Fixed Rent (a) Commencing as of the Rent Commencement Date, Tenant shall pay Fixed Rent to Landlord, or Landlord’s designee as designated in a written notice to Tenant at such address as Landlord shall from time to time designate by written notice to Tenant. Except as hereinafter provided, the Fixed Rent shall be due and payable in the amounts set forth on Schedule 2 hereto for the respective periods shown on such Schedule 2. Fixed Rent shall be due and payable in advance on the first day of each month (or if such first day is not a business day, the first business day of each month), commencing on the Date of Rent Commencement, during the Term (each such date being referred to herein as a “Due Date”). Notwithstanding the foregoing, from the Date of Rent Commencement until Tenant is notified otherwise by Landlord and Lender, Fixed Rent shall be paid by wire transfer to the account specified in the rent direction letter from Landlord to Tenant delivered concurrently with the execution and delivery of this Lease.
(b) If the Lease Commencement Date or Rent Commencement Date shall be on any day other than the first day of a calendar month, then all amounts to be paid on such dates shall be prorated on a per diem basis.
(c) If any installment of Fixed Rent is not paid on the respective Due Date, Tenant shall pay Landlord interest on such overdue payment at the Lease Default Rate, accruing from the Due Date of such payment until the same is paid; provided, however, the foregoing obligation to pay the Default Rate shall not be required for the first late payment of Fixed Rent in any calendar year so long as such delay in payment does not continue for longer than a period of ten (10) days. All Fixed Rent and Additional Rent shall be payable in U.S. Dollars.
(d) Commencing as of the Lease Commencement Date, all taxes, costs, expenses, and other amounts which Tenant is required to pay pursuant to this Lease (other than Fixed Rent), together with every fine, penalty, interest and cost which may be added in accordance herewith for non-payment or late payment thereof shall constitute additional rent (“Additional Rent”). All Additional Rent due to Landlord (or its designee) shall be paid directly by Tenant within thirty (30) days after Landlord gives written notice that payment is due, unless otherwise provided in this Lease, in which case, the Additional Rent shall be paid as otherwise so provided. Unless otherwise provided herein, Additional Rent payable by Tenant to a third (3rd) party (i.e., utility charges, maintenance contracts, supply contracts, vendor contracts, etc.) shall be paid as and when the same shall be due and payable pursuant to Tenant’s agreement or other arrangement with the applicable third (3rd) party. If Tenant shall fail to pay any such Additional Rent or any other sum due hereunder when the same shall become due (after the expiration of the applicable cure periods therefor), Landlord shall have all rights, powers and remedies with respect thereto as are provided herein or by Law in the case of non-payment of any Fixed Rent and shall, except as expressly provided herein, have the right (after the expiration of the applicable cure periods thereof), not sooner than ten (10) days after notice to Tenant (except in the event of an emergency, as reasonably determined by Landlord, in which case prior notice shall not be necessary) of its intent to do so, to pay the same on behalf of Tenant, and Tenant shall repay such amounts to Landlord on demand. Tenant shall pay to Landlord interest at the Lease Default Rate on all overdue Additional Rent and other sums due hereunder, in each case paid by Landlord or Lender on behalf of Tenant, from the date of payment by Landlord or Lender until repaid by Tenant.
Base Rental (a) Tenant hereby agrees to pay as the base annual rental ("Base ---- Rental") for the lease and use of the Leased Premises, an annual amount equal to ------ the product of (x) Twenty-Five and 35/100 Dollars ($25.35) ("Base Rental Rate"), ---------------- multiplied by (y) the number of square feet of Net Rentable Area comprising the Leased Premises, subject to increase pursuant to subsection (b) below. From and after the expiration of the Initial Term (to the extent Tenant renews and extends this Lease pursuant to Section 7.1), Tenant agrees to pay Base Rental for the Leased Premises at the Base Rental Rate determined in accordance with the provisions of Section 7.1, subject to increase pursuant to subsection (b) below.
