STANDARD OFFICE LEASE
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1.
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Basic Lease Provisions .
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1.1
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Date :
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November
7, 2007
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1.2
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Landlord :
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The
Realty Associates Fund VII, L.P.,
a
Delaware limited partnership
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1.3
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Tenant :
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Puredepth,
Inc., a Delaware corporation
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1.4
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Building Address :
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3
Twin Dolphin Drive, Redwood City, California
94065
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1.5
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Suite Number(s) :
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350
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1.6
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Rentable Area of Premises :
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4,626
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(in
square feet)
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1.7
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Load Factor Percentage :
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15.5%
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1.8
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Use :
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General
office
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1.9
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Term :
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Four
(4) years
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1.10
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Estimated Commencement Date :
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(TBD:
at substantial completion of tenant improvements)
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1.11
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Monthly Base Rent :
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Commencement
Date through
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12
th full
calendar month: $
12,952.80;
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13
th
through 24 th
month:
$13,341.38;
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25
th
through 36 th
month:
$13,741.63; and
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37
th
through 48 th
month:
$14,153.87.
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1.12
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Base Rent Paid Upon Execution :
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$12,952.80
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Applied To :
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Third
full calendar month of initial term of Lease
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(insert
month(s))
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1.13
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Security Deposit :
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$40,000.00
(See Addendum)
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1.14
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Tenant's Share :
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See
Section 4.2(a)
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1.15
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Base Year :
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2008
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1.16
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Business Hours :
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8:00
a.m. through 6:00 p.m. Monday through Friday and
8:00
a.m. through 1:00 p.m. on Saturday, excluding
Holidays
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1.17
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Non-Business Hours HVAC Charge :
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$50.00
per hour per HVAC zone
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1.18
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Number of Parking Spaces :
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Reserved :
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0
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Unreserved :
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14
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1.19
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Initial Monthly Parking
Rates Per Vehicle :
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Reserved :
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N/A
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Unreserved :
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$0
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1.20
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Real Estate Broker :
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Landlord :
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Cornish
& Carey Commercial
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Tenant :
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Jones
Lang LaSalle (Steve Levere and Chad Hutchinson)
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1.21
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Exhibits Attached to Lease :
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Exhibit
A - "Premises"; Exhibit B – "Verification
Letter";
Exhibit
C -"Rules and Regulations"; Exhibit
D – “Work
Letter
Agreement”; Exhibit E – “Addendum
to Lease”
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1.22
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Addresses for Notices :
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Landlord :
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The
Realty Associates Fund VII, L.P.
c/o
TA Associates Realty
1301
Dove Street, Suite 860
Newport
Beach, California 92660
Attention: Asset
Manager/Shores Center
and
The
Realty Associates Fund VII, L.P.
c/o
TA Associates Realty
28
State Street, Tenth Floor
Boston,
Massachusetts 02109
Attention: Asset
Manager/ Shores Center
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With a Copy to :
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CB
Commercial Real Estate, Inc.
3
Twin Dolphin Drive, Suite 195
Redwood
City, California 94065
Attention: Property
Manager/Shores Center
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Tenant :
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Puredepth,
Inc.
________________________
________________________
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1.23
Interpretation . The
Basic Lease Provisions shall be interpreted in conjunction
with all of the other terms and conditions of this
Lease. Other terms and conditions of this Lease
modify and expand on the Basic Lease
Provisions. If there is a conflict between the
Basic Lease Provisions and the other terms and conditions of
this Lease, the other terms and conditions shall
control.
2.
Premises .
2.1
Lease of Premises and Definition of
Project . The "
Premises " shall mean the area shown on
Exhibit "A" to this Lease. Landlord hereby leases
to Tenant, and Tenant hereby leases from Landlord, upon all
of the conditions set forth herein the Premises, together
with certain rights to the Common Areas as hereinafter
specified. The Premises shall not include an
easement for light, air or view. The building of
which the Premises is a part (the " Building
"), the Common Areas (as defined below), the land upon which
the same are located, along with all other buildings and
improvements designated by Landlord, including all parking
facilities, are herein collectively referred to as the "
Project ."
2.2
Calculation of Size of Building and
Premises . The number of rentable
square feet included within the Building(s) has been
calculated in accordance with the methods of measuring
rentable square feet, as that method is described in the
American National Institute Publication ANSI Z65.1-1996, as
promulgated by the Building Owners and Managers Association
(the " BOMA Standard "). The
number of rentable square feet in the Premises has been
calculated by measuring the number of usable square feet
within the Premises calculated in accordance with the BOMA
Standard and increasing the number of usable square feet by
the Load Factor Percentage (as defined in Section
1.7). If the rentable square feet in the Premises
changes after this Lease is executed by Landlord and Tenant,
the Base Rent and any advance rent shall be adjusted by
multiplying the new number of rentable square feet in the
Premises by the per square foot rental obtained by dividing
the Base Rent initially set forth in Section 1.11 by the
number of rentable square feet initially set forth in
Section 1.6. If the number of rentable square
feet in the Premises is changed, Tenant's Share shall be
adjusted as provided in Section 4.2(a).
2.3
Common Areas-Defined . The term "
Common Areas " is defined as all areas and
facilities outside the Premises and within the exterior
boundary line of the Project that are designated by Landlord
from time to time for the general non-exclusive use of
Landlord, Tenant and the other tenants of the Project and
their respective employees, suppliers, customers and
invitees, including, but not limited to, common entrances,
lobbies, corridors, stairwells, public restrooms, elevators,
parking areas, loading and unloading areas, roadways and
sidewalks. Landlord may also designate other land
and improvements outside the boundaries of the Project to be
a part of the Common Areas, provided that such other land and
improvements have a reasonable and functional relationship to
the Project.
2.4
Landlord’s Representations and
Warranties . Landlord represents and warrants
to Tenant that to Landlord's knowledge, the HVAC, plumbing,
mechanical and electrical facilities and installations
servicing the Premises are in good working condition, and
that the Premises does not include building materials
containing asbestos that might create a health
hazard. In the event that it is determined that
the foregoing representation and warranty is untrue, Landlord
shall not be in default under this Lease if after Landlord
receives written notice from Tenant describing how the untrue
representation or warranty is untrue, Landlord promptly takes
the actions necessary to remedy the breach of the
representation or warranty. The foregoing
representation and warranty is made as of the date set forth
in Section 1.1 and shall not apply to any point in time
thereafter. For purposes of this Lease, Landlord's
knowledge shall mean the actual knowledge of Scott Amling on
the date of this Lease without duty of
investigation.
3.
Term .
3.1
Term and Commencement Date . The
term and Commencement Date of this Lease are as specified in
Sections 1.9 and 1.10. The Commencement Date
set forth in Section 1.10 is an estimated Commencement
Date. Subject to the limitations contained in
Section 3.3 below, the actual Commencement Date shall be
the date possession of the Premises is tendered to Tenant in
accordance with Section 3.4 below; provided, however,
that the Commencement Date shall not occur prior to the date
set forth in Section 1.10. If the actual
Commencement Date does not occur on the first day of a
calendar month, the term of this Lease shall be extended by
the number of days between the actual Commencement Date and
the first day of the next calendar month, it being the
intention of Landlord and Tenant that the term of the Lease
end on the last day of a calendar month. When the
actual Commencement Date is established by Landlord, Tenant
shall, within five (5) days after Landlord's request,
complete and execute the letter attached hereto as Exhibit
"B" and deliver it to Landlord. Tenant's failure
to execute the letter attached hereto as Exhibit "B" within
said five (5) day period shall be a default hereunder and
shall constitute Tenant's acknowledgment of the truth of the
facts contained in the letter delivered by Landlord to
Tenant.
3.2
Delay in Possession .
Notwithstanding the estimated Commencement Date specified in
Section 1.10, if for any reason Landlord cannot deliver
possession of the Premises to Tenant on said date or any
other date, Landlord shall not be subject to any liability
therefor, nor shall such failure affect the validity of this
Lease or the obligations of Tenant hereunder; provided,
however, in such a case, Tenant shall not be obligated to pay
rent or perform any other obligation of Tenant under this
Lease, except as may be otherwise provided in this Lease,
until possession of the Premises is tendered to Tenant, as
defined in Section 3.4. If Landlord shall not
have tendered possession of the Premises to Tenant within
ninety (90) days following the estimated Commencement Date
specified in Section 1.10, as the same may be adjusted
in accordance with this Section 3.2 or Section 3.3 or in
accordance with the terms of any work letter agreement
attached to this Lease, Tenant may, at Tenant's option, by
notice in writing to Landlord within ten (10) days after the
expiration of the ninety (90) day period, terminate this
Lease. If Tenant terminates this Lease as provided
in the preceding sentence, the parties shall be discharged
from all obligations hereunder, except that Landlord shall
return any money previously deposited with Landlord by
Tenant; and provided further, that if such written notice by
Tenant is not received by Landlord within said ten (10) day
period, Tenant shall not have the right to terminate this
Lease as provided above unless Landlord fails to tender
possession of the Premises to Tenant within one hundred
seventy (170) days following the estimated Commencement Date
specified in Section 1.10, as the same may be adjusted
in accordance with this Section 3.2 or Section 3.3 or in
accordance with the terms of any work letter agreement
attached to this Lease. If Landlord is unable to
deliver possession of the Premises to Tenant on the estimated
Commencement Date specified in Section 1.10, as the same may
be adjusted in accordance with this Section 3.2 or Section
3.3 or in accordance with the terms of any work letter
agreement attached to this Lease, due to a Force Majeure
Event (as defined below), such Commencement Date shall be
extended by the period of the delay caused by the Force
Majeure Event. A “ Force Majeure
Event ” shall mean fire, earthquake, weather
delays or other acts of God, strikes, boycotts, war, riot,
insurrection, embargoes, shortages of equipment, labor or
materials, delays in issuance of governmental permits or
approvals, or any other cause beyond the reasonable control
of Landlord.
