Exhibit 10.16
SAN DIEGO TECH CENTER
OFFICE BUILDING LEASE BETWEEN
SAN DIEGO TECH CENTER, LLC
AND
INFLOW INC.
TABLE OF CONTENTS
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Page
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1. Definitions............................................................ 3
1.1 Location of Definitions............................................ 3
2. Premises
2.1 Premises/Building/Building Real Property Defined.................. 3
2.2 Building Common Area Defined...................................... 3
2.3 Project Defined................................................... 4
2.4 Project Common Area and Project Real Property Defined............. 4
2.5 Rentable Area Defined............................................. 4
2.6 Building Rentable Area Defined.................................... 4
2.7 Project Rentable Area Defined..................................... 4
2.8 Determination of Rentable Area.................................... 4
3. Term................................................................... 4
4. Rent; Additional Charges............................................... 4
4.1 Rent.............................................................. 4
4.2 Additional Charges................................................ 5
4.3 Manner of Payment................................................. 5
4.4 Abatement Periods................................................. 5
5. Additional Charges for Expenses........................................ 5
5.1 Definitions....................................................... 5
5.2 Special Allocations............................................... 8
5.3 Payment of Tenant's Building Share and Tenant's Project Share
of Building Expenses and Project Expenses....................... 8
5.4 Partial Year Adjustments.......................................... 9
5.5 Tenant's Right to Audit Landlord's Records........................ 9
5.6 Objections to Statements.......................................... 9
6. Security Deposit....................................................... 9
6.1 Landlord's Obligations............................................ 10
7. Acceptance of Premises................................................. 10
7.1 Construction of Tenant Improvements............................... 10
7.2 Condition at Delivery............................................. 10
8. Common Areas........................................................... 11
8.1 Right to Use Common Areas......................................... 11
8.2 Alteration of Building or Project Common Areas.................... 11
9. Use.................................................................... 11
9.1 Permitted Use..................................................... 11
9.2 No Nuisance....................................................... 11
9.3 Compliance with Laws.............................................. 11
9.4 Hazardous Materials............................................... 11
10. Alterations and Tenant's Property...................................... 12
10.1 Alterations Defined.............................................. 12
10.2 Removal of Property.............................................. 13
11. Repairs and Other Work................................................. 13
11.1 Tenant's Obligations............................................. 13
11.2 Conditions Applicable to Repairs and Other Work.................. 13
11.3 Landlord's Obligations........................................... 13
12. Liens.................................................................. 14
13. Subordination.......................................................... 14
14. Inability to Perform................................................... 14
15. Destruction............................................................ 14
15.1 Repair........................................................... 14
15.2 Tenant's Right to Terminate...................................... 15
15.3 Landlord's Right to Terminate.................................... 15
15.4 Extent of Repair Obligations..................................... 15
15.5 Arbitration...................................................... 15
15.6 Non-Application of Certain Statutes.............................. 15
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16. Insurance.............................................................. 15
16.1 Insurance on Tenant's Property................................... 15
16.2 Tenant's Liability Insurance..................................... 16
16.3 Form of Policies................................................. 16
16.4 Compliance with Insurance Requirements........................... 16
16.5 Landlord's Insurance............................................. 16
17. Eminent Domain......................................................... 16
17.1 Effect of Taking................................................. 16
17.2 Award............................................................ 17
17.3 Abatement of Rent................................................ 17
17.4 Temporary Taking................................................. 17
18. Assignment............................................................. 17
18.1 Consent Required................................................. 17
18.2 Notice........................................................... 17
18.3 No Release....................................................... 17
18.4 Cost of Processing Request....................................... 18
18.5 Corporation or Partnership Transfers............................. 18
18.6 Assumption of Obligations........................................ 18
18.7 No Signs......................................................... 18
18.8 Upon Termination................................................. 18
19. Utilities and Services................................................. 18
19.1 Landlord to Furnish.............................................. 18
19.2 Excess Usage..................................................... 19
19.3 Interruption of Service.......................................... 19
19.4 Security Systems and Programs.................................... 19
19.5 No Liability..................................................... 19
19.6 Communication Installation....................................... 19
19.7 Riser Access..................................................... 20
19.8 Generator Equipment.............................................. 20
19.9 HVAC Equipment................................................... 20
19.10 Other Equipment Installation..................................... 21
19.11 Special Electrical Services...................................... 21
19.12 Transmission and Operations Interference......................... 21
19.13 Structural Alterations........................................... 21
19.14 Equipment and Floor Loads........................................ 22
19.15 Co-location / Interconnection.................................... 22
20. Default................................................................ 22
20.1 Events Constituting Default...................................... 22
20.2 Remedies......................................................... 22
20.3 Remedies Cumulative.............................................. 23
20.4 Recovery Against Landlord........................................ 23
20.5 Events of Default by Landlord.................................... 23
21. Insolvency or Bankruptcy............................................... 24
22. Fees and Expenses; Indemnity: Payment.................................. 24
22.1 Landlord's Right to Remedy Defaults.............................. 24
22.2 Indemnity........................................................ 24
22.3 Assumption of Risk............................................... 25
22.4 Payment of Sums Due.............................................. 25
22.5 Interest On Past Due Obligations; Service Charge................. 25
23. Access to Premises..................................................... 25
23.1 Landlord's Right to Enter........................................ 25
23.2 Means of Entry................................................... 25
24. Notices................................................................ 25
25. No Waiver.............................................................. 26
26. Tenant's Certificates.................................................. 26
27. Rules and Regulations.................................................. 26
28. Tenant's Taxes......................................................... 26
29. Corporate Authority.................................................... 26
30. Miscellaneous.......................................................... 26
30.1 Asbestos Disclosure.............................................. 26
30.2 Financial Statements............................................. 27
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30.3 References 27
30.4 Successors and Assigns 27
30.5 Severability 27
30.6 Construction 27
30.7 Integration 27
30.8 Surrender 27
30.9 Quiet Enjoyment 28
30.10 Holding Over 28
30.11 Time of Essence 28
30.12 Broker's Commissions 28
30.13 No Merger 28
30.14 Consents 28
30.15 Survival 28
30.16 Amendments 28
30.17 Attorneys' Fees 28
30.18 Arbitration of Disputes 28
30.19 Relocation of Tenant 29
30.20 Business Days 29
31. Design and Construction Process 29
31.1 Tenant's Design Development Documents 29
31.2 Tenant's Construction Documents 30
31.3 Applicable Law; Budgetary Constraints 30
31.4 Requirements of Tenant's Documents 30
31.5 Contractors/Bidding Procedures 30
31.6 Construction 30
31.7 Disbursement of T.I. Allowance 30
31.8 Access/Landlord's Approval 30
31.9 Construction 31
32. Extension Option 31
32.1 Tenant Option 31
32.2 Extension Rent 31
32.3 Rent Notice by Landlord 31
32.4 Fair Market Value Rent 31
32.5 Effect of Xxxxxxx 00
00. Right of First Offer Space 32
34. Signage 32
35. Landlord's Warranties and Representations 32
36. Access 33
37. Confidentiality 33
EXHIBIT A Floor Plan
EXHIBIT B Site Plan
EXHIBIT C Rules and Regulations
EXHIBIT D Generator Equipment
EXHIBIT E First Offer Space
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BASIC LEASE TERMS OF OFFICE BUILDING LEASE
BETWEEN
SAN DIEGO TECH CENTER, LLC
AND
INFLOW, INC.
The following Basic Lease Terms constitute a general summary of the San
Diego Tech Center Office Building Lease to which they are attached. This summary
is for convenience only; the terms and provisions of the Lease attached hereto
are controlling.
1. Landlord: San Diego Tech Center, LLC, a Delaware
limited liability company.
2. Tenant: Inflow, Inc., a Delaware corporation.
3. Premises: Approximately 20,180 rentable square feet
in the building located at 0000 Xxxxxxxx
Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000,
commonly known as Xxxxx 000 xx Xxxxxxxx 0
of the San Diego Tech Center.
4. Lease Term: One hundred twenty-three (123) months,
with two five (5) year options to extend
subject to the terms of Article 32.
5. Commencement Date: October 1,1999.
6. Rent:
(a) Rent: $1.40 per rentable square foot per month, subject to
annual increases pursuant to the terms of Section 4.1
(b) Abatement of Rent:
Provided Tenant is not in default under the Lease,
pursuant to the terms of Section 4.4, Rent will be
fully abated from the Commencement Date through
December 31, 1999, will be abated as to 10,180
rentable square feet of the Premises from January 1,
2000 through June 30, 2000, and will be abated as to
2,180 rentable square feet of the Premises from July
1, 2000 through December 31, 2000.
(c) Additional Charges:
Tenant's Share of Building Expenses = 13.04%.
Tenant's Share of Project Expenses = 3.17%.
(See Section 5.3 for provisions regarding Additional
Charges.)
7. Security Deposit: Thirty-Six Thousand Three Hundred Twenty-Four Dollars
($36,324).
8. Permitted Use: General office purposes, computer and data center,
and co-location and telecommunication services.
9. T.I. Allowance: Four Hundred Three Thousand Six Hundred Dollars
($403,600) (i.e., $20 per rentable square foot of the
Premises), subject to the provisions of Articles 7
and 31.
10. Insurance: Tenant to obtain insurance as described in Article 16
of the Lease.
11. Address for Payments and Notices to Landlord:
c/o SENTRE Partners, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000.
12. Address for Notices to Tenant:
Inflow, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: General Manager
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with a copy to:
Inflow, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Legal Department.
13. Broker(s): Node Coin, Inc.
14. Parking: One (1) unreserved parking space per three hundred
(300) rentable square feet of the Premises, subject
to the terms of the Rules and Regulations attached
hereto as Exhibit "C".
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SAN DIEGO TECH CENTER
OFFICE BUILDING LEASE BETWEEN
SAN DIEGO TECH CENTER, LLC
AND INFLOW, INC.
THIS LEASE, dated as of September 10, 1999, for purposes of reference only,
is made and entered into by and between SAN DIEGO TECH CENTER, LLC, a Delaware
limited liability company ("Landlord"), and INFLOW, INC., a Delaware corporation
("Tenant").
Landlord and Tenant hereby covenant and agree as follows:
1. Definitions.
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1.1 Location of Definitions. For convenience of reference only, the
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following terms are defined in the Section indicated:
(a) AAA - 30.18(a)
(b) Additional Charges - 4.2
(c) Alterations - 10.1
(d) Asbestos Reports - 30.1
(e) Assignment - 18.1
(f) Building - 2.1
(g) Buildings - 2.3
(h) Building Common Area(s) - 2.2
(i) Building Expenses - 5.1(c)
(j) Building Real Property - 2.1
(k) Building Rentable Area - 2.6
(l) Business Day - 30.20
(m) Commencement Date - 3
(n) Damaged Property - 15.1
(o) Expiration Date - 3
(p) Extension Term - 32.1
(q) First Offer Space - 33
(r) Hazardous Material - 9.4
(s) Landlord's Agents - 9.4
(t) Landlord's Expense Statement - 5.3
(u) Partial Year - 5.4
(v) Premises - 2.1
(w) Project - 2.3
(x) Project Common Area(s) - 2.4
(y) Project Expenses - 5.1(d)
(z) Project Real Property - 2.4
(aa) Project Rentable Area - 2.7
(bb) Real Estate Taxes - 5.1(a)
(cc) Related Entities - 22.2
(dd) Rent - 4.1
(ee) Rentable Area - 2.5
(ff) Security Deposit - 6
(gg) Sublease - 18.1
(hh) Substitute Premises - 30.19
(ii) T.I. Allowance - 7.1
(jj) Tenant Improvements - 7.1
(kk) Tenant Owned Property - 10.2
(II) Tenant's Agents - 22.2
(mm) Tenant's Building Share - 5.1(e)
(nn) Tenant's Project Share - 5.1(f)
(00) Term - 3
(pp) The worth at the time of award - 20.2(f)
2. Premises.
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2.1 Premises/Building/Building Real Property Defined. Subject to the
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terms, covenants and conditions hereinafter set forth, Landlord hereby leases to
Tenant and Tenant hereby hires from Landlord those premises (the "Premises")
consisting of the area shown on the floor plan(s) attached hereto as Exhibit "A"
located in the building located at 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx
00000, commonly known as Building 2 of the San Diego Tech Center (the
"Building"). The Building and the real property upon which the Building is
located, together with the utilities, facilities, drives, walkways and other
amenities directly appurtenant to and servicing the Building are herein
sometimes collectively called the "Building Real Property". The exact boundary
of the Premises shall be as constructed, and shall extend to the unfinished
surface of all floors and the underside of the structural concrete slab forming
the ceiling of the Premises. Landlord shall have the right at Landlord's sole
discretion to lease portions of the Building for retail and other uses from time
to time, and Landlord makes no representations or warranties
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as to the character or nature of any of the tenancies in the Building. Landlord
shall have the exclusive right to determine the nature, location, and mix of
tenants of the Building and of the Project and all matters relating to the
operation thereof, subject to the terms and conditions of this Lease and
provided that the Project shall at all times be used, maintained and operated
consistent with a professional business environment.
2.2 Building Common Area Defined. The terms "Building Common Area" and
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"Building Common Areas" shall mean spaces, facilities, and installations such as
toilets, janitor, telephone, electrical, and mechanical rooms and closets, trash
facilities, stairs, public lobbies, corridors and other circulation areas,
wherever located in the Building. Building Common Areas shall also include all
other areas of the Building not leased or intended by Landlord to be leased to
tenants, as may be designated by Landlord from time to time.
2.3 Project Defined. The Building is part of a real estate project
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commonly known as the San Diego Tech Center (the "Project"). For purposes of
this Lease, the Project shall be deemed to consist of the Building, Buildings 1,
3, 3D, 4, 5, 5A, 5B and 5C, a free-standing restaurant, a free-standing athletic
club, an aerobic center, a racquetball court, two tennis courts, two volleyball
courts, walking/running paths, landscape, sidewalks and adjacent parking areas
and all appurtenances to the foregoing, all as shown on the site plan attached
hereto as Exhibit "B". The Building and Buildings 1, 3, 3D, 4, 5, 5A, 5B and 5C
(including common areas within said Buildings) are sometimes herein collectively
called the "Buildings").
2.4 Project Common Area and Project Real Property Defined. The term
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"Project Common Area" and "Project Common Areas" shall mean all portions of the
Project other than (i) the Buildings (but including the aerobic center and
racquetball court if they are located in any of the Buildings), and (ii) the
Building Common Areas. The real property upon which the Project Common Areas are
located, together with the utilities, facilities, drives, walkways and other
amenities appurtenant to or servicing the Project Common Areas, are herein
sometimes collectively called the "Project Real Property." Tenant acknowledges
and agrees that Landlord, in its sole discretion, may relocate, eliminate, alter
or otherwise make such decisions with respect to the various components of
Project Common Areas as Landlord in good xxxxx xxxxx appropriate, provided that
to do so would not have a materially adverse affect on Tenant's rights under the
Lease or on Tenant's business operations.
2.5 Rentable Area Defined. For purposes of this Lease, the "Rentable
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Area" of the Premises shall be 20,180 rentable square feet; provided, however,
that Landlord makes no representations or warranties as to the exact square
footage in the Premises.
2.6 Building Rentable Area Defined. For purposes of this Lease, the
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"Building Rentable Area" shall be 154,773 rentable square feet, consisting of
rentable square feet in the Building; provided, however, that Landlord makes no
representations or warranties as to the exact square footage in the Building.
2.7 Project Rentable Area Defined. For purposes of this Lease, the
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"Project Rentable Area" shall be 635,984 square feet, consisting of rentable
square feet contained in the Buildings; provided, however, that Landlord makes
no representations or warranties as to the exact square footage in the Project.
2.8 Determination of Rentable Area. Rentable Area for the Premises has
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been calculated pursuant to the BOMA's Standard Method of Measuring Floor Area
in Office Buildings, ANSI/BOMA Z65.1-1996. Tenant's architect shall have the
right to verify the calculation of the rentable area for the Premises within
thirty (30) days after the Commencement Date, after which thirty (30) day period
the rentable area of the Premises as set forth herein shall be deemed to be
mutually agreed upon by the parties and shall be conclusive and binding upon
them. Rentable Area for the Building and the Project has been or will be
calculated in a manner consistent with all other leases in the Project.
3. Term. The term (the "Term") of this Lease shall commence on October 1,
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1999 (the "Commencement Date"), and shall expire on December 31, 2010 (the
"Expiration Date"), unless sooner terminated pursuant to the terms of this Lease
or extended pursuant to Article 32 below. Prior to the Commencement Date for the
Premises, Landlord will allow Tenant access to the Premises in order to install
tenant improvements, fixtures, furnishings and equipment and to otherwise
prepare the Premises for Tenant's occupancy; provided that such early entry will
be subject to all the terms and provisions of this Lease as though the
Commencement Date had occurred, except for the payment of Rent and Additional
Charges which commence as set forth in this Lease.
4. Rent; Additional Charges.
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4.1 Rent. Tenant shall pay to Landlord during the initial Term $1.40 per
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month per rentable square foot of the Premises; provided, however, that if
Tenant is not in default under the Lease, Tenant's obligation to pay Rent will
be abated as provided in Section 4.4 below. The Rent for the Premises shall be
increased by three percent (3%) on January 1, 2003 and by three percent (3%)
every one (1) year anniversary thereafter, on a cumulative basis. Rent shall be
payable by Tenant monthly beginning on the Commencement Date and thereafter in
advance on or before the first day of each calendar month of the Term. If the
Commencement Date should occur on a day other than the first day
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of a calendar month, or the Expiration Date should occur on a day other than the
last day of a calendar month, then the Rent for such fractional month shall be
prorated upon a daily basis based upon a thirty (30) day calendar month, and
based upon the rate for the immediately following or preceding month. The rent
payable for the first full calendar month of the Term shall be payable upon
execution of this Lease by Tenant.
4.2 Additional Charges. Commencing on the Commencement Date, subject to
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abatement pursuant to Section 4.4 below, Tenant shall pay to Landlord in equal
monthly installments on or before the first day of each month, in advance and at
the place where the Rent is payable, all charges, fees and expenses and other
amounts whatsoever as provided in or due under this Lease ("Additional
Charges"), including without limitation all amounts due pursuant to the
provisions of Article 5 and the Exhibits hereto, in accordance with Section 5.3
below or any other Section of this Lease applicable to the particular Additional
Charges. Landlord shall have the same remedies for Tenant's failure to pay any
item of Additional Charges when due as for failure to pay any installment of
Rent when due. For purposes of determining Landlord's remedies in the event of
Tenant's default and calculating amounts due thereunder, Additional Charges
shall be deemed to be Rent. Tenant shall be responsible for payment of any
applicable Additional Charges throughout the Term, except as provided in Section
4.4 below.
4.3 Manner of Payment. All payments of Rent and Additional Charges shall
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be made without prior demand and without offset, deduction or counterclaim, in
lawful money of the United States of America. Such payments shall be made at the
address for Landlord specified herein or at such other place as Landlord shall
designate from time to time.
4.4 Abatement Periods. Notwithstanding anything to the contrary
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contained herein, and provided Tenant is not in default under the terms of this
Lease, the Rent, Tenant's Building Share of Building Expenses, and Tenant's
Project Share of Project Expenses shall be abated as follows:
(a) Rent will be abated as to the entire Premises (the "First Abatement
Space") during the period commencing on the Commencement Date and extending
through December 31, 1999 (the "First Abatement Period").
(b) On January 1, 2000, Tenant shall begin paying Rent, Tenant's
Building Share of Building Expenses, and Tenant's Project Share of Project
Expenses for 10,000 rentable square feet of the Premises in accordance with the
terms of this Lease, and Rent will be abated for a portion of the Premises
consisting of approximately 10,180 rentable square feet (the "Second Abatement
Space") during the period commencing on January 1, 2000 and extending through
June 30, 2000 (the "Second Abatement Period").
(c) On July 1, 2000, Tenant shall begin paying Rent, Tenant's Building
Share of Building Expenses, and Tenant's Project Share of Project Expenses for
18,000 rentable square feet of the Premises in accordance with the terms of this
Lease, and Rent will be abated for a portion of the Premises consisting of
approximately 2,180 rentable square feet (the "Third Abatement Space") during
the period commencing on July 1, 2000 and extending through December 31, 2000
(the "Third Abatement Period").
On January 1, 2001, Tenant shall begin paying Rent, Tenant's Building Share of
Building Expenses, and Tenant's Project Share of Project Expenses for the entire
Premises. All other terms and provisions of this Lease shall apply to the First
Abatement Space, Second Abatement Space and Third Abatement Space during the
First Abatement Period, Second Abatement Period and Third Abatement Period and
thereafter, including without limitation, Tenant's payment of those utilities
and services required to be paid directly by Tenant and Tenant's reimbursement
for electrical service as set forth in this Lease.
