EX-10.1 2 dex101.htm OFFICE LEASE BETWEEN REGISTRANT AND THE J.H.S TRUST Office Lease between Registrant and the J.H.S Trust

Exhibit 10.1

 

LEASE AGREEMENT

 

between

 

JOE SHEKOU and HAIDY SHEKOU

- LANDLORD -

 

and

 

AUTODESK, INC.

- TENANT -

 

October 5, 1993


TABLE OF CONTENTS

 

            Page

1.      DEFINITIONS    1
       1.1        Certain Definitions    1
       1.2        Table of Definitions    2
2.      PREMISES    3
       2.1        Landlord’s Construction Obligation    3
       2.2        Lease of Premises    3
       2.3        Rentable Area    3
3.      TERM    4
       3.1        Initial Term    4
      

3.1.1      Commencement and Expiration Dates

   4
      

3.1.2      Base Building Delivery Date; Late Delivery

   4
      

3.1.3      Tenant’s Termination Right

   4
       3.2        Extension Options    5
      

3.2.1      Option Rights

   5
      

3.2.2      Exercise of Extension Option

   5
      

3.2.3      Rent for Option Term

   6
      

3.2.4      Rent Determination

   6
      

    3.2.4.1        Landlord’s Estimate Notice

   6
      

    3.2.4.2        Landlord’s Rent Determination Notice

   7
      

    3.2.4.3        Tenant’s Objection Notice

   7
      

    3.2.4.4        Broker Arbitration

   7
      

    3.2.4.5        Continuation Payments

   8
      

    3.2.5        Refurbishment Allowances

   8
       3.3        Definition of Term    8
4.      RENT    8
       4.1        Gross Rent    8
       4.2        Annual Increase to Gross Rent    8
       4.3        Payment of Rent    9
       4.4        Payment of First and Last Month’s Rent    9
       4.5        Late Charge    10
       4.6        Interest    10
5.      OCCUPANCY    10
       5.1        Use    10
       5.2        Signage    10
       5.3        Satellite Dish    11
       5.4        Emergency Generator and Fuel Storage Tank    11

 

-i-


6.

     ASSIGNMENT, MORTGAGE, SUBLETTING    12
      

6.1        Consent Required

   12
      

6.2        Consent not Required

   12
      

6.3        Standard of Reasonableness

   12
      

6.4        Future Consent

   13

7.

     ALTERATIONS    13
      

7.1        Consent Required

   13
      

7.2        Consent Not Required

   13

8.

     REPAIRS    14
      

8.1        Tenant’s Obligation to Repair

   14
      

8.2        Landlord’s Obligation to Repair

   14

9.

     REQUIREMENTS OF LAW    15
      

9.1        Requirements of Law

   15

10.    

     SUBORDINATION, MORTGAGES, NONDISTURBANCE    15
      

10.1      Subordination

   15
      

10.2      Mortgages

   16
      

10.3      Nondisturbance

   16

11.

     INDEMNIFICATION    16
      

11.1       Indemnity

   16
      

11.2      Waiver of Claims

   16

12.

     DAMAGE OR DESTRUCTION    16
      

12.1      Partial Damage

   16
      

12.2      Total Damage

   17
      

12.3      Limitation on Replacement Costs

   17
      

12.4      Waiver

   17

13.

     EMINENT DOMAIN    17
      

13.1      Total Taking

   17
      

13.2      Partial Taking

   18
      

13.3      Restoration

   18
      

13.4      Temporary Taking

   18

14.

     SERVICES    18
      

14.1      Services

   18
      

14.2      Costs of Services

   19
      

14.3      Approval of Service Contracts

   19
      

14.4      Cessation of Services

   19

15.

     ACCESS TO PREMISES    20


16.

     INSURANCE    21
      

16.1      Tenant’s Insurance

   21
      

16.2      Landlord’s Insurance

   21
      

16.3      Policies

   21
      

16.4      Subrogation

   22

17.

     SECURITY    22

18.

     TENANT DEFAULT    23
      

18.1      Definition of Tenant Default

   23
      

18.2      Landlord’s Remedies

   24
      

18.2.1        Termination

   24
      

18.2.2        Non-Termination

   25

19.

