Exhibit 10.17
MILL CREEK CORPORATE CENTER
L E A S E
** **
BY AND BETWEEN
** **
PACIFIC REALTY ASSOCIATES, L.P.****,
a Delaware limited partnership
AND
AGILITY ROBOTICS, INC.,
a Delaware corporation
Table of Contents
| 1. | Basic Lease Terms | 1 |
| 2. | Delivery of Possession and Commencement; Landlord’s Work; Tenant Improvements | 3 |
| 3. | Lease Term; Early Entry | 4 |
| 4. | Rent Payment | 5 |
| 5. | Security Deposit; Letter of Credit | 5 |
| 6. | Use of the Premises; Hazardous Substances | 8 |
| 7. | Utility Charges; Building Maintenance and Repairs | 10 |
| 8. | Taxes and Operating Expenses | 12 |
| 9. | Parking and Storage Areas | 13 |
| 10. | Tenant’s Indemnification. | 14 |
| 11. | Insurance; Waiver of Subrogation | 14 |
| 12. | Property Damage. | 15 |
| 13. | Condemnation. | 15 |
| 14. | Assignment, Subletting and Other Transfers | 16 |
| 15. | Tenant Default | 17 |
| 16. | Landlord Default | 18 |
| 17. | Surrender at Expiration or Termination | 18 |
| 18. | Mortgage or Sale by Landlord; Estoppel Certificates | 19 |
| 19. | Liens | 19 |
| 20. | Attorneys Fees; Waiver of Jury Trial | 19 |
| 21. | Limitation on Liability; Transfer by Landlord. | 19 |
| 22. | Real Estate Brokers; Finders | 20 |
| 23. | Other | 20 |
| 24. | Special Provisions | 23 |
LEASE
** **
For valuable consideration, Landlord and Tenant hereby covenant and agree as follows:
| 1. | Basic Lease Terms. |
1.1. Effective Date of Lease. Notwithstanding any provision to the contrary contained herein, the provisions of this Lease shall be effective on that date as of which both Landlord and Tenant have executed this Lease as shown next to the respective signatures below (the “Effective Date”).
1.2. Landlord. Pacific Realty Associates L.P., a Delaware limited partnership (“Landlord”).
| Address for Payment of Rent: | Pacific Realty Associates, L.P. | ||
| Unit 64 – mccc222 agilityr | |||
| P. O. Box 4900 | |||
| Portland, OR 97208-4900 | |||
| (The unit number must be listed on a separate | |||
| line from the PO Box.) | |||
| Address for Notices: | Pacific Realty Associates, L.P. | ||
| Attn: R/E Counsel – mccc222 agilityr | |||
| 15350 S.W. Sequoia Parkway, Suite 300 | |||
| Portland, OR 97224 | |||
| Additional Contact Information: | Telephone: | (503) 624-6300 | |
| Facsimile: | (503) 624-7755 |
1.3. Tenant. Agility Robotics, Inc., a Delaware corporation (“Tenant”).
| Trade Name: | None. | ||
| Address for Invoices: | Agility Robotics, Inc. | ||
| 32114 Mallard Avenue | |||
| Tangent, OR 97389 | |||
| Address for Notices: | Agility Robotics, Inc. | ||
| 32114 Mallard Avenue | |||
| Tangent, OR 97389 | |||
| Additional Contact Information: | Telephone: | (503) 877-2297 | |
| Email Address: Jack Walter, Facility Manager | |||
| jack.walter@agilityrobotics.com | |||
| Taxpayer ID Number: | 47-5587432 |
1.4. Building. The approximately 70,208 square foot building shown on the attached Exhibit A-1 (the “Building”), which is being constructed by Landlord, also known as Building 8.
1.5. Premises; Premises Area. All of the Building located at the address commonly known as 4698 Truax Drive S.E., Salem, Oregon 97301 as generally shown on the attached Exhibit B-1 (the “Premises”). The Premises shall consist of approximately 70,208 square feet of warehouse and office space (the “Premises Area”) within the Building.
1.6. Outside Area. All areas and facilities within the Park (as defined below) not appropriated to the exclusive occupancy of any specific tenants or Landlord, including all non-reserved vehicle parking areas, traffic lanes, driveways, sidewalks, pedestrian walkways, landscaped areas, signs, service delivery facilities, truck maneuvering areas, trash disposal facilities, common storage areas, common utility facilities and all other areas for non-exclusive use (the “Outside Area”). Landlord reserves the right to change, reconfigure or rearrange the Outside Area and to do such other acts in and to the Outside Area as Landlord deems necessary or desirable, provided, however, that in no event shall such changes, reconfigurations or rearrangements materially adversely affect Tenant’s access to the Premises or parking of Tenant or its employees or invitees.
1.7. Park. The project in which the Premises and Building are located (and which includes the Premises and Building) is commonly known as Mill Creek Corporate Center (the “Park”), as shown on the attached Exhibit A-1. The Park consists of four buildings (including the Building), and the real property comprising the Park consists of one tax parcel. The Park is subject to that certain Declaration of Covenants, Conditions and Restrictions for Phase IA, IC and Phase II of Mill Creek Corporate Center recorded on January 4, 2008 in the Official Records of Marion County, Oregon at Reel 2905, Page 411 (the “Covenants”), a copy of which Landlord has furnished to Tenant and which, along with other things, established a property owners association (the “Association”). The Association imposes obligations for reimbursements of common element expenses and other charges associated with each parcel of land comprising the Park (the “Park Expenses”).
Page 1
1.8. Permitted Use. Tenant shall use the Premises only for the manufacturing and distribution of multi-purpose robots and general office purposes and such other lawful uses ancillary to the foregoing (the “Permitted Use”). Tenant is solely responsible for determining, to its satisfaction, that the Premises are suitable for its intended use, including all municipal codes and restrictions to which Tenant shall comply at Tenant’s sole expense.
1.9. Lease Term.
1.9.1. Commencement Date. The date on which Landlord delivers the Premises to Tenant with Landlord’s Work substantially completed pursuant to Paragraph 2 (the “Commencement Date”), which date is estimated to be September 1, 2023.
1.9.2. Rent Commencement Date. Except as provided in Paragraph 1.10.1 below, Tenant shall commence payment of Base Rent on that date which is two (2) full calendar months following the Commencement Date (the “Rent Commencement Date”). Tenant shall be responsible for payment of its proportionate share of Taxes and Operating Expenses pursuant to Paragraph 8 during the period of time commencing on the Commencement Date and continuing through and including the last day immediately preceding the Rent Commencement Date.
1.9.3. Expiration Date. The Lease Term shall expire approximately one hundred twenty-two (122) full calendar months following the Commencement Date (the “Expiration Date”), which date is estimated to be October 31, 2033, subject to Paragraphs 1.10.2 and 24.1.
1.9.4. Initial Term. The “Initial Term” shall be for a period of one hundred twenty-two (122) full calendar months commencing on the Commencement Date and expiring on the Expiration Date. If the Commencement Date does not occur on the first day of a month, the Initial Term shall include that portion of the month in which the Commencement Date occurs which follows the Commencement Date (the “First Partial Month”).
1.10. Base Rent. Subject to Paragraphs 1.10.2 and 4.1, monthly payments of base rent (“Base Rent”) shall be according to the following schedule:
| Period of Time | Monthly Base Rent | |||
| September 1, 2023 through October 31, 2023 | $ | 0.00 | ||
| November 1, 2023 through August 31, 2024 | $ | 74,203.00 | ||
| September 1, 2024 through August 31, 2025 | $ | 76,800.00 | ||
| September 1, 2025 through August 31, 2026 | $ | 79,488.00 | ||
| September 1, 2026 through August 31, 2027 | $ | 82,270.00 | ||
| September 1, 2027 through August 31, 2028 | $ | 85,150.00 | ||
| September 1, 2028 through August 31, 2029 | $ | 88,130.00 | ||
| September 1, 2029 through August 31, 2030 | $ | 91,214.00 | ||
| September 1, 2030 through August 31, 2031 | $ | 94,407.00 | ||
| September 1, 2031 through August 31, 2032 | $ | 97,711.00 | ||
| September 1, 2032 through August 31, 2033 | $ | 101,131.10 | ||
| September 1, 2033 through October 31, 2033 | $ | 104,671.00 |
1.10.1. Base Rent for First Partial Month. If the Commencement Date does not occur on the first day of a month, Tenant shall pay Base Rent for the First Partial Month equal to Seventy-Four Thousand Two Hundred Three and No/100 Dollars ($74,203.00), prorated to reflect the actual number of days from the date of delivery by Landlord during the First Partial Month.
1.10.2. Actual Dates and Monthly Base Rent Schedule. If the actual Commencement Date is a date other than the estimated date set forth in Paragraph 1.9.1, Landlord and Tenant shall execute and deliver a “Confirmation of Commencement Date Letter”. Such Confirmation of Commencement Date Letter shall establish and confirm the actual Commencement Date, Rent Commencement Date, Expiration Date and the dates for the monthly Base Rent schedule set forth in Paragraphs 1.9 and 1.10, respectively, of this Lease. Tenant shall execute and deliver the Confirmation of Commencement Date Letter to Landlord within fifteen (15) days following receipt of an accurate written Confirmation of Commencement Date Letter from Landlord. The Confirmation of Commencement Date Letter shall thereupon modify and be incorporated into this Lease.
Page 2
1.10.3. Abated Base Rent; Rights Personal to Tenant. This Lease provides for two (2) full calendar months of “free” rent in the amount of Seventy-Four Thousand Two Hundred Three and No/100 Dollars ($74,203.00) per month for the period between the Commencement Date and the Rent Commencement Date (hereinafter referred to as the “Abated Base Rent”). Tenant acknowledges that Tenant’s right to receive credit for the Abated Base Rent is absolutely conditioned upon Tenant’s full, faithful and punctual performance of its obligations under this Lease. Tenant shall be credited with having paid all of the Abated Base Rent upon expiration of the Lease Term only if Tenant has (i) fully, faithfully, and punctually performed all of Tenant’s obligations under this Lease, (ii) paid all Base Rent and Additional Rent due under this Lease (other than the Abated Base Rent), (iii) paid all other monetary obligations due under this Lease, and (iv) surrendered the Premises in the physical condition required by this Lease. In the event this Lease is terminated due to a default by Tenant of any of the terms of this Lease beyond applicable notice and cure periods (if any), the Abated Base Rent shall immediately become due and payable in full and this Lease shall be enforced as if there were no such rent abatement or other rent concessions. Tenant’s right to the Abated Base Rent is personal to Agility Robotics, Inc. (“Agility Robotics”) and may not be assigned or otherwise transferred by Agility Robotics in connection with an assignment or other transfer of this Lease or otherwise, and Tenant’s right to the Abated Base Rent may not be exercised by anyone other than Agility Robotics; provided, however, that such right may be transferred or assigned to any affiliate or other entity related to Agility Robotics, including those entities related due to a merger or acquisition. Any attempted assignment or other transfer of Tenant’s rights in this Paragraph 1.10.3 shall be of no effect and shall terminate these rights as of the effective date of the assignment or other transfer.
1.1. Security Deposit. One Hundred Four Thousand Six Hundred Seventy-One and No/100 Dollars ($104,671.00) (the “Security Deposit”). In addition, Tenant shall provide a Letter of Credit in accordance with each of Paragraphs 5.2 and 5.3.
1.2. Tenant’s Proportionate Shares. Subject to Paragraph 8.2, (i) Tenant’s initial proportionate share for Taxes (as defined in Paragraph 8.3) allocated to the Building is 100%, and (ii) Tenant’s initial proportionate share for Operating Expenses (as defined in Paragraph 8.4) allocated to the Building is 100%.
1.3. CC&Rs. Those certain Covenants described in Paragraph 1.7 (the “CC&Rs”).
1.4. Landlord’s Work. Those improvements to the Premises to be constructed by Landlord pursuant to Paragraph 2.2 below (“Landlord’s Work”).
1.5. Guarantor(s). None.
This lease (this “Lease”) is entered into by Landlord and Tenant as of the Effective Date set forth in the Basic Lease Terms.
| 2. | Delivery of Possession and Commencement; Landlord’s Work; Tenant Improvements. |
2.1. Delivery. Should Landlord be unable to deliver possession of the Premises on the Commencement Date as estimated in the Basic Lease Terms (i) Tenant shall take possession of the Premises when Landlord notifies Tenant that the Premises are ready for delivery to Tenant as set forth in this Lease, (ii) the Commencement Date shall be deferred until Landlord delivers notice tendering possession to Tenant if such delay is not caused by Tenant or Tenant’s employees, agents or contractors, provided that Landlord shall provide reasonable updates on the status of the Premises and the expected Commencement Date, and (iii) Landlord and Tenant shall execute the Confirmation of Commencement Date Letter pursuant to Paragraph 1.10.2. If Tenant or Tenant’s employees, agents or contractors cause construction of Landlord’s Work to be delayed, the Commencement Date shall be the date that, in the opinion of Landlord’s architect or space planner, substantial completion would have occurred if such delays had not taken place. Landlord shall have no liability to Tenant for any delays in the delivery of possession and neither Landlord nor Tenant shall have the right to terminate this Lease as the result of such delays, provided that if possession of the Premises is not delivered by Landlord to Tenant within thirty (30) days of the Commencement Date set forth in Paragraph 1.9.1, subject to delays beyond Landlord’s reasonable control, Tenant shall be entitled to one (1) day of free Base Rent for each day of delay thereafter.
