Tenant is liable and that this Lease is made upon the condition of such performance.

 

Landlord shall perform the Tenant Improvements described in the Work Letter attached hereto as EXHIBIT C .

 

ARTICLE 1

TERM

 

1.1 Commencement Date . The term of this Lease shall be for one hundred twenty (120) months (“Lease Term” or “Term”) unless sooner terminated as hereinafter provided, commencing on the date which is the earlier of:

 

(a) the date on which the Premises are Substantially Complete (as hereinafter defined); or

 

(b) the date that Tenant opens for business in the Premises.

The Premises shall be deemed to be “Substantially Complete” on the earliest of the date on which: (1) Landlord files or causes to be filed with the City, if required, and delivers to Tenant an architect’s notice of substantial completion, or similar written notice that the Premises are substantially complete, (2) Tenant first occupies all or any portion of the Premises, or (3) a certificate of occupancy (or a reasonably substantial equivalent such as a signoff from a building inspector or a temporary certificate of occupancy) is issued for the Premises; provided, however, that if the Premises are prevented from being Substantially Complete as a result of Delays Caused by Tenant (as defined in the Work Letter), then the Premises shall be deemed to be Substantially Complete on the date they would have been Substantially Complete but for such Delays Caused by Tenant. Determination that the Premises are Substantially Complete shall not, in and of itself, constitute satisfaction of Landlord’s obligation to complete the Tenant Improvements in strict compliance with the Work Letter.

 

1.1.1 The date that the Lease commences in accordance with this Article 1 shall be referred to herein as the “Commencement Date”. If the Commencement Date is not the first day of a calendar month, the Lease Term will be extended for the number of days remaining in the month in which the Commencement Date occurs. On and after the Commencement Date, the Lease shall continue in full force and effect for the period of time specified as the Lease Term or until this Lease is terminated as otherwise provided herein. Promptly following the Commencement Date, Landlord and Tenant shall execute a Commencement Date Memorandum in the form attached hereto as Exhibit F acknowledging, among other things, the (a) Commencement Date, (b) scheduled termination date of this Lease, (c) Tenant’s acceptance of the Premises, and (d) amount of the Lease Termination Fee (as hereinafter defined). Tenant’s failure to execute the Commencement Date Memorandum shall not affect Tenant’s liability hereunder.

 

1.1.2 Reference in this Lease to a “Lease Year” shall mean a period of twelve successive calendar months. The first Lease Year will begin on the Commencement Date if the Commencement Date occurs on the first day of a calendar month. If it occurs on any day other than the first day of a calendar month, then the first Lease Year will commence on the first day of the calendar month next following the Commencement Date.

 

1.1.3 Landlord and Tenant estimate that the Commencement Date shall be November 1, 2003, but such estimate is not and shall not be deemed to be a representation or warranty by Landlord that Premises shall be ready for Tenant’s occupancy on such date.

 

1.1.4 At any time prior to the last day of the fifth (5th) Lease Year, Tenant may provide an irrevocable written notice (“Lease Termination Notice”) to Landlord terminating this Lease as of the last day of the sixth (6th) Lease Year (“Termination Date”), subject to the terms of this Section 1.1.4. The Lease Termination Notice shall only be effective if it is accompanied by the Lease Termination Fee, which shall be calculated by Landlord in the manner set forth in this Section 1.1.4, plus all monetary amounts which are then past due and are payable under the Lease. The “Lease Termination Fee” shall mean an amount equal to the unamortized value as of the Termination Date of the “Lease Concessions” (as hereinafter defined), based on an amortization of the Lease Concessions over the initial Lease Term, with an imputed interest rate of ten percent (10%) per annum, and is estimated to be $1,917,317 based on the anticipated cost

 

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of the Tenant Improvements, Moving Allowance and leasing commissions. The final amount of the Lease Termination Fee shall be confirmed by Landlord and Tenant by execution of the Commencement Date Memorandum. For purposes of this Section 1.1.4, “Lease Concessions” shall mean (i) the cost of the Tenant Improvements (as described in Exhibit C hereto), (ii) the amount of the Moving Allowance paid to Tenant, and (iii) the amount of real estate leasing commissions paid to any broker (and any unpaid amounts owed to any broker) by Landlord in connection with the negotiation and execution of this Lease. , Tenant shall pay the Lease Termination Fee to Landlord concurrently with the delivery of the Lease Termination Notice. Tenant shall have no right to exercise this early termination option and the same shall be null and void and irrevocably waived by Tenant if Tenant fails to comply with and perform each and every condition and obligation specified in this Section 1.1.4 at the time and in the manner provided herein. In the event Tenant properly exercises its right to terminate this Lease in accordance with this Section 1.1.4, this Lease shall terminate on the Termination Date.

 

ARTICLE 2

POSSESSION

 

2.1 Lease in Full Force and Effect . Tenant agrees that, if Landlord is unable to deliver possession of the Premises to Tenant on the scheduled Commencement Date, other than as a result of Delays Caused by Tenant (as defined in the Work Letter), (which shall result in a day for day extension for each day resulting from a Delay Caused by Tenant) and except as provided in this Section 2.1, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, but in such event the Lease Term shall not commence until Landlord tenders possession of the Premises to Tenant. Notwithstanding the foregoing, if the Commencement Date has not occurred by January 1, 2004 other than as a result of Delays Caused by Tenant (which shall result in a day for day extension for each day resulting from a Delay Caused by Tenant), then Tenant’s sole remedy shall be that Landlord shall reimburse Tenant an amount equal to the difference in basic monthly rent Tenant actually pays pursuant to its Old Lease (as hereinafter defined) during a hold-over of its Old Premises (as hereinafter defined) from and after January 1, 2004 and the basic monthly rent Tenant was actually paying during the last month of the term of its Old Lease (as hereinafter defined) within ten (10) days of receipt by Landlord of a statement setting forth such charges (and reasonable evidence therefor), for so long as the Commencement Date has not occurred, other than as a result of Delays Caused by Tenant (which shall result in a day for day extension for each day resulting from a Delay Caused by Tenant), Landlord’s exposure for the same not to exceed $60,621.40 on a per month basis. As used herein, the term Old Premises shall be and mean that certain premises leased by Montague LLC, successor-in-interest to The Equitable Life Assurance Society of the United States (“Old Landlord”) to Tenant and located at 411 East Plumeria Drive, San Jose, California (“Old Premises”) under that certain Lease by and between Old Landlord and Tenant, dated as of May 15, 1996 (the “Old Lease”). Tenant represents and warrants that Tenant’s base monthly rent under the Old Lease for the last month of Tenant’s term thereunder is $121,242.80 and that the hold-over penalty under the Old Lease is 150% of such base monthly rent. Notwithstanding anything to the contrary contained herein, if the Commencement Date has not occurred by April 1, 2004, other than as a result of Delays Caused by Tenant (which shall result in a day for day extension for each day resulting from a Delay Caused by Tenant), then

