Table of Contents

 

			Page
ARTICLE I BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE			1
	1.1	Basic Lease Information; Definitions	1
	1.2	Leased Premises	24
	1.3	Term	25
	1.4	Options to Renew	25
	1.5	Use	28
	1.6	Survival	29
	1.7	Release Premises	29
ARTICLE II RENTAL, OPERATING EXPENSES AND REAL ESTATE TAXES			33
	2.1	Rental Payments	33
	2.2	Operating Expenses	35
	2.3	Real Estate Taxes	42
	2.4	Budget	45
	2.5	Audit Rights	48
ARTICLE III BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT			50
	3.1	Building Standard and Above Standard Services	50
	3.2	Separate Charge Parking Areas	57
	3.3	Graphics and Building Directory	57
	3.4	Building Signage; Exclusivity	58
	3.5	Tenant’s Exterior Equipment	61
	3.6	Building Management	62
ARTICLE IV CARE OF PREMISES; LAWS, RULES AND REGULATIONS			65
	4.1	Surrender of Leased Premises	65
	4.2	Access of Landlord to Leased Premises	65
	4.3	Nuisance	67
	4.4	Legal Compliance	67
	4.5	Rules of Building	67
	4.6	Use and Violations of Insurance Coverage	68
	4.7	Environmental Laws	68
	4.8	Prohibited Uses	69
ARTICLE V LEASEHOLD IMPROVEMENTS AND REPAIRS			70
	5.1	Leasehold Improvements	70
	5.2	Alterations	71
	5.3	Leasehold Improvements; Tenant Property	72
	5.4	Mechanics Liens	72
	5.5	Repairs by Landlord	73
	5.6	Repairs by Tenant	73
	5.7	Demising Work	74
	5.8	Payment of Refund Amount Per Section 26 of Purchase Agreement	77
ARTICLE VI CONDEMNATION, CASUALTY AND INSURANCE			77
	6.1	Condemnation	77

 

 

Table of Contents

 

			Page
	6.2	Damages from Certain Causes	78
	6.3	Casualty Clause	78
	6.4	Property Insurance	80
	6.5	Liability Insurance	81
	6.6	Hold Harmless	81
	6.7	WAIVER OF RECOVERY	82
ARTICLE VII DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION			82
	7.1	Default and Remedies	82
	7.2	Insolvency or Bankruptcy	85
	7.3	Negation of Lien for Rent	85
	7.4	Attorney’s Fees	85
	7.5	No Waiver of Rights	86
	7.6	Holding Over	86
	7.7	Subordination	87
	7.8	Estoppel Certificate	87
	7.9	Subsequent Documents	88
	7.10	Interest Holder Privileges	88
ARTICLE VIII ASSIGNMENT AND SUBLETTING			88
	8.1	General	88
	8.2	Landlord’s General Offer Rights	89
	8.3	Landlord’s Offer Rights For Retail Conversion Transactions	92
	8.4	Profit Payments Re: Certain Assignments and Subleases	94
	8.5	Transactions Exempt From Section 8.2, 8.3 and 8.4	94
	8.6	Miscellaneous	95
	8.7	Sublease SNDAs	96
ARTICLE IX TRANSFERs OF LANDLORD’s ESTATE			96
ARTICLE X EXPANSION RIGHTS			96
	10.1	Tenant Expansion Notices	96
	10.2	Landlord Expansion Response	97
	10.3	Expansion Space Leases	97
	10.4	Subordination of Expansion Space Rights	100
	10.5	Duration	101
	10.6	Disputes	101
ARTICLE XI TERMINATION RIGHTS			101
	11.1	Wachovia’s Termination Right	101
	11.2	Effect of Termination	102
ARTICLE XII DISPUTE RESOLUTION			103
	12.1	Approvals and Consents	103
	12.2	Dispute Resolution	104
	12.3	Conduct of the Arbitration	105
	12.4	Alternative Means of Arbitration with AAA	105

 

 

Table of Contents

 

			Page
ARTICLE XIII TENANT REMEDIES			105
	13.1	Generally	105
	13.2	Offset Rights	106
ARTICLE XIV MISCELLANEOUS			107
	14.1	Notices	107
	14.2	Brokers	107
	14.3	Binding on Successors	107
	14.4	Rights and Remedies Cumulative	108
	14.5	Governing Law	108
	14.6	Rules of Construction	108
	14.7	Authority and Qualification	108
	14.8	Severability	108
	14.9	Quiet Enjoyment	108
	14.10	Limitation of Personal Liability	109
	14.11	Memorandum of Lease	109
	14.12	Master Agreement	109
	14.13	Amendments	109
	14.14	Entirety	110
	14.15	References	110
	14.16	Counterpart Execution	110
	14.17	No Partnership	110
	14.18	Captions	110
	14.19	Required Radon Notice	110
	14.20	Changes by Landlord	110
	14.21	Waiver of Jury Trial	111
	14.22	Termination of Lease	111
ARTICLE XV ADDITIONAL PROVISIONS			112

 

EXHIBITS
Exhibit A	Description of the Land
Exhibit A-1	Site Plan
Exhibit B	Leased Premises
Exhibit B-1	Release Premises
Exhibit C	Property Specific Information
Exhibit D-1	Form of Mortgage Subordination, Non-Disturbance and Attornment Agreement
Exhibit D-2	Form of Ground Lease Subordination, Non-Disturbance and Attornment Agreement
Exhibit D-3	Form of Subtenant Subordination, Non-Disturbance and Attornment Agreement
Exhibit E	Forms of Estoppel Certificates

 

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT(2) (this “ Lease ”) is made and entered into as of [                              ], 2004, by and between FIRST STATES INVESTORS 3300, LLC, a Delaware limited liability company, a Delaware limited liability company (hereinafter called “ Landlord ”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (hereinafter called “ Tenant ”). Terms with initial capital letters used in this Lease shall have the meanings assigned for such terms in Section 1.1(b) .

 

BACKGROUND

 

A.             Tenant, as seller, and Landlord, as purchaser, are parties to the Purchase Agreement, pursuant to which Tenant agreed to sell and convey to Landlord, and Landlord agreed to purchase from Tenant, the Property as well certain other properties not covered by this Lease.

 

B.             The closing of the Purchase Agreement as to the Property has occurred as of the date hereof, and this Lease is being executed and delivered thereat pursuant to the Purchase Agreement.

 

C.             Wachovia Corporation, a North Carolina corporation, has agreed to guaranty and act as surety for the performance of Tenant’s obligations hereunder pursuant to that certain Lease Guaranty dated of even date herewith.

 

D.             Tenant and Landlord are parties to the Master Agreement (i) which contains certain additional covenants with respect to the subject matter of this Lease and certain other leases as more particularly provided therein, and (ii) which, during the Integration Period, shall be deemed integrated with, and constitute a part of, this Lease (and if, during the Integration Period, there shall be a conflict between the terms and provisions of the Master Agreement and those of this Lease, the terms and provisions of the Master Agreement control and govern).

 

ARTICLE I

BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE

 

1.1            Basic Lease Information; Definitions

 

(a)            The following Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any information and definitions contained in the Basic Lease Information shall mean and refer to the information and definitions hereinbelow set forth.

 

Commencement Date:                     [                              ], 2004(3).

 

(2)       In Virginia, title of document to be “Deed of Lease”.

 

(3)       Insert Closing Date.

 

1

 

Expiration Date:		[                              ], 2024(4).
Initial Term:		Commencing on the Commencement Date, and, unless extended or sooner terminated as herein provided, ending on Expiration Date.
Leased Premises:		The Original Leased Premises, subject to additions to, and/or deletions from, the Leased Premises as herein provided. The “ Original Leased Premises ” shall be and consist of the areas of the Property identified on Exhibit B hereto as being demised and leased to Tenant hereunder, including the areas of the Building so identified and, if applicable, any Drive-Through Banking Facilities so identified. Each time there is an addition to, or deletion from, the Leased Premises as provided herein, including pursuant to Section 1.7 (Release Premises), Section 6.1 (Condemnation), Article X (Expansion Rights) and Article XI (Termination Rights), Landlord and Tenant, within thirty (30) days thereafter, shall execute and deliver a written instrument confirming the same, which instrument shall (x) set forth the then Net Rentable Area of the Leased Premises, the Annual Basic Rent and Tenant’s Occupancy Percentage, and (y) be accompanied by a revised Exhibit B hereto showing the then location and configuration of the Leased Premises. References herein to the Leased Premises shall not include any Release Premises, except to the extent that former Release Premises are, at Tenant’s election, added to the Leased Premises as expressly provided in Section 1.7 hereof.
Release Premises:		All those certain portions of the Building identified on Exhibit B-1 hereto as being “Release Premises”, subject to deletions from the Release Premises pursuant to Section 1.7 (by virtue of either Tenant electing to add all or any portion of the Release Premises to the Leased Premises pursuant to Section 1.7(c)  or Tenant electing to surrender any portion of the Release Premises prior to the end of the Preliminary Period pursuant to Section 1.7(d)(1)  hereof). Each time there is a deletion from the Release Premises as herein provided, Landlord and Tenant, within thirty (30) days thereafter, shall execute and deliver a written instrument confirming the same, which instrument shall (x) set forth the then Net Rentable Area of the Release Premises and Tenant’s Occupancy Percentage, and (y) be accompanied by a revised Exhibit B-1 hereto showing the then location and configuration of the Release Premises.
Landlord’s Address for
Notices:		First States Investors [                ], LLC
		c/o First States Group, L.P.

 

(4)       Insert last day of month in which 20 th  anniversary of Closing Date occurs.

 

2

 

			1725 The Fairway
			Jenkintown, PA 19046
			Attention :  Nicholas S. Schorsch, President and CEO
			Fax Number:  (215) 887-2585
	with a copy to:		First States Group, L.P.
			1725 The Fairway
			Jenkintown, PA 19046
			Attention :  Edward J. Matey Jr., General Counsel
			Fax:  (215) 887-9856
Tenant’s Address for
Notices:			Wachovia Bank, N.A.
			Corporate Real Estate
			[                                                    ](5)
			[                                                    ]
			Attention:
			Fax:
	with a copy to:		Wachovia Bank, N.A.
			Corporate Real Estate
			225 Water Street, Suite 850
			Jacksonville, FL 32202
			Attention: Neil C. King, SVP
			Fax:  (904) 489-3544
	and to:		Wachovia Bank, N.A.
			Corporate Real Estate
			401 S. Tryon Street, 18th Floor
			Charlotte, NC 28202
			Attention: Sarah Muenow, AVP
			Fax:  (704) 374-6832
	and to:		Wachovia Bank, N.A.
			Corporate Legal Division
			301 S. College Street, 30 th  Floor, NC0630
			Charlotte, NC 28288-0630
			Attention:  Rebecca Reithauer (PID #      )(6)
			Fax:

 

(5)       This shall be the name and address of the regional CRE office responsible for management of the particular property.

 

(6)       Insert PID for the Property.

 

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	and to:		Bryan Cave, LLP
			1290 Avenue of the Americas
			New York, New York 10019
			Attention:
			Fax:
Interest Holder’s Address
for Notices:			[                                                    ]
			[                                                    ]
			[                                                    ]
			[                                                    ]
	with a copy to:		[                                                    ]
			[                                                    ]
			[                                                    ]
			[                                                    ]

 

(b)            As used in this Lease, the following terms shall have the respective meanings indicated below, and such meanings are incorporated in each such provision where used as if fully set forth therein:

 

“ AAA ” shall mean the American Arbitration Association.

