Document:

Exhibit 10.28

 

GLENDALE CITY CENTER
 GLENDALE, CALIFORNIA

 

OFFICE LEASE

 

 

LEGACY PARTNERS II GLENDALE N BRAND, LLC,

a Delaware limited liability company

 

as Landlord, 

 

and

 

LEGALZOOM.COM, INC.,

a Delaware corporation

 

as Tenant

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 1
    	
REAL   PROPERTY, BUILDING AND PREMISES
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 2
    	
LEASE   TERM
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE 3
    	
BASE   RENT
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE 4
    	
ADDITIONAL   RENT
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE 5
    	
USE   OF PREMISES
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE 6
    	
SERVICES   AND UTILITIES
    	
18
    
	
 
    	
 
    	
 
    
	
ARTICLE 7
    	
REPAIRS
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE 8
    	
ADDITIONS   AND ALTERATIONS
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE 9
    	
COVENANT   AGAINST LIENS
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE 10
    	
INDEMNIFICATION   AND INSURANCE
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE 11
    	
DAMAGE   AND DESTRUCTION
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE 12
    	
CONDEMNATION
    	
31
    
	
 
    	
 
    	
 
    
	
ARTICLE 13
    	
COVENANT   OF QUIET ENJOYMENT
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE 14
    	
ASSIGNMENT   AND SUBLETTING
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE 15
    	
SURRENDER;   OWNERSHIP AND REMOVAL OF TRADE FIXTURES
    	
36
    
	
 
    	
 
    	
 
    
	
ARTICLE 16
    	
HOLDING   OVER
    	
37
    
	
 
    	
 
    	
 
    
	
ARTICLE 17
    	
ESTOPPEL   CERTIFICATES
    	
37
    
	
 
    	
 
    	
 
    
	
ARTICLE 18
    	
SUBORDINATION
    	
38
    
	
 
    	
 
    	
 
    
	
ARTICLE 19
    	
TENANT’S   DEFAULTS; LANDLORD’S REMEDIES
    	
38
    
	
 
    	
 
    	
 
    
	
ARTICLE 20
    	
SECURITY   DEPOSIT
    	
41
    
	
 
    	
 
    	
 
    
	
ARTICLE 21
    	
COMPLIANCE   WITH LAW
    	
41
    
	
 
    	
 
    	
 
    
	
ARTICLE 22
    	
ENTRY   BY LANDLORD
    	
42
    
	
 
    	
 
    	
 
    
	
ARTICLE 23
    	
TENANT   PARKING
    	
42
    
	
 
    	
 
    	
 
    
	
ARTICLE 24
    	
MISCELLANEOUS   PROVISIONS
    	
44
    
	
 
    	
 
    	
 
    
	
EXHIBITS
    	
 
    	
 
    
	
Exhibit A
    	
OUTLINE   OF FLOOR PLAN OF PREMISES
    	
 
    
	
Exhibit A-1
    	
FIRST   TERMINATED SPACE
    	
 
    
	
Exhibit B
    	
WORK   LETTER
    	
 
    
	
Exhibit C
    	
AMENDMENT   TO LEASE
    	
 
    
	
Exhibit D
    	
RULES   AND REGULATIONS
    	
 
    
	
Exhibit E
    	
FORM OF   ESTOPPEL CERTIFICATE
    	
 
    
	
Exhibit F
    	
OUTLINE   OF RESERVED AREA
    	
 
    
	
Exhibit G
    	
JANITORIAL   SPECIFICATIONS
    	
 
    
	
Exhibit H
    	
FORM OF   SNDA FROM EXISTING LENDER
    	
 
    
	
Exhibit I
    	
SUPERIOR   RIGHTS
    	
 
    
	
 
    	
 
    	
 
    
	
RIDERS
    	
 
    	
 
    
	
EXTENSION OPTIONS RIDER
    	
 
    

 

i

 

INDEX

 

	
 
    	
Page
    
	
 
    	
 
    
	
Abated   Base Rent
    	
6
    
	
Abatement   Event
    	
20
    
	
Abatement   Event Termination Date
    	
21
    
	
Abatement   Event Termination Notice
    	
21
    
	
Abatement   Period
    	
6
    
	
Accountant
    	
17
    
	
ADA
    	
Exhibit B
    
	
Additional   Rent
    	
7
    
	
Affiliate
    	
36
    
	
Affiliate   Assignee
    	
36
    
	
Alterations
    	
23
    
	
Amortization   Interest Rate
    	
8
    
	
Applicable   Laws
    	
41
    
	
Applicable   Reassessment
    	
13
    
	
Approved   Working Drawings
    	
Exhibit B
    
	
Architect
    	
Exhibit B
    
	
AS   IS
    	
2
    
	
AS-IS
    	
3
    
	
Base   Building
    	
24
    
	
Base   Rent
    	
6
    
	
Base,   Shell and Core
    	
Exhibit B
    
	
BOMA
    	
2
    
	
Broker
    	
Rider
    
	
Brokers
    	
48
    
	
BS/BS   Exception
    	
23
    
	
Building
    	
2, 1
    
	
Building   Hours
    	
18
    
	
Building   Structure
    	
23
    
	
Building   Systems
    	
23
    
	
Calendar   Year
    	
7
    
	
CC&Rs
    	
17
    
	
Claims
    	
26
    
	
Common   Areas
    	
1
    
	
Comparable   Buildings
    	
1
    
	
Comparable   Transactions
    	
Rider
    
	
Concessions
    	
Rider
    
	
Consent
    	
Exhibit B
    
	
Construction   Drawings
    	
Exhibit B
    
	
Contemplated   Effective Date
    	
34
    
	
Contemplated   Transfer Space
    	
34
    
	
Contract
    	
Exhibit B
    
	
Contractor
    	
Exhibit B
    
	
Controllable   Expenses
    	
16
    
	
Coordination   Fee
    	
Exhibit B
    
	
Cost   Pools
    	
9
    
	
Current   Lender
    	
38
    
	
Damage   Termination Date
    	
31
    
	
Damage   Termination Notice
    	
31
    
	
Delay   Notice
    	
Exhibit B
    
	
Delivery   Conditions
    	
4
    
	
Design   Problem
    	
24
    
	
Drawing   Change Notice
    	
Exhibit B
    
	
Early   Occupancy Period
    	
6
    
	
Eligibility   Period
    	
20
    
	
Engineers
    	
Exhibit B
    
	
Estimate
    	
15
    
	
Estimate   Statement
    	
15
    
	
Estimated   Excess
    	
15
    
	
Excepted   Matters
    	
50
    

 

ii

 

	
 
    	
Page
    
	
 
    	
 
    
	
Excess
    	
15
    
	
Exercise   Date
    	
Rider
    
	
Exercise   Notice
    	
Rider
    
	
Existing   Leases
    	
2
    
	
Expense   Base Year
    	
7
    
	
Expense   Year
    	
7
    
	
Extension   Option
    	
Rider
    
	
Extension   Option Rent
    	
Rider
    
	
Extension   Option Rent Notice
    	
Rider
    
	
Extension   Option Term
    	
Rider
    
	
Extension   Option Terms
    	
Rider
    
	
Extension   Options
    	
Rider
    
	
Extension   Rider
    	
Rider
    
	
Fair   Market Rental Rate
    	
Rider
    
	
FF&E/Moving   Costs
    	
Exhibit B
    
	
Final   Costs
    	
Exhibit B
    
	
Final   Costs Statement
    	
Exhibit B
    
	
Final   Retention
    	
Exhibit B
    
	
Final   Space Plan
    	
Exhibit B
    
	
Final   Working Drawings
    	
Exhibit B
    
	
First   Terminated Space
    	
4
    
	
First   Termination Consideration
    	
5
    
	
First   Termination Date
    	
4
    
	
First   Termination Notice
    	
5
    
	
First   Termination Right
    	
4
    
	
Force   Majeure
    	
47
    
	
Force   Majeure Delay
    	
Exhibit B
    
	
Holidays
    	
18
    
	
HVAC
    	
18
    
	
Intention   to Transfer Notice
    	
34
    
	
Interest   Notice
    	
Rider
    
	
Interest   Rate
    	
16
    
	
Landlord
    	
1
    
	
Landlord   Caused Delay
    	
Exhibit B
    
	
Landlord   Parties
    	
26
    
	
Landlord’s   Repair Notice
    	
29
    
	
Lease
    	
1
    
	
Lease   Commencement Date
    	
4
    
	
Lease   Expiration Date
    	
4
    
	
Lease   Term
    	
4
    
	
Monument   Sign
    	
45
    
	
Nine   Month Period
    	
35
    
	
Non-Consent   Alterations
    	
23
    
	
Non-Contribution   Items
    	
Exhibit B
    
	
Notices
    	
47
    
	
Operating   Expenses
    	
7
    
	
Original   Tenant
    	
4
    
	
Outside   Agreement Date
    	
Rider
    
	
Overage
    	
15
    
	
Over-Allowance   Amount
    	
Exhibit B
    
	
Overlap   Period
    	
21
    
	
Parking   Discount
    	
43
    
	
Parking   Facilities
    	
1
    
	
Payment   Notice
    	
49
    
	
Potential   ADA Violation
    	
Exhibit B
    
	
Premises
    	
1
    
	
Project
    	
1
    
	
Proposition   13
    	
12
    
	
Proposition   13 Protection Amount
    	
13
    
	
Proposition   13 Purchase Price
    	
13
    
	
Protection   Period
    	
13
    

 

iii

 

	
 
    	
Page
    
	
 
    	
 
    
	
Real   Property
    	
1
    
	
Reassessment
    	
13
    
	
Recapture   Notice
    	
34
    
	
Reduction   Condition
    	
41
    
	
Refusal   Notice
    	
49
    
	
Renovations
    	
49
    
	
Rent
    	
7
    
	
Requesting   Party
    	
37
    
	
Review   Period
    	
33
    
	
ROFO   Exercise Notice
    	
3
    
	
ROFO   Notice
    	
2
    
	
ROFO   Right
    	
2
    
	
ROFO   Space
    	
2
    
	
ROFO   Terms
    	
3
    
	
Second   Chance Notice
    	
3
    
	
Second   Terminated Space
    	
5
    
	
Second   Termination Consideration
    	
5
    
	
Second   Termination Date
    	
5
    
	
Second   Termination Notice
    	
5
    
	
Second   Termination Right
    	
5
    
	
Secured   Areas
    	
42
    
	
Security   Deposit
    	
41
    
	
Space   Plan Allowance
    	
Exhibit B
    
	
Specifications
    	
Exhibit B
    
	
Staging   Space
    	
Exhibit B
    
	
Statement
    	
15
    
	
Subject   Space
    	
32
    
	
Submittal   Date
    	
Exhibit B
    
	
Substantial   Completion
    	
Exhibit B
    
	
Summary
    	
1
    
	
Superior   Leases
    	
2
    
	
Superior   Rights
    	
2
    
	
Systems   and Equipment
    	
11
    
	
Tax   Expense Base Year
    	
11
    
	
Tax   Expenses
    	
12
    
	
Tax   Increase
    	
13
    
	
Tenant
    	
1
    
	
Tenant   Change
    	
Exhibit B
    
	
Tenant   HVAC System
    	
21
    
	
Tenant   Improvement Allowance
    	
Exhibit B
    
	
Tenant   Improvement Allowance Items
    	
Exhibit B
    
	
Tenant   Improvements
    	
Exhibit B
    
	
Tenant   Parties
    	
26
    
	
Tenant’s   Security System
    	
21
    
	
Tenant’s   Share
    	
14
    
	
Tenant’s   Agents
    	
Exhibit B
    
	
Tenant’s   Name Sign
    	
45
    
	
Transaction   Costs
    	
34
    
	
Transfer   Notice
    	
32
    
	
Transfer   Premium
    	
34
    
	
Transferee
    	
32
    
	
Transfers
    	
32
    
	
Unusable   Area
    	
20
    
	
Utilities   Base Year
    	
14
    
	
Utilities   Costs
    	
14
    
	
Work   Letter
    	
Exhibit B
    

 

iv

 

SUMMARY OF BASIC LEASE INFORMATION

 

This Summary of Basic Lease Information (“Summary”) is hereby incorporated into and made a part of the attached Office Lease. Each reference in the Office Lease to any term of this Summary shall have the meaning as set forth in this Summary for such term. In the event of a conflict between the terms of this Summary and the Office Lease, the terms of the Office Lease shall prevail. Any capitalized terms used herein and not otherwise defined herein shall have the meaning as set forth in the Office Lease.

 

	
TERMS OF LEASE

(References are to the Office Lease)
    	
 
    	
DESCRIPTION
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.
    	
 
    	
Date:
    	
 
    	
August 26,   2010
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.
    	
 
    	
Landlord:
    	
 
    	
LEGACY   PARTNERS II GLENDALE N BRAND, LLC, a Delaware limited liability company
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
3.
    	
 
    	
Address   of Landlord (Section 24.19):
    	
 
    	
LEGACY   PARTNERS II GLENDALE N BRAND, LLC
    
	
 
    	
 
    	
 
    	
 
    	
c/o   Legacy Partners Commercial, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
4000   E. Third Avenue, Suite 600
    
	
 
    	
 
    	
 
    	
 
    	
Foster   City, California 94404
    
	
 
    	
 
    	
 
    	
 
    	
Attention:   Executive Vice President
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
LEGACY   PARTNERS II GLENDALE N BRAND, LLC
    
	
 
    	
 
    	
 
    	
 
    	
101   North Brand Boulevard, Suite 1230
    
	
 
    	
 
    	
 
    	
 
    	
Glendale,   California 91203
    
	
 
    	
 
    	
 
    	
 
    	
Attention:   Property Manager
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
4.
    	
 
    	
Tenant:
    	
 
    	
LEGALZOOM.COM,   INC., a Delaware corporation
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
5.
    	
 
    	
Address   of Tenant (Section 24.19):
    	
 
    	
LEGALZOOM.COM, INC.
    
	
 
    	
 
    	
 
    	
 
    	
7083   Hollywood Blvd., Suite 180
    
	
 
    	
 
    	
 
    	
 
    	
Los   Angeles, California 90028
    
	
 
    	
 
    	
 
    	
 
    	
Attention:   Legal Department
    
	
 
    	
 
    	
 
    	
 
    	
(Prior   to Lease Commencement Date)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
LEGALZOOM.COM, INC.
    
	
 
    	
 
    	
 
    	
 
    	
101   North Brand Boulevard, Suite 1100
    
	
 
    	
 
    	
 
    	
 
    	
Glendale,   California 91203
    
	
 
    	
 
    	
 
    	
 
    	
Attention:   Legal Department
    
	
 
    	
 
    	
 
    	
 
    	
(After   Lease Commencement Date)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
6.
    	
 
    	
Premises   (Article 1):
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
6.1
    	
Premises:
    	
 
    	
A   total of 49,008 rentable and 45,681 usable square feet consisting of   (i) 24,688 rentable and 23,012 usable square feet located on the entire   tenth (10th) floor,   designated as Suite 1000, and (ii) 24,320 rentable and 22,669   usable square feet of space located on the entire eleventh (11th) floor of the Building   (as defined below), designated as Suite 1100, as set forth in Exhibit A   attached hereto.
    
						

 

 

	
 
    	
 
    	
6.2
    	
Building:
    	
 
    	
The   Premises are located in that certain building (sometimes referred to herein   as the “Building”) whose address is 101   North Brand Boulevard, Glendale, California 91203.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
7.
    	
 
    	
Term   (Article 2):
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
7.1
    	
Lease   Term:
    	
 
    	
One   hundred twenty (120) months.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
7.2
    	
Delivery   Date:
    	
 
    	
The   date of mutual execution and delivery of the Lease.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
7.2
    	
Lease   Commencement Date:
    	
 
    	
The   date that is one hundred fifty (150) days following the Delivery Date, but in   no event earlier than January 1, 2011.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
7.3
    	
Lease   Expiration Date:
    	
 
    	
The   last day of the one hundred twentieth (120th) month following the   Lease Commencement Date.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
7.4
    	
Amendment   to Lease:
    	
 
    	
Landlord   and Tenant may confirm the Lease Commencement Date and Lease Expiration Date   in an Amendment to Lease (Exhibit C) to be executed pursuant to Article 2   of the Office Lease.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
8.
    	
 
    	
Base   Rent (Article 3):
    	
 
    	
 
    

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Monthly Rental
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Monthly
    	
 
    	
Rate per
    	
 
    
	
 
    	
 
    	
Annual
    	
 
    	
Installment
    	
 
    	
Rentable
    	
 
    
	
Months
    	
 
    	
Base Rent
    	
 
    	
of Base Rent
    	
 
    	
Square Foot
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1* — 12
    	
 
    	
$
    	
1,323,216.00
    	
 
    	
$
    	
110,268.00
    	
 
    	
$
    	
2.25
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
13 — 24
    	
 
    	
$
    	
1,364,382.70
    	
 
    	
$
    	
113,698.56
    	
 
    	
$
    	
2.32
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
25 — 36
    	
 
    	
$
    	
1,405,549.40
    	
 
    	
$
    	
117,129.12
    	
 
    	
$
    	
2.39
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
37 — 48
    	
 
    	
$
    	
1,446,716.10
    	
 
    	
$
    	
120,559.68
    	
 
    	
$
    	
2.46
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
49 — 60
    	
 
    	
$
    	
1,487.882.80
    	
 
    	
$
    	
123,990.24
    	
 
    	
$
    	
2.53
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
61 — 72
    	
 
    	
$
    	
1,534,930.50
    	
 
    	
$
    	
127,910.88
    	
 
    	
$
    	
2.61
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
73 — 84
    	
 
    	
$
    	
1,581,978.20
    	
 
    	
$
    	
131,831.52
    	
 
    	
$
    	
2.69
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
85 — 96
    	
 
    	
$
    	
1,629,025.90
    	
 
    	
$
    	
135,752.16
    	
 
    	
$
    	
2.77
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
97 — 108
    	
 
    	
$
    	
1,676,073.60
    	
 
    	
$
    	
139,672.80
    	
 
    	
$
    	
2.85
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
109 — 120
    	
 
    	
$
    	
1,729,002.20
    	
 
    	
$
    	
144,083.52
    	
 
    	
$
    	
2.94
    	
 
    

 

	
 
    	
 
    	
*Base   Rent for the second (2nd) through   eleventh (11th) full months   of the initial Lease Term shall be abated pursuant to the terms of Section 3.2   of this Lease.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
9.
    	
 
    	
Additional   Rent (Article 4):
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
9.1
    	
Expense   Base Year:
    	
 
    	
Calendar   Year 2011.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
9.2
    	
Tax   Expense Base Year:
    	
 
    	
Calendar   Year 2011.
    

 

2

 

	
 
    	
 
    	
9.3
    	
Utilities   Base Year:
    	
 
    	
Calendar   Year 2011.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
9.4
    	
Tenant’s   Share of Operating Expenses, Tax Expenses and Utilities Costs:
    	
 
    	
14.09%   (49,008 rentable square feet within the Premises/347,867 rentable square feet   of office space within the Building).
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
10.
    	
 
    	
Security   Deposit (Article 20):
    	
 
    	
$99,096.75,   subject and pursuant to Article 20 of the Lease.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
11.
    	
 
    	
Parking   (Article 23):
    	
 
    	
Tenant   shall have the obligation to purchase three (3) parking passes for   unreserved parking spaces for every 1,000 rentable square feet of the   Premises, for a total of one hundred forty-seven (147) parking passes for   unreserved parking spaces (the “Must Take Parking   Passes”).
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Tenant   shall have the right, but not the obligation, to purchase an additional one   (1) parking pass for unreserved parking spaces for every 1,000 rentable   square feet of the Premises, for a total of forty-nine (49) additional   parking passes for unreserved parking spaces (the “Optional   Parking Passes”).
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Tenant   shall have the right, but not the obligation, to convert up to ten percent   (10%) of its parking passes for unreserved parking spaces to parking passes   for reserved parking spaces (the “Reserved Parking   Passes”).
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
12.
    	
 
    	
Brokers   (Section 24.25):
    	
 
    	
CB   Richard Ellis, Inc. (Patrick Church and Anneke Greco) representing   Landlord, and Jones Lang LaSalle Brokerage, Inc. (Michael L. McRoskey,   Frank Scott, Tony Morales and Gary Horwitz) representing Tenant.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
13.
    	
 
    	
Reserved   Area (Section 1.4):
    	
 
    	
Space   located on the ninth (9th) floor of the Building as set forth in Exhibit F attached   to the Lease.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
14.
    	
 
    	
Extension   Options (Extension Options Rider):
    	
 
    	
Tenant   shall have two (2) options to extend the Lease Term for an additional   period of five (5) years each, pursuant to and in accordance with the   terms and conditions of the Extension Options Rider attached to the   Lease.
    

 

3

 

OFFICE LEASE

 

This Office Lease, which includes the preceding Summary and the exhibits attached hereto and incorporated herein by this reference (the Office Lease, the Summary and the exhibits to be known sometimes collectively hereafter as the “Lease”), dated as of the date set forth in Section 1 of the Summary, is made by and between LEGACY PARTNERS II GLENDALE N BRAND, LLC, a Delaware limited liability company (“Landlord”), and LEGALZOOM.COM, INC., a Delaware corporation (“Tenant”).

 

ARTICLE 1

 

REAL PROPERTY, BUILDING AND PREMISES

 

1.1          Real Property, Building and Premises. Upon and subject to the terms, covenants and conditions hereinafter set forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises set forth in Section 6.1 of the Summary (the “Premises”), which Premises are part of the building commonly known as Glendale City Center (the “Building”) and the project including the Building (collectively, the “Project”). Subject to Landlord’s reasonable regulations, restrictions and guidelines, Tenant may also use the electrical and telephone rooms and the area below the concrete ceiling and above the concrete floor of the Premises and behind the walls of the Premises, including the right, in connection with construction of the Tenant Improvements pursuant to the Work Letter (including Landlord’s approval of the Final Working Drawings), to core drill between the tenth (10th) and eleventh (11th) floors of the Building (and such other floors upon which Tenant leases from Landlord more than fifty percent (50%) of the usable square footage located thereon), to install and service wire, conduit and cable that serve Tenant’s equipment in the Premises in accordance with, and subject to, the other terms and provisions of this Lease and Landlord’s rights hereunder with respect to such areas. The outline of the floor plan of the Premises is set forth in Exhibit A attached hereto. The Building, the Building’s parking facilities (the “Parking Facilities”), any outside plaza areas, land and other improvements surrounding the Building which are reasonably designated from time to time by Landlord as common areas appurtenant to or servicing the Building, and the land upon which any of the foregoing are situated, are herein sometimes collectively referred to as the “Real Property”. Tenant is hereby granted the right to the nonexclusive use of the common corridors and hallways, stairwells, elevators, restrooms and other public or common areas located within the Building, and the non-exclusive use of the areas located on the Real Property designated by Landlord from time to time as common areas for the Building (the “Common Areas”); provided, however, that (i) the manner in which such public and Common Areas are maintained and operated shall be at the sole discretion of Landlord, (ii) the use thereof shall be subject to such reasonable, non-discriminatory rules, regulations and restrictions as Landlord may make from time to time, which rules and regulations shall not be unreasonably or discriminatorily modified or enforced in a manner which shall materially interfere with the conduct of Tenant’s Permitted Use from the Premises or Tenant’s use of or access to the Premises or the Parking Facilities, and (iii) Tenant may not go on the roof of the Building without Landlord’s prior consent (which may be withheld in Landlord’s sole and absolute discretion) and without otherwise being accompanied by a representative of Landlord. Notwithstanding anything to the contrary contained in this Lease, Landlord shall maintain and operate the Project, the Building and all the Common Areas in a manner materially consistent with that of other first-class, high-rise office buildings in the Tri-City market area (i.e., the Glendale/Burbank/Pasadena, California area), which are comparable in terms of size, age, quality of construction, appearance, and quality of common area improvements (the “Comparable Buildings”). Except when and where Tenant’s right of access is specifically excluded as the result of (i) an emergency, (ii) a requirement by Applicable Laws, or (iii) a specific provision set forth in this Lease, Tenant shall have the right of access to the Premises, the Building, the Common Areas and the Parking Facilities twenty-four (24) hours per day, seven (7) days per week during the “Lease Term”, as that term is defined in Section 2.1 of this Lease. Landlord reserves the right, in its reasonable discretion, from time to time to use any of the Common Areas, and the roof, risers and conduits of the Building for telecommunications and/or any other purposes, and to do any of the following: (1) make any changes, additions, improvements, repairs and/or replacements in or to the Real Property or any portion or elements thereof, including, without limitation, expanding or decreasing the size of any Common Areas and other elements thereof; (2) close temporarily any of the Common Areas while engaged in making repairs, improvements or alterations to the Real Property; and (3) perform such other

 

 

acts and make such other changes with respect to the Real Property as Landlord may, in the exercise of good faith business judgment, deem to be appropriate; provided, however, that no such additions to the Project, closures or changes to the Real Property shall increase Tenant’s obligations (including, without limitation, Tenant’s monetary obligations with respect to Tenant’s Share of Operating Expenses, Tax Expenses or Utilities Costs) or materially decrease Tenant’s rights under this Lease; provided further, however, Landlord shall take all commercially reasonable efforts necessary to minimize material interference with Tenant’s use of the Premises and business operations therein during any such additions to the Project, closures or changes to the Real Property.

 

1.2          Condition of Premises. Except as expressly set forth in this Lease and in the Work Letter attached hereto as Exhibit B, Landlord shall not be obligated to provide or pay for any improvement, remodeling or refurbishment work or services related to the improvement, remodeling or refurbishment of the Premises. Except as expressly set forth in this Lease and in the Work Letter attached hereto as Exhibit B, Tenant shall accept the Premises in its “AS IS” condition on the Lease Commencement Date.

 

1.3          Rentable and Usable Square Feet. For purposes of this Lease, the parties hereto stipulate that the rentable square feet for the Premises and Building shall be as set forth in Sections 6.1 and 9.4 of the Summary, as calculated by Landlord pursuant to the Standard Method for Measuring Floor Area in Office Buildings, ANSI Z65.1-1996 (“BOMA”), as modified by Landlord pursuant to Landlord’s standard rentable area measurements for the Project. For purposes hereof, the “rentable square feet” of any ROFO Space (as hereinafter defined in Section 1.4) shall be calculated by Landlord pursuant to the BOMA standards set forth above.

 

1.4          Right of First Offer. During the initial Lease Term, Tenant and any Affiliate Assignee (as defined in Article 14 below) shall have the ongoing right of first offer (the “ROFO Right”) with respect to Reserved Area set forth in Section 13 of the Summary (the “ROFO Space”), under the same terms and conditions hereof, except that the rental rate and any improvement allowance with respect to the ROFO Space shall be the rate specified in the applicable ROFO Notice (referenced below); provided, however, that if Tenant exercises the ROFO Right pursuant to this Section 1.4 within the first (1st) twelve (12) months of the initial Lease Term, the rental rate for the ROFO Space shall be the same rental rate for the Premises, as set forth in Section 8 of the Summary, and the Expense Base Year, Tax Expense Base Year and Utilities Base Year shall be the same as the Premises (Calendar Year 2011). Notwithstanding the foregoing (i) the lease term for Tenant’s lease of the ROFO Space pursuant to Tenant’s exercise of the ROFO Right shall commence only following the expiration or earlier termination of (A) any existing lease pertaining to the ROFO Space as of the date hereof (the “Existing Leases”) and (B) if the ROFO Space is vacant as of the date of this Lease, the first lease pertaining to the ROFO Space entered into by Landlord after the date of this Lease (collectively, the “Superior Leases”), including any renewal or extension of any such existing or future lease, whether or not such renewal or extension is pursuant to an express written provision in such lease, and regardless of whether any such renewal or extension is consummated pursuant to a lease amendment or a new lease, and (ii) such ROFO Right shall be subordinate and secondary to all rights of expansion, first refusal, first offer or similar rights granted to (X) the tenants of the Superior Leases and (Y) any rights of other tenants of the Real Property (the rights described in items (i) and (ii), above to be known collectively as “Superior Rights”). Attached hereto as Exhibit I is a list of Superior Right holders as of the date hereof. Tenant’s ROFO Right shall be on the terms and conditions set forth in this Section 1.4. It is further understood and agreed that the term for Tenant’s lease of any ROFO Space leased by Tenant shall be coterminous with Tenant’s lease of the Premises; provided, however, in no event shall Tenant lease the ROFO Space for a period of less than thirty-six (36) months, unless otherwise agreed by Landlord (and Tenant shall not have the right to exercise the ROFO Right unless the term of Tenant’s lease of the ROFO Space will be at least three (3) years based on the remaining Term of this Lease as reasonably determined by Landlord).

 

1.4.1            Procedure for Offer. From time to time during the initial Lease Term, Landlord shall deliver to Tenant written notice (the “ROFO Notice”) if the ROFO Space will become or is expected to become available for lease to third parties (or when any ROFO Space previously offered to and declined by Tenant remains available for lease to third-parties nine (9) consecutive months following Tenant’s decline thereof), where no Superior Right holder wishes to lease such space. Pursuant to such ROFO Notice, Landlord shall offer to lease to Tenant the then available ROFO Space. The ROFO Notice shall describe the space so offered to Tenant

 

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(including the rentable square feet thereof as determined pursuant to Section 1.3 above) and shall set forth all of Landlord’s proposed terms and conditions (including the proposed material terms (e.g., Base Rent and increase thereto, if any, Additional Rent, free rent, improvement allowance, parking concessions (including free parking (if any)), build-out period and similar items) applicable to Tenant’s lease of such space (collectively, the “ROFO Terms”).

 

1.4.2             Procedure for Acceptance. If Tenant wishes to exercise Tenant’s ROFO Right with respect to the space described in the ROFO Notice, then within five (5) business days after delivery of the ROFO Notice to Tenant, Tenant shall deliver notice to Landlord (the “ROFO Exercise Notice”) irrevocably exercising its ROFO with respect to the entire space described in the ROFO Notice and on the ROFO Terms contained therein. If Tenant does not exercise its ROFO Right within the five (5) business day period (on all of the ROFO Terms), then for a period of nine (9) months thereafter, Landlord shall be free to lease the space described in the ROFO Notice to anyone to whom Landlord desires on any terms Landlord desires and Tenant’s ROFO Right shall thereupon automatically terminate with respect to such space; provided, however, that if Landlord intends to enter into a lease upon ROFO Terms which are, in the aggregate, materially more favorable to a prospective third (3rd) party tenant than those ROFO Terms proposed by Landlord in the ROFO Notice to Tenant, then Landlord shall first deliver written notice to Tenant (“Second Chance Notice”) providing Tenant with the opportunity to lease the ROFO Space on such more favorable ROFO Terms. Tenant’s failure to elect to lease the ROFO Space upon such more favorable ROFO Terms by written notice to Landlord within three (3) business days after Tenant’s receipt of such Second Chance Notice from Landlord shall be deemed to constitute Tenant’s election not to lease such space upon such more favorable ROFO Terms, in which case Landlord shall be entitled to lease such space to any third (3rd) party on terms not materially more favorable to the third (3rd) party than those set forth in the Second Chance Notice. For purposes hereof, ROFO Terms shall be materially more favorable to a third party if such ROFO Terms reflect a net effective rental rate less than ninety-five percent (95%) of the net effective rental rate (taking into account the economic terms comprising the ROFO Terms) for such ROFO Space as those proposed by Landlord in the ROFO Notice (or subsequent Second Chance Notice, if applicable) to Tenant. Notwithstanding anything to the contrary contained herein, Tenant must elect to exercise its ROFO Right, if at all, with respect to all of the space comprising the ROFO Space offered by Landlord to Tenant in a ROFO Notice at any particular time, and Tenant may not elect to lease only a portion thereof or object to any of the ROFO Terms; provided, however, if Landlord desires to lease less than such entire ROFO Space offered to Tenant, Tenant shall first have a further right to lease such smaller ROFO Space pursuant to an additional ROFO Notice and upon the terms set forth in this Section 1.4. Within fifteen (15) days of Tenant’s delivery of its notice electing to lease the ROFO Space on the ROFO Terms in accordance with the terms of this Section 1.4, and as a condition to such exercise of Tenant’s ROFO Right, Tenant shall deliver to Landlord a non-refundable deposit as set forth in the applicable ROFO Notice, which shall be credited towards the first (1st) month’s base rent and security deposit for the ROFO Space equal to the last month’s Base Rent for such ROFO Space.

 

1.4.3             Construction of ROFO Space. Tenant shall take the ROFO Space in its “AS-IS” condition (unless otherwise provided in the ROFO Notice as part of the ROFO Terms), and Tenant shall be entitled to construct improvements in the ROFO Space at Tenant’s expense, in accordance with and subject to the provisions of Article 8 of this Lease. If Tenant exercises the ROFO Right within the first (1st) twelve (12) months of the initial Lease Term, Landlord shall build to suit the ROFO Space, with Landlord’s contribution not to exceed the prorated Tenant Improvement Allowance for the Premises as set forth in the Work Letter, but in no event shall Tenant be entitled to convert any allowance or contribution by Landlord in connection with the ROFO Space to free rent.

 

1.4.4             Lease of ROFO Space. If Tenant timely exercises Tenant’s right to lease the ROFO Space as set forth herein, Landlord and Tenant shall execute an amendment adding such ROFO Space to this Lease upon the ROFO Terms set forth in Landlord’s ROFO Notice and upon the same non-economic terms and conditions as applicable to the original Premises. Tenant shall commence payment of Rent for the ROFO Space and the lease term of the ROFO Space shall be as provided in the ROFO Terms. The lease term for the ROFO Space shall, unless otherwise provided in the ROFO Notice as part of the ROFO Terms, expire coterminously with Tenant’s lease of the original Premises.

 

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1.4.5             No Defaults. The rights contained in this Section 1.4 shall be personal to the original Tenant executing this Lease (the “Original Tenant”) and any Affiliate Assignee (as defined in Article 14 below), and may only be exercised by the Original Tenant or such Affiliate Assignee (and not any other assignee, sublessee or other transferee of the Original Tenant’s interest in this Lease) if the Original Tenant and all Affiliates collectively occupy no less than seventy-five percent (75%) of the entire Premises then being leased by Tenant as of the date of Tenant’s exercise of its ROFO Right. In addition, at Landlord’s option and in addition to Landlord’s other remedies set forth in this Lease, at law and/or in equity, Tenant shall not have the right to lease the ROFO Space as provided in this Section 1.4 if, as of the date of the ROFO Notice, or, at Landlord’s option, as of the scheduled date of delivery of such ROFO Space to Tenant, if Tenant is in monetary and/or material default under this Lease beyond the expiration of all applicable notice and cure periods. For purposes of this Lease, Tenant shall be in “material” default under this Lease if such default affects the Building structure or materially adversely affects the Systems or Equipment (as defined in Section 4.2.5 below). Further, Tenant’s right to exercise the ROFO Right shall terminate in the event Tenant exercises either the First Termination Right (as defined in Section 2.2.1 below), or the Second Termination Right (as defined in Section 2.2.2 below).

 

ARTICLE 2

 

LEASE TERM

 

2.1           Lease Term. The terms and provisions of this Lease shall be effective as of the date of this Lease except for the provisions of this Lease relating to the payment of Rent. The term of this Lease (the “Lease Term”) shall be as set forth in Section 7.1 of the Summary and shall commence on the date (the “Lease Commencement Date”) set forth in Section 7.2 of the Summary (subject, however, to the terms of the Work Letter), and shall terminate on the date (the “Lease Expiration Date”) set forth in Section 7.3 of the Summary, unless this Lease is sooner terminated as hereinafter provided. For purposes of this Lease, the term “Lease Year” shall mean each consecutive twelve (12) month period during the Lease Term, provided that the last Lease Year shall end on the Lease Expiration Date. Landlord shall make possession of the Premises available to Tenant no later than ten (10) business days after the date of the full execution and delivery of this Lease by Landlord and Tenant and upon Tenant’s satisfaction of its obligations in Section 10.3.6 regarding delivery of certificates of insurance and Tenant’s payment of the first month’s Base Rent and the Security Deposit (collectively, the “Delivery Conditions”). In the event the Delivery Conditions are satisfied but Landlord does not make possession of the Premises available to Tenant on or before the expiration of such ten (10) business day period, then Tenant shall have the right to terminate this Lease by providing Landlord with written notice of such termination at anytime prior to Landlord making possession of the Premises available to Tenant with such termination to be effective upon Landlord’s receipt of such termination notice. Upon such termination of this Lease, Landlord shall return the Security Deposit and any pre-paid Base Rent to Tenant and the parties shall be released from all obligations under this Lease except for those obligations which expressly survive the expiration or sooner termination of this Lease. Upon the occurrence of the Lease Commencement Date set forth in Section 7.2 of the Summary, within a reasonable period of time after the date Tenant takes possession of the Premises, Landlord shall deliver to Tenant an amendment to lease in the form attached hereto as Exhibit C, setting forth the Lease Commencement Date and the Lease Expiration Date, and Tenant shall execute and return such amendment to Landlord within ten (10) business days after Tenant’s receipt thereof (provided that if said notice is not factually correct, then Tenant shall make such changes as are necessary to make the notice factually correct and shall thereafter execute and return such notice to Landlord within such ten (10) business day period).

 

2.2           Early Termination Rights.

 

2.2.1        First Termination Right. Tenant shall have the one (1) time right (the “First Termination Right”) to terminate and cancel this Lease with respect to all or any of the suites (the total of which comprise approximately 9,150 rentable square feet) on the tenth (10th) floor of the Building more particularly identified on Exhibit A-1 attached hereto (the “First Terminated Space”), effective as of the date (the “First Termination Date”) designated by Tenant in the First Termination Notice, which shall be at anytime between the twenty-fourth (24th) and thirty-sixth (36th) full months of the initial Lease Term and which First Termination Date shall be at least nine (9) months following Tenant’s delivery of the First Termination

 

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Notice, subject to and in accordance with the terms of this Section 2.2.1. Notwithstanding anything above to the contrary, the actual space which will comprise the First Terminated Space shall be terminated (by such one-time right) in the following space order: “A,” “C,” “B,” and “D” as depicted on Exhibit A-1. Tenant’s exercise of the First Termination Right is contingent upon (i) Tenant’s delivery to Landlord on or before the date which is nine (9) months prior to the First Termination Date, written notice of Tenant’s exercise of such right (the “First Termination Notice”), and (ii) Tenant’s payment to Landlord of a flat fee in the amount of One Hundred Thirty-Five Thousand Dollars ($135,000.00) (the “First Termination Consideration”). If Tenant properly exercises the First Termination Option set forth in this Section 2.2.1 in strict accordance with the terms hereof, this Lease shall expire at midnight on the First Termination Date with respect to the First Terminated Space only, and Tenant shall be required to surrender the First Terminated Space to Landlord on or prior to the First Termination Date in accordance with the applicable provisions of this Lease. In addition, Tenant, at Tenant’s sole cost and expense, shall be required to redemise the Premises, construct a Building-standard corridor (including entry doors) to provide access between the First Terminated Space and the elevator lobby and bathrooms on such floor of the Building pursuant to plans approved by Landlord and otherwise in accordance with Article 8 of this Lease; provided, however, Landlord shall be responsible, at its sole cost and expense (and not as an Operating Expense) for completing any other alterations required for the First Terminated Space to be in a leasable, Building-standard condition. The First Termination Right set forth in this Section 2.2.1 is personal to the Original Tenant or any Affiliate Assignee, and may only be executed by the Original Tenant or such Affiliate Assignee if the Tenant is not in monetary and/or material default under this Lease beyond the expiration of all applicable notice and cure periods as of the date Tenant delivers the First Termination Notice or as of the First Termination Date.

 

2.2.2    Second Termination Right. Tenant shall have the one (1) time right (the “Second Termination Right”) to terminate and cancel this Lease with respect to that portion of the Premises not terminated pursuant to Section 2.2.1 above (the “Second Terminated Space”), effective as of the date (the “Second Termination Date”) which is the last day of the sixty- eighth (68th) month anniversary of the Lease Commencement Date. Tenant’s exercise of the Second Termination Right is contingent upon (i) Tenant’s delivery to Landlord on or before the date which is nine (9) months prior to the Second Termination Date, written notice of Tenant’s exercise of such right (the “Second Termination Notice”), (ii) Tenant’s payment to Landlord of the Second Termination Consideration (as defined below), and (iii) Tenant’s payment of the monthly installments of Base Rent due and payable hereunder for the first sixty-eight (68) months of the Lease Term. As used herein, the “Second Termination Consideration” shall mean an amount equal to the sum of: (A) the unamortized portion of the brokerage commissions (including, but not limited to, leasing bonuses paid to brokers), the Abated Base Rent (as defined in Section 3.2 below) and the Parking Discount (as defined in Article 23 below) in connection with this Lease (as well as any brokerage commissions, free rent, parking and other concessions in connection with any ROFO Space leased by Tenant pursuant to Section 1.4 above); plus (B) the unamortized portion of the costs of Landlord’s work (if any) in the Premises and the Tenant Improvement Allowance paid or incurred by Landlord pursuant to the Work Letter; and (C) the unamortized portion of the costs of the tenant improvements and tenant improvement allowance, if any paid or incurred by Landlord for any ROFO Space leased by Tenant pursuant to Section 1.4 above. The brokerage commissions, costs of Landlord’s work (if any), and Tenant Improvement Allowance, Abated Base Rent and the Parking Discount with respect to the Premises leased by Tenant shall all be amortized on a straight-line basis over the scheduled initial ten (10) year Lease Term, together with interest at the rate of eight percent (8%) per annum, and the unamortized portion thereof shall be determined based upon the unexpired portion of such initial ten (10) year Lease Term as of the Second Termination Date. The unamortized portion of the costs of any brokerage commissions and tenant improvement costs/allowance, if any, paid for or provided by Landlord to Tenant for any ROFO Space leased by Tenant pursuant to Section 1.4 shall be amortized on a straight-line basis over the scheduled initial term of the lease of the ROFO Space, together with interest at the rate of eight percent (8%) per annum, and the unamortized portion thereof shall be determined based upon the unexpired portion of such initial lease term for such ROFO Space as of the Second Termination Date. If Tenant properly exercises the Second Termination Right set forth in this Section 2.2.2 in strict accordance with the terms hereof, this Lease shall expire at midnight on the Second Termination Date, and Tenant shall be required to surrender the Premises to Landlord on or prior to the Second Termination Date in accordance with the applicable provisions of this Lease. The Second Termination Right set forth in this Section 2.2.2 is personal to the Original Tenant or any

 

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Affiliate Assignee, and may only be executed by the Original Tenant or such Affiliate Assignee if the Tenant is not in monetary and/or material default under this Lease beyond the expiration of all applicable notice and cure periods as of the date Tenant delivers the Second Termination Notice or as of the Second Termination Date.

 

2.3           Early Occupancy. If Substantial Completion of the Tenant Improvements (as such terms are defined in the Work Letter attached hereto as Exhibit B) occurs prior to the Lease Commencement Date, then following Substantial Completion of the Tenant Improvements and continuing until the Lease Commencement Date (the “Early Occupancy Period”), and so long as Landlord has received insurance certificates evidencing that Tenant is carrying the insurance required to be carried by Tenant pursuant to the terms of Article 10 below, Tenant shall have the right to access and occupy the Premises during the Early Occupancy Period; provided, however, that during such Early Occupancy Period and subject to the terms of the Work Letter, all of the terms and conditions of this Lease shall apply, including, without limitation, Tenant’s obligation to pay to Landlord all sums and charges required to be paid by Tenant under this Lease, including, without limitation, charges for additional services provided to the Premises so occupied pursuant to Sections 6.1.2 and 6.2 of this Lease. Subject to the foregoing, during such Early Occupancy Period, Tenant shall not be obligated to pay Base Rent for the Premises and/or Tenant’s Share of Operating Expenses, Tax Expenses or Utilities Costs (as such terms are defined below in Article 4 below) in accordance with the terms of this Lease, until the occurrence of the Lease Commencement Date (and no such Base Rent or such other charges shall accrue during such Early Occupancy Period).