5. Additional Charges for Expenses.
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5.1 Definitions. For purposes of this Article 5, the following terms
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shall have the following meanings:
(a) "Real Estate Taxes" shall mean all general real property taxes and
general and special assessments, transit charges or fees, fees or assessments,
housing fund assessments, payments in lieu of taxes, and any tax, fee or excise
levied or assessed (whether at the date of this Lease or thereafter) (i) on the
Building Real Property or Project Real Property, any portion thereof or
Landlord's interest therein, or Landlord's personal property used in the
operation of the Building or the Project Common Areas, (ii) on the use or
occupancy of the Building Real Property or the Project Real Property or any
portion thereof, including any tax or levy made against Rent, Additional
Charges, or gross receipts from the Building or the Project Common Areas, (iii)
in connection with the business of renting space in the Building or the Project
Common Areas, or (iv) as a result of the transfer of any interest in the
Building Real Property or Project Real Property or any portion thereof or
interest therein, that are now or hereafter levied or assessed by the United
States of America, the State of California, or any political subdivision, public
corporation, district or other political or public entity. Real Estate Taxes
shall also include any other tax, fee or other excise, however described, that
may be levied or assessed as a substitute for, in whole or in part, any other
Real Estate Taxes. Real Estate Taxes shall not include income, franchise,
inheritance or capital stock taxes, unless, resulting from a change in the
method of taxation, any of such
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taxes is levied or assessed against Landlord as a substitute for, in whole or in
part, any other tax, assessment or charge that would otherwise constitute a Real
Estate Tax. Real Estate Taxes shall not include those amounts payable by Tenant
pursuant to Article 28, or similar amounts attributable to other tenants of the
Building. Real Estate Taxes for any period in which the Building is not one
hundred percent (100%) occupied and assessed on that basis shall be adjusted
according to Landlord's reasonable estimate to reflect the Real Estate Taxes
which would be payable if the Building were one hundred percent (100%) occupied
and assessed on that basis.
(b) Notwithstanding anything to the contrary contained herein, Real
Estate Taxes shall not include income tax, excess profits or revenue tax, excise
---
tax, inheritance tax, gift tax, gains tax, franchise tax, transfer tax (as
opposed to increases in Real Estate Taxes resulting from a transfer of any
interest in the Building Real Property or Project Real Property), corporation
tax, capital levy, estate, succession or other similar tax or charge that may be
payable by or chargeable to Landlord under any present or future laws.
(c) "Building Expenses" shall mean the costs and expenses directly and
reasonably paid or incurred by Landlord in connection with the management,
operation, maintenance and repair of the Building, including without,
limitation, (i) Real Estate Taxes related to the Building Real Property, (ii)
the cost of heating, ventilation, air conditioning, steam, electricity, gas,
domestic water, sewer services, mechanical, elevator and other systems and all
other utilities, and the cost of supplies and equipment and maintenance and
service contracts in connection therewith, (iii) the cost of repairs,
replacements, general maintenance and cleaning, including the cost of janitorial
and other service agreements and trash removal, (iv) the cost of such fire,
extended coverage, boiler, sprinkler, apparatus, public liability, property
damage, rent, earthquake and other insurance as Landlord is required to carry
under this Lease or reasonably deems it appropriate to carry or is required to
carry by any mortgagee under any mortgage against the Building Real Property or
any portion thereof or interest therein with respect to the Building or any of
Landlord's or a property manager's personal property used primarily in the
operation of the Building, (v) the cost of any capital improvements made to the
Building after the date of this Lease as a labor-saving measure or to effect
other economies in the operation or maintenance of the Building but only to the
extent such improvements result in a reduction of Building Expenses (amortized
over such reasonable period as Landlord shall determine), or made to the
Building after the date of this Lease that are required under any governmental
law or regulation that was not applicable to the Building at the date of this
Lease (amortized over the useful life of the improvement), together with
interest on the unamortized balance(s) at the rate often percent (10%) per annum
or such higher market rate as may have been paid by Landlord on funds borrowed
for the purpose of constructing such capital improvements, (vi) costs of
maintenance, repair and replacement of the roof of the Building (amortized over
the useful life of the roof), (vii) all supplies, materials, equipment and tools
to the extent used in the management, operation and maintenance of the Building,
including any rental fees, (viii) all costs and fees for licenses, inspections
or permits that Landlord may be required to obtain with respect to the Building,
(ix) exterior and interior landscaping for the Building, and (x) any other
reasonable expenses of any other kind whatsoever reasonably incurred in
managing, operating, maintaining and repairing the Building. Expenses for any
period in which the Building is not one hundred percent (100%) occupied shall be
adjusted according to Landlord's reasonable estimate to reflect the Building
Expenses which would be payable if the Building were one hundred percent (100%)
occupied. Building Expenses shall not include any of the following: (a) legal
fees, brokerage commissions, advertising costs or other related expenses
incurred in connection with the marketing or leasing of the Building; (b)
repairs, alterations, additions, improvements or replacements made to rectify or
correct any defect in the design, materials or workmanship of the Building or
Building Common Areas; (c) costs incurred in connection with damage or repairs
which are covered under any insurance policy carried by Landlord (or would have
been covered had Landlord carried the insurance required to be carried by
Landlord under this Lease) in connection with the Building or Building Common
Areas; (d) costs associated with damage or repairs to the Building or Building
Common Areas necessitated by the gross negligence or willful misconduct of
Landlord or Landlord's agents; (e) executive salaries or salaries of service
personnel to the extent that such salaries are payable in connection with
services other than in connection with the management, operation, repair or
maintenance of the Building or Building Common Areas; (f) the cost of off-site
service personnel to the extent that such personnel are not engaged in the
management, operation, repair or maintenance of the Building or Building Common
Areas; (g) Landlord's general overhead and administrative expenses; (h) payments
of principal or interest on, points or other fees, charges and expenses related
to any mortgage or other encumbrance; (i) legal fees, accountant fees, and
expenses incurred in connection with disputes with tenants or occupants of the
Building or associated with the enforcement of any leases or defense of
Landlord's title to or interest in the Building or any part thereof, including,
without limitation, bad debts arising from any tenant default; (j) costs
(including permit, license and inspection fees) incurred in renovating or
otherwise improving, decorating, painting or altering space for other tenants or
other occupants or of vacant space in the Building; (k) costs incurred due to a
violation by Landlord or any other tenant in the Building of the terms and
conditions of any lease, including without limitation the Lease, or of any legal
requirement; (l) services or installations furnished to any tenant in the
Building which are not furnished to Tenant or quantities of such services
furnished to any tenant in the Building which are also furnished to Tenant but
are furnished to other tenants in an amount materially in excess of that which
would represent a fair proportion of such services; (m) the cost of any service
provided to Tenant or other occupants of the Building for which Landlord is
entitled to be reimbursed; (n) capital expenses other than as provided above;
(o) depreciation, amortization and other non-cash items; (p) ground rents; (q)
costs and expenses of remediation and clean-up of Hazardous Materials that,
prior to the Commencement Date, fell within the definition of "Hazardous
Material" set forth in Section 9.4 below; (r) costs of goods
-6-
and services customarily provided by property managers of buildings in the
Sorrento Valley / Sorrento Mesa area of San Diego that are similar to the
Building and which property managers are charging a fee similar to the
management fee being charged as part of Building Expenses, if the Landlord
charges a management fee as part of Building Expenses; (s) costs incurred for
repairs or other items to the extent Landlord is reimbursed by insurance
proceeds or any third party; (t) costs for new acquisitions of sculptures,
paintings or other objects of art; and (u) the costs of any goods or services
obtained from any affiliated or other related party of Landlord or of any of its
managers or members, to the extent such costs exceed the amount that would be
paid in an arm's-length purchase from an unaffiliated or unrelated party.
Landlord shall not collect in excess of one hundred percent (100%) of all
Building Expenses. No item of Building Expenses shall be included more than
once.
(d) "Project Expenses" shall mean the costs and expenses directly and
reasonably paid or incurred by Landlord in connection with the management,
operation, maintenance and repair of the Project Common Areas, including,
without limitation (i) Real Estate Taxes related to the Project Real Property,
(ii) the cost of heating, ventilation, air conditioning, steam, electricity,
gas, domestic water, sewer services, mechanical, elevator and other systems and
all other utilities, and the costs of supplies and equipment and maintenance and
service contracts in connection therewith, (iii) the cost of repairs,
replacements, general maintenance and cleaning, including the cost of janitorial
and other service agreements and trash removal, (iv) the cost of such fire,
extended coverage, boiler, sprinkler, apparatus, public liability, property
damage, rent, earthquake and other insurance as Landlord reasonably deems it
appropriate to carry or is required to carry by any mortgagee under any mortgage
against the Project Common Areas or any portion thereof or interest therein with
respect to the Project Common Areas or any of Landlord's or a property manager's
personal property used in the operation of the Project Common Areas, (v) wages,
salaries and other labor costs of all on-site employees, and all off-site
employees to the extent engaged in the operation, management, maintenance and
security of the Project, including taxes, insurance, retirement, medical and
other employee benefits, but excluding leasing commission, (vi) fees, charges
and other costs, including property management fees, consulting fees, attorneys'
fees and accounting fees of all independent contractors engaged by Landlord, and
all such fees reasonably charged by Landlord if Landlord performs management
services in connection with the Project, provided, however, that management fees
and costs shall not unreasonably exceed market rates customary for projects in
the Sorrento Valley / Sorrento Mesa area of San Diego that are comparable to the
Project, (vii) the cost of supplying, replacing and cleaning employee uniforms,
(viii) the fair market rental value of Landlord's or the property manager's
offices in the Project (which shall be of reasonable size), to the extent
utilized for the management or operation of the Project, (ix) the costs of any
capital improvements made to the Project Common Areas after the date of this
Lease as a labor-saving measure or to effect other economies in the operation or
maintenance of the Project Common Areas but only to the extent such improvements
result in a reduction of Project Expenses (amortized over such reasonable period
as Landlord shall determine), or made to the Project Common Areas after the date
of this Lease that are required under any governmental law or regulation that
was not applicable to the Project Common Areas at the date of this Lease
(amortized over the useful life of the improvement), together with interest on
the unamortized balance(s) at the rate of ten percent (10%) per annum or such
higher market rate as may have been paid by Landlord on funds borrowed for the
purpose of constructing such capital improvements, (x) costs of maintenance
repair and replacement of the roof of any portion of the Project Common Areas
(amortized over the useful life of the roof), (xi) all supplies, materials,
equipment and tools to the extent used in the management, operation and
maintenance of the Project Common Areas, including any rental fees, (xii) all
costs and fees for licenses, inspections or permits that Landlord may be
required to obtain in connection with the Project Common Areas, (xiii) expenses
incurred for the maintenance of art work, streetscaping and similar enhancements
of the Project which in Landlord's judgment, exercised in a commercially
reasonable manner, will benefit the Project, and (xiv) any other reasonable
expenses of any other kind whatsoever reasonably incurred in managing,
operating, maintaining and repairing the Project Common Areas. Expenses for any
period in which the Project is not 100% occupied shall be adjusted according to
Landlord's reasonable estimate to reflect the Project Expenses which would be
payable if the Project were 100% occupied. Project Expenses shall not include
any of the following: (a) legal fees, brokerage commissions, advertising costs
or other related expenses in connection with the marketing or leasing of the
Project; (b) repairs, alterations, additions, improvements or replacements made
to rectify or correct any defect in the design, materials or workmanship of the
Project of Project Common Areas; (c) costs incurred in connection with damage or
repairs which are covered under any insurance policy carried by Landlord (or
would have been covered had Landlord carried the insurance required to be
carried by Landlord under this Lease) in connection with the Project or Project
Common Areas; (d) costs associated with damage or repairs to the Project or the
Project Common Areas necessitated by the gross negligence or willful misconduct
of Landlord or Landlord's agents; (3) executive salaries or salaries of service
personnel to the extent that such salaries are payable in connection with
services other than in connection with the management, operation, repair or
maintenance of the Project or Project Common Areas; (f) the cost of off-site
service personnel to the extent that such personnel are not engaged in the
management, operation, repair or maintenance of the Project or Project Common
Areas; (g) Landlord's general overhead and administrative expenses; (h) payments
of principal or interest on, points or other fees, charges and expenses related
to any mortgage or other encumbrance; (i) legal fees, accountant fees and
expenses incurred in disputes with tenants or occupants of the Project or
associated with the enforcement of any leases or defense of Landlord's title to
or interest in the Project or any part thereof, including, without limitation,
bad debts arising from any tenant default; (j) costs (including permit, license
and inspection fees) incurred in renovating or otherwise improving, decorating,
painting or altering space for tenants or other occupants or of vacant space in
the Project; (k) costs incurred due to a violation by Landlord or any other
tenant in the Project of the terms
-7-
and conditions of any lease, including without limitation the Lease, or of any
legal requirement; (l) services or installations furnished to any tenant in the
Project which are not furnished to Tenant or quantities of such services
furnished to any tenant in the Project which are also furnished to Tenant but
are furnished to other tenants in an amount materially in excess of that which
would represent a fair proportion of such services; (m) the cost of any service
provided to Tenant or other occupants of the Project for which Landlord is
entitled to be reimbursed; (n) capital expenses other than as provided above;
(o) depreciation, amortization and other non-cash items; (p) ground rents; (q)
costs and expenses of remediation and clean-up of Hazardous Materials that,
prior to the Commencement Date, fell within the definition of "Hazardous
Material" set forth in Section 9.4 below; (r) costs of goods and services
customarily provided by property managers of projects in the Sorrento Valley /
Sorrento Mesa area of San Diego that are similar to the Project and which
property managers are charging a fee similar to the management fee being charged
as part of Project Expenses, if the Landlord charges a management fee as part of
Project Expenses; (s) costs incurred for repairs or other items to the extent
Landlord is reimbursed by insurance proceeds or any third party; (t) costs for
new acquisitions of sculptures, paintings or other objects of art; and (u) the
costs of any goods or services obtained from any affiliated or other related
party of Landlord or of any of its managers or members, to the extent such costs
exceed the amount that would be paid in an arm's-length purchase from an
unaffiliated or unrelated party. Landlord shall not collect in excess of one
hundred percent (100%) of all Project Expenses. No item of Project Expenses
shall be included more than once.
(e) Subject to adjustment prior to January 1, 2001 based on the terms of
Section 4.4, "Tenant's Building Share" shall mean 13.04% (calculated by dividing
the Rentable Area of the Premises (20,180) by the Building Rentable Area
(154,773)). Tenant's Building Share of Building Expenses shall normally be
computed by multiplying such percentage by Building Expenses, but shall be
subject to adjustment as a result of special allocations made pursuant to
Section 5.2 and the provisions of Section 5.3. If the Rentable Area of the
Premises is changed for any reason, Tenant's Building Share shall be modified by
multiplying the percentage specified in this Paragraph (e) by a fraction, the
numerator of which shall be the rentable area of the Premises after such change
and the denominator of which shall be the rentable area of the Premises
immediately before such change. If the rentable area of the Building is changed
as a result of any cause not within Landlord's reasonable control (for instance,
as a result of a reduction in area due to reconstruction following fire or the
exercise or threatened exercise of the right of eminent domain), then Tenant's
Building Share shall be recalculated by dividing the rentable area of the
Premises after such occurrence by the rentable area of the entire Building after
such occurrence.
(f) Subject to adjustment prior to January 1,2001 based on the terms of
Section 4.4, "Tenant's Project Share" shall mean 3.17% (calculated by dividing
Rentable Area in the Premises (20,180) by the Project Rentable Area (635,984)).
Tenant's Project Share of Project Expenses shall normally be computed by
multiplying such percentage by Project Expenses, but shall be subject to
adjustment as a result of special allocations made pursuant to Section 5.2 and
the provisions of Section 5.3. If the rentable area of the Premises is changed
for any reason, Tenant's Project Share shall be modified by multiplying the
percentage specified in this Paragraph (f) by a fraction, the numerator of which
shall be the rentable area of the Premises after such change and the denominator
of which shall be the rentable area of the Premises immediately before such
change. If the rentable area of the Project is changed as a result of any cause
not within Landlord's reasonable control (for instance, as a result of a
reduction in area due to reconstruction following fire or the exercise or
threatened exercise of the right of eminent domain), then Tenant's Project Share
shall be recalculated by dividing the rentable area of the Premises after such
occurrence by the rentable area of the entire Project after such occurrence.
5.2 Special Allocations. Building Expenses and Project Expenses which
-------------------
are, in Landlord's reasonable discretion, exercised in good faith, properly
chargeable solely to a single tenant or to a group of tenants shall be so
allocated. Landlord shall endeavor to make all such allocations fairly. Any
amount so allocated to Tenant shall be paid by Tenant as Additional Charges,
provided that if Tenant disputes such allocation the same shall be resolved by
arbitration pursuant to the terms of this Lease.
5.3 Payment of Tenant's Building Share and Tenant's Project Share of
----------------------------------------------------------------
Building Expenses and Project Expenses. Commencing on the Commencement Date for
--------------------------------------
the Premises, subject to abatement pursuant to Section 4.4 above, Tenant shall
pay to Landlord as Additional Charges one twelfth (1/12th) of Tenant's Building
Share of Building Expenses and one twelfth (1/12th) of Tenant's Project Share of
Project Expenses, respectively on or before the first day of each month of the
Term, in advance, in an amount reasonably estimated by Landlord and billed by
Landlord to Tenant; provided that Landlord shall have the right to revise such
estimate at anytime. Within one hundred twenty (120) days after the end of each
calendar year, Landlord shall furnish Tenant with a statement ("Landlord's
Expense Statement"), certified as true and correct by an accounting or auditing
officer of Landlord or a property manager, setting forth in reasonable detail
the actual amount of Building Expenses and Project Expenses for such year, and
Tenant's Building Share of Building Expenses and Tenant's Project Share of
Project Expenses, respectively. If the actual amount of Tenant's Building Share
or Tenant's Project Share of Building Expenses or Project Expenses,
respectively, due for such year differs from the estimated amount of Tenant's
Building Share or Tenant's Project Share of Building Expenses or Project
Expenses, respectively, paid by Tenant for such year, the difference shall be
paid by Tenant within thirty (30) days after the receipt of Landlord's Expense
Statement, or refunded in cash to Tenant within thirty (30) days after
determination thereof, as the case may be; provided, however, that in no event
shall Building Expenses or Project Expenses actually payable for a given
calendar year be less than zero.
-8-
5.4 Partial Year Adjustments. For the purpose of calculating Tenant's
------------------------
Building Share of Building Expenses and Tenant's Project Share of Project
Expenses, respectively, for the period between the Expiration Date or date of
early termination and the immediately preceding January 1 (each such period
being a "Partial Year"), Building Expenses and Project Expenses for the calendar
year in which the Partial Year occurs shall be reduced by multiplying such
amounts by a fraction, the numerator of which is the number of days in the
applicable Partial Year and the denominator of which is three hundred and sixty-
five (365), and such reduced amounts shall be the amounts payable during such
Partial Year, and monthly payments of Tenant's Building Share of estimated
Building Expenses and of Tenant's Project Share of Project Expenses shall be
based on the number of months in the applicable Partial Year.
5.5 Tenant's Right to Audit Landlord's Records. Within thirty (30) days
------------------------------------------
after Tenant's request, but not more than once per year, Landlord shall provide
Tenant with copies of Landlord's records relating to Building Expenses and
Project Expenses; provided, however, that Tenant shall reimburse Landlord for
the reasonable cost thereof except as otherwise provided herein. In the event of
any dispute or uncertainty as to said amounts Tenant shall be entitled to review
legible copies of all of Landlord's tax bills, invoices, files and records with
respect to the disputed items at the place where such materials are normally
maintained, but not more often than once per year. If, after its inspection and
review, Tenant has a good faith belief that it has reason to dispute the amount
of such Additional Charges, Tenant shall be entitled to retain a national,
independent certified public accountant to audit such materials. If Landlord
desires to contest such audit results, Landlord may do so by requesting
arbitration of the dispute as set forth below within fifteen (15) days of
receipt of the results of the audit, and the arbitration shall be final and
binding upon Landlord and Tenant. If it is determined from the audit, or the
arbitration if applicable, that Tenant was overcharged by more than five percent
(5%) of the correct amount payable, such overcharge shall entitle Tenant to
credit against its next payment of Additional Charges the amount of the
overcharge and the costs associated with the audit, and the arbitration if
applicable (and, if such credit occurs following the expiration of the Term,
Landlord shall promptly pay the amount of such credit to Tenant). If the audit,
or arbitration if applicable, determines that the Tenant was overcharged less
than five percent (5%) of the correct amount payable, such overcharge shall
entitle Tenant to credit against its next payment of Additional Charges the
amount of the overcharge (or, if such determination occurs following the
expiration of the Term and any Extension Term, then Landlord shall promptly pay
the amount of the overcharge directly to Tenant) and Tenant shall pay for all
costs associated with the audit, and the arbitration if applicable. If the
audit, or arbitration if applicable, determines that Tenant was charged the
correct amount, Tenant shall pay for all costs associated with the audit, and
the arbitration if applicable. If the audit, or arbitration if applicable,
determines that Tenant was undercharged, Tenant shall promptly pay the amount of
such undercharge to Landlord and Tenant shall pay for all costs associated with
the audit, and the arbitration if applicable.