(b) The Base Rental payable under subsection (a) shall be adjusted from time to time in accordance with the following provisions (any such adjustment hereinafter the "Base Rental Adjustment"): ----------------------
(i) Base Rental includes a component (the "Basic Cost Component") -------------------- attributable to Basic Costs (hereinafter defined) equal to $8.44 per square foot of Net Rentable Area in the Leased Premises. The Basic Cost Component is based on an estimate of Basic Costs to be incurred during calendar year 1999 as of the Effective Date. Prior to January 1 of each calendar year during the Term after the calendar year in which the Commencement Date occurs, or as soon thereafter as reasonably practical, Landlord shall provide an estimate of Basic Costs for the forthcoming calendar year. Tenant shall pay Base Rental for such forthcoming calendar year equal to the Base Rental set forth in subsection (a) above for such time period adjusted upward by an amount equal to the product of (A) the difference between the Basic Cost Component and the coming calendar year's estimated Basic Costs per square foot of Net Rentable Area in the Building, multiplied by (B) the Net Rentable Area of the Leased Premises.
(ii) By June 1 of each calendar year during Tenant's occupancy, or as soon thereafter as reasonably practical, Landlord shall furnish to Tenant a statement of Basic Costs for the previous calendar year or partial calendar year, as applicable, occurring during the Term. If actual Basic Costs for such calendar year or partial calendar year, as applicable, are greater than Landlord's estimate thereof pursuant to clause (i) above, Tenant shall be obligated to pay to Landlord within thirty (30) days of the delivery of such statement a lump sum payment (which payment shall be deemed a payment of Rent hereunder for all purposes) equal to the product of (x) the Net Rentable Area in the Leased Premises, multiplied by (y) the amount by which actual Basic Costs per square foot of Net Rentable Area in the Building exceed Landlord's estimate thereof for such calendar year or partial calendar year, as applicable. If actual Basic Costs for such calendar year or partial calendar year, as applicable, are less than Landlord's estimate thereof pursuant to clause (i) above, Landlord shall promptly after delivery of such statement make a lump sum payment to Tenant (or at Landlord's option, Landlord may credit such lump sum amount against remaining Base Rental installments for the current calendar year) equal to the product of (A) the Net Rentable Area in the Leased Premises, multiplied by (B) the amount by which estimated Basic Costs per square foot of Net Rentable Area in the Building exceed the actual amount thereof (to the extent such excess was actually paid by Tenant, but in no event shall such payment or credit be in an amount which would result in Tenant paying Base Rental for the applicable calendar year in an amount less than the annual Base Rental specified in subsection (a) above). The effect of this reconciliation payment (the "Annual Reconciliation Payment") is that Tenant ----------------------------- will pay during the Term its proportionate share (as defined in clause (iii) below) of Basic Costs increases over the Basic Cost Component, and no more. Additionally, Landlord shall not collect from Tenant pursuant to this subsection (b)(ii) any increase in Base Rental in an amount which would result in Landlord collecting from all tenants in the Building in any one (1) calendar year an amount in excess of one hundred percent (100%) of Basic Costs for such calendar year. The provisions of this subsection (ii) shall survive the expiration or earlier termination of this Lease.
(iii) All increases in Basic Costs shall be paid by Tenant in the proportion that the Net Rentable Area of the Leased Premises bears to ninety-five percent (95%) of the total Net Rentable Area of the space leased or held for lease in the Building, or to the total Net Rentable Area of space leased in the Building (if such total leased area is greater than ninety-five percent (95%) of the total Net Rentable Area of space leased or held for lease in the Building).
(iv) Nothing contained in this subsection (b) shall be construed at any time so as to reduce the annual Base Rental payable hereunder below the amount set forth in subsection (a) above.
(c) Basic Costs," as that term is used herein, shall ----------- consist of all Operating Expenses (defined below) of the Project as reasonably allocated by Landlord, computed on an accrual basis and determined in accordance with generally accepted accounting principles consistently applied. "Operating --------- Expenses," as that term is used herein, shall mean all expenses and costs (but -------- excluding charges separately paid by other tenants of the Project or other third parties other than through the payment of its share of operating expenses) of every kind and nature that Landlord shall pay or become obligated to pay because of or in connection with the ownership, maintenance, repair, and operation of the Project, including but not limited to, the following:
(i) Wages, salaries, fees and all related expenses (including, without limitation, taxes, insurance, burdens and benefits and costs incurred in providing same) of all personnel engaged in the operation, maintenance, repair and access control of the Project and personnel who provide traffic control relating to ingress and egress to and from the Garage and surrounding public streets.
(ii) Cost of all supplies, tools, equipment and materials, whether purchased or leased, used in the operation, maintenance, repair and/or access control of the Project.
