LEASE

Exhibit 10.2

LEASE

BETWEEN

TDC PRUE ROAD, L.P., AS LANDLORD

AND

ASSET ACCEPTANCE, LLC, AS TENANT

NETWORK CROSSING

SAN ANTONIO, TEXAS

TABLE OF CONTENTS

 

 

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LEASE AGREEMENT

This Lease Agreement (the “Lease”) is made and entered into as of the 27th day of April, 2009, by and between TDC PRUE ROAD, L.P., a Delaware limited partnership (“Landlord”), and ASSET ACCEPTANCE, LLC, a Delaware limited liability company (“Tenant”).

W I T N E S S E T H :

1. Definitions

The following are definitions of some of the defined terms used in this Lease. The definition of other defined terms are found throughout this Lease.

A. “Building” shall mean the building known 5250 Prue Road, San Antonio, Bexar County, Texas 78240.

B. “Base Rent”: Base Rent shall be paid according to the following schedule, subject to the provisions of Section 4 hereof. For the purposes hereof, “Lease Month” shall mean a period of time commencing on the same numeric day as the Commencement Date and ending on (but not including) the day in the next calendar month that is the same numeric date as the Commencement Date.

 

The Base Rent and Additional Rent due for Lease Month 5 of the Lease Term (hereinafter defined) shall be paid by Tenant to Landlord contemporaneously with Tenant’s execution hereof.

C. “Additional Rent” shall mean Tenant’s Pro Rata Share of Basic Costs (hereinafter defined) and any other sums (exclusive of Base Rent) that are required to be paid to Landlord by Tenant hereunder, which sums are deemed to be Additional Rent under this Lease.

D. “Basic Costs” are defined in Exhibit C attached hereto. Tenant’s initial estimated monthly Basic Costs payment is $6,149.36.

E. “Security Deposit” shall mean the sum of $0.00. The Security Deposit shall be paid by Tenant to Landlord contemporaneously with Tenant’s execution hereof.

 

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F. “Lease Term” shall mean a period of sixty-four (64) months commencing on the later to occur of (a) July 1, 2009 (the “Target Commencement Date”) and (b) the date upon which Landlord’s Work in the Premises has been substantially completed, as such date is determined pursuant to the Work Letter Agreement entered into between the parties hereof and executed as of even date herewith (the “Work Letter”) (the later to occur of such dates being defined as the “Commencement Date”). “Expiration Date” shall mean the last day of the Lease Term. Notwithstanding the foregoing, if the Expiration Date, as determined herein, does not occur on the last day of a calendar month, the Lease Term and the last Lease Year thereof shall be extended by the number of days necessary to cause the Expiration Date to occur on the last day of the last calendar month of the Lease Term. Tenant shall pay Base Rent and Additional Rent for such additional days at the same rate payable for the portion of the last calendar month immediately preceding such extension. Upon the determination of the actual Commencement Date and the actual Expiration Date, Landlord and Tenant shall each execute and deliver a Commencement Letter in the form of Exhibit F attached hereto (the “Commencement Letter”) setting forth the Commencement Date and the Expiration Date.

G. “Premises” shall mean the space located in the Building and outlined on Exhibit A to this Lease and known as Suite 525.

H. “Rentable Square Footage in the Premises” shall mean 17,445 square feet.

I. “Rentable Square Footage in the Project” shall mean 143,831 square feet.

J. “Tenant’s Pro Rata Share” shall mean 12.1288%, being the Rentable Square Footage of the Premises divided by the Rentable Square Footage of the Project, expressed as a percentage.

K. “Permitted Use” shall mean general office use, including, but not limited to, receiving, transmitting or administering (i) requests by telephone, (ii) incoming product support or information inquiries from consumers, and (iii) outgoing calls for telemarketing, clientele, product services, or debt collection, and no other use or purpose.

L. “Guarantor(s)” shall mean any party that agrees in writing to guarantee Tenant’s obligations under the Lease. As of the date of this Lease, there are no Guarantor(s).

M. “Broker” shall mean, collectively, Transwestern and Providence Commercial Real Estate Services, Inc.

N. “Business Day(s)” shall mean Mondays through Fridays exclusive of the normal business holidays.

O. “Common Areas” shall mean those areas located within the Project designated by Landlord, from time to time, for the common use or benefit of tenants generally and/or the public.

 

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P. “Default Rate” shall mean the lower of (i) eighteen percent (18%) per annum, or (ii) the highest rate of interest from time-to-time permitted under applicable federal and state law.

Q. “Project” shall mean the project currently known as Network Crossing, located at 5253 Prue Road and 5250 Prue Road, San Antonio, Texas. The Project includes the Building and the other four (4) buildings located at 5253 Prue Road and 5250 Prue Road, which Landlord operates jointly with the Building, and the land upon which all such buildings are located, which land is described in Exhibit A-1 attached hereto, and all other improvements located on such land.

R. “Notice Addresses” shall mean the following addresses for Tenant and Landlord, respectively:

Tenant:

Asset Acceptance, LLC

28405 Van Dyke Avenue

Warren, Michigan 48093

Attn: Mark A. Redman, Chief Financial Officer

With a copy to:

Asset Acceptance, LLC

28405 Van Dyke Avenue

Warren, Michigan 48093

Attn: Edwin L. Herbert, General Counsel

Landlord:

c/o Transwestern

8200 IH-10 W, Suite 800

San Antonio, TX 78230

Attention: Property Manager

with a copy to:

Transwestern

901 South Mopac, Building 4, Suite 250

Austin, TX 78746

Attention: Josh Delk

 

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Payments of Rent only shall be made payable to the order of:

TDC Prue Road, L.P.

at the following address:

c/o Transwestem

8200 IH-10 W, Suite 800

San Antonio, TX 78230

Attention: Property Manager

or such other name and address as Landlord shall, from time to time, designate.