 

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Tenant’s sole remedy shall be to terminate this Lease upon written notice to Landlord, no later than April 30, 2004 (as such date may be extended on a day to day basis for Delays Caused by Tenant), such termination to be effective upon the giving of such notice, and Landlord shall be entitled to exercise such termination right as well, in the same manner (provided, however, that in the event Landlord elects to so terminate, (i) Delays Caused by Landlord shall result in a day for day extension of such April 1 and April 30 dates, respectively, and (ii) Delays Caused by Tenant shall result in a day for day extension (not to exceed 15 days in the aggregate for all such Delays Caused by Tenant) of such April 1 and April 30 dates, respectively). Except as expressly provided in this Section 2.1, Tenant acknowledges that this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting from any delay in delivery of possession of the Premises to Tenant or occurrence of the Commencement Date.

 

2.2. Acceptance by Tenant . Landlord shall deliver the Premises to Tenant on the Commencement Date in material compliance with all Applicable Laws (as hereinafter defined). Tenant has determined that the Premises are appropriate for Tenant’s use and Tenant acknowledges that, except as otherwise expressly provided in this Lease, neither Landlord nor any broker or agent has made any representations or warranties in connection with the physical condition of the Premises or their fitness for Tenant’s use. Except as expressly provided to the contrary in this Lease, Landlord shall not be required to make any expenditure, incur any obligation, or incur any liability of any kind whatsoever in connection with this Lease or the ownership, construction, maintenance, operation or repair of the Premises or the Project. Tenant’s possession of the Premises during the period of time, if any, prior to the Commencement Date, shall be subject to all the provisions of this Lease and shall not advance the expiration date.

 

2.3 Landlord’s Furniture, Fixtures and Equipment . There is currently located in the Premises certain items of furniture, fixtures and equipment belonging to Landlord (as more particularly described on Exhibit G hereto, “Landlord’s FF&E”). Tenant shall have the right to use Landlord’s FF&E during the Lease Term, and upon the expiration or earlier termination of the Lease shall return the same to Landlord in substantially the same condition as existed as of the Commencement Date, subject to ordinary wear and tear. Neither Landlord nor Tenant shall be obligated to replace worn-out items of Landlord’s FF&E, and Tenant may dispose of the same. Any furniture, fixtures and equipment owned by Tenant or installed by Tenant at its expense in the Premises, whether or not as replacement of worn-out items of Landlord’s FF&E, shall be and remain the property of Tenant and may be removed by Tenant at any time during the Lease Term.

 

ARTICLE 3

RENT

 

3.1 Rent . Tenant shall pay to Landlord, in lawful money of the United States of America, at the address of Landlord designated on the signature page of this Lease or to such other person or at such other place as Landlord may from time to time designate in writing, the monthly base rent (the “Base Rent”) in advance, without notice, demand, offset or deduction, on the first day of each calendar month. Tenant shall pay the fifth month’s Base Rent on the date Tenant executes this Lease. Tenant shall pay the sixth month’s Base Rent on the first day of the

 

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sixth month of the Lease Term, and shall continue to pay Base Rent on the first day of each month thereafter (subject to adjustment as hereinafter provided) as follows:

 

 

If the Term commences or ends on a date other than the first or last day of a month, Base Rent shall be prorated on the basis of a thirty (30) day month. Tenant shall pay Landlord the Rent (as hereinafter defined) due under this Lease without any deduction or offset whatsoever by Tenant, foreseeable or unforeseeable.

 

3.2 Additional Rent . In addition to the Base Rent, Tenant agrees to pay as additional rental (the “Additional Rent” and together with the Base Rent, the “Rent”) the amount of rental adjustments and all other charges required by this Lease. All sums other than the Base Rent that Tenant is obligated to pay under this Lease will be Additional Rent, whether or not such sums are designated as Additional Rent.

 

3.3 Late Charge and Interest . Tenant acknowledges and agrees that the late payment of any Rent will cause Landlord to incur additional costs, including administration and collection costs, processing and accounting expenses, and increased debt service (the “Delinquency Costs”). If Landlord has not received any installment of Rent when due, Tenant shall pay a late charge (the “Late Charge”) equal to four percent (4%) of the delinquent amount; provided, however, that Tenant will be provided with three (3) grace periods in each twelve (12) month period, wherein Landlord will provide Tenant with written notice of such delinquent payment and Tenant shall have five (5) days in which to pay such delinquent Rent before the Late Charge applies. Tenant agrees that the Late Charge represents a reasonable estimate of the Delinquency Costs that will be incurred by Landlord. In addition, any amount not paid by one party to the other when due under this Lease shall bear interest from the date the amount was due until the date the amount is paid in full at a rate per annum (the “Applicable Interest Rate”) equal to the lesser of (a) the maximum interest rate permitted by law or (b) three percent (3%) above the prime rate in effect as of the due date as published in The Wall Street Journal (or, if such rate is no longer published, a substitute rate reasonably selected by Landlord). Landlord and Tenant agree that it is difficult to ascertain the damage that Landlord will suffer as a result of the late payment of any Rent and that the Late Charge and interest are the best estimates of the damage that Landlord will suffer in the event of late payment.

 

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ARTICLE 4

RENTAL ADJUSTMENT

 

4.1 Rental Adjustment .

 

(a) For the purpose of this Lease, the following terms are defined as follows:

 

(i) Tenant’s Percentage . That portion of the Project occupied by Tenant divided by the total rentable square footage of the Project, which result is the following: 24.53527%. In the event that Landlord provides any of the services described in Section 4.1(a)(ii)(B), below, to less than entire Project, Tenant’s Percentage for such services shall mean the rentable square footage of Premises divided by the total rentable square feet of the portion of the Project to which such services are provided, as determined by Landlord. Notwithstanding anything to the contrary in the foregoing or elsewhere herein, “Tenant’s Percentage” with respect to Direct Expenses which relate solely to the Premises (as opposed to the Common Areas) shall be 100%. The objective of this Section 4.1 is to provide that Tenant shall be responsible (a) for 100% of the Direct Expenses which relate solely to the Premises and (b) for Tenant’s Percentage of the Direct Expenses which relate to the Common Area. Direct Expenses which relate to the entire Project which benefit the Premises as well as the rest of the Project shall be allocated to Tenant based on Tenant’s Percentage.