 

“ Above Standard Services ” shall have the meaning assigned to such term in Section 3.1(c) .

 

“ Above Standard Services Rent ” shall mean any and all charges required to be paid by Tenant for Above Standard Services as expressed in Section 3.1(c) .

 

“ Actual Delivery Date ” shall have the meaning assigned to such term in Section 10.3 .

 

“ Additional Rent ” means Tenant’s Operating Expense Share, Tenant’s Tax Share, Above Standard Services Rent and all other sums (other than Annual Basic Rent) that Tenant is obligated to pay to or reimburse Landlord for by the terms of this Lease.

 

“ Affiliate ” of any party, shall mean any other person controlling, controlled by, or under common control with such party; the term “ control ”, as used herein, shall mean both (i) the possession, direct or indirect, of the power to direct or cause the direction, of the management and policies of such controlled party or other person, and (ii) the ownership, directly or indirectly, of more than fifty percent (50%) of the equity ( i.e. , the voting stock, general or other partnership interests, membership interests and/or other equity or beneficial interests) of such party or other person.

 

“ Alterations ” shall have the meaning assigned to such term in Section 5.2 .

 

“ Annual Basic Rent ” shall mean the annual basic rent payable by Tenant under this Lease for the Leased Premises, which Annual Basic Rent shall, from time to time, be equal to the sum of (I) the product of (i) the Annual Basic Rent Factor, multiplied by (ii) the Net Rentable Area of

 

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the Base Leased Premises, plus (II) if any Short-Term Additional Space is then part of the Leased Premises, then, as to each thereof, the product of (i) the STAS Basic Rental Factor for such Short-Term Additional Space, multiplied by (ii) the Net Rentable Area of such Short-Term Additional Space. The Annual Basic Rent due under this Lease shall be re-calculated each time there is a change in (x) the Net Rentable Area of the Leased Premises (due to additions to, or deletions from, the Leased Premises), (y) the Annual Basic Rent Factor (including a change in the Initial ABR Factor pursuant to the proviso in the definition thereof), or (z) the STAS Basic Rental Factor for any Short-Term Additional Space; with any such re-calculation being effective as of the date of such change. Upon any such re-calculation, Landlord and Tenant shall execute and deliver a written instrument confirming the same, and incorporating the same into this Lease.

 

“ Annual Basic Rent Factor ” (i) for the Initial Term, shall mean a rate, per RSF, per annum, equal to the Initial ABR Factor, except, that (x) effective as of the first day of the sixth (6 th ) Lease Year, the Annual Basic Rent Factor shall be increased to be 101.5% of the Initial ABR Factor, (y) effective as of the first date of the eleventh (11 th ) Lease Year, the Annual Basic Rent Factor shall be increased to be 101.5% of the Annual Basic Rent Factor immediately prior to the eleventh (11 th ) Lease Year, and (z) effective as of the first date of the sixteenth (16 th ) Lease Year, the Annual Basic Rent Factor shall be increased to be 101.5% of the Annual Basic Rent Factor immediately prior to the sixteenth (16 th ) Lease Year, and (ii) for each Renewal Term, shall mean the rate, per square foot of Net Rentable Area, for such Renewal Term that is described and determined pursuant to Section 1.4(c)(1)  hereof.

 

“ Applicable Rate ” shall mean an annual rate of interest equal to the lesser of (i) the greater of (a) the Prime Rate plus three percent (3%) and (b) thirteen (13%) percent, and (ii) the maximum contract interest rate per annum allowed by law.

 

“ Appraiser ” shall mean an independent licensed real estate broker, or independent licensed appraiser, having at least ten (10) years’ experience in brokering commercial leasing transactions, or appraising commercial income properties, as the case may be, in the Market Area involving properties similar to the Property, and who shall be associated with a nationally or regionally recognized real estate brokerage or appraisal firm, with local offices within, or in the vicinity of, the Market Area, which firm is not under contract with or otherwise so associated with either Landlord or Tenant as to reasonably impair its or their ability to render impartial judgments.

 

“ Arbitration Notice ” shall have the meaning assigned to such term in Section 12.2(a) .

 

“ Assignment ” shall have the meaning assigned to such term in Section 8.1.1 .

 

“ ATM ” shall mean automated teller machine.

 

“ Audit Notice ” shall have the meaning assigned to such term in Section 2.5 .

 

“ Availability Date ” shall have the meaning assigned to such term in Section 10.2 .

 

“ Available Leasable Areas ” shall have the meaning assigned to such term in Section 10.1 .

 

5

 

“ Bank Divestiture Transaction ” shall have the meaning assigned to such term in Section 8.5.1 .

 

“ Base Building ” shall mean, collectively, (i) the Building’s foundations and footings, and its structural slabs, beams, columns, girders, members and supports, (ii) the Building’s roof(s) and roof terraces, exterior walls (including facade), exterior windows and exterior entrances (including entrance doors), and (iii) Building Systems.

 

“ Base Leased Premises ” shall mean, collectively, (i) the Original Leased Premises (for so long thereafter as the same shall remain demised hereunder), (ii) any Coterminous Former Release Space (if, as and when the same are added to the Leased Premises pursuant to Section 1.7(e) , and for so long thereafter as the same shall remain demised hereunder), and (iii) any Coterminous Expansion Space (if, as and when the same are added to the Leased Premises pursuant to Section 10.4 , and for so long thereafter as the same shall remain demised hereunder).

 

“ BOMA ” shall mean the Building Owners and Managers Association.

 

“ Budget ” shall have the meaning assigned to such term in Section 2.4(a) .

 

“ Budget Year ” shall have the meaning assigned to such term in Section 2.4(a) .

 

“ Building ” shall mean the building (or building complex) located upon the Land and identified on Exhibit A-1 .

 

“ Building Identification Signage ” shall have the meaning assigned to such term in Section 3.4(a) .

 

“ Building Operating Hours ” shall be the hours, designated as such, on Exhibit C hereto.

 

“ Building Rules ” shall have the meaning assigned to such term in Section 4.5 .

 

“ Building Signage ” shall have the meaning assigned to such term in Section 3.4(a) .

 

“ Building Standard Services ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Building Standards ” shall mean materials of the type, quality and quantity generally used throughout the Building and in Comparable Buildings.

 

“ Building System HVAC Service ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Building Systems ” shall mean the utility and service systems (including electrical, gas, plumbing, condenser water, elevator, HVAC, communication, life safety and other mechanical systems) of the Building, but only up to, and not beyond, the point of distribution to any Leasable Areas and/or the point of connection to the separate facilities of a particular tenant or other occupant.

 

6

 

“ Building’s CW System ” shall have the meaning assigned to such term in Section 3.1(b) .

 

“ Building’s Loading & Delivery Facilities ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Bureau of Labor Statistics ” shall mean the U.S. Department of Labor, Bureau of Labor Statistics.

 

“ Business Days ” shall mean all days except Saturdays, Sundays and Holidays.

 

“ Casualty ” shall have the meaning assigned to such term in Section 6.3(a) .

 

“ Change in Control Transaction ” shall have the meaning assigned to such term in Section 8.1.1 .

 

“ Closing ” shall mean the closing and transfer of title to the Property to Landlord pursuant to the Purchase Agreement.

 

“ Commencement Date ” shall have the meaning assigned to such term in Section 1.1(a) .

 

“ Common Areas ” shall mean (i) the Building’s lobbies and corridors (located outside of Leasable Areas), including the Building’s elevators, escalators, stairways and other Building Systems providing ingress and egress thereto and therefrom, (ii) the Building’s loading and freight delivery areas (located outside of Leasable Areas), including any freight elevators located therein, (iii) the Building’s lavatories (located outside of Leasable Areas), (iv) the Building’s electrical, telephone and other utility or service rooms, closets and shafts (located outside of Leasable Areas), (v) the Parking Areas, (vi) the sidewalks, curb areas, plazas, walkways, driveways and other passageways upon the Land, together with any other landscaped areas of the Land (other than any Drive-Through Banking Facilities which, as herein-above provided, comprise part of the Leased Premises), and (vii) any other areas of the Property available, from time to time, for the common use of tenants and other occupants of the Property (and their customers, guests and invitees).

 

“ Communications Equipment ” shall have the meaning assigned to such term in Section 3.5(a) .

 

“ Comparable Buildings ” shall mean buildings within the Market Area that have a use, quality, age, configuration and construction that is comparable to that of the Building.

 

“ Contemplated OE Includable Capital Item ” shall have the meaning assigned to such term in Section 2.4(a) .

 

“ Contemplated Sublease Area ” shall have the meaning assigned to such term in Section 8.2.1 .

 

“ Contract of Sale ”  shall have the meaning assigned to such term in Section 9.1.1 .

 

7

 

proportionate share of all operating expenses, real estate taxes, utilities and other pass-throughs, without any “ base year ” or “ stop ”) between an informed and willing tenant (that is not then a tenant of any Leasable Area) and an informed and willing landlord, neither of whom is under any compulsion to enter into such transaction, demising such Leasable Area (determined with reference to market for space in Comparable Buildings that is comparable in size, location and quality to such Leasable Area), assuming (i) such arm’s length net lease will demise the Leasable Area in its then “AS IS” condition (except that if such Leasable Area is already a part of the Leased Premises, then assuming a condition and state of repair consistent with the requirements of this Lease), and (ii) such arm’s length net lease will be for a term equal to the then typical initial term of such a lease in the aforementioned market, and further assuming the following factors (and, based thereon, making any appropriate adjustments to the fixed rent which would otherwise be offered and accepted for such an arm’s length net lease pursuant to the foregoing provisions of this definition): (I) that the tenant will not receive, and the landlord will not provide or pay, (w) any workletter, (x) any improvement, relocation, moving or other allowance or contribution, (y) any rent abatement or other reduced or free rent period, or (z) any other allowance or concession, in connection with the tenant’s leasing of the Leasable Area (except that if such Leasable Area is Short-Term Expansion Space, then assuming that the tenant is entitled to a free rent period equal in length to the free rent period that Tenant is entitled to, pursuant to Section 10.4(g) , with respect to such Short-Term Expansion Space); (II) that the landlord will not pay any brokers’ fee or commission in connection with the tenant’s leasing of the Leasable Area; (III) that such arm’s length net lease provides for the landlord’s inclusion, and the tenant’s payment, of amortized capital expenditures in operating expenses to the same extent as provided in this Lease; and (IV) that the creditworthiness of the tenant is the same as that of Tenant.

 

“ Final Budget ” shall have the meaning assigned to such term in Section 2.4(d) .

 

“ Final Contract of Sale ” shall have the meaning assigned to such term in Section 9.1.1 .

 

“ Final SLC Plans & Specifications ” shall have the meaning assigned to such term in Section 5.7(b) .

 

“ Final SLC Space Plan ” shall have the meaning assigned to such term in Section 5.7(b) .

 

“ Fiscal Period ” shall have the meaning assigned to such term in Section 2.3(a) .

 

“ Force Majeure Events ” means events beyond Landlord’s or Tenant’s (as the case may be) control, which shall include, without limitation, all labor disputes, governmental regulations or controls, war, fire or other casualty, inability to obtain any material or services, acts of God, or any other cause not within the reasonable control of Landlord or Tenant (as the case may be).

