Exhibit 10.7
LEASE AGREEMENT
BASIC LEASE
INFORMATION
The following Basic Lease
Information is hereby incorporated into and made a part of the
Lease between Landlord and Tenant to which it is attached. Each
reference in the Lease to any of the Basic Lease Information shall
mean the respective information set forth below, and such
information is incorporated as a part of the terms provided under
the particular Lease Section pertaining to such information. In the
event of any conflict between any Basic Lease Information and the
Lease, the former shall control.
1.
Building: The approximately 162,587 square foot building
(the “ Building ”) to be constructed by Landlord
on the Premises, in accordance with the provisions of Exhibit
“B” attached hereto and incorporated herein. Upon
Substantial Completion (defined in Section 9.1 of this Basic Lease
Information) of the Building and not later than the Rent
Commencement Date, Landlord’s architect shall measure the
Building to determine its usable square footage area utilizing the
BOMA ANSI-Z-65.1 method of measurement (“ Useable Square
Footage ”). Tenant may verify Landlord’s
measurement utilizing its own architect.
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2.
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Landlord: Workstage-Oregon, LLC, a Michigan limited
liability company
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3.
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Landlord’s Address for Giving of Notices
and Payment of Rent:
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Workstage-Oregon, LLC
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Attention: Joe Peters
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4700 60 th Street S.E.
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Grand Rapids, MI 49512
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4.
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Tenant: Royal Caribbean Cruises Ltd., a Liberian
corporation
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5.
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Tenant’s Address for Giving of
Notices:
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Royal Caribbean Cruises
Ltd.
Attention: VP, Chief Human Resource
Officer
1050 Caribbean Way
Miami, FL 33132
With a copy to:
Royal Caribbean Cruises
Ltd.
Attention: General
Counsel
1050 Caribbean Way
Miami, FL 33132
6.
Premises: The real property described on Exhibit
“A” attached hereto and incorporated herein,
including all improvements located thereon.
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7.
Use: General business, which includes, but is not limited
to, infrastructure necessary for a customer contact/call center,
the use of conference and computer facilities, employee cafeteria
and related facilities, a wellness facility, a childcare facility,
and other legally permitted uses consistent with the
characteristics of a first-class office building in the
Eugene-Springfield metropolitan area.
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8.
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Lease Document Issuance and Reference
Date: January 24,
2005.
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9.
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Commencement Dates:
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9.1
Lease Commencement Date: The Lease Commencement Date for the
Premises shall be the later of the following dates: (a) Substantial
Completion of the Building; or (b) December 23, 2005. As used
herein, the terms “ Substantial Completion ” and
“ Substantially Complete ” means that (i) a
temporary Certificate of Occupancy for the Building has been
issued; (ii) at least ninety-five percent (95%) of all detail work
that is the responsibility of the Landlord is in place; (iii) all
mechanical, electrical, HVAC, elevators, life-safety and
communication systems shall be operational in the Building and on
the Premises; (iv) a punch list that reflects less than five
percent (5%) of the total work that is the obligation or under the
control of the Landlord is left to be completed; (v) all common
area improvements for the Premises shall be at least ninety-five
percent (95%) complete, including, but not limited to, the
roadways, parking lot, landscaping, Building lobby, and entrances
thereto, corridors and restrooms; and (vi) the Premises are
suitable for the conduct of Tenant’s daily business
operations. Tenant may, after receipt of Landlord’s prior
approval, which approval shall not be unreasonably withheld,
conditioned or delayed, (and subject to local municipal approval as
applicable) enter onto the Premises from time to time prior to the
Lease Commencement Date for the purpose of employee training and to
install its furniture, equipment and phone system, all at
Tenant’s expense. Landlord covenants, represents and warrants
that the data center portion of the Premises will be completed on
or before August 26, 2005; Landlord shall permit Tenant to have
access to the data center portion of Premises for the purpose of
installing data center equipment at Tenant’s expense on or
before said date. Landlord shall permit Tenant to have early access
to the remainder of the Premises for the purpose of: (a) installing
of furniture and equipment on or before December 13, 2005; and (b)
conducting public relations events, including a job fair and
related activities, on or before December 13, 2005 (both at
Tenant’s expense and subject to Tenant’s receipt of
municipal approval as applicable). All early access granted
hereunder shall be deemed to be upon all the terms, covenants,
conditions and provisions of this Lease, including specifically
Section F of Exhibit “B” , except for the
payment of Rent. Deadlines and performance obligations of Landlord
and Tenant pursuant to this Section 9.1 are subject to Force
Majeure, as defined in Section 31.
9.2
Rent Commencement Date: The Rent Commencement Date for the
Premises shall be thirty (30) days after the Lease Commencement
Date.
10. Expiration
Date: The day prior to the twentieth anniversary of the Lease
Commencement Date. Tenant may extend the Lease Term per Section
27.
11. Base Rent:
Base Rent shall be paid monthly. Except as provided below, Base
Rent shall equal $285,585.50 per month. The months referred to
above are the full calendar months
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after any first partial month of the Lease Term.
The monthly Base Rent rate for any such partial month shall be the
same as the rate specified for the first full calendar month when
Base Rent is payable. Base Rent shall increase two percent (2%) per
year on each anniversary of the Rent Commencement Date. Each
increase in Base Rent shall be cumulative. Landlord and Tenant
acknowledge that pursuant to the Memorandum of Understanding
between Tenant and the State of Oregon (the “ State
”), the State has agreed to award Tenant with up to $300,000
for roads, rights of way, sewers, storm water discharge and
treatment and other qualifying uses under the Oregon Special Works
Fund. Tenant shall direct the State to award the $300,000 amount
directly to Landlord. Base Rent will be adjusted downward to the
extent that that Landlord receives any portion of the $300,000
award. For example, if the entire $300,000 is paid to Landlord,
then Base Rent shall decrease to $283,448.00 per month.
12. Brokers :
Cushman & Wakefield of Florida, Inc. in cooperation with
Cushman & Wakefield of Oregon, Inc.
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LANDLORD
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TENANT
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WORKSTAGE-OREGON, LLC, a Michigan
limited liability company
By: /S/ JOHN C.
