EXHIBIT 10.1
STANDARD OFFICE LEASE AGREEMENT (NET)
THIS LEASE AGREEMENT
(hereafter called the “ Lease Agreement ”) made
as of the 2nd day of May, 2007 by and between UNITED PROPERTIES
INVESTMENT LLC , a Minnesota limited liability company having
offices at Suite 200, 3500 American Boulevard West,
Bloomington, Minnesota, 55431 (hereafter called the “
Landlord ”) and HEATLH FITNESS CORPORATION , a
Minnesota corporation (hereafter called the “ Tenant
”).
WITNESSETH
FOR AND IN CONSIDERATION of
the sum of One Dollar ($1.00) in hand paid by each of the parties
to the other, and other good and valuable consideration, receipt
and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
ARTICLE 1 — PREMISES AND TERM
A. Landlord does hereby lease
and let unto Tenant, and Tenant does hereby hire, lease and take
from Landlord, those areas of the Building depicted on
Exhibit A-1 attached hereto, and by this reference
incorporated herein, containing approximately 28,222 square feet in
the aggregate (hereafter called the “ Premises
”) and consisting of the following suites (each a “
Suite ”):
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Suite |
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Square Footage |
| 1100, Southpoint Tower |
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17,294 rentable square feet |
| 100, Southpoint East |
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6,989 rentable square feet |
| 50, Southpoint East |
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3,939 usable square feet |
Said
Premises are located in the City of Bloomington, County of
Hennepin, State of Minnesota. The term “ Building
” as it is used herein means the land and the Southpoint
Office Center consisting of three (3) interconnected buildings
at 1600 West 82 nd Street (“
Southpoint East ”), 1650 West 82 nd Street (“
Southpoint Tower ”) and 1700 West 82 nd Street (“
Southpoint West ”), all as depicted on
Exhibit A-2 attached hereto.
B. To have and to hold said
Premises for a term of sixty (60) months commencing
January 1, 2008 and terminating December 31, 2012
(hereafter called the “ Term ”) upon the rentals
and subject to the conditions set forth in this Lease Agreement,
and the Exhibits attached hereto. The commencement and termination
dates are specifically subject to the provisions of Article 5
hereof.
ARTICLE 2 — USE
The Premises shall be used by the
Tenant solely for the following purposes: General office use
ARTICLE 3 — RENTALS
Tenant agrees to pay to Landlord as
minimum rental (hereafter called “ Minimum Rental
”) for the Premises, without notice, set-off or demand, the
following amounts per month:
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Month of Term |
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Annual Rate Per RSF |
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Monthly Minimum Rental |
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For
Suite 1100 and Suite 100 together (24,283 rsf in the
aggregate):
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1 to 12
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$ |
13.00 |
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$ |
26,306.58 |
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13 to 24
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$ |
13.50 |
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$ |
27,318.38 |
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25 to 36
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$ |
14.00 |
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$ |
28,330.17 |
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37 to 48
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$ |
14.50 |
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$ |
29,341.96 |
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49 to 60
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$ |
15.00 |
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$ |
30,353.75 |
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| For Suite 50 (3,939
usf): |
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1 to 60
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$ |
15.00 |
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$ |
4,923.75 |
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Said
monthly installments shall be due and payable by Tenant in advance
on the first day of each calendar month during the Term of this
Lease Agreement, or any extension or renewal thereof, at the office
of Landlord set forth in the preamble to this Lease Agreement or at
such other place as Landlord may designate. In the event of any
fractional calendar month, Tenant shall pay for each day in such
partial month a rental equal to 1/30 of the Minimum Rental. Tenant
agrees to pay, as Additional Rental, which shall be collectible to
the same extent as Minimum Rental, all amounts which may become due
to Landlord hereunder and any tax, charge or fee that may be
levied, assessed or imposed upon or measured by the rents reserved
hereunder by any governmental authority acting under any present or
future law before any fine, penalty, interest or costs may be added
thereto for non-payment. Pursuant to Article 6 hereof,
Landlord’s estimated Operating Expenses and Real Estate Taxes
for 2007 total $11.40 per rentable square foot.