Page 3
2.2. Landlord’s Work; As-Is. The Premises shall be delivered to Tenant with Landlord’s Work substantially completed as set forth in the attached Exhibit B-2. Additionally, the Premises shall be delivered to Tenant in compliance with all Applicable Laws (as defined in Paragraph 6.2) , including the Americans with Disabilities Act of 1990 and in broom clean condition with all electrical, mechanical and plumbing systems serving the Premises in good working condition. The existence of any “punchlist”-type items shall not postpone the Commencement Date of this Lease. Subject to the full performance of Landlord’s Work, Tenant agrees to accept the Premises without any representation or warranty by or from Landlord as to the condition of the Premises, the habitability of the Premises, the fitness of the Premises for the Permitted Use and/or the conduct of Tenant’s business in the Premises, or the zoning of the Premises, except as otherwise specifically provided herein.
2.2.1. Landlord has agreed to construct Landlord’s Work without additional charge to Tenant. However, if Tenant requests any changes with respect to Landlord’s Work as set forth in Exhibit B-2, all additional costs incurred or to be incurred in connection with such changes must be paid to Landlord in full in immediately available funds by Tenant, and such payments must be made by Tenant within ten (10) days following Landlord’s written request therefor.
2.3. Tenant Improvements. Tenant shall make certain alterations, additions or improvements to the Premises in accordance with plans and specifications to be reviewed and approved by Landlord as set forth in Paragraph 6.5 and this Paragraph 2.3 (as used herein, the “Tenant Improvements”), at its sole cost and expense. Landlord may, but shall not be required to, supervise such Tenant Improvements and shall have reasonable access to the Premises in connection with such supervision. Prior to commencing construction of any Tenant Improvements, Tenant shall provide a copy of Tenant’s preliminary plans and specifications for the Tenant Improvements (collectively, “Tenant’s Preliminary Plans”) to Landlord for Landlord’s review and approval, which approval shall not be unreasonably withheld conditioned or delayed. Landlord shall, within ten (10) business days after receipt thereof, either provide comments to or approve Tenant’s Preliminary Plans. If Landlord does not timely provide its comments thereto, Tenant shall have the option to resubmit Tenant’s Preliminary Plans. If Landlord does not timely provide its comments thereto after such second request, Landlord shall be deemed to have approved Tenant’s Preliminary Plans. If Landlord provides Tenant with comments to Tenant’s Preliminary Plans, Tenant shall provide revised Tenant’s Preliminary Plans to Landlord incorporating Landlord’s comments. Landlord shall either provide comments to such revised Tenant’s Preliminary Plans within ten (10) days or approve them. The process described above shall be repeated, if necessary, until Tenant’s Preliminary Plans for the Tenant Improvements have been finally approved by Tenant and Landlord (upon such approval, the “Tenant’s Final Plans”). Tenant agrees that it shall not commence construction of the Tenant Improvements or any portion thereof until Tenant’s Final Plans have been finally approved by Landlord.
| 3. | Lease Term; Early Entry. |
The term of this Lease shall commence on the Commencement Date and expire on the Expiration Date (the “Lease Term”). Upon Landlord’s prior written approval and subject to the provisions of this Paragraph 3, Tenant may enter the Premises approximately two (2) months prior to the Commencement Date as estimated in the Basic Lease Terms for the limited purpose of installing Tenant’s furnishings, fixtures, equipment and voice/data equipment and completing Tenant’s Improvements pursuant to Paragraph 2.3 (“Early Entry”) but in no event shall Tenant be permitted to conduct business in the Premises during the Early Entry period. Such Early Entry shall be subject to the following conditions: (i) prior to the date of Early Entry Tenant shall deliver to Landlord the certificate(s) of insurance required pursuant to Paragraph 11.2; (ii) Tenant and its agents, employees and contractors shall not interfere with the performance of Landlord’s Work; (iii) Tenant shall coordinate the timing of Tenant’s entry and work during the Early Entry period with Landlord’s employees and contractors; and (iv) Tenant shall comply in all respects with the provisions of Paragraph 2.3. If Landlord determines that Tenant’s actions are interfering with Landlord’s ability to complete Landlord’s Work, Landlord shall have the right to withdraw its permission for Early Entry upon twenty-four (24) hours’ notice to Tenant. Tenant shall be responsible for and shall promptly repair any and all damage to the Premises or Landlord’s Work arising out of Tenant’s Early Entry. Landlord shall not be liable in any way for any injury, loss or damage which may occur to any of Tenant’s property or installations in the Premises during the Early Entry period except to the extent caused by Landlord’s gross negligence or willful misconduct. The Expiration Date shall be unchanged by such Early Entry. All provisions of this Lease shall be in effect from the date of Early Entry; however, Operating Expenses and Taxes shall be abated until the Commencement Date and Base Rent shall be abated until the Rent Commencement Date.
Page 4
| 4. | Rent Payment. |
4.1. Base Rent; Additional Rent. During the Lease Term, Tenant shall pay to Landlord the Base Rent for the Premises set forth in the Basic Lease Terms and all amounts other than Base Rent that this Lease requires (“Additional Rent”) without demand, deduction or offset, except as otherwise specifically provided herein. Payment shall be made in U.S. currency by checks payable to Landlord and mailed to the address for rent payments as set forth above, or via wire or ACH payment per Landlord’s direction, or as otherwise may be designated in writing by Landlord. Simultaneous with Tenant’s execution and delivery of this Lease to Landlord, Tenant shall pay the Base Rent for the first full month of the Lease Term for which Base Rent is due in the amount of Seventy-Four Thousand Two Hundred Three and No/100 Dollars ($74,203.00). In the event of a First Partial Month, Tenant shall pay Base Rent for such First Partial Month, calculated pursuant to Paragraph 1.10.1, within thirty (30) days of receipt of Landlord’s invoice therefor. Thereafter, Base Rent and Additional Rent shall be payable in advance on the first day of each month during the Lease Term without demand. Base Rent and Additional Rent for any partial month during the Lease Term shall be prorated to reflect the number of days during the relevant month. Payment by Tenant or receipt by Landlord of any amount less than the full Base Rent or Additional Rent due from Tenant, or any disbursement or statement on any check or letter accompanying any check or rent payment, shall not in any event be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rental or pursue any other remedy provided in this Lease.
4.2. Lockbox Payments. If Landlord directs Tenant to pay Base Rent, Additional Rent or other charges under this Lease to a “lockbox” or other depository whereby checks issued in payment of such items are initially cashed or deposited by a person or entity other than Landlord (albeit on Landlord’s authority) then, for any and all purposes under this Lease: (i) Landlord shall not be deemed to have accepted such payment until five (5) days after the date on which Landlord shall have actually received such funds, (ii) Landlord shall be deemed to have accepted such payment if (and only if) within said five (5)-day period, Landlord shall not have refunded (or attempted to refund) such payment to Tenant and (iii) Landlord shall not be bound by any endorsement or statement on any check or any letter accompanying any check or payment and no such endorsement, statement or letter shall be deemed an accord and satisfaction. Nothing in this Paragraph 4.2 shall require Tenant to pay Base Rent or Additional Rent prior to the first day of the month as set forth in Paragraph 4.1 above and the date upon which the funds are received by the “lockbox” shall be the date upon which Landlord receives the funds for the purposes of determining whether Tenant is in default under Paragraph 15.1.1(i) or whether interest or late fees are due pursuant to Paragraph 23.2 hereof. Landlord or Landlord’s bank may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or pursue any other remedy provided in this Lease, at law or in equity. Landlord may change the “lockbox” address at any time during the Lease Term by providing Tenant with thirty (30) days prior written notice. Notwithstanding anything herein to the contrary, Tenant shall always have the right to wire payment directly to Landlord in lieu of the “lockbox”.
| 5. | Security Deposit; Letter of Credit. |
5.1. Security Deposit. Simultaneous with Tenant’s execution and delivery of this Lease to Landlord, Tenant shall pay the Security Deposit stated in the Basic Lease Terms. The Security Deposit shall be held by Landlord to secure Tenant’s obligations under this Lease; however, the Security Deposit is not an advance rental deposit nor a measure of Landlord’s damages for a default by Tenant under this Lease. Landlord may commingle the Security Deposit with its funds and shall have no obligation to pay any interest on the Security Deposit. Landlord shall have the right to offset against the Security Deposit any sums owing from Tenant to Landlord and not paid when due, any damages caused by Tenant’s default, the cost of curing any default by Tenant should Landlord elect to do so, and the cost of performing any repair, maintenance or cleanup that is the responsibility of Tenant under this Lease. Offset against the Security Deposit shall not be an exclusive remedy in any of the above cases but may be invoked by Landlord, at its option, in addition to any other remedy provided by law or this Lease for Tenant’s nonperformance. Landlord shall give notice to Tenant each time an offset is claimed against the Security Deposit, and unless this Lease is terminated, Tenant shall within thirty (30) days after such notice deposit with Landlord a sum equal to the amount of the offset so that the total deposit amount, net of offset, shall remain constant throughout the Lease Term. Tenant’s failure to make such deposit after notice of such offset shall be a default under this Lease. Any remaining balance of the Security Deposit (together with a reasonable accounting and supporting evidence of the amounts, if any, withheld from the Security Deposit) shall be returned by Landlord to Tenant (or, at Landlord’s option, to the last assignee of Tenant) within thirty (30) days after expiration or earlier termination of this Lease.
5.2. Letter of Credit.
5.2.1. Description. To secure performance by Tenant under this Lease, Tenant agrees to provide to Landlord, upon execution of this Lease, an irrevocable standby letter of credit issued by a bank approved by Landlord in writing, which approval will not be unreasonably withheld. The letter of credit shall be in form consistent with the requirements of this Paragraph 5.2 approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. If a renewal or replacement letter of credit is required hereunder, Tenant shall promptly provide such renewal or replacement letter of credit in the same form. The letter of credit required hereunder from time to time is referred to as the “Letter of Credit”. Tenant shall cause the Letter of Credit to meet the following requirements.
(i) Term. The term of the Letter of Credit shall not expire until the earlier of: (a) the Expiration Date of this Lease, or (b) the date on which such Letter of Credit shall reach a value of $0 in accordance with the terms of Paragraph 5.2.1(ii).
(ii) Amount. The amount of the Letter of Credit shall be Two Million and No/100 Dollars ($2,000,000.00). If, but only if, Tenant shall not have been in default under this Lease beyond applicable notice and cure periods (if any) during the first thirty-six (36) full calendar months of the Lease Term or any twelve (12) consecutive month period thereafter and no draw has been made under the Letter of Credit, the amount of the Letter of Credit may be reduced by Two Hundred Thousand and No/100 Dollars ($200,000.00) on the first day of the thirty-seventh (37th) full calendar month of the Initial Term of the Lease and on each anniversary of such date thereafter during the Initial Term of the Lease. However, if a default occurs under this Lease beyond any applicable notice and cure periods (if any), the Letter of Credit shall not thereafter be reduced.
Page 5
(iii) Draws. The Letter of Credit shall expressly allow for Landlord to draw all or any part of the amount of the Letter of Credit for any unpaid rent or other charges due from Tenant or to cure any other defaults of Tenant. The Letter of Credit shall state that Landlord may draw the same at the office of the issuing bank, and shall specify the address of the same.
(iv) Assignment. The Letter of Credit shall specifically allow for assignment by Landlord of the Letter of Credit or its proceeds, absolutely or for security purposes, without payment of any fee or other conditions.
(v) Payment. The Letter of Credit shall state that Landlord shall have the right to draw the full amount of the Letter of Credit or any part of such amount for any unpaid rent or other charges due from Tenant or to cure any other defaults of Tenant, and that such amount shall be immediately paid to Landlord, upon presentation by Landlord to the issuing bank of a letter from Landlord stating that Landlord is authorized under this Lease to draw such amount. Except as otherwise specifically provided herein, no other or further condition to payment shall be stated in the Letter of Credit nor shall apply to the Letter of Credit.
(vi) Issuer. The Letter of Credit shall be issued by a bank reasonably acceptable to Landlord. Tenant shall obtain the prior written approval of Landlord, which shall not be unreasonably withheld, with respect to the issuer.
5.2.2. Right to Draw Funds. Landlord shall have the right to draw all or any portion of the Letter of Credit if a default beyond applicable notice and cure periods (if any) occurs under this Lease. Landlord shall also have the right to draw all or a portion of the Letter of Credit in the event a failure by Tenant occurs which would constitute a default after Landlord gives to Tenant notice of such failure and/or a time period to cure such failure expires, but, by reason of Tenant being or becoming a debtor in a bankruptcy proceeding or otherwise, (a) Landlord is unable to give such notice, or (b) the cure period will expire after Tenant becomes a debtor in such bankruptcy proceeding.
5.2.3. Proceeds. In the event funds represented by the Letter of Credit are paid to Landlord, Landlord shall have the right to use such proceeds to correct any default by Tenant and/or to compensate Landlord for any damages related to such default per the terms of this Lease; any remaining proceeds shall be added to and held as part of the Security Deposit pursuant to the provisions of Paragraph 5.1. Tenant shall promptly provide a replacement Letter of Credit in the amount drawn under the Letter of Credit upon written notice of such use of the proceeds. Tenant shall have no right to direct the application of any proceeds of any Letter of Credit. No drawing of the Letter of Credit nor application of any proceeds drawn, and no acceptance of a payment of money to be held as part of the Security Deposit or of a replacement Letter of Credit, shall be a waiver of any Event of Default by Tenant nor a waiver of any other right or remedy of Landlord.