2. Lease Grant/Possession

A. Subject to and upon the terms herein set forth, Landlord leases to Tenant and Tenant leases from Landlord the Premises on an “as is” basis (except as otherwise expressly set forth herein), together with the right, in common with others, to use the Common Areas. By taking possession of the Premises, Tenant is deemed to have accepted the Premises and agreed that the Premises is in good order and satisfactory condition, with no representation or warranty by Landlord as to the condition of the Premises or the Building or suitability thereof for Tenant’s use. NO WARRANTIES, EXPRESS OR IMPLIED, ARE MADE REGARDING THE CONDITION OR SUITABILITY OF THE PREMISES ON THE COMMENCEMENT DATE. FURTHER, TO THE EXTENT PERMITTED BY LAW, TENANT WAIVES ANY IMPLIED WARRANTY OF SUITABILITY OR OTHER IMPLIED WARRANTIES THAT LANDLORD WILL MAINTAIN OR REPAIR THE PREMISES OR ITS APPURTENANCES EXCEPT AS MAY BE CLEARLY AND EXPRESSLY PROVIDED IN THIS LEASE.

B. Notwithstanding anything to the contrary contained in this Lease, if Landlord is unable to tender possession of any portion of the Premises on the date possession is to be delivered due to the holding over of another party, this Lease shall not be void or voidable or otherwise affected. Landlord shall use reasonable efforts to regain possession of the Premises in order to deliver the same to Tenant. If the Commencement Date as set forth in Section IF is a specified date, the Commencement Date shall be postponed until the date Landlord delivers possession of the Premises to Tenant, the Expiration Date shall correspondingly be postponed on a per diem basis, and, upon determination of the actual Commencement Date and the actual Expiration Date, Landlord and Tenant shall each execute and deliver a Commencement Letter.

C. Tenant may take possession of the Premises approximately thirty (30) days prior to the Commencement Date for the sole purpose of performing any improvements therein, including without limitation, installation of voice/data cabling, telephone and networking equipment, staging or installing furniture, equipment or other personal property of Tenant (collectively, “Tenant’s Work”); provided that Tenant and Tenant’s contractors do not interfere with Landlord’s contractors performing the Landlord’s Work. Such possession of the Premises prior to the Commencement Date and the performance of Tenant’s Work shall be subject to all of the terms and conditions of the Lease, except that Tenant shall not be required to pay Rent with respect to the period of time prior to the Commencement Date during which Tenant performs such work.

 

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Tenant shall, however, be liable for the reasonable cost of any additional services that are requested by and provided to Tenant during the period of Tenant’s possession prior to the Commencement Date.

D. Notwithstanding anything to the contrary set forth herein, in the event the Tenant is unable to move into the Premises by June 30, 2009 for commencement of business operation therein on such date for any reason, Tenant, as its sole and exclusive remedy, shall be entitled to an abatement of Rent equal to $10,224.38.

3. Use

The Premises shall be used for the Permitted Use and for no other purpose. Tenant shall not conduct or give notice of any auction, liquidation, or going out of business sale on the Premises. Tenant agrees not to use or permit the use of the Premises for any purpose which is illegal or dangerous, which creates a nuisance or which would increase the cost of insurance coverage with respect to the Building. Tenant will conduct its business and control its agents, servants, employees, customers, licensees, and invitees in such a manner as not to interfere with or disturb other tenants or Landlord in the management of the Project. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise, or vibrations to emanate from the Premises, or take any other action that would constitute a nuisance or would disturb, unreasonably interfere with, or endanger Landlord or any tenants of the Project. Outside storage, including without limitation, storage of trucks and other vehicles, is prohibited without Landlord’s prior written consent. Tenant will maintain the Premises in a clean and healthful condition, and comply with all laws, ordinances, orders, rules and regulations of any governmental entity with reference to the use, condition, configuration or occupancy of the Premises. Landlord shall deliver the Premises to Tenant in compliance with all applicable laws, failing which, Landlord, as Tenant’s sole and exclusive remedy, will cause the Premises to be in compliance at no additional cost to Tenant. Tenant shall not, and shall not knowingly allow its employees, agents, contractors or invitees, to bring into the Project, Building or the Premises any dangerous or hazardous materials, except for customary office and cleaning supplies, provided Tenant uses, stores and disposes of the same in compliance with all applicable law. In the event Tenant’s employees, agents, contractors or invitees bring into the Project, Building or the Premises any dangerous or hazardous materials, Tenant shall be responsible for all costs and expenses incurred by Landlord in connection therewith. Tenant, at its expense, will comply with the rules and regulations of the Project attached hereto as Exhibit B and such other rules and regulations adopted and altered by Landlord from time-to-time and will cause all of its agents, employees, invitees and visitors to do so. All such changes to rules and regulations will be reasonable and shall be sent by Landlord to Tenant in writing at least thirty (30) days prior to the date such changes become effective. In the event of a conflict between the rules and regulations and the terms of this Lease, the terms of this Lease shall control. Landlord shall not knowingly enforce the rules and regulations against Tenant in a discriminatory manner.

 

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4. Rent

A. Tenant covenants to pay to Landlord during the Lease Tern, without any setoff or deduction except as otherwise expressly provided herein, the full amount of all Base Rent and Additional Rent due hereunder and the full amount of all such other sums of money as shall become due under this Lease, all of which hereinafter may be collectively called “Rent.” In addition, Tenant shall pay, as Additional Rent, all rent, sales and use taxes or other similar taxes, if any, levied or imposed by any city, state, county or other governmental body having authority, such payments to be in addition to all other payments required to be paid to Landlord by Tenant under this Lease. Such payments shall be paid concurrently with the payments of the Rent on which the tax is based. Base Rent and Additional Rent for each calendar year or portion thereof during the Lease Term, shall be due and payable in advance in monthly installments on the first day of each calendar month during the Lease Term, without demand. If the Lease Term commences on a day other than the first day of a month or terminates on a day other than the last day of a month, then the installments of Base Rent and Additional Rent for such month or months shall be prorated, based on the number of days in such month. All amounts received by Landlord from Tenant hereunder shall be applied first to the earliest accrued and unpaid Rent then outstanding. Tenant’s covenant to pay Rent shall be independent of every other covenant set forth in this Lease.

