STANDARD OFFICE LEASE
BY AND BETWEEN
ALTURAS SIETE II, LLC,
AN IDAHO LIMITED LIABILITY COMPANY
AS LANDLORD,
AND
CASTLE BIOSCIENCES, INC.,
A DELAWARE CORPORATION
AS TENANT
3707 N. 7TH STREET, PHOENIX, ARIZONA
SUITE 110, 305A, 307 AND 330
INDEX
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Page(s)
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ARTICLE 1 BASIC LEASE PROVISIONS
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1
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ARTICLE 2 TERM/PREMISES
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2
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ARTICLE 3 RENTAL
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4
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ARTICLE 4 SECURITY DEPOSIT - NONE
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9
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ARTICLE 5 HOLDING OVER
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9
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ARTICLE 6 OTHER TAXES
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9
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ARTICLE 7 USE
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10
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ARTICLE 8 CONDITION OF PREMISES
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11
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ARTICLE 9 REPAIRS AND ALTERATIONS
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11
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ARTICLE 10 LIENS
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13
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ARTICLE 11 PROJECT SERVICES
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14
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ARTICLE 12 RIGHTS OF LANDLORD
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16
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ARTICLE 13 INDEMNITY: EXEMPTION OF LANDLORD FROM LIABILITY
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17
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ARTICLE 14 INSURANCE
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18
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ARTICLE 15 ASSIGNMENT AND SUBLETTING
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20
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ARTICLE 16 DAMAGE OR DESTRUCTION
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23
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ARTICLE 17 SUBORDINATION
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23
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ARTICLE 18 EMINENT DOMAIN
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25
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ARTICLE 19 DEFAULT
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25
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ARTICLE 20 REMEDIES
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26
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ARTICLE 21 TRANSFER OF LANDLORD'S INTEREST
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28
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ARTICLE 22 BROKER
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29
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ARTICLE 23 PARKING
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29
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ARTICLE 24 WAIVER
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29
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ARTICLE 25 ESTOPPEL CERTIFICATE
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30
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ARTICLE 26 LIABILITY OF LANDLORD
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30
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ARTICLE 27 INABILITY TO PERFORM
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31
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ARTICLE 28 HAZARDOUS WASTE
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31
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ARTICLE 29 SURRENDER OF PREMISES; REMOVAL OF PROPERTY
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33
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ARTICLE 30 MISCELLANEOUS
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34
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ARTICLE 31 SIGNAGE/DIRECTORY
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39
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ARTICLE 32 RIGHT TO EXTEND TERM
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40
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ARTICLE 33 RIGHT OF FIRST OFFER
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41
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Exhibit A
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Premises
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Exhibit B
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Rules and Regulations
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Exhibit C
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Commencement Letter
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Exhibit D
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Description of Landlord’s Work/Work Letter
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Exhibit E
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Pre-Approved Hazardous Materials
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STANDARD OFFICE LEASE
This Standard Office Lease (“Lease”) is made and entered into and effective as of this 16th day of December, 2019, by and between Alturas Siete II, LLC, an Idaho limited liability company (“Landlord”), and Castle Biosciences, Inc., a Delaware corporation (“Tenant”).
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises described as Suites 110, 305A, 307 and 330, consisting of approximately 11,555 rentable square feet, as generally shown on the plan attached hereto and incorporated herein as Exhibit “A” (“Premises”) of the project (“Project”) located at 3707 N. 7th Street, Phoenix, Arizona, for the Term and upon the terms and conditions hereinafter set forth, and Landlord and Tenant hereby agree as follows:
ARTICLE 1
BASIC LEASE PROVISIONS
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It is intended that the capitalized terms in this column be defined terms in this Lease agreement, unless otherwise defined hereinafter.
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A.
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Term:
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Ninety-one (91) months
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Commencement Date:
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The date of substantial completion of Landlord’s Work providing for occupancy by Tenant, estimated to be January 1, 2020.
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Expiration Date:
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The last day of the ninety-first (91st) full calendar month after the Commencement Date.
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B.
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Square Footage:
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11,555 rentable square feet
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C.
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Basic Rental:
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(referred to herein as “rent”)
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Months of Term
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Monthly
Basic Rental
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Annual Basic Rental Per
Rentable Square Foot**
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1-12
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$19,258.33
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$20.00
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13-24
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$19,739.79
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$20.50
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25-36
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$20,221.25
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$21.00
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37-48
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$20,702.71
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$21.50
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49-60
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$21,184.17
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$22.00
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61-72
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$21,665.63
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$22.50
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73-84
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$22,147.08
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$23.00
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85-91
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$22,628.54
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$23.50
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*
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** Tenant shall also be responsible for and shall pay all applicable rental tax. All such amounts shall be paid concurrently with Monthly Basic Rental.
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D.
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Base Year:
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2020
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E.
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Tenant's Proportionate Share:
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21.4% (calculated based upon the Premises containing 11,555 rentable square feet and the Project containing 54,072 rentable square feet).
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F.
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Security Deposit:
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None
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G.
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Permitted Use:
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Clinical lab, research lab and general office use (and all directly related activities) and no other use, consistent with the character of the Project and in accordance with Applicable Laws.
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H.
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Brokers:
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Cushman & Wakefield (representing Landlord)
Tenant is not represented by a broker in connection with this Lease.
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I.
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Parking Passes:
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On the terms and conditions set forth in Article 23, Tenant shall have the right to utilize up to four (4.00) parking passes per one thousand (1,000) rentable square feet in the Premises (i.e. forty-six (46) parking passes), six (6) of such parking passes shall be to the dedicated covered, reserved portion of the parking area serving the Project at no additional charge (other than applicable taxes) for the entire lease term and six (6) of such parking passes shall be to the covered, reserved portion of the parking area serving the Project, at a rate of $45.00 per pass, per month (payable at such time as Basic Rental is due and payable).
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ARTICLE 2
TERM/PREMISES
The Term of this Lease shall commence on the Commencement Date as set forth in Article 1.A. of the Basic Lease Provisions and shall end on the Expiration Date set forth in Article 1.A. of the Basic Lease Provisions. For purposes of this Lease, the term “Lease Year” shall mean each consecutive twelve (12) month period during the Term, with the first (1st) Lease Year commencing on the Commencement Date; however, (a) if the Commencement Date falls on a day other than the first (1st) day of a calendar month, the first (1st) Lease Year shall end on
the last day of the eleventh (11th) month after the Commencement Date and the second (2nd) and each succeeding Lease Year shall commence on the first (1st) day of the next calendar month, and (b) the last Lease Year shall end on the Expiration Date. If Landlord does not deliver possession of the Premises to Tenant on or before the Commencement Date, Landlord shall not be subject to any liability for its failure to do so, and such failure shall not affect the validity of this Lease nor the obligations of Tenant hereunder, provided however that the Commencement Date shall be amended to the date the Premises are in fact delivered, and any Monthly Basic Rental shall abate and not be due by Tenant until delivery occurs. Landlord and Tenant agree to the number of square feet specified in Article 1.B. of the Basic Lease Provisions. Landlord will deliver to Tenant no less than three (3) days prior to the proposed occupancy date the Commencement Letter in a form substantially similar to that attached hereto as Exhibit “C” (the “Commencement Letter”), which Tenant shall counter-execute and return to Landlord within five (5) days of receipt thereof, if acceptable, or within five (5) days of receipt thereof provide a response to the Commencement Letter with details of the deficiency of the Premises (the “Deficiency Letter”). Failure of Tenant to timely execute and deliver the Commencement Letter, or provide a timely Deficiency Letter shall constitute acknowledgment by Tenant that the statements included in the Commencement Letter are true and correct, without exception.
Landlord shall make those repairs, alterations and additions, if any, to the Leased Premises described in Exhibit “D” attached hereto and incorporated herein for all purposes (the “Landlord’s Work”) upon the terms and conditions contained in Exhibit “D”. The parties acknowledge that as of the date of execution of this Lease, Landlord and Tenant have not yet agreed on final design, plans and specifications for Landlord’s Work. Landlord and Tenant shall diligently work in good faith to agree on the final design, plans and specifications for Landlord’s Work within a reasonable period after the Effective Date, at which time the parties shall update Exhibit “D” to this Lease to reflect the agreed upon design, plans and specifications for Landlord’s Work. All work and installation and materials shall be completed in a good and workmanlike manner, and shall be free of all liens, charges and other claims by any suppliers, laborers or materialmen. Landlord shall diligently pursue completion of Landlord’s Work and deliver the Leased Premises to the Tenant in a timely manner. Landlord shall be responsible for the first $15.00 per rentable square feet or One Hundred Seventy-Three Thousand Three Hundred Twenty-Five and No/100 Dollars ($173,325.00) (“Work Allowance”) of the hard and soft costs relating to the design and construction of Landlord’s Work. Tenant shall be responsible for promptly paying all reasonable costs of Landlord’s Work in excess of the Work Allowance, and Tenant shall promptly pay such amounts to Landlord upon Landlord’s demand therefor.
Tenant's access to the Premises at any time prior to the Commencement Date (“Early Entry”) shall be subject to all of the provisions of this Lease (including, without limitation, the insurance and indemnity provisions), except for the payment of Basic Rental. Such Early Entry shall not advance the Commencement Date. During any Early Entry, Landlord shall not be responsible for any loss, including theft, damage or destruction to any work or material installed or stored by Tenant at the Premises or for any injury to Tenant or Tenant's Agents, unless caused by the gross negligence or willful misconduct of Landlord. Landlord shall have the right to post appropriate notices of non-responsibility and to require Tenant to provide Landlord with evidence that Tenant has fulfilled its obligation to provide insurance pursuant to the provisions of this Lease. Tenant shall reasonably cooperate with Landlord during any such early entry.
Landlord’s Work will be substantially complete upon receipt by Landlord of a temporary or permanent certificate of occupancy, or its equivalent, for the Premises, along with a certificate of completion from Landlord’s architect.
ARTICLE 3
RENTAL
(a)Basic Rental. Tenant agrees to pay to Landlord during the Term hereof, at Landlord's office or to such other person or at such other place as directed from time to time by written notice to Tenant from Landlord, the Monthly Basic Rental (as set forth in Article 1.C. of the Basic Lease Provisions), payable in advance on the first (1st) day of each calendar month, without demand, setoff or deduction, and if this Lease commences or the date of expiration of this Lease occurs other than on the first (1st) day or last day of a calendar month, the Monthly Basic Rental for such month shall be prorated. Notwithstanding the foregoing, if the Commencement Date is not the first day of a month, Monthly Basic Rental for the partial month commencing as of the Commencement Date shall be prorated based upon the actual number of days in such month and shall be due and payable upon the Commencement Date. Any and all amounts due and payable by Tenant pursuant to this Lease (other than the Monthly Basic Rental) shall be deemed “Additional Rent” and Landlord shall be entitled to exercise the same rights and remedies upon default in payment of the Additional Rent as Landlord is entitled to exercise with respect to defaults in Monthly Basic Rental payments. Basic Rental and Additional Rental are collectively referred to as “Rental.”
(b)Increase in Direct Costs. The term “Base Year” means the calendar year set forth in Article 1.D. of the Basic Lease Provisions. If either the Premises and/or the Project is expanded or reduced, then Tenant's Proportionate Share shall be appropriately increased or decreased, and as to the calendar year in which such change occurs, Tenant's Proportionate Share for such calendar year shall be determined on the basis of the number of days during that particular calendar year that such Tenant's Proportionate Share was in effect. If this Lease shall terminate on any date other than the last day of a calendar year, the additional sum payable hereunder by Tenant during the calendar year in which this Lease terminates shall be prorated on the basis of the relationship which the number of days which have elapsed from the commencement of said calendar year to and including said date on which this Lease terminates bears to three hundred sixty five (365).
(c)Definitions. As used herein the term “Direct Costs” shall mean the sum of the following:
(i)“Tax Costs”, which shall mean any and all real estate taxes and other similar charges on real property or improvements, assessments, water and sewer assessments levied against the Project, and all other charges assessed, reassessed or levied upon the Project and appurtenances thereto and the parking or other facilities thereof, or the real property thereunder (collectively the “Real Property”) or attributable thereto or on the rents or issues received or derived therefrom which are assessed, reassessed or levied by the United States, the State of Arizona or any local government authority or agency or any political subdivision thereof, and shall include Landlord's reasonable legal fees, costs and disbursements incurred in connection with proceedings for reduction of Tax Costs or any part thereof; provided, however, if at any time after the date of this Lease the methods of taxation now prevailing shall be altered so that in lieu of or as a supplement to or a substitute for the whole or any part of any Tax Costs, there shall be assessed, reassessed or levied (a) a tax, assessment, reassessment, levy, imposition or charge wholly or partially as a capital or franchise levy or otherwise on the rents or issues derived therefrom, or (b) a tax, assessment, reassessment, levy (including but not limited to any municipal, state or federal levy), imposition or charge measured by or based in whole or in part upon the Real Property and imposed upon Landlord, then except to the extent such items are payable by Tenant under Article 6 below, such taxes, assessments, reassessments or levies or the part thereof so measured or based, shall be deemed to be included in the term “Direct Costs.” In addition, when calculating Tax Costs for the Base Year, special assessments shall only be deemed included in Tax Costs for the Base Year to the extent that such special assessments are included in Tax Costs for the applicable subsequent calendar year during the Term.
(ii)“Operating Costs”, which shall mean all costs and expenses paid or incurred by Landlord in connection with the maintenance, operation, replacement, ownership and repair of the Project, the equipment, the infra-building cabling and wiring, adjacent walks, malls and landscaped and common areas and the parking structure, areas and facilities of the Project. Operating Costs shall include but not be limited to, salaries, wages, medical, surgical and general welfare benefits and pension payments, payroll taxes, fringe benefits, employment taxes, workers' compensation, uniforms and dry cleaning thereof for all personnel who perform duties connected with the operation, maintenance and repair of the Project, its equipment, the intra-building cabling and wiring and the adjacent walks and landscaped areas, including janitorial (excluding janitorial contracted for directly by Tenant solely with respect to the Premises, if any), gardening, security, parking, operating engineer, elevator, painting, plumbing, electrical, carpentry, heating, ventilation, air conditioning and window washing; hired services, provided, however, if such personnel’s employment or duties are not exclusively limited to service at the Project on a full-time basis, then the costs of such personnel included within the Operating Costs shall adjusted to reflect only the proportionate share of such costs which reflect the actual time spent on the Project; a reasonable allowance for depreciation of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project; accountant's fees incurred in the preparation of rent adjustment statements (including, without limitation, bookkeeping and other property accounting costs); legal fees; real estate tax consulting fees; personal property taxes on property used in the maintenance and operation of the Project; fees, costs, expenses or dues payable pursuant to the terms of any covenants, conditions or restrictions or owners' association pertaining to the Project; capital expenditures incurred to effect economies of operation of, or stability of services to, the Project or otherwise incurred in order to enhance or upgrade the safety, security, fire/life/safety or other operating systems of the Project, and capital expenditures required by government regulations, laws, or ordinances including, but not limited to the Americans with Disabilities Act; provided however that any such permitted capital expenditure shall be amortized (with interest at ten percent (10%) per annum) over its useful life and only the amortized portion (together with accrued interest thereon) shall be included in Operating Costs for such year; costs incurred (capital or otherwise) on a regular recurring basis every three (3) or more years for certain maintenance projects (e.g., parking lot slurry coat or replacement of lobby and elevator cab carpeting); the cost of all charges for electricity, gas, water and other utilities furnished to the Project, including any taxes thereon; the cost of all charges for fire and extended coverage, liability and all other insurance in connection with the Project carried by Landlord; the cost of all building and cleaning supplies and materials; the cost of all charges for cleaning, maintenance and service contracts and other services with independent contractors and administration fees; a reasonable property management fee for comparable projects in the Phoenix, Arizona (which fee may be imputed if Landlord has internalized management or otherwise acts as its own property manager); and license, permit and inspection fees relating to the Project. In no event shall costs for any item of utilities included in Direct Costs for any year subsequent to the Base Year be less than the amount included in Direct Costs for the Base Year for such utility item. Notwithstanding anything to the contrary set forth in this Article 3, when calculating Operating Costs for the Base Year, Operating Costs shall exclude (a) increases due to extraordinary circumstances including, but not limited to, labor-related boycotts and strikes, utility rate hikes, utility conservation surcharges, or other surcharges, insurance premiums resulting from terrorism coverage, catastrophic events and/or the management of environmental risks, and (b) amortization of any capital items including, but not limited to, capital improvements, capital repairs and capital replacements (including such amortized costs where the actual improvement, repair or replacement was made in prior years). Furthermore, if a category or categories of services are provided or an unexpected increase in services are provided by Landlord in the Base Year, but not in subsequent calendar year(s), the Base Year shall be retroactively adjusted to reflect the Direct Costs which would have been incurred during the Base Year had such category or categories of services or unexpected increase in services not been provided during the Base Year.
Notwithstanding the foregoing, Operating Costs shall exclude the following: (1) the cost of providing any service directly to and paid directly by any tenant (outside of such tenant’s Common Area Expense payments); (2) the cost of any items for which Landlord is reimbursed by insurance proceeds, condemnation awards, a tenant of the Project, or otherwise to the extent so reimbursed; (3) any real estate brokerage commissions or other costs incurred in procuring tenants, or any fee in lieu of commissions; (4) ground lease payments (if any); (5) costs of items considered capital improvements under generally accepted accounting principles consistently applied except as expressly included in Operating Costs pursuant to the definition above; (6) costs incurred by Landlord due to the violation by Landlord or any tenant of the terms and conditions of any lease of space in the Project that would not have been incurred but for such violation; (7) Landlord’s general corporate overhead (as opposed to overhead expenses related to the Project or real property on which the Project is situated); (8) any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord (other than in the parking facilities for the Project); (9) bad debt expenses and interest, principal, points and fees on debts (except in connection with the financing of items which may be included in Operating Costs) or amortization on any ground lease, mortgage or mortgages or any other debt instrument encumbering the Project (including the real property on which the Project is situated); (10) marketing costs, including leasing commissions and attorneys’ fees in connection with the negotiation and preparation of letters, deal memos, letters of intent, leases, subleases and/or assignments, space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with present or prospective tenants or other occupants of the Project; (11) costs, including permit, license and inspection costs, incurred with respect to the installation of other tenants’ or occupants’ improvements made for tenants or other occupants in the Project or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants in the Project; (12) any costs expressly excluded from Operating Costs elsewhere in this Lease; (13) costs of
any items (including, but not limited to, costs incurred by Landlord for the repair of damage to the Project) to the extent Landlord receives reimbursement from insurance proceeds or from a third party (except that any deductible amount under any insurance policy shall be included within Operating Costs); (14) rentals and other related expenses for leasing an HVAC system, elevators, or other items (except when needed in connection with normal repairs and maintenance of the Project) which if purchased, rather than rented, would constitute a capital improvement not included in Operating Costs pursuant to this Lease; (15) depreciation, amortization and interest payments, except as specifically included in Operating Costs pursuant to the terms of this Lease and except on materials, tools, supplies and vendor-type equipment purchased by Landlord to enable Landlord to supply services Landlord might otherwise contract for with a third party, where such depreciation, amortization and interest payments would otherwise have been included in the charge for such third party’s services, all as determined in accordance with generally accepted accounting principles, consistently applied, and when depreciation or amortization is permitted or required, the item shall be amortized over its reasonably anticipated useful life; (16) expenses in connection with services or other benefits which are not offered to Tenant or for which Tenant is charged for directly but which are provided to another tenant or occupant of the Project, without charge; (17) electric power costs or other utility costs for which any tenant directly contracts with the local public service company (but Landlord shall have the right to “gross up” as if such space was vacant); (18) costs (including in connection therewith all attorneys’ fees and costs of settlement, judgments and/or payments in lieu thereof) arising from claims, disputes or potential disputes in connection with potential or actual claims, litigation or arbitrations pertaining to another tenant of the Project; (19) costs incurred in connection with the original construction of the Project, and (20) and commercially unreasonable amounts or types of insurance.
(d)Determination of Payment.
(i)If for any calendar year ending or commencing within the Term, Tenant's Proportionate Share of Direct Costs for such calendar year exceeds Tenant's Proportionate Share of Direct Costs for the Base Year, then Tenant shall pay to Landlord, in the manner set forth in Sections 3(d)(ii) and (iii), below, and as Additional Rent, an amount equal to the excess (the “Excess”).
(ii)Landlord shall give Tenant a yearly expense estimate statement (the “Estimate Statement”) which shall set forth Landlord's reasonable estimate (the “Estimate”) of what the total amount of Direct Costs for the then-current calendar year shall be and the estimated Excess (the “Estimated Excess”) as calculated by comparing Tenant's Proportionate Share of Direct Costs for such calendar year, which shall be based upon the Estimate, to Tenant's Proportionate Share of Direct Costs for the Base Year. The failure of Landlord to timely furnish the Estimate Statement for any calendar year shall not preclude Landlord from subsequently enforcing its rights to collect any Estimated Excess under this Article 3, once such Estimated Excess has been determined by Landlord. If pursuant to the Estimate Statement an Estimated Excess is calculated for the then-current calendar year, Tenant shall pay, with its next installment of Monthly Basic Rental due, a fraction of the Estimated Excess for the then-current calendar year (reduced by any amounts paid pursuant to the last sentence of this Section 3(d)(ii)). Such fraction shall have as its numerator the number of months which have elapsed in such current calendar year to the month of such payment, both months inclusive, and shall have twelve (12) as its denominator. Until a new Estimate Statement is furnished, Tenant shall pay monthly, with the Monthly Basic Rental installments, an amount equal to one-twelfth (1/12th) of the total Estimated Excess set forth in the previous Estimate Statement delivered by Landlord to Tenant.
(iii)In addition, Landlord shall endeavor to give to Tenant as soon as reasonably practicable following the end of each calendar year, a statement (the “Statement”) which shall state the Direct Costs incurred or accrued for such preceding calendar year, and which shall indicate the amount, if any, of the actual Excess, if any incurred. Upon receipt of the Statement for each calendar year during the Term, if amounts paid by Tenant as Estimated Excess are less than the actual Excess as specified on the Statement, Tenant shall pay, with its next installment of monthly Basic Rental due, the full amount of the Excess for such calendar year, less the amounts, if any, paid during such calendar year as Estimated Excess. If, however, the Statement indicates that amounts paid by Tenant as Estimated Excess are greater than the actual Excess as specified on the Statement, such overpayment shall be credited against (reduce) Tenant's next installments of Estimated Excess. The failure of Landlord to timely furnish the Statement for any calendar year shall not prejudice Landlord from enforcing its rights under this Article 3, once such Statement has been delivered. Even though the Term has expired or been terminated and Tenant has vacated the Premises, when the final determination is made of Tenant's actual Proportionate Share of the Direct Costs for the calendar year in which this Lease terminates, if an Excess (or a reduction) is present, Tenant shall immediately pay to Landlord (or Landlord shall refund to Tenant) an amount as calculated pursuant to the provisions of this Section 3(d). The provisions of this Section 3(d)(iii) shall survive the expiration or earlier termination of the Term.
(e)Intentionally deleted.
(f)Audit Right. Within sixty (60) days after receipt of a Statement by Tenant (“Review Period”), if Tenant disputes the amount set forth in the Statement, Tenant's employees or an independent certified public accountant, designated by Tenant, may, after reasonable notice to Landlord (“Review Notice”) and at reasonable times, inspect Landlord's records at Landlord's offices, provided that Tenant is not then in default after expiration of all applicable cure periods and provided further that Tenant and such accountant or representative shall, and each of them shall use their commercially reasonable efforts to cause their respective agents and employees to, maintain all information contained in Landlord's records in strict confidence. Notwithstanding the foregoing, Tenant shall only have the right to review Landlord's records one (1) time during any twelve (12) month period. If after such inspection, but within thirty (30) days after the Review Period, Tenant notifies Landlord in writing (“Dispute Notice”) that Tenant still disputes such amounts, a certification as to the proper amount shall be made in accordance with Landlord's standard accounting practices, at Tenant's expense, by an independent certified public accountant selected by Landlord. Tenant's failure to deliver the Review Notice within the Review Period or to deliver the Dispute Notice within thirty (30) days after the Review Period shall be deemed to constitute Tenant's approval of such Statement and Tenant, thereafter, waives the right or ability to dispute the amounts set forth in such Statement. If Tenant timely delivers the Review Notice and the Dispute Notice, Landlord shall cooperate in good faith with Tenant and the accountant to show Tenant and the accountant the information upon which the certification is to be based. However, if such certification by the accountant proves that the Direct Costs charged to Tenant, as set forth in the Statement were overstated by more than ten percent (10%), then the cost of the accountant and the cost of such certification shall be paid for by Landlord, provided that in no event shall Landlord be responsible for costs hereunder in excess of the amount of such overstatement. Promptly following the parties receipt of such certification, the parties shall make such appropriate payments or reimbursements, as the case may be, to each other, as are determined to be owing pursuant to such certification. Tenant agrees that this section shall be the sole method to be used by Tenant to dispute the amount of any Direct Costs payable by Tenant pursuant to the terms of this Lease, and Tenant hereby waives any other rights at law or in equity relating thereto.
(g) Controllable Expense Limitation. Notwithstanding anything to the contrary herein, during all Lease Years during the Term hereof, any increases in Tenant’s Proportionate Share of Controllable Direct Costs shall be limited to no more than five percent (5%) per year of the prior year’s Direct Costs, on a cumulative basis. “Controllable Direct Costs” shall mean all Direct Costs except Tax Costs, utilities and insurance.
ARTICLE 4
SECURITY DEPOSIT - NONE
ARTICLE 5
HOLDING OVER
Should Tenant, without Landlord's written consent, hold over after termination of this Lease, Tenant shall, at Landlord's option, become either a tenant at sufferance or a month-to-month tenant upon each and all of the terms herein provided as may be applicable to such a tenancy and any such holding over shall not constitute an extension of this Lease. During such holding over, Tenant shall pay in advance, monthly, Basic Rental at a rate equal to one hundred twenty-five percent (125%) of the rate in effect for the last month of the Term of this Lease including but not limited to Tenant's Proportionate Share of Direct Costs. Nothing contained in this Article 5 shall be construed as consent by Landlord to any holding over of the Premises by Tenant, and Landlord expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or earlier termination of the Term. If Tenant fails to surrender the Premises upon the expiration or termination of this Lease, Tenant agrees to (i) indemnify, defend and hold Landlord harmless from all costs, loss, expense or liability, including without limitation, claims made by any succeeding tenant and real estate brokers claims and attorney's fees and costs, and (ii) compensate Landlord for all costs, losses, expenses and/or liabilities incurred by Landlord as a result of such holdover, including without limitation, losses due to the loss of a succeeding tenancy.
ARTICLE 6
OTHER TAXES
Tenant shall be responsible for and pay all taxes assessed against or levied upon Tenant’s trade fixtures, furnishings, equipment and all other personal property (“Personal Property”) of Tenant located in the Premises. If any or all of Tenant's trade fixtures, furnishings, equipment and other personal property shall be assessed and taxed with property of Landlord, then Landlord
shall attempt to remove Tenant’s Personal Property from such assessment, but if unsuccessful and Landlord incurs tax associated with Tenant’s Personal Property, then Tenant shall reimburse Landlord, within ten (10) days after delivery to Tenant by Landlord of a written statement setting forth such amount, the amount of such taxes applicable to Tenant's Personal Property Tenant shall pay directly to the party or entity entitled thereto all business license fees, gross receipts taxes and similar taxes and impositions which may from time to time be assessed against or levied upon Tenant, as and when the same become due and before delinquency. Notwithstanding anything to the contrary contained herein, any sums payable by Tenant under this Article 6 shall not be included in the computation of “Tax Costs.”
ARTICLE 7
USE
(a)Tenant shall use and occupy the Premises only for the Permitted Use set forth in Article 1.G. of the Basic Lease Provisions and shall not use or occupy the Premises or permit the same to be used or occupied for any other purpose without the prior written consent of Landlord, which consent may be given or withheld in Landlord's sole and absolute discretion, and Tenant agrees that it will use the Premises in such a manner so as not to interfere with or infringe upon the rights of other tenants or occupants in the Project. Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances, governmental regulations or requirements now in force or which may hereafter be in force relating to or affecting (i) the condition, use or occupancy of the Premises (excluding structural changes to the Project not related to Tenant's particular use of the Premises), and/or (ii) improvements installed or constructed in the Premises by or for the benefit of Tenant. Tenant shall not do or permit to be done anything which would invalidate or increase the cost of any fire and extended coverage insurance policy covering the Project and/or the property located therein and Tenant shall comply with all reasonable rules, orders, regulations and requirements of any organization which sets out standards, requirements or recommendations commonly referred to by major fire insurance underwriters, and Tenant shall promptly upon demand and evidence of such increase from Landlord reimburse Landlord for any additional premium charges for any such insurance policy assessed or increased by reason of Tenant's failure to comply with the provisions of this Article.
(b)Tenant, at its sole cost and expense, covenants to conduct its business operations from the Premises strictly in accordance with all city, county, state and federal laws, rules, regulations, ordinances and generally accepted health care industry standards and practices, to the extent same presently exist or may exist in the future (collectively, “Applicable Law”), including but not limited to (i) compliance with any and all Occupational Safety and Health Administration guidelines, rules and standards, and (ii) ensuring that all waste products, including without limitation, any medical waste, if any, generated by Tenant or present within the Premises or the Project as a result of Tenant's use of the Premises, are appropriately used, stored, handled, transported and/or disposed of in strict accordance with all Applicable Laws.
(c)Tenant hereby agrees, at its sole cost and expense, to comply with any and all procedures, practices, rules, standards, guidelines and/or special precautions which are required by any applicable city, county, state and federal law, regulation, ordinance and/or health care standard and practice, as a result of the particular use of the Premises by Tenant.
(d)Tenant agrees not to engage in the practice of abortion services from the Premises. If any of the services provided from the Premises results in protests or demonstrations at the Project, Tenant shall discontinue such services upon notice from Landlord. Tenant agrees not to dispense any drugs for remuneration (including without limitation any medicinal marijuana or similar substances). Tenant shall not allow any client or patient to reside in or remain in the Premises on an overnight or in-patient basis.