 

(ii) Direct Expenses . The term “Direct Expenses” shall include “Taxes” (as hereinafter defined) and “Operating Expenses” (as hereinafter defined).

 

(A) “Taxes” means the sum of any and all real and personal property taxes and assessments, possessory-interest taxes, service payments in lieu of such taxes or fees, similar taxes or assessments (including fees “in-lieu” of any such tax or assessment) which are assessed, levied, charged, conferred or imposed by any public or quasi-public authority upon the Project (or any real property comprising any portion thereof) or its operations, together with all taxes, assessments or other fees imposed by any public authority upon or measured by any Rent or other charges payable hereunder, including any gross receipts tax or excise tax levied by any governmental authority with respect to receipt of rental income, or upon, with respect to or by reason of the possession, leasing, operation, use or occupancy by Tenant of the Premises or any portion thereof, or documentary transfer taxes upon this transaction or any document to which Tenant is a party creating or transferring a leasehold interest in the Premises, together with any tax imposed in substitution, partially or totally, of any tax previously included within the aforesaid definition or any additional tax the nature of which was previously included within the aforesaid definition, together with any and all costs and expenses (including, without limitation, attorneys, administrative and expert witness fees and costs) of challenging any of the foregoing or seeking, the reduction in or abatement, redemption or return of any of the foregoing, but only to the extent of any such reduction, abatement, redemption or return. All references to Taxes during a particular year shall be deemed to refer to taxes accrued during such year, or portion thereof, during the Lease Term, including supplemental tax bills regardless of when they are actually assessed and without regard to when such taxes are payable. The obligation of Tenant to pay for supplemental taxes shall survive the expiration or earlier termination of this Lease. In no event shall Tenant or any Tenant Party (as hereinafter defined) be entitled to file any property

 

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tax assessment appeal. Tenant’s obligations for Taxes for the last full and/or partial year(s) of the Term shall survive the expiration or early termination of the Lease. Tenant will have no obligation to pay for penalties and interest other than those attributable to Tenant’s failure to comply timely with its payment and other obligations pursuant to this Lease, any tax which may be levied upon net income or profits of Landlord or any personal property taxes, business or occupancy tax, gift, franchise, capital levy, or transfer taxes which may be levied against any estate or interest of Landlord, land development fees, including assessments of any kind for utilities and improvements installed in connection with the initial development of the Project, except to the extent such taxes or assessments are currently imposed. Taxes and assessments that apply to a period not within the Term (as it may be extended, as applicable) shall be prorated, so that only the portion attributable to the Term shall be part of Direct Expenses.

 

(B) “Operating Expenses” means the total costs and expenses incurred by Landlord during the term of this Lease in the operation, maintenance, repair and management of the Project (provided that they relate to the Premises, or to the Premises and some portion of the rest of the Project) and/or the Common Area (as hereinafter defined) (including, without limitation, the costs incurred by Landlord under the CC&Rs if Landlord incurs such costs under the CC&Rs for the operation, maintenance, repair, replacement and management of the Project and the Common Area in lieu of incurring such costs directly for the operation, maintenance, repair, replacement and management of the Common Area), and the Premises including, but not limited to, (a) repairs to and maintenance of the roof (and roof membrane), except for the Roof Repair (as hereafter defined), which shall not be included in Operating Expenses, skylights and exterior walls of the Premises; (b) cleaning, maintenance, repair, replacement, utility costs and landscaping of the entrances, lobbies and other public areas of the Premises, walkways, landscaped areas, driveways necessary for access to the Premises, parking areas (including sweeping, striping and slurry coating (but not the first slurry coating and striping after the date hereof)), common driveways, outdoor lighting, walkways, landscaping, and other common facilities designated by Landlord from time to time for the common use of all tenants of the Project (the “Common Area”), and other costs which are allocable to the Common Area or the Premises; (c) the costs and premiums relating to the insurance maintained by Landlord with respect to the Project, including, without limitation, Landlord’s cost of any reasonable self-insurance deductible or retention; (d) service and maintenance contracts for, and the repair and replacement of, the heating, ventilation and air-conditioning (HVAC) systems (except that the costs of acquiring one turbine for the HVAC (“Turbine”) the first time for Tenant’s exclusive use shall not be an Operating Expense) and elevators, if any, and maintenance, repair, replacement, monitoring and operation of the fire/life safety system, (e) service and maintenance contracts for security, cleaning, janitorial (excluding such cleaning and janitorial services within the Premises, which shall be performed by Tenant at its sole cost and expense) and landscaping services; (f) trash collection (g) all wage and labor costs, including fringe benefits, applicable to persons engaged in the operation, maintenance and repair of the Project as Landlord’s employees; (h) capital improvements made to or capital assets acquired for the Premises or the Common Area after the Commencement Date that (1) are intended to reduce Operating Expenses, to the extent they actually do reduce Operating Expenses, or (2) are reasonably necessary for the health and safety of the occupants of the Project or (3) are required under any and all applicable laws, statutes, codes, ordinances, orders, rules, regulations, conditions of approval and requirements of

 

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all federal, state, county, municipal and governmental authorities and all administrative or judicial orders or decrees and all permits, licenses, approvals and other entitlements issued by governmental entities, and rules of common law, and all Environmental Laws (as hereinafter defined), relating to or affecting the Project or the Premises or the use or operation thereof, hereafter enacted, and existing laws (including, without limitation, the Americans with Disabilities Act of 1990, 42 USC 12111 et seq. (the “ADA”)) if and to the extent the same may be hereafter amended from time to time, and any CC&Rs, or any corporation, committee or association formed in connection therewith, or any supplement thereto recorded in any official or public records with respect to the Project or any portion thereof (collectively, “Applicable Laws”), which capital costs, or an allocable portion thereof, shall be amortized over the period reasonably determined by Landlord, together with interest on the unamortized balance at the Applicable Interest Rate (as hereinafter defined) in effect as of the date such capital cost is first incurred with respect to the applicable capital improvement; and (i) any other similar costs incurred by Landlord related to the Project (provided that they relate to the Premises, or to the Premises and some portion of the rest of the Project) and/or the Common Area. Operating Expenses shall also include an administrative fee to Landlord for accounting and project management services relating to the Project equal to five percent (5%) of the actual total costs for maintenance and operation of the Common Area and the Premises but the basis will be exclusive of expenses in connection with Landlord’s development, management and administrative fees paid to third parties to perform any or all of Landlord’s supervisory and administrative obligations, and the costs of insurance premiums and property taxes and assessments (but not costs incurred contesting property taxes and assessments). Operating Expenses shall also include all costs and fees incurred by Landlord in connection with the management of this Lease and the Premises including the cost of those services which are customarily performed by a property management services company, whether performed internally or through an outside management company, including, without limitation, costs paid to the property manager’s agents or employees. Operating Expenses shall not include (i) costs associated with construction, tenant improvement, real estate commissions and attorneys’ fees incurred in connection with new leases, (ii) any costs associated with the construction, maintenance, or operation of buildings or other spaces in the Project intended for lease to other tenants and associated improvements, depreciation and loan payments, except for such expenses which benefit the Premises, or the Premises and some portion of the rest of the Project, (iii) costs to correct construction defects, or (iv) costs of repairs or other work as to which Landlord is reimbursed by insurance or a third party. Operating Expenses that cover a period not within the Lease Term will be prorated.