 

ARTICLE 3

 

BASE RENT

 

3.1           Base Rent. Tenant shall pay, without notice or demand, except as otherwise set forth herein, to Landlord or Landlord’s agent at the management office of the Project, or at such other place as Landlord may from time to time designate in writing, in currency or a check for currency which, at the time of payment, is legal tender for private or public debts in the United States of America, base rent (“Base Rent”) as set forth in Section 8 of the Summary, payable in equal monthly installments as set forth in Section 8 of the Summary in advance on or before the first (1st) day of each and every month during the Lease Term, without any setoff or deduction whatsoever (except as specifically set forth in this Lease). The Base Rent for the first (1st) full month of the Lease Term shall be paid at the time of Tenant’s execution of this Lease. If any rental payment date (including the Lease Commencement Date) falls on a day of the month other than the first day of such month or if any rental payment is for a period which is shorter than one (1) month, then the rental for any such fractional month shall be a proportionate amount of a full calendar month’s rental based on the proportion that the number of days in such fractional month bears to the number of days in the calendar month during which such fractional month occurs. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis.

 

3.2           Rent Abatement. Notwithstanding anything to the contrary contained herein and provided that Tenant faithfully performs all of the terms and conditions of this Lease, and no default by Tenant occurs hereunder (beyond all applicable notice and cure periods), Landlord hereby agrees that Tenant shall not be required to pay the monthly installments of Base Rent for the second (2nd) through eleventh (11th) full months of the initial Lease Term (the “Abatement Period”), with the abated Base Rent to be equal to One Million One Hundred Two Thousand Six Hundred Eighty Dollars ($1,102,680.00) in the aggregate (the “Abated Base Rent”). During the Abatement Period, Tenant shall still be responsible for the payment of all of its other monetary obligations under this Lease. In the event of a default by Tenant under the terms of this Lease that results in termination of this Lease in accordance with the provisions of Article 19 hereof, then as a part of the recovery set forth in Article 19 of this Lease, Landlord shall be entitled to the recovery of the unamortized (on a straight-line basis during the initial Lease Term) Abated Base Rent that was abated under the provisions of this Article 3.

 

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ARTICLE 4

 

ADDITIONAL RENT

 

4.1           Additional Rent. In addition to paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay as additional rent the sum of the following: (i) Tenant’s Share (as such term is defined below) of the annual Operating Expenses (as such term is defined below) which are in excess of the amount of Operating Expenses applicable to the Expense Base Year (as such term is defined below); plus (ii) Tenant’s Share of the annual Tax Expenses (as such term is defined below) which are in excess of the amount of Tax Expenses applicable to the Tax Expense Base Year (as such term is defined below); plus (iii) Tenant’s Share of the annual Utilities Costs (as such term is defined below) which are in excess of the amount of Utilities Costs applicable to the Utilities Base Year (as such term is defined below). Such additional rent, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease (including, without limitation, pursuant to Article 6), shall be hereinafter collectively referred to as the “Additional Rent`”. The Base Rent and Additional Rent are herein collectively referred to as the “Rent”. All amounts due under this Article 4 as Additional Rent shall be payable for the same periods and in the same manner, time and place as the Base Rent. Without limitation on other obligations of Landlord and Tenant which shall survive the expiration of the Lease Term, the obligations of Tenant to pay the Additional Rent provided for in this Article 4 shall survive the expiration of the Lease Term.

 

4.2           Definitions. As used in this Article 4, the following terms shall have the meanings hereinafter set forth:

 

4.2.1        “Calendar Year” shall mean each calendar year in which any portion of the Lease Term falls, through and including the calendar year in which the Lease Term expires.

 

4.2.2        “Expense Base Year” shall mean the year set forth in Section 9.1 of the Summary.

 

4.2.3        “Expense Year” shall mean each Calendar Year, provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive-month period, and, in the event of any such change, Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be equitably adjusted for any Expense Year involved in any such change to ensure that such change does not increase Tenant’s obligations hereunder.

 

4.2.4        “Operating Expenses” shall mean all expenses, costs and amounts of every kind and nature which Landlord shall pay during any Expense Year because of or in connection with the ownership, management, maintenance, repair, replacement, restoration or operation of the Real Property, all as determined in accordance with sound real estate management practices consistently applied, including, without limitation, any amounts paid for: (i) the cost of operating, maintaining, repairing, renovating and managing the utility systems, mechanical systems, sanitary and storm drainage systems, any elevator systems and all other “Systems and Equipment” (as defined in Section 4.2.5 of this Lease), and the cost of supplies and equipment and maintenance and service contracts in connection therewith; (ii) the cost of licenses, certificates, permits and inspections, and the cost of contesting the validity or applicability of any governmental enactments which may affect Operating Expenses, and the costs incurred in connection with implementation of a governmentally mandated transportation system management program or similar program; (iii) the cost of insurance carried by Landlord, in such amounts as Landlord may reasonably determine or as may be required by any mortgagees or the lessor of any underlying or ground lease affecting the Real Property; (iv) the cost of landscaping, relamping, supplies, tools, equipment and materials, and all fees, charges and other costs (including reasonable consulting fees, legal fees and accounting fees) incurred in connection with the management, operation, repair and maintenance of the Real Property, subject to item (xi) below; (v) the cost of parking area repair, restoration, and maintenance; (vi) any equipment rental agreements or management agreements (including the cost of any management fee (not to exceed management fees charged by first-class management companies unaffiliated with Landlord in Comparable Buildings) and the fair rental value of any office space provided thereunder); (vii) subject to Section 4.2.4(f) below, wages, salaries and other compensation and benefits of all persons engaged in the operation, management, maintenance or security of the Real Property, and employer’s Social Security taxes, unemployment taxes or

 

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insurance, and any other taxes which may be levied on such wages, salaries, compensation and benefits; (viii) payments under any easement, license, operating agreement, declaration, restrictive covenant, underlying or ground lease (excluding rent), or instrument pertaining to the sharing of costs by the Real Property; (ix) the cost of janitorial service, alarm and security service, if any, window cleaning, trash removal, replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies, corridors, restrooms and other common or public areas or facilities, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing, provided that any capital costs incurred by Landlord with respect to the replacement of such systems and equipment shall be amortized as forth in items (x) and (xi), below; (x) amortization (including interest on the unamortized cost at a rate equal to the floating commercial loan rate announced from time to time by Bank of America, a national banking association, or its successor, as its prime rate the “Amortization Interest Rate”) of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Real Property to the extent such acquisition costs, prior to amortization, are materially consistent with the costs incurred for such items by landlords of Comparable Buildings, given the scope, size and nature of the Project; and (xi) the cost of capital repairs, replacements or other improvements or other costs incurred in connection with the Project (A) which are intended to reduce current or future Operating Expenses to the extent of cost savings reasonably anticipated by Landlord (based upon reasonable supporting documentation) at the time of such expenditure to be incurred in connection therewith, or (B) that are required under any governmental law or regulation, except for capital repairs, replacements or other improvements to remedy a condition existing prior to the Lease Commencement Date which an applicable governmental authority, if it had knowledge of such condition prior to the Lease Commencement Date and if such condition was not subject to a variance or a grandfathered/grandmothered code waiver exception, would have then required to be remedied pursuant to then-current Applicable Laws, in their form existing as of the Lease Commencement Date; provided, however, that any such permitted capital expenditure shall be amortized (with interest at the Amortization Interest Rate) over its reasonable useful life in accordance with generally accepted commercial office building accounting practices. Any of the services which may be included in the computation of the Operating Expenses of the Building may be performed by divisions, subsidiaries or affiliates of Landlord, provided that the contracts for the performance of such services shall be competitive with similar contracts and transactions with unaffiliated entities for the performance of such services in Comparable Buildings. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. If the Building is less than ninety-five percent (95%) occupied during all or a portion of any Expense Year (including the Expense Base Year) with all tenants paying one hundred percent (100%) of all rental due and owing, Landlord shall make an appropriate adjustment to the variable components of Operating Expenses for such year or applicable portion thereof, employing sound accounting and management principles, consistently applied, to determine the amount of Operating Expenses that would have been paid had the Building been ninety-five percent (95%) occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year, or applicable portion thereof. Landlord shall (i) not make a profit by charging items to Operating Expenses that are otherwise also charged separately to others and (ii) Landlord shall not collect Operating Expenses from Tenant and all other tenants/occupants in the Building in an amount in excess of what Landlord incurred for the items included in Operating Expenses. Any refunds or discounts actually received by Landlord for any category of Operating Expenses shall reduce Operating Expenses in the applicable Expense Year (pertaining to such category of Operating Expenses).

 

If other than as a result of any legal, governmental or lender requirements or other occurrence(s) beyond the reasonable control of Landlord, following the 2011 Calendar Year any new category of operating expense is added to Operating Expenses, and/or the scope of any previously existing category of expense is materially increased, then during such time as the costs relating to such new category and/or materially increased scope are included in the Building’s expenses, the calculation of the Expense Base Year Operating Expenses shall be increased to reflect such Operating Expenses as would have been incurred had such new category item been included in the 2011 Calendar Year and/or had such materially increased scope been applicable during the 2011 Calendar Year, as applicable, giving due consideration to

 

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what the costs for such new category and/or materially increased scope item(s) would have been in the 2011 Calendar Year.

 

Landlord shall have the right, from time to time, in its reasonable discretion, to equitably and consistently allocate some or all of the Operating Expenses (and/or Tax Expenses and Utilities Costs) among different tenants of the Project or to include additional buildings in the Real Property for purposes of determining Operating Expenses (and/or Tax Expenses and Utilities Costs) and/or the provision of various services and amenities thereto (the “Cost Pools”). Such Cost Pools may include, without limitation, the office space tenants and retail space tenants of the Building and/or any such additional buildings.

 

Notwithstanding anything to the contrary set forth in this Article 4, when calculating Operating Expenses for the Expense Base Year, Operating Expenses shall exclude market-wide labor-rate increases due to extraordinary circumstances, including, but not limited to, boycotts and strikes; provided however, that at such time as any such particular cost increases or costs continue to be included in Operating Expenses during subsequent Expense Years, such particular cost increases or costs shall be included in the Expense Base Year calculation of Operating Expenses.

 

Notwithstanding the foregoing, Operating Expenses shall not, however, include:

 

(i)                 costs, including legal fees, space planners’ fees, advertising and promotional expenses (except as otherwise set forth above), and brokerage fees incurred in connection with the original construction or development, or original or future leasing of the Project, and costs, including permit, license and inspection costs , incurred with respect to the installation of tenant improvements made for new tenants initially occupying space in the Project after the Lease Commencement Date or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Project (excluding, however, such costs relating to any common areas of the Project or parking facilities);

 

(ii)                except as set forth in items (x) and (xi) above, depreciation, interest and principal payments on mortgages and other debt costs, if any, penalties and interest, costs of capital repairs and alterations, and costs of capital improvements and equipment;

 

(iii)               costs for which the Landlord is reimbursed by any tenant or occupant of the Project or by insurance by its carrier or any tenant’s carrier or by anyone else, and electric power costs for which any tenant directly contracts with the local public service company;

 

(iv)               any bad debt loss, rent loss, or reserves for bad debts or rent loss;

 

(v)                costs associated with the operation of the business of the partnership or entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Project (which shall specifically include, but not be limited to, accounting costs associated with the operation of the Project). Costs associated with the operation of the business of the partnership or entity which constitutes the Landlord include costs of partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Project, and costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Project management, or between Landlord and other tenants or occupants;

 

(vi)               the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Project unless such wages and benefits are prorated to reflect time spent on operating and managing the Project vis-à-vis time spent on matters unrelated to operating and managing the Project; provided, that in no event shall Operating Expenses for purposes of this Lease include wages and/or benefits attributable to personnel above the level of Property manager or Property engineer;

 

(vii)              amount paid as ground rental for the Project by the Landlord;

 

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(viii)             except for a Project management fee (as described in subsection (xii), above), overhead and profit increment paid to the Landlord or to subsidiaries or affiliates of the Landlord for services in or in connection the Project to the extent the same exceeds the costs such services rendered by qualified, first-class unaffiliated third parties on a competitive basis;

 

(ix)               any compensation paid to clerks, attendants or other persons in commercial concessions operated by the Landlord (which shall specifically exclude the Parking Facilities), provided that any compensation paid to any concierge at the Project shall be includable as an Operating Expense;

 

(x)                rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment which if purchased the cost of which would be excluded from Operating Expenses as a capital cost, except equipment not affixed to the Project which is used in providing janitorial or similar services and, further excepting from this exclusion such equipment rented or leased to remedy or ameliorate an emergency condition in the Project;

 

(xi)               all items and services for which Tenant or any other tenant in the Project reimburses Landlord or which Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;

 

(xii)              any costs expressly excluded from Operating Expenses elsewhere in this Lease;

 

(xiii)             rent for any office space occupied by Project management personnel to the extent the size or rental rate of such office space exceeds the size or fair market rental value of office space occupied by management personnel of Comparable Buildings, with adjustment where appropriate for the size of the applicable project;

 

(xiv)             costs arising from the gross negligence or willful misconduct of Landlord or its agents, employees, vendors, contractors, or providers of materials or services;

 

(xv)              fines, penalties, and interest on delinquent payments and principal payments (but interest shall be specifically included as provided for in items (x) and (xi), above, and interest included on real property taxes as part of a bonded assessment included in real property taxes shall be included in “Tax Expenses”, as that term is defined in Section 4.2.7, below);

 

(xvi)             costs incurred due to the violation by Landlord of the terms and conditions of any underlying documents pertaining to the Building or Project;

 

(xvii)            costs for extra or after-hours HVAC, utilities or services which are provided to Tenant and/or any occupant of the Building and as to which Tenant or such other occupants are separately charged and the applicable amounts are paid by Tenant or such other occupants;

 

(xviii)           Landlord’s general corporate overhead and general administrative expenses;

 

(xix)              costs incurred to comply with “Applicable Laws”, as that term is defined in Article 21 of this Lease, relating to the removal of hazardous material (as defined under Applicable Laws) which was in existence in the Building or on the Project prior to the Lease Commencement Date, and was of such a nature that a federal, state or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions that it then existed in the Building or on the Project, would have then required the removal of such hazardous material or other remedial or containment action with respect thereto; and costs incurred with respect to hazardous material, which hazardous material is brought into the Building or onto the Project after the date hereof by Landlord or anyone other Tenant and is of such a nature, at that time, that a federal, state or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions, that it then exists in the Building or on the Project, would have then required the removal, remediation or other action with respect thereto;

 

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(xx)               any reserves retained by Landlord;

 

(xxi)              insurance deductibles in excess of customary deductible amounts carried by landlords of the Comparable Buildings; in connection with any insurance deductible amounts included in Operating Expenses as a result of an earthquake which are for items otherwise classified as capital items, such amounts shall be amortized into Operating Expenses at the cost and over the term set forth in Section 4.2.4(xi) above;

 

(xxii)             late charges, penalties, liquidated damages, and interest;

 

(xxiii)            costs, other than those incurred in ordinary maintenance and repair, for sculpture, paintings, fountains or other objects of art;

 

(xxiv)           legal fees and costs, settlements, judgments or awards paid or incurred because of disputes between Landlord and Tenant, Landlord and other tenants or prospective occupants or prospective tenants/occupants or providers of goods and services to the Project;

 

(xxv)            advertising and promotional expenses and costs of signs in or on the Building identifying the owner of the Building or other tenants’ signs;

 

(xxvi)           costs due to violations of the CC&Rs or to create any future CC&Rs (as opposed to payments under any future CC&Rs otherwise includable as an Operating Expense hereunder);

 

(xxvii)          to the extent applicable, electric power costs or other utility costs for which any tenant directly contracts with the local public service company (but Landlord shall have the right to “gross up” as if the floor was vacant);

 

(xxviii)         any entertainment, dining or travel expenses for any purpose (except to the extent costs for similar items were included in the Expense Base Year);

 

(xxix)            costs of specialty clubs and services;

 

(xxx)             costs arising from any voluntary special assessment on the Building or the Project by any transit district authority or any other governmental entity having the authority to impose such voluntary assessment, unless such costs are included in the Base Year;

 

(xxxi)            any “validated” parking for any entity;

 

(xxxii)           costs of any “tap fees” or any sewer or water connection fees for the benefit of any particular tenant in the Building or the Project; and

 

(xxxiii)          fees payable by Landlord for management of the Project in excess of three percent (3%) of Landlord’s gross rental revenues, adjusted and grossed up to reflect a one hundred percent (100%) occupancy of the Project with all tenants paying rent, including base rent, pass-throughs, and parking fees (but excluding the cost of after-hours services or utilities) from the Project for any calendar year or portion thereof. Landlord acknowledges and agrees that the management fee for the Project during the Expense Base Year will be three percent (3%) of Landlord’s gross rental revenues calculated as provided above.

 

4.2.5   “Systems and Equipment” shall mean any plant, machinery, transformers, duct work, cable, wires, and other equipment, facilities, and systems designed to supply heat, ventilation, air conditioning and humidity or any other services or utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sprinkler, communications, alarm, security, or fire/life safety systems or equipment, or any other mechanical, electrical, electronic, computer or other systems or equipment which serve the Building and/or any other building in the Project in whole or in part.

 

4.2.6   “Tax Expense Base Year” shall mean the year set forth in Section 9.2 of the Summary.

 

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4.2.7   “Tax Expenses” shall mean all federal, state, county, or local governmental or municipal taxes, fees, assessments, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary, (including, without limitation, real estate taxes, general and special assessments, transit assessments, fees and taxes, child care subsidies, fees and/or assessments, job training subsidies, fees and/or assessments, open space fees and/or assessments, housing subsidies and/or housing fund fees or assessments, public art fees and/or assessments, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Real Property), which Landlord shall pay during any Expense Year because of or in connection with the ownership, leasing and operation of the Real Property or Landlord’s interest therein. For purposes of this Lease, Tax Expenses shall be calculated as if the tenant improvements in the Building were fully constructed and the Real Property, the Building and all tenant improvements in the Building were fully assessed for real estate tax purposes, and accordingly, during the portion of any Expense Year or Tax Expense Base Year, Tax Expenses shall be deemed to be increased appropriately.

 

4.2.7.1     Tax Expenses shall include, without limitation:

 

(i)            Any tax on Landlord’s rent, right to rent or other income from the Real Property or as against Landlord’s business of leasing any of the Real Property;

 

(ii)           Any assessment, tax, fee, levy or charge in addition to, or in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously included within the definition of real property tax, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June 1978 election (“Proposition 13”) and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants. It is the intention of Tenant and Landlord that all such new and increased assessments, taxes, fees, levies, and charges and all similar assessments, taxes, fees, levies and charges be included within the definition of Tax Expenses for purposes of this Lease;

 

(iii)          Any assessment, tax, fee, levy, or charge allocable to or measured by the area of the Premises or the rent payable hereunder, including, without limitation, any gross income tax upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof;

 

(iv)          Any assessment, tax, fee, levy or charge, upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises; and

 

(v)           Any reasonable expenses incurred by Landlord in attempting to protest, reduce or minimize Tax Expenses, if Landlord has a reasonable expectation of achieving a reduction in excess of the expenses incurred, shall be included in Tax Expenses in the Expense Year such expenses are incurred (excluding, however, those costs and expenses incurred by Landlord in securing any Proposition 8 reduction as set forth in Section 4.2.7.4 below).

 

4.2.7.2     Except as set forth in Section 4.2.7.4, below, refunds of Tax Expenses shall be credited against Tax Expenses and refunded to Tenant regardless of when received, based on the Expense Year to which the refund is applicable, provided that in no event shall the amount to be refunded to Tenant for any such Expense Year exceed the total amount paid by Tenant as Additional Rent under this Article 4 for such Expense Year. All special assessments which may be paid in installments shall be paid by Landlord in the maximum number of installments permitted by law and not included in Tax Expenses except in the year in which the assessment is actually paid.

 

4.2.7.3     Notwithstanding anything to the contrary contained in this Section 4.2.7, there shall be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and

 

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state net income taxes, and other taxes to the extent applicable to Landlord’s net income (as opposed to rents, receipts or income attributable to operations at the Real Property), (ii) any items included as Operating Expenses or Utilities Costs, (iii) any items paid by Tenant under Section 4.4  of this Lease,  (iv) tax penalties,  interest or late charges,  (v) any Tax Increase excluded from Tax Expenses pursuant to Section 4.2.7.4 below, and (vi) any amounts charged directly to Tenant or other tenants, including pursuant to Section 4.4.

 

4.2.7.4                               Proposition 13 Protection.

 

(i)                                      If one or more sales, financings or changes in ownership of the Building and/or the Project is consummated or improvements are made to the Building and/or Project, and as a result thereof, and to the extent that in connection therewith, the Building and/or Project is reassessed (the “Reassessment”)  for real estate tax purposes by the appropriate governmental authority pursuant to the terms of Proposition 13 occurs during the three (3) year period commencing on the Lease Commencement Date (the “Protection Period”), then the amount of any “Tax Increase” (defined below) resulting solely from such Reassessment shall be excluded from Tax Expenses.  After the Protection Period, Tenant’s Share of any Tax Increase resulting from a Reassessment after the Protection Period shall be amortized over a two (2) year period after the Reassessment with fifty percent (50%) of Tenant’s Share of such Tax Increase payable by Tenant over the first (1st) such year and the remaining fifty percent (50%) payable by Tenant over the second (2nd) such year.

 

(a)                                 “Tax Increase” means that portion of the Tax Expenses, as calculated immediately following the Reassessment which is attributable solely to the Reassessment, and will not include any portion of the Tax Expenses, as calculated immediately following the Reassessment, which is attributable to either:

 

i.                                          the value of the Building or Project as of the Lease Commencement Date (whether or not the Project is fully assessed as of the Lease Commencement Date);

 

ii.                                       assessments that are unrelated to a Change in Ownership of the Building, Project or any portion of either of the foregoing; or

 

iii.                                    the annual inflationary increase of real estate taxes permitted under the R&T Code (limited as of the date of this Lease to two percent (2%) per annum), excluding the annual inflationary increase on the Tax Increase immediately following the Reassessment.

 

(b)                                 “Proposition 13 Protection Amount” means Tenant’s Share of the aggregate Tax Increase excluded from Tax Expenses under this subparagraph.

 

(ii)                                  If, in connection with a pending or anticipated sale of the Building and/or the Project by Landlord, the occurrence of a Reassessment is reasonably foreseeable by Landlord and the Proposition 13 Protection Amount attributable to such Reassessment can be reasonably quantified or estimated for each Lease Year commencing with the Lease Year in which the Reassessment will occur, the terms of this Section shall apply to each such Reassessment.  By notice given by Landlord to Tenant during the Protection Period, Landlord may purchase the Proposition 13 Protection Amount from Tenant for an amount relating to the applicable Reassessment (the “Applicable Reassessment”),  within a reasonable period of time prior to the pending or anticipated sale of the Building and/or the Project by Landlord, by paying to Tenant an amount equal to the “Proposition 13 Purchase Price,” as that term is defined below, provided that the right of any successor of Landlord to exercise its right of repurchase hereunder shall not apply to any Reassessment which results from the event pursuant to which such successor of Landlord became the landlord under this Lease.  As used herein, “Proposition 13 Purchase Price” shall mean the present value of the Proposition 13 Protection Amount remaining from the date of payment of such amount by Landlord through the remainder of the Protection Period, assuming that the Proposition 13 Protection Amount for an Expense Year would have been paid by Tenant in equal monthly installments during each such Expense Year, and discounting by eight and one-half percent (81⁄2%) per annum.  Upon payment of the Proposition 13 Purchase Price, the provisions of this Section 4.2.7.4 will not apply to any Tax Increase attributable to the Reassessment.  Landlord may exercise its rights under this

 

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Section 4.2.7.4(ii) before receipt of the actual reassessment, and may reasonably estimate the amount of the reassessment and pay the Proposition 13 Purchase Price based such assessment upon the estimate. When the actual amount of the reassessment becomes known, if Landlord has underestimated the Proposition 13 Purchase Price, then upon notice by Landlord to Tenant, Tenant’s Rent next due will be credited with the amount of such underestimation, and if Landlord overestimates the Proposition 13 Purchase Price, then upon notice by Landlord to Tenant, Rent next coming due under this Lease will be increased by the amount of the overestimation.

 

4.2.7.5                               Proposition 8 Adjustments.   Notwithstanding anything to the contrary set forth in this Lease (but expressly subject to the terms of Section 4.2.7.4 above), the amount of Tax Expenses for the Expense Base Year and any Expense Year shall be calculated based on a fully occupied Project without taking into account any decreases in real estate taxes obtained under Proposition 8, and, therefore, the Tax Expenses in the Expense Base Year and/or an Expense Year may be greater than those actually incurred by Landlord, but shall, nonetheless, be the Tax Expenses under this Lease for purposes of calculating Operating Expenses for the Project;  provided that (a) any costs and expenses incurred by Landlord in securing any Proposition 8 reduction shall not be included in Project Expenses for purposes of this Lease, and (b) tax refunds under Proposition 8 shall not be deducted from Tax Expenses or otherwise credited to Tenant, but rather shall be the sole property of Landlord.  This Section 4.2.7.5 is not intended in any way to affect the inclusion in Tax Expenses of the statutory two percent (2%) annual increase in Tax Expenses (as such statutory increase may be modified by subsequent legislation).

 

4.2.8                                         “Tenant’s Share” shall mean the percentage set forth in Section 9.4 of the Summary.  Tenant’s Share was calculated by dividing the number of rentable square feet of the Premises by the total rentable square feet in the Building (as set forth in Section 9.4 of the Summary), and stating such amount as a percentage.  If Tenant’s Share is adjusted as a result of an increase or decrease in the size of the Premises, as to the Expense Year in which such adjustment occurs, Tenant’s Share for such year shall be determined on the basis of the number of days during such Expense Year that each such Tenant’s Share was in effect.

 

4.2.9                                         “Utilities Base Year” shall mean the year set forth in Section 9.3 of the Summary.

 

4.2.10                                  “Utilities Costs” shall mean all actual charges for utilities for the Building and the Project which Landlord shall pay during any Expense Year, including, but not limited to, the costs of water, sewer and electricity, and the costs of HVAC (including, unless paid by Tenant pursuant to Section 6.1.2 below, the cost of electricity to operate the HVAC air handlers) and other utilities as well as related fees, assessments and surcharges (but excluding those charges for which tenants directly reimburse Landlord or otherwise pay directly to the utility company).  Utilities Costs shall be calculated assuming the Building is at least ninety-five percent (95%) occupied during all or any portion of an Expense Year (including the Utilities Base Year).  If, during all or any part of any Expense Year, Landlord shall not provide any utilities (the cost of which, if provided by Landlord, would be included in Utilities Costs) to a tenant (including Tenant) who has undertaken to provide the same instead of Landlord, Utilities Costs shall be deemed to be increased by an amount equal to the additional Utilities Costs which would reasonably have been incurred during such period by Landlord if Landlord had at its own expense provided such utilities to such tenant.  Utilities Costs shall include any costs of utilities which are allocated to the Real Property under any declaration, restrictive covenant, or other instrument pertaining to the sharing of costs by the Real Property or any portion thereof, including any covenants, conditions or restrictions now or hereafter recorded against or affecting the Real Property.  For purposes of determining Utilities Costs incurred for the Utilities Base Year, Utilities Costs for the Utilities Base Year shall exclude any one time special charges, costs or fees or extraordinary charges or costs incurred in the Utilities Base Year only, including those attributable to boycotts, embargoes, strikes or other shortages of services or fuel; provided, however, at such time as any particular cost increases or costs continue to be included in Utilities Costs during subsequent Expense Years, such particular cost increase or costs shall be included in the Utilities Base Year calculation of Utilities Costs.

 

4.3                      Calculation and Payment of Additional Rent.

 

4.3.1                                         Calculation of Excess.  If for any Expense Year ending or commencing within the Lease Term, (i) Tenant’s Share of Operating Expenses for such Expense Year exceeds

 

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Tenant’s Share of Operating Expenses for the Expense Base Year and/or (ii) Tenant’s Share of Tax Expenses for such Expense Year exceeds Tenant’s Share of Tax Expenses for the Tax Expense Base Year, and/or (iii) Tenant’s Share of Utilities Costs for such Expense Year exceeds Tenant’s Share of Utilities Costs for the Utilities Base Year, then Tenant shall pay to Landlord, in the manner set forth in Section 4.3.2, below, and as Additional Rent, an amount equal to such excess (the “Excess”).

 

4.3.2                                         Statement of Actual Operating Expenses, Tax Expenses and Utilities Costs  and Payment by Tenant.  Landlord shall use commercially reasonable efforts to give to Tenant on or before the thirtieth (30th) day of May following the end of each Expense Year, a statement (the “Statement”)  which shall state on a line item by line item basis, the Operating Expenses, Tax Expenses and Utilities Costs incurred or accrued for such preceding Expense Year (including the Expense Base Year, Tax Expense Base Year and Utilities Base Year), and which shall indicate the amount, if any, of any Excess or overpayment by Tenant.  Upon receipt of the Statement for each Expense Year ending during the Lease Term, if an Excess is present, Tenant shall pay, within thirty (30) days following demand by Landlord, the full amount of the Excess for such Expense Year, less the amounts, if any, paid during such Expense Year as “Estimated Excess,” as that term is defined in Section 4.3.3 of this Lease, and if Tenant has paid more as Estimated Excess than the actual Excess (an “Overage”),  Tenant shall, at Landlord’s option, receive a credit in the amount of the Overage against the Rent next coming due under the Lease, or Landlord shall pay the amount of the Overage to Tenant within thirty (30) days following Landlord’s calculation thereof.  Notwithstanding anything to the contrary in this Lease, in the event this Lease has terminated or there is insufficient Rent due and payable by Tenant for Landlord to credit such Overage then Landlord shall pay the Overage to Tenant within thirty (30) days following Landlord’s calculation thereof.  The failure of Landlord to timely furnish the Statement for any Expense Year shall not prejudice Landlord from enforcing its rights under this Article 4.  Even though the Lease Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of the Operating Expenses, Tax Expenses and Utilities Costs for the Expense Year in which this Lease terminates, if an Excess is present, Tenant shall pay to Landlord an amount as calculated pursuant to the provisions of Section 4.3.1 of this Lease within thirty (30) days of Tenant’s receipt of an invoice therefore from Landlord, and if an Overage is present, Landlord shall refund the amount of the Overage to Tenant within thirty (30) days following Landlord’s determination.  Notwithstanding the foregoing, Tenant shall not be responsible for Tenant’s Share of any Operating Expenses, Tax Expenses or Utilities Costs attributable to any Expense Year which are first billed to Tenant more than two (2) Calendar Years after the expiration or any earlier termination of the applicable Expense Year or the Lease Expiration Date, provided that in any event Tenant shall be responsible for Tenant’s Share of any Operating Expenses, Tax Expenses or Utilities Costs levied by any governmental authority or by any public utility companies at any time following the applicable Expense Year or the Lease Expiration Date which are attributable to any Expense Year (provided that Landlord delivers Tenant a bill for such amounts within two (2) years following Landlord’s receipt of the bill therefor).  The provisions of this Section 4.3.2  shall survive the expiration or earlier termination of the Lease Term.

 

4.3.3                                         Statement of Estimated Operating Expenses, Tax Expenses and Utilities  Costs.   In addition, Landlord shall use commercially reasonable efforts to give Tenant on or before the thirtieth (30th) day of May a yearly expense estimate statement (the “Estimate Statement”  which shall set forth, on a line item by line item basis, Landlord’s reasonable and good faith estimate (the “Estimate”)  of what the total amount of Operating Expenses, Tax Expenses and Utilities Costs for the then-current Expense Year shall be and the estimated Excess (the “Estimated Excess”) as calculated by comparing (i) Tenant’s Share of Operating Expenses, which shall be based upon the Estimate, to Tenant’s Share of Operating Expenses for the Expense Base Year,  (ii) Tenant’s Share Tax Expenses, which shall be based upon the Estimate, to Tenant’s Share of Tax Expenses for the Tax Expense Base Year, and (iii) Tenant’s Share of Utilities Costs, which shall be based upon the Estimate, to Tenant’s Share of Utilities Costs for the Utilities Base Year.  The failure of Landlord to timely furnish the Estimate Statement for any Expense Year shall not preclude Landlord from enforcing its rights to collect any Estimated Excess under this Article 4.  If pursuant to the Estimate Statement an Estimated Excess is calculated for the then-current Expense Year, Tenant shall pay, within thirty (30) days after receipt of the Estimate Statement, a fraction of the Estimated Excess for the then-current Expense Year (reduced by any amounts paid pursuant to the last sentence of this Section 4.3.3). Such fraction shall have as its numerator the number of months which have elapsed in such

 

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current Expense Year to the month of such payment, both months inclusive, and shall have twelve (12) as its denominator.  Until a new Estimate Statement is furnished, Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in the previous Estimate Statement delivered by Landlord to Tenant.

 

4.3.4                                         Cap on Controllable Expenses.  Notwithstanding anything to the contrary contained in this Article 4,  the aggregate “Controllable Expenses”  (as hereinafter defined) included in Operating Expenses in any Expense Year after the Expense Base Year shall not increase by more than five percent (5%) on an annual, cumulative and compounded basis, over the actual aggregate Controllable Expenses included in Operating Expenses for any preceding Expense Year (including the Expense Base Year), but with no such limit on the amount of Controllable Expenses which may be included in the Operating Expenses incurred during the Expense Base Year.  For purposes of this Section 4.3.4, “Controllable Expenses” shall mean all Operating Expenses except:  (i) insurance carried by Landlord with respect to the Real Property and/or the operation thereof;  (ii) costs of capital expenditures which constitute Operating Expenses under Section 4.2.4(xi)(B) above; and (ii) wages, salaries and other compensation and benefits paid to Landlord’s employees, agents or contractors engaged in the operation, management, maintenance (including, but not limited to, janitorial and cleaning services) or security of the Building or Real Property, to the extent such wages, salaries and other compensation subject to collective bargaining agreements or government mandated requirements including, but not limited to, prevailing wage laws and similar requirements.  The provisions of this Section 4.3.4 do not apply to Tax Expenses or Utilities Costs.

 

4.4                                                  Taxes and Other Charges for Which Tenant Is Directly Responsible. Tenant shall reimburse Landlord within thirty (30) days of demand for any and all taxes or assessments required to be paid by Landlord (except to the extent included in Tax Expenses by Landlord), excluding state, local and federal personal or corporate income taxes measured by the net income of Landlord from all sources and estate and inheritance taxes, whether or not now customary or within the contemplation of the parties hereto, when:

 

4.4.1                                          said taxes are measured by or reasonably attributable to the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises, or by the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, to the extent the cost or value of such leasehold improvements exceeds the cost or value of a building standard build-out as reasonably determined by Landlord regardless of whether title to such improvements shall be vested in Tenant or Landlord (to the extent that Landlord enforces the terms of this Section 4.4.1 against Tenant, then Landlord shall not include in Tax Expenses, taxes assessed against any other tenant improvements in the Project to the extent such taxes relate to the value of such tenant improvements in excess of the “building standard”);

 

4.4.2                                          said taxes are assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion of the Real Property (including the Parking Facilities); or

 

4.4.3                                         said taxes are assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

 

4.5                                                 Late Charges.  If any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord’s designee within five (5) business days following the date that such amount is due, then Tenant shall pay to Landlord a late charge equal to five percent (5%) of the amount due plus any attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or other charges when due hereunder.  The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder, at law and/or in equity and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner.  In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid by the date that they are past due shall thereafter bear interest until paid at a rate (the “Interest Rate”) equal to the lesser of (i) the “Prime Rate” or “Reference Rate” announced from time to time by the Bank of America (or such reasonable comparable national banking institution as selected by Landlord in the event Bank of America ceases to exist or publish a Prime Rate or Reference Rate), plus two percent (2%), or (ii) the highest rate permitted by Applicable Law; provided, however, that no late charge shall be payable for the first late payment of Rent in any twelve (12) month period

 

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during the Lease Term unless such amount is not paid by Tenant within five (5) business days after Tenant’s receipt of Landlord’s written notice to Tenant of such failure to pay.

 

4.6                                          Landlord’s Books and Records. Within twenty-four (24) months after receipt of a Statement by Tenant and three (3) years from the Expense Base Year, Tax Expense Base Year and/or Utilities Base Year, if Tenant disputes the amount of Additional Rent set forth in the Statement, an independent accountant or third party lease audit firm designated and paid for by Tenant (which accountant or lease audit firm is not working on a contingency fee basis), or an employee of Tenant, may, after reasonable notice to Landlord and at reasonable times during business hours and accompanied by a representative of Landlord, inspect Landlord’s records with respect to the Statement at Landlord’s offices, provided that Tenant is not then in monetary default under this Lease beyond any applicable notice and cure period and Tenant has paid all amounts required to be paid under the applicable Estimate Statement and Statement, as the case may be.  In connection with such inspection, Tenant and Tenant’s agents must agree in advance to follow Landlord’s reasonable rules and procedures regarding inspections of Landlord’s records, and shall execute a commercially reasonable confidentiality agreement regarding such inspection.  Tenant’s failure to provide written notice to Landlord that Tenant wishes to dispute and audit (as provided above) the amount of Additional Rent set forth in any Statement within twenty-four (24) months after receipt of a Statement by Tenant and three (3) years from the Expense Base Year, Tax Expense Base Year and Utilities Base Year shall be deemed to be Tenant’s approval of such Statement and Tenant, thereafter, waives the right or ability to dispute the amounts set forth in such Statement.  In no event shall the payment by Tenant of any Operating Expense, Tax Expense or Utility Cost payment, or any amount on account thereof, preclude Tenant from exercising its rights under this Section 4.6. If after such inspection, Tenant still disputes such Additional Rent, a determination as to the proper amount shall be made, at Tenant’s expense, by an independent accountant (the “Accountant”)  mutually selected by Landlord and Tenant; provided that if such determination by the Accountant proves that Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs were overstated by more than five percent (5%), then the cost of Tenant’s accountant and the cost of the Accountant and the cost of such determination shall be paid for by Landlord.  If Landlord and Tenant cannot mutually agree as to the identity of the Accountant within thirty (30) days after Tenant notifies Landlord that Tenant desires an audit to be performed, then the Accountant shall be a nationally recognized accounting firm selected by Tenant, which is not paid on a contingency basis and who has not been engaged by Tenant in the twenty-four (24) month period preceding the Review Period.  If such audit reveals that Landlord has over-charged Tenant, then within twenty (20) days after the results of such audit are made available to Landlord, Landlord shall reimburse to Tenant the amount of such over-charge.  If the audit reveals that the Tenant was under-charged, then within twenty (20) days after the results of such audit are made available to Tenant, Tenant shall reimburse to Landlord the amount of such under-charge.  Unless a court of competent jurisdiction determines that Landlord committed fraud in its calculation of Operating Expenses, Tax Expenses or Utilities Costs, Tenant hereby acknowledges that Tenant’s sole right to inspect Landlord’s books and records and to contest the amount of Operating Expenses, Tax Expenses and Utilities Costs payable by Tenant shall be as set forth in this Section 4.6, and Tenant hereby waives any and all other rights pursuant to Applicable Laws to inspect such books and records and/or to contest the amount of Operating Expenses, Tax Expenses and Utilities Costs payable by Tenant.  This provision shall survive the termination of this Lease to allow the parties to enforce their respective rights hereunder.

 

ARTICLE 5

 

USE OF PREMISES

 

Tenant shall use the Premises solely for general office purposes consistent with the character of the Building, and Tenant shall not use or permit the Premises to be used for any other purpose or purposes whatsoever.  Tenant further covenants and agrees that it shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose contrary to the provisions of Exhibit D, attached hereto, or in violation of the laws of the United States of America, the State of California, or the ordinances, regulations or requirements of the local municipal or county governing body or other lawful authorities having jurisdiction over the Real Property.  Tenant shall comply with all recorded covenants, conditions, and restrictions (“CC&Rs”), and the provisions of all ground or underlying leases, now affecting the Real Property; provided, however, that any amendments to any existing CC&Rs or any new CC&Rs encumbering the Real Property after the date hereof shall not (and if they do, then

 

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Tenant shall not be obligated to comply with the same) do not materially and adversely (i) affect Tenant’s use of the Premises for the Permitted Use or use of or access to the Premises or the Parking Facilities, (ii) materially, adversely affect Tenant’s rights under this Lease, (iii) increase Tenant’s obligations under this Lease, and (iv) materially decrease Tenant’s rights under this Lease.  Tenant shall not use or allow another person or entity to use any part of the Premises for the storage, use, treatment, manufacture or sale of “Hazardous Material”, as that term is defined below; provided, however, Landlord agrees that Tenant may use and store Hazardous Materials within the Premises that are considered general office products so long as Tenant uses such products in compliance with Applicable Laws.  As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the state in which the Real Property is located or the United States Government.  Landlord confirms that it has received no written notice of the existence of any violation of Applicable Laws governing Hazardous Material existing at the Real Property as of the date of this Lease and no such Hazardous Materials will exist in the Premises or Building as of the Delivery Date.  To the extent it is determined that Hazardous Material exists at the Real Property as of the Lease Commencement Date in violation of laws governing Hazardous Material, and such violation does not arise out of any acts or omissions of Tenant, its agents, employees or contractors, Landlord shall promptly take such action as is necessary to comply with such laws at no cost to Tenant.  If, following the Lease Commencement Date, the Real Property becomes contaminated with Hazardous Material in violation of laws governing Hazardous Material, and such violation does not arise out of any acts or omissions of Tenant, its agents, employees or contractors, Landlord shall promptly take such action as is necessary to comply with such laws, or if the violation of laws governing Hazardous Material arises out of the acts or negligence of third parties, Landlord shall exercise commercially reasonable efforts to cause such third parties to take such action as is necessary to comply with such laws.

 

ARTICLE 6

 

SERVICES AND UTILITIES

 

6.1                                          Standard Tenant Services.  Landlord shall provide the following services on all days and at all times during the Lease Term, unless otherwise stated below.

 

6.1.1                      Subject to reasonable changes implemented by Landlord and to all governmental rules, regulations and guidelines applicable thereto, Landlord shall provide heating and air conditioning (“HVAC”) when necessary for normal comfort for normal office use in the Premises and in a manner substantially consistent with that provided by other landlords of Comparable Buildings such that temperatures in the Premises are in no event more or less than 72 degrees (72°) Fahrenheit +/- a variation that is consistent with the temperatures maintained in Comparable Buildings, from Monday through Friday, during the period from 8:00 a.m. to 6:00 p.m., and during the period from 9:00 a.m. to 1:00 p.m. on Saturday (the “Building Hours”), except for the date of observation of New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and other locally or nationally recognized holidays as designated by Landlord and which are observed by a majority of Comparable Buildings (collectively, the “Holidays”); provided, however, that HVAC service on Saturdays (9:00 a.m. to 1:00 p.m.) shall only be provided if Tenant provides Landlord with prior notice (which may be oral or written) no later than Noon on Friday requesting such Saturday HVAC service; provided, however, that Landlord will use good faith efforts to provide such Saturday HVAC if Tenant’s notice is provided after Noon on Friday but before 5 p.m. on Friday (but Landlord shall not be liable for failure to provide such Saturday HVAC on account of such late notice).

 

6.1.2                      Landlord shall provide adequate electrical wiring and facilities and power for normal general office provided that the connected electrical load of the incidental use equipment and lighting fixtures do not exceed an average of five (5) watts per usable square foot per floor of the Premises during Building Hours (exclusive of electricity for HVAC), calculated on an annual basis.

 

6.1.3                      As part of Operating Expenses or Utilities Costs (as determined by Landlord), Landlord shall replace lamps, starters and ballasts for Building standard lighting fixtures within the Premises.  Tenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises.

 

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6.1.4                      Landlord shall provide city water from the regular Building outlets for drinking, lavatory and toilet purposes and for typical office kitchens within the Premises.

 

6.1.5                      Landlord shall, in a manner consistent with Comparable Buildings, provide janitorial services five (5) days per week, except the date of observation of the Holidays, in and about the Premises and window washing services pursuant to the specifications attached hereto as Exhibit G and incorporated herein by this reference.  Landlord shall also no less than twice/day, wipe down counters in the restrooms serving the Premises, empty trash in the restrooms serving the Premises and replenish paper products in the restrooms serving the Premises.  Notwithstanding anything to the contrary in Exhibit G attached hereto, the quality of all services to be provided set forth on Exhibit G shall be provided in a manner consistent with Comparable Buildings.

 

6.1.6                      Landlord shall provide nonexclusive automatic passenger elevator service at all times.

 

6.1.7                      Landlord shall provide nonexclusive freight elevator service subject to reasonable non-discriminatory scheduling by Landlord.

 

6.1.8                      Landlord shall provide access control services in the Building materially similar to that provided at Comparable Buildings, including the provision of twenty four (24) hours per day, seven (7) days per week, on site Project access control equipment, personnel, procedures and/or systems.  Notwithstanding the foregoing, Landlord shall in no case be liable for personal injury or property damage for any error with regard to the admission to or exclusion from the Building or project of any person.  Subject to guard availability and at Tenant’s sole cost and expense, Landlord’s security guards shall, upon Tenant’s request, accompany any employee or visitor of Tenant from the Building to the Parking Facilities after sundown.