ARTICLE 8
CONDITION OF PREMISES
(a)Tenant hereby agrees that as of the Commencement Date, the Premises shall be taken “as is”, “with all faults”, “without any representations or warranties”, and Tenant hereby agrees and warrants that it has investigated and inspected the condition of the Premises and the suitability of same for Tenant's purposes, and Tenant does hereby waive and disclaim any objection to, cause of action based upon, or claim that its obligations hereunder should be reduced or limited because of the condition of the Premises or the Project or the suitability of same for Tenant's purposes. Tenant acknowledges that neither Landlord nor any agent nor any employee of Landlord has made any representations or warranty with respect to the Premises or the Project or with respect to the suitability of either for the conduct of Tenant's business and Tenant expressly warrants and represents that Tenant has relied solely on its own investigation and inspection of the Premises and the Project in its decision to enter into this Lease and let the Premises in the above-described condition. The existing leasehold improvements in the Premises as of the date of this Lease may be referred to herein as the “Tenant Improvements.” The taking of possession of the Premises on or after the Commencement Date by Tenant shall conclusively establish that the Premises and the Project were at such time in satisfactory condition.
ARTICLE 9
REPAIRS AND ALTERATIONS
(a)Landlord's Obligations. Landlord shall (i) maintain the structural portions of the Project (and those associated specifically with the Premises), including the foundation, floor/ceiling slabs, roof, curtain wall, exterior glass, columns, beams, shafts, stairs, stairwells and elevator cabs and common areas, and (ii) maintain and repair the mechanical, electrical, life safety, plumbing, sprinkler systems and heating, ventilating and air-conditioning systems serving the Project (and those associated specifically with the Premises), unless any repairs or maintenance to the foregoing is caused by Tenant, in which case the provisions of Section 9(b) below shall apply.
(b)Tenant's Obligations. Except as expressly provided as Landlord's obligation in this Article 9, Tenant shall keep the Premises in good condition and repair. All damage or injury to the Premises or the Project resulting from the act or negligence of Tenant, its employees, agents or visitors, guests, invitees or licensees or by the use of the Premises, shall be promptly repaired by Tenant at its sole cost and expense, to the satisfaction of Landlord; provided, however, that for damage to the Project as a result of casualty or for any repairs that may impact the mechanical, electrical, plumbing, heating, ventilation or air-conditioning systems of the Project, Landlord shall have the right (but not the obligation) to select the contractor and oversee all such repairs. Landlord may make any repairs which are not promptly made by Tenant after Tenant's receipt of written notice and the reasonable opportunity of Tenant to make said repair within five (5) business days from receipt of said written notice, and charge Tenant for the cost thereof, which cost shall be paid by Tenant within five (5) days from invoice from Landlord. “Receipt” shall be deemed to occur immediately upon delivery of notice by Landlord to Tenant. Tenant shall be responsible for the design and function of all non-standard improvements of the Premises, whether or not installed by Landlord at Tenant's request. Tenant waives all rights to make repairs at the expense of Landlord, or to deduct the cost thereof from the Monthly Basic Rental.
(c)Alterations. Tenant shall make no alterations, installations, changes or additions in or to the Premises or the Project (collectively, “Alterations”) without Landlord's prior written consent; provided that such consent may not be unreasonably withheld, conditioned or delayed if the Alterations are reasonably necessary for the Tenant’s business and are within the general scope of the Tenant Improvements; provided further, however, Tenant shall not be required to obtain Landlord’s consent for any cosmetic alterations, installations, changes or additions in or to the Premises that (a) do not impact the structural, mechanical, electrical, plumbing, fire/life safety or heating, ventilation and air conditioning systems of the Project, (b) are not visible from the outside of the interior of the Premises, (c) do not exceed Fifty Thousand and No/100 Dollars ($50,000.00) in the aggregate in any one (1) Lease Year, and (d) do not require a permit (“Minor Alterations”). Any Alterations approved by Landlord must be performed in accordance with the terms hereof, using only contractors or mechanics approved by Landlord in writing and upon the approval by Landlord in writing of fully detailed and dimensioned plans and specifications pertaining to the Alterations in question, to be prepared and submitted by Tenant at its sole cost and expense. Tenant shall at its sole cost and expense obtain all necessary third-party approvals and permits pertaining to any Alterations approved by Landlord or any Minor Alterations. Tenant shall cause all Alterations and Minor Alterations to be performed in a good and workmanlike manner, in conformance with all applicable federal, state, county and municipal laws, rules and regulations, pursuant to a valid building permit, and in conformance with Landlord's construction rules and regulations. If Landlord, in approving any Alterations, specifies a commencement date therefor, Tenant shall not commence any work with respect to such Alterations prior to such date. Tenant hereby agrees to indemnify, defend, and hold Landlord free and harmless from all liens and claims of lien, and all other liability, claims and demands arising out of any work done or material supplied to the Premises by or at the request of Tenant in connection with any Alterations or any Minor Alterations.
(d)Insurance; Liens. Prior to the commencement of any Alterations, Tenant shall provide Landlord with evidence that Tenant carries “Builder's All Risk” insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may reasonably require, it being understood that all such Alterations shall be insured by Tenant pursuant to Article 14 of this Lease immediately upon completion thereof. In addition, Landlord may, in its reasonable discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien free completion of any such Alteration in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00) (a “Substantial Alteration”) and naming Landlord as a co-obligee.
(e)Costs and Fees; Removal. If permitted Alterations or Minor Alterations are made, they shall be made at Tenant's sole cost and expense and shall be and become the property of Landlord, except that Landlord may, by written notice to Tenant given prior to the end of the Term, require Tenant at Tenant's expense to remove all partitions, counters, railings, cabling, Improvements and other Alterations or Minor Alterations from the Premises, and to repair any damage to the Premises and the Project caused by such removal. The preceding sentence shall not apply to Landlord’s Work. Any and all costs attributable to or related to the applicable building codes of the city in which the Project is located (or any other authority having jurisdiction over the Project) arising from Tenant's plans, specifications, improvements, Alterations or otherwise shall be paid by Tenant at its sole cost and expense. With regard to Alterations (other than Minor Alterations) under this Article 9, Landlord shall be entitled to receive an administrative/coordination fee (which fee shall vary depending upon whether or not Tenant orders the work directly from Landlord) sufficient to compensate Landlord for all reasonable overhead, general conditions, fees and other actual costs and expenses arising from Landlord's involvement with such work.
ARTICLE 10
LIENS
(a)Liens. Tenant shall keep the Premises and the Project free from any mechanics' liens, vendors liens or any other liens arising out of any Alterations and Minor Alterations performed, materials furnished or obligations incurred by Tenant, and Tenant agrees to defend, indemnify and hold Landlord harmless from and against any such lien or claim or action thereon, including but not limited to the lienholder's claim for legal fees or court costs, together with costs of suit and reasonable attorneys' fees and costs incurred by Landlord in connection with any such claim or action. Before commencing any work of Alteration to the Premises, Tenant shall give Landlord at least ten (10) business days' written notice of the proposed commencement of such Alteration work (to afford Landlord an opportunity to post appropriate notices of non-responsibility). If there shall be recorded against the Premises or the Project or the property of which the Premises is a part any claim or lien arising out of any such Alteration work performed, materials furnished or obligations incurred by Tenant and such claim or lien shall not be removed or discharged within ten (10) days of filing, Landlord shall have the right but not the obligation to pay and discharge said lien without regard to whether such lien shall be lawful or correct (in which event Tenant shall reimburse Landlord for any such payment made by Landlord within three (3) business days following written demand therefor), or to require that Tenant promptly deposit with Landlord in cash, lawful money of the United States, one hundred fifty percent (150%) of the amount of such claim, which sum may be retained by Landlord until such claim shall have been removed of record or until judgment shall have been rendered on such claim and such judgment shall have become final, at which time Landlord shall have the right to apply such deposit in discharge of the judgment on said claim and any costs, including attorneys' fees and costs incurred by Landlord, and shall remit the balance thereof to Tenant, however should the amount of any such judgment exceed the deposit as herein required, Tenant shall indemnify, defend and hold Landlord harmless as against any judgment amount so unsatisfied.
(b)Tenant's Work. Tenant shall take all actions reasonably necessary under Applicable Laws to ensure that no liens encumbering Landlord's interest in the Premises arise as a result of any work by or for Tenant within the Premises, including any Alterations (collectively, “Tenant's Work”). With respect to any Substantial Alteration, such actions shall include, without limitation, the recording of a notice of posted security in the Official Records of Maricopa County, Arizona, in accordance with Applicable Laws, and either (i) establish a construction disbursement account, or (ii) furnish and record, in accordance with Applicable Law, a surety bond for the prime contract for the Substantial Alteration at the Premises that meets the requirements of Applicable Law. Tenant shall notify Landlord of the name and address of Tenant's prime contractor who will be performing the Substantial Alteration as soon as it is known. Tenant shall notify Landlord promptly upon the signing of any contract with the prime contractor for any Substantial Alteration to the Premises. Tenant may not enter the Premises to begin initial construction on the Substantial Alteration until Tenant has delivered evidence satisfactory to Landlord that Tenant has complied with the terms of this Section 10(b). Failure by Tenant to comply with the terms of this Section 10(b) (subject to applicable notice and cure periods set forth in this Lease) shall permit Landlord to declare Tenant in default and to terminate this Lease.
ARTICLE 11
PROJECT SERVICES
(a)Basic Services. Landlord agrees to furnish to the Premises, at a cost to be included in Operating Costs, from 7:00 a.m. to 7:00 p.m. Mondays through Fridays, and 8:00 a.m. to 2:00 p.m. Saturdays, excepting local and national holidays, air conditioning and heat all in such reasonable quantities as is reasonably necessary for the comfortable occupancy and use of the Premises by Tenant consistent with Tenant’s Permitted Use. In addition, Landlord, at a cost to be included in Operating Costs, shall assure that electric current, elevator service and water are available to the Premises in such quantities as is reasonably necessary for the comfortable occupancy and use of the Premises by Tenant consistent with Tenant’s Permitted Use. Janitorial and maintenance services shall be furnished as part of the Operating Costs, five (5) days per week, excepting local and national holidays. Tenant shall comply with all rules and regulations which Landlord may establish for the proper functioning and protection of the common area air conditioning, heating, elevator, electrical, intra-building cabling and wiring and plumbing systems all consistent with the comfortable occupancy and use of the Premises by Tenant consistent with Tenant’s Permitted Use. Landlord shall not be liable for, and there shall be no rent abatement as a result of, any stoppage, reduction or interruption of any such services caused by governmental rules, regulations or ordinances, riot, strike, labor disputes, breakdowns, accidents, necessary repairs or other cause, provided however that Landlord will not engage in a repair of any HVAC, plumbing or electrical system without providing Tenant with reasonable prior written notice, and will endeavor to schedule such reasonable repairs during hours that do not disrupt Tenant’s Permitted Use of the Premises. Notwithstanding the foregoing, if there is any interruption of any such services caused by Landlord’s gross negligence or intentional misconduct, and such interruption continues for ten (10) days following Tenant’s delivery of written notice to Landlord, and Tenant ceases operating at the Premises due to such interruption, then Tenant shall be entitled to a day for day abatement of Basic Rental and Additional Rent commencing on the eleventh (11th) day following the date of such notice and continuing until such services(s) have been fully restored.
(b)Excess Usage. [deleted and reserved]
(c)Additional Electrical Service. [deleted and reserved]
(d)HVAC Balance. [deleted and reserved]
(e)Telecommunications. Upon request from Tenant from time to time, Landlord will provide Tenant with a listing of telecommunications and media service providers serving the Project, and Tenant shall have the right to contract directly with the providers of its choice. If Tenant wishes to contract with or obtain service from any provider which does not currently serve the Project or wishes to obtain from an existing carrier services which will require the installation of additional equipment, such provider must, prior to providing service, enter into a written agreement with Landlord setting forth the terms and conditions of the access to be granted to such provider. In considering the installation of any new or additional telecommunications cabling or equipment at the Project, Landlord will consider all relevant factors in a reasonable and non-discriminatory manner, including, without limitation, the existing availability of services at the Project, the impact of the proposed installations upon the Project and its operations and the available space and capacity for the proposed installations. Landlord may also consider whether the proposed service may result in interference with or interruption of other services at the Project or the business operations of other tenants or occupants of the Project. In no event shall Landlord be obligated to incur any costs or liabilities in connection with the installation or delivery of telecommunication services or facilities at the Project. All such installations shall be subject to Landlord's prior approval and shall be performed in accordance with the terms of Article 9. If Landlord approves the proposed installations in accordance with the foregoing, Landlord will deliver its standard form agreement upon request and will use commercially reasonable efforts to promptly enter into an agreement on reasonable and non-discriminatory terms with a qualified, licensed and reputable carrier confirming the terms of installation and operation of telecommunications equipment consistent with the foregoing.
(f)After-Hours Use. Landlord agrees that heating, ventilation and air conditioning to the Premises shall be available outside of the times provided in Section 11(a) above, subject to the terms of this paragraph. If Tenant requires heating, ventilation and/or air conditioning during times other than the times provided in Section 11(a) above, Tenant shall give Landlord such advance notice as Landlord shall reasonably require and shall pay Landlord's standard charge for such after-hours use if such use is on a non-recurring basis. Should Tenant wish to occupy and use the Premises after the dates and times permitted in Section 11(a), then Landlord and Tenant agree to meet and discuss the use during expanded hours (“Expanded Hours”). It is understood and agreed that Tenant may elect to use the Premises on an Expanded Hours basis (e.g., providing a second shift of workers as demand from the Tenant’s business increases). Landlord and Tenant agree that should the Tenant operate its business on an Expanded Hour basis then the parties will work together to provide sufficient service (i.e., utilities) to the Premises, with Tenant responsible for reimbursement of any incremental expenses incurred by Landlord for such Expanded Hours use. Notwithstanding anything to the contrary, Tenant shall not be charged after-hours HVAC charges for cooling specific to its server room.
(g)Reasonable Charges. Landlord may impose a reasonable charge for any utilities or services (other than electric current and heating, ventilation and/or air conditioning which shall be governed as set forth herein above) utilized by Tenant in excess of the amount or type outside of Tenant’s Permitted Use or during Expanded Hours.
(h)Sole Electrical Representative. Tenant agrees that Landlord shall be the sole and exclusive representative with respect to, and shall maintain exclusive control over, the reception, utilization and distribution of electrical power, regardless of point or means of origin, use or generation. Tenant shall not have the right to contract directly with any provider of electrical power or services.
ARTICLE 12
RIGHTS OF LANDLORD
(a)Right of Entry. Landlord and its agents shall have the right to enter the Premises at all reasonable times for the purpose of cleaning the Premises, examining or inspecting the same, serving or posting and keeping posted thereon notices as provided by law, or which Landlord deems necessary for the protection of Landlord or the Project. Landlord and its agents may enter the Premises, after proper notice, and at all reasonable times for the purpose of showing the same to prospective tenants (provided such showings to prospects are within 12 months from the end of the Term), lenders or purchasers of the Project (provided such showings to lenders and prospects are in accordance with subsection 12(d)), and for making such alterations, repairs, improvements or additions to the Premises or to the Project as Landlord may deem necessary or desirable. If Tenant shall not be personally present to open and permit an entry into the Premises at any time when such an entry by Landlord is necessary, Landlord may enter by means of a master key, or may forcibly enter in the case of an emergency, in each event without liability to Tenant and without affecting this Lease.
(b)Maintenance Work. Landlord reserves the right from time to time: (i) to install, maintain, repair, replace, or relocate HVAC, utility or telecommunication service to the Premises (and/or install, maintain, repair, replace, or relocate HVAC, utility or telecommunication service to the other parts of the Project pipes, ducts, conduits, wires, cabling, appurtenant fixtures and mechanical systems, wherever located in the Project, (ii) to alter, close or relocate any facility in the common areas or otherwise conduct any of the above activities for the purpose of complying with a general plan for fire/life safety for the Project, and (iii) to take such actions necessary to comply with any federal, state or local law, rule or order (“Maintenance Work”). Landlord shall attempt to perform any such Maintenance Work with the least inconvenience to Tenant as is reasonably practicable.
(c)Rooftop. If Tenant desires to use the rooftop of the Project for any purpose, including the installation of communication equipment to be used from the Premises, such rights will be granted in Landlord's sole discretion and Tenant must negotiate the terms of any rooftop access with Landlord or the rooftop management company or lessee holding rights to the rooftop from time to time. Any rooftop access granted to Tenant will be at prevailing rates and will be governed by the terms of a separate written agreement or an amendment to this Lease.
(d)Restrictions on Entry and Maintenance Work (HIPPA and Other Issues of Compliance During Entry). Notwithstanding subsection 12(a), Landlord understands and agrees that its ability to enter into areas of the Premises or inspect the Premises is restricted and subject to safety considerations of Tenant and any state or federal rules related to personal patient information (e.g., OSHA safety rules and HIPPA compliance). For clarity, Landlord agrees that Tenant may temporarily deny access to any portion of the Premises that is necessary, in the sole discretion of the Tenant, to protect any patient sample or test result (e.g., clean room access) from harm, protect any Landlord employee or agent from exposure to harmful substances, or protect from exposure any patient personal health information (e.g., clinical diagnosis, test results or clinical files). To assure protection of Landlord and its agents, and the sensitive information contained within the Premises, Landlord will provide Tenant with no less than three (3) days prior written notice of Landlord’s intent to exercise its Right of Entry and Maintenance Work rights so that Tenant may properly prepare the Premises and avoid unintended harm or disclosure.
ARTICLE 13
INDEMNITY: EXEMPTION OF LANDLORD FROM LIABILITY
(a)Indemnity. Tenant shall indemnify, defend and hold Landlord, its subsidiaries, partners, parental and other affiliates and their respective members, shareholders, officers, directors, employees and contractors (collectively, “Landlord Parties”) harmless from any and all claims arising from Tenant's use of the Premises or the Project or from the conduct of its business or from any activity, work or thing which may be permitted or suffered by Tenant in or about the Premises or the Project and shall further indemnify, defend and hold Landlord and the Landlord Parties harmless from and against any and all claims, liabilities, damages, expenses and losses arising from any breach or default in the performance of any obligation on Tenant's part to be performed under this Lease or arising from any negligence or willful misconduct of Tenant or any of its agents, contractors, employees or invitees, patrons, customers or members in or about the Project and from any and all costs, attorneys' fees and costs, expenses and liabilities incurred in the defense of any claim or any action or proceeding brought thereon, including negotiations in connection therewith. Tenant hereby assumes all risk of damage to property or injury to persons in or about the Premises from any cause, and Tenant hereby waives all claims in respect thereof against Landlord and the Landlord Parties, excepting where the damage or injury is caused by the gross negligence or willful misconduct of Landlord or the Landlord Parties.
(b)Exemption of Landlord from Liability. Notwithstanding anything to the contrary set forth in this Lease, Landlord and the Landlord Parties shall not be liable for injury to Tenant's business, or loss of income, loss of opportunity or loss of goodwill therefrom, or any consequential, punitive, special or exemplary damages, however occurring (including, without limitation, from any failure or interruption of services or utilities or as a result of Landlord's negligence). Without limiting the foregoing, except in connection with damage or injury resulting from the gross negligence or willful misconduct of Landlord or the Landlord Parties, Landlord and the Landlord Parties shall not be liable for damage that may be sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees, customers, agents, or contractors, or any other person in, on or about the Premises directly or indirectly caused by or resulting from any cause whatsoever, including, but not limited to, fire, steam, electricity, gas, water, or rain which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning, light fixtures, or mechanical or electrical systems, or from intrabuilding cabling or wiring, whether such damage or injury results from conditions arising upon the Premises or upon other portions of the Project or from other sources or places and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Tenant. Landlord and the Landlord Parties shall not be liable to Tenant for any damages arising from any willful or negligent action or inaction of any other tenant of the Project.
(c)Security. Tenant acknowledges that Landlord's election whether or not to provide any type of mechanical surveillance or security personnel whatsoever in the Project is solely within Landlord's discretion; Landlord and the Landlord Parties shall have no liability in connection with the provision, or lack, of such services, and Tenant hereby agrees to hold Landlord and the Landlord Parties harmless with regard to any such potential claim. Landlord and the Landlord Parties shall not be liable for losses due to theft, vandalism, or like causes. Tenant shall defend, indemnify, and hold Landlord and the Landlord Parties harmless from any such claims made by any employee, licensee, invitee, contractor, agent or other person whose presence in, on or about the Premises or the Project is attendant to the business of Tenant. If Landlord ever elects to provide security, in its sole and absolute discretion, Landlord may elect to suspend or terminate such security at any time, without notice to Tenant, in Landlord's sole and absolute discretion. Landlord's installation, maintenance, use and derivative applications of any surveillance equipment, cameras, monitors or related appliances or fixtures shall not constitute a warranty of safety or security for the benefit of Tenant, its invitees, licensees or guests, Tenant acknowledges such equipment may fail or otherwise malfunction, without warranty or duty of Landlord, and Tenant shall hold Landlord harmless therefrom. Notwithstanding the foregoing, Tenant may install a security system within the Premises that is controlled by Tenant (with access provided to Landlord) to protect Tenant’s property and to protect access to the patient information within the Premises.
(d)Landlord Indemnity. Landlord shall indemnify, defend and hold Tenant, its subsidiaries, partners, parental and other affiliates and their respective members, shareholders, officers, directors, employees and contractors harmless from any and all claims, liabilities, damages, expenses and losses arising from Landlord’s gross negligence or willful misconduct in connection with the operation by Landlord of the Project.
ARTICLE 14
INSURANCE
(a)Tenant's Insurance. Tenant shall, at all times during the Term of this Lease, and at its own cost and expense, procure and continue in force the following insurance coverage: (i) Commercial General Liability Insurance, written on an occurrence basis, with a combined single limit for bodily injury and property damages of not less than Two Million Dollars ($2,000,000) per occurrence and Three Million Dollars ($3,000,000) in the annual aggregate, including products liability coverage if applicable, owners and contractors protective coverage, contractual coverage for written contracts, and personal injury coverage, covering the insuring provisions of this Lease and exemption of Landlord from liability agreements set forth in Article 13 hereof; (ii) a policy of standard fire, extended coverage and special extended coverage insurance (all risks), including a vandalism and malicious mischief endorsement, sprinkler leakage coverage and earthquake sprinkler leakage where sprinklers are provided in an amount equal to the full replacement value new without deduction for depreciation of all (A) Tenant Improvements, Alterations, fixtures and other improvements in the Premises, including but not limited to all mechanical, plumbing, heating, ventilating, air conditioning, electrical, telecommunication and other equipment, systems and facilities, and (B) trade fixtures, furniture, equipment and other personal property installed by or at the expense of Tenant; (iii) Worker's Compensation coverage as required by law; and (iv) business interruption, loss of income and extra expense insurance covering any failure or interruption of Tenant's business equipment (including, without limitation, telecommunications equipment) and covering all other perils, failures or interruptions sufficient to cover a period of interruption of not less than six (6) months. Tenant shall carry and maintain during the entire Term (including any option periods, if applicable), at Tenant's sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 14 and such other reasonable types of insurance coverage and in such reasonable amounts covering the Premises and Tenant's operations therein, as may be reasonably required by Landlord; provided, however, in no event shall Landlord have the right to request any increased insurance amounts or additional coverages more than once every three (3) years during the Term.
(b)Form of Policies. The aforementioned minimum limits of policies and Tenant's procurement and maintenance thereof shall in no event limit the liability of Tenant hereunder. The Commercial General Liability Insurance policy shall name Landlord, the Landlord Parties, Landlord's property manager, Landlord's lender(s) and such other persons or firms as Landlord specifies from time to time, as additional insureds with an appropriate endorsement to the policy(s). All such insurance policies carried by Tenant shall be with companies having a rating of not less than A-VIII in Best's Insurance Guide. Tenant shall furnish to Landlord, from the insurance companies, or cause the insurance companies to furnish, certificates of coverage. The deductible under each such policy shall be reasonably acceptable to Landlord. No such policy shall be cancelable except after thirty (30) days prior written notice to Landlord by the insurer or Tenant. All such policies shall be endorsed to agree that Tenant's policy is primary and that any insurance carried by Landlord is excess and not contributing with any Tenant insurance requirement hereunder. Tenant shall furnish Landlord with renewals or binders. Tenant agrees that if Tenant does not take out and maintain such insurance or furnish Landlord with renewals or binders in a timely manner, Landlord may (but shall not be required to) procure said insurance on Tenant's behalf and charge Tenant the cost thereof, which amount shall be payable by Tenant upon demand with interest (at the rate set forth in Section 20(e) below) from the date such sums are expended. Tenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by Tenant, provided such blanket policies expressly afford coverage to the Premises and to Tenant as required by this Lease.
(c)Landlord's Insurance. Landlord shall, as a cost to be included in Operating Costs, procure and maintain at all times during the Term of this Lease, a policy or policies of insurance covering loss or damage to the Project in the amount of the full replacement costs without deduction for depreciation thereof, providing protection against all perils included within the classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler leakage, water damage, and special extended coverage on the building. Additionally, Landlord shall carry, in commercially reasonable amounts: (i) Bodily Injury and Property Damage Liability Insurance and/or Excess Liability Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii) Rental Income Insurance; and (iv) any other forms of insurance Landlord may deem appropriate or any lender may require. The costs of all insurance carried by Landlord shall be included in Operating Costs.
(d)Waiver of Subrogation. Landlord and Tenant each agree to require their respective insurers issuing the insurance described in Sections 14(a)(ii), 14(a)(iv) and the first sentence of Section 14(c), to waive any rights of subrogation that such companies may have against the other party. Tenant hereby waives any right that Tenant may have against Landlord and Landlord hereby waives any right that Landlord may have against Tenant as a result of any loss or damage to the extent such loss or damage is insurable under such policies.
(e)Compliance with Law. Tenant agrees that it will not, at any time, during the Term of this Lease, carry any stock of goods or do anything in or about the Premises (outside the Permitted Use) that will in any way tend to increase the insurance rates upon the Project. Tenant agrees to pay Landlord forthwith upon demand the amount of any increase in premiums for insurance that may be carried during the Term of this Lease, or the amount of insurance to be carried by Landlord on the Project resulting from Tenant doing any act in or about the Premises outside the Permitted Use and that increases the insurance rates (by adding such costs to the Direct Costs), whether or not Landlord shall have consented to such act on the part of Tenant. If Tenant installs upon the Premises any electrical equipment which causes an overload of electrical lines of the Premises, Tenant shall at its own cost and expense, in accordance with all other Lease provisions (specifically including, but not limited to, the provisions of Article 9, Article 10 and Article 11 hereof), make whatever changes are necessary to comply with requirements of the insurance underwriters and any governmental authority having jurisdiction there over, but nothing herein contained shall be deemed to constitute Landlord's consent to such overloading. Tenant shall, at its own expense, comply with all insurance requirements applicable to the Premises including, without limitation, the installation of fire extinguishers or an automatic dry chemical extinguishing system.
ARTICLE 15
ASSIGNMENT AND SUBLETTING
Tenant shall have no power to, either voluntarily, involuntarily, by operation of law or otherwise, sell, assign, transfer or hypothecate this Lease, or sublet the Premises or any part thereof, or permit the Premises or any part thereof to be used or occupied by anyone other than
Tenant or Tenant's employees agents, visitors, guests, invitees or licensees without the prior written consent of Landlord, which such consent shall not be unreasonably withheld, conditioned or delayed. The sale, assignment, transfer or hypothecation of any class of stock or other ownership interest in Tenant in excess of fifty percent (50%) in the aggregate shall be deemed a “Transfer” within the meaning and provisions of this Article 15, provided however that a financing transaction (e.g. the addition of capital or property that results in a transfer of equity interest) shall not be considered a Transfer, regardless of the percentage of the Tenant sold in the financing transaction. Tenant may transfer its interest pursuant to this Lease only upon the following express conditions:
(a)That the proposed Transferee (as hereafter defined) shall be subject to the prior written consent of Landlord, not unreasonably withheld, and Tenant acknowledges and agrees that Landlord may deny consent based such factors as Landlord deems material, including, without limitation:
(i)The use to be made of the Premises by the proposed Transferee is (a) not generally consistent with the character and nature of all other tenancies in the Project, or (b) a use which would be prohibited by any other portion of this Lease (including but not limited to any Rules and Regulations then in effect);
(ii)The financial responsibility of the proposed Transferee is not reasonably satisfactory to Landlord or in any event not at least equal to those which were possessed by Tenant as of the date of execution of this Lease;
(iii)The proposed Transferee is either a governmental agency or instrumentality thereof;
(iv) Intentionally deleted; or
(v)The rent charged by Tenant to such Transferee during the term of such Transfer, calculated using a present value analysis, is materially less than the rent being quoted by Landlord at the time of such Transfer for comparable space in the Project for a comparable term, calculated using a present value analysis.
(b)Upon Tenant's submission of a request for Landlord's consent to any such Transfer, Tenant shall pay to Landlord Landlord's then standard processing fee and reasonable attorneys' fees and costs incurred in connection with the proposed Transfer;
(c)That the proposed Transferee shall execute an agreement pursuant to which it shall agree to perform faithfully and be bound by all of the terms, covenants, conditions, provisions and agreements of this Lease applicable to that portion of the Premises so transferred; and
(d)That an executed duplicate original of said assignment and assumption agreement or other Transfer on a form reasonably approved by Landlord, shall be delivered to Landlord within five (5) days after the execution thereof, and that such Transfer shall not be binding upon Landlord until the delivery thereof to Landlord and the execution and delivery of Landlord's consent thereto. It shall be a condition to Landlord's consent to any Transfer that (i) upon Landlord's consent to any Transfer, Tenant shall pay and continue to pay fifty percent (50%) of any “Transfer Premium” (defined below), received by Tenant from the transferee; (ii) any sublessee of part or all of Tenant's interest in the Premises shall agree that if Landlord gives such sublessee notice that Tenant is in default under this Lease, such sublessee shall thereafter make all sublease or other payments directly to Landlord, which will be received by Landlord without any liability whether to honor the sublease or otherwise (except to credit such payments against sums due under this Lease), and any sublessee shall agree to attorn to Landlord or its successors and assigns at their request should this Lease be terminated for any reason, except that in no event shall Landlord or its successors or assigns be obligated to accept such attornment; (iii) any such Transfer and consent shall be effected on reasonable forms supplied by Landlord and/or its legal counsel; (iv) Landlord may require that Tenant not then be in default hereunder in any respect beyond any and all applicable notice and cure periods; and (v) Tenant or the proposed subtenant or assignee (collectively, “Transferee”) shall agree to pay Landlord, upon demand, as Additional Rent, a sum equal to the additional reasonable costs, if any, incurred by Landlord for maintenance and repair as a result of any change in the nature of occupancy caused by such subletting or assignment. “Transfer Premium” shall mean all rent, Additional Rent or other consideration payable by a Transferee in connection with a Transfer in excess of the Basic Rental and other amounts payable by Tenant under this Lease during the term of the Transfer and if such Transfer is for less than all of the Premises, the Transfer Premium shall be calculated on a rentable square foot basis. The calculation of “Transfer Premium” shall also include, but not be limited to, key money, bonus money or other cash consideration paid by a Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to the Transferee and any payment in excess of fair market value for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to the Transferee in connection with such Transfer. Any Transfer of this Lease which is not in compliance with the provisions of this Article 15 shall be voidable by written notice from Landlord and shall, at the option of Landlord, terminate this Lease. In no event shall the consent by Landlord to any Transfer be construed as relieving Tenant or any Transferee from obtaining the express written consent of Landlord to any further Transfer, or as releasing Tenant from any liability or obligation hereunder whether or not then accrued and Tenant shall continue to be fully liable therefor. No collection or acceptance of rent by Landlord from any person other than Tenant shall be deemed a waiver of any provision of this Article 15 or the acceptance of any Transferee hereunder, or a release of Tenant (or of any Transferee of Tenant). Notwithstanding anything to the contrary in this Lease, if Tenant or any proposed Transferee claims that Landlord has unreasonably withheld, conditioned or delayed its consent under this Article 15 or otherwise has breached or acted unreasonably under this Article 15, their sole remedies shall be a declaratory judgment and an injunction for the relief sought without any monetary damages, and Tenant hereby waives all other remedies, including, without limitation, any right at law or equity to terminate this Lease, on its own behalf and, to the extent permitted under all Applicable Laws, on behalf of the proposed Transferee.