     LANDLORD’ S DEFAULT    25
      

19.1      Landlord’s Default

   25

20.

     END OF TERM    26

21.

     HOLDING OVER    26

22.

     QUIET POSSESSION    26

23.

     TERMINATION, NO ORAL CHANGE    27

24.

     INABILITY TO PERFORM    27

25.

     BILLS AND NOTICES    28

26.

     TAX ON TENANT’S PERSONAL PROPERTY    29

27.

     SECURITY DEPOSIT    29

28.

     MARGINAL NOTES    29

29.

     TERMS AND DEFINITIONS    29

30.

     BROKERAGE    29

31.

     BINDING EFFECT    30

32.

     ATTORNEYS’ FEES    30

33.

     ESTOPPEL CERTIFICATES    30

34.

     OPTION TO PURCHASE    31
       34.1      Option to Purchase    31


      

34.1.1        Purchase Price

   31
      

34.1.2        Prepayment/Assumption of Loan

   31
      

34.1.3        Exercise

   31
      

34.1.4        Title

   31
      

34.1.5        Closing

   32
      

34.1.5.1        Documents

   32
      

34.1.6        Prorations

   33
      

34.1.7        Expenses

   33
35.      RIGHT OF FIRST REFUSAL    33
36.      MEMORANDUM OF LEASE    33
37.      MISCELLANEOUS    34
      

37.1        Governing Law

   34
      

37.2        Severability

   34
      

37.3        Authority

   34
      

37.4        Exhibits and Addenda

   34

 

Exhibit A

   -      Legal Description

Exhibit B

   -      Floor Plans of Premises

Exhibit C

   -      Subordination, Attornment, and Non-Disturbance Agreement

Exhibit D

   -      Janitorial Specifications

Exhibit E

   -      Broker Agreement

Exhibit F

   -      Preliminary Title Report

Exhibit G

   -      Memorandum of Lease

 

Construction Addendum

 

Land Purchase Option Addendum


LEASE AGREEMENT

 

THIS LEASE AGREEMENT (the “Lease”) is made and entered into as of the 5th day of October 1993, by and between JOE SHEKOU and HAIDY SHEKOU, husband and wife (the “Landlord”), and AUTODESK, INC., a California corporation (the “Tenant”).

 

RECITALS

 

A. WHEREAS, Landlord owns certain real property in San Rafael, California, that is approved for construction of a three-story commercial office building.

 

B. WHEREAS, Landlord desires to construct such building on said real property for use and occupancy by Tenant, and Tenant desires to locate its corporate headquarters in such building following construction thereof by Landlord.

 

C. WHEREAS, the parties desire to enter into this Lease to provide for Tenant’s use and occupancy of such building.

 

NOW, THEREFORE, in consideration of the foregoing and of the material covenants and obligations set forth herein, Landlord and Tenant hereby agree as follows:

 

1. DEFINITIONS

 

1.1 Certain Definitions. In addition to the terms defined elsewhere in this Lease, the terms set forth below shall have the following meanings:

 

1.1.1 The “Building” shall mean that certain three (3) story office building to be constructed by Landlord on the Land and located at 103-199 McInnis Parkway, San Rafael, California.

 

1.1.2 The “Land” shall mean that certain parcel of land in San Rafael, Marin County, California, containing approximately 8.13 acres, as more particularly described in Exhibit A attached hereto.

 

1.1.3 The “Property” shall mean the Land and the Building.

 

1.1.4 The “Premises” shall mean the entire rentable area of the Building, as shown on the floor plans of the Building attached hereto as Exhibit B.

 

1.1.5 The “Landlord Parties” shall mean Landlord’s subsidiaries, affiliates, agents, contractors, employees, directors and officers, and the constituent partners of Landlord (if Landlord is a partnership).

 

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1.1.6 The “Tenant Parties” shall mean Tenant’s agents, contractors, employees, subtenants or other occupants of the Premises.

