Document:

Exhibit 10.16

 

	
Form:
    	
07L
    	
 
    	
LEASE

 

 

New South Wales

Real Property Act 1900
    	
Leave this space clear.   Affix additional
    
	
 
    	
 
    	
 
    	
pages to the top   left-hand corner.
    

 

PRIVACY NOTE: this information is legally required and will become part of the public record

 

	
 
    	
STAMP   DUTY
    	
Office of State Revenue   use only
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(A)
    	
TORRENS   TITLE
    	
Property leased:
    
	
 
    	
Auto Consol 3778-152
    
	
 
    	
PART being Levels   6, 7 and 8, 341 George Street, Sydney
    

 

	
(B)
    	
LODGED BY
    	
Delivery 
    	
Name, Address or DX and   Telephone
    	
CODE
    
	
 
    	
Box
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Reference (optional):
    	
 
    	
L
    
						

 

	
(C)
    	
LESSOR
    	
341   GEORGE ST PTY LTD
    
	
 
    	
ACN   128 330 192
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
The   lessor leases to the lessee the property referred to above.
    
	
 
    	
 
    
	
(D)
    	
Encumbrances (if applicable):
    	
1.
    	
 
    	
2.
    	
 
    	
3.
    	
 
    

 

 

	
(E)
    	
LESSEE
    	
ATLASSIAN   PTY LTD
    
	
 
    	
ACN   102 443 916
    
	
 
    	
 
    
	
(F)
    	
TENANCY:
    

 

(G)  1.        TERM:  THREE (3) YEARS

 

2.        COMMENCING DATE:  1 JULY 2017

 

3.        TERMINATING DATE:  30 JUNE 2020

 

4.                       With an OPTION TO RENEW for a period of three (3) years as set out in Item 5A of the Schedule in Annexure A hereto.

 

5.        With an OPTION TO PURCHASE set out in clause                                   Annexure A

 

6.        Together with and reserving the RIGHTS set out in clause                                    of

 

7.        Incorporates the provisions or additional material set out in ANNEXURE A                                    Hereto

 

8.        Incorporates the provisions set out in LEASE filed at Land and Property Information New South Wales as registered No.

 

9.                       The RENT is set out in Item 7 of the Commercial Terms Schedule in Annexure A hereto.

 

1

 

	
DATE:
    	
9/7/2015
    	
 
    
	
 
    	
dd mm yyyy
    	
 
    

 

	
Certified   correct for the purposes of the Real Property Act 1900 and executed on behalf   of the corporation named below by the authorised person(s) whose   signature(s) appear(s) below pursuant to the authority specified.
    
	
 
    	
 
    
	
Corporation
    	
SEE   PAGE 58 & 58A OF ANNEXURE “A” FOR EXECUTION CLAUSES
    
	
Authority
    	
section 127 of   the Corporations Act 2001 (Cth)
    
			

 

	
 
    	
 
    	
 
    
	
Signature of authorised   person
    	
 
    	
Signature of authorised   person
    
	
 
    	
 
    	
 
    
	
Name of authorised   person
    	
 
    	
Name of authorised   person
    
	
 
    	
 
    	
 
    
	
Director
    	
 
    	
Director/Company   Secretary
    
	
Office held
    	
 
    	
Office held
    

 

	
Certified   correct for the purposes of the Real Property Act 1900 by the corporation   named below the common seal of which was affixed pursuant to the authority   specified and in the presence of the authorised person(s) whose   signature(s) appear(s) below.
    
	
 
    	
 
    
	
Corporation
    	
SEE   PAGE 58 & 58A OF ANNEXURE “A” FOR EXECUTION CLAUSES
    
	
 
    	
 
    
	
Authority
    	
section 127 of the Corporations   Act 2001 (Cth)
    
			

 

	
 
    	
 
    	
 
    
	
Signature of authorised   person
    	
 
    	
Signature of authorised   person
    
	
 
    	
 
    	
 
    
	
Name of authorised   person
    	
 
    	
Name of authorised   person
    
	
 
    	
 
    	
 
    
	
Director
    	
 
    	
Secretary
    
	
Office held
    	
 
    	
Office held
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Note: where applicable, the lessor   must complete the statutory declaration below.
    

 

(I)    STATUTORY DECLARATION

 

I

 

solemnly and sincerely declare that-

 

1.     The time for the exercise of option to renew/purchase in expired lease No. has ended;

 

2.     The lessee under that lease has not exercised the option.

 

I make this solemn declaration conscientiously believing the same to be true and by virtue of the Oaths Act 1900.

 

Made and subscribed at                                                                                  in the State of New South Wales on                                                        in the presence of-

 

	
Signature of   witness:
    	
Signature of   lessor:
    
	
 
    	
 
    
	
Name of witness:
    	
 
    
	
 
    	
 
    
	
Address of   witness:
    	
 
    

 

 

Qualification of witness: Justice of the Peace

 

2

 

Lease to Atlassian Pty Ltd

Levels 6, 7 and 8, 341 George Street, Sydney

 

‘A’

 

Schedule to lease

 

	
Parties:
    	
341   GEORGE ST PTY LTD ACN 128 330 192
    	
(Landlord)
    
	
And:
    	
ATLASSIAN   PTY LTD ACN 102 443 916
    	
(Tenant)
    

 

Dated: 9-7-2015

 

Commercial Terms Schedule

 

	
Item 1
    	
 
    	
The whole of the land in Auto Consol 3778-152
    
	
Land
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Item 2
    	
 
    	
Levels 6, 7 and 8, 341 George Street, Sydney
    
	
Premises
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Item 3
    	
 
    	
1 July 2017
    
	
Commencement Date
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Item 4
    	
 
    	
30 June 2020
    
	
Expiry Date
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Item 5
    	
 
    	
Three (3) years
    
	
Term
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Item 5A
    	
 
    	
One (1) option of three (3) years   commencing on 1 July 2020
    
	
Option to Renew
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Item 6
   Tenant’s Proportion
    	
 
    	
The same percentage that the area of the Premises   (including the storage area in clause 2.3) bears to the lettable area of the   Building.
    

 

3

 

	
Item 7
    	
 
    	
Office (Level 6):
    	
 
    	
$594.43 per square metre per annum plus GST from 3   July 2017 to 30 June 2018 and then subject to further reviews under   this lease.
    
	
Base Rent
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Office (Level 7):
    	
 
    	
$683.61 per square metre per annum plus GST from 1   July 2017 to 30 June 2018 and then subject to further reviews under   this lease.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Office (Level 8):
    	
 
    	
$683.61 per square metre per annum plus GST from 1   July 2017 to 30 June 2018 and then subject to further reviews under   this lease.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Storage:
    	
 
    	
$371.53 per square metre per annum plus GST from 1   July 2017 to 30 June 2018 and then subject to further reviews under   this lease.
    
	
 
    	
 
    	
 
    	
 
    
							

 

	
Item 8
    	
 
    	
Not applicable
    	
 
    	
 
    	
 
    
	
Market Review Dates
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Item 8A
    	
 
    	
On:
    	
1 July 2018
    	
 
    	
 
    
	
Fixed Percentage Annual
    	
 
    	
 
    	
1 July 2019
    	
 
    	
 
    
	
Review Dates
    	
 
    	
 
    	
1 July 2020
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
1 July 2021 and
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
1 July 2022
    	
 
    	
 
    

 

	
Item 9
   Facilities Hours
    	
 
    	
Daily between 8.00 a.m. and 6.00 p.m. —   Saturdays, Sundays and public holidays excepted. Outside those hours,   air-conditioning and other Facilities and Services to be provided to the Premises   at the request and at the cost of the Tenant.
    

 

	
Item 10
    	
 
    	
Commercial office
    	
 
    	
 
    	
 
    
	
Permitted Use
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Item 11
    	
 
    	
$20,000,000
    	
 
    	
 
    	
 
    
	
Public risk insurance
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Item 12
    	
 
    	
Landlord:
    	
341 George St Pty Ltd
    	
 
    	
 
    
	
Notices
    	
 
    	
 
    	
c/- Graeme Walker
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
WF Limited Partnership
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Suite 10, Level 1
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
341 George Street
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
SYDNEY NSW 2000
    	
 
    	
 
    

 

4

 

	
 
    	
 
    	
Tenant:
    	
The Directors
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Atlassian Pty Ltd
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Level 6
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
341 George Street
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
SYDNEY NSW 2000
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Item 13
    	
 
    	
The greater of:
    	
 
    	
 
    
	
Bank guarantee
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
·                       $1,668,635.80; and
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
·                       An   amount equal to 6 months Base Rent (as reviewed under this lease from time to   time) plus the Tenant’s Proportion of Building Outgoings plus GST
    
	
 
    	
 
    	
 
    
	
Item 14
   Guarantors
    	
 
    	
Not applicable while Atlassian Pty Ltd ACN 102 443   916 is the Tenant.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Item 15
    	
 
    	
Not applicable
    	
 
    	
 
    
	
CPI Review Dates
    	
 
    	
 
    	
 
    	
 
    

 

5

 

1                                                 Term

 

Term of lease

 

1.1                                       Subject to the provisions of this lease, this lease commences on the Commencement Date and ends on the Expiry Date.

 

Monthly tenancy

 

1.2                                       If the Landlord permits the Tenant to occupy the Premises after the Expiry Date (other than under a grant of a further lease), the Tenant does so as a monthly tenant on the terms and conditions of this lease with necessary changes applicable to a monthly tenancy except that:

 

(a)                                 the Base Rent is an amount equal to one month of the Base Rent payable immediately before the Expiry Date plus 10%;

 

(b)                                 the first payment of rent is to be made on the next day after the Expiry Date; and

 

(c)                                  the monthly tenancy may be terminated at any time by either party by one month’s notice given to the other party to expire on any date and the tenancy will end one month after service of that notice.

 

2                                                 Base Rent

 

2.1                                       The Tenant must pay the Base Rent by equal monthly instalments (and proportionately for any part of a month) in advance on the first day of each month, by direct debit, electronic transfer or as directed by the Landlord.

 

2.2                                       The Tenant must pay the first instalment of Base Rent on the Commencement Date.

 

2.3                                       The Tenant acknowledges that as at the Commencement Date of the Initial Term the lettable area of the Premises is 3,889.50 m2 (3,811.50 m2 of office area (Level 6 —1,192 m2, Level 7—1,320.50 m2, Level 8— 1,299 m2) and 78 m2 of storage area). This area may vary during the Term. The Landlord will give written notice to the Tenant of any such variations.

 

2.4                                       Any measurement of area under this lease will be in accordance with the then current Property Council method of measurement for commercial buildings.

 

3                                                 Review of Base Rent

 

Market Review of Base Rent

 

3.1                                       If the Landlord chooses to review the Base Rent at any Market Review Date then this clause 3 applies. The Landlord is not obliged to give a notice under clause 3.2.

 

3.2                                       During each Review Period the Landlord may give a Rent Review Notice to the Tenant in respect of the Market Review Date to which that Review Period relates.

 

6

 

3.3                                       The Base Rent from and including the relevant Market Review Date is the amount stated in the Rent Review Notice unless the Tenant gives the Landlord a notice within 14 days after the Rent Review Notice is given, disagreeing with that amount.

 

3.4                                       If the Landlord does not give the Tenant a Rent Review Notice in respect of a Market Review Date during that Review Period, then as from that Market Review Date until the next Market Review Date the Tenant must continue to pay Base Rent at the rate payable before that Market Review Date.

 

Dispute as to Base Rent

 

3.5                                       If the parties do not agree on the reviewed Base Rent on the relevant Market Review Date within 42 days after the notice under clause 3.2 is given, then it must be decided by a valuer who:

 

3.5.1                     is appointed by the parties but if they do not agree on whom to appoint within 52 days after the notice under clause 3.2 is given, that valuer is to be nominated at either party’s request by the president of the New South Wales division of the Australian Property Institute Inc; and

 

3.5.2                     is a full member of at least five years’ standing of that institute; and

 

3.5.3                     at the time of appointment is both experienced and actively engaged in valuing similar licensed premises; and

 

3.5.4                     must be instructed to:

 

(a)                                 decide what is the current annual market rent that would be reasonably expected to be paid for the Premises on the relevant Market Review Date if they were unoccupied and offered for renting for the Permitted Use having regard to the terms of this lease and all matters specified in clause 3.9; and

 

(b)                                 give a written valuation setting out what was taken into account, what was disregarded, their respective weightings and any other adjustments within one month after being appointed; and

 

3.5.5                     acts as an expert and not as an arbitrator and whose decision is final and binding.

 

The amount determined by the valuer is the Base Rent from and including the relevant Market Review Date.

 

Costs

 

3.6                                       If the Base Rent determined by the valuer under this clause 3:

 

3.6.1                     is less than the Base Rent nominated in the Rent Review Notice, then the Landlord and the Tenant must pay the valuer’s costs in equal shares;

 

3.6.2                     is equal to or exceeds the Base Rent nominated in the Rent Review Notice, then the Tenant must pay the valuer’s costs.

 

7

 

Adjustments

 

3.7                                       Until the Base Rent is agreed or decided under this clause 3, the Tenant must pay the Base Rent applicable immediately before the relevant Market Review Date by equal monthly instalments, on account of the Base Rent from the relevant Market Review Date.

 

3.8                                       On the first due date for Base Rent after the Base Rent is agreed or decided under this clause 3, the Tenant must pay the Landlord (or the Landlord must credit the Tenant with) the difference between what the Tenant has paid on account of Base Rent and the Rent for the period from and including the relevant Market Review Date to but excluding that due date for Base Rent.

 

Base Rent criteria

 

3.9                                       In determining the Base Rent, the parties and the valuer must determine the current market rent for the Premises as at the particular Market Review Date having regard to the provisions of this lease and must:

 

3.9.1                     have regard to the value of any goodwill attributable to the Tenant’s Business and the value of the Tenant’s Fixtures or fitout;

 

3.9.2                     disregard any rent or other money payable under any sub-lease or other tenancy which has not been approved by the Landlord under this lease;

 

3.9.3                     have regard to the Term and disregard the fact that part of the Term has elapsed at the Market Review Date;

 

3.9.4                     have regard to the rental value of comparable premises but in doing so must make no reduction on account of any Incentive;

 

3.9.5                     consider the Premises as used for the Permitted Use but must have regard also to any other use to which the Premises may be lawfully put;

 

3.9.6                     regard the Premises on a floor by floor basis without a discount where the Base Rent is to be determined for more than one floor;

 

3.9.7                     have regard to the terms and conditions of this lease and assume that all obligations of the Tenant and the Landlord in this lease have been performed and observed;

 

3.9.8                     make no reduction on account of any Incentive paid, provided or allowed to the Tenant or which would be likely to be paid, provided or allowed to a tenant in relation to a new tenancy in respect of the Premises were they vacant;

 

3.9.9                     assume that the Premises have been reinstated in accordance with clause 9 if the Premises have been damaged or destroyed; and

 

3.9.10              have regard to any written submissions made by the Landlord or the Tenant;

 

3.9.11              deleted.

 

8

 

Base Rent not to decrease

 

3.10                                Despite any other provision of this lease, the Base Rent from any Market Review Date until the next Review Date is the greater of:

 

3.10.1              the Base Rent determined under this clause 3; and

 

3.10.2              the Base Rent payable for the lease year of the Term immediately preceding the Market Review Date.

 

Fixed Review of Base Rent

 

3.11                                On each Fixed Percentage Annual Review Date, the Base Rent payable by the Tenant under this lease will be the Base Rent payable immediately before the relevant Fixed Percentage Annual Review Date increased by 4%.

 

4                                                 Tenant charges, Building Outgoings and Cleaning

 

Tenant to pay charges & Building Outgoings

 

4.1                                       The Tenant must pay on time all:

 

(a)                                 charges for electricity, gas, oil, water, telephone and any other services separately metered and consumed in the Premises; and

 

(b)                                 all other charges and impositions imposed by any Authority or person for all services separately supplied to the Premises.

 

4.2                                       The Tenant must pay to the Landlord the Tenant’s Proportion of Building Outgoings if there is an amount specified in Item 6, or if not specified in Item 6 then as notified by the Landlord.

 

Payments on account of

 

4.3                                       The Landlord may give the Tenant a notice at any time stating the Landlord’s estimates of the Building Outgoings and the Tenant’s Proportion.

 

4.4                                       The Tenant must pay monthly instalments in advance on each Rent Day on account of the Tenant’s Proportion of Building Outgoings.

 

Notice of actual Outgoings

 

4.5                                       As soon as possible after the end of any twelve month period, the Landlord will give the Tenant reasonable details of the actual Building Outgoings.

 

Adjustments

 

4.6                                       On the next Rent Day after the Landlord gives the Tenant a notice of either estimated or actual Building Outgoings, the Tenant must pay the Landlord (or the Landlord must credit the tenant with) the difference between what the Tenant has paid on account of the Tenant’s Proportion of Building Outgoings for the relevant twelve month period and what the notice says is payable.

 

9

 

Cleaning

 

4.7                                       The Tenant will at its own cost arrange for a regular and professional cleaning service for the Premises to a standard acceptable to the Landlord.

 

5                                                 Use Obligations

 

Positive use obligations

 

5.1                                       The Tenant must:

 

(a)                                 use the Premises only for the Permitted Use;

 

(b)                                 keep the Premises clean and tidy and free of vermin;

 

(c)                                  notify the Landlord and the proper Authority promptly of any infectious illness in the Premises which must be notified to an Authority and, if that infectious illness is confined to the Premises, the Tenant must disinfect the Premises to the reasonable satisfaction of the Landlord and that Authority;

 

(d)                                 give notice to the Landlord promptly of any damage or accident to or defects in the Building or any circumstances likely to cause any damage or injury within the Building of which the Tenant is aware;

 

(e)                                  comply with all reasonable directions of the Landlord relating to the receipt, delivery or other movement of any goods or articles of bulk or quantity;

 

(f)                                   pay all actual costs of the Landlord in providing, at the request of the Tenant, Facilities and Services outside the Facilities Hours;

 

(g)                                  comply with the directions of the Landlord in relation to smoking and place in the Premises signs as the Landlord may reasonably require to notify persons of the prohibitions contained in this lease in relation to smoking;

 

(h)                                 comply with the Rules;

 

(i)                                     participate in Emergency Procedures as reasonably required by the Landlord;

 

(j)                                    pay on demand all costs arising from the issue to the Tenant of any Keys and from any loss of or damage to any Key;

 

(k)                                 ensure that any Key system installed in the Premises is compatible with the system for the Building;

 

(l)                                     obtain all consents or approvals of any Authority or under any Laws or Requirements necessary in relation to the Tenant’s Business and not allow them to lapse or be revoked;

 

(m)                             obtain all consents or approvals of any Authority or under any Laws or Requirements necessary in relation to any repairs, changes or works undertaken by the Tenant in the Premises or the Building; and

 

10

 

(n)                                 repair or replace the Landlord’s Fixtures or any part thereof that are damaged or in need of replacement due to a Tenant Cause;

 

(o)                                 obtain the Landlord’s written consent before lodging any applications for consent or approvals for work referred to in subclause 5.1(m) above. Such consent may be withheld in the Landlord’s absolute discretion;

 

(p)                                 pay on demand the Landlord’s costs of placing or changing the Tenant’s details on the Building foyer directory board (other than the standard allocation of one slat); and

 

(q)                                 must return all access cards for the Premises to the Landlord immediately on the End Date.

 

Negative use obligations

 

5.2                                       The Tenant must not:

 

(a)                                 bring, place or store Heavy Items in the Building;

 

(b)                                 install any equipment in the Premises that overloads the Services;

 

(c)                                  obstruct access to the Services or the Facilities;

 

(d)                                 affix any television or radio mast or antenna to the Building without the Landlord’s consent (and any consent so given may be withdrawn at any time without consultation if the Landlord reasonably considers it to be in the interests of the other tenants of the Building to do so);

 

(e)                                  use any musical instruments, radios, televisions, audio-visual or other sound or picture producing equipment in the Premises which is audible or visible from outside the Premises;

 

(f)                                   install Coverings on the exterior of the Building or the internal face of perimeter glass;

 

(g)                                  cover or obstruct the air-conditioning ducts and outlets or the skylights and windows which reflect or admit air or light into the Building or cover or obstruct any lights or other means of illumination;

 

(h)                                 throw anything out of the windows or doors of the Building or down the elevator shafts or into the light areas of the Building;

 

(i)                                     deposit rubbish anywhere except in proper receptacles;

 

(j)                                    place any article or thing on any sill, ledge or other like part of the Building;

 

(k)                                 obstruct parts of the Common Areas normally used to enter or leave the Premises nor place items in any part of the Building other than the Premises;

 

(l)                                     store or use any Hazardous Store or Inflammable Substances in the Premises or on the Land unless where reasonably required for the Permitted Use;

 

11

 

(m)                             smoke cigarettes, pipes, cigars or any other form of tobacco or similar substance in the Building;

 

(n)                                 remove any carpet or other floor coverings from where they were originally installed in the Building;

 

(o)                                 do anything to the carpet or other floor coverings in the Premises which contravenes any guarantee relating to them notified to the Tenant by the Landlord;

 

(p)                                 keep animals or birds in the Premises;

 

(q)                                 carry on any noxious, noisome, or offensive business or do any act or thing which may cause nuisance, damage or disturbance to any person including the Landlord and any other occupier of the Building;

 

(r)                                    hold any auction, bankrupt or fire sale in the Premises;

 

(s)                                   prepare or cook food in the Premises except in areas approved by the Landlord for that purpose;

 

(t)                                    hang anything from or in any other way deface or damage the ceilings;

 

(u)                                 display or affix any Sign on the Building. However, the Landlord agrees that while the Tenant is Atlassian Pty Ltd or a Related Body Corporate, the Tenant’s flags outside the Building may remain during the Term. Any further signage required by the Tenant will be subject to a licence arrangement and fee to be agreed between the Landlord and the Tenant, with both parties to act reasonably, cooperatively and in good faith in this regard. However, if the parties cannot agree on the terms of such licence agreement within 30 days, then the Landlord will not be required to proceed.

 

(v)                                 use the Premises as a residence;

 

(w)                               cause damage to the Building;

 

(x)                                 make any duplicate of the Keys provided by the Landlord; or

 

(y)                                 at any time occupy or use the Premises at any time which is contrary to the hours approved from time to time by the Council or any Authority. In addition, the Tenant must comply with any direction of the Landlord in relation to hours of operation;

 

without the Landlord’s written consent.

 

Warranty as to use

 

5.3                                       The Landlord gives no warranty as to the use of the Premises that may be required by the Tenant. The Landlord gives no warranty that the Premises may be used for commercial offices nor that the Premises may be used 24 hours a day 7 days a week.

 

12

 

Laws and Requirements

 

5.4                                       The Tenant must comply with and observe all Laws and Requirements affecting:

 

(a)                                 the Premises or any Tenant’s Fixtures; or

 

(b)                                 the use or occupation of the Premises,

 

including, without limit, environmental matters and matters in respect of trade waste and dangerous goods whether addressed to or required to be effected by the Landlord, the Tenant or both or by any other person. The Tenant must provide promptly to the Landlord a copy of any Laws or Requirements notified to the Tenant. In complying with those Laws or Requirements the Tenant must obtain the Landlord’s consent and must observe the provisions of this lease. The Tenant is not required to effect structural or capital works pursuant to this clause unless rendered necessary by any Tenant Cause.

 

Essential Services Certification

 

5.5                                       If due to a Tenant Cause the Landlord is prevented from or delayed in complying with its obligations to obtain a statement in relation to each essential fire or other safety measure implemented in the Building as required by the Local Government Act 1993 and the regulations thereunder, then within a reasonable time (having regard to the requirements of the Act and of the Authority administering the Act) the Tenant, on being required by the Landlord to do so, must at the cost of the Tenant carry out such works and do such things as are necessary to enable the Landlord to obtain the statement and to comply with the Landlord’s obligations under that Act.

 

5.6                                       If required by the Landlord at any time because of a Tenant Cause, the Tenant must, within the period nominated by the Landlord in its notice to the Tenant, and at the Tenant’s cost, obtain and provide to the Landlord an essential services certificate in respect of the Premises. This clause does not limit the obligations of the Tenant under clause 5.5.

 

Access

 

5.7                                       The Tenant may access and use the Premises 24 hours a day 7 days a week. However, the Landlord gives no warranty that the Authorities allow the Premises to be used 24 hours a day 7 days a week.

 

Security

 

5.8                                       The Tenant is solely responsible for the security of the Premises and must keep the Premises secure at all times.

 

6                                                 Environmental Compliance

 

6.1                                       Compliance by Tenant

 

(a)                                 The Tenant must not in any way pollute or Contaminate the Premises or any part of the Land.

 

13

 

(b)                                 Subject to clause 6.1 (c), the Tenant must comply with all relevant legislation and the proper requirements of all relevant authorities regulating or controlling pollution or Contamination of the Premises.

 

(c)                                  Nothing in clause 6.1 requires the Tenant to remediate or remove any Contamination which existed in the Premises or any of the Land prior to the date that the Tenant first occupied the Premises.

 

6.2                                       Tenant to Indemnify Landlord

 

(a)                                 The Tenant must not make any claim against the Landlord, and releases and indemnifies the Landlord from and against any obligations, costs or damages, relating to:

 

(i)             any pollution, Contamination or other environmental damage to the Premises arising out of the Tenant’s use and occupation of the Premises or any licensed areas under this lease; and

 

(ii)          any notice or order issued by any authority relating to any actual or potential pollution, Contamination or other environmental damage to or from the Premises or any licensed areas under this lease arising out of the Tenant’s use and occupation of the Premises or any licensed areas under this lease;

 

(b)                                 The Landlord acknowledges that the release and indemnity by the Tenant does not apply to any pollution, Contamination or other environmental damage occurring as a result of any wilful or negligent act or omission by the Landlord done or omitted with knowledge that it was likely to cause pollution, Contamination or other environmental damage.

 

7                                                 Repairs and alterations

 

Repair and maintenance

 

7.1                                       The Tenant must:

 

(a)                                 keep the Landlord’s Fixtures and the Tenant’s Fixtures in good and substantial repair, maintenance and condition including replacing all damaged or faulty light bulbs, light globes and tubes in the Premises;

 

(b)                                 repair any damage to the Premises caused by a Tenant Cause; and

 

(c)                                  repaint the Premises to a standard acceptable to the Landlord every three (3) years and on the End Date.

 

7.2                                       Clause 7.1 does not impose any obligation on the Tenant for:

 

(a)                                 fair wear and tear; or

 

(b)                                 structural or capital works unless rendered necessary by any Tenant Cause.

 

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7.3                                       If any damage is caused to the Building or the Premises due to a Tenant Cause, the Tenant must promptly reinstate the Building or the Premises (including structural repairs) to the condition they were in before the Tenant Cause.

 

Landlord’s right of inspection

 

7.4                                       On giving the Tenant reasonable notice (being at least one Business Day’s notice) (except in an emergency when no notice is required), the Landlord may enter the Premises to;

 

(a)                                 inspect the state of repair of the Premises; and /or

 

(b)                                 inspect and/or monitor compliance with the terms of this lease (including the Rules).

 

Tenant to carry out obligations

 

7.5                                       The Landlord may serve on the Tenant a notice of any failure by the Tenant to carry out any obligation of the Tenant under clause 5 or clause 7. The notice may require the Tenant to carry out that obligation within a reasonable time. If the Tenant fails to do so, the Landlord may carry out that obligation at the Tenant’s cost.

 

Landlord’s right of entry

 

7.6                                       If:

 

(a)                                 the Landlord wishes to do works to the Premises or the Building which in the Landlord’s opinion acting reasonably are necessary to comply with its obligations under this lease, or which the Landlord is obliged to do under this lease or under any Law or Requirement;

 

(b)                                 an Authority requires work to be done at the Building which the Landlord elects to do and which is not the Tenant’s obligation under this lease; or

 

(c)                                  the Landlord elects to carry out any obligation which the Tenant is required to carry out under this lease, but fails to do,

 

then the Landlord, on giving to the Tenant reasonable notice (being at least one Business Day’s notice) (except in an emergency when no notice is required), may enter the Premises and do those works.

 

If after the Landlord has given the Tenant reasonable notice that it requires access to the Premises and the Tenant, acting reasonably, requires the Landlord to exercise its rights under this clause at a time other than the time nominated by the Landlord (except in the case of an emergency when no notice is required), the Tenant must pay the Landlord’s additional costs as a result of the delay or overtime costs incurred in complying with the Tenant’s request.