COTTRELL
Its: John C. Cottrell,
Member
Date: January 24,
2005
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ROYAL CARIBBEAN CRUISES LTD., a
Liberian corporation
By: /S/ JACK L.
WILLIAMS
Its: Jack L.
Williams
Date: January 24,
2005
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Exhibits (6):
Exhibit
“A” –
Premises Description
Exhibit
“B” –
Landlord’s Work (Build to Suit)
Exhibit
“C” –
Memorandum of Lease
Exhibit
“D” –
Lease Commencement Agreement
Exhibit
“E” –
Subordination, Non-Disturbance and Attornment Agreement
Exhibit
“F” –
List of Initial Improvements
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LEASE AGREEMENT
TERMS AND
CONDITIONS
SECTION 1
DEMISE AND RENT
1.1
Demise . Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, upon and subject to the terms, covenants,
provisions and conditions of this Lease Agreement (herein called
the “ Lease ”), the Premises described in the
Basic Lease Information.
1.2
Commencement and Expiration Dates . The term of this Lease
(herein called “ Lease Term ”) shall be for the
period specified in the Basic Lease Information (or until sooner
terminated as herein provided), as the same may be renewed pursuant
to Section 27. After the Lease Commencement Date has occurred, the
parties shall execute the Lease Commencement Agreement attached
hereto as Exhibit “D” , and incorporated herein,
confirming the actual Lease Commencement Date.
1.3
Rent . The rents shall be and consist of a Base Rent (herein
called “ Base Rent ”) and Additional Rent
(herein called “ Additional Rent ”). For
purposes of this Lease Agreement, Base Rent and Additional Rent are
referred to collectively as “ Rent .” Base Rent
shall be the amount indicated in the Basic Lease Information. Base
Rent shall be payable in equal monthly installments in advance on
the first day of each and every calendar month during the term of
this Lease (except to the extent otherwise specifically provided
elsewhere in this Lease). Additional Rent shall consist of all
other sums of money as shall become due from and payable by Tenant
to Landlord or to others as instructed by Landlord pursuant to the
terms of this Lease. All Rent shall be paid in lawful money of the
United States of America to Landlord at its office or such other
place, as Landlord shall designate by notice to Tenant. Tenant
shall pay the Base Rent and Additional Rent promptly when due
without notice or demand and without any abatement, deduction or
offset for any reason whatsoever, except as expressly provided in
this Lease. If the Lease Commencement Date occurs on a day other
than the first day of a calendar month, the Base Rent for that
partial calendar month shall be prorated on a daily
basis.
1.4
Late Charge . Tenant recognizes that late payment of any
Base Rent from Tenant to Landlord will result in administrative
expense to Landlord, the extent of which additional expense is
extremely difficult and economically impractical to ascertain.
Tenant therefore agrees that if Base Rent from Tenant to Landlord
remains unpaid ten (10) days after it is due, the amount of such
unpaid Base Rent shall be increased by a late charge to be paid to
Landlord by Tenant in an amount equal to $2,000.00; provided,
however, that Tenant is not obligated to pay the $2,000 late charge
until Tenant has been 10 days late in the payment of Base Rent more
than one (1) time in each calendar year of the Lease Term. Tenant
agrees that such amounts are reasonable estimates of the loss and
expense to be suffered by Landlord as a result of such late payment
by Tenant and may be charged by Landlord to defray such loss and
expense. Overdue Rent (Base Rent and Additional Rent) shall bear
interest payable to Landlord from the date due until paid at a rate
equal to the lesser of (i) nine percent (9%) per annum, or (ii)
three percent (3%) per annum above the “ Prime Rate
” as reported by the Wall Street Journal from time
to
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time (items (i) and (ii) are
collectively referred to herein as the “ Rate
”). The provisions of this Section in no way relieve Tenant
of the obligation to pay Rent on or before the date on which it is
due, nor do the terms of this Section in any way affect
Landlord’s remedies pursuant to Section 19 of this Lease
if Rent is past due.
1.5.1
Calculation. In addition to Base Rent, Tenant shall pay to
Landlord the following amount monthly as “ Supplemental
Rent ”, which shall be treated as “ Additional
Rent ”:
(Usable Square Footage multiplied by
$.30) divided by 12.
1.5.2
Purpose. The purpose of Supplemental Rent is to fund
Landlord’s obligations pursuant to Section 12.1.
1.5.3
Escalation. On each anniversary of the Rent Commencement
Date, Supplemental Rent shall adjust to the Consumer Price Index
Rate (provided that in no event shall Supplemental Rent decrease).
The term “Consumer Price Index Rate ” shall be
an amount calculated by adjusting the then-current Supplemental
Rent amount by a percentage equal to the percentage change over the
preceding twelve (12) month period of the " Consumer Price Index
- U.S. City Average for all Items for All Urban Consumers
(1982-84=100) " published in the Monthly Labor Review by the
Bureau of Labor Statistics of the United States Department of Labor
(the " CPI-U "), using the CPI-U published thirty (30) days
prior to the anniversary. Notwithstanding the foregoing, annual
increases in the Supplemental Rent shall be capped at two percent
(2%) per year. Landlord covenants to calculate the adjustment
fairly and accurately. If the CPI-U is discontinued, the "
Consumer Price Index - U.S. City Average for all Items for Urban
Wage Earners and Clerical Workers (1982-84=100) " published in
the Monthly Labor Review by the Bureau of Labor Statistics of the
United States Department of Labor shall be used for making the
computation. If the Bureau of Labor Statistics no longer maintains
such statistics on the purchasing power of the U.S. consumer
dollar, comparable statistics published by a responsible financial
periodical or recognized authority selected by the parties shall be
used for making the computation. If the CPI-U base year 1982-84 (or
other base year for a substituted index) is changed, the
denominator figure used in making the computation in this
Section 1.5.3 shall accordingly be changed so that all
increases in the CPI-U from the base year are taken into account
notwithstanding any such change in such CPI-U base year.
SECTION 2
USE
2.1
Generally . Tenant shall use and occupy the Premises for the
use specified in the Basic Lease Information and for no other
purpose without the written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed.