 

1.2 Table of Definitions. For the convenience of the parties, set forth below is a table of the terms defined in this Lease and the Addenda attached hereto, and the Sections in which such terms are defined:

 

Definition


   Lease Section

Base Building Delivery Date

   3.1.2

Building

   1.1.1

Building Systems

   7.2

Closing Date

   34.1.5

Commencement Date

   3.1.1

Communications Equipment

   5.3

Comparable Buildings

   3.2.3

Default Rate

   4.6

Event of Default

   18.1

Expiration Date

   3.1.1

Extension Notice

   3.2.2

Extension Option

   3.2.1

Fair Market Rent

   3.2.3

Initial Term

   3.1.1

Land

   1.1.2

Landlord

   Preamble

Landlord Parties

   1.1.5

Landlord’s Estimate Notice

   3.2.4.1

Landlord’s Notice

   35

Landlord’s Rent Determination Notice

   3.2.4.2

Late Delivery Penalty

   3.1.2

Laws or Law

   9.1

Lease

   Preamble

Lease Year

   3.1.1

Modified Offer

   35

 

2


Definition


   Lease Section

Mortgagee

   19.1

Offer

   35

Option Term

   3.2.1

Premises

   1.1.4

Premises

   3.2.2

Property

   1.1.3

Property Purchase Price

   34.1.1

Rent

   4.1

Taking or Condemnation

   13.1

Tenant

   Preamble

Tenant Parties

   1.1.6

Tenant’s Objection Notice

   3.2.4.3

Tenant’s Option to Purchase

   34.1

Tenant’s Right of First Refusal

   35

Term

   3.3

 

2. PREMISES

 

2.1 Landlord’s Construction Obligation. Landlord shall construct the Building and other improvements on the Land in accordance with the terms and conditions of the Construction Addendum attached hereto and incorporated herein by this reference.

 

2.2 Lease of Premises. Subject to and upon the terms, covenants and conditions hereinafter set forth, Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord. As an integral part of Tenant’s lease of the Premises, Tenant shall have the exclusive right to use the entirety of the Building, including the ground floor lobby, bathrooms, halls, passages, exits, entrances, elevators, loading and storage areas, stairways and the roof of the Building, and all portions of the Land outside of the Building, including all parking areas, roadways, walkways, trash enclosures and disposal areas, landscaped areas and other areas within the exterior boundaries of the Land. The use of such parking areas shall include the right to install, erect or paint identifying signs relating to the use of the parking areas in the Property.

 

2.3 Rentable Area. Landlord and Tenant hereby agree that the rentable square footage of the Premises shall be deemed to be 115,514 square feet of space, for all purposes.

 

3


3. TERM

 

3.1 Initial Term

 

3.1.1 Commencement and Expiration Dates. The initial term of this Lease (the “Initial Term”) and, subject to the provisions of Section 3.1.2 below, Tenant’s obligation to pay Rent shall commence (the “Commencement Date”) on the earlier to occur of (i) one hundred twenty (120) days following the date of substantial completion of the Base Building Shell (as defined in the Construction Addendum), or (ii) the occupancy for business purposes by Tenant of the entire Premises; and, unless sooner terminated as hereinafter provided, shall expire on the last day of the tenth (10th) Lease Year (the “Expiration Date”). As used herein, the term “Lease Year” means each consecutive twelve (12) month period during the term of this Lease; provided, however, that if the Commencement Date occurs on a day other than the first day of a month, then the first (1st) Lease Year shall consist of the partial month in which the Commencement Date occurs plus the succeeding twelve (12) full calendar months. The term of this Lease may be extended by Tenant pursuant to the provisions of Section 3.2 below.