 

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Alterations to the Building

 

7.7                                       The Tenant must not:

 

(a)                                 make any alterations or additions to the Building including the intertenancy partitions or floor coverings;

 

(b)                                 interfere with, alter or make any connections to the Services, the Landlord’s Fixtures or the Facilities; or

 

(c)                                  use, install or alter internal partitions in the Premises,

 

unless the Tenant:

 

(d)                                 obtains the Landlord’s consent; and

 

(e)                                  in all cases of such consent, the Tenant complies with the Works Conditions.

 

Landlord Access to services located in the Premises

 

7.8                                       The Tenant acknowledges that there are Building services plant located in or adjacent to the Premises which may only be access through the Premises and despite any other clause of this lease must not:

 

7.8.1                     restrict access to the Landlord or its authorised agents or contractors at any time to attend to service and maintenance of such Building services plant; or

 

7.8.2                     make any objection, claim, or fail to comply with its obligations under this lease in relation to the Landlord or its agents or contractors entering the Premises for the purpose of accessing such Building services plant.

 

7.9                                       The Tenant acknowledges that the Landlord and/or its authorised agents or contractors may access the Building services plant through the Premises at all times.

 

8                                         Assignment and sub-letting

 

Dealings not permitted

 

8.1                                       Except as otherwise stated in this clause 8, during the Term the Tenant must not Assign, sub-lease, mortgage, charge or otherwise deal with or part with possession of the Premises or this lease or any estate or interest in this lease or agree to do any of those things.

 

Sub-leases

 

8.2                                       The Tenant must not grant any sub-lease of the Premises without the Landlord’s prior written consent. The Landlord will consent to a sub-lease of the whole or part of the Premises if the Tenant complies with the Dealing Conditions.

 

Assignment

 

8.3                                       The Tenant must not Assign this lease without the Landlord’s prior written consent. The Landlord will consent to an Assignment if:

 

(a)                                 the Assignment relates to the whole of the Premises and the whole of the Tenant’s interest in this lease;

 

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(b)                                 the Tenant complies with the Dealing Conditions;

 

(c)                                  while the Tenant is Atlassian Pty Ltd ACN 102 443 916 or a Related Body Corporate, the Tenant satisfies the Landlord (acting reasonably) that the Assignee is capable of observing and performing the Tenant’s Covenants and has a good record as a commercial tenant. If the Tenant is not Atlassian Pty Ltd ACN 102 443 916 or a Related Body Corporate, the Tenant must satisfy the Landlord that the Assignee is of equal or greater capacity as the Tenant and the Guarantors, and that the Assignee is capable of observing and performing the Tenant’s Covenants; and

 

(d)                                 the Assignee covenants with the Landlord to perform and observe the Tenant’s Covenants after the Assignment.

 

8.4                                       An Assignment under clause 8.3 does not release the Tenant from the Tenant’s Covenants during the Initial Term, but the Tenant is released at the expiry of the Initial Term and is not liable during any further lease for an option period.

 

Mortgage of Tenant’s equipment etc

 

8.5                                       The Tenant must not mortgage, charge, lease or otherwise deal with any Tenant’s Fixtures without the Landlord’s consent.

 

9                                                 Insurance and damage

 

Tenant’s insurances

 

9.1                                       The Tenant must keep current during the Term:

 

(a)                                 a public risk insurance policy such policy to be for not less than the amount specified in item 11 or such other reasonable amount as the Landlord may notify the Tenant from time to time in respect of any single accident; and

 

(b)                                 plate glass insurance for all plate glass windows doors and display show cases forming part or within the Premises; and

 

(c)                                  insurance for the Tenant’s Fixtures, stock-in-trade and other property in the Premises.

 

9.2                                       The Tenant must give to the Landlord copies of a certificate of currency in respect of the insurance referred to in clause 9.1 annually.

 

Insurance terms

 

9.3                                       All policies of insurance under this clause 9 must:

 

(a)                                 be with an insurer of sufficient standing to meet any claim and such insurer must be represented in Australia;

 

(b)                                 be for such amounts and cover such risks and contain such conditions as are reasonably acceptable to or are reasonably required by the Landlord;

 

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(c)                                  have no exclusions, endorsements or alterations unless consented to by the Landlord; and

 

(d)                                 note the interest of the Landlord.

 

Not affect insurances

 

9.4                                       Without the Landlord’s consent the Tenant must not knowingly do any act or thing which may increase the cost of insurances in connection with the Building or property in the Building or affect or make void or voidable that insurance or which may conflict with Laws or Requirements relating to fires or that insurance.

 

Releases of Landlord

 

9.5                                       All property of the Tenant or of the Tenant’s Agents in the Building is at the sole risk of the Tenant.

 

9.6                                       The Tenant releases the Landlord from liability in respect of:

 

(a)                                 loss of or damage to any property of the Tenant or any other person; and

 

(b)                                 injury to or the death of any person,

 

in the Building except as a result of the negligence of the Landlord or the Landlord’s Agents.

 

Indemnities

 

9.7                                       The Tenant is liable for and must indemnify the Landlord against all Claims for which the Landlord becomes liable in connection with:

 

(a)                                 loss of or damage to the Building or to any property or injury to or the death of any person to the extent caused or contributed to by a Tenant Cause;

 

(b)                                 the negligent or careless use of the Building by the Tenant or the Tenant’s Agents;

 

(c)                                  any defect in the Building due to a Tenant Cause;

 

(d)                                 the Tenant’s failure to comply with any obligation of the Tenant under this lease; or

 

(e)                                  claims against the Landlord by any other tenant in the Building as a result of a Tenant Cause.

 

9.8                                       Clause 9.7 applies even if a Claim results from any act or thing which the Tenant may be authorised or obliged to do under this lease and even if at any time waiver or other indulgence has been given to the Tenant in respect of that act or thing.

 

Damage to Building

 

9.9                                       If the Building is damaged so that the Premises are wholly or substantially unfit for the Tenant’s occupation and use or (having regard to the nature and location of the

 

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Premises and the normal means of access) wholly or substantially inaccessible, then and so often as that happens:

 

(a)                                 a proportionate part of the Base Rent and Tenant’s Proportion of Building Outgoings, according to the nature and extent of the damage, abates and all remedies for recovery of that proportionate part of that money falling due after that damage are to be suspended until the Premises have been Reinstated; and

 

(b)                                 this lease may be terminated by notice given by the Landlord or the Tenant without liability attaching to either party because of that termination, except that the Tenant may not terminate this lease if within a period of two months after the damage, the Landlord gives a Reinstatement Notice.

 

9.10                                The Tenant is not entitled to the abatement and suspension of all remedies for recovery under clause 9.9(a) nor to terminate this lease under clause 9.9(b) if the damage is caused or contributed to by any Tenant Cause or if any policies of insurance effected on the Building have been vitiated or payment of the policy money refused due to Tenant Cause. The reduction of any abatement of the Base Rent and Tenant’s Proportion under this clause 9.10 will be proportional to the extent that the Tenant has caused or contributed to the damage.

 

9.11                                If the Landlord gives a Reinstatement Notice so that no Tenant’s right of termination arises under clause 9.9(b) and the Landlord does not, within a reasonable time (having regard to the extent of the damage and the time expected to obtain all necessary approvals and to commence and carry out the necessary works) Reinstate, (or, if clause 9.10 applies and the Landlord fails to give a Reinstatement Notice within a period of six months after the damage or fails to commence Reinstatement within a reasonable time thereafter) the Tenant may serve on the Landlord a notice of intention to terminate this lease. If the Landlord then fails to proceed with reasonable expedition to Reinstate, the Tenant may terminate this lease by giving not less than one month’s notice to the Landlord. At the expiration of that notice this lease ends.

 

9.12                                If in the Landlord’s opinion the damage to the Building is such that it is impractical or undesirable to Reinstate, the Landlord may terminate this lease by giving not less than one month’s notice to the Tenant. At the expiration of that notice this lease ends. No liability attaches to the Landlord because of termination of this lease under this clause or clause 9.9. Any termination is without prejudice to the rights of either party in respect of any antecedent breach of this lease.

 

9.13                                Clauses 9.9 to 9.12 do not impose on the Landlord any obligation to Reinstate.

 

10                                          Landlord’s Obligations

 

Quiet enjoyment

 

10.1                                Subject to the Landlord’s rights reserved by this lease, and subject to clauses 13 and 25, while the Tenant complies with its obligations under this lease the Tenant may use and occupy the Premises during the Term without interference by or through the Landlord.

 

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Facilities

 

10.2                                The Landlord must at its cost use reasonable endeavours to ensure the Facilities and Services are functional during the Facilities Hours.

 

10.3                                If the Landlord has complied with clause 10.2 and, despite that, at any time:

 

(a)                                 any Facilities or Services do not function;

 

(b)                                 the Landlord because of the need to repair, maintain or replace Facilities or Services or because of the operation of any Laws or Requirements is compelled to shut off or remove any Facilities or Services; or

 

(c)                                  the Landlord exercises its rights under clause 13.6 to close the Building,

 

then the Tenant is not entitled to terminate or rescind this lease nor to have any right of action or claim for compensation or damages or abatement of rent against the Landlord.

 

10.4                                The Landlord may vary the Facilities Hours at its discretion.

 

11                                          Default, termination

 

Essential terms

 

11.1                                The following obligations of the Tenant are essential terms of this lease:

 

(a)                                 all obligations to pay money; and

 

(b)                                 the obligations under clauses 5.1(a),(l), (m) and (o), 7, 8, 9, 11.10, 15, 15A, 17, 20 and 21.4.

 

This clause does not prevent any other obligation under this lease from being an essential term.

 

Default

 

11.2                                It is a Default under this lease if:

 

(a)                                 the Tenant does not comply with an essential term of this lease;

 

(b)                                 the Tenant does not comply with a term which is not an essential term of this lease and, if the failure to comply with the non-essential term can be remedied, it is not remedied within a reasonable time (having regard to the nature of the breach) after the Landlord asks the Tenant to remedy it;

 

(c)                                  the Tenant being a corporation, an Insolvency Event occurs in respect of the Tenant; or

 

(d)                                 the Tenant repudiates this lease.

 

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Avoid default

 

11.3                                The Tenant must ensure that no Default occurs.

 

Termination of lease

 

11.4                                If the Tenant Defaults, whether or not in the performance of an essential term, the Landlord may:

 

(a)                                 (unless prior demand or notice is required by Law) without any prior demand or notice, re-enter and take possession of the Premises and eject the Tenant and all other persons and repossess the Premises and terminate this lease; or

 

(b)                                 by notice to the Tenant, terminate this lease as from the date of giving that notice; or

 

(c)                                  by notice to the Tenant, elect to convert the unexpired portion of the Term into a quarterly tenancy (as to which clause 1.2 applies) and this lease is terminated from the giving of that notice.

 

Landlord may rectify

 

11.5                                The Landlord may remedy at any time, without notice, a Default by the Tenant. The Tenant must pay all reasonable costs incurred by the Landlord (including legal costs) in remedying a Default.

 

Tender after termination

 

11.6                                Money tendered by the Tenant after this lease is terminated and accepted by the Landlord without prejudice to the Landlord’s rights in relation to the termination may be applied in the manner the Landlord decides.

 

Damages

 

11.7                                If this lease is lawfully terminated by the Landlord

 

(a)                                 the Tenant indemnifies the Landlord for any Claim in connection with any Default giving rise to the termination or the termination of the lease; and

 

(b)                                 the Landlord may recover damages from the Tenant for the damage suffered by the Landlord for the Term including the difference between the aggregate of the Base Rent, and other money payable by the Tenant for the unexpired residue of the Term.

 

11.8                                The Landlord’s right to recover damages from the Tenant or any other person is not affected or limited if:

 

(a)                                 the Tenant abandons or vacates the Premises;

 

(b)                                 the Landlord acting lawfully elects to re-enter the Premises or terminate the lease;

 

(c)                                  the Landlord acting lawfully accepts the Tenant’s repudiation; or

 

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(d)                                 the parties’ conduct (or that of any person on their behalf) constitutes a surrender by operation of law.

 

Landlord may institute proceedings

 

11.9                                The Landlord may institute legal proceedings claiming damages against the Tenant in respect of the Term including the period before and after any repudiation, abandonment, termination, acceptance of repudiation or surrender by operation of law whether the proceedings are instituted before or after that conduct.

 

Interest on overdue money

 

11.10                         The Tenant must pay on demand interest on any money due but unpaid by the Tenant under this lease. Interest is payable at the Default Interest Rate and is to be computed on daily balances from the day after the due date for payment of the money until payment of that money in full. Interest not paid when due is to be capitalised at monthly intervals. Interest is payable on capitalised interest at the rate and in the manner referred to in this clause. Interest is recoverable in the same way as rent in arrears.

 

12                                          End Date

 

End Date obligations

 

12.1                                On the End Date the Tenant must yield up the Premises in the order and condition described in clause 7.1.

 

12.2                                On or before the End Date the Tenant:

 

(a)                                 must, but only if required by the Landlord, remove all or part of the Tenant’s Fixtures, and if required by the Landlord remove all fitout (regardless of who owns it), fixtures, fittings, furnishings, cables, conduits, wires (including, without limit, to the extent required by the Landlord, any existing partitioning or items which may be owned by the Landlord, the Tenant or a previous tenant);

 

(b)                                 reinstate and make good all penetration, including without limit the interconnecting wall to 343 George Street, Sydney;

 

(c)                                  must remove all Tenant’s Signs from the Building;

 

(d)                                 must give all Keys to the Landlord;

 

(e)                                  must if applicable, comply with clause 5.4;

 

(f)                                   must, but only if required by the Landlord, reinstate and make good the Premises and Services (including without limit, mechanical services, fire protection and electrical services) to base building layout and specifications;

 

(g)                                  must, if required by the Landlord, reinstate all ceiling and skirting services and repair the ceiling and floor to base building layout and specifications; and

 

(h)                                 must repaint the Premises to a standard, colour, and design acceptable to the Landlord; and

 

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(i)                                     must (if applicable) have all carpets in the Premises professionally steam cleaned, have all light fittings and the whole Premises professionally cleaned, replace all light globes and remove all rubbish from the Building.

 

(j)                                    deleted.

 

For the avoidance of doubt, the Tenant is not required to undertake any make good to the Licenced Area, subject to clause 31.3(h).

 

Tenant not to cause damage

 

12.3                                In performing its obligations under clauses 12.2, the Tenant must comply with this lease, including clause 5.2(w) and the Tenant must make good any damage to the Building or the Premises caused by the Tenant.

 

12.4                                If the Tenant defaults under clause 12.1, 12.2 or 12.3 or if the Landlord exercises its rights under clause 11.4, then the Landlord at the Tenant’s cost may after having given the Tenant 48 hours notice of its intention to do so carry out such work under clause 12.2 or 12.3 as the Landlord in its discretion thinks fit.

 

12.5                                The Landlord is entitled to treat any Tenant’s Fixtures not removed as if the Tenant had abandoned its interest in them and they had become the property of the Landlord and the Landlord may deal with them as the Landlord thinks fit (including sale or disposal of the Tenant’s Fixtures by public auction or otherwise) without being liable in any way to account to the Tenant.

 

13                                          Landlord’s rights

 

Roof

 

13.1                                The Landlord reserves the exclusive right to use the roof of the Building or to grant leases or licences or otherwise authorise any person to use those areas for such purposes as it thinks fit, subject at all times to the Tenant’s rights in accordance with clause 31.

 

Building name

 

13.2                                The Landlord reserves all rights in respect of the name of the Building and may change the name of the Building at its discretion from time to time.

 

Change of Landlord

 

13.3                                If another person becomes entitled to receive the rent payable by the Tenant under this lease, the Landlord is released from any obligation under this lease arising after that other person acquires the Landlord’s interest in this lease (and in respect of obligations prior to that date, once it has complied with those obligations) and the Tenant at the Landlord’s cost must enter into such covenants with the other person as the Landlord reasonably requires.

 

13.4                                An obligation owed by the Tenant to the Landlord which is due for performance before an event in clause 13.3 (including the payment of amounts owing for Base Rent in respect of a period or date or because of an event or Market Review Date occurring

 

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before that event) remains owing to the Landlord and not to the other person and may be recovered by the Landlord in its own name.

 

Landlord’s agents

 

13.5                                The Landlord may appoint persons to exercise any of its rights or perform any of its duties under this lease. Following receipt of notification of appointment to act from the Landlord, the Tenant must treat those persons when they are exercising those rights or performing those duties as if they were the Landlord. Communications from the Landlord override those from the persons appointed if they are inconsistent.

 

Close Building

 

13.6                                The Landlord may close the Building and the Land or both in an emergency or if the Landlord otherwise deems that action reasonably necessary.

 

Premises security

 

13.7                                The Landlord may enter the Premises to lock any door or window left unlocked. The Landlord is not responsible nor liable for security in the Premises or in respect of any unauthorised entry to the Premises.

 

Rules

 

13.8                                The Landlord may introduce and vary Rules which are consistent with this lease. The Tenant must at its own cost comply with all Rules.

 

Emergency

 

13.9                                Where in this lease there is reference to an emergency the reasonable determination of the Landlord as to the existence of an emergency is conclusive.

 

Landlord access

 

13.10                         To allow the Landlord to perform its obligations under this lease or under any Laws or Requirements, the Tenant must (upon receiving reasonable notice from the Landlord except in the case of an emergency when no notice is required) give the Landlord access to the Premises during the hours as the Landlord may notify to the Tenant from time to time.

 

Structural works

 

13.11                         Where in this lease the Tenant is obliged to do any work of a structural nature or which affects the Facilities, the Services or the Landlord’s Fixtures, the Landlord may elect that that work will be carried out only by the Landlord at the Tenant’s reasonable cost (and in determining reasonable cost the Tenant accepts the need of the Landlord to have regard to factors such as the urgency of the work, the nature of the work and the need to preserve any warranty or guarantee rights or to comply with service contracts).

 

Alterations to the Building

 

13.12                         The Landlord reserves the right from time to time to enlarge, alter or reduce the Building (other than the Premises, subject to the Landlord’s rights in relation thereto

 

24

 

under this lease) and to carry out construction or demolition works in any part of the Building.

 

Right of Entry to Premises

 

13.13                         The Landlord reserves the right and the Tenant shall permit the Landlord with all necessary materials, machinery, equipment and appliances at all times and upon reasonable notice (but without notice in any case which the Landlord considers an emergency) to enter upon the Premises and to use the whole or any part thereof for all or any of the following purposes:

 

(a)                                 carrying out or effecting any of the works contemplated by clauses 13.14 or 25.1;

 

(b)                                 erecting, laying or installing in, under or over the Premises pipes, sewers, drains, mains, ducts, conduits, gutters, watercourses, wires, cables, channels, flues and all other conducting media which may be required for or in connection with any existing or future Services;

 

(c)                                  inspecting, removing, maintaining, repairing, altering or adding to the Services whether in the Premises or some other part of the Building;

 

(d)                                 effecting any alterations, additions, improvements, repairs, maintenance or other work:

 

(i)            to the Building or the Premises which may be incumbent upon the Landlord under the provisions of any Laws or Requirements or which the Landlord may be entitled and elects to carry out pursuant to any provision of this lease, or

 

(ii)         to the Building which the Landlord may consider necessary or desirable.

 

Scaffolding

 

13.14                         The Landlord reserves the right and the Tenant shall permit the Landlord to erect scaffolding in or about the Building.

 

14                                          Notices

 

14.1                                A Notice:

 

(a)                                 must be in writing;

 

(b)                                 must be left at the address or sent to the facsimile number of the party in item 12, as varied by notice; and

 

(c)                                  may be sent by certified mail to the address of the party in item 12, as varied by notice.

 

14.2                                A Notice sent by certified mail and correctly addressed is taken to be received on the third (seventh, if posted to or from a place outside Australia) day after posting. A Notice

 

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sent by facsimile is taken to be received on production of a transmission report by the machine from which the facsimile was transmitted confirming that the whole facsimile was successfully transmitted to the facsimile number of the recipient notified for the purpose of this clause 14, unless the sender is aware that the transmission was impaired.

 

14.3                                A Notice by a party under this lease may be given by an Authorised Officer of the party.

 

14.4                                Unless a later time is specified in it, a Notice takes effect from the time it is received or deemed under this lease to be received.

 

14.5                                A certificate signed by the Landlord or its solicitors about a matter or about a sum payable to the Landlord in connection with this lease is sufficient evidence of the matter or sum stated in the certificate unless the matter or sum is proved to be false.

 

15                                          Bank Guarantee

 

15.1                                On or before the Commencement Date, the Tenant must deliver to the Landlord a Bank Guarantee.

 

15.2                                The Landlord at any time may claim on the Bank Guarantee and apply any money received towards money (including damages) payable by the Tenant in connection with this lease or any Related Agreement as the Landlord determines.

 

15.3                                The Landlord may claim and the bank is entitled to pay under the Bank Guarantee without reference to the Tenant and despite any contrary objection, claim or direction by the Tenant or any other party to a Related Agreement.

 

15.4                                The Landlord’s rights under this clause 15 are in addition to the other rights and remedies of the Landlord in relation to any default of the Tenant in connection with this lease.

 

15.5                                Each time the Landlord claims on a Bank Guarantee, the Landlord may notify the Tenant to top up the Bank Guarantee in relation to the claim (and any previous claims) made by the Landlord. Within seven days of receipt of each notice the Tenant must:

 

(a)                                 reinstate the Bank Guarantee to the full amount before the claims; or

 

(b)                                 give the Landlord a supplemental Bank Guarantee equal to the amount of the claims.

 

15.6                                If requested by the Landlord after each review of the Base Rent the Tenant must give the Landlord, within 7 days of the Landlord’s request, a supplemental bank guarantee so that the Bank Guarantee at all times is equal to the amount required in item 13.

 

15.7                                The Bank Guarantee must be assignable to the Landlord’s successors and assigns.

 

15.8                                Deleted.

 

15.9                                The Bank Guarantee will be returned to the Tenant provided that:

 

26

 

(a)                                 the Landlord has not exercised its rights under clause 11.4 of this lease following a Tenant Default; and

 

(b)                                 the Tenant has complied with all its obligations under this lease.

 

15A                                 Security Deposit

 

15A.1                       If the Landlord agrees that the Tenant may provide a security deposit in lieu of the Bank Guarantee, this clause 15A applies.

 

15A.2                       On or before the Commencement Date the Tenant must pay the security deposit to the Landlord by bank cheque.

 

15A.3                       The security deposit must be for the amount specified in item 13.

 

15A.4                       If the Tenant does not comply with its obligations under this lease or if the Landlord suffers damage because the Landlord cannot obtain possession of the Premises, then the Landlord may use the security deposit without notice to the Tenant.

 

15A.5                       If the Landlord uses the security deposit and the Landlord gives the Tenant a notice stating the amount required to fully reinstate the security deposit, the Tenant must pay that amount by bank cheque within 7 days of the Landlord issuing the notice.

 

15A.6                       When this lease ends, the Landlord may use any part of or the full amount of the security deposit for outstanding amounts payable by the Tenant under this lease.

 

16                                          Guarantors

 

Guarantee

 

16.1                                In consideration of the Landlord agreeing to grant this lease to the Tenant at the request of the Guarantor the Guarantor enters into this guarantee (“Guarantee”) in favour of the Landlord on the terms specified in this clause 16.

 

Scope of Guarantee

 

16.2                                The Guarantor agrees to guarantee the payment of Base Rent and the observance and performance of all the Tenant’s obligations as specified in this lease throughout the Term, including during holding over as periodical tenant after the expiry of the Term by the Tenant, its successors and assignees of this lease.

 

16.3                                This Guarantee covers the whole period whilst the Tenant occupies or is entitled to occupy the Premises under this lease as the Tenant, or whilst holding an equitable interest over the Premises under an agreement for lease or as a periodical tenant.

 

16.4                                This Guarantee extends to claims by the Landlord:

 

16.4.1              for damages for breaches of covenants under this lease;

 

16.4.2              for breaches of any essential terms of this lease;

 

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16.4.3              for repudiation of this lease;

 

16.4.4              for the Landlord’s loss or damage in the event of the Tenant abandoning or vacating the Premises;

 

16.4.5              in the event of the Landlord electing to re-enter or to terminate this lease;

 

16.4.6              for the Landlord’s reasonable legal and other expenses of seeking to enforce those obligations against the Tenant and the Guarantor, recovering possession and terminating this lease; and

 

16.4.7              for loss or damage consequent on disclaimer of this lease on the Tenant’s insolvency, as if this lease had not been disclaimed.

 

16.5                                This Guarantee is in favour of the Landlord and its successors and assigns being the owner of the Premises from time to time during the continuance of this Guarantee.

 

Liability of several Guarantors

 

16.6                                When there is more than one Guarantor under this lease:

 

16.6.1              the term Guarantor in this clause refers to each of the Guarantors and to all of them;

 

16.6.2              their obligations as Guarantor are joint and several;

 

16.6.3              the Landlord may enforce this Guarantee against all or any of them;

 

16.6.4              any notice or demand may be served on all of them by serving anyone of them; and

 

16.6.5              this Guarantee remains binding on the other Guarantors, even if

 

(a)                                 any Guarantor fails to execute this lease or to enter into this Guarantee;

 

(b)                                 this Guarantee is not binding on any Guarantor; or

 

(c)                                  the Landlord shall release any Guarantor from liability under this Guarantee.

 

Landlord’s covenants

 

16.7                                The Landlord covenants with the Guarantor to take reasonable steps to require the Tenant to comply with the Tenant’s obligations under this lease before seeking to enforce this Guarantee.

 

Landlord’s liability to Guarantor

 

16.8                                The Landlord’s failure to comply with the covenant in clause 16.7 shall not discharge this Guarantee, but the Guarantor may claim damages from the Landlord for any such

 

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breach and may rely on it in proceedings for injunction and for relief against forfeiture of this lease.

 

Claim under Guarantee

 

16.9                                The Landlord is entitled to require the Guarantor to pay to the Landlord any outstanding Base Rent or other amount or to compensate the Landlord for any loss or damage without the Landlord having instituted any proceedings against the Tenant in respect of such claims or breaches.

 

Guarantee not discharged

 

16.10                         This Guarantee is not discharged and the Landlord’s rights against the Guarantor are not affected by any of the following:

 

16.10.1       the granting of any indulgence or extension of time by the Landlord to the Tenant or to the Guarantor;

 

16.10.2       the Landlord’s neglect or failure to enforce covenants under this lease against the Tenant or waiver of any breaches or defaults under this lease;

 

16.10.3       the total or partial release of liability of the Tenant or of a Guarantor by the Landlord;

 

16.10.4       the entry into any arrangement, composition or compromise relating to this lease between the Landlord and the Tenant or any other person;

 

16.10.5       the variation of any provision of this lease between the Landlord and the Tenant without the Guarantor’s consent but only if they are minor and are not prejudicial to the Guarantor;

 

16.10.6       the death or bankruptcy or winding up of the Tenant or the Guarantor;

 

16.10.7       the Tenant’s liability under this lease, or this lease, being or becoming invalid, illegal, or unenforceable, including through any act, omission or legislation; or

 

16.10.8       the disclaimer of this lease following the Tenant’s insolvency.

 

Landlord’s certificate

 

16.11                         For the purpose of this Guarantee, a certificate or statement signed by or on behalf of the Landlord or the Landlord’s solicitors relating to any sum of money claimed by the Landlord to be due from the Tenant under this lease is prima facie evidence of the amount claimed and the facts stated therein.

 

Payments

 

16.12                         In respect of any payment made by or on behalf of the Tenant under this lease which is void or is avoided for any reason, the Guarantor shall remain liable under this Guarantee as if that payment had not been made.

 

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Until the Landlord’s claims against the Tenant and against the Guarantor have been fully satisfied, the Guarantor will hold on trust for the Landlord any money received by the Guarantor under any arrangement, composition, assignment, liquidation or bankruptcy of the Tenant.

 

17                                          Payments and costs

 

17.1                                Except where provided in this lease to the contrary, the Tenant must make payments under this lease without set-off or counterclaim and free and clear of any withholding or deduction.

 

17.2                                All payments by the Tenant under this lease must be paid to the Landlord or to a person nominated by the Landlord in a notice given to the Tenant.

 

17.3                                If the Tenant pays an amount and it is found later that the amount payable should have been higher, then the Landlord may demand payment of the difference even though the Landlord has given the Tenant a receipt for payment of the lower amount.

 

17.4                                The Landlord need not make demand for any amount payable by the Tenant under this lease unless this lease expressly specifies that demand must be made.

 

17.5                                All money under this lease must be paid to the address of the Landlord in item 12 or to such other place and in such manner (including by direct debit or electronic funds transfer) as the Landlord acting reasonably may direct.

 

17.6                                If the Tenant must pay to or reimburse the Landlord any cost, charge or other money under this lease, that amount is payable on demand unless otherwise provided in this lease.