Withholding consent to a change of use shall be deemed unreasonable
unless Landlord has a legitimate business purpose for withholding
consent. Tenant shall not commit or allow the commission of any
waste in, on, or about the Premises. Tenant shall not use the
Premises or permit anything to be done in or about the Premises
that will conflict with any law, statute, ordinance, or
governmental rule or
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regulation now in force or which may
hereafter be enacted or promulgated (the “ Legal
Requirements ”).
2.2
ADA Law Compliance . Landlord and Tenant acknowledge that
the provisions of the Americans with Disabilities Act (the “
ADA ”) allow allocation of responsibility for
compliance with the terms and conditions of the ADA in the Lease.
Landlord and Tenant agree that the responsibility for compliance
with the ADA shall be allocated as set forth in this Section.
Landlord shall be responsible for compliance with the applicable
provisions of the ADA with respect to the Premises and Landlord
represents that any improvements installed by Landlord pursuant to
Exhibit “B” will conform to the ADA requirements
imposed by the local governmental authorities in connection with
the issuance of building permits and inspection of the Premises to
verify compliance with the approved plans and specifications.
Tenant shall, at Tenant’s expense, promptly comply with all
requirements of any legally constituted public authorities made
necessary by reason of Tenant’s specific use of the Premises,
including without limitation, the ADA.
2.3
Environmental Law Compliance . For purposes of this Section
the term “ Hazardous Substances ” means and
includes all hazardous and toxic substances, waste or materials,
any pollutant or contaminant, including, without limitation, PCBs,
asbestos, asbestos-containing material, and raw materials that are
included under or regulated by any Environmental Laws. For purposes
of this Lease the term “ Environmental Laws ”
shall mean and include all federal, state and local statutes,
ordinances, regulations and rules presently in force or hereafter
enacted relating to environmental quality, contamination, and
clean-up of Hazardous Substances including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 § 6091 et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6091 et
seq., as amended by the Hazardous and Solid Waste Amendments of
1984, and state superlien and environmental clean-up statutes and
all rules and regulations presently or hereafter promulgated under
said statutes as amended. Landlord represents that, to the best of
Landlord’s knowledge, the Premises are in compliance with all
Environmental Laws respecting Hazardous Substances, and that
Landlord has received no notice of any pending or threatened lien,
action or proceeding respecting any alleged violation of
Environmental Laws respecting Hazardous Substances that has
occurred on or near the Premises or in or about the Building.
Landlord and Tenant shall each promptly comply with any future
Environmental Laws to the extent applicable to the Premises. Tenant
and Landlord shall not bring or permit anyone to bring Hazardous
Substances onto the Premises in excess of those substances
customarily used office settings; Tenant and Landlord shall comply
with all Environmental Laws in conjunction with its use and
disposal of the same. Landlord and Tenant are each responsible for
their own acts and omissions relating to compliance with
Environmental Laws and the use of Hazardous Substances at the
Premises. The parties have agreed to not apportion the
environmental risks between them relating to third-party acts or
omissions related to Environmental Laws and Hazardous Substances
and agree to defer to and avail themselves to state law and federal
law with respect to the apportionment of damages related to
third-party acts and omissions relating to Environmental Laws and
Hazardous Substances.
2.4
Indemnity Regarding Legal Violations . Tenant shall
indemnify and hold harmless Landlord from and against any and all
claims arising from Tenant’s breach of its
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representations, warranties and
covenants under this Lease respecting compliance with Legal
Requirements including but not limited to Environmental Laws;
together with all costs, expenses and liabilities incurred or in
connection with each such claim, action, proceeding or appeal,
including, without limitation, all reasonable attorneys’ fees
and expenses. Landlord shall indemnify and hold harmless Tenant
from and against any and all claims arising from Landlord’s
breach of its representations, warranties and covenants under this
Lease respecting compliance with Legal Requirements including but
not limited to the ADA or Environmental Laws; together with all
costs, expenses and liabilities incurred or in connection with each
such claim, action, proceeding or appeal, including, without
limitation, all reasonable attorneys’ fees and
expenses.
SECTION 3
TENANT’S ACCEPTANCE AND
MAINTENANCE OF PREMISES
By taking possession of the Premises
on the Lease Commencement Date, Tenant accepts the Premises as
being Substantially Complete. Tenant shall not be required to
accept the Premises unless and until the Premises are Substantially
Complete. Landlord’s obligations with respect to the Premises
are as set forth in Section 12.1 hereof. Tenant’s obligations
with respect to the Premises are as set forth in Section 12.2
hereof. Landlord shall provide Tenant with at least monthly updates
on the status of Landlord’s Work and shall provide Tenant
thirty (30) days prior notice of the exact date the Premises will
be ready for Tenant to take possession. Landlord shall promptly and
diligently repair any “ punchlist ” items and
any latent defects in the Premises (except any improvements
constructed by Tenant or its agents or employees) within sixty (60)
days following notice by Tenant.
SECTION 4
LANDLORD’S OPERATING
EXPENSES AND TAXES
4.1
Landlord’s Operating Expenses . For the purposes of
this Lease, the term “ Landlord’s Operating
Expenses ” shall mean all expenses paid or incurred by
Landlord (or on Landlord’s behalf) as reasonably determined
by Landlord (in accordance with generally accepted accounting
principles, if applicable or appropriate) to be necessary or
appropriate for the efficient operation, management (if applicable
pursuant to Section 12.2), maintenance and repair of the Premises,
including without limitation: (i) the cost of all charges of
insurance; (ii) charges of independent contractors performing
repairs or services to the Premises or wages, benefits and
applicable taxes on Landlord’s employees providing
management, maintenance and repair services at the Premises, to the
extent such items are reasonably allocable to the Premises in
accordance with generally accepted accounting principles; (iii)
alterations and improvements to the Premises made by reason of
changes to laws and requirements of any public authorities or the
requirements of insurance bodies after the Lease Commencement Date,
the cost of which shall be amortized (with interest at the Rate on
the unamortized balance) over the useful life of such improvements
in accordance with generally accepted accounting principles; (iv)
intentionally deleted ; (v) reasonable legal, accounting and
other professional fees incurred in connection with operation,
maintenance and management of the Premises except for
Landlord’s negligence or violation of Legal Requirements;
(vi) Taxes as defined in Section 4.3; (vii) all other charges
properly allocable to the operation, repair and maintenance of the
Premises in accordance with generally accepted accounting
principles; and (viii) intentionally deleted .