 

6.2                                          Overstandard Tenant Use.  Tenant shall not, without Landlord’s prior written consent (which consent shall not be unreasonably withheld), use excessive heat-generating machines, machines other than normal fractional horsepower office machines, or equipment or lighting other than typical task lighting and building standard lights in the Premises, which may adversely affect the temperature otherwise maintained by the air conditioning system or increase the water normally furnished for the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease.  If such consent is given, Landlord shall have the right to install supplementary air conditioning units or other facilities in the Premises, including supplementary or additional metering devices, and the cost thereof, including the cost of installation, operation and maintenance, increased wear and tear on existing equipment and other similar charges, shall be paid by Tenant to Landlord as Additional Rent upon billing by Landlord. If Tenant uses water in excess of that supplied by Landlord pursuant to Section 6.1  of this Lease, or if Tenant’s consumption of electricity shall exceed five (5) watts connected load per square foot of usable area of the Premises (exclusive of electricity for HVAC), calculated on an annual basis for the hours described in Section 6.1.1 above, Tenant shall pay to Landlord, within thirty (30) days after billing and as additional rent, the actual cost of such excess consumption, the actual cost of the installation, operation, and maintenance of equipment which is installed in order to measure and supply such excess consumption, and the actual cost (as defined below) of the increased wear and tear on existing equipment caused by such excess consumption.  If Tenant uses water or electricity in excess of that supplied by Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord, within thirty (30) days following billing, the actual cost of such excess consumption, the actual cost of the installation, operation, and maintenance of equipment which is installed in order to supply such excess consumption, the actual cost of the increased wear and tear on existing equipment caused by such excess consumption, and the actual cost of installing, testing and maintaining the metering devices.  If Tenant desires to use heat, ventilation or air conditioning during hours other than those for which Landlord is obligated to supply such utilities pursuant to the terms of Section 6.1 of this Lease, Tenant shall give Landlord such prior notice, as Landlord shall from time to time reasonably establish as appropriate, of Tenant’s desired use, and Landlord shall supply such heat, ventilation or air conditioning to Tenant at an hourly rate of Sixty-Eight Dollars ($68.00) per floor, which rate shall be subject to increase but only to the extent that Landlord’s “actual cost” of providing such after-hours utilities to Tenant shall increase (which shall be treated as Additional Rent); provided, however, that the first (1st) thirteen (13) hours of after-hours HVAC each month shall be at no additional cost to Tenant. For purposes of this Lease, “actual cost” shall mean the actual cost incurred by Landlord, as reasonably determined by Landlord, without charge for profit, overhead or administration,

 

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provided that, notwithstanding the foregoing, any amount actually charged by any unrelated third party to Landlord for the supply of such utilities shall be deemed Landlord’s “actual cost”. Tenant shall pay such cost within thirty (30) days after billing, as Additional Rent.

 

6.3                                          Interruption of Use.  Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent (except as otherwise provided herein) or otherwise, for failure to furnish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements (and Landlord agrees to use commercially reasonable efforts to minimize interference with Tenant’s business in the Premises in connection with the performance of any non-emergency work), by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Real Property after reasonable effort to do so, by any accident or casualty whatsoever, by act or default of Tenant or other parties; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises (subject, however, to Landlord’s covenant of quiet enjoyment) or relieve Tenant from paying Rent (except as otherwise provided herein) or performing any of its obligations under this Lease; provided, however, that Landlord shall use commercially reasonable and diligent efforts to restore such service to the extent the restoration of the same is not the obligation of Tenant, the utility company or other third party.  Furthermore, but subject to Section 10.1 below, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the services or utilities as set forth in this Article 6.

 

6.4                                          Additional Services.   Tenant shall at Tenant’s sole cost and expense provide any additional services which may be required by Tenant, including, without limitation, lamp replacement for non-Building standard lighting fixtures within the Premises, additional janitorial service, and additional repairs and maintenance; provided, however, that Landlord shall have the right, but not the obligation, to provide locksmithing service to Tenant and Tenant shall pay to Landlord, Landlord’s actual cost as set forth herein. To the extent requested by Tenant, Landlord shall provide any such additional services, repairs and maintenance, provided that Tenant shall pay to Landlord upon billing, the sum of all actual costs to Landlord of such additional services plus an administration fee not to exceed five percent (5%) of such costs. Charges for any utilities or services for which Tenant is required to pay from time to time hereunder, shall be deemed Additional Rent hereunder and shall be billed on a monthly basis.

 

6.5                                          Abatement of Rent.  In the event that Tenant is prevented from using, and does not use, the Premises or any portion thereof, as a result of (i) any repair, maintenance or alteration performed by Landlord, or which Landlord failed to perform, after the Lease Commencement Date and required by this Lease, which substantially interferes with Tenant’s use of or ingress to or egress from the Building, Project, or Premises or the Parking Facilities; (ii) any failure to provide services, utilities or ingress to and egress from the Building, Project, or Premises as required by this Lease; or (iii) the presence of Hazardous Materials (not brought on the Premises by Tenant or Tenant Parties) in violation of Applicable Laws which poses a material health risk to the environment or the Premises (any such set of circumstances as set forth in items (i) through (iii), above, to be known as an “Abatement Event”), then Tenant shall give Landlord Notice (as defined in Section 24.19 below) of such Abatement Event, and if such Abatement Event continues for five (5) consecutive business days (including Saturday) after Landlord’s receipt of any such Notice, or occurs for ten (10) non-consecutive business days in a twelve (12) month period (provided Landlord is sent a Notice pursuant to Section 24.19 of this Lease of each of such Abatement Event) (in either of such events, the “Eligibility Period”), then the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs and charges for Tenant’s parking passes (to the extent not utilized by Tenant) shall be abated or reduced, as the case may be, after the expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using, and does not use, the Premises, or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use (“Unusable Area”), bears to the total rentable area of the Premises; provided, however, in the event that Tenant is prevented from using, and does not use, the Unusable Area for a period of time in excess of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from

 

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effectively conducting its business therein, the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs and charges for Tenant’s parking passes (to the extent not utilized by Tenant) for the entire Premises shall be abated for such time as Tenant continues to be so prevented from using, and does not use, the Premises.  If, however, Tenant reoccupies any portion of the Premises during such period, the Rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date Tenant reoccupies such portion of the Premises. If Tenant’s right to abatement occurs during a free rent period which arises after the Lease Commencement Date, Tenant’s free rent period shall be extended for the number of days that the abatement period overlapped the free rent period (“Overlap Period”).  Landlord shall have the right to extend the Lease Expiration Date for a period of time equal to the Overlap Period if Landlord sends a notice to Tenant of such election within ten (10) days following the end of the extended free rent period. Such right to abate Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs and charges for Tenant’s parking passes (to the extent not utilized by Tenant) shall be Tenant’s sole and exclusive remedy at law or in equity for an Abatement Event; provided, however, (a) nothing in this Section 6.5, shall impair Tenant’s rights under Section 19.7, below, and (b) if Landlord has not cured such Abatement Event within two hundred seventy (270) days after receipt of notice from Tenant (or, in the event that the Premises or the Building are rendered inaccessible to Tenant by a casualty or act of Landlord, two hundred seventy (270) days following the date of Landlord’s actual knowledge of the occurrence of the Abatement Event), Tenant shall have the right to terminate this Lease during the first ten (10) business days of each calendar month following the end of such 270-day period until such time as Landlord has cured the Abatement Event, which right may be exercised only by delivery of thirty (30) days’ notice to Landlord (the “Abatement Event Termination Notice”) during such ten (10) business-day period, and shall be effective as of a date set forth in the Abatement Event Termination Notice (the “Abatement Event Termination Date”), which Abatement Event Termination Date shall not be less than thirty (30) days, and not more than six (6) months, following the delivery of the Abatement Event Termination notice.  Notwithstanding anything contained in this Section 6.5 to the contrary, Tenant’s Abatement Event Termination Notice shall be null and void (but only in connection with the first notice sent by Tenant with respect to each separate Abatement Event) if Landlord cures such Abatement Event within such thirty (30) day period following receipt of the Abatement Event Termination Notice.  To the extent Tenant is entitled to abatement because of an event covered by Articles 11 or 12 of this Lease, then the Eligibility Period shall not be applicable.

 

6.6                                          Tenant’s Security System. Subject to the terms of this Lease (including the Work Letter and/or Article 8 hereof, as applicable), Tenant may, at its own expense, install its own security system (“Tenant’s Security System”) in the Premises.  Tenant may coordinate the Tenant’s Security System to provide that the Building’s system and the Tenant’s Security System will operate on the same type of key card, so that Tenant’s employees are able to use a single card for both systems, but shall not otherwise integrate Tenant’s Security System with the Building systems.  Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the monitoring and operation of Tenant’s Security System.  Upon the expiration or earlier termination of this Lease, Tenant shall leave Tenant’s Security System, in the Premises, and Tenant’s Security System shall become a part of the Premises and belong to Landlord and shall be surrendered with the Premises upon the expiration or earlier termination of this Lease.

 

6.7                                          Tenant HVAC System.  Tenant shall have the right, at its sole cost and expense, to install supplemental HVAC systems within the Premises for the purpose of providing supplemental air-conditioning to the Premises (“Tenant HVAC System”) in accordance with the terms of Article 8 below and this Section 6.7.  Tenant shall have no right to utilize any space outside the Premises for the Tenant HVAC System (the space below the concrete ceiling and above the drop ceiling shall be considered a part of the Premises for purposes of this Section 6.7 and Tenant may utilize such area so long as Tenant’s use thereof does not interfere with the Base, Shell & Core including any base building equipment).  All aspects of the Tenant HVAC System shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed, unless the Building structure and/or the Building systems will be adversely affected, in which event Landlord’s approval may be withheld in Landlord’s sole and absolute discretion.  If required for such purpose, Tenant may connect into the Building’s chilled water system, if and to the extent that (i) Tenant’s use of chilled water pursuant to this Section 6.7 will not materially, adversely affect the chilled water system or the use thereof by

 

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other tenants of the Building, as determined by Landlord in Landlord’s reasonable discretion, and (ii) such connection is otherwise approved by Landlord,  which approval shall not be unreasonably withheld, conditioned or delayed, unless such connection adversely affects the Building structure and/or the Building systems, in which event Landlord’s approval may be withheld in Landlord’s sole and absolute discretion.  If Tenant connects into the Building’s chilled water system pursuant to the terms of the foregoing sentence, then Tenant shall install, at Tenant’s expense, a meter to measure Tenant’s use of chilled water, and Tenant shall reimburse Landlord for Tenant’s use of chilled water at the actual cost therefor.  Tenant shall be permitted, at Tenant’s sole cost and expense, to access 277/480 volts of electricity from the existing bus duct riser in connection with the Tenant HVAC System.  In connection with the foregoing, Tenant shall, at Tenant’s sole cost and expense, separately meter the electricity utilized by the Tenant HVAC System, and Tenant shall reimburse Landlord for the actual cost therefor. Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the monitoring, operation, maintenance, repair, and replacement of the Tenant HVAC System, and in no event shall the Tenant HVAC System interfere with Landlord’s operation of the Building.  Any reimbursements owing by Tenant to Landlord pursuant to this Section 6.7 shall be payable by Tenant within thirty (30) days of Tenant’s receipt of an invoice therefor.  Tenant shall leave the Tenant HVAC System in the Premises, and surrender the same to Landlord upon the expiration or earlier termination of this Lease, and such system shall become a part of the realty and Tenant shall thereafter have no further rights with respect thereto.

 

6.8                                          Property Manager.  Landlord shall provide a commercially reasonable system pursuant to which Tenant, in the event of any emergency, may promptly contact the Project manager and Project engineer or their equivalent twenty-four (24) hours per day, seven (7) days per week (whether or not within business hours).

 

6.9                                          Fiber Optic.  Subject to the terms of this Lease (including Article 8 below), and subject to Tenant obtaining Landlord’s consent, which shall not be unreasonably withheld or delayed, Tenant shall have the right, at Tenant’s sole cost and expense, to bring to the Building such fiber optic cabling as Tenant shall desire. Landlord shall reasonably cooperate with Tenant, at Tenant’s sole cost and expense, in connection with Tenant’s securing access to the fiber optic cabling of Tenant’s choice.

 

6.10                                   Internet Service.  Tenant shall have the right to contract with any internet service provider desired by Tenant, at Tenant’s sole cost and expense.

 

6.11                                   Loading Dock. At no additional cost, Tenant shall have the non-exclusive right to use the loading dock serving the Building so long as Tenant’s use thereof does not interfere with Landlord’s operation of the Building or the use of such loading dock by other tenants, service providers and vendors for the Building.

 

6.12                                   Emergency Generator.   Upon Tenant’s written request, Landlord will use good faith efforts to accommodate Tenant installing an emergency generator in the Project; provided, however, that the exact location, specifications, operational standards, use, installation and removal of such generator (if any) shall be subject to Landlord’s commercially reasonable requirements regarding the same.

 

ARTICLE 7

 

REPAIRS

 

7.1                                          Tenant’s Repairs.   Subject to Landlord’s repair obligations in Sections 7.2 and 11.1 below, Tenant shall, at Tenant’s own expense, keep the non-structural, interior portions of the Premises, including all improvements, fixtures and furnishings, in good order, repair and condition at all times during the Lease Term (but such obligation shall not extend to the Building Structure and the Building Systems, except pursuant to the BS/BS Exception (as all such terms are defined in Section 7.2, below)).  In addition, except as provided as part of Landlord’s repair obligation set forth above or elsewhere in this Lease, Tenant shall, at Tenant’s own expense, but under the supervision and subject to the prior approval of Landlord, and within any reasonable period of time specified by Landlord, pursuant to the terms of this Lease, including, without limitation, Article 8 hereof, promptly and adequately repair all damage to the Premises and replace or repair all damaged, broken, or worn fixtures and appurtenances, except for damage caused by ordinary wear and tear or beyond the reasonable control of Tenant (but such obligation

 

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shall not extend to the Building Structure and the Building Systems, except pursuant to the BS/BS Exception); provided however, that, at Landlord’s option, but only if Tenant fails to make such repairs and replacements, Landlord may, but need not, make such repairs and replacements within thirty (30) days after notice thereof from Landlord (or such sooner period in the case of an emergency), and Tenant shall pay Landlord the cost thereof, sufficient to reimburse Landlord for all the actual costs thereof, as well as a percentage of the actual costs thereof (to be uniformly established for the Building, but in no event to exceed five percent (5%)) sufficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising from Landlord’s involvement with such repairs and replacements, to the extent not duplicative of Operating Expenses or Utilities Costs and to the extent the work is not performed by people whose salaries are paid out of Operating Expenses or Utilities Costs, forthwith upon being billed for same.

 

7.2              Landlord’s Repairs.   Anything contained in Section 7.1 above to the contrary notwithstanding, and subject to Articles 11 and 12 of this Lease, Landlord shall maintain and keep in good repair and condition at all times during the Lease Term, in a manner substantially consistent with the maintenance and operations standards employed by landlords of Comparable Buildings, the exterior walls, foundation and roof of the Building, the Common Areas, the structural portions of the Building, including the floor/ceiling slabs, roof, curtain wall, exterior glass and mullions, columns, beams, shafts (including elevator shafts), stairs, parking areas, stairwells (excluding internal stairwells), escalators, elevator cabs, plazas, pavement, sidewalks, curbs, entrances, landscaping, art work, sculptures, men’s and women’s public washrooms, Building mechanical, electrical and telephone closets, and all common and public areas (collectively, “Building Structure”) and the base building mechanical, electrical, life safety, plumbing, sprinkler systems and HVAC systems and other building systems and equipment which were not constructed by, and are not for the exclusive use of, Tenant or Tenant Parties (collectively, the “Building Systems”).  Notwithstanding anything in this Lease to the contrary, Tenant shall be required to repair the Building Structure and/or the Building Systems to the extent required because of (i) Tenant’s use of the Premises for other than other than normal and customary business office operations, or (ii) the negligence or willful misconduct of Tenant or the Tenant Parties, unless and to the extent such damage is covered by insurance carried or required to be carried by Landlord pursuant to Article 10 and to which the waiver of subrogation is applicable (such obligation to the extent applicable to Tenant as qualified and conditioned will hereinafter be defined as the “BS/BS Exception”).  Landlord may, but shall not be required to, enter the Premises (but except during emergencies, Landlord may not enter “Secured Areas,” as that term is defined in Article 22 of this Lease) at all reasonable times to make such repairs, alterations, improvements or additions to the Premises or to the Project or to any equipment located in the Project as Landlord shall desire or deem necessary or as Landlord may be required to do by Applicable Laws; provided, however, except for emergencies, any such entry into the Premises by Landlord shall be performed in a manner so as to minimize any material or adverse affect upon Tenant’s use of, or ingress or egress to, the Premises.  Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil Code; or under any similar law, statute, or ordinance now or hereafter in effect.

 

ARTICLE 8

 

ADDITIONS AND ALTERATIONS

 

8.1              Landlord’s Consent to Alterations.     Tenant shall have the right,  without Landlord’s consent, but upon three (3) business days prior written notice to Landlord, to make strictly cosmetic, non-structural additions and alterations to the Premises that do not (i) involve the expenditure of more than Five Dollars ($5.00) per rentable square foot of the Premises occupied by Tenant at the time of such alteration in the aggregate in any twelve (12) month period during the Lease Term, (ii) affect the exterior appearance of the Building or any areas outside the Premises, (iii) affect or impact in any way the Building Structure or Building Systems,  or (iv) require the issuance of a building permit (collectively,  “Non-Consent Alterations”).  Tenant shall also have the right without prior notice at any time to install phone, computer and telecommunications lines and cabling that do not affect the Building Systems and are located entirely within the Premises.  Except in connection with Non-Consent Alterations, Tenant may not make any improvements, alterations, additions or changes to the Premises (collectively, the “Alterations”) without first procuring the prior written consent of Landlord to the plans, specifications and working drawings for such Alterations, which consent shall be requested by Tenant not less than ten (10) business days prior to the commencement thereof,

 

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and which consent shall not be unreasonably withheld or conditioned by Landlord unless a Design Problem exists and shall be granted or denied by Landlord within ten (10) business days. A “Design Problem” is defined as, and will be deemed to exist if such Alteration will (a) affect the exterior appearance of the Building; (b) adversely affect the Building Structure; (c) adversely affect the Building Systems; (d) unreasonably interfere with any other occupant’s normal and customary office operation; or (e) fail to comply with Applicable Laws.  Notwithstanding the foregoing, the installation by Tenant of a Wi-Fi Network shall be governed by the terms of Section 8.3 below.  If Tenant orders such Alterations from Landlord, Tenant shall pay for all overhead, general conditions, fees and other costs and expenses of the Alterations, and in connection with Alterations which will cost in excess of One Hundred Thousand Dollars ($100,000.00), Tenant shall pay to Landlord a Landlord supervision fee of two and one-half percent (2.5%) of the hard costs of the Alterations.  If Tenant shall itself make the Alterations, Tenant shall pay for all overhead, general conditions, fees and other costs and expenses of the Alterations, and shall pay to Landlord a supervision fee of two and one-half percent (2 1⁄2 %) of the hard cost of any Alterations which will cost in excess of One Hundred Thousand Dollars ($100,000.00).  The construction of the initial improvements to the Premises shall be governed by the terms of the Work Letter and not the terms of this Article 8.

 

8.2              Manner of Construction.  Landlord may impose, as a condition of its consent to any and all Alterations or repairs of the Premises or about the Premises, such requirements as Landlord in its reasonable discretion consistent with landlords of Comparable Buildings may deem desirable, including, but not limited to, the requirement that (i) Tenant utilize for such purposes only contractors, subcontractors, materials, mechanics and materialmen selected by Tenant and reasonably approved by Landlord, (ii) subject to the terms of Section 8.4 below, upon Landlord’s request given at the time of any required consent, Tenant shall, at Tenant’s expense, remove such Alterations upon the expiration or any early termination of the Lease Term, and (iii) all Alterations are of equal or greater quality as compared to the lesser of (A) the Building’s standards established by Landlord and (B) the then existing improvements located in the applicable portion of the Premises.  Tenant shall construct such Alterations and perform such repairs in conformance with any and all Applicable Laws and pursuant to a valid building permit (if applicable), issued by the City of Glendale, all in conformance with Landlord’s reasonable non-discriminatory written construction rules and regulations.  Landlord’s approval of the plans, specifications and working drawings for Tenant’s Alterations shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations of governmental agencies or authorities.  All work with respect to any Alterations must be done in a good and workmanlike manner and diligently prosecuted to completion to the end that the Premises shall at all times be a complete unit except during the period of work. In the event Tenant performs any Alterations in the Premises which require or give rise to governmentally required changes to the “Base Building,” as that term is defined below, then Landlord shall, at Tenant’s expense based on actual cost, make such changes to the Base Building. The “Base Building” shall include the Base, Shell & Core, the Building Structure and the Building Systems (including the core restrooms) on the floor or floors on which the Premises are located.  In performing the work of any such Alterations, Tenant shall have the work performed in such manner so as not to obstruct access to the Project or any portion thereof, by any other tenant of the Project, and so as not to obstruct the business of Landlord or other tenants in the Project.  If Tenant makes any Alterations, Tenant agrees to carry “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may reasonably require, it being understood and agreed that all of such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease immediately upon completion thereof. In addition, Landlord may, in its discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord, in an amount sufficient to ensure the lien free completion of Alterations costing in excess of Twenty-Five Thousand Dollars ($25,000.00) and naming Landlord as a co-obligee; provided, however, that the requirements of such lien and completion bond shall not be applicable to the Original Tenant or any Affiliate.  In addition to Tenant’s obligations under Article 9 of this Lease, upon completion of any Alterations, at Landlord’s request, Tenant agrees to prepare and Landlord shall execute if factually correct, and Tenant shall cause a Notice of Completion to be recorded in the office of the Recorder of the County of Los Angeles in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, (ii) deliver to the management office of the Real Property a reproducible copy of the “as built” drawings of the Alterations, and (iii) deliver to Landlord evidence of payment, contractors’ affidavits and full and final waivers of all liens for labor, services or materials.

 

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8.3              Wi-Fi Network.   Without limiting the generality of the foregoing, in the event Tenant desires to install wireless intranet, Internet or any data or communications network (“Wi- Fi Network”) in the Premises for the use by Tenant and its employees, then the same shall be subject to the provisions of this Section 8.3 (in addition to the other provisions of this Article 8). In the event Landlord consents to Tenant’s installation of such Wi-Fi Network, which consent shall not be unreasonably withheld, Tenant shall, in accordance with Section 8.4 below, remove the Wi-Fi Network from the Premises prior to the termination of the Lease.  Tenant shall use the Wi-Fi Network so as not to cause any interference to other tenants in the Building or to other tenants at the Project or with any other tenant’s communication equipment, and not to damage the Building or Project or interfere with the normal operation of the Building or Project and Tenant hereby agrees to indemnify, defend and hold Landlord harmless from and against any and all claims, costs, damages, expenses and liabilities (including attorneys’ fees) arising out of Tenant’s failure to comply with the provisions of this Section 8.3, except to the extent same is caused by the negligence or willful misconduct of Landlord and which is not covered by the insurance carried by Tenant under this Lease (or which would not be covered by the insurance required to be carried by Tenant under this Lease).  Should any interference occur, Tenant shall take all necessary steps as soon as reasonably possible and no later than five (5) business days following such occurrence to correct such interference.  If such interference continues after such five (5) business day period, Tenant shall immediately cease operating such Wi-Fi Network until such interference is corrected or remedied to Landlord’s reasonable satisfaction.  Tenant acknowledges that Landlord has granted and/or may grant telecommunication rights to other tenants and occupants of the Building and to telecommunication service providers and in no event shall Landlord be liable to Tenant for any interference of the same with such Wi-Fi Network; provided, however, Landlord shall use commercially reasonable efforts to cause such other networks to cure their interference.  Landlord makes no representation that the Wi-Fi Network will be able to receive or transmit communication signals without interference or disturbance. Tenant shall (i) be solely responsible for any damage caused as a result of the Wi-Fi Network, (ii) promptly pay any tax, license or permit fees charged pursuant to any laws or regulations in connection with the installation, maintenance or use of the Wi-Fi Network and comply with all precautions and safeguards recommended by all governmental authorities, (iii) pay for all necessary repairs, replacements to or maintenance of the Wi-Fi Network, and (iv) be responsible for any modifications,  additions or repairs to Building systems or infrastructure which are required by reason of the installation or operation of Tenant’s Wi-Fi Network. Should Landlord be required to retain professionals to research any interference issues that may arise and to confirm Tenant’s compliance with the terms of this Section 8.3, Landlord shall retain such professionals at commercially reasonable rates, and Tenant shall reimburse Landlord as Additional Rent within thirty (30) days following submission to Tenant of an invoice from Landlord, which costs shall not exceed $500 per year (except in the event of a default by Tenant hereunder).  This reimbursement obligation is independent of any rights or remedies Landlord may have in the event of a breach of default by Tenant under this Lease.

 

8.4              Landlord’s Property.  All Alterations, improvements, fixtures and/or equipment which may be installed or placed in or about the Premises, and all signs installed in, on or about the Premises, from time to time, shall be at the sole cost of Tenant (except as otherwise set forth herein) and shall be and become the property of Landlord, except that Tenant may remove any Alterations, improvements, fixtures and/or equipment which Tenant can substantiate to Landlord have not been paid for with any improvement allowance funds provided to Tenant by Landlord, provided Tenant repairs any damage to the Premises and Building caused by such removal and returns the affected portion of the Premises the condition existing prior to Tenant’s installation of the subject Alteration, improvement, fixture and/or equipment.  Furthermore, Landlord, at the time of Landlord’s consent, may require that Tenant remove any improvement (including the Tenant Improvements) or Alteration upon the expiration or early termination of the Lease Term, and repair any damage to the Premises and Building caused by such removal.  Notwithstanding the foregoing, Landlord and Tenant hereby acknowledge and agree that (x) upon the expiration or earlier termination of the Lease Term, Tenant shall not be required to remove or restore any improvements or alterations existing in the Premises as of the date of this Lease (unless the same are subsequently altered, modified or replaced by Tenant, in which event the terms of this Section 8.4 shall apply with respect to Tenant’s removal and/or restoration obligations relating thereto) and any Alterations or Non-Consent Alterations that constitute normal and customary office improvements, (y) Landlord shall make such designation, if at all, concurrently with Landlord’s approval (if applicable) of the subject subsequent Alteration or improvement or systems and equipment, and (z) in no event shall Tenant have any obligation to remove or restore

 

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any improvements or alterations existing in the Premises as of the last day of the fifth (5th) year of the initial Lease Term.   Whether an improvement or alteration is a normal and customary office improvement for purposes of this Section 8.4 shall be determined based upon what are generally considered normal and customary office improvements by landlords of Comparable Buildings.  To be considered a non-normal and customary office improvement for purposes of this Section 8.4, the cost to remove such item must be higher than the cost to remove typical office improvements.  Examples of improvements and alterations that the parties agree are not normal and customary office improvements are vaults, raised floors, and any showers or bathrooms not including Building core bathrooms.  If Tenant fails to complete any required removal and/or to repair any damage caused by the removal of any Tenant Improvements and/or Alterations, Landlord may do so and may charge the actual cost thereof to Tenant, and Tenant shall pay such cost to Landlord as Additional Rent within thirty (30) days of being billed for the same.

 

ARTICLE 9

 

COVENANT AGAINST LIENS

 

Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon the Real Property, Building or Premises, and any and all liens and encumbrances created by Tenant shall attach to Tenant’s interest only.  Landlord shall have the right at all times to post and keep posted on the Premises any notice which it deems necessary for protection from such liens.  Tenant covenants and agrees not to suffer or permit any lien of mechanics or materialmen or others to be placed against the Real Property, the Building or the Premises with respect to work or services claimed to have been performed for or materials claimed to have been furnished to Tenant or the Premises, and, in case of any such lien attaching or notice of any lien, Tenant covenants and agrees to cause it to be immediately released and removed of record. Notwithstanding anything to the contrary set forth in this Lease, if any such lien is not released and removed or bonded over within fifteen (15) business days following the date notice of such lien is delivered by Landlord to Tenant, Landlord, at its sole option, may immediately take all action necessary to release and remove such lien, without any duty to investigate the validity thereof,  and all sums,  costs and expenses, including reasonable attorneys’  fees and costs, incurred by Landlord in connection with such lien shall be deemed Additional Rent under this Lease and shall be due and payable by Tenant within thirty (30) days following demand therefor.

 

ARTICLE 10

 

INDEMNIFICATION AND INSURANCE

 

10.1            Indemnification and Waiver.  Except to the extent caused by the negligence or willful misconduct of any Landlord Party (as defined below) and subject to the waiver of subrogation, Tenant hereby assumes all risk of damage to property and injury to persons, in, on, or about the Premises from any cause whatsoever and agrees that, to the extent not prohibited by Applicable Laws,  Landlord, and its partners and subpartners, and their respective officers, agents, property managers, servants, employees, and independent contractors (collectively, “Landlord Parties”) shall not be liable for, and are hereby released from any responsibility for, any damage to property or injury to persons or resulting from the loss of use thereof, which damage or injury is sustained by Tenant or by other persons claiming through Tenant, except for damage to property which Landlord insures or is required to insure pursuant to the terms and conditions of this Lease and except for injury to persons outside of the Premises to the extent caused by the negligence or willful misconduct of the Landlord Parties.  Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from any and all loss, cost, damage, expense and liability (including without limitation court costs and reasonable attorneys’ fees) (collectively, “Claims”), except to the extent arising from the negligence or willful misconduct of the Landlord Parties, incurred in connection with or arising from any cause in, on or about the Premises (including, without limitation, Tenant’s installation, placement and removal of Alterations, improvements, fixtures and/or equipment in, on or about the Premises), and any negligence or willful misconduct of Tenant or of any person claiming by, through or under Tenant, or of the contractors, agents, servants, employees, licensees or invitees of Tenant (collectively, “Tenant Parties”) or any such person, in, on or about the Premises, the Building and Real Property; provided, however, that the terms of the foregoing indemnity shall not apply to the negligence or willful misconduct of Landlord or Landlord Parties.  Landlord hereby

 

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indemnifies, defends, protects and holds Tenant and Tenant Parties harmless from any such Claims and from Claims to the extent resulting from a breach of the terms of this Lease by Landlord; provided further that because Landlord is required to maintain insurance on the Building and the Project and Tenant compensates Landlord for such insurance as part of Tenant’s Share of Operating Expenses and because of the existence of waivers of subrogation or other waivers set forth in this Section 10.1 and in Section 10.3.7 of this Lease, Landlord hereby indemnifies, defends, protects and holds Tenant harmless from any Claim to any property to the extent such Claim is covered by such insurance (or would have been covered if Landlord had carried the insurance required hereunder), even if resulting from the negligent acts, omissions, or willful misconduct of the Tenant Parties.  Similarly, since Tenant must carry insurance pursuant to this Article 10 to cover its personal property within the Premises, the Tenant Improvements, and the Alterations, Tenant hereby indemnifies and holds Landlord harmless from any Claim to any property within the Premises, to the extent such Claim is covered by such insurance (or would have been covered if Tenant had carried the insurance required hereunder), even if resulting from the negligent acts, omissions or willful misconduct of the Landlord Parties. Further, Tenant’s agreement to indemnify Landlord and Landlord’s agreement to indemnify Tenant pursuant to this Section 10.1 are not intended and shall not relieve any insurance carrier of its obligations under policies required to be carried by Tenant or Landlord pursuant to the provisions of this Lease, to the extent such policies cover the matters subject to each party’s indemnification obligations.  Should Landlord or Tenant be named as a defendant in connection with a Claim which the subject party is to be indemnified by the other party pursuant to the terms hereof, the indemnifying party shall pay the indemnified party’s actual and reasonable costs and expenses incurred in such suit, including without limitation, its actual professional fees such as reasonable appraisers’, accountants’ and attorneys’ fees.  The provisions of this Section 10.1 shall survive the expiration or sooner termination of this Lease with respect to any claims or liability arising in connection with any event occurring prior to such expiration or termination. Notwithstanding anything in this Lease to the contrary, nothing in this Lease shall impose any obligations upon Landlord or Tenant to be responsible or liable for, and each hereby releases the other from all liability for, consequential damages, other than those consequential damages incurred by Landlord in connection with a holdover of the Premises by Tenant after the expiration or earlier termination of this Lease or incurred by Landlord in connection with any repair, physical construction or improvement work performed by or on behalf of Tenant in the Project.

 

10.2            Landlord’s Insurance; Tenant’s Compliance with Landlord’s Fire and Casualty  Insurance.  In a manner substantially consistent with the practices of landlords of Comparable Buildings, Landlord shall carry commercial general liability insurance with respect to the Building during the Lease Term, and shall further carry commercial property insurance and shall insure the Building and the Project during the Lease Term (for the full replacement value to the extent consistent with the practices of landlords of the Comparable Buildings) against loss or damage due to fire and other casualties covered within the classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler leakage, water damage and special extended coverage.  Such coverage shall be in such amounts, from such companies, and on such other terms and conditions, as Landlord may from time to time reasonably determine. Additionally, at the option of Landlord, such insurance coverage may include the risks of earthquakes and/or flood damage, terrorist acts and additional hazards, a rental loss endorsement and one or more loss payee endorsements in favor of the holders of any mortgages or deeds of trust encumbering the interest of Landlord in the Building or the ground or underlying lessors of the Building,  or any portion thereof.    Notwithstanding the foregoing provisions of this Section 10.2, the coverage and amounts of insurance carried by Landlord in connection with the Building shall, at a minimum, be comparable to the coverage and amounts of insurance which are carried by reasonably prudent landlords of Comparable Buildings (provided that in no event shall Landlord be required to carry earthquake insurance), including Worker’s Compensation and Employer’s Liability coverage as required by Applicable Laws.   Tenant shall, at Tenant’s expense, comply as to the Premises with all commercially reasonable insurance company requirements pertaining to the use of the Premises.  If Tenant’s conduct or use of the Premises (other than for the permitted use) causes any increase in the premium for such insurance policies, then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant’s expense, shall comply with all rules, orders, regulations or requirements of the American Insurance Association (formerly the National Board of Fire Underwriters) and with any similar body.

 

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10.3                                   Tenant’s Insurance.       Tenant shall maintain the following coverages in the following amounts.

 

10.3.1     Commercial General Liability Insurance covering the insured against claims of bodily injury, personal injury and property damage (including loss of use thereof) arising out of Tenant’s operations and contractual liabilities (covering the performance by Tenant of its indemnity agreements and containing a cross liability endorsement or severability of interest clause acceptable to Landlord) for limits of liability not less than:

 

	
Bodily   Injury and
   Property Damage Liability
    	
 
    	
 
    	
 
    	
$5,000,000   each occurrence

$5,000,000   annual aggregate
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Personal   Injury Liability
    	
 
    	
 
    	
 
    	
$5,000,000   each occurrence

$5,000,000   annual aggregate

0%   Insured’s participation
    

 

Landlord and Tenant acknowledge that Tenant shall have the right to cover its insurance requirements set forth in Sections 10.3.1 and 10.3.5 with a combination of auto liability, general liability and umbrella insurance coverages, provided that the amounts (based upon the general liability policy and the allocations of the umbrella policy) and other conditions required to be satisfied by the terms of this Article 10 are satisfied by such coverages.

 

10.3.2     Physical Damage Insurance covering (i) all office furniture, trade fixtures, office equipment, merchandise and all other items of Tenant’s property on the Premises installed by,  for,  or at the expense of Tenant,  (ii) the Tenant Improvements, including any Tenant Improvements which Landlord permits to be installed above the ceiling of the Premises or below the floor of the Premises, and (iii) all other improvements, alterations and additions to the Premises, including any improvements, alterations or additions installed at Tenant’s request above the ceiling of the Premises or below the floor of the Premises.  Such insurance shall be written on an “all-risks” “physical loss or damage” basis, for the full replacement cost value (subject to reasonable deductible amounts)  new without deduction for depreciation of the covered items and in amounts that meet any co-insurance clauses of the policies of insurance and shall include coverage for damage or other loss caused by fire or other peril including, but not limited to, vandalism and malicious mischief, theft, water damage of any type, including sprinkler leakage, bursting or stoppage of pipes and explosion.  Tenant shall have the right to maintain the insurance required hereunder through a “blanket policy” of insurance, provided the aggregate limits of insurance coverage required to be in effect for the Premises pursuant to the terms hereof shall not be reduced as a result of claims made against other premises or property of Tenant covered under such policy, and such blanket policy shall comply with the terms hereof.

 

10.3.3     Workers’ compensation insurance as required by law.

 

10.3.4     Loss of income, business interruption and extra expense insurance in such amounts as will reimburse Tenant for direct and indirect loss of earnings attributable to all perils commonly insured against by prudent tenants or attributable to prevention of loss of access to the Premises or to the Building as a result of such perils; provided, however, that Tenant shall have the right to elect not to maintain the types and amounts of insurance as set forth in this Section 10.3.4.   In the event Tenant shall elect not to so maintain the types and amounts of insurance as set forth in this Section 10.3.4, then Tenant shall be deemed to have fully self-insured such losses and shall have no right, under any circumstances, to seek recourse against Landlord or Landlord’s insurance coverage for any losses incurred by Tenant.

 

10.3.5     Tenant shall carry commercial automobile liability insurance having a combined single limit of not less than One Million Dollars ($1,000,000.00) per occurrence and insuring Tenant against liability for claims arising out of ownership, maintenance or use of any owned, hired or non-owned automobiles.

 

10.3.6     The minimum limits of policies of insurance required of Tenant under this Lease shall in no event limit the liability of Tenant under this Lease.  Such insurance shall: (i) name Landlord, and any other party it reasonably so specifies, as an additional insured; (ii) specifically cover the liability assumed by Tenant under this Lease, including, but not limited to, Tenant’s obligations under Section 10.1 of this Lease to the extent commercially reasonably available; (iii) be issued by an insurance company having a rating of not less than A-VIII in

 

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Best’s Insurance Guide or which is otherwise acceptable to Landlord and licensed to do business in the state in which the Real Property is located; (iv) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and is non-contributing with any insurance requirement of Tenant; and (v) provide that the insurer shall endeavor to provide ten (10) days’ prior written notice to Landlord and any mortgagee or ground or underlying lessor of Landlord if said insurance shall be canceled or coverage changed below that which is required under this Lease.  Tenant shall deliver certificates evidencing said policies to Landlord on or before the date Landlord delivers possession of the Premises to Tenant (and as a condition to Landlord’s delivery of the Premises to Tenant) and at least five (5) days before the expiration dates thereof. In addition to the foregoing, Tenant shall deliver certificates evidencing said policies to Landlord at least ten (10) days after receipt by Tenant of written notice that its insurance policy or coverage thereunder is being cancelled due to the non-payment by Tenant of the premium on the types and amounts of insurance required to be maintained by Tenant under Section 10.3 of this Lease.   If Tenant shall fail to procure such insurance, or to deliver such certificates, within such time periods, Landlord may, at its option, in addition to all of its other rights and remedies under this Lease, and without regard to any notice and cure periods set forth in Section 19.1 but upon five (5) business days notice to Tenant, procure such policies for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Rent within thirty (30) days after delivery of bills therefor.

 

10.3.7           Subrogation.   Landlord and Tenant intend that their respective property loss risks shall be borne by their respective insurance carriers to the extent above provided, and Landlord and Tenant hereby agree to look solely to, and seek recovery only from, their respective insurance carriers in the event of a property loss to the extent that such coverage is agreed to be provided hereunder.  The parties each hereby waive all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers, provided such waiver of subrogation shall not affect the right to the insured to recover thereunder.  The parties agree that their respective insurance policies are now, or shall be, endorsed such that the waiver of subrogation shall not affect the right of the insured to recover thereunder, so long as no material additional premium is charged therefor. If either party fails to carry the amounts and types of insurance required to be carried by it pursuant to this Article 10, in addition to any remedies the other party may have under this Lease, such failure shall be deemed to be a covenant and agreement by such party to self-insure with respect to the type and amount of insurance which such party so failed to carry, with full waiver of subrogation with respect thereto (provided that nothing contained herein shall be construed as granting Landlord or Tenant the right to self insure the obligations set forth in this Article 10).

 

ARTICLE 11

 

DAMAGE AND DESTRUCTION

 

11.1               Repair of Damage to Premises by Landlord. To the extent that Landlord does not already have actual knowledge of the same, Tenant shall promptly notify Landlord of any damage to the Premises resulting from fire or any other casualty.  If the Premises, Project or any Common Areas serving or providing access to the Premises shall be damaged by fire or other casualty, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control, and subject to all other terms of this Article 11, restore the base, shell, and core of the Project and such Common Areas.  Such restoration shall be to substantially the same condition of the base, shell, and core of the Project and Common Areas prior to the casualty, except for modifications required by zoning and building codes and other laws or by the holder of a mortgage on the Building or Real Property, or the lessor of a ground or underlying lease with respect to the Real Property and/or the Building, or any other modifications to the Common Areas deemed desirable by Landlord, which are consistent with the character of the Project, provided access to the Premises, Parking Facilities and any Common Areas serving the Premises shall not be materially impaired. Notwithstanding any other provision of this Lease, upon the occurrence of any damage to the Premises, upon notice (the “Landlord’s Repair Notice”) to Tenant from Landlord, Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance required under Section 10.3.2(ii) and (iii) of this Lease, and Landlord shall repair any injury or damage to the tenant improvements and alterations installed in the Premises and shall return such tenant improvements and alterations to their original condition; provided that if the cost of such repair by Landlord (based on competitive pricing without any profit mark-up or supervision fees to Landlord or its Affiliates) exceeds the amount

 

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of insurance proceeds received by Landlord from Tenant’s insurance carrier, as assigned by Tenant, the excess cost of such repairs shall be paid by Tenant to Landlord on a progress payment basis during Landlord’s repair of the damage.   Tenant’s insurance proceeds shall be disbursed for all costs and expenses incurred by Landlord in connection with the repair of any such damage to the Tenant Improvements and Alterations pursuant to a disbursement procedure mutually approved by Landlord and Tenant As long as the Tenant Improvements and other alterations, improvements and additions in the Premises are rebuilt, Tenant shall be entitled to retain any portion of the proceeds of the insurance described in Sections 10.3.2 (ii) and (iii) in excess of the cost of such restoration.  Notwithstanding anything to the contrary herein, in no event shall Landlord be obligated to repair or restore any specialized or dedicated equipment serving Tenant, such as any cabling, wiring, supplemental utility system, telephone system or wireless/Wi-Fi Network.  Landlord shall use commercially reasonable efforts to minimize any such inconvenience, annoyance or interference to Tenant resulting from Landlord’s repair of any damage pursuant to this Section 11.1.  Whether or not Landlord delivers a Landlord Repair Notice, prior to the commencement of construction, if this Lease does not terminate pursuant to Section 11.2 below or for any other reason, Tenant shall, prior to the commencement of construction, submit to Landlord, for Landlord’s review and approval, all plans, specifications and working drawings relating thereto, and Landlord shall select the non-affiliated independent third-party contractors to perform such improvement work.  Landlord shall not be liable for any inconvenience or annoyance to Tenant or the Tenant Parties, or injury to Tenant’s business resulting in any way from such damage or the repair thereof; provided however, that if such fire or other casualty shall have damaged the Premises or Common Areas necessary for Tenant to reasonably conduct Tenant’s Permitted Use, and the Premises (or a portion thereof) are not occupied by Tenant as a result thereof, then during the time and to the extent the Premises are unfit for the Permitted Use, the Rent shall be abated (including, in the event that Tenant performs such repairs, abatement during a commercially reasonable period of build-out time and a weekend to move-in) in proportion to the ratio that the amount of rentable square feet of the Premises which is unfit for the Permitted Use bears to the total rentable square feet of the Premises; provided, further, if the Premises is damaged such that the remaining portion thereof is not sufficient to allow Tenant to conduct its business operations from such remaining portion and Tenant does not conduct its business operations therefrom, Landlord shall allow Tenant a total abatement of Rent during the time and to the extent the Premises are unfit for occupancy for the Permitted Use, and not occupied by Tenant as a result of the subject damage (including, in the event that Tenant performs such repairs, abatement during a commercially reasonable period of build-out time and a weekend to move-in).  In the event that Landlord shall not deliver the Landlord Repair Notice, Tenant’s right to rent abatement pursuant to the preceding sentence shall terminate as of the date Tenant should have completed repairs to the Premises assuming Tenant used reasonable due diligence in connection therewith.