3.3
Delays Caused by Tenant . There
shall be no abatement of rent, and the ninety (90) day period
and the one hundred seventy (170) day period specified in
Section 3.2 shall be deemed extended, to the extent of
any delays caused by acts or omissions of Tenant, Tenant's
agents, employees and contractors, or for Tenant delays as
defined in any work letter agreement attached to this Lease,
if any (hereinafter " Tenant Delays
"). Tenant shall pay to Landlord an amount equal
to one thirtieth (1/30th) of the Base Rent due for the first
full calendar month of the Lease term for each day of Tenant
Delay. For purposes of the foregoing calculation,
the Base Rent payable for the first full calendar month of
the term of this Lease shall not be reduced by any abated
rent, conditionally waived rent, free rent or similar rental
concessions, if any. Landlord and Tenant agree
that the foregoing payment constitutes a fair and reasonable
estimate of the damages Landlord will incur as the result of
a Tenant Delay. Within thirty (30) days after
Landlord tenders possession of the Premises to Tenant,
Landlord shall notify Tenant of Landlord's reasonable
estimate of the date Landlord could have delivered possession
of the Premises to Tenant but for the Tenant
Delays. After delivery of said notice, Tenant
shall immediately pay to Landlord the amount described above
for the period of Tenant Delay.
3.4
Tender of Possession . Possession
of the Premises shall be deemed tendered to Tenant when
Landlord's architect or agent has determined that (a) the
improvements to be provided by Landlord pursuant to a work
letter agreement, if any, are substantially completed, and,
if necessary, have been approved by the appropriate
governmental entity, (b) the Project utilities are ready for
use in the Premises, (c) Tenant has reasonable access to the
Premises, and (d) three (3) days shall have expired following
advance written notice to Tenant of the occurrence of the
matters described in (a), (b) and (c) above of this
Section 3.4. If improvements to the Premises
are constructed by Landlord, the improvements shall be deemed
"substantially" completed when the improvements have been
completed except for minor items or defects which can be
completed or remedied after Tenant occupies the Premises
without causing substantial interference with Tenant's use of
the Premises. Within fifteen (15) days after
Landlord tenders possession of the Premises to Tenant,
Landlord and Tenant shall inspect the Premises to determine
if there are any minor items or defects in the
Improvements. Landlord shall use its commercially
reasonable efforts to remedy any such items and defects
within thirty (30) days after the date of the
inspection.
3.5
Early Possession . If Tenant
occupies the Premises prior to the Commencement Date, such
occupancy shall be subject to all provisions of this Lease,
such occupancy shall not change the termination date, and,
except as provided below, Tenant shall pay Base Rent and all
other charges provided for in this Lease during the period of
such occupancy. Provided that Tenant does not
interfere with or delay the completion by Landlord or its
agents or contractors of the construction of any tenant
improvements, Tenant shall have the right to enter the
Premises up to thirty (30) days prior to the anticipated
Commencement Date for the sole purpose of installing
furniture, trade fixtures, equipment, and similar items, and
Tenant shall have no obligation to begin paying Base Rent or
other charges based solely on its installation of these
items. Tenant shall be liable for any damages or
delays caused by Tenant's activities at the
Premises. Prior to entering the Premises Tenant
shall obtain all insurance it is required to obtain by the
Lease and shall provide certificates of said insurance to
Landlord. Tenant shall coordinate such entry with
Landlord's building manager, and such entry shall be made in
compliance with all terms and conditions of this Lease and
the Rules and Regulations attached hereto.
4.
Rent .
4.1
Base Rent . Tenant shall pay to
Landlord the Base Rent for the Premises set forth in
Section 1.11, without offset, demand or deduction on or
before the first day of each calendar month. At
the time Tenant executes this Lease it shall pay to Landlord
the advance Base Rent described in
Section 1.12. Base Rent for any period during
the term hereof which is for less than one month shall be
prorated based upon the actual number of days of the calendar
month involved. Base Rent and all other amounts
payable to Landlord hereunder shall be payable to Landlord in
lawful money of the United States, and Tenant shall be
responsible for delivering said amounts to Landlord at the
address stated herein or to such other persons or to such
other places as Landlord may designate in
writing.
4.2
Operating Expense Increases . Tenant
shall pay to Landlord during the term hereof, in addition to
the Base Rent, Tenant's Share of the amount by which all
Operating Expenses for each Comparison Year exceeds the amount
of all Operating Expenses for the Base Year. If
less than 95% of the rentable square feet in the Project is
occupied by tenants or Landlord is not supplying services to
95% of the rentable square feet of the Project at any time
during any calendar year (including the Base Year), Operating
Expenses for such calendar year shall be an amount equal to
the Operating Expenses which would normally be expected to be
incurred had 95% of the Project's rentable square feet been
occupied and had Landlord been supplying services to 95% of
the Project's rentable square feet throughout such calendar
year. Base Year Operating Expenses shall not include
market-wide labor-rate increases due to extraordinary
circumstances, including, but not
limited to, boycotts and strikes, and utility rate increases
due to extraordinary circumstances including, but not limited
to, conservation surcharges, boycotts, embargoes or other
shortages, or amortized costs relating to capital
improvements. Tenant's Share of Operating Expense increases
shall be determined in accordance with the following
provisions:
(a) Notwithstanding
anything to the contrary contained in Section 1.14, Landlord
shall have the right to determine Tenant's Share of the cost
of Operating Expenses using any one of the following methods
or any combination of the following methods, and Tenant
hereby agrees that the following methods of allocation are
reasonable: (i) by multiplying the cost of all Operating
Expenses by a fraction, the numerator of which is the number
of square feet of rentable space in the Premises and the
denominator of which is the number of square feet of rentable
space in all buildings in the Project; or (ii) with respect
to an Operating Expense attributable solely to the Building
in which the Premises is located, requiring Tenant to pay
that portion of the cost of the Operating Expense that is
obtained by multiplying such cost by a fraction, the
numerator of which is the number of square feet of rentable
space in the Premises and the denominator of which is the
number of square feet of rentable space in the Building in
which the Premises is located or (iii) by allocating an
Operating Expense in any other reasonable manner, as
determined by Landlord.
(b) "
Comparison Year " is defined as each
calendar year during the term of this Lease after the Base
Year. Tenant's Share of the Operating Expense
increases for the last Comparison Year of the Lease Term
shall be prorated according to that portion of such
Comparison Year as to which Tenant is responsible for a share
of such increase.
(c) Subject
to the limitations set forth in (d) below, "
Operating Expenses " shall include all
costs, expenses and fees incurred by Landlord in connection
with or attributable to the Project, including but not
limited to, the following items: (i) all costs, expenses and
fees associated with or attributable to the ownership,
management, operation, repair, maintenance, improvement,
alteration and replacement of the Project, or any part
thereof, including but not limited to, the following: (A) all
surfaces, coverings, decorative items, carpets, drapes,
window coverings, parking areas, loading and unloading areas,
trash areas, roadways, sidewalks, stairways, walls,
structural elements, landscaped areas, striping, bumpers,
irrigation systems, lighting facilities, building exteriors
and roofs, fences and gates; (B) all heating, ventilating and
air conditioning equipment (" HVAC "),
plumbing, mechanical, and electrical systems, life safety
systems and equipment, telecommunication equipment,
elevators, escalators, tenant directories, fire detection
systems including sprinkler system maintenance and repair;
(ii) the cost of trash disposal, janitorial services and
security services and systems; (iii) the cost of
all insurance purchased by Landlord and enumerated in
Section 8 of this Lease, including any deductibles; (iv)
the cost of water, sewer, gas, electricity, and other
utilities available at the Project and paid by Landlord; (v)
the cost of labor, salaries and applicable fringe benefits
incurred by Landlord; (vi) the cost of materials, supplies
and tools used in managing, maintaining and/or cleaning the
Project; (vii) the cost of accounting fees, management fees,
legal fees and consulting fees attributable to the ownership,
operation, management, maintenance and repair of the Project
plus the cost of any space occupied by the property manager
and leasing agent (if Landlord is the property manager,
Landlord shall be entitled to receive a fair market
management fee); (viii) the cost of operating, replacing,
modifying and/or adding improvements or equipment mandated by
any law, statute, regulation or directive of any governmental
agency and any repairs or removals necessitated thereby
(including, but not limited to, the cost of complying with
the Americans With Disabilities Act and regulations of the
Occupational Safety and Health Administration); (ix) payments
made by Landlord under any easement, license, operating
agreement, declaration, restrictive covenant, or instrument
pertaining to the payment or sharing of costs among property
owners; (x) any business property taxes or personal property
taxes imposed upon the fixtures, machinery, equipment,
furniture and personal property used in connection with the
operation of the Project; (xi) the cost of all business
licenses, any gross receipt taxes based on rental income or
other payments received by Landlord, commercial rental taxes
or any similar taxes or fees; (xii) transportation taxes,
fees or assessments, including but not limited to, mass
transportation fees, metrorail fees, trip fees, regional and
transportation district fees, (xiii) all costs and expenses
associated with or related to the implementation by Landlord
of any transportation demand management program or similar
program; (xiv) fees assessed by any air quality management
district or other governmental or quasi-governmental entity
regulating pollution; (xv) the cost of installing
intrabuilding network cabling (" INC ") and
maintaining, repairing, securing and replacing existing INC;
and (xvi) the cost of any other service provided
by Landlord or any cost that is elsewhere stated in this
Lease to be an "Operating Expense." Real Property
Taxes shall be paid in accordance with Section 10 below
and shall not be included in Operating
Expenses. Landlord shall have the right but not
the obligation, from time to time, to equitably allocate some
or all of the Operating Expenses among different tenants of
the Project or among the different buildings which comprise
the Project (the " Cost Pools
"). Such Cost Pools may include, but shall not be
limited to, the office space tenants of the Project and the
retail space tenants of the Project.