 

“ FSG ” shall mean (i) FIRST STATES GROUP, L.P., a Delaware limited partnership, or (ii) a person constituting an immediate or remote successor to FIRST STATES GROUP, L.P. by virtue of one or more mergers, consolidations and/or transfers of all, or substantially all, the assets of FIRST STATES GROUP, L.P. (or another person described in this clause (ii)).

 

“ GAAP ” shall mean generally accepted accounting principles, consistently applied.

 

9

 

“ Governmental Authority ” means the United States, the state, county, city and political subdivision in which the Property is located or that exercises jurisdiction over the Property, Landlord or Tenant, and any agency, department, commission, board, bureau or instrumentality of any of the foregoing that exercises jurisdiction over the Property, Landlord or Tenant.

 

“ Gross Revenue ” shall mean all gross rental income of Landlord generated from the operation of the Property, including basic rents, additional rents and other charges collected from Tenant and other tenants or occupants of the Property, but excluding (a) any such rents and other charges which represent payment or reimbursement for any utilities or services provided to tenants or other occupants of the Property which are not provided to Tenant under this Lease without a separate charge, (b) revenue received by Landlord for parking (whether from Tenant, other tenants or occupants of the Property or otherwise), or from vending areas, cafeterias, fitness centers, etc., and (c) any revenue received by Landlord from any further development or leasing of the Property. In no event shall the term “gross rental income”, as used in this definition, ever be deemed to include (i) security deposits, unless and until such deposits are applied as rental income, (ii) interest on bank accounts for the operation of the Property, (iii) proceeds from the sale or refinancing of the Property (or any portion thereof), (iv) insurance proceeds or dividends received from any insurance policies pertaining to physical loss or damage to the Property, (v) condemnation awards or payments received in lieu of condemnation of the Property and (vi) any trade discounts and rebates received in connection with the purchase of personal property or services in connection with the operation of the Property.

 

“ Hazardous Materials ” means any flammable materials, explosive materials, radioactive materials, asbestos-containing materials, the group of organic compounds known as polychlorinated biphenyls and any other hazardous, toxic or dangerous waste, substance or materials defined as such in (or for purposes of) the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 to 9675 ,  the federal Hazardous Materials Transportation Act, 42 U.S.C. §§ 5101 to 5127 , the federal Solid Waste Disposal Act as amended by the Resources Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 to 6992k , the federal Toxic Substance Control Act, 15 U.S.C. §§ 2601 to 2692 or any other Legal Requirement from time to time in effect regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material.

 

“ Holidays ” shall mean New Year’s Day, Martin Luther King Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Thanksgiving Day, Christmas Day and any and all other dates observed as bank holidays by national banks.  If, in the case of any holiday described above, a different day shall be observed than the respective day described above, then that day that constitutes the day observed by national banks in the State on account of such holiday shall constitute the Holiday under this Lease.

 

“ HVAC ” shall mean heating, ventilating and air conditioning.

 

10

 

“ Initial ABR Factor ” shall mean [$            ](7) per RSF, per annum; provided , however , that if the provisions of [Section 8 of the Master Agreement](8) are applicable, then, effective as of the first (1 st ) day of the third Lease Year, the Initial ABR Factor shall be re-calculated in accordance therewith. Upon any such re-calculation, Landlord and Tenant shall execute and deliver a written instrument confirming the same, and incorporating the same into this Lease.

 

“ Initial Term ” shall have the meaning assigned to such term in Section 1.1(a) .

 

“ Interest Holder ” shall mean each of (i) any Overlessor with which Tenant has entered into an Overlease SNDA, and (ii) any Mortgagee with which Tenant has entered into a Mortgage SNDA.

 

“ Integrated Properties ” shall mean all the Portfolio Properties, in which, at the time in question, space is demised under a lease which, at the time in question, is defined as an “ Integrated Lease ” pursuant to the provisions of the Master Agreement.

 

“ Integration Period ” shall mean all periods within the Term during which this Lease is defined as an “ Integrated Lease ” pursuant to the provisions of the Master Agreement.

 

“ JAMS ” shall mean Judicial Arbitration & Mediation Services, Inc.

 

“ KWHs ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Land ” shall mean the parcel(s) of land identified on Exhibit A hereto(9).

 

“ Landlord ” shall mean only the owner of Landlord’s Estate, at the time in question; it being agreed that: (I) during the Integration Period, the foregoing provisions of this definition shall not be construed to relieve Landlord Named Herein, or any subsequent Landlord, from the obligations of Landlord under this Lease accruing during the period that it is Landlord hereunder or thereafter; (II) upon any transfer of Landlord’s Estate that complies with the provisions of Article IX hereof, but results in the end of the Integration Period (and upon each subsequent transfer of Landlord’s Estate that complies with the provisions of Article IX hereof), the transferor shall thereby be relieved and freed of all obligations of Landlord under this Lease accruing after such transfer; and (III) upon any transfer of Landlord’s Estate, the transferee shall thereby be deemed to have assumed all obligations of Landlord under this Lease accruing after such transfer (and, during the Integration Period, such transferee shall also be deemed to have assumed all the obligations of Landlord under the Master Agreement).

 

(7)	This initial dollar figure will be determined pursuant to the Purchase Agreement and inserted in the document at Closing
(8)	This Article of the Master Agreement needs to provide for re-calculation of Initial ABR Factor after Preliminary Period based on addition of Release Premises across the portfolio.
(9)	Needs to include legal description of land owned in fee as well as that ground/nnn leased.

 

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“ Landlord Appointed Property Manager ” shall have the meaning assigned to such term in Section 3.6(a) .

 

“ Landlord Budget Objection ” shall have the meaning assigned to such term in Section 2.4(f) .

 

“ Landlord Default Notice ” shall have the meaning assigned to such term in Section 7.10 .

 

“ Landlord Electrical Invoice ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Landlord Event of Default ” shall have the meaning assigned to such term in Section 13.1(a) .

 

“ Landlord Expansion Response ” shall have the meaning assigned to such term in Section 10.2 .

 

“ Landlord Initiated Contest ” shall have the meaning assigned to such term in Section 2.3(c) .

 

“ Landlord Management Period ” shall have the meaning assigned to such term in Section 3.6(a) .

 

“ Landlord Named Herein ” shall mean [FIRST STATES INVESTORS [              ], LLC].

 

“ Landlord Party ” shall mean any principal (which shall include any shareholder, partner, member or other owner, direct or indirect, disclosed or undisclosed) of Landlord, or any director, officer, employee, agent or contractor of Landlord (or of any principal of Landlord).

 

“ Landlord Repairs ” shall have the meaning assigned to such term in Section 5.5(a) .

 

“ Landlord’s Average Cost Per KWH ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Landlord’s Estate ” shall mean the estate and interest of Landlord in the Property, including fee title to the Property and/or the lessee’s interest in an Overlease affecting the Property.

 

“ Landlord’s Liens ” shall have the meaning assigned to such term in Section 7.3(a) .

 

“ Landlord’s Offer Notice ”  shall have the meaning assigned to such term in Section 9.2.1 .

 

“ Landlord’s Preliminary Notice ” shall have the meaning assigned to such term in Section 9.3.1 .

 

“ Landlord’s RCT Period ” shall have the meaning assigned to such term in Section 8.3.2 .

 

“ Landlord’s RCT Termination Notice ” shall have the meaning assigned to such term in Section 8.3.2 .

 

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“ Landlord’s RCT Termination Option ” shall have the meaning assigned to such term in Section 8.3.2 .

 

“ Landlord’s Recapture Notice ” shall have the meaning assigned to such term in Section 8.2.2 .

 

“ Landlord’s Recapture Option ” shall have the meaning assigned to such term in Section 8.2.2 .

 

“ Landlord’s Recapture Period ” shall have the meaning assigned to such term in Section 8.2.2 .

 

“ Landlord’s Restoration Work ” shall have the meaning assigned to such term in Section 6.3(a) .

 

“ Landlord’s RFR Notice ” shall have the meaning assigned to such term in Section 9.3.2 .

 

“ Landlord’s Transfer Notice ” shall have the meaning assigned to such term in Section 9.2.4 .

 

“ Leased Premises ” shall have the meaning assigned to such term in Section 1.1(a) . For purposes of this Lease, the Leased Premises, at any time, shall be deemed to consist only of the space within the inside surfaces of all the demising walls, exterior windows and entrances, and structural ceilings and floors, bounding the areas comprising the Leased Premises, at such time.

 

“ Leasable Area Submeters ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Leasable Areas ” shall, at any time, mean all areas of the Building that are then leased (or occupied), available for lease (or occupancy), or otherwise susceptible of being leased (or occupied), by tenants (or other occupants); whether or not the same are then being marketed or are then capable of being legally or physically occupied.

 

“ Lease Year ” means (i) the period commencing on the Commencement Date and ending on the last day of the calendar month in which the first (1 st ) anniversary of the Commencement Date occurs (sometimes herein referred to as the first Lease Year), and (ii) each period of twelve (12) consecutive calendar months thereafter occurring within the Term ( i.e. , the second Lease Year commences upon the expiration of first Lease Year and ends one (1) year later, and all subsequent Lease Years commence upon the expiration of the prior Lease Year), except, that the last Lease Year during the Term ends on the last day of the Term.

 

“ Leasehold Improvements ” shall mean all improvements, betterments and/or equipment installed within, and affixed or attached to, the Leased Premises, so as to become a part thereof, by, or on behalf of, Tenant (or any Tenant Party) (including (x) such improvements, betterments and/or equipment constructed or installed by Tenant prior to the date hereof, or such improvements, betterments and/or equipment constructed or installed by Tenant pursuant to Section 5.2 hereof). Without limiting the foregoing, the term Leasehold Improvements shall be deemed to include (i) permanent interior walls, permanent floor coverings ( e.g. , wall-to-wall

 

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carpeting, but not area rugs or other un-affixed carpeting), permanent wall coverings ( e.g. , wall paper, wood paneling) and drop ceilings, (ii) basic light fixtures (but not chandeliers or other lighting fixtures above the quality of Building Standard), (iii) doors, door hardware, (iv) window blinds, (v) to the extent that any portion of the Leased Premises is, immediately prior to the end of the Term, being used as a retail banking branch, the vaults, vault doors, teller counters and under-counter steel located in such portion of the Leased Premises, and, with respect to the Drive-Through Banking Facilities (if any), the pneumatic tubing and kiosks thereat, and (vi) Tenant’s line, riser and other connections to the Building Systems. Notwithstanding the foregoing provisions of this definition, in no event shall the term “Leasehold Improvements” be deemed to include any property included within the definitions of “ Base Building ” or “ Tenant Property ” hereunder.

 

“ Legal Requirements ” means any law, statute, ordinance, order, rule, regulation or requirement of a Governmental Authority.

 

“ LL Rent Schedule ”  shall have the meaning assigned to such term in Section 9.2.1 .

 

“ LL Transfer ” shall have the meaning assigned to such term in Section 9.1.1 .

 

“ LL Transfer Permitted Encumbrances ”  shall have the meaning assigned to such term in Section 9.2.1 .

 

“ LRW Estimate ” shall have the meaning assigned to such term in Section 6.3(a) .