5.2.4. Letter of Credit Failures. The following events shall each be a default not subject to any notice, grace, or cure provisions of this Lease. If any such default occurs, Landlord shall be entitled, without waiver of the default or of other rights or remedies, to exercise all remedies for such default, including the right to draw any Letter of Credit immediately. Tenant shall, within ten (10) business days of written notice of any such draw (subject to any delays beyond Tenant’s reasonable control so long as Tenant is diligently pursuing obtaining the same), provide a replacement Letter of Credit. The defaults not subject to notice, grace, or cure are:
(i) The bank or Tenant fails to deliver the Letter of Credit or any renewal or replacement Letter of Credit as and when required.
(ii) Tenant delivers any Letter of Credit which does not conform strictly to the requirements of this Lease.
(iii) In the event Landlord separately consents to a Letter of Credit with an expiry earlier than that otherwise required hereunder, such Letter of Credit shall provide that the same shall automatically renew for one year periods until at least the expiry required hereunder unless the bank gives written notice of nonrenewal at least sixty (60) days prior to an annual renewal date; in the event the bank gives such notice of nonrenewal and Tenant fails to provide a replacement Letter of Credit within ten (10) business days of receipt of notice of such nonrenewal, the same shall be a default hereunder.
(iv) In the event Landlord separately consents to a Letter of Credit with an expiry as otherwise required hereunder but which states that notice of early expiration of the Letter of Credit may be given, then such Letter of Credit shall require at least sixty (60) days’ prior written notice to Landlord of early expiration, which notice shall be effective only upon an anniversary of the issuance date of the Letter of Credit, which anniversary must occur on or after the sixtieth day following the giving of such notice of early expiration, and Tenant fails to provide a replacement Letter of Credit within ten (10) business days of receipt of notice of such nonrenewal. If any such notice of early expiration shall be given by the bank, the same shall be a default hereunder.
Page 6
The following event shall be a default after the applicable notice and cure period. If the bank issuing the Letter of Credit becomes insolvent, closes, or is placed under regulatory supervision, Tenant shall be in default under this Lease unless Tenant provides a replacement Letter of Credit within ten (10) business days of receiving written notice of any such event, subject to any delays beyond Tenant’s reasonable control so long as Tenant is diligently pursuing obtaining the same.
5.2.5. Interim Return. By reason of operation of the above provisions of this Paragraph, Landlord may hold a cash Security Deposit and a Letter of Credit, or two Letters of Credit, in either case for a total sum greater than the total otherwise required hereunder. If such a circumstance occurs, Landlord shall agree to return all or a portion of the Security Deposit, and/or to accept a replacement Letter of Credit or amendment to the Letter of Credit, such that the combination of the Security Deposit and the Letter of Credit equals the amount otherwise required hereunder. If this occurs, Landlord shall have the right, in its sole discretion, to determine the mix of the cash Security Deposit and the Letter of Credit to equal such total. Tenant may make written request for such reduction if but only if all of the following conditions are met:
(i) No default, beyond an applicable notice and cure period, exists ; and
(ii) No failure on the part of Tenant exists or has occurred which, together with notice, passage of time, or both, would constitute a default.
Following receipt of such request made at a time when the above conditions are satisfied, Landlord shall provide to Tenant written notice of the adjustment which Landlord will accept to the cash Security Deposit and/or Letter of Credit then held by Landlord, specifying the cash or Letter of Credit (or amendment) to be delivered by Tenant and the cash or Letter of Credit to be surrendered by Landlord. Such adjustment will require Tenant to deliver cash, an amendment to any Letter of Credit then held by Landlord, and/or an additional or replacement Letter of Credit. Tenant shall make the required delivery to Landlord. After such delivery is made to Landlord, Landlord shall surrender to Tenant the specified cash and/or Letter of Credit on the ninety fifth (95th) day after Tenant completes its deliveries if but only if the following conditions are then met:
| (a) | Tenant is not a debtor in a bankruptcy proceeding; |
| (b) | No default exists; |
| (c) | No failure on the part of Tenant exists or has occurred which, together with notice, passage of time, or both, would constitute a default; |
| (d) | This Lease shall have been free from any default for a period of ninety (90) days; and |
| (e) | This Lease or Tenant’s right of possession shall not have been terminated. |
5.3. TI Letter of Credit. To secure payment to the cost of the Tenant Improvements, Tenant agrees to also provide to Landlord, upon execution of this Lease, an irrevocable standby letter of credit (the “TI Letter of Credit”) issued by a bank approved by Landlord in writing, which approval will not be unreasonably withheld. The TI Letter of Credit shall be in form consistent with the requirements of Paragraph 5.2, except as otherwise provided in Paragraph 5.3.1, approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. If a renewal or replacement TI Letter of Credit is required hereunder, Tenant shall provide such renewal or replacement TI Letter of Credit in the same form
5.3.1. The initial amount of the TI Letter of Credit shall be the final construction estimate for the cost of the Tenant Improvements. The amount of the TI Letter of Credit may be reduced by the documented costs incurred by Tenant for the Tenant Improvements during the previous month on the first day of the first full calendar month following the date on which Tenant commences construction of the Tenant Improvements and on the first day each month thereafter until the Tenant Improvements are completed, as evidenced by a certificate of substantial completion delivered by the Tenant to the Landlord.
Page 7
| 6. | Use of the Premises; Hazardous Substances. |
6.1. Permitted Use. The Premises shall be used for the Permitted Use set forth in the Basic Lease Terms and for no other purpose without Landlord’s prior written consent which may be withheld in Landlord’s commercially reasonable discretion.
6.2. Compliance with Applicable Laws and Requirements. In connection with its use, Tenant (i) shall at its expense comply with the CC&Rs, all applicable laws, ordinances, regulations, codes and orders of any governmental or other public authority including without limitation, any and all Environmental Laws as defined in Paragraph 6.7.7 and the Americans with Disabilities Act of 1990 (collectively, together with any supplements or modifications thereto, “Applicable Laws”); (ii) shall create no nuisance nor allow any reasonably objectionable liquid, odor, or noise to be emitted from the Premises; (iii) shall store no gasoline or other highly combustible materials on the Premises which would violate any applicable fire code or regulation nor conduct any operation that shall increase Landlord’s fire insurance rates for the Premises, the Building or the Park; (iv) shall not invalidate or impair any roof warranty; (v) shall not overload the walls, ceilings floors or electrical circuits of the Premises or Building; (vi) shall not permit anything to be done in the Premises or elsewhere in the Building or the Park in any manner that causes injury to the Premises, the Building or the Park or any equipment, facilities or systems therein; and (vii) shall not allow any pets or animals on the Premises. Tenant, at Tenant’s sole cost and expense, shall obtain and maintain any and all permits and licenses required in order for Tenant to operate the Permitted Use in the Premises. Any power-driven machinery or equipment which Tenant proposes to install shall be subject to Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed; without limiting the foregoing, such consent may be conditioned upon Tenant retaining at Tenant’s sole cost and expense (A) a qualified electrician reasonably acceptable to Landlord and (B) a qualified engineer or architect reasonably acceptable to Landlord. Allowable ground floor load shall not exceed five hundred (500) pounds per square foot.
6.2.1. ADA/Code Compliance. Landlord represents to Tenant that upon completion of construction of the Building and the Landlord’s Work, the Building will be in compliance with Applicable Laws.
6.3. Storage. Without limiting the foregoing and subject to Paragraph 6.5, Tenant, at Tenant’s sole cost and expense, shall make such alterations and additions to the Premises and the Building required due to Tenant’s racking configuration and storage of products within the Premises and that are required by Applicable Laws. Such alterations and additions to the Premises may be required for compliance with applicable building and fire codes, and may include, without limitation, installation of fire rated separation walls, fire sprinkler system upgrades, racking sprinklers, smoke vents, curtain boards, small hose stations and firefighter entrances.
6.4. Signage. Tenant, at Tenant’s sole cost and expense, may erect a sign stating its name at the front face of the Building and/or on a monument sign after first securing Landlord’s written approval of the size, color, design, wording and location. All signage and the installation and maintenance thereof shall comply with all Applicable Laws, the CC&Rs and Landlord’s signage criteria for the Building and/or Park attached hereto as Exhibit C. No signs shall be painted on the Building or exceed the height of the Building. All signs installed by Tenant shall be removed, at Tenant’s sole cost and expense, upon expiration or earlier termination of this Lease with the sign location restored to its former state, reasonable wear and tear excepted.
6.5. Alterations. Other than the Tenant Improvements, Tenant shall make no further alterations, additions or improvements (sometimes referred to in this Paragraph collectively as “Alterations”) to the Premises without Landlord’s prior written consent per this Paragraph 6.5 as provided herein and without a valid building permit issued by the appropriate governmental agency, if applicable. Tenant shall submit to Landlord, for Landlord’s written approval, a written description of the Alterations that Tenant proposes to perform, all applications for permits for such Alterations (if any), detailed plans and specifications for Alterations constituting Major Alterations, and such other information regarding the intended Alterations as Landlord may reasonably require, and no request for Landlord’s consent to Alterations shall be deemed complete until such information is delivered. To the extent that any alterations, additions or improvements to the Premises constitute “Major Alterations” (as defined below), Landlord may withhold its consent in Landlord’s sole and absolute discretion; otherwise, Landlord’s consent to any alterations, additions or improvements to the Premises other than Major Alterations shall not be unreasonably withheld, conditioned or delayed. As used herein, “Major Alterations” shall mean any alterations, additions or improvements (i) which are visible from outside the Premises and/or Building (including design and aesthetic changes), and/or (ii) to the exterior of the Building, the roof of the Building, the heating, ventilation and/or air conditioning systems serving the Premises, the fire sprinkler, plumbing, electrical, mechanical and/or any other systems serving the Premises, any interior, load-bearing walls, the foundation and/or the slab of the Building. Tenant shall notify Landlord in writing at least fifteen (15) days prior to commencement of any work to enable Landlord to post a Notice of Non-Responsibility or other notice deemed proper before the commencement of work. Any and all such Alterations shall comply with all Applicable Laws including, without limitation, obtaining any required permits or other governmental approvals. In addition, all Alterations shall be performed only by licensed contractors and subcontractors and shall be performed in strict compliance with all permits (if any), any plans and specifications approved by Landlord, and all conditions to Landlord’s approval. Tenant shall cause its contractors and subcontractors to maintain insurance reasonably acceptable to Landlord. Upon termination of this Lease, any Alterations (including without limitation all electrical, lighting, plumbing, heating and air-conditioning equipment, doors, windows, partitions, drapery, carpeting, shelving, counters, and physically attached fixtures) made by Tenant shall at once become part of the realty and belong to Landlord unless the terms of the applicable consent provide otherwise, or Landlord requests that part or all of the Alterations be removed, which shall be provided by written notice to Tenant at least sixty (60) days before termination or expiration of this Lease. In such case, Tenant, at its sole cost and expense, shall promptly remove the specified Alterations and shall fully repair and restore the relevant portion(s) of the Premises to the condition in which Tenant is otherwise required to surrender the Premises under Paragraph 17.1. Notwithstanding the foregoing, Tenant shall not be required to remove or restore the initial improvements and alterations included in Landlord’s Work.
6.5.1. Notwithstanding anything herein to the contrary, Tenant shall have the right to make interior, non-structural Alterations not exceeding Two Thousand Five Hundred Dollars ($2,500.00) in the aggregate without Landlord’s consent. Tenant shall give Landlord written notice of any such Alterations at least fifteen (15) days prior to commencement of any work.
Page 8
6.6. Cabling. Tenant shall not install or cause to be installed any cabling or wiring (collectively, “Cabling”) without the prior written consent of Landlord as provided in Paragraph 6.5. Any installation of Cabling shall be performed pursuant to Paragraph 6.5, shall meet the requirements of the National Electrical Code (as may be amended from time to time), and shall comply with all Applicable Laws. On or prior to the expiration or earlier termination of this Lease, Tenant, at Tenant’s sole cost and expense, shall remove all Cabling so installed by or on behalf of Tenant unless Landlord, in its sole and absolute discretion, elects in writing to waive this requirement. Any Cabling removed by Tenant shall be disposed of by Tenant, at Tenant’s sole cost and expense, in accordance with all Applicable Laws.
6.7. Hazardous Substances.
6.7.1. Use of Hazardous Substances. Tenant shall not cause or permit any Hazardous Substances (as defined in Paragraph 6.7.7) to be spilled, leaked, disposed of or otherwise released on, under or about the Premises, the Outside Area or any other portion of the Park by Tenant, its employees, agents, contractors or invitees (each, a “Tenant Party”). Subject to the provisions of this Paragraph 6.7, (i) Tenant may use on the Premises only those Hazardous Substances typically used in the prudent and safe operation of the Permitted Use, and (ii) Tenant may store such Hazardous Substances on the Premises, but only in quantities necessary to satisfy Tenant’s reasonably anticipated needs. Notwithstanding the foregoing, in no event shall Tenant use any chlorinated solvents on or about the Premises, the Building, the Outside Area or the Park. In addition to complying with Paragraph 6.2, Tenant shall exercise the highest degree of care in the use, handling and storage of Hazardous Substances and shall take all reasonably practicable measures to minimize the quantity and toxicity of Hazardous Substances used, handled or stored on the Premises.
6.7.2. Notice of Release. Tenant shall notify Landlord, including delivery of notice by email with confirmation of transmission (in addition to delivery of notice as set forth in Paragraph 23.7), promptly upon becoming aware of the following: (i) any spill, leak, disposal or other release of any Hazardous Substances on, under or about the Premises, the Outside Area or any other portion of the Park; (ii) any notice or communication from a governmental agency or any other person relating to any Hazardous Substances on, under or about the Premises; or (iii) any violation of any Environmental Laws with respect to the Premises or Tenant’s activities on or in connection with the Premises.