(d) Notwithstanding anything
to the contrary contained in the Lease, Operating Expenses
shall be defined so as to exclude the following: (i) all
costs associated with defending any lawsuits with any
mortgagee or tenant and costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord's
interest in the Building; (ii) all costs (including permit,
license and inspection fees) incurred in order to construct
tenant improvements in space to be occupied exclusively by
tenants or in renovating or redecorating vacant space which
is intended for the exclusive occupancy by tenants in the
future, including the cost of alterations or improvements to
the Premises; (iii) leasing commissions and attorney fees
incurred in connection with leasing space in the Project to
tenants; (iv) reserves for equipment or capital replacement;
(v) depreciation and amortization of the Building; (vi)
interest on debt or amortization payments on any mortgages or
deeds of trust or any other debt instrument encumbering the
Building; (vii) bad debt loss, rent loss, or reserves for bad
debt or rent loss; (viii) costs of services, supplies or
other materials provided by Landlord or its affiliates to the
extent that the cost of such services, supplies or materials
exceeds the fair market value of such services, supplies or
materials; (ix) advertising and promotional costs; (x)
Landlord's income taxes, inheritance taxes and estate taxes;
(xi) the cost of repairs or other work undertaken by reason
of fire, windstorm or other casualty to the extent that
Landlord actually receives reimbursement for such costs from
insurance proceeds (except that insurance deductibles shall
be included in Operating Expenses); (xii) costs of repair or
replacement for any item covered by a warranty if the cost of
repair is actually reimbursed to Landlord by the entity
providing the warranty; (xiii) costs for which Landlord
actually receives reimbursement by its insurance carrier or
by any tenant's insurance carrier; (xiv) fines, penalties or
interest resulting from the gross negligence or willful
misconduct of the Landlord; (xv) rental payments and any
related costs pursuant to any ground lease of land underlying
all or any portion of the Building; (xvi) costs, fees, dues,
contributions or similar expenses for political or charitable
organizations (Operating Expenses may include the cost of
fees and dues of industry associations) and (xvii)
costs of items considered capital replacements or
improvements under generally accepted accounting principles
consistently applied, except for (1) the annual amortized
cost incurred by Landlord after the Commencement Date for any
capital improvements installed or paid for by Landlord and
required by any new (or change in) laws, rules or regulations
of any governmental or quasi governmental authority which are
enacted or first enforced after the Commencement Date; (2)
the annual amortized cost of any equipment, device or capital
improvement purchased or incurred as a labor saving measure
or to affect other economics in the operation or maintenance
of the Building and/or Project; or (3) during each Comparison
Year, the unamortized cost of minor capital improvements,
tools or expenditures incurred in that year to the extent
each item costs less than $25,000. If, in any
calendar year following the Base Year, (a “
Subsequent Year ”), a new type of
expense item (e.g. earthquake insurance) is included in
Operating Expenses which was not included in the Base Year
Operating Expenses, then the cost of such new type of item
shall be added to the Base Year Operating Expenses for
purposes of determining the Operating Expenses payable under
this Lease for such Subsequent Year; provided, however, in no
event shall any Capital Item ever be included in the Base
Year Operating Expenses. During each Subsequent
Year, the same amount shall continue to be included in the
computation of Operating Expenses for the Base Year,
resulting in each such Subsequent Year Operating Expenses
only including the increase in the cost of such new item over
the Base Year, as so adjusted. However, if in any
Subsequent Year thereafter, such new item is not included in
Operating Expenses, no such addition shall be made to Base
Year Operating Expenses. Conversely, as reasonably
determined by Landlord, when an expense item that was
originally included in the Base Year Operating Expenses is,
in any Subsequent Year, no longer included in Operating
Expenses, then the cost of such item shall be deleted from
the Base Year Operating Expenses for purposes of determining
the Operating Expenses payable under this Lease for such
Subsequent Year. The same amount shall continue to
be deleted from the Base Year Operating Expenses for each
Subsequent Year thereafter that the item is not
included.
(e) If
pursuant to (d) above Landlord is required to amortize a
capital improvement, the cost shall be amortized over the
useful life of the capital improvement, as reasonably
determined by Landlord, together with an interest factor on
the unamortized cost of such item equal to the lesser of
twelve percent (12%) per annum or the maximum rate of
interest permitted by applicable law.
(f) Tenant's
Share of Operating Expense increases shall be payable by
Tenant within ten (10) business days after a reasonably
detailed statement of actual expenses is presented to Tenant
by Landlord. At Landlord's option, however,
Landlord may, from time to time, estimate what Tenant's Share
of Operating Expense increases will be, and the same shall be
payable by Tenant monthly during each Comparison Year of the
Lease term, on the same day as the Base Rent is due
hereunder. In the event that Tenant pays
Landlord's estimate of Tenant's Share of Operating Expense
increases, Landlord shall use commercially reasonable efforts
to deliver to Tenant within one hundred eighty (180) days
after the expiration of each Comparison Year a reasonably
detailed statement (the " Statement ")
showing Tenant's Share of the actual Operating Expense
increases incurred during such year. Landlord's
failure to deliver the Statement to Tenant within said period
shall not constitute Landlord's waiver of its right to
collect said amounts or otherwise prejudice Landlord's rights
hereunder. If Tenant's payments under this
Section 4.2(f) during said Comparison Year exceed
Tenant's Share as indicated on the Statement, Tenant shall be
entitled to credit the amount of such overpayment against
Tenant's Share of Operating Expense increases next falling
due. If Tenant's payments under this
Section 4.2(f) during said Comparison Year were less
than Tenant's Share as indicated on the Statement, Tenant
shall pay to Landlord the amount of the deficiency within
thirty (30) days after delivery by Landlord to Tenant of the
Statement. Landlord and Tenant shall forthwith
adjust between them by cash payment any balance determined to
exist with respect to that portion of the last Comparison
Year for which Tenant is responsible for Operating Expense
increases, notwithstanding that the Lease term may have
terminated before the end of such Comparison Year; and this
provision shall survive the expiration or earlier termination
of the Lease.
(g) The
computation of Tenant's Share of Operating Expense increases
is intended to provide a formula for the sharing of costs by
Landlord and Tenant and will not necessarily result in the
reimbursement to Landlord of the exact costs it has
incurred. Landlord shall not collect or be
entitled to collect Operating Expenses from all of its
tenants in an amount which is in excess of 100% of the
Operating Expenses actually paid by Landlord in connection
with the operation of the Project.
(h) If
Tenant disputes the amount set forth in the Statement, Tenant
shall have the right, at Tenant's sole expense, not later
than sixty (60) days following receipt of such Statement, to
cause Landlord's books and records with respect to the
calendar year which is the subject of the Statement to be
audited by a certified public accountant mutually acceptable
to Landlord and Tenant, and Landlord shall provide reasonable
cooperation in making relevant materials available in
conjunction with such audit. The audit shall take
place at the offices of Landlord where its books and records
are located at a mutually convenient time during Landlord's
regular business hours. Tenant's Share of
Operating Expenses shall be appropriately adjusted based upon
the results of such audit, and the results of such audit
shall be final and binding upon Landlord and
Tenant. Tenant shall have no right to conduct an
audit or to give Landlord notice that it desires to conduct
an audit at any time Tenant is in default under the
Lease. The accountant conducting the audit shall
be compensated on an hourly basis and shall not be
compensated based upon a percentage of overcharges it
discovers. No subtenant shall have any right to
conduct an audit, and no assignee shall conduct an audit for
any period during which such assignee was not in possession
of the Premises. Tenant's right to undertake an
audit with respect to any calendar year shall expire sixty
(60) days after Tenant's receipt of the Statement for such
calendar year, and such Statement shall be final and binding
upon Tenant and shall, as between the parties, be
conclusively deemed correct, at the end of such sixty (60)
day period, unless prior thereto Tenant shall have given
Landlord written notice of its intention to audit Operating
Expenses for the calendar year which is the subject of the
Statement. If Tenant gives Landlord notice of its
intention to audit Operating Expenses, it must commence such
audit within sixty (60) days after such notice is delivered
to Landlord, and the audit must be completed within one
hundred twenty (120) days after such notice is delivered to
Landlord. If Tenant does not commence and complete
the audit within such periods, the Statement which Tenant
elected to audit shall be deemed final and binding upon
Tenant and shall, as between the parties, be conclusively
deemed correct. Tenant agrees that the results of
any Operating Expense audit shall be kept strictly
confidential by Tenant and shall not be disclosed to any
other person or entity.