 

“ Management Designation Notice ” shall have the meaning assigned to such term in Section 3.6(c) .

 

“ Market Area ” shall mean the metropolitan area within which the Property is located, which area may be more particularly identified on Exhibit C hereto.

 

“ Master Agreement ” shall mean that certain Master Agreement Regarding Leases by and between Landlord Named Herein and Wachovia, dated as of the date hereof.

 

“ Measurement Standard ” shall mean the Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1989, as promulgated by BOMA.

 

“ Monthly Estimated OE Payments ” shall have the meaning assigned to such term in Section 2.2(b) .

 

“ Mortgage ” shall mean any mortgage or deed of trust which may now or hereafter affect the Property (and/or an Overlease).

 

“ Mortgagee ” shall mean any holder of any Mortgage.

 

“ Mortgage SNDA ” shall mean a subordination, non-disturbance and attornment agreement between a Mortgagee and Tenant in the form annexed as Exhibit D-1 hereto, and in proper form for recording, together with such changes thereto that are both proposed by a Mortgagee and approved by Tenant; it being agreed that Tenant shall not unreasonably withhold

 

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its approval of any such proposed change so long as (i) such proposed change is customary (at the time in question), and (ii) such proposed change does not (to more than a de minimis extent) decrease Tenant’s rights, or increase Tenant’s obligations, from those contained in the form of Mortgage SNDA annexed as Exhibit D-1 hereto.

 

“ Net Rentable Area ”, of any Leasable Area, shall mean the number of RSF comprising the same determined in conformity with the Measurement Standard. References herein to the Net Rentable Area “ of the Building ” shall be deemed to mean the aggregate Net Rentable Area of all the Leasable Areas of the Building, as so determined. The final, and conclusively binding, determinations of the Net Rentable Areas of the Leased Premises (as the same exist on the Commencement Date), the Release Premises (as the same exist on the Commencement Date) and the Building (as the same exists on the Commencement Date) are as specified in Exhibit C hereto.

 

“ Net Sublease Consideration ” shall have the meaning assigned to such term in Section 8.4.2 .

 

“ Non-Consent Alterations ” shall have the meaning assigned to such term in Section 5.2(c) .

 

“ Non-Dedicated Parking Areas ” shall mean all portions of the Parking Areas other than Tenant Dedicated Parking Areas.

 

“ Notice Parties ” shall mean (i) in case of Landlord, the parties identified, with addresses, in Section 1.1(a)  under the heading “ Landlord’s Address for Notices ” (as the same may be modified consistent with the provisions of Section 14.1 hereof), and (ii) in the case of Tenant, the parties identified, with addresses, in Section 1.1(a)  under the heading “ Tenant’s Address for Notices ” (as the same may be modified consistent with the provisions of Section 14.1 hereof).

 

“ NPV Profit Amount ” shall have the meaning assigned to such term in Section 8.2.3 .

 

“ OE Overpayment ” shall have the meaning assigned to such term in Section 2.2(f) .

 

“ OE Includable Capital Item ” shall have the meaning assigned to such term in Section 2.2(c)(3) .

 

“ OE Underpayment ” shall have the meaning assigned to such term in Section 2.2(f) .

 

“ Operating Expenses ” shall have the meaning assigned to such term in Section 2.2(b) .

 

“ Operating Expense Statement ” shall have the meaning assigned to such term in Section 2.2(f) .

 

“ Original Leased Premises ” shall have the meaning assigned to such term in Section 1.1(a) .

 

“ OT Building System HVAC Service ” shall have the meaning assigned to such term in Section 3.1(c) .

 

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“ Other Building Signage ” shall have the meaning assigned to such term in Section 3.4(a) .

 

“ Other Demising Work ” shall have the meaning assigned to such term in Section 5.7(a) .

 

“ Other Demising Work Costs ” shall have the meaning assigned to such term in Section 5.7(a) .

 

“ Other Leasable Area Submeters ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Other Permitted Leases ” shall have the meaning assigned to such term in Section 9.2.1 .

 

“ Other Qualified Rooftop Equipment ” shall have the meaning assigned to such term in Section 3.5(d) .

 

“ Outside Completion Date ” shall have the meaning assigned to such term in Section 6.3(d) .

 

“ Outside Expiration Date ” shall mean [                            , 2054](10).

 

“ Overlease ” shall mean any ground lease, or other overlease, of the Property or any part thereof, now or hereafter existing.

 

“ Overlessor ” shall mean any lessor under an Overlease.

 

“ Overlease SNDA ” shall mean a subordination, non-disturbance and attornment agreement between an Overlessor and Tenant in the form annexed as Exhibit D-2 hereto, and in proper form for recording, together with such changes thereto that are both proposed by an Overlessor and approved by Tenant; it being agreed that Tenant shall not unreasonably withhold its approval of any such proposed change so long as (i) such proposed change is customary (at the time in question), and (ii) such proposed change does not (to more than a de minimis extent) decrease Tenant’s rights, or increase Tenant’s obligations, from those contained in the form of Overlease SNDA annexed as Exhibit D-2 hereto.

 

“ Parking Areas ” shall mean the parking areas and facilities for the Property as indicated on Exhibit A-1 hereto, together with (i) any walkways, driveways and other passageways upon the Land providing ingress and egress between such areas and facilities and the Building and/or between such areas and facilities and the Building, and (ii) any additional improvements now or hereafter located on the Land related to the foregoing areas and facilities.

 

“ Personnel Costs ” shall have the meaning assigned to such term in Section 2.2(c) .

 

“ Portfolio Properties ” shall mean all properties acquired by Landlord pursuant to the Purchase Agreement.

 

(10)     Insert last day of month in which 50 th  anniversary of the Closing Date occurs.

 

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“ Preliminary Period ” shall mean the first two Lease Years ( i.e. , the period commencing on the Commencement Date and expiring on the last date of the second (2nd) Lease Year).

 

“ Premises Submeter ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Primary Demising Work ” shall have the meaning assigned to such term in Section 5.7(a) .

 

“ Primary Demising Work Costs ” shall have the meaning assigned to such term in Section 5.7(a) .

 

“ Prime Rate ” shall mean the “ prime rate ” announced by Wachovia Bank, National Association, or its successor, from time to time (or if the “ prime rate ” is discontinued, the rate announced as that being charged to said bank’s most credit-worthy commercial borrowers).

 

“ Prohibited Uses ” shall have the meaning assigned to such term in Section 4.8(b) .

 

“ Property ” means, collectively, (i) the Land, and (ii) all improvements now or hereafter located on the Land, including (x) the Building (inclusive of all improvements, betterments and/or equipment that, from time to time, are affixed or attached thereto, or otherwise constitute a part thereof), (y) the Common Areas (within or outside of the Building), including all sidewalks, curbs, plazas, paved walkways, driveways and other passageways upon the Land (as well as any other landscaping upon the Land), and (z) any Drive-Through Banking Facilities which comprise part of the Leased Premises, and (iii) any personal property belonging to Landlord which is located within or upon the Land and/or Building, and used in connection with the operation thereof.

 

“ Property Manager ” shall have the meaning assigned to such term in Section 3.6(a) .

 

“ Purchase Agreement ” shall mean that certain Agreement of Sale and Purchase by and between Wachovia, as seller, and Landlord Named Herein, as purchaser, dated                               , 2004.

 

“ Qualified Damage ” shall have the meaning assigned to such term in Section 6.3(b) .

 

“ RCT Termination Date ” shall have the meaning assigned to such term in Section 8.3.3 .

 

“ RE Tax Contest ” shall have the meaning assigned to such term in Section 2.3(c) .

 

“ Real Estate Taxes ” shall have the meaning assigned to such term in Section 2.3(b) .

 

“ Recapture Effective Date ” shall have the meaning assigned to such term in Section 8.2.3 .

 

“ Release Premises ” shall have the meaning assigned to such term in Section 1.1(a) .

 

“ Release Premises Election Date ” shall mean the last day of the sixth (6th) full calendar month of the second (2nd) Lease Year.

 

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“ Release Space Expiration Date ” shall have the meaning assigned to such term in Section 1.7(d) .

 

“ Relevant Books and Records ” shall have the meaning assigned to such term in Section 2.5(a) .

 

“ Remedial Work ”, as to any portion of the Property (including the Leasable Areas or the Common Areas), means the removal, relocation, elimination, remediation or encapsulation of Hazardous Materials from such portion(s) of the Property and, to the extent thereby required, the reconstruction and rehabilitation of such portion(s) of the Property pursuant to, and in compliance with, the provisions of this Lease.

 

“ Renewal Appraisal Notice ” shall have the meaning assigned to such terms in Section 1.4(e) .

 

“ Renewal Option ” and “ Renewal Options ” shall have the meanings assigned to such terms in Section 1.4(a) .

 

“ Renewal Option Notice Date ” shall mean, with respect to any Renewal Option, the date on which Tenant sends Tenant’s Renewal Notice to Landlord as provided in Section 1.4 .

 

“ Renewal Term ” and “ Renewal Terms ” shall have the meanings assigned to such terms in Section 1.4(a) .

 

“ Rent ” means Annual Basic Rent and Additional Rent.

 

“ Requesting Party ” shall have the meaning assigned to such term in Section 12.1(a)(i) .

 

“ Required Above Standard Services ” shall have the meaning assigned to such term in Section 3.1(c) .

 

“ Responding Party ” shall have the meaning assigned to such term in Section 12.1(a)(i) .

 

“ Retail Conversion Transaction ” shall have the meaning assigned to such term in Section 8.1.1 .

 

“ RFR Contract ” shall have the meaning assigned to such term in Section 9.3.4 .

 

“ RFR Exercise Period ” shall have the meaning assigned to such term in Section 9.3.3 .

 

“ RFR Period ”  shall have the meaning assigned to such term in Section 9.1.1 .

 

“ ROFO Closing ” shall have the meaning assigned to such term in Section 9.2.3 .

 

“ ROFO Exercise Period ” shall have the meaning assigned to such term in Section 9.2.2 .

 

“ ROFO Period ” shall have the meaning assigned to such term in Section 9.1.1 .

 

“ ROFO Transfer Period ” shall have the meaning assigned to such term in Section 9.2.4 .

 

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“ RSF ” shall mean rentable square feet.

 

“ Scheduled Delivery Date ” shall have the meaning assigned to such term in Section 10.3 .

 

“ SEC ” means the Securities and Exchange Commission.

 

“ Section 8.5 Transaction ” shall have the meaning assigned to such term in Section 8.5.1 .

 

“ Security Areas ” shall have the meaning assigned to such term in Section 4.2 .

 

“ Self-Insurance Net Worth Test ” shall mean, as of any date, that (i) Tenant has a net worth of at least $1,000,000,000, and (ii) Tenant’s long-term senior unsecured debt obligations are rated at least BB+ (or its equivalent) by Fitch Investors Service and Baa3 (or its equivalent) by Moody’s as of that date; provided that if Tenant is rated by only one of Fitch Investors Service or Moody’s, such obligations shall have such rating from Fitch Investors Service or Moody’s, as the case may be, and a comparable rating from one of S&P or another nationally-recognized rating agency.

 

“ Separate Charge Parking Areas ” shall mean the portions of the Parking Areas that are designated as “ Separate Charge Parking Areas ” on Exhibit A-1 hereto.