(iii) Cost of utilities for the Project, including but not limited to, water, steam, sewer, waste disposal, gas and electricity, and power for heating, lighting, air conditioning and ventilating the Project (including all Common Areas, General Common Areas and Service Areas).
(iv) Management fees paid to the property manager for the management of the Project (provided, however, in no event shall Landlord include in Operating Expenses in any one calendar year a net management fee in excess of three percent (3%) of the gross revenues of the Project for such calendar year; and, provided further, however, in lieu thereof, Landlord may charge Tenant separately, and not as a part of Basic Costs, for a management fee contribution which shall not in any one (1) calendar year exceed three percent (3%) of the Base Rental and the Base Rental Adjustment payable by Tenant for such calendar year) and the cost of all maintenance and service agreements for the Project and the equipment therein, including but not limited to, access control service, window cleaning, traffic control, janitorial service, landscape maintenance, and elevator maintenance.
(v) Legal and accounting costs for the Project, including a reasonable allocation of off-site costs, together with the costs of annual audits of the Project operating costs by certified public accountants.
(vi) Cost of all insurance relating to the Project, including but not limited to, fire and extended coverage insurance, rental loss or abatement insurance, and casualty and liability insurance applicable to the Project and Landlord's personal property used in connection therewith, plus the cost of all deductible payments made by Landlord in connection therewith.
(vii) Cost of repairs, replacements and general maintenance (excluding repairs, replacements and general maintenance paid for with proceeds of insurance or condemnation or by third parties).
(viii) Any and all common area maintenance costs related to public areas, including without limitation, sidewalks and landscaping for the Project.
(ix) All taxes, assessments and governmental charges, whether or not directly paid by Landlord, whether federal, state, county or municipal and whether they be by taxing districts or any Governmental Authority (defined in Section 5.7 hereof) presently taxing the Project or by others subsequently created, attributable to the Project or its operation and an allocation to the Project of the taxes, assessments and governmental charges for the roads which service the Complex, but excluding, however, taxes and assessments attributable to the personal property of tenants, federal and state taxes on income, death taxes, franchise taxes, and any taxes imposed or measured on or by the income of Landlord from the operation of the Project or imposed in connection with any change of ownership of the Project; provided, however, if the taxing authorities do not separately assess the Project, Landlord may make a reasonable allocation of the taxes, assessments or charges to give effect to this sentence, and provided further, however, that if at any time during the Term, the present method of taxation or assessment shall be so changed that the whole or any part of the taxes, assessments, levies, impositions or charges now levied, assessed or imposed on real estate and the improvements thereon shall be discontinued and as a substitute therefor, or in lieu of or in addition thereto, taxes, assessments, levies, impositions or charges shall be levied, assessed or imposed, wholly or partially, as a capital levy or otherwise, on the rents received from the Project or the rents reserved herein or any part thereof, then such substitute or additional taxes, assessments, levies, impositions or charges, to the extent so levied, assessed or imposed with respect to the Project, shall be deemed to be included within Operating Expenses. Consultation, accounting and legal fees and other fees and costs resulting from any challenge of tax assessments as reasonably allocated by Landlord also shall be included in Operating Expenses. Tenant hereby waives any and all rights under Legal Requirements to an administrative or judicial review of any determination of the appraised value of the Project, including without limitation, any rights available under the Texas Tax Code (as amended). It is agreed that Tenant will be responsible for ad valorem taxes on its personal property and on the value of the leasehold improvements in the Leased Premises to the extent that the same exceed Building Standard Improvements (defined in Exhibit C-2) (and if the taxing authorities do not separately assess Tenant's leasehold improvements, Landlord may make a reasonable allocation of the ad valorem taxes allocated to the Project to give effect to this sentence). All taxes, assessments and governmental charges shall be included in Operating Expenses in the calendar year in which such taxes, assessments or governmental charges are levied, assessed or imposed without regard to when such taxes, assessments or governmental charges are payable; provided, however, in the case of special taxes and assessments which may be payable in installments, only the amount of each installment accruing during a calendar year shall be included in the Operating Expenses for such year.
(x) Amortization of the cost, together with reasonable financing charges, of furnishing and installing capital investment items which are (1) included in the Basic Cost Component and any unamortized amount of such costs for subsequent years, (2) primarily for the purpose of reducing Operating Expenses or avoiding increases in Operating Expenses in Landlord's good faith estimate, (3) primarily for the purpose of promoting safety, (4) required to comply with the Americans with Disabilities Act of 1990, as amended, 42 U.S.C. ss. 12101 et seq., or (5) required by Legal Requirements that become effective after the Commencement Date. All such costs shall be amortized over the useful life of the capital investment items with the useful life and amortization schedule being determined in accordance with generally accepted accounting principles.