 

17.7                                The Tenant must pay all stamp duty (including penalties and fines other than penalties and fines due to the default of the Landlord), mortgagee’s consent fees and registration fees in connection with this lease.

 

17.8                                If the Tenant defaults under this lease, the Tenant must pay all costs and expenses (including legal costs) which the Landlord suffers or incurs in connection with that default.

 

17.9                                Where the Tenant is obliged under this lease to do some act or thing, it must be done at the cost of the Tenant unless otherwise provided in this lease.

 

17.10                         The Tenant’s obligation to pay under this lease is an obligation to pay to the Landlord unless otherwise provided in this lease.

 

17.11                         The Tenant must pay the Tenant’s and the Landlord’s reasonable legal costs in respect of the preparation, negotiation, stamping and registration of this lease.

 

18                                          Governing law

 

18.1                                This lease is governed by the law in force in New South Wales.

 

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18.2                                Each party submits to the non-exclusive jurisdiction of the courts of New South Wales.

 

18.3                                Without preventing any other mode of service, any document in an action (including any writ of summons or other originating process or any third or other party notice) may be served on any party by being left for that party at its address for service of notices set out in item 12, as varied by notice.

 

19                                          General

 

Exercise of rights

 

19.1                                The Landlord may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by the Landlord does not prevent a further exercise of that or of any other right, power or remedy.

 

19.2                                Failure by either party to exercise or delay in exercising a right, power or remedy does not prevent its exercise.

 

19.3                                The rights, powers and remedies provided in this lease are cumulative with and not exclusive of the rights, powers or remedies provided by law independently of this lease.

 

Waiver

 

19.4                                A provision of or a right created under this lease may not be waived or varied except in writing signed by the party or parties to be bound.

 

19.5                                A custom or practice which may grow up between the parties in the course of administering this lease is not to be construed to waive or to lessen:

 

(a)                                 the right of the Landlord to insist on the performance by the Tenant of any provision of this lease; or

 

(b)                                 the Landlord’s rights, powers or remedies in respect of any default of the Tenant.

 

19.6                                A waiver by either party of a particular breach or default is not to be deemed to be a waiver of the same or any other subsequent breach or default.

 

19.7                                The demand of or subsequent acceptance of any money under this lease by the Landlord is not to be deemed a waiver of any preceding breach of this lease by the Tenant, other than the relevant Tenant’s breach to which the payment relates.

 

Legislation

 

19.8                                Any present or future legislation which operates to vary the obligations of the Tenant in connection with this lease with the result that the Landlord’s rights, powers or remedies are adversely affected (including by way of delay or postponement) is excluded except to the extent that its exclusion is prohibited or rendered ineffective by law.

 

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Set-off

 

19.9                                At its sole discretion the Landlord may, upon giving the Tenant written notice, apply any credit balance in any currency in any account of the Tenant with the Landlord towards satisfaction of any amount then payable by the Tenant to the Landlord under this lease. At its sole discretion the Landlord by notice to the Tenant may reduce the amount payable at any time by the Landlord to the Tenant by the amount payable at that time by the Tenant to the Landlord under this lease. The Tenant is taken to have paid the Landlord that part of the amount then payable by the Tenant equal to the amount of the reduction. The Tenant authorises the Landlord in the name of the Tenant or the Landlord to do anything (including to execute any document) that is required for the purpose of this clause.

 

Indemnities

 

19.10                         Each indemnity in this lease is a continuing obligation, separate and independent from the other obligations of the Tenant and survives the End Date. It is not necessary for the Landlord to incur expense or make payment before enforcing a right of indemnity conferred by this lease.

 

Exclusion of statutory provisions

 

19.11                         The covenants, powers and provisions implied in leases because of sections 84, 84A, 85 and 86 of the Conveyancing Act 1919 do not apply to this lease. In this lease words used in any of the forms of words in the first column of part 2 of schedule 4 to the Conveyancing Act 1919 do not imply a covenant under section 86 of that act

 

Antecedent rights and obligations

 

19.12                         The End Date does not affect:

 

(a)                                 the Landlord’s or the Tenant’s rights in connection with a breach of this lease by the other party before the End Date; or

 

(b)                                 the Landlord’s or the Tenant’s obligations under this lease in respect of periods before the End Date.

 

Severability

 

19.13                         If a provision of this lease is void, unenforceable or illegal in a jurisdiction it is severed for that jurisdiction. The remainder of this lease has full force and effect and the validity or enforceability of that provision in any other jurisdiction is not affected. This clause has no effect if the severance alters the basic nature of this lease or is contrary to public policy.

 

If document not a lease

 

19.14                         If this document is found not to be a lease or to be a lease for a period less than the Term, the parties are bound in contract to carry out their obligations under this document for the Term, as if this were deemed to be a lease, unless expressly released under this document from those obligations.

 

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Relationship of parties

 

19.15                         This lease does not create any relationship between the parties other than the relationship of landlord and tenant on the terms of this lease.

 

Counterparts

 

19.16                         This lease may consist of a number of counterparts. The counterparts taken together constitute one instrument.

 

No caveat

 

19.17                         The Tenant must not lodge or allow to be lodged for it a caveat against the Land in relation to this lease after registration of this lease at the office of Land and Property Information — NSW.

 

Entire agreement

 

19.18                         This lease constitutes the entire agreement of the parties in relation to the matters in this lease and supersedes all prior agreements, understandings and negotiations between the parties in relation to those matters.

 

Attorneys

 

19.19                         If this lease is executed by an attorney the attorney states by such execution that as at the time of such execution the attorney has received no notice of the revocation of the power of attorney under which the attorney executed this lease.

 

Non-merger

 

19.20                         Each representation and covenant under this lease continues until satisfied or completed.

 

20                                          GST

 

20.1                                The Base Rent and other moneys payable under this lease by the Tenant have been calculated without regard to GST. The parties intend the Landlord to be entitled to charge an additional amount if the Landlord becomes subject to GST as a result of the grant of this lease or any supply to the Tenant under or in connection with this lease. In order to give effect to this intention, the following provisions of this clause apply.

 

Passing-on provision

 

20.2                                If a supply made by the Landlord to the Tenant under this lease is subject to GST the Tenant must pay to the Landlord at the same time as payment for the supply is due an additional amount equal to 10% of the amount of the payment for the supply.

 

GST invoice

 

20.3                                The Landlord must give the Tenant the documentation in the form and containing the information required by law to enable the Tenant to claim a refund or credit of GST payable on the supply by the Landlord at the same time a request for payment for the supply is made.

 

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Change in rate

 

20.4                                If the GST rate changes then, from the date of the change clause 20.2 will be deemed amended so that the new rate applies in lieu of the percentage stated in clause 20.2.

 

21                                          Strata Conversion

 

21.1                                In this clause ‘strata conversion’ means a subdivision of the Premises or the Building under the Strata Titles (Freehold Development) Act 1973 or the Community Land Development Act 1989 or the Community Land Management Act 1989 or any other legislation permitting such a subdivision.

 

21.2                                The Tenant acknowledges that the Landlord may complete a strata conversion of the Premises and the Building.

 

21.3                                The Tenant consents to the strata conversion.

 

21.4                                The Tenant will, within seven (7) days of the Landlord’s written request to do so, sign and return to the Landlord any consents and other documents necessary to enable the Landlord to carry out the strata conversion and the Tenant will make no objection or claim for compensation in relation to the strata conversion. The Tenant will be deemed to have given all such consents and approved all such other documents if the Tenant has not returned all such consents to the Landlord within seven (7) days of the Landlord’s written request to do so.

 

21.5                                When the strata conversion occurs:

 

(a)                                 any reference in this lease to the Building will be deemed to be a reference to the buildings comprised in the registered plan or plans of which the Premises form part;

 

(b)                                 the rules and regulation made by the Landlord for the Building will be deemed to include any by-laws of the owner’s corporation;

 

(c)                                  this lease will be amended (by a variation of lease at the Landlord’s cost) in any respect that is necessary to ensure that this lease reflects the fact that the strata conversion has been carried out; and

 

(d)                                 any levies or other monies payable to the owner’s corporation will be deemed to be Building Outgoings for the purposes of this lease;

 

(e)                                  the following clause will be added to this lease:

 

‘Strata By-Laws

 

The Tenant must at all times comply with the by-laws of the Strata Plan and it is agreed between the Landlord and the Tenant that all such by-laws shall be deemed to be incorporated in this lease as covenants to apply between the Landlord and the Tenant in the same manner as such by-laws are applicable between the owners corporation of the Strata Plan and the registered proprietors of the lots in the Strata Plan.’; and

 

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(f)                                   the Tenant will not be liable to pay any additional items of costs or outgoings other than as required under this lease.

 

22                                          Option to Renew

 

22.1                                If the Tenant:

 

22.1.1              has paid the Base Rent punctually during this lease;

 

22.1.2              has not failed to observe and perform its obligations during the Term which has been serious or persistent or both;

 

22.1.3              gives notice to the Landlord under clause 22.2; and

 

22.1.4              between the time of notification and the end of the Initial Term duly and punctually pays the annual rent and performs its obligations under this lease,

 

then at the end of the Initial Term, the Landlord must grant and the Tenant must take a further lease of the Premises in accordance with this clause 22.

 

22.2                                A notice of exercise of the Tenant’s option under this clause 22 must:

 

22.2.1              state clearly that the Tenant wishes to take a further lease of the Premises under the option contained in clause 22.1; and

 

22.2.2              be given not earlier than 18 months and not later than 12 months before the end of the Initial Term.

 

22.3                                The provisions of the further lease will be the same as the provisions of this lease with the following exceptions:

 

22.3.1              the new lease will begin immediately after the end of the Initial Term;

 

22.3.2              the term of the new lease will be three (3) years;

 

22.3.3              the Base Rent at the commencement of the new lease will be the Base Rent for the last lease year of the Initial Term increased by 4%;

 

22.3.4              this clause 22 will be deleted; and

 

22.3.5              clauses 27, 28 and 30 will be deleted;

 

22.3.6              all other consequent changes of dates as necessary to reflect the new lease term; and

 

22.3.7              the new lease will provide for an incentive of 10% of the gross Base Rent and Tenant’s Proportion of Building Outgoings payable by the Tenant over the option term but calculated on the Base Rent and Tenant’s Proportion of Building Outgoings payable by the Tenant in the first year of the option term.

 

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23                                          Tenant’s Fitout

 

23.1                                In this clause:

 

“Consents” means all consents and approvals from the Authorities necessary for the carrying out of the Fitout Work including, without limit, a construction certificate; and

 

“Fitout Work” means any work to be carried out by the Tenant in fitting out the Premises including the Tenant’s Fixtures.

 

23.2                                If the Tenant completes any Fitout Work, it must not carry out the Fitout Work without obtaining the Landlord’s prior written approval and the Consents.

 

23.3                                The Tenant must, prior to obtaining the Consents and prior to commencing the Fitout Work, submit to the Landlord for the Landlord’s written approval:

 

(a)                                 detailed work drawings and specifications for completing the Fitout Work including (but without limitation) full details of fittings, proposed finishes and any alterations or additions to the Premises; and

 

(b)                                 details of all contractors and subcontractors to be employed in the carrying out of the Fitout Work. The Landlord may (acting reasonably) require the Tenant to amend the Fitout Work prior to giving the Landlord’s approval.

 

23.4                                The Tenant:

 

(a)                                 will proceed with all expedition to obtain from the Authorities the Consents;

 

(b)                                 must complete the Fitout Work within a reasonable time;

 

(c)                                  indemnifies the Landlord from and against all claims and losses arising from the Fitout Work or the completion of the Fitout Work; and

 

(d)                                 must complete the Fitout Work in accordance with the Landlord’s fitout guide issued for the Building from time to time.

 

23.5                                The Tenant must after obtaining the Consents and the Landlord’s approval:

 

(a)                                 carry out the Fitout Work in a good and reasonable manner; and

 

(b)                                 at the expiration or sooner termination of this lease, unless the Landlord otherwise requires, remove those items of the Fitout Work from the Premises and promptly make good any damage caused by that removal and comply with clause 12 of this lease.

 

24                                  Deleted

 

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25                                          Tenant Acknowledgements

 

25.1                                The Tenant acknowledges that:

 

(a)                                 the Landlord is in the process of completing a refurbishment of the Building;

 

(b)                                 the Landlord discloses to the Tenant the likelihood of the following occurring as a result of the refurbishment:

 

·               access to the Premises being inhibited; and

 

·               disruption of, or significant adverse effect on, the Tenant’s operations in the Premises;

 

(c)                                  notwithstanding any rights of quiet enjoyment of the Tenant, the Tenant cannot make any claim for compensation or damages in respect of anything disclosed in this clause for any losses, damages or costs arising from the Landlord’s refurbishment of the Building or anything arising from the likely occurrences disclosed in this clause; and

 

(d)                                 that other occupants of the Building will from time to time conduct fit out work on entry, alteration or vacating their premises and unless those works and actions by other occupants materially and substantially derogate from the grant of this lease then the Tenant shall not make any objection, claim or fail to fulfil its obligations under this lease as a result of fitout works described in this clause and conducted by the Landlord or other occupants of the Building.

 

26                                          Incentive

 

26.1                                After the Roof Garden Costs (if any) have been determined and agreed by both parties, the Landlord will allow the incentive calculated pursuant to clause 26.2 (the Tenant’s Incentive) to the Tenant.

 

26.2                                The Tenant’s Incentive will be calculated as follows:

 

Tenant’s Incentive = A — B

 

where:

 

A = $1,786,267.00

 

B = 49.33 % of the Roof Garden Costs

 

26.3                                The Tenant’s Incentive will be allowed to the Tenant as rent free period amortised equally over the number of whole months calculated from the date of completion of the Roof Garden Works to 30 June 2020.

 

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27                                          Roof Garden Works

 

27.1                                The Landlord and the Tenant will negotiate and agree with one another in good faith, acting reasonably, cooperatively and using reasonable endeavours, to agree as to the scope and specifications of the proposed roof garden on the roof level of the Building for exclusive use by the Tenant in accordance with clause 31 (but subject to the Landlord’s rights under this lease and clause 31) together with access for the Tenant to the roof garden (“the Roof Garden Works”) and all ancillary matters thereto.

 

27.2                                In the event that the Lessor and the Lessee, having complied with clause 27.1, are unable to agree as to the scope and specifications of the Roof Garden Works, then the Lessor and the Lessee will not be obliged to proceed with undertaking the Roof Garden Works in accordance with this clause 27, and the balance of this clause 27 shall cease to have effect.

 

27.3                                Subject to clauses 27.1 and 27.2, the Landlord will construct promptly, in a good workmanlike manner using new materials appropriately qualified licensed contractors, the Roof Garden Works.

 

27.4                                All costs associated with the Roof Garden Works (“the Roof Garden Costs”) will be paid by the Landlord but partially deducted from the Tenant’s Incentive under clause 26.2 above.

 

27.5                                This clause 27 will not be contained in any option lease.

 

28                                          Landlord Works

 

28.1                                The Landlord shall, as soon as reasonably practicable after the Commencement Date, at its own cost, undertake the following in a good workmanlike manner:

 

(a)                                 undertake a review of the air-conditioning in the Premises and resolve any base building issues identified in that review to the reasonably satisfaction of the Tenant. Such review must be undertaken promptly by an appropriately qualified licensed contractor;

 

(b)                                 use reasonable endeavours to have the staged works being completed by the fire damper contractor finalised as soon as practicable.

 

This clause 28 will not be contained in any option lease.

 

29                                          Dogs Permitted

 

29.1                                While the Tenant is Atlassian Pty Ltd ACN 102 443 916, the Tenant will be permitted to allow dogs owned by its employees within the Premises subject to the following conditions:

 

(a)                                 dogs must be contained within the Premises and not permitted on or in Common Areas;

 

38

 

(b)                                 dogs must be removed from the Premises daily and must not be permitted to remain overnight;

 

(c)                                  the Tenant’s rights under this clause are subject always to the Tenant at its own cost obtaining the approval of all Authorities and providing evidence of such approvals to the Landlord;

 

(d)                                 dogs must only be brought into the Premises using a rear lift in the Building nominated by the Landlord;

 

(e)                                  in the event that the Landlord receives any notice or complaint from another occupant of the Building or from any Authority in respect of the dogs, the Landlord must notify the Tenant in writing of same, and the Tenant must immediately rectify the source of the notice or complaint, and if the Tenant fails to do so within a reasonable time thereafter, the Tenant’s rights under this clause will cease immediately thereafter; and

 

(f)                                   the Landlord may (acting reasonably) from time to time limit the number of dogs that the Tenant allows within the Premises, provided that if the number of dogs that the Tenant allows within the Premises is to be limited as a result of a request from an Authority, the Landlord is deemed to be acting reasonably.

 

30                                          Tenant’s Right of First Refusal

 

30.1                                If the existing tenant of levels 4 and 5 of the Building does not exercise its option to renew under its lease (“Existing Lease”) and if the Landlord proposes to lease levels 4 and 5 of the Building (“Both Levels”), the Landlord must not do so without complying with the following provisions of this clause 30:

 

(a)                                 the Landlord must give notice to the Tenant, no later than six (6) months prior to the expiry date of the Existing Lease, that the Landlord proposes to lease Both Levels) and that the existing tenant did not exercise its option to renew under the Existing Lease;

 

(b)                                 the notice referred to in clause 30.1(a):

 

(i)                                     must be in writing;

 

(ii)                                  must state the details referred to in clause 30.1(a); and

 

(iii)                               must state the proposed base rent payable and incentive to be provided under the lease over Both Levels.

 

(c)                                  The Tenant may, but only within 60 days of the date of service of the notice referred to in clause 30.1(b), serve on the Landlord a written notice to the effect that the Tenant has decided to exercise its right to lease Both Levels whereupon the Landlord shall instruct their solicitor to prepare one (1) lease over Both Levels. Such lease shall be on the same terms and conditions as this lease except for:

 

39

 

(i)                                     the “Premises” shall be changed to Levels 4 and 5 and the area in clause 2.3 will be amended to reflect the estimated lettable area of Levels 4 and 5;

 

(ii)                                  the initial term will commence on 1 April 2018 (“the Start Date”) and expire on 30 June 2023;

 

(iii)                               the Tenant must be granted access to Both Levels on 1 April 2018 for the purposes of undertaking fitout;

 

(iv)                              the Tenant will be granted an incentive as determined in accordance with clause 30.1(c)(vii);

 

(v)                                 there will be no option period;

 

(vi)                              the rent reviews during the term will be 4% annual increases on each anniversary of the commencement date of the new lease;

 

(vii)                           the base rent and incentive payable at the Start Date shall be determined by agreement between the parties in good faith, however if the parties cannot agree within 21 days of the Tenant’s notice in accordance with clause 30.1(c) then the parties will appoint a Valuer in accordance with clause 3.5 of this lease who must determine the market rent and incentive in accordance with clause 3.9 except that for the purposes of this clause 30, clause 3.9.8 is deleted;

 

“3.9.8              take into account that the Landlord has provided a two (2) month rent free period under the lease over Both Levels.”

 

The valuer must also determine the incentive based on market conditions for a lease renewal for an existing tenant.

 

(viii)                        this first right of refusal (clause 30) shall be deleted;

 

(ix)                              clauses 27 and 28 shall be deleted; and

 

(d)                                 If the Tenant exercises its right to lease Both Levels under clause 30(c), the Tenant will be deemed to have exercised the option to renew for a further 3 years under clause 22 of this lease and the Tenant must take a further lease of the Premises in accordance with clause 22.

 

(e)                                  Within twenty one (21) days after service of the leases referred to in clause 30.1(c), the Tenant must return the duly signed lease to the Landlord’s solicitor together with the original bank guarantee required under the lease, evidence of insurances required under the lease and all documents or cheques required under the lease.

 

(f)                                   In the event of the Tenant failing to give notice in accordance with clause 30.1(c), the Landlord is at liberty to lease one or Both Levels to other parties.

 

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(g)                                  The rights contained in this clause 30 are personal to the Tenant while the Tenant is Atlassian Pty Ltd ACN 102 443 916 or a Related Body Corporate only and are not assignable to any assignee or transferee.

 

This clause will not be contained in any option lease.

 

31                                          Licensed Area

 

31.1                                “Licensed Area” in this lease means the roof garden to be constructed by the Landlord under clause 27 of this lease.

 

31.2                                Subject to and in accordance with the terms of this clause 31, during the Term the Landlord grants to the Tenant an exclusive licence to use the Licensed Area, subject to the Landlord’s rights under this lease and this clause 31.

 

31.3                                The Tenant must at its own cost:

 

(a)                                 clean the Licensed Area to the extent it is not clean or tidy due to the Licensee’s actions;

 

(b)                                 use the Licensed Area only for the Permitted Use and uses ancillary to the Permitted Use;

 

(c)                                  except as a result of the act, negligence or default of the Landlord or the Landlord’s Agents, indemnify the Landlord and the Landlord’s Agents in respect of all claims for loss or damage arising out of the Tenant’s use of the Licensed Area or the use of the Licensed Area by the Tenant’s Employees and Agents;

 

(d)                                 observe and comply with all reasonable rules and any building management statement from time to time introduced by the Landlord in relation to the Licensed Area;

 

(e)                                  use the Licensed Area at the risk of the Tenant;

 

(f)                                   except as a result of the act, negligence or default of the Landlord or the Landlord’s Agents, the Tenant releases the Landlord and the Landlord’s Agents from all claims of every kind resulting from any accident, damage or injury occurring as a result of the Licensed Area or its use;

 

(g)                                  not alter, add to or in any way change the Licensed Area without the Landlord’s prior consent (which must not be unreasonably withheld or delayed);

 

(h)                                 the Tenant must at the Tenant’s cost make good and repair any damage to the Licensed Area caused or contributed to by the Tenant or the Tenant’s Employees and Agents;

 

41

 

(i)                                     not grant rights in respect of the use of the Licensed Area, sell, sublet, Assign or otherwise part with possession of the Licensed Area or its interest in the Licensed Area or attempt or offer to do so at any time;

 

(j)                                    remove all rubbish of the Tenant’s and leave the Licensed Area in a clean state and condition at all times after use by the Tenant.

 

31.4                                The Tenant’s repair obligations under clauses 7.1(a) and (b), 7.3 and 7.4 of this lease extend to the Licensed Area.

 

31.5                                The Tenant’s insurance obligations and the indemnities in clauses 9.1 to 9.8 inclusive of this lease extend to the Licensed Area.

 

31.6                                The Tenant must allow the Landlord (and its contractors) unfettered access and use of the Licensed Area at all times reasonably required.

 

31.7                                The licence granted to the Lessee under this clause 31 will terminate on the End Date or earlier termination of this lease.

 

31.8                                If at any time:

 

(a)                                 the Landlord, because of the need to repair or maintain any part of the Licensed Area or Building or because of the operation of any Laws or requirement of any Authority is required to close off the Licensed Area and does so;

 

(b)                                 the Landlord exercises its rights to close the Licensed Area,

 

then the Tenant is not entitled to terminate or rescind this lease and the Tenant will not have any right of action or claim for compensation or damages or abatement of Base Rent against the Landlord.

 

31.9                                This lease is not conditional on the Licensed Area being made available to the Tenant.

 

31.10                         Notwithstanding any other provision of this clause 31 or this lease, the Tenant will not have any right of action or claim for compensation or damages or abatement of Base Rent against the Landlord because:

 

(a)                                 of the use or access of the Licensed Area by the Landlord or the Landlord’s contractors in accordance with this clause 31; or

 

(b)                                 the Tenant’s use of any part of the Licensed Area is restricted or limited for any reason whatsoever in accordance with this clause 31.

 

32                                          Deleted.

 

33                                          Deleted.

 

42

 

SCHEDULE 1 DEFINITIONS AND INTERPRETATION

 

Definitions

 

1.1                               Unless the context otherwise requires:

 

Assign means assign, transfer or otherwise dispose of, and Assignment has a like meaning.

 

Assignee means a person to whom the Tenant proposes to assign this lease under clause 8.3.

 

Authorised Officer means:

 

for the Landlord, a director, secretary or an officer whose title contains the word ‘manager’ or a person performing the functions of any of them or any other person appointed by the Landlord to act as an Authorised Officer for the purpose of this lease; and

 

for the Tenant, a director, secretary or person appointed by the Tenant to act as an Authorised Officer for the purpose of this lease.

 

Authority means any government, statutory, public or other authority or body having jurisdiction over the Building or the Premises or any matter or thing relating to the Building or the Premises, including but not limited to WorkCover or any heritage authority or body.

 

Bank Guarantee means an irrevocable and unconditional undertaking in favour of the Landlord only issued by a bank or other person approved by the Landlord containing such terms and conditions as are acceptable to the Landlord for an amount equal to the amount in item 13 with no expiry date.

 

Base Rent means the annual rent payable by the Tenant under this lease in respect of the Premises as specified in Item 7 and varied in accordance with this lease.

 

Building means 341 George Street, Sydney and includes the Premises and includes improvements on the Land including the Landlord’s Fixtures, the Facilities, the Services, the Common Areas and the Premises, and where appropriate includes the Land.

 

Building Outgoings means the items listed in Schedule 2.

 

Claim means claim, demand, liability, loss, damages, proceedings, costs, charges and expenses.

 

Commencement Date means the date in item 3.

 

Common Areas means those parts (if any) of the Building or the Land or both designated by the Landlord from time to time for use by the tenants or other occupiers of the Building and their respective employees, invitees and licensees

 

43

 

and any other persons authorised by the Landlord in common with each other, but excluding the roof of the Building and excluding any access to the roof of the Building.

 

Consumer Price Index means the Consumer Price Index, Sydney — all groups or the index officially substituted for it.

 

Contaminate means to cause Contamination.

 

Contamination means the presence in, on or under the Land of a substance at a concentration above the concentration at which the substance is normally present in, on or under (respectively) land in the same locality, being a presence that presents a risk of harm to human health or any other aspect of the environment, including but not limited to any electromagnetic radiation or electromagnetic substances.

 

Corporations Act means the Corporations Act (Cwth), 2001.

 

Coverings means blinds, screens, awnings or other window coverings.

 

CPI Review Date means each date in item 8.

 

Current CPI means the Consumer Price Index number for the quarter ending immediately before the relevant CPI Review Date.

 

Dealing means a proposed sub-lease under clause 8.2 or a proposed assignment under clause 8.3, and Deal has a corresponding meaning.

 

Dealing Conditions means in relation to a Dealing that:

 

(a)                                 the Tenant, at the time of applying for consent and up to the date of the proposed Dealing, is not in material default in the observance and performance of the Tenant’s Covenants;

 

(b)                                 the Tenant pays the Landlord’s reasonable and proper costs (whether or not the proposed Dealing proceeds to completion) including the Landlord’s costs and legal costs of giving of their consent;

 

(c)                                  the Tenant satisfies the Landlord that the Sublessee or Assignee is a respectable, responsible and solvent person;

 

(d)                                 the Tenant and either the Sublessee or the Assignee execute a deed with the Landlord in a form approved by the Landlord acting reasonably providing among other things that;

 

(i)                                     the Sublessee or Assignee covenants with the Landlord not to cause or contribute to a breach of this lease by the Tenant;

 

(ii)                                  the Tenant and either the Sublessee or the Assignee comply with the Landlord’s reasonable requirements in relation to documenting, stamping and registering the proposed Dealing; and

 

44

 

(iii)                               in the case of an assignment the Tenant procures from the Assignee in favour of the Landlord any guarantee the Landlord requires (including without limit a bank guarantee and personal/directors’ guarantees) in a form acceptable to the Landlord of the obligations and covenants of the Sublessee or Assignee in connection with the Dealing.

 

Default means any breach of this lease by the Tenant and includes (but is not limited to) the defaults listed in clause 11.2.

 

Default Interest Rate means the rate which is two per centum above the highest overdraft rate charged by the Landlord’s Bank for commercial loans in excess of $100,000 as at the due date for payment of a relevant amount of money under this lease.

 

Dispute Notice means a notice given under and which complies strictly with clauses 3.5.

 

Dispute Period means the period commencing on the date of delivery of a Rent Review Notice and ending at 5.00 pm on the date 21 days after that date or within such extended period as the Landlord and the Tenant may agree, time being of the essence.

 

Emergency Procedures means emergency evacuation procedures and practice drills for emergency procedures in relation to the Building.

 

End Date means the earlier of the Expiry Date or the date of termination of this lease.

 

Expiry Date means the date in item 4.

 

Facilities means all facilities to the Building including car stackers, lifts, air-conditioning and toilets.

 

Facilities Hours means the times for the provision of relevant Facilities as specified in item 9.