B. To the extent allowed by law, all installments of Rent not paid when due shall bear interest at the Default Rate from the date due until paid, provided with respect to such interest, Tenant shall be entitled to a grace period of seven (7) days after notice from Landlord with respect to the first two (2) late payments in any calendar year. In addition, if Tenant fails to pay any installment of Base Rent and Additional Rent or any other item of Rent when due and payable hereunder, a “Late Charge” equal to five percent (5%) of such unpaid amount will be due and payable immediately by Tenant to Landlord, provided with respect to such Late Charge, Tenant shall be entitled to a grace period of seven (7) days after notice from Landlord with respect to the first two (2) late payments in any calendar year.

C. The Additional Rent payable hereunder shall be adjusted from time-to-time in accordance with the provisions of Exhibit C attached hereto.

5. Security Deposit

Intentionally omitted.

6. Utilities and Services

(a) Landlord agrees to provide water, sanitary sewer, gas, electricity and telephone service connections to the Building. Landlord shall, as part of the Landlord’s Work, shall bring such utilities except for telephone to the Premises. Tenant shall be responsible for installation of Tenant’s telecommunications wiring and cabling. From and after the Commencement Date, Tenant shall pay for all water, gas, heat, light, power, telephone, sewer charges and other utilities and services used on or from the Premises, together with any taxes, penalties, surcharges or the like pertaining thereto and any maintenance charges for utilities. To the extent possible, all utility

 

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services will be separately metered to the Premises and placed in Tenant’s name on the Commencement Date. If it is not possible to place a utility service on a separate meter in Tenant’s name, then all costs associated with the provision of such utility service to the Premises will be included as part of Basic Costs and paid by Tenant in accordance with the provisions of Exhibit C attached hereto. Landlord shall have the right at any time and from time-to-time during the Lease Term to designate the provider of electrical service to the Project as Landlord shall elect (each being an “Electric Service Provider”). Tenant shall cooperate with Landlord, and the applicable Electric Service Provider, at all times and, as reasonably necessary, shall allow Landlord and such Electric Service Provider reasonable access to the Building’s electric lines, feeders, wiring, and any other machinery within the Premises. Tenant’s use of electrical services shall not exceed in voltage, rated capacity, or overall load that which is standard for the Building. In the event Tenant shall request that it be allowed to consume electrical services in excess of Building standard, Landlord reasonably may refuse to consent to such usage or may consent upon such conditions as Landlord reasonably elects, and all such additional usage shall be paid for by Tenant as Additional Rent.

(b) Except as otherwise expressly provided herein, the failure by Landlord to any extent to furnish, or the interruption or termination of these defined services in whole or in part, resulting from adherence to laws, regulations and administrative orders, force majeure, unavailability of utilities from a service provider, interruptions of utilities caused by repairs, construction, or any other causes beyond the reasonable control of Landlord shall not render Landlord liable in any respect nor be construed as an eviction of Tenant, nor cause an abatement of rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement hereof. Should any of the equipment or machinery used in the provision of such services for any cause cease to function properly, Landlord shall use reasonable diligence to repair such equipment or machinery but, except as otherwise expressly provided herein, Tenant shall have no claim for offset or abatement of rent or damages on account of an interruption in service thereby or resulting therefrom. Except as expressly provided herein, Landlord shall not be required to make any repairs to or maintain the Premises. Tenant shall have primary responsibility for security and janitorial services with respect to the Premises.

7. Signage

A. Tenant shall not make any changes to the exterior of the Premises, install any exterior lights, decorations, balloons, flags, pennants, banners, or painting, or erect or install any signs, windows or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior of the Premises, without Landlord’s prior written consent. All signs installed by Tenant shall be subject to any applicable governmental laws, ordinances, regulations, the sign criteria for the Project, and Landlord’s or other architectural controls and other requirements. The current sign specifications applicable to the Project are attached hereto as Exhibit G. Tenant shall maintain all signs upon the Premises and the Building in good condition and repair. Tenant shall pay all costs associated with any signage installed by Tenant, including without limitation, installation expenses, maintenance and repair costs, utilities and insurance. Tenant agrees that, subject to inclusion in Basic Costs, Landlord shall have the right, after written notice to Tenant, to temporarily remove and replace any of Tenant’s signage in connection with and during the course of any repairs, changes, alterations, modifications,

 

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renovations or additions to the Building. Upon surrender or vacation of the Premises, Tenant shall remove all signs and repair, paint, and/or replace the Building facia surface to which its signs are attached. All signs, blinds, draperies and other window treatment or bars or other security installations visible from outside the Premises shall be subject to Landlord’s approval and conform in all respects to Landlord’s requirements.

B. Provided that (i) Tenant is not in default under the terms of the Lease after the expiration of any applicable cure periods; (ii) Tenant is in occupancy of the Premises; and (iii) Tenant has not assigned the Lease or sublet any part of the Premises other than pursuant to a Permitted Transfer, then Tenant shall have the right, at Tenant’s sole cost and expense, to have a single panel on the multi-tenant monument sign designated as “B.2” on Exhibit H attached hereto (the “Monument Sign”). Following installation of Tenant’s panel, Tenant shall remain liable for all costs related to the maintenance of the panel and for Tenant’s proportionate share of maintenance and repair expenses for the Monument Sign. Tenant must obtain Landlord’s written consent to any proposed signage panel prior to its fabrication and installation. Landlord will not unreasonably withhold its consent to any signage panel that complies with the Project’s sign specifications attached hereto as Exhibit G. To obtain Landlord’s consent, Tenant shall submit design drawings to Landlord, showing the type and sizes of all lettering, the colors, finishes and types of materials used. If during the Lease Term (i) Tenant is in default under the terms of the Lease after the expiration of any applicable cure periods; or (ii) Tenant fails to continuously occupy (other than due to a casualty, condemnation or interruption of services) the Premises; or (iii) Tenant assigns the Lease or subleases any part of the Premises, then Tenant’s signage rights granted in this Section 7.B will terminate and Landlord may remove any of Tenant’s panel from the Monument Sign at Tenant’s cost. The right to install the panel on the Monument Sign is personal to the Tenant listed in the first paragraph of this Lease and is not assignable to any other tenant under this Lease. Further, in the event Tenant does not install a panel on the Monument Sign by September 30, 2010, Tenant’s right to the panel on the Monument Sign shall terminate.