 

3.1.2 Base Building Delivery Date; Late Delivery. Landlord shall complete the Base Building Shell and deliver possession of the Building to Tenant for the construction of the Tenant Improvements (as defined in the Construction Addendum) on or before September 1, 1994 (the “Base Building Delivery Date”). The requirements for the completion of the Base Building Shell and the required notice to Tenant of the completion of such work are specified in the Construction Addendum. If Landlord fails to so deliver possession of the Building to Tenant on or before the Base Building Delivery Date, Tenant shall receive a penalty (“Late Delivery Penalty”) in the amount of $100,000 per month (pro-rated for a partial month) for each month (or partial month) that Landlord is late in so delivering the Building to Tenant. Landlord shall either immediately pay to Tenant the Late Delivery Penalty or Tenant shall have the right to offset the Rent due each month in an amount equal to the difference between the total Rent due for any such month minus the then current debt service and expenses and taxes for the Building (which amount of monthly offset shall equal $20,000) until the Late Delivery Penalty plus interest thereon at the rate of seven percent per annum is fully realized by Tenant. This rent credit, together with any rent credit allowed pursuant to Section 19 of the Lease and Section 8(d) of the Construction Addendum, shall not exceed the cumulative total of $20,000 per month.

 

3.1.3 Tenant’s Termination Right. In addition to the credit against Rent provided for in Section 3.1.2, if Landlord fails to deliver the Building to Tenant with all of the Base Building Shell completed within one hundred twenty (120) days of the Base Building Delivery Date, Tenant shall have the right to terminate this Lease, within ten (10) business days after the

 

4


passage of such 120th day, by delivering written notice to Landlord of Tenant’s election to so terminate this Lease. In the event Tenant so elects to terminate this Lease, Landlord shall, within ten (10) days after receipt of Tenant’s notice of termination, refund to Tenant the advance payment of Rent paid by Tenant pursuant to Section 4.4 below (together with the interest thereon specified in Section 4.4); and, following such termination, Landlord and Tenant shall have no further obligations or liability under this Lease, except for liabilities accrued under the Lease prior to the date of termination.

 

3.2 Extension Options.

 

3.2.1 Option Rights. Tenant shall have three (3) options to extend the term of this Lease with respect to all or any portion of the Premises for additional periods of five (5) years each. Each such option to extend the term of this Lease shall be referred to herein as an “Extension Option,” and the five (5) year period of each such Extension Option shall be referred to herein as an “Option Term.” The first Option Term shall commence on the day following the Expiration Date, and each subsequent Option Term shall commence on the day following the expiration of the immediately preceding Option Term.

 

3.2.2 Exercise of Extension Option. Tenant must notify Landlord in writing of its exercise of any Extension Option (“Extension Notice”), and such Extension Notice must be given by Tenant to Landlord on or before the date that is six (6) months prior to the expiration of the Initial Term or the then current Option Term, as the case may be. Notwithstanding the foregoing, Tenant shall not have the right to exercise an Extension Option if an Event of Default then exists against Tenant. If Tenant elects to exercise an Extension Option with respect to only a portion of the Premises initially demised hereunder, Tenant shall specify in its Election Notice the portion of the Premises as to which Tenant’s election applies; and in such case, upon the commencement of the Option Term in question, the term “Premises” as used herein shall mean that portion of the Premises specified in Tenant’s Extension Notice. In the event Tenant elects to exercise an Extension Option with respect to only a portion of the Premises initially demised hereunder, then the portion Tenant desires to occupy for the Option Term, if less than an entire floor, shall be as to each partial floor subject to the reasonable consent of Landlord. In such event, Landlord’s consent may be withheld only if the portion of the Premises sought to be extended will unnecessarily and unreasonably interfere with Landlord’s ability to relet the portion of the Premises that is not extended and does not constitute an area that is required by Tenant by virtue of the location of permanent improvements to the Building. Landlord shall be responsible for all costs incurred to demise portions of the Premises retained by Tenant from the remainder of the Building. In the event Tenant elects to exercise an Extension Option with respect to only a portion of the Premises initially demised hereunder, the parties shall enter into an amendment of this Lease that modifies the provisions of this Lease premised upon single use of the Building to reflect a multi-tenant use of the Building.