 

11.2            Landlord’s Option to Repair.  Notwithstanding the terms of Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the Premises, the Building and/or any other portion of the Real Property and instead terminate this Lease by notifying Tenant in writing of such termination within sixty (60) days after the date of damage, such notice to include a termination date giving Tenant ninety (90) days to vacate the Premises, but Landlord may so elect only if the (a) Building or Project shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, (b) Landlord elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction and (c) one or more of the following conditions is present:  (i) repairs cannot reasonably be completed within one hundred eighty (180) days of the date of damage (when such repairs are made without the payment of overtime or other premiums); (ii) the holder of any mortgage on the Real Property or ground or underlying lessor with respect to the Real Property and/or the Building shall require that the insurance proceeds or any portion thereof be used to retire the mortgage debt, or shall terminate the ground or underlying lease, as the case may be; or (iii) the damage is not fully covered, except for deductible amounts, by Landlord’s insurance policies (or by the insurance Landlord is required to carry under this Lease); provided, however, that if Landlord does not elect to terminate this Lease pursuant to Landlord’s termination right as provided above, and the repairs cannot, in the reasonable opinion of a licensed architect or contractor reasonably selected by Landlord, be completed within one hundred eighty (180) days after the date of the damage or destruction (which period shall be subject to extension for up to sixty (60) days as a result of an event of Force Majeure), Tenant may, within thirty (30) days following Landlord’s election to rebuild and/or restore the Premises, Building and/or Project, elect to terminate this Lease by written notice to Landlord effective as of the date specified in the notice, which date shall not be

 

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less than thirty (30) days nor more than ninety (90) days after the date such notice is given by Tenant.  Furthermore, if neither Landlord nor Tenant has terminated this Lease, and the repairs are not actually completed within two hundred forty (240) days following the date of the damage (which period shall be subject to extension as a result of any Force Majeure), Tenant shall have the right to terminate this Lease during the first five (5) business days of each calendar month following the end of such period until such time as the repairs are complete, by notice to Landlord (the “Damage Termination Notice”), effective as of a date set forth in the Damage Termination Notice (the “Damage Termination Date”), which Damage Termination Date shall not be less than ten (10) business days nor more than ninety (90) days following the end of each such month.  At any time, from time to time, after the date occurring sixty (60) days after the date of the damage, Tenant may request that Landlord provide Tenant with an estimate from the architect or contractor described above setting forth such architect’s or contractor’s reasonable opinion of the date of completion of the repairs and Landlord shall respond to such request within ten (10) business days.   In the event that the Premises or the Building is destroyed or damaged to any substantial extent during the last twelve (12) months of the Lease Term (excluding unexercised Extension Options, as hereinafter defined in the Extension Options Rider attached to this Lease) and, in the reasonable judgment of Landlord, the damage or destruction to the Premises or Building cannot be repaired by the date which occurs fifty percent (50%) of the way through the then remaining Lease Term, then notwithstanding anything contained in this Article 11, either Landlord or Tenant shall have the option to terminate this Lease by giving written notice to the other party of the exercise of such option within thirty (30) days after such damage or destruction, in which event this Lease shall cease and terminate one hundred twenty (120) days after the date of such notice, Tenant shall pay the Base Rent and Additional Rent, properly apportioned up to such date of damage, and both parties hereto shall thereafter be freed and discharged of all further obligations hereunder, except as provided for in provisions of this Lease which by their terms survive the expiration or earlier termination of the Lease Term. Upon any such termination of this Lease pursuant to this Section 11.2, Tenant shall pay the Base Rent and Additional Rent, properly apportioned up to such date of termination, and both parties hereto shall thereafter be freed and discharged of all further obligations hereunder, except as provided for in provisions of this Lease which by their terms survive the expiration or earlier termination of the Lease Term.

 

11.3            Waiver of Statutory Provisions.   The provisions of this Lease, including this Article 11, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the Building or any other portion of the Real Property, and any statute or regulation of the state in which the Real Property is located, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the Building or any other portion of the Real Property.

 

ARTICLE 12

 

CONDEMNATION

 

12.1            Permanent Taking.  If the whole or any material part (i.e., more than twenty-five percent (25%)) of the Premises, Building or Real Property shall be taken by power of eminent domain or condemned by any competent authority for any public or quasi-public use or purpose, or if any adjacent property or street shall be so taken or condemned, or reconfigured or vacated by such authority in such manner as to require the use, reconstruction or remodeling of any material part of the Premises, Building or Real Property, or if Landlord shall grant a deed or other instrument in lieu of such taking by eminent domain or condemnation, Landlord shall have the option to terminate this Lease upon ninety (90) days’ notice, provided such notice is given no later than one hundred eighty (180) days after the date of such taking, condemnation, reconfiguration, vacation, deed or other instrument; provided, however, that (i) Landlord shall only have the right to terminate this Lease as provided herein if Landlord terminates the leases of all tenants in the Building similarly affected by the taking, and (ii) to the extent that the Premises are not adversely affected by such taking and Landlord continues to operate the Building as an office building, Landlord shall not terminate this Lease.  If more than twenty-five percent (25%) of the rentable square feet of the Premises is taken, or if access to the Premises is substantially impaired, or if Tenant cannot conduct its business operations in substantially the same manner such business operations were conducted prior to such taking while still retaining substantially

 

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the same material rights and benefits it bargained to receive under this Lease, Tenant shall have the option to terminate this Lease upon ninety (90) days’ notice, provided such notice is given no later than one hundred eighty (180) days after the date of such taking.  Landlord shall be entitled to receive the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking of Tenant’s personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Lease Term pursuant to the terms of this Lease, and for moving expenses, so long as such claim is payable separately to Tenant or is otherwise separately identifiable.  All Rent shall be apportioned as of the date of such termination, or the date of such taking, whichever shall first occur. If any part of the Premises shall be taken, and this Lease shall not be so terminated, the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be proportionately abated.  Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of the California Code of Civil Procedure.

 

12.2            Temporary Taking.  Notwithstanding anything to the contrary contained in this Article 12, in the event of a temporary taking of all or any portion of the Premises for a period of one hundred and eighty (180) days or less, then this Lease shall not terminate but the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be abated for the period of such taking in proportion to the ratio that the amount of rentable square feet of the Premises taken bears to the total rentable square feet of the Premises; provided, further, that in such event, if a portion of the Premises is taken such that the remaining portion thereof is not sufficient to allow Tenant to conduct its business operations from such remaining portion and Tenant does not conduct its business operations therefrom, Landlord shall allow Tenant a total abatement of Rent during the time and to the extent the Premises are taken, and not occupied by Tenant as a result thereof.  Tenant’s abatement period shall continue until Tenant has been given reasonably sufficient time, and reasonably sufficient access to the Premises, the parking facilities and/or the Building, to install its property, furniture, fixtures, and equipment to the extent the same shall have been removed and/or damaged as a result of such eminent domain taking and to move in over one (1) weekend.  Landlord shall be entitled to receive the entire award made in connection with any such temporary taking.

 

ARTICLE 13

 

COVENANT OF QUIET ENJOYMENT

 

Landlord covenants that Tenant, on paying the Rent, charges for services and other payments herein reserved and on keeping, observing and performing all the other terms, covenants, conditions, provisions and agreements herein contained on the part of Tenant to be kept, observed and performed within all applicable notice and cure periods, shall, during the Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and agreements hereof without interference by any persons lawfully claiming by or through Landlord.  The foregoing covenant is in lieu of any other covenant express or implied.

 

ARTICLE 14

 

ASSIGNMENT AND SUBLETTING

 

14.1            Transfers.  Tenant shall not, without the prior written consent of Landlord, which consent shall not be unreasonably withheld or conditioned, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, permit any assignment, or other transfer of this Lease or any interest hereunder by operation of law, sublet the Premises or any part thereof, or permit the occupancy or use of the Premises by any persons other than Tenant, its employees and contractors (all of the foregoing are hereinafter sometimes referred to collectively as “Transfers” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “Transferee”).   If Tenant shall desire Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing, which notice (the “Transfer Notice”)  shall include (i) the proposed effective date of the Transfer,  which shall not be less than ten (10)  business days,  (ii) a description of the portion of the Premises to be transferred (the “Subject Space”), (iii) all of the terms of the proposed Transfer, the name and address of the proposed Transferee, and a copy of all existing and/or proposed documentation pertaining to the proposed Transfer (but not any documentation related solely to the sale of Tenant’s business), including all existing operative

 

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documents to be executed to evidence such Transfer or the agreements incidental or related to such Transfer, (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof, and (v) such other information as Landlord may reasonably require. Landlord shall approve or disapprove of the proposed Transfer in accordance with Section 14.2, below, within fifteen (15) business days (the “Review Period”) after Landlord’s receipt of the applicable Transfer Notice. In the event that Landlord fails to notify Tenant in writing of such approval or disapproval within such Review Period, Tenant shall provide Landlord with a second (2nd) Transfer Notice and in the event Landlord fails to notify Tenant in writing of such approval or disapproval within five (5) business days of the receipt by Landlord of the second (2nd) Transfer Notice, Landlord shall be deemed to have approved such Transfer. Any Transfer made without Landlord’s prior written consent shall, at Landlord’s option, be null, void and of no effect. Each time Tenant requests Landlord’s consent to a proposed Transfer, whether or not Landlord shall grant consent, within thirty (30) days after written request by Landlord, as Additional Rent hereunder, Tenant shall reimburse Landlord for its review and processing fees, as well as reasonable legal fees incurred by Landlord in connection with Tenant’s proposed Transfer, not to exceed Two Thousand Five Hundred Dollars ($2,500.00) in the aggregate per Transfer in the ordinary course of business.

 

14.2   Landlord’s Consent.   Landlord shall not unreasonably withhold or condition its consent to any proposed Transfer of the Subject Space to the Transferee on the terms specified in the Transfer Notice. The parties hereby agree that it shall be reasonable under this Lease and under any Applicable Law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply, without limitation as to other reasonable grounds for withholding consent:

 

14.2.1   The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building or Real Property as reflected by the then-existing tenants of the Project with respect to comparable space;

 

14.2.2   The Transferee intends to use the Subject Space for purposes which are not permitted under this Lease;

 

14.2.3   The Transferee is either a governmental agency or instrumentality thereof (i) which is that of a foreign country, (ii) which is of a character or reputation, is engaged in a business, or is of, or is associated with, a political orientation or faction, which is inconsistent with the quality of the Project, or which would otherwise reasonably offend a landlord of a comparable building located in the vicinity of the Project, (iii) which is capable of exercising the power of eminent domain or condemnation, or (iv) which would significantly increase the human traffic in, or the security threat to, the Premises, the Building, and/or the Project;

 

14.2.4   The Transfer will result in more than a reasonable and safe number of occupants per floor within the Subject Space;

 

14.2.5   The Transferee is not a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken pursuant to the Transfer on the date consent is requested; or

 

14.2.6   The proposed Transfer would cause Landlord to be in violation of another lease or agreement to which Landlord is a party, or would give an occupant of the Building or Real Property a right to cancel its lease, provided that upon written request from Tenant, Landlord shall provide notice of the nature of all such applicable rights.

 

14.2.7   Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee, (i) occupies space in the Project except for a proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, a proposed Transferee which occupies space in the Project that is contiguous to the Premises at the time of the request for consent (whether on the same floor or a contiguous floor by floor basis), or (ii) is negotiating with Landlord to lease space in the Project at such time (as evidenced by an exchange of letters in the last four (4) months), and Landlord has comparable space in the Project available to lease to such Transferee.

 

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If Landlord consents to any Transfer pursuant to the terms of this Section 14.2 (and does not exercise any recapture rights Landlord may have under Section 14.4 of this Lease), Tenant may within nine (9) months after Landlord’s consent, but not later than the expiration of said nine-month period, enter into such Transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if there are any changes in the terms and conditions from those specified in the Transfer Notice (i) such that Landlord would initially have been entitled to refuse its consent to such Transfer under this Section 14.2, or (ii) which would cause the proposed Transfer to be more materially favorable to the Transferee than the terms set forth in Tenant’s original Transfer Notice, Tenant shall again submit the Transfer to Landlord for its approval and other action under this Article 14 (including Landlord’s right of recapture, if any, under Section 14.4 of this Lease).

 

14.3   Transfer Premium.   If Landlord consents to a Transfer, as a condition thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty percent (50%) of any “Transfer Premium,” as that term is defined in this Section 14.3, actually received by Tenant from such Transferee. “Transfer Premium” shall mean all rent, additional rent or other consideration payable by such Transferee in connection with the Transfer (as opposed to the sale of Tenant’s business) in excess of the Rent and Additional Rent payable by Tenant under this Lease on a per rentable square foot basis if less than all of the Premises is transferred, after deducting the reasonable expenses incurred by Tenant for (i) any changes, alterations and improvements to the Premises in connection with the Transfer, (ii) any brokerage commissions in connection with the Transfer (iii) any free rent reasonably provided to the Transferee, (iv) any marketing fees in connection with the Transfer, (iv) any key money, bonus money or other cash consideration paid by Tenant to Transferee for furniture, fixtures, equipment and/or similar items; (v) any attorney fees or fees paid to Landlord actually incurred by Tenant in connection with such Transfer; (vi) any lease takeover incurred by Tenant in connection with the Transfer; (vii) out-of-pocket costs of advertising the space subject to the Transfer, and (viii) any improvement allowance or other economic concessions (space planning allowance, moving expenses, etc.) paid by Tenant to Transferee in connection with such Transfer. “Transfer Premium” shall also include, but not be limited to, key money and bonus money paid by Transferee to Tenant in connection with such Transfer (as opposed to the sale of Tenant’s business), and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee in connection with such Transfer. The determination of the amount of Landlord’s applicable share of the Transfer Premium shall be made on a monthly basis as rent or other consideration is received by Tenant under the Transfer. Notwithstanding anything contained herein to the contrary, under no circumstances shall Landlord be paid any Transfer Premium until Tenant has recovered all applicable Tenant’s Subleasing Costs for each applicable Transferred Space, it being understood that if in any year the gross revenues, less the deductions set forth and included in Tenant’s Subleasing Costs, are less than any and all costs actually paid in assigning or subletting the affected space (collectively “Transaction Costs”), the amount of the excess Transaction Costs shall be carried over to the next year and then deducted from net revenues with the procedure repeated until a Transfer Premium is achieved.

 

14.4   Landlord’s Option as to Subject Space.   Notwithstanding anything to the contrary contained in this Article 14, in the event Tenant contemplates a Transfer of all or a portion of the Premises consisting of forty percent (40%) or more of the then Premises, Tenant shall give Landlord notice (the “Intention to Transfer Notice”) of such contemplated Transfer (whether or not the contemplated Transferee or the terms of such contemplated Transfer have been determined). The Intention to Transfer Notice shall specify the portion of and amount of rentable square feet of the Premises which Tenant intends to Transfer (the “Contemplated Transfer Space”), the contemplated date of commencement of the Contemplated Transfer (the “Contemplated Effective Date”) and the contemplated length of the term of such contemplated Transfer, and shall specify that such Intention to Transfer Notice is delivered to Landlord pursuant to this Section 14.4 in order to allow Landlord to elect to recapture the Contemplated Transfer Space for the term set forth in the Intention to Transfer Notice. Thereafter, Landlord shall have the option, by giving written notice (the “Recapture Notice”) to Tenant within fifteen (15) business days after receipt of any Intention to Transfer Notice, to recapture the Contemplated Transfer Space for the term set forth in the Intention to Transfer Notice. Such recapture shall cancel and terminate this Lease with respect to such Contemplated Transfer Space as of the Contemplated Effective Date until the last day of the term of the contemplated

 

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Transfer as set forth in the Intention to Transfer Notice. However, if Landlord delivers a Recapture Notice to Tenant, Tenant may, within five (5) business days after Tenant’s receipt of the Recapture Notice, deliver written notice to Landlord indicating that Tenant is rescinding its request for consent to the proposed Transfer, in which case such Transfer shall not be consummated and this Lease shall remain in full force and effect as to the portion of the Premises that was the subject of the Transfer. Tenant’s failure to so notify Landlord in writing within said five (5) business day period shall be deemed to constitute Tenant’s election to allow the Recapture Notice to be effective. In the event of a recapture by Landlord, if this Lease shall be canceled with respect to less than the entire Premises, the Rent reserved herein shall be prorated on the basis of the number of rentable square feet retained by Tenant in proportion to the number of rentable square feet contained in the Premises, and this Lease as so amended shall continue thereafter in full force and effect, and upon request of either party, the parties shall execute written confirmation of the same; and Landlord shall (a) install, on a commercially reasonable basis, any corridor and/or demising wall, at Landlord’s expense, which is required as a result of the termination of the Lease with respect to less than the entire Premises (provided that, in the event of a recapture by Landlord for less than the remainder of the Lease Term, Landlord shall restore the Premises to the condition existing prior to such construction prior to delivering the Contemplated Transfer Space that Landlord recaptured back to Tenant), (b) balance the HVAC on the floor containing the Premises, and (c) perform any electrical or plumbing work necessary to separate the portion of the Premises that is terminated from the remainder of the Premises (provided that, in the event of a recapture by Landlord for less than the remainder of the Term, Landlord shall restore the Premises to the condition existing prior to such construction prior to delivering the Contemplated Transfer Space that Landlord recaptured back to Tenant). If Landlord declines, or fails to elect in a timely manner, to recapture such Contemplated Transfer Space under this Section 14.4, then, subject to the other terms of this Article 14, for a period of nine (9) months (the “Nine Month Period”) commencing on the last day of such fifteen (15) business day period, Landlord shall not have any right to recapture the Contemplated Transfer Space with respect to any Transfer made during the Nine Month Period, provided that any such Transfer is substantially on the terms set forth in the Intention to Transfer Notice, and provided further that any such Transfer shall be subject to the remaining terms of this Article 14. If such a Transfer is not so consummated within the Nine Month Period (or if a Transfer is so consummated, then upon the expiration of the term of any Transfer of such Contemplated Transfer Space consummated within such Nine Month Period), Tenant shall again be required to submit a new Intention to Transfer Notice to Landlord with respect any contemplated Transfer, as provided above in this Section 14.4.

 

14.5   Effect of Transfer.   If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no way be deemed to have been waived or modified, (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution, an original executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Landlord, and (iv) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord’s consent, shall relieve Tenant or any guarantor of the Lease from liability under this Lease. Landlord or its authorized representatives shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to any Transfer, and shall have the right to make copies thereof. If the Transfer Premium respecting any Transfer shall be found understated, Tenant shall, within thirty (30) days after demand, pay the deficiency and, if understated by more than four percent (4%), Tenant shall pay Landlord’s costs of such audit.

 

14.6   Additional Transfers.   For purposes of this Lease, the term “Transfer” shall also include (i) if Tenant is a partnership or a limited liability company, the withdrawal or change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more of the partners or members, or transfer of fifty percent (50%) or more of partnership or membership interests, within a twelve (12) month period, or the dissolution of the partnership without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation (i.e., whose stock is not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant, (B) the sale or other transfer of more than an aggregate of fifty percent (50%) of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12) month period, or (C) the sale, mortgage, hypothecation or pledge of more than an aggregate of fifty percent (50%) of the value of the unencumbered assets of Tenant within a twelve (12) month period.

 

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14.7   Non-Transfers.   Notwithstanding anything to the contrary contained in this Article 14, neither (i) an assignment or subletting of all or a portion of the Premises to (A) an entity which is controlled by, controls or is under common control with Tenant or an Affiliate of Tenant or (B) a purchaser of all or substantially all of the assets or a majority of stock or membership interests of Tenant or of an entity which is controlled by, controls or is under common control with Tenant or an Affiliate of Tenant through a purchase, merger, consolidation or reorganization of Tenant by or with another entity (whether such acquisition takes the form of an asset sale, a stock sale or a combination thereof), nor (ii) transfer, by operation of law or otherwise, in connection with the merger, consolidation or other reorganization of Tenant or of an entity which is controlled by, controls or is under common control with Tenant or an Affiliate of Tenant, shall be subject to Landlord’s consent pursuant to this Article 14, the payment of a Transfer Premium, Landlord’s recapture right or deemed a Transfer under this Article 14 (hereinafter, such entities, purchasers, and parties shall be referred to collectively or individually as an “Affiliate”); provided, however, no sublease or assignment to an Affiliate shall release the Tenant named herein from any liability under this Lease. In addition to the foregoing any sale or transfer of the stock of Tenant’s parent company shall not be subject to Landlord’s consent pursuant to the Article 14, the payment of a Transfer Premium or Landlord’s recapture right. Tenant shall immediately notify Landlord of any such assignment, purchase, transfer, sublease, action or use. For purposes of this Lease, “control” shall mean the ownership of more than fifty percent (50%) of the outstanding equity securities of an entity, or possession of the right to vote, in the ordinary direction of its affairs, of at least fifty percent (50%) of the voting interest in any entity. An Affiliate that is an assignee of Original Tenant’s entire interest in this Lease may be referred to herein as an “Affiliate Assignee.”

 

Notwithstanding anything to the contrary contained in this Article 14, Tenant may, with written notice to Landlord but without Landlord’s consent, sublease, license or allow the use of a portion of the Premises to an entity that is (a) funded by Tenant or an Affiliate in connection with Tenant’s or the Affiliate’s business, or (b) engaged in a business transaction with Tenant or an Affiliate that requires Tenant or the Affiliate to provide office space, provided that the following conditions are all met: (i) Tenant must certify in writing to Landlord that the party that is subleasing, licensing or otherwise using the space is not paying rent in excess of the rent Tenant is paying under this Lease; (ii) such party and its agents, employees, licensees and invitees must either carry the insurance Tenant is required to carry under this Lease or Tenant’s insurance must provide the coverage to such party as though such party were the primary insured under Tenant’s insurance policy; (iii) no demising wall shall be installed with respect thereto; and (iv) that portion of the Premises subject to such sublease, license or use shall not exceed ten thousand (10,000) rentable square feet on a cumulative basis.

 

ARTICLE 15

 

SURRENDER; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

 

15.1   Surrender of Premises   No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in a writing signed by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee of Landlord shall not constitute a surrender of the Premises or effect a termination of this Lease, whether or not the keys are thereafter retained by Landlord, and notwithstanding such delivery Tenant shall be entitled to the return of such keys at any reasonable time upon request until this Lease shall have been properly terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof, shall not work a merger, and at the option of Landlord shall operate as an assignment to Landlord of all subleases or subtenancies affecting the Premises.

 

15.2   Removal of Tenant Property by Tenant.   Notwithstanding anything to the contrary contained herein, all articles of personal property and all business and trade fixtures, machinery and equipment, furniture and movable partitions owned by Tenant or installed by Tenant at its expense in the Premises, which items are not a part of the Tenant Improvements installed in the Premises, shall remain the property of Tenant, and may be removed by Tenant at any time during the Lease Term. Further, in connection therewith, Landlord agrees to execute any reasonable waivers or lien releases in connection with Tenant’s lease of any such articles of personal property and all business and trade fixtures, machinery and equipment, furniture and movable partitions. Upon the expiration of the Lease Term, or upon any earlier termination of this Lease,

 

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Tenant shall, subject to the provisions of this Article 15, quit and surrender possession of the Premises to Landlord in as good order and condition as when Tenant took possession and as thereafter improved by Landlord and/or Tenant, reasonable wear and tear and repairs which are specifically made the responsibility of Landlord hereunder excepted. Upon such expiration or termination, Tenant shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, and such items of furniture, equipment, free-standing cabinet work, moveable partitions and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises and similar articles of any other person claiming under Tenant. In connection with any removal/restoration requirements, Tenant shall repair at its own expense all damage to the Premises and Building resulting from any such removal. Notwithstanding anything to the contrary in this Lease, Tenant shall not be required under any circumstance (including, without limitation, in the event that this Lease terminates prior to the Lease Expiration Date because of a default by Tenant hereunder or in the event Tenant exercises its Second Termination Right in Section 2.2.2 hereof) to remove Tenant’s HVAC system and any cabling, wiring or conduit (including any such cabling or wiring associated with the Wi-Fi Network, if any) which may have been placed at the Real Property or within the Building by or on behalf of Tenant; provided, however, upon the expiration or sooner termination of this Lease, Tenant shall, at Tenant’s sole cost and expense, be required to remove any non-general office type Tenant Improvements and Alterations (and repair any damage caused by such removal) identified by Landlord in accordance with Section 8.4 above. Landlord and Tenant acknowledge and agree that nothing in this Section 15.2 shall prohibit Tenant from removing any furniture, equipment, free-standing cabinet work and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises, at any time throughout the Lease Term (provided that Tenant repairs any damage resulting therefrom).

 

ARTICLE 16

 

HOLDING OVER

 

If Tenant holds over after the expiration of the Lease Term hereof, with or without the express or implied consent of Landlord, such tenancy shall be from month-to-month only, and shall not constitute a renewal hereof or an extension for any further term, and in such case Base Rent shall be payable at a monthly rate equal to one hundred fifty percent (150%) of the Base Rent applicable during the last rental period of the Lease Term under this Lease. Such month-to- month tenancy shall be subject to every other term, covenant and agreement contained herein. Landlord hereby expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 16 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefrom.

 

ARTICLE 17

 

ESTOPPEL CERTIFICATES

 

Within ten (10) business days following a request in writing by Landlord or Tenant, Tenant or Landlord, as the case may be, shall execute, acknowledge and deliver to the requesting party (the “Requesting Party”) an estoppel certificate, which, as submitted by the Requesting Party, shall be substantially in the form of Exhibit E attached hereto, as modified appropriately if Tenant is the Requesting Party (or such other commercially reasonable form as may be required by any prospective mortgagee or purchaser of the Project, or any portion thereof, or any assignee), indicating therein any exceptions thereto that may exist at that time, and shall also contain any other information reasonably requested by the Requesting Party or Landlord’s mortgagee or prospective mortgagee or Tenant’s Transferee, as the case may be. Any such certificate may be relied upon by any prospective mortgagee or purchaser of all or any portion of the Project or any buyer, assignee or lender of Tenant. Failure of either Landlord or Tenant to timely execute and deliver such estoppel certificate within an additional five (5) business days following such party’s receipt of a notice from the Requesting Party that such estoppel certificate

 

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has not been timely executed and returned (within the above referenced ten (10) business day period) shall constitute an acknowledgment by such party that statements included in the estoppel certificate are true and correct, without exception. In addition, Landlord and Tenant shall be liable to the Requesting Party, and shall indemnify the Requesting Party from and against any loss, cost, damage or expense, incidental, consequential, or otherwise, including attorneys’ fees, arising or accruing directly or indirectly, from any failure of Landlord or Tenant to execute or deliver to the Requesting Party any such estoppel certificate.

 

ARTICLE 18

 

SUBORDINATION

 

This Lease is subject and subordinate to all present and future ground or underlying leases of the Real Property and to the lien of any mortgages or trust deeds, now or hereafter in force against the Real Property, if any, and to any modifications or replacements thereof, and to all advances made thereunder; provided, however, a condition precedent to the subordination of this Lease to be subordinated to any particular future ground or underlying lease of the Building or the Project or to the lien of any mortgage or trust deed, first encumbering the Building or the Project following the date of this Lease and to any renewals, extensions, modifications, consolidations and replacements thereof, is that Landlord shall obtain for the benefit of Tenant a commercially reasonable subordination, non-disturbance and attornment agreement from the lessor or lender of such future instrument. Such commercially reasonable non-disturbance agreement(s), shall include the obligation of any such ground lessor, mortgage holder or deed of trust holder to recognize Tenant’s rights specifically set forth in this Lease to offset certain amounts against Rent due hereunder and Landlord’s obligations to comply with the provisions of this Lease, or to otherwise receive certain credits against Rent as expressly set forth herein. The holders of such mortgages or trust deeds, or the lessors under such ground lease or underlying leases, may also elect in writing that this Lease be superior thereto, and such election will be binding upon Tenant. Subject to Tenant’s receipt of the non-disturbance agreement(s) described above, Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed in lieu thereof (or if any ground lease is terminated), to attorn to the lienholder or purchaser or any successors thereto upon any such foreclosure sale or deed in lieu thereof (or to the ground lessor), if so reasonably requested to do so by such purchaser or lienholder or ground lessor, and to recognize such purchaser or lienholder or ground lessor as the lessor under this Lease, provided such lienholder or purchaser or ground lessor shall agree to accept this Lease and not disturb Tenant’s occupancy, so long as Tenant timely pays the rent and observes and performs the terms, covenants and conditions of this Lease to be observed and performed by Tenant within all applicable notice and cure periods. Tenant covenants and agrees to execute and deliver, within ten (10) business days of request and without charge therefor, such further commercially reasonable instruments as may be reasonably requested to evidence the subordination or superiority of this Lease to the lien of any such ground leases, mortgages or deeds of trust as referenced herein. Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale. Tenant hereby acknowledges that as of the date on which Landlord and Tenant execute this Lease there is a deed of trust encumbering, and in force against, the Real Property in favor of Prudential Real Estate Investors (“Current Lender”). Simultaneously with Tenant’s execution of this Lease, Tenant shall sign, notarize and deliver a subordination, non-disturbance and attornment agreement substantially in the form of Exhibit H attached hereto, which agreement shall thereafter by executed by Tenant, Current Lender and Landlord and then recorded against the Real Property.

 

ARTICLE 19

 

TENANT’S DEFAULTS; LANDLORD’S REMEDIES

 

19.1   Events of Default by Tenant.   The occurrence of any of the following shall constitute a default of this Lease by Tenant:

 

19.1.1   Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, when due unless such failure is cured within five (5) business days after Tenant’s receipt of notice that said amounts are past due; or

 

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19.1.2   Any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant where such failure continues for thirty (30) days after written notice thereof from Landlord to Tenant; provided however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any similar or successor law; and provided further that if the nature of such default is such that the same cannot reasonably be cured within a thirty (30) day period, Tenant shall not be deemed to be in default if it diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure said default.

 

19.2   Landlord’s Remedies Upon Default.   Upon the occurrence of any such default by Tenant after the expiration of any applicable notice and cure period, Landlord shall have, in addition to any other remedies available to Landlord at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and, subject to the express terms hereof, nonexclusive, without any notice or demand whatsoever (except as expressly set forth herein).

 

19.2.1   Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover from Tenant the following:

 

(i)   The worth at the time of award of any unpaid rent which has been earned at the time of such termination; plus

 

(ii)   The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

 

(iii)   The worth at the time of award of the amount by which the unpaid rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

 

(iv)   Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, as allowed under Applicable Laws; and

 

(v)   At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law.

 

The term “Rent” as used in this Section 19.2 shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in Sections 19.2.1(i) and (ii), above, the “worth at the time of award” shall be computed by allowing interest at the Interest Rate set forth in Section 4.5 of this Lease. As used in Section 19.2.1(iii) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

 

19.2.2   In the event this Lease has not been terminated, Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due.

 

19.2.3   If Tenant shall fail to perform any obligation under this Lease, and such failure shall continue in excess of the time allowed under Section 19.1.2, above, unless a specific time period is otherwise stated in this Lease, and such failure to perform poses a material risk of injury or harm to persons or damage to or loss of property, Landlord may, but shall not be obligated to, make any such payment or perform or otherwise cure any such obligation,

 

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provision, covenant or condition on Tenant’s part to be observed or performed (and may enter the Premises for such purposes). In the event of Tenant’s failure to perform any of its obligations or covenants under this Lease, and such failure to perform poses a material risk of injury or harm to persons or damage to or loss of property, then Landlord shall have the right to cure or otherwise perform such covenant or obligation at any time after such failure to perform by Tenant, whether or not any such notice or cure period set forth in Section 19.1 above has expired. Any such actions undertaken by Landlord pursuant to the foregoing provisions of this Section 19.2.3 shall not be deemed a waiver of Landlord’s rights and remedies as a result of Tenant’s failure to perform and shall not release Tenant from any of its obligations under this Lease. Except as may be specifically provided to the contrary in this Lease, Tenant shall pay to Landlord, as Additional Rent, within thirty (30) days after delivery by Landlord to Tenant of statements therefor: (i) sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with Landlord’s performance or cure of any of Tenant’s obligations pursuant to the provisions of Section 19.2.3 above; and (ii) sums equal to all expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all legal fees and other amounts so expended. Tenant’s obligations under this Section 19.2.3 shall survive the expiration or sooner termination of the Lease Term.

 

19.3   Intentionally Omitted.

 

19.4   Sublessees of Tenant.   If Landlord elects to terminate this Lease on account of any default by Tenant, as set forth in this Article 19, Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions or arrangements. In the event of Landlord’s election to succeed to Tenant’s interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder.

 

19.5   Waiver of Default.   No waiver by Landlord or Tenant of any violation or breach by the other party of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other or later violation or breach by such party of the same or any other of the terms, provisions, and covenants herein contained. Forbearance by Landlord or Tenant in enforcement of one or more of the remedies herein provided upon a default by the other party shall not be deemed or construed to constitute a waiver of such default. The acceptance of any Rent hereunder by Landlord following the occurrence of any default, whether or not known to Landlord, shall not be deemed a waiver of any such default, except only a default in the payment of the Rent so accepted.

 

19.6   Efforts to Relet.   For the purposes of this Article 19, Tenant’s right to possession shall not be deemed to have been terminated by efforts of Landlord to relet the Premises, by its acts of maintenance or preservation with respect to the Premises, or by appointment of a receiver to protect Landlord’s interests hereunder. The foregoing enumeration is not exhaustive, but merely illustrative of acts which may be performed by Landlord without terminating Tenant’s right to possession.

 

19.7   Default by Landlord.   Landlord shall not be deemed to be in default in the performance of any obligation required by it under this Lease, or under any agreement executed in connection herewith, unless and until it has failed to perform such obligation within thirty (30) days after receipt of written notice by Tenant to Landlord, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be deemed to be in default if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecute the same to completion. Nothing in this Article 19 shall be interpreted to mean that Tenant shall have the right to terminate this Lease or that Tenant is excused from paying any Rent due hereunder.

 

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ARTICLE 20

 

SECURITY DEPOSIT

 

Concurrent with Tenant’s execution of this Lease, Tenant shall deposit with Landlord a security deposit (the “Security Deposit”) in the amount set forth in Section 10 of the Summary. The Security Deposit shall be held by Landlord as security for the faithful performance by Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the Lease Term. If Tenant defaults with respect to any provisions of this Lease (beyond all applicable notice and cure periods), including, but not limited to, the provisions relating to the payment of Rent, Landlord may, but shall not be required to, use, apply or retain all or any part of the Security Deposit for the payment of any Rent or any other sum in default, or for the payment of any amount that Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage that Landlord may suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used or applied, Tenant shall, within five (5) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount, and Tenant’s failure to do so shall be a default under this Lease. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant, or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder, within sixty (60) days following the expiration of the Lease Term. Tenant shall not be entitled to any interest on the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. Notwithstanding the foregoing contained in this Article 20, so long as Tenant is not then in default hereunder (the “Reduction Condition”), the original amount of the Security Deposit shall be applied to Base Rent coming due under this Lease on the first (1st) day of the thirty-seventh (37th) month of the initial Lease Term. It is understood and agreed that, if the original amount of the Security Deposit is applied as set forth above, there shall be no further reduction or application of any remaining portion (if any) of the Security Deposit for the remainder of the Lease Term.

 

ARTICLE 21

 

COMPLIANCE WITH LAW

 

Tenant shall not do anything or suffer anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated (collectively, “Applicable Laws”). At its sole cost and expense, Tenant shall promptly comply with all such Applicable Laws to the extent they relate to (i) Tenant’s use of the Premises for other than general office purposes, (ii) the Alterations, or improvements in the Premises, or (iii) the base building, but, as to the base building, only to the extent such obligations are triggered by Tenant’s Alterations, or the Tenant Improvements or use of the Premises for non-general office use. In addition, Tenant shall fully comply with all present or future governmentally mandated programs intended to manage parking, transportation or traffic in and around the Real Property, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities. The judgment of any court or competent jurisdiction or the admission of Tenant or Landlord in any judicial action, regardless of whether the other party to this Lease is a party thereto, that Tenant or Landlord, respectively, has violated any said governmental measures, shall be conclusive of that fact as between Landlord and Tenant. Landlord shall comply with all Applicable Laws relating to the base building, provided that compliance with such Applicable Laws is not the responsibility of Tenant under this Lease (including the terms of this Article 21), and provided further that Landlord’s failure to comply therewith would prohibit Tenant from obtaining or maintaining a certificate of occupancy for the Premises, or would unreasonably and materially affect the safety of Tenant’s employees or create a significant health

 

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hazard for Tenant’s employees or otherwise materially interfere with Tenant’s Permitted Use and enjoyment of the Premises and the Parking Facilities.

 

ARTICLE 22

 

ENTRY BY LANDLORD

 

Landlord reserves the right at all reasonable times and upon not less than forty-eight (48) hours prior written notice to Tenant (except in the case of an emergency, in which case prior notice shall not be required) to enter the Premises to: (i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees or tenants (for tenants, only during the last six (6) months of the Lease Term), or to the ground or underlying lessors; (iii) to post notices of nonresponsibility; or (iv) alter, improve or repair the Premises or the Building if necessary to comply with current building codes or other Applicable Laws, or for structural alterations, repairs or improvements to the Building. Notwithstanding anything to the contrary contained in this Article 22, Landlord may enter the Premises at any time, without notice to Tenant, (A) in emergency situations and/or (B) to perform janitorial or other recurring services required of Landlord pursuant to this Lease. Any such entries shall be without the abatement of Rent, except as otherwise provided in this Lease, and shall include the right to take such reasonable steps as required to accomplish the stated purposes; provided, however, except for emergencies, Landlord shall use commercially reasonable efforts to perform any such entry in an expeditious manner so as to minimize interference with Tenant’s use of the Premises. Landlord shall use commercially reasonable efforts to schedule entries into the Premises under this Article 22 with Tenant (except entries under items (A) and (B) set forth above, and/or in the event of emergency) so that Tenant, at Tenant’s option, may provide a representative to accompany Landlord (but Landlord shall not have any obligation to wait for such Tenant representative to the extent the same is not reasonably available). Even in an emergency situation, Landlord shall use commercially reasonable efforts to minimize disruption to Tenant’s business operations. Except as otherwise provided in the Lease, Tenant hereby waives any claims for damages or for any injuries or inconvenience to or interference with Tenant’s business, lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant’s vaults, safes and special security areas designated in advance by Tenant. In an emergency, Landlord shall have the right to enter without notice and use any means that Landlord may deem proper to open the doors in and to the Premises; provided, however, that Landlord shall, subject to Section 10.1 of this Lease and to the extent that such damage is not covered by insurance required to be carried by Tenant under this Lease or caused by any governmental agencies, repair any damage to the Premises caused by any such emergency entry into the Premises by Landlord. Any entry into the Premises in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises. In addition, notwithstanding anything to the contrary set forth in this Article 22, Tenant may designate certain areas of the Premises as “Secured Areas” should Tenant require such areas for the purpose of securing certain valuable property. In connection with the foregoing, Landlord shall not enter such Secured Areas except in the event of an emergency. Landlord need not clean any area designated by Tenant as a Secured Area and shall only maintain or repair such Secured Area to the extent (i) such repair or maintenance is required in order to maintain and repair the Building; (ii) required by Applicable Laws, or (iii) in response to specific requests by Tenant and in accordance with a schedule reasonably designated by Tenant, subject to Landlords’ reasonable approval.

 

ARTICLE 23

 

TENANT PARKING

 

23.1   Tenant Parking Passes.   Tenant shall purchase throughout the Lease Term the number of monthly Must-Take Parking Passes set forth in Section 11 of the Summary, located in those portions of the Parking Facilities as may be designated by Landlord from time to time. In addition, Tenant shall have the right, from time to time, but not the obligation, to rent from Landlord, commencing on the Lease Commencement Date, up to the amount of Optional Parking Passes set forth in Section 11 of the Summary, on a monthly basis throughout the Lease Term, located in those portions of the Parking Facilities as may be designated by Landlord from time to time; provided, however, Tenant may increase or decrease the number of Optional

 

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Parking Passes rented by Tenant upon not less than thirty (30) days written notice to Landlord. Tenant shall pay to Landlord for the use of all such parking passes (but only including those Optional Parking Passes that Tenant has elected to take, from time to time, as provided above), on a monthly basis, the prevailing rate charged from time to time by Landlord or Landlord’s parking operator for parking passes in the Parking Facilities where such parking passes are located. As of the date hereof, the prevailing rate for reserved parking passes is One Hundred Ten Dollars ($110.00) per reserved parking pass per month and the prevailing rate for unreserved parking passes is Seventy-Five Dollars ($75.00) per unreserved parking pass per month; provided, however, that during the first thirty-three (33) months of the initial Lease Term, Tenant shall receive a discount of Fifty Dollars ($50.00) for each unreserved parking pass and Seventy Dollars ($70.00) for each reserved parking pass (the “Parking Discount”), with Landlord’s then prevailing rate for reserved and unreserved parking passes to be reduced by the applicable Parking Discount during such thirty-three (33) month period; provided further, however, by notice to Tenant, Landlord shall have the right to purchase the value of Parking Discount from Tenant for an amount equal to the present value of the Parking Discount, discounted by eight and one-half percent (8.5%) per annum. In such event, the Parking Discount shall no longer be available to Tenant.

 

23.2   Parking Procedures.   Tenant’s continued right to use the parking passes is conditioned upon Tenant abiding by all reasonable, non-discriminatory rules and regulations which are prescribed from time to time for the orderly operation and use of the Parking Facilities and upon Tenant’s cooperation in seeing that Tenant’s employees and visitors also comply with such rules and regulations. In addition, Landlord may assign any parking spaces and/or make all or a portion of such spaces reserved or institute an attendant-assisted tandem parking program and/or valet parking program if Landlord determines in its sole discretion that such is necessary or desirable for orderly and efficient parking. Landlord specifically reserves the right, from time to time, to change the size, configuration, design, layout, location and all other aspects of the Parking Facilities (provided that Tenant’s parking rights are not reduced or materially changed as a result thereof and so long as Tenant’s obligations are not materially or unreasonably increased as a result thereof and such change(s) do not create a material safety risk for Tenant), and Tenant acknowledges and agrees that Landlord, from time to time, may, without incurring any liability to Tenant and without any abatement of Rent under this Lease (except as provided in Section 6.5 of this Lease), from time to time, close-off or restrict access to the Parking Facilities, or temporarily relocate Tenant’s parking spaces to other parking structures and/or surface parking areas within a reasonable distance from the Parking Facilities, for purposes of permitting or facilitating any such construction, alteration or improvements or to accommodate or facilitate renovation, alteration, construction or other modification of other improvements or structures located on the Real Property, provided that any such closures, restrictions or relocations are required by Applicable Laws or are reasonably necessary on a temporary basis or otherwise do not materially adversely affect Tenant’s rights under this Lease. Landlord shall use commercially reasonable efforts to cause any such work to be conducted in a manner which minimizes any inconvenience to the Tenant Parties and to provide alternative parking (if necessary), at no additional cost to Tenant. Landlord may delegate its responsibilities hereunder to a parking operator in which case such parking operator shall have all the rights of control attributed hereby to Landlord. The parking rates charged by Landlord for Tenant’s parking passes shall be exclusive of any parking tax or other charges imposed by governmental authorities in connection with the use of such parking, which taxes and/or charges shall be paid directly by Tenant or the parking users, or, if directly imposed against Landlord, Tenant shall reimburse Landlord for all such taxes and/or charges within thirty (30) days after Tenant’s receipt of the invoice from Landlord. The parking passes provided to Tenant pursuant to this Article 23 are provided solely for use by Tenant’s own personnel and such passes may not be transferred, assigned, subleased or otherwise alienated by Tenant without Landlord’s prior approval, except on a pro rata basis in connection with an assignment or subletting of the Premises permitted or approved in accordance with the terms of Article 14 of this Lease. Tenant may validate visitor parking by such method or methods as the Landlord may reasonably establish, at the validation rate from time to time generally applicable to visitor parking.