 

Fixed Percentage Annual Review Date means each date in item 8A.

 

GST means a goods and services tax, consumption tax, value added tax or like tax.

 

Heavy Item means any thing which the Tenant proposes to bring in the Building which exceeds the stated carrying capacity of the floors as advised from time to time by the Landlord.

 

Incentive means any inducement, incentive or concession of any kind however named or structured in connection with a tenancy and includes any premium or capital payment and any period of abatement or reduction of rent or other money.

 

45

 

Inflammable Substance means any substance or thing of an inflammable nature including acetylene gas, volatile or explosive oils and alcohol which in the Landlord’s reasonable opinion might cause damage to the Building.

 

Initial Term means the lease term of 3 years commencing on 1 July 2017.

 

Insolvency Event means the happening of any of these events:

 

(a)                                 an order is made that a body corporate be wound up;

 

(b)                                 an order appointing a liquidator or provisional liquidator in respect of a body corporate is made;

 

(c)                                  except to reconstruct or amalgamate while solvent on terms consented to by the Landlord acting reasonably, a body corporate enters into, or resolves to enter into, a scheme of arrangement or composition with, or assignment for the benefit of, all or any class of its creditors, or it proposes a reorganisation, moratorium or other administration involving any of them;

 

(d)                                 a body corporate resolves to wind itself up, or otherwise dissolve itself, or gives notice of intention to do so, except to reconstruct or amalgamate while solvent on terms approved by the Landlord acting reasonably or is otherwise wound up or dissolved;

 

(e)                                  a body corporate is or states that it is insolvent;

 

(f)                                   as a result of the operation of section 459F(1) of the Corporations Act, a body corporate is taken to have failed to comply with a statutory demand;

 

(g)                                  a body corporate is, or makes a statement from which it may be reasonably deduced by the Landlord that the body corporate is, the subject of an event described in section 459C(2)(b) or section 585 of the Corporations Act;

 

(h)                                 a body corporate takes any step to obtain protection or is granted protection from its creditors, under any applicable legislation or an administrator is appointed to a body corporate;

 

(i)                                     a person becomes an insolvent under administration as defined in section 9 of the Corporations Act or action is taken which could result in that event; or

 

(j)                                    anything analogous or having a substantially similar effect to any of the events specified above happens under the law of any applicable jurisdiction.

 

Institute means the Australian Property Institute Inc (NSW Division).

 

Keys means keys, access cards and other access or security devices relating to

 

46

 

the Building.

 

Land means the land described in item 1.

 

Landlord means 341 George St Pty Ltd ACN 128 330 192 and its successors am assigns.

 

Landlord’s Agents means the Landlord’s employees, agents, contractors, consultants, invitees, sub tenants, licensees, concessionaires and others who at any time are in the Building with the consent of the Landlord express or implied.

 

Landlord’s Bank means the bank for the time being used by the Landlord.

 

Landlord’s Fixtures means the plant, equipment, fixtures, furniture, furnishings, Coverings, and light fittings in or on the Premises from time to time supplied by the Landlord.

 

Laws means statutes, rules, regulations, proclamations, ordinances or by-laws present or future and includes applicable Australian Standards and Codes of Practice.

 

Market Review Date means each of the dates in item 8.

 

Notice means a notice, approval, consent, certificate, nomination, offer or other communication in connection with this lease.

 

Permitted Use means the use in item 10.

 

Premises means the part of the Building demised by this lease as described in item 2 which:

 

(a)                                 extends up to and including:

 

(i)                       the internal face of external walls and of any internal structural walls of the Building;

 

(ii)                    the false ceiling below the internal face of the concrete ceiling;

 

(iii)                 the internal face of the concrete floor; and

 

(iv)                the centre line of any partitions which separate the Premises from other parts of the Building; and

 

(b)                                 includes the Tenant’s Fixtures and the Landlord’s Fixtures in that part of the Building.

 

Previous CPI means the Consumer Price Index number for the quarter ending immediately before the Previous Rent Review Date.

 

Previous Rent Review Date means the date being the last CPI Review Date before the relevant CPI Review Date (or, if there has not been one, the

 

47

 

Commencement Date).

 

Reinstate means to reinstate the Building and make the Premises fit for occupation and use of the Tenant or accessible as the case may be following damage of the kind referred to in clause 9.9.

 

Reinstatement Notice means a notice given by the Landlord to the Tenant under clause 9.9(b) of the Landlord’s intention to Reinstate.

 

Related Agreement means any document entered into by the Landlord and the Tenant (or parties related to the Tenant) in connection with this lease.

 

Related Body Corporate means a related body corporate as defined in the Corporations Act 2001.

 

Relevant Interest means the power:

 

(a)                                 to exercise, or to control the exercise of, the right to vote attached to a share or unit; or

 

(b)                                 to dispose of, or to exercise control over the disposal of, a share or unit.

 

Rent Day means the 1st day of each month.

 

Rent Review Notice means a notice given by the Landlord under clauses 3.2 of the Landlord’s assessment of the Base Rent to apply from the relevant Market Review Date.

 

Requirements means requirements, notices, orders or directions received from or given by any Authority.

 

Review Period in respect of a Market Review Date or Licence Fee Market Review Date means the period:

 

(a)                   commencing three months before that Market Review Date; and

 

(b)                   ending on the day twelve months after that Market Review Date.

 

Rules means rules relating to the management and care of the Building or the conduct of tenants, occupants and other persons in the Building or the use or occupation of the Building introduced by the Landlord from time to time. As at the Commencement Date of the Initial Term the Rules are those set out in Schedule 3.

 

Services means all services supplied to or in the Premises such as air conditioning, gas, water, drainage, fresh air, exhaust systems, electricity, sprinkler heads, heating and lighting and includes:

 

(a)                   the Facilities to the extent that those Facilities are in, connected to or exclusively service the Premises; and

 

48

 

(b)                   the Landlord’s Fixtures.

 

Sign means a sign, advertisement, notice or similar thing.

 

Sublessee means a sublessee proposed under clause 8.2.

 

Tenant means Atlassian Pty Ltd ACN 102 443 916 and its successors and assigns.

 

Tenant’s Agents means the Tenant’s employees, agents, contractors, consultants, invitees, sublessees, licensees, concessionaires and others who at any time are in the Building with the consent of the Tenant express or implied.

 

Tenant’s Business means that business of the Tenant carried on in the Premises in compliance with the Permitted Use.

 

Tenant’s Cleaning Costs means the total costs as determined by the Landlord from time to time of providing cleaning services to the Premises.

 

Tenant Cause means:

 

(a)                   any act, omission, neglect, default or misconduct of the Tenant or of the Tenant’s Agents;

 

(b)                   the particular use or occupancy of the Premises by the Tenant or the Tenant’s Agents; or

 

(c)                    the Tenant’s Fixtures.

 

Tenant’s Covenants means the covenants, obligations and agreements on the part of the Tenant contained or implied in this lease.

 

Tenant’s Fixtures means all fixtures, fittings, plant, equipment, cabling, furniture, internal partitions, fitout and other articles in the Premises in the nature of trade or tenant’s fixtures (including any riser duct cables) in each case which are owned or leased by the Tenant or otherwise brought on to the Premises by or on behalf of the Tenant.

 

Tenant’s Proportion means the proportion in item 6.

 

Term means the term of this lease in item 5 being the period from the Commencement Date to the Expiry Date.

 

Works Conditions means that relevant works consented to by the Landlord under this lease must be carried out:

 

(a)                   at the Tenant’s cost;

 

(b)                   to a high quality of design and workmanship;

 

(b)                   by a contractor and under the supervision of persons both approved by the Landlord;

 

49

 

(c)                    in accordance with all Laws and Requirements:

 

(d)                   in accordance with plans and specifications approved by the Landlord;

 

(e)                    in accordance with and only after obtaining the approvals of all relevant Authorities;

 

(f)                     only after providing copies to the Landlord of all approvals from relevant Authorities in relation to the works prior to carrying out the works;

 

(g)                    so long as the Tenant provides as-built drawings for the Premises layout and services on completion of the works;

 

(h)                   so long as the Tenant provides copies to the Landlord of all certificates of compliance from relevant Authorities in relation to the works within a reasonable period as nominated by the Landlord (but in any event within 90 days) after the completion of the works;

 

(i)                       so long as the Tenant pays the costs of the Landlord in connection with the works including the Landlord’s costs of giving consent and the fees of any architect or other consultant used by the Landlord in connection with the works;

 

(j)                      subject to any specific conditions of the Landlord’s consent in relation to those works and subject to any fitout guide issued by the Landlord in respect of the Building; and

 

(k)                   the Tenant must ensure that its contractors do not derogate from the grant of lease and rights of quiet enjoyment of any other tenant in the Building and must use their best endeavours not to cause disruption to the business of Westpac Banking Corporation conducted in the Building or to the Landlord’s Builder or its agents.

 

Interpretation

 

1.2                               Unless the context otherwise requires:

 

(a)                                 a reference to this lease or another instrument includes any variation or replacement of any of them;

 

(b)                                 a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;

 

(c)                                  the singular includes the plural and vice versa;

 

(d)                                 the word ‘person’ includes a firm, a body corporate, an unincorporated association or an authority;

 

50

 

(e)                                  a reference to a person includes a reference to the person’s executors, administrators, successors, permitted substitutes (including persons taking by novation) and permitted assigns;

 

(f)                                   an agreement, representation or warranty in favour of two or more persons is for the benefit of them jointly and severally;

 

(g)                                  an agreement, representation or warranty on the part of two or more persons binds them jointly and severally;

 

(h)                                 a reference to an accounting term is to be interpreted in accordance with approved accounting standards under the Corporations Act and, if not inconsistent with those accounting standards, generally accepted principles and practices in Australia consistently applied by a body corporate or as between bodies corporate and over time;

 

(i)                                     a reference to any thing (including any amount) is a reference to the whole and each part of it and a reference to a group of persons is a reference to all of them collectively, to any two or more of them collectively and to each of them individually;

 

(j)                                    a reference to the president of a body or authority is a reference, if there is no such person, to the senior officer of the body or authority or to the person who fulfils the duties of president;

 

(k)                                 a reference to a clause is a reference to a clause in this lease;

 

(l)                                     ‘include’ (in any form) when introducing a list of items does not limit the meaning of the words to which the list relates to those items or to items of a similar kind;

 

(m)                             a reference to this lease includes all schedules and annexures to this lease and the Rules;

 

(n)                                 a reference to ‘month’ or ‘monthly’ means respectively calendar month and calendar monthly; and

 

(o)                                 a reference to ‘day’ means any day of the week including Saturday, Sunday and public holidays.

 

1.3                               If this lease prohibits the Tenant from doing a thing then:

 

(a)                                 the Tenant must do everything necessary to ensure that the Tenant’s Agents do not do that thing; and

 

(b)                                 the Tenant may not allow or cause any person to do that thing.

 

1.4                               If this lease requires the Tenant to do a thing then the Tenant must do everything necessary to ensure that the Tenant’s Agents also do that thing.

 

51

 

1.5                               Headings are inserted for convenience and do not affect the interpretation of this lease.

 

1.6                               In the interpretation of this lease no rule of construction applies to the disadvantage of one party on the basis that that party put forward the lease.

 

52

 

SCHEDULE 2 BUILDING OUTGOINGS

 

Statutory or regulatory

 

1.              Rates and Taxes

 

All rates, statutory charges and taxes (but only land tax on a single bolding basis, calculated on the table value of the Land and excluding the Landlord’s income tax or capital gains tax), assessments and charges (including charges for water, excess water, reticulation or discharge of water or sewerage or drainage, including meter rents and sewerage usage, drainage, trade waste and fire services), fees and levies (excluding levies for the use of areas as car parking spaces) and impositions and duties of any Authority assessed, charged, imposed or levied in respect of the building, the Land or services to the Building or the Land (regardless of ownership) or the Landlord’s ownership and operation of them including in respect of receipts of rent and other moneys under this lease (including any bank debits tax and financial institutions duty) except where the rate, tax, fee or levy arises due to the unlawful, improper or negligent act or the unlawful, improper or negligent omission of the Tenant, in which case the costs cannot be recovered by the Landlord.

 

2.              Insurance

 

Insurance premiums, stamp duty and brokers fees for:

 

(a)                 insurance of the Building (but not to the extent that such insurance exceeds its full insurable reinstatement value),

 

(b)                 insurance of the Building and the Landlord and the Manager against other risks relating to the Landlord’s interest in the Building as the Landlord, acting reasonably, deems necessary or desirable (including public liability, consequential and economic loss (and loss of rents and outgoings), machinery breakdown and any other insurance incidental to ownership, repair, maintenance, management and security of the Building and the Land (or either of them)) but excluding loss of rents arising from normal vacancies during letting up periods;, and

 

(c)                  workers compensation insurance for people performing functions in relation to the Building (where applicable, adjusted equitably reflect the proportion of time spend in relation to the building and to other activities).

 

3.              Repairs and maintenance

 

(a)                 Costs of maintaining and repairing (including repair by replacement of parts) the Common Areas, plant rooms, cleaners’ rooms, security or fire control rooms, service ducts and risers (and fixtures, fittings and furnishings in them) including painting them).

 

(b)                 Costs of carrying out safety and environmental audits in respect of the Building or the Land, except where the audit is required due to the unlawful, improper or negligent act or the unlawful, improper omission of the Landlord.

 

53

 

4.              Services

 

Costs of maintaining and repairing (including repair by replacement of parts) the following or or of the Building or the Land and providing services in respect of:

 

(a)                   the Elevators;

 

(b)                   the air-conditioning plant and equipment;

 

(c)                    the fire protection services, sprinkler and fire alarm installations;

 

(d)                   diesel generators;

 

(e)                    building automation systems;

 

(f)                     landscaping, planting, weeding and maintaining any gardens, lawns, plants and flowers in Common Areas;

 

(g)                    security, control, tenant liaison services and systems for the Building;

 

(h)                   control of pests in Common Areas;

 

(i)                       operations management and building supervision services for the Building;

 

(j)                      the auditor’s certificate pursuant to clause 3.4(b)(2) of this Schedule 2; and

 

(k)                   all other services provided in respect of the Building and the Land (or either of them).

 

5.              Management

 

A management fee or charge to cover the Landlord’s cost of having the Building and the Land managed.

 

6.              Energy costs

 

All costs for electricity, gas, oil and any other source or type of energy, power or fuel in respect of the Building or the Land.

 

7.              Strata management costs

 

Any fees or levies payable by the Landlord under the Strata Management Statement.

 

8.              Cleaning

 

Costs of providing toilet and washroom requisites in the Building and cleaning:

 

(a)                 all toilets, basins, taps, sanitary stacks, fountains, pipes, plumbing and associated appurtenances in the Building;

 

(b)                 the interior and exterior surfaces of all windows in the Building; and

 

(c)                  all Common Areas, plant rooms, cleaners’ rooms, security or fire control rooms, service ducts and risers and other areas (except those occupied for the time being

 

54

 

by a tenant or licensee) cleaned in the Building (including all fixtures, fittings and furnishings in them and garbage and refuse removal and the cost of any licence or permit for disposal of waste from the Building).

 

9.              ABGR Standard

 

All costs of complying with the Australian Building Greenhouse Rating Standard and maintaining the Building to that standard and all costs of complying with the requirements of the Department of the Environment and Water Resources Australian Greenhouse Office.

 

55

 

SCHEDULE 3 RULES

 

The provisions of the lease apply to these Rules.

 

1.                                              The Tenant may not:

 

(a)                                         smoke in the Building or in any place in which smoking is at any time not permitted by law or which is or may be a nuisance or injurious to the health or well being of any person; or

 

(b)                                         put up signs, notices, advertisements, blinds or awnings, antennae or receiving dishes or install vending or amusement machines without the Landlord’s approval in writing; or

 

(c)                                          hold auction, bankrupt or fire sales in the Premises; or

 

(d)                                         keep an animal or bird on the Premises; or

 

(e)                                          use a business name which includes words connecting the business name with the Building without the Landlord’s approval in writing; or

 

(f)                                           remove floor coverings from where they were originally laid in the Premises without the Landlord’s approval in writing; or

 

(g)                                          do anything to the floor coverings in the Building which affects any guarantee in connection with them if the Landlord has given the Tenant a notice setting out the relevant terms of the guarantee; or

 

(h)                                         use any method of heating, cooling or lighting the Premises other than those provided or approved by the Landlord; or

 

(i)                                             use the passenger lifts to carry goods or equipment; or

 

(j)                                            operate a musical instrument, radio, television or other equipment that can be heard outside the Premises; or

 

(k)                                         throw anything out of any part of the Building or down lift or light wells; or

 

(l)                                             move heavy or bulky objects through any part of the Building unless authorised by the Landlord, and at such times as the Landlord may demand; or

 

(m)                                     obstruct or interfere with:

 

(i)                                     windows in the Premises except by internal blinds or curtains approved by the Landlord; or

 

(ii)                                  any air vents, air conditioning ducts or skylights in the Premises; or

 

(iii)                               the Common Areas; or

 

(n)                                         interfere with directory boards provided by the Landlord; or

 

(o)                                         park or permit or suffer any of the Tenant’s Employees and Agents to park or leave any motor or other vehicle in any place in which the Landlord may from time to time prohibit parking; or

 

56

 

(p)                                         store or permit any item to be left outside the Premises without the prior approval in writing of the Landlord.

 

2.                                              The Tenant must:

 

(a)                                         put up signs in the Premises prohibiting smoking if required by the Landlord; and

 

(b)                                         if the Landlord approves the Tenant’s use of a business name which is connected with the Building, terminate any right it has to use that business name on the date it must vacate the Premises; and

 

(c)                                          secure the Premises when they are unoccupied and comply with the Landlord’s directions about Building security; and

 

(d)                                         if there are directory boards, submit the form in which it requires its name and description to appear on them to the Landlord for its approval, make whatever changes the Landlord reasonably requires and pay the Landlord on demand the cost of placing that information on the directory boards; and

 

(e)                                          comply with any directions of the Landlord in connection with the disposal of or recycling of rubbish; and

 

(f)                                           comply with loading and unloading regulations for the Building which may be advised by the Landlord to the Tenant in writing from time to time.

 

57

 

Execution page

 

Certified as correct for the purposes of the Real Property Act 1900 and executed on behalf of the corporation named below by the authorised persons(s) whose signature(s) appear(s) below pursuant to the authority specified.

 

	
DATE:
    	
9-7-2015
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Executed   by :
    	
 
    	
341   George St Pty Ltd
    

 

	
by its attorney pursuant to Power of Attorney Book   4572 No 894:
    

 

	
/s/ Andrew   Wennerbom
    	
 
    	
/s/ Jeanette   Pavicic
    
	
Signature of   attorney
    	
 
    	
Signature of   witness
    
	
 
    	
 
    	
 
    
	
Andrew   Wennerbom
    	
 
    	
Jeanette Pavicic
    
	
Name of attorney
    	
 
    	
Name of witness   (print name in full)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
LVL 8, 131 York   St, Sydney
    
	
 
    	
 
    	
Address of   witness
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Corporation:
    	
 
    	
Atlassian   Pty Ltd
    
	
 
    	
 
    	
 
    
	
Authority:
    	
 
    	
Section 127   of the Corporations Act 2001
    
	
 
    	
 
    	
 
    
	
/s/ Scott   Farquhar
    	
 
    	
/s/ Mike   Cannon-Brookes
    
	
Signature of   authorised person
    	
 
    	
Signature of   authorised person
    
	
 
    	
 
    	
 
    
	
Scott Farquhar
    	
 
    	
Mike   Cannon-Brookes
    
	
Name of   authorised person (print)
    	
 
    	
Name of   authorised person (print)
    
	
 
    	
 
    	
 
    
	
CEO/Director
    	
 
    	
CEO/Director
    
	
Office Held
    	
 
    	
Office Held
    
	
(Director or   Secretary or Sole
    	
 
    	
(Director or   Secretary or Sole Director/Secretary)
    
	
Director/Secretary)
    	
 
    	
 
    

 

58

 

MORTGAGEE’S CONSENT

 

59Exhibit 10.17

 

BASIC LEASE INFORMATION

INDUSTRIAL GROSS

 

	
LEASE   DATE:
    	
June 26, 2011
    
	
 
    	
 
    
	
TENANT:
    	
ATLASSIAN, INC.
    
	
 
    	
 
    
	
TENANT’S   NOTICE ADDRESS:
    	
1098 Harrison Street, San Francisco, CA 94103
    
	
 
    	
 
    
	
TENANT’S   BILLING ADDRESS:
    	
1098 Harrison Street, San Francisco, CA 94103
    
	
 
    	
 
    
	
TENANT
    	
PHONE
    
	
CONTACT:
    	
NUMBER:
    
	
 
    	
FAX NUMBER:
    
	
 
    	
 
    
	
LANDLORD:
    	
Redbird Investment Group, LLC,
    
	
 
    	
C/o Sequoia Land Investments
    
	
 
    	
1-C Gate Five Road
    
	
 
    	
Sausalito, CA 94965
    
	
 
    	
 
    
	
LANDLORD’S   NOTICE ADDRESS:
    	
Redbird Investment Group, LLC
    
	
 
    	
c/o Sequoia Land Investments
    
	
 
    	
1-C Gate Five Road
    
	
 
    	
Sausalito, CA 94965
    
	
 
    	
 
    
	
LANDLORD’S   REMITTANCE
    	
Redbird Investment Group, LLC
    
	
ADDRESS:
    	
C/o Sequoia Land Investments
    
	
 
    	
1-C Gate Five Road
    
	
 
    	
Sausalito, CA 94965
    
	
 
    	
 
    
	
Building   Description:
    	
1064 & 1098 Harrison Street, San Francisco,   CA 94103
    
	
 
    	
 
    
	
Premises:
    	
Approximately 42,039 rentable square feet for the entire   Term (notwithstanding the reduced Deemed Square Footage amount shown for   Lease Years 1 and 2 below for purposes of Base Rent calculation only)
    
	
 
    	
 
    
	
Permitted   Use:
    	
Office use and any legally permitted use under   applicable zoning
    
	
 
    	
 
    
	
Term   Commencement Date:
    	
The later to occur of (i) change of the zoning   of the Building to office use by the City and County of San Francisco, or   (ii) the first to occur of: (a) the commencement of Tenant’s   business operations on the Premises, or (b) November 1, 2011,   subject to the provisions of Section 2 below.
    
	
 
    	
 
    
	
Length   of Term:
    	
Eighty-four (84) months
    
	
 
    	
 
    
	
Term Expiration   Date:
    	
Seventh anniversary of the Term Commencement Date.
    
	
 
    	
 
    
	
Rent:
    	
 
    
	
Base   Rent:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Deemed
    	
 
    
	
 
    	
Lease
    	
 
    	
Monthly
    	
 
    	
Annual
    	
 
    	
Square
    	
 
    
	
 
    	
Year
    	
 
    	
Base Rent
    	
 
    	
Base Rent
    	
 
    	
Footage
    	
 
    
	
 
    	
1
    	
 
    	
$
    	
41,666.67
    	
 
    	
$
    	
500,000
    	
 
    	
25,000 
    	
r.s.f.
    
	
 
    	
2
    	
 
    	
$
    	
50,000.00
    	
 
    	
$
    	
600,000
    	
 
    	
30,000
    	
r.s.f.
    
	
 
    	
3
    	
 
    	
$
    	
70,065.00
    	
 
    	
$
    	
840,780
    	
 
    	
42,039
    	
r.s.f.
    

 

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
4
    	
 
    	
$
    	
77,071.50
    	
 
    	
$
    	
924,858
    	
 
    	
42,039 
    	
r.s.f.
    
	
 
    	
5
    	
 
    	
$
    	
80,574.75
    	
 
    	
$
    	
966,897
    	
 
    	
42,039
    	
r.s.f.
    
	
 
    	
6
    	
 
    	
$
    	
84,078.00
    	
 
    	
$
    	
1,008,936
    	
 
    	
42,039
    	
r.s.f.
    
	
 
    	
7
    	
 
    	
$
    	
87,581.25
    	
 
    	
$
    	
1,050,975
    	
 
    	
42,039
    	
r.s.f.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Base   Year for Operating Expenses:
    	
2012
    
	
 
    	
 
    
	
Security   Deposit:
    	
Six (6) months’ rent, cash or letter of credit,   subject to the provisions of Section 20
    
	
 
    	
 
    
	
Tenant’s   Proportionate Share
    	
100%
    
	
Of   Building:
    	
 
    

 

The foregoing Basic Lease Information is incorporated into and made a part of this Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective information above and shall be construed to incorporate all of the terms provided under the particular Lease paragraph pertaining to such information. In the event of any conflict between the Basic Lease Information and the Lease, the latter shall control.

 

	
LANDLORD
    	
 
    	
TENANT
    
	
 
    	
 
    	
 
    
	
Redbird   Investment Group, LLC
    	
 
    	
Atlassian, Inc.
    
	
A Delaware   Limited Liability Company
    	
 
    	
A Delaware   Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J.   Cardinal
    	
 
    	
By:
    	
/s/ Scott Farquhar
    
	
 
    	
 
    	
Bruce J.   Cardinal
    	
 
    	
 
    	
Name:
    	
Scott Farquhar
    
	
 
    	
 
    	
 Managing Member
    	
 
    	
 
    	
Its:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Jay Simons
    
	
 
    	
 
    	
 
    	
Name:
    	
Jay Simons
    
	
 
    	
 
    	
 
    	
Its:
    	
Director
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
Basic   Lease Information
    	
1
    
	
 
    	
Table   of Contents
    	
3
    
	
1.
    	
Premises
    	
5
    
	
2.
    	
Possession   and Lease Commencement
    	
5
    
	
3.
    	
Term
    	
5
    
	
4.
    	
Option   Rights
    	
5
    
	
5.
    	
Use
    	
8
    
	
6.
    	
Rules and   Regulations
    	
8
    
	
7.
    	
Rent
    	
8
    
	
8.
    	
Operating   Expenses
    	
9
    
	
9.
    	
Insurance   and Indemnification
    	
12
    
	
10.
    	
Waiver   of Subrogation
    	
14
    
	
11.
    	
Landlord’s   Repairs and Maintenance
    	
14
    
	
12.
    	
Tenant’s   Repairs and Maintenance
    	
15
    
	
13.
    	
Alterations
    	
15
    
	
14.
    	
Signs
    	
16
    
	
15.
    	
Inspection/Posting   Notices
    	
16
    
	
16.
    	
Services   and Utilities
    	
17
    
	
17.
    	
Subordination
    	
18
    
	
18.
    	
Financial   Statements
    	
18
    
	
19.
    	
Estoppel   Certificate
    	
18
    
	
20.
    	
Security   Deposit
    	
19
    
	
21.
    	
Limitation   of Tenant’s Remedies
    	
19
    
	
22.
    	
Assignment   and Subletting
    	
19
    
	
23.
    	
Authority   of Tenant
    	
21
    
	
24.
    	
Condemnation
    	
21
    
	
25.
    	
Casualty   Damage
    	
21
    
	
26.
    	
Holding   Over
    	
22
    
	
27.
    	
Default
    	
23
    
	
28.
    	
Liens
    	
25
    
	
29.
    	
Transfers   by Landlord
    	
25
    
	
30.
    	
Right   of Landlord to Perform Tenant’s Covenants
    	
25
    
	
31.
    	
Waiver
    	
25
    
	
32.
    	
Notices
    	
26
    
	
33.
    	
Attorney’s   Fees
    	
26
    
	
34.
    	
Successors   and Assigns
    	
26
    
	
35.
    	
Force   Majeure
    	
26
    
	
36.
    	
Surrender   of Premises
    	
27
    
	
37.
    	
Hazardous   Materials
    	
27
    
	
38.
    	
Miscellaneous
    	
28
    
	
39.
    	
Additional   Provisions
    	
29
    
	
40.
    	
Jury   Trial Waiver
    	
30
    
	
 
    	
Signatures
    	
30
    

 

	
Exhibits:
    	
 
    
	
Exhibit A
    	
Rules and Regulations
    

 

3

 

	
Exhibit B
    	
Site Plan, Property Description
    
	
Exhibit C
    	
Hazardous Materials Questionnaire
    
	
Additional Exhibits as   Required
    	
 
    

 

4

 

LEASE

 

THIS LEASE is made as of the           day of June, 2011, by and between Redbird Investment Group, LLC, a Delaware Limited Liability Company (hereinafter called “Landlord”), and Atlassian, Inc., a Delaware Corporation (hereinafter called “Tenant”).

 

1. PREMISES

 

Landlord leases to Tenant and Tenant leases from Landlord, upon the terms and conditions hereinafter set forth, those premises (the “Premises”) outlined in red on Exhibit B  and described in the Basic Lease Information. The Premises shall consist of the building located at 1064 and 1098 Harrison Street, San Francisco, California (the “Building”) as described in the Basic Lease Information. The Building is outlined on Exhibit B.