8. Maintenance, Repairs and Alterations

A. Except to the extent such obligations are imposed upon Landlord hereunder, Tenant shall, at its sole cost and expense, maintain the Premises in good order, condition and repair throughout the entire Lease Term, ordinary wear and tear excepted, including but not limited to, windows, glass, plate glass doors, any special office entry, interior walls and finish work, and floors and floor covering. Landlord shall assign to Tenant, on a non-exclusive basis with Landlord, during the Lease Term, all warranties received by Landlord in connection with any of the foregoing items Tenant is required to maintain and repair. Tenant agrees to keep the areas visible from outside the Premises in a neat, clean and attractive condition at all times. If Tenant fails to maintain the Premises in good order, condition and repair, Landlord shall give Tenant written notice to perform such acts as are reasonably required to so maintain the Premises. If Tenant fails to commence such work within thirty (30) days after receipt of such notice and diligently pursue it to its completion, then Landlord may, at is option, make such repairs, and Tenant shall pay the cost thereof to Landlord on demand as Additional Rent, together with an administration charge in an amount equal to ten percent (10%) of the cost of such repairs. Tenant shall, within thirty (30) days after Landlord’s written demand therefor (which demand shall include reasonable evidence supporting such costs), reimburse Landlord for the cost of all

 

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repairs, replacements and alterations (collectively, “Repairs”) in and to the Premises, Building and Project and the facilities and systems thereof, plus an administration charge of ten percent (10%) of such cost, the need for which Repairs arises out of (1) Tenant’s use or occupancy of the Premises, (2) the installation, removal, use or operation of Tenant’s Property (hereinafter defined) or Alterations (hereinafter defined), or (3) the act, omission, misuse or negligence of Tenant, its agents, contractors, employees or invitees.

B. Landlord shall, as a component of Basic Costs, keep and maintain in good repair and working order and make repairs to and perform maintenance upon: (1) the structural elements of the Building; (2) the Building systems that serve the Building in general; and (3) the roof of the Building. In addition, Landlord shall be responsible, at no additional cost to Tenant, for the costs of correcting latent defects in the Landlord’s Work and/or the shell of the Building. Landlord shall at Tenant’s sole cost and expense, but without mark-up or profit, maintain and repair the mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the Premises, including without limitation, entering into a regularly scheduled preventative maintenance/service contract with respect to the HVAC systems. Tenant shall immediately give Landlord written notice of the need for repairs, after which Landlord shall have reasonable opportunity to repair same. Tenant shall reimburse Landlord for the reasonable cost of any maintenance or repair to be made at Tenant’s expense within thirty (30) days after receipt of an invoice from Landlord therefor. Landlord shall also maintain in good repair and condition the parking areas and other Common Areas of the Project, including, but not limited to driveways, alleys, landscape and grounds. Tenant will be responsible for the payment of all costs associated with Landlord’s maintenance if the need therefor arises due to the fault or negligence of Tenant or its agents, employees, licensees or invitees. Except as otherwise expressly provided in this Section 8.B or elsewhere in this Lease, Landlord will not at any time be required to make any improvements, repairs, replacements or alterations to the Premises.

C. Tenant shall not make or allow to be made any alterations, additions or improvements to the Premises (collectively, “Alterations”), without first obtaining the written consent of Landlord. However, Landlord’s consent shall not be required for any alteration that satisfies all of the following criteria (a “Cosmetic Alteration”): (1) is of a cosmetic nature such as painting (but not wallpapering), hanging pictures, hanging white boards and installing carpeting; (2) is not visible from the exterior of the Premises or Building; (3) will not affect the systems or structure of the Building; (4) does not require work to be performed inside the Walls or above the ceiling of the Premises; and (5) does not require a building permit. Cosmetic Alterations shall otherwise be subject to all the other provisions of this Section 8 other than delivery of plans and specifications. Prior to commencing any Alterations and as a condition to obtaining Landlord’s consent, Tenant shall deliver to Landlord plans and specifications acceptable to Landlord; names and addresses of contractors reasonably acceptable to Landlord; copies of contracts; necessary permits and approvals; evidence of contractor’s and subcontractor’s insurance in accordance with Section 11 hereof; and a payment bond or other security, all in form and amount satisfactory to Landlord. Tenant shall be responsible for insuring that all such persons procure and maintain insurance coverage against such risks, in such amounts and with such companies as Landlord may reasonably require. All Alterations shall be constructed in a good and workmanlike manner using Building standard materials or other new materials of equal or greater quality. Landlord, to the extent reasonably necessary to avoid any disruption to the tenants and occupants of the

 