 

23.3   Reserved Parking Rights.   Tenant shall also have the right to convert up to ten percent (10%) of its Must Take Parking Passes and Optional Parking Passes into Reserved Parking Passes upon not less than thirty (30) days written notice to Landlord; provided, however, Tenant may, from time to time, reconvert Reserved Parking Passes into Must Take Parking Passes and Optional Parking Passes upon not less than thirty (30) days written notice to

 

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Landlord. Reserved parking spaces rented by Tenant shall be (i) for single, non-tandem spaces where Tenant can park and retain the keys to the vehicle, and (ii) identified with a Building standard reserved parking sign. Notwithstanding anything above to the contrary, Landlord shall have the right to designate the location of Tenant’s reserved parking spaces (attributable to Tenant’s Reserved Parking Passes) in the Parking Facilities and Landlord shall also have the right to relocate all or any portion of the same from time to time during the Lease Term. All costs incurred by Landlord to designate any of Tenant’s reserved parking spaces and/or to designate any reserved parking area shall be at Tenant’s sole cost and expense.

 

ARTICLE 24

 

MISCELLANEOUS PROVISIONS

 

24.1   Terms; Captions.   The necessary grammatical changes required to make the provisions hereof apply either to corporations or partnerships or individuals, men or women, as the case may require, shall in all cases be assumed as though in each case fully expressed. The captions of Articles and Sections are for convenience only and shall not be deemed to limit, construe, affect or alter the meaning of such Articles and Sections.

 

24.2   Binding Effect.   Subject to all other provisions of this Lease, each of the covenants, conditions and provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective successors or assigns, provided this clause shall not permit any assignment by Tenant contrary to the provisions of Article 14 of this Lease.

 

24.3   No Waiver.   No waiver of any provision of this Lease shall be implied by any failure of a party to enforce any remedy on account of the violation of such provision, even if such violation shall continue or be repeated subsequently, any waiver by a party of any provision of this Lease may only be in writing, and no express waiver shall affect any provision other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord from Tenant after the termination of this Lease shall in any way alter the length of the Lease Term or of Tenant’s right of possession hereunder or after the giving of any notice shall reinstate, continue or extend the Lease Term or affect any notice given Tenant prior to the receipt of such monies, it being agreed that after the service of notice or the commencement of a suit or after final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit or judgment. Tenant’s payment of any Rent hereunder shall not constitute a waiver by Tenant of any breach or default by Landlord under this Lease nor shall Landlord’s payment of monies due Tenant hereunder constitute a waiver by Landlord of any breach or default by Tenant under this Lease.

 

24.4   Modification of Lease.   Should any current or prospective mortgagee or ground lessor for the Real Property require a modification or modifications of this Lease, which modification or modifications will not cause an increased cost or expense to Tenant or in any other way materially and adversely change the rights and obligations of Tenant hereunder, then and in such event, Tenant agrees that this Lease may be so modified and agrees to execute whatever commercially reasonable documents are required therefor and deliver the same to Landlord within ten (10) business days following the request therefor. Landlord shall reimburse to Tenant the actual, documented and reasonable attorneys’ fees incurred by Tenant in reviewing such documents, not to exceed Two Thousand Dollars ($2,000.00). Should Landlord or any such current or prospective mortgagee or ground lessor require execution of a short form of Lease for recording, containing, among other customary provisions, the names of the parties, a description of the Premises and the Lease Term, Tenant agrees to execute such short form of Lease and to deliver the same to Landlord within ten (10) business days following the request therefor, the recordation of which shall be at the sole cost and expense of Landlord.

 

24.5   Transfer of Landlord’s Interest.   Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Real Property, the Building and/or in this Lease, and Tenant agrees that in the event of any such transfer (to the extent such obligations are assumed by the transferee), Landlord shall automatically be released from all liability under this Lease not accrued as of the date of the transfer and Tenant agrees to look solely to such transferee for the performance of Landlord’s obligations hereunder after the date of transfer and such transferee shall be deemed to have fully assumed and be liable for all obligations of this

 

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Lease to be performed by Landlord and Tenant shall attorn to such transferee. Without limiting the generality of the foregoing, it is acknowledged and agreed that the liability of Landlord under this Lease is limited to its actual period of ownership of title to the Building. The liability of any transferee of Landlord shall be limited to the interest of such transferee in the Real Property or Building (including all rental, insurance and condemnation proceeds therefrom); provided, any such transferee shall be obligated to comply with all of Landlord’s obligations under the Work Letter including, without limitation, payment of the Tenant Improvement Allowance. Tenant further acknowledges that Landlord may assign its interest in this Lease to a mortgage lender as additional security and agrees that such an assignment shall not release Landlord from its obligations hereunder and that Tenant shall continue to look to Landlord for the performance of its obligations hereunder.

 

24.6   Prohibition Against Recording.   Except as provided in Section 24.4 of this Lease, neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant.

 

24.7   Landlord’s Title; Air Rights.   Landlord’s title is and always shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord. No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease; provided, however, Landlord shall be prohibited from placing any so-called “super graphic” signs on the exterior of the Building.

 

24.8   Tenant’s Signs.

 

24.8.1   Interior Signs. Provided all signs are in keeping with the quality, design and style of the Building and Project, Tenant, if the Premises comprise an entire floor of the Building, at its sole cost and expense, may install identification signage anywhere in the Premises including in the elevator lobby of the Premises, provided that such signs must not be visible from the exterior of the Building, and only Tenant signs visible from the exterior of the Building shall be subject to Landlord’s approval (which approval shall not be unreasonably withheld). If other tenants occupy space on the floor on which the Premises is located, Tenant shall be entitled, at its sole cost and expense, to (i) one (1) identification sign on or near the entry doors of the Premises, and (ii) one (1) identification or directional sign, as reasonably designated by Landlord, in the elevator lobby on the floor on which the Premises are located. Any such signs on a multi-tenant floor shall be installed by a signage contractor reasonably designated by Landlord. The location, quality, design, style, lighting and size of such signs on a multi-tenant floor shall be consistent with the Landlord’s Building standard signage program and shall be subject to Landlord’s prior written approval, in its reasonable discretion. Upon the expiration or earlier termination of this Lease, Tenant shall be responsible, at its sole cost and expense, for the removal of such signage and the repair of all damage to the Building caused by such removal. Except for such identification signs, Tenant may not install any signs on the exterior or roof of the Building or the Common Areas. Any signs, window coverings, or blinds (even if the same are located behind the Landlord approved window coverings for the Building), or other items visible from the exterior of the Building are subject to the prior approval of Landlord, in its reasonable discretion.

 

24.8.2   Monument Signage.   Tenant shall have the non-exclusive right, subject to the approval from all applicable governmental and quasi-governmental entities, and subject to all applicable governmental and quasi-governmental laws, rules, regulations and codes, to install one (1) sign (“Tenant’s Name Sign”) containing the name “LegalZoom” on one (1) side on the top position on the monument sign serving the Building (the “Monument Sign”). The design, size, specifications, graphics, materials, manner of affixing, exact location, colors and lighting (if applicable) of Tenant’s Name Sign shall be (i) consistent with the quality and appearance of the Project, (ii) subject to the approval of all applicable governmental and quasi-governmental authorities, and subject to all applicable governmental and quasi-governmental laws, rules, regulations and codes, and (iii) subject to Landlord’s approval (which shall not be unreasonably withheld, conditioned or delayed). Landlord shall install Tenant’s Name Sign on the Monument Sign at Tenant’s sole cost and expense. In addition, Tenant shall be responsible for all other costs attributable to the fabrication maintenance, repair and removal of Tenant’s Name Sign. The Name Sign right granted to Tenant under this Section 24.8.2 are personal to the Original Tenant and any Affiliate Assignee and may not be exercised or used by or assigned to any other person or entity. In addition, Original Tenant or such Affiliate Assignee shall no longer have any right

 

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to Tenant’s Name Sign if at any time during the Term the Original Tenant or Affiliate Assignee does not lease and occupy at least one (1) entire floor of the Premises then leased by Tenant hereunder. Upon the expiration or sooner termination of this Lease, or upon the earlier termination of Tenant’s signage rights under this Section 24.8.2, Landlord shall have the right to permanently remove Tenant’s Name Sign and to repair all damage to the Monument Sign resulting from such removal and Tenant shall reimburse Landlord for the actual, reasonable, out-of-pocket costs thereof.

 

24.9   Relationship of Parties.   Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venturer or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of Rent nor any act of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of landlord and tenant.

 

24.10   Application of Payments.   Landlord shall have the right to apply payments received from Tenant pursuant to this Lease, regardless of Tenant’s designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect.

 

24.11   Time of Essence.   Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. Whenever in this Lease a payment is required to be made by one party to the other, but a specific date for payment is not set forth or a specific number of days within which payment is to be made is not set forth, or the words “immediately”, “promptly”, and/or “on demand”, or their equivalent, are used to specify when such payment is due, then such payment shall be due thirty (30) days after the date that the party which is entitled to such payment sends notice to the other party demanding such payment.

 

24.12   Partial Invalidity.   If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by law.

 

24.13   No Warranty.   In executing and delivering this Lease, Tenant has not relied on any representation, including, but not limited to, any representation whatsoever as to the amount of any item comprising Additional Rent or the amount of the Additional Rent in the aggregate or that Landlord is furnishing the same services to other tenants, at all, on the same level or on the same basis, or any warranty or any statement of Landlord which is not set forth herein or in one or more of the Exhibits attached hereto.

 

24.14   Landlord Exculpation.   It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and notwithstanding any Applicable Law to the contrary, the liability of Landlord and the Landlord Parties hereunder (including any successor landlord) and any recourse by Tenant against Landlord or the Landlord Parties shall be limited solely and exclusively to an amount which is equal to the ownership interest of Landlord in the Building (together with any rental, condemnation or insurance proceeds received by Landlord or the Landlord Parties in connection with the Project, Building or Premises), and neither Landlord, nor any of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant.

 

24.15   Entire Agreement.   It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. This Lease and any side letter or separate agreement executed by Landlord and Tenant in connection with this Lease and dated of even date herewith contain all of the terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use and occupancy of the Premises, shall be considered to be the only agreement between the parties hereto and their representatives and agents, and none of the terms, covenants, conditions or provisions of this

 

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Lease can be modified, deleted or added to except in writing signed by the parties hereto. All negotiations and oral agreements acceptable to both parties have been merged into and are included herein. There are no other representations or warranties between the parties, and all reliance with respect to representations is based totally upon the representations and agreements contained in this Lease.

 

24.16   Right to Lease.   Landlord reserves the absolute right to effect such other tenancies in the Building or other portions of the Project as Landlord in the exercise of its sole business judgment shall determine to best promote the interests of the Real Property, so long as those tenancies within the Building are consistent with a first-class office building. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Lease Term, occupy any space in the Building or Real Property.

 

24.17   Force Majeure.   Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease and except with respect to Landlord’s monetary obligations to Tenant (collectively, the “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure.

 

24.18   Intentionally Omitted.

 

24.19   Notices.   All notices, demands, statements or communications (collectively, “Notices”) given or required to be given by either party to the other hereunder shall be in writing, shall be sent by United States certified or registered mail, postage prepaid, return receipt requested, delivered by reputable overnight courier service, or delivered personally (i) to Tenant at the appropriate address set forth in Section 5 of the Summary, or to such other place as Tenant may from time to time designate in a Notice to Landlord; or (ii) to Landlord at the addresses set forth in Section 3 of the Summary, or to such other firm or to such other place as Landlord may from time to time designate in a Notice to Tenant. Any Notice will be deemed given (a) if by personal delivery, on the date it is personally delivered or such personal delivery is rejected, (b) if by certified or registered mail, the date set forth on the receipt for such certified or registered mail for delivery or rejection, or (c) if by overnight courier service, the date the overnight courier delivery is made or attempted to be made. If Tenant is notified of the identity and address of Landlord’s mortgagee or ground or underlying lessor, Tenant shall give to such mortgagee or ground or underlying lessor written notice of any default by Landlord under the terms of this Lease by registered or certified mail, and such mortgagee or ground or underlying lessor shall be given a reasonable opportunity to cure such default prior to Tenant’s exercising any remedy available to Tenant to terminate this Lease.

 

24.20   Joint and Several.    If there is more than one Tenant, the obligations imposed upon Tenant under this Lease shall be joint and several.

 

24.21   Authority.   If Tenant is a corporation, trust or partnership, Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in California and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so. In such event, Tenant shall, within ten (10) business days after Landlord’s written request, deliver to Landlord satisfactory evidence of such authority and, if a corporation, also deliver to Landlord satisfactory evidence of (i) good standing in Tenant’s state of incorporation and (ii) qualification to do business in California

 

24.22   Jury Trial; Attorneys’ Fees.   IF EITHER PARTY COMMENCES LITIGATION AGAINST THE OTHER FOR THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR DAMAGES FOR THE BREACH HEREOF OR OTHERWISE FOR ENFORCEMENT OF ANY REMEDY HEREUNDER, THE PARTIES HERETO AGREE TO AND HEREBY DO WAIVE ANY RIGHT TO A TRIAL BY JURY. In the event of any such commencement of litigation or any other proceeding, the prevailing party shall be entitled to recover from the other

 

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party such costs and reasonable attorneys’ fees as may have been incurred, including any and all costs incurred in enforcing, perfecting and executing such judgment.

 

24.23   Governing Law.   This Lease shall be construed and enforced in accordance with the laws of the State of California without regard to choice of law principles.

 

24.24   Submission of Lease.   Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant, and Landlord’s lender holding a lien with respect to the Building has approved this Lease and the terms and conditions hereof.

 

24.25   Brokers.    Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the real estate brokers or agents specified in Section 12 of the Summary (the “Brokers”), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. Landlord shall pay the brokerage commissions owing to the Brokers in connection with this Lease, pursuant to the terms of a separate written agreement between Landlord and the Brokers. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including without limitation reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of the indemnifying party’s dealings with any real estate broker or agent other than the Brokers.

 

24.26   Independent Covenants.   This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not, except as expressly provided in this Lease, be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to any setoff of the Rent or other amounts owing hereunder against Landlord, except as otherwise provided herein; provided, however, that the foregoing shall in no way impair the right of Tenant to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given to Landlord and any holder of a mortgage or deed of trust covering the Building, Real Property or any portion thereof, of whose address Tenant has theretofore been notified, and an opportunity is granted to Landlord and such holder to correct such violations as provided above.

 

24.27   Building Name and Signage.   Landlord shall have the right at any time to change the name of the Building and Real Property and to install, affix and maintain any and all signs on the exterior and on the interior of the Building and any portion of the Real Property as Landlord may, in Landlord’s sole discretion, desire. Tenant shall not use the names of the Buildings or Real Property or use pictures or illustrations of the Building or Real Property in advertising or other publicity, without the prior written consent of Landlord.

 

24.28   Building Directory.   At Landlord’s initial cost, Landlord shall include Tenant’s name and location in the Building on one (1) line on the Building directory; provided, however, that any Landlord approved changes to such signage shall be at Tenant’s sole cost and expense. Landlord acknowledges and agrees that all such identifying entries on the Building directory shall not be personal to the Original Tenant and shall be provided by Landlord, subject to the terms hereof, to any Transferee of Tenant permitted under Article 14 of this Lease.

 

24.29   Confidentiality.   Landlord and Tenant acknowledge that the content of this Lease and any related documents are confidential information. Landlord and Tenant shall keep such confidential information strictly confidential and, except as required by a subpoena or to comply with Applicable Laws, shall not disclose such confidential information to any person or entity other than Landlord’s and Tenant’s respective financial, legal, and space planning consultants, assignees and purchasers, and any Transferee.

 

24.30   Landlord’s Construction.   It is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, Building, Real Property, or any part thereof and that no representations or warranties respecting the condition of the Premises, the Building or the Real Property have been

 

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made by Landlord to Tenant, except as specifically set forth in this Lease and the Work Letter. However, Tenant acknowledges that Landlord may from time to time, at Landlord’s sole option, renovate, improve, alter, or modify (collectively, the “Renovations”) the Building and/or Real Property (other than the Premises), including without limitation the Building Parking Facilities, Common Areas, systems and equipment, roof, and structural portions of the same, which Renovations may include, without limitation, (i) modifying the Common Areas and tenant spaces to comply with Applicable Laws and regulations, including regulations relating to the physically disabled, seismic conditions, and building safety and security, and (ii) installing new carpeting, lighting, and wall coverings in the Building Common Areas, and in connection with such Renovations, Landlord may, among other things, erect scaffolding or other necessary structures in the Building, limit or eliminate access to portions of the Real Property, including portions of the Common Areas, or perform work in the Building and/or Real Property, which work may create noise, dust or leave debris in the Building and/or Real Property. Tenant hereby agrees that such Renovations and Landlord’s actions in connection with such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent, except as otherwise provided herein. Landlord shall have no responsibility or for any reason be liable to Tenant for any direct or indirect injury to or interference with Tenant’s business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises (except as otherwise provided herein) or of Tenant’s personal property or improvements resulting from the Renovations or Landlord’s actions in connection with such Renovations, or for any inconvenience or annoyance occasioned by such Renovations or Landlord’s actions in connection with such Renovations; provided, however, Landlord shall use commercially reasonable efforts to minimize interference with Tenant’s use of, and access to, the Premises and the Parking Facilities servicing the same, in connection with any Renovations undertaken by Landlord.

 

24.31   Intentionally Omitted.

 

24.32   Failure to Fund Landlord Obligations.   If Landlord fails to (i) timely fund any amount due to Tenant under this Lease, including, without limitation, any monthly payment of the Tenant Improvement Allowance within the time periods set forth in the Work Letter, or (ii) pay the brokerage commission payable by Landlord with respect to this Lease in accordance with the terms and conditions of a separate written brokerage agreement executed by Landlord, Tenant shall be entitled to deliver to Landlord written notice (“Payment Notice”) of such failure to pay. Each Payment Notice shall include a reasonably particularized breakdown of all the amounts Tenant contends are owed. If Landlord objects to any amounts set forth in a Payment Notice, Landlord shall identify the specific line items it objects to and shall provide the reasonable basis for such objection(s). If Landlord fails to fulfill any such payment obligation within five (5) business days after Landlord’s receipt of the Payment Notice from Tenant and if Landlord fails to deliver written notice to Tenant within such five (5) business day period explaining Landlord’s reasons that any amounts described in Tenant’s Payment Notice are not due and payable by Landlord (“Refusal Notice”), Tenant shall be entitled to fund the entire amount which is the subject of the Payment Notice (or, if Landlord timely sent a Refusal Notice, only those amounts to which Landlord did not object) itself and to offset such amount(s), together with interest at the Interest Rate from the last day of such 5-business day period until the actual date of offset, against Tenant’s obligations to pay Rent. If Landlord delivers a Refusal Notice, and if Landlord and Tenant are not able to agree on the amounts to be so paid by Landlord, if any, within ten (10) business days after Tenant’s receipt of a Refusal Notice, Landlord or Tenant may elect to have such dispute resolved by expedited binding arbitration before a retired judge of the Superior Court of the State of California under the auspices of JAMS (or any successor to such organization, or if there is no such successor, then to a comparable organization mutually agreed upon by Landlord and Tenant) in Los Angeles, California, according to the then rules of commercial arbitration of such organization. JAMS shall be instructed to complete the arbitration within ten (10) business days. If such dispute is so submitted to arbitration, Tenant shall not be permitted any such offset against Base Rent unless and until the arbitration proceedings are concluded in Tenant’s favor and Landlord fails to pay to Tenant the amounts paid by Tenant which the arbitration panel determined shall have been disbursed by Landlord. If the dispute is resolved in favor of Tenant in such arbitration proceeding and Landlord fails to pay to Tenant the amounts paid by Tenant (which the arbitration panel determined should have been paid by Landlord) within thirty (30) days of the arbitration panel’s notice of decision, then Tenant shall be entitled to offset against the Rent payable under the Lease such undisbursed amount so paid by Tenant and which the arbitration

 

49

 

panel determined should have been disbursed by Landlord, together with interest thereon, at the Interest Rate, from the date Landlord was obligated to pay such amount (based upon the date Tenant first accurately notified Landlord that such amount should have been paid to Tenant) through and including the earlier of (1) the date Landlord reimburses Tenant for such amount, and (2) the date that Tenant deducts from Rent such amount.

 

24.33   Good Faith.   Except (i) for matters for which there is a standard of consent or discretion specifically set forth in this Lease; (ii) matters which could have an adverse effect on the Building structure or the Building Systems, or which could affect the exterior appearance of the Building, or (iii) matters covered by Article 4 (Additional Rent), Article 10 (Insurance), or Article 19 (Defaults; Remedies) of this Lease (collectively, the “Excepted Matters”), any time the consent of Landlord or Tenant is required under this Lease (including, without limitation, the exhibits attached to the Lease), such consent shall not be unreasonably withheld or delayed, and, except with regard to the Excepted Matters, whenever this Lease grants Landlord or Tenant the right to take action, exercise discretion, establish Rules and Regulations or make an allocation or other determination, Landlord and Tenant shall act reasonably and in good faith.

 

24.34   Survival of Provisions Upon Termination of Lease.   Any term, covenant or condition of this Lease which requires the performance of obligations or forbearance of an act by either party hereto after the termination of this Lease shall survive such termination of this Lease. Such survival shall be to the extent reasonably necessary to fulfill the intent thereof, or if specified, to the extent of such specification, as same is reasonably necessary to perform the obligations and/or forbearance of an act set forth in such term, covenant or condition. Notwithstanding the foregoing in the event a specific term, covenant or condition is expressly provided for in such a clear fashion as to indicate that such performance of an obligation or forbearance of an act is no longer required, then the specific shall govern over this general provision of this Lease.

 

24.35   Financial Statements.   In connection with a proposed refinancing or sale of the Building and provided that Tenant’s financial statements are not publicly available, Landlord may request that Tenant provide Landlord, no more than once per twelve (12) month period and within ten (10) business days of a request therefor, with a current financial statement for Tenant dated no earlier than one (1) year prior to such request, certified as accurate by Tenant. Such statement shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant; provided, however, any such statement shall be provided only to the extent it exists, in the form that it exists and its delivery shall be conditioned upon Landlord (and any proposed lender or purchaser to which such statement will be delivered) executing and delivering to Tenant a commercially reasonable confidentiality agreement prior to any disclosure of such financial statement or information; provided, further, Tenant shall not have to disclose any statement or information whose disclosure is prohibited by Applicable Laws to which Tenant is subject (as reasonably determined by Tenant).

 

[SIGNATURES APPEAR ON NEXT PAGE]

 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date first above written.

 

	
 
    	
“Landlord”:
    
	
 
    	
 
    
	
 
    	
LEGACY   PARTNERS II GLENDALE N BRAND, LLC, 
    
	
 
    	
a   Delaware limited liability company,
    
	
 
    	
Owner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
LEGACY   PARTNERS COMMERCIAL, L.P., 
    
	
 
    	
 
    	
a   California limited partnership,
    
	
 
    	
 
    	
as   Property Manager and Agent for Owner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
LEGACY   PARTNERS COMMERCIAL, INC.,
    
	
 
    	
 
    	
 
    	
General   partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/   Paul Meyer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Its:
    	
Paul   Meyer
    
	
 
    	
 
    	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    	
 
    	
BL   DRE# 01464134
    
	
 
    	
 
    	
 
    
	
 
    	
“Tenant”:
    
	
 
    	
 
    
	
 
    	
LEGALZOOM.COM, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Frank Monestere
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Frank   Monestere
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
President   & COO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Chas Rampenthal
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Chas   Rampenthal
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
Secretary
    

 

*** If Tenant is a CORPORATION, the authorized officers must sign on behalf of the corporation and indicate the capacity in which they are signing. The Lease must be executed by the president or vice president and the secretary or assistant secretary, unless the bylaws or a resolution of the board of directors shall otherwise provide, in which event, the bylaws or a certified copy of the resolution, as the case may be, must be attached to this Lease.Exhibit 10.29

 

SUBLEASE AGREEMENT

 

THIS SUBLEASE AGREEMENT (this “Sublease”), dated as of the 7th day of December, 2009, by and between MARSH USA INC., a Texas corporation with a usual place of business at 10900 Stonelake Boulevard, Suite 325, Austin, Texas 78759 (“Sublandlord”) and LEGALZOOM.COM, INC., a Delaware corporation with a usual place of business at 7083 Hollywood Boulevard, Suite 180, Los Angeles, California 90028 (“Subtenant”).

 

W I T N E S S E T H:

 

WHEREAS, by that certain Commercial Office Lease Agreement dated June 16, 2003 by and between Bank One Corporation, predecessor-in-interest to Principal Life Insurance Company as landlord (hereinafter, the “Over landlord”) and Sublandlord, as amended by that certain First Amendment dated April 28, 2004, and as future amended by that certain Second Amendment dated May 31, 2007 (hereinafter collectively referred to as the “Overlease”) for certain premises located at 10900 Stonelake Boulevard, Austin, Texas 78759 (the “Building”), which premises are more particularly described in the Overlease (hereinafter the “Leased Premises”); and

 

WHEREAS, Subtenant desires to sublet a portion of the Leased Premises from Sublandlord upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Sublandlord and Subtenant hereto agree as follows:

 

1.                                       Defined Terms.  Unless otherwise specifically stated herein, all initially capitalized terms not defined herein shall have the same meaning respectively assigned to them in the Overlease.

 

2.                                       Subleased Premises and Term.  Sublandlord hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord the premises shown on Exhibit A attached hereto and made a part hereof for all purposes containing approximately 24,820 rentable square feet (the “Subleased Premises”) for a term commencing the earlier of (i) Subtenant’s conduct of business in the Subleased Premises, or (ii) thirty (30) days following full execution and delivery of this Sublease (the “Commencement Date”)  and ending August 30, 2013 (the “Expiration Date”) unless the term is earlier cancelled or terminated in accordance with the terms of this Sublease (the “Term”).  Sublandlord and Subtenant shall execute a memorandum setting forth the actual Commencement Date of the Term in substantially the form attached hereto as Exhibit D.

 

3.                                       Rent.  Subtenant shall pay to Sublandlord as Basic Rent $446,760.00 per annum ($37,320.00 monthly based on $18.00 per rentable square foot per annum) beginning on the Commencement Date until the Expiration Date and shall pay all other charges such as after hour HVAC within thirty (30) days after Subtenant’s receipt of an invoice therefore. Until further notice, rent payments shall be sent to:

 

Marsh USA Inc. Austin

75 Remittance Drive, Suite #1726

Chicago, IL 60675-1726.

 

Notwithstanding anything in this Sublease to the contrary, so long as Subtenant is not in material default under this Sublease beyond any applicable notice and cure periods, Subtenant shall be

 

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entitled to an abatement of Rent for the first five (5) consecutive full calendar months of the Term, beginning on the Commencement Date and ending on the last day of the 5th full calendar month of the Term. The total amount of Rent abated shall equal One Hundred Eighty Six Thousand One Hundred Fifty Dollars ($186,150.00) (the “Abated Rent”).

 

4.                                       Security Deposit.  Subtenant has deposited with Sublandlord the sum of One Hundred Forty Eight Thousand Nine Hundred Twenty and No/100 Dollars ($148,920.00) as a security deposit (the “Security Deposit”). The Security Deposit shall not bear interest. The Security Deposit shall be held by Sublandlord as security for the faithful performance by Subtenant of all the terms, covenants and conditions of this Sublease to be kept and performed by Subtenant. The Security Deposit may be applied by Sublandlord to cure any material default by Subtenant hereunder and, in such event, Subtenant shall immediately, upon demand by Sublandlord, deposit with Sublandlord the amount necessary to restore the Security Deposit to its original amount; provided, however, that so long as (i) Subtenant has not defaulted hereunder beyond any applicable notice and cure periods during the twelve (12) month period immediately following the Commencement Date, then Sublandlord shall reduce the Security Deposit and return the sum of Seventy Four Thousand Four Hundred Sixty and No/100 Dollars ($74,460.00) to Subtenant within fifteen (15) days of the completion of the twelve (12) month period immediately following the Commencement Date. Following such date, Sublandlord shall continue to hold a Security Deposit equal to Seventy Four Thousand Four Hundred Sixty and No/100 Dollars ($74,460.00) throughout the remainder of the Term. Sublandlord shall return any unapplied portion of the Security Deposit to Subtenant within fifteen (15) calendar days after the later to occur of either of the following: (i) the Expiration Date or (ii) the date Subtenant surrenders the Subleased Premises to Sublandlord.

 

5.                                       Use.  Subtenant shall use and occupy the Subleased Premises for general office and call center use, including uses incidental thereto and for no other purpose. Subtenant’s use and enjoyment of the Subleased Premises shall at all times be in compliance with this Sublease, the Overlease and all applicable laws.

 

6.                                       Provisions of Overlease.  Sublandlord represents that it has delivered a true and complete copy of the Overlease and all Exhibits and Amendments to Subtenant, a copy of which is attached hereto as Exhibit B and made a part hereof for all purposes. Subtenant acknowledges that it has reviewed the terms of the Overlease. Subtenant hereby assumes all of the responsibilities and obligations on the part of the Sublandlord to be performed under the Overlease with respect to the entire Subleased Premises, except to the extent otherwise expressly provided in this Sublease or by their nature or purpose are inapplicable or inappropriate to the subleasing of the Subleased Premises pursuant to this Sublease. All of the terms, provisions, covenants and conditions contained in the Overlease, and such rights and obligations as are contained in the Overlease, are hereby imposed upon the respective parties hereto, the Sublandlord being substituted for the Overlandlord in the Overlease, with the Sublandlord having all of the rights, remedies and powers of the Overlandlord as set forth in the Overlease, and the Subtenant being substituted for the Tenant in the Overlease, with the Subtenant having all the rights, obligations and duties of the Tenant as set forth in the Overlease. It is expressly understood and agreed, however, that neither party shall be bound by any warranties and representations made by the Overlandlord or Tenant in the Overlease, nor, subject to paragraphs 7 and 9 hereof, shall Sublandlord be obligated to perform any of the terms, covenants, conditions and agreements in the Overlease required to be performed by the Overlandlord; and Subtenant agrees to look solely to the Overlandlord for the performance of the same. Subtenant further covenants and agrees not to violate any of the terms and provisions of the Overlease applicable to the Subleased Premises. Subtenant shall be bound by all of the restrictions and limitations placed upon the Sublandlord as Tenant under the Overlease, as if the Subtenant were the tenant thereunder, except as otherwise specifically provided herein.

 

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The delineation of particular obligations of Subtenant contained herein shall in no event be construed to limit any of the obligations of Subtenant pursuant to the provisions of this paragraph 5. In the event the Overlease is terminated pursuant to its terms for any reason other than the default of the Sublandlord as the Tenant thereunder, this Sublease shall automatically cease and terminate as of the date upon which the Overlease is so terminated. In the event the Overlease is terminated pursuant to its terms for any reason other than the default of the Sublandlord as the Tenant thereunder, this Sublease shall automatically cease and terminate as of the date upon which the Overlease is so terminated.

 

The following paragraphs of the Overlease do not apply herein except as necessary to interpret the paragraphs of the Overlease that do apply: Basic Lease Information, 1.1-1.3; 2.2; 2.5; the right of termination in 11.1; 13.4; 24.12; Rider One; Exhibits A-1, B, G, H, I, J and K; First Amendment; Second Amendment (other than to reflect the renewal of the Overlease and OFAC Compliance provision). Under Section 9 of the Overlease, the insurance which requires the naming of Overlandlord shall name Sublandlord as well. For purposes of incorporating Section 2.3, the Expense Stops will be the same used in the Overlease. During the Term, at Subtenant’s sole cost and expense and no more than one (1) time in a calendar year, Subtenant shall have the right to review all records supporting the Annual Cost Statement provided by Overlandlord to Sublandlord.

 

For avoidance of doubt, and without limitation, the abatement in Rent referenced in Section 8.4, Section 11 and Section 16 of the Overlease shall also be applicable to Subtenant and this Sublease but only if Sublandlord receives the abatement from Overlandlord.

 

Without limiting Overlandlord’s rights under Section 6.4 of the Overlease, Sublandlord will designate, at the time Sublandlord reviews Subtenant’s construction plans, if any, which alterations made by Subtenant and approved by Sublandlord, will be required to be removed from the Subleased Premises at the expiration and /or termination of the Sublease. For avoidance of doubt, Subtenant shall not be required to remove any improvements or alterations which existed in the Subleased Premises as of the Commencement Date including, but not limited to, any cabling, telecommunication or security system.. Overlandlord’s right to require restoration will be as set forth in the Overlease.

 

7.                                       Sublandlord Not Liable for Acts of Overlandlord.  Sublandlord shall not be liable for any of the obligations, duties, responsibilities or liabilities of the Overlandlord under the Overlease or for the failure of any delay by the Overlandlord to perform or discharge the same. Sublandlord shall not be obligated upon or to take any action by reason of any matter relating to the operation or maintenance, repair, replacement or restoration of the Subleased Premises or of any facilities or services thereof. Sublandlord will enforce the Overlease against Overlandlord at Subtenant’s request and, if the cause of the enforcement action is of common interest to Subtenant and Sublandlord, Subtenant will pay its pro rata share of the expenses of enforcement incurred by Sublandlord. Without limiting the generality of the foregoing, if the cause of the enforcement action is of no interest or benefit to Sublandlord, Subtenant may enforce the Overlease in Sublandlord’s name at Subtenant’s exclusive cost by counsel reasonably acceptable to Sublandlord.

 

8.                                       Condition of Subleased Premises.  Except as set forth herein, neither Sublandlord nor Sublandlord’s agents have made any representations or promises with respect to the Subleased premises or Subleased Premises or the equipment and improvements therein situated or the physical condition thereof.  Subtenant accepts the Subleased Premises in “as is” conditions on the date hereof subject to further reasonable wear and tear and their being left broom clean.

 

9.                                       Sublandlord’s Services.  Subtenant shall receive from Overlandlord pursuant to the provisions of the Overlease services to or for the benefit of the Subleased Premises which are to be provided under the Overlease without additional charger or rental and Sublandlord shall cooperate with

 

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Subtenant in obtaining such services at Subtenant’s expense. In accordance with paragraph 6 and 7 hereof and subject to the performance by Sublandlord of its obligations thereunder, Subtenant agrees to look solely to the Overlandlord for the rendition of such services or for any other services provided in this Sublease and Sublandlord shall not be liable to Subtenant for any loss, damage or expense resulting from any failure of the Overlandlord to furnish such services unless due to the acts of misconduct on the part of the Sublandlord as tenant under the Overlease.

 

10.                                 Subtenant to Perform Certain Obligations.  Notwithstanding anything contained in the Overlease or in this Sublease, Subtenant agrees that it shall be responsible to perform all repairs and maintenance to the Subleased Premises, as required of Sublandlord under the Overlease, except any repairs or maintenance caused by the act or omission of Sublandlord or the Overlandlord and their respective employees, agents, contractors or clients.

 

11.                                 Holding Over.  Except to the extent Sublandlord is relieved of liability by Overlandlord, if Subtenant shall retain possession of the Subleased Premises or any part thereof after the termination of this Sublease, Subtenant shall equitable contribute to all damages sustained by Sublandlord under the Overlease which are expressly agreed to include the claims of the Overlandlord against Sublandlord arising from Sublandlord’s consequent failure to the extent due to Subtenant’s holdover to surrender the entire Leased Premises. The provisions of this paragraph shall not operate as a waiver by Sublandlord of any right of re-entry hereinabove provided.

 

12.                                 Performance of Overlease.  Unless the breach or default is caused by the acts or omissions of Subtenant, Sublandlord covenants and agrees that it will not breach any of the terms, covenants, or conditions of the Overlease and will not cause or permit any default or termination (other than under Articles 11 or 16) under the Overlease, and Sublandlord shall take all action necessary for the continuance in full force and effect of the Overlease. Sublandlord further covenants and agrees not to modify, amend or waive any of the terms, covenants or conditions of the Overlease which would affect any of the Subtenant’s rights and benefits or obligations under the Overlease with respect to the Subleased Premises.

 

13.                                 Notices.  Any notice to be given hereunder by either party shall be in writing and shall be deemed given upon delivery by a recognized courier service (i.e., Federal Express or UPS). Notice given by the courier service shall be deemed give upon receipt. Furthermore, Sublandlord shall forward to Subtenant within 48 hours of receipt any notices it receives from Overlandlord that pertains to defaults, change of ownership, services, or any other information that could affect Subtenant and/or the Subleased Premises. Notice given to the parties shall be sent to the following addresses:

 

	
Sublandlord:
    	
Marsh USA Inc.
    
	
 
    	
10900 Stonelake Boulevard, Suite 200
    
	
 
    	
Austin, Texas 78759
    
	
 
    	
 
    
	
With a copy to:
    	
Marsh & McLennan Real Estate   Advisors Inc.
    
	
 
    	
Waterfront Corporate Center
    
	
 
    	
121 River Street
    
	
 
    	
Hoboken, New Jersey 07030
    
	
 
    	
 
    
	
Subtenant:
    	
LegalZoom.com, Inc.
    
	
 
    	
Attention: General Counsel
    
	
 
    	
7083 Hollywood Boulevard, Suite 180
    
	
 
    	
Los Angeles, California 90028
    

 

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With a copy to:
    	
LegalZoom.com, Inc.
    
	
 
    	
10900 Stonelake Boulevard, Suite 325
    
	
 
    	
Austin, Texas 78759
    
	
 
    	
Attn: Mike Wilson, Vice President of   Operations
    

 

14.                                 Possession.  Upon receipt of Overlandlord’s consent to this Sublease and delivery of the Security Deposit and insurance certificate required hereunder, Subtenant will be given complete access to the Subleased Premises on all the terms and conditions of this Sublease for the purpose of preparing the Subleased Premises for Subtenant’s occupancy including, but not limited to, installing telecommunications, computer cabling, Subtenant improvements, alterations and any other equipment.

 

15.                                 Parking.  Sublandlord, during the Term, conveys and transfers to Subtenant 141 spaces of its parking space rights under the Overlease (based on 5.67 parking spaces per 1,000 rentable square feet subleased by Subtenant). All parking shall be provided to Subtenant at no cost during the Term.

 

16.                                 Indemnification.  Each party agrees to defend with counsel reasonably approved by the other party, hold harmless and indemnify the other party from all claims of liability for injury, loss, accident or damage to any person or porperty and from any claims, actions, proceedings and expenses and costs in connection therewith (including, without limitation, reasonable attorneys’ fees and expenses) arising from the omission, fault, wrongful act, negligence or other misconduct of the other party and persons for whose conduct the other party is legally responsible occurring on or about the Building and the Subleased Premises, or either.

 

Subtenant further indemnifies and agrees to hold harmless Sublandlord against any and all claims, loss and damage, including without limitation reasonable attorneys’ fees and expenses, which may at any time be asserted by Overlandlord against Sublandlord for failure of Sublandlord to perform any of the covenants, agreements, terms, provisions of conditions contained in the Overlease, which, by reason of the provisions of this Sublease, Subtenant is obligated to perform and which Subtenant has failed to perform (other than any such failure caused by Sublandlord).

 

Sublandlord agrees to defend with counsel reasonably approved by Subtenant, hold harmless and indemnify Subtenant from any claim, expense, loss and damage, including without limitation reasonable attorneys’ fees and expenses which may at any time be incurred by, suffered by or asserted against Subtenant by reason of Sublandlord’s breach of the Overlease (other than breaches caused by Subtenant) or the Sublease or by reason of the acts or omissions in or about the Building of those persons for whom Sublandlord is legally responsible (other than Subtenant).

 

17.                                 Brokerage.  Each party represents and warrants that it dealt with no broker other than Transwestern and Jones Lang LaSalle in this transaction and will indemnify the other party from any loss incurred because this representation and warranty is untrue. Sublandlord will pay said brokers under a separate agreement.

 

18.                                 Furniture.  Subtenant may use the furniture and equipment currently located in the Subleased Premises and listed in Exhibit C and will surrender the same with the Subleased Premises in the condition and configuration received, further reasonable wear and tear excepted. Subtenant shall not remove the furniture listed in Exhibit C from the Subleased Premises during the Term without the prior written consent of Sublandlord, which consent shall not be unreasonably withheld but may be conditioned on the original configuration being re-established on or before the expirations of this Sublease or any earlier termination or cancellation at Subtenant’s expense. Sublandlord will leave all telecom wiring in place and attached to the existing punch downs/racks and patch panels and will leave its

 

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supplemental HVAC in the server room in working order for Subtenant’s use.  All these items will be left “as is” with no warranty.

 

19.                                 Quiet Enjoyment.  Sublandlord covenants that subject to Subtenant’s payment of the Basic Rent and observing and performing all terms, covenants and conditions on Subtenant’s part to be observed and performed hereunder, Subtenant shall peacefully and quietly hold and enjoy the Subleased Premises without molestation from Sublandlord or anyone claiming under Sublandlord.

 

20.                                 Approval.  This Sublease is subject to the approval of the Overlandlord.  If such approval is not delivered by December 31, 2009, then, at any time thereafter before such approval is delivered, Subtenant may cancel this Sublease on notice to Sublandlord in which event Sublandlord will immediately return the Security Deposit to Subtenant.

 

21.                                 First Refusal.  If at any time during the Term, Sublandlord proposes to accept a bona-fide offer to sublease the remaining space on the third floor of the Building (“Expansion Premises”) to an unrelated third party, Sublandlord will notify Subtenant of the terms of the bona-fide offer and Subtenant will then have four (4) business days to notify Sublandlord whether Subtenant will commit to the same terms. If Subtenant declines and Sublandlord does not thereafter sublease to said third party on substantially the same terms as those offered to Subtenant, Sublandlord will offer the revised bona-fide offer to Subtenant to Subtenant for acceptance as aforesaid.

 

If, at any time within the first year of the Term, Sublandlord has not accepted a bona-fide offer to sublease from a third party, then during the first year of the Term, Subtenant shall have the right of first offer on the Expansion Premises on the same terms and conditions contained in this Sublease but with the Abated Rent, Security Deposit and cancellation fee apportioned to the ratio of the Term to the term for the Expansion Premises with no early entry period and the Expansion Space shall be incorporated into this Sublease by amendment.

 

22.                                 Cancellation.  Subtenant may cancel this Sublease effective November 30, 2012 upon written notice on or before July 1, 2012, and the concurrent delivery of a cancellation fee of One Hundred Sixty-Four Thousand One Hundred Thirty-One and No/100 Dollars ($ 164,131.00).

 

23.                                 Signage.  Subtenant shall have the right to install suite and standard directory signage at Subtenant’s expense with Overlandlord’s consent. Subtenant shall have the right to include its logo and name in its signage, consistent with typical signage in the Building.

 

24.                                 Economic Incentives.  Sublandlord shall reasonably and promptly cooperate with Subtenant, upon Subtenant’s request and at Subtenant’s expense, in its application for any municipal incentives or similar benefits for which Subtenant may apply. Until such time that Subtenant has received written approval of all incentives, Subtenant requires that no press or public statements, releases or comments be made regarding Subtenant and/or this Sublease transaction without the prior written approval from Subtenant.  Sublandlord’s covenants in this Section 25 are a material inducement for Subtenant to enter into this Sublease.

 

25.                                 No Partnership.  Sublandlord shall not in any way or for any purpose be deemed a partner, joint venture or member of any joint enterprise with Subtenant.

 

26.                                 No Poaching.  Subtenant will not knowingly hire any employees who were employed by Sublandlord in the Building in the three months prior to their being hired by Subtenant. Subtenant will pay Sublandlord $5,000 per employee hired by Subtenant in breach of this covenant, this being agreed as liquidated damages.

 

6

 

27.                                 Entire Instrument.  This Sublease and the exhibits and addendum attached set forth the entire agreement between the parties. Except as specifically set forth herein, there are no agreements, representations or warranties as to any matter. Any prior conversations or writings are merged herein, superseded hereby and extinguished, including, without limitation, any letters of intent written by or on behalf of Sublandlord or Subtenant. No person has the power or authority to bind the parties to any agreement not set forth herein. No subsequent amendment to this Sublease shall be binding upon Sublandlord or Subtenant unless in writing and signed by Sublandlord and Subtenant. If any provision contained in an exhibit or addendum is inconsistent with the body of this Sublease, the provision contained in said exhibit or addendum shall supersede the provision in the body of the Sublease. The captions appearing herein are inserted only as a matter of convenience and are not intended to define, limit, construe or describe the scope or intent of any paragraph, nor in any other way to affect this Sublease.

 

28.                                 Attorneys’ Fees.  Should any party hereto institute any action or proceeding in court, including in any bankruptcy proceeding, to enforce or seek an interpretation of any provision hereof or for damages by reason of an alleged breach of any provision of this Sublease, the prevailing party shall be entitled to recover from the losing party or parties its reasonable attorneys’ fees and expenses, including, without limitation, the costs of services of paralegals, legal assistants, legal secretaries and expert witnesses, and costs of litigation, investigation and appeal incurred by the prevailing party in such action or proceeding. The prevailing party shall remain entitled to recover the above attorneys’ fees in the event the losing party or parties should become the subject of an order for relief under Title 11 of the United States Bankruptcy Code, or any successor statute or any other applicable statute.