 

“ Separately Leasable Condition ”, when used with respect to any space in the Building, shall mean that such space (subject to the construction within such space of leasehold improvements of the type and nature normally found within legally occupied Leasable Areas) is legally capable of being separately leased to a tenant for general office purposes (or, in the case of ground floor space, general office, retail or banking purposes), including (i) being separately demised from any other Leasable Area ( i.e. , bounded by demising walls), (ii) having an independent means of ingress and egress ( i.e. , independent of any other Leasable Area) to, and from, the outside of the Building or to and from the Common Areas that serve such space, and (iii) being otherwise served by such Common Areas, whether general or limited, that, assuming the construction within such space of leasehold improvements of the type and nature normally found within legally occupied Leasable Areas, shall be legally sufficient to permit such space to separately leased as herein-above provided in this definition. The term “ leasehold improvements ”, as used herein, shall mean improvements and betterments to, and within the confines of, a demised Leasable Area, over and above the components of the Base Building therein.

 

“ Service Failure ” shall have the meaning assigned to such term in Section 3.1(f) .

 

“ Short-Term Additional Space ” shall mean each of (i) the Short-Term Former Release Space (if, as and when the same are added to the Leased Premises pursuant to Section 1.7(f) , and for so long thereafter as the same shall remain demised hereunder), or (ii) any Short-Term Expansion Space (if, as and when the same are added to the Leased Premises pursuant to Section 10.3 , and for so long thereafter as the same shall remain demised hereunder).

 

“ Short-Term Former Release Space ” shall have the meaning assigned to such term in Section 1.7(f) .

 

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“ Tenant Budget Objection ” shall have the meaning assigned to such term in Section 2.4(b) .

 

“ Tenant Business Group ” shall have the meaning assigned to such term in Section 8.5.1 .

 

“ Tenant Controlled Contest ” shall have the meaning assigned to such term in Section 2.3(c) .

 

“ Tenant Created Lien ” shall have the meaning assigned to such term in Section 5.4(b) .

 

“ Tenant-Dedicated Parking Areas ” shall mean the portions of the Parking Areas that are designated as “ Tenant Dedicated Parking Areas ” on Exhibit A-1 hereto.

 

“ Tenant Expansion Notice ” shall have the meaning assigned to such term in Section 10.1 .

 

“ Tenant Lien Cure Period ” shall have the meaning assigned to such term in Section 5.4(b) .

 

“ Tenant Management Agreement ” shall have the meaning assigned to such term in Section 3.6(c) .

 

“ Tenant Managed Property ” shall have the meaning assigned to such term in Section 3.6(c) .

 

“ Tenant Management Period ” shall have the meaning assigned to such term in Section 3.6(c) .

 

“ Tenant Management Services ” shall have the meaning assigned to such term in Section 3.6(c) .

 

“ Tenant Named Herein ” shall mean WACHOVIA BANK, NATIONAL ASSOCIATION.

 

“ Tenant Party ” shall mean (i) any principal (which shall include any shareholder, partner, member or other owner, direct or indirect, disclosed or undisclosed) of Tenant, or any director, officer, employee, agent or contractor of Tenant (or of any principal of Tenant), or (ii) any Subtenant or other person claiming by, through or under Tenant (directly or indirectly), or any principal, director, officer, employee, agent or contractor of such Subtenant or such other person.

 

“ Tenant Prominence Period ” shall have the meaning assigned to such term in Section 3.4(b) .

 

“ Tenant Property ” shall mean all movable personal property or trade fixtures (including any cabling or wiring installed within ceilings, ducts or chases of the Building but not permanently embedded within the walls of the Building) installed or maintained by, or at the instance of, Tenant (or any Tenant Party) within the Leased Premises (or, as expressly permitted hereunder, any areas outside of the Leased Premises).Without limiting the foregoing, the term Tenant Property shall be deemed to include the following: (i) any furniture, furnishings and

 

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equipment; (ii) moveable partitions and systems furniture; (iii) business, telecommunications and audio-visual equipment; (iv) computers, computer equipment, software and peripherals; (v) security systems and equipment; (vi) paintings and/or other works of art or decoration; (vii) all of Tenant’s signage (whether exterior or interior), including Building Identification Signage and Tenant’s Exterior Signage (but excluding Tenant’s Monuments); (viii) ATMs connected to or located within the Building, or situated as freestanding structures on the Property, and any ATM related equipment; (ix) safes; (x) safe deposit boxes (including the nests or frames thereof); (xi) any equipment within the Leased Premises relating to Tenant’s separate service systems (including, if within the Leased Premises, Tenant’s Supplemental HVAC Equipment); (xii) Tenant’s Exterior Equipment (including Tenant’s Rooftop Equipment and, if outside the Leased Premises, Tenant’s Supplemental HVAC Equipment); and (xiii) specialty fixtures, such as chandeliers or other lighting fixtures above the quality of Building Standard.

 

“ Tenant Required Contest ” shall have the meaning assigned to such term in Section 2.3(c) .

 

“ Tenant Sub-Manager ” shall have the meaning assigned to such term in Section 3.6(c) .

 

“ Tenant’s Allotted CW Capacity ” shall have the meaning assigned to such term in Section 3.1(b) .

 

“ Tenant’s Building Signage ” shall have the meaning assigned to such term in Section 3.4(a) .

 

“ Tenant’s Dedicated Electrical Capacity ” shall have the meaning assigned to such term in Section 3.1(a) .

 

“ Tenant’s Exclusive Period ” shall have the meaning assigned to such term in Section 10.3 .

 

“ Tenant’s Existing Exterior Equipment ” shall have the meaning assigned to such term in Section 3.5(a) .

 

“ Tenant’s Exterior Equipment ” shall have the meaning assigned to such term in Section 3.5(c) .

 

“ Tenant’s Occupancy Percentage ” shall mean a fraction, expressed as a percentage, (i) the numerator of which is the Net Rentable Area of the Leased Premises (and, during the Preliminary Period to the extent provided in Section 1.7 hereof, the Net Rentable Area of the Release Premises) at the time the determination is made, and (ii) the denominator of which is Net Rentable Area of the Building. Tenant’s Occupancy Percentage shall be re-calculated each time there is a change in the Net Rentable Area of the Leased Premises (due to additions to, or deletions from, the Leased Premises) (or, as applicable pursuant to Section 1.7 hereof, the Release Premises, due to additions thereto, or deletions therefrom); with any such re-calculation (and Tenant’s obligations in respect of Additional Rent payable on the basis of Tenant’s Occupancy Percentage) being effective as of the date of such change. Upon any such re-calculation, Landlord and Tenant shall execute and deliver a written instrument confirming the same, and incorporating the same into this Lease.

 

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“ Tenant’s Offer Notice ” shall have the meaning assigned to such term in Section 8.2.1 .

 

“ Tenant’s Operating Expense Share ” shall have the meaning assigned to such term in Section 2.2(a) .

 

“ Tenant’s Renewal Notice ” shall have the meaning assigned to such term in Section 1.4(b) .

 

“ Tenant Repairs ” shall have the meaning assigned to such term in Section 5.6(a) .

 

“ Tenant’s RCT Notice ” shall have the meaning assigned to such term in Section 8.3.1 .

 

“ Tenant’s RFR Exercise Notice ” shall have the meaning assigned to such term in Section 9.3.3 .

 

“ Tenant’s RFR Option ” shall have the meaning assigned to such term in Section 9.3.3 .

 

“ Tenant’s ROFO Option ” shall have the meaning assigned to such term in Section 9.2.2 .

 

“ Tenant’s ROFO Exercise Notice ” shall have the meaning assigned to such term in Section 9.2.2 .

 

“ Tenant’s Rooftop Equipment ” shall have the meaning assigned to such term in Section 3.5(d) .

 

“ Tenant’s Supplemental HVAC Equipment ” shall have the meaning assigned to such term in Section 3.1(b) .

 

“ Tenant’s Tax Share ” shall have the meaning assigned to such term in Section 2.3(a) .

 

“ Tenant’s Title Insurer ” shall have the meaning assigned to such term in Section 9.2.3 .

 

“ Tenant’s Transfer Period ” shall have the meaning assigned to such term in Section 8.2.4 .

 

“ Tenant’s Transfer Notice ” shall have the meaning assigned to such term in Section 8.2.4 .

 

“ Tenant’s Reimbursement Amount ” shall have the meaning assigned to such term in Section 5.7(b) .

 

“ Term ” shall have the meaning assigned to such term in Section 1.3 .

 

“ Termination Rights Exercise Notice ” shall have the meaning assigned to such term in Section 11.1 .

 

“ Third Party Leasing Rights ” shall have the meaning assigned to such term in Section 10.4 .

 

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“ Threshold Alteration Amount ” shall have the meaning assigned to such term in Section 5.2(c) .

 

“ Vacate Space ” shall have the meaning assigned to such term in Section 11.1 .

 

“ Wachovia ” shall mean (i) Tenant Named Herein, or (ii) a person constituting an immediate or remote successor to Tenant Named Herein by virtue of one or more mergers, consolidations and/or transfers of all, or substantially all, the assets of Tenant Named Herein (or another person described in this clause (ii)).

 

“ Wachovia Party ” shall mean Wachovia or any Affiliate of Wachovia.

 

“ Wachovia’s Termination Right ” shall have the meaning assigned to such term in Section 11.1 .

 

As used in this Lease, (i) the phrase “ and/or ” when applied to one or more matters or things shall be construed to apply to any one or more or all thereof as the circumstances warrant at the time in question, (ii) the terms “ herein ” “ hereof ” and “ hereunder ”, and words of similar import, shall be construed to refer to this Lease as a whole, and not to any particular Article or Section, unless expressly so stated, (iii) the term “ including ”, whenever used herein, shall mean “including without limitation”, except in those instances where it is expressly provided otherwise, (iv) the term “ person ” shall mean a natural person, a partnership, a corporation, a limited liability company, and/or any other form of business or legal association or entity, (v) the term “ alterations ” shall mean any alterations, additions, removals and/or any other changes, and (vii) the term “ contractor ” shall include any construction manager, general contractor, subcontractor or other trade contractor.

 

1.2          Leased Premises

 

Subject to and upon the terms hereinafter set forth, Landlord does hereby lease and demise to Tenant, and Tenant does hereby lease and take from Landlord, the Leased Premises. Tenant shall be entitled to the following as appurtenances to the Leased Premises: (I) the right to use, and permit Tenant Parties and/or the customers, invitees and guests of Tenant or any Tenant Parties, to use, (a) on an exclusive basis, the Tenant-Dedicated Parking Areas and (b) on a non-exclusive basis (in common with Landlord and other tenants or occupants of the Property, their customers, invitees and guests), the Non-Dedicated Parking Areas and all the other Common Areas; (II) all rights and benefits appurtenant to, or necessary or incidental to, the use and enjoyment of the Leased Premises by Tenant for the purposes permitted by Section 1.5 hereof, including the right of Tenant, its employees and invitees, in common with Landlord and other persons, to use any non-exclusive easements and/or licenses in, about or appurtenant to the Property, including the non-exclusive right to use any walkways, tunnels, and skywalks connected to the Property; and (III) all other rights and benefits provided to Tenant with respect to the Property pursuant to this Lease (including the rights granted to Tenant to use the roof of the Building, and other portions of the Property located outside of the Premises, pursuant to Section 3.5 hereof).