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Project, shall have the right to designate the time when any Alterations may be performed and to otherwise designate reasonable rules, regulations and procedures for the performance of work in the Building. Upon completion of the Alterations, Tenant shall deliver to Landlord “as-built” plans, contractor’s affidavits and full and final waivers of lien and receipted bills covering all labor and materials. All Alterations shall comply with the insurance requirements and with applicable codes, ordinances, laws and regulations. Tenant shall reimburse Landlord upon demand for all reasonable sums, if any, expended by Landlord for third party examination of the architectural, mechanical, electrical and plumbing plans for any Alterations. In addition, if Landlord so requests, Landlord shall be entitled to oversee the construction of any Alterations that may affect the structure of the Building or any of the mechanical, electrical, plumbing or life safety systems of the Building. Landlord’s approval of Tenant’s plans and specifications for any Alterations performed for or on behalf of Tenant shall not be deemed to be a representation by Landlord that such plans and specifications comply with applicable insurance requirements, building codes, ordinances, laws or regulations or that the Alterations constructed in accordance with such plans and specifications will be adequate for Tenant’s use. Tenant may, without the consent of Landlord, but at its own cost and expense and in a good workmanlike manner, erect such shelves, bins, machinery, and trade fixtures (together with any other personal property brought into the Premises by Tenant, collectively, “Tenant’s Property”) as it may deem advisable, without altering the basic character of the Building or improvements and without overloading or damaging such Building or improvements, and in each case complying with all applicable governmental laws, ordinances, regulations and other requirements. All Alterations and partitions erected by Tenant shall be and remain the property of Tenant during the term of this Lease, and Tenant shall, unless Landlord otherwise elects as hereinafter provided, remove all Alterations and partitions erected by Tenant and restore the Premises to its original condition by the date of termination of this Lease or upon earlier vacating of the Premises; provided, however, that if Landlord so elects prior to termination of this Lease or upon earlier vacating of the Premises, such Alterations and/or partitions shall become the property of Landlord as of the date of termination of this Lease or upon earlier vacating of the Premises and shall be delivered up to the Landlord with the Premises. All of Tenant’s Property may be removed by Tenant prior to the termination of this Lease, and all of Tenant’s Property and all electronic, phone and data cabling exclusively serving the Premises (whether such cabling is located within or outside of the Premises) shall be removed by the date of termination of this Lease or upon earlier vacating of the Premises. Any removal by Tenant shall be accomplished in a good workmanlike manner so as not to damage the primary structure or structural qualities of the Building. If Tenant fails to remove any of the foregoing items or to perform any required repairs and restoration, (i) Landlord, at Tenant’s sole cost and expense, may remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver such items to any other place of business of Tenant, or warehouse the same, and Tenant shall pay the cost of such removal, repair, delivery, or warehousing of such items within ten (10) days after written demand from Landlord and (ii) such failure shall be deemed a holding over by Tenant under Section 21 hereof until such failure is rectified by Tenant or Landlord.

 

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9. Assignment and Subletting

A. Except in connection with a Permitted Transfer (defined in Section 9.E below), Tenant shall not assign, sublease, transfer or encumber any interest in this Lease or allow any third party to use any portion of the Premises (collectively or individually, a “Transfer”) without the prior written consent of Landlord, which consent to an assignment or sublease shall not be unreasonably withheld, conditioned or delayed. Without limitation, it is agreed that Landlord’s consent shall not be considered unreasonably withheld if: (1) the proposed transferee’s financial condition is worse than the financial condition of Tenant as of the Commencement Date; (2) the transferee’s business or reputation is not suitable for the Project considering the business and reputation of the other tenants and the Project’s prestige, as determined by Landlord in the exercise of its reasonable discretion, or would result in a violation of another tenant’s rights under its lease at the Project; (3) the transferee is a governmental agency or occupant of the Project; (4) Tenant is in default beyond any applicable notice and cure period; (5) any portion of the Project or the Premises would likely become subject to additional or different laws as a consequence of the proposed Transfer; or (6) Landlord or its leasing agent has received a proposal from or made a proposal to the proposed transferee to lease space in the Project within six (6) months prior to Tenant’s delivery of written notice of the proposed Transfer to Landlord. Any attempted Transfer in violation of this Section 9, shall, exercisable in Landlord’s sole and absolute discretion, be void. Consent by Landlord to one or more Transfers shall not operate as a waiver of Landlord’s rights to approve any subsequent Transfers. In no event shall any Transfer or Permitted Transfer release or relieve Tenant from any obligation under this Lease or any liability hereunder.

B. If Tenant requests Landlord’s consent to a Transfer, Tenant shall submit to Landlord (i) financial statements for the proposed transferee, (ii) a copy of the proposed assignment or sublease, and (iii) such other information as Landlord may reasonably request. Within ten (10) Business Days after Landlord’s receipt of the required information and documentation, Landlord shall either: (1) consent or reasonably refuse consent to the Transfer in writing; (2) in the event of a proposed assignment of this Lease, terminate this Lease effective the first to occur of ninety (90) days following written notice of such termination or the date that the proposed Transfer would have come into effect; and (3) in the event of a proposed subletting for substantially all of the remaining Lease Term, terminate this Lease with respect to the portion of the Premises which Tenant proposes to sublease effective the first to occur of ninety (90) days following written notice of such termination or the date the proposed Transfer would have come into effect. Notwithstanding the foregoing, Tenant shall have the right, exercisable within five (5) days after receipt of Landlord’s intent to terminate this Lease pursuant to this Section 9.B, to withdraw its request for consent to the proposed Transfer, in which case this Lease shall continue as if such Transfer was never proposed by Tenant. Tenant shall pay Landlord a review fee of $1,000.00 for Landlord’s review of any Permitted Transfer or proposed Transfer. In addition, Tenant shall reimburse Landlord for its actual reasonable costs and expenses (including, without limitation, reasonable attorney’s fees) incurred by Landlord in connection with Landlord’s review of such proposed Transfer or Permitted Transfer within thirty (30) days after receipt of an invoice (including reasonable documentation of such costs) therefor.

 

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C. Tenant shall pay to Landlord fifty percent (50%) of all cash and other consideration which Tenant receives as a result of a Transfer (after deduction of all out-of-pocket costs paid to third parties by Tenant in connection with such Transfer, including, without limitation, marketing expenses and brokerage fees) that is in excess of the rent payable to Landlord hereunder for the portion of the Premises and Lease Term covered by the Transfer within ten (10) days following receipt thereof by Tenant. This Section 9.C shall not apply to a Permitted Transfer.

D. Except as provided below with respect to a Permitted Transfer, if Tenant is a corporation, limited liability company, partnership or similar entity, and the person, persons or entity which owns or controls a majority of the voting interests at the time changes for any reason (including but not limited to a merger, consolidation or reorganization), such change of ownership or control shall constitute a Transfer. The foregoing shall not apply so long as (i) Tenant or its parent is an entity whose outstanding stock is listed on a nationally recognized security exchange, or (ii) if at least eighty percent (80%) of its voting stock is owned by another entity, the voting stock of which is so listed.