(xi) Costs of licenses, permits and inspection fees related to the Project.
(xii) Any allocation of expenditures for service, repair, maintenance or operation of the Complex attributable to the Project, determined in accordance with generally accepted accounting principles.
(xiii) Cost of an office in the Building or allocation of a central office in the Complex (if applicable) maintained for management of the Project (but not the costs reasonably allocable to any portion of such office used for leasing activities for the Project). Anything in the foregoing provisions hereof to the contrary notwithstanding, Operating Expenses shall not include the following:
(A) Leasing commissions, attorneys' fees, costs, disbursements and other expenses incurred in connection with negotiations for leases with tenants, other occupants, or prospective tenants or other occupants of the Project, or similar costs incurred in connection with disputes with tenants, other occupants, or prospective tenants or other occupants of the Project.
(B) Non-cash items, such as deductions for depreciation or obsolescence of the Project and the Project equipment, or interest on capital invested (except as provided in clause (x) above).
(C) Payments of principal and interest or other finance charges made on any debt (except as provided in clause (x) above), and rental payments made under any ground or underlying lease or leases, except to the extent that a portion of such payments is expressly for ad valorem/real estate taxes or insurance premiums on the Project.
(D) Costs incurred by Landlord in the sale, financing, refinancing, mortgaging, selling or change of ownership of the Project, including brokerage commissions, attorneys' and accountants' fees, closing costs, title insurance premiums, transfer taxes and interest charges.
(E) Costs which are to be capitalized in accordance with generally accepted accounting principles not included under Section 3.2(c)(i) through (xiii).
(F) Costs and expenses attributable to the initial construction of the Project.
(G) Any penalty charges inccured by Landlord due to Landlord's late payment of taxes, utility bills or other amounts included in Operating Expenses except to the extent Landlord was contesting the payment of any such item in good faith.
(H) Allowances and other costs and expenses incurred in fixturing, furnishing, renovating or otherwise improving, decorating or redecorating space for tenants or prospective tenants of the Building, or vacant leasable space in the Building (including permit, license and inspection costs but excluding normal maintenance, repair and replacement costs).
(I) Cost of any political or charitable donations or contributions.
(d) If an Annual Reconciliation Payment is due by Tenant to Landlord with respect to the immediately preceding calendar year pursuant to Section 3.2(b)(ii) above, Tenant, at its sole cost and expense, shall have the right (to be exercised by giving notice to Landlord within sixty (60) days after receipt of the statement of Basic Costs for such previous calendar year) to audit and/or inspect Landlord's books and records pertaining only to items affecting Basic Costs for such preceding calendar year; provided that such audit and/or inspection must be commenced and concluded by December 31 of the year following the year to which any such disputed item relates; and provided further that such audit and/or inspection does not unreasonably interfere with the conduct of Landlord's business. Notwithstanding the foregoing, if Tenant elects to audit and/or inspect Landlord's books and records to the extent permitted above, Landlord, in its sole discretion, may elect to furnish Tenant a copy of an audit prepared by a certified public acc
Option to Extend Lease Term Landlord hereby grants to Tenant an option to extend the Lease Term for either a) a one (1) year period; b) a two (2) year period; or c) a three (3) year period (“Option Period”), on the following terms and conditions:
A. Tenant must give Landlord notice in writing of its exercise of the option in question, and the length of the Option Period, no earlier than 270 days before the date the Lease Term would end, but for the exercise of the said option, and no later than 180 days before the date the Lease Term would end, but for the exercise of the said option.
B. Tenant may not extend the Lease Term pursuant to any option granted by this paragraph if Tenant is in Default beyond any applicable notice and cure period as of the date of exercise of the option, or as of the date this Lease would have been terminated but for said exercise.
C. All terms, covenants and conditions of this Lease shall apply during the option period, except that the Base Monthly Rent for the Option Period shall be determined as provided in section D below.