 

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3.2.3 Rent for Option Term. Tenant’s occupancy of the Premises pursuant to the exercise of an Extension Option shall be upon all of the same terms and conditions contained in this Lease, except that the Rent shall be adjusted to equal 92.5% of the Fair Market Rent for the Premises being extended. The term “Fair Market Rent” for the Premises being extended for the Option Term applicable thereto shall mean the “fair market” base rent at the commencement of such Option Term for the Premises being extended for a term equal to the Option Term, based on the prevailing rental rates then being obtained in arms’-length transactions for new leases and lease renewals or extensions of comparable space and having a term similar to the Option Term in the Building and in comparable buildings in Marin County (“Comparable Buildings”), taking into account the size, age, location and amenities of the Building and Comparable Buildings. Landlord and Tenant acknowledge that the escalations of Rent currently provided for during the initial term is allocated toward taxes and expenses. Therefore, Fair Market Rent shall take into account that this Lease (as extended) is structured as a gross lease with a portion of the Rent being allocated toward taxes and expenses (which shall not include utilities that Tenant separately pays for, and will continue to pay for), which means that consideration shall be made for increases or decreases, if any, in the Rent for taxes and expenses. Concessions or inducements then being offered in arms’-length transactions in the Building or in Comparable Buildings shall be considered in determining Fair Market Rent, including, without limitation, “free rent” periods, improvement or refurbishment allowances then being given by Landlord or landlords of Comparable Buildings for comparable space and comparable lease terms, moving allowances, and other cash payments from a landlord to or on behalf of a tenant, such as payments for lease takeovers. Fair Market Rent shall also take into account leasing commissions, attorneys’ fees, and other transaction costs that may be saved by Landlord by way of such extension compared with leasing space to a new tenant; provided, however, that the refurbishment allowance and any commissions paid by Landlord to Tenant’s broker shall also be taken into account in determining Fair Market Rent.

 

3.2.4 Rent Determination. Fair Market Rent shall be determined in the following manner:

 

3.2.4.1 Landlord’s Estimate Notice. Not less than five (5) months prior to the commencement of an Option Term, Landlord shall provide written notice to Tenant of Landlord’s preliminary good faith estimate of the Fair Market Rent for the Premises being extended (“Landlord’s Estimate Notice”). Tenant shall have the right to rescind Tenant’s exercise of the Extension Option in question by giving written notice to Landlord of such election within thirty (30) days after receipt of Landlord’s Estimate Notice, in which case Tenant’s exercise of such Extension Option shall be rescinded and shall have no force or effect. In

 

6


the event Tenant does not rescind its exercise of the Extension Option, then Tenant shall be bound to the Option Term, with the Fair Market Rent being determined in accordance with the provisions set forth herein.

 

3.2.4.2 Landlord’s Rent Determination Notice. If Tenant does not elect to rescind its exercise of the Extension Option, then the actual Fair Market Rent for such Option Term shall be specified by Landlord in a written notice (“Landlord’s Rent Determination Notice”) given to Tenant not less than ninety (90) days prior to commencement of the Option Term, subject to Tenant’s right of arbitration as set forth below.

 

3.2.4.3 Tenant’s Objection Notice. If Tenant believes that the Fair Market Rent specified by Landlord in Landlord’s Rent Determination Notice exceeds the actual Fair Market Rent for the Premises being extended, Tenant shall so notify Landlord (“Tenant’s Objection Notice”) within ten (10) business days following receipt of Landlord’s Rent Determination Notice. If Tenant fails to so notify Landlord within said ten (10) business days, Landlord’s determination of the Fair Market Rent for the Premises being extended shall be deemed approved by Tenant.

 