5.
Security Deposit . Tenant
shall deliver to Landlord at the time it executes this Lease
the security deposit set forth in Section 1.13 as
security for Tenant's faithful performance of Tenant's
obligations hereunder. If Tenant fails to pay Base
Rent or other charges due hereunder, or otherwise defaults
with respect to any provision of this Lease, Landlord may use
all or any portion of said deposit for the payment of any Base
Rent or other charge due hereunder, to pay any other sum to
which Landlord may become obligated by reason of Tenant's
default, or to compensate Landlord for any loss or damage
which Landlord may suffer thereby. If Landlord so
uses or applies all or any portion of said deposit, Tenant
shall within ten (10) days after written demand therefor
deposit cash with Landlord in an amount sufficient to restore
said deposit to its full amount. Landlord shall not
be required to keep said security deposit separate from its
general accounts. If Tenant performs all of
Tenant's obligations hereunder, said deposit, or so much
thereof as has not heretofore been applied by Landlord, shall
be returned, without payment of interest or other amount for
its use, to Tenant (or, at Landlord's option, to the last
assignee, if any, of Tenant's interest hereunder) at the
expiration of the term hereof, and after Tenant has vacated
the Premises. No trust relationship is created
herein between Landlord and Tenant with respect to said
security deposit. Tenant acknowledges that the
security deposit is not an advance payment of any kind or a
measure of Landlord's damages in the event of Tenant's
default. Tenant hereby waives the provisions of any
law which is inconsistent with this Section 5 including,
but not limited to, Section 1950.7 of the California Civil
Code.
6.
Use .
6.1
Use . The Premises shall be used
and occupied only for the purpose set forth in
Section 1.8 and for no other purpose. If
Section 1.8 gives Tenant the right to use the Premises
for general office use, by way of example and not limitation,
general office use shall not include medical office use or
any similar use, laboratory use, classroom use, an executive
suite or similar use, any use not characterized by applicable
zoning and land use restrictions as general office use, any
use which would require Landlord or Tenant to obtain a
conditional use permit or variance from any federal, state or
local authority, or any other use not compatible, in
Landlord's sole judgment, with a first class office
building. Notwithstanding any permitted use
inserted in Section 1.8, Tenant shall not use the
Premises for any purpose which would violate the Project's
certificate of occupancy, any conditional use permit or
variance applicable to the Project or violate any covenants,
conditions or other restrictions applicable to the
Project. No exclusive use has been granted to
Tenant hereunder.
6.2
Compliance with Law .
(a) Landlord
warrants to Tenant that to Landlord’s actual knowledge
the Premises, in the state existing as of the date set forth
in Section 1.1, but without regard to alterations or
improvements to be made by Tenant or the use for which Tenant
will occupy the Premises, does not violate any covenants or
restrictions of record, or any applicable building code,
regulation or ordinance in effect on such
date. Landlord’s actual knowledge shall mean
and be limited to the actual knowledge of the person who is
the Building owner’s asset manager (not the
Building’s property manager) on the date set forth in
Section 1.1, without duty of investigation, and such asset
manager shall have no personal liability if such
representation or warranty is
untrue. Landlord’s representation and
warranty that improvements comply with applicable building
codes, regulations and ordinances shall mean that to
Landlord’s actual knowledge the improvements complied
with the codes, regulations and ordinances in effect when the
improvements were originally constructed. If
Tenant occupies the Premises at the time this Lease is
executed, this warranty shall be of no force or
effect.
(b) Tenant
shall, at Tenant's sole expense, promptly comply in all
material respects with all applicable laws, ordinances,
rules, regulations, orders, certificates of occupancy,
conditional use or other permits, variances, covenants and
restrictions of record, the recommendations of Landlord's
engineers or other consultants, and requirements of any fire
insurance underwriters, rating bureaus or government
agencies, now in effect or which may hereafter come into
effect, whether or not they reflect a change in policy from
that now existing, during the term or any part of the term
hereof, relating in any manner to the Premises or the
occupation and use by Tenant of the Premises (“
Legal Requirements
”). Tenant shall, at Tenant's sole expense,
comply with all requirements of the Americans With
Disabilities Act that relate to the Premises, and all
federal, state and local laws and regulations governing
occupational safety and health. Notwithstanding
the foregoing, in no event shall Tenant be required to make
changes required by Legal Requirements to the Building's
electrical, HVAC, plumbing, life safety or similar systems,
or to the structural components of the Premises ("
Landlord Changes "), unless such changes are
required due to Tenant’s negligence or misuse of the
Premises, Tenant's alteration of the Premises or
Tenant’s particular use of the Premises. If
the changes are required due to Tenant’s negligence or
misuse of the Premises, Tenant's alteration of the Premises
or Tenant’s particular use of the Premises, Landlord
shall make such changes and Tenant shall reimburse Landlord
for the reasonable cost thereof. With respect to
other Landlord Changes, Landlord shall cause same to be
completed, and subject to the other limitations contained in
this Lease, the cost thereof may be included in Operating
Expenses. Tenant shall conduct its business and
use the Premises in a lawful manner and shall not use or
permit the use of the Premises or the Common Areas in any
manner that will tend to create dangerous situations, waste
or a nuisance or shall tend to disturb other occupants of the
Project. Tenant shall obtain, at its sole expense,
any permit or other governmental authorization required to
operate its business from the Premises. Landlord
shall not be liable for the failure of any other tenant or
person to abide by the requirements of this section or
to otherwise comply with applicable laws and regulations, and
Tenant shall not be excused from the performance of its
obligations under this Lease due to such a
failure.
6.3
Condition of Premises
. Except as otherwise provided in this Lease,
Tenant hereby accepts the Premises and the Project in their
condition existing as of the date this Lease is executed by
Landlord and Tenant, subject to all applicable federal, state
and local laws, ordinances, regulations and permits governing
the use of the Premises, the Project's certificate of
occupancy, any applicable conditional use permits or
variances, and any easements, covenants or restrictions
affecting the use of the Premises or the
Project. Tenant acknowledges that it has satisfied
itself by its own independent investigation that the Premises
and the Project are suitable for its intended use and that
its use is permitted by applicable laws and regulations, and
that neither Landlord nor Landlord's agents has made any
representation or warranty as to the present or future
suitability of the Premises, or the Project for the conduct
of Tenant's business.
7.
Maintenance, Repairs and Alterations
.
7.1
Landlord's Obligations . Landlord
shall keep the Project (excluding the interior of the
Premises and space leased to other occupants of the Project)
in good condition and repair. If plumbing pipes,
electrical wiring, HVAC ducts or vents within the Premises
are in need of repair, Tenant shall immediately notify
Landlord, and Landlord shall cause the repairs to be
completed within a reasonable time, and Tenant shall
immediately pay the entire cost of the repairs to Landlord if
such repairs are necessitated by Tenant’s negligence or
misuse. Except as provided in Section 9.3,
there shall be no abatement of rent or liability to Tenant on
account of any injury or interference with Tenant's business
with respect to any improvements, alterations or repairs made
by Landlord to the Project or any part
thereof. Tenant expressly waives the benefits of
any statute now or hereafter in effect which would otherwise
afford Tenant the right to make repairs at Landlord's expense
or to terminate this Lease because of Landlord's failure to
keep the Project in good order, condition and
repair.
7.2
Tenant's Obligations .
(a) Subject
to the requirements of Section 7.3, Tenant shall be
responsible for keeping the Premises in good condition and
repair, at Tenant's sole expense. By way of
example, and not limitation, Tenant shall be responsible, at
Tenant's sole expense, for repairing and/or replacing,
carpet, marble, tile or other flooring, paint, wall
coverings, corridor and interior doors and door hardware,
telephone and computer equipment, interior glass, window
treatments, ceiling tiles, shelving, cabinets, millwork and
other tenant improvements. In addition, Tenant
shall be responsible for the installation, maintenance and
repair of all telephone, computer and related cabling from
the telephone terminal room on the floor on which the
Premises is located to and throughout the Premises, and
Tenant shall be responsible for any loss, cost, damage,
liability and expense (including attorneys' fees) arising out
of or related to the installation, maintenance, repair and
replacement of such cabling. If Tenant fails to
keep the Premises in good condition and repair, Landlord may,
but shall not be obligated to, make any necessary
repairs. If Landlord makes such repairs, Landlord
may bill Tenant for the cost of the repairs as additional
rent, and said additional rent shall be payable by Tenant
within ten (10) days.