 

2. POSSESSION AND LEASE COMMENCEMENT

 

Tenant shall be entitled to early occupancy of the Premises for the sole purpose of installing furniture, fixtures and equipment (including Tenant’s data and telephone equipment) in the Premises commencing on the date this Lease is executed by Landlord and Tenant, and continuing until the Term Commencement Date; provided that during each such early occupancy period, except as provided in the succeeding sentence hereof, all terms, provisions and conditions of this Lease shall apply. Tenant shall not be liable for any Rent (defined below) for any period prior to the Term Commencement Date except for utilities, janitorial services or any other monetary obligation for purposes of constructing its tenant improvements and installing its furniture, fixtures and equipment prior to the term Commencement Date. Tenant acknowledges that Tenant has inspected and accepts the Premises in their present condition, broom clean, “as is,” and as suitable for, the Permitted Use (as defined below), and for Tenant’s intended operations in the Premises. Tenant agrees that the Premises and other improvements are in good and satisfactory condition as of the Lease Date, except for matters shown on Schedule I attached hereto, which shall be repaired, remediated or brought into full compliance with Regulations (as defined below) by Landlord (“Landlord’s Work”) at Landlord’s sole cost and expense within sixty (60) days after the Lease Date, provided, however, that items 8 and 9 on Schedule I (“Concurrent Work”) may be completed during the construction of the Tenant Improvements (as defined below) at Landlord’s sole cost and expense so long as the completion of such work does not materially interfere with the timely completion of the Tenant Improvements.. Tenant further acknowledges that no promises to alter, remodel or improve the Premises have been made by Landlord or any agents of Landlord unless such are expressly set forth in this Lease, including Schedule I hereto. Reasonably promptly following the completion of Landlord’s Work, Tenant shall execute and return to Landlord a “Commencement Date Letter” in which Tenant shall agree to acceptance of the Premises and to the determination of the Term Commencement Date, in accordance with the terms of this Lease; provided, however, that the Term Commencement Date shall be extended on a day-for-day basis in the event that Landlord’s Work (other than the Concurrent Work) is not completed within sixty (60) days of the Lease Date until such time as Landlord’s Work (other than the Concurrent Work) is complete, but only to the extent that any such delay in the completion of Landlord’s Work materially interferes with the timely completion of the Tenant Improvements.

 

3. TERM

 

The term of this Lease (the “Term”) shall commence on the Term Commencement Date and continue in full force and effect for the number of months specified as the Length of Term in the Basic Lease Information or until this Lease is terminated as otherwise provided herein. If the Term Commencement Date is a date other than the first day of the calendar month, the Term shall be the number of months of the Length of Term in addition to the remainder of the calendar month following the Term Commencement Date.

 

4. OPTION RIGHTS

 

A.                                    Option To Extend. Landlord hereby grants Tenant one (1) option to extend the Lease Term for the entire Premises by a period of five (5) years “Option Term”. Such option shall be exercisable only by Notice delivered by Tenant to Landlord as provided below, provided that, as of the date of delivery of such Notice, Tenant is not in default under this Lease (beyond any applicable notice and cure periods). Upon the proper exercise of such option to extend, the Lease Term, as it applies to the entire Premises, shall be extended for a period of five (5) years. The rights contained in this Section 4 shall only be

 

5

 

exercised by the Original Tenant, an affiliate of Original Tenant or a Transferee approved by Landlord (and not any other assignee, subtenant or other transferee of Tenant’s interest in this Lease) if Tenant and/or its approved Transferee is in occupancy of the entire then-existing Premises.

 

B.                                    Option Rent. The Rent payable by Tenant during the Option Term (the “Option Rent”) shall be equal to the Market Rent as set forth below. For purposes of this Lease, the term “Market Rent” shall mean rent (including additional rent and considering any “base year” or “expense stop” applicable thereto), including all escalations, at which tenants, as of the commencement of the Option Term are, pursuant to transactions completed within the twelve (12) months prior to the first day of the Option Term, leasing non-sublease, non-encumbered, non-synthetic, non-equity space (unless such space was leased pursuant to a definition of “fair market” comparable to the definition of Market Rent) comparable in size, location and quality to the Premises for a “Comparable Term,” giving appropriate consideration to the annual rental rates per rentable square foot, the standard of measurement by which the rentable square footage is measured, the ratio of rentable square feet to usable square feet, and taking into consideration only, and granting only, the following concessions (provided that the rent payable in Comparable Deals in which the terms of such Comparable Deals are determined by use of a discounted fair market rate formula shall be equitably increased in order that such Comparable Deals will not reflect a discounted rate) (collectively, the “Rent Concessions”): (a) rental abatement concessions or build-out periods, if any, being granted such tenants in connection with such comparable spaces; (b) tenant improvements or allowances provided or to be provided for such comparable space, taking into account the value of the existing improvements in the Premises, such value to be based upon the age, quality and layout of the improvements and the extent to which the same could be utilized by general office users as contrasted with this specific Tenant, (c) without Proposition 13 protection, and (d) all other monetary concessions, if any, being granted such tenants in connection with such comparable space; provided, however, that notwithstanding anything to the contrary contained herein, no consideration shall be given to the fact that Landlord is or is not required to pay a real estate brokerage commission in connection with the applicable term or the fact that the Comparable Deals do or do not involve the payment of real estate brokerage commissions. The term “Comparable Term” shall refer to the length of the lease term, without consideration of options to extend such term, for the space in question. In addition, the determination of the Market Rent shall include a determination as to whether, and if so to what extent, Tenant must provide Landlord with financial security, such as a letter of credit or guaranty, for Tenant’s rent obligations during any Option Term. Such determination shall be made by reviewing the extent of financial security then generally being imposed in Comparable Transactions upon tenants of comparable financial condition and credit history to the then existing financial condition and credit history of Tenant (with appropriate adjustments to account for differences in the then-existing financial condition of Tenant and such other tenants.

 

C.                                    Exercise of Option. The option contained in this Section 4 shall be exercised by Tenant, if at all, only in the following manner: (i) Tenant shall deliver written notice to Landlord not more than twelve (12) and not less than nine (9) months prior to the expiration of the initial Lease Term, stating that Tenant is interested in exercising its option; (ii) Landlord, after receipt of Tenant’s notice, shall deliver notice (the “Option Rent Notice”) to Tenant not less than seven (7) months prior to the expiration of the initial Lease Term, setting forth the Option Rent; and (iii) if Tenant wishes to exercise such option, Tenant shall, on or before six (6) months prior to the expiration of the initial Lease Term, exercise the option by delivering written notice thereof to Landlord and concurrently with such exercise, Tenant may, at its option, object to the Option Rent contained in the Option Rent Notice, in which case the parties shall follow the procedure, and the Option Rent shall be determined, as set forth in subsection D, below.

 

D.                                    Determination of Option Rent. In the event Tenant timely and appropriately objects to the Option Rent, Landlord and Tenant shall attempt to agree upon the Option Rent, using their best good faith efforts. If Landlord and Tenant fail to reach agreement within fifteen (15) business days following Tenant’s objection to the Option Rent (the “Outside Agreement Date”), then each party shall make a separate determination of the Option Rent, within five (5) business days after the Outside Agreement Date, and such determinations shall be submitted to arbitration as set forth below:

 

(i) Landlord and Tenant shall each appoint one arbitrator who shall be a real estate broker who shall have been active over the five (5) year period ending on the date of such appointment in the leasing of similar properties in the area. The determination of the arbitrators shall be limited solely to the issue of whether Landlord’s or Tenant’s submitted Option Rent is the closest to the actual Option Rent, as determined by the arbitrators. Each such arbitrator shall be appointed within fifteen (15) days after the applicable Outside Agreement Date.

 

6

 

(ii) The two (2) arbitrators so appointed shall within ten (10) days of the date of the appointment of the last appointed arbitrator agree upon and appoint a third arbitrator who shall be qualified under the same criteria set forth hereinabove for qualification of the initial two (2) arbitrators.

 

(iii) The three (3) arbitrators shall within thirty (30) days of the appointment of the third arbitrator reach a decision as to whether the parties shall use Landlord’s or Tenant’s submitted Option Rent, and shall notify Landlord and Tenant thereof.

 

(iv) The decision of the majority of the three (3) arbitrators shall be binding upon Landlord and Tenant. If either Landlord or Tenant fails to appoint an arbitrator within fifteen (15) days after the applicable Outside Agreement Date, then the arbitrator appointed by one of them shall reach a decision, notify Landlord and Tenant thereof and such arbitrator’s decision shall be binding upon Landlord and Tenant. If the two (2) arbitrators fail to agree upon and appoint a third arbitrator, or if both parties fail to appoint an arbitrator, then the appointment of the third arbitrator or any arbitrator shall be dismissed and the matter to be decided shall be forthwith submitted to arbitration under the provisions of the American Arbitration Association, but subject to the instruction set forth in this Section. The cost of the arbitration shall be paid by Landlord and Tenant equally.

 

E.            Termination Option. Tenant shall have a one-time option (the “Termination Option”) to terminate this Lease, effective as of the last day of the sixtieth (60th) full calendar month of the Lease Term (“Effective Date”). In the event this Lease is not terminated effective as of the Effective Date, this Lease shall continue in full force and effect. The Termination Option is granted subject to the following terms and conditions:

 

(i) Tenant delivers to Landlord a written notice of Tenant’s election to exercise the Termination Option (“Termination Notice”), which notice is given not less than nine (9) months prior to the Effective Date (the “Termination Date”); and

 

(ii) Tenant pays to Landlord, concurrently with Tenant’s exercise of the Termination Option and delivery to Landlord of the Termination Notice as required above, a cash lease termination fee (collectively, the “Fee”) in the aggregate amount of four (4) month’s Base Rent equal to the last four (4) months Base Rent prior to the Termination Date, plus the unamortized portion of the Tenant Improvement Allowance and leasing commissions, together with interest computed on such unamortized portion for the period commencing on the Term Commencement Date and expiring on the Termination Date at a rate of 8% per annum. If the Termination Notice is not given as and when required by the provisions of this Section 4 (E), set forth above and the sums required by the provisions of this Section set forth above are not paid concurrently with Tenant’s delivery to Landlord of the Termination Notice, then Tenant’s Termination Option as provided for herein shall forever terminate and be of no further force or effect. At all times during the period from the date the Termination Notice is given through the Termination Date, Tenant shall be fully obligated to perform all obligations required to be performed by it under the Lease as and when required by this Lease, including, without limitation, the payment of Base Rent and Tenant’s Share of Direct Expenses.

 

(iv) If Tenant timely and properly exercises the Termination Option, (i) all Rent payable under this Lease shall be paid through and apportioned as of the Termination Date (in addition to payment by Tenant of the Fee); (ii) neither party shall have any rights, estates, liabilities, or obligations under this Lease for the period accruing after the Termination Date, except those which have not been satisfied during the term of this lease; (iii) Tenant shall surrender and vacate the Premises and deliver possession thereof to Landlord on or before the Termination Date in the condition required under this Lease for surrender of the Premises; and (iv) Landlord and Tenant shall enter into a written agreement reflecting the termination of this Lease upon the terms provided for herein, which agreement shall be executed within thirty (30) days after Tenant exercises the Termination Option and delivers to Landlord the Termination Notice and Fee required above. It is the parties’ intention that nothing contained herein shall impair, diminish or otherwise prevent Landlord from recovering from Tenant such additional sums as may be necessary for payment of Tenant’s Share of Operating Expenses, Tax Expenses, and Utility Expenses and any other sums due and payable under this Lease (provided such sums relate to items accrued prior to the expiration or earlier termination of the Lease), including without limitation, any sums required to repair any damage to the Premises and/or restore the Premises to the condition required under the provisions of this Lease.

 

The Termination Option shall automatically terminate and become null and void upon the earlier to occur of (i) the termination of Tenant’s right to possession of the Premises, or (ii) the failure of Tenant to timely or properly exercise the Termination Option as contemplated herein. This Termination Option is personal to Tenant and its affiliates and may not be assigned, voluntarily or involuntarily, to any other party or entity, separate from or as part of the Lease.

 

7

 

5. USE

 

A.                                    General. Tenant shall use the Premises for the permitted use specified in the Basic Lease Information (“Permitted Use”) and for no other use or purpose. Landlord shall diligently pursue the change of zoning of the Building to explicitly permit general office use. Landlord reserves the right, without notice or liability to Tenant, and without the same constituting an actual or constructive eviction, to alter or modify the common areas from time to time, including the location and configuration thereof, and the amenities and facilities which Landlord may determine to provide from time to time.

 

B.                                    Limitations. Tenant shall not permit any odors, smoke, dust, gas, substances, noise or vibrations to emanate from the Premises or from any portion of the common areas as a result of Tenant’s or any Tenant’s Party’s use thereof, nor take any action which would constitute a nuisance or would disturb, obstruct or endanger any other tenants or occupants of the Building or elsewhere, or interfere with their use of their respective premises or common areas. Storage outside the Premises of materials, vehicles or any other items is prohibited. Tenant shall not use or allow the Premises to be used for any immoral, improper or unlawful purpose, nor shall Tenant cause or maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer the commission of any waste in, on or about the Premises. Tenant shall not allow any sale by auction upon the Premises, or place any loads upon the floors, walls or ceilings which could endanger the structure, or place any harmful substances in the drainage system of the Building. No waste, materials or refuse shall be dumped upon or permitted to remain outside the Premises except in trash containers placed inside exterior enclosures designated for that purpose by Landlord. Landlord shall not be responsible to Tenant for the non-compliance by any other tenant or occupant of the Building with any of the above-referenced rules or any other terms or provisions of such tenant’s or occupant’s lease or other contract.

 

C.                                    Compliance with Regulations. Except for Landlord’s Work, which shall remain the sole responsibility of Landlord, Tenant shall at its sole cost and expense strictly comply with all existing or future applicable municipal, state and federal and other governmental statutes, rules, requirements, regulations, laws and ordinances, including zoning ordinances and regulations, and covenants, easements and restrictions of record governing and relating to the use, occupancy or possession of the Premises, to Tenant’s use of the common areas, or to the use, storage, generation or disposal of Hazardous Materials (hereinafter defined) (collectively “Regulations”). Tenant shall at its sole cost and expense obtain any and all licenses or permits necessary for Tenant’s use of the Premises. Tenant shall at its sole cost and expense promptly comply with the requirements of any board of fire underwriters or other similar body now or hereafter constituted. Tenant shall not do or permit anything to be done in, on, under or about the Building or bring or keep anything which will in any way increase the rate of any insurance upon the Premises or Building or upon any contents therein or cause a cancellation of said insurance or otherwise affect said insurance in any manner. Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord), protect and hold Landlord harmless from and against any loss, cost, expense, damage, attorneys’ fees or liability arising out of the failure of Tenant to comply with any Regulation. Tenant’s obligations pursuant to the foregoing indemnity shall survive the expiration or earlier termination of this Lease.

 

6. RULES AND REGULATIONS

 

Tenant shall faithfully observe and comply with the building rules and regulations attached hereto as Exhibit A and any other rules and regulations and any modifications or additions thereto which Landlord may from time to time prescribe in writing for the purpose of maintaining the proper care, cleanliness, safety, traffic flow and general order of the Premises or the Building. Tenant shall cause Tenant’s Parties to comply with such rules and regulations. Landlord shall not be responsible to Tenant for the non-compliance by any other tenant or occupant of the Building with any of such rules and regulations, any other tenant’s or occupant’s lease or any Regulations.

 

7. RENT

 

A.                                    Base Rent. Tenant shall pay to Landlord and Landlord shall receive, without notice or demand throughout the Term, Base Rent as specified in the Basic Lease Information, payable in monthly installments in advance on or before the first day of each calendar month, in lawful money of the United States, without deduction or offset whatsoever, at the Remittance Address specified in the Basic Lease Information or to such other place as Landlord may from time to time designate in writing. Base Rent for the first full month of the Term shall be paid by Tenant upon Tenant’s execution of this Lease. Thereafter, if the Term Commencement Date and Tenant’s obligation for payment of Base Rent commences on a day other than the first day of a month, then Base Rent shall be prorated and the

 

8

 

prorated installment shall be paid on the first day of the calendar month next succeeding the Term Commencement Date. The Base Rent payable by Tenant hereunder is subject to adjustment as provided elsewhere in this Lease, as applicable. As used herein, the term “Base Rent” shall mean the Base Rent specified in the Basic Lease Information as it may be so adjusted from time to time.

 

B.                                    Additional Rent. All monies other than Base Rent required to be paid by Tenant hereunder, including, but not limited to, Tenant’s Proportionate Share of Operating Expenses, as specified in Paragraph 8 of this Lease, charges to be paid by Tenant under Paragraph 16, the interest and late charge described in Paragraphs 27.D and E, and any monies spent by Landlord pursuant to Paragraph 30, shall be considered additional rent (“Additional Rent”). “Rent” shall mean Base Rent and Additional Rent.

 

8. OPERATING EXPENSES

 

A.                                    Operating Expenses. In addition to the Base Rent required to be paid hereunder, beginning with the expiration of the Base Year specified in the Basic Lease Information (the “Base Year”), Tenant shall pay as Additional Rent, Tenant’s Proportionate Share of the Building, as defined in the Basic Lease Information, of increases in Operating Expenses (defined below) over the Operating Expenses incurred by Landlord during the Base Year (the “Base Year Operating Expenses”), in the manner set forth below. Neither Base Year Operating Expenses nor Operating Expenses used for calculation of increases in Operating Expenses in subsequent years shall include market-wide labor-rate increases due to extraordinary circumstances, including, but not limited to, boycotts and strikes, utility rate increases due to extraordinary circumstances including, but not limited to, conservation surcharges, boycotts, embargoes or other shortages. Landlord’s determination of Tenant’s Proportionate Share of the Building shall be conclusive so long as it is reasonably and consistently applied. “Operating Expenses” shall mean all expenses and costs of every kind and nature which Landlord shall pay or become obligated to pay, because of or in connection with the ownership, management, maintenance, repair, preservation, replacement and operation of the Building and its supporting facilities as may be determined by Landlord to be necessary or desirable to the Building (as determined in a reasonable manner) other than those expenses and costs which are specifically attributable to Tenant or which are expressly made the financial responsibility of Landlord pursuant to this Lease. Operating Expenses shall include, but are not limited to, the following:

 

(1)                                 Taxes. All real property taxes and assessments, possessory interest taxes, sales taxes, personal property taxes, business or license taxes or fees, gross receipts taxes, service payments in lieu of such taxes or fees, annual or periodic license or use fees, excises, transit charges, and other impositions, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind (including fees “in-lieu” of any such tax or assessment) which are now or hereafter assessed, levied, charged, confirmed, or imposed by any public authority upon the Building, its operations or the Rent (or any portion or component thereof), or any tax, assessment or fee imposed in substitution, partially or totally, of any of the above. Operating Expenses shall also include any taxes, assessments, reassessments, or other fees “in-lieu” of any such tax or assessment or impositions with respect to the maintenance, alteration, repair, use or occupancy by Tenant of the Premises, Building or any portion thereof, including, without limitation, by or for Tenant, and all increases therein or reassessments thereof whether the increases or reassessments result from increased rate and/or valuation (whether upon a transfer of the Building or any portion thereof or any interest therein or for any other reason). Operating Expenses shall not include inheritance or estate taxes imposed upon or assessed against the interest of any person in the Building, or taxes computed upon the basis of the net income of any owners of any interest in the Building. If it shall not be lawful for Tenant to reimburse Landlord for all or any part of such taxes, the monthly rental payable to Landlord under this Lease shall be revised to net Landlord the same net rental after imposition of any such taxes by Landlord as would have been payable to Landlord prior to the payment of any such taxes. Notwithstanding any other provision of this Lease, Tenant shall be solely responsible for all property taxes and assessments levied on tenant’s improvements and Alterations in accordance with Revenue and Taxation Code, Section 441, and all other taxes assessed or owing thereon during the term of this Lease.

 

(2)                                 Insurance. All insurance premiums and costs, including, but not limited to, any deductible amounts, premiums and other costs of insurance incurred by Landlord, including for the insurance coverage set forth in Paragraph 9.A herein, but excluding in all events, insurance premiums and costs for earthquake coverage, if Landlord elects to obtain any such coverage.

 

9

 

(3)                                 Common Area Maintenance.

 

(a)                                 Repairs and general maintenance of and for the Building and public and common areas and facilities of and comprising the Building, including, but not limited to, the roof and roof membrane, elevators, mechanical rooms, alarm systems, pest extermination, landscaped areas and service areas, driveways, sidewalks, truck staging areas, fire sprinkler systems, sanitary and storm sewer lines, utility services, heating/ventilation/air conditioning systems, electrical, mechanical or other systems, telephone equipment and wiring servicing, plumbing, lighting, and any other items or areas which affect the operation or appearance of the Building, which determination shall be at Landlord’s reasonable discretion, except for: those items to the extent paid for by the proceeds of insurance; and those items attributable solely or jointly to specific tenants of the Building.

 

(b)                                 Repairs and general maintenance shall include the cost of any improvements made to or assets acquired for the Building that in Landlord’s reasonable discretion may reduce any other Operating Expenses, including present or future repair work, are reasonably necessary for the health and safety of the occupants of the Building, or for the operation of the Building systems, services and equipment, or are required to comply with any Regulation, such costs or allocable portions thereof to be amortized over the period applicable under generally accepted accounting principles, together with interest on the unamortized balance at the publicly announced “prime rate” charged by Wells Fargo Bank, N.A. (San Francisco) or its successor at the time such improvements or capital assets are constructed or acquired.

 

(c)                                  Payment under or for any easement, license, permit, operating agreement, declaration, restrictive covenant or instrument relating to the Building.

 

(d)                                 All expenses and rental related to services and costs of supplies, materials and equipment used in operating, managing and maintaining the Premises and the Building, the equipment therein and the adjacent sidewalks, driveways and service areas, including, without limitation, expenses related to service agreements regarding fire systems, window cleaning, elevator maintenance, Building exterior maintenance, landscaping and expenses related to the administration, management and operation of the Building.

 

(e)                                  The cost of supplying any services and utilities which benefit all or a portion of the Premises, Building to the extent not addressed in Paragraph 16 hereof.

 

(f)                                   Legal expenses and the cost of audits by certified public accountants; provided, however, that legal expenses chargeable as Operating Expenses shall not include the cost of negotiating leases, collecting rents, evicting tenants nor shall it include costs incurred in legal proceedings with or against any other tenant or to enforce the provisions of any other lease.

 

Operating Expenses shall not include costs or expenses for: (1) interest on debt or amortization payments on any mortgages or deeds of trust and rent under any ground leases; (2) costs of restoration to the extent of net insurance proceeds received by Landlord with respect thereto; (3) costs incurred in renovating or otherwise improving, painting or redecorating usable space for tenants; (4) legal fees and other related expenses associated with the negotiation or enforcement of leases; (5) all items and services for which Tenant reimburses Landlord or pays third persons or which Landlord provides selectively without reimbursement to one or more tenants or occupants of the Building (other than Tenant) which are not customary for normal office use; (6) leasing commissions and other similar payments paid to agents or employees of Landlord, independent brokers and other persons incurred in connection with Landlord’s leasing activities; (7) costs for space planning of tenant space in the Building; (8) repairs or other work occasioned by fire, windstorm or other casualty or damage to the extent Landlord is reimbursed by insurance; (9) costs for structural repairs and replacements; (10) advertising and publicity expenditures; (11) Landlord’s reserve accounts; (12) any compensation paid to clerks, attendants or other persons in commercial concessions, if any, operation of any retail space or similar concessions; (13) costs of correcting construction or latent defects in the Building or Landlord’s Work; (14) costs of cleaning up or removing asbestos or hazardous materials; (15) Landlord’s costs of any services sold or provided tenants or other occupants for which Landlord is entitled to be reimbursed by such tenants or other occupants as an additional charge or rental over and above the basic rental and escalations payable under the lease with such tenant or other occupant; (16) costs of capital repairs and capital equipment except to the extent such costs are amortized over the useful life of the capital repair or equipment in accordance with generally accepted accounting principles; (17) costs incurred by Landlord due to the violation by Landlord of the terms and conditions of any lease of space in the Building; (18) costs incurred in connection with

 

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upgrading the Building to comply with disability, life, fire and safety codes in effect prior to the Lease Date; (19) Landlord’s general corporate overhead and general administrative expenses not related to the operation of the Building; (20) all compensation to executives, officers or partners of Landlord or to any other person at or above the level of property manager; (21) salaries of service personnel to the extent that such service personnel perform services not attributable to the management, repair or operation of the Building; (22) the cost of any political or charitable donations or contributions; (23) costs of purchasing, installing and replacing art work or decorative features; and (24) administrative and/or management fees, office expenses rent and office supplies which, in the aggregate, exceed 4% of the total Rent payable hereunder.

 

The above enumeration of services and facilities shall not be deemed to impose an obligation on Landlord to make available or provide such services or facilities except to the extent if any that Landlord has specifically agreed elsewhere in this Lease to make the same available or provide the same. Without limiting the generality of the foregoing, Tenant acknowledges and agrees that it shall be solely responsible for providing adequate security for its use of the Premises, including without limitation, any equipment, telecommunication and monitoring services or other security services at its sole cost and expense and that Landlord shall have no obligation or liability with respect thereto, except to the extent if any that Landlord has specifically agreed elsewhere in this Lease to provide the same.

 

B.                                    Payment of Estimated Operating Expenses. “Estimated Operating Expenses” for any particular year shall mean Landlord’s estimate of the Operating Expenses for such fiscal year made with respect to such fiscal year as hereinafter provided. Landlord shall have the right from time to time to revise its fiscal year and interim accounting periods so long as the periods as so revised are reconciled with prior periods in a reasonable manner. During the last month of each fiscal year during the Term, or as soon thereafter as practicable, Landlord shall give Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal year. Tenant shall pay Tenant’s Proportionate Share of the difference between Estimated Operating Expenses and Base Year Operating Expenses with installments of Base Rent for the fiscal year to which the Estimated Operating Expenses applies in monthly installments on the first day of each calendar month during such year, in advance. Such payment shall be construed to be Additional Rent for all purposes hereunder. If at any time during the course of the fiscal year, Landlord determines that Operating Expenses are projected to vary from the then Estimated Operating Expenses by more than five percent (5%), Landlord may, by written notice to Tenant, revise the Estimated Operating Expenses for the balance of such fiscal year, and Tenant’s monthly installments for the remainder of such year shall be adjusted so that by the end of such fiscal year Tenant has paid to Landlord Tenant’s Proportionate Share of the revised difference between Estimated Operating Expenses and Base Year Operating Expenses for such year, such revised installment amounts to be Additional Rent for all purposes hereunder.

 

C.                                    Computation of Operating Expense Adjustment. “Operating Expense Adjustment” shall mean the difference between Estimated Operating Expenses and actual Operating Expenses for any fiscal year, over Base Year Operating Expenses, determined as hereinafter provided. Within sixty (60) days after the end of each fiscal year, or as soon thereafter as practicable, Landlord shall deliver to Tenant a statement of actual Operating Expenses for the fiscal year just ended, accompanied by a computation of Operating Expense Adjustment. If such statement shows that Tenant’s payment based upon Estimated Operating Expenses is less than Tenant’s Proportionate Share of actual increases in Operating Expenses over the Base Year Operating Expenses, then Tenant shall pay to Landlord the difference within thirty (30) days after receipt of such statement, such payment to constitute Additional Rent for all purposes hereunder. If such statement shows that Tenant’s payments of Estimated Operating Expenses exceed Tenant’s Proportionate Share of actual increases in Operating Expenses over the Base Year Operating Expenses, then (provided that Tenant is not in default under this Lease) Landlord shall pay to Tenant the difference within thirty (30) days after delivery of such statement to Tenant. If this Lease has been terminated or the Term hereof has expired prior to the date of such statement, then the Operating Expense Adjustment shall be paid by the appropriate party within thirty (30) days after the date of delivery of the statement. Tenant’s obligation to pay increases in Operating Expenses over the Base Year Operating Expenses shall commence on January 1 of the year succeeding the Base Year. Should this Lease terminate at any time other than the last day of the fiscal year, Tenant’s Proportionate Share of the Operating Expense Adjustment shall be prorated based on a month of 30 days and the number of calendar months during such fiscal year that this Lease is in effect. Tenant shall in no event be entitled to any credit if Operating Expenses in any year are less than Base Year Operating Expenses. Notwithstanding anything to the contrary contained in Paragraph 8.A or 8.B, Landlord’s failure to provide any notices or statements within the time periods specified in those paragraphs shall in no way excuse Tenant from its obligation to pay Tenant’s Proportionate Share of increases in Operating Expenses.