 

(b) Payment of Direct Expenses .

 

(i) Tenant shall pay to Landlord as Additional Rent Tenant’s Percentage of Direct Expenses paid or incurred by Landlord. Tenant shall pay such Additional Rent to Landlord without offset or deduction, concurrently with the regular monthly Base Rent payment next due following the receipt of such statement from Landlord setting forth the amount owed by Tenant.

 

(ii) On or before April 30th of each year (except for the first year of the Lease Term, in which case, on or before December 31st of such year) (and from time to time as

 

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Landlord reasonably determines appropriate), Landlord shall provide Tenant with Landlord’s estimate of the Tenant’s Percentage of Direct Expenses for the calendar year (the “Landlord’s Estimate”). This estimated amount shall be divided into twelve equal monthly installments; provided, however, that Landlord may adjust such amounts from time to time, or divide them into something other than twelve equal monthly installments, in order to allow for the Landlord’s Estimate to bear an equitable relationship to Tenant’s Percentage of reasonably anticipated Direct Expenses over the calendar year. Tenant shall pay to Landlord without offset or deduction, concurrently with the regular monthly Base Rent payment next due following the receipt of such statement, an amount equal to one monthly installment multiplied by the number of months from January in the calendar year in which said statement is submitted to the month of such payment, both months inclusive. Subsequent installments shall be payable concurrently with the regular monthly Base Rent payments for the balance of that calendar year and shall continue until the next calendar year’s statement is rendered.

 

(iii) As soon as possible after the end of each calendar year, Landlord shall provide Tenant with a statement showing the amount of Tenant’s Percentage of Direct Expenses and the amount of Landlord’s Estimate actually paid by Tenant (the “Operating Expense Statement”). Thereafter, Landlord shall reconcile the above amounts and shall either bill Tenant for the balance due (payable within thirty (30) days of receipt) or credit any overpayment by Tenant towards the next monthly installment of Landlord’s Estimate falling due, as the case may be.

 

(c) Tenant’s obligation to pay Tenant’s Percentage of Direct Expenses shall survive the expiration or termination of this Lease. Tenant’s Percentage of Direct Expenses shall be paid by Tenant when due even though the Term has expired and/or Tenant has vacated the Premises.

 

(d) Landlord will keep full, accurate, and separate books of account with backup documentation covering the Direct Expenses for three years after the close of each calendar year. Tenant will have the right at reasonable times during the term to inspect and obtain copies of such records. In addition, Tenant is entitled, once during any calendar year and once within thirty (30) days after expiration or termination of this Lease, to an independent audit by an Accounting Firm (as defined below) designated by Tenant of Landlord’s books and records to determine Tenant’s Direct Expenses charges. Audits may be conducted at any reasonable time, upon at least twenty (20) days prior, written notice to Landlord, and will be conducted at normal business hours at the Project or at another reasonably convenient location designated by Landlord. Tenant will promptly pay to Landlord any deficiency or Landlord will promptly refund to Tenant any overpayment, as the case may be, which is conclusively established by the audit. Tenant’s right to audit for any subject year shall expire one (1) year after the delivery to Tenant of the Operating Expense Statement for the calendar year which Tenant desires to audit and, unless such right is exercised prior to such time, Tenant shall have waived its right to request such an audit for such time period. The costs of the audit will be borne by Tenant unless the audit shows that Landlord overstated Tenant’s Direct Expenses charges by more than 5% for the period examined, in which case the reasonable and necessary third party out-of-pocket costs for the audit will be borne by Landlord. The audit shall only be conducted by a reputable accounting firm (“Accounting Firm”). As a condition precedent to any such audit, Tenant shall deliver to Landlord a copy of Tenant’s written agreement with such Accounting Firm, which

 

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agreement shall include provisions which state that: (A) such Accounting Firm is not being engaged as a contingency or other incentive based auditor; (B) such Accounting Firm will not in any manner solicit any other tenant of the Project with respect to an audit or other review of Landlord’s accounting records at the Project, and (C) such Accounting Firm shall maintain in strict confidence any and all information obtained in connection with the Audit and shall not disclose such information to any person or entity other than to the management personnel of Tenant. Prior to the commencement of any such audit, the Accounting Firm, Landlord and Tenant shall enter into a confidentiality agreement in form and substance acceptable to Landlord whereby the Accounting Firm and Tenant shall covenant, among other things, that the Accounting Firm and the Tenant shall keep the books and records of Landlord in strict confidence.

 

ARTICLE 5

CONDITIONS TO COMMENCEMENT

 

5.1 Memorandum of Lease . The continuation of this Lease and the Commencement Date are conditioned upon delivery to Tenant of the Memorandum of Lease (as hereinafter defined), duly executed and acknowledged by Landlord.