6.7.3. Spills and Releases. In the event of a spill, leak, disposal or other release of any Hazardous Substances on, under or about the Premises, the Outside Area or any other portion of the Park caused by Tenant or a Tenant Party, Tenant shall (i) immediately undertake all emergency response necessary to contain, cleanup and remove the released Hazardous Substance(s), (ii) promptly undertake all investigatory, remedial, removal and other response action necessary or appropriate to ensure that any Hazardous Substances contamination is completely eliminated and all affected portions of the Premises, Outside Area and Park are returned to the condition that existed prior to the spill, leak, disposal or other release, all to Landlord’s reasonable satisfaction, and (iii) provide Landlord copies of all information and reports related to the Hazardous Substances and this event, including but not limited to all correspondence with any governmental agency regarding the release (or threatened or suspected release) or the response action, a detailed report documenting all such response action, and a certification that any contamination has been eliminated. All such response action shall be performed, all such reports shall be prepared and all such certifications shall be made by an environmental consultant reasonably acceptable to Landlord.
6.7.4. Investigations. If Landlord at any time during the Lease Term (including any holdover period) reasonably believes that Tenant or a Tenant Party is not complying with any of the requirements of this Paragraph 6.7, Landlord may require Tenant to furnish to Landlord, within thirty (30) days following Landlord’s request therefor, an environmental audit or any environmental assessment with respect to the matters of concern to Landlord. Such audit or assessment shall be prepared by a qualified consultant acceptable to Landlord. If the audit or assessment shows that Tenant is in compliance with the requirements of this Paragraph 6.7, Landlord shall pay for the cost thereof; otherwise, Tenant shall pay for the cost of the audit or assessment.
Page 9
6.7.5. Tenant’s Indemnification. Tenant shall indemnify, defend and hold harmless Landlord, its employees and agents, any persons holding a security interest in the Premises or any other portion of the Park, and the respective successors and assigns of each of them, for, from, against and regarding any and all claims, demands, liabilities, damages, fines, losses (including without limitation diminution in value and loss of use), costs (including without limitation the cost of any investigation, remedial, removal or other response action required by Environmental Laws) and expenses (including without limitation attorneys fees and expert fees incurred in obtaining advice and incurred at and in preparation for discovery, including depositions, arbitration, trial, appeal, petition for review, administrative proceeding and any litigation or other proceedings in bankruptcy court including those involving issues unique to bankruptcy law) arising out of or in any way relating to the use, treatment, storage, generation, transport, release, leak, spill, disposal or other handling of Hazardous Substances on, under or about the Premises or the Park by Tenant or any other Tenant Party. Landlord’s rights under this Paragraph 6.7.5 are in addition to and not in lieu of any other rights or remedies to which Landlord may be entitled under this Lease or otherwise. In the event any action is brought against Landlord by reason of any such claim, Tenant shall resist or defend such action or proceeding by counsel reasonably satisfactory to Landlord upon Landlord’s demand. The obligation to indemnify, defend and hold harmless shall include, without limitation, (A) reasonable costs incurred in connection with investigation of site conditions, (B) reasonable costs of any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision with respect to Hazardous Substances, (C) diminution in value of the Premises and/or any other portion of the Park, (D) damages arising from any adverse impact on marketing of space in the Building and/or any other portion of the Park, (E) reasonable sums paid in settlement of claims, attorneys fees, consultant and laboratory fees and expert fees, and (F) the value of any loss of the use of the Premises or any other portion of the Park or any part thereof. Tenant’s obligations under this Paragraph 6.7.5 shall survive the expiration or termination of this Lease for any reason.
6.7.6. Landlord’s Responsibility. If the Premises are or become contaminated by Hazardous Substances that are not brought to the Park, or spilled, leaked, released or disposed of, by Tenant or any Tenant Party, then Landlord shall promptly take or cause to be taken all legally required steps to remediate the same without reimbursement from Tenant.
6.7.7. Definitions. The term “Environmental Laws” shall mean any and all federal, state, or local laws, statutes, rules, regulations, ordinances, or judicial or administrative decrees or orders relating to: (i) health, safety or environmental protection; (ii) the emissions, discharges, releases or threatened releases of pollutants, contaminants or toxic or hazardous materials into the environment (including, without limitation, ambient air, surface water, ground water or subsurface strata); or (iii) the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of, or exposure to pollutants, contaminants or toxic or hazardous materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §9601 et seq. (“CERCLA”), as amended and judicially and administratively interpreted through the date hereof, and all regulations promulgated thereunder as of such date. The term “Hazardous Substance” (collectively, “Hazardous Substances”) shall mean: (A) any products, materials, solvents, elements, compounds, chemical mixtures, contaminants, pollutants, or other substances identified as toxic or hazardous under CERCLA or any other Environmental Laws; and (B) the following substances: PCBs, gasoline, kerosene or other petroleum products, toxic pesticides and herbicides, volatile and/or chlorinated solvents, materials containing asbestos or formaldehyde and radioactive materials.
| 7. | Utility Charges; Building Maintenance and Repairs. |
7.1. Utility Charges. Tenant shall pay when due all charges for electricity, natural gas, water, garbage collection, janitorial service, sewer, and all other utilities of any kind furnished to the Premises during the Lease Term. If charges are not separately metered, Landlord shall apportion the utility charges on an equitable basis, subject to Tenant’s reasonable review, and Tenant shall pay such charges to Landlord within thirty (30) days following receipt by Tenant of Landlord’s written statement for such charges. Landlord shall have no liability resulting from any interruption of utility services caused by fire or other casualty, strike, riot, vandalism, the making of necessary repairs or improvements, or any other cause beyond Landlord’s reasonable control. Tenant shall control the temperature in the Premises to prevent freezing of any sprinkler system.
7.1.1. Tenant understands that Landlord may be required under applicable law to obtain, input and disclose certain benchmarking data for the U.S. Environmental Protection Agency’s ENERGY STAR® Portfolio Manager. Landlord may also elect to voluntarily obtain, input and disclose such data. Accordingly, within ten (10) business days following written request therefor from Landlord (and thereafter as set forth below), Tenant will complete, execute and deliver to Landlord a data release authorization for each utility serving the Premises maintained in Tenant’s name or otherwise for the account of Tenant, in form and substance required by the relevant utility provider, permitting the relevant utility to disclose to Landlord Tenant’s monthly billing data, building square footage, occupancy type, and other information reasonably required for purposes of inputting the benchmarking data required by the U.S. Environmental Protection Agency’s ENERGY STAR® Portfolio Manager (the “Data Release Authorization”).
Page 10
7.2. Landlord’s Maintenance and Repairs.
7.2.1. Costs Not Included In Operating Expenses. Landlord’s maintenance, repair and replacement obligations which are paid by Landlord and not reimbursed by Tenant are set forth in this Paragraph 7.2.1. Except for those repairs for which Tenant is responsible pursuant to any provisions of this Lease, Landlord, at its own cost and expense, shall be responsible only for (i) roof replacement, (ii) repair and replacement of the foundation of the Building, (iii) repair and replacement of the structural elements of the Building, and (iv) storm drain and storm water discharge improvements. The terms “roof” and “walls” as used herein shall not include windows, glass or plate glass, doors, special store fronts or office entries.
7.2.2. Costs Included In Operating Expenses. Except for those repairs for which Tenant is responsible pursuant to any provisions of this Lease, Landlord is responsible for performing maintenance, repairs and replacements of (i) the exterior paved areas and curbs of the Outside Area, including but not limited to snow and ice removal, (ii) all landscaping of the Building and Outside Area, (iii) the exterior walls of the Building (including painting), gutters, downspouts and roof repairs, (iv) sprinkler systems and main sewage line(s) and (v) any other maintenance, repair or replacement items normally associated with the foregoing. The foregoing costs and expenses of such repair, replacement, maintenance and other such items shall be included as part of Operating Expenses and Tenant shall be responsible for paying its proportionate share thereof. The amount of Tenant’s rental obligation set forth in Paragraph 1.10 does not include the cost of such items and Landlord’s performance of repair, replacement, maintenance and other items, is not a condition to payment of such rental obligations.
7.2.3. Notice to Landlord. Tenant shall promptly give Landlord written notice of defect or need for repairs required pursuant to the terms of this Lease upon Tenant discovery of same, following the receipt of which Landlord shall promptly repair same or cure such defect. Landlord’s liability with respect to any defects, repairs, replacement or maintenance for which Landlord is responsible hereunder shall be limited to the cost of such repairs or maintenance or the curing of such defect, except to the extent Landlord’s failure to repair or cure the relevant item results in a default by Landlord under Paragraph 16 of this Lease.
7.2.4. Tenant’s Repair of Emergency Condition; Tenant’s Waiver. If Landlord’s failure to promptly repair as required under Paragraphs 7.2.1 and 7.2.2 following receipt by Landlord of Tenant’s notice as required above results in an emergency situation which threatens property damage or injury to persons, Tenant shall have the right, following telephonic notice to Landlord (which telephonic notice shall be followed by additional notice from Tenant to Landlord pursuant to Paragraph 23.7 as soon as reasonably practicable), to effect such repairs or other cure as is necessary (and only to the extent necessary) to cure the emergency condition. Landlord shall pay the out of pocket costs actually incurred by Tenant to effect such cure of the emergency condition within twenty (20) days following receipt by Landlord of an invoice therefor together with evidence in reasonable detail of the out of pocket costs actually incurred by Tenant to complete such repairs or other cure. If Tenant elects to make such repairs or other cure, Tenant shall fully complete such repairs or other cure in full compliance with all Applicable Laws and Landlord shall not be deemed to be in default under this Lease for Landlord’s nonperformance of such repairs or other cure. Except as provided in this Paragraph 7.2.4, Tenant waives any right now or hereafter granted by law to make any repairs which are the responsibility of Landlord upon Landlord’s failure to make such repairs.
7.3. Tenant’s Maintenance and Repairs. Tenant, at its own cost and expense, shall keep all parts of the Premises (except for those for which Landlord is expressly responsible hereunder) neatly maintained and in good condition and repair, ordinary wear and tear, casualty and condemnation excepted, and promptly make all necessary repairs and replacements (except for replacements by Landlord pursuant to Paragraph 7.2) to the Premises. Without limiting the generality of the foregoing, Tenant’s responsibility shall include (i) maintenance and repair of any portion of the electrical system which exclusively serves the Premises, above-slab plumbing, and all drainpipes and sewer line(s) exclusively serving and located within the Premises, (ii) maintenance, repair and replacement of overhead and personnel doors, (iii) replacement of all broken or cracked glass within or on the exterior of the Premises with glass of the same quality and type, and (iv) pest control and janitorial service. Tenant shall refrain from any discharge that will damage the septic tank or sewers serving the Premises. Tenant, at its own cost and expense, shall maintain and repair all hot water, heating, ventilation and air conditioning systems and equipment within the Premises (the “HVAC System”) pursuant to manufacturer’s guidelines as provided to Tenant by Landlord in writing. As of the Commencement Date, Tenant shall, at its sole cost and expense, contract with a reputable HVAC service contractor, approved by Landlord in its reasonable discretion (the “HVAC Contractor”), to perform not less than quarterly inspections and to perform routine maintenance and repairs of the HVAC System (the “HVAC Maintenance Contract”). Tenant shall provide a copy of the HVAC Maintenance Contract to Landlord within ten (10) business days after Landlord’s written request therefor. At all times throughout the Lease Term, Tenant shall be solely responsible for all costs for the quarterly inspections and routine maintenance associated with the HVAC Maintenance Contract and all maintenance and repairs performed on the HVAC System, including replacement of all or any portion thereof, except to the extent caused by the negligence or willful misconduct of Landlord or any other tenant. If the Premises have a separate building entrance, Tenant shall keep the sidewalks abutting the Premises and the separate entrance free and clear of snow, ice, debris, and obstructions of every kind. Tenant shall be responsible for all repairs and alterations in and to the Premises, the Building and the Park and the facilities and systems thereof, to the extent that the need for which arises out of the performance or existence of any alterations made by Tenant; or the act, omission, misuse or neglect of Tenant, a Tenant Party, Tenant’s subtenants or its subtenant’s employees, agents or contractors. Tenant shall promptly make all repairs in or to the Premises, the Building or the Park for which Tenant is responsible.
Page 11
7.4. Security. Tenant acknowledges and agrees that Tenant is responsible for securing the Premises and that Landlord does not and shall not be obligated to provide any police personnel or other security services or systems for any portion of the Premises, Building, Outside Area and/or Park. Tenant shall be permitted to install, at Tenant’s sole cost and expense, its own security system to the Premises, subject to the provisions of Paragraph 6.5.