(b) On
the last day of the term hereof, or on any sooner
termination, Tenant shall surrender the Premises to Landlord
in the same condition as received, ordinary wear and tear and
casualty damage excepted, clean and free of debris and
Tenant's personal property. Tenant shall repair
any damage to the Premises occasioned by the installation or
removal of Tenant's trade fixtures, furnishings and
equipment. Tenant shall leave the electrical
distribution systems, plumbing systems, lighting fixtures,
HVAC ducts and vents, window treatments, wall coverings,
carpets and other floor coverings, doors and door hardware,
millwork, ceilings and other tenant improvements at the
Premises and in good condition, ordinary wear and tear
excepted. Landlord shall have the right (i) to
require Tenant to remove any telecommunications or other
cabling installed by Tenant in the Premises as part of the
original tenant improvements (whether constructed by Landlord
or Tenant) or at later times during the term of the Lease
(collectively, “ Cabling ”) or
(ii) to leave all or part of the Cabling and, in this event,
Tenant shall label the cabling it leaves so that Landlord can
determine the purpose of the Cabling.
7.3
Alterations and Additions
.
(a) Except
as provided below, Tenant shall not, without Landlord's prior
written consent, which may be given or withheld in Landlord's
sole discretion, make any alterations, improvements,
additions, utility installations or repairs (hereinafter
collectively referred to as " Alterations ")
in, on or about the Premises or the
Project. Alterations shall include, but shall not
be limited to, the installation or alteration of security or
fire protection systems, communication systems, millwork,
shelving, file retrieval or storage systems, carpeting or
other floor covering, painting, window and wall coverings,
electrical distribution systems, lighting fixtures, telephone
or computer system wiring, HVAC and
plumbing. Landlord shall not unreasonably withhold
its consent to Tenant making cosmetic, non-structural
alterations (" Cosmetic Alterations ") to
the inside of the Premises (e.g., paint and carpet,
communication systems, telephone and computer system wiring)
that do not (i) involve the expenditure of more than $10,000
in the aggregate in any calendar year, (ii) affect the
exterior appearance of the Building, (iii) affect the
Building’s electrical, plumbing, HVAC, life, fire,
safety or security systems, (iv) affect the structural
elements of the Building or (v) adversely affect any other
tenant of the Project. At the expiration of the
term, Landlord may require the removal of any Alterations
installed by Tenant and the restoration of the Premises and
the Project to their prior condition, at Tenant's
expense. If a work letter agreement is entered
into by Landlord and Tenant, Tenant shall not be obligated to
remove the tenant improvements constructed in accordance with
the work letter agreement. If, as a result of any
Alteration made by Tenant, Landlord is obligated to comply
with the Americans With Disabilities Act or any other law or
regulation and such compliance requires Landlord to make any
improvement or Alteration to any portion of the Project, as a
condition to Landlord's consent, Landlord shall have the
right to require Tenant to pay to Landlord prior to the
construction of any Alteration by Tenant, the entire cost of
any improvement or alteration Landlord is obligated to
complete by such law or regulation. Should
Landlord permit Tenant to make its own Alterations, Tenant
shall use only such contractor as has been expressly approved
by Landlord, and Landlord may require Tenant to provide to
Landlord, at Tenant's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times
the estimated cost of such Alterations, to insure Landlord
against any liability for mechanic's and materialmen's liens
and to insure completion of the work. In addition,
Tenant shall pay to Landlord a fee equal to three percent
(3%) of the cost of the Alterations to compensate Landlord
for the overhead and other costs it incurs in reviewing the
plans for the Alterations and in monitoring the construction
of the Alterations (the “ Landlord Fee
”). If Landlord incurs architectural,
engineering or other consultants’ fees in evaluating
such Alterations, Tenant shall reimburse Landlord for these
fees in addition to the Landlord Fee. If Tenant
proposes Alterations to Landlord but subsequently elects not
to construct the Alterations, and Landlord has incurred costs
in reviewing Tenant’s proposed Alterations (e.g.,
architect’s, engineer’s or property management
fees), Tenant shall reimburse Landlord for the costs incurred
by Landlord within ten (10) days after written
demand. Should Tenant make any Alterations without
the prior approval of Landlord, or use a contractor not
expressly approved by Landlord, Landlord may, at any time
during the term of this Lease, require that Tenant remove all
or part of the Alterations and return the Premises to the
condition it was in prior to the making of the
Alternations. In the event Tenant makes any
Alterations, Tenant agrees to obtain or cause its contractor
to obtain, prior to the commencement of any work, "builders
all risk" insurance in an amount approved by Landlord and
workers compensation insurance.
(b) Any
Alterations in or about the Premises that Tenant shall desire
to make shall be presented to Landlord in written form, with
plans and specifications which are sufficiently detailed to
obtain a building permit. If Landlord consents to
an Alteration, the consent shall be deemed conditioned upon
Tenant acquiring a building permit from the applicable
governmental agencies, furnishing a copy thereof to Landlord
prior to the commencement of the work, and compliance by
Tenant with all conditions of said permit in a prompt and
expeditious manner. Tenant shall provide Landlord
with as-built plans and specifications for any Alterations
made to the Premises.
(c) Tenant
shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Tenant
at or for use in the Premises, which claims are or may be
secured by any mechanic's or materialmen's lien against the
Premises or the Project, or any interest
therein. If Tenant shall, in good faith, contest
the validity of any such lien, Tenant shall furnish to
Landlord a surety bond satisfactory to Landlord in an amount
equal to not less than one and one half times the amount of
such contested lien claim indemnifying Landlord against
liability arising out of such lien or claim. Such
bond shall be sufficient in form and amount to free the
Project from the effect of such lien. In addition,
Landlord may require Tenant to pay Landlord's reasonable
attorneys' fees and costs incurred as a result of any such
lien.
(d) Tenant
shall give Landlord not less than ten (10) days' advance
written notice prior to the commencement of any work in the
Premises by Tenant, and Landlord shall have the right to post
notices of non-responsibility in or on the Premises or the
Project.
(e) All
Alterations (whether or not such Alterations constitute trade
fixtures of Tenant) which may be made to the Premises by
Tenant shall be paid for by Tenant, at Tenant's sole expense,
and shall be made and done in a good and workmanlike manner
and with new materials satisfactory to Landlord, and such
Alteration shall be the property of Landlord and remain upon
and be surrendered with the Premises at the expiration of the
Lease term, unless Landlord requires their removal pursuant
to Section 7.3(a). Tenant's personal property
and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage
to the Premises or the Project, shall remain the property of
Tenant and may be removed by Tenant subject to the provisions
of Section 7.2(b).
7.4
Failure of Tenant to Remove
Property . If this Lease is
terminated due to the expiration of its term or otherwise,
and Tenant fails to remove its property as required by
Section 7.2(b), in addition to any other remedies
available to Landlord under this Lease, and subject to any
other right or remedy Landlord may have under applicable law,
Landlord may remove any property of Tenant from the Premises
and store the same elsewhere at the expense and risk of
Tenant.
8.
Insurance .
8.1
Insurance-Tenant .
(a) Tenant
shall obtain and keep in force during the term of this Lease
a commercial general liability policy of insurance with
coverages acceptable to Landlord, in Landlord's reasonable
discretion, which, by way of example and not limitation,
protects Tenant and Landlord (as an additional insured)
against claims for bodily injury, personal injury and
property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing coverage in an
amount not less than $2,000,000 per occurrence and not less
than $3,000,000 in the aggregate with an "Additional
Insured-Managers and Landlords of Premises Endorsement" and
contain the "Amendment of the Pollution Exclusion" for damage
caused by heat, smoke or fumes from a hostile
fire. The policy shall not contain any
intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" for the
performance of Tenant's indemnity obligations under this
Lease.
(b) Tenant
shall obtain and keep in force during the term of this Lease
“Causes of Loss – Special Form” extended
coverage property insurance (previously known as “all
risk” property insurance) with coverages acceptable to
Landlord, in Landlord's reasonable
discretion. Said insurance shall be written on a
one hundred percent (100%) replacement cost basis on Tenant's
personal property, all tenant improvements installed at the
Premises by Landlord or Tenant, Tenant's trade fixtures and
other property. By way of example, and not
limitation, such policies shall provide protection against
any peril included within the classification "fire and
extended coverage," against vandalism and malicious mischief,
theft and sprinkler leakage (including sprinkler
leakage caused by an earthquake). Tenant’s
policy shall include endorsements to insure Tenant against
losses to valuable papers, records and computer equipment and
to compensate Tenant for the cost of recovering lost
data. To the extent that Tenant’s policy
covers tenant improvements to the Premises, Landlord shall be
a loss payee on such policy. If this Lease is
terminated as the result of a casualty in accordance with
Section 9, the proceeds of said insurance attributable
to the replacement of all tenant improvements at the Premises
shall be paid to Landlord. If insurance proceeds
are available to repair the tenant improvements, at
Landlord's option, all insurance proceeds Tenant is entitled
to receive to repair the tenant improvements shall be paid by
the insurance company directly to Landlord, Landlord shall
select the contractor to repair and/or replace the tenant
improvements, and Landlord shall cause the tenant
improvements to be repaired and/or replaced to the extent
insurance proceeds are available.