ARTICLE 4 — CONSTRUCTION
Preliminary plans (hereafter the
“ Preliminary Plans ”) for the permanent
improvements Tenant desires to have made to the Premises to modify
the Premises to accommodate Tenant’s intended use thereof are
attached hereto as Exhibit B. Tenant shall have until
June 1, 2007 to make modifications to the Preliminary Plans.
Upon approval of the Landlord to any modifications made to the
Preliminary Plans by Tenant, which approval shall not be
unreasonably withheld or delayed, Landlord shall cause Nelson
Architecture, Inc. (the “ Architect ”) to
prepare final plans, including a full set of construction drawings
(hereafter the “ Plans ”) which shall be
consistent with, except for mutually agreed upon changes, the
Preliminary Plans. Upon approval of the Plans by Landlord and
Tenant, which approval shall not be unreasonably withheld or
delayed by either party and any required approval of the Plans by
the City of Bloomington (“ City ”) and the
issuance of a building permit by the City, Landlord shall be
responsible for constructing the improvements as shown on the Plans
(hereafter called “ Tenant Improvements ”) for
and on behalf of Tenant. Landlord’s construction manager
shall obtain bids for the construction of the Tenant Improvements
from at least three (3) reputable subcontractors for each
Major Subcontract (a “ Major Subcontract ” shall
be deemed any contract in excess of $10,000.00). All Major
Subcontract bids shall be disclosed and reviewed with Tenant and
absent a compelling reason to do otherwise, Landlord shall select
the lowest bidding subcontractor for each Major Subcontract.
Landlord and Tenant have agreed that the costs of such Tenant
Improvements shall be paid by Tenant, although Landlord shall
provide Tenant an allowance of up to $450,000.00 to be utilized
toward the cost of the Tenant Improvements (hereafter called the
“ T. I. Allowance ”). The T. I. Allowance shall
be used only for the payment of costs relating to the construction
of the Tenant Improvements (including the costs of preparing the
Preliminary Plans and Plans, demolition and building permit costs,
Wiring costs, a construction management fee payable to
Landlord’s construction manager in the total amount of eight
percent (8%) of the total cost of the Tenant Improvements,
and
upon
presentation to Landlord of paid receipts or other reasonable
evidence of payment by Tenant, up to $20,000.00 of Tenant’s
out-of-pocket moving costs) (hereafter collectively referred to as
the “ Improvement Costs ”), which Improvement
Costs Landlord shall pay directly out of the T. I. Allowance, for
the credit of Tenant, and in no event shall any part of the T. I.
Allowance be paid to or payable to Tenant. Any Improvement Costs
which exceed the T. I. Allowance (hereafter the “ Excess
Improvement Costs ”) shall be paid by Tenant to Landlord
without further demand within fifteen (15) days of the day of
submission by Landlord to Tenant of a statement of said costs
(hereafter the “ Improvement Costs Statement ”);
it being further agreed by the parties that at Tenant’s
option, Tenant may elect to pay more of the Improvement Costs than
just any Excess Improvement Costs, which payment would likewise be
due within fifteen (15) days of the day of submission by
Landlord to Tenant of the Improvement Costs Statement. Any
improvements to the Premises, other than as shown on the Plans, and
the furnishing of the Premises, shall be made by Tenant at the sole
cost and expense of Tenant, subject to all other provisions of this
Lease Agreement, including compliance with all applicable
governmental laws, ordinances and regulations. If the Tenant
Improvements cannot be substantially completed prior to the
commencement of the Term, then the provisions of Article 5
shall apply.