3.2.4.4 Broker Arbitration. If Tenant notifies Landlord that Tenant objects to Landlord’s determination of Fair Market Rent, and if the parties are unable to agree upon the Fair Market Rent for the Premises being extended within twenty (20) days after Landlord’s receipt of Tenant’s Objection Notice, then Landlord and Tenant shall each designate, within ten (10) days after the lapse of such twenty (20) day negotiation period, a real estate broker licensed in the State of California and then currently engaged in the office leasing brokerage business in Marin County for at least the immediately preceding five (5) years. If one party fails to notify the other of its designated broker, the broker designated on a timely basis shall be the sole broker to determine the issues. In the event that two brokers are chosen, the brokers so chosen shall meet within ten (10) business days after the second broker is appointed, and if within ten (10) business days after such first meeting the brokers shall be unable to agree upon the Fair Market Rent, they shall appoint a third broker, who shall be a competent and impartial person with qualifications similar to those required of the first two brokers pursuant to this Paragraph. Each of said three brokers shall, within fifteen (15) days after the appointment of the third broker, determine the Fair Market Rent for the Premises being extended for a term equal to Option Term. The Fair Market Rent shall be the arithmetic average of such three determinations; provided, however, that if any such broker’s determination deviates more than ten percent (10%) from the median of such determinations, the Fair Market Rent shall be equal to the average of the two closest determinations; and, provided further, that in no event shall the Fair Market Rent for the Premises being extended be in excess of the amount originally specified by Landlord in Landlord’s Estimate Notice. Landlord shall pay the costs and fees of Landlord’s broker

 

7


in connection with any determination of Fair Market Rent hereunder, and Tenant shall pay the costs and fees of Tenant’s broker in connection with such determination. The costs and fees of any third broker shall be paid one-half by Landlord and one-half by Tenant.

 

3.2.4.5 Continuation Payments. If the Fair Market Rent of the Premises being extended has not been determined as of the commencement of the Option Term, then, until such Fair Market Rent is determined, Tenant shall continue to pay as Rent for the Premises being extended the per square foot rental rate in effect at the time of Landlord’s Rent Determination Notice. When such Fair Market Rent has been determined, if Tenant has underpaid the Rent applicable for the Option Term, Tenant shall pay such deficiency to Landlord at the time the next monthly payment of Rent is due or if Tenant has overpaid such Rent, Landlord shall, at Landlord’s option, credit the amount of such overpayment against Tenant’s payment(s) of Rent next coming due hereunder or pay such overpayment to Tenant within ten (10) days after Tenant’s demand for payment thereof.

 

3.2.5 Refurbishment Allowances. In the event Tenant exercises an Extension Option, Landlord shall pay to Tenant upon such exercise the amounts set forth below corresponding to the Extension Option being exercised for refurbishment of the improvements in the Premises being extended:

 

Option


  

Amount Per

Rentable Square Foot of

Premises Being Extended


First Extension Option

   $ 5.00

Second Extension Option

   $ 8.00

Third Extension Option

   $ 12.00

 

3.3 Definition of Term. As used herein, “Term” shall mean the Initial Term together with any extension thereof as such may be extended and in effect pursuant to the terms hereof.

 

4. RENT

 

4.1 Gross Rent. From and after the Commencement Date, but subject to the terms of Section 3.1.2 above, Tenant shall pay to Landlord during the first Lease Year gross rent (the “Rent”) in the amount of $1.58 per rentable square foot of the Premises per month (i.e., $182,512.12).

 

4.2 Annual Increase to Gross Rent. Landlord and Tenant have agreed that, in lieu of Tenant having the obligation to pay for operating expenses and taxes of the Property (other than as provided in Section 14.2 regarding payment by Tenant for gas and electricity), the Rent shall be subject to regularly scheduled annual increases commencing on the first day of the second Lease

 

8


Year and the first day of each Lease Year thereafter during the Initial Term, in accordance with the following schedule:

 

Lease Year


   Monthly Per Square Foot Rental Rate

Second

   $1.62 (i.e., $187,132.68)

Third

   $1.66 (i.e., $191,753.24)

Fourth

   $1.70 (i.e., $196,373.80)

Fifth

   $1.74 (i.e., $200,994.36)

Sixth

   $1.79 (i.e., $206,770.06)

Seventh

   $1.83 (i.e., $211,390.62)

Eighth

   $1.88 (i.e., $217,166.32)

Ninth

   $1.92 (i.e., $221,786.88)

Tenth

   $1.97 (i.e., $227,562.58)

 

4.3 Payment of Rent. Rent shall be payable by Tenant in consecutive monthly installments on or before the first day of each month, in advance, at the address specified for Landlord in Section 25, or such other place as Landlord shall designate, without any prior demand therefor and without any abatement, deduction or setoff whatsoever except as otherwise expressly provided in this Lease. If the Commencement Date should occur on a day other than the first day of a calendar month, the rental for such fractional month shall be prorated on a daily basis based upon the number of days in such month.