 

ARTICLE 6

USE

 

Tenant shall use the Premises for general office, administrative, staff training and software research and development, and other legally permitted uses which have been approved by Landlord and are consistent with all City ordinances and Tenant shall not use or permit the Premises to be used for any other purpose without Landlord’s prior written consent. Nothing contained herein shall be deemed to give Tenant any exclusive right to such use in the Project. Tenant shall not use or occupy the Premises in violation of law or of the certificate of occupancy issued for the Premises or Project. Landlord represents to Tenant that as of the date of this Lease, general office use (without taking into account Tenant’s specific contemplated use) is a permitted use under Applicable Laws applicable to the Premises. Tenant shall comply with any direction of any governmental authority having jurisdiction which shall, by reason of the nature of Tenant’s use or occupancy of the Premises, impose any duty upon Tenant or Landlord with respect to the Premises or with respect to the use or occupation thereof. Tenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire, extended coverage or any other insurance policy covering the Premises and/or Project and/or property located therein and shall comply with all rules, orders, regulations and requirements of the Insurance Service Offices, formerly known as the Pacific Fire Rating Bureau or any other organization performing a similar function. Tenant shall promptly, upon demand, reimburse Landlord for any additional premium charged for such policy by reason of Tenant’s failure to comply with the provisions of this Article. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Project, or injure or annoy them, or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Landlord hereby agrees and acknowledges that Tenant, its employees and invitees shall have the non-exclusive right to use the Common

 

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Area, including the outdoor sand volleyball courts, basketball court, walking/jogging trails, and picnic areas which are part of the Common Area during Landlord’s ownership of such Common Area, or such portions thereof (but excluding therefrom the cafeteria, except to the extent it is operated by Avaya and access thereto is made available to other tenants), subject to Landlord’s right to reasonably change and reconfigure the Common Areas, including without limitation such recreational facilities; and during Landlord’s ownership of the Common Area, Landlord shall make no changes to the Common Area which would materially adversely affect Tenant’s reasonable use thereof, provided, further, that after Landlord no longer owns all of the Common Areas, it shall ensure that the same are subject to CC&Rs that are intended to reasonably protect Tenant’s rights under this Article 6. Tenant shall have access to the Premises 24 hours per day, 365 days per year. Tenant shall not commit or suffer to be committed any waste in or upon the Premises. Tenant’s use of the Premises shall be subject to and Tenant shall comply with all Applicable Laws and any recorded covenants, conditions and restrictions (“CC&Rs”) now in place or hereinafter recorded, as the same may be amended from time to time, provided that Tenant shall have received copies of such CC&Rs for Tenant’s review prior to Tenant’s execution of this Lease or prior to the Tenant becoming bound by the same. Tenant acknowledges that there have been and may be from time to time recorded easements and/or declarations granting or declaring easements for parking, utilities, fire or emergency access, and other matters. Tenant’s use of the Premises shall be subject to and Tenant shall comply with any and all such easements and declarations. Landlord covenants not to enter into or approve any new CC&R’s or future amendments or modifications to CC&Rs during the Term of this Lease if the same would materially decrease Tenant’s rights or materially increase Tenant’s obligations under this Lease, or materially adversely interfere with the peaceful enjoyment of the Premises and Common Areas as contemplated in this Lease; provided, however, that Tenant acknowledges that Landlord intends to enter into CC&R’s, and that as long as they do not materially decrease Tenant’s rights or materially increase Tenant’s obligations under this Lease, or materially adversely interfere with the peaceful enjoyment of the Premises and Common Areas as contemplated in this Lease, Landlord may do so, without Tenant’s consent, and such CC&R’s shall be superior to the Lease. Tenant’s use of the Premises shall be subject to such reasonable guidelines as may from time to time be prepared by Landlord. Tenant acknowledges that governmental entities with jurisdiction over the Project may, from time to time promulgate laws, rules, plans and regulations affecting the use of the Premises, including, but not limited to, traffic management plans and energy conservation plans. Tenant’s use of the Project shall be subject to and Tenant shall comply with any and all such laws, rules, plans, and regulations. Tenant, at its sole cost, shall comply with any and all federal, state or local environmental, health and/or safety-related laws, regulations, standards, decisions of courts, ordinances, rules, codes, orders, decrees, directives, guidelines, permits or permit conditions, currently existing and as amended, enacted, issued or adopted in the future which are or become applicable to Tenant, the Premises, the Common Area or the Project (“Environmental Laws”). Tenant will have no liability for the costs of compliance with laws applicable to the Premises as of the date of delivery of possession of the Premises to Tenant if the Premises were not in compliance with such laws on such date except to the extent that compliance is required (i) by reason of Tenant’s specific use of the Premises (and not applicable to office buildings generally), or (ii) as a result of work performed or alterations made by Tenant on or to the Premises. To the extent that Tenant is not liable for the costs of compliance with laws pursuant to the foregoing, Landlord will be liable for the costs

 

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of such compliance. If Tenant does store, use or dispose of any “Hazardous Materials” (as hereinafter defined), Tenant shall notify Landlord in writing at least ten (10) days prior to their first appearance on the Premises. As used herein, “Hazardous Materials” means any chemical, substance, material, controlled substance, object, condition, waste, living organism or combination thereof, whether solid, semi solid, liquid or gaseous, which is or may be hazardous to human health or safety or to the environment due to its radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity, phytotoxicity, infectiousness or other harmful or potentially harmful properties or effects, including, without limitation, tobacco smoke, petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls (PCBs), refrigerants other than those contained in standard kitchen units (including those substances defined in the Environmental Protection Agency’s “Refrigerant Recycling Rule,” as amended from time to time) and all of those chemicals, substances, materials, controlled substances, objects, conditions, wastes, living organisms or combinations thereof which are now or become in the future listed, defined or regulated in any manner by any Environmental Law based upon, directly or indirectly, such properties or effects.

 

If during the initial Lease Term food service (consisting of an offering of breakfast and lunch foods) is not offered at the Project during customary breakfast and lunch hours on business days, Tenant shall be entitled to a credit against Base Rent calculated as follows: (i) during the first sixty (60) consecutive days that such food service is not offered, the rent credit shall be a monthly amount equal to (x) the number of rentable square feet within the initial Premises (i.e., not including any expansion of the Premises pursuant to Article 54 or otherwise) occupied by the originally named Tenant, a Tenant Affiliate and/or any Permitted Assignee, multiplied by (y) $0.05; (ii) from and after the sixty-first (61st) consecutive day that such food service is not offered and continuing until the earlier of (x) the expiration of the initial Lease Term or earlier termination of this Lease, or (y) the date when such food service is offered at the Project by anyone other than Tenant, a Tenant Affiliate or any Permitted Assignee, the rent credit shall be a monthly amount equal to (1) the number of rentable square feet within the initial Premises (i.e., not including any expansion of the Premises pursuant to Article 54 or otherwise) occupied by the originally named Tenant, a Tenant Affiliate and/or any Permitted Assignee, multiplied by (2) $0.10. In no event shall Tenant be entitled to any such rent credit after the expiration of the initial one hundred twenty (120) month Lease Term, or with respect to any space added to the Premises pursuant to Article 54 or otherwise.