(e) Notwithstanding anything to the contrary contained in this Article 15, Landlord shall have the option, by giving written notice to Tenant (“Landlord's Recapture Notice”) within thirty (30) days after Landlord's receipt of a request for consent to a proposed Transfer, to terminate this Lease as to the portion of the Premises that is the subject of the proposed Transfer (hereinafter, the “Recapture Space”), unless Tenant agrees to revoke its request for Landlord’s Consent to a proposed Transfer within five (5) days following Tenant’s receipt of such written notice from Landlord, in which event this Lease shall continue in full force and effect notwithstanding the prior request from Tenant. If this Lease is so terminated with respect to less than the entire Premises, (i) the Basic Rental and Tenant's Proportionate Share shall be prorated based on the number of rentable square feet retained by Tenant as compared to the total number of rentable square feet previously contained in the Premises, and this Lease as so amended shall continue thereafter in full force and effect, and upon the request of either party, the parties shall execute written confirmation of the same, and (ii) Tenant shall be responsible for all costs incurred by Landlord in connection with separately demising the Recapture Space separate and apart from the balance of the Premises, including without limitation, all ductwork, systems work, demising wall installation and compliance with governmental requirements relating thereto (“Landlord's Recapture Costs”). Tenant shall reimburse Landlord for Landlord's Recapture Costs within ten (10) business days following written demand therefor from Landlord. The effective date of any such termination shall be set forth in Landlord's Recapture Notice.
ARTICLE 16
DAMAGE OR DESTRUCTION
If the Project is damaged by fire or other insured casualty, the damage shall be repaired by Landlord and provided such repairs can, in Landlord's sole opinion, be completed within two hundred seventy (270) days after commencement of the necessity for repairs, without the payment of overtime or other premiums, and until such repairs are completed, rent shall be abated in proportion to the part of the Premises which is unusable by Tenant in the conduct of its business (but there shall be no abatement of rent by reason of any portion of the Premises being unusable for a period equal to one (1) day or less). If repairs cannot, in Landlord's opinion, be completed within two hundred seventy (270) days after the necessity for repairs this Lease shall instead terminate, by notifying Tenant in writing of such termination within sixty (60) days after Landlord makes such a determination, with such notice to include a termination date giving Tenant sixty (60) days to vacate the Premises. In addition, Landlord may elect to terminate this Lease if the Project shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, if the damage is not fully covered, except for deductible amounts, by Landlord's insurance policies. Finally, if the Premises or the Project is damaged to any substantial extent during the last twelve (12) months of the Term, then notwithstanding anything contained in this Article 16 to the contrary, Landlord and Tenant shall each have the option to terminate this Lease by giving written notice to the other party of the exercise of such option within sixty (60) days after Landlord or Tenant, as applicable, learns of the necessity for repairs as the result of such damage. A total destruction of the Project shall automatically terminate this Lease. Tenant understands that Landlord will not carry insurance of any kind on Tenant's furniture, furnishings, trade fixtures or equipment, and that Landlord shall not be obligated to repair any damage thereto or replace the same. Except as otherwise expressly set forth in this Lease, Tenant acknowledges that Tenant shall have no right to any proceeds of insurance carried by Landlord relating to property damage.
ARTICLE 17
SUBORDINATION
This Lease is subject to and Tenant agrees to comply with all matters of record affecting the Real Property. This Lease is also subject and subordinate to all ground or underlying leases, mortgages and deeds of trust which affect the Real Property, as well as all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, if the lessor under any such lease or the holder or holders of any such mortgage or deed of trust shall advise Landlord that they desire or require this Lease to be prior and superior thereto, upon written request of Landlord to Tenant, Tenant agrees to execute, acknowledge and deliver, within five (5) days, any and all reasonable documents or instruments which Landlord or such lessor, holder or holders deem necessary or desirable for purposes thereof. Landlord shall have the right to cause this Lease to be and become and remain subject and subordinate to any and all ground or underlying leases, mortgages or deeds of trust which may hereafter be executed covering the Premises, the Project or the property or any renewals, modifications, consolidations, replacements or extensions thereof, for the full amount of all advances made or to be made thereunder and without regard to the time or character of such advances, together with interest thereon and subject to all the terms and provisions thereof; provided, however, that Landlord obtains from the lender or other party in question a written undertaking in favor of Tenant to the effect that such lender or other party will not disturb Tenant's right of possession under this Lease if Tenant is not then or thereafter in breach of any covenant or provision of this Lease. Tenant agrees, within five (5) days after Landlord's written request therefor, to execute, acknowledge and deliver upon request any and all reasonable documents or instruments requested by Landlord or necessary or proper to assure the subordination of this Lease to any such mortgages, deeds of trust, or leasehold estates. Tenant agrees that if any proceedings are brought for the foreclosure of any mortgage or deed of trust or any deed in lieu thereof, to attorn to the purchaser or any successors thereto upon any such foreclosure sale or deed in lieu thereof as so requested to do so by such purchaser and to recognize such purchaser as the lessor under this Lease; Tenant shall, within five (5) days after request execute such further reasonable instruments or assurances as such purchaser may reasonably deem necessary to evidence or confirm such attornment. Tenant agrees to provide copies of any notices of Landlord's default under this Lease to any mortgagee or deed of trust beneficiary whose address has been provided to Tenant and Tenant shall provide such mortgagee or deed of trust beneficiary a commercially reasonable time after receipt of such notice within which to cure any such default. Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale.
ARTICLE 18
EMINENT DOMAIN
If the whole of the Premises or the Project or so much thereof as to render the balance unusable by Tenant shall be taken under power of eminent domain, or is sold, transferred or conveyed in lieu thereof, this Lease shall automatically terminate as of the date of such condemnation, or as of the date possession is taken by the condemning authority, at Landlord's option. No award for any partial or entire taking shall be apportioned, and Tenant hereby assigns to Landlord any award which may be made in such taking or condemnation, together with any and all rights of Tenant now or hereafter arising in or to the same or any part thereof; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any award made to Tenant for the taking of personal property and trade fixtures belonging to Tenant and removable by Tenant at the expiration of the Term hereof as provided hereunder or for the loss of Tenant’s leasehold interest or the interruption of, or damage to, Tenant's business. In the event of a partial taking described in this Article 18, or a sale, transfer or conveyance in lieu thereof, which does not result in a termination of this Lease, the rent shall be apportioned according to the ratio that the part of the Premises remaining useable by Tenant bears to the total area of the Premises. Tenant hereby waives any and all rights it might otherwise have pursuant to Applicable Law, to terminate the Lease in the event of a partial taking.
ARTICLE 19
DEFAULT
Each of the following acts or omissions of Tenant, shall constitute an “Event of Default” after the required notice and failure to cure:
(a)Failure or refusal to pay Basic Monthly Rental, Additional Rent or any other amount to be paid by Tenant to Landlord hereunder within five (5) calendar days after notice that the same is due or payable hereunder; said notice period shall be in lieu of, and not in addition to, any notice requirements provided by Arizona law, provided further that Landlord shall only be required to provide the number and frequency of notices for late or missing payments pursuant to Section 30(m);
(b)As set forth in items (b) through and including (i) below, the material failure to perform or observe any covenant or condition of this Lease to be performed or observed, provided that such material breach continues for more than thirty (30) days following written notice to Tenant of such breach and the breach by Tenant is not then cured. Any notice provided within Article 19 shall be in lieu of, and not in addition to, any notice requirements provided by Arizona law and provided, however, that if the nature of Tenant’s obligation is such that more than thirty (30) days are required for performance, then Tenant shall not be in default if Tenant commences performance within such notice period and thereafter diligently prosecutes the same to completion;
(c)Abandonment or vacating or failure to accept tender of possession of the Premises or any significant portion thereof for more than sixty (60) continuous days;
(d)The taking in execution or by similar process or law (other than by eminent domain) of the estate hereby created;
(e)The filing by Tenant or any guarantor hereunder in any court pursuant to any statute of a petition in bankruptcy or insolvency or for reorganization or arrangement for the appointment of a receiver of all or a portion of Tenant's property; the filing against Tenant or any guarantor hereunder of any such petition, or the commencement of a proceeding for the appointment of a trustee, receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of the property of either, or a proceeding by any governmental authority for the dissolution or liquidation of Tenant or any guarantor hereunder, if such proceeding shall not be dismissed or trusteeship discontinued within thirty (30) days after commencement of such proceeding or the appointment of such trustee or receiver; or the making by Tenant or any guarantor hereunder of an assignment for the benefit of creditors. If Tenant's performance of this Lease is in default or breach at the time of the filing of a petition in any chapter of bankruptcy by or on behalf of Tenant, or involuntarily by the creditors or interested parties of Tenant, Tenant hereby stipulates to the lifting of the automatic stay in effect and relief from such stay for Landlord if Tenant files a petition under the United States Bankruptcy laws, for the purpose of Landlord pursuing its rights and remedies against Tenant and/or a guarantor of this Lease particularly for the purpose of taking possession of the subject premises or the pursuit of post-petition debt;
(f)Tenant's failure to cause to be released any mechanics liens filed against the Premises or the Project within twenty (20) days after the date the same shall have been filed or recorded;
(g)Tenant's failure to observe or perform according to the provisions of Article 7, Article 14, Article 17, Article 25 or Article 28 within ten (10) business days after notice from Landlord; or
(h)[deleted and reserved]; or
(i)[deleted and reserved].
ARTICLE 20
REMEDIES
(a)Upon the occurrence of an Event of Default under this Lease as provided in Article 19 hereof, Landlord may exercise all of its remedies as may be permitted by law, including without limitation, terminating this Lease, reentering the Premises and removing all persons and property therefrom, which property may be stored by Landlord at a warehouse or elsewhere at the risk, expense and for the account of Tenant. If Landlord elects to terminate this Lease, Landlord shall be entitled to recover from Tenant the aggregate of all amounts permitted by law, including but not limited to (i) the worth at the time of award of the amount of any unpaid rent which had been earned at the time of such termination; plus (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, specifically including but not limited to, tenant improvement expenses, brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion thereof for a new tenant, whether for the same or a different use, and any special concessions made to obtain a new tenant; and (v) at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by Applicable Law. The term “rent” as used in this Section 20(a) shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in items (i) and (ii), above, the “worth at the time of award” shall be computed by allowing interest at the rate set forth in item (e), below, but in no case greater than the maximum amount of such interest permitted by law. As used in item (iii), above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
(b)Nothing in this Article 20 shall be deemed to affect Landlord's right to indemnification for liability or liabilities arising prior to the termination of this Lease for personal injuries or property damage under the indemnification clause or clauses contained in this Lease.
(c)Notwithstanding anything to the contrary set forth herein, Landlord's re-entry to perform acts of maintenance or preservation of or in connection with efforts to relet the Premises or any portion thereof, or the appointment of a receiver upon Landlord's initiative to protect Landlord's interest under this Lease shall not terminate Tenant's right to possession of the Premises or any portion thereof and, until Landlord does elect to terminate this Lease, this Lease shall continue in full force and effect and Landlord may enforce all of Landlord's rights and remedies hereunder or at law, including any right for a landlord to continue a lease in effect after the lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations. Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due.
(d)All rights, powers and remedies of Landlord hereunder and under any other agreement now or hereafter in force between Landlord and Tenant shall be cumulative and not alternative and shall be in addition to all rights, powers and remedies given to Landlord by law, and the exercise of one or more rights or remedies shall not impair Landlord's right to exercise any other right or remedy.
(e)Any amount due from Tenant to Landlord hereunder which is not paid when due shall bear interest at the lower of twelve percent (12%) per annum or the maximum lawful rate of interest from the due date until paid, unless otherwise specifically provided herein, but the payment of such interest shall not excuse or cure any default by Tenant under this Lease. In addition to such interest: (i) if Rental is not paid on or before the fifth (5th) day of the calendar month for which the same is due, a late charge equal to ten percent (10%) of the amount overdue or $100, whichever is greater, shall be immediately due and owing and shall accrue for each calendar month or part thereof until such rental, including the late charge, is paid in full, which late charge Tenant hereby agrees is a reasonable estimate of the damages Landlord shall suffer as a result of Tenant's late payment and (ii) an additional charge of $25 shall be assessed for any check given to Landlord by or on behalf of Tenant which is not honored by the drawee thereof; which damages include Landlord's additional administrative and other costs associated with such late payment and unsatisfied checks and the parties agree that it would be impracticable or extremely difficult to fix Landlord's actual damage in such event. Such charges for interest and late payments and unsatisfied checks are separate and cumulative and are in addition to and shall not diminish or represent a substitute for any or all of Landlord's rights or remedies under any other provision of this Lease or applicable law.
(f)Landlord shall not be in default under this Lease unless Landlord fails to perform obligations required of Landlord within thirty (30) days after written notice is delivered by Tenant to Landlord and to the holder of any mortgages or deeds of trust (collectively, “Lender”) covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying the obligation which Landlord has failed to perform; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance, then Landlord shall not be in default if Landlord or Lender commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion.
(g)In the event of any default, breach or violation of Tenant's rights under this Lease by Landlord, Tenant's exclusive remedies shall be an action for specific performance or action for actual damages. Without limiting any other waiver by Tenant which may be contained in this Lease, Tenant hereby waives the benefit of any law granting it the right to perform Landlord's obligation, or the right to terminate this Lease on account of any Landlord default.
ARTICLE 21
TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer or termination of Landlord's interest in the Premises or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu of foreclosure or otherwise whether voluntary or involuntary, Landlord shall be automatically relieved of any and all obligations and liabilities on the part of Landlord from and after the date of such transfer or termination. Tenant agrees to attorn to the transferee upon any such transfer and to recognize such transferee as the lessor under this Lease and Tenant shall, within five (5) days after request, execute such further instruments or assurances as such transferee may reasonably deem necessary to evidence or confirm such attornment.
ARTICLE 22
BROKER
In connection with this Lease, Landlord and Tenant warrant and represent that the parties have had dealings only with firm(s) set forth in Article 1.H. of the Basic Lease Provisions and that it knows of no other person or entity who is or might be entitled to a commission, finder's fee or other like payment in connection herewith and, as a result, both Landlord and Tenant do hereby indemnify and agree to hold the other Party and their respective agents, members, partners, representatives, officers, affiliates, shareholders, employees, successors and assigns harmless from and against any and all loss, liability and expenses that such Party may incur should such warranty and representation prove incorrect, inaccurate or false.
ARTICLE 23
PARKING
Tenant shall be provided, commencing on the Commencement Date, the number of parking passes set forth in Article 1.I of the Basic Lease Provisions. In addition to the parking charge by Landlord, if any, under all circumstances Tenant shall be responsible for the full amount of any taxes imposed by any governmental authority in connection with the renting of such parking passes by Tenant or the use of the parking facility by Tenant. Tenant's continued right to use the parking passes is conditioned upon Tenant abiding by all rules and regulations which are prescribed from time to time for the orderly operation and use of the parking facility where the parking passes are located, including any sticker or other identification system established by Landlord, Tenant's cooperation in seeing that Tenant's employees and visitors also comply with such rules and regulations, and Tenant not being in default under this Lease. Landlord specifically reserves the right to change the size, configuration, design, layout and all other aspects of the Project parking facility at any time and Tenant acknowledges and agrees that Landlord may, without incurring any liability to Tenant and without any abatement of rent under this Lease, from time to time, close-off or restrict access to the Project parking facility for purposes of permitting or facilitating any such construction, alteration or improvements; provided that such alternations or re-designs at all times preserve Tenant’s rights to the reserved and covered spaces described in Article 1. Landlord may, from time to time, relocate any reserved parking spaces (if any) rented by Tenant to another location in the Project parking facility. Landlord may delegate its responsibilities hereunder to a parking operator or a lessee of the parking facility in which case such parking operator or lessee shall have all the rights of control attributed hereby to the Landlord. The parking passes rented by Tenant pursuant to this Article 23 are provided to Tenant solely for use by Tenant's own personnel and such passes may not be transferred, assigned, subleased or otherwise alienated by Tenant without Landlord's prior approval. Tenant may validate visitor parking by such method or methods as the Landlord may establish, at the validation rate from time to time generally applicable to visitor parking.
ARTICLE 24
WAIVER
No waiver by either Party of any provision of this Lease shall be deemed to be a waiver of any other provision hereof or of any subsequent breach by either Party of the same or any other provision. No provision of this Lease may be waived by either Party, except by an instrument in writing executed by the Parties. Either Party’s consent to or approval of any act by a Party requiring consent or approval shall not be deemed to render unnecessary the obtaining of the Party’s consent to or approval of any subsequent act of that Party, whether or not similar to the act so consented to or approved. No act or thing done by Landlord or Landlord's agents during the Term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Any payment by Tenant or receipt by Landlord of an amount less than the total amount then due hereunder shall be deemed to be in partial payment only thereof and not a waiver of the balance due or an accord and satisfaction, notwithstanding any statement or endorsement to the contrary on any check or any other instrument delivered concurrently therewith or in reference thereto. Accordingly, Landlord may accept any such amount and negotiate any such check without prejudice to Landlord's right to recover all balances due and owing and to pursue its other rights against Tenant under this Lease, regardless of whether Landlord makes any notation on such instrument of payment or otherwise notifies Tenant that such acceptance or negotiation is without prejudice to Landlord's rights.
ARTICLE 25
ESTOPPEL CERTIFICATE
Landlord and Tenant, as applicable, shall, at any time and from time to time, upon not less than ten (10) days’ prior written notice from the other party, execute, acknowledge and deliver to the other party a statement in writing (the “Estoppel Certificate”) certifying the following information, (but not limited to the following information if further information is requested): (i) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as modified, is in full force and effect); (ii) the dates to which the rental and other charges are paid in advance, if any; (iii) the amount of Tenant's security deposit, if any; and (iv) acknowledging that there are not, to Landlord or Tenant's knowledge, as applicable, any uncured defaults on the part of the other party hereunder, and no events or conditions then in existence which, with the passage of time or notice or both, would constitute a default on the part of such party hereunder, or specifying such defaults, events or conditions, if any are claimed. It is expressly understood and agreed that any such statement contained in the Estoppel Certificate delivered by Landlord or Tenant as provided herein may be relied upon by any prospective purchaser, assignee, transferee or encumbrancer of all or any portion of the Real Property. A party’s failure to deliver such statement within such time shall constitute an admission by such party that all statements contained therein are true and correct.
ARTICLE 26
LIABILITY OF LANDLORD
Notwithstanding anything in this Lease to the contrary, any remedy of Tenant for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default by Landlord hereunder or any claim, cause of action or obligation, contractual, statutory or otherwise by Tenant against Landlord or the Landlord Parties concerning, arising out of or relating to any matter relating to this Lease and all of the covenants and conditions or any obligations, contractual, statutory, or otherwise set forth herein, shall be limited solely and exclusively to an amount which is equal to the interest of Landlord in the Project. No other property or assets of Landlord or any Landlord Party shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to this Lease, Landlord's obligations to Tenant, whether contractual, statutory or otherwise, the relationship of Landlord and Tenant hereunder, or Tenant's use or occupancy of the Premises.
ARTICLE 27
INABILITY TO PERFORM
This Lease and the obligations of Tenant and Landlord hereunder shall not be affected or impaired because Landlord is unable to fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay is caused by reason of any prevention, delay, stoppage due to strikes, lockouts, acts of God, acts of terrorism, or any other cause previously, or at such time, beyond the reasonable control or anticipation of Landlord (collectively, a “Force Majeure”) and Landlord's and Tenant’s obligations under this Lease shall be forgiven and suspended by any such Force Majeure.
ARTICLE 28
HAZARDOUS WASTE
(a)Tenant shall not cause or permit any Hazardous Material (as defined in Section 28(d) below) to be brought, kept or used in or about the Project by Tenant, its agents, employees, contractors, or invitees; provided however, (i) Tenant shall be allowed to store and use reasonable amounts of commercially available cleaning products, printing inks and other products for normal office operations, in compliance with all Laws (as defined in Section 28(e) below), without the consent of Landlord, and (ii) with the prior written consent of Landlord, and subject to additional reasonable requirements imposed by Landlord, Tenant shall be allowed to generate, produce, bring upon, use, store, treat or dispose of any Hazardous Materials to the extent such Hazardous Materials are consistent with Tenant’s business and so long as such generation, production, usage, storage and disposal are in compliance with all Laws (as defined in Section 28(e) below). Notwithstanding anything contained in this Article 28 to the contrary, Landlord hereby consents to and approves of, and Tenant shall be permitted to generate, produce, bring upon, use, store, treat or dispose of, in compliance with all Laws, those certain Hazardous Materials described on Exhibit “E” attached hereto (the “Pre-Approved Hazardous Materials”). Tenant indemnifies Landlord and the Landlord Parties from and against any breach by Tenant of the obligations stated in the preceding sentence, and agrees to defend and hold Landlord and the Landlord Parties harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, diminution in value of the Project, damages for the loss or restriction or use of rentable or usable space or of any amenity of the Project, damages arising from any adverse impact or marketing of space in the Project, and sums paid in settlement of claims, attorneys' fees and costs, consultant fees, and expert fees) which arise during or after the Term of this Lease as a result of such breach. This indemnification of Landlord and the Landlord Parties by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal, or restoration work required by any federal, state, or local governmental agency or political subdivision because of Hazardous Material present in the soil or ground water on or under the Project, except to the extent any of the foregoing was caused by the gross negligence or willful misconduct of Landlord or Landlord’s employees or agents or to the extent any of the foregoing was caused or necessitated by the presence or existence of any Hazardous Materials on the Project prior to the Effective Date of this Lease. Without limiting the foregoing, if the presence of any Hazardous Material on the Project caused or permitted by Tenant results in any contamination of the Project, then subject to the provisions of Article 9, Article 10 and Article 11 hereof, Tenant shall promptly take all actions at its sole expense as are necessary to return the Project to the condition existing prior to the introduction of any such Hazardous Material and the contractors to be used by Tenant for such work must be approved by Landlord, which approval shall not be unreasonably withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Project and so long as such actions do not materially interfere with the use and enjoyment of the Project by the other tenants thereof; provided however, Landlord shall also have the right, by written notice to Tenant, to directly undertake any such mitigation efforts with regard to Hazardous Materials in or about the Project due to Tenant's breach of its obligations pursuant to this Section 28(a), and to charge Tenant, as Additional Rent, for the costs thereof.
(b) Landlord and Tenant acknowledge that Landlord may become legally liable for the costs of complying with Laws (as defined in Section 28(e) below) relating to Hazardous Material which are not the responsibility of Landlord or the responsibility of Tenant, including the following: (i) Hazardous Material present in the soil or ground water on the Project of which Landlord has no knowledge as of the effective date of this Lease; (ii) a change in Laws which relate to Hazardous Material which make that Hazardous Material which is present on the Real Property as of the effective date of this Lease, whether known or unknown to Landlord, a violation of such new Laws; (iii) Hazardous Material that migrates, flows, percolates, diffuses, or in any way moves on to, or under, the Project after the effective date of this Lease; or Hazardous Material present on or under the Project as a result of any discharge, dumping or spilling (whether accidental or otherwise) on the Project by other lessees of the Project or their agents, employees, contractors, or invitees, or by others. Accordingly, Landlord and Tenant agree that the cost of complying with Laws relating to Hazardous Material on the Project for which Landlord is legally liable and which are paid or incurred by Landlord shall be an Operating Cost (and Tenant shall pay Tenant's Proportionate Share thereof in accordance with Article 3, subject to the limitations set forth in Section 3(g)) unless the cost of such compliance as between Landlord and Tenant, is made the responsibility of Tenant pursuant to Section 28(a) above, or is made the responsibility of Landlord as a result of the gross negligence or willful misconduct of Landlord and/or the Landlord Parties. To the extent any such Operating Cost relating to Hazardous Material is subsequently recovered or reimbursed through insurance, or recovery from responsible third parties or other action, Tenant shall be entitled to a proportionate reimbursement to the extent it has paid its share of such Operating Cost to which such recovery or reimbursement relates.
(c)It shall not be unreasonable for Landlord to withhold its consent to any proposed Transfer if (i) the proposed transferee's anticipated use of the Premises involves the generation, storage, use, treatment, or disposal of Hazardous Material; (ii) the proposed Transferee has been required by any prior landlord, lender, or governmental authority to take remedial action in connection with Hazardous Material contaminating a property if the contamination resulted from such Transferee's actions or use of the property in question; or (iii) the proposed Transferee is subject to an enforcement order issued by any governmental authority in connection with the use, disposal, or storage of a Hazardous Material.
(d)As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material, or waste which is or becomes regulated by any local governmental authority, the State of Arizona or the United States Government. The term “Hazardous Material” includes, without limitation, any material described as a toxic or hazardous material, waste, pollutant, contaminant or infectious waste, or words of similar import, in any federal, state or local law, ordinance, order, rule or regulation as well as any contaminants, pollutants, irritants, chemicals, waste, toxic substances, gases, liquids, solids, fumes, vapor, soot, smoke, acids, alkali, petroleum or petroleum by-product or derivative, biological matter, or other substances or materials of any kind which are or may be harmful or injurious to human health or life, animal health or life, plant health or life, or the environment.
(e)As used herein, the term “Laws” means any applicable federal, state or local law, ordinance, or regulation relating to any Hazardous Material affecting the Project, including, without limitation, the laws, ordinances, and regulations referred to in Section 28(d) above.
ARTICLE 29
SURRENDER OF PREMISES; REMOVAL OF PROPERTY
(a)The voluntary or other surrender of this Lease by Tenant to Landlord, or a mutual termination hereof, shall not work a merger, and shall at the option of Landlord, operate as an assignment to it of any or all subleases or subtenancies affecting the Premises.
(b)Upon the expiration of the Term of this Lease, or upon any earlier termination of this Lease, Tenant shall quit and surrender possession of the Premises to Landlord in good order and condition, reasonable wear and tear and repairs which are Landlord's obligation excepted, and shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, all furniture, equipment, business and trade fixtures, free-standing cabinet work, moveable partitioning and other articles of personal property in the Premises (except to the extent Landlord elects by notice to Tenant to exercise its option to have any subleases or subtenancies assigned to it), and Tenant shall repair all damage to the Premises resulting from the removal of such items from the Premises.
(c)Subject to any applicable limitations set forth in Section 12(d), whenever Landlord shall reenter the Premises as provided in Article 20 hereof, or as otherwise provided in this Lease, any property of Tenant not removed by Tenant upon the expiration of the Term of this Lease (or within forty-eight (48) hours after a termination by reason of and Event of Default of Tenant), as provided in this Lease, shall be considered abandoned and Landlord may remove any or all of such items and dispose of the same in any manner or store the same in a public warehouse or elsewhere for the account and at the expense and risk of Tenant, and if Tenant shall fail to pay the cost of storing any such property after it has been stored for a period of thirty (30) days or more, Landlord may sell any or all of such property at public or private sale, in such manner and at such times and places as Landlord, in its sole discretion, may deem proper, without notice to or demand upon Tenant, for the payment of all or any part of such charges or the removal of any such property, and shall apply the proceeds of such sale as follows: first, to the cost and expense of such sale, including reasonable attorneys' fees and costs for services rendered; second, to the payment of the cost of or charges for storing any such property; third, to the payment of any other sums of money which may then or thereafter be due to Landlord from Tenant under any of the terms hereof; and fourth, the balance, if any, to Tenant. Upon vacating the Premises and return thereof to Landlord, Tenant waives any and all rights to the return of any Tenant's property remaining therein, the same shall be deemed abandoned and may be disposed of by Landlord without further notice or legal requirement. Tenant shall indemnify and hold Landlord harmless as against any claim by third parties asserting a possessory or ownership interest in any abandoned property.
(d)All fixtures, Tenant Improvements, Alterations and/or appurtenances attached to or built into the Premises prior to or during the Term, whether by Landlord or Tenant and whether at the expense of Landlord or Tenant, or of both, shall be and remain part of the Premises and shall not be removed by Tenant at the end of the Term unless otherwise expressly provided for in this Lease, unless such removal may be had without damage to the Premises, or unless such removal is required by Landlord. Such fixtures, Tenant Improvements, Alterations and/or appurtenances shall include but not be limited to: all floor coverings, paneling, molding, doors,, plumbing systems, security systems, electrical systems, lighting systems, all fixtures and outlets for the systems mentioned above and for all telephone, radio and television purposes.