D. The Base Monthly Rent for the Option Period shall be the greater of: (i) the Base Monthly Rent payable for the last month of the Premises Lease Term, or (ii) ninety-five (95%) percent of the then fair market monthly rent determined as of the commencement of the Option Period, based upon a lease for premises of like size, quality and location in the Menlo Park area. If the parties are unable to agree upon the fair market monthly rent for the Premises for the Option Period within 30 days from Tenant’s delivery of notice of exercise of the option, then the fair market monthly rent shall be determined by appraisal conducted pursuant to subsection E of this paragraph.
E. In the event it becomes necessary to determine by appraisal the fair market rent of the Premises for the purpose of establishing the Base Monthly Rent during the Option Period, then such fair market monthly rent shall be determined by three real estate appraisers, all of whom shall be members of the American Institute of Real Estate Appraisers, with not less than five years’ experience appraising real property (other than residential or agricultural property) located in San Mateo County, California, in accordance with the following procedures:
(i) The party demanding an appraisal (the “Notifying Party”) shall notify the other party (the “Non-Notifying Party”) thereof by delivering a written demand for appraisal, which demand, to be effective, must give the name, address, and qualifications of an appraiser selected by the Notifying Party. Within 10 days of receipt of said demand, the Non-Notifying Party shall select its appraiser and notify the Notifying Party, in writing, of the name, address, and qualifications of an appraiser selected by it. Failure by the Non-Notifying Party to select a qualified appraiser within said 10 business day period shall be deemed a waiver of its right to select a second appraiser on its own behalf; and the Notifying Party shall select a second appraiser on behalf of the Non-Notifying Party within five days after the expiration of said 10 business day period. Within 10 business days from the date the second appraiser shall have been appointed, the two appraisers so selected shall appoint a third appraiser. If the two appraisers fail to select a third qualified appraiser, the third appraiser shall be selected by the American Arbitration Association or if it shall refuse to perform this function, then at the request of either Landlord or Tenant, such third appraiser shall be promptly appointed by the American Arbitration Association or, if it shall refuse to perform this function then, at the request of either Landlord or Tenant, such third appraiser shall be promptly appointed by the then Presiding Judge of the Superior Court of the State of California, County of San Mateo.
(ii) The three appraisers so selected shall meet in Menlo Park, California, not later than 20 days following the selection of the third appraiser. At said meeting the appraisers so selected shall attempt to determine the fair market monthly rent of the Premises for the Option Period.
(iii) If the appraisers so selected are unable to complete their determinations in one meeting, they may continue to consult at such times as they deem necessary for a 15 day period from the date of the first meeting, in an attempt to have at least two of them agree. If, at the initial meeting or at any time during said 15 day period, two or more of the appraisers so selected agree on the fair market rent of the Leased Premises, such agreement shall be determinative and binding on the parties hereto, and the agreeing appraisers shall, in simple letter form executed by the agreeing appraisers, forthwith notify both Landlord and Tenant of the amount set by such agreement.
(iv) If two or more appraisers do not so agree within said 15 day period, then each appraiser shall, within five days after the expiration of said 15 day period, submit his independent appraisal in simple letter form to Landlord and Tenant stating his determination of the fair market rent of the Premises for the Option Period. The parties shall then determine the fair market rent for the Premises by determining the average of the fair market rent set by each of the appraisers. However, if the lowest appraisal is less than eighty-five percent (85%) of the middle appraisal then such lowest appraisal shall be disregarded and/or if the highest appraisal is greater than one hundred fifteen percent (115%) of the middle appraisal then such highest appraisal shall be disregarded. If the fair market rent set by any appraisal is so disregarded, then the average shall be determined by computing the average set by the other appraisals that have not been disregarded.
(v) Nothing contained herein shall prevent Landlord and Tenant from jointly selecting a single appraiser to determine the fair market rent of the Premises, in which event the determination of such appraisal shall be conclusively deemed the fair market rent of the Premises.
(vi) Each party shall bear the fees and expenses of the appraiser selected by or for it, and the fees and expenses of the third appraiser (or the joint appraiser if one joint appraiser if one joint appraiser is used) shall be borne fifty percent (50%) by Landlord and fifty percent (50%) by Tenant.
F. The option rights of Tenant under the within article 20 of this Lease, and the extended term thereunder, are granted solely and exclusively for Tenants’ personal benefit and may not be assigned or transferred by Tenant other than as part of a Voluntary Permitted Transfer.
G. The Base Monthly Rent for the remainder of the Option Period, if any, shall be adjusted by annual CPI increases.