 

ARTICLE 7

NOTICES

 

Any notice required or permitted to be given hereunder must be in writing and may be given by personal delivery or by mail, and if given by mail shall be deemed sufficiently given if sent by registered or certified mail addressed to Tenant at the Premises, or to Landlord at its address set forth at the end of this Lease. Either party may specify a different address or addresses for notice purposes by written notice to the other.

 

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ARTICLE 8

BROKERS

 

Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, except (i) Jerry Inguagiato and Lawrence W. Bramon of CB Richard Ellis, Inc., who represent Tenant, and (ii) Craig Fordyce and Michael Rosendin of Colliers International, whose commissions shall be payable by Landlord pursuant to a separate written agreement between such parties and Landlord. Each party warrants to the other that it knows of no other real estate broker or agent who is or might be entitled to a commission in connection with the Lease.

 

ARTICLE 9

HOLDING OVER; SURRENDER

 

9.1 Holding Over . If Tenant holds over the Premises or any part thereof after expiration of the Term, such holding over shall, at Landlord’s option, constitute a month-to-month tenancy (the “Hold Over”), at a rent equal to, for the first two months of the Hold Over, one hundred ten percent (110%) of the greater of (a) the then fair market value of the base rent for the Premises as determined by Landlord and (b) the Base Rent in effect immediately prior to the Hold Over. For the remaining term of the Hold Over, Tenant’s monthly rent shall be equal to one hundred twenty five percent (125%) of the greater of (a) the then fair market value of the base rent for the Premises as determined by Landlord and (b) the Base Rent in effect immediately prior to the Hold Over. The Hold Over shall otherwise be on all the other terms and conditions of this Lease. The provisions of this Section 9.1 shall not be construed as Landlord’s permission for Tenant to hold over. Acceptance of Rent by Landlord following expiration or termination shall not constitute a renewal of this Lease or extension of the Term except as specifically set forth above. If Tenant fails to surrender the Premises upon expiration or earlier termination of this Lease, Tenant shall indemnify and hold Landlord harmless from and against all loss or liability resulting from or arising out of Tenant’s failure to surrender the Premises, including, but not limited to, any amounts required to be paid to any tenant or prospective tenant who was to have occupied the Premises after the expiration or earlier termination of this Lease and any related attorneys’ fees and brokerage commissions.

 

9.2 Surrender . Upon the termination of this Lease or Tenant’s right to possession of the Premises, Tenant will surrender the Premises broom clean, together with all keys, in good condition and repair, reasonable wear and tear excepted. Tenant shall patch and fill all holes within the Premises caused by Tenant. In no event may Tenant remove from the Premises any mechanical or electrical systems or any wiring or any other aspect of any systems within the Premises. Conditions existing because of Tenant’s failure to perform maintenance, repairs or replacements in accordance with this Lease shall not be deemed “reasonable wear and tear.”

 

ARTICLE 10

TAXES ON TENANT’S PROPERTY

 

Tenant shall be liable for and shall pay, at least ten (10) days before delinquency, or, if tax bills are not sent directly to Tenant from the tax collector, thirty (30) days after receipt of the

 

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bill from Landlord, whichever is later, all taxes levied against any personal property or trade fixtures placed by Tenant in or about the Premises. If any such taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property of if the assessed value of the Premises is increased by the inclusion therein of a value placed upon such personal property or trade fixtures of Tenant and if Landlord, after written notice to Tenant, pays the taxes based upon such increased assessment, which Landlord shall have the right to do regardless of the validity thereof, but only under proper protest if requested by Tenant, Tenant shall, upon demand, repay to Landlord the amount of such taxes so levied against Landlord, or the portion of such taxes resulting from such increase in the assessment.

 

ARTICLE 11

CONDITION OF PREMISES

 

Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises or the Project or with respect to the suitability of either for the conduct of Tenant’s business. Notwithstanding the foregoing, Landlord covenants to maintain the Common Area in good condition, including keeping the Common Area neat and clean, sufficiently lighted, properly landscaped, and repaired.

 

ARTICLE 12

ALTERATIONS

 

(a) Tenant shall make no alterations, additions or improvements in or to the Premises without Landlord’s prior written consent (and the parties hereto agree that, without limitation, Landlord may take into account, in deciding whether or not to grant consent, the cost of removal of any such items and restoration of the Premises thereafter), and then only by contractors or mechanics approved by Landlord. Tenant agrees that there shall be no construction or partitions or other obstructions which might interfere with Landlord’s free access to mechanical installations or service facilities of the Premises or Project or interfere with the moving of Landlord’s equipment to or from the enclosures containing said installations or facilities. All such work shall be done at such times and in such manner as Landlord may from time to time designate. Tenant covenants and agrees that all work done by Tenant shall be performed in full compliance with all laws, rules, orders, ordinances, regulations and requirements of all governmental agencies, offices, and boards having jurisdiction, and in full compliance with the rules, regulations and requirements of the Insurance Service Offices formerly known as the Pacific Fire Rating Bureau, and of any similar body. Before commencing any work, Tenant shall give Landlord at least five (5) days written notice of the proposed commencement of such work and shall, if the cost of such work exceeds $200,000 and if required by Landlord, secure at Tenant’s own cost and expense, a completion and lien indemnity bond, satisfactory to Landlord, for said work. Tenant further covenants and agrees that any mechanic’s lien filed against the Premises or against the Premises or Project for work claimed to have been done for, or materials claimed to have been furnished to, Tenant will be discharged by Tenant, by bond or otherwise, within ten days after notice to Tenant of the filing thereof, at the cost and expense of Tenant. Subject to any contrary agreement reached by Landlord and Tenant, all alterations, including Permitted Alterations, additions or improvements upon the Premises made by either party, including (without limiting the generality of the foregoing) all wallcovering, built-in cabinet

 

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work, paneling and the like, shall become the property of Landlord, and shall remain upon, and be surrendered with the Premises, as a part thereof, at the end of the term hereof, except that Tenant may, by written notice to Landlord prior to the expiration of the Lease Term, remove all partitions, counters, railings and the like installed by or on behalf of Tenant (except for Tenant Improvements), and Tenant shall repair all damage resulting from such removal or, if not so removed and repaired, Tenant shall pay to Landlord all costs arising from such removal and repair. Notwithstanding the foregoing, Tenant may construct non-structural alterations which do not adversely affect the value of the Premises or materially impact any of the building systems, if the cost of installation thereof does not exceed Fifty Thousand and No/100 Dollars ($50,000.00) with respect to any single project or One Hundred Thousand and No/100 Dollars ($100,000.00) (in the aggregate, including prior Permitted Alterations) during any calendar year (“Permitted Alterations”), without Landlord’s prior approval (but Tenant shall be required, prior to making the Permitted Alterations, to inform Landlord of the same, and Landlord shall have the right to determine whether Tenant must remove such Permitted Alterations upon the expiration of the Lease Term, as provided herein, by expressing such intent to Tenant and Tenant shall be bound by such election) and Tenant shall in all events provide written notice to Landlord, as required herein, prior to the commencement of such work.