ARTICLE 30
MISCELLANEOUS
(a)SEVERABILITY; ENTIRE AGREEMENT. ANY PROVISION OF THIS LEASE WHICH SHALL PROVE TO BE INVALID, VOID, OR ILLEGAL SHALL IN NO WAY AFFECT, IMPAIR OR INVALIDATE ANY OTHER PROVISION HEREOF AND SUCH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT. THIS LEASE AND THE EXHIBITS AND ANY ADDENDUM ATTACHED HERETO CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH REGARD TO TENANT'S OCCUPANCY OR USE OF ALL OR ANY PORTION OF THE PROJECT, AND NO PRIOR AGREEMENT OR UNDERSTANDING PERTAINING TO ANY SUCH MATTER SHALL BE EFFECTIVE FOR ANY PURPOSE. NO PROVISION OF THIS LEASE MAY BE AMENDED OR SUPPLEMENTED EXCEPT BY AN AGREEMENT IN WRITING SIGNED BY THE PARTIES HERETO OR THEIR SUCCESSOR IN INTEREST. THE PARTIES AGREE THAT ANY DELETION OF LANGUAGE FROM THIS LEASE PRIOR TO ITS MUTUAL EXECUTION BY LANDLORD AND TENANT SHALL NOT BE CONSTRUED TO HAVE ANY PARTICULAR MEANING OR TO RAISE ANY PRESUMPTION, CANON OF CONSTRUCTION OR IMPLICATION INCLUDING, WITHOUT LIMITATION, ANY IMPLICATION THAT THE PARTIES INTENDED THEREBY TO STATE THE CONVERSE, OBVERSE OR OPPOSITE OF THE DELETED LANGUAGE.
(b)Attorneys' Fees; Waiver of Jury Trial.
(i)In any action to enforce the terms of this Lease, including any suit by Landlord for the recovery of rent or possession of the Premises, the losing party shall pay the successful party a reasonable sum for attorneys' fees and costs in such suit and such attorneys' fees and costs shall be deemed to have accrued prior to the commencement of such action and shall be paid whether or not such action is prosecuted to judgment. Tenant shall also reimburse Landlord for all costs incurred by Landlord in connection with enforcing its rights under this Lease against Tenant following a bankruptcy by Tenant or otherwise, including without limitation, legal fees, experts' fees and expenses, court costs and consulting fees. Should Tenant default in the performance of any covenant or provision of this Lease, resulting in the preparation of a Notice of Default, such as a Notice to Pay Rent or Quit, or a Notice to Perform Covenant or Quit, Tenant shall pay, as additional rental, upon demand of Landlord, Landlord's attorney's fees and costs in the preparation and/or service of such Notice of Default. A reasonable attorney fee for the purposes of the foregoing shall not exceed $3,000.00.
(ii)Should Landlord, without fault on Landlord's part, be made a party to any litigation instituted by Tenant or by any third party against Tenant, or by or against any person holding under or using the Premises by license of Tenant, or for the foreclosure of any lien for labor or material furnished to or for Tenant or any such other person or otherwise arising out of or resulting from any act or transaction of Tenant or of any such other person, Tenant covenants to save and hold Landlord harmless from any judgment rendered against Landlord or the Premises or any part thereof and from all costs and expenses, including reasonable attorneys' fees and costs incurred by Landlord in connection with such litigation.
(iii) TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION SEEKING SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY BREACH UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY HEREUNDER.
(c)Time of Essence. Each of Tenant's covenants herein is a condition of Landlord's duty to perform and time is of the essence with respect to the performance of every provision of this Lease.
(d)Headings; Joint and Several. The article headings contained in this Lease are for convenience only and do not in any way limit or amplify any term or provision hereof. The terms “Landlord” and “Tenant” as used herein shall include the plural as well as the singular, the neuter shall include the masculine and feminine genders and the obligations herein imposed upon Tenant shall be joint and several as to each of the persons, firms or corporations of which Tenant may be composed each referred to herein as a “Party” or jointly as the “Parties”.
(e)Reserved Area. Tenant hereby acknowledges and agrees that the exterior walls of the Premises and the area between the finished ceiling of the Premises and the slab of the floor of the Project thereabove have not been demised hereby and the use thereof together with the right to install, maintain, use, repair and replace pipes, ducts, conduits, wiring and cabling leading through, under or above the Premises or throughout the Project in locations which will not materially interfere with Tenant's use of the Premises and serving other parts of the Project are hereby excepted and reserved unto Landlord.
(f)NO OPTION. THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT, IT BEING INTENDED HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY LANDLORD AND TENANT AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.
(g)Use of Project Name; Improvements. Tenant shall not be allowed to use the name, picture or representation of the Project, or words to that effect, in connection with any business carried on in the Premises or otherwise (except as Tenant's address) without the prior written consent of Landlord, with such consent not unreasonably withheld.
(h)Rules and Regulations. Tenant shall observe faithfully and comply strictly with the rules and regulations (“Rules and Regulations”) attached to this Lease as Exhibit “B” and made a part hereof, and such other Rules and Regulations as Landlord may from time to time reasonably adopt for the safety, care and cleanliness of the Project, the facilities thereof, or the preservation of good order therein. Landlord shall not be liable to Tenant for violation of any such Rules and Regulations, or for the breach of any covenant or condition in any lease by any other tenant in the Project. A waiver by Landlord of any Rule or Regulation for any other tenant shall not constitute nor be deemed a waiver of the Rule or Regulation for this Tenant.
(i)Quiet Possession. Upon Tenant's paying the Monthly Basic Rental, Additional Rent and other sums provided hereunder and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire Term hereof, subject to all of the provisions of this Lease.
(j)Rent. All payments required to be made hereunder to Landlord shall be deemed to be rent, whether or not described as such.
(k)Successors and Assigns. Subject to the provisions of Article 15 hereof, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors and assigns.
(l)Notices. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal service evidenced by a signed receipt or sent by registered or certified mail, return receipt requested, or via overnight courier, and shall be effective upon proof of delivery, addressed if to Tenant then at the Premises; with a copy to the then current President of Tenant (as of the date of this Lease, 820 S. Friendswood Drive, Suite 201, Friendswood, Texas 77546, or if to Landlord then at Alturas Siete II, LLC, c/o Alturas Capital Partners, 500 East Shore Drive, Suite 120, Eagle, Idaho 83616, Attention: Legal, with a copy to the then current property manager). Either party may by notice to the other specify a different address for notice purposes. A copy of all notices to be given to Landlord hereunder shall be concurrently transmitted by Tenant to such party hereafter designated by notice from Landlord to Tenant.
(m)Persistent Delinquencies. If Tenant shall be delinquent by more than fifteen (15) days in the payment of rent on three (3) separate occasions in any twelve (12) month period or if there are three (3) or more non-monetary defaults by Tenant in any twelve (12) month period beyond any and all applicable notice and cure periods set forth in this Lease, then without limiting any other rights or remedies of Landlord, Landlord shall have the right to terminate this Lease by thirty (30) days written notice given by Landlord to Tenant within thirty (30) days of the last such delinquency, such thirty day notice shall not constitute a surrender of the Lease, and shall entitle Landlord to implement all remedies available at law or equity for breach of lease damages, as provided by Section 20 of this Lease, and applicable law.
(n)Right of Landlord to Perform. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant's sole cost and expense and without any abatement of rent. If Tenant shall fail to pay any sum of money, other than rent, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, and such failure shall continue beyond any applicable cure period set forth in this Lease, Landlord may, but shall not be obligated to, without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such other act on Tenant's part to be made or performed as is in this Lease provided. All sums so paid by Landlord, shall be payable to Landlord on demand and Tenant covenants to pay any such sums, and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of the nonpayment thereof by Tenant as in the case of default by Tenant in the payment of the rent.
(o)Access, Changes in Project, Facilities, Name.
(i)Every part of the Project except the inside surfaces of all walls, windows and doors bounding the Premises (including exterior building walls, the rooftop, core corridor walls and doors and any core corridor entrance), and any space in or adjacent to the Premises or within the Project used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or other building facilities, and the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, decoration and repair, are reserved to Landlord.
(ii)Landlord reserves the right, without incurring any liability to Tenant therefor, to make such changes in or to the Project and the fixtures and equipment thereof, as well as in or to the street entrances, halls, passages, elevators, stairways and other improvements thereof, as it may deem necessary or desirable provided that such change does not materially change access or the Permitted Use of Tenant.
(iii)Landlord may adopt any name for the Project and Landlord reserves the right, from time to time, to change the name and/or address of the Project at any time.
(p)Signing Authority. Tenant represents and warrants that it is duly authorized to execute and deliver this Lease on behalf of Tenant in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the By-laws of said corporation. Concurrently with Tenant's execution of this Lease, Tenant shall provide to Landlord a copy of such resolution of the Board of Directors authorizing the execution of this Lease on behalf of such corporation, which copy of resolution shall be duly certified by the secretary or an assistant secretary of the corporation to be a true copy of a resolution duly adopted by the Board of Directors of said corporation and shall be in a form reasonably acceptable to Landlord.
(q)Substitute Premises. [deleted and reserved]
(r)Survival of Obligations. Any obligations of Tenant under this Lease shall survive the expiration or earlier termination of this Lease.
(s)Confidentiality. The Parties acknowledges that the content of this Lease and any related documents are confidential information. Except as otherwise required by law or securities regulations, the Parties shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant's financial, legal and space planning consultants and any proposed Transferees, except as required by law.
(t)Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State of Arizona. No conflicts of law rules of any state or country (including, without limitation, Arizona conflicts of law rules) shall be applied to result in the application of any substantive or procedural laws of any state or country other than Arizona. All controversies, claims, actions or causes of action arising between the parties hereto and/or their respective successors and assigns, shall be brought, heard and adjudicated by the courts of the State of Arizona, with venue in the County of Maricopa. Each of the parties hereto hereby consents to personal jurisdiction by the courts of the State of Arizona in connection with any such controversy, claim, action or cause of action, and each of the parties hereto consents to service of process by any means authorized by Arizona law and consents to the enforcement of any judgment so obtained in the courts of the State of Arizona on the same terms and conditions as if such controversy, claim, action or cause of action had been originally heard and adjudicated to a final judgment in such courts. Each of the parties hereto further acknowledges that the laws and courts of Arizona were freely and voluntarily chosen to govern this Lease and to adjudicate any claims or disputes hereunder.
(u)Office of Foreign Assets Control. Tenant certifies to Landlord that (i) Tenant is not entering into this Lease, nor acting, for or on behalf of any person or entity named as a terrorist or other banned or blocked person or entity pursuant to any law, order, rule or regulation of the United States Treasury Department or the Office of Foreign Assets Control, and (ii) Tenant shall not assign this Lease or sublease to any such person or entity or anyone acting on behalf of any such person or entity. Landlord shall have the right to conduct all reasonable searches in order to ensure compliance with the foregoing. Tenant hereby agrees to indemnify, defend and hold Landlord and the Landlord Parties harmless from any and all claims arising from or related to any breach of the foregoing certification.
(v)Financial Statements. Within ten (10) days after Tenant's receipt of Landlord's written request and no more than once per calendar quarter during each calendar year of the Term, Tenant shall provide Landlord with current financial statements of Tenant and financial statements for the two (2) calendar or fiscal years (if Tenant's fiscal year is other than a calendar year) prior to the then current financial statement year. Any such statements shall be prepared in accordance with generally accepted accounting principles and, if the normal practice of Tenant, shall be audited by an independent certified public accountant (but only with respect to completed fiscal years (and then only to the extent available)).
(w)Exhibits. The Exhibits attached hereto are incorporated herein by this reference as if fully set forth herein.
(x)Independent Covenants. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent (and not dependent) and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord's expense or to set off of any of the rent or other amounts owing hereunder against Landlord.
(y)Counterparts. This Lease may be executed in counterparts, each of which shall be deemed an original, but such counterparts, when taken together, shall constitute one agreement
(z)Non-Discrimination. Tenant herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this Lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Premises, nor shall Tenant himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, subtenants or vendees in the Premises.”
ARTICLE 31
SIGNAGE/DIRECTORY
Provided Tenant is not in default hereunder, on or before the Commencement Date, Landlord, at Landlord's sole cost and expense, shall install initial suite entry signage and lobby directory signage (collectively, “Tenant's Signage”). Tenant's Signage shall be subject to Landlord's approval as to, without limitation, size, design, location, graphics, materials, colors
and similar specifications and shall be consistent with the exterior design, materials and appearance of the Project and the Project's signage program and shall be further subject to all matters of record and all applicable governmental laws, rules, regulations, codes and Tenant's receipt of all permits and other governmental approvals and any applicable covenants, conditions and restrictions. Tenant's Signage shall be personal to the original Tenant named in this Lease and may not be assigned to any assignee or sublessee, or any other person or entity. Landlord has the right, but not the obligation, to oversee the installation of Tenant's Signage. The cost to maintain and operate, if any, Tenant's Signage shall be paid for by Tenant. Upon the expiration of the Term, or other earlier termination of this Lease, Tenant shall, at Tenant's sole cost, cause the removal of Tenant's Signage (provided that Landlord shall have the right, at its election, to perform such removal on behalf of Tenant, at Tenant's expense). Such costs shall (i) be payable within three (3) business days following written demand therefor from Landlord, and (ii) include, without limitation, the cost to repair and restore the Project to its original condition, normal wear and tear excepted. All modifications or alterations to Tenant's Signage shall be at Tenant's sole cost and expense.
ARTICLE 32
RIGHT TO EXTEND TERM
If there is no continuing Event of Default by Tenant and the Tenant is occupying the Premises and has not otherwise assigned or sublet all or any portion of the Leased Premises, then Tenant shall have the right to extend the Term for up to two (2) terms of five (5) years each (the “First Extended Term” and “Second Extended Term” respectively and each an “Extended Term” and together “Extended Terms”), by giving Landlord written notice of its intention to do so (an “Extension Notice”) not sooner than three hundred sixty-five (365) days and not later than two hundred seventy (270) days prior to the expiration of the original Lease Term or the First Extended Term, as applicable. The Extended Terms shall be upon all of the terms and conditions of this Lease, except that Landlord and Tenant hereby acknowledge and agree that Basic Rental payable during the first twelve (12) months of each of the Extended Terms shall be shall be the greater of Fair Market Rental Value (as defined below) or the then-current Basic Rental, and that Basic Rental for each subsequent twelve (12) month period during the applicable portion of each Extended Term shall be equal to the Basic Rental in effect immediately prior to the commencement of such succeeding twelve (12) month period of the applicable Extended Term multiplied by one hundred three percent (103%).
For the purposes of this Lease, the “Fair Market Rental Value” shall mean the then-prevailing annual market rental value, for office space of comparable size, quality and location to the Premises in comparable buildings in the Phoenix, Arizona market. Promptly after receiving the Extension Notice, Landlord shall provide Tenant with Landlord’s good faith determination of the Fair Market Rental Value for the first twelve (12) months of the applicable Extended Term. Within fifteen (15) days after Tenant’s receipt of Landlord’s determination, Tenant shall notify Landlord whether Tenant accepts or rejects such determination. If Tenant fails to notify Landlord within such fifteen (15) day period, Tenant shall be deemed to have accepted such determination. If Tenant delivers to Landlord timely notice of its objection to such determination, Landlord and Tenant shall use good faith efforts to agree upon the Fair Market Rental Value within thirty (30) business days following Landlord’s receipt of Tenant’s notice of objection (the
“Outside Agreement Date”). If Landlord and Tenant are unable to so agree by the Outside Agreement Date, then Landlord and Tenant shall have the Fair Market Rental Value determined in accordance with the so-called “baseball” method of determination, as summarized below.
Within thirty (30) days after the Outside Agreement Date, Landlord and Tenant shall, at each of their own cost and expense, each determine and report to the other in writing their final determination of the Fair Market Rental Value. If such respective determinations are within five percent (5%) of each other, the Fair Market Rental Value shall be the average of such amounts. However, if after receiving such determinations, Landlord and Tenant are unable to agree on the Fair Market Rental Value (and the respective amounts are not within five percent (5%) of each other), then, within fifteen (15) days after receipt of such determinations, Landlord and Tenant shall jointly appoint an independent arbitrator (the “Arbitrator”) with experience in real estate activities, including at least ten (10) years’ experience serving as a broker in transactions involving commercial office space of comparable size and quality to the Premises in the Phoenix, Arizona market, which Arbitrator shall, within twenty (20) days following the Arbitrator’s appointment, determine and report in writing to Landlord and Tenant the Fair Market Rental Value by selecting either Landlord’s or Tenant’s determination of the Fair Market Rental Value, according to whichever of the applicable determinations is closer to the Fair Market Rental Value, as determined by the Arbitrator. If Landlord and Tenant cannot agree on the Arbitrator in accordance with the foregoing, Landlord and Tenant may appoint a mutually approved third-party such as a judge or arbitration service to appoint the Arbitrator in accordance with the criteria stated in this Section. The appointed Arbitrator shall have no discretion other than to select Landlord’s or Tenant’s determination of the Fair Market Rental Value as aforesaid. The cost and expense of the Arbitrator and any third-party appointed to select the Arbitrator shall be shared equally by Landlord and Tenant, and each of Landlord and Tenant shall reasonably cooperate with the Arbitrator in providing documentation and any other reasonable evidence regarding how Landlord or Tenant, as applicable, arrived at its determination of the Fair Market Rental Value. If the Extended Term commences prior to the final determination of the Fair Market Rental Value, Tenant shall pay to Landlord the Basic Rental payable during the prior twelve (12) month period pending resolution of the Fair Market Rental Value, subject to adjustment upon resolution of such Fair Market Rental Value. Any amount owing to Landlord or Tenant based on the final resolution of the Fair Market Rental Value shall be paid by the applicable party to the other party within thirty (30) days following final determination of the Fair Market Rental Value.
ARTICLE 33
RIGHT OF FIRST OFFER
If there is no continuing Event of Default by Tenant and the Tenant is occupying the Premises and has not otherwise assigned or sublet all or any portion of the Leased Premises, then during the period commencing upon execution of the Lease and expiring on the last day of the twenty-fourth (24th) month of the initial Term (the "ROFO Period"), Tenant shall have a Right of First Offer (“ROFO”) to lease any space contiguous to the Premises that is leased as of the date of this Lease and subsequently becomes available, pursuant to the terms set forth in this paragraph. Landlord shall notify Tenant of any such space becoming available during the ROFO Period and Tenant shall have three (3) days after such notification to notify Landlord that Tenant
elects to lease such space. If Tenant fails to deliver notice to Landlord of its election to exercise the ROFO, Tenant shall be deemed to have elected not to exercise the ROFO. The base rent, terms and conditions for the ROFO space shall be those set forth in Landlord’s ROFO notice, provided, however, the terms set forth in Landlord’s ROFO notice must provide that (a) the Work Allowance shall be proportionately adjusted for the portion of the Term remaining under the Lease, and (b) the lease term shall be coterminous with the Term. This ROFO shall be personal to Tenant, and is not transferable. Any attempted assignment or transfer by Tenant of the ROFO shall be null and void.
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IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the foregoing provisions and Articles, including all exhibits and other attachments referenced therein, as of the date first above written.
“LANDLORD”
ALTURAS SIETE II, LLC, an Idaho limited liability company
By: Alturas Capital Partners, LLC, a Delaware limited liability company
Its: Manager
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By
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/s/ Travis Barney
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Name:
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Travis Barney
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Its:
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Chief Credit Officer
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“TENANT”
CASTLE BIOSCIENCES, INC., a Delaware corporation
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By
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/s/ Derek Maetzold
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Name:
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Derek Maetzold
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Its:
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President and CEO
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EXHIBIT “A”
PREMISES — SUITES 110, 305A, 307 AND 330
* This Exhibit “A” is provided for informational purposes only and is intended to be only an approximation of the layout of the Premises and shall not be deemed to constitute any representation by Landlord as to the exact layout or configuration of the Premises or the Project.
EXHIBIT A
-1-
4816-6389-8027.4
EXHIBIT “B”
RULES AND REGULATIONS
1. No sign, advertisement or notice shall be displayed, printed or affixed on or to the Premises or to the outside or inside of the Project or so as to be visible from outside the Premises or Project without Landlord's prior written consent. Landlord shall have the right to remove any non-approved sign, advertisement or notice, without notice to and at the expense of Tenant, and Landlord shall not be liable in damages for such removal. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by Landlord or by a person selected by Landlord and in a manner and style acceptable to Landlord.
2. Tenant shall not obtain for use on the Premises ice, waxing, cleaning, interior glass polishing, rubbish removal, towel or other similar services, or accept barbering or bootblackening, or coffee cart services, milk, soft drinks or other like services on the Premises, except from persons authorized by Landlord and at the hours and under regulations fixed by Landlord. No vending machines or machines of any description shall be installed, maintained or operated upon the Premises without Landlord's prior written consent.
3. The sidewalks, halls, passages, exits, entrances, elevators and stairways shall not be obstructed by Tenant or used for any purpose other than for ingress and egress from Tenant's Premises. Under no circumstances is trash to be stored in the corridors. Notice must be given to Landlord for any large deliveries. Furniture, freight and other large or heavy articles, and all other deliveries may be brought into the Project only at times and in the manner designated by Landlord, and always at Tenant's sole responsibility and risk. Landlord may impose reasonable charges for use of freight elevators after or before normal business hours. All damage done to the Project by moving or maintaining such furniture, freight or articles shall be repaired by Landlord at Tenant's expense. Tenant shall not take or permit to be taken in or out of entrances or passenger elevators of the Project, any item normally taken, or which Landlord otherwise reasonably requires to be taken, in or out through service doors or on freight elevators. Tenant shall move all supplies, furniture and equipment as soon as received directly to the Premises, and shall move all waste that is at any time being taken from the Premises directly to the areas designated for disposal.
4. Toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein, particularly non bio-degradable substances likely to clog plumbing, such as female hygiene products (tampons). Employees, invitees and licensees of Tenant are to be advised of proper usage of these facilities.
5. Tenant shall not overload the floor of the Premises or mark, drive nails, screw or drill into the partitions, ceilings or floor or in any way deface the Premises. Tenant shall not place typed, handwritten or computer generated signs in the corridors or any other common areas. Should there be a need for signage additional to the Project standard tenant placard, a written request shall be made to Landlord to obtain approval prior to any installation. All costs for said signage shall be Tenant's responsibility.
6. In no event shall Tenant place a load upon any floor of the Premises or portion of any such flooring exceeding the floor load per square foot of area for which such floor is designed to carry and which is allowed by law, or any machinery or equipment which shall cause excessive vibration to the Premises or noticeable vibration to any other part of the Project. Prior to bringing any heavy safes, vaults, large computers or similarly heavy equipment into the Project, Tenant shall inform Landlord in writing of the dimensions and weights thereof and shall obtain Landlord's consent thereto. Such consent shall not constitute a representation or warranty by Landlord that the safe, vault or other equipment complies, with regard to distribution of weight and/or vibration, with the provisions of this Rule 6 nor relieve Tenant from responsibility for the consequences of such noncompliance, and any such safe, vault or other equipment which Landlord determines to constitute a danger of damage to the Project or a nuisance to other tenants, either alone or in combination with other heavy and/or vibrating objects and equipment, shall be promptly removed by Tenant, at Tenant's cost, upon Landlord's written notice of such determination and demand for removal thereof
7. Tenant shall not use or keep in the Premises or Project any kerosene, gasoline or inflammable, explosive or combustible fluid or material, or use any method of heating or air-conditioning other than that supplied by Landlord.
8. Tenant shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved by Landlord.
9. Tenant shall not install or use any blinds, shades, awnings or screens in connection with any window or door of the Premises and shall not use any drape or window covering facing any exterior glass surface other than the standard drapes, blinds or other window covering established by Landlord.
10. Tenant shall cooperate with Landlord in obtaining maximum effectiveness of the cooling system by closing window coverings when the sun's rays fall directly on windows of the Premises. Tenant shall not obstruct, alter, or in any way impair the efficient operation of Landlord's heating, ventilating and air-conditioning system. Tenant shall not tamper with or change the setting of any thermostats or control valves.
11. The Premises shall not be used for manufacturing or for the storage of merchandise except as such storage may be incidental to the permitted use of the Premises. Tenant shall not, without Landlord's prior written consent, occupy or permit any portion of the Premises to be occupied or used for the manufacture or sale of liquor or tobacco in any form, or a barber or manicure shop, or as an employment bureau. The Premises shall not be used for lodging or sleeping or for any improper, objectionable or immoral purpose. No auction shall be conducted on the Premises.
12. Tenant shall not make, or permit to be made, any unseemly or disturbing noises, or disturb or interfere with occupants of Project or neighboring buildings or premises or those
having business with it by the use of any musical instrument, radio, phonographs or unusual noise, or in any other way.
13. No bicycles or vehicles of any kind shall be brought into or kept in or about the Premises, and no cooking shall be done or permitted by any tenant in the Premises, except that the preparation of coffee, tea, hot chocolate and similar items for tenants, their employees and visitors shall be permitted. No tenant shall cause or permit any unusual or objectionable odors to be produced in or permeate from or throughout the Premises. The foregoing notwithstanding, Tenant shall have the right to use a microwave and to heat microwavable items typically heated in an office. No hot plates, toasters, toaster ovens or similar open element cooking apparatus shall be permitted in the Premises.
14. No animals of any kind shall be brought into or kept about the Project by Tenant or Tenant's agents, except seeing eye dogs for the visually impaired.
15. The sashes, sash doors, skylights, windows and doors that reflect or admit light and air into the halls, passageways or other public places in the Project shall not be covered or obstructed by any tenant, nor shall any bottles, parcels or other articles be placed on the window sills.
16. No additional locks or bolts of any kind shall be placed upon any of the doors or windows by any tenant, nor shall any changes be made in existing locks or the mechanisms thereof unless Landlord is first notified thereof, gives written approval, and is furnished a key therefor. Each tenant must, upon the termination of his tenancy, give to Landlord all keys and key cards of stores, offices, or toilets or toilet rooms, either furnished to, or otherwise procured by, such tenant, and in the event of the loss of any keys so furnished, such tenant shall pay Landlord the cost of replacing the same or of changing the lock or locks opened by such lost key if Landlord shall deem it necessary to make such change. If more than two keys for one lock are desired, Landlord will provide them upon payment therefor by Tenant. Tenant shall not key or re-key any locks. All locks shall be keyed by Landlord's locksmith only.
17. Landlord shall have the right to prohibit any advertising by any tenant which, in Landlord's opinion, tends to impair the reputation of the Project or its desirability as an office building and upon written notice from Landlord any tenant shall refrain from and discontinue such advertising.
18. Each tenant shall be responsible for all persons for whom it requests after hours access and shall be liable to Landlord for all acts of such persons. Landlord shall have the right from time to time to establish reasonable rules and charges pertaining to freight elevator usage, including the allocation and reservation of such usage for tenants' initial move-in to their premises, and final departure therefrom. Landlord may also establish from time to time reasonable rules and charges for accessing the equipment areas of the Project, including the risers, rooftops and telephone closets.
19. Any person employed by any tenant to do janitorial work shall, while in the Project and outside of the Premises, be subject to and under the control and direction of the Office of the Project or its designated representative such as security personnel (but not as an agent or servant of Landlord, and the Tenant shall be responsible for all acts of such persons).
20. All doors opening on to public corridors shall be kept closed, except when being used for ingress and egress. Tenant shall cooperate and comply with any reasonable safety or security programs, including fire drills and air raid drills, and the appointment of “fire wardens” developed by Landlord for the Project, or required by law. Before leaving the Premises unattended, Tenant shall close and securely lock all doors or other means of entry to the Premises and shut off all lights and water faucets in the Premises.
21. The requirements of tenants will be attended to only upon application to the Office of the Project.
22. Canvassing, soliciting and peddling in the Project are prohibited and each tenant shall cooperate to prevent the same.
23. All office equipment of any electrical or mechanical nature shall be placed by tenants in the Premises in settings approved by Landlord, to absorb or prevent any vibration, noise or annoyance.
24. No air-conditioning unit, space heater, or other similar apparatus shall be installed or used by any tenant without the prior written consent of Landlord. Tenant shall pay the cost of all electricity used for air-conditioning in the Premises if such electrical consumption exceeds normal office requirements, regardless of whether additional apparatus is installed pursuant to the preceding sentence.
25. There shall not be used in any space, or in the public halls of the Project, either by any tenant or others, any hand trucks except those equipped with rubber tires and side guards.
26. All electrical ceiling fixtures hung in offices or spaces along the perimeter of the Project must be fluorescent and/or of a quality, type, design and bulb color approved by Landlord. Tenant shall not permit the consumption in the Premises of more than 21/2 watts per net usable square foot in the Premises in respect of office lighting nor shall Tenant permit the consumption in the Premises of more than 11/2 watts per net usable square foot of space in the Premises in respect of the power outlets therein, at any one time. If such limits are exceeded, Landlord shall have the right to require Tenant to remove lighting fixtures and equipment and/or to charge Tenant for the cost of the additional electricity consumed.
27. Parking.
(a) Project parking facility hours shall be determined by Landlord from time to time.
(b) Automobiles must be parked entirely within the stall lines on the floor.
(c) All directional signs and arrows must be observed.
(d) The speed limit shall be 5 miles per hour.
(e) Parking is prohibited in areas not striped for parking.
(f) Parking cards or any other device or form of identification supplied by Landlord (or its operator) shall remain the property of Landlord (or its operator). Such parking identification device must be displayed as requested and may not be mutilated in any manner. The serial number of the parking identification device may not be obliterated. Devices are not transferable or assignable and any device in the possession of an unauthorized holder will be void. There will be a replacement charge to the Tenant or person designated by Tenant of $25.00 for loss of any parking card. There shall be a security deposit of $25.00 due at issuance for each card key issued to Tenant.
(g) The monthly rate for parking is payable one (1) month in advance and must be paid by the third business day of each month. Failure to do so will automatically cancel parking privileges and a charge at the prevailing daily rate will be due. No deductions or allowances from the monthly rate will be made for days parker does not use the parking facilities.
(h) Tenant may validate visitor parking by such method or methods as the Landlord may approve, at the validation rate from time to time generally applicable to visitor parking.
(i) Landlord (and its operator) may refuse to permit any person who violates the within rules to park in the Project parking facility, and any violation of the rules shall subject the automobile to removal from the Project parking facility at the parker's expense. In either of said events, Landlord (or its operator) shall refund a pro rata portion of the current monthly parking rate and the sticker or any other form of identification supplied by Landlord (or its operator) will be returned to Landlord (or its operator).
(j) Project parking facility managers or attendants are not authorized to make or allow any exceptions to these Rules and Regulations.
(k) All responsibility for any loss or damage to automobiles or any personal property therein is assumed by the parker.
(1) Loss or theft of parking identification devices from automobiles must be reported to the Project parking facility manager immediately, and a lost or stolen report must be filed by the parker at that time.
(m) The parking facilities are for the sole purpose of parking one automobile per space. Washing, waxing, cleaning or servicing of any vehicles by the parker or his agents is prohibited.