 

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D.                                    Gross Lease. This shall be a gross Lease; however, it is intended that Base Rent shall be paid to Landlord absolutely net of all costs and expenses other than Operating Expenses each year equal to Tenant’s Proportionate Share of Base Year Operating Expenses, except as otherwise specifically provided to the contrary in this Lease. The provisions for payment of increases in Operating Expenses and the Operating Expense Adjustment are intended to pass on to Tenant and reimburse Landlord for all costs and expenses of the nature described in Paragraph 8.A incurred in connection with the ownership, management, maintenance, repair, preservation, replacement and operation of the Building and its supporting facilities and such additional facilities (subject to the express exclusions and limitations with respect to Operating Expenses contained in the penultimate subparagraph of Paragraph 8.A), in excess of the Base Year Operating Expenses, now and in subsequent years as may be determined by Landlord to be necessary or desirable to the Building, provided that Landlord shall use its reasonable efforts to minimize Operating Expenses in a manner consistent with good business practices.

 

E.                                    Tenant Audit. If Tenant shall dispute the amount set forth in any statement provided by Landlord under Paragraph 8.B or 8.C above, Tenant shall have the right, not later than one hundred eighty (180) days following receipt of such statement and upon the condition that Tenant shall first deposit with Landlord the full amount in dispute, to cause Landlord’s books and records with respect to Operating Expenses for such fiscal year to be audited by certified public accountants selected by Tenant and subject to Landlord’s reasonable right of approval. The Operating Expense Adjustment shall be appropriately adjusted on the basis of such audit. If such audit discloses a liability for a refund in excess of five percent (5%) of Tenant’s Proportionate Share of the Operating Expenses previously reported, the cost of such audit shall be borne by Landlord; otherwise the cost of such audit shall be paid by Tenant. If Tenant shall not request an audit in accordance with the provisions of this Paragraph 8.E within one hundred eighty (180) days after receipt of Landlord’s statement provided pursuant to Paragraph 8.B or 8.C, such statement shall be final and binding for all purposes hereof. Tenant acknowledges and agrees that any information revealed in the above described audit may contain proprietary and sensitive information and that significant damage could result to Landlord if such information were disclosed to any party other than Tenant’s auditors. Tenant shall not in any manner disclose, provide or make available any information revealed by the audit to any person or entity except Tenant’s advisors, consultants and representatives involved in such audit without Landlord’s prior written consent, which consent may be withheld by Landlord in its sole and absolute discretion. The information disclosed by the audit will be used by Tenant solely for the purpose of evaluating Landlord’s books and records in connection with this Paragraph 8.E.

 

9. INSURANCE AND INDEMNIFICATION

 

A.                                    Landlord’s Insurance. All insurance maintained by Landlord shall be for the sole benefit of Landlord and under Landlord’s sole control.

 

(1)                                 Property Insurance. Landlord agrees to maintain property insurance insuring the Building against damage or destruction due to risk including fire, vandalism, and malicious mischief in an amount not less than the replacement cost thereof, in the form and with deductibles and endorsements as selected by Landlord. At its election, Landlord may instead (but shall have no obligation to) obtain “All Risk” coverage, and may also obtain earthquake, pollution, and/or flood insurance in amounts selected by Landlord, provided, however, that deductibles, premiums and other costs for earthquake insurance shall be borne solely by Landlord and excluded from Operating Expenses pursuant to Paragraph 8.A.

 

(2)                                 Optional Insurance. Landlord, at Landlord’s option, may also (but shall have no obligation to) carry (i) insurance against loss of rent, in an amount equal to the amount of Base Rent and Additional Rent that Landlord could be required to abate to all Building tenants in the event of condemnation or casualty damage for a period of twelve (12) months; and (ii) liability insurance and such other insurance as Landlord may deem prudent or advisable in such amounts and on such terms as Landlord shall determine. Landlord shall not be obligated to insure, and shall have no responsibility whatsoever for any damage to, any furniture, machinery, goods, inventory or supplies, or other personal property or fixtures which Tenant may keep or maintain in the Premises, or any leasehold improvements, additions or alterations within the Premises. Notwithstanding anything to the contrary contained in Section 8, Tenant shall not be liable for payment of any increase in Operating Expenses that results from Landlord’s election to procure insurance described in this Section 9.A.(2) which was not in place for the entirety of the Base Year and the cost of which was not included in the Base Year Operating Expenses.

 

B.                                    Tenant’s Insurance. Tenant shall procure at Tenant’s sole cost and expense and keep in effect from the date of this Lease and at all times until the end of the Term the following:

 

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(1)                                 Property Insurance. Insurance on all personal property and fixtures of Tenant and all improvements, additions or alterations made by or for Tenant to the Premises on an “All Risk” basis, insuring such property for the full replacement value of such property.

 

(2)                                 Liability Insurance. Commercial General Liability insurance covering bodily injury and property damage liability occurring in or about the Premises or arising out of the use and occupancy of the Premises, and any part of either, and any areas adjacent thereto, and the business operated by Tenant or by any other occupant of the Premises. Such insurance shall include contractual liability coverage insuring all of Tenant’s indemnity obligations under this Lease. Such coverage shall have a minimum combined single limit of liability of at least Two Million Dollars ($2,000,000.00), and a minimum general aggregate limit of Three Million Dollars ($3,000,000.00), with an “Additional Insured — Managers or Landlords of Premises Endorsement” and the “Amendment of the Pollution Exclusion Endorsement.” All such policies shall be written to apply to all bodily injury (including death), property damage or loss, personal and advertising injury and other covered loss, however occasioned, occurring during the policy term, shall be endorsed to add Landlord and any party holding an interest to which this Lease may be subordinated as an additional insured, and shall provide that such coverage shall be “primary” and non-contributing with any insurance maintained by Landlord, which shall be excess insurance only. Such coverage shall also contain endorsements including employees as additional insureds if not covered by Tenant’s Commercial General Liability Insurance. All such insurance shall provide for the severability of interests of insureds; and shall be written on an “occurrence” basis, which shall afford coverage for all claims based on acts, omissions, injury and damage, which occurred or arose (or the onset of which occurred or arose) in whole or in part during the policy period.

 

(3)                                 Workers’ Compensation and Employers’ Liability Insurance. Workers’ Compensation Insurance as required by any Regulation, and Employers’ Liability Insurance in amounts not less than One Million Dollars ($1,000,000) each accident for bodily injury by accident; One Million Dollars ($1,000,000) policy limit for bodily injury by disease; and One Million Dollars ($1,000,000) each employee for bodily injury by disease.

 

(4)                                 Commercial Auto Liability Insurance. Commercial auto liability insurance with a combined limit of not less than One Million Dollars ($1,000,000) for bodily injury and property damage for each accident. Such insurance shall cover liability relating to any auto (including owned, hired and non-owned autos).

 

(5)                                 Alterations Requirements. In the event Tenant shall desire to perform any Alterations, Tenant shall deliver to Landlord, prior to commencing such Alterations (i) evidence satisfactory to Landlord that Tenant carries “Builder’s Risk” insurance covering construction of such Alterations in an amount and form approved by Landlord, (ii) such other insurance as Landlord shall nondiscriminatorily require, and (iii) a lien and completion bond or other security in form and amount satisfactory to Landlord.

 

(6)                                 General Insurance Requirements. All coverages described in this Paragraph 8.B shall be endorsed to (i) provide Landlord with thirty (30) days’ notice of cancellation or change in terms; and (ii) waive all rights of subrogation by the insurance carrier against Landlord. If at any time during the Term the amount or coverage of insurance which Tenant is required to carry under this Paragraph 9.B is, in Landlord’s reasonable judgment, materially less than the amount or type of insurance coverage typically carried by owners or tenants of properties located in the general area in which the Premises are located which are similar to and operated for similar purposes as the Premises or if Tenant’s use of the Premises should change with or without Landlord’s consent, Landlord shall have the right to require Tenant to increase the amount or change the types of insurance coverage required under this Paragraph 9.B. All insurance policies required to be carried by Tenant under this Lease shall be written by companies rated A X or better in “Best’s Insurance Guide” and authorized to do business in the State of California. In any event deductible amounts under all insurance policies required to be carried by Tenant under this Lease shall not exceed Five Thousand Dollars ($5,000.00) per occurrence. Tenant shall deliver to Landlord on or before the Term Commencement Date, and thereafter at least thirty (30) days before the expiration dates of the expired policies, certified copies of Tenant’s insurance policies, or a certificate evidencing the same issued by the insurer thereunder; and, if Tenant shall fail to procure such insurance, or to deliver such policies or certificates, Landlord may, at Landlord’s option and in addition to Landlord’s other remedies in the event of a default by Tenant hereunder, procure the same for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Rent.

 

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C.                                    Indemnification. Tenant shall indemnify, defend by counsel reasonably acceptable to Landlord, protect and hold Landlord, its directors, shareholders, partners, lenders, members, managers, contractors, affiliates, and employees (collectively, “Landlord Indemnities”) harmless from and against any and all claims, liabilities, losses, costs, loss of rents, liens, damages, injuries or expenses, including reasonable attorneys’ and consultants’ fees and court costs, demands, causes of action, or judgments, directly or indirectly arising out of or related to: (1) claims of injury to or death of persons or damage to property or business loss occurring or resulting directly or indirectly from the use or occupancy of the Premises, Building by Tenant or Tenant’s Parties, or from activities or failures to act of Tenant or Tenant’s Parties with respect to the Premises; (2) claims arising from work or labor performed, or for materials or supplies furnished to or at the request of Tenant in connection with performance of any work done for the account of Tenant within the Premises or Building; (3) claims arising from any breach or default on the part of Tenant in the performance of any covenant contained in this Lease; and (4) claims arising from the negligence or intentional acts or omissions of Tenant or Tenant’s Parties with respect to the Premises. The foregoing indemnity by Tenant shall not be applicable to claims to the extent arising from the gross negligence or willful misconduct of Landlord. Landlord shall not be liable to Tenant and Tenant hereby waives all claims against Landlord for any injury to or death of or damage to any person or property or business loss in or about the Premises or Building by or from any cause whatsoever (other than Landlord’s gross negligence or willful misconduct) and, without limiting the generality of the foregoing, whether caused by water leakage of any character from the roof, walls, basement or other portion of the Premises, Building, or caused by gas, fire, oil or electricity in, on or about the Premises, Building, acts of God or of third parties, or any matter outside of the reasonable control of Landlord. The provisions of this Paragraph shall survive the expiration or earlier termination of this Lease.

 

10. WAIVER OF SUBROGATION

 

Landlord and Tenant each waives any claim, loss or cost it might have against the other for any injury to or death of any person or persons, or damage to or theft, destruction, loss, or loss of use of any property (a “Loss”), to the extent the same is insured against (or is required to be insured against under the terms hereof) under any property damage insurance policy covering the Building, the Premises, Landlord’s or Tenant’s fixtures, personal property, leasehold improvements, or business, regardless of whether the negligence of the other party caused such Loss.

 

11. LANDLORD’S REPAIRS AND MAINTENANCE

 

Landlord, at Landlord’s sole cost and expense, shall maintain in good repair, reasonable wear and tear excepted, the structural soundness of the roof, foundations, and exterior walls of the Building and shall maintain the roof membrane and exterior walls in a watertight condition; provided, however, if Landlord fails to perform or cure any defects with respect to any maintenance or repair work required under this Lease, including, without limitation, Landlord’s Work, within thirty (30) days after Landlord receives Tenant’s written notice of the need for such repairs (or such period of time in excess of thirty (30) days as is reasonably necessary based upon the nature of such work, provided Landlord commences and diligently pursues the work during such 30 days period), then Tenant shall be permitted to make such repairs, upon delivery of an additional five (5) business days’ prior written notice to Landlord indicating that Tenant will be undertaking such repairs, and Tenant shall be entitled to recover from Landlord the reasonable costs of such repairs made by Tenant. The term “exterior walls” as used herein shall not include windows, glass or plate glass, doors, special store fronts or office entries. Following the completion of Landlord’s Work, Landlord shall replace, if needed, the electrical and mechanical systems of the Premises as Operating Expenses with such costs amortized over the useful life of any capital repairs or replacements in accordance with generally accepted accounting principles. Landlord shall enter into a regularly scheduled preventative maintenance/service contract with a maintenance contractor for servicing all hot water, heating and air conditioning systems and equipment and the elevator within or serving the Premises, the cost of which shall be included within the Base Year Operating Expenses. The service contracts must include all services suggested by the equipment manufacturer within the operation/maintenance manual and must become effective within thirty (30) days after the Lease Date. Any damage caused by or repairs necessitated by any negligence or act of Tenant or Tenant’s Parties may be repaired by Landlord at Landlord’s option and Tenant’s expense. Tenant shall immediately give Landlord written notice of any defect or need of repairs in such components of the Building for which Landlord is responsible, after which Landlord shall have a reasonable opportunity and the right to enter the Premises at all reasonable times to repair same. Landlord’s liability with respect to any defects, repairs, or maintenance for which Landlord is responsible under any of the provisions of this Lease shall be limited to the cost of such repairs or maintenance, and there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of repairs, alterations or improvements in or to any portion of the Premises or the Building or to fixtures, appurtenances or equipment in the

 

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Building, except as provided in Paragraph 25. Landlord shall cause the electrical and mechanical systems serving the Premises to be in good condition and repair as of the date that is sixty (60) days following the Lease Date in accordance with Schedule I at Landlord’s sole cost and expense. Subject to the completion of Landlord’s Work, Tenant accepts the Premises “as is,” as being in good order, condition and repair and the condition in which Landlord is obligated to deliver them and suitable for the Permitted Use and Tenant’s intended operations in the Premises.

 

12. TENANT’S REPAIRS AND MAINTENANCE

 

Tenant shall at all times during the Term at Tenant’s expense maintain all parts of the Premises and such portions of the Building as are within the exclusive control of Tenant and not required to be maintained, repaired, constructed or replaced by Landlord (i) pursuant to Paragraph 11 above, (ii) as Operating Expenses of the Building, (iii) under a service contract pursuant to Paragraph 11 above, or (iv) as part of Landlord’s Work, in a first-class, good, clean and secure condition and promptly make all necessary repairs and replacements, as reasonably determined by Landlord, including but not limited to, all windows, glass, doors, walls, including demising walls, and wall finishes, floors and floor covering with materials and workmanship of the same character, kind and quality as the original. Tenant shall at Tenant’s expense also perform regular removal of trash and debris. Notwithstanding anything to the contrary contained herein, Tenant shall, at its expense, promptly repair any damage to the Premises or the Building resulting from or caused by any negligence or act of Tenant or Tenant’s Parties. Nothing herein shall expressly or by implication render Tenant Landlord’s agent or contractor responsible to effect any repairs or maintenance required of Tenant under this Paragraph 12, as to all of which Tenant shall be solely responsible.

 

13. ALTERATIONS

 

A.                                    Tenant shall not make, or allow to be made, any alterations, physical additions, improvements or partitions, including without limitation the attachment of any fixtures or equipment, in, about or to the Premises (“Alterations”) without obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld with respect to proposed Alterations which: (a) comply with all applicable Regulations; and, (b) are, in Landlord’s opinion, compatible with the Building and its mechanical, plumbing, electrical, heating/ventilation/air conditioning systems, and will not cause the Building or such systems to be required to be modified to comply with any Regulations (including, without limitation, the Americans With Disabilities Act). Specifically, but without limiting the generality of the foregoing, Landlord shall have the reasonable right of written consent for all plans and specifications for the proposed Alterations, construction means and methods, all appropriate permits and licenses, any contractor or subcontractor to be employed on the work of Alterations, and the time for performance of such work, and may impose rules and regulations for contractors and subcontractors performing such work. Notwithstanding the foregoing two sentences, Landlord has consented to the Tenant Improvements described on Schedule II attached hereto; provided, however, that Landlord reserves the right to approve or disapprove in Landlord’s reasonable discretion, any material changes to such Tenant Improvements as so described. Tenant shall supply to Landlord any documents and information reasonably requested by Landlord in connection with Landlord’s consideration of a request for approval of material changes to the Tenant Improvements described on Schedule II or any further Alterations Tenant desires to make. Tenant shall cause all Alterations to be accomplished in a first-class, good and workmanlike manner, and to comply with all applicable Regulations and Paragraph 28 hereof. At no time shall Tenant allow, permit or authorize any work on the Premises by any unlicensed or uninsured contractor. Tenant shall at Tenant’s sole expense, perform any additional work required under applicable Regulations due to the Alterations hereunder. No review or consent by Landlord of or to any proposed Alteration or additional work shall constitute a waiver of Tenant’s obligations under this Paragraph 13. Tenant shall reimburse Landlord for all actual, out-of-pocket costs up to $3,500 that Landlord may incur in connection with granting approval to Tenant for any such Alterations, including any costs or expenses which Landlord may incur in electing to have outside architects and engineers review said plans and specifications, and shall pay Landlord. All such Alterations shall remain the property of Tenant until the expiration or earlier termination of this Lease, at which time they shall be and become the property of Landlord; provided, however, that Landlord may, at Landlord’s option, require that Tenant, at Tenant’s expense, remove any or all Alterations made by Tenant and restore the affected portion of the Premises to standard Building finishes by the expiration or earlier termination of this Lease, to their condition existing prior to the construction of any such Alterations. Notwithstanding the foregoing sentence, Landlord shall not require Tenant to so remove any of the Tenant Improvements (as defined below), other than the amphitheatre, the conference room below the amphitheatre, the modifications to the east wall of the Building, the garden retreat, the phone booths, the glass box on the west side of the second floor, and any elements comprising material changes to the Tenant Improvements described on Schedule II to the extent such element has the effect of reducing the aggregate amount of usable standard

 

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work space in the Premises, any of which Landlord may require Tenant to remove by notifying Tenant in writing no later than one year prior to the expiration of the Term. With respect to Alterations other than the Tenant Improvements, Landlord shall advise Tenant in writing at the time of approval of any Alterations sought by Tenant whether Tenant will be required to remove such Alterations at the time of expiration or termination of this Lease. All such removals and restoration shall be accomplished in a first-class and good and workmanlike manner so as not to cause any damage to the Premises or Building whatsoever. If Tenant fails to remove such Alterations or Tenant’s trade fixtures or furniture or other personal property, Landlord may keep and use them or remove any of them and cause them to be stored or sold in accordance with applicable law, at Tenant’s sole expense. In addition to and wholly apart from Tenant’s obligation to pay Tenant’s Proportionate Share of Operating Expenses, Tenant shall be responsible for and shall pay prior to delinquency any taxes or governmental service fees, possessory interest taxes, fees or charges in lieu of any such taxes, capital levies, or other charges imposed upon, levied with respect to or assessed against its fixtures or personal property, on the value of Alterations within the Premises, and on Tenant’s interest pursuant to this Lease, or any increase in any of the foregoing based on such Alterations. To the extent that any such taxes are not separately assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced to Tenant by Landlord.

 

B.                                    In compliance with Paragraph 28 hereof, at least ten (10) days before beginning construction of any Alteration, Tenant shall give Landlord written notice of the expected commencement date of that construction to permit Landlord to post and record a notice of non-responsibility. Upon substantial completion of construction, if the law so provides, Tenant shall cause a timely notice of completion to be recorded in the office of the recorder of the county in which the Building is located.

 

C.                                    Tenant shall be entitled to a one-time tenant improvement allowance (the “Tenant Improvement Allowance”) not to exceed $17.00 per rentable square foot of the Premises for the costs relating to the initial design and construction of Tenant’s improvements, which are permanently affixed to the Premises (the “Tenant Improvements”). In no event shall Landlord be obligated to make disbursements in a total amount which exceeds the Tenant Improvement Allowance.

 

D.                                    Following the complete construction of the Tenant Improvements, Landlord shall no later than thirty (30) days after completion, disburse to Tenant a check in an amount equal to the Tenant Improvement Allowance provided that (i) Tenant has delivered to Landlord properly executed mechanics lien releases from all of Tenant’s contractors, subcontractors, laborers, materialmen and suppliers, in compliance with California Civil Code Section 3262(d)(4), (ii) Landlord has determined that no substandard work exists which adversely affects the mechanical, electrical, plumbing, heating, ventilating and air conditioning, life-safety or other systems of the Building, the curtain wall of the Building, the structure or exterior appearance of the Building, or any other tenant’s use of such other tenant’s leased premises in the Building and (iii) Architect has delivered to Landlord a certificate, in a form reasonably acceptable to Landlord, certifying that the construction of the Tenant Improvements in the Premises has been substantially completed.

 

14. SIGNS

 

Tenant shall not place, install, affix, paint or maintain any signs, notices, graphics or banners whatsoever which is visible from the exterior of the Premises or the Building without Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall remove all such signs or graphics by the expiration or any earlier termination of this Lease. Such installations and removals shall be made in such manner as to comply with Regulations and to avoid injury to or defacement of the Premises or Building and any other improvements contained therein, and Tenant shall repair any injury or defacement including without limitation discoloration caused by such installation or removal.

 

15. INSPECTION/POSTING NOTICES

 

After reasonable notice of no less than 24 hours, except in emergencies where no such notice shall be required, Landlord and Landlord’s agents and representatives, shall have the right to enter the Premises to inspect the same, to clean, to perform such work as may be permitted or required hereunder, to make repairs, improvements or alterations to the Premises or Building, to deal with emergencies, to post such notices as may be permitted or required by law to prevent the perfection of liens against Landlord’s interest in the Building or to exhibit the Premises to prospective tenants, purchasers, encumbrancers or to others, or for any other purpose as Landlord may deem necessary or desirable; provided, however, that Landlord shall use reasonable efforts not to unreasonably interfere with Tenant’s business operations. Tenant shall not be entitled to any abatement of Rent by reason of the exercise of any such right of entry. Tenant waives any claim 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 occasioned

 

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thereby. Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant’s vaults and safes or special security areas (designated in advance), and Landlord shall have the right to use any and all means which Landlord may deem necessary or proper to open said doors in an emergency, in order to obtain entry to any portion of the Premises, and any entry to the Premises or portions thereof obtained by Landlord by any of said means, or otherwise, shall not be construed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portions thereof. At any time within six (6) months prior to the expiration of the Term or following any earlier termination of this Lease or agreement to terminate this Lease, Landlord shall have the right to erect on the Building a suitable sign indicating that the Premises are available for lease.

 

16. SERVICES AND UTILITIES

 

A.                                    Tenant shall contract for and pay directly when due for all water, gas, heat, air conditioning, power, telephone, security services, sewer, cleaning, janitorial, sanitary and storm sewer lines and other utilities and services related thereto and/or used on or from the Premises, together with any taxes, penalties, surcharges or the like pertaining thereto, and maintenance charges for utilities and shall furnish all electric light bulbs, ballasts and tubes. If any such services are not separately billed or metered to Tenant, Tenant shall pay an equitable proportion, as determined in good faith by Landlord. All sums payable under this Paragraph 16 shall constitute Additional Rent hereunder.

 

B.                                    Tenant acknowledges that Tenant has inspected and accepts the water, electricity, heat and air conditioning and other utilities and services being supplied or furnished to the Premises as of the Lease Date, if any, as being sufficient in their present condition, “as is,” for the Permitted Use, and for Tenant’s intended operations in the Premises, subject to the completion of Landlord’s Work, which is to be completed within sixty (60) days after the Lease Date. Landlord shall have no obligation to provide additional electricity, heating or air conditioning, but if Landlord elects to provide such services at Tenant’s request, Tenant shall, upon demand, pay to Landlord a reasonable charge for such services as determined by Landlord. Tenant agrees to keep and cause to be kept closed all window covering when necessary because of the sun’s position, and Tenant also agrees at all times to cooperate fully with Landlord and to abide by all of the regulations and requirements which Landlord may prescribe for the proper functioning and protection of electrical, electric windows, heating, ventilating and air conditioning systems. Wherever heat-generating machines, excess lighting or equipment are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air conditioning units in the Premises and the cost thereof, including the cost of installation and the cost of operation and maintenance thereof, shall be paid by Tenant to Landlord upon demand by Landlord.

 

C.                                    Tenant shall not without written consent of Landlord use any apparatus, equipment or device in the Premises, including without limitation, computers, electronic data processing machines, copying machines, and other machines, using excess lighting or using electric current, water, or any other resource in excess of or which will in any way increase the amount of electricity, water, or any other resource being furnished or supplied for the use of the Premises for reasonable and normal office use, in each case as of the Term Commencement Date, or which will require additions or alterations to or interfere with the Building power distribution systems; nor connect with electric current, except through existing electrical outlets in the Premises or water pipes, any apparatus, equipment or device for the purpose of using electrical current, water, or any other resource. Except to the extent of Landlord’s gross negligence or willful misconduct, Landlord shall not be liable for any damages directly or indirectly resulting from nor shall the Rent or any monies owed Landlord under this Lease herein reserved be abated by reason of: (a) the installation, use or interruption of use of any equipment used in connection with the furnishing of any such utilities or services, or any change in the character or means of supplying or providing any such utilities or services or any supplier thereof; (b) the failure to furnish or delay in furnishing any such utilities or services when such failure or delay is caused by acts of God or the elements, labor disturbances of any character, or otherwise, or because of any interruption of service due to Tenant’s use of water, electric current or other resource in excess of that being supplied or furnished for the use of the Premises as of the Term Commencement Date; or (c) the inadequacy, limitation, curtailment, rationing or restriction on use of water, electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises or Building otherwise; or (d) the partial or total unavailability of any such utilities or services to the Premises or the Building or the diminution in the quality or quantity thereof, whether by Regulation or otherwise; or (e) any interruption in Tenant’s business operations as a result of any such occurrence; nor shall any such occurrence constitute an actual or constructive eviction of Tenant or a breach of an implied warranty by Landlord. Landlord shall further have no obligation to protect or preserve any apparatus, equipment or device installed by Tenant in the Premises, including without limitation by providing additional or after-hours

 

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heating or air conditioning. Landlord shall be entitled to cooperate voluntarily and in a reasonable manner with the efforts of national, state or local governmental agencies or utility suppliers in reducing energy or other resource consumption. The obligation to make services available hereunder shall be subject to the limitations of any such voluntary, reasonable program. In addition, Landlord reserves the right to change the supplier or provider of any such utility or service from time to time. Landlord may, but shall not be obligated to, upon notice to Tenant, contract with or otherwise obtain any electrical or other such service for or with respect to the Premises or Tenant’s operations therein from any supplier or provider of any such service. Tenant shall cooperate with Landlord and any supplier or provider of such services designated by Landlord from time to time to facilitate the delivery of such services to Tenant at the Premises and to the Building, including without limitation allowing Landlord and Landlord’s suppliers or providers, and their respective agents and contractors, reasonable access to the Premises for the purpose of installing, maintaining, repairing, replacing or upgrading such service or any equipment or machinery associated therewith.

 

17. SUBORDINATION

 

Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, this Lease shall be and is hereby declared to be subject and subordinate at all times to: (a) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Premises and/or the land upon which the Premises and Building are situated, or both; and (b) any mortgage or deed of trust which may now exist or be placed upon the Building and/or the land upon which the Premises or the Building are situated, or said ground leases or underlying leases, or Landlord’s interest or estate in any of said items which is specified as security. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. If any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord provided that Tenant shall not be disturbed in its possession under this Lease by such successor in interest so long as Tenant is not in default under this Lease beyond any applicable cure period. Within ten (10) days after request by Landlord, Tenant shall execute and deliver any additional documents evidencing Tenant’s attornment or the subordination of this Lease with respect to any such ground leases or underlying leases or any such mortgage or deed of trust, in the form requested by Landlord or by any ground landlord, mortgagee, or beneficiary under a deed of trust, subject to such nondisturbance requirement. If requested in writing by Tenant, Landlord shall use commercially reasonable efforts to obtain a subordination, nondisturbance and attornment agreement for the benefit of Tenant reflecting the foregoing from any ground landlord, mortgagee or beneficiary, at Tenant’s expense, subject to such other commercially reasonable and customary terms and conditions as the ground landlord, mortgagee or beneficiary may require.

 

18. FINANCIAL STATEMENTS

 

At the request of Landlord from time to time but at least annually for Tenant and for Tenant parent/guarantor, Tenant shall provide to Landlord Tenant’s and Tenant’s guarantor’s current financial statements or other information discussing financial worth of Tenant and any guarantor, which Landlord shall use solely for purposes of this Lease and in connection with the ownership, management, financing and disposition of the Building.