Within fifteen (15) days of Landlord's request for arbitration, Landlord
and Tenant shall each appoint one arbitrator who shall be a real estate
professional (including, without limitation, real estate lawyers and brokers
(who may specialize in either landlord or tenant representation, or both)) who
shall have been active over the five (5) year period ending on the date of such
appointment in the leasing of comparable commercial properties in the San Diego,
California area, exclusive of any broker from any brokerage firm currently
representing (or who had previously represented within the preceding three (3)
year period) either party, or any affiliate thereof. The two arbitrators so
appointed shall within fifteen (15) days of the date of the appointment of the
last appointed arbitrator agree upon and appoint a third arbitrator who shall be
qualified under the same criteria as set forth above. The three arbitrators
shall within thirty (30) days of the appointment of the third arbitrator reach a
determination of Tenant's Share of Building Expenses and Project Expenses. The
decision of the majority of the three arbitrators shall be final and binding
upon Landlord and Tenant.
5.6 Objections to Statements. Tenant acknowledges that Landlord's
------------------------
ability to budget and incur expenses depends on the finality of Landlord's
Expense Statements and agrees that Tenant shall have one hundred twenty (120)
days following receipt of such Statements within which to raise any objection to
the calculations contained therein. Failure of Tenant to object within such one
hundred twenty (120) day period shall be deemed a waiver of any such objection,
absent fraud or manifest errors. Tenant shall continue to make all payments
required hereunder pending resolution of any such objection. No delay by
Landlord in providing any Statement shall be deemed a default by Landlord or a
waiver of Landlord's right to require payment of Tenant's obligations for actual
or estimated Building Expenses or Project Expenses.
6. Security Deposit. This Lease shall be of no effect unless and until
----------------
Tenant deposits with Landlord Thirty-Six Thousand Three Hundred Twenty-Four
Dollars ($36,324) in immediately available funds (the "Security Deposit") as
security for the full performance of Tenant's obligations under this Lease. Upon
default by Tenant with respect to the payment of any item of Rent or Additional
Charges or any other obligation contained herein, and following ten (10) days
prior written notice to Tenant of its intent to do so, Landlord may use or
retain all or any portion of the Security Deposit for the payment of any Rent
or Additional Charges or other such sum in default or for the payment of any
amount Landlord may spend or may become obligated to spend by reason of Tenant's
default. In the event any portion of the Security Deposit is applied or used,
Tenant shall, within ten (10) days after written notice thereof, deposit an
additional amount with Landlord sufficient to restore the Security Deposit to
its original amount as specified in this Section and Tenant's failure to do so
shall constitute a material breach of this Lease. If Tenant is not in default
under this Lease at the termination hereof, Landlord shall return the Security
-9-
Deposit to Tenant within thirty (30) days after such termination, minus any
amounts required to restore the Premises to good condition and repair, including
damage resulting from the removal by Tenant of its trade fixtures or equipment.
6.1 Landlord's Obligations. Landlord's obligation with respect to any
----------------------
Security Deposit is that of a debtor and not as a trustee, consequently such
sums may be commingled with rental receipts or dissipated and no interest shall
accrue thereon. In the event of the sale of the real property of which the
Premises constitute a part, Landlord or its agent shall transfer to Landlord's
successor in interest the sums held as Security Deposit and notify Tenant in
writing of such transfer and the name and address of Landlord's successor in
interest. Upon such written notification, Tenant shall have no further claim
against Landlord with respect to the Security Deposit, provided that Landlord's
successor in interest specifically assumes or by operation of law is deemed to
have assumed Landlord's obligations regarding the Security Deposit.
7. Acceptance of Premises:
----------------------
7.1 Construction of Tenant Improvements. Tenant shall construct but
-----------------------------------
Landlord will own (and to the extent set forth in this Section 7.1 will pay for)
certain improvements (the "Tenant Improvements") in the Premises. The Tenant
Improvements for the Premises shall be designed and completed in accordance with
this Article 7 and Article 31 below, the cost to Landlord of which shall not
exceed Four Hundred Three Thousand Six Hundred Dollars ($403,600) (i.e., $20 per
rentable square foot of the Premises) ("T.I. Allowance"). As part of the Tenant
Improvements, Tenant shall use the T.I. Allowance to pay for twenty-five percent
(25%) of the costs of the initial upgrade by Landlord of the Building's
electrical power system, such that the Premises will be served with 1400 amps of
277/480V 3 phase power in accordance with Section 19.1 below, however, in no
case shall such amount paid by Tenant exceed Fifty-five Thousand Dollars
($55,000). Any costs to construct the Tenant Improvements (including any
demolition of current improvements) in excess of the T.I. Allowance shall be
paid for by Tenant. The Tenant Improvements shall consist of all interior
demolition and improvements constructed in the Premises which are not part of
the Building's structure or shell and shall include by way of illustration,
floor coverings, interior partitions, doors, ceilings, lighting fixtures, wall
coverings, electrical and telephone outlets. The Tenant Improvements shall be
constructed in accordance with plans and specifications prepared by Tenant's
architect and approved by both Landlord and Tenant pursuant to Article 31 of
this Lease. Except as otherwise provided herein, the T.I. Allowance shall be
available towards the costs of the actual, incurred costs of the Tenant
Improvements, including the cost of all labor and materials for the construction
and installation of the Tenant Improvements; the cost of demolition work; the
cost of all permits, licenses, and fees; all amounts paid to Tenant's
contractors under and pursuant to contracts for the construction and
installation of the Tenant Improvements; all architectural, engineering, space
planning, and other consultant's fees; all amounts paid for mechanical drawings,
plans, specifications, shop drawings, designs, and layouts; and reasonable
incidental costs related to the foregoing. The foregoing notwithstanding,
Landlord shall cause to be constructed, at Landlord's cost, a demising wall
for the Premises as shown on Exhibit A attached hereto (the "Demising Wall"), on
or before October 15, 1999. Tenant acknowledges that Landlord has already
provided, at Landlord's cost, a primary lobby and entry door for the Premises.
7.2 Condition at Delivery. Landlord will cause all Building systems to
---------------------
be in good working order and condition, and the roof of the Building to be in
good condition, at the time the Premises are delivered to Tenant. Except as
aforesaid, Tenant shall receive the Premises broom clean in their "as is"
condition as of the date of this Lease without any demolition or other work
having been done and subject to reasonable wear and tear arising from any
current tenant's or occupant's occupancy and moving out of the Premises. Tenant
agrees to accept possession of the Premises in such condition, and Tenant shall
notify Landlord of any defects in the condition of the Premises within thirty
(30) days after Tenant takes possession of the Premises. By so accepting the
Premises and thereafter occupying the Premises for such thirty (30) days without
notifying Landlord of any defects, Tenant shall be deemed to have accepted the
same and to have acknowledged that the Premises fully comply with Landlord's
obligations under this Section. Notwithstanding the foregoing, the Demising Wall
to be constructed by Landlord pursuant to Section 7.1 above shall be constructed
in a good and workmanlike manner and without unreasonably interfering with any
construction of the Tenant Improvements, and if Tenant does not notify Landlord
of any defects of the Demising Wall within thirty (30) days after Landlord's
construction of the Demising Wall is completed, then Tenant shall be deemed to
have accepted the Demising Wall and to have acknowledged that the Demising Wall
fully complies with Landlord's obligations in regard thereto. Landlord makes no
representation or warranty as to the nature, quality, or suitability for
Tenant's business of the Tenant Improvements, the Project, the Building, or the
Premises, and Tenant shall have no rights against Landlord by reason of such
matters or any claimed deficiencies therein. Notwithstanding any contrary
provisions in this Lease, (a) Tenant shall be responsible for causing all
alterations, additions and improvements in or to the Premises (including without
limitation the Tenant Improvements) to comply with all laws, codes and
ordinances (including without limitation The Americans With Disabilities Act)
(collectively "Laws"), and for making any modifications to the Premises required
under any Law as a result of any change in use by Tenant or any change in Laws;
and (b) Landlord shall be responsible for causing the Project to comply with all
Laws as they exist and are interpreted prior to the Commencement Date, however
any costs incurred in connection with any Laws enacted on or after the
Commencement Date, or as a result of any new or different interpretations of
Laws as they currently exist, shall be costs which will constitute Building
Expenses or Project Expenses under this Lease.
-10-
8. Common Areas.
------------
8.1 Right to Use Common Areas. Tenant and Tenant's Agents shall have the
-------------------------
right to use the Building Common Areas and Project Common Areas in common with
other persons, subject to Landlord's reasonable rules and regulations and the
provisions of this Lease.
8.2 Alteration of Building or Project Common Areas. Landlord hereby
----------------------------------------------
reserves the right, at any time and from time to time, without liability to
Tenant of any kind whatsoever (including without limitation liability for loss
of business or profits), to make alterations or additions to the Building, the
Building Common Areas or the Project Common Areas; to change, add to, eliminate
or reduce the extent, size, shape, number or configuration of any aspect of the
Building, the Building Common Areas or the Project Common Areas or their
operations; to close to the general public all or any portion of the Building,
the Building Common Areas or the Project Common Areas, to the extent and for the
period necessary to avoid any dedication to the public, to effect any repairs or
further construction, or in case of invasion, mob, riot, public excitement or
other circumstances rendering such action advisable in Landlord's reasonable
opinion; to change the arrangement, character, use or location of entrances or
passageways, doors and doorways, corridors, elevators, stairs, landscaping,
toilets, mechanical, plumbing, electrical or other operating systems or any
other portions of the Building, the Building Common Areas or the Project Common
Areas, to change common area to rental space and rental space to common area; to
utilize portions of the common area for entertainment, displays, product shows,
the leasing of temporary or permanent kiosks or other such uses as, in
Landlord's judgment, tend to attract the public; and to change the name, number
or designation by which the Building is commonly known. Except as otherwise
provided in this Lease, Landlord shall have the exclusive rights to the airspace
above and around, and the subsurface below, the Premises and other portions of
the Building. Except as otherwise provided in this Lease, Landlord shall have
the exclusive right to use all exterior walls, roofs and other portions of the
Building, including common areas for signs, notices, and other promotional
purposes. Landlord shall, to the extent reasonably possible under the
circumstances, provide Tenant with advance notice of any such alterations which
Landlord reasonably anticipates will impair Tenant's use of the Premises, and
shall perform any such alterations in a manner so as to cause as little
interference with Tenant's use of the Premises as is reasonably possible;
provided, however, that Landlord shall not be obligated to perform work during
other than normal business hours, unless doing so is reasonably possible and
Tenant so requests and Tenant agrees to pay all additional costs of doing so.
Tenant waives all rights to consequential damages (including without limitation
damages for lost profits and lost opportunities) arising in connection with
Landlord's exercise of its right under this Section, except to the extent
arising from the gross negligence or willful misconduct of Landlord or
Landlord's agents in connection therewith. Nothing in this Section 8.2 shall
permit Landlord to do any of the following, except in emergency situations: (a)
to alter the Premises or the mechanical, plumbing, electrical, HVAC or other
operating systems installed by or for Tenant for the operation of its business
in the Premises without Tenant's consent; (b) to prevent access to the Premises
by Tenant and Tenant's customers and vendors as provided in this Lease; (c) to
alter in a way that materially adversely affects, or eliminates, any of the
Building Common Areas and Project Common Areas reasonably necessary for the use
and enjoyment of the Premises in accordance with this Lease (such as utility
facilities, parking areas, drives, walkways, electrical and telephone closets,
risers and other areas used for utilities and other building systems); or (d) to
permit any activity reasonably inconsistent with a first class office park or
that otherwise would unreasonably interfere with Tenant's use and enjoyment of
the Premises or the conduct of Tenant's business as provided in this Lease.
9. Use.
---
9.1 Permitted Use. The Premises shall be used only for general office
-------------
purposes, computer and data center, and co-location and telecommunication
services. Tenant shall be responsible for compliance with all zoning laws and
ordinances and Tenant acknowledges that neither Landlord nor its agents has made
any representations or warranties with respect thereto. Landlord shall not apply
for or consent to any change in the zoning for the Building or the Project which
will make the conduct of all or any portion of Tenant's business unlawful.
9.2 No Nuisance. Tenant shall not allow, suffer or permit the Premises
-----------
or any use thereof to constitute a nuisance or unreasonably interfere with the
safety, comfort or enjoyment of the Project by Landlord or any other occupants
of the Project or their customers, invitees or any others lawfully in, upon or
about the Project or its environs.
9.3 Compliance with Laws. Tenant, at Tenant's expense, shall comply with
--------------------
and cause all of Tenant's Agents to comply with all applicable laws, ordinances,
rules and regulations of governmental authorities applicable to the Premises and
the use and occupancy thereof, and Tenant shall not violate any applicable laws,
ordinances, rules and regulations of governmental authorities applicable to the
remainder of the Project or the use or occupancy thereof.
9.4 Hazardous Materials. Tenant shall not cause or suffer or permit any
-------------------
Hazardous Materials to be brought upon, kept, used, discharged, deposited or
leaked in or about the Premises or any other portion of the Project by Tenant or
any of Tenant's Agents or by anyone in the Premises (other than Landlord or
Landlord's contractors, subcontractors, agents, servants or employees
(collectively, "Landlord's Agents")), except to the extent such Hazardous
Materials are customarily kept or used by typical office tenants and in
connection with data center uses and are kept, used and disposed of in strict
-11-
compliance with all laws, ordinances and regulations relating to Hazardous
Materials. If Tenant breaches the obligations stated in the preceding sentence,
or if the presence of any Hazardous Material on the Premises or any other
portion of the Project caused or suffered or permitted by Tenant or any of
Tenant's Agents or by anyone in the Premises (other than Landlord or Landlord's
Agents) results in contamination of the Premises or any other portion of the
Project, or if contamination of the Premises or any other portion of the Project
by any Hazardous Material otherwise occurs for which Tenant is legally liable,
then Tenant shall indemnify, defend and hold Landlord harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities, expenses and
losses (including without limitation diminution in value of the Project, damages
for the loss of restriction on use of leasable space or of any amenity of the
Building or the Project, damages arising from any adverse impact on marketing of
space and sums paid in settlement of claims, attorneys' fees, consultant fees
and expert fees) which arise during or after the Term of this Lease as a result
of such contamination. This indemnification shall include, without limitation,
costs incurred in connection with any investigation of site conditions or any
clean-up, remedial, removal or restoration work required by any federal, state
or local governmental agency or political subdivision because of any Hazardous
Material present in the soil or groundwater on or under the Premises or any
other portion of the Project. Without limiting the foregoing, if the presence of
any Hazardous Material on the Premises or any other portion of the Project
caused or suffered or permitted by Tenant or any of Tenant's Agents or by anyone
in the Premises (other than Landlord or Landlord's Agents) results in any
contamination of the Premises or any other portion of the Project, Tenant shall,
at its sole cost and expense, promptly take all actions necessary to return the
Premises and all other portions of the Project affected to the condition
existing prior to the introduction of any such Hazardous Material to the
Premises or other portions of the Project, provided that Landlord's approval of
such actions shall first be obtained, which approval shall not be unreasonably
withheld if such actions would not potentially have any material adverse effect
on the Premises or any other portion of the Project. Nothing in this Section 9.4
shall impose any obligation or liability upon Tenant whatsoever with respect to
Hazardous Materials except to the extent introduced to the Project or any part
thereof by Tenant, any of Tenant's Agents or any of Tenant's customers, vendors
or other invitees.
"Hazardous Material" means any hazardous or toxic substance, material
or waste which is or becomes regulated by any local governmental authority, the
State of California or the United States Government. The term "Hazardous
Material" includes, without limitation, any material or substance which is (i)
defined as "hazardous waste," "extremely hazardous waste" or "restricted
hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140, of the California Health and Safety Code (Hazardous Waste Control
Law), (ii) defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code (Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous Substance
Account Act), (iii) defined as a "hazardous material," "hazardous substance" or
"hazardous waste" under Section 25501 of the California Health and Safety Code
(Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety
Code (Underground Storage of Hazardous Substances), (v) listed under Article 9,
or defined as hazardous or extremely hazardous pursuant to Article 11, of Title
22 of the California Code of Regulations, Division 4, Chapter 30, (vi)
designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. Section 1317), (vii) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C. Section 6903), (viii)
defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq. (42 U.S.C. Section 9601), (ix) petroleum or (x) asbestos or asbestos-
containing materials.
Landlord shall protect, defend, indemnify, and hold Tenant, its agents
and employees harmless from and against any and all losses, liabilities,
injuries, costs, expenses, claims of any and every kind whatsoever (including,
without limitation, court costs and attorneys' fees) which at any time or from
time to time may be paid, incurred, or suffered by or asserted against Tenant,
with respect to the presence in the Premises of any Hazardous Material but only
to the extent such Hazardous Material was installed or deposited in the Building
by Landlord, or any agent, employee, or contractor of Landlord.
Landlord shall not cause or permit any Hazardous Materials to be
brought upon, kept, used, discharged, deposited or leaked in or about the
Premises or the Building by Landlord or Landlord's Agents, except to the extent
such Hazardous Materials are customarily kept or used in the operation and
maintenance of buildings similar to the Building and are kept, used and disposed
of in strict compliance with all laws, ordinances and regulations relating to
Hazardous Materials. Landlord shall indemnify, defend and hold Tenant harmless
from any and all claims, judgments, damages, penalties, fines costs,
liabilities, expenses and losses (including without limitation damages for the
loss of or restriction on use of the Premises or of any amenity or of the
Building or the Project, and sums paid in settlement of claims, attorney's fees,
consultant fees and expert fees) which arise during or after the Term of this
Lease as a result of (i) any Hazardous Materials introduced on, under or within
the Premises or the Project by Landlord or any of Landlord's Agents, or (ii) the
violation of any laws, rules or regulations or the provisions of this Lease
related to Hazardous Materials by Landlord or any of Landlord's Agents.
10. Alterations and Tenant's Property.
---------------------------------
10.1 Alterations Defined. Tenant shall not make or suffer or allow to
-------------------
be made any alterations, additions or improvements in or to the Premises (herein
collectively called "Alterations") without first obtaining Landlord's written
consent based on detailed plans and specifications submitted by Tenant (where
reasonably necessary). Landlord's consent may be withheld in Landlord's sole
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discretion if Alterations may affect any portions of the Project containing
asbestos or may affect the structure or life safety systems of the Building;
otherwise Landlord's consent shall not be unreasonably withheld.
10.2 Removal of Property. All Alterations shall become the property
-------------------
of Landlord, and shall be surrendered to Landlord, upon the expiration or
earlier termination of this Lease; provided, however, that this provision shall
not apply to movable equipment, trade fixtures, personal property or furniture
owned by Tenant ("Tenant Owned Property"), including the Generator Equipment,
the HVAC Equipment and the Other Equipment (which terms are defined in Article
19). At Landlord's sole election, any or all Alterations made by or on behalf of
Tenant shall be removed from the Premises at Tenant's sole cost and expense at
the expiration or sooner termination of this Lease (provided that, if Landlord's
consent was required for any Alteration, such removal shall be required only if
Landlord expressly conditioned its consent upon the requirement that Tenant
remove such Alteration upon expiration or earlier termination of this Lease),
and the Premises shall be restored, at Tenant's sole cost and expense, to their
condition before the making of such Alterations. Notwithstanding the foregoing,
Tenant shall have the right to elect not to remove conduit, cabling, piping,
electrical conductors or standard office equipment. Tenant shall repair at its
sole cost and expenses all damage caused to the Premises or the Building by
removal of any Alterations or Tenant Owned Property. Any Tenant Owned Property
not removed from the Premises before the expiration or earlier termination this
Lease shall, at Landlord's option, become the property of Landlord, or Landlord
may remove them and Tenant shall pay to Landlord the cost of removal. Tenant
waives and releases its rights under Section 1019 of the California Civil Code,
or any similar law now or hereafter in effect, to the extent inconsistent with
the provisions of this Lease.
11. Repairs and Other Work.
----------------------
11.1 Tenant's Obligations. Tenant shall at all times maintain the
--------------------
Premises (including without limitation, to the extent located in the Premises or
installed by Tenant, utility systems, all signs, metal work, doors, and windows,
except as is otherwise provided in this Lease) in good, clean and sanitary
condition and, at Tenant's cost and expense, shall make all repairs and
replacements as and when necessary to preserve the Premises in good working
order and condition. Notwithstanding the foregoing, if any portion of the
plumbing (including condenser water lines), mechanical, electrical, HVAC, life
safety or structural systems of the Premises (other than the portions of any
such systems installed by Tenant to the extent that other tenants and the
Project are not affected) requires maintenance or repair which Tenant is
otherwise obligated to perform under this Lease, Landlord shall have the option
to repair and maintain such portion on Tenant's behalf. If Landlord performs any
work on Tenant's behalf pursuant to this Section, Tenant shall pay the
reasonable costs of such work upon completion. Landlord shall not be liable for,
and there shall be no abatement of Rent or Additional Charges with respect to,
any injury to or interference with Tenant's business arising from any repairs,
maintenance, alteration or improvement in or to any portion of the Building,
including the Premises, or in or to the fixtures, appurtenances and equipment
therein. Tenant hereby waives and releases its rights under Sections 1941,
1941.1 and 1942 of the California Civil Code or under any similar law now or
hereafter in effect, except to the extent expressly provided herein. Tenant
specifically waives all rights to consequential damages (including without
limitation damages for lost profits and lost opportunities) arising in
connection with any repairs, maintenance, alteration or improvement in or to any
portion of the Building, except to the extent arising from the gross negligence
or willful misconduct of Landlord or Landlord's Agents. Notwithstanding the
foregoing provisions of this Section 11.1, the Landlord shall, to the extent
reasonably possible under the circumstances, provide Tenant with advance notice
of any such activities, and shall perform such activities in a manner so as to
cause as little interference with Tenant's use of the Premises or the conduct of
its business as reasonably possible; provided, however, that Landlord shall not
be obligated to perform work during other than normal business hours, unless
doing so is reasonable possible, Tenant so requests and Tenant agrees to pay any
additional cost of doing so.