(n) Landlord (and its operator) reserves the right to refuse the issuance of monthly stickers or other parking identification devices to any Tenant and/or its employees who refuse to comply with the above Rules and Regulations and all City, State or Federal ordinances, laws or agreements.
(o) Tenant agrees to acquaint all employees with these Rules and Regulations.
(p) No vehicle shall be stored in the Project parking facility for a period of more than one (1) week.
28. The Project is a non-smoking Project. Smoking or carrying lighted cigarettes, pipes, cigars, cigarettes or any other substance is prohibited at all times within the Premises or elevators, common area restrooms, or any other interior common area of the Project.
29. Tenant shall not, without Landlord's prior written consent (which consent may be granted or withheld in Landlord's absolute discretion), allow any employee or agent to carry any type of gun or other firearm in or about any of the Premises or Project.
30. Tenant shall not use or occupy or permit any portion of the Premises to be used or occupied as an employment bureau or for the storage, manufacture or sale of liquor, narcotics or drugs. Tenant shall not engage or pay any employees in the Project except those actually working for Tenant in the Project, and Tenant shall not advertise for non-clerical employees giving the Project as an address. The Premises shall not be used, or permitted to be used, for lodging or sleeping or for any immoral or illegal purpose.
31. Landlord reserves the right to control and operate the Common Areas in such manner as it deems best for the benefit of the Project tenants. Landlord may exclude from all or a part of the Common Areas at all hours, other than during Normal Business Hours, all unauthorized persons. “Normal Business Hours” shall be deemed to be between the hours of 7:00 A.M. and 7:00 P.M. Monday through Friday, 8:00 A.M. and 2:00 P.M. Saturday, but excluding legal holidays. Tenant shall be responsible for all Tenants or Tenant's agents who enter the Project at any time, whether during or after Normal Business Hours and shall be liable to Landlord for all acts of such persons.
32. Tenant shall have the responsibility for the security of the Premises and, before closing and leaving the Premises at any time, Tenant shall see that all entrance doors are locked and all lights and office equipment within the Premises are turned off, and Landlord shall have no responsibility relating thereto. Landlord will not be responsible for any lost or stolen personal property, equipment, money or jewelry from the Premises or common areas regardless of whether such loss occurs when the area is locked against entry or not.
33. [deleted and reserved]
34. The elevator designated for freight by Landlord will be available for use by all tenants in the Project during the hours and pursuant to such procedures as Landlord may determine from time to time. The persons employed to move Tenant's equipment, material, furniture or other property in or out of the Project must be acceptable to Landlord. The moving company must be a locally recognized professional mover, whose primary business is the performing of relocation services, and must be bonded and fully insured. A certificate or other verification of such insurance must be received and approved by Landlord prior to the start of any moving operations. Insurance must be sufficient in Landlord's sole opinion, to cover all personal liability, theft or damage to the Project, including, but not limited to, floor coverings, doors, walls, elevators, stairs, foliage and landscaping. Special care must be taken to prevent damage to foliage and landscaping during adverse weather. All moving operations will be conducted at such times and in such a manner as Landlord will direct, and all moving will take place during non-Normal Business Hours unless Landlord agrees in writing otherwise. Tenant will be responsible for the provision of Project security during all moving operations, and will be liable for all losses and damages sustained by any party as a result of the failure to supply adequate security. Landlord will have the right to prescribe the weight, size and position of all equipment, materials, furniture or other property brought into the Project. Heavy objects will, if considered necessary by Landlord, stand on wood strips of such thickness as is necessary properly to distribute the weight. Landlord will not be responsible for loss of or damage to any such property from any cause, and all damage done to the Project by moving or maintaining such property will be repaired at the expense of Tenant. Landlord reserves the right to inspect all such property to be brought into the Project and to exclude from the Project all such property which violates any of these Rules and Regulations or the Lease. Supplies, goods, materials, packages, furniture and all other items of every kind delivered to or taken from the Premises will be delivered or removed through the entrance and route designated by Landlord, and Landlord will not be responsible for the loss or damage of any such property unless such loss or damage results from the negligence of Landlord.
35. Tenant shall give Landlord prompt notice of any accidents to or defects in the water pipes, gas pipes, electric lights and fixtures, heating apparatus, or any other service equipment.
36. With the exception of any commuter bike rack in the Project, Tenant and Tenant's agents shall not bring into the Project building or keep on the Premises any bicycle or other vehicle without Landlord's written consent.
EXHIBIT “C”
COMMENCEMENT LETTER
TO: ______________________________ DATE: _________________
_____________________
RE: Lease dated ______________________, between _______________________ (“Landlord”), and _________________________ (“Tenant”), concerning Suite ____________, located at 3707 N 7th Street, Phoenix, Arizona 85014 (the “Project”).
Two Whom it May Concern:
In accordance with the Lease, Landlord wishes to advise and/or confirm the following:
1. That the Premises is outlined and attached hereto as Exhibit A and is located on the 1st floor of the Project.
2. The Premises have been accepted herewith by the Tenant as being substantially complete in accordance with the Lease and that there is no deficiency in construction.
3. That the Tenant has taken possession of the Premises and acknowledges that under the provisions of the Lease the Term of said Lease shall commence as of ________________ for a term of __________________ months ending on _________________.
4. That in accordance with the Lease, Basic Rental commenced to accrue on _____________.
5. If the Commencement Date of the Lease is other than the first day of the month, the first billing will contain a prorata adjustment. Each billing thereafter shall be for the full amount of the monthly installment as provided for in said Lease.
6. Rent is due and payable in in accordance with the terms of the Lease. Your rent checks should be made payable to _______________________________.
7. The exact number of rentable square feet within the Premises is ______________ square feet.
8. Tenant's Proportionate Share, as adjusted based upon the exact number of rentable square feet within the Premises is _________________%.
AGREED AND ACCEPTED:
Tenant:
_____________________________
EXHIBIT “D”
LANDLORD’S WORK
WORK LETTER
This Work Letter shall set forth the terms and conditions relating to the completion of the tenant improvements (“Improvements”) in the Premises. This Work Letter is essentially organized chronologically and addresses the issues of the construction of the Premises, in sequence, as such issues will arise. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Lease to which this Work Letter is attached.
SECTION 1
CONSTRUCTION DRAWINGS FOR THE PREMISES
As soon as reasonably practicable following mutual execution and delivery of the Lease, Landlord shall cause Landlord’s architect to prepare detailed plans and specifications for the Improvements (“Construction Documents”) based upon that certain Space Plan attached hereto as Schedule 1 (the “Plan”). Landlord shall then forward the Construction Documents, along with a reasonable description of the proposed Project-standard specifications and materials, to Tenant for Tenant’s approval. Tenant shall approve or reasonably disapprove any draft of the Construction Documents within five (5) business days after Tenant’s receipt thereof; provided, however, that any disapproval of the Construction Documents by Tenant shall be accompanied by a detailed written explanation of the reasons for Tenant’s disapproval. Failure of Tenant to reasonably disapprove any draft of the Construction Documents within said five (5) business day period shall be deemed to constitute Tenant’s approval thereof. The Construction Documents, as approved by Landlord and Tenant, may be referred to herein as the “Approved Construction Documents.” Landlord and Tenant’s approval of the Approved Construction Documents shall not be a representation or warranty of Landlord or Tenant that such drawings are adequate for any use or comply with any Law, but shall merely be the consent of Landlord and Tenant thereto. Landlord shall construct the Improvements substantially in accordance with the Approved Construction Documents. Unless specifically noted to the contrary on the Approved Construction Documents, the Improvements shall be constructed using Project-standard quantities, specifications and materials. Tenant shall make no changes or modifications to the Approved Construction Documents without the prior written consent of Landlord, which consent may be withheld in Landlord’s sole discretion if such change or modification would directly or indirectly delay the “Substantial Completion,” as that term is defined in Section 5.1 of this Tenant Work Letter, of the Improvements.
SECTION 2
BIDDING; RETENTION OF CONTRACTOR;
WARRANTIES AND GUARANTIES
The Approved Construction Documents will be issued for bid to two (2) general contractors approved to do work in the Project. After review of the bids by the Landlord and
Tenant, one general contractor (the “Contractor”) shall be mutually selected by Landlord and Tenant and awarded the project, by Landlord. Landlord shall enter into an AIA construction contract or similar contract with the Contractor selected by Tenant and Landlord which shall comply with the provisions of this Exhibit and provide for, among other things, i) a one-year warranty for all defective work; ii) a requirement that the Contractor perform the work in substantial accordance with the Approved Construction Documents and in a good and workmanlike manner and; iii) a requirement that the Contractor is responsible for final clean up (including removal of debris). Landlord hereby assigns to Tenant, on a non-exclusive basis, to the extent assignable, all warranties and guaranties by the Contractor relating to the Improvements, and Tenant hereby waives all claims against Landlord relating to, or arising out of the construction of, the Improvements.
SECTION 3
OVER-ALLOWANCE AMOUNT
Landlord shall be responsible for the first One Hundred Seventy-Three Thousand Three Hundred Twenty-Five Dollars ($173,325.00) (“Work Allowance”) of the hard and soft costs relating to the design and construction of the Improvements. Tenant shall be responsible for promptly paying all costs of the Improvements in excess of the Work Allowance (“Over Allowance Amount”). Landlord and Tenant shall initially share in the cost of the progress billing for the work based upon the ratio of the Work Allowance to the Over Allowance Amount as determined by the budget agreed to with the Contractor. Tenant shall pay any invoice for an Over Allowance Amount to Landlord, as Additional Rent, within ten (10) business days after Tenant’s receipt thereof.
SECTION 4
TENANT'S COVENANTS
Tenant shall, at the request of the Landlord and at no cost to Tenant, cooperate with Landlord and the space planner or architect retained by Landlord, to cause a Notice of Completion or Certificate of Occupancy to be issued by the City of Phoenix or the then authorized agency required to approve tenants occupancy of the completed space.
SECTION 5
COMPLETION OF THE IMPROVEMENTS
5.1Substantial Completion. For purposes of this Lease, “Substantial Completion” of the Improvements in the Premises shall occur upon the completion of construction of the Improvements in the Premises pursuant to the Approved Construction Documents, with the exception of any punch list items and any tenant fixtures, work-stations, built-in furniture, or equipment to be installed by Tenant.
5.2Delay of the Substantial Completion of the Premises. Except as provided in this Section 5.2, the Commencement Date shall occur as set forth in the Lease. If there shall be a delay or there are delays in the Substantial Completion of the Improvements in the Premises as a result of the following (collectively, “Tenant Delays”):
5.2.1Tenant’s failure to timely approve any matter requiring Tenant’s approval;
5.2.2A breach by Tenant of the terms of this Tenant Work Letter or the Lease beyond applicable notice and cure periods;
5.2.3Tenant’s request for changes in the Plans, Construction Documents or Approved Construction Documents which add to the Contractor’s construction timeframe;
5.2.4Tenant’s requirement for materials, components, finishes or improvements which are not available in a commercially reasonable time given the anticipated date of Substantial Completion of the Improvements in the Premises, or which are different from, or not included in, Landlord’s standard improvement package items for the Project, after Landlord informs Tenant of such unavailability; or
5.2.5Any other acts or omissions of Tenant, or its agents, contractors, representatives, or employees;
then, notwithstanding anything to the contrary set forth in the Lease or this Tenant Work Letter and regardless of the actual date of the Substantial Completion of the Improvements in the Premises, the date of Substantial Completion thereof shall be deemed to be the date that Substantial Completion would have occurred if no Tenant Delay or Delays, as set forth above, had occurred.
5.3Punch List. Within five (5) days after the Commencement Date, Landlord and Tenant shall inspect the Premises for purposes of compiling a “punch list” of any items needing correction. Any matters not shown on the punch list shall be deemed approved by Tenant. Landlord shall promptly correct any items on such list, but in no event more than thirty (30) days after delivery of the list (except with regard to those items with longer lead times).
SECTION 6
MISCELLANEOUS
6.1Tenant’s Representative. Tenant will designate a sole representative with respect to the matters set forth in this Work Letter within five (5) days after Landlord’s request therefor, who, until further notice to Landlord, shall have full authority and responsibility to act on behalf of the Tenant as required in this Work Letter.
6.2Landlord’s Representative. Prior to commencement of construction of the Improvements, Landlord shall designate a representative with respect to the matters set forth in this Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Work Letter.
6.3Time of the Essence. Time is of the essence with respect to Tenant’s obligations under this Work Letter. Unless otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar days.
EXHIBIT “E”
PRE-APPROVED HAZARDOUS MATERIALS
In the normal course of operation, Tenant's laboratory uses and generates small quantities of chemicals and chemical waste (inventory list attached). All such chemicals are handled and processed according to standard Hazardous Materials protocols (Title 49 CFR). Tenant maintains and will continue to maintain contracts with third party specialty vendors for both removal of chemical by-product as well as any/all material designated as medical waste.
SECOND AMENDMENT TO STANDARD OFFICE LEASE
THIS SECOND AMENDMENT TO STANDARD OFFICE LEASE (this “Second Amendment”) is made this 16th day of December, 2019 (the “Amendment Date”), by ALTURAS SIETE I, LLC, an Idaho limited liability company (“Landlord”), and Castle Biosciences, Inc., a Delaware corporation (“Tenant”), and amends that certain Standard Office Lease dated October 5, 2015 (the “Original Lease”), as previously amended by that certain First Amendment to Lease dated December 4, 2018 (the “First Amendment”, and together with the Original Lease referred to collectively as the “Lease”), between Landlord and Tenant, for the lease of those certain premises that consist of approximately 11,916 rentable square feet known as Suites 125, 130 and 160 (the “Premises”) in the building located at 3737 North 7th Street, Phoenix, Arizona 85014, as follows:
1.EXTENSION OF TERM. The Term is extended by forty-eight (48) months, such that the Expiration Date is July 31, 2027.
2.BASIC RENTAL. Basic Rental shall remain as set forth in Lease through July 31, 2023. Commencing on August 1, 2023 and continuing thereafter, Basic Rental shall be as follows:
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Period
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Annual Basic Rental Per Rentable Square Foot
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Monthly Basic Rental
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8/1/23 - 2/29/24
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$21.50
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$21,349.50
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3/1/24 - 2/28/25
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$22.00
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$21,846.00
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3/1/25 - 2/28/26
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$22.50
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$22,342.50
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3/1/26 - 2/28/27
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$23.00
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$22,839.00
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3/1/27 - 7/31/27
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$23.50
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$23,335.50
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Tenant also shall be responsible for and shall pay all applicable rental tax. All such amounts shall be paid concurrently with Monthly Basic Rental.
3. PARKING CHARGES. Effective as of the Amendment Date, all of Tenant’s parking at the Project, as allocated under the Lease, shall be at no additional charge (other than applicable taxes) for the entire Term.
4. OPERATING COSTS. The definition of “Operating Costs” under Section 3(d)(ii) of the Original Lease is hereby deleted in its entirety and replaced with the following:
“Operating Costs”, which shall mean all costs and expenses paid or incurred by Landlord in connection with the maintenance, operation, replacement, ownership and repair of the Project, the equipment, the infra-building cabling and wiring, adjacent walks, malls and landscaped and common areas and the parking structure, areas and facilities of the Project. Operating Costs shall include but not be limited to, salaries, wages, medical, surgical and general welfare benefits and pension payments, payroll taxes, fringe benefits, employment taxes, workers' compensation, uniforms and dry cleaning thereof for all personnel who perform duties connected with the operation, maintenance and repair of the Project, its equipment, the intra-building cabling and wiring and the adjacent walks and landscaped areas, including janitorial (excluding janitorial contracted for directly by Tenant solely with respect to the Premises, if any), gardening, security, parking, operating engineer, elevator, painting, plumbing, electrical, carpentry, heating, ventilation, air conditioning and window washing; hired services, provided, however, if such personnel’s employment or duties are not exclusively limited
to service at the Project on a full-time basis, then the costs of such personnel included within the Operating Costs shall adjusted to reflect only the proportionate share of such costs which reflect the actual time spent on the Project; a reasonable allowance for depreciation of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project; accountant's fees incurred in the preparation of rent adjustment statements (including, without limitation, bookkeeping and other property accounting costs); legal fees; real estate tax consulting fees; personal property taxes on property used in the maintenance and operation of the Project; fees, costs, expenses or dues payable pursuant to the terms of any covenants, conditions or restrictions or owners' association pertaining to the Project; capital expenditures incurred to effect economies of operation of, or stability of services to, the Project or otherwise incurred in order to enhance or upgrade the safety, security, fire/life/safety or other operating systems of the Project, and capital expenditures required by government regulations, laws, or ordinances including, but not limited to the Americans with Disabilities Act; provided however that any such permitted capital expenditure shall be amortized (with interest at ten percent (10%) per annum) over its useful life and only the amortized portion (together with accrued interest thereon) shall be included in Operating Costs for such year; costs incurred (capital or otherwise) on a regular recurring basis every three (3) or more years for certain maintenance projects (e.g., parking lot slurry coat or replacement of lobby and elevator cab carpeting); the cost of all charges for electricity, gas, water and other utilities furnished to the Project, including any taxes thereon; the cost of all charges for fire and extended coverage, liability and all other insurance in connection with the Project carried by Landlord; the cost of all building and cleaning supplies and materials; the cost of all charges for cleaning, maintenance and service contracts and other services with independent contractors and administration fees; a reasonable property management fee for comparable projects in the Phoenix, Arizona (which fee may be imputed if Landlord has internalized management or otherwise acts as its own property manager); and license, permit and inspection fees relating to the Project.
5. ALTERATIONS. Section 9(c), Section 9(d) and Section 9(e) of the Original Lease are hereby deleted in their entirety and replaced with the following:
(c)Alterations. Tenant shall make no alterations, installations, changes or additions in or to the Premises or the Project (collectively, “Alterations”) without Landlord's prior written consent; provided that such consent may not be unreasonably withheld, conditioned or delayed if the Alterations are reasonably necessary for the Tenant’s business and are within the general scope of the Tenant Improvements; provided further, however, Tenant shall not be required to obtain Landlord’s consent for any cosmetic alterations, installations, changes or additions in or to the Premises that (a) do not impact the structural, mechanical, electrical, plumbing, fire/life safety or heating, ventilation and air conditioning systems of the Project, (b) are not visible from the outside of the interior of the Premises, (c) do not exceed Fifty Thousand and No/100 Dollars ($50,000.00) in the aggregate in any one (1) Lease Year, and (d) do not require a permit (“Minor Alterations”). Any Alterations approved by Landlord must be performed in accordance with the terms hereof, using only contractors or mechanics approved by Landlord in writing and upon the approval by Landlord in writing of fully detailed and dimensioned plans and specifications pertaining to the Alterations in question, to be prepared and submitted by Tenant at its sole cost and expense. Tenant shall at its sole cost and expense obtain all necessary third-party approvals and permits pertaining to any Alterations approved by Landlord or any Minor Alterations. Tenant shall cause all Alterations and Minor Alterations to be performed in a good and workmanlike manner, in conformance with all applicable federal, state, county and municipal laws, rules and regulations, pursuant to a valid building permit, and in conformance with Landlord's construction rules and regulations. If Landlord, in approving any Alterations, specifies a commencement date therefor, Tenant shall not commence any work with respect to such Alterations prior to such date. Tenant hereby agrees to indemnify, defend, and hold Landlord free and harmless from all liens and claims of lien, and all other liability, claims and demands arising out of any work done or material supplied to the Premises by or at the request of Tenant in connection with any Alterations or any Minor Alterations.
(d)Insurance; Liens. Prior to the commencement of any Alterations, Tenant shall provide Landlord with evidence that Tenant carries “Builder's All Risk” insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may reasonably require, it being understood that all such Alterations shall be insured by Tenant pursuant to Article 14 of this Lease immediately upon completion thereof. In addition, Landlord may, in its reasonable discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien free completion of any such Alteration in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00) (a “Substantial Alteration”) and naming Landlord as a co-obligee.
(e)Costs and Fees; Removal. If permitted Alterations or Minor Alterations are made, they shall be made at Tenant's sole cost and expense and shall be and become the property of Landlord, except that Landlord may, by written notice to Tenant given prior to the end of the Term, require Tenant at Tenant's expense to remove all partitions, counters, railings, cabling, Improvements and other Alterations or Minor Alterations from the Premises, and to repair any damage to the Premises and the Project caused by such removal. The preceding sentence shall not apply to Landlord’s Work. Any and all costs attributable to or related to the applicable building codes of the city in which the Project is located (or any other authority having jurisdiction over the Project) arising from Tenant's plans, specifications, improvements, Alterations or otherwise shall be paid by Tenant at its sole cost and expense. With regard to Alterations (other than Minor Alterations) under this Article 9, Landlord shall be entitled to receive an administrative/coordination fee (which fee shall vary depending upon whether or not Tenant orders the work directly from Landlord) sufficient to compensate Landlord for all reasonable overhead, general conditions, fees and other actual costs and expenses arising from Landlord's involvement with such work.
6. LIENS. The first sentence of Section 10(a) of the Original Lease is hereby deleted in its entirety and replaced with the following:
Tenant shall keep the Premises and the Project free from any mechanics' liens, vendors liens or any other liens arising out of any Alterations and Minor Alterations performed, materials furnished or obligations incurred by Tenant, and Tenant agrees to defend, indemnify and hold Landlord harmless from and against any such lien or claim or action thereon, including but not limited to the lienholder's claim for legal fees or court costs, together with costs of suit and reasonable attorneys' fees and costs incurred by Landlord in connection with any such claim or action.
7. TENANT’S WORK. Section 10(b) of the Original Lease is hereby deleted in its entirety and replaced with the following:
(b) Tenant's Work. Tenant shall take all actions reasonably necessary under Applicable Laws to ensure that no liens encumbering Landlord's interest in the Premises arise as a result of any work by or for Tenant within the Premises, including any Alterations (collectively, “Tenant's Work”). With respect to any Substantial Alteration, such actions shall include, without limitation, the recording of a notice of posted security in the Official Records of Maricopa County, Arizona, in accordance with Applicable Laws, and either (i) establish a construction disbursement account, or (ii) furnish and record, in accordance with Applicable Law, a surety bond for the prime contract for the Substantial Alteration at the Premises that meets the requirements of Applicable Law. Tenant shall notify Landlord of the name and address of Tenant's prime contractor who will be performing the Substantial Alteration as soon as it is known. Tenant shall notify Landlord promptly upon the signing of any contract with the prime contractor for any Substantial Alteration to the Premises. Tenant may not enter the Premises to begin initial construction on the Substantial Alteration until Tenant has delivered evidence satisfactory to Landlord that Tenant has complied with the terms of this Section 10(b). Failure by Tenant to comply with the terms of this Section 10(b) (subject to applicable notice and cure periods set forth in this Lease) shall permit Landlord to declare Tenant in default and to terminate this Lease.
8. BASIC SERVICES. Section 11(a) of the Original Lease is hereby deleted in its entirety and replaced with the following:
(a) Basic Services. Landlord agrees to furnish to the Premises, at a cost to be included in Operating Costs, from 7:00 a.m. to 7:00 p.m. Mondays through Fridays, and 8:00 a.m. to 2:00 p.m. Saturdays, excepting local and national holidays, air conditioning and heat all in such reasonable quantities as is reasonably necessary for the comfortable occupancy and use of the Premises by Tenant consistent with Tenant’s Permitted Use. In addition, Landlord, at a cost to be included in Operating Costs, shall assure that electric current, elevator service and water are available to the Premises in such quantities as is reasonably necessary for the comfortable occupancy and use of the Premises by Tenant consistent with Tenant’s Permitted Use. Janitorial and maintenance services shall be furnished as part of the Operating Costs, five (5) days per week, excepting local and national holidays. Tenant shall comply with all rules and regulations which Landlord may establish for the proper functioning and protection of the common area air conditioning, heating, elevator, electrical, intra-building cabling and wiring and plumbing systems all consistent with the comfortable occupancy and use of the Premises by Tenant consistent with Tenant’s Permitted Use. Landlord shall not be liable for, and there shall be no rent abatement as a result of, any stoppage, reduction or interruption of any such services caused by governmental rules, regulations or ordinances, riot, strike, labor disputes, breakdowns, accidents, necessary repairs or other cause, provided however that Landlord will not engage in a repair of any HVAC, plumbing or electrical system without providing Tenant with reasonable prior written notice, and will endeavor to schedule such reasonable repairs during hours that do not disrupt Tenant’s Permitted Use of the Premises. Notwithstanding the foregoing, if there is any interruption of any such services caused by Landlord’s gross negligence or intentional misconduct, and such interruption continues for ten (10) days following Tenant’s delivery of written notice to Landlord, and Tenant ceases operating at the Premises due to such interruption, then
Tenant shall be entitled to a day for day abatement of Basic Rental and Additional Rent commencing on the eleventh (11th) day following the date of such notice and continuing until such services(s) have been fully restored.
9. AFTER-HOURS USE. Section 11(f) of the Original Lease is hereby deleted in its entirety and replaced with the following:
(f) After-Hours Use. Landlord agrees that heating, ventilation and air conditioning to the Premises shall be available outside of the times provided in Section 11(a) above, subject to the terms of this paragraph. If Tenant requires heating, ventilation and/or air conditioning during times other than the times provided in Section 11(a) above, Tenant shall give Landlord such advance notice as Landlord shall reasonably require and shall pay Landlord's standard charge for such after-hours use if such use is on a non-recurring basis. Should Tenant wish to occupy and use the Premises after the dates and times permitted in Section 11(a), then Landlord and Tenant agree to meet and discuss the use during expanded hours ("Expanded Hours"). It is understood and agreed that Tenant may elect to use the Premises on an Expanded Hours basis (e.g., providing a second shift of workers as demand from the Tenant's business increases). Landlord and Tenant agree that should the Tenant operate its business on an Expanded Hour basis then the parties will work together to provide sufficient service (i.e., utilities) to the Premises, with Tenant responsible for reimbursement of any incremental expenses incurred by Landlord for such Expanded Hours use. Notwithstanding anything to the contrary, Tenant shall not be charged after-hours HVAC charges for cooling specific to its server room.
10. TENANT INDEMNITY. The last sentence of Section 13(a) of the Original Lease is hereby deleted in its entirety and replaced with the following:
Tenant hereby assumes all risk of damage to property or injury to persons in or about the Premises from any cause, and Tenant hereby waives all claims in respect thereof against Landlord and the Landlord Parties, excepting where the damage or injury is caused by the gross negligence or willful misconduct of Landlord or the Landlord Parties.
11. LANDLORD INDEMNITY. Section 13(d) of the Original Lease is hereby deleted in its entirety and replaced with the following:
(d) Landlord Indemnity. Landlord shall indemnify, defend and hold Tenant, its subsidiaries, partners, parental and other affiliates and their respective members, shareholders, officers, directors, employees and contractors harmless from any and all claims, liabilities, damages, expenses and losses arising from Landlord’s gross negligence or willful misconduct in connection with the operation by Landlord of the Project.
12. INCREASES TO TENANT INSURANCE. The last sentence of Section 14(a) of the Original Lease is hereby deleted in its entirety and replaced with the following:
Tenant shall carry and maintain during the entire Term (including any option periods, if applicable), at Tenant's sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 14 and such other reasonable types of insurance coverage and in such reasonable amounts covering the Premises and Tenant's operations therein, as may be reasonably required by Landlord; provided, however, in no event shall Landlord have the right to request any increased
insurance amounts or additional coverages more than once every three (3) years during the Term.
13. LANDLORD’S INSURANCE. Section 14(c) of the Original Lease is hereby deleted in its entirety and replaced with the following:
(c) Landlord's Insurance. Landlord shall, as a cost to be included in Operating Costs, procure and maintain at all times during the Term of this Lease, a policy or policies of insurance covering loss or damage to the Project in the amount of the full replacement costs without deduction for depreciation thereof, providing protection against all perils included within the classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler leakage, water damage, and special extended coverage on the building. Additionally, Landlord shall carry, in commercially reasonable amounts,: (i) Bodily Injury and Property Damage Liability Insurance and/or Excess Liability Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii) Rental Income Insurance; and (iv) any other forms of insurance Landlord may deem appropriate or any lender may require. The costs of all insurance carried by Landlord shall be included in Operating Costs.
14. ASSIGNMENT AND SUBLETTING. The first sentence of Section 15 of the Original Lease is hereby deleted in its entirety and replaced with the following:
Tenant shall have no power to, either voluntarily, involuntarily, by operation of law or otherwise, sell, assign, transfer or hypothecate this Lease, or sublet the Premises or any part thereof, or permit the Premises or any part thereof to be used or occupied by anyone other than Tenant or Tenant's employees agents, visitors, guests, invitees or licensees without the prior written consent of Landlord, which such consent shall not be unreasonably withheld, conditioned or delayed.
15. LANDLORD RECAPTURE. Section 15(e) of the Original Lease is hereby deleted in its entirety and replaced with the following:
Notwithstanding anything to the contrary contained in this Article 15, Landlord shall have the option, by giving written notice to Tenant (“Landlord's Recapture Notice”) within thirty (30) days after Landlord's receipt of a request for consent to a proposed Transfer, to terminate this Lease as to the portion of the Premises that is the subject of the proposed Transfer (hereinafter, the “Recapture Space”), unless Tenant agrees to revoke its request for Landlord’s Consent to a proposed Transfer within five (5) days following Tenant’s receipt of such written notice from Landlord, in which event this Lease shall continue in full force and effect notwithstanding the prior request from Tenant. If this Lease is so terminated with respect to less than the entire Premises, (i) the Basic Rental and Tenant's Proportionate Share shall be prorated based on the number of rentable square feet retained by Tenant as compared to the total number of rentable square feet previously contained in the Premises, and this Lease as so amended shall continue thereafter in full force and effect, and upon the request of either party, the parties shall execute written confirmation of the same, and (ii) Tenant shall be responsible for all costs incurred by Landlord in connection with separately demising the Recapture Space separate and apart from the balance of the Premises, including without limitation, all ductwork, systems work, demising wall installation and compliance with governmental requirements relating thereto (“Landlord's Recapture Costs”). Tenant shall reimburse Landlord for Landlord's Recapture Costs within ten (10) business days
following written demand therefor from Landlord. The effective date of any such termination shall be set forth in Landlord's Recapture Notice.