Notwithstanding the foregoing, Landlord’s Operating Expenses
shall not include any expense for items outlined as
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Landlord’s responsibility in
Section 12.1 (it being the intent of the parties that Landlord
shall assume the responsibility for those items in exchange for the
payment of Supplemental Rent). Landlord's Operating Expenses shall
be reasonable, directly related to the Premises, and comparable to
that of other Class "A" suburban customer connect call center
buildings in the Eugene-Springfield, Oregon office space market.
Landlord’s Operating Expenses are not a profit center for
Landlord and Landlord shall only pass through to Tenant
Landlord’s actual expenses incurred with respect to the
Premises. Landlord will utilize its best efforts to minimize
Landlord’s Operating Expenses and real estate taxes. Landlord
shall pass through to Tenant the benefit of any and all economic
and business incentives awarded to Landlord from state and local
governments as a result of Tenant’s occupancy of the
Premises, including but not limited to property tax abatements, as
further referenced in Section 26.9.
4.2
Exclusions From Landlord’s Operating Expenses .
Landlord’s Operating Expenses shall not include: (i)
depreciation or amortization (except as provided above in Section
4.1); (ii) interest on and amortization of debts (except as
provided above in Section 4.1) or any ground lease rental; (iii)
intentionally deleted ; (iv) leasing commissions,
attorneys’ fees, costs and disbursements and other expenses
(including advertising) incurred in connection with leasing the
Premises for prospective tenants or occupants; (v) refinancing
costs; (vi) intentionally deleted ; (vii) repairs occasioned
by fire, windstorm or other casualty or by condemnation or eminent
domain, to the extent such repairs are paid for by insurance
proceeds or condemnation proceeds; (viii) the cost of fulfilling
Landlord’s obligations pursuant to Section 12.1 (except as
specifically permitted in Section 4.1(iii)); (ix) any
attorney’s fees incurred by Landlord where the Tenant
prevails in establishing a breach of the Lease by the Landlord; (x)
any fines, penalties, damages, and the like payable to third
parties or governmental entities due to Landlord’s violation
of the Lease or any Legal Requirements; (xi) overhead and profit
increment paid to Landlord or to subsidiaries or affiliates of
Landlord for services in the Building to the extent the same
exceeds the costs of such services rendered by other first class
unaffiliated third parties on a competitive basis; (xii)
Landlord’s general corporate overhead and general and
administrative expenses; (xiii) all items and services for which
Tenant reimburses Landlord; (xiii) advertising and promotional
expenditures in connection with leasing the Building, and costs of
the installation of signs in or on the Building identifying the
owner of the Building; (xiv) costs incurred in connection with
upgrading the Building to comply with handicap, life, fire and
safety codes in effect and in force prior to the date the
Certificate of Occupancy for the Building is obtained; (xv) the
cost of any replacement or major repair of any component of the
Building due to construction or design defects. A major repair
means one that costs more than $5,000.00. Where repairs must be
made throughout the Building to multiple units of the same
component, the cost of repairing all of the units shall be
considered a single repair for purposes of determining if a major
repair is involved. Landlord shall use reasonable efforts to seek
reimbursement for all expenses where Landlord has a valid claim
against a party for causing the expense to be incurred such as
damage to the Building caused by negligence of a third party.
Except as provided in Section 12.2, Landlord is not entitled to a
management fee relating to its management of the Premises. In no
event shall Landlord’s Operating Expenses include the costs
of items that are the responsibility of Landlord pursuant to
Section 12.1 (it being the intent of the parties that Landlord is
responsible for those items in exchange for the payment of
Supplemental Rent).
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4.3
Taxes . The term “ Taxes ” includes (i)
all real property taxes and assessments (general and special) and
personal property taxes, charges, rates, duties and assessments
rated, levied or imposed by any governmental authority with respect
to the Premises and any improvements, fixtures and equipment
located therein or thereon, and with respect to all other property
of Landlord, real or personal, located in or on the Premises or the
Building and used in connection with the operation of the Building;
(ii) any tax in lieu of a real property tax; (iii) any tax or
excise levied or assessed by any governmental authority on the
rentals payable under this Lease or rentals accruing from the use
of the Premises; provided that this shall not include federal or
state, corporate or personal income taxes; and (iv) any tax or
excise imposed or assessed against Landlord which is measured or
based in whole or in part on the capital employed by Landlord to
improve the Premises and construct the Building in lieu of a real
property tax. Anything in this Section to the contrary
notwithstanding, Taxes shall not include federal or state,
corporate or personal income taxes. If Landlord receives a refund
of Taxes then Landlord shall credit such refund, net of any
professional fees and costs incurred by Landlord to obtain the
same, against the Taxes for the Operating Year to which the refund
is applicable or the current Operating Year, at Landlord’s
option. Taxes shall not include any late charges, interest or
penalties incurred due to late payment. Landlord shall use
reasonable efforts to reduce and minimize Taxes as well as all
other Landlord’s Operating Expenses throughout the Term of
the Lease to the extent possible consistent with operating the
Building in a first-class manner as compared to other comparable
Class “A” suburban customer connect call center
buildings in the Eugene-Springfield, Oregon office space market.
Tenant shall pay the real property tax assessments due for the
Premises directly to the taxing authority and provide Landlord with
proof of payment within thirty (30) days thereof. If Tenant pays
the real property tax assessment in a timely manner, Tenant shall
receive all the benefits of the maximum discount available by law,
whether or not Landlord has paid same timely. Tenant shall not pay
any increase in the real property tax assessment resulting from a
reassessment due to a transfer of ownership of the Premises by
Landlord.