11.2 Conditions Applicable to Repairs and Other Work. All repairs,
-----------------------------------------------
replacements, and reconstruction (including without limitation all Alterations)
made by or on behalf of Tenant or any of Tenant's Agents (as defined below)
shall be made and performed (a) at Tenant's cost and expense and at such time
and in such manner as Landlord may reasonably designate, (b) by contractors or
mechanics reasonably approved by Landlord, (c) at least equal in quality of
materials and workmanship to the original work or installation, (d) in
accordance with such reasonable requirements as Landlord may impose with respect
to insurance and bonds to be obtained by Tenant in connection with the proposed
work, (e) in accordance with the Rules and Regulations for the Building adopted
by Landlord from time to time and in accordance with all applicable laws and
regulations of governmental authorities having jurisdiction over the Premises,
(f) so as not to interfere with the use and enjoyment of the Building by
Landlord, other tenants of the Building or any other persons, and (g) in
compliance with such other requirements as Landlord may reasonably impose
(including without limitation a requirement that Tenant furnish Landlord with
as-built drawings upon completion of the work).
11.3 Landlord's Obligations. Landlord shall at all times maintain the
----------------------
Building Common Areas and Project Common Areas in good, clean and sanitary
condition and shall make all repairs and replacements as and when necessary to
preserve the Building Common Areas and Project Common Areas in good working
order and condition, and Tenant shall not be responsible for any costs of
causing the Project to comply with Laws (defined in Section 7.2 above) as they
exist and are interpreted prior to the Commencement Date.
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12. Liens.
-----
12.1 Tenant shall keep the Premises and the Building Real Property
free from any liens arising out of any (a) work performed or material furnished
to or for the Premises between the time Tenant has been provided access to the
Premises and the time Tenant surrenders possession of the Premises (at or after
expiration or earlier termination of the Lease), or (b) obligations incurred by
or for Tenant or any of Tenants' Agents before or during the Term of this Lease.
In the event that Tenant shall not, within fifteen (15) days following notice of
the imposition of any such lien, cause the same to be released of record by
payment or posting of a bond reasonably satisfactory to Landlord in form and
substance, Landlord shall have, in addition to all other remedies provided
herein and by law, the right (but not the obligation) to cause the lien to be
released by such means as Landlord shall reasonably deem proper, including
payment of the claim giving rise to such lien. All such sums reasonably paid by
Landlord and all expenses incurred by it in connection therewith shall be
considered Additional Charges and shall be payable by Tenant within thirty (30)
days after demand. Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or that
Landlord shall deem proper for the protection of Landlord, the Premises, the
Building Real Property and any other party having an interest therein, from
mechanics', materialmen's and other liens. In addition to all other requirements
contained in this Lease, Tenant shall give to Landlord at least ten (10)
Business Days prior written notice of commencement of any construction on the
Premises.
13. Subordination.
-------------
13.1 Tenant agrees that this Lease shall be subject and subordinate
at all times to (a) all ground leases or underlying leases that may now exist or
hereafter be executed affecting the Building Real Property or any portion
thereof, (b) the lien of any mortgage or other security instrument (and any
advances thereunder) that may now exist or hereafter be executed in any amount
for which the Building Real Property or any portion thereof, any ground leases
or underlying leases, or Landlord's interest or estate therein is specified as
security; and (c) all modifications, renewals, supplements, consolidations and
replacements thereof. Notwithstanding the foregoing, Landlord shall have the
right to subordinate or cause to be subordinated to this Lease any such ground
leases, underlying leases or liens, provided that so long as Tenant is not in
default under this Lease, Tenant's right of possession to the Premises and
Tenant's other rights arising out of this Lease shall not be disturbed. If any
ground lease or underlying lease terminates for any reason or any mortgage or
other security instrument is foreclosed or a conveyance in lieu of foreclosure
is made for any reason, Tenant shall, notwithstanding any subordination, attorn
to and become the tenant of the successor in interest to Landlord at the option
of such successor in interest. Tenant covenants and agrees to execute and
deliver, within ten (10) calendar days after demand by Landlord and in the form
reasonably requested by Landlord, any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground leases,
underlying leases, mortgages, or other security instruments. Landlord shall use
commercially reasonable efforts to provide Tenant with a subordination, non-
disturbance and attornment agreement in a form reasonably acceptable to
Landlord, Tenant and Landlord's lender.
14. Inability to Perform.
--------------------
14.1 Except to the extent expressly provided herein, if, by reason of
acts of God, governmental restrictions, strikes, labor disturbances, shortages
of materials or supplies or any other cause or event beyond Landlord's
reasonable control, Landlord is (i) unable to furnish or is delayed in
furnishing any utility or service required to be furnished by Landlord under the
provisions of Article 19, any other Article of this Lease, or any collateral
instrument, (ii) unable to perform or make or is delayed in performing or making
any installations, decorations, repairs, alterations, additions or improvements,
required to be performed or made under this Lease or under any collateral
instrument, or (iii) unable to fulfill or is delayed in fulfilling any of
Landlord's other obligations under this Lease or any collateral instrument, no
such inability or delay shall (a) constitute an actual or constructive eviction,
in whole or in part, (b) entitle Tenant to any abatement or diminution of Rent
or Additional Charges, (c) relieve Tenant from any of its obligations under this
Lease, or (d) impose any liability upon Landlord or its agents by reason of
inconvenience or annoyance to Tenant or by reason of injury to or interruption
of Tenant's business, or otherwise. Tenant hereby waives and releases its right
to terminate this Lease under Section 1932(1) of the California Civil Code or
under any similar law, statue or ordinance now or hereafter in effect, except to
the extent expressly provided herein.
14.2 Except to the extent expressly provided herein, to the extent
that acts of God, governmental restrictions, strikes, labor disturbances,
shortages of materials or supplies or any other cause or event beyond Tenant's
reasonable control, cause Tenant to be unable to fulfill or to be delayed in
fulfilling any of Tenant's obligations under this Lease other than the payment
of Rent or any Additional Charge, no such inability or delay shall (a) relieve
Landlord from any of its obligations under this Lease, or (b) impose any
liability upon Tenant or its agents.
15. Destruction.
-----------
15.1 Repair. If any portion of the Building is damaged by fire,
earthquake, flood or other casualty (the "Damaged Property") to the extent that
such portion is rendered unusable by Tenant or renders a portion of the Premises
unusable and the Damaged Property can, in Landlord's reasonable
-14-
opinion, be repaired within one hundred twenty (120) days after the date of
damage (under a normal construction schedule not requiring the payment of
overtime or premium), Landlord shall proceed immediately to make such repairs in
accordance with Section 15.4 below (unless this Lease is terminated pursuant to
this Article 15). Landlord's opinion shall be delivered to Tenant within thirty
(30) days after the date of the damage. Landlord shall consider and include as
part of its evaluation, the period of time necessary to obtain the required
approvals of the mortgagee and insurer and governmental entities, to order and
obtain materials, and to engage contractors. Notwithstanding anything to the
contrary herein, the total destruction of the Building shall automatically
terminate this Lease as of the date of destruction.
15.2 Tenant's Right to Terminate. If such damage causes all or any
---------------------------
material portion of the Premises to be unusable by Tenant and (i) in Landlord's
reasonable opinion damage to the Damaged Property cannot be repaired and
restored to substantially the condition existing prior to the damage within one
hundred twenty (120) days from the date of the damage (under a normal
construction schedule not requiring the payment of overtime or premium), or (ii)
the Lease will expire within one (1) year from the date of any material damage
to or destruction of the Premises, or (iii) the Damaged Property is not in fact
substantially repaired and restored to its condition as it existed before the
damage within one hundred twenty (120) days from the date of the damage (subject
to extension under Article 14) Tenant may terminate this Lease by delivery of
written notice to Landlord within thirty (30) days after the date on which
Landlord's opinion is delivered to Tenant. Upon termination, Rent and Additional
Charges pursuant to Article 4 shall be apportioned as of the date of the damage
and all prepaid Rent and Additional Charges pursuant to Article 4 shall be
repaid.
15.3 Landlord's Right to Terminate. In the event (i) the uninsured
-----------------------------
portion of any damage to or destruction of the Building equals or exceeds
twenty-five percent (25%) of the replacement cost of the Building; or (ii) the
Lease will expire within one (1) year from the date of any material damage to or
destruction of the Premises and Tenant fails to extend the Term in accordance
with any right expressly granted in this Lease within thirty (30) days after the
date of damage, Landlord may elect to terminate this Lease as hereinafter
provided. Landlord may terminate this Lease for the reason stated in clause (i)
of this Section, by delivery of written notice to Tenant within thirty (30) days
after the date of damage or destruction; and for the reason stated in clause
(ii) of this Section, by delivery of written notice to Tenant within forty-five
(45) days after the date of the damage or destruction. For purposes of the
foregoing, the uninsured portion shall not include a deficiency in insurance
proceeds to the extent caused by (i) Landlord's failure to carry insurance
required by this Lease; (ii) Landlord's election to carry required insurance in
an amount less than 100% of the replacement costs; or (iii) Landlord's election
to obtain insurance with a deductible amount or coinsurance obligations.
15.4 Extent of Repair Obligations. If this Lease is not terminated as
----------------------------
a result of any damage to the Premises covered by Section 15.1 above, Landlord's
repair obligation shall extend to the structure of the Building and all
improvements (except those constructed or installed by Tenant, including the
Tenant Improvements) in the Premises at the completion of construction of the
Tenant Improvements, and Tenant shall repair all other portions of the Premises
(including without limitation the Tenant Improvements, Alterations, and Tenant's
trade fixtures, equipment, furnishings and other personal property). All such
repairs shall be performed in a good and workmanlike manner, with due diligence,
and shall restore the items repaired to substantially the same usefulness,
design and construction as existed immediately before the damage. All work by
Tenant shall be performed in accordance with the requirements of Section 11.2
above. In the event of any termination of this Lease, the proceeds from any
insurance paid by reason of damage to or destruction of the Building Real
Property or any portion thereof, or any other element, component or property
insured by Landlord shall belong to and be paid to Landlord, except for proceeds
payable under Tenant's insurance policies. In the event of a casualty covered by
insurance which Landlord is required to carry under this Lease, Rent and
Additional charges under Article 4 above shall xxxxx commencing on the date of
the casualty and ending when the Damaged Property is repaired as aforesaid by
Landlord and the Premises are delivered to Tenant. The extent of the abatement
shall be based upon the portion of the Premises rendered untenantable,
inaccessible or unfit for use in a reasonable business manner for the purposes
stated in this Lease.
15.5 Arbitration. If the parties are unable to agree upon the
-----------
appropriate abatement of Rent and Additional Charges pursuant to this Article 15
within thirty (30) days after repairs are completed, either party may submit the
dispute to arbitration in accordance with Section 30.18.
15.6 Non-Application of Certain Statutes. The provisions of this
-----------------------------------
Lease, including this Article 15, 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, or any other portion of the Building. Any
statute or regulation of the State of California or any other governmental
authority or body, including, without limitation, Sections 1932(2) and 1933(4)
of the California Civil Code, with respect to any rights or obligations
concerning any such damage or destruction in the absence of an express agreement
between the parties, and any other statute or regulation relating to damage or
destruction of leased premises, 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 or any other portion of the Building.
16. Insurance.
---------
16.1 Insurance on Tenant's Property. Tenant shall provide insurance
------------------------------
coverage for all risks of physical loss or damage insuring the full replacement
value of the Tenant Improvements and
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Alterations, and, to the extent desired by Tenant (Landlord having no obligation
to provide insurance coverage for), Tenant's trade fixtures, furnishings,
equipment, signs and all other items of personal property of Tenant.
16.2 Tenant's Liability Insurance. Tenant shall procure at its cost
----------------------------
and expense and keep in effect during the Term of this Lease broad form
commercial general liability insurance with a minimum combined single limit of
liability of at least Two Million Dollars ($2,000,000), and statutory workers
compensation insurance with a One Million Dollars ($1,000,000) limit covering
all of Tenant's employees. Such broad form commercial general liability
insurance shall include, without limitation, products and completed operations
liability insurance, fire legal liability insurance (subject to applicable
sublimits), contractual liability insurance, and such other reasonable and
customary coverage as Landlord may reasonably require from time to time. At
Landlord's request, Tenant shall increase such insurance coverage to a level
that is reasonable and customary. If the parties are unable to agree on the
coverage and amount that is reasonable and customary, the matter shall be
determined by arbitration pursuant to Section 30.18 below.
16.3 Form of Policies. All insurance policies required to be carried
----------------
by Tenant under this Lease shall (i) be written by companies rated A8 or better
in "Best's Insurance Guide" and authorized to do business in California, (ii)
name Landlord, SENTRE Partners, Inc. and any other parties designated by
Landlord as additional insureds, (iii) as to liability coverages, be written on
an "occurrences" basis, and (iv) provide that Landlord shall receive at least
thirty (30) days notice from the insurer before any cancellation or change in
coverage. Each such policy shall contain a provision that such policy and the
coverage evidenced thereby shall be primary and non-contributing with respect to
any policies carried by Landlord and that any coverage carried by Landlord shall
be excess insurance. Any deductible amounts under any insurance policies
required hereunder shall be subject to Landlord's prior written approval (which
shall not be unreasonably withheld) and in any event Tenant shall be liable for
payment of same in the event of any casualty. Tenant shall deliver reasonably
satisfactory evidence of such insurance to Landlord on or before the
Commencement Date, and thereafter at least thirty (30) days before the
expiration dates of expiring policies; and, in the event Tenant shall fail to
procure such insurance or to deliver reasonably satisfactory evidence thereof
within five (5) Business Days after written notice from Landlord of such
failure, Landlord may, at its option and in addition to Landlord's other
remedies in the event of a default by Tenant hereunder, procure such insurance
for the account of Tenant, and the cost thereof shall be paid to Landlord as
Additional Charges. Notwithstanding the foregoing, if any such insurance expires
without having been renewed by Tenant, Landlord shall have the option in
addition to Landlord's other remedies to procure such insurance for the account
of Tenant immediately and without notice to Tenant, and the cost thereof shall
be paid to Landlord as Additional Charges. The limits of the insurance required
under this Lease shall not limit the liability of Tenant.
16.4 Compliance with Insurance Requirements. Tenant shall not do
--------------------------------------
anything, or suffer or permit anything to be done, in or about the Premises that
shall invalidate or be in conflict with the provisions of any fire or other
insurance policies covering the Building or any property located therein.
Tenant, at Tenant's expense, shall comply with, and shall cause all occupants of
the Premises to comply with, all applicable customary rules, orders, regulations
or requirements of any board of fire underwriters or other similar body.
Landlord acknowledges that Tenant's permitted use of the Premises does not
conflict with Landlord's insurance policies covering the Building or any
property located therein.
16.5 Landlord's Insurance. Landlord shall purchase and keep in full
--------------------
force and effect "special perils coverage" insurance covering the Project in an
amount equal to 100% of the full replacement value of the Project improvements
at the time of the loss, and at least Three Million Dollars ($3,000,000.00) in
liability insurance with respect to the Project, including coverage for Project
Common areas.
17. Eminent Domain. For the purposes of this Article 17, the phrase
------- ------
"usable by Tenant" shall mean reasonably usable by Tenant for the conduct of its
business in the Premises materially in the manner conducted prior to the taking.
17.1 Effect of Taking. If all of the Premises is condemned or taken
----------------
in any manner for public or quasi-public use, or any transfer of the Premises is
made in avoidance of an exercise of the power of eminent domain (each of which
events shall be referred to as a "taking"), this Lease shall automatically
terminate as of the date of the vesting of title as a result of such taking. If
a part of the Premises is so taken, this Lease shall automatically terminate as
to the portion of the Premises so taken as of the date of the vesting of title
as a result of such taking. If such portion of the Real Property is taken as to
render the Building incapable of economically feasible operation, this Lease may
be terminated by Landlord, as of the date of the vesting of title as a result of
such taking, by written notice to Tenant within sixty (60) days following notice
to Landlord of the date on which said vesting will occur. If such portion of the
Premises or the Building or the Project is taken as to render the Premises or
the remaining portion thereof unusable by Tenant, this Lease may be terminated
by Tenant as of the date of the vesting of title as a result of such taking, by
written notice to Landlord within sixty (60) days following notice to Tenant of
the date on which said vesting will occur. If this Lease is not terminated as a
result of any taking, Landlord shall restore the Building to an architecturally
whole unit; provided, however, that Landlord shall not be obligated to expend on
such restoration more than the amount of condemnation proceeds actually received
by Landlord, unless Tenant pays to Landlord in advance the difference between
the cost of such restoration and the amount of the condemnation proceeds
received by Landlord.
-16-
17.2 Award. Landlord shall be entitled to the entire award for any
------
taking, including, without limitation, any award made for the value of the
leasehold estate created by this Lease. No award for any partial or entire
taking shall be apportioned, and Tenant hereby assigns to Landlord any award
that may be made in any taking, together with any and all rights of Tenant now
or hereafter arising in or to such award or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any separate award made to Tenant for
its relocation expenses, the taking of personal property and fixtures belonging
to Tenant, the unamortized value of improvements made or paid for by Tenant or
the interruption of or damage to Tenant's business.
17.3 Abatement of Rent. In the event of a partial taking that does
-----------------
not result in a termination of this Lease as to the entire Premises, the Rent
shall xxxxx in proportion to the portion of the Premises taken or rendered
untenantable by such taking. Tenant hereby waives and releases its rights under
Section 1265.130 of the California Code of Civil Procedure or any similar
statute now or hereafter in effect.
17.4 Temporary Taking. If all or any portion of the Premises is taken
----------------
for a limited period of time, this Lease shall remain in full force and effect;
provided, however, that the Rent and Additional Charges payable pursuant to
Article 4 above shall xxxxx during such limited period in proportion to the
portion of the Premises taken by such taking. Landlord shall be entitled to
receive the entire award made in connection with any such temporary taking. Any
temporary taking of all or a portion of the Premises which continues for four
(4) months shall be deemed a permanent taking of the Premises or such portion.
18. Assignment.
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18.1 Consent Required. Notwithstanding the provisions of Section 30.4
----------------
below, neither Tenant nor any sublessee or assignee of Tenant shall, directly or
indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge
or otherwise transfer or hypothecate all or any part of the Premises or Tenant's
leasehold estate hereunder (each such act is herein referred to as an
"Assignment"), or sublet the Premises or any portion thereof or permit the
Premises to be occupied by anyone other than Tenant (each such act is herein
referred to as a "Sublease"), without Landlord's prior written consent in each
instance, which consent shall not be unreasonably withheld or delayed. Any
Assignment or Sublease that is not in compliance with this Article 18 shall be
void and, at the option of Landlord, shall constitute a material default by
Tenant under this Lease. The acceptance of Rent or Additional Charges by
Landlord from a proposed assignee, sublessee or occupant of the Premises shall
not constitute consent to such Assignment or Sublease by Landlord. Fifty percent
(50%) of any and all amounts paid to Tenant as consideration for any Assignment,
and fifty percent (50%) of the excess of the total amount of rent and other
consideration paid under or in consideration for any Sublease over the Rent and
Additional Charges payable hereunder, shall be payable to Landlord as Additional
Charges. The right to such amounts is expressly reserved from the grant of
Tenant's leasehold estate for the benefit of Landlord. Tenant shall use
reasonable diligent efforts to collect all such amounts. Landlord shall have the
right from time to time, upon reasonable advance notice, to review Tenant's
records relating to any such amounts payable to or received by Tenant.
Notwithstanding the foregoing, (a) the co-location of equipment owned by
Tenant's customers in the Premises shall not require the prior written consent
of Landlord, provided that the agreement entered into by Tenant and Tenant's
customers for such co-location of equipment shall provide that the customer
acquires no possessory, leasehold or other real property right in the Premises
or any other portion of the Project and does not obtain any of Tenant's rights
under this Lease; and (b) any Assignment or Sublease of the Premises to any
entity that (i) controls or is controlled by Tenant, (ii) is under common
control with Tenant, or (iii) acquires all or substantially all of Tenant's
assets by merger, purchase, consolidation or reorganization with satisfaction of
the net worth requirement set forth in Section 18.5 below (provided that Tenant
shall notify Landlord of such merger, purchase, consolidation or reorganization
in accordance with Section 18.5 below), shall not require Landlord's prior
approval.