(c) Tenant
shall, at all times during the term hereof, maintain the
following insurance with coverages reasonably acceptable to
Landlord (i) workers' compensation insurance as
required by applicable law, (ii) employers liability
insurance with limits of at least $1,000,000 per occurrence,
(iii) automobile liability insurance for owned, non-owned and
hired vehicles with limits of at lease $1,000,000 per
occurrence and (iv) business interruption and extra expense
insurance. In addition to the insurance required
in (i), (ii), (iii) and (iv) above, Landlord shall have the
right to require Tenant to increase the limits of its
insurance and/or obtain such additional insurance as is
customarily required by landlords owning similar real
property in the geographical area of the
Project.
8.2
Insurance-Landlord .
(a) Landlord
shall obtain and keep in force a policy of general liability
insurance with coverage against such risks and in such
amounts as Landlord deems advisable insuring Landlord against
liability arising out of the ownership, operation and
management of the Project.
(b) Landlord
shall also obtain and keep in force during the term of this
Lease a policy or policies of insurance covering loss or
damage to the Project in the amount of the
replacement cost thereof (excluding foundations and similar
items), as determined by Landlord from time to
time. The terms and conditions of said policies,
their deductibles and the perils and risks covered thereby
shall be determined by Landlord, from time to time, in
Landlord's sole discretion. In addition, at
Landlord's option, Landlord shall obtain and keep in force,
during the term of this Lease, a policy of rental
interruption insurance, with loss payable to Landlord, which
insurance shall, at Landlord's option, also cover all
Operating Expenses. At Landlord's option, Landlord
may obtain insurance coverages and/or bonds related to the
operation of the parking areas. At Landlord's
option, Landlord may obtain coverage for flood and earthquake
damages. In addition, Landlord shall have the
right to obtain such additional insurance as is customarily
carried by owners or operators of other comparable office
buildings in the geographical area of the
Project. Tenant will not be named as an additional
insured in any insurance policies carried by Landlord and
shall have no right to any proceeds therefrom. The
policies purchased by Landlord shall contain such deductibles
as Landlord may determine. In addition to amounts
payable by Tenant in accordance with Section 4.2, Tenant
shall pay any increase in the property insurance premiums for
the Project over what was payable immediately prior to the
increase to the extent the increase is specified by
Landlord's insurance carrier as being caused by the nature of
Tenant's occupancy or any act or omission of
Tenant.
8.3
Insurance Policies
. Tenant shall deliver to Landlord certificates
for the insurance policies required under Section 8.1
concurrently with the execution of this Lease using an ACORD
27 form or a similar form approved by
Landlord. Tenant's insurance policies shall not be
cancelable or subject to reduction of coverage or other
modification except after thirty (30) days prior written
notice to Landlord. Tenant shall, at least thirty
(30) days prior to the expiration of such policies, furnish
Landlord with renewals thereof. Tenant's insurance
policies shall be issued by insurance companies authorized to
do business in the state in which the Project is located, and
said companies shall maintain during the policy term a
"General Policyholder's Rating" of at least A and a financial
rating of at least "Class X" (or such other rating as may be
required by any lender having a lien on the Project) as set
forth in the most recent edition of "Best Insurance
Reports." All insurance obtained by Tenant shall
be primary to and not contributory with any similar insurance
carried by Landlord, whose insurance shall be considered
excess insurance only. Landlord, Landlord’s
property manager and lender(s) and their respective officers,
shareholders, directors, partners, members, managers,
employees, successors and assigns, shall be included as
additional insureds under Tenant’s commercial general
liability policy and under the Tenant’s excess or
umbrella policy, if any, using ISO additional insured
endorsement CG 20 11 or a substitute providing equivalent
coverage. Tenant's insurance policies shall not
include deductibles in excess of $5,000.
8.4
Waiver of Subrogation
. Landlord waives any and all rights of recovery
against Tenant and Tenant’s employees and agents for or
arising out of damage to, or destruction of, the Project to
the extent that Landlord's insurance policies then in force
insure against such damage or destruction (or to the extent
of what would have been covered had Landlord maintained the
insurance required to be carried under this Lease) and permit
such waiver. Tenant waives any and all rights of
recovery against Landlord and Landlord's employees and agents
for or arising out of damage to, or destruction of, the
Project to the extent that Tenant's insurance policies then
in force insure against such damage or destruction (or to the
extent of what would have been covered had Tenant maintained
the insurance required to be carried under this Lease) and
permit such waiver. Tenant shall cause the insurance policies
it obtains in accordance with Section 8.1 relating to
property damage to provide that the insurance company waives
all right of recovery by subrogation against Landlord in
connection with any liability or damage covered by Tenant's
insurance policies.
8.5
Coverage . Landlord
makes no representation to Tenant that the limits or forms of
coverage specified above or approved by Landlord are adequate
to insure Tenant's property or Tenant's obligations under
this Lease, and the limits of any insurance carried by Tenant
shall not limit Tenant's obligations or liability under any
indemnity provision included in this Lease or under any other
provision of this Lease.
9.
Damage or Destruction .
9.1
Effect of Damage or Destruction
. If all or part of the Project is damaged by
fire, earthquake, flood, explosion, the elements, riot, the
release or existence of Hazardous Substances (as defined
below) or by any other cause whatsoever (hereinafter
collectively referred to as " Damages "),
but the Damages are not material (as defined in
Section 9.2 below), Landlord shall repair the Damages to
the Project as soon as is reasonably possible, and this Lease
shall remain in full force and effect. If all or
part of the Project is destroyed or materially damaged (as
defined in Section 9.2 below), Landlord shall have the
right, in its sole and complete discretion, to repair or to
rebuild the Project or to terminate this
Lease. Landlord shall within ninety (90) days
after the discovery of such material damage or destruction
notify Tenant in writing of Landlord's intention to repair or
to rebuild or to terminate this Lease. Tenant
shall in no event be entitled to compensation or damages on
account of annoyance or inconvenience in making any repairs,
or on account of construction, or on account of Landlord's
election to terminate this Lease. Notwithstanding
the foregoing, if Landlord shall elect to rebuild or repair
the Project after material damage or destruction, but in good
faith determines that the Premises cannot be substantially
repaired within two hundred forty (240) days after the date
of the discovery of the material damage or destruction,
without payment of overtime or other premiums, and the damage
to the Project will render the entire Premises unusable
during said two hundred forty (240) day period, Landlord
shall notify Tenant thereof in writing at the time of
Landlord's election to rebuild or repair, and Tenant shall
thereafter have a period of fifteen (15) days within which
Tenant may elect to terminate this Lease, upon thirty (30)
days' advance written notice to Landlord. Tenant's
termination right described in the preceding sentence shall
not apply if the damage was caused by the negligent or
intentional acts of Tenant or its employees, agents,
contractors or invitees. Failure of Tenant to
exercise said election within said fifteen (15) day period
shall constitute Tenant's agreement to accept delivery of the
Premises under this Lease whenever tendered by Landlord,
provided Landlord thereafter pursues reconstruction or
restoration diligently to completion, subject to delays
caused by Force Majeure Events. If Landlord is
unable to repair the damage to the Premises or the Project
during such two hundred forty (240) day period due to Force
Majeure Events, the two hundred forty (240) day period shall
be extended by the period of delay caused by the Force
Majeure Events. Subject to Section 9.3 below,
if Landlord or Tenant terminates this Lease in accordance
with this Section 9.1, Tenant shall continue to pay all
Base Rent, Operating Expense increases and other amounts due
hereunder which arise prior to the date of
termination.
9.2
Definition of Material Damage
. Damage to the Project shall be deemed material
if, in Landlord's reasonable judgment, the uninsured cost of
repairing the damage will exceed $25,000. If
insurance proceeds are available to Landlord in an amount
which is sufficient to pay the entire cost of repairing all
of the damage to the Project, the damage shall be deemed
material if the cost of repairing the damage exceeds
$100,000. Damage to the Project shall also be
deemed material if (a) the Project cannot be rebuilt or
repaired to substantially the same condition it was in prior
to the damage due to laws or regulations in effect at the
time the repairs will be made, (b) the holder of any mortgage
or deed of trust encumbering the Project requires that
insurance proceeds available to repair the damage in excess
of $25,000 be applied to the repayment of the indebtedness
secured by the mortgage or the deed of trust, or (c) the
damage occurs during the last twelve (12) months of the Lease
term.
9.3
Abatement of Rent . If
Landlord elects to repair damage to the Project and all or
part of the Premises will be unusable or inaccessible to
Tenant in the ordinary conduct of its business until the
damage is repaired, and the damage was not caused by the
negligence or intentional acts of Tenant or its employees,
agents, contractors or invitees, Tenant's Base Rent and
Tenant's Share of Operating Expense increases shall be abated
until the repairs are completed in proportion to the amount
of the Premises which is unusable or inaccessible to Tenant
in the ordinary conduct of its
business. Notwithstanding the foregoing, there
shall be no abatement of Base Rent or Tenant's Share of
Operating Expense increases by reason of any portion of the
Premises being unusable or inaccessible for a period equal to
five (5) consecutive business days or less.