 

4.4 Payment of First and Last Month’s Rent. Upon the delivery by Landlord to Tenant of a commitment letter from Landlord’s permanent lender that such lender is committing to fund a permanent loan (which date is estimated by Landlord to be October 12, 1993), Tenant shall pay to Landlord the estimated first and last months Rent (i.e., $182,512.12 and $227,562.58). In the event Tenant elects to terminate this Lease pursuant to the terms of the Land Purchase Option Addendum attached hereto, the repayment of the amount paid by Tenant to Landlord pursuant to the foregoing sentence shall be secured by a deed of trust on the Property; and Tenant hereby agrees to reconvey such deed of trust if Tenant does not elect to terminate the Lease pursuant to the terms of the Land Purchase Option Addendum attached hereto. The amount so paid by Tenant upon the execution of this Lease (or the amount thereof outstanding at any time) shall bear simple interest at the rate of seven percent (7%) per annum throughout the Initial Term. Landlord shall pay to Tenant the accrued amount of such interest on the Commencement Date and thereafter on January 1st of each year during the Initial Term and on the Expiration Date or the date of any earlier termination of this Lease. In the event Landlord fails to make any such payment to Tenant when due, Tenant shall have the

 

9


right to offset the amount due against the Rent next due to Landlord hereunder. In the event the Property is transferred for any reason and Tenant is required to pay such first and last months rent again, Tenant retains the right to proceed against Joe Shekou and Haidy Shekou for the repayment of such amount Tenant is required to pay again.

 

4.5 Late Charge. Tenant acknowledges that the late payment of any Rent will cause Landlord to incur damages, the exact amount of which would be impractical and extremely difficult to ascertain. Such damages may include, without limitation, processing, accounting, and other administrative costs, loss of use of the overdue funds, and late charges that may be imposed on Landlord by the terms of any encumbrance and note secured by any encumbrance covering any portion of the Property. Landlord and Tenant agree that if Landlord does not receive any payment of Rent by the eighth (8th) day of a calendar month in which Rent is due and Landlord has notified Tenant in writing by the fourth (4th) day of such calendar month that such Rent has not been received, Tenant shall pay to Landlord on demand a late charge in an amount equal to the late charge imposed by the then current senior mortgage holder; provided, however, Tenant shall not be responsible for a late charge that exceeds five percent (5%) of the Rent for such month. The parties agree that such late charges represent a reasonable estimate of the cost that Landlord will incur by reason of late payment by Tenant.

 

4.6 Interest. Notwithstanding any other provisions of this Lease, any payment owed by either party to the other hereunder, including payment of Rent hereunder, that is not paid when due shall bear interest from the date that is fifteen (15) days following written notice to the party from whom such payment is due that such payment is past due until the same has been fully paid, such interest to be at a rate (the “Default Rate”) that is equal to the lesser of (i) two percent (2%) above the rate of interest publicly announced from time to time by Bank of America N.T. & S.A. at its San Francisco headquarters as its “Reference Rate” for commercial borrowing adjusted monthly on the first day of each month, such adjustment to be effective for the following month, and (ii) the highest rate permitted by law.

 

5. OCCUPANCY

 

5.1 Use. Tenant shall use and occupy the Premises for general office purposes and related lawful uses that may from time to time be necessary or desirable to be incorporated into Tenant’s corporate headquarters, including, without limitation, computer centers, client briefing and service centers, training rooms, employee showers and fitness rooms, and dining facilities and other food service operations.

 

5.2 Signage. Tenant, at its sole cost, shall have exclusive signage rights for the Property, including the right to install one or more signs on the exterior of the Building and to install one or

 

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more monument signs on the Land. Such signage shall be subject to the approval of the City of San Rafael, if and to the extent required; and such signage shall also be subject to the approval of Landlord, with such approval by landlord not to be unreasonably withheld, delayed, or conditioned.