18.2 Notice. Any request by Tenant for Landlord's consent to a
------
specific Assignment or Sublease shall include (a) the name of the proposed
assignee, sublessee or occupant, (b) the nature of the proposed assignee's
sublessee's or occupant's business to be carried on in the Premises, (c) a copy
of the proposed Assignment or Sublease, and (d) such financial information (in
the event of an Assignment) and such other information as Landlord may
reasonably request concerning the proposed assignee, sublessee or occupant or
its business. Landlord shall respond in writing, stating the reasons for any
disapproval, within fifteen (15) Business Days after receipt of all information
reasonably necessary to evaluate the proposed Assignment or Sublease. If
Landlord fails to respond in writing within such fifteen (15) Business Day
period, and further fails to respond within five (5) Business Days after
Landlord's actual receipt of written notice from Tenant of Landlord's failure to
respond within such period, Tenant's request shall be deemed approved.
18.3 No Release. No consent by Landlord to any Assignment or Sublease
----------
by Tenant, and no specification in this Lease of a right of Tenant's to make any
Assignment or Sublease, shall relieve Tenant of any obligation to be performed
by Tenant under this Lease, whether arising before or after (a) the Assignment
or Sublease or (b) any extension of the Term (pursuant to exercise of an option
granted in this Lease). The consent by Landlord to any Assignment or Sublease
shall not relieve Tenant or any successor of Tenant from the obligation to
obtain Landlord's express written consent to any other Assignment or Sublease.
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18.4 Cost of Processing Request. Tenant shall pay to Landlord the
--------------------------
reasonable amount of Landlord's cost of reviewing and processing every proposed
Assignment or Sublease (including, without limitation, reasonable accountants'
and attorneys' fees) and the reasonable amount of all direct and indirect
expenses incurred by Landlord arising from any assignee, occupant or sublessee
taking occupancy (including, without limitation, freight elevator operation for
moving of furnishings and trade fixtures, security service, janitorial and
cleaning service, and rubbish removal of service), not to exceed $2,500 per
Assignment or Sublease.
18.5 Corporation or Partnership Transfers. Any sale or other
------------------------------------
transfer, including without limitation by consolidation, merger or
reorganization, but excluding transfer of stock of Tenant over a recognized
securities exchange if Tenant is a publicly held corporation, of a majority of
the voting stock of Tenant or any beneficial interest therein, if Tenant is a
corporation, or any sale or other transfer of a majority of the general
partnership interests in Tenant or any beneficial interest therein, if Tenant is
a partnership, shall be an Assignment for purposes of this Lease, unless the
corresponding purchaser, transferee or successor, as applicable, has a net worth
equal to or greater than Tenant's net worth as represented by Tenant to Landlord
prior to the Commencement Date. Tenant shall provide Landlord with notice of
such sale or other transfer, either prior to such sale or transfer or within a
reasonable time thereafter.
18.6 Assumption of Obligations. Each assignee or other transferee of
-------------------------
Tenant's interest hereunder, other than Landlord, shall assume, as provided in
this Section, all obligations of Tenant under this Lease and shall be and remain
liable jointly and severally with Tenant for the payment of Rent and Additional
Charges, and for the performance of all the terms, covenants, conditions and
agreements herein contained on Tenant's part to be performed for the Term. Each
sublessee of all or any portion of the Premises shall agree in writing for the
benefit of Landlord (a) to comply with and agree to those provisions of this
Lease as are reasonably designated by Landlord, and (b) that such sublease (and
all further subleases of any portion of the Premises) shall terminate upon any
termination of this Lease, regardless of whether or not such termination is
voluntary. No Assignment or Sublease shall be valid or effective unless the
assignee or sublessee or Tenant shall deliver to Landlord a fully-executed
counterpart of the Assignment or Sublease and an instrument that contains a
covenant of assumption by the assignee or agreement to perform Tenant's
obligations, reasonably satisfactory in substance and form to Landlord,
consistent with the requirements of this Section. The failure or refusal of the
assignee to execute such instrument of assumption shall not release or discharge
the assignee from its liability as set forth above. The foregoing
notwithstanding, such assumption shall not be required prior to foreclosure by a
lender holding a leasehold trust deed encumbering Tenant's interest in the Lease
(provided that Landlord previously consented to such trust deed).
18.7 No Signs. Tenant shall not place or allow to be placed in, on or
--------
about the Building or any other portion of the Project any sign or other notice
indicating Tenant's desire to assign this Lease or sublet the Premises.
18.8 Upon Termination. In the event of a termination of this Lease by
----------------
reason of Tenant's default or in the event of a mutually agreed termination, at
Landlord's option, each sublessee of any portion of the Premises shall attorn to
Landlord. Each such sublessee shall be deemed to have agreed to the provisions
of this Section and any such Assignment or Sublease shall specifically provide
as such.
19. Utilities and Services.
----------------------
19.1 Landlord to Furnish. Landlord shall furnish, subject to
-------------------
reimbursement pursuant to Article 5 above, (a) heating, ventilation and air
conditioning to the Premises during the hours of 7:00 a.m. until 6:00 p.m.
Monday through Friday and, upon request, 8:00 a.m. to 1:00 p.m. on Saturday
(excluding holidays), (b) automatic elevator service to the floor or floors
where the Premises are located at all times, and (c) water for drinking,
cleaning and washroom purposes only at those points of supply shown on the
approved plans for the Premises. Tenant shall be solely responsible for and
shall promptly pay all other utilities and services supplied to the Premises.
Tenant acknowledges and agrees that if the Premises currently share electrical
house meters with other tenants, Tenant shall reimburse Landlord, along with its
Monthly Basic Rent and Additional Charges, for Tenant's prorata share of the
costs of such electrical service (calculated by dividing the Rentable Area of
the Premises by the total rentable area covered by each such house meter), until
the Premises are separately metered. When the electricity being supplied to the
Premises is separately metered, Tenant shall be responsible for all costs of
electrical service to the Premises, as shown on the separate meter serving the
Premises. Tenant shall have the right to make its own arrangements for
electrical service. Tenant shall, at its cost, be responsible for all janitorial
service for the Premises. The electrical power supplied to the Premises (the
cost for the use of which shall be paid by Tenant) shall be 600 amps of 277/480V
3 phase power beginning on the Commencement Date, and Landlord shall increase
such electrical power supplied to the Premises to 1400 amps of 277/480 3 phase
power as of January 31, 2000, and such increase shall be at Landlord's cost and
expense except for the portion to be paid by Tenant pursuant to Section 7.1
above. If after Tenant has paid such portion pursuant to Section 7.1, Landlord
receives any rebate or reimbursement from the utility provider as a direct
result of Landlord's electrical upgrade (thereby reducing the cost to Landlord
of such upgrade), then Landlord shall pay to Tenant a fraction of such rebate or
reimbursement, which fraction shall be determined by dividing the amount paid by
Tenant towards the cost of Landlord's upgrade by the total cost of the upgrade.
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19.2 Excess Usage. Whenever heat generating machines or equipment or
------------
lighting are used in the Premises by Tenant which materially affect the
temperature otherwise maintained by the air conditioning system, Landlord shall
have the right to install supplementary air conditioning facilities in the
Premises or otherwise modify the ventilating and airconditioning system serving
the Premises (other than the HVAC Equipment installed by Tenant), and the
reasonable cost of such facilities and modifications shall be borne by Tenant.
Tenant also shall pay the cost of providing all heating or cooling energy to the
Premises during hours other than those specified in clause (a) of Section 19.1
above (if such heating or cooling was requested by Tenant or Tenant's Agents);
such cost to be charged at Landlord's actual cost (currently $25.00 per hour,
which rate is subject to change). Landlord shall furnish such after-hours
heating or cooling energy upon at least twenty-four (24) hours advance notice
from Tenant. Tenant shall pay in advance Landlord's reasonable estimate of any
and all costs for additional facilities and modifications which may be
constructed by Landlord under this Section (including without limitation the
costs of labor, materials, equipment, supervision and management fee), subject
to adjustment of final costs upon completion.
19.3 Interruption of Service. Landlord reserves the right to stop the
-----------------------
service of the heating, ventilating, air conditioning, elevator, plumbing,
electrical or other mechanical systems or facilities in the Premises or Building
when necessary by reason of accident or emergency, or for repairs, alterations,
replacements or improvements that, in the reasonable judgment of Landlord, are
desirable or necessary, until such accident or emergency shall have been
corrected or such repairs, alterations, replacements or improvements shall have
been completed. Landlord shall give Tenant advance notice of any such
interruption of services when reasonably possible, and shall restore such
services as soon as reasonably possible and in a manner so as to cause as little
interference with Tenant's use of the Premises as is reasonably possible;
provided, however, that Landlord shall not be obligated to perform work during
other than normal business hours, unless doing so is reasonably possible and
Tenant so requests and Tenant agrees to pay all additional costs of doing so. In
addition, Landlord reserves the right to limit, restrict or ration the use of
water, electricity, gas or any other form of energy or any other service or
utility serving the Premises or the Building, if required to do so by the
specific mandate of any federal, state or local governmental agency.
19.4 Security Systems and Programs. The parties acknowledge that
-----------------------------
safety and security devices, services and programs provided by Landlord, if any,
while intended to deter crime and safety, may not in given instances prevent
theft or other criminal acts, or insure safety of persons or property. The risk
that any safety or security device; service or program may not be effective, or
may malfunction or be circumvented, is assumed by Tenant with respect to
Tenant's property and interests, and Tenant shall obtain insurance coverage to
the extent Tenant desires protection against criminal acts and other losses.
Tenant agrees to cooperate with any reasonable safety or security program
developed by Landlord or required by law.
Tenant shall have the right, at Tenant's sole cost and expense, to
install its own security system in the Premises (subject to Section 19.10 below
regarding Other Equipment), and to create a special security area within the
Premises to encompass Tenant's equipment room. Tenant shall be permitted to
install non-building-standard locks and other access controls which restrict
access to Tenant and its customers, provided that Landlord shall be provided
with keys or other entry mechanisms which may be used in accordance with the
terms of this Lease. Landlord shall not enter Tenant's secured equipment area or
permit any janitorial, maintenance, repair or other service to such area except
as provided below or approved by Tenant. Landlord shall use reasonable efforts
to notify Tenant prior to entering Tenant's secured equipment area, and only if
Tenant is unable to respond quickly enough to avoid material adverse harm to the
Project or any portion thereof then Landlord shall have the right to enter such
area without the accompaniment or consent of Tenant. Any entry by Landlord will
be conducted with reasonable caution under the circumstances to prevent damage
to or interference with any of the equipment in the area.
19.5 No Liability. Landlord shall not be liable or responsible for
------------
any interruption in the services to be provided under this Article 19, or for
any interruptions of services occurring in connection with the making of
repairs, replacements or improvements to the Premises or the Building, however
Landlord shall use commercially reasonable efforts in non-emergency situations
to provide to Tenant prior notice of any such action that may impact any of
Tenant's utility services.
19.6 Communication Installation. Provided Tenant is not in default
--------------------------
under the terms of this Lease, during the Term, Tenant shall have a non-
exclusive license to install and maintain on a portion of the roof of the
Building not to exceed two hundred (200) square feet, at Tenant's sole cost and
expense, certain communications equipment including satellite/microwave dishes
and related equipment ("Communication Equipment") on the terms and conditions
set forth herein. Prior to the installation of the Communication Equipment on
the roof(s), Tenant shall provide in writing to Landlord the Communication
Equipment specifications, including the total square footage, location, and
design of the Communication Equipment for approval by Landlord, in Landlord's
sole and absolute discretion. If required by Landlord, the Communication
Equipment, at Tenant's cost and expense, shall be screened with a material
similar to the exterior of the Building so as to cause the screening to appear
to be part of the Building. If any repairs or replacement of material on the
roof(s) are required, Tenant shall pay the cost and expense for Landlord to
remove or relocate the Communication Equipment for such reasonable time as may
be necessary for Landlord and its contractors and agents to conduct such repair
or
-19-
replacement. Tenant shall be solely responsible for any damage to or loss of the
Communication Equipment and shall carry loss and casualty insurance with full
replacement value coverage. Landlord, at its option, shall remove or require
Tenant to remove the Communication Equipment upon the termination of this Lease,
and Tenant shall promptly reimburse Landlord the cost and expense to repair any
and all damage caused to the Building(s) in connection with such removal. Tenant
shall not be entitled to modify or add to the Communication Equipment without
Landlord's prior written consent. The placement of the Communication Equipment
shall not interfere with any existing facilities, including but not limited to
existing equipment of other tenants of the Buildings, located in or on the roof
of the Building or located elsewhere in the Project. Tenant shall be responsible
for obtaining (prior to installation of the Communications Equipment) any and
all approvals, permits or licenses that may be required by any governmental
authorities in connection with the Communication Equipment. Provided the
foregoing conditions are satisfied there shall be no charge to Tenant for such
license, and such license shall expire at the end of the Term of this Lease.
19.7 Riser Access. Tenant agrees and acknowledges that Landlord has
------------
no obligation to ensure or guaranty that Tenant will be able to obtain the
necessary connections to public streets, utilities or other property as
necessary for the operation of Tenant's telecommunications equipment in the
Building and that it shall be solely the responsibility of Tenant to negotiate
agreements with public utilities and/or third parties to provide these
connections. Notwithstanding the foregoing, (a) at the request of Tenant,
Landlord shall provide Tenant with the right to run up to ten (10)
telecommunications cables from the Premises, through the Building and to the
boundary of the real property on which the Building is located, and (b) subject
to the availability of space as determined by Landlord in Landlord's sole
discretion, during the Term, Tenant shall have a non-exclusive license for
reasonable access to vertical and horizontal shafts within the Building and to
the existing underground conduits located between the Buildings of the Project
in order for Tenant to connect the Communication Equipment, the Generator
Equipment and the HVAC Equipment to the Premises, and (c) Tenant shall have the
right, at no additional charge, subject to the provisions of Section 10.1 above,
to install additional conduit to connect the Communication Equipment, the
Generator Equipment and the HVAC Equipment to the Premises and to provide
Tenant's telecommunication services to Tenant's customers. In connection with
such access and use Tenant agrees not to interrupt or interfere with any
existing tenant's business or other telecommunications provider operating within
the Building or the Project. Without limiting the foregoing, such license shall
include Tenant's right to use or construct and maintain one (1) four (4) inch
conduit with diverse routing with one (1) inch or smaller interducts as
determined by Landlord in its sole discretion in the risers of the Building and
within the existing underground conduits located between the Buildings of the
Project. Except as specifically provided herein, all of the work as set forth
herein shall be at the sole cost and expense of Tenant and shall be subject to
prior written approval in coordination with Landlord, as further described and
provided in the other provisions of this Lease. Landlord agrees that provided
the foregoing conditions are satisfied there shall be no charge to Tenant for
such license, and such license shall expire at the end of the Term of this
Lease.
19.8 Generator Equipment. Tenant shall have the right, at Tenant's
-------------------
sole cost and expense, to install and maintain on a pad site provided by
Landlord at no cost to Tenant in an area adjacent to the Building as determined
by Landlord, a generator, fuel storage tank(s), and related equipment and piping
(collectively, the "Generator Equipment"), and to integrate the Premises power
into such generator. The specifications, location and design of the Generator
Equipment shall be approved by Landlord in writing prior to installation and the
Generator Equipment shall be in the location within the area depicted on Exhibit
"D" attached hereto. Prior to the installation of the Generator Equipment,
Tenant shall provide to Landlord a written description of the Generator
Equipment, which shall be in detail reasonably satisfactory to Landlord. Tenant,
at Tenant's sole cost and expense, shall screen all sides, including the top, of
the Generator Equipment and install any other improvements reasonably required
by Landlord in connection with installation of the Generator Equipment. If
required by Landlord, the sides of the Generator Equipment, at Tenant's cost and
expense, shall be screened with a material similar to the exterior of the
Building so as to cause the screening to appear to be part of the Building.
Tenant shall be solely responsible for any damage to or loss of the Generator
Equipment and shall carry loss and casualty insurance with full replacement
value coverage. Tenant shall have the right to remove the Generator Equipment at
any time during the Term or at the end of the Term, and Tenant shall repair at
its sole cost and expenses all damage caused to the Premises or the Building by
such removal. Landlord, at its option, shall remove or require Tenant to remove
the Generator Equipment upon the termination of the initial Term of this Lease,
and Tenant shall promptly reimburse Landlord the cost and expense to repair any
and all damage caused in connection with such removal. Tenant shall not be
entitled to modify or add to the Generator Equipment without Landlord's prior
written consent. The placement of the Generator Equipment shall not interfere
with any existing facilities located in the Building or the Project. Tenant
shall be responsible for obtaining (prior to installation of the Generator
Equipment) any and all permits or licenses that may be required by any
governmental authorities in connection with the Generator Equipment. Landlord
agrees that provided the foregoing conditions are satisfied there shall be no
charge to Tenant for such space for the Generator Equipment, and Tenant's right
to such space set forth herein shall expire at the end of the Term of this
Lease.
19.9 HVAC Equipment. Provided Tenant is not in default under the
--------------
terms of this Lease, during the Term, Tenant shall have a non-exclusive license
to install and maintain on a portion of the roof of the Building not to exceed
twelve hundred (1200) square feet and located above Tenant's data center, at
Tenant's sole cost and expense, certain heating, ventilation and air
conditioning equipment ("HVAC Equipment") on the terms and conditions set forth
herein. Prior to the installation of the HVAC Equipment
-20-
on the roof(s), Tenant shall provide in writing to Landlord the HVAC Equipment
specifications, including the total square footage, location, and design of the
HVAC Equipment for approval by Landlord, in Landlord's reasonable discretion. If
required by Landlord, the HVAC Equipment, at Tenant's cost and expense, shall be
screened with a material similar to the exterior of the Building so as to cause
the screening to appear from a ground-level view to be part of the Building. If
any repairs or replacement of material on the roof(s) are required, Tenant shall
pay the cost and expense for Landlord to remove or relocate the HVAC Equipment
for such reasonable time as may be necessary for Landlord and its contractors
and agents to conduct such repair or replacement. Tenant shall be solely
responsible for any damage to or loss of the HVAC Equipment and shall carry loss
and casualty insurance with full replacement value coverage. Tenant shall have
the right to remove the HVAC Equipment at any time during the Term or at the end
of the Term, and Tenant shall repair at its sole cost and expenses all damage
caused to the Premises or the Building by such removal. Landlord, at its option,
shall remove or require Tenant to remove the HVAC Equipment upon the termination
of this Lease, and Tenant shall promptly reimburse Landlord the cost and expense
to repair any and all damage caused to the Building(s) in connection with such
removal. Tenant shall not be entitled to modify or add to the HVAC Equipment
without Landlord's prior written consent. The placement of the HVAC Equipment
shall not interfere with any existing facilities, including but not limited to
existing equipment of other tenants of the Buildings, located in or on the roof
of the Building or located elsewhere in the Project. Tenant shall be responsible
for obtaining (prior to installation of the HVAC Equipment) any and all
approvals, permits or licenses that may be required by any governmental
authorities in connection with the HVAC Equipment. Provided the foregoing
conditions are satisfied there shall be no charge to Tenant for such license,
and such license shall expire at the end of the Term of this Lease. Tenant shall
have the right to tap into the Building's domestic water supply to operate a
humidifier system in the Premises. Tenant shall have the right to install drains
for the HVAC Equipment and to discard HVAC wastewater into the Building's sewage
system. Tenant shall have the right to remove or cap any heating system in the
Premises.
19.10 Other Equipment Installation. Tenant, at Tenant's sole cost and
----------------------------
expense, shall have the right (a) to install UPS systems and their associated
batteries in the Premises, and to integrate the Building power into such
systems; (b) to convert the present sprinkler system within the Premises to a
dry-pipe, pre-action system, to reasonably relocate or encase any water mains or
other water pipes running through or adjacent to the Premises, to install an FM
200 gas system in the Premises, or to install any other fire suppression system
approved in advance by Landlord (which approval shall not be unreasonably
withheld); and (c) to install its own electrical grounding system or to tie into
the Building's existing grounding systems. All equipment installed by Tenant in
relation to the above rights, and any security system to be installed by Tenant
pursuant to Section 9.4 above, is collectively referred to herein as "Other
Equipment". The location of the Other Equipment shall be approved by Landlord in
writing prior to installation. Prior to the installation of Other Equipment,
Tenant shall provide to Landlord a written description of the Other Equipment,
which shall be in detail reasonably satisfactory to Landlord. Tenant shall be
solely responsible for any damage to or loss of the Other Equipment and shall
carry loss and casualty insurance with full replacement value coverage.
Landlord, at its option, shall remove the Other Equipment upon the termination
date of this Lease, and Tenant shall promptly reimburse Landlord the cost and
expense to repair any and all damage caused in connection with such removal.
Tenant shall not be entitled to modify or add to the Other Equipment without
Landlord's prior written consent. The placement of the Other Equipment shall not
interfere with any existing facilities located in the Building or the Project.
Tenant shall be responsible for obtaining (prior to the installation of the
Other Equipment) any and all permits or licenses that may be required by any
governmental authorities in connection with the Other Equipment.