E. Tenant may assign its entire interest under this Lease or sublet the Premises (i) to any entity controlling or controlled by or under common control with Tenant or (ii) to any successor to Tenant by purchase, merger, consolidation or reorganization (hereinafter, collectively, referred to as “Permitted Transfer”) without the consent of Landlord, provided: (1) Tenant is not in default under this Lease beyond any applicable cure period; (2) if such proposed transferee is a successor to Tenant by purchase, said proposed transferee shall acquire all or substantially all of the stock or assets of Tenant’s business or, if such proposed transferee is a successor to Tenant by merger, consolidation or reorganization, the continuing or surviving entity shall own all or substantially all of the assets of Tenant; (3) with respect to a Permitted Transfer to a proposed transferee described in clause (ii), such proposed transferee shall have a net worth which is at least equal to the greater of Tenant’s net worth at the date of this Lease or Tenant’s net worth as of the day prior to the proposed purchase, merger, consolidation or reorganization as evidenced to Landlord’s reasonable satisfaction; and (4) Tenant shall give Landlord written notice at least thirty (30) days prior to the effective date of the proposed purchase, merger, consolidation or reorganization.

10. Mechanic’s Liens

Tenant has no express or implied authority to create or place any lien or encumbrance of any kind upon, or in any manner to bind the interest of Landlord or Tenant in, the Premises or the Project or to charge the rentals payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs. Tenant covenants and agrees that it will pay or cause to be paid all sums due and payable by it on account of any labor performed or materials furnished in connection with any work performed on the Premises and that it will save and hold Landlord harmless from all loss, cost or expense (including without limitation, reasonable attorneys’ fees) based on or arising out of asserted claims or liens against the leasehold estate or against the interest of Landlord in the Premises or under this Lease. If a lien is attached to the Project or any part thereof and the same is not discharged of record (by bonding or payment) within fifteen (15)

 

12

days after Tenant’s receipt of notice of such lien, then, in addition to any other right or remedy of Landlord, Landlord may, but shall not be obligated to, discharge the same. Any amount paid by Landlord for any of the aforesaid purposes including, but not limited to, reasonable attorneys’ fees, shall be paid by Tenant to Landlord within thirty (30) days after demand as Additional Rent. Tenant shall within fifteen (15) days of receiving such notice of lien or claim have such lien or claim released of record. Tenant’s failure to comply with the provisions of the foregoing sentence shall be deemed an Event of Default entitling Landlord to exercise all of its remedies therefor without the requirement of any additional notice or cure period.

11. Insurance

A. Landlord shall, at all times during the Lease Term, procure and maintain: (i) policies of insurance covering loss or damage to the Project in an amount equal to the full replacement cost of the Building, including leasehold improvements in the Premises, which shall provide protection against loss by fire and other all-risk casualties including earthquake and flood and such other property insurance as may be required by Landlord’s mortgagee or as otherwise desired by Landlord, and (ii) commercial general liability insurance applicable to the Building and the Common Areas, providing a minimum limit of $3,000,000.00 per occurrence. Landlord’s property insurance policy shall be endorsed to waive the insurance carrier’s right of subrogation if such waiver is not contained in the insurance policy.

B. Tenant shall procure and maintain, at its expense, (i) all-risk (special form) property insurance in an amount equal to the full replacement cost of Tenant’s Property located in the Premises; (ii) a policy or policies of general liability and umbrella or excess liability insurance applying to Tenant’s operations and use of the Premises, providing a minimum limit of $3,000,000.00 per occurrence and in the aggregate, naming Landlord and Landlord’s Project manager as additional insureds, (iii) automobile liability insurance covering owned, non-owned and hired vehicles in an amount not less than a combined single limit of $1,000,000.00 per accident, and (iv) workers’ compensation insurance covering Tenant’s employment of workers and anyone for whom Tenant may be liable for workers’ compensation claims (workers’ compensation insurance is required and no alternative forms of insurance are permitted) and employer’s liability insurance in an amount not less than $1,000,000.00 each accident, $1,000,000.00 disease-each employee and policy limit, with the insurance policies required under this clause (iv) to be endorsed to waive the insurance carriers’ right of subrogation. Tenant shall maintain the foregoing insurance coverages in effect commencing on the earlier to occur of the Commencement Date and the date Tenant takes possession of the Premises, and continuing to the end of the Lease Term.

C. The insurance requirements set forth in this Section 11 are independent of the waiver, indemnification, and other obligations under this Lease and will not be construed or interpreted in any way to restrict, limit or modify the waiver, indemnification and other obligations or to in any way limit any party’s liability under this Lease. In addition to the requirements set forth in this Section II, the insurance required of Tenant under this Lease must be issued by an insurance company with a rating of no less than A-VIII in the current Best’s Insurance Guide or that is otherwise acceptable to Landlord, and admitted to engage in the business of insurance in the state in which the Building is located; be primary insurance for all

 

13

claims under it and provide that any insurance carried by Landlord, Landlord’s Project manager, and Landlord’s lenders is strictly excess, secondary and noncontributing with any insurance carried by Tenant; and provide that insurance may not be cancelled, nonrenewed or the subject of change in coverage of available limits of coverage, except upon thirty (30) days’ prior written notice to Landlord and Landlord’s lenders. Tenant will deliver to Landlord a legally enforceable certificate of insurance on all policies procured by Tenant in compliance with Tenant’s obligations under this Lease on or before the date Tenant first occupies any portion of the Premises, at least ten (10) days before the expiration date of any policy and upon the renewal of any policy.

D. If Tenant’s business operations, conduct or use of the Premises or any other part of the Project causes an increase in the premium for any insurance policy carried by Landlord, Tenant will, within ten (10) days after receipt of written notice from Landlord, reimburse Landlord for the entire increase.

E. Notwithstanding anything to the contrary set forth herein, neither Landlord nor Tenant shall be liable (by way of subrogation or otherwise) to the other party (or to any insurance company insuring the other party) for any loss or damage to any of the property of Landlord or Tenant, as the case may be, with respect to their respective property, the Building, the Project or the Premises or any addition or improvements thereto, or any contents therein, to the extent covered by insurance carried or required to be carried by a party hereto EVEN THOUGH SUCH LOSS MIGHT HAVE BEEN OCCASIONED BY THE NEGLIGENCE OR WILLFUL ACTS OR OMISSIONS OF THE LANDLORD OR TENANT OR THEIR RESPECTIVE EMPLOYEES, AGENTS, CONTRACTORS OR INVITEES. Landlord and Tenant shall give each insurance company which issues policies of insurance, with respect to the items covered by this waiver, written notice of the terms of this mutual waiver, and shall have such insurance policies properly endorsed, if necessary, to prevent the invalidation of any of the coverage provided by such insurance policies by reason of such mutual waiver. For the purpose of the foregoing waiver, the amount of any deductible applicable to any loss or damage shall be deemed covered by, and recoverable by the insured under the insurance policy to which such deductible relates.