 

5.3 Satellite Dish. Tenant shall have the right to use the roof of the Building (or another portion of the Property equally suitable) for the purpose of installing, operating, maintaining and replacing Tenant’s communications equipment, including, without limitation, satellite dishes, microwave antennas and similar devices (“Communications Equipment”). Tenant may, at its sole cost and expense, erect, maintain, install and operate such Communications Equipment on the roof of the Building (or another location on the Property equally suitable) in one or more locations specified by Tenant and subject to Landlord’s approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall be entitled to run appropriate conduit from such Communications Equipment to the Premises, in order to connect Tenant’s related equipment in the Premises to such Communications Equipment on the roof of the Building. Tenant shall at all times maintain such Communications Equipment in good order and repair and Tenant shall be responsible for any and all costs and expenses incurred in connection with such Communications Equipment, including, without limitation, the installation of conduit from such Communications Equipment to the Premises. In the event the Communications Equipment is installed on the roof of the Building, Tenant shall construct a walkway and railing on the roof of the Building so as to reach the Communications Equipment and to discourage unauthorized access to other portions of the roof. Tenant’s installation, repair, maintenance, and operation of the Communications Equipment shall be subject to and in accordance with all applicable governmental codes, laws, rules, regulations or ordinances in effect from time to time. Tenant shall indemnify and hold harmless Landlord from all damage, loss, cost, and liability arising from Tenant’s operation and maintenance of the Communications Equipment.

 

5.4 Emergency Generator and Fuel Storage Tank. Tenant, at its sole cost and expense, shall have the right to install an emergency generator system serving the Building, including an emergency generator, fuel storage tank and associated piping and connections. The location of the generator and fuel storage tank (which may be underground or above ground) on the Land shall be determined by Tenant and approved by Landlord, such approval not to be unreasonably withheld, conditioned or delayed; provided, however, that in the event locating the fuel storage tank above ground is both reasonable and not disruptive of Tenant’s use of the Property, it shall not be unreasonable for Landlord to refuse to consent to locating the fuel storage tank underground. Tenant shall at all times maintain such emergency generator system, including the fuel storage tank, in good condition and repair, and Tenant shall comply with all applicable federal, state and local laws, statutes and regulations relating to the operation and

 

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maintenance of such system, including, without limitation, California Health and Safety Code Sections 25280 et seq. (and regulations promulgated thereto). Tenant shall indemnify and hold harmless Landlord from all damage, loss, cost, and liability arising from Tenant’s operation and maintenance of the fuel storage tank installed by Tenant pursuant to this Section. Upon the expiration or early termination of the Term, Tenant shall, at its expense, remove the fuel storage tank (unless Landlord elects to have the tank remain and assume all liability therefore) in accordance with all applicable federal, state and local laws, statutes and regulations.

 

6. ASSIGNMENT, MORTGAGE, SUBLETTING

 

6.1 Consent Required. Except as provided below, neither Tenant, nor Tenant’s legal representatives, successors or assigns, shall assign, mortgage or encumber this Lease, or sublet, or use or occupy or permit the Premises or any part thereof to be used or occupied by others, without the prior consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed. If this Lease be assigned, or if the Premises or any part thereof be sublet or occupied by any party other than Tenant, Landlord may, after default by Tenant and the failure to cure such default during any applicable cure periods, collect rent from the assignee, subtenant or occupant and apply the net amount collected to the rent herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as Tenant, or a release of Tenant from the further performance by Tenant of the obligations on the part of Tenant herein contained.

 

6.2 Consent not Required. Tenant shall have the right, without Landlord’s consent, but with notice to Landlord, to assign this Lease or sublet all or a portion of the Premises to any parent, subsidiary, affiliate or successor of Tenant, to any person, firm or corporation which shall be controlled by, under the control of, or under common control with Tenant, or to any entity into which Tenant may be merged or consolidated or which purchases all or substantially all of the assets of Tenant. No assignment or sublease, whether with or without Landlord’s consent, shall relieve Tenant from its covenants and obligations under this Lease.

 

6.3 Standard of Reasonableness. Notwithstanding any contrary provision of the foregoing, it shall be reasonable for Landlord to deny such consent to an a