 

29.                                 Successors.  This Sublease shall be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assigns.

 

30.                                 Interpretation.  The laws of the State of Texas shall govern the validity, construction and effect of this Sublease. Wherever the context so requires, the singular number shall include the plural, the plural shall refer to the singular, and the neuter gender shall include the masculine and feminine genders. In the event that any provision of this Sublease shall be adjudicated by a court of competent jurisdiction to be void, illegal, invalid or unenforceable, the remaining terms and provisions of this Sublease shall not be affected thereby, and each of such remaining terms and provisions of this Sublease shall be valid and enforceable to the fullest extent permitted by law and shall in no way be impaired thereby. If suit is initiated against any party hereto for any cause or matter arising from or in connection with any rights or obligations of the parties under this Sublease, the sole jurisdiction and venue for such action shall be Travis County, Texas or the nearest federal district court. The parties hereto acknowledge and agree that each has been given the opportunity to independently review this Sublease with legal counsel, and/or has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. Since all parties have participated in the negotiation and drafting of this Sublease, in the event of an ambiguity in or dispute regarding the interpretation of same, the interpretation of this Sublease shall not be resolved by any rule of interpretation providing for interpretation against the party who causes the uncertainty to exist or against the draftsman.

 

31.                                 Waiver Of Trial By Jury.  SUBLANDLORD AND SUBTENANT DESIRE AND INTEND THAT ANY DISPUTES ARISING SOLELY BETWEEN THEM WITH RESPECT TO OR IN CONNECTION WITH THIS SUBLEASE BE SUBJECT TO EXPEDITIOUS RESOLUTION IN A COURT TRIAL WITHOUT A JURY. THEREFORE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, SUBLANDLORD AND SUBTENANT EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING OR OTHER HEARING BROUGHT BY EITHER SUBLANDLORD AGAINST SUBTENANT OR SUBTENANT AGAINST SUBLANDLORD ON ANY MATTER

 

7

 

WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS SUBLEASE, THE RELATIONSHIP OF SUBLANDLORD AND SUBTENANT, SUBTENANTS USE OR OCCUPANCY OF THE SUBLEASED PREMISES OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT. THIS PROVISION DOES NOT APPLY TO ACTIONS, PROCEEDINGS OR HEARINGS INVOLVING OTHER PARTIES WHO HAVE NOT SO WAIVED.

 

32.                                 Separate Counterparts.  This Sublease may be executed in one or more separate counterparts, each of which, when so executed, shall be deemed to be an original. Such counterparts shall together constitute and be one and the same instrument.

 

33.                                 Non-Waiver.  The waiver by either part of any default in the performance by the other of any covenant contained herein shall not be construed to be a waiver of any preceding or subsequent default of the same or any other covenant contained herein.

 

34.                                 Sublandlord’s Default.  In the event of a default by Sublandlord, Sublandlord shall commence promptly to cure, and diligently pursue to cure, such default immediately upon receipt of written notice from Subtenant specifying the nature of such default, and in any event such cure shall commence within ten (10) days from the date Subtenant delivers written notice of an alleged breach, and Sublandlord shall complete such cure within a commercially reasonable period of time. In the event Sublandlord does not cure a default within a commercially reasonable period of time, Subtenant may seek any remedy available at law or in equity.

 

35.                                 Assignment.  Subtenant may assign all or a portion of the Subleased Premises provided such assignment complies with Section 15.6 of the Overlease.

 

8

 

IN WITNESS WHEREOF, Sublandlord and Subtenant have caused this Sublease to be executed and delivered the date first above written.

 

	
 
    	
MARSH USA INC.,
    
	
 
    	
A Texas corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Randy Dillon
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LEGALZOOM.COM, INC.,
    
	
 
    	
A Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Frank Monestere
    
	
 
    	
Name:
    	
Frank Monestere
    
	
 
    	
Title:
    	
President
    
					

 

9

 

EXHIBIT B

Overlease

 

Exhibit B

 

 

Exhibit “B”

 

June 16, 2003

 

COMMERCIAL OFFICE LEASE AGREEMENT

 

Bank One Corporation, a Delaware corporation, LANDLORD

 

AND

 

Marsh USA Inc., a Texas corporation, TENANT

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page No.
    
	
 
    	
 
    	
 
    
	
1.
    	
PREMISES,   TERM, INITIAL IMPROVEMENTS, ACCEPTANCE OF PREMISES
    	
3
    
	
 
    	
 
    	
 
    
	
2.
    	
RENT   AND SECURITY DEPOSIT
    	
3
    
	
 
    	
 
    	
 
    
	
3.
    	
TAXES
    	
6
    
	
 
    	
 
    	
 
    
	
4.
    	
LANDLORD’S   MAINTENANCE AND REPAIR OBLIGATIONS
    	
6
    
	
 
    	
 
    	
 
    
	
5.
    	
TENANT’S   MAINTENANCE AND REPAIR OBLIGATIONS
    	
6
    
	
 
    	
 
    	
 
    
	
6.
    	
ALTERATIONS   BY TENANT
    	
6
    
	
 
    	
 
    	
 
    
	
7.
    	
SIGNS
    	
8
    
	
 
    	
 
    	
 
    
	
8.
    	
SERVICES   AND UTILITIES
    	
8
    
	
 
    	
 
    	
 
    
	
9.
    	
INSURANCE   BY TENANT
    	
9
    
	
 
    	
 
    	
 
    
	
10.
    	
SUBROGATION   OF RIGHTS OF RECOVERY
    	
10
    
	
 
    	
 
    	
 
    
	
11.
    	
CASUALTY   DAMAGE
    	
10
    
	
 
    	
 
    	
 
    
	
12.
    	
LIABILITY, INDEMNIFICATION,   AND NEGLIGENCE
    	
10
    
	
 
    	
 
    	
 
    
	
13.
    	
USE;   COMPLIANCE WITH LAWS; PARKING
    	
10
    
	
 
    	
 
    	
 
    
	
14.
    	
INSPECTION,   ACCESS AND RIGHT OF ENTRY; NEW CONSTRUCTION
    	
11
    
	
 
    	
 
    	
 
    
	
15.
    	
ASSIGNMENT   AND SUBLETTING
    	
12
    
	
 
    	
 
    	
 
    
	
16.
    	
CONDEMNATION
    	
12
    
	
 
    	
 
    	
 
    
	
17.
    	
SURRENDER   AND REDELIVERY OF PREMISES; HOLDING OVER
    	
13
    
	
 
    	
 
    	
 
    
	
18.
    	
QUIET   ENJOYMENT
    	
14
    
	
 
    	
 
    	
 
    
	
19.
    	
EVENTS   OF DEFAULT
    	
14
    
	
 
    	
 
    	
 
    
	
20.
    	
REMEDIES
    	
14
    
	
 
    	
 
    	
 
    
	
21.
    	
LANDLORD’S   DEFAULT AND LIMITATIONS OF LIABILITY
    	
15
    
	
 
    	
 
    	
 
    
	
22.
    	
MORTGAGES
    	
15
    
	
 
    	
 
    	
 
    
	
23.
    	
ENCUMBRANCES
    	
16
    
	
 
    	
 
    	
 
    
	
24.
    	
MISCELLANEOUS
    	
16
    
	
 
    	
 
    	
 
    
	
25.
    	
NOTICES
    	
18
    
	
 
    	
 
    	
 
    
	
26.
    	
CERTAIN   RIGHTS RESERVED BY LANDLORD
    	
19
    
	
 
    	
 
    	
 
    
	
27.
    	
LANDLORD’S   LIEN
    	
18
    
	
 
    	
 
    	
 
    
	
28.
    	
TENANT’S   ACKNOWLEDGEMENTS
    	
18
    
	
 
    	
 
    	
 
    
	
29.
    	
THIS   RIDER CONTROLS
    	
21
    
	
 
    	
 
    	
 
    
	
30.
    	
RENEWAL   OPTION
    	
21
    
	
 
    	
 
    	
 
    
	
EXHIBIT A
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT A-1
    	
2
    
	
 
    	
 
    	
 
    
	
EXHIBIT B
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT C
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT D
    	
1
    

 

 

	
EXHIBIT E
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT F
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT G
    	
3
    
	
 
    	
 
    	
 
    
	
EXHIBIT H
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT I
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT J
    	
1
    
	
 
    	
 
    	
 
    
	
EXHIBIT K
    	
1
    

 

 

LIST OF DEFINED TERMS

 

	
 
    	
Page No.
    
	
 
    	
 
    
	
Adjusted   Substantial Completion Date
    	
B-2
    
	
Affiliate
    	
16
    
	
Agreement
    	
G-3
    
	
AS-IS
    	
3
    
	
Base   Rent
    	
3
    
	
Building
    	
1, 3
    
	
Building’s   Structure
    	
6
    
	
Change   Order Cost
    	
B-2
    
	
Change   Orders
    	
B-2
    
	
Claimant
    	
14
    
	
Collateral
    	
20
    
	
Commencement   Date
    	
3
    
	
Common   Areas
    	
3
    
	
Construction   Management Fee
    	
7
    
	
Construction   Plans
    	
B-1
    
	
Contract   Sum
    	
B-2
    
	
Electrical   Costs
    	
5
    
	
Event   of Default
    	
13
    
	
Excess
    	
4
    
	
Excess   Costs
    	
B-2
    
	
Excused   Delays
    	
B-2
    
	
Expense   Stop
    	
4
    
	
Expiration   Date
    	
1
    
	
Final   Calendar Year
    	
4
    
	
Finish   Allowance
    	
B-2
    
	
Indemnified   Parties
    	
10
    
	
Initial   Improvements
    	
3, B-1
    
	
L.C.
    	
B-3
    
	
Land
    	
3
    
	
Landlord
    	
3
    
	
Landlord   Delays
    	
B-2
    
	
Landlord’s   Mortgagee
    	
15
    
	
Landlord’s   Contractors
    	
B-4
    
	
Law
    	
16
    
	
Laws
    	
16
    
	
Lease
    	
3
    
	
Loss
    	
10
    
	
Mortgage
    	
15
    
	
Original   Term
    	
3
    
	
Outside   Broker
    	
G-3
    
	
Permitted   Costs
    	
B-2
    
	
Premises
    	
3
    
	
Prepayment
    	
B-3
    
	
Primary   Lease
    	
15
    
	
Project
    	
G-3
    
	
Property   Manager
    	
1
    
	
Proportionate   Share
    	
3
    
	
Rent
    	
3
    
	
Rentals
    	
G-3
    
	
Repair   Period
    	
9
    
	
Rules and   Regulations
    	
11
    
	
Security   Deposit
    	
5
    
	
Space   Plan
    	
B-1
    
	
Space   Planner
    	
B-1
    
	
Substantial   Completion
    	
B-4
    
	
Substantially   Complete
    	
B-4
    
	
Taxes
    	
5
    
	
Tenant
    	
3
    
	
Tenant   Delays
    	
B-2
    
	
Tenant   Parties
    	
16
    
	
Tenant   Party
    	
16
    
	
Tenant   Prospect
    	
G-3
    
	
Tenant’s   Contractors
    	
B-4
    
	
Term
    	
3
    

 

 

	
Transfer
    	
11
    
	
UCC
    	
20
    
	
Vacation   Date
    	
11
    

 

 

BASIC LEASE INFORMATION

 

	
Effective   Date:
    	
 
    	
June 9,   2003
    
	
 
    	
 
    	
 
    
	
Tenant:
    	
 
    	
Marsh   USA Inc., a Texas corporation
    
	
 
    	
 
    	
 
    
	
Tenant’s   Address:
    	
 
    	
10900   Stonelake Boulevard, Suite 300
    
	
 
    	
 
    	
Austin,   Texas, 78759
    
	
 
    	
 
    	
 
    
	
Tenant’s   Contact:
    	
 
    	
Sean   O’Donoghue
    	
Telephone:               (212)   345-8676
    
	
 
    	
 
    	
 
    
	
Landlord:
    	
 
    	
Bank   One Corporation, a Delaware corporation
    
	
 
    	
 
    	
 
    
	
Landlord’s   Address: c/o 
    	
 
    	
Bank   One Real Estate
    
	
 
    	
 
    	
20   S. Clark Street, 17th Floor
    
	
 
    	
 
    	
Chicago, Illinois   60603
    
	
 
    	
 
    	
 
    
	
With   copy to:
    	
 
    	
Bank   One Law Department
    
	
 
    	
 
    	
1111   Polaris Parkway, Suite 4P
    
	
 
    	
 
    	
Columbus,   Ohio 43240
    
	
 
    	
 
    	
Attn:   Mr. Thomas M. Hennessey
    
	
 
    	
 
    	
 
    
	
Landlord’s   Contact:
    	
 
    	
Mike   Weinberg
    
	
 
    	
 
    	
 
    
	
Payments:
    	
 
    	
All   Rent payments shall be sent to Landlord in care of (“Property   Manager”) at the address below, or such place as Landlord may   designate from time to time. 
    
	
 
    	
 
    	
Payment   Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Bank   One Real Estate
    
	
 
    	
 
    	
1111   Polaris Parkway, Suite 1J
    
	
 
    	
 
    	
Columbus,   Ohio 43240
    
	
 
    	
 
    	
Attn:   Lease Administration
    
	
 
    	
 
    	
 
    
	
Building:
    	
 
    	
(the   “Building”) located in Austin,   Travis County, Texas, comprising 165,435 deemed net rentable square feet   located on the real property (the “Land”) as   described in Exhibit “A” attached to this lease.
    
	
 
    	
 
    	
 
    
	
Premises
    	
 
    	
59,152   deemed net rentable square feet located on the third floor of the Building as   outlined on the plan attached to this Lease as Exhibit “A-1” and whose   street address is 10900 Stonelake Boulevard, Austin, Texas.
    
	
 
    	
 
    	
 
    
	
Original   Term
    	
 
    	
Commencing   upon the Commencement Date and ending at 5:00 p.m. on the last day of   the Sixtieth (60th) full   calendar month thereafter, (the “Expiration Date)   subject to adjustment and earlier termination as provided in the Lease.
    
	
 
    	
 
    	
 
    
	
Commencement   Date
    	
 
    	
Sixty   (60) days following the Execution Date of this Lease or such later date   resulting from Landlord Delay.
    
	
 
    	
 
    	
 
    
	
Expiration   Date
    	
 
    	
5:00   PM on the last day of the Sixtieth (60th) full calendar month   following the Commencement Date.
    
	
 
    	
 
    	
 
    
	
Security   Deposit
    	
 
    	
$ NONE
    
	
 
    	
 
    	
 
    
	
Rent
    	
 
    	
Basic   Rent, Tenant’s Proportionate Share of Electrical Costs, Tenant’s share of   Excess, and all other sums that Tenant may owe to Landlord under the Lease.
    
	
 
    	
 
    	
 
    
	
Expense   Stops:
    	
 
    	
Real   Property Taxes:
    	
Greater   of $2.25 per rentable square foot of Premises or the tax for 2003 as finally   determined.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Utilities:
    	
$2.40   per rentable square foot of Premises
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Common   Area Expenses:
    	
2003   Base Year
    
	
 
    	
 
    	
 
    
	
Initial   Basic Rent:
    	
 
    	
$ 83,798.67 per month, which is based on an annual Basic Rent of $17.00 per   rentable square foot.
    
					

 

 

	
Permitted   Use:
    	
 
    	
General   office and call/service center use, including use incidental thereto, and for   no other purpose without Landlord’s prior written consent. No retail sales   may be made from the Premises.
    
	
 
    	
 
    	
 
    
	
Tenant’s   Proportionate Share:
    	
 
    	
35.76%, which is   the percentage obtained by dividing: (a) the 59,152 deemed net rentable   square feet in the Premises by (b) the deemed net rentable square feet   in the Building.
    
	
 
    	
 
    	
 
    
	
Guarantor:
    	
 
    	
Marsh   USA Inc., a Delaware corporation
    

 

The foregoing Basic Lease Information is incorporated into and made a part of this Lease identified above. If any conflict exists between any Basic Lease Information and the Lease, then the Lease shall control.

 

	
TENANT
    	
 
    
	
 
    	
 
    
	
MARSH   USA INC., A TEXAS CORPORATION
    	
 
    
	
 
    	
 
    
	
Name:
    	
/s/   Stephen R. Skeeter
    	
 
    
	
Printed   Name:
    	
Mr. Stephen   R. Skeeter
    	
 
    
	
Title:
    	
Managing   Director
    	
 
    
	
 
    	
 
    
	
LANDLORD:
    	
 
    
	
 
    	
 
    
	
BANK   ONE CORPORATION
    	
 
    
	
a   Delaware corporation
    	
 
    
	
 
    	
 
    
	
Name:
    	
/s/   Roy C. Keller
    	
 
    
	
Printed   Name:
    	
Roy   C. Keller
    	
 
    
	
Title:
    	
Senior   Vice President
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Printed   Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

 

LEASE AGREEMENT

 

This Lease Agreement (this “Lease”) is entered into by BANK ONE CORPORATION, A DELAWARE CORPORATION (“Landlord”), and MARSH USA INC., A TEXAS CORPORATION, a (“Tenant”).

 

1.                                                                                       PREMISES, TERM, INITIAL IMPROVEMENTS, ACCEPTANCE OF PREMISES.

 

1.1                                                                                 Premises.  Landlord leases to Tenant, and Tenant leases from Landlord, the space depicted on the floor plan attached as Exhibit A-1 (the “Premises”), subject to the terms and conditions in this Lease. The Premises are part of the 165,435 square foot building (the “Building”) located on the real property described on Exhibit A (the “Land”). All references to “Building” shall individually and collectively refer to all buildings and the Parking Area (defined below) on the Land, now and during the lease Term (defined below), unless the context otherwise requires. Landlord and Tenant hereby agree that, the rentable square footage contained in the Premises is deemed to be 59,152 net rentable square feet and the rentable square footage of the Building is deemed to be net rentable square feet and Tenant’s “Proportionate Share” of the Building is 35.76%. “Common Areas” will mean all areas, space, facilities, and equipment (whether or not located within the Building) made available by Landlord for the common and joint use of Landlord, Tenant, and others designated by Landlord using or occupying space in the Building or on the Land to the extent that the Common Areas are not expressly made a part of the Premises, and are made available for the use of all tenants in the Building. Landlord hereby grants Tenant a non-exclusive right to use the Common Areas during the lease Term in common with others designed by Landlord, subject to the terms and conditions of this Lease, including, without limitation, the restrictions on intended use and the Rules and Regulations (defined below).

 

1.2                                                                                 Term. The lease term shall be sixty (60) months, beginning sixty (60) days following the Execution Date of the Lease (the “Commencement Date”), and ending at 5:00 PM on the last day of the Sixtieth (60th) full calendar month thereafter (the “Expiration Date”), the original term of the Lease (“Original Term”.) The Original Term, together with any renewals and extensions, shall be referred to collectively as the lease “Term.” If the Commencement Date is not the first day of a calendar month, then the Term shall end sixty months after the first day of the first full calendar month of the Term. Following Substantial Completion (defined in Exhibit B), Landlord and Tenant shall execute an instrument specifying the Commencement Date and the Expiration Date of the Original Term.

 

1.3                                                                                 Initial Improvements. If an Exhibit B is attached to this Lease, Tenant shall construct in the Premises the improvements (the “Initial Improvements” as defined in Exhibit B) described on the plans and specifications referenced on Exhibit B.

 

1.4                                                                                 Tenant’s Acceptance of Premises. By occupying the Premises, Tenant accepts the Premises in its “AS-IS, WHERE IS” condition as of the date of  Tenant’s occupancy, subject to all lights, restrooms, HVAC systems, and base building electrical (i.e. the “Building Systems”) being in good working order and condition, and completion of punch-lists, if any relating to the Initial Improvements, if an Exhibit B is attached. If an Exhibit B is not attached, then Tenant accepts the Premises in its “AS-IS, WHERE IS” condition as of the date of Tenant’s occupancy, and Landlord shall have no obligation to perform or pay for any repair or other work, other than as set forth in this Lease.

 

2.                                                                                       RENT AND SECURITY DEPOSIT.

 

2.1                                                                                 Rent; No Right of Offset. The Basic Rent, the Additional Rent and all other payments and reimbursements required to be made by Tenant under this Lease, including any sums due under the attached Exhibit B, shall constitute “Rent.” Tenant shall make each payment of the following items of Rent when due, without prior notice, demand, deduction or offset.

 

2.2                                                                                 Basic Rent.

 

Tenant shall pay to Landlord “Basic Rent” equal to the following amounts for the following periods of time:

 

	
 
    	
 
    	
Time Period
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Monthly Basic Rent
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Month   1
    	
 
    	
through
    	
 
    	
Month   60
    	
 
    	
Annual   Rate of $17.00 PSF
    	
 
    	
$
    	
83,798.67
    	
 
    
											

 

The first monthly installment of Basic Rent, plus the other monthly charges set forth in Section 2.3, shall be due upon Lease Commencement. Monthly installments of Basic Rent shall then be due on the first day of each calendar month following the Commencement Date. If the Term begins on a day other than the first day of a month or ends on a day other than the last day of a month, the Basic Rent and Additional Rent for each partial month shall be prorated.

 

2.3                                                                                 Additional Rent. On the same day that Basic Rent is due, Tenant shall pay as “Additional Rent” its Proportionate Share of Excess (defined below).

 

 

2.3.1                                                                        Operating Expenses.

 

2.3.1.1                                                               Tenant shall pay an amount (per each rentable square foot in the Premises) equal to the excess (“Excess”) from time to time of actual Operating Expenses per rentable square foot in the Building over the respective expense stops for Real Property Taxes, Utilities, and Common Area Expenses (collectively the “Expense Stops”) as defined hereafter:

 

	
Real   Property Taxes:
    	
Greater   of $2.25 per rentable square foot or the actual taxes for 2003 as finally   determined.
    
	
 
    	
 
    
	
Utilities:
    	
$2.40   per rentable square foot
    
	
 
    	
 
    
	
Common   Area Expenses:
    	
Actual   Common Area Expenses in calendar year 2003
    

 

Landlord may collect such amount in a lump sum, to be due within 30 days after Landlord furnishes to Tenant the Annual Cost Statement. Alternatively, Landlord may make a good faith estimate of the Excess to be due by Tenant for any calendar year or part thereof during the Term, and, unless Landlord delivers to Tenant a revision of the estimated Excess, Tenant shall pay to Landlord, on the Commencement Date and on the first day of each calendar month thereafter, an amount equal to the estimated Excess for such calendar year or part thereof divided by the number of months in such calendar year during the Term. From time to time during any calendar year, Landlord may estimate and re-estimate the Excess to be due by Tenant for that calendar year and deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the monthly installments of Excess payable by Tenant shall be appropriately adjusted in accordance with the estimations so that, by the end of the calendar year in question, Tenant shall have paid all of the Excess as estimated by Landlord. Any amounts paid based on such an estimate shall be subject to adjustment pursuant to Section 2.3.1.4 of this Lease when actual Operating Expenses are available for each year.

 

2.3.1.2                                                               Operating Expenses Inclusions.  Operating Expenses shall include all expenses and disbursements of every kind which Landlord reasonably incurs, pays or becomes obligated to pay in connection with the ownership, operation and maintenance of the Building and Land including, but not limited to, the following: (1) Taxes (defined below) and the cost of any tax consultant employed to assist Landlord in determining the fair tax valuation of the Building and Land; (2) the costs of all utilities other than the cost of utilities actually reimbursed to Landlord by Building’s tenants; (3) the cost of insurance; (4) the cost of repairs, replacement, and general maintenance of the Building, (5) cost of service or maintenance contracts with independent contractors for the operation, maintenance, repair, and/or replacement or security of the Building [including without limitation window cleaning, elevator maintenance, landscape maintenance and replacement, and security service (if provided)]; (6) the cost of dues, assessments, and other charges applicable to the Land payable to any property or community owner association under restrictive covenants or deed restrictions to which the Premises are subject; (7) the annual cost of all capital improvements made to the Building and/or the Land which, although capital in nature, can reasonably be expected to reduce normal operating costs of the Building (but only to the extent of savings realized), as well as alterations, additions, and improvements made by Landlord to comply with Law (defined below) first coming into effect after the date hereof, as amortized over the useful economic life of such improvements as determined by Landlord in its reasonable discretion (without regard to the period over which such improvements may be depreciated or amortized for Federal income tax purposes); (8) all supplies and materials used in the operation, managements, maintenance, replacements, repair and security of the Building; and (9) wages and salaries (including management fees) of all employees engaged in the operation, repair, replacement, maintenance and security of the Building, including taxes, insurance, and benefits relating thereto. Items (3) through (9) above being further defined herein as “Common Area Expenses”).

 

2.3.1.3                                                               Operating Expense Exclusions. Operating Expenses shall not include the following (1) any loan costs for interest, principal amortization, or other payments on loans to Landlord; (2) leasing commissions, advertising expenses and all other marketing expenses; (3) legal expenses other than those incurred for the general benefit of the Building’s tenants; (4) allowances, concessions, and other costs of renovating or otherwise improving space for occupants of the Building or vacant space in the Building; (5) income taxes imposed on or measured by the income of Landlord from the operation of the Building; (6) costs incurred in connection with the original construction of the Building or for correcting defects or inadequacy in the construction of the Building; (7) for depreciation of the Building; (8) for capital improvements made to the Building, other than capital improvements described in 2.3.1.2 above and except for items which, though capital for accounting purposes, are properly considered maintenance and repair items, such as painting of Common Areas, replacement of carpet in elevator lobbies, and the like provided their useful lives are five years or less; (9) for repair, replacements and general maintenance that should be paid by proceeds of insurance or by Tenant or other third parties, and alterations attributable solely to tenants of the Building other than Tenant; (10) rents due under ground leases; (11) any bad debt loss, rent loss or reserves for bad debt or rent loss; (12) the expense of services provided to other tenants in the Building which are not provided to Tenant on a rent inclusive basis hereunder; (13) costs associated with the operation of the business of the entity which constitutes Landlord as the same are distinguished from the costs of operation of the Building, including accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Building, costs of any disputes between Landlord and its employees (if any) not engaged in Building operation, disputes of Landlord with Building management, or fees or costs paid in connection with disputes with other tenants; (14) any damage or loss resulting from any casualty which the Landlord covenanted to insure against; (15) management fees in excess of three percent (3%) of gross revenue of the Building, (16) salaries to Manager or Landlord above the position of property manager, (17) charitable contributions; (18) costs to install, repair or remove signs at or near the top of the Building that include the name of a tenant of the Building; and (19) any other reasonable expenses which, in accordance with GAAP, would not normally be treated as Operating Costs by landlords of Class A Buildings, such as costs for artwork in excess of

 

 

$5,000 annually, dining clubs, restaurants and helicopter pads (other than for emergency use) which the parties agree are not normal Operating Expenses; (20) costs for which Landlord is reimbursed; (21) unrecovered expenses directly resulting from the negligence of the Landlord, its agents, servants or employees; (22) the wages of any employee who does not devote substantially all of his time to the Building or to other Landlord buildings, but only such allocation or amount in proportion to the extent such employees devotes time to the Building (allocations of the time of pooled employees are permitted); (23) fines, penalties, and interest thereon; (24) any costs whatsoever incurred in connection with the ownership, management and operating of a garage or parking area which does not supply free parking to tenant and its invitees; (25) costs of running the Building office and salaries of persons above the one person (or more than one person in the event such persons are allocated between other buildings of Landlord) who directly supervises labor in construction and maintenance; (26) any costs or expenses which are more than two (2) fiscal years old; (27) any costs or expenses that are incurred directly or indirectly with respect to Landlord’s indemnity obligations under this lease; (28) any costs or expenses that are incurred to make any of Landlord’s representations or warranties under this lease true and correct; (29) costs attributable to leasable area located in the lobby of the Building to the extent that the use (e.g., restaurant use) of such space by a tenant imposes a burden on Building services, including cleaning, that is materially greater than those base building services provided to other tenants in the Building; (30) except as specifically provided above in Sections 2.3.1.2 and 2.3.1.3, capital items which shall be deemed to be any item having an expected useful life in excess of three years. If a capital item is leased by Landlord, rather than purchased, the decision by Landlord to lease the item in question shall not serve to increase the Tenant’s proportionate share of operating expenses beyond that which would have applied had the item in question been purchased.

 

2.3.1.4                                                               Operating Expense Calculation and Annual Cost Statements. Within a reasonable time after the end of each calendar year and the Expiration Date, Landlord shall prepare and deliver to Tenant an Annual Cost Statement showing Tenant’s actual Excess of Operating Expenses for the applicable calendar year, provided that with respect to the calendar year in which the Expiration Date occurs, (1) that the calendar year shall be deemed to have commenced on January 1 of that year and ended on the Expiration Date (the “Final Calendar Year”) and (2) Landlord shall have the right to estimate the actual Excess allocable to the Final Calendar Year. Unless Tenant makes written exception to any item within thirty (30) days after Landlord furnishes its Annual Cost Statement of Tenant’s Excess, the Annual Cost Statement shall be considered as final and accepted by Tenant. If Tenant’s total monthly payments of Tenant’s Excess for the applicable calendar year are more than Tenant’s actual Excess, then Landlord shall retain the excess and credit the amount against Tenant’s future Excess payments. With respect to the Final Calendar Year, Landlord shall pay to Tenant the amount of all excess payments, less any additional amounts then owed to Landlord. If Tenant’s total monthly payments of Tenant’s Excess for any year are less than Tenant’s actual Excess for that year, Tenant shall pay the difference to Landlord within ten (10) days after Landlord’s request for payment. There shall be no duplication of costs for reimbursements in calculating Operating Expenses.

 

2.3.1.5                                                               Grossed-Up  Operating  Expenses.          If during any year the Building is less than ninety-five percent (95%) occupied, then, for purposes of calculating Operating  Expenses for that year, the amount of Operating Expenses that fluctuates with Building occupancy shall be “grossed-up” to the amount which, in Landlord’s reasonable estimation, it would have been had the Building been ninety-five percent (95%) occupied for that entire year. Grossed-up expenses shall include by definition janitorial costs and supplies, utilities, HVAC repairs and maintenance, and variable management fees. Grossed up expenses shall not include fixed expenses such as landscaping and Real Property Taxes.

 

2.3.1.6                                                               Cap on Controllable Common Area Expenses. Tenant shall not be responsible for the Excess relating to the annual year-over-year growth of Common Area Expenses that are under the reasonable control by Landlord. As defined herein, those controllable expenses are all Common Area Expenses, with the exception of insurance and a variable management fee not to exceed three percent (3.0%).

 

2.4                                                                                 Late Fee. If any Rent or other payment required of Tenant under this Lease is not paid when due, Landlord may charge Tenant, and Tenant shall pay upon demand a fee equal to two percent (2.0%) of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenant’s delinquency; provided however, that Landlord shall give written notice of such delinquency to Tenant with opportunity to cure within a ten (10) day period after the date of such notice without such late charge, provided Landlord shall not be obligate to furnish Tenant with more than one (1) written notice of a delinquency and opportunity to cure each calendar year during the Term of the Lease. All such fees shall be Additional Rent.

 

2.5                                                                                 Initial Monthly Rent. The amounts of the initial monthly Basic Rent and Additional Rent for Tenant’s Proportionate Share of Operating Expenses and Taxes are as follows:

 

	
Basic Rent (Section 2.2)
    	
 
    	
$
    	
83,798.67
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Excess Taxes (Defined below)
    	
 
    	
$
    	
0.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Excess Utilities
    	
 
    	
$
    	
0.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Excess Common Area Expenses
    	
 
    	
$
    	
0.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total initial monthly payment
    	
 
    	
$
    	
83,798.67
    	
 
    

 

 

2.6                                                                                 Security Deposit. Intentionally Deleted.

 

 

3.                                       TAXES

 

3.1                                 Real Property Taxes. The term “Taxes” shall include all taxes, assessments and governmental charges that accrue against the Land and the Building, whether federal, state, county, or municipal, and whether imposed by taxing or management districts or authorities presently existing or hereafter created. Landlord shall pay the Taxes, and Tenant shall pay Landlord for Tenant’s Proportionate Share of the Taxes. If, during the Term, there is levied, assessed or imposed on Landlord a capital levy or other tax directly on the Rent; or a franchise tax, assessment, levy or charge measured by or based upon the Rent; then all such taxes, assessments, levies or charges, or any part so measured or based, shall be included within the term “Taxes.” Taxes does not include obligations incurred to procure the right to build the Building such as transit fees or any tax not imposed exclusively on the ownership or operation of interests in real property as opposed to commercial enterprises generally.

 

3.2                                 Personal Property Taxes. Tenant shall before delinquency pay all taxes and assessments levied or assessed against any personal property, trade fixtures or alterations placed in or about the Premises; and upon Landlord’s request, deliver to it receipts from the applicable taxing authority or other evidence acceptable to Landlord to verify that the taxes have been paid. If any such taxes are levied or assessed against Landlord or its property, and (1) Landlord pays them or (2) the assessed value of Landlord’s property is increased and Landlord pays the increased taxes, then Tenant shall pay to Landlord the amount of all such taxes within ten (10) days after Landlord’s request for payment. All such amounts shall bear interest from the date paid by Landlord to the applicable taxing authority until reimbursed by Tenant at the rate set forth in Section 24.13.

 

4.                                       LANDLORD’S MAINTENANCE AND REPAIR OBLIGATIONS.

 

In addition to those obligations set forth hereafter in Section 8 Services and Utilities. Landlord’s maintenance obligations shall be to maintain the Building as a first class office building, but Landlord shall not be obligated to maintain or repair Tenant’s fixtures, alterations, additions, partitions, improvements, equipment, trade fixtures, inventory and personal property.

 

5.                                       TENANT’S MAINTENANCE AND REPAIR OBLIGATIONS

 

5.1                                 Tenant’s Maintenance of the Premises. Tenant shall maintain the Premises in a clean, safe, operable, attractive condition and shall not permit or allow to remain any waste or damage to any portion of the Premises. Subject to Section 10, Tenant shall repair or replace, subject to Landlord’s direction and supervision any damage to the Building caused by Tenant or Tenant Party. All repairs and replacements performed by or on behalf of Tenant shall be performed in a good and workmanlike manner acceptable in all respects to Landlord, and in accordance with Landlord’s standards applicable to alterations or improvements performed by Tenant. Tenant shall repair and pay for any damage caused by any failure by Tenant to perform obligations under this Lease. Tenant and any Tenant Party shall not do anything that would inhibit or prevent other tenants’ use and enjoyment of the Common Areas.

 

5.2                                 Landlord’s Optional Performance of Tenant’s Obligations. In the event Tenant fails to maintain the Premises as required in this Section 5, and following Landlord’s delivery of written notice to Tenant describing with reasonable detail the nature of such failure, Tenant shall have thirty (30) days to remedy such failure to maintain. Thereafter, Landlord has the right, but not the obligation, to perform or provide any maintenance, repairs or replacements to be performed by Tenant under this Section 5 and to provide any utility service required to be provided under Section 8 below, upon notice to Tenant. Should Landlord elect to do so, Tenant shall reimburse Landlord for all expenses and costs incurred by Landlord in performing Tenant’s obligations plus an additional five percent (5%) of such amount to compensate Landlord for the overhead and administrative costs relating to the performance of all such obligations. All such amounts owing pursuant to this Section 5 shall be deemed Rent under this Lease, which Tenant shall pay Landlord within ten (10) days after Landlord’s request for payment.

 

6.                                       ALTERATIONS BY TENANT.

 

6.1                                 No Tenant Alterations. Tenant shall not make any changes, modifications, alterations, additions or improvements to the Premises, or install any heat or cold generating equipment, or other equipment, machinery or devices in the Premises or any other part of the Building without the prior written consent of Landlord (except for cosmetic and light wall portioning and minor rewiring, provided no building permit is required by the City of Austin).

 

6.2                                 Requirements for Landlord’s Written Consent. Landlord shall not be required to notify Tenant of whether it consents to any alterations until it has received plans and specifications which are sufficiently detailed to allow construction of the work depicted in them to be performed in a good and workmanlike manner, and Landlord has had a reasonable opportunity to review them. Without in any way limiting Landlord’s rights to refuse its consent to Tenant’s proposed alterations, if Landlord consents in writing to Tenant’s proposed alterations, then Landlord’s consent shall be conditioned without limitation on all of the following: (1) Landlord’s reasonable approval of the contractor or person making the alterations and approving each contractor’s insurance coverage provided in connection with the alterations and their installation, (2) Landlord’s supervision of their installation, (3) Landlord’s approval of final and complete plans and specifications for the alterations and their installation, (4) the appropriate governmental agency, if any, having final and complete plans and specifications for such work, and (5) Landlord’s determination of whether any changes, modifications, alterations, additions or improvements to the Premises, or installations of any equipment or machinery would do any of the following: (i) adversely affect structural or load bearing portions of the Premises or the Building, (ii) result in a material increase of electrical usage above the normal type of amount of electrical current to be provided by Landlord, (iii) result in an above-standard increase of Tenant’s use of heating or air conditioning, (iv) impact mechanical, electrical or plumbing systems in the Premises or the Building, (v) affect areas of the Premises that can be viewed from Common Areas, (vi) require greater or more difficult cleaning work, such as kitchens, reproduction rooms, or interior glass partitions, etc., or (vii) violate any

 

 

provision in Section 13 of this Lease or Exhibit B, attached hereto. If the alterations will affect the Building structure, HVAC System, or mechanical, electrical, or plumbing systems, then the plans and specifications must be prepared by a licensed engineer reasonably acceptable to Landlord. Landlord’s approval of any plans and specifications shall not be a representation that the plans or the work depicted in them will comply with any applicable Law (defined below) or be adequate for any purpose, but shall merely be Landlord’s consent to Tenant’s installation of the alterations. Tenant shall bear the risk of complying with Title III of the Americans with Disabilities Act of 1990, the Texas Elimination of Architectural Barriers Act, and all rules, regulations and guidelines promulgated under either of such acts, as amended from time to time (the “Disabilities Acts”) within the Premises, and Landlord shall bear the risk of complying with the Disabilities Acts in the Common Areas of the Building other than compliance that is necessitated by the use of the Premises for other than the Permitted Use (which risk and responsibility shall be borne solely by Tenant). Landlord shall have the right, but not the obligation, to periodically inspect the work in the Premises and may require changes in the method or quality of the work. If Landlord’s consent is granted, any such changes, modifications, alternations, additions, improvements or installations shall be made at Tenant’s sole cost and expense.

 

6.3                                 Tenant’s Obligations. Landlord represents that to the best of its actual knowledge, that the “as-built” plans of the Premises in CADD form delivered to Tenant prior to the Execution Date are materially correct. Upon completion of any alteration requiring approval under this Lease, Tenant shall deliver to Landlord accurate, up to date reproducible “as-built” plans. If Tenant has not delivered to Landlord the as-built drawings within thirty (30) days of completion of the alterations, Landlord may contract for production of as-built drawings at Tenant’s sole cost and expense by providing Tenant five (5) days written notice of Landlord’s intent to contract for such drawings. Tenant shall reimburse Landlord for such costs within ten (10) days of Landlord’s request for payment. All work performed by Tenant in the Premises, including work relating to the alterations or their repair, shall be performed in a good and workmanlike manner in accordance with Law (defined below) and with Landlord’s and Landlord’s insurance carriers’ specifications and requirements.

 

6.4                                 Ownership of Alterations. Upon the Expiration Date or earlier termination of this Lease, Tenant shall return the Premises to Landlord clean and in the condition existing at the time Tenant took possession of the Premises, except for: (1) ordinary wear and tear, (2) damage that Landlord has the obligation to repair under the terms of this Lease, (3) all changes, modifications, alterations, additions or improvements that Tenant does not have the obligation to remove under the terms of this Section 6.4, and (4) damage by casualty. Except as provided below, all changes, modifications, alterations, additions or improvements and property at the Premises (including wall to wall carpeting, paneling or other wall covering and any other surface material attached to or affixed to the floor, wall or ceiling of the Premises) will remain in and be surrendered with the Premises upon the Expiration Date or earlier termination of this Lease, and Tenant waives all rights to any payment, reimbursement or compensation for the property that must remain at the Premises in accordance with this subsection. Tenant must, however, remove from the Premises prior to the Expiration Date or earlier termination of this Lease any changes, modifications, alterations, additions or improvements that Landlord has designated for removal at the time of Landlord’s written approval of such changes, modifications, alterations, additions or improvements. Notwithstanding, the parties agree that Landlord may not designate for the removal items typically found in other first class office buildings, unless such items adversely impact the cost of subsequent reuse or re-tenanting (such as raised computer floors, full kitchens, supplemental HVAC units, etc.). Tenant shall not be required to remove from the Premises any of the changes, modifications, alterations, additions or improvements which are constructed in the Premises with the Construction Plans (as defined in Exhibit “B”) or those that do not require Landlord’s approval. Tenant must promptly repair any damage to the Premises caused by its removal of personal property, changes, modifications, alterations, additions or improvements, and leave a surface ready to receive a new finish.

 

6.5                                 Trade Fixtures. Tenant may erect shelves, bins, machinery and trade fixtures provided that such items (1) do not alter the basic character of the Premises or the Building; (2) do not overload or damage the same; and (3) may be removed without damage to the Premises. Unless Landlord specifies in writing otherwise, all alterations, additions, and improvements shall be Landlord’s property when installed in the Premises.

 

7.                                       SIGNS

 

7.1                                 Premises’ Exterior. Tenant shall not without Landlord’s prior written consent (1) make any changes to the exterior of the Premises or the Building, (2) install any exterior lights, decorations, balloons, flags, pennants, banners or paintings, (3) erect or install any signs, windows, blinds, draperies, window treatments, bars, security installations, or door lettering, decals, window or glass-front stickers, placards, decorations or advertising media of any type that is visible from the exterior of the Premises.

 

7.2                                 Requirements for Landlord’s Written Consent. Landlord shall not be required to notify Tenant in writing of whether it consents to any sign until Landlord (1) has received detailed, to-scale drawings specifying the design, material composition, color scheme, and method of installation, and (2) has had a reasonable opportunity to review them. Notwithstanding the foregoing, Landlord shall provide its consent in its sole discretion.

 

8.                                       SERVICES AND UTILITIES.

 

8.1                                 Services. Landlord shall use all reasonable efforts to furnish to Tenant: (i) water (hot and cold) at those points of supply provided for general use of tenants of the Building; (ii) heated and refrigerated air conditioning as appropriate, in accordance with Exhibit E hereto; (iii) janitorial service (including trash removal), in accordance with Exhibit F attached hereto and incorporated herein, to the Premises on Business Days other than Holidays for Building-standard installations (Landlord reserves the right to bill Tenant separately, at cost, for extra janitorial service required for non-standard installations) and such window washing as may from time

 

 

to time in Landlord’s judgment be reasonably required; (iv) elevators for ingress and egress to the floor on which the Premises are located, in common with other tenants, provided that Landlord may reasonably limit the number of elevators to be in operation at times other than during customary Business Hours and on Holidays; (v) replacement of Building-standard light bulbs and fluorescent tubes, provided that Landlord’s standard charge for such bulbs and tubes shall be paid by Tenant; and (vi) electrical current during normal Business Hours other than for computers, electronic data processing equipment, special lighting, equipment that requires more than 110 volts, or other equipment whose electrical energy consumption exceeds normal office usage (110/208 volt 3-phase capable of providing up to 8.5 watts per rentable square foot for Tenant’s total power requirements to each floor (i.e. receptacles, lighting, HVAC, etc.)), and (v) contract or salaried surveillance personnel on site during Normal Business Hours (as defined below). Landlord shall maintain the Common Areas of the Building in reasonably good order and condition. If Tenant desires any of the services specified in this subparagraph at any time other than times herein designated, such services shall be supplied to Tenant upon the written request of Tenant delivered to Landlord before 3:00 p.m. on the same Business Day, and Tenant shall pay to Landlord the actual cost of such services, without mark-up, within ten days after Landlord has delivered to Tenant an invoice therefor. Landlord's current hourly charge for after-hours service is $35.00 per air handler, subject to change by Landlord. “Business Days” means Monday through Friday (except for Holidays); “Normal Business Hours” means 7:00 a.m. to 6:00 p.m. on Business Days and 8:00 a.m. to 1:00 p.m. on Saturday (other than Holidays); and “Holidays” means New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

 

8.2                                 Excess Utility Use. Landlord shall use reasonable efforts to furnish electrical current for computers, electronic data processing equipment, special lighting, equipment that requires more than 110 volts, or other equipment whose electrical energy consumption exceeds normal office usage through the then-existing feeders and risers serving the Building and the Premises, and Tenant shall pay to Landlord the cost of such service within ten (10) days after Landlord has delivered to Tenant an invoice therefor. Landlord may determine the amount of such additional consumption and potential consumption by either or both: (i) a survey of standard or average tenant usage of electricity in the Building performed by a reputable consultant selected by Landlord and paid for by Tenant; or (ii) a separate meter in the Premises installed, maintained, and read by Landlord, at Tenant’s expense. Tenant shall not install any electrical equipment requiring special wiring or requiring voltage in excess of 110 volts or otherwise exceeding capacity of the feeders or lines to the Building or the risers or wiring installation of the Building or the Premises unless approved in advance by Landlord. The use of electricity in the Premises shall not exceed the capacity of existing feeders and risers to or wiring in the Premises. Any risers or wiring required to meet tenant’s excess electrical requirements shall upon Tenant’s written request, be installed by Landlord, at Tenant’s cost, if, in Landlord’s sole and absolute judgment, the same are necessary and shall not cause permanent damage or injury to the Building or the Premises, cause or create a dangerous or hazardous condition, entail excessive or unreasonable alterations, repairs, or expenses, or interfere with or disturb other tenants of the building. If Tenant uses machines or equipment (other than general office machines, excluding computers and electronic data processing equipment) in the Premises which affect the temperature otherwise maintained by the air conditioning system or otherwise overload any utility, Landlord may install supplemental air conditioning units or other supplemental equipment in the Premises, and the cost thereof, including the cost of installation, operation, use and maintenance, shall be paid by Tenant to Landlord within ten (10) days after Landlord has delivered to Tenant an invoice therefor.