7.5. Access to Premises; Interference. Provided that Landlord gives Tenant reasonable notice (but in no event less than one (1) business day), Landlord shall have access to the Premises at times throughout the Lease Term to perform repairs and maintenance required under this Lease and to perform any other alterations or improvements which Landlord deems necessary in its reasonable discretion (“Landlord’s Future Work”). Landlord and Tenant agree to communicate and reasonably cooperate with each other with respect to the performance of Landlord’s Future Work such that Landlord is able to perform Landlord’s Future Work economically and efficiently without unreasonable disruption to Tenant’s continuing operations in the Premises. However, Tenant understands that Landlord may be performing Landlord’s Future Work during business hours and that Landlord’s Future Work may be performed in and around the exterior of the Premises and in the Premises. Accordingly, notwithstanding any provision to the contrary contained in this Lease and provided that Landlord’s Future Work is performed in a reasonable manner, Landlord and Landlord’s contractors, agents and employees shall have all access and other rights reasonably required in order to perform and complete Landlord’s Future Work. Such performance and completion of Landlord’s Future Work shall in no way constitute constructive eviction of Tenant from any portion of the Premises nor shall Tenant be entitled to abatement or reduction of Base Rent, Additional Rent or other charges payable by Tenant under this Lease as a result thereof. Except to the extent caused by negligence or willful misconduct, Landlord shall have no liability for interference with Tenant’s use when making alterations, improvements or repairs to the Premises, Building, Outside Area or the Park. Notwithstanding the foregoing, if Landlord seeks entry into the Premises for any party other than Landlord and/or its employees or contractors, if Tenant reasonably determines that one or more of the persons for which entry is sought is in Tenant’s reasonable and good faith judgment deemed to be a business competitor of Tenant or otherwise objectionable, then entry of such persons shall be prohibited. Further, Tenant may elect to require that entry by anyone other than Landlord or Landlord’s employees or contractors may be subject to execution of a reasonable nondisclosure agreement to be provided to Landlord by Tenant.
| 8. | Taxes and Operating Expenses. |
8.1. Payments. Commencing on the Commencement Date (subject to Paragraph 3) and thereafter in advance on the first day of each month during the Lease Term, Tenant shall pay a monthly sum as Additional Rent representing Tenant’s proportionate share of Taxes and Operating Expenses for the Premises. Such amount shall annually be estimated by Landlord in good faith to reflect actual or anticipated costs. Upon termination of this Lease or at periodic intervals during the Lease Term, Landlord shall compute its actual costs for such items during the relevant period and shall furnish Tenant with a statement in reasonable detail showing such items. Any overpayment by Tenant shall be credited against payments of Additional Rent to be made by Tenant under this Lease, and any deficiency shall be paid by Tenant within thirty (30) days after receipt of Landlord’s statement. Landlord’s books and records of expenses for Taxes and Operating Expenses may be inspected by Tenant or a third party auditor not more than one (1) time per annum at reasonable times upon thirty (30) days prior written notice to Landlord; provided, however, that Tenant shall not retain any third party auditor on a contingency fee basis to perform any such audit or inspection.
8.2. Tenant’s Proportionate Share. Tenant’s proportionate share of Taxes shall mean that percentage which the Premises Area set forth in the Basic Lease Terms bears to the total rentable square footage of all buildings covered by the tax statement for the Taxes. Tenant’s proportionate share of Operating Expenses for the Building shall be computed by dividing the Premises Area by the total rentable area of the Building. If in Landlord’s reasonable judgment either of these methods of allocation results in an inappropriate allocation to Tenant, Landlord shall select some other reasonable method of determining Tenant’s proportionate share.
Page 12
8.3. Taxes Charged. As used herein, “Taxes” means all taxes, assessments and/or governmental charges of any kind and nature assessed against the Premises, the Building or the Park during the Lease Term and shall include all general real property taxes, all general and special assessments payable in installments, and any rent tax, tax on Landlord’s interest under this Lease, or any tax in lieu of the foregoing, whether or not any such tax is now in effect. The Taxes shall be allocated to the buildings in the Park on a proportionate basis of rentable square feet. Landlord shall have the right to employ a tax consulting firm to attempt to assure a fair tax burden on the Building and grounds within the applicable taxing jurisdiction, and Tenant agrees to pay its proportionate share (calculated in the same manner as Tenant’s proportionate share of Taxes) of the cost of such consultant. Tenant shall not, however, be obligated to pay any tax based upon Landlord’s net income. In addition, Tenant shall be liable for all taxes levied or assessed against any personal property or fixtures placed by Tenant in the Premises. If any such taxes are levied or assessed against Landlord or Landlord’s property and (i) Landlord pays the same or (ii) the assessed value of Landlord’s property is increased by inclusion of such personal property and fixtures and Landlord pays the increased taxes, then, within thirty (30) days following receipt by Tenant of a copy of the applicable tax bill with Landlord’s written request for payment thereof, Tenant shall pay to Landlord such taxes as part of Tenant’s payment of Taxes.
8.4. Operating Expenses. “Operating Expenses” charged to Tenant hereunder shall mean all costs incurred by Landlord in connection with owning, operating, insuring, maintaining, repairing and replacing the Premises, Building, and all other portions of the Park or Outside Area (allocated to the Building on a proportionate basis) including, without limitation, the cost of all utilities or services not paid directly by Tenant, property insurance, liability insurance, property management, maintenance, repair and replacement of landscaping, parking areas, and any other common facilities, and performing Landlord’s obligations under Paragraph 7.2.2. Operating Expenses shall include without limitation, the following: (i) reserves for roof repair, exterior painting and other appropriate reserves; (ii) the cost, including interest at eight percent (8%) per annum, amortized over its useful life, of any capital improvement made to any portion of the Park by Landlord after the Effective Date of this Lease which is required under any Applicable Laws that were not applicable to the relevant portion of the Park at the time the relevant portion of the Park was constructed; (iii) the cost, including interest at eight percent (8%) per annum, amortized over its useful life, of installation of any device or other equipment which improves the operating efficiency of any system within the Park and thereby reduces Operating Expenses; (iv) maintenance, repair and replacement items which have a reasonable life expectancy in excess of five (5) years and which, if charged to Operating Expenses in one (1) year, would unreasonably distort total Operating Expenses for that year and therefore the cost thereof is being spread over the reasonable life expectancy of the work performed; (v) a management fee equal to three percent (3%) of the sum of Base Rent, Operating and Taxes paid by Tenant under this Lease; and (vi) costs associated with the Park Expenses for the Association. Operating Expenses shall not include roof replacement, correction of the Building foundation and/or correction of deficiencies in structural elements of the Building.
| 9. | Parking; Off-Site Parking and Storage Areas. |
9.1. Parking. Subject to the provisions of this Paragraph 9.1, Tenant, its employees, agents, contractors and invitees shall have the non-exclusive right to use the common driveways and truck court areas located in the Outside Area, subject to the parking rights and rights of ingress and egress of other occupants. In addition, Tenant, its employees, agents, contractors and invitees shall have the exclusive right to use up to ten (10) reserved and labeled parking spaces and the non-exclusive right to use up to sixty-three (63) parking spaces in that portion of the parking area more particularly shown on the attached Exhibit A-1. Additional parking spaces may be provided in the loading area of the Building. Other than as provided in this Paragraph 9.1, Tenant’s parking shall not be reserved and shall be limited to vehicles no larger than standard size automobiles, or standard size pickups or sport utility vehicles. Under no circumstances shall overnight parking be allowed, nor shall trucks, trailers or other large vehicles serving the Premises (i) be used for any purpose other than for the loading and unloading of goods and materials or (ii) be permitted to block streets and/or ingress and egress to and from the Park. Temporary parking of large delivery vehicles in the Park may be permitted only with Landlord’s prior written consent. Vehicles shall be parked only in striped parking spaces and not in driveways, loading areas or other locations not specifically designated for parking. Handicapped spaces shall only be used by those legally permitted to use them. Pursuant to Paragraph 1.6 of this Lease, Landlord reserves the right to grant parking rights (exclusive and otherwise) within the relevant portions of the Outside Area to occupants of the Park, provided that Tenant’s rights under this Paragraph 9.1 and this Lease shall not be impaired.
9.1.1. Off-Site Parking. Effective starting on the date which is the eighteen (18) full calendar months following the Commencement Date, Tenant shall have the option to lease an additional one hundred twenty (120) parking spaces in the parking area shown on Exhibit A-2 at a rate of Five Thousand and No/100 Dollars ($5,000.00) per month for the first twelve (12) full calendar months, which rental amount will increase by three percent (3%) on each anniversary of the first day of the first full calendar month after which Tenant elects to lease such parking spaces. If Tenant exercises its option to lease the additional parking spaces, Landlord and Tenant shall memorialize the agreement through a separate license agreement.
Page 13
9.2. Storage Areas. Tenant shall not store any materials, supplies or equipment outside the Premises in any unapproved or unscreened area. If Tenant erects any visual barriers for storage areas, Landlord shall have the right to approve the design and location, which approval may be withheld or conditioned in Landlord’s sole and absolute discretion and all of which shall be removed upon the expiration or earlier termination of this Lease as and if required by Landlord prior to the termination or expiration date. For the avoidance of doubt, docking or loading of vehicles will not constitute a visual barrier or a default under this Paragraph 9.2. Trash and garbage receptacles shall be kept covered at all times.
| 10. | Tenant’s Indemnification. |
** **
Except to the extent caused by Landlord’s gross negligence or willful misconduct, Tenant shall indemnify, defend and hold harmless Landlord for, from, against and regarding any claims, losses, liabilities, damage, causes of action, demands and costs and expenses (including attorneys’ fees) arising from or related to (i) Tenant’s use of the Premises; (ii) any injury to any person or for the loss of or damage to any property (including Tenant’s property) occurring in or about the Premises from any cause whatsoever, except to the extent caused by Landlord’s gross negligence or willful misconduct; (iii) any negligent or willful act or omission of Tenant or a Tenant Party; or (iv) any failure by Tenant to perform any material obligation under this Lease. In the event any action is brought against Landlord by reason of any such claim, Tenant shall resist or defend such action or proceeding by counsel satisfactory to Landlord upon Landlord’s demand. Landlord shall have no liability to Tenant for any injury, loss or damage caused by third parties, or by any condition of the Premises. The obligations under this Paragraph 10 shall survive termination of this Lease.
| 11. | Insurance; Waiver of Subrogation. |
11.1. Landlord. Landlord shall keep the Premises insured against fire and other risks covered by a “Causes of Loss-Special Form” property insurance policy and against such other losses (including, without limitation earthquake, earth movement and flood) in Landlord’s commercially reasonable discretion.
11.2. Tenant. Tenant shall keep all of Tenant’s property on the Premises, and all improvements, alterations and other betterments installed by Tenant, insured against fire and other risks covered by a “Causes of Loss - Special Form” property insurance policy in an amount equal to the replacement cost of such property, the proceeds of which shall, so long as this Lease is in effect, be used for the repair or replacement of the property so insured. Tenant shall also carry commercial general liability insurance written on an occurrence basis with policy limits of not less than Two Million and No/100 Dollars ($2,000,000.00) each occurrence, which initial amount shall be subject to periodic increase based upon inflation, increased liability awards, recommendation of Landlord’s professional insurance advisers and other relevant factors, provided reasonable notice of any changes is provided to Tenant to identify and procure such additional coverage. In addition, if Tenant’s use of the Premises includes any activity or matter that would be excluded from coverage under a commercial general liability policy, Tenant shall obtain such endorsements to the commercial general liability policy or otherwise obtain insurance to insure all liability arising from such activity or matter in such amounts as Landlord may reasonably require. Such commercial general liability insurance shall be (i) provided by an insurer or insurers who are approved to issue insurance policies in the State in which the Premises are located and have an A.M. Best financial strength rating of A- or better and financial size category of VII or larger, and (ii) shall be evidenced by a certificate delivered to Landlord on or prior to the Commencement Date and annually thereafter stating that the coverage shall not be cancelled or materially altered without thirty (30) days advance written notice to Landlord. Landlord shall be named as an additional insured on such policy together with, upon written request from Landlord, Landlord’s mortgagee and Landlord’s managing agent. All insurance policies required to be carried by Tenant hereunder shall be written as primary policies not contributing with and not in excess of coverage which Landlord may carry and shall not have a deductible in excess of a commercially reasonable amount.
11.3. Waiver of Subrogation. Landlord and Tenant each hereby releases the other, and the other’s partners, officers, directors, members, agents and employees, from any and all liability and responsibility to the releasing party and to anyone claiming by or through it or under it, by way of subrogation or otherwise, for all claims or demands whatsoever which arise out of damage or destruction of the releasing party’s property to the extent of insurance proceeds received by the releasing party from insurance required to be carried hereunder (or which would have been received had such party complied with such requirements) or, if greater, the proceeds actually received from all insurance maintained by the releasing party. Landlord and Tenant grant this release on behalf of themselves and their respective insurance companies and each represents and warrants to the other that it is authorized by its respective insurance company to grant the waiver of subrogation contained in this Paragraph 11.3. This release and waiver shall be binding upon the parties whether or not insurance coverage is in force at the time of the loss or destruction of property referred to in this Paragraph 11.3.
Page 14
| 12. | Property Damage. |
12.1. Notice; Total Destruction. Tenant shall immediately give written notice to Landlord if the Premises or the Building are damaged or destroyed. If the Premises or the Building should be totally destroyed or so damaged by an insured peril in an amount exceeding thirty percent (30%) of the full construction replacement cost of the Building or Premises, respectively (as used herein, the “Damage Threshold”), Landlord may elect to terminate this Lease as of the date of the damage by notice of termination in writing to Tenant within thirty (30) days after such date, in which event all unaccrued rights and obligations of the parties under this Lease shall cease and terminate except to the extent such obligations specifically survive termination of this Lease.
12.2. Partial Destruction. If the Building or the Premises should be damaged by an insured peril which does not meet the Damage Threshold, or if damage or destruction meeting the Damage Threshold occurs but Landlord does not elect to terminate this Lease, this Lease shall not terminate and Landlord shall restore the Premises to substantially its previous condition, except that Landlord shall not be required to rebuild, repair or replace any part of the partitions, fixtures, alterations, additions and other improvements required to be covered by Tenant’s insurance pursuant to Paragraph 11.2. If the Premises are untenantable in whole or part during the period commencing upon the date of the occurrence of such damage and ending upon substantial completion of Landlord’s required repairs or rebuilding, Base Rent shall be reduced during such period to the extent the Premises are not reasonably usable by Tenant for the Permitted Use.