ARTICLE 5 — POSSESSION
A. Except as otherwise provided
and subject to the provisions of Article 5 B below, Landlord
shall deliver possession of the Premises on or before the date
hereinabove specified for commencement of the Term, but delivery of
possession prior to such commencement date shall not affect the
expiration date of this Lease Agreement. Failure of Landlord to
deliver possession of the Premises by the date hereinabove
provided, due to a holding over by a prior tenant, delay by the
City in approving the Plans or issuing a building permit or any
other cause beyond Landlord’s reasonable control, or time
required for construction delays due to labor or material
shortages, strikes, or acts of God, shall automatically postpone
the date of commencement of the Term of this Lease Agreement and
shall extend the termination date by periods equal to those which
shall have elapsed between and including the date hereinabove
specified for commencement of the Term hereof and the date on which
possession of the Premises is delivered to the Tenant. The rentals
herein reserved shall commence on the first day of the Term,
provided, however, in the event of any occupancy by Tenant prior to
the beginning of the Term, such occupancy shall in all respects be
the same as that of a tenant under this Lease Agreement, and the
rental shall commence as of the date that Tenant enters into such
occupancy of the Premises. Provided further, that if Landlord shall
be delayed in delivery of the Premises to Tenant due to
Tenant’s failure to agree to the Plans, changes in or
additions to the Plans or the Tenant Improvements made at the
request of Tenant or any other delay caused by a party employed by
or the agent of Tenant, or by Tenant’s failure to pay for the
costs of the Tenant Improvements in excess of the T. I. Allowance,
then in such case the rental shall be accelerated by the number of
days of such delay, and the rentals shall commence the same as if
occupancy had been taken by Tenant. Prior to the commencement of
the Term, Landlord shall have no responsibility or liability for
loss or damage to fixtures, facilities or equipment installed or
left on the Premises. By occupying the Premises as a Tenant, or to
install fixtures, facilities or equipment, or to perform finishing
work, Tenant shall be conclusively deemed to have accepted the same
and to have acknowledged that the Premises are in the condition
required by this Lease Agreement, except items which are not in
compliance with the Plans and for which Tenant has given Landlord a
written “punch list” within thirty (30) days of
Tenant’s first occupancy of the Premises. Should the
commencement of the rental obligations of Tenant under this Lease
Agreement occur for any reason on a day other than the first day of
a calendar month, then in that event solely for the purposes of
computing the Term of this Lease Agreement, the commencement date
of the Term shall become and be the first day of the first full
calendar month following the date when Tenant’s rental
obligation commences, or the first day of the first full calendar
month following the commencement date set out in Article 1 (if
such is other than the first date of a calendar month), whichever
date is later, and the termination date shall be adjusted
accordingly; provided however, that the termination date shall be
the last day of a calendar month, which date shall in no event be
earlier than the termination date set out in Article 1.
Immediately after Tenant’s occupancy of the Premises the
Landlord and Tenant shall execute a ratification agreement which
shall set forth the final commencement and termination dates for
the Term and shall acknowledge the Minimum Rental, the rentable
square footage of the Premises, delivery of the Premises in the
condition required by this Lease Agreement and the respective
amounts of the Improvement Costs, Excess Improvement Costs, Letter
of Credit, Unfurnished Allowance and Contingent Annual
Payment.
B. It is acknowledged by the
parties that Suite 1100 of the Premises is currently occupied
by a tenant required to vacate said Suite 1100 no later than
November 4, 2007 and Suites 50 and 100 of the Premises are
both currently vacant. Notwithstanding anything in Article 5 A
above to the contrary, in the event Tenant desires to lease
Suite 50 and/or Suite 100 (but not Suite 1100) prior
to the scheduled commencement date of the Term of January 1,
2008, Tenant shall so notify Landlord in writing (hereafter “
Tenant’s Early Lease Notice ”) specifying
therein the Suite(s) (Suite 50 and/or Suite 100) Tenant
desires to lease early (hereafter each an “ Early Lease
Suite ”). Following such Tenant’s Early Lease
Notice for an Early Lease Suite, Landlord shall cause the Architect
to prepare Plans for the Tenant Improvements to be made to such
Early Lease Suite and upon approval of such Plans by the parties,
Landlord shall construct the Tenant Improvements to such Early
Lease Suite in accordance with the provisions of Article 4
above. Upon delivery of possession of such Early Lease Suite by
Landlord to Tenant with the Tenant Improvements thereto
substantially completed, the Term of this Lease Agreement shall
commence as to such Early Lease Suite and Tenant shall begin paying
for such Early Lease Suite, Minimum Rental as set forth in
Article 3 above and as to Suite 100, Additional Rental
under Article 6 of this Lease Agreement for Real Estate Taxes
and Operating Expenses based on the 6,989 rentable square feet
comprising said Suite 100. Notwithstanding anything herein to
the contrary, the lease of an Early Lease Suite by Tenant in
accordance with the foregoing provisions of this Article 5 B
prior to the commencement date of the Term of this Lease Agreement
for the remainder of the Premises, shall not affect the expiration
date of the Term of this Lease Agreement, which expiration date
shall continue to apply to all of the Premises being leased under
this Lease Agreement and be the last day of the sixtieth (60th)
full calendar month following the date the Term of this Lease
Agreement has commenced as to all of the Premises.