 

8.3                                 Discontinuance. Landlord’s obligation to furnish services under Section 8 shall be subject to the rules and regulations of the supplier of such services and governmental rules and regulations. Landlord may, upon not less than thirty (30) days prior written notice to Tenant, discontinue any such service to the Premises, provided Landlord first arranges for a direct connection thereof through the supplier of such service. Tenant shall, however, be responsible for contracting with the supplier of such service and for paying all deposits for, and costs relating to, such service.

 

8.4                                 Restoration of Services. Landlord shall use reasonable efforts to restore any service that becomes unavailable; however, such unavailability shall not render Landlord liable for any interruption or failure of utility service to the Premises. If the curtailment was within Landlord’s reasonable control and such curtailment continues for three (3) business days, then Landlord shall grant Tenant one day of abatement in Basic Rent for each day past the third day such service is unavailable. Alternatively, if the curtailment was not within Landlord’s reasonable control and such curtailment continues for ten (10) business days, then Landlord shall grant Tenant one day of abatement in Basic Rent for each day past the tenth day such service is unavailable. Other than the abatement referenced above in this Section 8.4, Tenant shall not be entitled to any other abatement or reduction of Rent by reason of any damages, interruption or failure of utilities or other services to the Premises or any damages caused thereby. Any such interruption or failure in any utility or service shall not be construed as an eviction, constructive or actual of Tenant or as a breach of the implied warranty of suitability, and shall not relieve Tenant from the obligation to perform any covenant or agreement under this Lease. All amounts due from Tenant under this Section 8 shall be payable within ten (10) days after Landlord’s request for payment.

 

9.                                       INSURANCE BY TENANT. Tenant shall, during the Lease Term, procure at its expense and keep in force the following insurance:

 

9.1                                 Commercial General Liability Insurance. Commercial general liability insurance naming the Landlord, Bank One Corporation, Landlord’s Mortgagee (defined below), and Property Manager as additional insureds against claims for bodily injury and property damage occurring in or about the Premises arising from or in connection with Tenant’s wrongful acts or omissions in its use or occupancy of the Premises. The insurance policy or policies shall have a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence with a Two Million Dollar ($2,000,000) aggregate limit and excess umbrella liability insurance in the amount of Two Million Dollars ($2,000,000). If Tenant has other locations that it owns or leases, the policy shall include an aggregate

 

 

limit per location endorsement. The liability insurance shall be primary and not “contributing to” any insurance available to Landlord, and Landlord’s insurance shall be in excess of all of Tenant’s insurance. In no event shall the limits of Tenant’s insurance limit its liability under this Lease.

 

9.2                                 Property Insurance. Property insurance insuring;  1) all fixtures, alterations, additions, partitions, improvements and equipment installed in the Premises, 2) trade fixtures, 3) inventory, and 4) personal property located on or in the Premises for perils covered by the causes of loss - special form (all risk), including coverage for flood, earthquake and damages from any boiler and machinery, if applicable. The insurance shall be written on a replacement cost basis in an amount equal to one hundred percent (100%) of the full replacement value of the aggregate of the foregoing.

 

9.3                                 Workers’ Compensation Insurance. Workers’ compensation insurance in accordance with the Laws of the State of Texas and employer’s liability insurance in an amount not less than Five Hundred Thousand Dollars ($500,000.00). The worker’s compensation insurance must include an all-states endorsement.

 

9.4                                 Other Insurance. Tenant shall also keep in force all other insurance that Landlord reasonably deems necessary and prudent or that is reasonably required by Landlord’s beneficiaries or mortgagees of any deed of trust or mortgage encumbering the Premises, the Building, or the Land.

 

9.5                                 Standard of Tenant’s Insurance. Each policy required to be maintained by Tenant shall be with companies rated A-X or better in the most current issue of Best’s Insurance Reports and will contain endorsements that (1) such insurance may not lapse with respect to Landlord or its Property Manager or be canceled or materially amended with respect to Landlord or its Property Manager without the insurance company’s endeavor to give Landlord and its Property Manager at least ten (10) days prior written notice of every such cancellation or amendment, (2) Tenant shall be solely responsible for payment of premiums, (3) in the event of payment of any loss covered by any policy, Tenant’s insurance, as to covered claims arising from the Premises, shall be primary in the event of overlapping coverage with insurance which may be carried by Landlord. Insurers shall be licensed to do business in the state in which the Premises are located and domiciled in the United States. Any deductible amounts under any required insurance policies shall not exceed $25,000. Tenant shall deliver to Landlord duplicate originals of certificates of insurance. Tenant shall have the right to provide insurance in a “blanket” policy, if the required blanket policy expressly provides coverage to the Premises and to Landlord as required by this Lease.

 

9.6                                 Landlord’s Rights. In the event Tenant does not purchase the insurance required by this Lease or keep any required insurance in full force and effect, Landlord may, but shall not be obligated to, purchase the necessary insurance and pay the premium. Tenant shall repay to Landlord, as Additional Rent, the amount so paid promptly upon demand. In addition, Landlord may recover from Tenant and Tenant agrees to pay, as Additional Rent, any and all expenses, including attorneys’ fees, and damages which Landlord may sustain by reason of the failure of Tenant to obtain and maintain any insurance.

 

9.7                                 Nature of Tenant’s Obligation. Tenant’s insurance obligations under this Section 9 are freestanding obligations which are not dependent on any other conditions or obligations under this Lease.

 

9.8                                 Insurance by Landlord. Landlord shall, during the Lease Term, procure and keep in force the following insurance, the cost of which may be deemed as Additional Rent payable, by Tenant pursuant to Section 2.3.:

 

(1)                                PROPERTY INSURANCE. “All Risk” property insurance, including, without limitation, coverage for earthquake and flood in such amounts as are customary in Austin, Texas; and machinery (if applicable); sprinkler damage; vandalism; malicious mischief. Such Insurance shall not cover Tenant’s equipment, trade fixtures, inventory, fixtures or personal property located on or in the Premises;

 

(2)                                  LIABILITY INSURANCE. Commercial general liability (lessor’s risk) insurance against any and all claims for bodily injury, death or property damage occurring in or about the Building or the Land. Such insurance shall have a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence with a Two Million Dollar ($2,000,000) aggregate limit; and

 

(3)                                  OTHER. Such other insurance, including but not limited to Loss of Rents coverage, as Landlord deems necessary and prudent.

 

10.                                 SUBROGATION OF RIGHTS OF RECOVERY.  LANDLORD AND TENANT MUTUALLY WAIVE THEIR RESPECTIVE RIGHTS OF RECOVERY AGAINST EACH OTHER FOR ANY LOSS OF, OR DAMAGE TO, EITHER PARTY’S PROPERTY, TO THE EXTENT THAT THE LOSS OR DAMAGE IS INSURABLE UNDER AN INSURANCE POLICY REQUIRED UNDER THIS LEASE TO BE IN EFFECT AT THE TIME OF THE LOSS OR DAMAGE. Each party shall obtain any special endorsements,  if required by its insurer, under which the insurer shall waive its rights of subrogation against the other party.

 

11.                                 CASUALTY DAMAGE.

 

11.1                           Destruction. Tenant immediately shall give written notice to Landlord of any damage to the Premises, the Building, or the Land. If the Premises, the Building, or the Land are totally destroyed by an insured peril, or so damaged by an insured peril that, in Landlord’s reasonable estimation (to be given in writing

 

 

within thirty (30) days after the occurrence), rebuilding or repairs cannot be substantially completed (exclusive of leasehold improvements Tenant makes) within one hundred eighty (180) days after the date of Landlord’s actual knowledge of the damage, and Landlord does not elect to relocate Tenant as described below, then either party may terminate this Lease by delivering to the other written notice of termination within fifteen (15) days after the Landlord issues its estimate. Notwithstanding, Landlord may undertake, at its expense, to relocate Tenant to office space reasonably comparable to the Premises, provided that Landlord notifies Tenant of its intention to do so in a written notice delivered to Tenant within thirty (30) days after the damage, and in such instance this Lease shall continue in full force and effect. Such relocation may be for a portion of the remaining Term or the entire Term. Landlord shall complete any such relocation within ninety (90) days after Landlord has delivered such written notice to Tenant. If Landlord does not elect to relocate Tenant following such damage to the Premises or the Building, then Tenant may terminate this Lease by delivering to Landlord written notice of termination within fifteen (15) days following the date on which Landlord notifies Tenant in writing of the estimated time for the restoration. In either event, the Rent shall be abated during the unexpired portion of this Lease, effective upon the date the damage occurred. Time is of the essence with respect to the delivery of all notices of damage and termination.

 

11.2                           Restoration of Premises. Subject to Section 11.3, if this Lease is not terminated under Section 11.1, then Landlord shall restore the Premises to substantially its previous condition, except that Landlord shall not be required to rebuild, repair or replace any part of the alterations, other improvements, or personal property required to be covered by Tenant’s insurance under Section 9. If the Premises are untenantable, in whole or in part, during the period beginning on the date the damage occurred and ending on the date of substantial completion of Landlord’s repair or restoration work, then the Rent for that period shall be reduced to such extent as may be fair and reasonable under the circumstances.

 

12.                                 INDEMNIFICATION.

 

12.1                           Indemnity by Tenant. Tenant will indemnify the Landlord from loss, cost or expense including reasonable attorneys’ fees incurred by reason of the negligent or willful acts or omissions of those for whom in the circumstances Tenant is responsible in law which also arise from Tenant’s use or occupancy of the Premises.

 

12.2                           Indemnity by Landlord. Landlord will indemnify Tenant from loss, cost or expense including reasonable attorneys’ fees incurred by reason of the negligent or willful acts or omissions of those for whom in the circumstances Landlord is responsible in law which also arise from Landlord’s maintenance or management of the Building, except to the extent covered by Tenant’s use or occupancy of the Premises described in 12.1 above.

 

12.3                           Limitations of the Indemnification. These indemnities are limited:

 

(i)                                     by the waivers set forth in Section 10 above;

 

(ii)                                  to the indemnitor’s equitable share of the losses, costs or expenses based on the relative culpability of each person whose negligent or willful acts or omissions contributed to the loss;

 

(iii)                               to direct, proximately caused damages as opposed to consequential or indirect damages or business interruption.

 

This indemnity shall not be deemed or construed to make a party liable for any matter that the other party is obligated to do by this Lease, by law, pursuant to the other party’s obligation to a third party, or otherwise.

 

13.                                 USE: COMPLIANCE WITH LAWS; PARKING.

 

13.1                           Permitted Use. The Premises shall be used only for general office use, and for no other purpose without Landlord’s prior written consent. No retail sales may be made from the Premises. The Premises shall not be used for any use which is disreputable, and no part of the Premises shall be used as an escort service, a massage parlor or spa, blood bank, medical clinic, or an adult book or adult videotape store (which are defined as stores in which any portion of the inventory is not available for sale or rental to children under 18 years old because such inventory explicitly details with or depicts human sexuality). Tenant shall not sell, display, transmit or distribute (electronically or otherwise) materials or merchandise of a pornographic nature or merchandise generally sold in an adult book or adult video tape store (as defined above). Tenant shall not use the Premises as living or sleeping quarters or a residence. Tenant shall not use the Premises to receive, store or handle any product, material or merchandise that is explosive or highly inflammable or hazardous. Tenant shall keep the Premises neat and clean at all times. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, light, noise or vibrations to emanate from the Premises; nor commit, suffer or permit any waste in or upon the Premises; nor at any time sell, purchase or give away or permit the sale, purchase or gift of food in any form by or to any of Tenant’s agents or employees or other parties in the Premises; nor take any other action that would constitute a public or private nuisance or would disturb the quiet enjoyment of any other tenant of the Building, or unreasonably interfere with, or endanger Landlord or any other person; nor permit the Premises to be used for any purpose or in any manner that would (1) void the insurance thereon, (2) increase the insurance risk, (3) cause the disallowance of any sprinkler credits, (4) violate any Law (defined below) including, but not limited to, any zoning ordinance, or (5) be dangerous to life, limb or property. Tenant shall pay to Landlord on demand any increase in the cost of any insurance on the Premises or the Building incurred by Landlord, which is caused by Tenant’s use of the Premises or because Tenant vacates the Premises, and acceptance of such payment shall not constitute a waiver of any of Landlord’s other rights or remedies nor a waiver of Tenant’s duty to comply herewith.

 

 

13.2                           Compliance with Laws. Tenant shall be solely responsible for satisfying itself and Landlord that the Permitted Use will comply with all applicable Laws.  Tenant shall, at its sole cost and expense, be responsible for complying with all Laws (defined below) and Rules and Regulations (defined below) applicable to the use, occupancy, and condition of the Premises.  However, Tenant shall not bear the cost of improvements or modifications to the Building or structural and mechanical elements of the Premises (i.e. such as sprinkler or elevator modifications).  Tenant shall promptly correct any violation of a Law, or Rules or Regulations with respect to the Premises.  Tenant shall comply with any direction of any governmental authority having jurisdiction which imposes any duty upon Tenant or Landlord with respect to the Premises, Building, and/or Land, or with respect to the occupancy or use thereof.

 

13.3                           Compliance with Rules and Regulations. Tenant will comply with such rules and regulations (the “Rules and Regulations”) generally applying to tenants in the Building as may be adopted from time to time by Landlord for the management, cleanliness of, and the preservation of good order and protection of the Premises, the Building and the Land.  A current copy of the Rules and Regulations applicable to the Building is attached hereto as Exhibit D.  All such Rules and Regulations are hereby made a part hereof.  All changes and amendments to the Rules and Regulations sent by Landlord to Tenant in writing and conforming to the foregoing standards shall be carried out and observed by Tenant.  Landlord hereby reserves all rights necessary to implement and enforce the Rules and Regulations and each and every provision of this Lease.

 

13.4                           Parking. Tenant and its employees, agents and invitees shall have the non-exclusive right to use three hundred fifty-five (355) undesignated vehicular parking spaces in the surface parking area and structured garage associated with the Building (the “Parking Area”) free of charge during the Original Term and Renewal Terms, subject to (1) such Rules and Regulations (as defined herein) as Landlord may promulgate from time to time and (2) rights of ingress and egress of other tenants and their employees, agents and invitees.  Such Parking is available on a first come first serve basis and without reservation of individual or block spaces.  In the event Landlord provides reserved parking for any tenant of the Building, Landlord will allocate and provide Tenant with reserved parking in an equal proportion to other tenants in the Building, based upon the amount of rentable area each tenant and Tenant then currently lease.  In no instance shall Tenant allow its employees, agents and invitees to occupy more parking spaces in the Parking Areas that exceed the ratio of six (6) parking spaces per 1,000 rentable square feet of leased space.  Parking in the structured garage during the Second Renewal Term or any parking spaces requested by Tenant in excess of a ratio of six (6) spaces per 1,000 square feet of rentable area shall be at market rates then in effect at the Building as such may be set or adjusted by Landlord from time to time.  Landlord does not reserve or allocate parking spaces at the Premises nor guarantee its availability on a daily basis.  Tenant shall only permit parking by its employees, agents or invitees of appropriate vehicles in appropriate designated Parking Areas.

 

14.                                 INSPECTION; ACCESS AND RIGHT OF ENTRY; NEW CONSTRUCTION. Without being deemed or construed as committing an actual or constructive eviction of Tenant and without abatement of Rent, Landlord and Landlord’s agents and representatives may enter the Premises during business hours to inspect the Premises [with prior notice, except in the case of emergencies]; to make such repairs as may be required or permitted under this Lease; to perform any unperformed obligations of Tenant hereunder; and to show the Premises to prospective purchasers, mortgagees, ground lessors, and, during the last (9) months of the Term, tenants, provided that Landlord uses reasonable efforts to minimize interruption to Tenant’s use and occupancy.  Tenant hereby waives any claim for damages for any injury or inconvenience or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby.  Landlord shall have the right to use any and all means which Landlord may deem proper to enter the Premises in an emergency without liability therefor.  During the last nine (9) months of the Term, Landlord may erect a sign on the Premises indicating that the Premises are available.

 

15.                                 ASSIGNMENT AND SUBLETTING.

 

15.1.                        Transfers. Tenant shall not, without the prior written consent of Landlord, which will not be unreasonably withheld and will be given or denied within ten (10) days after delivery of the information required by the last sentence hereof, (1) assign, transfer, or encumber this Lease or any estate or interest herein, (2) sublet any portion of the Premises, (3) grant any license, concession, or other right of occupancy of any portion of the Premises, or (4) permit the use of the Premises by any parties other than Tenant (any of the events listed in Sections 15.1 (1) through (6) being a “Transfer”).  If Tenant requests Landlord’s consent to a Transfer, then Tenant shall provide Landlord with a written description of all terms and conditions of the proposed Transfer, copies of the proposed documentation, and the following information about the proposed transferee: name and address; reasonably satisfactory information about its business and business history; its proposed use of the Premises; banking, financial, and other credit information; and general references sufficient to enable Landlord to determine the proposed transferee’s creditworthiness and character.

 

15.2                           Landlord’s Written Consent Requirements.  In determining whether Landlord shall consent to any proposed assignment or subletting of the Premises, Landlord will consider the following factors: provided that the proposed transferee (1) has a good reputation in the business community, (2) does not engage in a business which may place Landlord in violation of any non-compete or exclusive use agreement, and (3) will use the Premises consistent with the permitted use allowed under the Lease which shall not be environmentally harmful.

 

15.3                           Obligations of Tenant and Proposed Transferee.  If Landlord consents to a proposed Transfer, then the proposed transferee shall deliver to Landlord a written agreement, in a form satisfactory to Landlord, whereby the proposed transferee expressly assumes the Tenant’s obligations hereunder (however, in the event of transfer of less than all of the space in the Premises the proposed transferee shall be liable only for obligations under this Lease that are properly allocable to the space subject to the Transfer, and only to the extent of the rent it has

 

 

agreed to pay Tenant).  Landlord’s consent to a Transfer shall not release any Guarantor of Tenant’s obligations hereunder nor release Tenant from performing its obligations under this Lease, but rather Tenant and its transferee shall be jointly and severally liable.  No such Transfer shall constitute a novation.  Landlord’s consent to any Transfer shall not waive Landlord’s rights as to any subsequent Transfers.  If a default occurs while the Premises or any part thereof are subject to a Transfer, then Landlord, in addition to its other remedies, may collect directly from such transferee all rents becoming due to Tenant and apply such rents against Tenant’s Rent obligations.  Tenant authorizes its transferees to make payments of Rent directly to Landlord upon receipt of notice from Landlord to do so.  If Landlord should fail to notify Tenant in writing of its decision within the thirty (30) day period after Landlord’s receipt of Tenant’s written request for Landlord’s consent to a Transfer, then Landlord shall be deemed to have granted consent to the proposed Transfer.

 

15.4                           Landlord’s Recapture Right.  Intentionally deleted.

 

15.5                           Excess Rent.  Notwithstanding anything to the contrary contained in Section 15 of this Lease, Tenant hereby assigns, transfers and conveys fifty percent (50%) of all net consideration received by Tenant under any Transfer, other than to a Permitted Tranferee, which is in excess of the Rent payable by Tenant under this Lease, and Tenant shall hold such amounts in trust for Landlord and pay them to Landlord within ten (10) days after receipt after first recovering its costs which may include legal fees, brokerage, free rent and other inducements, unamortized leasehold improvements in excess of any allowance paid by Landlord and Rent and Additional Rent paid while the Premises were vacant and on the market.

 

15.6                           Permitted Transfers.  Notwithstanding anything to the contrary contained in this Section 15 of this Lease, if the proposed subtenant or assignee is any corporation which controls, is controlled by or is under common control with Tenant, or any corporation or entity resulting from the merger or consolidation of Tenant, or is any person or entity which acquires all or substantially all of the assets of Tenant as a going concern of the business that is being conducted on the Premises (a “Permitted Transferee”), then Tenant may assign or sublet the Premises or any portion thereof to a Permitted Transferee without the prior written consent of Landlord, subject to Landlord’s subsequent ability to reasonably inquire into the factors set forth in this Section 15.6.  In the event that Tenant requests to transfer all or a part of its interest in this Lease to any corporation in which or with which Tenant or its corporate successors or assigns is merged or consolidated, in accordance with applicable statutory provisions covering merger and consolidation of corporations, then Tenant’s obligations under this Lease must be assumed by the corporation surviving such merger or created by such consolidation, and the tangible net worth of the surviving or created corporation must not be less than the tangible net worth of Tenant as the effective date of the Transfer.  “Tangible Net Worth” means the excess of assets over total liabilities, in each case, as determined in accordance with generally accepted accounting principles (“GAAP”) consistently applied, excluding, however, the determination of total assets, all assets which would be classified as intangible assets under GAAP, including without limitation, goodwill, licenses, patents, trademarks, trade-names, copyrights, and franchises.  Any such sublease or assignment shall not in any way affect or limit the liability of tenant under the terms of this Lease including compliance with the terms of this Section 15.  For purposes of this paragraph, “Control” shall be deemed to mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of Tenant or any such corporation or entity as the case may be, whether through the ownership of voting securities, by contract, or otherwise.

 

16.                                 CONDEMNATION.

 

16.1                           Taking – Landlord’s and Tenant’s Rights.  If any part of the Building is taken by right of eminent domain or conveyed in lieu thereof (a “Taking”), and such Taking prevents Tenant from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately before such Taking, then Landlord may, at its expense, relocate Tenant to office space reasonably comparable to the Premises, provided that Landlord notifies Tenant of its intention to do so within thirty (30) days after the Taking.  Such relocation may be for a portion of the remaining Term or the entire Term.  Landlord shall complete any such relocation within two hundred ten (210) days after Landlord has notified Tenant of its intention to relocate Tenant.  If Landlord does not elect to relocate Tenant following such Taking, then Tenant may terminate this Lease as of the date of such Taking by giving written notice to Landlord within sixty (60) days after the Taking and Rent shall be apportioned as of the date of such Taking.  If Landlord does not relocate Tenant and Tenant does not terminate this Lease, then Rent shall be abated on a reasonable basis as to that portion of the Premises rendered untenantable by the Taking.

 

16.2                           Taking – Landlord’s Rights.  If any material portion, but less than all, of the Building becomes subject to a Taking, or if Landlord is required to pay any of the proceeds received for a Taking to Landlord’s Mortgagee, then this Lease, at the option of Landlord, exercised by written notice to Tenant within thirty (30) days after such Taking, shall terminate and Rent shall be apportioned as of the date of such Taking.  If Landlord does not so terminate this Lease and does not elect to relocate Tenant, then this Lease will continue, but if any portion of the Premises has been taken, Basic Rent shall abate as provided in the last sentence of Section 16.1.

 

16.3                           Award.  If any Taking occurs, then Landlord shall receive the entire award or other compensation for the Land, the Building, and other improvements taken, and Tenant may separately pursue a claim against the condemnor for the value of Tenant’s personal property which Tenant is entitled to remove under this Lease, moving costs, loss of business, and other claims it may have.

 

17.                                 SURRENDER AND REDELIVERY OF PREMISES; HOLDING OVER.

 

17.1                           Surrender and Redelivery of Premises.  No act by Landlord shall be an acceptance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid, unless it is in

 

 

writing and signed by Landlord.  Tenant’s delivery of the keys or access cards to Property Manager or any agent or employee of Landlord shall not operate as a termination of this Lease or a surrender of the Premises.

 

17.1.1                  Joint Inspection.  At least thirty (30) days before the Expiration Date, Tenant shall arrange to meet with Landlord for a joint inspection of the Premises.

 

17.1.2                  Tenant’s Payment Obligations.  Tenant shall pay to Landlord the amount, as reasonably estimated by Landlord, of Tenant’s obligation hereunder for Operating Expenses for the year in which the Term ends.  All such amounts shall be used and held by Landlord for payment of such obligations of Tenant hereunder, with Tenant being liable for any additional costs therefor upon demand by Landlord or with any excess to be returned to Tenant after all such obligations have been determined and satisfied as the case may be.  Any Security Deposit held by Landlord may be credited against the amount due by Tenant under this Section 17.

 

17.1.3                  Condition of Premises.  After the Expiration Date or earlier termination of this Lease, or the termination of Tenant’s right to possess the Premises, Tenant shall (1) deliver to Landlord the Premises in a clean and operational condition, free of all personal property of Tenant as required hereunder, (2) deliver to Landlord all keys, parking cards and access cards to the Premises and Parking Areas, (3) remove all signage placed on the Premises, the Building, or the Land by or at Tenant’s request, and (4) deliver in place to Landlord the modular office furnishings listed in the attached Exhibit G, in good condition, reasonable wear and tear accepted, which Landlord has provided to Tenant, without liability, for Tenant’s use free of charge during the Lease Term.  All fixtures, alterations, additions, and improvements (whether temporary or permanent) shall be Landlord’s property and shall remain on the Premises, except as provided in the next two sentences.  All items not removed following ten (10) days written notice to Tenant from Landlord shall, at the sole option of Landlord, be deemed abandoned by Tenant and may be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord without notice to Tenant and without any obligation to account for such items.  All work required of Tenant under this Section 17 shall be coordinated with Landlord and be done in a good and workmanlike manner, in accordance with all Laws (defined below), and so as not to damage the Building or unreasonably interfere with other tenants’ use of their premises.  If Tenant fails to perform work under this Section 17, Tenant shall pay all costs incurred by Landlord in performing such work within ten (10) after Landlord’s request thereof.

 

17.2                           Holding Over.  If a Tenant Party fails to vacate the Premises after the Expiration Date or earlier termination of this Lease, then a Tenant Party’s possession of the Premises shall constitute and be construed as a tenancy at will only, subject, however, to all of the terms, provisions, covenants and agreements on the part of Tenant under this Lease, and such Tenant Party shall be subject to immediate eviction and removal; Tenant or any such Tenant Party covenants and agrees to pay Landlord, in addition to the other Rent due hereunder, if any, as Rent for the period of such holdover a prorated daily Basic Rent equal to (i) during the first thirty-days of holdover the sum of one hundred percent (100%) of the daily Basic Rent plus 100% of the Additional Rent, both payable during the last month of the Term, and (ii) during any day of holdover thereafter, one hundred fifty percent (150%) of the daily Basic Rent plus one hundred percent (100%) Additional Rent, both payable during the last month of the Term.  Tenant’s possession of the Premises after the Expiration Date or earlier termination of this Lease shall immediately constitute an Event of Default under Section 19.5 herein.  The Rent during such holdover period shall be payable to Landlord from time to time on demand; provided, however, if no demand is made during a particular month, holdover rent accruing during such month shall be paid in accordance with the provisions of this Section 17.  Tenant will vacate the Premises and deliver same to Landlord immediately upon Tenant’s receipt of notice from Landlord to so vacate.  No holding over by a Tenant Party (whether with or without the consent of Landlord), and no payments of money by Tenant to Landlord after the end of the Term, shall operate to reinstate, continue or extend the Term, and no extension of this Term shall be valid unless evidenced by a writing signed by both Landlord and Tenant.  No payments of money by Tenant (other than the holdover rent accruing during such holdover period paid in accordance with the provisions of this Section 17) to Landlord after the Expiration Date or earlier termination of this Lease shall constitute full payment of Rent under the terms of this Lease.

 

18.                                 QUIET ENJOYMENT. Provided Tenant has fully performed its obligations under this Lease, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance from Landlord or any party claiming by, through or under Landlord, but not otherwise, subject, however, to all of the provisions of this Lease and all Laws (defined below), liens, encumbrances and restrictive covenants to which the Land is subject.  Landlord shall not be responsible for the acts or omissions of any other tenant or third party that may interfere with Tenant’s use and enjoyment of the Premises.

 

19.                                 EVENTS OF DEFAULT. Each of the following events shall constitute an “Event of Default” under this Lease:

 

19.1                           Monetary Default; Failure to Pay Rent. Tenant fails to pay Rent when due or any payment or reimbursement required under this Lease or under any other lease with Landlord when due, and in either case such failure continues for a period of five (5) days from the date such payment was due; provided however, that Landlord shall give written notice of such default to Tenant with opportunity to cure within a ten (10) day period after the date of such notice, provided Landlord shall not be obligated to furnish Tenant with more than two (2) written notices of default and opportunity to cure each calendar year during the Term of this Lease.

 

19.2                           Bankruptcy; Insolvency.  The filing of a petition by or against Tenant or any Guarantor of Tenant’s obligations hereunder (1) in any bankruptcy or other insolvency proceeding; (2) seeking any relief under any debtor relief Law; (3) for the appointment of a liquidator, receiver, trustee, custodian, or similar official for all or substantially all of Tenant’s property or for Tenant’s interest in this Lease; or (4) for reorganization or

 

 

modification of Tenant’s capital structure (however, if any such petition is filed against Tenant, then the filing of such petition shall not constitute an Event of Default, unless it is not dismissed within 45 days after the filing thereof).

 

19.3                           Intentionally Deleted.

 

19.4                           Liens; Encumbrances. Tenant fails to discharge any lien placed upon the Premises in violation of Section 23 within ten (10) days after any such lien or encumbrance is filed against the Premises.

 

19.5                           Non-Monetary Default; Failure to Perform.  Tenant fails to comply with any term, provision or covenant of this Lease (other than those listed in this Section 19), and Tenant does not commence to cure and thereafter diligently prosecute such cure within twenty (20) days after written notice thereof to Tenant.

 

20.                                 REMEDIES.

 

20.1                           Upon any Event of Default, Landlord may, in addition to all other rights and remedies afforded Landlord hereunder or by Law, take any of the following actions:

 

20.1.1                  Terminate the Lease.  Terminate this Lease by giving Tenant written notice thereof, in which event, Tenant shall pay to Landlord the sum of (1) all Rent accrued hereunder through the date of termination, (2) all amounts due under Section 20.2, and (3) an amount equal to (i) the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a per annum rate equal to the “Prime Rate” as published on the date this Lease is terminated by The Wall Street Journal, Southwest Edition, in its listing of “Money Rates”, minus (ii) the then present fair rental value of the Premises for such period, similarly discounted; or

 

20.1.2                  Terminate Tenant’s Right of Possession.  Terminate Tenant’s right to possess the Premises without terminating this Lease by giving written notice thereof to Tenant, in which event Tenant shall pay to Landlord (1) all Rent and other amounts accrued hereunder to the date of termination of possession, (2) all amounts due from time to time under Section 20.2, and (3) all Rent and other sums required hereunder to be paid by Tenant during the remainder of the Term, diminished by any net sums thereafter received by Landlord through reletting the Premises during such period.  Landlord shall not be obligated to relet the Premises before leasing other portions of the Building, and Tenant’s obligations hereunder shall not be diminished because of Landlord’s failure to relet the Premises or to collect Rent due for a reletting.  Tenant shall not be entitled to the excess of any consideration obtained by reletting over the Rent due hereunder.  Reentry by Landlord in the Premises shall not affect Tenant’s obligations hereunder for the unexpired Term; rather Landlord may, from time to time, bring action against Tenant to collect amounts due by Tenant, without the necessity of Landlord’s waiting until the expiration of the Term.  Actions to collect amounts due by Tenant to Landlord under this subsection may be brought from time to time on one or more occasions, without the necessity of Landlord waiting until the Expiration Date of this Lease.  Unless Landlord delivers written notice to Tenant expressly stating that it has elected to terminate this Lease, all actions taken by Landlord to exclude or dispossess Tenant of the Premises shall be deemed to be taken under this subsection.  If Landlord elects to proceed under this Section 20.1.2, it may at any time elect to terminate this Lease under Section 20.1.1; or

 

20.2                           Landlord’s Other Rights and Remedies.  Upon any default or Event of Default, Tenant shall pay to Landlord all costs incurred by Landlord (including court costs and attorneys’ fees and expenses) in (1) obtaining possession of the Premises, (2) removing and storing Tenant’s or any other occupant’s property, (3) repairing, restoring, altering, remodeling, or otherwise putting the Premises into condition acceptable to a new tenant, (4) reletting all or any part of the Premises (including brokerage commissions, cost of tenant finish work, and other costs incidental to such reletting), (5) performing Tenant’s obligations which Tenant failed to perform, and (6) enforcing, or advising Landlord of, its rights, remedies, and recourses.  Landlord’s acceptance of Rent following an Event of Default shall not waive Landlord’s rights regarding such Event of Default.  Landlord’s receipt of Rent with knowledge of any default by Tenant hereunder shall not be a waiver of such default, and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless set forth in writing and signed by Landlord.  No waiver by Landlord of any violation or breach of any of the terms contained herein shall waive Landlord’s rights regarding any future violation of such term or violation of any other term.  If Landlord repossesses the Premises pursuant to a judgment under the Texas Property Code which entitles Landlord to a writ of forcible entry and detainer or, after Tenant vacates, by self-help, then Landlord shall have the right to (i) keep in place and use or (ii) remove and store, at Tenant’s expense, all of the furniture, trade fixtures, equipment and other personal property in the Premises, including that which is owned by or leased to Tenant at all times before any foreclosure thereon by Landlord or repossession thereof by any lessor thereof or third party having a lien thereon.  Landlord may relinquish possession of all or any portion of such furniture, trade fixtures, equipment and other property to any person (a “Claimant”) who presents to Landlord a copy of any instrument represented by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting Claimant the right under various circumstances to take possession of such furniture, trade fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity or legality of the instrument.  Landlord may, as its option and without prejudice to or waiver of any rights it may have, (a) escort Tenant to the Premises to retrieve any personal belongings of Tenant and/or its employees not covered by the Landlord’s statutory lien or the security interest described in Section 27 or (b) obtain a list from Tenant of the personal property of Tenant and/or its employees that is not covered by the Landlord’s statutory lien or the security interest described in Section 27, and make such property available to Tenant and/or Tenant’s employees; however, Tenant first shall pay in cash all costs and estimated expenses to be incurred in connection with the removal of such property and making it available.  The rights of Landlord herein stated are cumulative and in addition to any and all other rights that Landlord has or may hereafter have at law or in equity, and Tenant hereby agrees that the rights herein granted Landlord are commercially reasonable.

 

 

21.                                 LANDLORD’S DEFAULT AND LIMITATIONS OF LIABILITY.

 

21.1.                        DEFAULTS BY LANDLORD.  If Landlord fails to perform any of its obligations hereunder and Landlord does not commence to cure and thereafter diligently prosecute such cure within such twenty (20) days after written notice from Tenant specifying such failure, Tenant’s exclusive and sole remedy shall be an action for damages.

 

21.2                           LIMITATIONS ON LANDLORD’S LIABILITY.

 

THE LIABILITY OF LANDLORD TO A TENANT PARTY FOR ANY DEFAULT BY LANDLORD, SHALL BE LIMITED TO ACTUAL AND DIRECT DAMAGES. IN NO EVENT SHALL LANDLORD BE LIABLE TO A TENANT PARTY FOR CONSEQUENTIAL OR SPECIAL DAMAGES BY REASON OF A FAILURE TO PERFORM (OR A DEFAULT) BY LANDLORD HEREUNDER OR OTHERWISE. EXCEPT FOR CLAIMS WHICH MAY BE COVERED BY INSURANCE, IF A TENANT PARTY SHALL RECOVER A MONEY JUDGMENT AGAINST LANDLORD, THE TENANT PARTY AGREES THAT SUCH MONEY JUDGMENT SHALL BE SATISFIED SOLELY BY LANDLORD’S INTEREST IN THE PREMISES AND BUILDING AND THE RENTS, PROFITS OR PROCEEDS THEREOF, AS THE SAME MAY THEN BE ENCUMBERED, AND LANDLORD, ITS AFFILIATES, PARTNERS, OFFICERS, DIRECTORS, SHAREHOLDERS, AND EMPLOYEES SHALL NOT BE LIABLE OTHERWISE FOR ANY OTHER CLAIM ARISING OUT OF OR RELATING TO THIS LEASE.

 

21.3                           Examination of Lease; No Contract Until Execution by Parties.  Submission by Landlord of this instrument to Tenant for examination or signature does not constitute a reservation of or option for lease. This Lease will be effective as a lease or otherwise only upon execution by both Landlord and Tenant and delivery to the parties. If Tenant is a corporation (including any form of professional association), limited liability company, partnership (general or limited), or other form of organization other than an individual, then each individual executing this Lease on behalf of Tenant hereby covenants, warrants and represents: (1) that such individual is duly authorized to execute and deliver this Lease on behalf of Tenant in accordance with the organizational documents of Tenant; (2) that this Lease is binding upon Tenant; (3) that Tenant is duly organized and legally existing in the state of its organization, and is qualified to do business in the State of Texas; (4) that upon request, Tenant will provide Landlord with true and correct copies of all organizational documents of Tenant, and any amendments thereto; and (5) that the execution and delivery of this Lease by Tenant will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease, loan, credit agreement, partnership agreement or other contract or instrument to which Tenant is a party or by which Tenant may be bound. If Tenant is a form of organization other than an individual, Tenant will, prior to the Commencement Date, deliver to Landlord written documentation reasonably satisfactory to Landlord evidencing the authority of an authorized representative of Tenant to enter into the Lease and bind Tenant to all of the obligations of Tenant under the Lease.

 

22.                                 MORTGAGES.

 

22.1                           Lease Subordinate to Mortgage.  This Lease shall be subordinate to any deed of trust, mortgage or other security instrument (a “Mortgage”), and any ground lease, master lease, or primary lease (a “Primary Lease”) that now or hereafter covers any portion of the Premises (the mortgagee under any Mortgage or the lessor under any Primary Lease is referred to herein as “Landlord’s Mortgagee”), and to increases, renewals, modifications, consolidations, replacements, and extensions thereof. However, any Landlord’s Mortgagee may elect to subordinate its Mortgage or Primary Lease (as the case may be) to this Lease by delivering written notice thereof to Tenant. The provisions of this Section 22 shall be self-operative, and no further instrument shall be required to effect such subordination; however, Tenant shall from time to time within ten (10) days after request therefor, execute any instruments that may be reasonably required by any Landlord’s Mortgagee to evidence the subordination of this Lease to any such Mortgage or Primary Lease, provided such Mortgagee provides Tenant a non-disturbance and attornment agreement in a form reasonably acceptable to Tenant.

 

22.2                           Attornment.  Tenant shall attorn to any party succeeding to Landlord’s interest in the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, upon such party’s request, and shall execute such agreements confirming such attornment as such party may reasonably request. Tenant shall not seek to enforce any remedy it may have for any default on the part of Landlord without first giving written notice by certified mail, return receipt requested, specifying the default in reasonable detail to any Landlord’s Mortgagee whose address has been given to Tenant, and affording such Landlord’s Mortgagee a reasonable opportunity to perform Landlord’s obligations hereunder.

 

22.3                           No Landlord’s Mortgagee’s Liability.  Notwithstanding any such attornment or subordination of a Mortgage or Primary Lease to this Lease, the Landlord’s Mortgagee shall not be liable for any acts of any previous landlord, shall not be obligated to install the Initial Improvements, and shall not be bound by any amendment to which it did not consent in writing nor any payment of Rent made more than one month in advance.

 

23.                                 ENCUMBRANCES.

 

23.1                           No Liens.  Tenant has no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any manner to bind Landlord’s property or the interest of Landlord or Tenant in the Premises or to charge the rent for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs. Tenant shall timely pay or cause to be paid all sums due for any labor performed or materials furnished in connection with any work performed on the Premises by or at the request of Tenant. Notwithstanding the foregoing, Tenant shall give

 

 

Landlord immediate written notice of the placing of any lien or encumbrance against the Premises, Building or Land.

 

23.2                                                                           Landlord’s Rights.  In the event that Tenant shall not, within ten (10) days following notification to Tenant of the imposition of any such lien, cause the same to be released of record by payment or the posting of a bond in amount, form and substance acceptable to Landlord, 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 it shall deem proper, including payment of or defense against the claim giving rise to such lien. Nothing in this Lease shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of or to the Building or the Premises or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any mechanic’s or other liens against the interest of Landlord in the Building, Land or the Premises. Nothing in this Section 23 modifies an Event of Default under Section 19.4 herein.

 

24.                                                                                 MISCELLANEOUS.

 

24.1                                                                           Laws; Affiliate Tenant Party.  Words of any gender used in this Lease shall include any other gender, and words in the singular shall include the plural, unless the context otherwise requires. The captions inserted in this Lease are for convenience only and in no way affect the interpretation of this Lease. The following terms shall have the following meanings: “Laws” shall mean all federal, state, and local laws, zoning ordinances, municipal regulations, rules, and regulations; all court orders, governmental directives, and governmental orders, all Environmental Laws (as defined below), all applicable laws, regulations and building codes governing nondiscrimination accommodations and commercial facilities, and all restrictive covenants affecting the Property, and “Law” shall mean any of the foregoing; “Affiliate” shall mean any person or entity which, directly or indirectly, controls, is controlled by, or is under common control with the party in question; and “Tenant Party” or collectively the “Tenant Parties” shall include Tenant, any assignees claiming by, through, or under Tenant.

 

24.2                                                                           Joint and Several Liability. If there is more than one Tenant, then the obligations hereunder imposed upon Tenant shall be joint and several, whether or not Tenant’s obligations arise during the Original Term of this Lease, during any renewal or extension, or a holdover term or thereafter. If there is a Guarantor of Tenant’s obligations hereunder, then the obligations hereunder imposed upon Tenant shall be the joint and several obligations of Tenant and such Guarantor, and Landlord need not first proceed against Tenant before proceeding against such Guarantor nor shall any such Guarantor be released from its Guaranty for any reason whatsoever.

 

24.3                                                                           Landlord’s Assignment; Authority of Tenant. Landlord may transfer and assign, in whole or in part, its rights and obligations in the Building, Land, or Premises that are the subject to this Lease, in which case Landlord shall have no further liability hereunder to the extent that the transferee assumes the responsibility thereafter accruing in a writing, and notice of such transfer and/or assignment in the form of an Assignment & Assumption Agreement is subsequently delivered to Tenant.

 

Tenant shall furnish to Landlord, promptly upon demand, a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the due authorization of such party to enter into this Lease. Tenant and each person signing this Lease on behalf of Tenant represents to Landlord as follows:  Tenant and its general partners and managing members, if applicable, are each duly organized and legally existing under the laws of the state of its incorporation and are duly qualified to do business in the state where the Building is located. Tenant and its general partners and managing members, if applicable, each have all requisite power and all governmental certificates of authority, licenses, permits, qualifications and other documentation to lease the Premises and to carry on its business as now conducted and as contemplated to conducted. Each person signing on behalf of Tenant is authorized to do so.

 

24.4                                                                           Force Majeure. Whenever a period of time is herein prescribed for action to be taken by Landlord or Tenant, the party taking the action shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental actions or inactions or laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such acting party; provided, however, in no event shall the foregoing apply to the financial obligations of Tenant under this Lease, including, without limitation, Tenant’s obligation to promptly pay Basic Rent, Additional Rent, reimbursements or any other amount payable to Landlord as well as Tenant’s obligation to maintain insurance hereunder.