 

19. ESTOPPEL CERTIFICATE

 

Tenant agrees from time to time, within ten (10) days after request of Landlord, to deliver to Landlord, or Landlord’s designee, an estoppel certificate stating that this Lease is in full force and effect, that this Lease has not been modified (or stating all modifications, written or oral, to this Lease), the date to which Rent has been paid, the unexpired portion of this Lease, that there are no current defaults by Landlord or Tenant under this Lease (or specifying any such defaults), that the leasehold estate granted by this Lease is the sole interest of Tenant in the Premises and/or the land at which the Premises are situated, and such other matters pertaining to this Lease as may be reasonably requested by Landlord or any mortgagee, beneficiary, purchaser or prospective purchaser of the Building or any interest therein. Failure by Tenant to execute and deliver such certificate shall constitute an acceptance of the Premises and acknowledgment by Tenant that the statements included are true and correct without exception. Tenant agrees that if Tenant fails to execute and deliver such certificate within such ten (10) day period, Landlord may execute and deliver such certificate on Tenant’s behalf and that such certificate shall be binding on Tenant. Landlord and Tenant intend that any statement delivered pursuant to this Paragraph may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the Building or any interest therein. The parties agree that Tenant’s obligation to furnish such estoppel certificates in a timely fashion is a material inducement for Landlord’s execution of this Lease, and shall be an event of

 

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default (without any cure period that might be provided under Paragraph 27.A(3) of this Lease) if Tenant fails to fully comply or makes any material misstatement in any such certificate.

 

20. SECURITY DEPOSIT

 

Tenant agrees to deposit with Landlord upon execution of this Lease, a security deposit equal to six (6) months’ rent, based on the rent schedule for year three (3), in the form of cash or a letter of credit as stated in the Basic Lease Information (the “Security Deposit”), which sum shall be held and owned by Landlord, without obligation to pay interest, as security for the performance of Tenant’s covenants and obligations under this Lease. Provided that Tenant is not in monetary default hereunder beyond any applicable cure periods, effective as of beginning of month twenty-five (25) of the Lease Term, and as of the beginning of each twelve (12) month period of the Lease Term thereafter, the Security Deposit shall be reduced by one (1) month’s rent based on the rent schedule for year three (3), provided that in no event shall the Security Deposit be reduced below the sum of two (2) months’ rent owing for year three. In addition, in the event Tenant has an initial public offering of its securities or if Tenant is acquired by an entity whose shares are traded on a public exchange, the Security Deposit shall be reduced at the end of twelve (12) months following such event, to two (2) months’ rent based on the rent schedule for year three, provided that the publicly traded or acquiring entity’s net worth at the one year anniversary of such event is equal to or greater than Tenant’s net worth as of the Lease Date. The Security Deposit is not an advance rental deposit or a measure of damages incurred by Landlord in case of Tenant’s default. Upon the occurrence of any event of default by Tenant, Landlord may from time to time, without prejudice to any other remedy provided herein or by law, use such fund as a credit to the extent necessary to credit against any arrears of Rent or other payments due to Landlord hereunder, and any other damage, injury, expense or liability caused by such event of default, and Tenant shall pay to Landlord, on demand, the amount so applied in order to restore the Security Deposit to its original amount. Although the Security Deposit shall be deemed the property of Landlord, any remaining balance of such deposit shall be returned by Landlord to Tenant at such time after termination of this Lease that all of Tenant’s obligations under this Lease have been fulfilled, reduced by such amounts as may be required by Landlord to remedy defaults on the part of Tenant in the payment of Rent or other obligations of Tenant under this Lease, to repair damage to the Premises or Building caused by Tenant or any Tenant’s Parties and to clean the Premises. Landlord is hereby granted a security interest in the Security Deposit in accordance with applicable provisions of the California Commercial Code. Landlord may use and commingle the Security Deposit with other funds of Landlord. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of any Regulations, now or hereinafter in force, which restricts the amount or types of claim that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return of security deposits.

 

21. LIMITATION OF TENANT’S REMEDIES

 

The obligations and liability of Landlord to Tenant for any default by Landlord under the terms of this Lease are not personal obligations of Landlord or of the individual or other partners of Landlord or its or their partners, directors, officers, or shareholders, and Tenant agrees to look solely to Landlord’s interest in the Building for the recovery of any amount from Landlord, and shall not look to other assets of Landlord nor seek recourse against the assets of the individual or other partners of Landlord or its or their partners, directors, officers or shareholders. Any lien obtained to enforce any such judgment and any levy of execution thereon shall be subject and subordinate to any lien, mortgage or deed of trust on the Building. Tenant shall have no right to offset against or recoup Rent or other payments due and to become due to Landlord hereunder, which Rent and other payments shall be absolutely due and payable hereunder in accordance with the terms hereof. In no case shall Landlord be liable to Tenant for any lost profits, damage to business, or any form of special, indirect or consequential damage on account of any breach of this Lease or otherwise, notwithstanding anything to the contrary contained in this Lease.

 

22. ASSIGNMENT AND SUBLETTING

 

A.                                    (1)                                 General. Tenant’s rights granted under this Lease do not include the right to assign this Lease or sublease the Premises, or to receive any excess, either in installments or lump sum, over the Rent which is expressly reserved by Landlord as hereinafter provided, except, in each case, as otherwise expressly hereinafter provided. Tenant shall not assign or pledge this Lease or sublet the Premises or any part thereof, whether voluntarily or by operation of law, or permit the use or occupancy of the Premises or any part thereof by anyone other than Tenant, or suffer or permit any such assignment, pledge, subleasing or occupancy, without Landlord’s prior written consent which shall not be unreasonably withheld or delayed on the terms contained herein. Notwithstanding anything to the contrary contained in this Paragraph 22, Tenant may permit its joint venture partners or parties with whom Tenant has formed a strategic alliance to jointly

 

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occupy with Tenant portions of the Premises up to 2000 square feet in the aggregate at any time and from time to time during the Term without providing notice to or obtaining consent from Landlord. If Tenant desires to assign this Lease or sublet any or all of the Premises, Tenant shall give Landlord written notice (the “Transfer Notice”) at least forty-five (45) days prior to the anticipated effective date of the proposed assignment or sublease, which shall contain all of the information reasonably requested by Landlord to address Landlord’s decision criteria specified hereinafter. Landlord shall then have a period of thirty (30) days following receipt of the Transfer Notice to notify Tenant in writing that Landlord, acting reasonably, elects either to deny such assignment or subletting or to consent to the proposed assignment or sublease, subject, however, to Landlord’s prior written consent of the proposed assignee or subtenant and of any related documents or agreements associated with the assignment or sublease. If Landlord should fail to notify Tenant in writing of such election within said period, Landlord shall be deemed to have consented. Consent to any assignment or subletting shall not constitute consent to any subsequent transaction to which this Paragraph 22 applies. Notwithstanding anything to the contrary contained in this Paragraph 22, in the event of (i) a merger, consolidation or sale of assets by Tenant in an arm’s length transaction in the ordinary course of business and outside of an insolvency context, (ii) the acquisition of all or substantially all of the assets of Tenant by an entity continuing to operate the business of Tenant (unless such assets have been acquired in connection with the insolvency of Tenant), or (iii) an assignment or subletting to an affiliate of Tenant, Tenant shall have the right to sublet or assign all or a portion of the Premises without Landlord’s consent, provided a Transfer notice is given to Landlord together with a document satisfactory to Landlord executed by the transferee or assignee, agreeing to be bound by all of the terms and obligations of this Lease, including payment of the appropriate Rent.

 

(2)                                 Conditions of Landlord’s Consent. Without limiting the other instances in which it may be reasonable for Landlord to withhold Landlord’s consent to an assignment or subletting, Landlord and Tenant acknowledge that it shall be reasonable for Landlord to withhold Landlord’s consent in the following instances: if the proposed assignee does not agree to be bound by and assume the obligations of Tenant under this Lease in form and substance satisfactory to Landlord; the use of the Premises by such proposed assignee or subtenant would not be a Permitted Use or would violate any exclusivity or other arrangement which Landlord has with any other tenant or occupant or any Regulation, or would otherwise result in an undesirable tenant mix for the Building as determined by Landlord; the proposed assignee or subtenant is not of sound financial condition as determined by Landlord in Landlord’s sole but reasonable discretion; the proposed assignee or subtenant is a governmental agency; the proposed assignee or subtenant does not have a good reputation as a tenant of property or a good business reputation; the proposed assignee or subtenant is a person with whom Landlord is negotiating to lease space in the Building or is a present tenant of the Building; the assignment or subletting would entail any Alterations which would lessen the value of the leasehold improvements in the Premises or use of any Hazardous Materials or other noxious use or use which may disturb other tenants of the Building; or Tenant is in default of any obligation of Tenant under this Lease, or Tenant has defaulted under this Lease on three (3) or more occasions during any twelve (12) months preceding the date that Tenant shall request consent. Failure by or refusal of Landlord to consent to a proposed assignee or subtenant shall not cause a termination of this Lease. In connection with each request for assignment or subletting, Tenant shall reimburse Landlord for Landlord’s actual, out-of-pocket costs of effecting any such transfer, including, without limitation, reasonable attorneys’ fees, up to a maximum of $2,000.

 

B.                                    Bonus Rent. Any Rent or other consideration realized by Tenant under any such sublease or assignment in excess of the Rent payable hereunder, after deducting a reasonable brokerage commission, improvement costs and free rent incurred by Tenant, shall be divided and paid, fifty percent (50%) to Tenant, fifty percent (50%) to Landlord.

 

C.                                    Corporation. If Tenant is a corporation, a transfer of corporate shares by sale, assignment, bequest, inheritance, operation of law or other disposition (including such a transfer to or by a receiver or trustee in federal or state bankruptcy, insolvency or other proceedings) resulting in a change in the present control of such corporation or any of its parent corporations by the person or persons owning a majority of said corporate shares, shall constitute an assignment for purposes of this Lease.

 

D.                                    Unincorporated Entity. If Tenant is a partnership, joint venture, unincorporated limited liability company or other unincorporated business form, a transfer of the interest of persons, firms or entities responsible for managerial control of Tenant by sale, assignment, bequest, inheritance, operation of law or other disposition, so as to result in a change in the present control of said entity and/or of the

 

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underlying beneficial interests of said entity and/or a change in the identity of the persons responsible for the general credit obligations of said entity shall constitute an assignment for all purposes of this Lease.

 

E.                                    Liability. No assignment or subletting by Tenant, permitted or otherwise, shall relieve Tenant of any obligation under this Lease or any guarantor of this Lease of any liability under its guaranty or alter the primary liability of the Tenant named herein for the payment of Rent or for the performance of any other obligations to be performed by Tenant, including obligations contained in Paragraph 26 with respect to any assignee or subtenant. Landlord may collect rent or other amounts or any portion thereof from any assignee, subtenant, or other occupant of the Premises, permitted or otherwise, and apply the net rent collected to the Rent payable hereunder, but no such collection shall be deemed to be a waiver of this Paragraph 22, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of the obligations of Tenant under this Lease or any guarantor of this Lease of any liability under its guaranty. Any assignment or subletting which conflicts with the provisions hereof shall be void.

 

23. AUTHORITY

 

Landlord represents and warrants that it has full right and authority to enter into this Lease and to perform all of Landlord’s obligations hereunder and that all persons signing this Lease on its behalf are authorized to do. Tenant and the person or persons, if any, signing on behalf of Tenant, jointly and severally represent and warrant that Tenant has full right and authority to enter into this Lease, and to perform all of Tenant’s obligations hereunder, and that all persons signing this Lease on its behalf are authorized to do so.

 

24. CONDEMNATION

 

A.                                    Condemnation Resulting in Termination. If the whole or any substantial part of the Premises should be taken or condemned for any public use under any Regulation, or by right of eminent domain, or by private purchase in lieu thereof, and the taking would prevent or materially interfere with Tenant’s normal business operations in the Premises, either party shall have the right to terminate this Lease at its option. If any material portion of the Building is taken or condemned for any public use under any Regulation, or by right of eminent domain, or by private purchase in lieu thereof, Landlord may terminate this Lease at its option. In either of such events, the Rent shall be abated during the unexpired portion of this Lease, effective when the physical taking of said Premises shall have occurred.

 

B.                                    Condemnation Not Resulting in Termination. If a portion of the Building of which the Premises are a part should be taken or condemned for any public use under any Regulation, or by right of eminent domain, or by private purchase in lieu thereof, and the taking prevents or materially interferes with Tenant’s normal business operations in the Premises, and this Lease is not terminated as provided in Paragraph 24.A above, the Rent payable hereunder during the unexpired portion of this Lease shall be reduced, beginning on the date when the physical taking shall have occurred, to such amount as may be fair and reasonable under all of the circumstances, but only after giving Landlord credit for all sums received or to be received by Tenant by the condemning authority. Notwithstanding anything to the contrary contained in this Paragraph, if the temporary use or occupancy of any part of the Premises shall be taken or appropriated under power of eminent domain during the Term, this Lease shall be and remain unaffected by such taking or appropriation and Tenant shall continue to pay in full all Rent payable hereunder by Tenant during the Term; in the event of any such temporary appropriation or taking, Tenant shall be entitled to receive that portion of any award which represents compensation for the use of or occupancy of the Premises during the unexpired Term.

 

C.                                    Award. Landlord shall be entitled to (and Tenant shall assign to Landlord) any and all payment, income, rent, award or any interest therein whatsoever which may be paid or made in connection with such taking or conveyance and Tenant shall have no claim against Landlord or otherwise for any sums paid by virtue of such proceedings, whether or not attributable to the value of any unexpired portion of this Lease, except as expressly provided in this Lease. Notwithstanding the foregoing, any compensation specifically and separately awarded Tenant for Tenant’s personal property and moving costs, shall be and remain the property of Tenant.

 

D.                                    Waiver of CCP§1265.130. Each party waives the provisions of California Civil Code Procedure Section 1265.130 allowing either party to petition the superior court to terminate this Lease as a result of a partial taking.

 

25. CASUALTY DAMAGE

 

A.                                    General. If the Premises or Building should be damaged or destroyed by fire, earthquake, tornado, or other casualty (collectively, “Casualty”), Tenant shall give immediate written notice thereof

 

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to Landlord. Within thirty (30) days after Landlord’s receipt of such notice, Landlord shall notify Tenant whether in Landlord’s reasonable estimation material restoration of the Premises can reasonably be made within one hundred eighty (180) days from the date of such notice and receipt of required permits for such restoration. Landlord’s determination shall be binding on Tenant.

 

B.                                    Within 180 Days. If the Premises or Building should be damaged by Casualty to such extent that material restoration can in Landlord’s reasonable estimation be reasonably completed within one hundred eighty (180) days after the date of such notice and receipt of required permits for such restoration, this Lease shall not terminate. Provided that the Casualty is an insured risk, Landlord shall proceed to rebuild and repair the Premises diligently and in the manner determined by Landlord, except that Landlord shall not be required to rebuild, repair or replace any part of any Alterations which may have been placed on or about the Premises or paid for by Tenant. If the Premises are untenantable in whole or in part following such damage, the Rent payable hereunder during the period in which they are untenantable shall be abated proportionately, but only to the extent of rental abatement insurance proceeds received by Landlord during the time and to the extent the Premises are unfit for occupancy.

 

C.                                    Greater than 180 Days. If the Premises or Building should be damaged by Casualty to such extent that rebuilding or repairs cannot in Landlord’s reasonable estimation be reasonably completed within one hundred eighty (180) days after the date of such notice and receipt of required permits for such rebuilding or repair, then Landlord shall have the option of either: (1) terminating this Lease effective upon the date of the occurrence of such damage, in which event the Rent shall be abated during the unexpired portion of this Lease; or (2) electing to rebuild or repair the Premises diligently and in the manner reasonably determined by Landlord. Landlord shall notify Tenant of its election within thirty (30) days after Landlord’s receipt of notice of the damage or destruction. Notwithstanding the above, Landlord shall not be required to rebuild, repair or replace any part of any Alterations which may have been placed, on or about the Premises or paid for by Tenant. If the Premises are not usable by Tenant’s for Tenant’s normal business operations in whole or in part following such damage, the Rent payable hereunder during the period in which they are not usable by Tenant for Tenant’s normal business operations shall be abated proportionately.

 

D.                                    Tenant’s Fault. Notwithstanding anything herein to the contrary, if the Premises or any other portion of the Building are damaged by Casualty resulting from the fault, negligence, or breach of this Lease by Tenant or any of Tenant’s Parties, Base Rent and Additional Rent shall not be diminished during the repair of such damage and, subject to the provisions of Paragraph 10, Tenant shall be liable to Landlord for the cost and expense of the repair and restoration of the Building caused thereby to the extent such cost and expense is not covered by insurance proceeds.

 

E.                                    Insurance Proceeds. Notwithstanding anything herein to the contrary, if the Premises or Building are damaged or destroyed and are not covered by the insurance proceeds received by Landlord or if the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises requires that the insurance proceeds be applied to such indebtedness, then in either case Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within thirty (30) days after the date of notice to Landlord that said damage or destruction is not covered by insurance or such requirement is made by any such holder, as the case may be, whereupon this Lease shall terminate.

 

F.                                     Waiver. This Paragraph 25 shall be Tenant’s sole and exclusive remedy in the event of damage or destruction to the Premises or the Building. As a material inducement to Landlord entering into this Lease, Tenant hereby waives any rights it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil Code of California with respect to any destruction of the Premises, Landlord’s obligation for tenantability of the Premises and Tenant’s right to make repairs and deduct the expenses of such repairs, or under any similar law, statute or ordinance now or hereafter in effect.

 

G.                                   Tenant’s Personal Property. In the event of any damage or destruction of the Premises or the Building, under no circumstances shall Landlord be required to repair any injury or damage to, or make any repairs to or replacements of, Tenant’s personal property.

 

26. HOLDING OVER

 

Unless Landlord expressly consents in writing to Tenant’s holding over, Tenant shall be unlawfully and illegally in possession of the Premises, whether or not Landlord accepts any rent from Tenant or any other person while Tenant remains in possession of the Premises without Landlord’s written consent. If Tenant shall retain possession of the Premises or any portion thereof without Landlord’s consent following the expiration of this Lease or sooner termination for any reason, then Tenant shall pay to Landlord for each day of such retention one hundred fifty percent (150%) of the amount of daily rental

 

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as of the last month prior to the date of expiration or earlier termination (“Holdover Rent”). Acceptance of Rent by Landlord following expiration or earlier termination of this Lease, or following demand by Landlord for possession of the Premises, shall not constitute a renewal of this Lease, and nothing contained in this Paragraph 26 shall waive Landlord’s right of reentry or any other right. Additionally, if upon expiration or earlier termination of this Lease, or following demand by Landlord for possession of the Premises, Tenant has not fulfilled its obligation with respect to repairs and cleanup of the Premises or any other Tenant obligations as set forth in this Lease, then Landlord shall have the right to perform any such obligations as it deems necessary at Tenant’s sole cost and expense, and any time required by Landlord to complete such obligations shall be considered a period of holding over and the terms of this Paragraph 26 shall apply. Notwithstanding anything to the contrary contained in this Lease but without limiting Tenant’s liability for payment of Holdover Rent, Tenant shall not be liable for consequential damages arising from Tenant’s failure to vacate the Premises occurring during the first thirty (30) day period following the expiration or termination of this Lease. The provisions of this Paragraph 26 shall survive any expiration or earlier termination of this Lease.

 

27. DEFAULT

 

A.                                    Events of Default. The occurrence of any of the following shall constitute an event of default on the part of Tenant, provided that Tenant waives any right to notice Tenant may have under Section 1951.3 of the Civil Code of the State of California, the terms of this Paragraph 27.A being deemed such notice to Tenant as required by said Section 1951.3:

 

(1)                                 Nonpayment of Rent. Failure to pay any installment of Rent or any other amount due and payable hereunder for a period of three (3) days following written notice from Landlord of the delinquency of such payment, time being of the essence.

 

(2)                                 Other Obligations. Failure to perform any obligation, agreement or covenant under this Lease other than those matters specified in subparagraphs (1) and (2) of this Paragraph 27.A, and in Paragraphs 9, 17, 19 and 26, which failure continues for fifteen (15) days after written notice of such failure, as to which time is of the essence.

 

(3)                                 General Assignment. A general assignment by Tenant for the benefit of creditors.

 

(4)                                 Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant’s creditors, which involuntary petition remains undischarged for a period of thirty (30) days. If under applicable law, the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant’s obligations under this Lease.

 

(5)                                 Receivership. The employment of a receiver to take possession of substantially all of Tenant’s assets or the Premises, if such appointment remains undismissed or undischarged for a period of fifteen (15) days after the order therefor.

 

(6)                                 Attachment. The attachment, execution or other judicial seizure of all or substantially all of Tenant’s assets or Tenant’s leasehold of the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of fifteen (15) days after the levy thereof.

 

(7)                                 Insolvency. The admission by Tenant in writing of its inability to pay its debts as they become due.

 

B.                                    Remedies Upon Default.

 

(1)                                 Termination. In the event of the occurrence of any event of default, Landlord shall have the right to give a written termination notice to Tenant, and on the date specified in such notice, Tenant’s right to possession shall terminate, and this Lease shall terminate unless on or before such date all Rent in arrears and all costs and expenses incurred by or on behalf of Landlord hereunder shall have been paid by Tenant and all other events of default of this Lease by Tenant at the time existing shall have been fully remedied to the satisfaction of Landlord. At any time after such termination, Landlord may recover possession of the Premises or any part thereof and expel and remove therefrom Tenant and any other person occupying the same, including any subtenant or subtenants notwithstanding Landlord’s consent to any sublease, by any lawful means, and again repossess and enjoy the Premises without prejudice to any of the remedies that Landlord may have under this Lease, or at law or equity by any reason of Tenant’s default or of

 

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such termination. Landlord hereby reserves the right, but shall not have the obligation, to recognize the continued possession of any subtenant. The delivery or surrender to Landlord by or on behalf of Tenant of keys, entry codes, or other means to bypass security at the Premises shall not terminate this Lease.

 

(2)                                 Continuation After Default. Even though an event of default may have occurred, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession under Paragraph 27.B(1) hereof. Landlord shall have the remedy described in California Civil Code Section 1951.4 (“Landlord may continue this Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations”), or any successor code section. Accordingly, if Landlord does not elect to terminate this Lease on account of any event of default by Tenant, Landlord may enforce all of Landlord’s rights and remedies under this Lease, including the right to recover Rent as it becomes due. Acts of maintenance, preservation or efforts to lease the Premises or the appointment of a receiver under application of Landlord to protect Landlord’s interest under this Lease or other entry by Landlord upon the Premises shall not constitute an election to terminate Tenant’s right to possession.

 

(3)                                 Increased Security Deposit. If Tenant is in default under Paragraph 27.A(1) hereof and such default remains uncured for ten (10) days after the expiration of the applicable cure period or a payment default beyond the applicable cure period occurs more than three times in any twelve (12) month period, Landlord may require that Tenant increase the Security Deposit to the amount of five (5) times the current month’s Rent at the time of the most recent default.

 

C.                                    Damages After Default. Should Landlord terminate this Lease pursuant to the provisions of Paragraph 27.B(1) hereof, Landlord shall have the rights and remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor code sections. Upon such termination, in addition to any other rights and remedies to which Landlord may be entitled under applicable law or at equity, Landlord shall be entitled to recover from Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts which had been earned at the time of termination, (2) the worth at the time of award of the amount by which the unpaid Rent and other amounts that would have been earned after the date of termination until the time of award exceeds the amount of such Rent loss that Tenant proves could have been reasonably avoided; (3) the worth at the time of award of the amount by which the unpaid Rent and other amounts for the balance of the Term after the time of award exceeds the amount of such Rent loss that the Tenant proves could be reasonably avoided; and (4) any other amount and court costs necessary to compensate Landlord for all detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom. The “worth at the time of award” as used in (1) and (2) above shall be computed at the Applicable Interest Rate (defined below). The “worth at the time of award” as used in (3) above shall be computed by discounting such amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). If this Lease provides for any periods during the Term during which Tenant is not required to pay Base Rent or if Tenant otherwise receives a Rent concession, then upon the occurrence of an event of default, Tenant shall owe to Landlord the full amount of such Base Rent or value of such Rent concession, plus interest at the Applicable Interest Rate, calculated from the date that such Base Rent or Rent concession would have been payable.

 

D.                                    Late Charge. In addition to its other remedies, Landlord shall have the right without notice or demand to add to the amount of any payment required to be made by Tenant hereunder, and which is not paid and received by Landlord when due, to an amount equal to five percent (5%) of the delinquent amount, or $150.00, whichever amount is greater, for each month or portion thereof that the delinquency remains outstanding to compensate Landlord for the loss of the use of the amount not paid and the administrative costs caused by the delinquency, the parties agreeing that Landlord’s damage by virtue of such delinquencies would be extremely difficult and impracticable to compute and the amount stated herein represents a reasonable estimate thereof; provided, however that such charge shall not apply to the first such delinquency. Any waiver by Landlord of any late charges or failure to claim the same shall not constitute a waiver of other late charges or any other remedies available to Landlord.

 

E.                                    Interest. Interest shall accrue on all sums not paid when due hereunder at the lesser of ten percent (10%) per annum or the maximum interest rate allowed by law (“Applicable Interest Rate”) from the due date until paid.

 

F.                                     Remedies Cumulative. All of Landlord’s rights, privileges and elections or remedies are cumulative and not alternative, to the extent permitted by law and except as otherwise provided herein.

 

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G.                                   Replacement of Statutory Notice Requirements. When this Lease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notice required by California Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by this Paragraph 27 shall replace and satisfy the statutory service-of-notice procedures, including those required by California Code of Civil Procedure Section 1162 or any similar or successor statute.

 

28. LIENS

 

Tenant shall at all times keep the Premises and the Building free from liens arising out of or related to work or services performed, materials or supplies furnished or obligations incurred by or on behalf of Tenant or in connection with work made, suffered or done by or on behalf of Tenant in or on the Premises or Building. If Tenant shall not, within ten (10) days following the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as Landlord shall deem proper, including payment of the claim giving rise to such lien. All sums paid by Landlord on behalf of Tenant and all expenses incurred by Landlord in connection therefor shall be payable to Landlord by Tenant on demand with interest at the Applicable Interest Rate as Additional Rent. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Building and any other party having an interest therein, from mechanics’ and materialmen’s liens, and Tenant shall give Landlord not less than ten (10) business days prior written notice of the commencement of any work in the Premises or Building which could lawfully give rise to a claim for mechanics’ or materialmen’s liens to permit Landlord to post and record a timely notice of non-responsibility, as Landlord may elect to proceed or as the law may from time to time provide, for which purpose, if Landlord shall so determine, Landlord may enter the Premises. Tenant shall not remove any such notice posted by Landlord without Landlord’s consent, and in any event not before completion of the work which could lawfully give rise to a claim for mechanics’ or materialmen’s liens.

 

29. TRANSFERS BY LANDLORD

 

In the event of a sale or conveyance by Landlord of the Building or a foreclosure by any creditor of Landlord, the same shall operate to release Landlord from any liability upon any of the covenants or conditions, express or implied, herein contained in favor of Tenant, to the extent required to be performed after the passing of title to Landlord’s successor-in-interest. In such event, Tenant agrees to look solely to the responsibility of the successor-in-interest of Landlord under this Lease with respect to the performance of the covenants and duties of “Landlord” first arising after the passing of title to Landlord’s successor-in-interest. This Lease shall not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee. Landlord’s successor(s)-in-interest shall not have liability to Tenant with respect to the failure to perform any of the obligations of “Landlord,” to the extent required to be performed prior to the date such successor(s)-in-interest became the owner of the Building, and all such liability shall be retained by Landlord.

 

30. RIGHT OF LANDLORD TO PERFORM TENANT’S COVENANTS

 

All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of Rent. If Tenant shall fail to pay any sum of money, other than Base Rent, required to be paid by Tenant hereunder or shall fail to perform any other act on Tenant’s part to be performed hereunder, including Tenant’s obligations under Paragraph 12 hereof, and such failure shall continue for fifteen (15) days after notice thereof by Landlord, in addition to the other rights and remedies of Landlord, Landlord may make any such payment and perform any such act on Tenant’s part. In the case of an emergency, no prior notification by Landlord shall be required. Landlord may take such actions without any obligation and without releasing Tenant from any of Tenant’s obligations. All sums so paid by Landlord and all incidental costs incurred by Landlord and interest thereon at the Applicable Interest Rate, from the date of payment by Landlord, shall be paid to Landlord on demand as Additional Rent.