12.3. Damage Near End of Lease Term. If the damage to the Premises or Building occurs during the last twelve (12) months of the Lease Term in an amount exceeding twenty-five percent (25%) of the full construction replacement cost of the Building or Premises, respectively, either Landlord or Tenant may elect to terminate this Lease as of the date the damage occurred, regardless of the sufficiency of any insurance proceeds. The party electing to terminate this Lease shall give written notification to the other party of such election within thirty (30) days after Tenant’s notice to Landlord of the occurrence of the damage, in which event all unaccrued rights and obligations of the parties under this Lease shall cease and terminate except to the extent such obligations specifically survive termination of this Lease.
12.4. Repair of Damage. All repairs made by Landlord pursuant to this Paragraph 12 shall be accomplished as soon as is reasonably possible, subject to force majeure as described in Paragraph 23.1. The repair and restoration of the Premises shall be made pursuant to plans and specifications developed by Landlord in Landlord’s commercially reasonable discretion and judgment, and such plans and specifications shall exclude all equipment, fixtures, improvements and alterations installed by Tenant. All insurance proceeds for repairs shall be payable solely to Landlord, and Tenant shall have no interest therein. Nothing herein shall be construed to obligate Landlord to expend monies in excess of the insurance proceeds received by Landlord. Landlord shall be responsible for the insurance deductible, unless the loss is caused by Tenant or Tenant’s agents, employees, officers or representatives, in which case, and notwithstanding the provisions of Paragraph 11.3, Tenant shall be responsible for the amount of the deductible.
12.5. Other Damage. If the Premises or the Building is substantially or totally destroyed by any cause whatsoever which is not covered by the foregoing provisions of this Paragraph 12, this Lease shall terminate as of the date the destruction occurred; provided, however, that if the damage does not exceed thirty percent (30%) of the full construction replacement cost of the Building or Premises respectively, Landlord may elect (but will not be required) to rebuild the Premises at Landlord’s own expense, in which case this Lease shall remain in full force and effect. Landlord shall notify Tenant of such election within thirty (30) days after the casualty.
| 13. | Condemnation. |
13.1. Partial Taking. If a portion of the Premises is condemned and access to the Premises or Tenant’s use or occupation of the Premises is not materially adversely affected and Paragraph 13.2 does not apply, this Lease shall continue on the following terms:
13.1.1. Landlord shall be entitled to all of the proceeds of condemnation, and Tenant shall have no claim against Landlord as a result of the condemnation; provided, Tenant shall receive any portion relating to Tenant’s personal property, leased personal property, intellectual property, and improvements.
Page 15
13.1.2. Landlord shall proceed as soon as reasonably possible to make such repairs and alterations to the Premises as are necessary to restore the remaining Premises to a condition as comparable as reasonably practicable to that existing at the time of condemnation. Landlord need not incur expenses for restoration in excess of the amount of condemnation proceeds received by Landlord after payment of all reasonable costs, expenses and attorneys’ fees incurred by Landlord in connection therewith.
13.1.3. Base Rent and Operating Expenses shall be proportionately abated during the period of restoration to the extent the Premises are not reasonably usable or accessible by Tenant for the Permitted Use pursuant to Paragraph 6.1, and Base Rent shall be reduced (and Operating Expenses appropriately adjusted) for the remainder of the Lease Term in an amount equal to the reduction in rental value of the Premises caused by the taking.
13.2. Total Taking. If a condemning authority takes the entire Premises or a portion sufficient to render the remainder unsuitable for Tenant’s use or makes it otherwise reasonably inaccessible, then either party may elect to terminate this Lease effective on the date that title passes to the condemning authority. Landlord shall be entitled to all of the proceeds of condemnation, and Tenant shall have no claim against Landlord as a result of such condemnation; provided, however, that Tenant shall have the right to pursue a separate award for Tenant’s personal property, leased personal property, intellectual property, and improvements so long as the same does not reduce the award otherwise payable to Landlord.
| 14. | Assignment, Subletting and Other Transfers. |
14.1. General. Neither this Lease nor any part of the Premises may be assigned, mortgaged, or subleased, nor may a right of use of any portion of the Premises be conferred on any person or entity by any other means, without the prior written consent of Landlord which shall not be unreasonably withheld, conditioned or delayed so long as there is no existing default under this Lease but which may be issued subject to reasonable conditions. A change of ownership of fifty-one percent (51%) or more of ownership interests in Tenant shall be deemed an assignment. Prior to effectuating any assignment, or sublease, Tenant shall notify Landlord in writing of the name and address of the proposed transferee, and deliver to Landlord with such notice a true and complete copy of the proposed assignment agreement, sublease or other occupancy agreement, current financial statements of such proposed transferee, a statement of the use of the Premises by such proposed transferee and such other information or documents as may be reasonably appropriate to enable Landlord to determine the qualifications of the proposed transferee together with a request that Landlord consent thereto (“Tenant’s Notice”). Without limiting Landlord’s ability to deny or condition consent for any other reason, it shall not be considered unreasonable if Landlord’s consent to a proposed sublease, assignment or other transfer is denied based on the following: (i) the business of the proposed transferee (A) is not compatible with the nature and character of the Park or the businesses in the Park, in Landlord’s reasonable discretion, and/or (B) will conflict with any exclusive uses or use restrictions that Landlord has granted to other occupants of the Park, (ii) the financial strength of the proposed transferee is not at least equal to the financial strength of Tenant either at the time Tenant entered into this Lease or at the time of the proposed transfer, (iii) the proposed transferee will excessively overpark the Building and/or the Park with automobiles or trucks (excessively overpark shall mean that the proposed transferee’s parking will violate local parking restrictions or will interfere with other tenants occupying the Building or the Park), (iv) the proposed transferee cannot demonstrate to Landlord’s reasonable satisfaction the management skills or experience necessary, in Landlord’s reasonable opinion, to be successful in the Premises, (v) the proposed transferee has a record of environmental contamination or their anticipated use of the Premises involves the generation, storage, use, sale, treatment, release or disposal of any Hazardous Substances, or (vi) the proposed form of sublease, assignment or other occupancy agreement is unacceptable in Landlord’s reasonable discretion where an unacceptable form of sublease, assignment or other occupancy agreement shall mean that the content and format of the form are not consistent with the terms of this Lease or the CC&Rs or are not consistent with the terms and requirements of Landlord’s loan documents for the Building). Any attempted assignment, or subletting, or encumbrance by Tenant in violation of the terms and covenants of this Paragraph 14.1 shall be void.
14.2. No Release; Excess Rent. No assignment, subletting or other transfer, whether consented to by Landlord or not, or permitted hereunder, shall relieve Tenant of its liability under this Lease. If an event of default occurs while the Premises or any part thereof are assigned, sublet or otherwise transferred, then Landlord, in addition to any other remedies herein provided, or provided by law, may collect directly from such assignee, sublessee or transferee all rents payable to Tenant and apply such rent against any sums due Landlord hereunder. No such collection shall be construed to constitute a novation or a release of Tenant from the further performance of Tenant’s obligations hereunder. If Tenant assigns or otherwise transfers this Lease or sublets the Premises for an amount in excess of the rent called for by this Lease, one-half (1/2) of Excess Consideration (as defined below) shall be paid to Landlord within ten (10) days following receipt by Tenant. As used herein, “Excess Consideration” means all rents or other sums received by Tenant under any such assignment, subletting or other transfer which are in excess of the rents and other sums payable by Tenant under this Lease after deduction therefrom for reasonable costs actually paid by Tenant for additional improvements installed in the portion of the Premises subject to such assignment, subletting or other transfer by Tenant at Tenant’s sole cost and expense for the specific assignee, sublessee or other transfer in question and reasonable leasing commissions paid by Tenant in connection with such assignment, subletting or other transfer, without deduction for carrying costs due to vacancy or otherwise.
Page 16
| 15. | Tenant Default. |
15.1. Default. Any of the following shall constitute a default by Tenant under this Lease:
15.1.1. Tenant’s failure to (i) pay rent or any other charge under this Lease within ten (10) days after it is due or (ii) promptly cure or remove any lien pursuant to Paragraph 19 or (iii) except as provided in Paragraphs 15.1.2 through 15.1.4, comply with any other term or condition within thirty (30) days following written notice from Landlord specifying the noncompliance. If any failure described in clause (iii) of the immediately preceding sentence cannot be cured within the thirty (30)-day period, this provision shall be deemed complied with so long as Tenant commences correction within such period and thereafter proceeds in good faith and with reasonable diligence to effect the remedy as soon as practicable.
15.1.2. Tenant’s insolvency; assignment for the benefit of its creditors; Tenant’s voluntary petition in bankruptcy or adjudication as bankrupt; attachment of or the levying of execution on the leasehold interest and failure of Tenant to secure discharge of the attachment or release of the levy of execution within sixty (60) days; or the appointment of a receiver for Tenant’s properties.
15.1.3. Abandonment of the Premises by Tenant.
15.1.4. Failure of Tenant to deliver the documents or agreements required under Paragraph 18.1 within thirty (30) days following written notice from Landlord identifying the failure to deliver.
15.2. Remedies for Default. For any default as described in Paragraph 15.1, Landlord shall have the right to pursue any one (1) or more of the following remedies in addition to all other rights or remedies provided herein or at law or in equity, without any notice or demand, except as set forth below, of any kind or nature whatsoever to Tenant or to any other party liable, in whole or in part, for the performance of Tenant’s obligations under this Lease:
15.2.1. Terminate this Lease and/or Tenant’s right to possession of the Premises and Tenant’s other rights under this Lease by ten (10) days’ written notice to Tenant without relieving Tenant from its obligation to pay damages.
15.2.2. Re-enter and take possession of the Premises and remove any persons or property by legal action or by self-help with the use of reasonable force and without liability for damages and without having accepted a surrender. Tenant’s liability to Landlord for damages shall survive the tenancy. Landlord may, after such retaking of possession, relet the Premises upon any reasonable terms. No such reletting shall be construed as an acceptance of a surrender of Tenant’s leasehold interest.
15.2.3. In the event of termination or retaking of possession following default, Landlord shall be entitled to recover immediately, without waiting until the due date of any future rent or until the date fixed for expiration of the Lease Term, the following amounts as damages:
(i) The loss of rental from the date of default until a new tenant is secured and paying rent.
(ii) The reasonable costs of reentry and reletting including without limitation the reasonable costs of any cleanup, refurbishing, removal and disposal of Tenant’s property and fixtures, or any other expense occasioned by Tenant’s default including but not limited to remodeling or repair costs, attorney fees, court costs, broker commissions, and marketing costs.
(iii) Any excess of the value of the rent and all of Tenant’s other obligations under this Lease over the reasonable expected return from the Premises for the period commencing on the earlier of the date of trial or the date the Premises are relet, and continuing through the end of the Lease Term. The present value of future amounts shall be computed using a discount rate equal to the prime loan rate in effect on the date of trial of major national banks who are members of the Federal Reserve System, insured by the Federal Deposit Insurance Corporation and are located in the State in which the Premises are located.
15.3. No Bar of Action(s). Landlord may sue periodically to recover damages during the period corresponding to the remainder of the Lease Term, and no action for damages shall bar a later action for damages subsequently accruing.
Page 17
15.4. Landlord Performance. If Tenant fails to perform any obligation under this Lease, Landlord shall have the option to do so after thirty (30) days written notice to Tenant or upon shorter notice in an emergency situation. Landlord’s reasonable expenditures incurred in connection with such performance shall be reimbursed by Tenant within thirty (30) days of Tenant’s receipt of a written invoice detailing such costs. Such action by Landlord and any reimbursement by Tenant shall not waive any default or any other remedies available to Landlord because of the default.
15.5. No Exclusion. The foregoing remedies shall be in addition to and shall not exclude any other remedy available to Landlord at law or in equity.
| 16. | Landlord Default. |
Landlord shall be in default under this Lease if it shall fail to comply with any term, provision or covenant of this Lease and shall not cure such failure within thirty (30) days after written notice thereof to Landlord unless such cure cannot reasonably be accomplished within such thirty (30)-day period. Landlord shall have such additional time as is reasonably necessary to accomplish such cure provided Landlord promptly commences and diligently prosecutes such cure to completion.
| 17. | Surrender at Expiration or Termination. |
17.1. Surrender. On expiration or early termination of this Lease, Tenant shall deliver all keys to Landlord, have final utility readings made and pay all utility accounts current on the date of move out, and surrender the Premises clean and free of debris inside and out, with all mechanical, electrical, and plumbing systems in good operating condition, all signage removed and defacement corrected, reasonable wear and tear excepted, and all repairs called for under this Lease completed. The Premises shall be delivered in the same condition as at the Commencement Date, subject only to damage by casualty, condemnation, the provisions of Paragraphs 6.5, 6.6, 9.2 and 17.2 and depreciation and wear from ordinary use. Tenant shall remove all of its furnishings and trade fixtures that remain its property and restore all damage resulting from such removal. Failure to remove said property within ten (10) days of termination of this Lease shall be an abandonment of same, and Landlord shall have the absolute right to deem the same to be without value and to remove and/or dispose of it in any manner whatsoever without liability, and Tenant shall be liable to Landlord for any costs of removal, restoration, transportation to storage, storage and/or disposal, with interest on all such expenses as provided in Paragraph 23.2. The provisions of this Paragraph 17.1 (including, without limitation, all provisions referenced herein) shall survive the expiration or earlier termination of this Lease. Notwithstanding anything in this Paragraph 17.1 or any other provision of this Lease to the contrary, Tenant shall not be required to remove or restore any alterations or improvements included in Landlord’s Work.