ARTICLE 6 — TENANT’S PRO RATA SHARE OF REAL ESTATE
TAXES AND OPERATING EXPENSES
A. During each full or partial
calendar year during the Term of this Lease Agreement, Tenant shall
pay to Landlord, as Additional Rental, an amount equal to the Real
Estate Taxes and Operating Expenses (both as hereafter defined) per
square foot of rentable area in the Building multiplied by the
number of square feet of rentable area in the Premises prorated for
the period that Tenant occupied the Premises. In the event that
during all or any portion of any calendar year, the Building is not
fully rented and occupied Landlord may make any appropriate
adjustment in occupancy-related Operating Expenses for such year
for the purpose of avoiding distortion of the amount of such
Operating Expenses to be attributed to Tenant by reason of
variation in total occupancy of the Building, by determining on a
commercially reasonable basis the Operating Expenses that would
have been paid or incurred by Landlord had the Building been
ninety-five percent (95%) rented and occupied, and the amount so
determined shall be deemed to have been Operating Expenses for such
year.
Notwithstanding anything herein
or elsewhere in this Lease Agreement to the contrary, Tenant shall
have no obligation to pay Additional Rental under this
Article 6 for Real Estate Taxes and Operating Expenses on the
3,939 usable square feet comprising Suite 50 only, it being
acknowledged and agreed that the monthly installments of Minimum
Rental payable under Article 3 of this Lease Agreement for
Suite 50 only are being paid on a “gross rental”
basis.
B. Landlord shall, each year
during the Term of this Lease Agreement, give Tenant an estimate of
Operating Expenses and Real Estate Taxes payable per square foot of
rentable area for the coming calendar year. Tenant shall pay, as
Additional Rental, along with its monthly Minimum Rental payments
required hereunder, one-twelfth (1/12) of such estimated Operating
Expenses and Real Estate Taxes and such Additional Rental shall be
payable until subsequently adjusted for the following year pursuant
to this Article.
C. As soon as possible after the
expiration of each calendar year, Landlord shall determine and
certify to Tenant the actual Operating Expenses and Real Estate
Taxes for the previous year per square foot of rentable area in the
Building and the amount applicable to the Premises. If such
statement shows that Tenant’s share of Operating Expenses and
Real Estate Taxes exceeds Tenant’s estimated monthly payments
for the previous calendar year, then Tenant shall, within twenty
(20) days after receiving Landlord’s certification, pay such
deficiency to Landlord. In the event of an overpayment by Tenant,
such overpayment shall be refunded to Tenant, at the time of
certification, in the form of an adjustment in the Additional
Rental next coming due, or if at the end of the Term by a
refund.
D. For the purposes of this
Article, the term “ Real Estate Taxes ” means
the total of all taxes, fees, charges and assessments, general and
special, ordinary and extraordinary, foreseen or unforeseen, which
become due or payable against or upon the Building, the parcel(s)
of land upon which it is located
2
or
Landlord. All costs and expenses incurred by Landlord during
negotiations for or contests of the amount of Real Estate Taxes
shall be included within the term “Real Estate Taxes.”
For purposes of this Article, the term “ Operating
Expenses ” shall be deemed to mean all costs and expenses
directly related to the Building incurred by Landlord in the
repair, operation, management and maintenance of the Building
including interior and exterior and common area maintenance,
management fees, cleaning expenses, energy expenses, insurance
premiums, and the amortization of capital investments made to
reduce operating costs, that are necessary due to governmental
requirements or that are required by the insurer under any
insurance policy carried on the Building by Landlord, all as
determined on a commercially reasonable basis by Landlord.
E. Landlord may at any time
designate a fiscal year in lieu of a calendar year and in such
event, at the time of such a change, there may be a billing for the
fiscal year which is less than 12 calendar months.
F. Landlord reserves, and Tenant
hereby assigns to Landlord, the sole and exclusive right to
contest, protest, petition for review, or otherwise seek a
reduction in the Real Estate Taxes.