SECTION 5
PAYMENT OF LANDLORD’S
OPERATING EXPENSES
5.1
Operating Year . As used in this Section 5, the term “
Operating Year ” shall mean each calendar year of the
Lease Term and in the event this Lease begins or ends on any date
other than the first day of the calendar year, the calculations,
costs and payments referred to herein shall be prorated during the
first partial calendar year.
5.2
Lease . Throughout the entire Lease Term, Tenant shall pay
as Additional Rent, the Landlord’s Operating Expenses of the
Premises.
5.3
Written Statement of Estimate . At least ten (10) days prior
to the commencement of each Operating Year during the Lease Term,
Landlord shall furnish Tenant with a written statement setting
forth the estimated Landlord’s Operating Expenses for the
next Operating Year. Tenant shall pay to Landlord as Additional
Rent commencing on the first day of the Operating Year, and
thereafter on the first day of each calendar month of each
Operating Year during the Lease term, an amount equal to
one-twelfth of the amount of Landlord’s written statement. If
Landlord delivers the written statement late, Tenant shall continue
to pay to Landlord an amount equal to one-twelfth of the estimated
Landlord’s Operating Expenses for the
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immediately preceding Operating Year
until Landlord does furnish the written statement, at which time
Tenant shall pay the amount of any excess for the expired portion
of the current Operating Year over the Tenant’s actual
payments during such time and any excess payments by Tenant
credited to the next due payment of Rent from Tenant refunded to
Tenant within thirty (30) days following the date of such
statement. The late delivery of any written statement by Landlord
shall not constitute a waiver of Tenant’s obligation to pay
Landlord’s Operating Expenses.
5.4
Final Written Statement . Within ninety (90) days after the
close of each Operating Year during the Lease Term, Landlord shall
deliver to Tenant a written statement (the “ Operating
Statement ”) setting forth the actual increase in
Landlord’s Operating Expenses for the preceding Operating
Year. If the actual increase in Landlord’s Operating Expenses
is in excess of the estimated increase in Landlord’s
Operating Expenses, Tenant shall pay the amount of such excess to
Landlord as Additional Rent within thirty (30) days after receipt
of such statement by Tenant. If the actual increase in
Landlord’s Operating Expenses is less than the estimated
increase in Landlord’s Operating Expenses actually paid by
Tenant, then the amount of the excess overpayment shall be paid by
Landlord to Tenant within thirty (30) days following the date of
such statement if Tenant requests full reimbursement, or otherwise
Landlord may elect to apply the overpayment to Tenant’s next
Rent payment, reimbursing only the excess over such next payment,
if any.
5.5
Tenant Examination . The Operating Statement referred to
herein shall be audited by an independent certified accountant of
Landlord’s choosing (which audit costs shall be treated as
Landlord’s Operating Expenses) and shall be prepared in
accordance with generally accepted accounting principles,
consistently applied and shall contain sufficient detail to enable
Tenant or its agents to verify the calculation. Tenant shall have
the right to audit Landlord's books and records with respect to the
preparation of the Operating Statement. Upon at least ten (10)
days’ advance written notice to Landlord and during business
hours, Tenant may examine and copy any invoices, receipts, canceled
checks, vouchers or other instruments used to support the figures
shown on the Operating Statement. Tenant shall use reasonable
efforts to complete such examination in a manner that will minimize
the disruption to the Landlord’s business caused by the
examination. If such audit reveals that Tenant overpaid Landlord by
more than three percent (3%), Landlord shall reimburse Tenant for
the cost of Tenant's audit, including its accountant and legal fees
associated therewith, and immediately refund the overpayment to
Tenant. Tenant’s monthly payment of increases in
Landlord’s Operating Expenses in accordance with Section 5.3
shall not waive Tenant’s right to examine and dispute the
correctness of the Operating Statement provided pursuant to Section
5.4. Each such Operating Statement given by Landlord pursuant to
Section 5.4 shall be conclusive and binding upon Tenant and
Landlord unless within one hundred twenty (120) days after the
receipt of such Operating Statement, Tenant notifies Landlord that
it disputes the correctness of the Operating Statement, specifying
the particular respects in which the Operating Statement is claimed
to be incorrect.
5.6
No Reduction in Amount of Base Rent . Nothing in the Lease
shall be construed to mean the Base Rent amount specified in the
Basic Lease Information shall be reduced due to any decrease in
Landlord’s Operating Expenses.
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SECTION 6
SUBORDINATION, NOTICE TO SUPERIOR
LESSORS AND MORTGAGEES
6.1
Subordination . Any lease to which this Lease is subject and
subordinate, is herein called “ Superior Lease ”
and the lessor of a Superior Lease or its successor in interest is
herein called “ Superior Lessor .” Any mortgage
to which this Lease is subject and subordinate, is herein called
“ Superior Mortgage ” and the holder of a
Superior Mortgage, or its successor in interest is herein called
“ Superior Mortgagee .” Landlord shall cause any
Superior Lessor or Superior Mortgagee to enter into the
Subordination, Non-disturbance and Attornment Agreement attached
hereto as Exhibit “E” , and incorporated
herein.
SECTION 7
QUIET ENJOYMENT
So long as Tenant pays all of the
Base Rent and Additional Rent and performs all of Tenant’s
other obligations hereunder, Tenant shall peaceably and quietly
have, hold and enjoy the Premises without hindrance, ejection or
interference by Landlord or any person lawfully claiming through or
under Landlord.
SECTION 8
ASSIGNMENT AND
SUBLETTING
8.1
Generally . Except for the permitted transfers described
below in this Section, Tenant shall not sell, assign, transfer,
mortgage, sublet, encumber or otherwise transfer by operation of
law or otherwise this Lease or any interest herein, or the Premises
or any portion thereof, without the prior written consent of
Landlord which consent Landlord shall not unreasonably withhold,
delay, or condition. Tenant may retain any profit, which may arise
from any sublet or assignment. The Tenant may recover damages if
the Landlord is found either to have acted in bad faith or to have
acted unreasonably in withholding, conditioning or delaying
consent. No consent by Landlord to any sale, assignment, transfer,
mortgage, sublease, or other encumbrance shall be construed to
relieve Tenant from its obligations hereunder or from obtaining
Landlord’s written consent in the future.