9.4
Tenant's Acts . If such
damage or destruction occurs as a result of the negligence or
the intentional acts of Tenant or Tenant's employees, agents,
contractors or invitees, and the proceeds of insurance which
are actually received by Landlord are not sufficient to pay
for the repair of all of the damage, Tenant shall pay, at
Tenant's sole cost and expense, to Landlord upon demand, the
difference between the cost of repairing the damage and the
insurance proceeds received by Landlord.
9.5
Tenant's Property . As
more fully set forth in Section 47, Landlord shall not
be liable to Tenant or its employees, agents, contractors,
invitees or customers for loss or damage to merchandise,
tenant improvements, fixtures, automobiles, furniture,
equipment, computers, files or other property (hereinafter
collectively " Tenant's property ") located
at the Project. Tenant shall repair or replace all
of Tenant's property at Tenant's sole cost and
expense. Tenant acknowledges that it is Tenant's
sole responsibility to obtain adequate insurance coverage to
compensate Tenant for damage to Tenant's
property.
9.6
Waiver . Landlord and
Tenant hereby waive the provisions of any present or future
statutes which relate to the termination of leases when
leased property is damaged or destroyed and agree that such
event shall be governed by the terms of this
Lease.
10.
Real and Personal Property Taxes
.
10.1
Payment of Taxes
. Tenant shall pay to Landlord during the term of
this Lease, in addition to Base Rent and Tenant's Share of
Operating Expense increases, Tenant's Share of the amount by
which all "Real Property Taxes" (as defined in
Section 10.2 below) for each Comparison Year exceeds the
amount of all Real Property Taxes for the Base
Year. Tenant's Share of Real Property Tax
increases shall be payable by Tenant at the same time, in the
same manner and under the same terms and conditions as Tenant
pays Tenant's Share of Operating Expense increases as
provided in Section 4.2(f) of this
Lease. Except as expressly provided in
Section 10.4 below, if the Real Property Taxes incurred
during any Comparison Year are less than the Real Property
Taxes incurred during the Base Year, Tenant shall not be
entitled to receive any credit, offset, reduction or benefit
as a result of said occurrence.
10.2
Definition of "Real Property Tax"
. As used herein, the term " Real Property
Taxes " shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary,
improvement bond or bonds imposed on the Project or any
portion thereof by any authority having the direct or
indirect power to tax, including any city, county, state or
federal government, or any school, agricultural, sanitary,
fire, street, drainage or other improvement district thereof,
as against any legal or equitable interest of Landlord in the
Project or in any portion thereof, unless such tax is defined
as an Operating Expense by
Section 4.2(c). Real Property Taxes shall not
include income, inheritance and gift taxes.
10.3
Personal Property Taxes
. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings,
equipment and all other personal property of Tenant contained
in the Premises or related to Tenant's use of the
Premises. If any of Tenant's personal property
shall be assessed with Landlord's real or personal property,
Tenant shall pay to Landlord the taxes attributable to Tenant
within ten (10) days after receipt of a written statement
from Landlord setting forth the taxes applicable to Tenant's
property.
10.4
Reassessments . From
time to time Landlord may challenge the assessed value of the
Project as determined by applicable taxing authorities and/or
Landlord may attempt to cause the Real Property Taxes to be
reduced on other grounds. If Landlord is
successful in causing the Real Property Taxes to be reduced
or in obtaining a refund, rebate, credit or similar benefit
(hereinafter collectively referred to as a "
Reduction "), Landlord shall, to the extent
practicable, credit the Reduction(s) to Real Property Taxes
for the calendar year to which a Reduction applies and
recalculate the Real Property Taxes owed by Tenant for years
after the year in which the Reduction applies based on the
reduced Real Property Taxes (if a Reduction applies to
Tenant's Base Year, the Base Year Real Property Taxes shall
be reduced by the amount of the Reduction and Tenant's Share
of Real Property Tax increases shall be recalculated for all
Comparison Years following the year of the Reduction based on
the lower Base Year amount). All costs incurred by
Landlord in obtaining and/or processing the Real Property Tax
reductions (e.g., consulting fees, accounting fees, costs of
recalculating Base Years and Comparison Years etc.) may be
included in Operating Expenses or deducted from the
Reduction. Landlord shall have the right to
compensate a person or entity it employs to obtain a
Reduction by giving such person or entity a percentage of any
Reduction obtained.
11.
Utilities .
11.1
Services Provided by Landlord
. Subject to all governmental rules, regulations
and guidelines applicable thereto, Landlord shall use
commercially reasonable efforts to (a) provide HVAC to the
Premises for a typical office use during the times described
in Section 11.4, (b) on a monthly basis, an amount of
electricity not to exceed five (5) watts multiplied by the
number of usable square feet in the Premises multiplied by
the total number of Business Hours in the month (“
Maximum Electrical Consumption ”), (c)
water in the Premises or in the Common Area for reasonable
and normal drinking and lavatory use, (d) replacement light
bulbs and/or fluorescent tubes and ballasts for standard
overhead fixtures, and (e) building standard janitorial
services.
11.2
Intrabuilding Network Cabling
. In addition to the items described in 11.1
above, Landlord shall also provide Tenant with access to a
reasonable amount of INC. For purposes of this
Section 11.2, a reasonable amount of INC shall not
exceed six (6) cable pairs per one thousand (1,000) usable
square feet of space in the Premises. If Tenant
requires additional INC capacity, the cost of providing,
maintaining, repairing and replacing such capacity shall be
borne solely by Tenant. Additional INC capacity
may only be installed, maintained, repaired and replaced by a
contractor approved by Landlord, in Landlord's reasonable
discretion. The Building's minimum point of entry
(" MPOE ") for telephone service, the INC
risers and the telephone terminal rooms located on each floor
of the Building may only be accessed with Landlord's prior
consent and by contractors approved by Landlord, in
Landlord's reasonable discretion. Tenant shall be
responsible for any loss, cost, damage, liability and expense
(including attorneys' fees) arising out of or related to the
installation, maintenance, repair and replacement of
additional INC capacity.
11.3
Occupant Density
. Tenant shall maintain a ratio of not more than
one Occupant (as defined below) for each two hundred fifty
(250) square feet of rentable area in the Premises
(hereinafter, the “ Occupant Density
”). If Landlord has a reasonable basis to
believe that Tenant is exceeding the Occupant Density, upon
request by Landlord, Tenant shall maintain on a daily basis
an accurate record of the number of employees, visitors,
contractors and other people that visit the Premises
(collectively " Occupants
"). Landlord shall have the right to audit
Tenant's Occupant record and, at Landlord's option, Landlord
shall have the right to periodically visit the Premises
without advance notice to Tenant in order to track the number
of Occupants working at the Premises. For purposes
of this section, "Occupants" shall not include people not
employed by Tenant that deliver or pick up mail or other
packages at the Premises, employees of Landlord or employees
of Landlord's agents or contractors. Tenant
acknowledges that increased numbers of Occupants causes
additional wear and tear on the Premises and the Common
Areas, additional use of HVAC, electricity, water and other
utilities, and additional demand for other Building
services. Tenant's failure to comply with the
requirements of this section shall constitute a default under
Section 13.3 and Landlord shall have the right, in addition
to any other remedies it may have at law or equity, to
specifically enforce Tenant's obligations under this
section. Nothing contained in this section shall
be interpreted to entitle Tenant to use more parking spaces
than the number permitted by Section 1.18.
11.4
Hours of Service
. Building services, HVAC and utilities shall be
provided during Business Hours (as defined in Section
1.16). Times other than Business Hours are
hereinafter referred to as “ Non-Business
Hours ”. Janitorial services shall
be provided five (5) times per week excluding
holidays. Tenant acknowledges that there will be
no air circulation or temperature control within the Premises
when the HVAC is not operating and, consequently, during such
times the Premises may not be suitable for human occupation
or for the operation of computers and other heat sensitive
equipment. Nationally recognized holidays
(hereinafter, “ Holidays ”)
shall include, but shall not necessarily be limited to, New
Years Day, Martin Luther King Jr. Day, Presidents' Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Landlord shall use commercially
reasonable efforts to provide HVAC to the Premises during
Non-Business Hours subject to (a) the payment by Tenant of
Landlord's standard charge, as determined by Landlord from
time to time, in Landlord's sole discretion, for Non-Business
Hours HVAC (the “ Non-Business Hours HVAC
Charge ”) and (b) Tenant providing to Landlord
at least one (1) business day's advance written notice of
Tenant's need for Non-Business Hours HVAC. As of
the date of this Lease, and subject to future increases, the
Non-Business Hours HVAC Charge is set forth in Section
1.17. The Non-Business Hours HVAC Charge applies
to each HVAC zone in the Building that Non-Business Hours
HVAC is provided to and Non-Business Hours HVAC is charged in
minimum increments of two (2) consecutive
hours. Tenant shall pay to Landlord all
Non-Business Hours HVAC Charges within ten (10) days after
Landlord bills Tenant for said charges. Subject to
applicable laws and regulations, Landlord shall have no
obligation to provide lighting to the Common Areas during
Non-Business Hours.