 

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1.3          Term

 

The Initial Term of this Lease shall be as defined in Section 1.1(a) , which Initial Term may be renewed and extended as provided in Section 1.4 hereof (the Initial Term and, to the extent renewed and extended, the Renewal Terms, are hereinafter collectively called the “ Term ”). Tenant is in possession of the Leased Premises as of the date of this Lease and shall accept the Leased Premises in its “AS-IS” condition, as of the Commencement Date, subject to all applicable Legal Requirements and matters of title heretofore affecting the same. Landlord has made no representation or warranty (express or implied) regarding the suitability of the Leased Premises or the Building for the conduct of Tenant’s business, and Tenant waives any warranty (express or implied) that (a) the Leased Premises, the Common Areas or the Building generally are suitable for Tenant’s intended purposes, or (b) the Leased Premises, the Common Areas or the Building generally are now in compliance with Legal Requirements in effect on the Commencement Date. Except as otherwise expressly set forth in this Lease, in no event shall Landlord have any obligation for any defects existing on the Commencement Date in the Leased Premises, the Common Areas or the Building generally, or any legal limitation on the use thereof.

 

1.4          Options to Renew

 

(a)            Subject to the conditions hereinafter set forth, Tenant is hereby granted options (individually, a “ Renewal Option ” and, collectively, the “ Renewal Options ”) to renew the Term with respect to all, or any portion of, the Leased Premises as then demised hereunder for six (6) successive periods of five (5) years each (individually, a “ Renewal Term ” and collectively the “ Renewal Terms ”); provided that the Term shall not extend, for any portion of the Leased Premises, beyond the Outside Expiration Date.

 

(b)            The first Renewal Term (if the first Renewal Option is exercised) shall commence at the expiration of the Initial Term, and each subsequent Renewal Term (if the pertinent Renewal Option is exercised) shall commence at the expiration of the immediately preceding Renewal Term. Tenant shall exercise each of its Renewal Options, if at all, by delivering notice of such exercise to Landlord (each, a “ Tenant’s Renewal Notice ”) not later than twelve (12) months prior to the then current expiration of the Term. In any case that Tenant exercises a Renewal Option with respect to less than all of the Leased Premises as then demised hereunder, Tenant shall identify the portion(s) of the Leased Premises with respect to which the Renewal Option is being exercised. IN ORDER TO PREVENT TENANT’S INADVERTENT FORFEITURE OF ANY THEN REMAINING RENEWAL OPTION, IF TENANT SHALL FAIL TO TIMELY EXERCISE ANY AVAILABLE RENEWAL OPTION, TENANT’S RIGHT TO EXERCISE SUCH RENEWAL OPTION SHALL NOT LAPSE UNTIL LANDLORD SHALL DELIVER TO TENANT WRITTEN NOTICE THAT SUCH NOTICE OF EXERCISE HAS NOT BEEN DELIVERED AND TENANT SHALL THEREAFTER FAIL TO EXERCISE SUCH RENEWAL OPTION WITHIN TEN (10) BUSINESS DAYS FOLLOWING THE DELIVERY OF SUCH NOTICE.

 

(c)            Tenant’s leasing of the Leased Premises during any Renewal Term shall be upon all the then executory terms and conditions of this Lease (as applicable prior to such Renewal Term), except as follows :

 

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(1)            The Annual Basic Rent Factor for each Renewal Term shall be equal to the Fair Market Rental Value Per RSF of the Base Leased Premises for the Renewal Term (as determined by the parties or, in the absence of their agreement, determined by appraisal, all as herein-after provided); provided , however , that:

 

(A)           if, as of the commencement of such Renewal Term, both (i) Tenant hereunder is a Wachovia Party, and (ii) the Integration Period has not ended, then the Annual Basic Rent Factor for such Renewal Term shall be adjusted as provided in Section 2 of the Master Agreement, as applicable;

 

(B)            if, as of the commencement of such Renewal Term, the Tenant hereunder is not a Wachovia Party (whether or not the Integration Period has ended), then the Annual Basic Rent Factor for such Renewal Term shall not exceed a rate equal to 110% of the Annual Basic Rent Factor on the last day of the Initial Term or immediately preceding Renewal Term, as applicable; and

 

(C)            if, as of the commencement of such Renewal Term, (i) the Tenant hereunder is a Wachovia Party, and (ii) the Integration Period has ended, then the Annual Basic Rent Factor for such Renewal Term shall not exceed the following: (x) in the case of the first Renewal Term, a rate equal to 110% of the Annual Basic Rent Factor on the last day of the Initial Term; and (y) in the case of each subsequent Renewal Term, a rate equal to 105% of the Annual Basic Rent Factor for the immediately preceding Renewal Term.

 

(2)            The STAS Basic Rental Factor for each Short-Term Additional Space for each Renewal Term shall be equal to the Fair Market Rental Value Per RSF of such Short-Term Additional Space for such Renewal Term (as determined by the parties or, in the absence of their agreement, determined by appraisal, all as herein-after provided).

 

(d)            Within thirty (30) days following the Renewal Option Notice Date with respect to any Renewal Option, Landlord shall deliver to Tenant, a proposal setting forth Landlord’s determination of the Fair Market Rental Value Per RSF for the Leased Premises for the pertinent Renewal Term (which, if the Leased Premises as to which such Renewal Option is exercised includes any Short-Term Additional Space, then such determination shall include separate components for the Fair Market Rental Value Per RSF for the Base Leased Premises, and the Fair Market Rental Value Per RSF of the Short-Term Additional Space). Thereafter, and until the delivery of a Renewal Appraisal Notice, Landlord and Tenant shall endeavor to reach agreement as to the Fair Market Rental Value Per RSF of the Leased Premises for the pertinent Renewal Term (and, as applicable, each component thereof).

 

(e)            If Landlord and Tenant are unable to reach a definitive agreement as to the Fair Market Rental Value Per RSF for Leased Premises for any Renewal Term within sixty (60) days following the Renewal Option Notice Date, then either Landlord or Tenant, by written notice thereof to the other party (herein called a “ Renewal Appraisal Notice ”), may cause such Fair Market Rental Value Per RSF to be submitted for resolution in accordance with the following provisions of this Section 1.4(e) :

 

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(1)            Within thirty (30) days after delivery of the Renewal Appraisal Notice, Landlord and Tenant shall each select and engage an Appraiser to determine such Fair Market Rental Value Per RSF. If either party fails to select and engage an Appraiser within such time, and if such failure continues for more than five (5) Business Days following such party’s receipt of written notice that states in all capital letters (or other prominent display) that such party has failed to select an Appraiser as required under the Lease and will be deemed to have waived certain rights granted to it under the Lease unless it selects an Appraiser within five (5) Business Days, then the Appraiser engaged by the other party shall select the second Appraiser.

 

(2)            Within thirty (30) days following the date on which the second Appraiser is selected, (i) each Appraiser shall prepare a sealed determination of the such Fair Market Rental Value Per RSF, (ii) the Appraisers, together with Landlord and Tenant, shall arrange a meeting at the Property during Building Operating Hours (or at such other place and time as is reasonably acceptable to both Appraisers, Landlord and Tenant) for the purpose of distributing such sealed determinations, and (iii) at such meeting, the Appraisers shall each simultaneously present their determinations of such Fair Market Rental Value Per RSF, to the other Appraiser and to Landlord and Tenant. If the higher of the two determinations of such Fair Market Rental Value Per RSF does not exceed one hundred five percent (105%) of the lower of the two determinations of such Fair Market Rental Value Per RSF, then the average of the two (2) determinations shall be such Fair Market Rental Value Per RSF (and the same shall constitute the final determination thereof). If the higher of the two determinations of such Fair Market Rental Value Per RSF exceeds 105% of the lower of the two determinations of such Fair Market Rental Value Per RSF, then within five (5) Business Day after receipt by Landlord and Tenant of both appraisal reports, the Appraisers selected by Landlord and Tenant shall agree on a third Appraiser (the “ Third Appraiser ”) to make a determination of such Fair Market Rental Value Per RSF.  The Third Appraiser shall not make an independent determination, but shall, within ten (10) Business Days after his or her designation, select one (1) of the two (2) determinations already made, whichever of the two determinations the Third Appraiser determines to be closest to such Fair Market Rental Value Per RSF, as the controlling determination with respect to such Fair Market Rental Value Per RSF. The decision of the Third Appraiser shall be conclusive and binding; and such Fair Market Rental Value Per RSF shall be as set forth in such controlling determination (which shall constitute the final determination thereof). Each party shall pay the costs of its Appraiser and one-half (1/2) of the cost of the Third Appraiser.

 

(3)            The instructions to the Appraisers with respect to the determination of such Fair Market Rental Value Per RSF will be to determine the same solely in accordance with the definition Fair Market Rental Value Per RSF as set forth in this Lease (including the criteria and assumptions set forth therein). The Appraisers shall have no authority to alter any provisions of such definition, or any other provisions of this Lease.

 

(4)            Within thirty (30) days following the final determination of such Fair Market Rental Value Per RSF, Tenant shall elect one (1) of the following options by written notice to Landlord: (A) to revoke the exercise of the pertinent Renewal Option, in which event, the Term shall automatically, and without further action of Landlord or Tenant, expire on the later of (1) the expiration of the Initial Term (or, if applicable, the expiration of the Renewal Term with respect to the immediately preceding Renewal Option) or (2) the last day of the calendar month that is six (6) months following the month in which Tenant’s notice of

 

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revocation was given to Landlord; or (B) to ratify its exercise of the pertinent Renewal Option. If Tenant fails to exercise either of the foregoing options within such thirty (30) day period, then Tenant shall be deemed to have elected option (B). If Tenant elects (or is deemed to have elected) option (B), then Tenant thereby shall have irrevocably exercised the pertinent Renewal Option and Tenant may not thereafter withdraw the exercise of the Renewal Option.

 

(5)            If the Fair Market Rental Value Per RSF of the Leased Premises for any Renewal Term shall not have been final determined prior to the commencement of the Renewal Term (and, accordingly, the actual Annual Basic Rent therefor is not finally known as of the commencement of such Renewal Term), then (i) for the period commencing on such first day of such Renewal Term and ending on the date that such Fair Market Rental Value Per RSF is finally determined, Tenant shall make payments, on account of the Annual Basic Rent for such Renewal Term (as and when Annual Basic Rent is payable under this Lease) based upon the Annual Basic Rent Factor in effect immediately prior to such Renewal Term, and, for any Short-Term Additional Space, the STAS Basic Rental Factor in effect immediately prior to such Renewal Term, and (ii) upon such Fair Market Rental Value Per RSF being finally determined, such payments on account of Annual Basic Rent shall be reconciled with the actual Annual Basic Rent, and, within thirty (30) days after such final determination, (x) if such payments on account of Annual Basic Rent made by Tenant during such period were less than the actual Annual Basic Rent for such period, then Tenant shall pay to Landlord the amount of such deficiency, together with interest thereon at the Prime Rate, and (y) if such payments on account of Annual Basic Rent made by Tenant during such period were in excess of the actual Annual Basic Rent for such period, then Landlord shall refund to Tenant the amount of such excess, together with interest thereon at the Prime Rate.