17.2. Removal of Hazardous Substances. Upon expiration of this Lease or sooner termination of this Lease for any reason, Tenant shall remove all Hazardous Substances and facilities used for the storage or handling of Hazardous Substances from the Premises and restore the affected areas by repairing any damage caused by the installation or removal of the facilities. Following such removal, Tenant shall certify in writing to Landlord that all such removal is complete. Until such time as Tenant has fulfilled all the requirements of this Paragraph 17.2 (in addition to any other requirements), Landlord may treat Tenant as a holdover Tenant as provided below; provided, however, that any such continuation of this Lease shall not relieve Tenant of its obligations under this Paragraph 17.2.
17.3. Failure to Vacate. If Tenant fails to vacate the Premises when required and holds over without Landlord’s prior written consent, Landlord may elect either (i) to treat Tenant as a tenant from month to month, subject to all provisions of this Lease except the provision for Lease Term and at a rental rate equal to one hundred twenty-five percent (125%) of the Base Rent payable by Tenant immediately preceding the scheduled expiration of the Lease Term plus Additional Rent, or (ii) to treat Tenant as a tenant at sufferance, eject Tenant from the Premises and recover damages caused by wrongful holdover including, without limitation, as set forth in Paragraph 17.4. Failure of Tenant to remove furniture, furnishings, cabling or other telecommunications equipment, or trade fixtures which Tenant is required to remove under this Lease shall constitute a failure to vacate to which this Paragraph 17.3 shall apply if such property not removed substantially interferes with occupancy of the Premises by another tenant or with occupancy by Landlord for any purpose including preparation for a new tenant. If a month-to-month tenancy results from a holdover by Tenant under this Paragraph 17.3, the tenancy shall be terminable upon thirty (30) days written notice from Landlord. Tenant waives any notice that would otherwise be provided by law with respect to a month-to-month tenancy.
Page 18
17.4. Indemnification. Tenant acknowledges that, if Tenant holds over without Landlord’s consent as provided above, such holding over may compromise or otherwise affect Landlord’s ability to enter into new leases with prospective tenants regarding the Premises and/or the Building. Therefore, if Tenant fails to surrender the Premises upon the expiration or other termination of this Lease, then, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless for, from, against and regarding any and all obligations, losses, claims, actions, causes of action, liabilities, penalties, damages (including consequential damages), costs and expenses (including reasonable attorneys and consultants fees and expense) resulting from such failure including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender and any lost profits to Landlord resulting therefrom. The provisions of this Paragraph 17.4 are in addition to, and do not affect, Landlord’s right to re-entry or other rights hereunder or provided by law. Tenant’s obligations under this Paragraph 17.4 shall survive the expiration or earlier termination of this Lease.
| 18. | Mortgage or Sale by Landlord; Estoppel Certificates. |
18.1. Priority. This Lease is and shall be prior to any mortgage or deed of trust (“Encumbrance”) recorded after the Effective Date of this Lease and affecting the Building and the land upon which the Building is located. However, if any lender holding an Encumbrance secured by the Building and the land underlying the Building requires that this Lease be subordinate to the Encumbrance, then Tenant agrees that this Lease shall be subordinate to the Encumbrance if the holder thereof agrees in writing with Tenant that no foreclosure, deed given in lieu of the foreclosure, or sale pursuant to the terms of the Encumbrance, or other steps or procedures taken under the Encumbrance shall affect Tenant’s right to quiet possession of the Premises so long as Tenant pays rent and timely observes and performs all of the provisions of this Lease. If the foregoing condition is met, Tenant agrees to execute a commercially reasonable written non-disturbance agreement.
18.2. Attornment. If the Building is sold as a result of foreclosure of any Encumbrance thereon or otherwise transferred by Landlord or any successor, Tenant shall attorn to the purchaser or transferee, and the transferor shall have no further liability hereunder.
18.3. Estoppel Certificate. Tenant shall within thirty (30) days after notice from Landlord execute and deliver to Landlord a certificate stating whether or not this Lease has been modified and is in full force and effect and specifying any modifications or alleged breaches by the other party. The certificate shall also state the amount of Base Rent and Additional Rent, the amount of the Security Deposit (if any), the amount of any prepaid Base Rent and Additional Rent and any other factual information reasonably requested by Landlord. Failure to deliver the certificate within the specified time shall be conclusive upon Tenant that this Lease is in full force and effect and has not been modified except as may be represented by Landlord.
| 19. | Liens. |
Tenant shall keep the Premises free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant and shall indemnify, defend and hold Landlord harmless for, from, against and regarding all claims, costs and liabilities, including attorneys’ fees and costs, in connection with or arising out of any such lien or claim of lien.
| 20. | Attorneys’ Fees; Waiver of Jury Trial. |
In the event that any party shall bring an action to enforce its rights under this Lease, the prevailing party in any such proceeding shall be entitled to recover its reasonable attorneys, witness and expert fees and costs of the proceeding incurred at and in preparation for discovery (including depositions), arbitration, trial, appeal and review, and also any litigation or other proceedings in bankruptcy including those involving issues unique to bankruptcy law. For purposes hereof, the reasonable fees of Landlord’s in-house attorneys or Tenant’s in-house attorneys, as the case may be, who perform services in connection with any such enforcement action are recoverable, and shall be based on the fees regularly charged by private attorneys with the equivalent number of years of experience in the relevant subject matter area of the law, in law firms in Salem, Oregon with approximately the same number of attorneys as are employed by Landlord’s Law Department or Tenant’s Law Department, as the case may be. The provisions of this Paragraph 20 are separate and severable and shall survive a judgment on this Lease. Disputes between the parties which are to be litigated shall be tried before a judge without a jury.
| 21. | Limitation on Liability; Transfer by Landlord. |
21.1. Property and Assets. Tenant shall look solely to the property and assets of Landlord for the payment of any claim against Landlord or for the performance of any obligation of Landlord; neither the joint venturers, general partners, limited partners, members, employees, nor agents (as the case may be) of Landlord shall have any personal liability for obligations entered into on behalf of Landlord (or its predecessors in interest) and their respective properties shall not be subject to the claims of any person in respect of any such liability or obligation. As used herein, the words “property and assets of Landlord” means only Landlord’s interest in the Building and excludes all other assets of Landlord and any rights of Landlord for the payment of capital contributions or other obligations to it by any joint venturer, general partner, limited partner or member (as the case may be) in such capacity.
Page 19
21.2. Transfer by Landlord. All obligations of Landlord hereunder will be binding upon Landlord only during the period of its possession of the Premises and not thereafter. The term “Landlord” shall mean only the owner of the Premises for the time being, and if such owner transfers its interest in the Premises, such owner shall thereupon be released and discharged from all covenants and obligations of the Landlord thereafter accruing, but such covenants and obligations shall be binding during the Lease Term upon each new owner for the duration of each owner’s ownership.
21.3. Other Occupants. Landlord shall have no liability to Tenant for loss or damages arising out of the acts or inaction of other tenants or occupants.
| 22. | Real Estate Brokers; Finders. |
The parties acknowledge that Kidder Mathews has represented Landlord and Jones Lang LaSalle has represented Tenant in the negotiation of this Lease and that a real estate commission shall be paid to Kidder Mathews and Jones Lang LaSalle by Landlord pursuant to a separate agreement. Each party shall indemnify, defend, protect and hold the other party harmless for, from, against and regarding all claims, costs, demands, actions, liabilities, losses and expenses (including the reasonable attorneys’ fees of counsel chosen by the other party) arising out of or resulting from any claims that may be asserted against such other party, by any other broker, finder or other person with whom the party bearing the indemnity obligation has or purportedly has dealt. Each party’s respective obligations pursuant to the foregoing indemnity shall survive the expiration or sooner termination of this Lease.
| 23. | Other. |
23.1. Force Majeure. The occurrence of any of the following events shall excuse the performance of such obligations of Landlord or Tenant to the extent thereby rendered impossible or not reasonably practicable for so long as such event continues so long as the party under this Lease required to perform gives prompt notice of such delay to the other party: strikes; lockouts; labor disputes; acts of God; inability to obtain labor, materials or reasonable substitutes therefor; governmental restrictions, regulations, or controls; judicial orders; enemy or hostile government action; terrorism; civil commotion; fire or other casualty; condemnation and other causes beyond the reasonable control of the party obligated to perform; provided, however, that in no event will the occurrence of any of said events or causes excuse the failure to pay rent or any other payment to be made by Tenant hereunder strictly as and when required under this Lease.
23.2. Interest; Late Charges. Rent not paid within ten (10) days of when due shall bear interest from the date due until paid at the rate of the lesser of (i) ten percent (10%) per annum or (ii) the maximum rate permitted by Applicable Law. Landlord may at its option impose a late charge of
$.05 for each $1.00 of rent for rent payments made more than ten (10) days late in addition to interest and other remedies available for default. Any such late charge and interest shall be payable by Tenant as Additional Rent hereunder, and shall be payable within thirty (30) days of Landlord’s written demand therefor. Tenant acknowledges and agrees that any such late payment by Tenant will cause Landlord to incur costs and expenses not contemplated by this Lease, the exact amounts of which will be extremely difficult to ascertain, and that such late charge represents a fair estimate of the costs and expenses which Landlord would incur by reason of Tenant’s late payment. Tenant further agrees that such late charge shall neither constitute a waiver of Tenant’s default with respect to such overdue amount nor prevent Landlord from exercising any other right or remedy available to Landlord.
23.3. Captions; Paragraph Headings. The captions and headings used in this Lease are for the purpose of convenience only and shall not be construed to limit or extend the meaning of any part of this Lease. Reference to a “Paragraph” shall mean reference to either a specified numbered paragraph or subparagraph of this Lease.
23.4. Nonwaiver. Waiver by either party of strict performance of any provision of this Lease shall not be a waiver of or prejudice the party’s right to require strict performance of the same provision in the future or of any other provision.
23.5. Succession. Subject to the limitations on transfer of Tenant’s interest, this Lease shall bind and inure to the benefit of the parties, their respective heirs, successors, and assigns.
23.6. Entry for Inspection. Landlord and its authorized representatives shall have the right to enter upon the Premises with reasonable notice (but in no event shall less than one (1) business days’ notice be required) to determine Tenant’s compliance with this Lease, to make necessary repairs to the Building or the Premises, or to show the Premises or the Building to any prospective tenant or purchasers. Landlord may place and maintain upon the Building and/or Premises notices for leasing or sale of the Building and/or the Premises in locations that do not impair Tenant’s use or visibility, or negatively affect Tenant’s reputation. Landlord may enter upon the Premises without notice by any means necessary in the case of an emergency. Notwithstanding the foregoing, if Landlord seeks entry into the Premises for any party other than Landlord and/or its employees or contractors, if Tenant reasonably determines that one or more of the persons for which entry is sought is in Tenant’s reasonable and good faith judgment is deemed to be a business competitor of Tenant or otherwise objectionable, then entry of such persons shall be prohibited. Further, Tenant may elect to require that entry by anyone other than Landlord or Landlord’s employees or contractors may be subject to execution of a reasonable nondisclosure agreement to be provided to Landlord by Tenant.
Page 20
23.7. Notices. Any notice permitted or required to be given hereunder shall be in writing and shall be given by personal delivery or certified United States mail (return receipt requested), U.S. Express Mail or nationally recognized overnight air courier, in each case postage or equivalent prepaid, addressed to the address for notices set forth in the Basic Lease Terms. The person to whom and the place to which notices are to be given may be changed from time to time by either party by written notice given to the other party. If any notice is given by mail, it shall be effective upon the earlier of (i) seventy-two (72) hours after deposit in the U.S. Mail with postage prepaid, or (ii) actual delivery or refusal to accept such delivery, as indicated by the return receipt; and if given by personal delivery, U.S. Express Mail or by overnight air courier, one (1) day after being deposited with carrier.
23.8. Entire Agreement. This Lease is the entire agreement between the parties, and there are no agreements or representations between the parties except as expressed herein.
23.9. Warranties of Landlord. The person executing this Lease on behalf of Landlord warrants to Tenant that Landlord is a valid and existing corporation or other relevant entity, that Landlord has all right and authority to enter into this Lease, and that the person executing on behalf of Landlord is authorized to do so.
23.10. Warranties of Tenant.
23.10.1. Authority. The person(s) executing this Lease on behalf of Tenant warrant(s) to Landlord that Tenant has all right and authority to enter into this Lease, and that each and every person executing on behalf of Tenant is authorized to do so.
23.10.2. Incorporation; Formation. Tenant represents and warrants to Landlord that (i) Tenant is duly organized, and validly existing under the laws of the State of Delaware as of the Effective Date and that Tenant shall remain so throughout the Lease Term, and (ii) Tenant is qualified to do business in, and is in good standing under, the laws of the State of Oregon as of the Effective Date and that Tenant shall remain so throughout the Lease Term.
23.10.3. Evidence. Upon Landlord’s reasonable request that shall not exceed more than one (1) time per year, Tenant shall provide evidence satisfactory to Landlord confirming the warranties set forth in this Paragraph 23.10.
23.11. Time of Essence. Time is of the essence of the performance of each of Tenant’s obligations under this Lease.
23.12. Modifications. This Lease may not be modified except by written endorsement attached to this Lease, dated and signed by the parties.
23.13. No Appurtenances. This Lease does not create any rights to light and air by means of openings in the walls of the Building, any rights or interests in parking facilities, or any other rights, easements or licenses, by implication or otherwise, except as expressly set forth in this Lease or its exhibits.