11.5
Excess Usage by Tenant
.
(a) Notwithstanding
the use set forth in Section 1.8, and subject to the
requirements of (c) below, Tenant shall not use electricity in
excess of the Maximum Electrical Consumption, and Tenant shall
not use other Building utilities or services in excess of
those used by a typical office building tenant using its
premises for ordinary office use. Tenant shall only
install in the Premises the type and amount of office
equipment that a typical office tenant would install, and
Tenant shall not install in the Premises office equipment,
lighting fixtures or similar items which will generate above
average heat, noise or vibration at the Premises or which will
adversely effect the temperature maintained by the HVAC
system. If Landlord believes Tenant is using
electricity in excess of the Maximum Electrical Consumption,
Landlord shall have the right, in addition to any other rights
or remedies it may have under this Lease, to (i) at Tenant's
expense, install separate metering devices at the Premises to
measure Tenant’s electrical usage, (ii) require Tenant
to pay to Landlord all costs, expenses and damages incurred by
Landlord as a result of such excess usage, and/or (iii)
require Tenant to stop using electricity in excess of the
Maximum Electrical Consumption.
(b) If
the Premises contains a computer room, telecommunications room
or other area that is serviced by a separate HVAC unit on a
continuous basis (a “ Separate HVAC
Unit ”), Tenant shall pay at Tenant’s
sole expense the entire cost of all electricity used by the
Separate HVAC Unit (the “ Separate HVAC Unit
Electrical Cost ”). No portion of
the Separate HVAC Unit Electrical Cost shall be paid by
Landlord, and Tenant shall not be entitled to receive any
credit towards Separate HVAC Unit Electrical Costs for
electricity used by the Separate HVAC Unit during Business
Hours. Landlord may determine the Separate HVAC
Unit Electrical Cost by installing, at Tenant’s expense,
a separate metering device or by estimating the cost of such
usage. The Separate HVAC Unit Electrical Cost shall
be paid by Tenant within ten (10) days after Landlord provides
to Tenant a bill for such usage. In addition, if
there is an existing Separate HVAC Unit in the Premises when
Tenant leases the Premises, Tenant accepts such existing
Separate HVAC Unit in its “as is”
condition. Tenant shall pay, at Tenant’s sole
cost and expense, the entire cost of maintaining, repairing
and, when necessary, replacing any Separate HVAC
Unit. Tenant shall continuously maintain, at
Tenant’s sole cost and expense, maintenance contracts
for all Separate HVAC Units, using maintenance contract forms
and with companies approved by Landlord, in Landlord’s
sole discretion (the “ Maintenance
Contracts ”). Tenant shall provide
copies of the Maintenance Contracts to Landlord within ten
(10) days after the Commencement Date, and within ten (10)
days after such contracts are modified or renewed, and at
other times upon Landlord’s request.
(c) Landlord
reserves the right to measure the electricity used by Tenant
in the Premises from time to time (the “
Premises Electrical Consumption ”)
using Sub-Metering Devices (as defined below). Each
month Tenant shall have the right to use electricity during
Business Hours in an amount not to exceed the five (5) watts
multiplied by the number of usable square feet in the Premises
multiplied by the total number of Business Hours in the month
(“ Maximum Business Hours Usage
”). Landlord shall have the right, in
Landlord’s sole discretion, to require Tenant to pay for
some or all of the electricity used in the Premises during
Business Hours in excess of the Maximum Business Hours
Usage. Landlord shall determine the cost of
Tenant’s electricity usage using the local utility rate
for the Building’s electrical service and Landlord may
add to the cost of Tenant’s electricity usage any costs
incurred by Landlord in billing such charges to
Tenant. Each month Landlord shall have the right,
in Landlord’s sole discretion, to require Tenant to pay
for some or all of the electricity used in the Premises that
month during Non-Business Hours (“ Non-Business
Hours Usage ”), and Tenant shall receive no
electricity credit or allotment for Non-Business Hours
Usage. If electrical consumption for lighting,
convenience outlets and/or other equipment in the Premises is
not now separately metered, Landlord may, at Landlords
expense, separately meter electrical consumption for lighting,
convenience outlets and/or other equipment in the Premises
using E-Mon D-Mon meters or similar devices (collectively,
“ Sub-Metering Devices
”). If Landlord installs Sub-Metering
Devices, and based on readings from the Sub-Metering Devices
it is determined that Tenant is using electricity in excess of
the Maximum Business Hours Usage, Tenant shall reimburse
Landlord for the costs Landlord has incurred in causing the
Sub-Metering Devices to be installed. Landlord may,
but shall not be obligated to, take into consideration the
times at which Tenant is using electricity in determining the
amount paid by Tenant for its electrical
usage. Landlord shall have the right to bill Tenant
for its electricity usage periodically, and Tenant shall pay
such bills within ten (10) days after
receipt. Landlord's failure to bill Tenant for its
electrical usage for any given period shall not constitute
Landlord's waiver of its right to collect such amount at a
later date or otherwise prejudice Landlord's rights
hereunder. The payment by Tenant of electrical
costs pursuant to this section shall not limit Tenant’s
obligation to pay for after hours HVAC charges as provided in
11.4 above or to pay for the Separate HVAC Unit Electrical
Cost as provided in (a) above.
11.6
Interruptions . Tenant
agrees that Landlord shall not be liable to Tenant for its
failure to furnish gas, electricity, telephone service,
water, HVAC or any other utility services or building
services when such failure is occasioned, in whole or in
part, by repairs, replacements, or improvements, by any
strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, telephone service or other
utility at the Project, by any accident, casualty or event
arising from any cause whatsoever, including the negligence
of Landlord, its employees, agents and contractors, by act,
negligence or default of Tenant or any other person or
entity, or by any other cause, and such failures shall never
be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant
from the obligation of paying rent or performing any of its
obligations under this Lease. Furthermore,
Landlord shall not be liable under any circumstances for loss
of property or for injury to, or interference with, Tenant's
business, including, without limitation, loss of profits,
however occurring, through or in connection with or
incidental to a failure to furnish any such services or
utilities. Landlord may comply with voluntary
controls or guidelines promulgated by any governmental entity
relating to the use or conservation of energy, water, gas,
light or electricity or the reduction of automobile or other
emissions without creating any liability of Landlord to
Tenant under this Lease.
12.
Assignment and Subletting
.
12.1
Landlord's Consent Required
. Tenant shall not voluntarily or by operation of
law assign, transfer, hypothecate, mortgage, sublet, or
otherwise transfer or encumber all or any part of Tenant's
interest in this Lease or in the Premises (hereinafter
collectively a " Transfer "), without
Landlord's prior written consent, which shall not be
unreasonably withheld. Landlord shall respond to
Tenant's written request for consent hereunder within twenty
(20) days after Landlord's receipt of the written request
from Tenant. Any attempted Transfer without such
consent shall be void and shall constitute a default and
breach of this Lease. Tenant's written request for
Landlord's consent shall include, and Landlord's twenty (20)
day response period referred to above shall not commence,
unless and until Landlord has received from Tenant, all of
the following information: (a) financial statements for the
proposed assignee or subtenant prepared in accordance with
generally accepted accounting principles for the lesser of
(i) the past three (3) years or (ii) the time period the
assignee or subtenant has been in existence, (b) federal tax
returns for the proposed assignee or subtenant for the lesser
of (i) the past three (3) years or (ii) the time period the
assignee or subtenant has been in business, (c) a TRW credit
report or similar report on the proposed assignee or
subtenant, (d) a detailed description of the business the
assignee or subtenant intends to operate at the Premises, (d)
the proposed effective date of the assignment or sublease,
(f) a copy of the proposed sublease or assignment agreement
which includes all of the terms and conditions of the
proposed assignment or sublease, (g) a detailed description
of any ownership or commercial relationship between Tenant
and the proposed assignee or subtenant and (h) a detailed
description of any Alterations the proposed assignee or
subtenant desires to make to the Premises. If the
obligations of the proposed assignee or subtenant will be
guaranteed by any person or entity, Tenant's written request
shall not be considered complete until the information
described in (a), (b) and (c) of the previous sentence has
been provided with respect to each proposed guarantor.
"Transfer" shall also include the transfer (a) if Tenant is a
corporation, and Tenant's stock is not publicly traded over a
recognized securities exchange, of more than twenty five
percent (25%) of the voting stock of such corporation during
the term of this Lease (whether or not in one or more
transfers) or the dissolution, merger or liquidation of the
corporation, or (b) if Tenant is a partnership or other
entity, of more than twenty five percent (25%) of the profit
and loss participation in such partnership or
entity during the term of this Lease (whether or
not in one or more transfers) or the dissolution, merger or
liquidation of the partnership. If Tenant is a
limited or general partnership (or is comprised of two or
more persons, individually or as co-partners), Tenant shall
not be entitled to change or convert to (i) a limited
liability company, (ii) a limited liability partnership or
(iii) any other entity which possesses the characteristics of
limited liability without the prior written consent of
Landlord, which consent may be given or withheld in
Landlord's sole discretion. Tenant's sole remedy
in the event that Landlord shall wrongfully withhold consent
to or disapprove any ass