ARTICLE 7 — UTILITIES AND SERVICE
A. Landlord agrees to furnish
water, electricity, elevator service, and janitorial service. In
the event Tenant’s requirements and/or usage of such
utilities and services is substantially greater than is customarily
supplied to a typical tenant in the Building, Landlord or Tenant
may request that the difference in such requirement and/or usage be
determined and that appropriate adjustments be made in the Minimum
Rental provided for in Article 3 of this Lease
Agreement.
B. Landlord agrees to furnish
heat during the usual heating season and air conditioning during
the usual air conditioning season, all during normal business hours
as defined in this Lease Agreement. Notwithstanding the foregoing,
upon reasonable advance notice given by Tenant from time to time,
Landlord shall furnish HVAC services to the Premises outside normal
business hours, provided that Tenant reimburses Landlord, as
Additional Rental, for Landlord’s actual costs
therefore.
C. No temporary interruption or
failure of such services incidental to the making of repairs,
alterations or improvements, or due to accidents or strike or
conditions or events not under Landlord’s control, shall be
deemed as an eviction of the Tenant or relieve the Tenant from any
of the Tenant’s obligations hereunder.
D. For the purposes of this
Article 7, normal business hours shall be deemed to mean the
periods of time between 7:00 a.m. and 6:00 p.m. (7.00 p.m. for
Suite 100 only), Monday through Friday and 9:00 a.m. to 1:00
p.m. on Saturdays, and specifically excluding Sundays and legal
holidays.
ARTICLE 8 — NON-LIABILITY OF LANDLORD
Except in the event of gross
negligence of Landlord, its agents, employees or contractors,
Landlord shall not be liable for any loss or damage for failure to
furnish heat, air conditioning, electricity, elevator service,
water, sprinkler system or janitorial service. Landlord shall not
be liable for personal injury, death or any damage from any cause
about the Premises or the Building except if caused by
Landlord’s gross negligence.
ARTICLE 9 — CARE OF PREMISES
A. Tenant agrees:
1. To keep the Premises in as good
condition and repair as they were in at the time Tenant took
possession of same, reasonable wear and tear and damage from fire
and other casualty for which insurance is normally procured
excepted;
2. To keep the Premises in a clean
and sanitary condition;
3. Not to commit any nuisance or
waste on the Premises, overload the Premises or the electrical,
water and/or plumbing facilities in the Premises or Building, throw
foreign substances in plumbing facilities, or waste any of the
utilities furnished by Landlord;
4. To abide by such rules and
regulations as may from time to time be reasonably promulgated by
Landlord;
5. To preserve and protect all
carpeted areas and to provide and use carpet protector mats in all
locations within the Premises where chairs with castors are used;
and
6. To obtain Landlord’s prior
approval of the interior design of any portion of the Premises
visible from the common areas or from the outside of the Building.
“Interior design” as used in the preceding sentence
shall include but not be limited to floor and wall coverings,
furniture, office design, artwork and color scheme.
B. If Tenant shall fail to keep
and preserve the Premises in the state of condition required by the
provisions of this Article 9, the Landlord may at its option
put or cause the same to be put into the condition and state of
repair agreed upon, and in such case the Tenant, on demand, shall
pay the cost thereof.
ARTICLE 10 — NON-PERMITTED USE
Tenant agrees to use the Premises
only for the purposes set forth in Article 2 hereof. Tenant
further agrees not to commit or permit any act to be performed on
the Premises or any omission to occur which shall be in violation
of any statute, regulation or ordinance of any governmental body or
which will increase the insurance rates on the Building or which
will be in violation of any insurance policy carried on the
Building by the Landlord. Tenant, at its expense, shall comply with
all governmental laws, ordinances, rules and regulations applicable
to the use of the Premises and its occupancy and shall promptly
comply with all governmental orders, rulings and directives for the
correction, prevention and abatement of any violation upon, or in
connection with the Premises or Tenant’s use or occupancy of
the Premises, including the making of any alterations or
improvements to the Premises, all at Tenant’s sole cost and
expense. The Tenant shall not disturb other occupants of the
Building by making any undue or unseemly noise or otherwise and
shall not do or permit to be done in or about the Premises anything
which will be dangerous to life or limb.