19.11 Special Electrical Services. With respect to any special
---------------------------
electrical services installed by or on behalf of Tenant, the HVAC Equipment or
any supplemental air conditioning used by Tenant, the Generator Equipment or any
other generator installed by Tenant, the Communication Equipment, the Other
Equipment, and any other non-building standard or special requirements of Tenant
which are agreed to and accepted by Landlord under this Lease, Tenant agrees and
acknowledges that Landlord may from time to time establish reasonable rules and
regulations with respect to the testing of such items (such as requiring the
safety testing of any generator to be performed prior to 7:00 a.m.), providing
that such rules and regulations will not materially and adversely interfere with
Tenant's normal business operations as described hereunder.
19.12 Transmission and Operations Interference. Tenant has made or
----------------------------------------
will make prior to the date of this Lease such independent investigations as
Tenant deems necessary or appropriate concerning the suitability of the
Premises, Building and Project for Tenant's operations. Landlord shall not be
liable in any manner for claims for expenses, damages or loss resulting from any
transmission or operational interference.
19.13 Structural Alterations. Tenant shall have the right, at
----------------------
Tenant's sole cost and expense, to do any or all of the following, provided that
to the extent the following are not part of the initial Tenant Improvements
Article 10 above shall apply: (a) to reinforce floor load capacities; (b) to
cover or block up windows and/or exterior walls in the Premises, provided that
such measures are reasonably acceptable to Landlord with respect to the external
aesthetics of the Building; (c) to fence in any equipment or facilities located
or installed outside the Premises, provided that such fence is reasonably
acceptable to Landlord with respect to the external aesthetics of the Building;
and (d) to install up to three manholes adjacent to the Building for bringing
telecommunications fiber into the Building.
-21-
19.14 Equipment and Floor Loads. Tenant shall have the right, at
-------------------------
Tenant's sole cost and expense, to install, maintain, repair and replace
computer, telecommunication and other equipment in Tenant's equipment room
located within the Premises, so long as the average load of such equipment is
not excessive for the floor's load capacity. Tenant shall have the right to
install fixed telephony and HVAC systems in the Premises in accordance with the
terms of this Lease, and Landlord hereby consents thereto. Tenant shall have the
right to move computer, telecommunication and other equipment in and out of the
Premises from time to time in the course of its business, in accordance with the
Terms of this Lease, and Landlord hereby consents thereto.
19.15 Co-location/Interconnection. Tenant shall have the right, at
---------------------------
Tenant's sole cost and expense (but at no additional charge by Landlord), to do
any or all of the following: (a) to co-locate equipment owned by Tenant's
customers in the Premises, or to provide short-term rights to use portions of
the Premises to Tenant's customers and vendors, with the prior consent of
Landlord, or without the prior consent of Landlord if the agreement entered into
by Tenant and Tenant's customers for such co-location of equipment or short-term
rights provides that the customer acquires no possessory, leasehold or other
real property right in the Premises or any other portion of the Project and does
not obtain any of Tenant's rights under this Lease; (b) to connect customer
equipment to telecommunications facilities in the Building; and (d) to
interconnect Tenant's telecommunications facilities with, and/or to provide
telecommunications services to, other tenants of the Building.
20. Default.
20.1 Events Constituting Default. Except as otherwise provided
---------------------------
herein, the failure to perform or honor any covenant, condition or other
obligation of Tenant or the failure of any representation made by Tenant under
this Lease (including Exhibits hereto) shall constitute a default hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided, if
any. Tenant shall have a period of three (3) Business Days from the date of
written notice from Landlord within which to cure any default in the payment of
Rent. Tenant shall have a period of ten (10) days from the date of written
notice from Landlord within which to cure any default in the payment of
Additional Charges. Tenant shall have a period of thirty (30) days from the date
of written notice from Landlord within which to cure any other default under
this Lease; provided, however, that with respect to any default (other than a
default which can be cured by the payment of money) that cannot reasonably be
cured within thirty (30) days, the default shall not be deemed to be uncured if
Tenant commences to cure within thirty (30) days from Landlord's notice,
continues to prosecute diligently the curing of such default and actually cures
such default within sixty (60) days after Landlord's notice.
20.2 Remedies. Upon the occurrence of a default by Tenant that is not
--------
cured by Tenant within the grace periods specified in Section 20.1, Landlord
shall have the following rights and remedies in addition to all other rights and
remedies available to Landlord at the law or in equity:
(a) The rights and remedies provided by California Civil Code
Section 1951.2, including, but not limited to, the right to terminate Tenant's
right to possession of the Premises and to recover (i) "the worth at the time of
award" (as defined in Section 20.2(f) below) of the unpaid Rent and Additional
Charges which shall have been earned at the time of termination; plus (ii) the
worth at the time of award of the amount by which the unpaid Rent and Additional
Charges which would have been earned after termination until the time of award
shall exceed the amount of loss of such Rent and Additional Charges 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 and Additional Charges for the
balance of the Term of this Lease after the time of award shall exceed the
amount of loss of such Rent and Additional Charges that Tenant proves could be
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 would be likely to result therefrom
(including, without limitation, attorneys' and accountants' fees, costs of
alterations of the Premises, interest costs and brokers' fees incurred upon any
reletting of the Premises);
(b) The rights and remedies provided by California Civil Code
Section 1951.4 (Landlord may continue the Lease in effect after Tenant's breach
and abandonment and recover Rent and Additional Charges as they become due).
Acts of maintenance or preservation, efforts to relet the Premises or the
appointment of a receiver upon Landlord's initiative to protect its interest
under this Lease shall not of themselves constitute a termination of Tenant's
right to possession;
(c) The right and power to enter the Premises and remove therefrom
all persons and property, to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to sell such
property and apply the proceeds therefrom pursuant to applicable California law.
In such event, Landlord may from time to time sublet the Premises or any part
thereof for such term or terms (which may extend beyond the Term) and at such
rent and such other terms as Landlord in its sole discretion may deem advisable,
with the right to make alterations and repairs to the Premises. Upon each such
subletting, rents received from such subletting shall be applied by Landlord,
first, to payment of any indebtedness other than Rent and Additional Charges due
hereunder from Tenant to Landlord; second, to the payment of any costs of such
subletting (including with limitation attorneys' and accountants' fees, costs of
alterations of the Premises, interests costs, and brokers' fees) and of any such
alterations and repairs; third, to payment of Rent and Additional Charges due
and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future Rent and Additional
-22-
Charges as they become due hereunder. If any rental or other charges due under
such sublease shall not be promptly paid to Landlord by the sublessee(s), or if
such rentals received from such subletting during any month are less than Rent
and Additional Charges to be paid during that month by Tenant hereunder, Tenant
shall pay any such deficiency to Landlord as well as any unpaid indebtedness
other than Rent and Additional Charges due hereunder from Tenant to Landlord and
the costs of such subletting (including without limitation attorneys' and
accountants' fees, costs of alterations of the Premises, interests costs and
brokers' fees), and any other amounts due Landlord under this Section. Such
deficiency shall be calculated and paid monthly. For all purposes set forth in
this Section, Landlord is hereby irrevocably appointed attorney-in-fact for
Tenant, with power of substitution. No taking possession of the Premises by
Landlord shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention is given to Tenant. Landlord's
subletting the Premises without termination shall not constitute a waiver of
Landlord's right to elect to terminate this Lease for such previous breach;
(d) The right to have a court appointed receiver appointed for the
Premises, upon application by Landlord, to take possession of the Premises, to
apply any rental collected from the Premises and to exercise all other rights
and remedies granted to Landlord pursuant to Section 20.2(c); and
(e) The right to specific performance of any or all of Tenant's
obligations hereunder, and to damages for delay in or failure to such
performance.
(f) For purposes of Section 20.2(a) the "worth at the time of
award" of the amounts referred to in subparagraphs (i) and (ii) shall be
computed with interest at the annual rate of two (2) percentage points per annum
above the rate of interest then most recently announced by Citibank, N.A., New
York, New York, or its successor, as its prime rate of interest or the maximum
rate allowed by law; the "worth at the time of award" of the amount referred to
in subparagraph (iii) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award plus one percent (1%); and "Rent and Additional Charges" with respect to
each month shall be calculated by adding (a) one twelfth (1/12th) of the Rent
payable for a full lease year at the time of default, plus (b) the monthly
average of the Additional Charges payable by Tenant hereunder for the year
immediately before the year in which the default occurred, or if the default
occurs in the first year of the Term, Landlord's estimate of Additional Charges
which would have been payable monthly by Tenant during that year. For purposes
of computing amounts that would have accrued after the time of award, increases
in Rent and Additional Charges shall be projected based upon the average rate of
inflation from the Commencement Date through the time of award; provided,
however, that in no event shall Rent be deemed to decrease after the time of
award, nor shall Additional Charges under Article 5 be deemed to be less than
zero.
Notwithstanding any contrary provisions in this Lease, (i) in no
event shall Landlord have a lien on any of Tenant's property or the property of
any of Tenant's customers, and (ii) in no event shall Landlord be entitled to
remove or interfere with Tenant's property or the property of Tenant's customers
without judicial or statutory process.
20.3 Remedies Cumulative. The exercise of any remedy provided by law
-------------------
or the provisions of this Lease shall not exclude other remedies unless they are
expressly excluded by this Lease or result in duplication of recovery. Tenant
hereby waives any right of redemption or relief from forfeiture following the
termination of, or exercise of any remedy by Landlord with respect to, this
Lease.
20.4 Recovery Against Landlord. Tenant shall look solely to
-------------------------
Landlord's interest in the Building Real Property (including any proceeds of
sale of the Building Real Property and insurance proceeds received by Landlord
with respect to the Building Real Property) for the recovery as provided under
applicable law of any judgment against Landlord; provided, however, that Tenant
shall not be entitled to recover out of any insurance proceeds received by
Landlord which Landlord is applying or has a good faith intention to apply to
work on the Building and actually applies to work on the Building in accordance
with this Lease. Landlord, or if Landlord is a partnership, its partners whether
general or limited, or if Landlord or any constituent partner or Landlord is a
corporation, its directors, officers and shareholders, shall never be personally
liable for any such judgment.
20.5 Events of Default by Landlord. The failure by Landlord to
-----------------------------
observe or perform any of the covenants, conditions, or provisions of this Lease
to be observed or performed by Landlord, where such failure shall continue for a
period of thirty (30) days after written notice thereof by Tenant to Landlord,
shall be deemed to be a default by Landlord under this Lease, provided, however,
that if the nature of Landlord's default is such that more than thirty (30) days
are reasonably required for its cure, then Landlord shall not be deemed to be in
default if Landlord commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion, provided that the
default shall actually be cured within sixty (60) days after notice.
Notwithstanding the foregoing, Tenant shall give written notice of any default
by Landlord to all mortgagees under mortgages encumbering all or any portion of
the Building Real Property or any interest therein of which Tenant has received
written notice, and Landlord shall not be deemed to be in default unless
Landlord and no mortgagee have commenced to cure such default or commenced
foreclosure proceedings within thirty (30) days (or such longer period as is
reasonably required, but not to exceed one sixty (60) days) after such mortgagee
has received such notice.
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21. Insolvency or Bankruptcy.
------------------------
21.1 The occurrence of any of the following shall, at Landlord's
option, constitute a breach of this Lease by Tenant: (i) the appointment of a
receiver to take possession of all or substantially all of the assets of Tenant
or the Premises, (ii) an assignment by Tenant for the benefit of creditors,
(iii) any action taken or suffered by Tenant under any insolvency, bankruptcy,
reorganization, moratorium or other debtor relief act or statute, whether now
existing or hereafter amended or enacted, (iv) the filing of any voluntary
petition in bankruptcy by Tenant, or the filing of any involuntary petition by
Tenant's creditors, which involuntary petition remains undischarged for a period
of sixty (60) days, (v) the attachment, execution or other judicial seizure of
all or substantially all of Tenant's assets or the Premises, if such attachment
or other seizure remains undismissed or undischarged for a period of ten (10)
Business Days after the levy thereof, (vi) the admission by Tenant in writing of
its inability to pay its debts as they become due, (vii) the filing by Tenant of
any answer admitting or failing timely to contest a material allegation of a
petition filed against Tenant in any proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation or dissolution of Tenant or
similar relief, or (viii) if within sixty (60) days after the commencement of
any proceeding against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statue, law or regulation, such proceeding shall not have been
dismissed. Upon the occurrence of any such event or at any time thereafter, this
Lease shall terminate five (5) days after written notice of termination from
Landlord to Tenant. In no event shall this Lease be assigned or assignable by
operation of law or by voluntary or involuntary bankruptcy proceedings or
otherwise, and in no event shall this Lease or any right or privileges hereunder
be an asset of Tenant under any bankruptcy, insolvency or reorganization
proceedings. If, upon the occurrence of any of the events enumerated above,
under applicable law Tenant or the trustee in bankruptcy has the right to affirm
this Lease and continue to perform the obligations of Tenant hereunder, Tenant
or such trustee shall, in such time period as may be permitted by the bankruptcy
court having jurisdiction, cure all defaults of Tenant outstanding hereunder as
of the date of the affirmance of this Lease and provide to Landlord such
adequate assurances as may be necessary to ensure Landlord of the continued
performance of Tenant's obligations under this Lease. Notwithstanding the
provisions of Section 20.1, there shall be no cure periods for any breach or
default under this Article 21.
22. Fees and Expenses; Indemnity: Payment.
-------------------------------------
22.1 Landlord's Right to Remedy Defaults. If Tenant shall default in
-----------------------------------
the performance of any of its obligations under this Lease after notice of
expiration of the applicable cure period, if any, Landlord, at any time
thereafter and without additional notice, may remedy such default for Tenant's
account and at Tenant's expense, without thereby waiving any other rights or
remedies of Landlord with respect to such default. Notwithstanding the
foregoing, Landlord shall have the right to cure any failure by Tenant to
perform any of its obligations under this Lease without notice to Tenant if such
failure results in an immediate threat to life or safety of any person, or with
telephonic notice if such failure impairs the Building or its efficient
operation.
22.2 Indemnity. Subject to the provisions of Section 15.6 and except
---------
to the extent caused by the gross negligence or wilful misconduct of the party
seeking indemnification, Tenant shall indemnify Landlord, all partners of any
partnership constituting Landlord, and their respective officers, directors,
shareholders, employees, servants and agents, all mortgagees of Landlord's
interest in all or any portion of the Building Real Property, and the lessor or
lessors under all ground or underlying leases (sometimes collectively referred
to herein as "Related Entities") against and save Landlord and Related Entities
harmless from and defend Landlord and Related Entities through attorneys
reasonably satisfactory to Landlord and Tenant which may include in-house
attorneys) from and against any and all claims, loss, cost, liability, damage
and expense including, without limitation, penalties, fines and reasonable
attorneys' fees, to the extent incurred in connection with or arising from (a)
any default by Tenant in the observance or performance of any of the terms,
covenants, conditions or other obligations of this Lease to be observed or
performed by Tenant, or the failure of any representation made by Tenant in this
Lease, (b) the use or occupancy or manner of use or occupancy of the Premises by
Tenant or any person occupying the Premises, (c) any occurrence or happening on
the Premises between the Commencement Date and the time Tenant is no longer in
possession of the Premises, (d) any negligence or wilful misconduct of Tenant or
any person claiming through or under Tenant, or of the contractors,
subcontractors, agents, servants, employees, or licensees of Tenant or any
person claiming through or under Tenant (collectively "Tenant's Agents") in the
Premises or anyone in the Premises (other than Landlord or Landlord's agents,
employees or contractors), including without limitation, any negligence or
wilful misconduct in the making or performing of any Alterations, (e) any
negligence or wilful misconduct of Tenant or any subtenant of the Premises or
any of their respective employees while on the Building Real Property, (f)
Landlord's inability to obtain access to any portion of the Premises with
respect to which Landlord has not been furnished a key (if locked) or access has
been otherwise restricted (including without limitation Tenant's data
center/secured equipment area), (g) the use by Tenant or any of Tenant's Agents
of any Project Common Area or Building Common Area, (h) the use of the Premises
by any of Tenant's customers or the lack of notice to Landlord by Tenant of the
identity of any party to or the terms of any co-location agreement or any other
agreement regarding the use of any portion of the Premises, or (i) Tenant's (or
Tenant's customers' or vendors') access to any area of the Project other than
the Premises that is not generally open to tenants of the Project at the time of
access without the accompaniment or consent of a security agent of Landlord.
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22.3 Assumption of Risk. Except to the extent arising out of the gross
------------------
negligence or willful misconduct of Landlord or Landlord's Agents, neither
Landlord nor any Related Entities shall be liable for any damage or damages of
any nature whatsoever to persons or property caused by explosion, fire, theft or
breakage, vandalism, falling plaster, by sprinkler, drainage or plumbing
systems, or air conditioning equipment, by failure for may cause to supply
adequate drainage, by the interruption of any public utility or service, by
steam, gas, electricity, water, rain or other substances leaking, issuing or
flowing into any part of the Premises, by natural occurrence, acts of the public
enemy, riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority, or by anything done or omitted to be done by any
tenant, occupant or person in the Building, it being agreed that Tenant shall be
responsible for obtaining appropriate insurance to protect its interests.
22.4 Payment of Sums Due. Except as otherwise provided, Tenant shall pay to
-------------------
Landlord, within thirty (30) days after delivery by Landlord to Tenant of bills
or statements therefor, all Additional Charges and reasonable expenditures made
and reasonable monetary obligations incurred by Landlord in collecting or
attempting to collect the Rent, any Additional Charges or any other sum actually
due under this Lease or in enforcing or attempting to enforce any rights of
Landlord under this Lease or pursuant to law, including without limitation
reasonable attorneys' fees; and Landlord shall pay to Tenant, within thirty (30)
days after delivery by Tenant to Landlord of bills or statements therefor, any
sum actually due Tenant under this Lease or in enforcing or attempting to
enforce any rights of Tenant under this Lease or pursuant to law, including
without limitation reasonable attorneys' fees.
22.5 Interest On Past Due Obligations; Service Charge. Unless otherwise
------------------------------------------------
specifically provided herein, any amount due from Tenant to Landlord under this
Lease which is not paid within three (3) Business Days from the date when due
shall bear interest from the due date until paid at the lesser of the highest
rate then permitted by law or a rate per annum which is equal to four percent
(4%) plus the highest rate identified by Bank of America NT&SA as its "reference
rate" between the date such amount was due and the date such payment was
received. In addition, Tenant shall pay a service charge equal to five percent
(5%) of any amount which is not paid within the applicable grace period
specified in Section 20.1, to compensate Landlord for additional bookkeeping and
administrative expenses and lost investment opportunities which are likely to
result from such late payment. The payment of such interest or service charge
(or both) shall not alone excuse or cure any default under the Lease.
23. Access to Premises.
------------------
23.1 Landlord's Right to Enter. Landlord reserves for itself and its
-------------------------
agents, employees and independent contractors the right to enter the Premises at
all reasonable times (upon reasonable telephonic notice, if possible) to inspect
the Premises, to supply any service to be provided by Landlord to Tenant
hereunder, to show the Premises to prospective purchasers, mortgagees or (during
the last twelve (12) months of the Lease only) tenants, to post notices of
nonresponsibility, to determine whether Tenant is complying with its obligations
under this Lease, and to alter, improve or repair the Premises or any other
portion of the Building. Landlord's right to enter the Premises shall include
the right to grant access to the Premises to governmental or utility employees.
Landlord may erect, use and maintain scaffolding, pipes, conduits, and other
necessary structures in and through the Premises or any other portion of the
Building where reasonably required by the character of the work to be performed
in making repairs or improvements, provided that the entrance to the Premises
shall not be blocked thereby, and that there is no unreasonable interference
with the business of Tenant. In the event of an emergency Landlord shall have
the right to enter the Premises at any time without notice. Tenant hereby waives
any claim for damages for any injury or inconvenience to or interference with
Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, any
right to abatement or Rent or Additional Charges, or any other loss occasioned
by Landlord's exercise of any of its rights under this Article 23. Any entry to
the Premises or portions thereof obtained by Landlord in accordance with this
Article 23 shall not be construed or deemed to be a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction, actual or constructive, of
Tenant from the Premises or any portion thereof. Landlord shall perform all work
pursuant to this Section as quickly as is reasonably possible and in a manner
designed to cause as little interference with Tenant's use of the Premises as is
reasonably possible; provided, however, that Landlord shall not be obligated to
perform work during other than normal business hours. Tenant waives all rights
to consequential damages (including without limitation damages for lost profits
and lost opportunities) arising in connection with Landlord's exercise of its
right under this Section. Notwithstanding the foregoing, Landlord shall have the
right to enter Tenant's secured equipment area (sometimes referred to in this
Lease as Tenant's data center) within the Premises only in accordance with
Section 19.4 above.
23.2 Means of Entry. Landlord shall have the right to use any and all
--------------
means that Landlord may deem necessary or proper to open doors in an emergency,
in order to obtain entry to any portion of the Premises.