 

(b) All articles of personal property and all business and trade fixtures, machinery and equipment, furniture and movable partitions owned by Tenant or installed by Tenant at its expense in the Premises shall be and remain the property of Tenant and may be removed by Tenant at any time during the Lease Term. If Tenant shall fail to remove all of its effects from the Premises upon termination of this Lease for any cause whatsoever, Landlord may, at its option, dispose of the same in the manner provided by law, and charge the costs thereof together with interest to Tenant as provided by law.

 

(c) Tenant may, at its sole cost and expense, install one or more satellite antenna dishes on the roof of the Premises without charge therefor by Landlord. Prior to any such installation, Tenant shall provide to Landlord for its approval (which shall not be unreasonably withheld or delayed) Tenant’s plans showing the proposed location of such installation, and shall not commence such installation until obtaining Landlord’s approval. All work related to the installation of the satellite antenna dish shall be done in accordance with all Applicable Laws and the terms and provisions of this Lease.

 

ARTICLE 13

REPAIRS

 

13.1 Tenant . Without in any way limiting Landlord’s obligations under this Lease to construct the Tenant Improvements, by entry hereunder, Tenant accepts the Premises as being in good and sanitary order, condition and repair. Tenant, at Tenant’s sole cost and expense, shall keep, maintain and preserve the Premises in first class condition and repair, and shall, when and if needed, at Tenant’s sole cost and expense, make all repairs to the Premises and every part thereof, including, without limitation, Tenant’s trade fixtures, installations, equipment and other personal property items within the Premises; all plumbing and sewage facilities (including all sinks, toilets, faucets and drains), and all ducts, pipes, vents or other parts of the HVAC (but subject to Section 13.2 (b) hereof); all fixtures, interior walls, floors, carpets and ceilings; all

 

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windows, doors, entrances, plate glass, showcases and skylights (including cleaning both interior and exterior surfaces); all electrical facilities and all equipment (including all lighting fixtures, lamps, bulbs, tubes, fans, vents, exhaust equipment and systems); and any automatic fire extinguisher equipment in the Premises. With respect to utility facilities serving the Premises (including electrical wiring and conduits, gas lines, water pipes, and plumbing and sewage fixtures and pipes), Tenant shall be responsible for the maintenance and repair of any such facilities which serve only the Premises, including all such facilities that are within the walls or floor, or on the roof of the Premises, and any part of such facility that is not within the Premises, but only up to the point where such facilities join a main or other junction (e.g., sewer main or electrical transformer) from which such utility services are distributed to other parts of the Project as well as to the Premises. Tenant shall replace any damaged or broken glass in the Premises (including all interior and exterior doors and windows) with glass of the same kind, size and quality. Tenant shall repair any damage to the Premises (including exterior doors and windows) caused by vandalism or any unauthorized entry. Tenant shall maintain continuously throughout the Term a service contract for the washing of all windows (both interior and exterior surfaces) in the Premises with a contractor approved by Landlord, which contract provides for the periodic washing of all such windows at least once every 60 days during the Lease Term. Tenant shall furnish Landlord with copies of all such service contracts, which shall provide that they may not be canceled or changed without at least thirty (30) days’ prior written notice to Landlord. Tenant shall be responsible for all cleaning and janitorial services to be performed within the Premises, and shall contract with a provider of such services reasonably acceptable to Landlord providing for the regular cleaning of the Premises. Tenant shall also be responsible for the repair, maintenance and replacement of all interior supplemental air conditioning units serving the Premises. All such repairs, maintenance and replacements by Tenant shall be performed in a good and workmanlike manner. Tenant shall, upon the expiration or sooner termination of the term hereof, surrender the Premises to Landlord in the same condition as when received, usual and ordinary wear and tear excepted. Except as otherwise expressly set forth in this Lease, Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof. Tenant acknowledges, agrees and affirms that Landlord has made no representations to Tenant respecting the condition of the Premises or the Project, other than Landlord’s covenant to construct and install the Tenant Improvements. Without limiting the foregoing, Tenant shall, at Tenant’s sole expense, be responsible for repairing any area damaged by Tenant, Tenant’s agents, employees, invitees and visitors (it being understood that Tenant may use any proceeds available from the insurance maintained by Tenant and Landlord, respectively, pursuant to Article 20 to reimburse Tenant for such expenses, provided that the unavailability or insufficiency of such proceeds shall not in any way limit Tenant’s obligations hereunder). All repairs and replacements by Tenant shall be made and performed: (a) at Tenant’s cost and expense and at such time and in such manner as Landlord may reasonably designate, (b) by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld, (c) so that same shall be at least equal in quality, value and utility to the original work or installation, (d) in a manner and using equipment and materials that will not interfere with or impair the operations, use or occupation of the Project or any of the mechanical, electrical, plumbing or other systems in the Premises or the Project, and (e) in accordance with the Rules and Regulations attached hereto as EXHIBIT D and all Applicable Laws. In the event Tenant fails, in the reasonable judgment of Landlord, to maintain the Premises in accordance

 

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with its obligations under the Lease, Landlord shall have the right, but not the obligation, to enter the Premises and perform such maintenance, repairs or refurbishing at Tenant’s sole cost and expense (including a sum for overhead to Landlord equal to ten percent (10%) of the cost of the maintenance, repairs or refurbishing). Tenant shall maintain written records of maintenance and repairs, as required by any Applicable Law, and shall use certified technicians to perform such maintenance and repairs, as so required. Tenant shall promptly deliver to Landlord full and complete copies of all service or maintenance contracts entered into by Tenant for the Premises.