ARTICLE 11 — INSPECTION
The Landlord or its employees or
agents shall have the right without any diminution of rent or other
charges payable hereunder by Tenant to enter the Premises at all
reasonable times for the purpose of exhibiting the Premises to
prospective tenants or purchasers or existing or prospective
mortgagees of the Building (“ Mortgagees ”),
inspection, cleaning, repairing, testing, altering or improving the
same or said Building, but nothing contained in this Article shall
be construed so as to impose any obligation on the Landlord to make
any repairs, alterations or improvements.
ARTICLE 12 — ALTERATIONS
Tenant will not make any alterations,
repairs, additions or improvements in or to the Premises (for
purposes of this Article 12, any of the foregoing being
referred to as the “ Work ”) or add, disturb or
in any way change any plumbing, wiring, life/safety or mechanical
systems, locks, or structural portions of the Building without the
prior written consent of the Landlord as to the character of the
Work, the manner of doing the Work, and the
3
contractor(s) doing the Work. Such consent shall not be
unreasonably withheld or delayed, if such Work is required of
Tenant or is the obligation of Tenant pursuant to this Lease
Agreement. As a condition to Landlord’s consent to Work
proposed by Tenant, Landlord may impose such conditions with
respect thereto as Landlord deems appropriate, including, without
limitation, requiring Tenant to furnish surety performance and/or
payment bonds or other security for the payment of all costs
incurred in connection with such Work, insurance against
liabilities that may arise out of such Work, plans and
specifications approved by Landlord and permits necessary for such
Work. If such Work is performed by contractor(s) not retained by
Landlord, Tenant shall upon completion of such Work,
(i) deliver to Landlord evidence that payment for all such
Work has been made by Tenant, contractors’ affidavits and
full and final mechanic’s lien waivers and (ii) pay to
Landlord a construction supervision fee of five percent (5%) of the
total cost of such Work, but in no event less than $500.00 to
reimburse Landlord for the costs incurred by its construction
manager in inspecting and supervising such Work. All such Work
shall be done in a good and workmanlike manner using quality
materials and shall comply with all applicable governmental laws,
ordinances, rules and regulations. Tenant agrees to indemnify and
hold Landlord free and harmless from any liability, loss, cost,
damage or expense (including attorney’s fees) by reason of
any of such Work. The provisions of Article 27 of this Lease
Agreement shall apply to all Work performed under this
Article 12.
ARTICLE 13 — SIGNS
Tenant agrees that no signs or other
advertising materials shall be erected, attached or affixed to any
portion of the interior or exterior of the Premises or the Building
without the express prior written consent of Landlord.
ARTICLE 14 — COMMON AREAS
A. Tenant agrees that the use of
all corridors, passageways, elevators, toilet rooms, parking areas
and landscaped areas in and around said Building, by the Tenant or
Tenant’s employees, visitors or invitees, shall be subject to
such rules and regulations as may from time to time be made by
Landlord for the safety, comfort and convenience of the owners,
occupants, tenants and invitees of said Building. Tenant agrees
that no awnings, curtains, drapes or shades shall be used upon the
Premises except as may be approved by Landlord.
B. In addition to the Premises,
Tenant shall have the right of non-exclusive use, in common with
others, of (a) all unrestricted automobile parking areas,
driveways and walkways, and (b) loading facilities, freight
elevators and other facilities as may be constructed in the
Building, all to be subject to the terms and conditions of this
Lease Agreement and to reasonable rules and regulations for the use
thereof as prescribed from time to time by Landlord.
C. Landlord shall have the right
to make changes or revisions in the site plan and in the Building
so as to provide additional leasing area. Landlord shall also have
the right to construct additional buildings on the land described
on Exhibit A-2 for such purposes as Landlord may deem
appropriate. Landlord also reserves all airspace rights above,
below and to all sides of the Premises, including the right to make
changes, alterations or provide additional leasing areas.
D. Landlord and Tenant agree
that Landlord will not be responsible for any loss, theft or damage
to vehicles, or the contents thereof, parked or left in the parking
areas of the Building and Tenant agrees to so advise its employees,
visitors or invitees who may use such parking areas. The parking
areas shall include those areas designated by Landlord, in its sole
discretion, as either restricted or unrestricted parking areas. Any
restricted parking areas shall be leased only by separate license
agreement with Landlord. Tena
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