24. Notices. Except as otherwise provided in this Lease, any payment
-------
required to be made and any bills, statements, notices, demands, requests or
other communications given or required to be given under this Lease shall be
effective only if rendered or given in writing, sent by personal delivery or
registered or certified mail, return receipt requested, or by overnight courier
service, addressed (a) to Tenant at the Premises (Attention: General Manager)
with a copy of any notice, other than an unlawful detainer notice, 3-day notice
or any other statutory notice, to Inflow, Inc., 0000 Xxxxxxx, Xxxxx 000, Xxxxxx
-00-
Xxxxxxxx 00000 (Attention: Legal Department), (b) to Landlord c/o SENTRE
Partners, Inc., 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000, or
(c) to such other address as either Landlord or Tenant may designate as its new
address in California for such purpose by notice given to the other in
accordance with the provisions of this Section. Any such xxxx, statement,
notice, demand, request or other communication shall be deemed to have been
rendered or given on the date of receipt or refusal to accept delivery.
25. No Waiver. Neither this Lease nor any term or provision hereof may be
---------
waived, and no breach thereof shall be waived, except by a written instrument
signed by the party against which the enforcement of the waiver is sought. No
failure by Landlord to insist upon the strict performance of any obligation of
Tenant under this Lease or to exercise any right, power or remedy consequent
upon a breach thereof, no acceptance of full or partial Rent or Additional
Charges during the continuance of any such breach, no course of conduct between
Landlord and Tenant, and no acceptance of the keys to or possession of the
Premises before the termination of the Term by Landlord or any employee of
Landlord shall constitute a waiver of any such breach or a waiver or
modification of any term, covenant or condition of this Lease or operate as a
surrender of this Lease. No waiver of any breach shall affect or alter this
Lease, but each and every term, covenant and condition of this Lease shall
continue in full force and effect with respect to any other then-existing or
subsequent breach thereof. No payment by Tenant or receipt by Landlord of a
lesser amount than the aggregate of all Rent and Additional Charges then due
under this Lease shall be deemed to be other than on account of the first items
of such Rent and Additional Charges then accruing or becoming due, unless
Landlord elects otherwise. No endorsement or statement on any check and no
letter accompanying any check of other payment of Rent or Additional Charges in
any such lesser amount and no acceptance by Landlord of any such check or other
payment shall constitute an accord and satisfaction. Landlord may accept such
check or payment without prejudice to Landlord's right to recover the balance of
such Rent or Additional Charges or to pursue any other legal remedy.
26. Tenant's Certificates. Tenant and Landlord, at any time during the Term
---------------------
of this Lease and from time to time, within ten (10) days after written request,
shall execute, acknowledge and deliver to the other party, addressed (at such
other party's request) to any prospective purchaser, ground or underlying
lessor, mortgagee, investor or similar interested party, an estoppel certificate
in reasonable and customary form and substance. The failure of either party to
do so within such ten (10) day period shall be conclusive upon such party that
all facts set forth in the other party's proposed certificate are true and
correct. It is intended that any such certificate may be relied upon by any
prospective purchaser, ground or underlying lessor, mortgagee, investor or
similar interested party.
27. Rules and Regulations. Tenant shall faithfully observe and comply with,
---------------------
and shall cause all occupants of the Premises and Tenant's Agents to observe and
comply with, the rules and regulations, attached to this Lease as Exhibit "C"
relating to the Building and the Project Common Areas and all reasonable
modifications thereof and additions thereto from time to time put into effect by
Landlord. Landlord shall not be responsible for the nonperformance by any other
tenant or occupant of the Project of any of such rules and regulations. In the
event of any conflict between any such rule or regulation and this Lease, this
Lease shall govern. No such rule or regulation shall materially interfere with
the conduct of Tenant's business or the exercise of any right of Tenant
expressly provided in this Lease. The rules and regulations shall be subject to
a standard of commercial reasonableness and exercised only in good faith.
Landlord shall not initiate or consent to any amendments to the covenant,
conditions and restrictions of the Xxxx/Mira Industrial Park which would impair
any of the rights of Tenant under this Lease or interfere with the use and
occupancy of the Premises or the conduct of Tenant's business.
28. Tenant's Taxes. In addition to all other sums to be paid by Tenant
--------------
under this Lease, Tenant shall pay, before delinquency, any and all taxes levied
or assessed during the Term of this Lease, whether now customary or within the
contemplation of the parties hereto, upon, measured by or reasonably
attributable to the Tenant Improvements, equipment, furniture, fixtures and
other personal property located in the Premises, including without limitation
any Alterations. Tenant shall reimburse Landlord upon demand for any and all
such taxes paid or payable by Landlord (other than state and federal, personal
or corporate income taxes measured by the net income of Landlord from all
sources).
29. Corporate Authority. If either party signs as a corporation or
-------------------
partnership or other entity, each of the persons executing this Lease on behalf
of such party does hereby covenant and warrant that such party is a duly
authorized and existing entity, that such party has and is (or within thirty
(30) days after the Commencement Date will be) qualified to do business in
California, that the entity has full right and authority to enter into this
Lease, and that each and both of the persons signing on behalf of the entity is
and are authorized to do so. Tenant shall deliver to Landlord a copy of their
certificate of qualification to do business in California upon receipt of the
same.
30. Miscellaneous.
-------------
30.1 Asbestos Disclosure. Tenant acknowledges that it has been
-------------------
furnished with and has reviewed a copy of the two reports prepared by the Szaras
Company, dated September 12, 1991 and January 20, 1992, respectively, regarding
the presence of asbestos in the Project (the "Asbestos Reports"); provided
however, Landlord has no current actual knowledge, without any independent
investigation or inquiry, of any inaccuracy or incompleteness of the contents of
such report. The Asbestos Reports are hereby accepted and approved by Tenant.
Tenant acknowledges that Landlord
-26-
has not made any representations or warranties as to the content, accuracy or
completeness of the Asbestos Reports, and that Landlord has merely provided the
Asbestos Reports for the information of Tenant. Notwithstanding the foregoing,
Landlord represents and warrants that to Landlord's current actual knowledge,
without any independent investigation or inquiry, the asbestos located in the
"xerox/storage room" within the Building, as referred to in the Asbestos
Reports, has been removed; provided, however, that if such asbestos has not in
fact been removed and is discovered in the Premises, then Landlord shall, at
Landlord's cost, promptly cause such asbestos to be removed, and such removal
shall be performed in a manner so as to cause as little interference with
Tenant's use of the Premises as is reasonably possible. Tenant shall not
maintain any physical contact with the affected area described in the Asbestos
Reports and shall prohibit Tenant's Agents from doing the same. Tenant shall
notify Tenant's Agents of the presence of asbestos and shall share copies of the
Asbestos Reports with all Tenant's Agents and shall comply with all governmental
laws and regulations relating to disclosure, notification and warnings with
respect to the contents of the Asbestos Reports.
30.2 Financial Statements. Upon Landlord's written request from time to
--------------------
time (not more frequently than once per year), Tenant shall promptly furnish
Landlord with certified financial statements reflecting Tenant's then-current
financial condition, in such form and detail as Landlord may reasonably request;
provided, however, that so long as the stock of Tenant is traded on a national
exchange, Tenant may furnish an annual report instead of financial statements.
30.3 References. All personal pronouns used in this Lease, whether used in
----------
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and vice versa. The use herein of the words
"including" or "include" when following any general statement, term or matter
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not nonlimiting language (such as "without limitation",
or "but not limited to", or words of similar import) is used with reference
thereto. All references to "mortgage" and "mortgagee" shall include deeds of
trust and beneficiaries under deeds of trust, respectively. All Exhibits
referenced herein and attached to this Lease are hereby incorporated in this
Lease by this reference. The captions preceding the Sections and Articles of
this Lease have been inserted solely as a matter of convenience and such
captions in no way define or limit the scope or intent of any provision of this
Lease.
30.4 Successors and Assigns. The terms, covenants and conditions contained
----------------------
in this Lease shall bind and inure to the benefit of Landlord and Tenant and
except as otherwise provided herein, their respective personal representatives
and successors and assigns; provided, however, that upon the sale, assignment or
transfer by Landlord (or by any subsequent Landlord) of its interest in the
Building as owner or lessee, including any transfer upon or in lieu of
foreclosure or by operation of law, Landlord (or subsequent Landlord) shall be
relieved from all subsequent obligations or liabilities under this Lease, and
all obligations subsequent to such sale, assignment or transfer (but not any
obligations or liabilities that have accrued prior to the date of such sale,
assignment or transfer) shall be binding upon the grantee, assignee or other
transferee of such interest. Any such grantee, assignee or transferee, by
accepting such interest, shall be deemed to have assumed such subsequent
obligations and liabilities.
30.5 Severability. If any provision of this Lease or the application
------------
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall remain in effect and shall be enforceable to the full extent permitted by
law.
30.6 Construction. This Lease shall be governed by the and construed in
------------
accordance with the laws of the State of California applicable to leases of real
property made and entirely performed in California. Any actions or proceedings
brought under this Lease, or with respect to any matter arising under or out of
this Lease, shall be brought and tried only in courts located in the City and
County of San Diego, California (excepting appellate courts).
30.7 Integration. The terms of this Lease (including the Exhibits hereto)
-----------
are intended by the parties as a final expression of their agreement with
respect to such terms as are included in this Lease and may not be contradicted
by evidence of any prior or contemporaneous agreement, arrangement,
understanding or negotiation (whether oral or written). The parties further
intend that this Lease constitutes the complete and exclusive statement of its
terms, and no extrinsic evidence whatsoever may be introduced in any judicial
proceeding involving this Lease. Neither Landlord nor Landlord's agents have
made any representations or warranties with respect to the Premises, the
Building, the Building Real Property, or any other portion of the Project or
this Lease except as expressly set forth herein. The language in all parts of
this Lease shall in all cases be construed as a whole and in accordance with its
fair meaning and not restricted for or against any party.
30.8 Surrender. Upon the expiration or sooner termination of the Term,
---------
Tenant will quietly and peacefully surrender to Landlord the Premises in the
condition in which they are required to be kept as provided in Articles 10 and
11, ordinary wear and tear excepted. Upon expiration or earlier termination of
this Lease, Tenant shall, immediately upon request of Landlord, execute,
acknowledge and deliver to Landlord a recordable deed quitclaiming to Landlord
any interest of Tenant in the Premises, the Building Real Property and this
Lease.
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30.9 Quiet Enjoyment. Upon Tenant paying the Rent and Additional Charges
---------------
and performing all of Tenant's obligations under this Lease, Tenant may
peacefully and quietly enjoy the Premises during the Term; subject, however, to
the provisions of this Lease and to any mortgages or ground or underlying leases
referred to in Article 13.
30.10 Holding Over. If Tenant shall hold over after the expiration of the
------------
Term, Tenant shall pay Rent equal to one hundred fifty percent (150%) of the
Rent payable during the final full lease year (exclusive of abatements, if any),
together with an amount reasonably estimated by Landlord for the monthly
Additional Charges payable under this Lease, and shall otherwise be on the terms
and conditions herein specified so far as applicable (but expressly excluding
all renewal or extension rights). No holding over by Tenant after the Term shall
operate to extend the Term. In the event of any holding over without Landlord's
prior written consent, Tenant shall indemnify Landlord against all claims for
damages by any other tenant to whom Landlord may have leased all or any part of
the Premises commencing upon or after the expiration of the Term. Any holding
over with Landlord's written consent shall be construed as a tenancy at
sufferance or from month to month, at Landlord's option. Any holding over
without Landlord's written consent shall entitle Landlord to reenter the
Premises as provided in Article 20, and to enforce all rights and remedies
provided by law or this Lease.
30.11 Time of Essence. Time is of the essence of each and every provision
---------------
of this Lease.
30.12 Broker's Commissions. Each party represents and warrants to the
--------------------
other that it has not entered into any agreement or incurred or created any
obligation which might require the other party to pay any broker's commission,
finder's fee or other commission or fee relating to the leasing of the Premises,
except for an agreement by Landlord to pay Node Com, Inc. a commission of four
percent (4%) of the net aggregate rent for the first five (5) years of the Term
and two percent (2%) of the net aggregate rent for years six (6) through ten
(10) of the Term, with fifty percent (50%) of such commission payable upon
Landlord's approval of Tenant's Construction Documents pursuant to Section 31.2
above and the other fifty percent (50%) payable on or before January 1, 2000.
Each party shall indemnify, defend and hold harmless the other and the other's
constituent partners and their respective officers, directors, agents and
employees from and against all claims for any such commissions or fees made by
anyone claiming by or through the indemnifying party, except for the broker
named above in this Section 30.12.
30.13 No Merger. The voluntary or other surrender or termination of this
---------
Lease by Tenant, or mutual cancellation thereof shall not work a merger, but,
at Landlord's sole option, shall either terminate all existing subleases or
subtenancies or shall operate as an assignment to Landlord or all such
subleases or subtenancies. Tenant agrees that in the event Tenant becomes the
owner of the Building Real Property, Tenant's leasehold hereunder shall not then
or thereafter merge with the fee estate and Tenant hereby irrevocably surrenders
any right to effect such merger and this Lease shall continue in full force and
effect.
30.14 Consents. Unless otherwise expressly provided in this Lease, all
--------
consents and approvals to be given by Landlord or Tenant shall not be
unreasonably withheld, conditioned or delayed.
30.15 Survival. All of Tenant's and Landlord's covenants and obligations
--------
contained in this Lease which by their nature might not be fully performed or
capable of performance before the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. No provision of this
Lease providing for termination in certain events shall be construed as a
limitation or restriction of Landlord's or Tenant's rights and remedies at law
or in equity available upon a breach by the other party of this Lease.
30.16 Amendments. No amendments or modifications of this Lease or any
----------
agreements in connection therewith shall be valid unless in writing duly
executed by both Landlord and Tenant. No amendment to this Lease shall be
binding on any mortgagee of Landlord (or purchaser at any foreclosure sale)
unless such mortgagee shall have consented thereto in writing.
30.17 Attorneys' Fees. If Landlord becomes a party to any litigation not
---------------
initiated by Tenant concerning this Lease, the Premises or the Building Real
Property by reason of any act or omission of Tenant or its authorized
representatives, and not by reason of Landlord's own act or omission or any act
or omission of Landlord's authorized representatives, Tenant shall be liable to
Landlord for reasonable attorneys' fees and court costs incurred by Landlord in
the litigation.
If either party commences an action against the other party arising out of
or in connection with this Lease, or institutes any proceeding in a bankruptcy
or similar court which has jurisdiction over the other party or any or all of
its property or assets, the prevailing party shall be entitled to have and
recover from the losing party reasonable attorneys' fees and court costs.
30.18 Arbitration of Disputes.
-----------------------
(a) If arbitration is expressly provided for in this Lease as a dispute
resolution procedure, the arbitration shall be conducted as provided in this
Article, except as otherwise provided in this Lease. All proceedings shall be
conducted according to the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA"), or its successor organization,
except as hereinafter provided. No action at law or in equity in connection with
any such dispute shall be brought until arbitration hereunder shall have been
waived, either expressly or pursuant to this Article. The judgment upon the
award rendered in any arbitration hereunder shall be final and binding on both
parties hereto and may be entered in any court having jurisdiction thereof.
(b) During an arbitration proceeding pursuant to this Article, the
parties shall continue to perform and discharge all of their respective
obligations under this Lease, except as otherwise provided in this Lease.
(c) Unless arbitration is specified as a dispute resolution procedure
as to a particular dispute hereunder, disputes under this Lease shall not be
resolved by arbitration unless both parties agree in writing to do so, and
disputes shall be resolved as otherwise provided by law. Any controversy or
claim arising out of or relating to this Lease which involves less than $50,000
or which relates to a denial of any consent or approval shall be resolved by
arbitration, upon the request of either party.
(d) All disputes that may be arbitrated in accordance with this
Article shall be raised by notice to the other party, which notice shall state
with particularity the nature of the dispute and the demand for relief, making
specific reference by article number and title of the provisions of this Lease
alleged to have given rise to the dispute. The notice shall also refer to this
Article and shall state whether or not the party giving the notice demands
arbitration under this Article. If no such demand is contained in the notice,
the other party against whom relief is sought shall have the right to demand
arbitration under this Article within ten (10) Business Days after such notice
is received. Unless one of the parties demands arbitration, the provisions of
this Article shall be deemed to have been waived with respect to the dispute in
question.
(e) The notice specified in Paragraph (d) above shall identify the
arbitrator to act on the notifying party's behalf. The arbitrator shall be a
person who has demonstrated at least ten (10) years of experience in commercial
real estate matters and, in particular, the subject matter of the dispute in
question. Within ten (10) Business Days after receipt of the notice of
arbitration, the other party shall notify the first party of the identity of the
arbitrator to act on such other party's behalf, which arbitrator shall be
similarly qualified. If such party fails to identify its arbitrator within ten
(10) Business Day period, the arbitrator named by the notifying party shall be
the only arbitrator to resolve the dispute. If two (2) arbitrators are chosen
pursuant to the foregoing, they shall meet within ten (10) Business Days after
the second arbitrator is appointed and, if within ten (10) Business Days after
such first meeting the two arbitrators shall be unable to agree promptly upon a
resolution of the dispute, they shall appoint a third arbitrator, who shall be
similarly qualified. In the event they are unable to agree upon such appointment
within five (5) Business Days after expiration of such ten (10) day period, the
third arbitrator shall be selected by the parties themselves, if they can agree
thereon, within a further period of ten (10) Business Days. If the parties do
not so agree, either party, on behalf of both, may request appointment of such a
qualified person by the AAA. If the AAA shall refuse or be unable to provide
such selection, the arbitrator shall be appointed by any successor organization
providing substantially the same services, and in the absence of such an
organization, by the Presiding Judge of the California Superior Court for the
City and County of San Diego. The arbitrator(s) so selected shall resolve the
dispute. The arbitration proceedings shall take place at a mutually acceptable
location in the City and County of San Diego.
(f) When resolving any dispute, the arbitrators shall apply the
pertinent provisions of this Lease without departure therefrom in any respect.
The arbitrators shall not have the power to change any of the provisions of this
Lease, but this Article shall not prevent in any appropriate case the
interpretation, construction and determination by the arbitrators of the
applicable provisions of this Lease to the extent necessary in applying the same
to the matters to be determined by arbitration.
(g) Except as otherwise expressly provided in this Lease, the cost of
the arbitration, including reasonable attorneys' and expert witness fees, shall
be borne by the unsuccessful party (as determined by the arbitrators).
30.19 Relocation of Tenant. [Intentionally deleted].
--------------------
30.20 Business Days. For purposes of this Lease, the term "Business
-------------
Day" shall mean any day that is not a Saturday or Sunday and is not any of the
following days: New Year's Day, President's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, the day after Thanksgiving, or Christmas Day.
31. Design and Construction Process for Initial Tenant Improvements.
---------------------------------------------------------------
31.1 Tenant's Design Development Documents. Landlord will provide
-------------------------------------
Tenant with base building plans and drawings for the Building and any other
plans in Landlord's possession, including any CAD drawings of the Building and
drawings of the Building's mechanical and electrical systems. Tenant will
prepare for review by Landlord two complete sets of Tenant's Design Development
Documents consisting of drawings, details, outlines, specifications and other
documents to fix and describe the size and character of the Premises with
respect to architectural, structural, mechanical, electrical and fire safety
systems, materials and such other components as may be appropriate; such
documents shall
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indicate material finishes, heat load requirements of Tenant-supplied equipment
and such other specialty systems and components as Landlord reasonably will
request.
31.2 Tenant's Construction Documents. Within ten (10) business days of
-------------------------------
Landlord's receipt of Tenant's Design Development Documents, Landlord will
review those documents. Based upon such review Landlord may order reasonable
modifications to any of Tenant's Design Development Documents, which
modifications will be made by Tenant in accordance with Landlord's direction and
will be incorporated in Tenant's Construction Documents to be prepared by
Tenant; except that if Tenant reasonably cannot make any such modification
regarding a reasonable improvement included by Tenant in Tenant's Documents in
good faith, and if such modification would have a material adverse impact on the
operation of Tenant's business or Tenant's costs for the initial build out of
the Premises, then Tenant shall have the right to terminate this Lease effective
upon fifteen (15) days prior written notice to Landlord, unless Landlord
withdraws the modification order by delivering notice of such withdrawal to
Tenant prior to such termination date. Tenant will prepare for review by
Landlord two complete sets of Tenant's Construction Documents consisting of
drawings and specifications setting forth in complete detail the final
requirements for the construction of the Premises. Landlord will complete its
review of Tenant's Construction Documents within ten (10) business days of
receipt of those documents. Based upon such review Landlord may order reasonable
modifications to any of Tenant's Construction Documents and the modifications
will be made by Tenant in accordance with Landlord's direction within fifteen
(15) business days of request by Landlord; except that if Tenant reasonably
cannot make any such modification regarding a reasonable improvement included by
Tenant in Tenant's Documents in good faith, and if such modification would have
a material adverse impact on the operation of Tenant's business or Tenant's
costs for the initial build out of the Premises, then Tenant shall have the
right to terminate this Lease effective upon fifteen (15) days prior written
notice to Landlord, unless Landlord withdraws the modification order by
delivering notice of such withdrawal to Tenant prior to such termination date.