8.1.1 Tenant shall,
by written notice, advise Landlord of its desire from and after a
stated date (which shall not be less than thirty (30) days nor more
than ninety (90) days after the date of Tenant’s notice), to
transfer its interest in the Premises or any portion thereof for
any part of the term hereof; and such notice by Tenant shall state
the name and address of the proposed transferee, and Tenant shall
deliver to Landlord a true and complete copy of the proposed
transfer instrument summary term sheet representative of the
business terms of the transfer with said notice, and reasonable
financial information so that Landlord can evaluate the proposed
transferee.
8.1.2 Upon any
request by Tenant to transfer all or any part of the Premises,
Landlord shall respond in writing to Tenant within ten (10) days
after the date of Tenant’s request provided the notice
contains a prominent warning of such deadline for response, and
Landlord shall have the right to either: (a) permit the transfer on
the conditions referred to in Section 8.2 and any other
conditions Landlord may reasonably impose; or (b) reasonably
deny
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Tenant’s request, in which
event this Lease shall continue in full force and effect and
unmodified.
8.2
Conditions of Landlord’s Consent . As a condition to
Landlord’s prior written consent as provided for in this
Section, the transferee(s) shall agree in writing to comply with
and be bound by all of the terms, covenants, conditions, provisions
and agreements of this Lease, and Tenant shall deliver to Landlord,
promptly after execution, an executed copy of each transfer
instrument and an agreement of said compliance by each
transferee.
8.3
Permitted Transfers . Provided that Tenant is not currently
in default under the Lease beyond any applicable notice and cure
periods, upon thirty (30) days’ advance written notice to
Landlord, Tenant may sublet the Premises or assign this Lease
without the Landlord’s consent, with respect to the following
types of transfers: (i) a subsidiary, affiliate, franchisee,
division or corporation controlled or under common control with
Tenant, so long as Tenant remains primarily liable under the Lease;
(ii) a successor corporation related to Tenant by merger,
consolidation, non-bankruptcy reorganization, or government action,
so long as the successor corporation has a net worth and financial
investment rating by a rating service (such as Standard &
Poors) equal to or greater than Tenant’s net worth or
financial investment rating as of the Lease Document Issuance and
Reference Date; (iii) the purchaser of substantially all of the
Tenant’s assets provided that Tenant has substantial assets
which will be included in the sale which are in addition to those
located in the Premises, so long as the successor corporation has a
net worth and financial investment rating by a rating service (such
as Standard & Poors) equal to or greater than Tenant’s
net worth or financial investment rating as of the Lease Document
Issuance and Reference Date; or (iv) a sublease of all or any
portion of the Premises to any third-party sublessee, so long as
Tenant remains primarily liable under the Lease.
SECTION 9
INSURANCE
9.1
Waiver of Right of Recovery . Anything to the contrary in
this Lease notwithstanding, neither party, shall be liable to the
other party or to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage to any
building, structure or other tangible property normally covered
under an all risk policy of property insurance or under
workers’ compensation laws and benefits even though such loss
or damage might have been occasioned by the negligence of such
party, its agents or employees.
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9.2
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Public Liability Insurance
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9.2.1
Tenant’s Insurance. Tenant, at its expense, shall
maintain at all times during the term of this Lease, public
liability insurance in respect of the Premises and the conduct or
operation of business therein, with Landlord and its managing
agent, if any, and any Superior Lessor or Superior Mortgagee whose
name and address shall previously have been furnished to Tenant, as
additional insureds, with Five Million and No/100 Dollars
($5,000,000.00) minimum combined single limit coverage, or its
equivalent. All such above-described insurance shall insure the
performance by Tenant of the indemnity agreement as to liability
for injury to, illness of, or death of persons and damage to
property set forth in Section 15. Tenant shall deliver to
Landlord certificates of insurance, in form reasonably satisfactory
to Landlord issued by the insurance
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company or its authorized agent, at
least ten (10) days before the Lease Commencement Date. Tenant
shall procure and pay for renewals of such insurance from time to
time, and Tenant shall deliver to Landlord such renewal certificate
as soon as possible but not more than thirty (30) days following
issuance of the same. All such policies shall contain a provision
whereby the same cannot be canceled or modified unless Landlord and
any additional insured is given at least twenty (20) days prior
written notice of such cancellation or modification. Tenant shall
forward a certificate of insurance to Landlord in a form reasonably
acceptable to Landlord.
9.2.2
Landlord’s Insurance. Landlord, at its expense, shall
maintain at all times during the term of this Lease, public
liability insurance in respect to its activities at the Premises
with Tenant named as an additional insured, with Five Million and
No/100 Dollars ($5,000,000.00) minimum combined single limit
coverage, or its equivalent. All such insurance shall insure the
performance by Landlord of the indemnity agreement as to liability
for injury to, illness of, or death of persons and damage to
property set forth in Section 15. Landlord shall deliver to
Tenant certificates of insurance, in form reasonably satisfactory
to Tenant issued by the insurance company or its authorized agent,
at least ten (10) days before the Lease Commencement Date. Landlord
shall procure and pay for renewals of such insurance from time to
time, and Landlord shall deliver to Tenant such renewal certificate
as soon as possible but not more than thirty (30) days following
issuance of the same. All such policies shall contain a provision
whereby the same cannot be canceled or modified unless Tenant and
any additional insured is given at least twenty (20) days prior
written notice of such cancellation or modification.
9.3
Acceptable Insurance Companies . All insurance policies
required to be carried by the parties hereunder shall be issued by
responsible insurance companies authorized to issue insurance in
the State of Oregon rated B VII or higher by Best’s Insurance
Rating Service. Tenant may self insure on any of the required
insurance provided that upon request Tenant shall deliver to
Landlord reasonably satisfactory evidence of sufficient reserves
and net worth to justify such self insurance and provided further
that any other provisions of this Lease affected by the
Tenant’s insurance such as the waiver of subrogation rights
or indemnity provisions shall be interpreted and applied in such a
manner as to avoid any adverse effect on the Landlord by allowing
Tenant to self insure.