 

1.5          Use

 

The Leased Premises may be used and occupied only for (i) banking purposes, and uses incidental thereto, (ii) general office purposes, and uses incidental thereto, (iii) any other lawful purposes for which the Property is used on the Commencement Date, and/or (iv) any other lawful purposes as are consistent with the character of the Building. Without limiting the generality of the foregoing, the permitted uses of the Leased Premises shall include (without limitation): (a) conference, training and/or meeting facilities, (b) libraries, (c) coffee bars, (d) support staff facilities (including word processing and copy facilities), (e) lunchrooms, cafeterias and kitchen facilities for use by Tenant and its employees and invitees, including vending machines and microwave ovens for use by Tenant and its employees and invitees, subject, however, to Legal Requirements, (f) storage space incidental to banking and general business office purposes only, (g) bank and storage vaults, (h) cash vaults, (i) telephone call centers, (j) retail banking and sales facilities, (k) child care facilities, (l) fitness centers, and (k) data and service center operations. Tenant is not obligated to maintain occupancy or conduct operations in all or any portion of the Leased Premises. For purposes of this Section 1.5 , the term “banking” shall be deemed to include, without limitation, all traditional banking activities as well as the sale of insurance and annuities of all types, trust services, investment and financial advice, the sale of securities, credit card operations and sales, mortgage lending and servicing, and data and service center functions. In addition, and without limiting the generality of any of the foregoing provisions, the Leased Premises may be used for any operations or activities required to support or otherwise provide services in support of Tenant’s business operations, regardless of whether

 

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or not those business operations are conducted within the Leased Premises. If Tenant receives notice of any material directive, order, citation or of any violation of any Legal Requirement or any insurance requirement, Tenant shall endeavor to promptly notify Landlord in writing of such alleged violation and furnish Landlord with a copy of such notice.

 

1.6          Survival

 

Any claim, cause of action, liability or obligation arising during the Term of this Lease in favor of a party hereto and against or obligating the other party hereto shall (to the extent not theretofore fully performed) survive the expiration or any earlier termination of this Lease.

 

1.7          Release Premises

 

(a)            The rights and obligations of the parties with respect to the Release Premises shall be as set forth in this Section 1.7 . The Release Premises shall not constitute part of the Leased Premises (unless and until, and only to the extent that, the same are added to the Leased Premises pursuant to the provisions of Section 1.7(e)  or (f)  below), but the same shall be deemed demised by this Lease, and the provisions of this Lease (other than this Section 1.7 ) shall apply to the Release Premises to the extent expressly provided in this Section 1.7 .

 

(b)            During the Preliminary Period, Tenant may use and occupy the Release Premises subject to, and in accordance with, the following:

 

(1)            Tenant shall not pay any Annual Basic Rent with respect to the Release Premises.

 

(2)            Tenant shall pay only Additional Rent with respect to the Release Premises, and shall do so on the same terms and conditions as it pays Additional Rent with respect to the Leased Premises, but not, with respect to any portion of the Release Premises, after the date (even if such date is prior to the end of the Preliminary Period) that Tenant shall have surrendered the same with reasonable notice to Landlord and otherwise consistent with the provisions of Section 1.7(d)(3)  hereof (and, accordingly, solely for purposes of calculating Tenant’s Occupancy Percentage during the Preliminary Period, the numerator thereof shall include, in addition to the Net Rentable Area of the Leased Premises, the Net Rentable Area of the Release Premises to the extent the same has not yet been surrendered by Tenant consistent with the foregoing).

 

(3)            Tenant’s use of the Release Premises shall be subject to the provisions of Section 1.5 hereof, and, except for the provisions of this Lease requiring the payment of Rent, all the other provisions of this Lease shall apply to the Release Premises as fully as the same to the Leased Premises.

 

(c)            On or prior to the Release Premises Election Date, Tenant shall advise Landlord of Tenant’s election to (i) surrender any portion of the Release Premises as of a date not later than the expiration of the Preliminary Period, (ii) add any portion of the Release Premises to the Leased Premises on a coterminous basis pursuant to Section 1.7(e)  effective as of the first day immediately following the Preliminary Period, or (iii) add any portion of the Release Premises to the Leased Premises on a short term basis pursuant to Section 1.7(f)  effective as of the first day

 

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immediately following the Preliminary Period.  Tenant shall be permitted to make different elections with respect to different portions of the Release Premises. If Tenant fails to notify Landlord of its election with respect to any portion of the Release Premises prior to the expiration of the Release Premises Election Date, then Tenant shall be deemed to have elected to surrender such portion of the Release Premises not later than the expiration of the Preliminary Period.

 

(d)            With respect to any portion of the Release Premises that Tenant shall have elected (or is deemed to have elected) to surrender as herein-above provided (any such portion of the Release Premises being herein called “ Surrender Release Space ”), the following provisions shall apply:

 

(1)            Tenant shall surrender all Surrender Release Space on or prior to the expiration of the Preliminary Period (the earlier of (x) the date upon which Tenant actually surrenders any Surrender Release Space, and (y) the last day of the Preliminary Period, is herein called the “ Release Space Expiration Date ” with respect to such Surrender Release Space).

 

(2)            If Tenant shall fail to surrender any Surrender Release Space on or prior to the expiration of the Preliminary Period, then, for the period commencing on the date immediately following the Preliminary Period and ending on the date that such Surrender Release Space shall be surrendered, Tenant (i) shall pay Annual Basic Rent with respect to such Release Premises at the Fair Market Rental Value Per RSF thereof, and (ii) shall continue to pay Additional Rent on the same basis as during the Preliminary Period. Notwithstanding the foregoing, either Landlord or Tenant may terminate Tenant’s right to possess and occupy such Surrender Release Space at any time following the expiration of the Preliminary Period upon thirty (30) days’ prior written notice to the other party.

 

(3)            Tenant shall surrender all Surrender Release Space consistent with the provisions of Section 4.1 hereof (as applied to Surrender Release Space as if the same were part of the Leased Premises), subject, however, to the provisions of Section 1.7(d)(4)  below.

 

(4)            If any Surrender Release Space is not in Separately Leasable Condition on the Release Space Expiration Date with respect thereto, then Landlord, promptly following the Release Space Expiration Date, shall proceed to cause the Demising Work with respect to such Surrender Release Space to be performed in accordance with the provisions of Section 5.7 hereof; provided , however , that (i) any Demising Work performed by Landlord while Tenant is still in occupancy of the Surrender Release Space shall be performed subject to, and in a manner that is consistent with Tenant’s continued occupancy, and (ii) Landlord shall not have the right or obligation under this Lease to perform any Demising Work with respect to any Surrender Release Space if, as of the Release Space Expiration Date with respect thereto, either (x) no Leased Premises or Release Premises is remaining within the Building, or (y) no Leased Premises exists in the Building, and Tenant’s right to convert any remaining Release Premises to Leased Premises pursuant to in Sections 1.7(e)  and (f)  has either lapsed by its terms or been irrevocably waived by Tenant, in writing.

 

(e)            Any Release Premises that Tenant shall have elected to add to the Leased Premises on a coterminous basis pursuant to this Section 1.7(e)  (“ Coterminous Former Release

 

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Space ”), as herein-above provided, shall be added to the Leased Premises, effective upon the date immediately following the Preliminary Period upon, subject to, and in accordance with, the provisions:

 

(1)            (A) the initial term of this Lease with respect to the Coterminous Former Release Space shall be the balance of the Initial Term ( i.e. , the period commencing on the date immediately following the Preliminary Period and ending on the Expiration Date), and (B) the provisions of Section 1.4 hereof shall apply to the Coterminous Former Release Space as fully and completely as the same apply to the balance of the Leased Premises;

 

(2)            the Annual Basic Rent for the Coterminous Former Release Space shall be payable at the same rate as that applicable to the balance of the Base Leased Premises ( i.e. , at a rate, per RSF, equal to the Annual Basic Rent Factor from time to time in effect), and, accordingly, upon the date that the Coterminous Former Release Space is added to the Leased Premises, the Annual Basic Rent hereunder shall be recalculated based on the addition of the Net Rentable Area of the Coterminous Former Release Space to the Net Rentable Area of the Leased Premises;

 

(3)            Additional Rent shall be payable with respect to the Coterminous Former Release Space on the same basis as the same is payable with respect to the balance of the Leased Premises, and, accordingly, upon the date that the Coterminous Former Release Space is added to the Leased Premises, Tenant’s Occupancy Percentage shall be adjusted based on the addition of the Net Rentable Area of the Coterminous Former Release Space to the Net Rentable Area of the Leased Premises; and

 

(4)            subject to the foregoing, and except as otherwise expressly provided herein, all of the other then executory terms and conditions of this Lease shall apply to the Coterminous Former Release Space as fully and completely as the same apply to the balance of the Leased Premises.

 

(f)             Any Release Premises that Tenant shall have elected to add to the Leased Premises on a short-term basis pursuant to this Section 1.7(f)  (“ Short-Term Former Release Space ”), as herein-above provided, shall be added to the Leased Premises, effective upon the date immediately following the Preliminary Period upon, subject to, and in accordance with, the following provisions:

 

(1)            (A) the initial term of this Lease with respect to the Short-Term Former Release Space shall be a five (5) year period commencing on the date immediately following the Preliminary Period and ending on the fifth (5 th ) anniversary of such date, and (B) from and after such initial term (and until the end of the Initial Term), Tenant shall have the right(s) to renew the term of this Lease with respect to the Short-Term Former Release Space for one or more special renewal periods, as Tenant may elect, each equal to the lesser of (x) five (5) years or (y) the then remaining balance of the Initial Term, each such right to be exercisable, by written notice to Landlord, given not less than nine (9) months prior to the expiration of the then current term of this Lease with respect to the Short-Term Former Release Space, and (C) the provisions of Section 1.4 hereof shall apply to the Short-Term Former Release Space as fully and completely as the same apply to the balance of the Leased Premises;

 

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ARTICLE II

RENTAL, OPERATING EXPENSES AND REAL ESTATE TAXES

 

2.1          Rental Payments

 

(a)            Beginning on the Commencement Date, and continuing throughout the Term of this Lease, Tenant shall pay Annual Basic Rent and Additional Rent with respect to the Leased Premises, all as applicable and as required by and in conformity with the provisions of this Lease. Annual Basic Rent shall be due and payable in equal monthly installments on the first day of each calendar month during the Term, in advance. Tenant’s Operating Expense Share and Tenant’s Tax Share shall be due and payable in accordance with Sections 2.2 and 2.3 hereof. Unless otherwise specified herein, any Additional Rent (other than Tenant’s Operating Expense Share and Tenant’s Tax Share, but including any Above Standard Services Rent) shall be payable thirty (30) days following Landlord’s submission to Tenant of an invoice therefor.

 

(b)            If the Term commences on a day other than the first day of a calendar month, or if the Term expires or terminates on other than the last day of a calendar month, then all installments of Rent that are payable on a monthly basis shall be prorated for the month in which the Term commences or expires or terminates, as the case may be, and the installment or installments so prorated for the month in which such Term commences or expires or terminates, as the case may be, shall be paid in advance on the first day of such month occurring within the Term. Said installments for such prorated month or months shall be calculated by multiplying the full monthly installment by a fraction, the numerator of which shall be the number of days of such month occurring within the Term, and the denominator of which shall be the total number of days in such month. If the Term commences on other than the first day of a calendar year, or if the Term expires or terminates on other than the last day of a calendar year, then all Rent payable on a calendar year basis shall be prorated for such calendar year in which the Term commences or expires or terminates, as the case may be, by multiplying such Rent by a fraction, the numerator of which shall be the number of days of such calendar occurring within the Term, and the denominator of which shall be the total number of days in such calendar year. In such event, the foregoing calculation shall be made as soon as is reasonably possible. Landlord and Tenant hereby agree that the provisions of this Section 2.1(b)  shall survive the expiration or termination of this Lease.