31.3 Applicable Law: Budgetary Constraints. Tenant's Design Development
--------------
Documents and Tenant's Construction Documents are herein occasionally
collectively called "Tenant's Documents." All Tenant's Documents will conform
with applicable federal, state and local law (including without limitation The
Americans With Disabilities Act of 1990 and its implementing regulations, as
amended or supplemented from time to time) and with Building and Project plans
and specifications. It will be the responsibility of Tenant to prepare and
submit Tenant's Documents that fall within Tenant's budgetary constraints (if
any). Any redesign made necessary by the failure of Tenant's documentation to
fall within Tenant's budgetary constraints, and any resulting delay therefrom,
will be the sole responsibility of Tenant. Landlord will not be responsible for
any failure of bidder's estimates to fall within Tenant's budgetary constraints.
31.4 Requirements of Tenant's Documents. Tenant's Documents will be
----------------------------------
completely and fully coordinated. Tenant's Documents will also Illustrate all
relevant existing site conditions and will include all work necessary to achieve
a Certificate or Statement of Occupancy for the Premises. Tenant's Documents
will be signed and sealed by an architect or professional engineer (where
applicable), licensed and registered in the State of California. All costs and
expenses incurred by Tenant in connection with Tenant's Documents may be paid
from the T.I. Allowance.
31.5 Contractors/Bidding Procedures. Landlord and Tenant will agree on a
------------------------------
list of mutually acceptable contractors who will be asked to submit bids for the
demolition of the existing tenant improvements (as may be necessary) and
construction of the Tenant Improvements. Upon receipt of the bids, Tenant will
select the contractor from the agreed upon list. The selected bid need not be
the low bid.
31.6 Construction. Tenant's contractor will comply with reasonable
------------
construction rules made by Landlord and will coordinate its work with any other
work being undertaken at the Project. The Tenant Improvements will be
constructed in accordance with Tenant's Documents. Tenant diligently will pursue
the demolition of the existing tenant improvements (as may be necessary) and the
construction of the Tenant Improvements in a lien free, good and workmanlike
manner in accordance with generally accepted construction practices until all of
the work has been completed, subject to Section 31.9.
31.7 Disbursement of T.I. Allowance. Landlord will disburse the T.I.
------------------------------
Allowance within thirty (30) days after receipt of invoices that have been
approved by Tenant for work that has been completed, less a ten percent (10%)
retention (the aggregate amount of such retentions referred to herein as the
"Final Retention"). Subject to the terms of this Lease, Landlord shall deliver
to Tenant the Final Retention within five (5) Business Days following the
substantial completion of construction of the Tenant Improvements in the
Premises, provided that (i) Landlord has no reasonable basis to believe that the
Tenant Improvements have not been constructed in accordance with the terms of
this Lease, and (ii) Tenant's architect delivers to Landlord a certificate, in a
form acceptable to Landlord, certifying that the construction of the Tenant
Improvements in the Premises has been substantially completed and the Premises
are ready for occupancy in accordance with Tenant's Documents. If the cost of
the Tenant Improvements is less than the T.I. Allowance, the difference shall be
retained by Landlord.
31.8 Access/Landlord's Approval. Landlord will be entitled (but will not be
--------------------------
obligated) to inspect the Tenant Improvements for the Premises under
construction and upon completion, at reasonable times and intervals, for the
purpose of determining that the work is being constructed in
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accordance with Tenant's Documents and the provisions of this Lease. No approval
by Landlord or Landlord's architect or engineer of any drawings, plans or
specifications which are prepared in connection with construction of
improvements in the Premdises will constitute a representation or warranty by
Landlord as to the adequacy or sufficiency of such drawings, plans or
specifications, or the improvements to which they relate, for any use, purpose
or condition, but such approval will merely be the consent of Landlord to the
construction or installation of improvements in the Premises according to such
drawings, plans or specifications.
31.9 Construction. Tenant may commence construction of the Tenant
------------
Improvements for the Premises at any time on or after Landlord allows Tenant
access to the Premises in accordance with Article 3 above.
32. Extension Option.
----------------
32.1 Tenant Option. Tenant shall have two (2) options to extend the
-------------
Term of this Lease each for an additional period of five (5) years
(individually, an "Extension Term," and collectively, "Extension Terms") which
will commence on the day following the last day of the Term, or the last day of
the first Extension Term, if exercised. The option for each Extension Term may
be exercised by Tenant only by written notice (the "Extension Exercise Notice")
given to Landlord not earlier than the date which is twelve (12) months prior
and not later than the date which is at least nine (9) months prior to the
expiration of the period of the Term, or the expiration of the period of the
first Extension Term, if exercised (the "Extension Exercise Date"). Except as
stated below in this Article, all of the terms and conditions of this Lease in
effect immediately prior to the commencement of an Extension Term shall equally
pertain in all respects to that Extension Term.
32.2 Extension Rent. The Rent and Additional Charges during each
--------------
extension period will be the Market Rental Value of the Premises (as defined and
determined pursuant to Section 32.3) for that period.
32.3 Rent Notice by Landlord. The Market Rental Value as determined by
-----------------------
Landlord will be designated by notice to Tenant ("Landlord's Notice") pursuant
and subject to Section 32.4 no later than eight (8) months prior to expiration
of the period of the Term or the expiration of the period of the first Extension
Term, if exercised.
32.4 Fair Market Value Rent. The Market Rental Value of the Premises
----------------------
will be the fair market rent and all additional charges and additional rent for
the Premises determined as of the date of Landlord's Notice, taking into
consideration the rental rates then being obtained by Landlord for comparable
space in the Project and the rates being obtained by other landlords in other
projects in the Sorrento Valley / Sorrento Mesa area of San Diego, California of
the same approximate age, quality, condition and level of amenities, as adjusted
on account of pertinent differences such as the heights of the floors in
question, incentives for initial occupancy such as free rent, existing lease
takeover and assumption costs, interruption in occupancy, brokerage commissions
and demolition and improvement costs and allowances (or the inapplicability of
such incentives in the case of renewals or extensions), size of space, length of
term and anticipated commencement date with respect to such renewal and any
other economic concessions; provided, however, that in no event shall the Market
Rental Value be less than the Rent in effect under this Lease immediately prior
to the commencement of the applicable Extension Term. Landlord's determination
of Market Rental Value shall be final and binding unless Tenant, within thirty
(30) calendar days and by notice to Landlord, withdraws its exercise of the
extension option or gives notice to Landlord that it will, and promptly
thereafter does submit such determination of Market Rental Value to arbitration
pursuant to Section 30.18 of this Lease. In the event of such submission, the
Market Rental Value shall be determined by the arbitrators, whose determination
shall be based upon the same factors set forth in this Section.
32.5 Effect of Default. If Tenant is in default during the time period
-----------------
when it may otherwise exercise an option, then any attempt to exercise such
option while such default is continuing shall be null, void, and of no force or
effect. If Tenant exercises an option and if Tenant is in default at any time
after exercise of such option or on the first day for commencement of the
applicable Extension Term, then the exercise of such option by Tenant shall be
null, void, and of no force or effect. If Tenant has been in default in payment
of any sum required by this Lease where a late charge has become due under this
Lease for more than three times during the prior twelve-month period, then the
options to extend the Term set forth in this Article shall be canceled and shall
be of no force or effect. No condition of the Premises, including, without
limitation, any alteration or improvement made by Tenant, oral intention
expressed by Tenant or detrimental reliance by Tenant on any statement, act, or
omission by Landlord shall vest any rights in Tenant for exercise of the options
set forth herein or to possess the Premises during any period set for extension
of the Term in such options, or stop Landlord from eviction of Tenant after the
end of the Term of this Lease then in effect, or give rise to any equitable
defense to such eviction. Tenant hereby waives any and all equitable remedies
with respect to the options set forth herein unless Tenant has complied in all
respect with the written notice requirements set forth herein. The sole and
exclusive method for exercise of the options set forth herein shall be delivery
of the written notice called for herein by Tenant to Landlord on a timely basis.
Landlord and Tenant hereby agree that time is of the essence with respect to
delivery of any notice of exercise by Tenant to Landlord. The date for delivery
of any notice required or permitted in the options set forth herein shall be
determined by the provisions for delivery of notice contained in this Lease. In
the event the Tenant has multiple options to
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extend or renew this Lease, a later option cannot be exercised unless the prior
option to extend has been exercised.
33. Right of First Offer Space. During the Term, but not during any
--------------------------
Extension Term, if any space on the ground floor of the Building or directly
above the Premises on the second floor of the Building as depicted on Exhibit
"E" attached hereto ("First Offer Space") becomes vacant and available, Landlord
may first offer such First Offer Space to any other tenants currently in the
Building as of the Commencement Date, and if there are no such tenants or if
such tenants do not agree to lease the First Offer Space, Landlord shall notify
Tenant in writing and shall offer the First Offer Space to Tenant at the rent
described below, subject to the terms set forth herein. Tenant's right to lease
the First Offer Space shall be an ongoing right and shall be subordinate to any
existing rights, including without limitation, any extension rights, to lease
such space currently held by existing tenants in the Project. If Tenant, within
five (5) Business Days after receipt of Landlord's notice, indicates in writing
its agreement to lease all (but not a part) of the First Offer Space specified
in Landlord's notice, and Tenant is not in default under the Lease, such First
Offer Space shall be included within the Premises and leased to Tenant pursuant
to the provisions of this Lease. If Tenant does not indicate within five (5)
Business Days its agreement to lease such First Offer Space, Landlord shall
thereafter have the right to lease such First Offer Space or part of it to a
third party upon such terms as Landlord, in its sole discretion, shall deem
appropriate and Tenant's right of first offer as to such First Offer Space (but
not any other First Offer Space that may become available during the initial
Term) shall terminate and be of no further force or effect. Tenant acknowledges
that this Article permits Landlord to hold open and offer for rent the First
Offer Space to a third party, subject to the limitations of this Article, and
that this Article does not grant to Tenant an option. If Tenant elects in
writing to exercise its right to lease any First Offer Space, this Lease shall
become applicable to such First Offer Space upon the date Landlord delivers
possession of the First Offer Space to Tenant. The date on which the First Offer
Space becomes part of the Premises under the terms of this Article shall be
referred to herein as the "First Offer Space Commencement Date." The rent and
additional charges for the First Offer Space shall commence to accrue on the
First Offer Space Commencement Date and shall be the fair market rent and
additional charges determined as of the estimated First Offer Space Commencement
Date then being obtained by Landlord for comparable space in the Project;
provided, however, that in no event shall the rent for the First Offer Space be
less than the then current Rent applicable with respect to the Premises. The
additional rentable square feet within the First Offer Space shall be added to
the Premises in determining Tenant's Building Share and Tenant's Project Share.
Following the First Offer Space Commencement Date, the requirements and
conditions of this Lease, including the Expiration Date, shall apply to the
First Offer Space. Any termination of this Lease terminates all rights under
this Article. Tenant's rights under this Article are personal to the original
Tenant and may be exercised only by the original Tenant while occupying all of
the Premises. Any assignment or subletting by Tenant of this Lease or of all or
a portion of the Premises (even if such assignment or subletting does not
require the consent of Landlord or is approved by Landlord) terminates Tenant's
rights under this Article, unless Landlord consents to the contrary in writing
at the time of such subletting or assignment.
34. Signage. Tenant shall not erect or maintain any temporary or permanent
-------
sign on or about the Premises, the Building, or the Project, or visible from the
Common Areas or exterior, without obtaining prior written approval from
Landlord, which may be granted or withheld in Landlord's sole and absolute
discretion. Any request for approval of a sign shall be made in such detail as
Landlord shall reasonably request. Landlord shall, upon the request of Tenant
and at Tenant's expense, identify Tenant's business name on the monument sign
located outside the Building, and Landlord shall, at Landlord expense, identify
Tenant's business name at the interior suite entrance to the Premises and on the
directory board for the Building. All signs, whether erected by Landlord or
Tenant, shall conform to Landlord's building standard signage (except as
otherwise approved in writing by Landlord) and to all laws, ordinances, rules,
regulations, permits, covenants, conditions, restrictions, and easements
pertaining to signs. In the event of a violation of the foregoing by Tenant,
Landlord may remove same without any liability, and may charge the expense
incurred in such removal to Tenant. Tenant shall remove all approved signs which
it has erected upon the termination of the Lease and repair all damage caused by
such removal. Tenant shall have the right to use its standard graphic on the
sign provided at the entrance to the Premises.
35. Landlord's Warranties and Representations. Landlord warrants and
-----------------------------------------
represents to Tenant that: (a) Landlord is a duly formed and validly existing
limited liability company in good standing under the laws of the State of
Delaware and is qualified to do business and in good standing in the State of
California; (b) the Lease has been duly authorized, executed and delivered by
Landlord and is the legal, valid and binding obligation of the Landlord; (c) no
consent is required for the execution and delivery of the Lease and the leasing
of the Premises by Landlord to Tenant that has not been obtained; (d) there are
no ground leases, mortgages or deeds of trust affecting the Project or any part
thereof other than such mortgages and deeds of trust of which Landlord has
informed Tenant prior to the Commencement Date; (e) to Landlord's current actual
knowledge, without any independent investigation or inquiry, there are no
Hazardous Materials located within the Premises or the Building as of the date
of the Lease other than those which have been disclosed to Tenant in writing;
and (f) to Landlord's current actual knowledge, without any independent
investigation or inquiry, the building and its systems are designed or have been
modified to operate prior to, during and after the year 2000 without error
relating to or arising out of date data.
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36. Access. Tenant and Tenant's customers and vendors shall have access to
------
the Premises 24 hours per day, 7 days per week, and 365 days per year. Tenant,
and to the extent applicable Tenant's customers and vendors, shall have access
24 hours per day, 7 days per week, and 365 days per year to the Building Common
Areas, the Project Common Areas and all of Tenant's equipment (including without
limitation, the Generator Equipment, the HVAC Equipment, conduits and antennas
and power and telephone closets serving the Premises, and the parking area at
the Project) without prior notice to Landlord; except that Tenant shall use
reasonable efforts to notify a security agent of Landlord prior to accessing any
area other than the Premises that is not generally open to tenants of the
Building at the time of access, and only if such security agent is unable to
respond quickly enough to avoid material adverse harm to Tenant's business
operations then Tenant shall have the right to enter such area without the
accompaniment or consent of the security agent.
37. Confidentiality. If Landlord obtains access to any confidential
---------------
information of Tenant concerning Tenant's business, finances, facilities,
operations, plans, customers, proprietary software, technology and products,
which Landlord understands or reasonably should understand to be such
("Confidential Information"), Landlord shall not use in any way, for its own
account or the account of any third party, except as expressly permitted by this
Lease, nor disclose to any third party (except as required by law or to its
attorneys, accountants and other advisors and mortgagees and prospective
purchasers of the Premises as reasonably necessary and who are notified of this
confidentiality restriction), any such Confidential Information.
IN WITNESS WHEREOF, Landlord and Tenant have each caused their duly
authorized representative to execute this Lease on their behalf as of the date
first above written.
LANDLORD: TENANT:
--------- ------
SAN DIEGO TECH CENTER, LLC, INFLOW, INC., a Delaware corporation
a Delaware limited liability company
By: /s/ Xxxxxx X. Xxxxx
By: San Diego Realty Fund 5, LLC, -----------------------------
a California limited liability
company, Its Administrate Member Xxxxxx X. Xxxxx, President & C.E.O.
------------------------------------
[Printed Name Title]
By: /s/ Xxxxx X. Printe
---------------------------- ------------------------------------
Its: Manager Xxxxx X. Printe, Assistant Secretary
------------------------------------
[Printed name and Title]
EXHIBIT A
Floor Plan
EXHIBIT B
Site Plan
EXHIBIT C
RULES AND REGULATIONS
ATTACHED TO AND MADE A PART OF OFFICE BUILDING LEASE
(Capitalized terms shall have the meaning set forth in the Lease.)
1. Parking-General. Subject to compliance with the rules and regulations
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set forth below in paragraph 2, so long as the Lease to which this Exhibit D is
attached remains in effect, Tenant or persons designated by Tenant shall be
entitled to non-exclusive use of unreserved surface parking areas located at the
Project. All persons utilizing the Project parking facilities shall comply with
the rules and regulations set forth below. Landlord reserves the right to modify
and/or adopt such other reasonable and non-discriminatory rules and regulations
for the Project parking as it deems necessary. Landlord may refuse to permit any
person who violates the rules and regulations to park in the Project parking
facilities. Any violation of this Parking Agreement shall subject the violator's
car to removal from the Project parking facilities at the violator's expense.
2. Parking-Rules and Regulations.
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(a) Cars must be parked entirely within the stall lines painted on
the floor.
(b) All directional signs and arrows must be observed.
(c) The speed limit shall be 5 miles per hour.
(d) Parking is prohibited:
(1) In areas not striped for parking;
(2) In fire lanes;
(3) Where "no parking" signs are posted;
(4) In cross-hatched areas; and
(5) In such other areas as may be designated by Landlord.
(e) Every xxxxxx is required to park and lock his or her own car. All
responsibility for theft and/or damage to cars, other personal property or
persons is assumed by the xxxxxx.
(f) No more than one vehicle may be parked in any one parking space.
Washing, waxing, cleaning or servicing of any vehicle by a xxxxxx and/or his
agents is prohibited.
(g) Tenant shall acquaint all its officers and employees with these
rules and regulations.
3. Asbestos.
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(a) Tenant has been provided with the Asbestos Reports described in Section
30.1 of the Lease. The reports contain a management plan and procedures.
(b) It is important to the health and safety of everyone in the Project
that the procedures described in the management plan and in the Asbestos Reports
be strictly followed. If Tenant has reason to believe that anyone is not
following these procedures, that there is asbestos in any area of the Building
or Project not indicated in the Asbestos Reports, or that any asbestos
containing materials have been damaged, Tenant shall immediately contact
Landlord or its property manager. Tenant shall not fail to follow the attached
procedures in any way and must obtain the property manager's approval as to any
work to be done by Tenant or any of Tenant's Agents if the work involves any
procedures to be done in any area containing asbestos. The property manager may
withhold consent to any such work if the property manager is of the opinion that
the work may create a danger to the employee, or others in the Building or
Project. Stoppage of work shall occur only for imminent dangers and work shall
recommence only when Tenant adopts procedures appropriate to mitigate such
dangers in accordance with the Asbestos Reports.
4. Miscellaneous.
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(a) No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the Building
(other than the Premises, if not visible from the exterior of the Building)
without the written consent of Landlord, first had and obtained, and Landlord
shall have the right to remove any such sign, placard, picture, advertisement,
name or notice without notice to and at the expense of Tenant. All signs or
lettering on doors shall conform to Landlord's sign criteria for the Building.
Tenant shall not place anything or allow anything to be placed near the glass of
any window, door, partition or wall which may appear unsightly from outside the
Premises.
Exhibit C-1
(b) Tenant shall not alter any lock or install any new or additional locks
or any bolts on any door of the Premises without obtaining the prior express
written consent of Landlord which consent shall not be unreasonably withheld.
(c) Toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein, and the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant or those employees or invitees of Tenant who shall have caused
it.
(d) Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought in or kept in or about the Premises or the
Building.
(e) Except as provided in the Lease, Tenant shall not use or keep in the
Premises any flammable or combustible fluid or material, including, but not
limited to, kerosene or gasoline and shall not use any method of heating or air
conditioning other than that supplied or installed by Landlord.
(f) Upon the termination of its tenancy, Tenant shall deliver to Landlord
the keys for all offices, rooms and toilet rooms which shall have been furnished
to Tenant or which Tenant shall have had made, and in the event of loss of any
keys so furnished, shall pay Landlord therefor.
(g) Tenant shall not lay linoleum, tile, carpet or any other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner, without obtaining the prior express written consent of Landlord which
consent shall not be unreasonably withheld. The expense of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by Tenant, or by the contractors, employees or invitees of Tenant who
caused the damage.
(h) Landlord reserves the right to exclude or expel from the Buildings any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
the rules and regulations of the Project.
(i) Landlord shall have the right, after prior notice to Tenant, to change
the name and the street address of the Building of which the Premises are a
part.
(j) Tenant shall not disturb, solicit, or canvas any occupant of the
Building or Project and shall cooperate to prevent same.
(k) Without the written consent of Landlord, Tenant shall not use the name
of the Building or the Project in connection with or in promotion or advertising
of the business of Tenant except as Tenant's address.
(l) All exterior window coverings, whether curtains, blinds or otherwise,
used by Tenant shall be approved in writing by Landlord. Landlord intends that
all window coverings in the Project be uniform and standard in color, texture
and appearance and Tenant shall have no right to deviate from or change the
exterior window coverings approved by Landlord.
(m) Tenant shall comply with all documents, instruments and covenants
recording against the Project, including, without limitation, the covenants,
conditions and restrictions of the Xxxx/Mira Mesa Industrial Park, a copy of
which has been received and reviewed by Tenant.
Exhibit C-2
EXHIBIT D
Generator Equipment
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EXHIBIT E
First Offer Space
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