9.4
Property Insurance . Tenant shall maintain property
insurance covering the Premises and the Tenant’s Property
located on the Premises. Such insurance shall be written on a
special form covering the full replacement cost and shall be
maintained throughout the entire Lease Term, with Landlord and its
managing agent, if any, and any Superior Lessor or Superior
Mortgagee whose name and address shall previously have been
furnished to Tenant, as additional insureds. Tenant shall deliver
to Landlord certificates of insurance, in form reasonably
satisfactory to Landlord issued by the insurance company or its
authorized agent, at least ten (10) days before the Lease
Commencement Date. Tenant shall procure and pay for renewals of
such insurance from time to time, and Tenant shall deliver to
Landlord such renewal certificate as soon as possible but not more
than thirty (30) days following issuance of the same. All such
policies shall contain a provision whereby the same cannot be
canceled or modified unless Landlord and any additional insured is
given at least twenty (20) days prior written notice of such
cancellation or modification. A certificate of such insurance
acceptable to Landlord shall be sent to Landlord. Such insurance
shall have commercially reasonable deductibles. Tenant
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shall bring or keep all personal
property and trade fixtures upon the Premises or in the Building
solely at its own risk, and Landlord shall not under any
circumstances be liable for any damages thereto or any destruction
or theft thereof except that Landlord shall be responsible for
damages arising from its acts or omissions. During the Lease Term,
Tenant shall maintain business interruption insurance with respect
to Tenant’s business operations at the Premises. Tenant may
self-insure for such risk.
SECTION 10
ALTERATIONS
10.1
Requirements . Tenant shall not make or suffer to be made
any alterations, additions, or improvements in, on, or to the
Premises or any part thereof which would require a building permit
without the prior written consent of Landlord, which shall not be
reasonably withheld, conditioned or delayed; except that Tenant may
replace floor coverings, wall coverings, reconfigure interior
improvements and non-load bearing interior walls, and re-paint the
Premises without Landlord’s consent. Subject to
Section 11.2 hereof, any such alterations, additions, or
improvements in, on, or to said Premises, except for Tenant’s
movable furniture, trade fixtures and equipment, shall immediately
become Landlord’s property and, at the end of the term
hereof, shall remain on the Premises without compensation to
Tenant. If Landlord consents to the making of any such alterations,
additions, or improvements by Tenant, the same shall be made by
Tenant, at Tenant’s sole cost and expense, in accordance with
plans and specifications approved by Landlord, and any contractor
or person selected by Tenant to make the same must first be
approved in writing by Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed. Tenant shall require
any party performing work on or at the Premises to comply with
Landlord’s reasonable insurance requirements. Tenant shall
obtain all required governmental permits and authorizations for any
such work and Tenant shall cause all such work to be completed in a
good and workmanlike manner, free from defective materials and in
compliance with all building, zoning, and other laws, ordinances,
rules, and regulations. If the alterations, additions or
improvements shall be made by Landlord for Tenant’s account,
Tenant shall reimburse Landlord for the cost thereof within thirty
(30) days after receipt of a statement, setting forth the actual
cost of such alterations, additions or improvements. At the time
consent is given to Tenant to make an improvement to the Premises,
Landlord shall indicate in writing whether or not removal, repair
and restoration will be required with respect to such improvement
upon the expiration or earlier termination of this Lease. If
Landlord’s consent is not required for said alteration, upon
Tenant’s request, Landlord shall state in writing whether
proposed alterations, additions or improvements must be removed
upon the expiration or sooner termination of the Lease
Term.
Except for those items defined as
Tenant’s property in Section 11.2 of this Lease, all of the
initial improvements to be installed pursuant to Exhibit
“B” shall immediately become Landlord’s
property and, at the end of the term hereof, shall remain on the
Premises without compensation to Tenant, except for removable trade
fixtures and the items described in
Exhibit “F” hereto, which shall be
considered Tenant’s property and Tenant may remove or leave
said items on the Premises at Tenant’s sole
option.
After the expiration or sooner
termination of the Lease Term and upon demand by Landlord made no
later than thirty (30) days after such expiration or earlier
termination, Tenant
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shall promptly remove any or all
alterations, additions, or improvements made by or for the account
of Tenant, designated by Landlord to be removed, and Tenant shall
repair and restore the Premises to their original condition,
subject to ordinary wear and tear, casualty and condemnation. Such
removal, repair and restoration work shall be done promptly and
with all due diligence at Tenant’s sole cost and expense. The
provisions of this Section 10 shall not apply to the initial
Tenant Improvements described in Exhibit “B” to
this Lease or to alterations or improvements that Landlord has
previously indicated by writing that Tenant would not have to
remove.
10.2
Indemnification of Landlord . Tenant, at its expense, and
with diligence and dispatch, shall procure the cancellation or
discharge of all notices of violation arising from or otherwise
connected with alterations, or any other work, labor, services or
materials done for or supplied to Tenant at Tenant’s request,
which shall be issued by any public authority having or asserting
jurisdiction. Tenant shall defend, indemnify and save harmless
Landlord and any Superior Lessor or Superior Mortgagee from and
against any and all mechanic’s and other liens and
encumbrances filed in connection with alterations, or any other
work, labor, services or materials done for or supplied to Tenant
(other than work performed for Tenant by Landlord pursuant to
Exhibit “B” ), including, without limitation,
security interests in any materials, fixtures or articles so
installed in and constituting part of the Premises and against all
costs, expenses and liabilities incurred in connection with any
such lien or encumbrance or any action or proceeding brought
thereon. Tenant, at its expense, shall procure the satisfaction or
discharge of record of all such liens and encumbrances within
thirty (30) days after Tenant’s receipt of notice of after
the filing thereof. Nothing herein contained shall prevent Tenant
from contesting, in good faith and at its own expense, any notice
of violation, or lien provided Tenant posts for the protection of
Landlord security reasonably acceptable to Landlord.
SECTION 11
LANDLORD’S AND
TENANT’S PROPERTY
11.1
Landlord’s Property . All fixtures, carpeting,
equipment, improvements and appurtenances attached to or built into
the Premises at the commencement of or during the term of this
Lease, whether or not by or at the expense of Tenant, shall be and
remain a part of the Premises, shall be deemed the property of
Landlord and shall not be removed by Tenant, except as provided in
Sections 10 and 11.2.