16. DAMAGE OR DESTRUCTION. Section 16 of the Original Lease is hereby deleted in its entirety and replaced with the following:
If the Project is damaged by fire or other insured casualty, the damage shall be repaired by Landlord and provided such repairs can, in Landlord's sole opinion, be completed within two hundred seventy (270) days after commencement of the necessity for repairs, without the payment of overtime or other premiums, and until such repairs are completed, rent shall be abated in proportion to the part of the Premises which is unusable by Tenant in the conduct of its business (but there shall be no abatement of rent by reason of any portion of the Premises being unusable for a period equal to one (1) day or less). If repairs cannot, in Landlord's opinion, be completed within two hundred seventy (270) days after the necessity for repairs this Lease shall instead terminate, by notifying Tenant in writing of such termination within sixty (60) days after Landlord makes such a determination, with such notice to include a termination date giving Tenant sixty (60) days to vacate the Premises. In addition, Landlord may elect to terminate this Lease if the Project shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, if the damage is not fully covered, except for deductible amounts, by Landlord's insurance policies. Finally, if the Premises or the Project is damaged to any substantial extent during the last twelve (12) months of the Term, then notwithstanding anything contained in this Article 16 to the contrary, Landlord and Tenant shall each have the option to terminate this Lease by giving written notice to the other party of the exercise of such option within sixty (60) days after Landlord or Tenant, as applicable, learns of the necessity for repairs as the result of such damage. A total destruction of the Project shall automatically terminate this Lease. Tenant understands that Landlord will not carry insurance of any kind on Tenant's furniture, furnishings, trade fixtures or equipment, and that Landlord shall not be obligated to repair any damage thereto or replace the same. Except as otherwise expressly set forth in this Lease, Tenant acknowledges that Tenant shall have no right to any proceeds of insurance carried by Landlord relating to property damage.
17. EMINENT DOMAIN. Section 18 of the Original Lease is hereby deleted in its entirety and replaced with the following:
If the whole of the Premises or the Project or so much thereof as to render the balance unusable by Tenant shall be taken under power of eminent domain, or is sold, transferred or conveyed in lieu thereof, this Lease shall automatically terminate as of the date of such condemnation, or as of the date possession is taken by the condemning authority, at Landlord's option. No award for any partial or entire taking shall be apportioned, and Tenant hereby assigns to Landlord any award which may be made in such taking or condemnation, together with any and all rights of Tenant now or hereafter arising in or to the same or any part thereof; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any award made to Tenant for the taking of personal property and trade fixtures belonging to Tenant and removable by Tenant at the expiration of the Term hereof as provided hereunder or for the loss of Tenant’s leasehold interest or the interruption of, or damage to, Tenant's business. In the event of a partial taking described in this Article 18, or a sale, transfer or conveyance in lieu thereof, which does not result in a termination of this Lease, the rent shall be apportioned according to the ratio that the part of the
Premises remaining useable by Tenant bears to the total area of the Premises. Tenant hereby waives any and all rights it might otherwise have pursuant to Applicable Law, to terminate the Lease in the event of a partial taking.
18. DEFAULT. Section 19(c) and Section 19(g) of the Original Lease are hereby deleted in their entirety and replaced with the following:
(c) Abandonment or vacating or failure to accept tender of possession of the Premises or any significant portion thereof for more than sixty (60) continuous days;
(g) Tenant's failure to observe or perform according to the provisions of Article 7, Article 14, Article 17, Article 25 or Article 28 within ten (10) business days after notice from Landlord; or
Additionally, Section 19(i) of the Original Lease is hereby deleted in its entirety.
19. ESTOPPEL CERTIFICATE. Article 25 of the Original Lease is hereby deleted in its entirety and replaced with the following:
Landlord and Tenant, as applicable, shall, at any time and from time to time, upon not less than ten (10) days’ prior written notice from the other party, execute, acknowledge and deliver to the other party a statement in writing (the “Estoppel Certificate”) certifying the following information, (but not limited to the following information if further information is requested): (i) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as modified, is in full force and effect); (ii) the dates to which the rental and other charges are paid in advance, if any; (iii) the amount of Tenant's security deposit, if any; and (iv) acknowledging that there are not, to Landlord or Tenant's knowledge, as applicable, any uncured defaults on the part of the other party hereunder, and no events or conditions then in existence which, with the passage of time or notice or both, would constitute a default on the part of such party hereunder, or specifying such defaults, events or conditions, if any are claimed. It is expressly understood and agreed that any such statement contained in the Estoppel Certificate delivered by Landlord or Tenant as provided herein may be relied upon by any prospective purchaser, assignee, transferee or encumbrancer of all or any portion of the Real Property. A party’s failure to deliver such statement within such time shall constitute an admission by such party that all statements contained therein are true and correct
20. LIABILITY OF LANDLORD. Article 26 of the Original Lease is hereby deleted in its entirety and replaced with the following:
Notwithstanding anything in this Lease to the contrary, any remedy of Tenant for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default by Landlord hereunder or any claim, cause of action or obligation, contractual, statutory or otherwise by Tenant against Landlord or the Landlord Parties concerning, arising out of or relating to any matter relating to this Lease and all of the covenants and conditions or any obligations, contractual, statutory, or otherwise set forth herein, shall be limited solely and exclusively to an amount which is equal to the interest of Landlord in the Project. No other property or assets of Landlord or any Landlord Party shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Tenant's remedies under or with respect to this Lease, Landlord's obligations to Tenant, whether contractual, statutory or otherwise, the relationship of Landlord and Tenant hereunder, or Tenant's use or occupancy of the Premises.
21. HAZARDOUS WASTE.
(a) Notwithstanding anything in the Original Lease to the contrary, (i) Tenant shall be allowed to store and use reasonable amounts of commercially available cleaning products, printing inks and other products for normal office operations, in compliance with all Laws, without the consent of Landlord, (ii) with the prior written consent of Landlord, and subject to additional reasonable requirements imposed by Landlord, Tenant shall be allowed to generate, produce, bring upon, use, store, treat or dispose of any Hazardous Materials to the extent such Hazardous Materials are consistent with Tenant’s business and so long as such generation, production, usage, storage and disposal are in compliance with all Laws, and (iii) Landlord hereby consents to and approves of, and Tenant shall be permitted to generate, produce, bring upon, use, store, treat or dispose of, in compliance with all Laws, those certain Hazardous Materials described on Exhibit “A” attached hereto (the “Pre-Approved Hazardous Materials”).
(b) Landlord and Tenant hereby further agree that (i) the indemnification from Tenant to Landlord under Section 28(a) of the Original Lease shall not apply to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord’s employees or agents or to the extent any of the foregoing was caused or necessitated by the presence or existence of any Hazardous Materials on the Project prior to the Effective Date of this Lease, and (ii) the cost of complying with Laws relating to Hazardous Material on the Project for which Landlord is legally liable and which are paid or incurred by Landlord shall be an Operating Cost (and Tenant shall pay Tenant's Proportionate Share thereof in accordance with and subject to the limitations set forth in the Lease, as modified by this Second Amendment) unless the cost of such compliance as between Landlord and Tenant, is made the responsibility of Tenant pursuant to Section 28(a) of the Lease, as modified by this Second Amendment, or is made the responsibility of Landlord as a result of the gross negligence or willful misconduct of Landlord and/or the Landlord Parties.
22. CONFIDENTIALITY. Landlord and Tenant agree that the Parties’ obligations under Section 30(s) of the Original Lease are subject to disclosures otherwise required by law or securities regulations.
23. RIGHT TO EXTEND TERM. Landlord and Tenant hereby agree as follows:
(a) If there is no continuing Event of Default by Tenant and the Tenant is occupying the Premises and has not otherwise assigned or sublet all or any portion of the Leased Premises, then Tenant shall have the right to extend the Term for up to two (2) terms of five (5) years each (the “First Extended Term” and “Second Extended Term” respectively and each an “Extended Term” and together “Extended Terms”), by giving Landlord written notice of its intention to do so (an “Extension Notice”) not sooner than three hundred sixty-five (365) days and not later than two hundred seventy (270) days prior to the expiration of the original Lease Term or the First Extended Term, as applicable. The Extended Terms shall be upon all of the terms and conditions of this Lease, except that Landlord and Tenant hereby acknowledge and agree that Basic Rental payable during the first twelve (12) months of each of the Extended Terms shall be shall be the greater of Fair Market Rental Value (as defined below) or the then-current Basic Rental, and that Basic Rental for each subsequent twelve (12) month period during the applicable portion of each Extended Term shall be equal to the Basic Rental in effect immediately prior to the commencement of such succeeding twelve (12) month period of the applicable Extended Term multiplied by one hundred three percent (103%).
(b) For the purposes of this Lease, the “Fair Market Rental Value” shall mean the then-prevailing annual market rental value, for office space of comparable size, quality and location to the Premises in comparable buildings in the Phoenix, Arizona market. Promptly after receiving the Extension Notice, Landlord shall provide Tenant with Landlord’s good faith determination of the Fair Market Rental Value for the first twelve (12) months of the applicable Extended Term. Within fifteen (15) days after Tenant’s receipt of Landlord’s determination, Tenant shall notify Landlord whether Tenant accepts or rejects such determination. If Tenant fails to notify Landlord within such fifteen (15) day period, Tenant shall be deemed to have accepted such determination. If Tenant delivers to Landlord timely notice of its objection to such determination, Landlord and Tenant shall use good faith efforts to agree upon the Fair Market Rental Value within thirty (30) business days following Landlord’s receipt of Tenant’s notice of objection (the “Outside Agreement Date”). If Landlord and Tenant are unable to so agree by the Outside Agreement Date, then Landlord and Tenant shall have the Fair Market Rental Value determined in accordance with the so-called “baseball” method of determination, as summarized below.
(c) Within thirty (30) days after the Outside Agreement Date, Landlord and Tenant shall, at each of their own cost and expense, each determine and report to the other in writing their final determination of the Fair Market Rental Value. If such respective determinations are within five percent (5%) of each other, the Fair Market Rental Value shall be the average of such amounts. However, if after receiving such determinations, Landlord and Tenant are unable to agree on the Fair Market Rental Value (and the respective amounts are not within five percent (5%) of each other), then, within fifteen (15) days after receipt of such determinations, Landlord and Tenant shall jointly appoint an independent arbitrator (the “Arbitrator”) with experience in real estate activities, including at least ten (10) years’ experience serving as a broker in transactions involving commercial office space of comparable size and quality to the Premises in the Phoenix, Arizona market, which Arbitrator shall, within twenty (20) days following the Arbitrator’s appointment, determine and report in writing to Landlord and Tenant the Fair Market Rental Value by selecting either Landlord’s or Tenant’s determination of the Fair Market Rental Value, according to whichever of the applicable determinations is closer to the Fair Market Rental Value, as determined by the Arbitrator. If Landlord and Tenant cannot agree on the Arbitrator in accordance with the foregoing, Landlord and Tenant may appoint a mutually approved third-party such as a judge or arbitration service to appoint the Arbitrator in accordance with the criteria stated in this Section. The appointed Arbitrator shall have no discretion other than to select Landlord’s or Tenant’s determination of the Fair Market Rental Value as aforesaid. The cost and expense of the Arbitrator and any third-party appointed to select the Arbitrator shall be shared equally by Landlord and Tenant, and each of Landlord and Tenant shall reasonably cooperate with the Arbitrator in providing documentation and any other reasonable evidence regarding how Landlord or Tenant, as applicable, arrived at its determination of the Fair Market Rental Value. If the Extended Term commences prior to the final determination of the Fair Market Rental Value, Tenant shall pay to Landlord the Basic Rental payable during the prior twelve (12) month period pending resolution of the Fair Market Rental Value, subject to adjustment upon resolution of such Fair Market Rental Value. Any amount owing to Landlord or Tenant based on the final resolution of the Fair Market Rental Value shall be paid by the applicable party to the other party within thirty (30) days following final determination of the Fair Market Rental Value.
24. RIGHT OF FIRST OFFER. Article 32 of the Original Lease is hereby deleted in its entirety and replaced with the following:
If there is no continuing Event of Default by Tenant and the Tenant is occupying the Premises and has not otherwise assigned or sublet all or any portion of the Leased Premises, then during the period commencing upon execution of this Second Amendment and expiring on the last day of the twenty-fourth (24th) month thereafter (the "ROFO Period"), Tenant shall have a Right of First Offer ("ROFO") to lease any space
contiguous to the Premises that is leased as of the date of this Lease and subsequently becomes available, pursuant to the terms set forth in this paragraph. Landlord shall notify Tenant of any such space becoming available during the ROFO Period and Tenant shall have three (3) days after such notification to notify Landlord that Tenant elects to lease such space. If Tenant fails to deliver notice to Landlord of its election to exercise the ROFO, Tenant shall be deemed to have elected not to exercise the ROFO. The base rent, terms and conditions for the ROFO space shall be those set forth in Landlord's ROFO notice, provided, however, the terms set forth in Landlord's ROFO notice must provide that (a) the Work Allowance shall be proportionately adjusted for the portion of the Term remaining under the Lease, and (b) the lease term shall be coterminous with the Term. This ROFO shall be personal to Tenant, and is not transferable. Any attempted assignment or transfer by Tenant of the ROFO shall be null and void.
25. RULES AND REGULATIONS. Landlord and Tenant hereby agree as follows:
(a) Item 31 of the Rules and Regulations set forth in Exhibit “B” of the Original Lease is hereby amended to define “Normal Business Hours” as between the hours of 7:00 A.M. and 7:00 P.M. Monday through Friday, 8:00 A.M. and 2:00 P.M. Saturday, but excluding legal holidays.
(b) Item 37 of the Rules and Regulations set forth in Exhibit “B” of the Original Lease is hereby deleted in its entirety.
26. REAL ESTATE BROKERAGE. Tenant represents that it has not had dealings with any real estate broker, finder or other person with respect to this Second Amendment, other than Cushman & Wakefield, who represents Landlord (the “Broker”), and that Tenant is not represented by a real estate broker, finder or other person with respect to this Second Amendment. Landlord shall pay the Broker a commission with respect to this Second Amendment pursuant to a separate agreement. If any other person shall assert a claim to a finder’s fee, brokerage commission or other compensation on account of alleged employment as a finder or broker or for performance of services as a finder or broker in connection with this transaction, the party under whom the finder or broker is claiming shall indemnify, defend, and hold harmless the other party for, from and against any and all obligations, debts, covenants, conditions, representations, costs, and liabilities and any and all demands, causes of action, and claims, of every type, kind, nature or character, direct or indirect, known or unknown, absolute or contingent, determined or speculative, at law, in equity or otherwise, including attorneys’ fees and litigation and court costs, in connection with such claim or any action or proceeding brought on such claim.
27. CONDITION OF PREMISES. Tenant is in possession of and has accepted the Premises. Tenant acknowledges that all work to be performed by Landlord in the Premises as required by the terms of the Lease has been satisfactorily completed and all allowances to be paid by Landlord as required by the terms of the Lease have been paid in full.
28. EXISTING CLAIMS. Tenant represents and warrants that there are no existing claims or causes of action against Landlord arising out of the Lease, either currently or that would exist with the giving of notice or with the passage of time, nor are there any existing defenses that Tenant has against the enforcement of the Lease by Landlord. Similarly, Landlord represents and warrants that there are no existing claims or causes of action against Tenant arising out of the Lease, either currently or that would exist with the giving of notice or with the passage of time, nor are there any existing defenses that Landlord has against the enforcement of the Lease by Tenant.
29. MISCELLANEOUS. Except as set forth in this Second Amendment, the Lease shall continue in full force and effect. This Second Amendment supersedes and replaces all previous terms in the Lease
that may conflict with the terms in this Second Amendment. Capitalized terms used in this Second Amendment without definition will have the meaning stated in the Lease. This Second Amendment may be executed in counterparts and/or with scanned and emailed .pdf signatures and/or facsimile signatures. The warranties contained in this Second Amendment are made and given in addition to, and not in lieu of, any other warranties made in the Lease.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment on the Amendment Date.
LANDLORD:
ALTURAS SIETE I, LLC,
an Idaho limited liability company
By: Alturas Capital Partners, LLC,
a Delaware limited liability company
Its: Manager
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By:
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/s/ Travis Barney
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Print Name:
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Travis Barney
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Title:
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Chief Credit Officer
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TENANT:
Castle Biosciences, Inc.,
a Delaware corporation
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By:
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/s/ Derek Maetzold
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Print Name:
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Derek Maetzold
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Title:
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President and CEO
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EXHIBIT “A”
PRE-APPROVED HAZARDOUS MATERIALS
In the normal course of operation, the Castle laboratory uses and generates small quantities of chemicals and chemical waste (inventory list attached). All such chemicals are handled and processed according to standard Hazardous Materials protocols (Title 49 CFR). Castle maintains and will continue to maintain contracts with third party specialty vendors for both removal of chemical by-product as well as any/all material designated as medical waste.
Exhibit 10.3
COMMERCIAL LEASE
USE OF THIS FORM BY PERSONS WHO ARE NOT MEMBERS OF THE TEXAS ASSOCIATION OF REALTORS®, INC. IS NOT AUTHORIZED.
©Texas Association of REALTORS®, Inc. 2014
Table of Contents
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No.
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Paragraph Description
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Pg.
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No.
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Paragraph Description
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Pg.
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1.
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Parties
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2
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24.
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Assignment and Subletting
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11
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2.
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Leased Premises
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2
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25.
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Relocation
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11
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3.
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Term
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26.
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Subordination
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11
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A.
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Term
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2
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27.
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Estoppel Certification & Financial Info
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11
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B.
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Delay of Occupancy
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2
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28.
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Casualty Loss
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12
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C.
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Certificate of Occupancy
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3
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29.
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Condemnation
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12
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4.
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Rent and Expenses
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30.
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Attorney's Fees
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12
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A.
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Base Monthly Rent
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3
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31.
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Representation
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12
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B.
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Additional Rent
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3
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32.
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Brokers
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13
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C.
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First Full Month's Rent
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3
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33.
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Addenda
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13
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D.
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Prorated Rent
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3
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34.
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Notices
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13
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E.
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Place of Payment
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3
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35.
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Special Provisions
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14
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F.
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Method of Payment
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3
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36.
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Agreement of the Parties
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14
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G.
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Late Charges
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4
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H.
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Returned Checks
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4
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ADDENDA & EXHIBITS (check all that apply)
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5.
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Security Deposit
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4
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☒
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Exhibit A - Drawing layout of Premises
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6.
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Taxes
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4
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☐
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Exhibit ___________________________
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7.
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Utilities
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4
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☒
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Commercial Lease Addendum for Broker's Fee (TXR-2102)
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8.
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Insurance
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5
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9.
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Use and Hours
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6
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☒
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Commercial Lease Addendum for Expense Reimbursement (TXR-2103)
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10.
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Legal Compliance
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6
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11.
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Signs
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6
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☐
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Commercial Lease Addendum for Extension Option (TXR-2104)
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12.
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Access By Landlord
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7
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13.
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Move-In Condition
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7
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☐
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Commercial Lease Addendum for Percentage Rent (TXR-2106)
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14.
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Move-Out Condition
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7
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15.
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Maintenance and Repair
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☐
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Commercial Lease Addendum for Parking (TXR-2107)
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A.
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Cleaning
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7
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B.
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Conditions Caused by a Party
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8
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☐
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Commercial Landlord's Rules and Regulations (TXR-2108)
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C.
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Repair & Maintenance Responsibility
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8
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D.
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Repair Persons
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8
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☐
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Commercial Lease Guaranty (TXR-2109)
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E.
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HVAC Service Contract
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9
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☐
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Commercial Lease Addendum for Right of First Refusal (TXR-2105)
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F.
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Common Areas
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9
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G.
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Notice of Repairs
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9
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☐
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Commercial Lease Addendum for Optional Space (TXR-2110)
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H.
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Failure to Repair
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9
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16.
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Alterations
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9
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☐
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Commercial Lease Addendum for Construction (TXR-2111) or (TXR-2112)
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17.
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Liens
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9
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18.
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Liability
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9
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☐
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Commercial Lease Addendum for Contingencies (TXR-2119)
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19.
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Indemnity
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10
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20.
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Default
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10
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☒
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Addendum to Commercial Lease
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21.
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Abandonment, Interruption of Utilities,
Removal of Property & Lockout
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10
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☒
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Construction Agreement_______
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☐
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_______________________________________
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22.
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Holdover
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10
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☐
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Information About Brokerage Services (TXR-2501)
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23.
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Landlord's Lien & Security Interest
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11
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 1 of 15
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COMMERCIAL LEASE
USE OF THIS FORM BY PERSONS WHO ARE NOT MEMBERS OF THE TEXAS ASSOCIATION OF REALTORS®, INC. IS NOT AUTHORIZED.
©Texas Association of REALTORS®, Inc. 2014
1.PARTIES: The parties to this lease are:
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Landlord:
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Tannos Land Holding III, LLC
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; and
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Tenant:
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Castle Biosciences, Inc.
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2.LEASED PREMISES:
A.Landlord leases to Tenant the following described real property, known as the "leased premises," along with all its improvements (Check only one box):
☒(1) Multiple-Tenant Property: Suite or Unit Number TBD containing approximately 21,760
square feet of rentable area in Tannos Land Holding III (project name)
at 505 S Friendswood Dr
(address) in Friendswood, TX 77546 (city),
(county), Texas, which is legally described on attached Exhibit or as follows:
☐(2) Single-Tenant Property: The real property containing approximately square feet of rentable
area at: (address) in
(city), (county), Texas,
which is legally described on attached Exhibit or as follows:
B.If Paragraph 2A(1) applies:
1."Property" means the building or complex in which the leased premises are located, inclusive of any common areas, drives, parking areas, and walks; and
2.the parties agree that the rentable area of the leased premises may not equal the actual or useable area within the leased premises and may include an allocation of common areas in the Property. The rentable area ☐ will ☐ will not be adjusted if re-measured.
3.TERM:
A.Term: The term of this lease is months and days, commencing on:
See the attached Addendum to Commercial Lease (Commencement Date) and ending on (Expiration Date).
B.Delay of Occupancy: If Tenant is unable to occupy the leased premises on the Commencement Date because of construction on the leased premises to be completed by Landlord that is not substantially
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 2 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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complete or a prior tenant's holding over of the leased premises, Landlord will not be liable to Tenant for such delay and this lease will remain enforceable. In the event of such a delay, the Commencement Date will automatically be extended to the date Tenant is able to occupy the Property and the Expiration Date will also be extended by a like number of days, so that the length of this lease remains unchanged. If Tenant is unable to occupy the leased premises after the 90th day after the Commencement Date because of construction on the leased premises to be completed by Landlord that is not substantially complete or a prior tenant's holding over of the leased premises, Tenant may terminate this lease by giving written notice to Landlord before the leased premises become available to be occupied by Tenant and Landlord will refund to Tenant any amounts paid to Landlord by Tenant. This Paragraph 3B does not apply to any delay in occupancy caused by cleaning or repairs.
C.Certificate of Occupancy: Unless the parties agree otherwise, Tenant is responsible for obtaining a certificate of occupancy for the leased premises if required by a governmental body.
4.RENT AND EXPENSES:
A.Base Monthly Rent: On or before the first day of each month during this lease, Tenant will pay Landlord base monthly rent as described on attached Exhibit or as follows:
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Dates
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Rate per rentable square foot (optional)
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Base Monthly Rent $
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From
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To
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$ Monthly Rate
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$ Annual Rate
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CD
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Month 60
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$1.85 / rsf / month
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$22.20 / rsf / year
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$40,256.00
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/ rsf / month
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/ rsf / year
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/ rsf / month
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/ rsf / year
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/ rsf / month
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/ rsf / year
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/ rsf / month
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/ rsf / year
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B.Additional Rent: In addition to the base monthly rent, Tenant will pay Landlord all other amounts, as provided by the attached (Check all that apply.):
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☒
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(1)
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Commercial Lease Addendum for Expense Reimbursement (TXR-2103)
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☐
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(2)
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Commercial Lease Addendum for Percentage Rent (TXR-2106)
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☐
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(3)
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Commercial Lease Addendum for Parking (TXR-2107)
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☐
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(4)
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All amounts payable under the applicable addenda are deemed to be "rent" for the purposes of this lease.
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C.First Full Month's Rent: The first full monthly rent is due on or before @ Execution of lease .
D.Prorated Rent: If the Commencement Date is on a day other than the first day of a month, Tenant will pay Landlord as prorated rent, an amount equal to the base monthly rent multiplied by the following fraction: the number of days from the Commencement Date to the first day of the following month divided by the number of days in the month in which this lease commences. The prorated rent is due on or before the Commencement Date.
E.Place of Payment: Tenant will remit all amounts due to Landlord under this lease to the following person at the place stated or to such other person or place as Landlord may later designate in writing:
Name: Tannos Land Holding III, LLC Address:810 S Friendswood Dr, Friendswood, Texas 77546
F.Method of Payment: Tenant must pay all rent timely without demand, deduction, or offset, except as permitted by law or this lease. If Tenant fails to timely pay any amounts due under this lease or if any
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 3 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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check of Tenant is returned to Landlord by the institution on which it was drawn, Landlord after
providing written notice to Tenant may require Tenant to pay subsequent amounts that become due
under this lease in certified funds. This paragraph does not limit Landlord from seeking other
remedies under this lease for Tenant's failure to make timely payments with good funds.
G.Late Charges: If Landlord does not actually receive a rent payment at the designated place of payment within 5 days after the date it is due, Tenant will pay Landlord a late charge equal to 10% of the amount due. In this paragraph, the mailbox is not the agent for receipt for Landlord. The late charge is a cost associated with the collection of rent and Landlord's acceptance of a late charge does not waive Landlord's right to exercise remedies under Paragraph 20.
H.Returned Checks: Tenant will pay $ 40.00 for each check Tenant tenders to Landlord which is returned by the institution on which it is drawn for any reason, plus any late charges until Landlord receives payment.
5.SECURITY DEPOSIT:
A.Upon execution of this lease, Tenant will pay $ 50,000.00 to Landlord as a security deposit.
B.Landlord may apply the security deposit to any amounts owed by Tenant under this lease. If Landlord applies any part of the security deposit during any time this lease is in effect to amounts owed by Tenant, Tenant must, within 10 days after receipt of notice from Landlord, restore the security deposit to the amount stated.
C.Within 60 days after Tenant surrenders the leased premises and provides Landlord written notice of Tenant's forwarding address, Landlord will refund the security deposit less any amounts applied toward amounts owed by Tenant or other charges authorized by this lease.
6.TAXES: Unless otherwise agreed by the parties, Landlord will pay all real property ad valorem taxes assessed against the leased premises.
7.UTILITIES:
A.The party designated below will pay for the following utility charges to the leased premises and any connection charges for the utilities. (Check all that apply.)
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N/A
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Landlord
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Tenant
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(1)
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Water
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☐
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☒
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☐
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(2)
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Sewer
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☐
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☒
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☐
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(3)
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Electric
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☐
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☐
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☒
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(4)
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Gas
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☒
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☐
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☐
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(5)
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Telephone
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☐
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☐
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☒
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(6)
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Internet
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☐
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☐
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☒
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(7)
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Cable
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☐
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☐
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☒
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(8)
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Trash
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☐
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☒
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☐
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(9)
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AC, Heat, Water and Sewer is part of NNN
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☒
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☐
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(10)
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All other utilities
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☒
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☐
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☐
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B.The party responsible for the charges under Paragraph 7A will pay the charges directly to the utility
service provider. The responsible party may select the utility service provider except that if Tenant selects the provider, any access or alterations to the Property or leased premises necessary for the utilities may be made only with Landlord's prior consent, which Landlord will not unreasonably withhold. If Landlord incurs any liability for utility or connection charges for which Tenant is responsible to pay
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 4 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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and Landlord pays such amount, Tenant will immediately upon written notice from Landlord reimburse Landlord such amount.
C.Notice: Tenant should determine if all necessary utilities are available to the leased premises and are adequate for Tenant's intended use.
D.After-Hours HVAC Charges: "HVAC services" means heating, ventilating, and air conditioning of the leased premises. (Check one box only.)
☐ (1) Landlord is obligated to provide the HVAC services to the leased premises only during the Property's operating hours specified under Paragraph 9C.
☒(2) Landlord will provide the HVAC services to the leased premises during the operating hours specified under Paragraph 9C for no additional charge and will, at Tenant's request, provide HVAC services to the leased premises during other hours for an additional charge of $ Landlord's cost per hour. Tenant will pay Landlord the charges under this paragraph immediately upon receipt of Landlord's invoice. Hourly charges are charged on a half-hour basis. Any partial hour will be rounded up to the next half hour. Tenant will comply with Landlord's procedures to make a request to provide the additional HVAC services under this paragraph.
☐(3) Tenant will pay for the HVAC services under this lease.
8.INSURANCE:
A.During all times this lease is in effect, Tenant must, at Tenant's expense, maintain in full force and effect from an insurer authorized to operate in Texas:
(1)public liability insurance naming Landlord as an additional insured with policy limits on an occurrence basis in a minimum amount of: (check only (a) or (b) below)
☒(a) $1,000,000; or
☐(b) $2,000,000.
If neither box is checked the minimum amount will be $1,000,000.
(2)personal property damage insurance for the business operations being conducted in the leased premises and contents in the leased premises in an amount sufficient to replace such contents after a casualty loss; and
☐(3) business interruption insurance sufficient to pay 12 months of rent payments;
B.Before the Commencement Date, Tenant must provide Landlord with a copy of insurance certificates evidencing the required coverage. If the insurance coverage is renewed or changes in any manner or degree at any time this lease is in effect, Tenant must, not later than 10 days after the renewal or change, provide Landlord a copy of an insurance certificate evidencing the renewal or change.
C.If Tenant fails to maintain the required insurance in full force and effect at all times this lease is in effect, Landlord may:
(1)purchase insurance that will provide Landlord the same coverage as the required insurance and Tenant must immediately reimburse Landlord for such expense; or
(2)exercise Landlord's remedies under Paragraph 20.
D.Unless the parties agree otherwise, Landlord will maintain in full force and effect insurance for: (1) fire and extended coverage in an amount to cover the reasonable replacement cost of the improvements of the Property; and (2) any public liability insurance in an amount that Landlord determines reasonable and appropriate.
E.If there is an increase in Landlord's insurance premiums for the leased premises or Property or its contents that is caused by Tenant, Tenant's use of the leased premises, or any improvements made by or for Tenant, Tenant will, for each year this lease is in effect, pay Landlord the increase immediately
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 5 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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after Landlord notifies Tenant of the increase. Any charge to Tenant under this Paragraph 8E will be equal to the actual amount of the increase in Landlord's insurance premium.