23.14. Financial Statements. Upon written request of Landlord, Tenant shall furnish to Landlord, within ten (10) business days following receipt of Landlord’s written request, but not more than one (1) time per year or in the event of Tenant default, Tenant’s current financial statements (including balance sheet and income statement for the year most recently ended); Tenant agrees that these financial statements must be accurate and be prepared in the ordinary course of Tenant’s business and, if not audited, certified by the chief financial officer or accounting officer of Tenant. Landlord may make such financial statement available to any prospective lender or purchaser of the Park or any portion thereof, provided such lender or purchaser, and their respective agents, is subject to a nondisclosure agreement, which includes confidentiality for such financial statements. Landlord must provide written notice to Tenant of any such disclosure to any prospective lender or purchaser. Landlord shall otherwise keep such financial statement confidential and shall require any such prospective lender or purchaser to do the same.
23.15. Rules and Regulations. Landlord shall have the right to make and enforce rules, regulations and criteria consistent with this Lease for the purpose of promoting safety, order, cleanliness and good service to the tenants and other occupants of the Park. Copies of all such rules and regulations, if any, shall be furnished to Tenant and shall be complied with as if part of this Lease.
Page 21
23.16. Applicable Law; Severability. This Lease shall be construed, applied and enforced in accordance with the laws of the State in which the Premises are located. If a court of competent jurisdiction holds any portion of this Lease to be illegal, invalid or unenforceable as written, it is the intention of the parties that (i) such portion of this Lease be enforced to the extent permitted by law and (ii) the balance of this Lease remain in full force and effect. It is also the intention of the parties that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable there be added, as a part of this Lease, a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable.
23.17. Intentionally omitted.
23.18. Tenant’s Liability. In the event Tenant now or hereafter consists of more than one person, firm or corporation, then all such persons, firms or corporations shall be jointly and severally liable as Tenant under this Lease. Tenant shall not be liable for any consequential, special or punitive damages under this Lease, except as otherwise specifically set forth herein.
23.19. Construction and Interpretation. All provisions of this Lease have been negotiated by Landlord and Tenant at arm’s length and neither party shall be deemed the author of this Lease. This Lease shall not be construed for or against either party by reason of the authorship or alleged authorship of any provision hereof or by reason of the status of the respective parties as Landlord or Tenant.
23.20. No Recordation. Neither this Lease, nor any short form or memorandum thereof, shall be recorded in any manner against the real property of which the Premises comprises a portion.
23.21. No Partnership Created. Neither this Lease nor the calculation and payment of Base Rent, Additional Rent or any other sums hereunder, is intended to create a partnership or joint venture between Landlord and Tenant, or to create a principal-and-agent relationship between the parties.
23.22. OFAC. Tenant represents and warrants to Landlord that Tenant is not and shall not become a person or entity with whom Landlord is restricted from doing business under any current or future regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including, but not limited to, those named on OFAC’s Specially Designated and Blocked Persons list) or under any current or future statute, executive order (including, but not limited to, the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is not and shall not engage in any dealings or transaction or be otherwise associated with such persons or entities.
23.23. Equal Employment Opportunity. Landlord and Tenant shall abide by the requirements of 41 CFR 60-300.5(a) and 41 CFR 60-741.5(a). These regulations prohibit discrimination against qualified individuals and protected veterans on the basis of disability or veteran status, and require affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified individuals with disabilities and protected veterans.
23.24. Confidentiality. Neither party shall disclose to any third party the terms or provisions of this Lease, nor any communications or information sent to a party from a party under or pursuant to this Lease, except only as may be required by law. For the avoidance of doubt, disclosure to a party’s attorneys, accountants or other consultants shall not be a breach of this Paragraph 23.24.
23.25. Counterparts; Delivery by Facsimile or Electronic Mail. This Agreement may be executed in counterparts, each of which will be considered an original and all of which together will constitute one and the same agreement. This Agreement or any counterpart may be executed and delivered by facsimile or by electronic mail in pdf format and such signatures shall be binding upon the party delivering the same as if they were originals, with an executed original hard copy to follow via overnight courier or U.S. mail at the request of any party hereto.
23.26. Exhibits. The following exhibits are attached hereto and incorporated herein by this reference:
| Exhibit A-1 | Site Plan Showing the Park, the Building, and Parking | |
| Exhibit A-2 | Site Plan Showing Off-Site Parking | |
| Exhibit B-1 | Site Plan Showing the Premises | |
| Exhibit B-2 | Landlord’s Work | |
| Exhibit C | Landlord’s Signage Criteria |
Page 22
| 24. | Special Provisions. |
24.1. Option to Renew. Subject to the condition that Tenant shall not, at the time Landlord receives an Option Notice hereunder or at the time of commencement of any Renewal Term hereunder, be in default of any of the terms of this Lease beyond applicable notice and cure periods (if any), Tenant is hereby granted the option to renew the Lease Term for two (2) periods of sixty (60) months each (singularly, a “Renewal Term” and collectively, the “Renewal Terms”), the first such Renewal Term to commence on the day following the expiration of the Initial Term of this Lease and the remaining Renewal Term(s) to commence on the day following the expiration of the immediately preceding Renewal Term. Tenant must exercise this option, if at all, by delivering irrevocable written notice of such election (the “Option Notice”) to Landlord at least two hundred seventy (270) days prior to expiration of the Initial Term or the immediately preceding Renewal Term, as applicable. If Tenant does not validly deliver an Option Notice to renew the Lease Term for one (1) or more Renewal Term(s), the provisions of this Paragraph 24.1 shall be null and void and of no further force or effect. Any such renewal of this Lease shall be upon the same terms and conditions as this Lease except that Base Rent during each Renewal Term shall be determined as provided in Paragraph 24.2 and Landlord shall have no obligation to perform any tenant improvements or other work in connection with any such renewal of this Lease. Except to the extent specifically provided in this Paragraph 24.1, Tenant has no rights to renew the Lease Term.
24.2. Market Base Rent. Base Rent during any Renewal Terms shall be determined based upon the “Market Base Rent” defined as the average (mean) of the annual base rental rates then being charged for space located in the Salem, Oregon metropolitan area and comparable to the Premises, taking into consideration all relevant factors including, without limitation, use, location, floor level within the applicable building, size, base shell condition (excluding Tenant specialty improvements) and parking rights (to the extent that parking rights are a factor in determining base rental rates in the then current marketplace). It is agreed that bona fide written offers to lease the Premises or similar premises in the Building made to Landlord by third parties (at arms length) may be used by Landlord as an indication of Market Base Rent. Notwithstanding any provision to the contrary set forth herein, in no event shall the Market Base Rent for any Renewal Terms be less than the Base Rent then currently payable by Tenant immediately prior to the commencement of the relevant Renewal Term.
24.2.1. Determination. Landlord shall submit its opinion of Market Base Rent to Tenant within fifteen (15) days after Landlord’s receipt of the Option Notice and Tenant shall respond thereto within fifteen (15) days thereafter by either (i) accepting Landlord’s opinion of Market Base Rent (in which case, such Market Base Rent shall be used to determine Base Rent during the relevant Renewal Term) or (ii) submitting Tenant’s opinion of Market Base Rent. If Landlord and Tenant cannot agree upon the Market Base Rent of the Premises within fifteen (15) days thereafter, then Landlord and Tenant within five (5) business days shall each submit to each other their final written statement of Market Base Rent (“Final Statement”). If the Market Base Rent set forth in Landlord’s Final Statement (“Landlord’s Market Base Rent”) and the Market Base Rent set forth in Tenant’s Final Statement (“Tenant’s Market Base Rent”) differ by five percent (5%) or less of the lesser of the respective Market Base Rent submittals, the Market Base Rent for the Renewal Term shall be the average of Landlord’s Market Base Rent and Tenant’s Market Base Rent. If Landlord’s Market Base Rent and Tenant’s Market Base Rent differ by more than five percent (5%) of the lesser of the respective Market Base Rent submittals, within ten (10) days after submitting their respective Final Statement, Landlord and Tenant shall together appoint one active commercial real estate broker with 10+ years of experience in the Salem, Oregon market and be disinterested (the “Broker”). If Landlord and Tenant cannot mutually agree upon an Broker within said ten (10) day period, the parties shall jointly apply to the Presiding Judge of the Circuit Court for the County in which the Premises are located (the “Judge”), requesting said Judge to appoint the Broker; if either Landlord or Tenant does not so apply to the Judge within five (5) days following the expiration of the ten (10) day period, the real estate broker initially suggested by the party who timely applied to the Judge shall be deemed the Broker for purposes of the arbitration. The parties shall share equally any costs of such application to the Judge. Within ten (10) days following selection or appointment of the Broker, the Broker shall determine whether Landlord’s or Tenant’s Final Statement of Market Base Rent is the closest to the actual (in such Broker’s opinion) Market Base Rent of the Premises and shall select either Landlord’s or Tenant’s Final Statement of Market Base Rent as the closest to the actual (in such Broker’s opinion) Market Base Rent of the Premises, without any compromising or averaging. The Market Base Rent for the Premises as determined pursuant to the immediately preceding sentence shall be the Market Base Rent used in determining Base Rent during the relevant Renewal Term. The fees and expenses of said Broker shall be borne equally by Landlord and Tenant.
24.2.2. Base Rent During Determination. If, for any reason, the Market Base Rent hereunder is not determined prior to the beginning of the relevant Renewal Term, then Tenant shall continue to pay the Base Rent amount in effect immediately preceding the commencement of the relevant Renewal Term and, upon final determination of the Market Base Rent for the relevant Renewal Term, Tenant shall pay to Landlord a cash payment equal to the sum of such amounts as may be necessary to adjust each monthly Base Rent payment which has been made hereunder to the Market Base Rent effective as of the relevant Renewal Term.
[signatures on following page]
Page 23
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the respective dates set opposite their signatures below, but this Lease, on behalf of such party, shall be deemed to have been dated as of the Effective Date.
| LANDLORD: | ||
| PACIFIC REALTY ASSOCIATES, L.P., | ||
| a Delaware limited partnership | ||
| By: | PacTrust Realty, Inc., | |
| a Delaware corporation, its General Partner |
| Date: | June 30, 2023 | By: | /s/ Erica A. Sporre |
| Eric A. Sporre, Vice President |
| TENANT: | |
| AGILITY ROBOTICS, INC., | |
| a Delaware corporation |
| Date: | June 30, 2023 | By: | /s/ Damion Shelton |
| Printed Name: | Damion Shelton | ||
| Its: | CEO |
Page 24




EXHIBIT C
MILL CREEK CORPORATE CENTER
SIGN CRITERIA
| 1.0 | GENERAL |
| 1.1 | All signs, free standing and building applied including permanent and temporary, must comply with the City of Salem Oregon Sign Ordinance per the applicable zone. |
| 1.2 | All signs require the review and approval of the Landlord architect. Letter of approval shall accompany sign permit application. |
| 1.3 | Signage on site and at buildings occurs as a method of identification and way finding. Signs are limited to names and logo identification. Tag lines and supplemental advertising are not approved unless accepted by variance request to Landlord architect. |
| 2.0 | SIGN DESIGN STANDARDS |
| 2.1 | Each building has an assigned sign zone indicated by a dashed outline on the building elevation drawings. This zone is intended to accommodate both linear and stacked lettering and logos. |
| 2.2 | Individual dimensional letters and logos are approved. Surface raceway, illuminated, box cabinet, plaque and panel signs are not approved, unless by variance request. |
| 2.3 | Concrete penetrations will require repair/patching when signs are removed or altered. |
| 2.4 | In general, 24” tall maximum letter size for single line text, or when two lines are required, 36” maximum (copy and space between) is approved. 48” maximum height for logos. |
| 3.0 | MONUMENT SIGNS |
| 3.1 | Are to occur at site entry locations where building signage is not viewable. One sign per building is allowed by variance request where approved by Landlord architect. |
| 3.2 | Locations must occur outside of public rights of way and vision clearance triangles. |
| 3.3 | Maximum height is four feet (4’) above adjacent grade. |
| 3.4 | Base construction of brick, stone, or concrete to 12” above grade is approved. |
| 3.5 | Sign cabinets 3’ by 8’ maximum are approved. Construction shall be of reinforced metals, power-coated in one background color. Lettering may be applied dimensional, vinyl die-cut or relief cut out with translucent materials. |
| 4.0 | SUPPORT SIGNAGE |
| 4.1 | Tenant Entrances: |
| ● | At glass doors, the signage shall be listed at adjacent window or wall surfaces. May be listed on glass doors only when no other surface is available. |
| ● | Information listed shall typically not exceed a 24” x 24” area. Area may vary in W x H dimensions only when adjacent window size is less than 24”. |
| ● | Information shall be die cut vinyl and may include company name and/or logo, hours of operation, emergency contacts and other critical information. |
| ● | Maximum height of 3” text allowed. |

Page 1 of 2
| 4.2 | Dock and Service Entrances: |
| ● | Dock doors: 10” letters located 12” above door head |
| ● | Man doors: 6” letters 8” above door head or 3” vinyl die cut letters on door centered 68” above sill. |
| ● | No signs on overhead doors. |
| 5.0 | SUBMITTAL REQUIREMENTS |
| 5.1 | Provide the following: |
| ● | Electronic (pdf) submission at a page set-up of 11” x 17” minimum. Submission shall be in color, to scale, and with sign locations indicated on building and/or site. Elevations at 1/8” scale minimum. Photo/computer montage is recommended. |
| ● | Section and detail information indicating illumination, mounting, color and materials. |
| ● | Drawings to indicate letter/logo size and placement. |
| 5.2 | Variance Request: |
| ● | Submit letter of request indicating variance necessity, hardship or other pertinent information to Landlord architect. |

Page 2 of 2