11.2
Tenant’s Property . The provisions of
Section 11.1 above notwithstanding, all business and trade
fixtures, custom millwork, reception desks, machinery and equipment
(including but not limited to supplemental air-conditioning units
and surface mounted light fixtures, if any), communications and
computer equipment and office equipment may be removed by the
Tenant. Tenant may remove furniture, furnishings (excluding window
coverings) and other articles of movable personal property owned by
Tenant and located in the Premises. All of the foregoing items
which Tenant is allowed to remove from the Premises are herein
collectively called “ Tenant’s Property ”)
and shall be and remain the property of Tenant and may be removed
by Tenant at any time during the term of this Lease; provided, that
if any of Tenant’s Property is removed, Tenant shall promptly
repair or pay the cost of repairing any damage to the Premises or
to the Building resulting from the installation and/or removal
thereof to Landlord’s reasonable satisfaction.
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SECTION 12
REPAIR, MAINTENANCE AND
MANAGEMENT OF PREMISES
12.1
Landlord’s Capital Repair and Replacement Obligations.
Except for the items specifically designated as being
Tenant’s responsibility pursuant to the second sentence of
Section 12.2, Landlord shall make all capital repairs and capital
replacements to the Premises at its sole expense, including but not
limited to: (a) the foundations, exterior walls, and other
structural elements and structural components of the Building; (b)
the roof and the roof membrane of the Building; and (c) the
elevators, heating and air conditioning systems, UPS, ATS, and the
parking lots and drive aisles. The cost of Landlord’s
obligations pursuant to this Section 12.1, shall not be deemed a
Landlord’s Operating Expense, it being the intent of the
parties that Landlord shall assume the responsibility for these
items in exchange for the payment of Supplemental Rent. With
respect to any capital repairs or capital replacements to the
Premises with a cost greater than $5,000, Tenant shall have the
right to review and approve any proposals or contracts relating
thereto. A repair or replacement shall be deemed “
capital ” for purposes of this Section 12, if it can
be capitalized in accordance with United States generally accepted
accounting principles.
12.2
Tenant’s Maintenance, Repair and Replacement
Obligations. Except for the obligations of Landlord set forth
in Section 12.1, Tenant, at Tenant's sole expense, shall repair,
replace and maintain the Premises, and Tenant’s furniture,
fixtures and equipment, in good order, condition and repair, and in
a manner consistent with the standards identified by IREM for Class
"A" office buildings, subject to and excepting reasonable wear and
tear and damage from insured events of casualty or destruction. In
addition to the foregoing, Tenant shall make all capital repairs
and capital replacements of Building electrical, other electrical
(including all electrical conduit, utility facilities and
equipment, and generators on the Premises), the supplemental air
conditioning system located in the data center portion of the
Premises, plumbing fixtures and equipment, all fire/life safety
facilities and equipment, and exterior surfaces and interior
surfaces of all glass, including exterior windows and interior
glass and all doors. Without limiting the foregoing, Tenant shall
regularly schedule with a maintenance contractor or contractors
service for all heating and air conditioning systems, elevators and
mechanical systems and other Building Systems and equipment which
service contracts shall include all service recommended by any
applicable equipment manufacturer and shall otherwise be in
accordance with applicable operations maintenance manuals therefor.
Tenant will keep the Premises in a neat and sanitary condition,
safe for human occupancy and use, and will not commit any nuisance
or waste in, on or about the Premises or the Property. Tenant is
solely responsible for and to the fullest extent allowable under
the laws, will release, indemnify, protect and defend Landlord
against (with counsel reasonably acceptable to Landlord) and hold
Landlord harmless from, the cost of repairing, and any claims
resulting from, any penetrations or perforations of the roof or
exterior walls that the Tenant causes. Tenant will maintain the
Premises in a first class condition. Tenant's repairs will be at
least equal in quality and workmanship to the original work and
Tenant will make the repairs in accordance with all laws and in a
manner so as to avoid damage to the structural elements of the
Building.
Tenant shall manage the Premises
using its in-house property management personnel or an outside
property management company. If Tenant ceases or intends to cease
managing the Premises, Landlord shall have the right to assume (or
hire an outside property
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management firm to assume)
management responsibilities for the Premises at a management fee to
be negotiated by the parties (at a rate that is customary in the
Eugene-Springfield real estate market) and such fee shall
constitute a Landlord’s Operating Expense that may be passed
through to Tenant as Additional Rent pursuant to Section 4.1.
Tenant shall have the right to enter into contracts with
third-party service providers for discrete services. Tenant shall
promptly furnish to Landlord copies of all such contracts with
third-party service providers upon Landlord’s
request.
If Tenant should be in default of
its obligations to perform any of its obligations under this
Section 12.2, following the expiration of any applicable cure
period following notice, then Landlord may, if it so elects, in
addition to any other remedies provided herein, effect such repair
and maintenance. No entry in making such repairs or maintenance
shall be deemed an eviction or disturbance of Tenant's use or
possession, or render Landlord liable for damages, by abatement of
rent or otherwise or relieve Tenant from any obligation herein set
forth provided that any such entry will, except in emergencies, be
made following reasonable notice to Tenant and such repairs will,
to the extent reasonably possible, be performed in a manner to
minimize impact on Tenant's use of the Premises. Any sums expended
by Landlord in effecting such repairs and maintenance shall be due
and payable within 30 days of written demand and shall constitute
Additional Rent due hereunder.
12.3
Utilities . Tenant shall pay, before delinquency, all
charges for all utility services consumed on or provided to the
Premises including, without limitation, charges for water, sewer,
internet, electricity, HVAC, janitorial and telecommunication
services. Landlord shall not be liable in damages or otherwise for
any interruptions or failure in the supply of any utilities or
utility service to the Premises except such failure or interruption
which results from the acts or omissions of Landlord.
12.4
Disclaimer . So long as Landlord has not acted negligently
or intentionally and Landlord uses its reasonable efforts to
restore any services that are reduced or interrupted, Landlord
shall not be in default