 

24.5                                                                           Certificate of Occupancy; Financial Statements: Estoppel Certificates. Prior to Tenant’s occupancy of the Premises, Tenant shall obtain and deliver to Landlord a Certificate of Occupancy for the Premises from the appropriate governmental authority. Tenant and any Guarantor shall, from time to time, within thirty (30)  days after request of Landlord, deliver to the Landlord or Landlord’s designee, estoppel certificates, in reasonable similarity to the form attached hereto as Exhibit I. stating that this Lease and the Guaranty are in full effect, the date to which Rent has been paid, the unexpired Term and such other factual matters pertaining to this Lease as may be reasonably requested by Landlord. Tenant’s obligation to furnish the above-described items in a timely fashion is a material inducement for Landlord’s execution of this Lease. If Tenant fails to execute any such estoppel certificate within such thirty (30) day period, Tenant’s failure to execute any such estoppel certificate shall immediately constitute an Event of Default under Section 19.5.

 

 

24.6                                                                           Communications Equipment. Tenant shall have access to an equitable share of rooftop area and an equitable use of risers, electrical closets and telecommunications areas in common with other tenants and occupants for Tenant’s communications needs at no cost to Tenant during the Lease Term and any renewals or extensions thereto. Further, Landlord shall reasonably designate, at Tenant’s request, a mutually agreed upon area on the first floor where Tenant’s communication lines will enter the Building such that no unauthorized personnel would have access to Tenant’s communication lines and equipment. Any cost to secure Tenant’s communications lines and equipment shall be a cost of Tenant.

 

24.7                                                                           Entire Agreement. This Lease constitutes the entire agreement of the Landlord and Tenant with respect to the subject matter of this Lease, and contains all of the covenants and agreements of Landlord and Tenant with respect thereto. Landlord and Tenant each acknowledge that no representations, inducements, promises or agreements, oral or written, have been made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant, which are not contained herein, and any prior agreements, promises, negotiations, or representations not expressly set forth in this Lease are of no effect. This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto.

 

24.8                                                                           Survival of Tenant’s Indemnities and Obligations. Each indemnity agreement and hold harmless agreement contained herein shall survive the expiration or termination of the Lease. Additionally, all obligations of Tenant hereunder not fully performed by the end of the Term shall survive, including, without limitation, all payment obligations with respect to Taxes and insurance and all obligations concerning the condition and repair of the Premises.

 

24.9                                                                           Substitution Space. Intentionally Deleted

 

24.10                                                                     Severability. If any provision of this Lease is illegal, invalid or unenforceable, then the remainder of this Lease shall not be affected thereby.

 

24.11                                                                     Effective Date. All references in this Lease to “Effective Date” or similar references shall be deemed to refer to the last date, in point of time, on which all parties hereto have executed this Lease.

 

24.12                                                                     Brokerage Commissions. Landlord and Tenant each warrant to the other that they have not dealt with any broker or agent other than Gaines Bagby of CB/Richard Ellis, representing Landlord, and Jim Graham of Fischer & Company, Inc., representing Tenant, and that they know of no broker or agent who are or might be entitled to a commission in connection with this Lease.  TENANT AND LANDLORD SHALL EACH INDEMNIFY THE OTHER AGAINST ALL COSTS, ATTORNEYS’ FEES, AND OTHER LIABILITIES FOR COMMISSIONS OR OTHER COMPENSATION CLAIMED BY ANY BROKER OR AGENT CLAIMING THE SAME BY, THROUGH, OR UNDER TENANT OR LANDLORD, RESPECTIVELY. A true and correct copy of the Commission Agreement between Landlord and Gaines Bagby of CB/Richard Ellis, representing Landlord, and Jim Graham of Fischer & Company, Inc., representing Tenant, are attached hereto as Exhibits “J1” and “J-2” and incorporated by reference herein for all purposes.

 

24.13                                                                     Confidentiality. The terms and conditions of this Lease are confidential and Tenant shall not disclose the terms of this Lease to any third party except as may be required by Law or to enforce its rights hereunder.

 

24.14                                                                     Interest. Tenant shall pay interest on all past due Rent from the date due until paid at the lawful rate of two percent (2%) per annum above the “prime rate” as published in The Wall Street Journal from time to time. In no event, however, shall the charges permitted under this Section 24.14 or elsewhere in this Lease, to the extent they are considered to be interest under applicable Law, exceed the maximum lawful rate of interest.

 

24.15                                                                     Time. Time is of the essence in this Lease and in each and all of the provisions hereof. Whenever a period of days is specified in this Lease, such period shall refer to calendar days unless otherwise expressly stated in this Lease.

 

24.16                                                                     Attorneys’ Fees. In the event of the filing of any legal action or proceeding brought by either party against the other arising out of this Lease, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs incurred in such action (including, without limitation, all costs of appeal) and such amount shall be included in any judgment rendered in such proceeding.

 

24.17                                                                     Choice of Law and Exclusive Venue. THIS LEASE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE PREEMPTED BY APPLICABLE FEDERAL LAW, WITHOUT REGARD TO ANY CONFLICT OF LAWS RULE OR PRINCIPLE WHICH MIGHT REFER THE CONSTRUCTION OR ENFORCEMENT OF THIS LEASE TO THE LAWS OF ANOTHER JURISDICTION. JURISDICTION AND VENUE FOR ANY ACTION HEREUNDER SHALL BE EXCLUSIVELY IN AUSTIN, TRAVIS COUNTY, TEXAS EITHER IN TEXAS STATE DISTRICT COURT OR IN FEDERAL DISTRICT COURT, NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION.

 

25.18                                                                     Waiver of Right to Trial By Jury. TENANT AND LANDLORD EACH: (1) AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS

 

 

LEASE OR THE RELATIONSHIP BETWEEN THE PARTIES AS TENANT AND LANDLORD THAT CAN BE TRIED BY A JURY; AND (2) WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

 

24.19                                                                     Waiver of Right to File Tax Protest. WITH RESPECT TO THE BUILDING OR ANY PORTION THEREOF, TENANT HEREBY WAIVES ALL RIGHTS UNDER SECTIONS 41.413 AND 42.015 OF THE TEXAS TAX CODE OR ANY SIMILAR OR CORRESPONDING LAW: (1) TO PROTEST A DETERMINATION OF APPRAISED VALUE OR TO APPEAL AN ORDER DETERMINING A PROTEST AND (2) TO RECEIVE NOTICES OF REAPPRAISALS.

 

25.                                                                                 NOTICES.  Each provision of this instrument or of any applicable Laws and other requirements with reference to the sending, mailing or delivering of notice or the making of any payment hereunder shall be deemed to be complied with, when and if, the following steps are taken:

 

25.1                                                                           Rent Payments to Landlord. All Rent shall be payable to Landlord at the address for Landlord set forth below 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 shall not be deemed satisfied until such Rent has been actually received by Landlord.

 

25.2                                                                           Payments to Tenant. All payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address set forth below, or at such other address within the continental United States as Tenant may specify from time to time by written notice delivered in accordance herewith.

 

25.3                                                                           Written Notices. Any written notice or document required or permitted to be delivered hereunder shall be deemed to be delivered upon the earlier to occur of (1) tender of delivery (in the case of a hand-delivered notice), (2) deposit in the United States Mail, postage prepaid, Certified Mail, or (3) receipt by facsimile transmission followed by a confirmatory letter, in each case, addressed to the parties hereto at the respective addresses set out below, or at such other address as they have theretofore specified by written notice delivered in accordance herewith. If Landlord has attempted to deliver notice to Tenant at Tenant’s address reflected on Landlord’s books but such notice was returned or acceptance thereof was refused, then Landlord may post such notice in or on the Premises, which notice shall be deemed delivered to Tenant upon the posting thereof.

 

25.4                                                                           Multiplicity. If and when included within the term “Tenant,” as used in this instrument, there is more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of a notice specifying an individual at a specific address within the continental United States for the receipt of notices and payments to Tenant. All parties included within the terms “Landlord” and “Tenant,” respectively, shall be bound by notices given in accordance with the provisions of Section 25 to the same effect as if each had received such notice.

 

26.                                                                                 CERTAIN RIGHTS RESERVED BY LANDLORD. Provided that the exercise of such rights does not unreasonably interfere with Tenant’s use or occupancy of the Premises, Landlord shall have the following rights:

 

26.1                                                                           to decorate and to make inspections, repairs, alterations, additions, changes or improvements, whether structural or otherwise, in and about the Building, or any part thereof; for such purposes, to enter upon the Premises for such purposes, and upon reasonable prior notice to Tenant except in the case of emergencies, and during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building; to interrupt or temporarily suspend Building services and facilities; and to change the arrangement and location of entrances or passageways, doors, and doorways, corridors, elevators, stairs, restrooms, or other public parts of the Building; and/or

 

26.2                                                                           to change the name by which the Building is designated.

 

Tenant agrees that Landlord in exercising its rights listed above will do so without having committed an actual or constructive eviction of Tenant or breach of implied warranty of suitability and without an abatement of Rent, provided that Landlord takes reasonable efforts to minimize disruption of Tenant or interference with Tenant and that access to the Premises remains substantially the same.

 

27.                                                                                 Intentionally deleted.

 

28.                                                                                 TENANT’S ACKNOWLEDGEMENTS.  TENANT ACKNOWLEDGES THAT (1) IT HAS INSPECTED AND ACCEPTS THE PREMISES IN AN “AS IS, WHERE IS” CONDITION SUBJECT ONLY TO LATENT DEFECT AND LANDLORD’S OBLIGATION TO PROVIDE THE BUILDING SYSTEMS IN GOOD WORKING ORDER, (2) THE BUILDINGS AND IMPROVEMENTS COMPRISING THE SAME ARE SUITABLE FOR THE PURPOSE FOR WHICH THE PREMISES ARE LEASED AND LANDLORD HAS MADE NO WARRANTY, REPESENTATION, COVENANT, OR AGREEMENT WITH RESPECT TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PREMISES, (3) THE PREMISES ARE IN GOOD AND SATISFACTORY CONDITION, (4) NO REPRESENTATIONS AS TO THE REPAIR OF THE PREMISES, NOR PROMISES (EXPRESS OR IMPLIED) TO ALTER, REMODEL, OR IMPROVE THE BUILDING OR PREMISES OR ANY OTHER PART OF THE LAND HAVE BEEN MADE BY LANDLORD (UNLESS AND EXCEPT AS MAY BE SET

 

 

FORTH IN EXHIBIT B ATTACHED HERETO THIS LEASE), (5) THERE ARE NO REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, THAT EXTEND BEYOND THE DESCRIPTION OF THE PREMISES, AND (6) NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY TENANT BY IMPLICATION OR OTHERWISE, EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE.

 

[Remainder of Page Intentionally Left Blank]

 

 

	
Executed by Tenant on this 22 day of June,   2003.
    	
 
    
	
 
    	
 
    
	
TENANT:
    	
 
    
	
 
    	
 
    
	
MARSH USA INC., A TEXAS CORPORATION
    	
 
    
	
 
    	
 
    
	
Name:
    	
/s/ Stephen R. Skeeter
    	
 
    
	
Printed Name:
    	
Mr. Stephen R. Skeeter
    	
 
    
	
Title:
    	
Managing Director
    	
 
    
	
 
    	
 
    	
 
    
	
Address:
    	
1000 Louisiana Street, Suite 4000
    	
 
    
	
 
    	
Houston, TX 77002-5008
    	
 
    
	
Phone Number:
    	
(713) 654-0471
    	
 
    
	
Fax Number:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Executed by Landlord on this 24 day of June,   2003, (the “Execution Date”).
    
	
 
    	
 
    
	
LANDLORD:
    	
 
    
	
 
    	
 
    
	
BANK ONE   CORPORATION
    	
 
    
	
a Delaware   corporation
    	
 
    
	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
 
    	
/s/ Roy C. Keller
    	
 
    
	
Printed Name:
    	
Roy C. Keller
    	
 
    
	
Title:
    	
Senior Vice President
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Printed Name:
    	
 
    	
 
    
	
Title:
    	
1 Bank One Plaza
    	
 
    
	
 
    	
Suite IL 1-0522
    	
 
    
	
Address: c/o:
    	
Chicago, Illinois 60670
    	
 
    
	
 
    	
 
    	
 
    
	
Phone Number:
    	
312-336-3050
    	
 
    
	
Fax Number:
    	
312-732-2044
    	
 
    

 

 

RIDER ONE

 

Additional Provisions

 

29.           THIS RIDER CONTROLS. The provisions set forth in this Rider control to the extent they conflict with any provision or provisions set forth in the body of this Lease Agreement.

 

30.           RENEWAL OPTIONS. Provided that all of the following have not occurred: (1) Tenant is not in default of any of the terms, covenants and conditions hereof, (2) Tenant’s right to possession of the Premises has not been terminated, then Tenant shall of the right and option to extend the Original Term of this Lease (the “Renewal Option”) for two (2) further sixty (60) month renewal terms (each renewal term, if more than one, hereinafter the “Renewal Term”). Such extension of the Original Term shall be on the same terms, covenants and conditions as provided for in the Original Term, except as follows:

 

30.1         First Renewal Option.    The Base Rent for the first renewal option (the “First Renewal Option”) shall be at $17.00 per rentable square foot (i.e. $ 83,796.67 per month). Tenant shall deliver written notice to Landlord of Tenant’s intent to exercise the First Renewal Option granted herein (the “First Renewal Notice”) no less than nine (9) months prior to the expiration of the Original Term of this Lease. Upon Landlord’s receipt of the First Renewal Notice, Landlord shall lease to Tenant the Premises for an extended renewal term (the “First Renewal Term”) of sixty (60) months in the then-current “AS IS WHERE IS” with all faults condition, and Landlord shall not provide to Tenant any allowances or other tenant inducements in association with the First Renewal Term. All Expense Stops during the First Renewal Term shall remain those amounts as defined in Section 2.3 of the Lease.

 

30.2         Second Renewal Option    The Base Rent for the second renewal option (the “Second Renewal Option”) shall be at the lower of the Fair Market Rate (as defined below in Section 30.3 and adjusted to reflect the limitation on Tenant’s inducements set forth below) or the “gross” rental equivalent of a $20.00 per rentable square foot NNN rate. Tenant shall deliver written notice to Landlord of Tenant’s intent to exercise the Second Renewal Option granted herein (the “Second Renewal Notice”) not more than twelve (12) months nor less than nine (9) months prior to the expiration of the First Renewal Term. If Landlord and Tenant mutually agree in writing upon the base rent for the Second Renewal Term, then Landlord shall lease to Tenant the Premises for an extended renewal term (the “Second Renewal Term”) of sixty (60) months in the then-current “AS IS WHERE IS” with all faults condition, and Landlord shall not provide to Tenant any allowances or other tenant inducements in association with the Second Renewal Term, except for a renewal improvement allowance in the amount of $ 5.00 per rentable square foot of Premises (the “Second Renewal Allowance”) which shall be paid by Landlord to Tenant following commencement of the Second Renewal Term and within thirty (30) days following written request by Tenant for reimbursement of actual expenses incurred in the improvement of the Premises during the Second Renewal Term, accompanied by associated invoices or backup which document such expenditures. During said Second Renewal Term, the Expenses Stops shall be reset to those actual expenses incurred by Landlord in calendar year 2013, subject to a ninety-five (95%) gross-up for occupancy for those expenses that vary with occupancy. Within fifteen (15) days following receipt by Landlord of the Second Renewal Notice, Landlord shall deliver written notice to Tenant (the “Rent Notice”) of Landlord’s determination of the Fair Market Rate for the Premises applicable to the Second Renewal Term (“Landlord’s Determination”). Tenant shall deliver written notice to Landlord (“Tenant’s Notice”), within fifteen (15) days after Tenant’s receipt of the Rent Notice, whether Tenant accepts or disputes Landlord’s Determination, and if Tenant disputes Landlord’s Determination, Tenant’s Notice shall set forth Tenant’s determination of the Fair Market Rate applicable to the Second Renewal Term in question (“Tenant’s Determination”). Landlord’s Determination and Tenant’s Determination are each hereinafter referred to as a “Determination” and are collectively hereinafter referred to as the “Determinations”. Alternatively, Tenant shall have the right, within fifteen (15) days following receipt of Landlord’s Determination, to rescind Tenant’s Second Renewal Notice by written notice to Landlord, in which event the provisions of this Section 30.2 shall be of no further force and effect and this Lease shall automatically terminate and expire as otherwise set forth in this Lease. If Tenant fails to give Tenant’s Notice or to rescind Tenant’s Second Renewal Notice within such fifteen (15) day period, then Tenant shall be deemed to have accepted Landlord’s Determination. If Tenant disputes Landlord’s Determination, Landlord and Tenant shall again endeavor to agree upon the Fair Market Rate applicable to the Second Renewal Term for an additional period of ten (10) days (the “Negotiation Period”). If the parties cannot agree within such Negotiation Period, the Fair Market Rate shall be determined by the appraisal process as set forth below in Section 30.5.

 

30.3         Determination of Fair Market Rent.   As used herein, the “Fair Market Rate” shall be the rate that is charged to tenants for space in the Building or in comparable buildings within the Northwest submarket of Austin, Texas, for space of comparable size, location and condition. The Fair Market Rate should take into consideration the following factors: location, age and quality of the building, floor level(s) within a particular building, common area load factors, quantity of parking and charges related to the use thereof, tenant finish allowances, space planning allowances, refurbishment allowances, parking concessions and other concession or inducements being provided to tenants by landlords, expense stops, other rental adjustments, the credit standing of the tenant, lease term, tenant signage rights, exclusive use provisions, and any other economic or qualitative term that would be relevant in making a determination of the Fair Market Rate.

 

30.4         Failure to Deliver Notice.   In the event Tenant fails to deliver the First Renewal Notice or Second Renewal Notice, as the case may be, within the time periods set forth above, time being of the

 

 

essence with respect to Tenant’s exercise thereof, Tenant’s right to extend the term hereof shall automatically terminate, be null and void, and be of no further force and effect.

 

30.5         Failure to Agree upon the Fair Market Rate. In the event the Fair Market Rate for the Second Renewal Term is to be determined by appraisal as prescribed by Section 30.2 above, said appraisal shall be conducted in accordance with the following procedures:

 

30.5.1      Within twenty (20) days following the conclusion of the Negotiation Period, Landlord and Tenant shall each select a real estate appraiser, who shall be a member of the American Institute of Real Estate Appraisers, and who shall have at least five (5) years appraisal experience with respect to commercial office rental properties in Austin, Texas. If one of the parties hereto fails to appoint an appraiser within the time period prescribed, then the single appraiser appointed shall be the sole appraiser and shall determine the Fair Market Rate at issue. If two appraisers are appointed, they shall have thirty (30) days from the date the second appraiser is appointed (the “30-Day Appraisal Period”)  within which to make independent determinations of the Fair Market Rate at issue, taking into consideration the Determinations provided by Landlord and Tenant. The appraiser(s) shall be advised that the determination of the Fair Market Rate at issue shall be governed by the definitions of same set forth in Section 30.3 of this Lease and the requirement that each appraiser independently determine the Fair Market Rate (“Appraiser’s Determination”). On or before to the conclusion of the 30-Day Appraisal Period, the appraisers shall together arrange a face-to-face meeting in Austin, Texas where by each appraiser will simultaneously exchange with the other a signed original letter which outlines each appraiser’s respective Appraiser’s Determination. In the event the higher of the two Appraiser’s Determination is no more than five percent (5.0%) higher than the other, then the Fair Market Rate shall be thereafter concluded to be a simple average of the two Appraiser’s Determination, in which case this determination shall be conclusive binding upon both Landlord and Tenant.

 

30.5.2      If the two appraisers appointed by the parties are not within five percent (5%) as described above, then said appraisers shall, within ten (10) days after the expiration of the 30-day Appraisal Period, select a third appraiser (the “Third Appraiser”). The Third Appraiser must meet the qualifications set forth in subparagraph (1) above, and shall be a person who has not previously acted in any capacity for either Landlord or Tenant.

 

30.5.3      The Third Appraiser shall subscribe to fairly and impartially choose the Appraiser’s Determination, which more accurately reflects the Fair Market Rate, in accordance herewith. The third Appraiser shall conduct such hearings, as he/she deems appropriate (or such hearings as either Landlord or Tenant shall reasonably request). Within fifteen (15) days after the Third Appraiser has been appointed, the Third Appraiser shall select the Appraiser’s Determination, which, in his/her opinion, more accurately reflects the Fair Market Rate, and shall notify Landlord, Tenant and each of the initial appraisers of such selection in writing. With respect to Tenant’s Second Renewal Option, the Fair Market Rate set forth in the final Appraiser’s Determination selected by the Third Appraiser shall be the Final Determination of such amounts, which Final Determination shall be conclusive and binding upon both Landlord and Tenant.

 

30.5.4      Except as otherwise provided in the Lease, each party hereto shall pay the fees and expenses of the appraiser selected by such party, and the fees and expenses of the Third Appraiser shall be borne equally by Landlord and Tenant.

 

31.           RIGHT OF FIRST REFUSAL. Provided that all of the following have not occurred: (1) Tenant is not in default of any of the terms, covenants and conditions hereof, and (2) Tenant’s right to possession of the Premises has not been terminated, Landlord hereby grants to Tenant during the Original Term a Right of First Refusal (the “ROFR”) to lease then available lease space on the second floor of the Building totaling a maximum of 15,000 SF of contiguous area. If Landlord shall accept, subject to Tenant’s ROFR, a bona-fide offer (the “Bona-fide Offer”) to lease all or a portion of the second floor of the Building, Landlord shall provide Tenant written notice (the “Refusal Notice”) of the terms and conditions outlined in the Bona-fide Offer, specifically the size of the proposed lease space, demising plan, the location of the lease space within the Building (i.e. the “Refusal Space”), as well as the lease term, base rent, expense stops, and tenant improvement allowance. Upon receipt of the Refusal Notice from Landlord, Tenant shall have fifteen (15) business days to deliver written notice (the “Acceptance Notice”) to Landlord of Tenant’s intention to exercise this ROFR with respect to the space described in the Refusal Notice. In the event Tenant fails to provide notice in regards to this ROFR or does not execute this ROFR, Tenant’s rights shall not lapse, but shall instead become subordinate to any lease rights granted to the new tenant for the Refusal Space, provided such rights are not in direct conflict with the rights previously granted to Tenant in the Lease (i.e. Landlord shall not grant superior rights of first refusal to the new tenant that nullify Tenant’s ROFR), and Landlord shall be free to lease the Refusal Space to a tenant prospect on terms in reasonable similarity to those outlined in the Refusal Notice.

 

31.1         ROFR During First 30 Months.  If Tenant exercises its ROFR during the first thirty (30) months of the Original Term, then Tenant shall lease from Landlord the Refusal Space on the same terms and conditions as provided in the Lease, specifically including, but not limited to: (i) the Lease Term for the Refusal Space, which shall be coterminous with the Lease and shall end upon the Expiration Date, (ii) the Base Rent, which shall be at $17.00 per rentable square foot, and (iii) the Expense Stops which shall remain as those defined in Section 2.3 of the Lease and (iv) the Tenant Improvement Allowance shall be pro rated for the remaining lease term. Tenant shall lease the Refusal Space in the then-current “AS IS WHERE IS” with all faults condition, except that all Building systems shall be in good working order and condition and the construction of a demising wall, at Landlord’s expense, to separate the Refusal Space from adjacent leasable space and/or common areas.

 

 

31.2         ROFR During Last 30 Months. If Tenant exercises its ROFR during the last thirty (30) months of the Original Term, then Tenant shall lease from Landlord the Refusal Space on those same terms and conditions which match, fully and completely, those terms as described in the Bona-fide Offer. Tenant shall lease the Refusal space in the then-current “AS IS WHERE IS” with all faults condition, and Landlord shall not provide to Tenant any allowances or other tenant inducements in association with the ROFR, other than those allowances or tenant inducements described in the Bona-fide Offer.

 

31.3         Relocation of Tenant’s ROFR. In the event the Bona-fide Offer for lease space is in excess of fifteen thousand (15,000) rentable square feet, Landlord shall have the right to fully and entirely transfer Tenant’s ROFR from the second floor of the Building to the first floor of the Building. In the event Landlord elects to transfer Tenant’s ROFR to the first floor of the Building, Landlord will provide Tenant written notice to that effect and upon Tenant’s receipt of such notice, Tenant’s ROFR shall thereafter though the remainder of the Lease Term, apply only to the first floor of the Building.

 

31.4         Irrevocable Notice. In the event Tenant provides Landlord with Acceptance Notice to exercises its ROFR, such written notice shall be binding upon Tenant without the need of further documentation, and shall be irrevocable unless Landlord may agree in writing to release Tenant from the lease obligation created by the Acceptance Notice. In the event Landlord may agree to release Tenant from its Acceptance Notice, such release shall be on the express condition that Tenant thereafter waive its ROFR for the remainder of the Lease Term

 

31.5         Commencement and Ratification of Lease. The Commencement Date for the Refusal Space shall be: (i) in the case of a ROFR execution under Section 31.2, sixty (60) days (ninety days if the Refusal Space has not previously been built out for office use) following Landlord’s completion of the demising wall separating the space and written notice to Tenant, and (ii) in the case of a ROFR execution under Section 31.3, five (5) days following written notice from Landlord that the Refusal Space has met substantial completion in regards to the improvements to the Refusal space, if any, in accordance with the plans and specifications approved by Landlord, but in no instance more than (60) days following Landlord’s receipt of the Acceptance Notice.

 

32.           DELIVERY OF PREMISES AND TEMPORARY SPACE

 

32.1         Delivery of Premises. Landlord shall deliver early possession of the Premises to Tenant no later than the execution date of this Lease. Every day beyond the execution date of the Lease that Tenant is not allowed possession of the Premises shall constitute a day of Landlord Delay. Upon Landlord delivery of possession, Tenant shall have sixty (60) days exclusive possession for purposes of constructing the Initial Improvements, installation of furniture and voice/data cabling, networking, and staging prior to the Commencement Date, subject only to the rights of Landlord’s contractors to freely access the Premises for the purpose of constructing demising walls to separate the Premises from the Building Common Areas. If Tenant completes the Initial Improvements (as defined later in Exhibit B) prior to the Commencement Date, then Tenant shall be entitled to early occupancy of the applicable space for purposes of conducting its business operations for up to fourteen (14) days prior to such Commencement Date (the “Early Occupancy Period”). Tenant shall not be required to pay any Base Rent during such Early Occupancy Period, except for its pro-rata share of actual Operating Expenses, for which Landlord shall invoice Tenant within thirty-days following the Commencement Date. Provided Tenant is not conducting business operations within the Premises, Tenant shall have no responsibility to pay its pro-rata share of the actual Operating Expenses from the date Landlord delivers possession of the Premises to Tenant and the Commencement Date.

 

32.2         Temporary Office Space. Simultaneous with the execution of this Lease, Tenant may occupy the space shown on Exhibit K hereto, rent free, including furniture and phone service, for a maximum of twenty (20) employees until the Commencement Date of this Lease, at which time Tenant shall promptly surrender possession of the office area described in the Temporary Lease and return such space in the condition that it was first provided to Tenant.

 

33.           TENANT SIGNAGE.

 

33.1         Monument Signage. Landlord, at its cost and expense, and subject to all regulatory approvals and entitlements, will design, permit and construct a new monument sign visible from Braker Lane (the “Braker Monument”), and upon completion of such construction, Landlord shall grant Tenant, during the Lease Term, preferential placement of Tenant’s corporate identity upon the Braker Monument, subject to sign criteria as determined by Landlord in its sole discretion. Furthermore, in the event Landlord constructs a second monument sign near the front entrance to the Building (the “Entrance Monument”), then upon completion of such construction, Landlord shall grant Tenant, during the Lease Term preferential placement of Tenant’s corporate identity upon the Entrance Monument, subject to sign criteria as determined by Landlord in its sole discretion. Tenant shall bear the full cost to manufacture, and install Tenant’s corporate identity from the Braker Monument and Entrance Monument, as well as the cost to remove and repair any damage thereto at the expiration of the Lease.

 

33.2         Building Signage. Landlord has granted no rights to Tenant for the installation of signage upon the Building exterior. However, in the event Landlord, in its sole discretion, grants building signage to a tenant, Tenant shall have equivalent rights to such similar Building Signage, in common with such other tenant(s). In no instance shall Landlord grant building signage to more than one (1) tenant, in addition to Tenant, without the written consent of Tenant. In the event building signage is granted to a tenant, Landlord will develop and implement a standard sign criteria to ensure consistency of the building signage and to preserve the quality of the Building.

 

 

34.           EXCLUSIVE USE.  Landlord agrees that during the Original Term and any Renewal Term, it will not lease space in the Building to other entities in the risk and insurance services industry.

 

35.           GUARANTY.  Attached hereto as Exhibit H.

 

 

EXHIBIT A

 

[Legal Description]

 

Lot 1, Block “A”, STONELAKE OFFICE PARK, a subdivision recorded in Volume 99, Page 190-191 of the Plat Records of Travis County, Texas.

 

 

LANDLORD CONSENT TO SUBLEASE

 

THIS LANDLORD CONSENT TO SUBLEASE (this “Agreement”) is dated to be effective December 30, 2009, and is by and between Landlord, Tenant and Subtenant, as those terms are defined hereinbelow, in connection with that certain Commercial Office Lease Agreement dated June 16, 2003 by and between Bank One Corporation, predecessor-in-interest to Principal Life Insurance Company, an Iowa corporation (“Landlord”) and Marsh USA Inc., a Texas corporation (“Tenant”), as amended by that certain First Amendment dated April 28, 2004, and as further amended by that certain Second Amendment dated May 31, 2007 (hereinafter collectively referred to as the “Lease”) for certain premises located at 10900 Stonelake Boulevard, Austin, Texas 78759 (the “Building”), which premises are more particularly described in the Lease (the “Premises”).

 

RECITALS

 

A.            Tenant desires to sublease a portion of the Premises (“Sublease Premises”) to LegalZoom.com, Inc. (“Subtenant”). The Sublease Premises are more particularly described in the Sublease.

 

B.            Landlord, subject to the provisions herein contained, has agreed to consent to the sublease of the Sublease Premises to Subtenant pursuant to the terms and conditions of that certain Sublease dated as of December 7, 2009 (“Sublease”), a copy of which is attached hereto as Exhibit A.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth below, the parties agree as follows:

 

1.             Landlord’s Consent. Landlord hereby consents to the sublease of Sublease Premises from Tenant to Subtenant upon the following terms and conditions:

 

(a)           LANDLORD SHALL NOT BE BOUND BY ANY TERM OR CONDITION OF THE SUBLEASE. Landlord shall only be bound by the terms and conditions of the Lease.  Landlord shall owe to Tenant only those duties specified in the Lease. Nothing contained in this Agreement or the Sublease shall be deemed to amend or alter any term, condition or obligation of the Lease, including, without limitation, Tenant’s obligation to receive Landlord’s written consent prior to allowing any alteration to the Premises.

 

(b)           Tenant shall remain liable for the performance of all of the terms, conditions and provisions of the Lease, including, without limitation, prompt payment of all base rent, additional rent, Tenant’s share of operating expenses and taxes, and other amounts accruing under the Lease.

 

(c)           If so directed by Landlord, Subtenant shall pay directly to Landlord any and all amounts due to Tenant under the Sublease. Nothing contained herein shall make Landlord responsible for the collection of any amounts due under the Sublease from Subtenant or any other person or entity. Landlord shall credit any and all amounts actually received from Subtenant against amounts which Tenant

 

 

owes or shall owe to Landlord and Tenant shall credit any and all amounts actually received by Landlord from Subtenant against amounts which Subtenant owes or shall owe to Tenant.

 

(d)           Subtenant acknowledges that any and all option rights to Tenant contained in the Lease (if any) including, without limitation, any rights or options regarding renewal, extension, refusal, offer or expansion, have not been transferred to Subtenant pursuant to the Sublease and nothing contained in the Sublease or this Agreement shall be construed otherwise.

 

(e)           Landlord and Tenant may enter into any amendment, assignment, modification, termination or extension of the Lease as it pertains to the Premises, so far as the same shall relate solely to the subject matter of the Lease as it pertains to the Premises, with the consent of Subtenant, which shall not be unreasonably withheld or delayed.

 

(f)            Under no circumstances shall the Sublease merge with the Lease. The Sublease and Lease shall each survive and remain separate and distinct agreements.

 

(g)           Tenant shall pay to Landlord 50% of all excess rent, as more fully set forth in Section 15.5 of the Lease.

 

2.             Indemnification and Hold Harmless.   In addition and without limitation to any term or condition of the Lease regarding indemnification, holding harmless or waiver, Tenant and Subtenant hereby indemnify and hold harmless Landlord from and against all liabilities, obligations and costs for brokerage fees incurred with respect to the Sublease.

 

3.             Effective Date.    Landlord’s consent and this Agreement shall not be effective until the date upon which satisfaction of the following conditions have been fully satisfied:

 

(a)           Attachment of all Exhibits to this Agreement;

 

(b)           Complete and full execution of this Agreement by Landlord, Tenant and Subtenant;

 

(c)           Payment of Landlord’s sublease consent costs, which the parties agree to be $500.00; and

 

(d)           Subtenant supplying to Landlord a certificate of insurance that satisfies all insurance requirements of Landlord.

 

4.             Miscellaneous.

 

(a)           This Agreement and the provisions hereof shall be binding on and inure to the benefit of the parties hereto and their successors, except as otherwise provided for in the Lease.

 

2

 

(b)           Neither the Tenant nor the Subtenant shall record this Agreement.

 

(c)           If any party commences an action against any of the parties arising out of or in connection with this Agreement, the prevailing party or parties shall be entitled to recover from the losing party or parties reasonable attorneys’ fees and costs of such suit.

 

(d)           In the event of any conflict between this Agreement and the Sublease, the terms and conditions of this Agreement shall control.

 

[Remainder of Page Intentionally Left Blank]

 

3

 

IN WITNESS WHEREOF, this Agreement is dated effective as of the date and year first above written.

 

	
 
    	
LANDLORD:
    
	
 
    	
 
    
	
 
    	
PRINCIPAL   LIFE INSURANCE COMPANY, an Iowa corporation for its Principal U.S. Property   Separate Account, f/k/a Principal Life Insurance Company, an Iowa   corporation, for its Real Estate Separate Account
    
	
 
    	
 
    
	
 
    	
By:   PRINCIPAL REAL ESTATE INVESTORS, LLC, a Delaware limited liability company,   its authorized signatory
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joe Wanninger
    
	
 
    	
 
    	
Name:
    	
Joe   Wanninger
    	
DEC 30 2009
    
	
 
    	
 
    	
Title:
    	
Investment   Director
    
	
 
    	
 
    	
 
    	
Asset   Management
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TENANT:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
MARSH   USA, Inc.,
    
	
 
    	
a   Texas corporation
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Randy Dillon
    
	
 
    	
 
    	
Name:
    	
Randy   Dillon
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SUBTENANT:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
LEGALZOOM.COM, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Frank Monestere
    
	
 
    	
 
    	
Name:
    	
Frank   Monestere
    
	
 
    	
 
    	
Title:
    	
President   & COO
    

 

4

 

MEMORANDUM OF SUBLEASE

 

This Memorandum of Lease (“Memorandum”), dated to be effective as of January 21, 2010,  is entered into by and between Marsh USA, Inc., a Texas corporation (“Sublandlord”), and Legalzoom.com, Inc., a Delaware corporation (“Subtenant”).

 

1.             Grant of Lease; Term.

 

Sublandlord subleases to Subtenant, and Subtenant subleases from Sublandlord, those certain premises more particularly described on Exhibit A attached hereto and incorporated herein for a term commencing February 5, 2010 (the “Commencement Date”) and will continue until August 30, 2013 unless earlier cancelled or terminated subject to the terms, provisions and conditions of that certain Sublease (“Sublease”) between the parties hereto dated December 7, 2009.  The provisions of the Sublease are incorporated herein by this reference.

 

2.             Purpose.    This Memorandum is prepared for the purpose of establishing the Commencement Date, and it in no way modifies the provisions of the Sublease. In the event of any inconsistency between the provisions of this Memorandum and the Sublease, the provisions of the Sublease shall prevail.

 

3.             No Recording.      This Memorandum may not be recorded.

 

EXECUTED as of the 21 day of January, 2010.

 

	
 
    	
SUBLANDLORD:
    
	
 
    	
 
    
	
 
    	
MARSH   USA INC.,
    
	
 
    	
a   Texas corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Randy Dillon
    
	
 
    	
Name:
    	
Randy   Dillon
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
SUBTENANT:
    
	
 
    	
 
    
	
 
    	
LEGALZOOM.COM, INC.,
    
	
 
    	
A   Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Frank Monestere
    
	
 
    	
Name:
    	
Frank   Monestere
    
	
 
    	
Title:
    	
President   
    

 

 

FIRST AMENDMENT TO SUBLEASE AGREEMENT

 

This First Amendment (this “Amendment”) to that certain Sublease Agreement by and between MARSH USA INC., a Texas corporation (“Sublandlord”) and LEGALZOOM.COM, INC., a Delaware corporation (“Subtenant”) dated December 7, 2009 concerning certain premises located at 10900 Stonelake Boulevard, Austin, Texas 78759 (“Sublease Agreement”) is made and entered into as of March 8, 2010. All capitalized terms not defined herein shall have the same meaning respectively assigned to them under the Sublease Agreement.

 

RECITALS

 

A.            On December 7, 2009, Sublandlord and Subtenant entered into the Sublease Agreement.

 

B.            The parties wish to amend the Sublease Agreement to correct a typographical error in the monthly rental amount payable by Subtenant to Sublandlord.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.             The first parenthetical phrase in the first sentence of Section 3 of the Sublease Agreement is hereby deleted and replaced in its entirety with the following:

 

“($37,230.00 monthly based on $18.00 per rentable square foot per annum)”

 

2.             Except as otherwise provided herein, all other terms and conditions of the Sublease will remain in full force and effect.

 

[Signature Page to Follow.]

 

 

IN WITNESS WHEREOF, Sublandlord and Subtenant have caused this Sublease to be executed and delivered the date first above written.

 

 

	
 
    	
“Sublandlord”
    
	
 
    	
 
    
	
 
    	
MARSH   USA INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Randy Dillon
    
	
 
    	
 
    	
Name:
    	
Randy   Dillon
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
“Subtenant”
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
LEGALZOOM.COM, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Frank Monestere
    
	
 
    	
 
    	
Name:
    	
Frank   Monestere
    
	
 
    	
 
    	
Title:
    	
President   and Chief Operating Officer
    

 

 

SECOND AMENDMENT TO SUBLEASE

 

THIS SECOND AMENDMENT (this “Second Amendment”) dated as of the 28th day of July, 2011, by and between MARSH USA INC.,  a Texas corporation with a  usual place of business at 10900 Stonelake Boulevard, Suite 200, Austin, Texas 78759 (“Sublandlord”) and LEGALZOOM.COM, INC., a Delaware corporation with a usual place of business at 101 N. Brand, 11th Floor, Glendale, California 91203 (“Subtenant”).

 

W I T N E S S E T H:

 

WHEREAS, by Sublease Agreement dated as of December 7, 2009 and amended by that certain First Amendment to Sublease Agreement dated as of March 8, 2010 (as amended, the “Sublease”), Sublandlord subleased to Subtenant approximately 24,820 rentable square feet on the 3rd floor of the office building located at 10900 Stonelake Boulevard, Austin, Texas 78759 (“Subleased Premises”); and

 

WHEREAS, the parties wish to further amend the Sublease to expand the Subleased Premises.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.             Unless specifically stated herein, all capitalized terms not defined herein shall have the same meaning assigned to them in the Sublease which in turn incorporates defined terms from the Overlease.

 

2.             The Sublandlord hereby subleases to Subtenant approximately 33,800 square feet, known as Suite 350, which is the balance of the 3rd floor in the Building (the “Expansion Premises”) which is a portion of the Leased Premises demised to Sublandlord under the initial Overlease. The term of Subtenant’s lease of the Expansion Premises commencing the later of September 1, 2011 or the date of Overlandlord’s consent hereto and ending of the Expiration Date.

 

3.             Subtenant shall pay to Sublandlord as Basic Rent for the Expansion Premises $25,000.00 per annum ($20,833.33 per month) beginning on October 1, 2011 until the Expiration Date and shall pay all other charges (such as after-hour HVAC), if actually requested and used by Subtenant within 30 days after Subtenant’s receipt of an invoice therefor.

 

4.             As to the Expansion Premises only, there will be no pass-through of Operating Expenses, Real Property Taxes, Utilities or Common Area Expenses.

 

5.             Subtenant’s Security Deposit under the Sublease was $148,920.00 and Subtenant is entitled to have (a) a partial refund of the Security Deposit in the amount of $74,460.00 (“Refund Amount”) and (b) the Security Deposit amount reduced to $74,460.00. The Security Deposit as so reduced shall be increased by $63,000.00 on the occasion of this Second Amendment (“Second Amendment Deposit Amount”) with the result that: (i) Sublandlord shall

 

1

 

apply $63,000.00 of the Refund Amount to serve as the Second Amendment Deposit Amount and (ii) the Sublandlord’s partial refund of the original Security Deposit will be reduced to $11,460.00 which Sublandlord will pay to Subtenant within ten calendar (10) days after Overlandlord’s consent to this Second Amendment. If Subtenant has not defaulted hereunder beyond any applicable grace or cure periods before September 30, 2012, Sublandlord will refund $20,000 of the Security Deposit to the Subtenant. As of the Expansion Premises only, there will be no pass-through of Operating Expenses, Real Property Taxes, Utilities or Common Area Expenses.

 

6.             The following changes are made of the Sublease.

 

(a)           Section 13 of the Sublease is amended to change the addresses for notices to the Subtenant to:

 

	
Subtenant:
    	
LegalZoom,com, Inc.
    
	
 
    	
Attn:   General Counsel
    
	
 
    	
101   N. Brand Blvd., 11th Floor
    
	
 
    	
Glendale,   CA 91203
    
	
 
    	
 
    
	
With   a copy to:
    	
LegalZoom.com, Inc.
    
	
 
    	
Attn:   Mike Wilson, Vice President of Operations
    
	
 
    	
10900   Stonelake Blvd., Ste. 320
    
	
 
    	
Austin,   TX 78759
    

 

(b)           Subtenant’s parking allowance under Section 15 of the Sublease is increased by 85 parking spaces which will only be available on a first come, first served basis.

 

(c)           Section 18 of the Sublease is amended to add to Exhibit C thereto the furniture, fixtures and equipment in the Expansion Premises listed in Exhibit A hereto.

 

(d)           Referring to Section 22 of the Sublease, that right of the cancellation can only be exercised as to the initial Subleased Premises, not the Expansion Premises demised under this Second Amendment.

 

(e)           This Second Amendment will not be effective until Overlandlord has consented hereto. If that consent is not received within the 60-day period following the date of this Second Amendment, either party may cancel this Second Amendment whereupon Sublandlord will pay Subtenant the Refund Amount within 10 calendar days.

 

7.             All amendments in this Second Amendment are incorporated into the Sublease thereto as if originally written therein. All matters not expressly amended by this Second Amendment shall remain as written and are hereby ratified and affirmed by both Sublandlord and Subtenant. In the event of any conflict between this Second Amendment and the Sublease, this Second Amendment shall control.

 

8.             This Second Amendment together with the Sublease (and exhibits referenced therein) represents the entire agreement of the parties. There are no oral agreements. This Second Amendment and the Sublease may not be modified except by written agreement

 

2

 

executed by Sublandlord and Subtenant. This Second Amendment may be signed in one or more counterparts, each of which shall be considered an original. Facsimile or scanned signatures of this Second Amendment shall be accepted and deemed originals for all purposes.

 

IN WITNESS WHEREOF, the Sublandlord and Subtenant have caused this Second Amendment to be executed and delivered the date first above written.

 

 

	
 
    	
MARSH   USA INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Patricia Hagemann
    
	
 
    	
Printed   Name: Patricia Hagemann
    
	
 
    	
Title:   Managing Director
    
	
 
    	
 
    
	
 
    	
LEGALZOOM.COM, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   F. Krupica
    
	
 
    	
Printed   Name: F.Krupica
    
	
 
    	
Title:   CFO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   John Suh
    
	
 
    	
John   Suh
    
	
 
    	
CEO
    

 

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