 

31. WAIVER

 

If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, or constitute a course of dealing contrary to the expressed terms of this Lease. The acceptance of Rent by Landlord shall not constitute a waiver of any preceding

 

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breach by Tenant of any term, covenant or condition of this Lease, regardless of Landlord’s knowledge of such preceding breach at the time Landlord accepted such Rent. Failure by Landlord to enforce any of the terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive or decrease the right of Landlord to insist thereafter upon strict performance by Tenant. Waiver by Landlord of any term, covenant or condition contained in this Lease may only be made by a written document signed by Landlord, based upon full knowledge of the circumstances.

 

32. NOTICES

 

Each provision of this Lease or of any applicable governmental laws, ordinances, regulations and other requirements with reference to sending, mailing, or delivery of any notice or the making of any payment by Landlord or Tenant to the other shall be deemed to be complied with when and if the following steps are taken:

 

A.                                    Rent. All Rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at Landlord’s Remittance Address set forth in the Basic Lease Information, or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. Tenant’s obligation to pay Rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such Rent and other amounts have been actually received by Landlord.

 

B.                                    Other. All notices, demands, consents and approvals which may or are required to be given by either party to the other hereunder shall be in writing and either personally delivered, sent by commercial overnight courier, mailed, certified or registered, postage prepaid or sent by facsimile with confirmed receipt (and with an original sent by commercial overnight courier), and in each case addressed to the party to be notified at the Notice Address for such party as specified in the Basic Lease Information or to such other place as the party to be notified may from time to time designate by at least fifteen (15) days notice to the notifying party. Notices shall be deemed served upon receipt or refusal to accept delivery. Tenant appoints as its agent to receive the service of all default notices and notice of commencement of unlawful detainer proceedings the person in charge of or apparently in charge of occupying the Premises at the time, and, if there is no such person, then such service may be made by attaching the same on the main entrance of the Premises.

 

C.                                    Required Notices. Tenant shall immediately notify Landlord in writing of any notice of a violation or a potential or alleged violation of any Regulation that relates to the Premises or the Building, or of any inquiry, investigation, enforcement or other action that is instituted or threatened by any governmental or regulatory agency against Tenant or any other occupant of the Premises, or any claim that is instituted or threatened by any third party that relates to the Premises or the Building.

 

33. ATTORNEYS’ FEES

 

If during the continuance of an event of default under this Lease, Landlord places the enforcement of this Lease, or any part thereof, or the collection of any Rent due, or to become due hereunder, or recovery of possession of the Premises in the hands of an attorney, Tenant shall pay to Landlord, upon demand, Landlord’s reasonable attorneys’ fees and court costs, whether incurred before trial, at trial, appeal or review. In any action which Landlord or Tenant brings to enforce its respective rights hereunder, the unsuccessful party shall pay all costs incurred by the prevailing party including reasonable attorneys’ fees, to be fixed by the court, and said costs and attorneys’ fees shall be a part of the judgment in said action.

 

34. SUCCESSORS AND ASSIGNS

 

This Lease shall be binding upon and inure to the benefit of Landlord, its successors and assigns, and shall be binding upon and inure to the benefit of Tenant, its successors, and to the extent assignment is approved by Landlord as provided hereunder, Tenant’s assigns.

 

35. FORCE MAJEURE

 

If performance by a party of any portion of this Lease is made impossible by any prevention, delay, or stoppage caused by strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes for those items, government actions, civil commotions, fire or other casualty, or other causes beyond the reasonable control of the party obligated to perform, performance by that party for a period equal to the period of that prevention, delay, or stoppage is excused. Tenant’s obligation to pay Rent, however, is not excused by this Paragraph 35.

 

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36. SURRENDER OF PREMISES

 

Tenant shall, upon expiration or sooner termination of this Lease, surrender the Premises to Landlord in the same condition as existed on the date Tenant completed the Tenant Improvements, normal wear and tear excluded, but with all interior walls cleaned, all holes in walls repaired, all carpets shampooed and cleaned, all HVAC equipment in operating order and in good repair, and all floors broom-clean, and free of any Tenant-introduced marking or painting, all to the reasonable satisfaction of Landlord. Tenant shall remove all of its debris from the Building. At or before the time of surrender, Tenant shall comply with the terms of Paragraph 13.A hereof with respect to Alterations to the Premises and all other matters addressed in such Paragraph. If the Premises are not so surrendered at the expiration or sooner termination of this Lease, the provisions of Paragraph 26 hereof shall apply. All keys to the Premises or any part thereof shall be surrendered to Landlord upon expiration or sooner termination of the Term. Tenant shall give written notice to Landlord at least thirty (30) days prior to vacating the Premises and shall meet with Landlord for a joint inspection of the Premises at the time of vacating, but nothing contained herein shall be construed as an extension of the Term or as a consent by Landlord to any holding over by Tenant. In the event of Tenant’s failure to give such notice or participate in such joint inspection, Landlord’s inspection at or after Tenant’s vacating the Premises shall conclusively be deemed correct for purposes of determining Tenant’s responsibility for repairs and restoration. Any delay caused by Tenant’s failure to carry out its obligations under this Paragraph 36 beyond the term hereof, shall constitute unlawful and illegal possession of Premises under Paragraph 26 hereof.

 

37. HAZARDOUS MATERIALS

 

A.                                    General Restrictions. Tenant shall conduct its business and shall cause each Tenant Party to act in such a manner as to (a) not release or permit the release of any Hazardous Material in, under, on or about the Premises or Building, or (b) not use, store, generate, treat, discharge, disperse, handle, manufacture, transport or dispose of (collectively, “Handle”) any Hazardous Materials (other than incidental amounts of customary cleaning and office supplies) in or about the Premises or Building without the prior written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion (“Hazardous Materials Consent Requirements”). “Hazardous Material” means any hazardous, explosive, radioactive or toxic substance, material or waste which is or becomes regulated by any local, state or federal governmental authority or agency, including, without limitation, any material or substance which is (i) defined or listed as a “hazardous waste,” “extremely hazardous waste,” “restricted hazardous waste,” “hazardous substance,” “hazardous material,” “pollutant” or “contaminant” under any Regulation, (ii) petroleum or petroleum derivative, (iii) a flammable explosive, (iv) a radioactive material or waste, (v) a polychlorinated biphenyl, (vi) asbestos or asbestos containing material, (vii) infectious waste, or (viii) a carcinogen.

 

B.                                    Required Disclosures. Prior to Tenant (and at least five (5) days prior to any assignee or any subtenant of Tenant) taking possession of any part of the Premises, and on each anniversary of the Term Commencement Date (each such date is hereinafter referred to as a “Disclosure Date”), until and including the first Disclosure Date occurring after the expiration or sooner termination of this Lease, Tenant shall disclose to Landlord in writing the names and amounts of all Hazardous Materials, or any combination thereof, which were Handled on, in, under or about the Premises or Building for the twelve (12) month period prior to such Disclosure Date, or which Tenant intends to Handle on, under or about the Premises during the twelve (12) month period following the Disclosure Date by executing and delivering to Landlord a “Hazardous Materials Questionnaire”, in the form attached hereto as Exhibit C (as updated and modified by Landlord, from time to time). Tenant’s disclosure obligations under this Paragraph 37.B shall include a requirement that, to the extent any information contained in a Hazardous Materials Questionnaire previously delivered by Tenant shall become inaccurate in any material respect, Tenant shall immediately deliver to Landlord a new updated Hazardous Materials Questionnaire.

 

C.                                    Additional Obligations. If any Hazardous Materials shall be released into the environment comprising or surrounding the Building in connection with the acts, omissions or operations of Tenant or any Tenant Party, Tenant shall at its sole expense promptly prepare a remediation plan therefore consistent with applicable Regulations and recommended industry practices (and approved by Landlord and all governmental agencies having jurisdiction) to fully remediate such release, and thereafter shall prosecute the remediation plan so approved to completion with all reasonable diligence and to the satisfaction of Landlord and applicable governmental agencies. If any Hazardous Materials are Handled in, under, on or about the Premises during the Term, or if Landlord determines in good faith that any release of any Hazardous Material or violation of Hazardous Materials Regulations may have occurred in, on, under or about the Premises during the Term, Landlord may require Tenant to at Tenant’s sole

 

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expense, (i) retain a qualified environmental consultant reasonably satisfactory to Landlord to conduct a reasonable investigation (an “Environmental Assessment”) of a nature and scope reasonably approved in writing in advance by Landlord with respect to the existence of any Hazardous Materials in, on, under or about the Premises and providing a review of all Hazardous Materials activities of Tenant and the Tenant Parties, and (ii) provide to Landlord a reasonably detailed, written report, prepared in accordance with the institutional real estate standards, of the Environmental Assessment.

 

D.                                    Indemnity. Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord), protect and hold Landlord harmless from and against any and all claims, liabilities, losses, costs, loss of rents, liens, damages, injuries or expenses (including attorneys’ and consultants’ fees and court costs), demands, causes of action, or judgments directly or indirectly arising out of or related to the use, generation, storage, release, or disposal of Hazardous Materials by Tenant or any of Tenant’s Parties in, on, under or about the Premises, the Building or surrounding land or environment, which indemnity shall include, without limitation, damages for personal or bodily injury, property damage, damage to the environment or natural resources occurring on or off the Premises, losses attributable to diminution in value or adverse effects on marketability, the cost of any investigation, monitoring, government oversight, repair, removal, remediation, restoration, abatement, and disposal, and the preparation of any closure or other required plans, whether such action is required or necessary prior to or following the expiration or earlier termination of this Lease. Neither the consent by Landlord to the use, generation, storage, release or disposal of Hazardous Materials nor the strict compliance by Tenant with all laws pertaining to Hazardous Materials shall excuse Tenant from Tenant’s obligation of indemnification pursuant to this Paragraph 37.D. Tenant’s obligations pursuant to the foregoing indemnity shall survive the expiration or earlier termination of this Lease. Landlord shall indemnify, defend (by counsel reasonably acceptable to Tenant), protect and hold Tenant harmless from and against any and all claims, liabilities, losses, costs, loss of rents, liens, damages, injuries or expenses (including attorneys’ and consultants’ fees and court costs), demands, causes of action, or judgments directly or indirectly arising out of or related to the use, generation, storage, release, or disposal of Hazardous Materials by Landlord or any tenants who occupied the Premises, Building prior to Tenant’s occupancy, in, on, under or about the Premises, the Building or surrounding land or environment.

 

38. MISCELLANEOUS

 

A.                                    General. The term “Tenant” or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their respective successors, executors, administrators and permitted assigns, according to the context hereof.

 

B.                                    Time. Time is of the essence regarding this Lease and all of its provisions.

 

C.                                    Choice of Law. This Lease shall in all respects be governed by the laws of the State of California.

 

D.                                    Entire Agreement. This Lease, together with its Exhibits, addenda and attachments and the Basic Lease Information, contains all the agreements of the parties hereto and supersedes any previous negotiations. There have been no representations made by the Landlord or understandings made between the parties other than those set forth in this Lease and its Exhibits, addenda and attachments and the Basic Lease Information.

 

E.                                    Modification. This Lease may not be modified except by a written instrument signed by the parties hereto. Tenant accepts the area of the Premises as specified in the Basic Lease Information as the approximate area of the Premises for all purposes under this Lease, and acknowledges and agrees that no other definition of the area (rentable, usable or otherwise) of the Premises shall apply. Tenant shall in no event be entitled to a recalculation of the square footage of the Premises, rentable, usable or otherwise, and no recalculation, if made, irrespective of its purpose, shall reduce Tenant’s obligations under this Lease in any manner, including without limitation the amount of Base Rent payable by Tenant or Tenant’s Proportionate Share of the Building.

 

F.                                     Severability. If, for any reason whatsoever, any of the provisions hereof shall be unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect.

 

G.                                   Recordation. Tenant shall not record this Lease or a short form memorandum hereof.

 

H.                                   Examination of Lease. Submission of this Lease to Tenant does not constitute an option or offer to lease and this Lease is not effective otherwise until execution and delivery by both Landlord and Tenant.

 

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I.                                        Accord and Satisfaction. No payment by Tenant of a lesser amount than the total Rent due nor any endorsement on any check or letter accompanying any check or payment of Rent shall be deemed an accord and satisfaction of full payment of Rent, and Landlord may accept such payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue other remedies. All offers by or on behalf of Tenant of accord and satisfaction are hereby rejected in advance.

 

J.                                      Easements. Landlord may grant easements on the Building and dedicate for public use portions of the Building without Tenant’s consent; provided that no such grant or dedication shall materially interfere with Tenant’s Permitted Use of the Premises. Upon Landlord’s request, Tenant shall execute, acknowledge and deliver to Landlord documents, instruments, maps and plats necessary to effectuate Tenant’s covenants hereunder.

 

K.                                   Drafting and Determination Presumption. The parties acknowledge that this Lease has been agreed to by both the parties, that both Landlord and Tenant have consulted with attorneys with respect to the terms of this Lease and that no presumption shall be created against Landlord because Landlord drafted this Lease. Except as otherwise specifically set forth in this Lease, with respect to any consent, determination or estimation of Landlord required or allowed in this Lease or requested of Landlord, Landlord’s consent, determination or estimation shall be given or made solely by Landlord in Landlord’s good faith opinion, whether or not objectively reasonable. If Landlord fails to respond to any request for its consent within the time period, if any, specified in this Lease, Landlord shall be deemed to have disapproved such request.

 

L.                                    Exhibits. The Basic Lease Information, and the Exhibits, addenda and attachments attached hereto are hereby incorporated herein by this reference and made a part of this Lease as though fully set forth herein.

 

M.                                 No Light, Air or View Easement. Any diminution or shutting off of light, air or view by any structure which may be erected on lands adjacent to or in the vicinity of the Building shall in no way affect this Lease or impose any liability on Landlord.

 

N.                                    No Third Party Benefit. This Lease is a contract between Landlord and Tenant and nothing herein is intended to create any third party benefit.

 

O.                                   Quiet Enjoyment. Upon payment by Tenant of the Rent, and upon the observance and performance of all of the other covenants, terms and conditions on Tenant’s part to be observed and performed, Tenant shall peaceably and quietly hold and enjoy the Premises for the term hereby demised without hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under Landlord, subject, nevertheless, to all of the other terms and conditions of this Lease. Landlord shall not be liable for any hindrance, interruption, interference or disturbance by other tenants or third persons, nor shall Tenant be released from any obligations under this Lease because of such hindrance, interruption, interference or disturbance.

 

P.                                     Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original.

 

Q.                                   Multiple Parties. If more than one person or entity is named herein as Tenant, such multiple parties shall have joint and several responsibility to comply with the terms of this Lease.

 

R.                                    Prorations. Any Rent or other amounts payable to Landlord by Tenant hereunder for any fractional month shall be prorated based on a month of 30 days. As used herein, the term “fiscal year” shall mean the calendar year or such other fiscal year as Landlord may deem appropriate.

 

39. ADDITIONAL PROVISIONS

 

A.                                    Pets. Tenant shall be permitted to bring household pets onto the Premises, subject to any Rules and Regulations and to the terms of this Lease.

 

B.                                    Access to Premises. Tenant shall have access to the Premises 24 hours per day, seven (7) days per week, 365 days per year, with electrical service provided at all times.

 

C.                                    Access to Roof. Subject to the existing easements and facilities installed on the roof, tenant shall have access to the Building’s roof for the purpose of installing its own satellite and wireless communication equipment, without additional charge, but subject to Landlord’s prior written approval as to quantity, size and location of such equipment and subject to all applicable laws, rules and regulations. This right to install such equipment shall not be deemed to grant to Tenant the right to lease or sublease to third party service providers roof space for the purpose of installing commercial antennas, cell relay towers and equipment for

 

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wireless communications. Any revenue derived from such activity and leasing shall be deemed to be the sole property and revenue of Landlord which is payable to Landlord upon receipt. Any skylights or other improvements to the roof or installed on the roof shall be subject to the terms and provisions of Section 13 hereof governing Alterations.

 

40. JURY TRIAL WAIVER

 

EACH PARTY HERETO (WHICH INCLUDES ANY ASSIGNEE, SUCCESSOR HEIR OR PERSONAL REPRESENTATIVE OF A PARTY) SHALL NOT SEEK A JURY TRIAL, AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY WAIVES TRIAL BY JURY, AND HEREBY FURTHER WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN WHICH THE BUILDING IS LOCATED, AND AGREES AND CONSENTS TO PERSONAL JURISDICTION OF THE COURTS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY STATUTE, EMERGENCY OR OTHERWISE, WHETHER ANY OF THE FOREGOING IS BASED ON THIS LEASE OR ON TORT LAW. EACH PARTY REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL CONCERNING THE EFFECT OF THIS PARAGRAPH 40. THE PROVISIONS OF THIS PARAGRAPH 40 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and the year first above written.

 

	
 
    	
LANDLORD
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Redbird   Investment Group, LLC,
    	
 
    
	
 
    	
a Delaware   Limited Liability Company
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J.   Cardinal
    	
 
    
	
 
    	
 
    	
Bruce J.   Cardinal, Managing Member
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date: July 7,   2011
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TENANT
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Atlassian, Inc.
    	
 
    
	
 
    	
A Delaware   Corporation
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Bruce-Smith
    	
 
    
	
 
    	
 
    	
John Bruce-Smith
    	
 
    
	
 
    	
 
    	
Its: Director
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jay Simons
    	
 
    
	
 
    	
 
    	
Jay Simons
    	
 
    
	
 
    	
 
    	
Its: Director
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date: June 26,   2011
    	
 
    

 

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EXHIBIT C

 

HAZARDOUS MATERIALS QUESTIONNAIRE

 

This questionnaire is designed to solicit information regarding Tenant’s proposed use, generation, treatment, storage, transfer or disposal of hazardous or toxic materials, substances or wastes. If this Questionnaire is attached to or provided in connection with a lease, the reference herein to any such items shall include all items defined as “Hazardous Materials,” “Hazardous Substances,” “Hazardous Wastes,” “Toxic Materials,” “Toxic Substances, “Toxic Wastes,” or such similar definitions contained in the lease. Please complete the questionnaire and return it to Landlord for evaluation. If your use of materials or substances, or generation of wastes is considered to be significant, further information may be requested regarding your plans for hazardous and toxic materials management. Your cooperation in this matter is appreciated. If you have any questions, do not hesitate to call us for assistance.

 

1.              PROPOSED TENANT

 

Name (Corporation, Individual, Corporate or Individual DBA, or Public Agency):

Atlassian Software, Inc.

 

	
Standard   Industrial Classification Code (SIC):
    	
7372
    	
 
    

 

	
Street   Address:
    	
375 Alabama St.   #325
    	
 
    
	
 
    	
 
    	
 
    
	
City,   State, Zip Code:
    	
San Francisco,   CA 94110
    	
 
    
	
 
    	
 
    	
 
    
	
Contact   Person & Title:
    	
Jay Simons, VP   Marketing
    	
 
    

 

	
Telephone   Number: 
    	
(415) 358-2947
    	
Facsimile 
    
	
 
    	
 
    	
 
    
	
Number: ( )
    	
 
    	
 
    

 

2.              LOCATION AND ADDRESS OF PROPOSED LEASE

 

	
Street   Address:
    	
1098 Harrison   St.
    
	
 
    	
 
    
	
City,   State, Zip Code:
    	
San Francisco,   CA 94103
    
	
 
    	
 
    
	
Bordering   Streets:
    	
7th St., 6th St., Harrison
    
	
 
    
	
Streets   to which Premises has Access:
    	
Harrison
    
			

 

3.              DESCRIPTION OF PREMISES

 

	
Floor   Area:
    	
42k 58ft
    
	
 
    	
 
    
	
Date of Original Construction:
    

 

 

Past Uses of Premises:

 

Dates and Descriptions of Significant Additions, Alterations or Improvements:

 

 

Proposed Additions, Alterations or Improvements, if any:

 

4.              DESCRIPTION OF PROPOSED PREMISES USE

 

Describe proposed use and operation of Premises including (i) services to be performed, (ii) nature and types of manufacturing or assembly processes, if any, and (iii) the materials or products to be stored at the Premises.

 

office use for software development, sales and marketing, and support

 

Will the operation of your business at the Premises involve the use, generation, treatment, storage, transfer or disposal of hazardous wastes or materials? Do they now? Yes o No x If the answer is “yes,” or if your SIC code number is between 2000 to 4000, please complete Section V.

 

5.              PERMIT DISCLOSURE

 

Does or will the operation of any facet of your business at the Premises require any permits, licenses or plan approvals from any of the following agencies?

 

	
U.S.   Environmental Protection Agency
    	
Yes o
    	
No x
    
	
 
    	
 
    	
 
    
	
City   or County Sanitation District
    	
Yes o
    	
No x
    
	
 
    	
 
    	
 
    
	
State   Department of Health Services
    	
Yes o
    	
No x
    
	
 
    	
 
    	
 
    
	
U.S.   Nuclear Regulatory Commission
    	
Yes o
    	
No x
    
	
 
    	
 
    	
 
    
	
Air   Quality Management District
    	
Yes o
    	
No x
    
	
 
    
	
Bureau   of Alcohol, Firearms and Tobacco
    	
Yes o
    	
No x
    
	
 
    
	
City   or County Fire Department
    	
Yes o
    	
No x
    
	
 
    
	
Regional   Water Quality Control Board
    	
Yes o
    	
No x
    
	
 
    	
 
    	
 
    
	
Other   Governmental Agencies (if yes, 
    	
Yes o
    	
No x
    
	
 
    	
 
    	
 
    
	
identify:
    	
)
    	
 
    
								

 

 

If the answer to any of the above is “yes,” please indicate permit or license numbers, issuing agency and expiration date or renewal date, if applicable.

 

 

 

 

If your answer to any of the above is “yes,” please complete Sections VI and VII.

 

6.              HAZARDOUS MATERIALS DISCLOSURE

 

Will any hazardous or toxic materials or substances be stored on the Premises? Yes o No x If the answer is “yes,” please describe the materials or substances to be stored, the quantities thereof and the proposed method of storage of the same (i.e., drums, aboveground or underground storage tanks, cylinders, other), and whether the material is a Solid (S), Liquid (L) or Gas (G):

 

	
Material/
    	
 
    	
Quantity to be
    	
 
    	
 
    	
 
    	
Amount to be Stored
    	
 
    	
Maximum Period of
    
	
Substance
    	
 
    	
Stored on Premises
    	
 
    	
Storage Method
    	
 
    	
on a Monthly Basis
    	
 
    	
Premises Storage
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Attach additional sheets if necessary.

 

Is any modification of the Premises improvements required or planned to mitigate the release of toxic or hazardous materials substance or wastes into the environment? Yes o No x If the answer is “yes,” please describe the proposed Premises modifications:

 

 

 

 

7.              HAZARDOUS WASTE DISCLOSURE

 

Will any hazardous waste, including recyclable waste, be generated by the operation of your business at the Premises? Yes o No x If the answer is “yes,” please list the hazardous waste which is expected to be generated (or potentially will be generated) at the Premises, its hazard class and volume/frequency of generation on a monthly basis.

 

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Maximum Period of
    
	
Waste Name
    	
 
    	
Hazard Class
    	
 
    	
Volume/Month
    	
 
    	
Premises Storage
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Attach additional sheets if necessary.

 

If the answer is “yes,” please also indicate if any such wastes are to be stored within the Premises and the proposed method of storage (i.e., drums, aboveground or underground storage tanks, cylinders, other).

 

	
Waste Name
    	
 
    	
Storage Method
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

Attach additional sheets if necessary.

 

If the answer is “yes,” please also describe the method(s) of disposal for each waste. Indicate where disposal will take place including the methods, equipment and companies to be used to transport the waste:

 

 

 

 

Is any treatment or processing of hazardous wastes to be conducted at the Premises? Yes o No x If the answer is “yes,” please describe proposed treatment/processing methods:

 

 

 

 

Which agencies are responsible for monitoring and evaluating compliance with respect to the storage and disposal of hazardous materials or wastes at or from the Premises? (Please list all agencies):

 

 

 

 

 

Have there been any agency enforcement actions regarding Tenant (or any affiliate thereof), or any existing Tenant’s (or any affiliate’s) facilities, or any past, pending or outstanding administrative orders or consent decrees with respect to Tenant or any affiliate thereof? Yes o No x If the answer is “yes,” have there been any continuing compliance obligations imposed on Tenant or its affiliates as a result of the decrees or orders? Yes o No x If the answer is “yes,” please describe:

 

 

 

 

Has Tenant or any of its affiliates been the recipient of requests for information, notice and demand letters, cleanup and abatement orders, or cease and desist orders or other administrative inquiries? Yes o No x If the answer is “yes,” please describe:

 

 

 

 

Are there any pending citizen lawsuits, or have any notices of violations been provided to Tenant or its affiliates or with respect to any existing facilities pursuant to the citizens suit provisions of any statute? Yes o No x If the answer is “yes,” please describe:

 

 

 

 

Have there been any previous lawsuits against the company regarding environmental concerns? Yes o No x If the answer is “yes,” please describe how these lawsuits were resolved:

 

 

 

 

Has an environmental audit ever been conducted at any of your company’s existing facilities? Yes o No x If the answer is “yes,” please describe:

 

 

 

 

Does your company carry environmental impairment insurance? Yes o No x If the answer is “yes,” what is the name of the carrier and what are the effective periods and monetary limits of such coverage?

 

 

 

 

8.              EQUIPMENT LOCATED OR TO BE LOCATED AT THE PREMISES

 

Is (or will there be) any electrical transformer or other equipment containing polychlorinated biphenyls located at the Premises? Yes o No x If the answer is “yes,” please specify the size, number and location (or proposed location):

 

 

 

 

Is (or will there be) any tank for storage of a petroleum product located at the Premises? Yes o No x If the answer is “yes,” please specify capacity and contents of tank; permits, licenses and/or approvals received or to be received therefor and any spill prevention control or conformance plan to be taken in connection therewith:

 

 

 

 

9.              ONGOING ACTIVITIES (APPLICABLE TO TENANTS IN POSSESSION)

 

Has any hazardous material, substance or waste spilled, leaked, discharged, leached, escaped or otherwise been released into the environment at the Premises? Yes o No x If the answer is “yes,” please describe including (i) the date and duration of each such release, (ii) the material, substance or waste released, (iii) the extent of the spread of such release into or onto the air, soil and/or water, (iv) any action to clean up the release, (v) any reports or notifications made of filed with any federal, state, or local agency, or any quasi-governmental agency (please provide copies of such reports or notifications) and (vi) describe any legal, administrative or other action taken by any of the foregoing agencies or by any other person as a result of the release:

 

 

 

 

This Hazardous Materials Questionnaire is certified as being true and accurate and has been completed by the party whose signature appears below on behalf of Tenant as of the date set forth below.

 

	
DATED: 
    	
July 5,   2011
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature 
    	
/s/ Jay Simons
    
	
 
    	
 
    	
Print Name 
    	
Jay Simons
    
	
 
    	
 
    	
Title
    	
VP Marketing
    

 

 

SCHEDULE I

 

Landlord’s Work

 

All Landlord’s Work shall strictly comply with Regulations and shall be performed in a good and workmanlike manner using new materials.

 

1.                                      Repair all leaks in roof and roof membrane, including leak in the east building at the big open area and leak in the northeast corner of the Building. Install cementitious waterproofing to bottom two feet of interior concrete wall surfaces of the north wall of the Building (approximately 100’ of northwest section); install cementitious waterproofing along bottom 3’ of outside north wall; and reapply elastomeric coating to achieve an overall watertight condition and prevent any water intrusion.

 

2.                                      Test for mold and complete any recommended remediation.

 

3.                                      Seal concrete seams and cracks in northeast section of floor.

 

4.                                      Repair split cooling system leak, repair control wiring in upright furnace, perform any repairs required to bring HVAC system to a condition of good working order.

 

5.                                      Replace 27 broken windows, replace film on four windows, and repair or replace two window motors.

 

6.                                      Repair or replace major main air handler/swamp cooler on roof.

 

7.                                      Replace or repair Reznor heat exchanger on roof.

 

8.                                      Repair or replace all leaking, loose, or inoperable plumbing fixtures, including replacement of two urinals and four toilets and remounting of three toilets and three lavatories.

 

9.                                      Replace and re-tape leak-damaged sheetrock in southeast stairwell and ceiling above.

 

 

SCHEDULE II

 

Tenant Improvements

 

Option B Revision 2/Desk Study, Site Analysis Set, First Floor Plan, dated 06.3.11, Atlassian Offices, 1098 Harrison Street, San Francisco, CA by Studio Sarah Willman Architecture.

 

Option B Revision 2/Desk Study, Site Analysis Set, Second Floor Plan dated 06.3.11, Atlassian Offices, 1098 Harrison Street, San Francisco, CA by Studio Sarah Willman Architecture.

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