12. Indemnity

To the extent not expressly prohibited by law, and except to the extent caused by Landlord’s negligence, neither Landlord nor Landlord’s Project manager nor any of their respective officers, directors, employees, members, managers, or agents shall be liable to Tenant, or to Tenant’s agents, servants, employees, customers, licensees, or invitees for any injury to person or damage to property caused by any act, omission, or neglect of Tenant, its agents, servants, employees, customers, invitees, licensees or by any other person entering the Building or upon the Project under the invitation of Tenant or arising out of the use of the Project, Building or Premises by Tenant and the conduct of its business or out of a default by Tenant in the performance of its obligations hereunder. Landlord hereby agrees to indemnify, defend and hold Tenant and its officers, directors, employees, members, managers and agents, harmless from all liability and claims for any property damage, or bodily injury or death of, or personal injury to, a person in or on the Project (other than in or on the Premises) caused by or resulting

 

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from the negligence or willful misconduct of Landlord or its agents or employees. Additionally, if a lien is placed on Tenant’s leasehold estate under this Lease or against the interest of Tenant in the Premises on account of any labor performed or materials furnished in connection with any work performed by or at the request of Landlord, and the same is not discharged of record (by bonding or payment) within fifteen (15) days after Landlord’s receipt of notice of such lien, then, Landlord will save and hold Tenant harmless from all loss, cost or expense (including without limitation, reasonable attorneys’ fees) incurred by Tenant as a result of such lien. Tenant hereby indemnifies and holds Landlord and Landlord’s Project manager and their respective officers, directors, employees, members, managers and agents (“Indemnitees”), harmless from all liability and claims (i) for any property damage, or bodily injury or death of, or personal injury to, a person in or on the Premises, and this indemnity shall be enforceable to the full extent, WHETHER OR NOT SUCH LIABILITY AND CLAIMS ARE THE RESULT OF THE JOINT OR CONCURRENT ACTS, NEGLIGENT OR INTENTIONAL (BUT NOT THE SOLE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) of the Indemnitees, and for (ii) any property damage, or bodily injury or death of, or personal injury to, a person in or on the Project caused by or resulting from the negligence or willful misconduct of Tenant or its agents or employees. To the extent that Tenant’s indemnity obligations are satisfied by Tenant’s insurance companies providing Tenant coverage for such obligations, Tenant shall be relieved of such obligations. Notwithstanding the terms of this Lease to the contrary, the terms of this Section shall survive the expiration or earlier termination of this Lease.

13. Damages from Certain Causes

To the extent not expressly prohibited by law, Landlord shall not be liable to Tenant or Tenant’s employees, contractors, agents, invitees or customers, for any injury to person or damage to property sustained by Tenant or any such party or any other person claiming through Tenant resulting from any accident or occurrence in the Premises or any other portion of the Project becoming out of repair or by defect in or failure of equipment, pipes, or wiring, or by broken glass, or by the backing up of drains, or by gas, water, steam, electricity, or oil leaking, escaping or flowing into the Premises (except where due to Landlord’s grossly negligent or willful failure to make repairs required to be made pursuant to other provisions of this Lease, after the expiration of a reasonable time after written notice to Landlord of the need for such repairs), EVEN IF SUCH DAMAGE RESULTS FROM THE NEGLIGENCE OF LANDLORD OR ITS PARTNERS OR THEIR RESPECTIVE PARTNERS, MEMBERS, AGENTS OR EMPLOYEES, nor shall Landlord be liable to Tenant for any loss or damage that may be occasioned by or through the acts or omissions of other tenants of the Project or of any other persons whomsoever, including, but not limited to riot, strike, insurrection, war, court order, requisition, order of any governmental body or authority, acts of God, fire or theft.

 

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14. Casualty Damage

If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord. In case the Building shall be so damaged that substantial alteration or reconstruction of the Building shall, in Landlord’s sole opinion, be required, which cannot reasonably be completed within one hundred eighty (180) days from the date of the fire or other casualty (whether or not the Premises shall have been damaged by such casualty) or in the event there is less than two (2) years of the Lease Term remaining or in the event Landlord’s mortgagee should require that a material portion of the insurance proceeds payable as a result of a casualty be applied to the payment of the mortgage debt or in the event of any material uninsured loss to the Building, Landlord may, at its option, terminate this Lease by notifying Tenant in writing of such termination within sixty (60) days after the date of such casualty. If Landlord does not elect to terminate this Lease pursuant to the foregoing termination right, Landlord shall deliver to Tenant within sixty (60) days after the date of the damage, a reasonable estimate of the time required to repair and restore the Building (the “Repair Estimate”). If Landlord does not thus elect to terminate this Lease pursuant to the foregoing and Tenant does not elect to terminate this Lease as provided below, Landlord shall commence and proceed with reasonable diligence to restore the Building, and the improvements located within the Premises to substantially the same condition in which it was immediately prior to the happening of the casualty. If as a result of such fire or casualty, the Premises or any part thereof have been damaged and the Repair Estimate states that repair and restoration will not be completed within one hundred eighty (180) days after the date of the damage, Tenant may terminate this Lease by giving Landlord notice of termination within ten (10) Business Days after the date Tenant receives the Repair Estimate. If either Landlord or Tenant terminates this Lease pursuant to this Section 14, Rent shall abate from and after the later to occur of (i) Tenant’s vacation of the Premises and (ii) the date of the damage. Notwithstanding the foregoing, Landlord’s obligation to restore the Building, and the improvements located within the Premises shall not require Landlord to expend for such repair and restoration work more than the insurance proceeds actually received by Landlord as a result of the casualty. When the repairs described above have been completed by Landlord, Tenant shall complete the restoration of all furniture, fixtures and equipment which are necessary to permit Tenant’s reoccupancy of the Premises. Landlord shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof, except that Rent shall be abated from the date of the damage or destruction for any portion of the Premises that is not susceptible to use by Tenant in a reasonably normal manner, which abatement shall be in the same proportion that the Rentable Area of the Premises which is unusable by Tenant bears to the total Rentable Area of the Premises; provided that Tenant shall not be entitled to any abatement of Rent if the damage or destruction in the Premises is restored within five (5) Business Days after Landlord’s receipt of written notice from Tenant of the occurrence of the damage or destruction. In the event the Lease is terminated pursuant to this Section 14, neither party shall have any further obligations hereunder after such termination except for those obligations that expressly survive the termination hereof.