9.USE AND HOURS:
A.Tenant may use the leased premises for the following purpose and no other: general office use and uses incidental thereto Monday through Sunday as needed.
B.Unless otherwise specified in this lease, Tenant will operate and conduct its business in the leased premises during business hours that are typical of the industry in which Tenant represents it operates.
C.The Property maintains operating hours of (specify hours, days of week, and if inclusive or exclusive of weekends and holidays): 24/7 as needed by tenants
10.LEGAL COMPLIANCE:
A.Tenant may not use or permit any part of the leased premises or the Property to be used for:
(1)any activity which is a nuisance or is offensive, noisy, or dangerous;
(2)any activity that interferes with any other tenant's normal business operations or Landlord's management of the Property;
(3)any activity that violates any applicable law, regulation, zoning ordinance, restrictive covenant, governmental order, owners' association rules, tenants' association rules, Landlord's rules or regulations, or this lease;
(4)any hazardous activity that would require any insurance premium on the Property or leased premises to increase or that would void any such insurance;
(5)any activity that violates any applicable federal, state, or local law, including but not limited to those laws related to air quality, water quality, hazardous materials, wastewater, waste disposal, air emissions, or other environmental matters;
(6)the permanent or temporary storage of any hazardous material; or
(7)____________________________________________________________________________________________________________________________________________________________________.
B."Hazardous material" means any pollutant, toxic substance, hazardous waste, hazardous material, hazardous substance, solvent, or oil as defined by any federal, state, or local environmental law, regulation, ordinance, or rule existing as of the date of this lease or later enacted.
C.Landlord does not represent or warrant that the leased premises or Property conform to applicable restrictions, zoning ordinances, setback lines, parking requirements, impervious ground cover ratio requirements, and other matters that may relate to Tenant's intended use. Tenant must satisfy itself that the leased premises may be used as Tenant intends by independently investigating all matters related to the use of the leased premises or Property. Tenant agrees that it is not relying on any warranty or representation made by Landlord, Landlord's agent, or any broker concerning the use of the leased premises or Property.
11.SIGNS:
A.Tenant may not post or paint any signs or place any decoration outside the leased premises or on the Property without Landlord's written consent. Landlord may remove any unauthorized sign or decorations, and Tenant will promptly reimburse Landlord for its cost to remove any unauthorized sign or decorations.
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 6 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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B.Any authorized sign must comply with all laws, restrictions, zoning ordinances, and any governmental order relating to signs on the leased premises or Property. Landlord may temporarily remove any authorized sign to complete repairs or alterations to the leased premises or the Property.
C.By providing written notice to Tenant before this lease ends, Landlord may require Tenant, upon move- out and at Tenant's expense, to remove, without damage to the Property or leased premises, any or all signs or decorations that were placed on the Property or leased premises by or at the request of Tenant. Any signs or decorations that Landlord does not require Tenant to remove and that are fixtures, become the property of the Landlord and must be surrendered to Landlord at the time this lease ends.
12.ACCESS BY LANDLORD:
A.During Tenant's normal business hours Landlord may enter the leased premises for any reasonable purpose, including but not limited to purposes for repairs, maintenance, alterations, and showing the leased premises to prospective tenants or purchasers. Landlord may access the leased premises after Tenant's normal business hours if: (1) entry is made with Tenant's permission; or (2) entry is necessary to complete emergency repairs. Landlord will not unreasonably interfere with Tenant's business operations when accessing the leased premises.
B.During the last _____ days of this lease, Landlord may place a "For Lease" or similarly worded sign on the leased premises.
13.MOVE-IN CONDITION: Tenant has inspected the leased premises and accepts it in its present (as-is) condition unless expressly noted otherwise in this lease or in an addendum. Landlord and any agent have made no express or implied warranties as to the condition or permitted use of the leased premises or Property.
14.MOVE-OUT CONDITION AND FORFEITURE OF TENANT'S PERSONAL PROPERTY:
A.At the time this lease ends, Tenant will surrender the leased premises in the same condition as when received, except for normal wear and tear. Tenant will leave the leased premises in a clean condition free of all trash, debris, personal property, hazardous materials, and environmental contaminants.
B.If Tenant leaves any personal property in the leased premises after Tenant surrenders possession of the leased premises, Landlord may: (1) require Tenant, at Tenant's expense, to remove the personal property by providing written notice to Tenant; or (2) retain such personal property as forfeited property to Landlord.
C."Surrender" means vacating the leased premises and returning all keys and access devices to Landlord. "Normal wear and tear" means deterioration that occurs without negligence, carelessness, accident, or abuse.
D.By providing written notice to Tenant before this lease ends, Landlord may require Tenant, upon move- out and at Tenant's expense, to remove, without damage to the Property or leased premises, any or all fixtures that were placed on the Property or leased premises by or at the request of Tenant. Any fixtures that Landlord does not require Tenant to remove become the property of the Landlord and must be surrendered to Landlord at the time this lease ends.
15.MAINTENANCE AND REPAIRS:
A.Cleaning: Tenant must keep the leased premises clean and sanitary and promptly dispose of all garbage in appropriate receptacles. ☐ Landlord ☒ Tenant will provide, at its expense, janitorial services to the leased premises that are customary and ordinary for the property type. Tenant will maintain any grease trap on the Property which Tenant uses, including but not limited to periodic emptying and cleaning, as well as making any modification to the grease trap that may be necessary to comply with any applicable law.
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 7 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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B.Repairs of Conditions Caused by a Party: Each party must promptly repair a condition in need of repair that is caused, either intentionally or negligently, by that party or that party's guests, patrons, invitees, contractors or permitted subtenants.
C.Repair and Maintenance Responsibility: Except as otherwise provided by this Paragraph 15, the party designated below, at its expense, is responsible to maintain and repair the following specified items in the leased premises (if any). The specified items must be maintained in clean and good operable condition. If a governmental regulation or order requires a modification to any of the specified items, the party designated to maintain the item must complete and pay the expense of the modification. The specified items include and relate only to real property in the leased premises. Tenant is responsible for the repair and maintenance of its personal property. (Check all that apply.)
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N/A
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Landlord
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Tenant
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(1)
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Foundation, exterior walls, roof, and other structural components
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☐
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☒
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☐
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(2)
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Glass and windows
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☐
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☐
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☒
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(3)
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Fire protection equipment
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☐
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☐
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☒
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(4)
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Fire sprinkler systems
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☐
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☐
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☒
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(5)
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Exterior & overhead doors, including closure devices, molding, locks, and hardware
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☐
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☒
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☐
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(6)
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Grounds maintenance, including landscaping and irrigation systems
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☐
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☒
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☐
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(7)
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Interior doors, including closure devices, frames, molding, locks, and hardware
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☐
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☐
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☒
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(8)
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Parking areas and walks
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☐
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☒
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☐
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(9)
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Plumbing systems, drainage systems and sump pumps
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☐
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☐
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☒
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(10)
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Electrical systems, mechanical systems
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☐
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☐
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☒
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(11)
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Ballast and lamp replacement
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☐
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☐
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☒
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(12)
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Heating, Ventilation and Air Conditioning (HVAC) systems
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☐
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☐
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☒
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(13)
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HVAC system replacement
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☐
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☐
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☐
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(14)
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Signs and lighting:
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(a)
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Pylon
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☐
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☐
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☒
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(b)
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Facia
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☐
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☐
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☒
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(c)
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Monument
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☐
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☒
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☐
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(d)
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Door/Suite
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☐
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☒
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☐
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(e)
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Other:________________
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☐
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☒
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☐
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(15)
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Extermination and pest control, excluding wood-destroying insects.
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☐
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☒
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☐
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(16)
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Fences and Gates
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☐
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☒
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☐
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(17)
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Storage yards and storage buildings
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☐
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☒
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☐
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(18)
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Wood-destroying insect treatment and repairs
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☐
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☒
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☐
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(19)
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Cranes and related systems
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☐
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☒
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☐
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(20)
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Sprinklers systems from the point they enter the Leased Premises
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☐
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☒
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(21)
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Each tenant will have their own electric meter
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☒
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(22)
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All other items and systems
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☐
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☒
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D.Repair Persons: Repairs must be completed by trained, qualified, and insured repair persons.
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 8 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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E.HVAC Service Contract: If Tenant maintains the HVAC system under Paragraph 15C(12), Tenant ☐is
☒ is not required to maintain, at its expense, a regularly scheduled maintenance and service contract for the HVAC system. The maintenance and service contract must be purchased from a HVAC maintenance company that regularly provides such contracts to similar properties. If Tenant fails to maintain a required HVAC maintenance and service contract in effect at all times during this lease, Landlord may do so and Tenant will reimburse Landlord for the expense of such maintenance and service contract or Landlord may exercise Landlord's remedies under Paragraph 20.
F.Common Areas: Landlord will maintain any common areas in the Property in a manner as Landlord determines to be in the best interest of the Property. Landlord will maintain any elevator and signs in the common area. Landlord may change the size, dimension, and location of any common areas, provided that such change does not materially impair Tenant's use and access to the leased premises. Tenant has the non-exclusive license to use the common areas in compliance with Landlord's rules and regulations. Tenant may not solicit any business in the common areas or interfere with any other person's right to use the common areas. This paragraph does not apply if Paragraph 2A(2) applies.
G.Notice of Repairs: Tenant must promptly notify Landlord of any item that is in need of repair and that is Landlord's responsibility to repair. All requests for repairs to Landlord must be in writing.
H.Failure to Repair: Landlord must make a repair for which Landlord is responsible within a reasonable period of time after Tenant provides Landlord written notice of the needed repair. If Tenant fails to repair or maintain an item for which Tenant is responsible within 10 days after Landlord provides Tenant written notice of the needed repair or maintenance, Landlord may: (1) repair or maintain the item, without liability for any damage or loss to Tenant, and Tenant must immediately reimburse Landlord for the cost to repair or maintain; or (2) exercise Landlord's remedies under Paragraph 20.
16.ALTERATIONS:
A.Tenant may not alter (including making any penetrations to the roof, exterior walls or foundation), improve, or add to the Property or the leased premises without Landlord's written consent. Landlord will not unreasonably withhold consent for the Tenant to make reasonable non-structural alterations, modifications, or improvements to the leased premises.
B.Tenant may not alter any locks or any security devices on the Property or the leased premises without Landlord's consent. If Landlord authorizes the changing, addition, or rekeying of any locks or other security devices, Tenant must immediately deliver the new keys and access devices to Landlord.
C.If a governmental order requires alteration or modification to the leased premises, the party obligated to maintain and repair the item to be modified or altered as designated in Paragraph 15 will, at its expense, modify or alter the item in compliance with the order and in compliance with Paragraphs 16A and 17.
D.Any alterations, improvements, fixtures or additions to the Property or leased premises installed by either party during the term of this lease will become Landlord's property and must be surrendered to Landlord at the time this lease ends, except for those fixtures Landlord requires Tenant to remove under Paragraph 11 or 14 or if the parties agree otherwise in writing.
17.LIENS: Tenant may not do anything that will cause the title of the Property or leased premises to be encumbered in any way. If Tenant causes a lien to be filed against the Property or leased premises, Tenant will within 20 days after receipt of Landlord's demand: (1) pay the lien and have the lien released of record; or (2) take action to discharge the lien. Tenant will provide Landlord a copy of any release Tenant obtains pursuant to this paragraph.
18.LIABILITY: To the extent permitted by law, Landlord is NOT responsible to Tenant or Tenant's employees, patrons, guests, or invitees for any damages, injuries, or losses to person or property caused by:
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 9 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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A.an act, omission, or neglect of: Tenant; Tenant's agent; Tenant's guest; Tenant's employees; Tenant's patrons; Tenant's invitees; or any other tenant on the Property;
B.fire, flood, water leaks, ice, snow, hail, winds, explosion, smoke, riot, strike, interruption of utilities, theft, burglary, robbery, assault, vandalism, other persons, environmental contaminants, or other occurrences or casualty losses.
19.INDEMNITY: Each party will indemnify, defend, and hold the other party harmless from any property damage, personal injury, suits, actions, liabilities, damages, cost of repairs or service to the leased premises or Property, or any other loss caused, negligently or otherwise, by that party or that party's employees, patrons, guests, or invitees.
20.DEFAULT:
A.If Landlord fails to comply with this lease within 30 days after Tenant notifies Landlord of Landlord's failure to comply, Landlord will be in default and Tenant may seek any remedy provided by law. If, however, Landlord's non-compliance reasonably requires more than 30 days to cure, Landlord will not be in default if the cure is commenced within the 30-day period and is diligently pursued.
B.If Landlord does not actually receive at the place designated for payment any rent due under this lease within 5 days after it is due, Tenant will be in default. If Tenant fails to comply with this lease for any other reason within 10 days after Landlord notifies Tenant of its failure to comply, Tenant will be in default.
C.If Tenant is in default, Landlord may, with at least 3 days written notice to Tenant: (i) terminate this lease, or (ii) terminate Tenant's right to occupy the leased premises without terminating this lease and may accelerate all rents which are payable during the remainder of this lease or any renewal period. Landlord will attempt to mitigate any damage or loss caused by Tenant's breach by using commercially reasonable means. If Tenant is in default, Tenant will be liable for:
(1)any lost rent;
(2)Landlord's cost of reletting the leased premises, including brokerage fees, advertising fees, and other fees necessary to relet the leased premises;
(3)repairs to the leased premises for use beyond normal wear and tear;
(4)all Landlord's costs associated with eviction of Tenant, such as attorney's fees, court costs, and prejudgment interest;
(5)all Landlord's costs associated with collection of rent such as collection fees, late charges, and returned check charges;
(6)cost of removing any of Tenant's equipment or fixtures left on the leased premises or Property;
(7)cost to remove any trash, debris, personal property, hazardous materials, or environmental contaminants left by Tenant or Tenant's employees, patrons, guests, or invitees in the leased premises or Property;
(8)cost to replace any unreturned keys or access devices to the leased premises, parking areas, or Property; and
(9)any other recovery to which Landlord may be entitled under this lease or under law.
21.ABANDONMENT, INTERRUPTION OF UTILITIES, REMOVAL OF PROPERTY, AND LOCKOUT: Chapter 93 of the Texas Property Code governs the rights and obligations of the parties with regard to:(a) abandonment of the leased premises; (b) interruption of utilities; (c) removal of Tenant's property; and(d) ''lock-out'' of Tenant.
22.HOLDOVER: If Tenant fails to vacate the leased premises at the time this lease ends, Tenant will become a tenant-at-will and must vacate the leased premises immediately upon receipt of demand from Landlord. No holding over by Tenant, with or without the consent of Landlord, will extend this lease. Tenant will
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(TXR-2101) 4-1-14
|
Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 10 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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indemnify Landlord and any prospective tenants for any and all damages caused by the holdover. Rent for any holdover period will be 150% of the base monthly rent plus any additional rent calculated on a daily basis and will be immediately due and payable daily without notice or demand.
23.LANDLORD'S LIEN AND SECURITY INTEREST: To secure Tenant's performance under this lease, Tenant grants to Landlord a lien and security interest against all of Tenant's nonexempt personal property that is in the leased premises or on the Property. This lease is a security agreement for the purposes of the Uniform Commercial Code. Landlord may file a financing statement to perfect Landlord's security interest under the Uniform Commercial Code.
24.ASSIGNMENT AND SUBLETTING: Landlord may assign this lease to any subsequent owner of the Property. Tenant may not assign this lease or sublet any part of the leased premises without Landlord's written consent. An assignment of this lease or subletting of the leased premises without Landlord's written consent is voidable by Landlord. If Tenant assigns this lease or sublets any part of the leased premises, Tenant will remain liable for all of Tenant's obligations under this lease regardless if the assignment or sublease is made with or without the consent of Landlord.
25.RELOCATION:
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☐
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A.
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By providing Tenant with not less than 90 days advanced written notice, Landlord may require Tenant to relocate to another location in the Property, provided that the other location is equal in size or larger than the leased premises then occupied by Tenant and contains similar leasehold improvements. Landlord will pay Tenant's reasonable out-of-pocket moving expenses for moving to the other location. "Moving expenses" means reasonable expenses payable to professional movers, utility companies for connection and disconnection fees, wiring companies for connecting and disconnecting Tenant's office equipment required by the relocation, and printing companies for reprinting Tenant's stationary and business cards. A relocation of Tenant will not change or affect any other provision of this lease that is then in effect, including rent and reimbursement amounts, except that the description of the suite or unit number will automatically be amended
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☒
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B.
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Landlord may not require Tenant to relocate to another location in the Property without Tenant's prior consent.
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26.SUBORDINATION:
A.This lease and Tenant's leasehold interest are and will be subject, subordinate, and inferior to:
(1)any lien, encumbrance, or ground lease now or hereafter placed on the leased premises or the Property that Landlord authorizes;
(2)all advances made under any such lien, encumbrance, or ground lease;
(3)the interest payable on any such lien or encumbrance;
(4)any and all renewals and extensions of any such lien, encumbrance, or ground lease;
(5)any restrictive covenant affecting the leased premises or the Property; and
(6)the rights of any owners' association affecting the leased premises or Property.
B.Tenant must, on demand, execute a subordination, attornment, and non-disturbance agreement that Landlord may request that Tenant execute, provided that such agreement is made on the condition that this lease and Tenant's rights under this lease are recognized by the lien-holder.
27.ESTOPPEL CERTIFICATES & FINANCIAL INFORMATION:
A.Within 10 days after receipt of a written request from Landlord, Tenant will execute and deliver to Landlord an estoppel certificate that identifies the terms and conditions of this lease.
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 11 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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B.Within 30 days after receipt of a written request from Landlord, Tenant will provide to Landlord Tenant's current financial information (balance sheet and income statement). Landlord may request the financial information no more frequently than once every 12 months.
28.CASUALTY LOSS:
A.Tenant must immediately notify Landlord of any casualty loss in the leased premises. Within 20 days after receipt of Tenant's notice of a casualty loss, Landlord will notify Tenant if the leased premises are less than or more than 50% unusable, on a per square foot basis, and if Landlord can substantially restore the leased premises within 120 days after Tenant notifies Landlord of the casualty loss.
B.If the leased premises are less than 50% unusable and Landlord can substantially restore the leased premises within 120 days after Tenant notifies Landlord of the casualty, Landlord will restore the leased premises to substantially the same condition as before the casualty. If Landlord fails to substantially restore within the time required, Tenant may terminate this lease.
C.If the leased premises are more than 50% unusable and Landlord can substantially restore the leased premises within 120 days after Tenant notifies Landlord of the casualty, Landlord may: (1) terminate this lease; or (2) restore the leased premises to substantially the same condition as before the casualty. If Landlord chooses to restore and does not substantially restore the leased premises within the time required, Tenant may terminate this lease.
D.If Landlord notifies Tenant that Landlord cannot substantially restore the leased premises within 120 days after Tenant notifies Landlord of the casualty loss, Landlord may: (1) choose not to restore and terminate this lease; or (2) choose to restore, notify Tenant of the estimated time to restore, and give Tenant the option to terminate this lease by notifying Landlord within 10 days.
E.If this lease does not terminate because of a casualty loss, rent will be reduced from the date Tenant notifies Landlord of the casualty loss to the date the leased premises are substantially restored by an amount proportionate to the extent the leased premises are unusable.
29.CONDEMNATION: If after a condemnation or purchase in lieu of condemnation the leased premises are totally unusable for the purposes stated in this lease, this lease will terminate. If after a condemnation or purchase in lieu of condemnation the leased premises or Property are partially unusable for the purposes of this lease, this lease will continue and rent will be reduced in an amount proportionate to the extent the leased premises are unusable. Any condemnation award or proceeds in lieu of condemnation are the property of Landlord and Tenant has no claim to such proceeds or award. Tenant may seek compensation from the condemning authority for its moving expenses and damages to Tenant's personal property.
30.ATTORNEY'S FEES: Any person who is a prevailing party in any legal proceeding brought under or related to the transaction described in this lease is entitled to recover prejudgment interest, reasonable attorney's fees, and all other costs of litigation from the nonprevailing party.
31.REPRESENTATIONS:
A.Tenant's statements in this lease and any application for rental are material representations relied upon by Landlord. Each party signing this lease represents that he or she is of legal age to enter into a binding contract and is authorized to sign the lease. If Tenant makes any misrepresentation in this lease or in any application for rental, Tenant is in default.
B.Landlord is not aware of any material defect on the Property that would affect the health and safety of an ordinary person or any environmental hazard on or affecting the Property that would affect the
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 12 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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health or safety of an ordinary person, except: ________________________________________.
C.Each party and each signatory to this lease represents that: (1) it is not a person named as a Specially Designated National and Blocked Person as defined in Presidential Executive Order 13224; (2) it is not acting, directly or indirectly, for or on behalf of a Specially Designated and Blocked Person; and (3) is not arranging or facilitating this lease or any transaction related to this lease for a Specially Designated and Blocked Person. Any party or any signatory to this lease who is a Specially Designated and Blocked person will indemnify and hold harmless any other person who relies on this representation and who suffers any claim, damage, loss, liability or expense as a result of this representation.
32.BROKERS:
A.The brokers to this lease are:
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Principal Broker:
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UTR Realtor/Commercial Division
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Cooperating Broker
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NAI Partners
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Agent:
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The Rowsey Group / Sharon Rowsey
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Agent:
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Griff Bandy
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Address:
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17000 El Camino #107
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Address:
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1900 West Loop South, Suite 500
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Houston, Texas 77058
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Houston, Texas 77027
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Phone & Fax:
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(713) 922-7701
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Phone & Fax:
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(713) 629-0504
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E-mail:
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E-mail:
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License No.:
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0483822
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License No.:
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Principal Broker: (Check only one box)
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☒
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represent Landlord only.
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represent Tenant only.
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is an intermediary between Landlord and Tenant
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B.Fees:
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(1)
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Principal Broker's fee will be paid according to: (Check only one box).
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(a)
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a separate written commission agreement between Principal Broker and:
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☒ Landlord ☐ Tenant.
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(b)
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the attached Commercial Lease Addendum for Broker's Fee (TXR-2102).
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(2)
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Cooperating Broker's fee will be paid according to: (Check only one box).
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(a)
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a separate written commission agreement between Cooperating Broker and:
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☐Principal Broker ☒Landlord ☐Tenant
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(b)
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the attached Commercial Lease Addendum for Broker's Fee (TXR-2102).
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33.ADDENDA: Incorporated into this lease are the addenda, exhibits and other information marked in the Addenda and Exhibit section of the Table of Contents. If Landlord's Rules and Regulations are made part of this lease, Tenant agrees to comply with the Rules and Regulations as Landlord may, at its discretion, amend from time to time.
34.NOTICES: All notices under this lease must be in writing and are effective when hand-delivered, sent by mail, or sent by facsimile transmission to:
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Landlord at:
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Tannos Land Holding III, LLC
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Address:
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810 S Friendswood Dr, Friendswood, TX 77546
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 13 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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Phone:
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Fax:
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and a copy to:
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Address:
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Phone:
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Fax:
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Landlord also consents to receive notices by e-mail at:
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Tenant at the leased premises,
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and a copy to:
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Castle Biosciences, Inc.
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Address:
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Phone:
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(832) 974-1556
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Fax:
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Tenant also consents to receive notices by e-mail at: _________________
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35.SPECIAL PROVISIONS:
See the attached Addendum to Commercial Lease and Construction Agreement.
36.AGREEMENT OF PARTIES:
A.Entire Agreement: This lease contains the entire agreement between Landlord and Tenant and may not be changed except by written agreement.
B.Binding Effect: This lease is binding upon and inures to the benefit of the parties and their respective heirs, executors, administrators, successors, and permitted assigns.
C.Joint and Several: All Tenants are jointly and severally liable for all provisions of this lease. Any act or notice to, or refund to, or signature of, any one or more of the Tenants regarding any term of this lease, its renewal, or its termination is binding on all Tenants.
D.Controlling Law: The laws of the State of Texas govern the interpretation, performance, and enforcement of this lease.
E.Severable Clauses: If any clause in this lease is found invalid or unenforceable by a court of law, the remainder of this lease will not be affected and all other provisions of this lease will remain valid and enforceable.
F.Waiver: Landlord's delay, waiver, or non-enforcement of acceleration, contractual or statutory lien, rental due date, or any other right will not be deemed a waiver of any other or subsequent breach by Tenant or any other term in this lease.
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(TXR-2101) 4-1-14
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Initialed for Identification by Landlord: LT, ____, and Tenant: DJM, ____
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Page 14 of 15
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Commercial Lease concerning:
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505 S Friendswood Dr
Friendswood, TX 77546,
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G.Quiet Enjoyment: Provided that Tenant is not in default of this lease, Landlord covenants that Tenant will enjoy possession and use of the leased premises free from material interference.
H.Force Majeure: If Landlord's performance of a term in this lease is delayed by strike, lock-out, shortage of material, governmental restriction, riot, flood, or any cause outside Landlord's control, the time for Landlord's performance will be abated until after the delay.
I.Time: Time is of the essence. The parties require strict compliance with the times for performance.
Brokers are not qualified to render legal advice, property inspections, surveys, engineering studies, environmental assessments, tax advice, or compliance inspections. The parties should seek experts to render such services. READ THIS LEASE CAREFULLY. If you do not understand the effect of this Lease, consult your attorney BEFORE signing.
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Landlord:
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Tannos Land Holding III, LLC
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Tenant:
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Castle Biosciences, Inc.
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By:
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By:
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By (signature):
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/s/ Louis T. Tannos
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By (signature):
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/s/ Derek Maetzold
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Printed Name:
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Louis T. Tannos
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Printed Name:
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Derek Maetzold
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Title:
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President
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Title:
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President and CEO
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Date:
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12/16/19
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Date:
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12/17/19
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By:
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By:
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By (signature):
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By (signature):
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Printed Name:
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Printed Name:
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Title:
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Title:
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(TXR-2101) 4-1-14
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Page 15 of 15
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COMMERCIAL LEASE ADDENDUM FOR EXPENSE REIMBURSEMENT
USE OF THIS FORM BY PERSONS WHO ARE NOT MEMBERS OF THE TEXAS ASSOCIATION OF REALTORS®, INC. IS NOT AUTHORIZED.
©Texas Association of REALTORS®, Inc. 2010
ADDENDUM TO THE COMMERCIAL LEASE BETWEEN THE UNDERSIGNED PARTIES CONCERNING
THE LEASED PREMISES AT 505 S Friendswood Dr, Friendswood, TX 77546,
In addition to rent stated in the lease, Tenant will pay Landlord the additional rent described in this addendum. Tenant will pay the additional rent each month at the time the base-monthly rent in the lease is due.
A.Definitions:
(1)“Tenant's pro rata share” is 40.520 %.
(2)“CAM” means all of Landlord's expenses reasonably incurred to maintain, repair, operate, manage, and secure the Property (for example, security, lighting, painting, cleaning, decorations, utilities, trash removal, pest control, promotional expenses, and other expenses reasonably related the Property's operations); CAM does not include capital expenditures, interest, depreciation, tenant improvements, insurance, taxes, or brokers' leasing fees Notwithstanding the foregoing, CAM does include the amortized costs incurred by Landlord in making capital improvements or other modifications to the Property to the extent such improvements or modifications reduce CAM overall. These costs will be amortized over the useful life of the improvement or modification on a straight-line basis; however, in no event will the charge for such amortization included in CAM exceed the actual reduction in CAM achieved by the improvements and modifications.
(3)“Insurance” means Landlord's costs to insure the leased premises and the Property including but not limited to insurance for casualty loss, general liability, and reasonable rent loss.
(4)“Taxes” means the real property ad valorem taxes assessed against the leased premises and Property inclusive of all general and special assessments and surcharges.
(5)“Structural” means all of Landlord's expenses reasonably incurred to maintain, repair, and replace the roof, foundation, exterior walls, load bearing walls and other structural components of the Property.
B.Method: The additional rent will be calculated under the following method:
Note: “CAM” does not include taxes and insurance costs.
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☐
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(1)
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Base-year expenses: Each month Tenant will pay Tenant's pro rata share of the projected monthly expenses for the Property that exceed the amount of the monthly base-year expenses for the calendar year for: ☐taxes; ☐insurance; ☐CAM; ☐structural; and ☐_________________
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☐
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(2)
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Expense-stop: Each month Tenant will pay Tenant's pro rata share of the projected monthly expenses for the Property that exceed $________________ per square foot per year for: ☐ taxes; ☐insurance; ☐ CAM; ☐ structural; and ☐______________________________________________________.
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☒
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(3)
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Net: Each month Tenant will pay Tenant's pro rata share of the projected monthly expenses for the Property for: ☒taxes; ☒insurance; ☒ CAM; ☐ structural; and ☐_____________________________
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_____________________________________________________________________________________.
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C.Projected Monthly Expenses: On or about December 31 of each calendar year, Landlord will project the applicable monthly expenses (those that Tenant is to pay under this addendum) for the following calendar year and will notify Tenant of the projected expenses. The projected expenses are based on Landlord's estimates of such expenses. The actual expenses may vary.
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(TXR-2103) 1-26-10
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Initialed for identification by Landlord: LT, ____, and Tenant: DJM,____
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Page 1 of 2
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Expense Reimbursement Addendum concerning 505 S Friendswood Dr, Friendswood, TX 77546,
Notice: The applicable projected expenses at the time which the above-referenced lease commences are shown in the table below. The total area of the Property presently used by Landlord for calculating
expense reimbursements is 53,702 rentable square feet (including any add on factor for common areas).
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Projected Expenses
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$ Monthly Rate
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$ Annual Rate
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$0.70 / rsf / month
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$8.40 / rsf / year
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D.Reconciliation: Within a reasonable time after the end of each calendar year, Landlord will notify Tenant of the actual costs of the applicable expenses (those that Tenant is to pay under this addendum) for the previous year. If the actual costs of the applicable expenses exceed the amounts paid or owed by Tenant for the previous year, Tenant must pay the deficient amount to Landlord within 30 days after Landlord notifies Tenant of the deficient amount. If the actual costs of the applicable expenses are less than the amounts paid by Tenant for the previous year, Landlord will refund the excess to Tenant or will credit the excess to Tenant's next rent payment. Tenant may audit or examine those items in Landlord's records that relate to Tenant's obligations under this addendum. Landlord will promptly refund to Tenant any overpayment revealed by an audit or examination. If the audit or examination reveals an error of more than 5% over the amounts Landlord collected in a calendar year from Tenant under this addendum, Landlord will pay the reasonable cost of the audit or examination. Landlord may not seek a deficiency from Tenant under this paragraph if Landlord fails to timely provide the required notice.