 

13.2 Landlord . (a) Anything contained in Section 13.1 above to the contrary notwithstanding, and subject to Section 13.2(b) below, as items of Operating Expenses, Landlord shall repair and maintain the structural portions of the Premises, including the foundations and roof structure, and shall repair and maintain the elevators, life safety and security systems, and heating, ventilating and air conditioning systems installed or furnished by Landlord, and perform roof repair and maintenance to the Premises. Landlord shall not be liable for any failure to make any such repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. Landlord shall not be required to make any repair resulting from (i) any alteration or modification to the Premises or to mechanical equipment within the Premises performed by, or on behalf of, Tenant or to special equipment or systems installed by, or on behalf of, Tenant, (ii) the installation, use or operation of Tenant’s property, fixtures and equipment, (iii) the moving of Tenant’s property in or out of or in and about the Premises, (iv) Tenant’s use or occupancy of the Premises in violation of Article 6 of this Lease or in a manner not contemplated by the parties at the time of the execution of this Lease, (v) the acts or omissions of Tenant or any employees, agents, customers, visitors, invitees, licensees, contractors, assignees or subtenants of Tenant (individually, a “Tenant Party” and collectively, “Tenant’s Parties”), (vi) fire and other casualty, except as provided by Article 21 of this Lease or (vii) condemnation, except as provided in Article 22 of this Lease. Landlord shall have no obligation to make repairs under this Section 13.2 until a reasonable time after (a) Landlord first becomes aware of the need for such repairs, or (b) receipt of written notice from Tenant of the need for such repairs, whichever is earlier. Except as provided in Article 21 of this Lease, there shall be no abatement of Rent during the performance of such work. Except for the initial Tenant Improvements, if any, provided for in the Work Letter, Landlord shall have no obligation during the Term of this Lease to remodel, repair, improve, decorate or paint any part of the Premises or to clean, repair or replace carpeting or window coverings. Landlord shall not be liable to Tenant for injury or damage that may result from any defect in the construction or condition of the Premises, nor for any damage that may result from interruption of Tenant’s use of the Premises during any repairs by Landlord, except to the extent, if any, that Landlord may be liable therefor under Section 18.2 hereof. Without affecting Tenant’s rights under Section 23.3 hereof, Tenant waives any right to repair the Premises and/or the Common Area at the expense of Landlord under any Applicable Laws including without limitation Sections 1941 and 1942 of the California Civil Code.

 

(b) Landlord shall perform the following, none of which shall be charged to Tenant as Operating Expenses: (i) immediately acquire a Turbine for the HVAC, storing the same as a spare, and inserting it if and when required, but only the first time the same is required; (ii) slurry

 

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coat and stripe the parking areas the first time the same is required; and (iii) cause repairs to the roof of the Building pursuant to that certain letter from Alliance Roofing to Jerry Inguagiato dated April 25, 2003 and a fax letter from Alliance Roofing to Jerry Inguagiato dated April 24, 2003 (such work, the first time such work is performed, is referred to herein as the “Roof Repair”).

 

ARTICLE 14

LIENS

 

Tenant shall not permit any mechanic’s, materialmen’s or other liens to be filed against the Premises or Project, nor against Tenant’s leasehold interest in the Premises, as a result of work undertaken by Tenant or any Tenant Party or anyone claiming by, through or under Tenant or any Tenant Party. Landlord shall have the right at all reasonable times to post and keep posted on the Premises any notices which it deems necessary for protection from such liens. Tenant will give Landlord prior written notice of Tenant’s intention to contest any such lien, in which case upon demand by Landlord, Tenant shall procure and record a lien release bond under applicable law in an amount sufficient to remove the lien of record. If a judgment is rendered against Tenant by a court of competent jurisdiction, Tenant will satisfy such judgment at once. If Tenant does not post the release bond or fails to pay any such adverse judgment for foreclosure of a lien within thirty (30) days after the request of the Landlord, then Landlord may pay the judgment and/or otherwise take action to remove such liens, as Landlord may determine, and Tenant shall pay to Landlord at once, upon notice by Landlord, any sum paid by Landlord to remove such liens, together with interest at the maximum rate per annum permitted by law from the date of such payment by Landlord.

 

ARTICLE 15

ENTRY BY LANDLORD AND RESERVED RIGHTS OF LANDLORD

 

Landlord shall have the right to enter the Premises at reasonable times and upon 24 hours prior written notice (with no such notice required in the event of an emergency) for any lawful reason and/or to undertake the following, without limitation: to inspect the Premises; to supply any service to be provided by Landlord to Tenant hereunder; to show the Premises to prospective purchasers or tenants; to post notices of nonresponsibility, to alter, improve or repair the Premises or Project; to install, use, maintain, repair, alter, relocate (to the extent the same are not located in the Premises but are instead located in the common areas or other portions of the Project) or replace any pipes, ducts, conduits, wires, equipment or other facilities in the common areas or the Premises or Project; to grant easements on the Project, dedicate for public use portions thereof and record covenants, conditions and restrictions affecting the Project and/or amendments to CC&Rs as specified elsewhere herein; change the name of the Premises or Project; affix reasonable signs and displays; and, during the last nine (9) months of the Term, place signs for the rental of and show the Premises to prospective tenants, all without being deemed guilty of any eviction of Tenant and without abatement of Rent. Landlord may, in order to carry out any of the foregoing purposes, erect scaffolding and other necessary structures where required by the character of the work to be performed, provided, however, that Landlord shall make reasonable efforts to undertake such work during evenings and on weekends, and in a manner to minimize any interference with Tenant’s business. Tenant hereby waives any claim

 

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for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss in, upon and about the Premises, except to the extent resulting from Landlord’s negligence or willful misconduct. Landlord shall at all times have and retain a key with which to unlock all doors in the Premises. Landlord shall have the right to use any and all means which Landlord may deem proper to open said doors in an emergency in order to obtain entry to the Premises. Any entry to the Premises obtained by Landlord by any of said means, or otherwise, shall not be construed or deemed to be a forcible or unlawful entry into the Premises, or any eviction of Tenant from the Premises or any portion thereof, and any damages caused on account thereof shall be paid by Tenant.

 

ARTICLE 16

UTILITIES AND SERVICES

 

Tenant shall be responsible for contracting with all necessary utility companies and providers to provide to the Premises all heat, light, gas, power, electricity, telephone and all other utilities required by Tenant and/or the Premises. Landlord represents that the Premises are separately metered for the following utilities: electrical, gas, domestic water and fire water. Tenant shall pay for all heat, light, gas, power, electricity, telephone or other service metered to Tenant and/or the Premises, which services shall not be included in the Operating Expenses. In no event shall Landlord incur any liability as a result of any interruption of the provision of any of the foregoing utility services to Tenant, except to the extent resulting from Landlord’s negligence or willful misconduct. In addition, Tenant shall not be entitled to any abatement or reduction of rent by reason of such interruption and Tenant shall not be relieved from the performance of any covenant or agreement i