 

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15. Condemnation

If the whole or any substantial part of the Premises or if the Building or any portion thereof which would leave the remainder of the Building unsuitable for use comparable to its use on the Commencement Date, or if the land on which the Building is located or any material portion thereof, shall be taken or condemned for any public or quasi-public use under governmental law, ordinance or regulation, or by right of eminent domain, or by private purchase in lieu thereof, then Landlord may, at its option, terminate this Lease and Rent shall be abated during the unexpired portion of this Lease, effective when the physical taking of said Premises or said portion of the Building or land shall occur. If the whole or more than thirty percent (30%) of the Premises shall be taken or condemned for any public or quasi-public use under governmental law, ordinance or regulation, or by right of eminent domain, or by private purchase in lieu thereof, then Tenant may, at its option terminate this Lease by delivering notice of termination to Landlord within thirty (30) days after the taking, and Rent shall be abated during the unexpired portion of this Lease, effective when the physical taking of said Premises shall occur. If this Lease is not terminated, the rent for any portion of the Premises so taken or condemned shall be abated during the unexpired Lease Term effective when the physical taking of said portion of the Premises shall occur. All compensation awarded for any taking or condemnation, or sale proceeds in lieu thereof, shall be the property of Landlord, and Tenant shall have no claim thereto, the same being hereby expressly waived by Tenant, except for any portions of such award or proceeds which are specifically allocated by the condemning or purchasing party for the taking of or damage to trade fixtures of Tenant and moving costs, which Tenant specifically reserves to itself.

16. Events of Default

The following events shall be deemed to be “Events of Default” under this Lease: (i) Tenant fails to pay any Rent when due; provided that the first two (2) such failures during any consecutive twelve (12) month period during the Term shall not be an Event of Default if Tenant pays the amount due within seven (7) days after Tenant’s receipt of written notice from Landlord such payment was not made when due, (ii) Tenant fails to perform or observe any other provision or covenant of this Lease not described in this Section 16, and such failure is not cured within thirty (30) days (or immediately if the failure involves a hazardous condition) after written notice from Landlord, however, other than with respect to a hazardous condition, if Tenant’s failure to comply cannot reasonably be cured within thirty (30) days, Tenant shall be allowed additional time (not to exceed thirty (30) additional days) as is reasonably necessary to cure the failure so long as Tenant begins the cure within thirty (30) days and diligently pursues the cure to completion; (iii) Tenant fails to observe or perform any of the covenants with respect to delivering subordination agreements or estoppel certificates as set forth in Section 22, (iv) the leasehold interest of Tenant is levied upon or attached under process of law; (v) Tenant dissolves; (vi) Tenant abandons or vacates the Premises; or (vii) any voluntary or involuntary proceedings are filed by or against Tenant or any guarantor of this Lease under any bankruptcy, insolvency or similar laws and, in the case of any involuntary proceedings, are not dismissed within ninety (90) days after filing.

 

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17. Remedies

A. Upon the occurrence of any Event of Default, Landlord shall have the following rights and remedies, in addition to those allowed by law or equity, anyone or more of which may be exercised without further notice to or demand upon Tenant and which may be pursued successively or cumulatively as Landlord may elect:

 

(1)

Landlord may re-enter the Premises and attempt to cure any default of Tenant, in which event Tenant shall, upon demand, reimburse Landlord as Additional Rent for all reasonable costs and expenses which Landlord incurs to cure such default;

 

(2)

Landlord may terminate this Lease by giving to Tenant notice of Landlord’s election to do so, in which event the Lease Term shall end, and all right, title and interest of Tenant hereunder shall expire, on the date stated in such notice;

 

(3)

Landlord may terminate the right of Tenant to possession of the Premises without terminating this Lease by giving notice to Tenant that Tenant’s right to possession shall end on the date stated in such notice, whereupon the right of Tenant to possession of the Premises or any part thereof shall cease on the date stated in such notice; and

 

(4)

Landlord may enforce the provisions of this Lease by a suit or suits in equity or at law for the specific performance of any covenant or agreement contained herein, or for the enforcement of any other appropriate legal or equitable remedy, including recovery of all moneys due or to become due from Tenant under any of the provisions of this Lease.

Landlord shall not be required to serve Tenant with any notices or demands as a prerequisite to its exercise of any of its rights or remedies under this Lease, other than those notices and demands specifically required under this Lease. In order to regain possession of the Premises and to deny Tenant access thereto, Landlord or its agent may, at the expense and liability of the Tenant, alter or change any or all locks or other security devices controlling access to the Premises without posting or giving notice of any kind to Tenant and Landlord shall have no obligation to provide Tenant a key to new locks installed in the Premises or grant Tenant access to the Premises. Tenant shall not be entitled to recover possession of the Premises, terminate this Lease, or recover any actual, incidental, consequential, punitive, statutory or other damages or award of attorneys’ fees, by reason of Landlord’s alteration or change of any lock or other security device and the resulting exclusion from the Premises of the Tenant or Tenant’s agents, servants, employees, customers, licensees, invitees or any other persons from the Premises. Landlord may, without notice, remove and either dispose of or store, at Tenant’s expense, any property belonging to Tenant that remains in the Premises after Landlord has regained posse