E.Special Provisions:
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Landlord:
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Tannos Land Holding III, LLC
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Tenant:
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Castle Biosciences, Inc.
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By:
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By:
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By (signature):
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/s/ Louis T. Tannos
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By (signature):
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/s/ Derek Maetzold
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Printed Name:
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Louis T. Tannos
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Printed Name:
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Derek Maetzold
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Title:
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President
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Title:
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President and CEO
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By:
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By:
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By (signature):
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By (signature):
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Printed Name:
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Printed Name:
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Title:
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Title:
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(TXR-2103) 1-26-10
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Page 2 of 2
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ADDENDUM TO COMMERCIAL LEASE
This Addendum to Commercial Lease (this “Addendum”), is attached to, and made a part of, that certain Commercial Lease (separately, “the Lease” or, as modified hereby, “this Lease”) by and between TANNOS LAND HOLDING III, LLC, as Landlord, and CASTLE BIOSCIENCES, INC., as Tenant, and relating to approximately 21,760 square feet of rentable area (the “Leased Premises”) located at 505 S. Friendswood Drive, Friendswood, Brazoria County, Texas 77546. All terms herein which have a defined meaning in the Lease have the same meaning when used herein unless otherwise expressly stated to the contrary.
The following terms are made part of, and incorporated by reference into, the Lease:
1.Term. The Commencement Date shall occur on the earlier of (i) August 1, 2020, or (ii) the fifth (5th) business day after the leasehold improvements to be constructed by Landlord in the Leased Premises pursuant to the Commercial Lease Construction Addendum (the “Landlord’s Work”) are Substantially Complete and notice thereof is delivered to Tenant. The Landlord’s Work shall be “Substantially Complete” when the Landlord’s Work has been completed in accordance with the approved construction documents and Tenant is able to access and occupy the Leased Premises and conduct its business therein in a reasonable manner and (b) Landlord has obtained final inspection approval from all appropriate regulatory authorities for the Leased Premises, even though minor punchlist items remain to be completed. Notwithstanding the foregoing, if the Landlord’s Work is not Substantially Complete by August 1, 2020, the Commencement Date shall be postponed until the Landlord’s Work is Substantially Complete and notice thereof is delivered to Tenant. However, if the Landlord’s Work is not Substantially Complete by August 1, 2020 due to any Tenant Delay (as defined below), the Landlord’s Work shall be deemed to be Substantially Complete on the date the Landlord’s Work would have been Substantially Complete, but for such Tenant Delay. As used herein, “Tenant Delay” means any delay in the Substantial Completion of the Landlord’s Work that is caused by (A) Tenant’s request for change orders to the construction documents previously approved by Landlord and Tenant, (B) Tenant’s failure to deliver or approve any required documentation the Construction Documents, and the like by the applicable deadline for doing so, and (C) Tenant’s failure to otherwise respond to any Landlord request within a reasonable period. If the Landlord’s Work is not Substantially Complete by August 1, 2020 after taking any Tenant Delay into account, then Tenant shall be entitled to receive a day-for-day abatement of rent for each day that occurs after August 1, 2020 until the Landlord’s Work is Substantially Complete.
2.Parking. Landlord shall provide Tenant up to four (4) unreserved parking spaces per 1,000 square feet of rentable area leased by Tenant in the Building (the “Unreserved Permits”) allowing access to unreserved areas in parking facilities for the Property (the “Parking Facilities”). Tenant shall have the right to convert up to 9 of such unreserved parking spaces to reserved parking spaces in the locations of the Parking Facilities shown on the attached Schedule 1. All unreserved and reserved parking spaces shall be provided to Tenant at no charge to Tenant during lease term.
3.Legal Compliance. Landlord is not aware of any restriction, regulation or applicable law that would prohibit Tenant’s use of the Leased Premises for the use permitted in this Lease. Landlord shall be responsible for any capital expenditure required to comply with any law, restriction or regulation applicable to the Leased Premises unless such compliance is due solely as a result of Tenant’s specific use of the Leased Premises or any alteration made by Tenant to the Leased Premises.
4.Insurance. Landlord shall maintain: (1) commercial general liability insurance applicable to the Property which provides, on an occurrence basis, a minimum combined single limit of no less than $1,000,000; and (2) property insurance on all of the improvements of the Property in the amount of the full replacement cost thereof, as reasonably estimated by Landlord.
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Addendum to Commercial Lease
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Page 1
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5.Waiver of Subrogation. Notwithstanding anything in this Lease to the contrary, Tenant waives, and shall cause its insurance carrier(s) and any other party claiming through or under such carrier(s), by way of subrogation or otherwise, to waive any and all rights of recovery, claims, actions or causes of action against Landlord and its lienholder, officers, employees, contractors, agents and property manager for any claims, loss or damage to Tenant’s business, any loss of use of the Leased Premises, and any claims, loss, theft or damage to Tenant’s property (including Tenant’s automobiles or the contents thereof), INCLUDING ALL RIGHTS (BY WAY OF SUBROGATION OR OTHERWISE) OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF ACTION ARISING OUT OF THE NEGLIGENCE OF LANDLORD OR ANY OF LANDLORD’S AGENTS, EMPLOYEES OR CONTRACTORS, which loss or damage is (or would have been, had the insurance required by this Lease been maintained) covered by insurance. In addition, notwithstanding anything in this Lease to the contrary, Landlord waives (except for any commercially reasonable deductible, not to exceed $20,000.00, associated with any claim), and shall cause its insurance carrier(s) and any other party claiming through or under such carrier(s), by way of subrogation or otherwise, to waive any and all rights of recovery, claims, action or causes of action against Tenant and its officers, employees, contractors and agents for any loss of or damage to or loss of use of the Leased Premises, any additions or improvements in the Property, or any contents thereof, INCLUDING ALL RIGHTS (BY WAY OF SUBROGATION OR OTHERWISE) OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF ACTION ARISING OUT OF THE NEGLIGENCE OF TENANT OR ANY OF TENANT’S AGENTS, EMPLOYEES OR CONTRACTORS, which loss or damage is (or would have been, had the insurance required by this Lease been maintained) covered by insurance.
6.Utilities. Paragraph 7.C of the Lease is deleted in its entirety and replaced with the following paragraph:
“Notwithstanding anything to the contrary in this lease, (x) in the event of any interruption in any utility service to the extent caused by Landlord or its employees, agents or contractors and is not the result of any casualty or condemnation, and (y) if any such interruption renders all or any portion of the Leased Premises untenantable or not reasonably suitable for the permitted use, and such condition exists for three (3) consecutive business days after Landlord is aware of such interruption, then the Rent for the portion of the Leased Premises rendered untenantable or not reasonably suitable for the permitted use, shall abate based upon the pro rata portion of the Premises which is rendered untenantable or not reasonably suitable for the permitted use commencing retroactively on the first (1st) day of such interruption until the utility service is restored to the Leased Premises.”
7.Legal Compliance. Notwithstanding anything to the contrary in Paragraph 10 of the Lease,
a.The text that reads “Except as otherwise set forth in this lease,” shall be added to the first and last sentences of Paragraph 10.C of the Lease.
8.Signs. The following two (2) paragraphs are added to the end of Paragraph 11 of the Lease:
“D. During the term of this Lease, Tenant shall, at Tenant’s sole cost and expense, have the right to install a sign displaying its name on the top parapet on the front of the Building. Notwithstanding the foregoing, the exact location, size, material, construction, appearance and design of any signage permitted by this paragraph shall be subject to (i) the prior written approval of Landlord, which shall not be unreasonably withheld, conditioned or delayed, and (ii) Tenant’s compliance with all applicable laws.
D.Landlord agrees maintain Building directory signage identifying the tenants of the Building (“Directory Signage”) located in the lobby of the Building, and Tenant shall have the right to have its name placed on such Directory Signage.
9.Access by Landlord. Paragraph 12B is deleted in its entirety.
10.Move-In Condition. The last sentence of Paragraph 13 of the Lease is deleted in its entirety and replaced with the following sentence:
“Landlord and any agent have made no express or implied warranties as to the condition or permitted use of the leased premises or Property, except as otherwise set forth in this lease or in an addendum.”
11.Move-Out Condition and Forfeiture of Tenant’s Personal Property. Paragraph 14.A of the Lease is deleted in its entirety and replaced with the following paragraph:
“At the time this lease ends, Tenant will surrender the leased premises in the same condition as it existed on the Commencement Date, except for normal wear and tear, casualty damage that Tenant is not required to repair, condemnation loss, and any repairs that are Landlord’s responsibility under this lease.” Tenant will leave the leased premises in a clean condition free of all trash, debris, personal property, hazardous materials and environmental contaminants.
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Addendum to Commercial Lease
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Page 2
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12.Maintenance and Repair. Landlord shall maintain in good order, condition and repair the common areas and the exterior structural walls, load bearing walls, the outside face of the exterior walls, foundations, the roof of the Building, Utility Facilities (as defined below) and the sprinklers up to the point they enter the Leased Premises. Tenant shall provide to Landlord prompt written notice of the need of such repairs or maintenance. As used herein, the term “Utility Facilities” means any and all systems, machinery, facilities, installations, supply lines, transformers, pipes, conduits, ducts, penetrations, components, appurtenances and equipment, owned by Landlord and located on or at the Property, for the generation or supply of any utilities (including, without limitation, any individual HVAC units owned or maintained by Landlord). Tenant shall have no responsibility to correct or remedy: (i) any violations of Laws related in any way to the cleanliness, maintenance, occupancy, condition and use of the Property existing on or prior to the Commencement Date; (ii) any violations of Laws caused solely by the action or inaction of Landlord, or its employees, agents or contractors (the “Landlord Parties”) and not by Tenant in whole or in part; or (iii) any violations of Laws applicable to buildings generally, provided that Tenant shall be responsible for complying with all Laws related to Tenant’s specific use of or alteration to the Property and all costs related thereto. Landlord shall be obligated to correct or remedy its obligations in the foregoing items (i)-(iii) at its sole cost and expense, without reimbursement from Tenant. Tenant shall be obligated to correct or remedy its obligations in the foregoing item (iii) at its sole cost and expense, without reimbursement from Landlord.”
13.Alterations. The following sentence is added after the last sentence of Paragraph 16.D:
“Tenant shall be permitted to install and remove at any time during the Term its trade fixtures and equipment; provided, however, that Tenant shall be responsible for repairing any damage caused to the Property by the installation or removal of such trade fixtures and equipment.”
14.Liability. The first sentence of Paragraph 18 is deleted in its entirety and replaced with the following sentence:
“To the extent permitted by law and not caused by the gross negligence or intentional misconduct of Landlord or the Landlord Parties, Landlord is NOT responsible to Tenant or Tenant’s employees, patrons, guests, or invitees for any damages, injuries, or losses to person or property caused by:”
15.Paragraph 20.B of the Lease is deleted and replaced with the following paragraph:
“B. Tenant’s failure to pay all or any portion of the base monthly rent, additional rent or any other amount payable by Tenant hereunder when due, and the continuation of such failure for a period of 5 business days after Tenant receives written notice of such failure from Landlord, provided that the Landlord shall only be obligated to give Tenant written notice of its failure to pay two times in any twelve consecutive month period of the Term of the leased premises.
16.Landlord’s Lien and Security Interest. Paragraph 23 of the Lease is deleted in its entirety and replaced with the following paragraph:
“Tenant shall have the absolute right from time to time during the Term hereof and without Landlord’s further approval, written or otherwise, but upon written notice to Landlord, to grant and assign to Tenant’s lender or lenders a security interest in Tenant’s personal property. Landlord agrees to execute and deliver to such lenders the form of collateral access agreement attached hereto as Exhibit A-1 and such other documents as such lenders may reasonably request upon receipt of such request (collectively, the “Collateral Access Agreement”). If requested by Tenant, Landlord shall agree to subordinate any contractual, statutory or other Landlord’s lien Landlord may have on Tenant’s property to any lien placed upon the said property or estate during the term of this Lease by Tenant’s lender(s).”
17.Assignment. The following is added to Paragraph 24 of the Lease:
“Notwithstanding anything in the lease to the contrary, Tenant may assign all or part of its interest in this Lease or sublease all or part of the Premises (a "Permitted Transfer") to the following types of entities (a "Permitted Transferee") without the consent of Landlord:
a.an affiliate of Tenant;
b.any corporation, limited partnership, limited liability partnership, limited liability company or other business entity in which or with which Tenant, or its corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions governing merger and consolidation of business entities, so long as (A) Tenant's obligations hereunder are assumed by the entity surviving such merger or created by such consolidation; and (B) the tangible net worth of the surviving or created entity is not less than the tangible net worth of Tenant immediately preceding such transaction; or
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Addendum to Commercial Lease
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Page 3
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c.any corporation, limited partnership, limited liability partnership, limited liability company or other business entity acquiring all or substantially all of Tenant's assets if such entity's tangible net worth after such acquisition is not less than the tangible net worth of Tenant immediately preceding such transaction.
Tenant shall promptly notify Landlord of any such Permitted Transfer. Tenant shall remain liable for the performance of all of the obligations of Tenant hereunder, or if Tenant no longer exists because of a merger, consolidation, or acquisition, the surviving or acquiring entity shall expressly assume in writing the obligations of Tenant hereunder. The occurrence of a Permitted Transfer shall not waive Landlord's rights as to any subsequent assignments or subleases.”
18.CAM Charges. Notwithstanding anything to the contrary in this Lease, the term “CAM” (as defined in the Commercial Lease Addendum for Expense Reimbursement) shall not include any of the following: (i) except as expressly set forth in definition of CAM, the cost of any capital improvements or any depreciation or amortization thereof; (ii) principal and interest payments on any debts on the Property; (iii) the cost of repairs or other work to the extent Landlord is reimbursed by insurance or condemnation proceeds, or is reimbursed pursuant to warranties or service contracts; (iv) costs in connection with leasing space in the Building or elsewhere within the Property, including without limitation brokerage commissions, attorneys’ fees, expenses for preparation of leases, expenses related to constructing improvements for the sole benefit of an individual tenant, advertising and other marketing expenses, and lease concessions (including assumption of rent under existing leases), rental abatements and construction allowances granted to specific tenants; (v) costs incurred in connection with the sale, financing or refinancing of the Building or the Property, including without limitation legal, auditing, consulting and professional fees paid or incurred in connection therewith; (vi) fines, interest and penalties incurred by Landlord, including without limitation those due to the late payment of Taxes (as defined below) or other expenses for which Landlord is responsible; (vii) organizational expenses associated with the creation and operation of the entity which constitutes Landlord; (viii) any penalties or damages that Landlord pays to Tenant under the Lease or to other tenants in the Building under their respective leases; (ix) the amount of rent or other charges payable under and pursuant to any ground lease or superior lease pertaining to the Property, except to the extent inclusive of taxes or insurance; (x) costs, fees, and compensation paid to Landlord or to any affiliate of Landlord for services in or to the Property to the extent that they exceed the charges for comparable services generally charged by an unaffiliated third party of comparable skill, competence, stature, and reputation; (xi) services and costs for which Tenant or any other tenant or occupant of the Building or third person specifically reimburses Landlord in addition to its pro rata share of common area maintenance charges; (xii) contributions to charitable or political organizations; (xiii) costs relating to disputes between Landlord and a specific tenant of the Building; (xiv) contributions to operating expense reserves other than reserved for taxes and insurance payable under this Lease; (xv) costs relating to disputes between Landlord and tenant(s) of the Property.
19.Renewal Option. Tenant shall have the option to renew the term of this Lease pursuant to the Renewal Option attached hereto as Exhibit A-1, which is incorporated herein for all purposes.
20.Right of First Refusal. Tenant shall have the right to lease additional space on the third (3rd) floor of the Building pursuant to the Right of First Refusal attached hereto as Exhibit A-2, which is incorporated herein for all purposes.
[Signature Page to Follow]
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Addendum to Commercial Lease
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Page 4
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Landlord and Tenant execute this Addendum to be effective as of the date of the Lease.
LANDLORD:
TANNOS LAND HOLDING III, LLC
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By:
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/s/ Louis T. Tannos
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Name:
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Louis T. Tannos
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Title:
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President
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TENANT:
CASTLE BIOSCIENCES, INC.
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By:
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/s/ Derek Maetzold
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Name:
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Derek Maetzold
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Title:
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President and CEO
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Addendum to Commercial Lease
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Page 5
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Exhibit A-1
to
Addendum to Commercial Lease
RENEWAL OPTION
(a) Provided that this Lease is in full force and effect as of the date of the Renewal Notice (as such term is hereinafter defined), and (ii) Tenant shall not be in default beyond any applicable notice and cure period under this Lease, Tenant shall have one (1) option to extend the term of this Lease for an additional term of five (5) years (the “Renewal Term”). Tenant’s option with respect to the Renewal Term shall be exercisable by written notice (the “Renewal Notice”) to Landlord given not less than twelve (12) months prior to the expiration of the term of this Lease. The Renewal Term shall constitute an extension of the term of this Lease and shall be upon all of the same terms and conditions as the initial Term, except that (i) there shall be no further option to renew the term of the Lease, and (ii) the base monthly rent for the Renewal Term shall be as determined pursuant to the provisions below, and shall commence on the first day of the Renewal Term.
(b) The base monthly rent for the Leased Premises for the Renewal Term shall be the Fair Market Rent, provided, in no event shall the Fair Market Rent by more than 110%, nor less than 90%, of the base monthly rent payable during the initial term of this Lease. “Fair Market Rent” means the base rent for comparable space in Class “A” buildings in the Friendswood, Texas area that a willing lessee would pay and a willing lessor would accept for the Leased Premises during the Renewal Term, taking into account all relevant factors, including, but not limited to, lease takeovers/assumptions; relocation/moving allowances; space planning/interior architecture and engineering allowances; refurbishment and repainting allowances; club memberships; other concessions or inducements; extent of services provided or to be provided; distinction between "gross" and "net" lease; base year or dollar amount for escalation purposes (both operating and ad valorem/real estate taxes); any other adjustments (including by way of indexes) to base rental; credit standing and financial stature of the tenant; term or length of lease; the time the particular rental rate under consideration was agreed upon and became or is to become effective; the payment of a leasing commission and/or fees/bonuses in lieu thereof, whether to Landlord, any person or entity affiliated with Landlord, or otherwise.
(c) If Tenant timely exercises the Renewal Option pursuant to this Exhibit, Landlord shall notify Tenant (the “Rent Notice”) within 30 days of Tenant’s exercise of the Renewal Option, if applicable, of the Fair Market Rent during such Renewal Term (“Landlord’s Determination”). Tenant shall notify Landlord (“Tenant’s Notice”), within 30 days after Tenant’s receipt of the Rent Notice, except as provided in the last sentence of this Section (c), whether Tenant accepts or disputes Landlord’s Determination, and if Tenant disputes Landlord’s Determination, Tenant’s Notice shall set forth Tenant’s determination (“Tenant’s Determination”) of the Fair Market Rent during the applicable Renewal Term. If Tenant fails to give Tenant’s Notice within such 30-day period, then Tenant shall be deemed to have timely accepted Landlord’s Determination.
(d) If Tenant timely disputes Landlord’s Determination, and Landlord and Tenant fail to agree as to the Fair Market Rent within 30 days after the giving of the earlier of Tenant's Notice or Tenant’s Determination (the “Negotiation Period”), then Tenant may, by providing Landlord written notice no later than the expiration of the Negotiation Period, elect to (i) retract its Renewal Notice and not exercise the renewal option set forth in this Exhibit, in which case such renewal option shall become null and void (the “Retraction Notice”), or (ii) elect to proceed with exercising the renewal option set forth in this Exhibit, in which case the Fair Market Rent shall be determined by arbitration as set forth in this paragraph (the “Arbitration Notice”). In the event Tenant fails to provide Landlord with the Retraction Notice or Arbitration Notice prior to the expiration of the Negotiation Period, Tenant shall be deemed to have retracted its Renewal Notice and elected not to exercise the renewal option set forth in this Exhibit, in which case such renewal option shall become null and void. In the event Tenant timely delivers the Arbitration Notice to Landlord, Fair Market Rent shall be determined as follows: A senior officer of a recognized Houston, Texas leasing brokerage firm (the “Baseball Arbitrator”) shall be selected and paid for jointly by Landlord and Tenant. If Landlord and Tenant are unable to agree upon the Baseball Arbitrator, then the same shall be designated by the American Arbitration Association (the “AAA”). The Baseball Arbitrator selected by the parties or designated by the AAA shall have at least ten years’ experience in (i) the leasing of first-class office space in the Friendswood, Texas area, or (ii) the appraisal of Class “A” office buildings in the Friendswood, Texas area. Landlord and Tenant shall each submit to the Baseball Arbitrator and to the other Landlord’s Determination and Tenant’s Determination of the Fair Market Rent of the Leased Premises. The Baseball Arbitrator shall determine which of the two rent determinations more closely represents the Fair Market Rent of the Leased Premises for the Renewal Term. The Baseball Arbitrator may not select any other rental value for the Leased Premises other than one submitted by Landlord or Tenant. The determination of the party so selected or designated shall be binding upon Landlord and Tenant and shall serve as the basis for the determination of the base monthly rent payable for the Renewal Term,
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Addendum to Commercial Lease
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Page 6
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subject to further adjustment as provided in the Lease. After a determination has been made of the Fair Market Rent, the parties shall execute and deliver an instrument setting forth the Fair Market Rent, but the failure to so execute and deliver any such instrument shall not affect the determination of Fair Market Rent.
(e) If Tenant disputes Landlord’s Determination and if the final determination of Fair Market Rent shall not be made on or before the first day of the Renewal Term then, pending such final determination, Tenant shall pay, as base monthly rent for the Renewal Term, an amount equal to Landlord’s Determination. If, based upon the final determination of the Fair Market Rent, the base monthly rent payments made by Tenant for such portion of the Renewal Term were (i) less than the Fair Market Rent payable for the Renewal Term, Tenant shall pay to Landlord the amount of such deficiency within 20 days after demand therefor or (ii) greater than the Fair Market Rent payable for the Renewal Term, Landlord shall refund the excess within 20 days after such determination.
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Addendum to Commercial Lease
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Page 7
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Exhibit A-2
to
Addendum to Commercial Lease
RIGHT OF FIRST REFUSAL
(a) Subject to and upon the terms, provisions and conditions set forth in this Exhibit, so long as Tenant is not in default of this Lease beyond any applicable notice and/or cure period, Tenant shall have, and is hereby granted, a continuing right of first refusal to lease (the “Right of First Refusal”) all or any portion of the portion of the remainder of the third (3rd) floor of the Building (the “ROFR Premises”), during the Term of the Lease which becomes Available. As used herein, the term “Available” means, as to any space, that such space is vacant and free of any present or future possessory right now or, to the extent specified in section (e) below, hereafter existing in favor of any third party.
(b) Should a third party make an offer to lease the ROFR Premises which Landlord is willing to accept, Landlord shall promptly deliver to Tenant written notice indicating the relevant terms and conditions of such third -party offer (the “Lease Proposal”). If the ROFR Leased Premises is the subject of lease negotiations which include other portions of the Building, the foregoing Right of First Refusal shall, at Landlord’s option, apply to the entire space which is subject to such negotiations, and, at Landlord’s option, Tenant shall be obligated to either accept or refuse the opportunity to lease such entire space on the terms provided in the Lease Proposal, except that the term with respect to the ROFR Premises shall be co-terminus with the term of the Lease and the economic components of the third party proposal which are amortized over the term shall be adjusted to account for the difference between the term of the third party offer and the remaining term of the Lease. In the event that the term of this Lease is longer than the third-party offer, then the base monthly rent, at Landlord’s option, for such additional period shall be the Fair Market Rent (as defined in Exhibit G) determined at the time such third-party offer would have otherwise expired. Tenant shall have a period of five (5) business days after receipt of a Lease Proposal to irrevocably and unconditionally exercise its Right of First Refusal to lease the entire ROFR Premises (and such additional space, if applicable). Such exercise must be in writing and received by the Landlord within such five (5) business day period. If Landlord fails to receive written notice of the Tenant’s exercise of its Right of First Refusal within such five (5) business day period then Tenant shall be deemed to not have timely exercised such right.
(c) In the event that Tenant exercises this Right of First Refusal, Tenant will execute and return to Landlord an amendment to this Lease adding the ROFR Premises or such other documentation as Landlord shall reasonably require in order to confirm the leasing of such ROFR Premises (but an otherwise valid exercise of the Right of First Refusal shall be fully effective whether or not such confirmatory documentation is executed) within twenty (20) days after Tenant’s receipt of such documentation.
(d) If Landlord does not receive written notice from Tenant of its exercise of this Right of First Refusal within the five (5) business day period referenced in subparagraph (b) above, Landlord shall have a period of up to two hundred seventy (270) days thereafter to lease the ROFR Premises for an effective rental rate not less than ninety percent (90%) of the rental rate reflected in the Lease Proposal (on a net effective basis taking into account all economic components of the transaction). If Landlord does not lease the ROFR Premises within said two hundred seventy (270) day period or proposes to lease the ROFR Premises for an effective rental rate of less than ninety percent (90%) of the effective rental rate reflected in the Lease Proposal, the Right of First Refusal shall then reapply on any subsequent leasing thereof on the terms set forth herein.
(e) Tenant acknowledges and agrees that this Right of First Refusal is subject and subordinate to (a) any pre-existing preferential right, refusal right, expansion right or related right of any other tenant in the Building, (b) any and all preferential rights, expansion options, refusal rights pertaining to the ROFR Premises, and (c) the right to renew the lease of any existing tenant of the ROFR Premises, whether by formal renewal option or otherwise.
(f) Except as otherwise provided in the Lease Proposal, Landlord shall deliver, and Tenant shall accept, the ROFR Premises broom-clean and vacuumed but otherwise in an “AS IS” and “WITH ALL FAULTS” condition. The term of this Lease with respect to the ROFR Premises shall commence upon such space being delivered to Tenant and shall expire on the Expiration Date. Rent will accrue and be due and payable with respect to the ROFR Premises on the date (the “ROFR Premises Commencement Date”) that is consistent with the Lease Proposal.
(g) Upon request of Landlord at any time after the ROFR Premises Commencement Date, Tenant shall execute and deliver to Landlord a declaration (in a form provided by Landlord) specifying (i) the ROFR Premises Commencement Date, (ii) the base monthly rent schedule for the ROFR Premises, (iii) the Rentable Area of the ROFR Premises, and (iv) Tenant’s Share of Operating Expenses with respect to the ROFR Premises.
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Addendum to Commercial Lease
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Page 8
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CONSTRUCTION AGREEMENT
This Construction Agreement is attached as an Exhibit to that certain Commercial Lease (the “Lease”) between Tannos Land Holding III, LLC, as Landlord, and Castle Biosciences, Inc., as Tenant, relating to the lease by Landlord to Tenant of that certain 21,760 square feet in the building located at 505 S Friendswood Drive, Friendswood, TX 77546. Unless otherwise specified, all capitalized terms used in this Construction Agreement shall have the same meanings as in the Lease as amended by the Amendment.
1.Approved Plans.
(a)Plans. No later than forty (40) days after the date of this lease, Tenant shall submit to Landlord plans and specifications for construction of the improvements in the Leased Premises (the “Plans”).
(b)Landlord’s Approval. Within ten (10) days following and receipt of the Plans, Landlord shall approve or disapprove such Plans in writing. If Landlord disapproves, Landlord shall provide Tenant in writing specific reasons for such disapproval. Tenant shall submit corrected Plans within ten (10) days of receipt of Landlord’s disapproval notice. Landlord shall approve or disapprove the corrected Plans within five (5) additional days from receipt thereof. Upon Landlord’s approval, the Plans shall become the “Approved Plans”.
2.Pricing and Bids.
(a)Estimates. Following receipt of the Approved Plans, Landlord will cause its affiliated company, Tannos Construction, to competitively bid price the construction of the Work in accordance with the Approved Plans with three (3) vendors (or subcontractors, as applicable) per line item and furnish the written bids to Tenant. There shall be no construction management fee payable by Tenant to Landlord for its review of the Plans or management of the Work.
(b)Approved Pricing. Upon receipt, Tenant shall promptly review such estimates and complete negotiations with Landlord for any changes or adjustments thereto. Within ten (10) days after such receipt, Tenant shall return the selected bids with written approval to Landlord.
3.Construction Allowance. Landlord will contribute $25.00 per square foot of rentable area in the Leased Premises (the “Construction Allowance”) toward the cost of constructing the Work in accordance with this Construction Agreement. The cost of all space planning, design, consulting or review services and construction drawings, installation of cabling, and moving into the Leased Premises shall be included in the cost of the Work and may be paid out of the Construction Allowance, to the extent sufficient funds are available for such purpose. All costs of the constructing the Work in accordance with this Construction Agreement in excess of the Construction Allowance shall be paid by Tenant.
4.The Work. Subject to the terms of this Construction Agreement, Landlord agrees to cause permanent leasehold improvements to be constructed in the Leased Premises (the “Work”) by Tannos Construction & Development, LLC in a good and workmanlike manner in accordance with the Approved Plans and the approved bids, on a cost plus 13% basis (such amount being 8% profit and overhead and 5% for general conditions), and all accounting for the construction of the Work will be on an ''open book" basis.. Landlord agrees to obtain a warranty against any defects in the Work from its general contractor for the benefit of Tenant.
5.Change Orders and Cost Overruns. All changes to, and deviations from, the Approved Plans (each, a “Change Order”), including any (i) direction of Tenant to omit any portion of the Work, (ii) additional architectural or engineering services, (iii) changes to materials whether standard materials, specially ordered materials, or specially fabricated materials, (iv) cancellation or modification of supply or fabrication orders, and (v) removal or alteration of any portion of the Work, must be approved in advance in writing by Landlord and Tannos Construction. Except as otherwise expressly provided in this Construction Agreement, all costs of the Work in excess of the Construction Allowance (collectively, “Cost Overruns”) shall be paid by Tenant to Landlord within twenty (20) days of Landlord’s invoice.
Landlord and Tenant execute this Construction Agreement to be effective as of the date of the Lease.
LANDLORD:
TANNOS LAND HOLDING III, LLC
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By:
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/s/ Louis T. Tannos
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Name:
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Louis T. Tannos
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Title:
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President
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TENANT:
CASTLE BIOSCIENCES, INC.
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By:
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/s/ Derek Maetzold
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Name:
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Derek Maetzold
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Title:
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President and CEO
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