 

(c)            Tenant agrees to pay all Rent as shall become due from and payable by Tenant to Landlord under this Lease at the times and in the manner provided in this Lease, without abatement (except as specifically provided in this Lease), demand, offset (except as specifically provided in this Lease) or counterclaim, at Landlord’s address as provided herein (or such other address in the continental United States as may be designated in writing by Landlord from time to time).  Tenant shall have the right, at its option, to pay Rent by means of electronic funds transfer to such account and depository institution as Landlord shall specify from time to time upon Tenant’s request.

 

(d)            All past-due Rent owed by Tenant to Landlord under this Lease shall bear interest from the due date thereof until payment is received by Landlord at the Applicable Rate, but only if Tenant’s failure to pay such Rent shall continue for a period of five (5) Business Days after notice of such failure from Landlord, which notice shall refer to this Section 2.1(d)  and state, in

 

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all capital letters (or other prominent display), that Tenant’s failure to pay such Rent by such 5th Business Day shall result in interest accruing thereon from the due date thereof. All past-due sums owed by Landlord to Tenant pursuant to this Lease shall bear interest from the date due thereof until payment is received by Tenant at the Applicable Rate, but only if Landlord’s failure to pay such sums shall continue for a period of five (5) Business Days after notice of such failure from Tenant, which notice shall refer to this Section 2.1(d)  and state, in all capital letters (or other prominent display), that Landlord’s failure to pay such sums by such 5th Business Day shall result in interest accruing thereon from the due date thereof; provided, further, however , that, in any case that Landlord receives a late charge as provided in Section 2.1(e)  below, interest shall only accrue from and after date that is thirty (30) days after the due date thereof. Any payments made by Landlord or Tenant to the other hereunder shall not be deemed a waiver by such party of any rights against the other party.

 

(e)            Without limiting any other remedies for non-payment of Rent (other than as expressly provided in Section 2.1(d)  above), (i) in the event any installment of Annual Basic Rent is not paid by Tenant on or before the fifth (5th) day of the month for which it is due, and such amount shall remain unpaid for more than five (5) Business Days after Tenant’s receipt of written notice from Landlord that such amount is past due, then Tenant shall pay to Landlord a late charge equal to one percent (1%) of the past due installment of Annual Basic Rent, and (ii) in the event any payment of Additional Rent is not paid by Tenant on or before the due date thereof, and such amount shall remain unpaid for more than five (5) Business Days after Tenant’s receipt of written notice from Landlord that such amount is past due, then Tenant shall pay to Landlord a late charge equal to one percent (1%) of the past due amount. Any notice from Landlord to Tenant of past-due Rent under this Section 2.1(e) , to be effective, must refer to this Section 2.1(e) and state, in all capital letters (or other prominent display), that Tenant’s failure to remit payment by the appointed date shall result in the imposition of a late charge. Landlord may not send any such notice of overdue payment to Tenant prior to the fifth (5th) day following the date such payment is due, and if any such premature notice is sent, it shall be deemed to have been sent on the fifth (5th) day following the date such payment was due. Notwithstanding the foregoing, Tenant shall not be obligated to pay a late charge on installments of Rent to the extent properly abated or set-off by Tenant pursuant to an express right to do so as set forth in this Lease or to the extent that Tenant’s payment is deficient by an amount that is less than or equal to one (1%) percent of the total amount due (but the foregoing shall not relieve Tenant of its obligation to promptly remit the amount of any such deficiency). The late charge described herein is not intended as a penalty, but is intended as liquidated damages to compensate Landlord for its additional costs in processing the applicable late payment.

 

(f)             If, during any period that multiple items of Rent are past-due, Landlord shall receive any payments from Tenant that are not expressly attributed to any particular items of Rent and are not otherwise evidently in payment of any particular items of Rent, then, and only in such events, such payments shall be applied by Landlord in the following order (as amongst then past-due items of Rent): (i) Annual Basic Rent, (ii) Tenant’s Operating Expense Share, (iii) Tenant’s Tax Share, (iv) Above Standard Services Rent, and (v) to any remaining items of Additional Rent.

 

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(g)            In those instances for which the right of offset is expressly provided hereunder, Tenant shall be entitled to offset against Rent next coming due, any amounts that are owed or payable by Landlord to Tenant under or pursuant to the terms of this Lease.

 

2.2          Operating Expenses

 

(a)            For each calendar year occurring during the Term, Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Occupancy Percentage of the Operating Expenses for such calendar year as hereinafter provided (the amount so payable by Tenant being herein called “ Tenant’s Operating Expense Share ”). However, (i) for the first calendar year occurring within the Term ( i.e. , the calendar year commencing on January 1, 2004 and ending on December 31, 2004), Operating Expenses shall be deemed to consist only of amounts paid or incurred on, or subsequent to, the Commencement Date, and (ii) for any calendar year which ends later than the last day of the Term, the Tenant’s Operating Expense Share shall be prorated to correspond to that portion of such calendar year occurring within the Term.

 

(b)            Tenant shall pay Tenant’s Operating Expense Share for each such calendar year pursuant to the following provisions:

 

(1)            For each calendar month occurring during any such calendar year, Tenant, on the first (1 st ) day of such calendar month, shall make a payment on account of Tenant’s Operating Expense Share equal to one-twelfth (1/12 th ) of Landlord’s good-faith estimate of Tenant’s Operating Expense Share for such calendar year as shown on the Final Budget for such calendar year (such payments on account being herein called the “ Monthly Estimated OE Payments ”). However, (A) Landlord, by notice to Tenant, may, at any time and from time to time during any calendar year, reduce the amount of the Monthly Estimated OE Payment for such calendar year, and (B) for the balance of the first calendar year occurring within the Term ( i.e. , the period commencing on the Commencement Date and ending on December 31, 2004), the Monthly Estimated OE Payments shall be in the amount set forth on Exhibit C hereto, and shall be payable only on the first (1 st ) day of each calendar month occurring after the calendar month in which the Commencement Date occurs, and (C) for any calendar year which ends later than the last day of the Term, the Monthly Estimated OE Payments shall be made only for calendar months during such calendar year occurring within the Term.

 

(2)            Any overpayment or underpayment of Tenant’s Operating Expense Share for any calendar year based on the Monthly Estimated OE Payments on account thereof shall be reconciled after the end of such calendar year as provided in Section 2.2(f) .

 

(c)            “ Operating Expenses ”, for each calendar year, shall be determined in accordance with the provisions of the following Sections 2.2(c)(1) , (2)  and (3)  below, sequentially applied :

 

(1)            Subject to the provisions of Section 2.2(c)(2)  and (3)  below, Operating Expenses shall include all expenses and costs of every kind and nature incurred by, or on behalf of, Landlord in connection with the operation, management, repair and maintenance of the Property in respect of such calendar year, consistent with accepted principles of sound management practices (determined with reference to the operation, management, repair and maintenance of Comparable Buildings), and which, except as otherwise expressly provided

 

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herein, shall be allocable to such calendar year in accordance with GAAP, on an accrual basis, including the expenses and costs set forth in items (i) through (ix) below:

 

(i)             wages and salaries, including payroll taxes, insurance and fringe benefits (collectively, “ Personnel Costs ”), paid to employees of Landlord (or employees of the Property Manager, employed on Landlord’s behalf) engaged in operation, management, repair and maintenance of the Property;

 

(ii)            the costs of acquiring or leasing tools and equipment, and the costs of purchasing materials and supplies, to the extent used in the operation, management, repair and maintenance of the Property;

 

(iii)           the costs of providing utilities and services (including electricity, water, gas, steam, sewer, cleaning and HVAC services) to the Leased Premises, other Leasable Areas and the Common Areas;

 

(iv)           the costs of repairing, replacing and/or maintaining the Base Building and/or the Common Areas (together with any personal property of Landlord therein or thereon that constitute part of the Property) whether such repair, replacement and/or maintenance is structural or non-structural, ordinary or extraordinary, foreseen or unforeseen;

 

(v)            the costs of all maintenance and service agreements with respect to the Base Building and/or the Common Areas, including access control service, window cleaning, mechanical, electrical and plumbing service contracts, including elevator maintenance, janitorial service, security, landscaping maintenance, garbage and waste disposal;

 

(vi)           insurance premiums under insurance with respect to the Property (including any personal property included within the definition of Property hereunder) that is either (a) required to be obtained by Landlord pursuant to this Lease or (b) customarily obtained by the owners of Comparable Buildings, including, as applicable, property and liability insurance, insurance against rental loss following fire, condemnation or other insured occurrences at the Property;

 

(vii)          the costs of Remedial Work performed to the Common Areas (other than Common Areas located on floors not leased in whole or in part by Tenant);

 

(viii)         the management fees of the Property Manager, but only up to (and not in excess of ) an annual fee equal to two and one-half percent (2.5%) of Gross Revenues for the Property; provided , however , that, during any Tenant Management Period, Operating Expenses shall include (in addition to the management fees paid to Tenant pursuant to the Tenant Management Agreement as set forth in Section 3.6(c)(2)  hereof) the amount of the asset management fees that Landlord is entitled to receive pursuant to the provisions of Section 3.6(c)(4)  hereof;

 

(ix)            if, and only if, the Property Manager utilizes space in the Building as a management office for the Property, which space would otherwise constitute part of the Leasable Areas, then Operating Expenses shall be deemed to include an amount equal to the fair market rental of such management office; provided , however , that in no event shall Operating

 

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Expenses include the fair market rental of any such office to the extent used for development or leasing purposes (as opposed to management purposes) (it being agreed if any such office is used, in part, as a management office, and, in part, for development or leasing purposes, then such fair market rental shall be allocated on a fair and equitable basis between such uses); and

 

(x)             rent payable under an Existing Overlease (exclusive of items of additional rent which reflect a pass-through of (i) items included in Real Estate Taxes or (ii) items otherwise included in Operating Expenses hereunder).

 

(2)            Anything contained in the provisions of Section 2.2(c)(1)  above notwithstanding, Operating Expenses shall not include any of the following:

 

(A)           any Personnel Costs paid to (i) any persons above the grade of building or property manager, and/or (ii) any persons engaged in the development and/or leasing of the Property (it being agreed that Personnel Costs paid to employees, above the grade of building manager, who are, in part, engaged in the operation, management, repair and maintenance of the Property, and, in part, engaged in the development and leasing of the Property, shall be allocated on a fair and equitable basis between such duties);

 

(B)            the costs of furnishing any utilities or services to any Leasable Areas, unless such utility or service is furnished by Landlord to the Leased Premises pursuant to this Lease as a Building Standard Service and otherwise without any additional or separate charge to Tenant;

 

(C)            the costs of repairing and maintaining (as well as any costs of maintenance and service agreements with respect to) any Leasable Areas, except as to the components of the Base Building located within such Leasable Areas;

 

(D)           the costs of performing any other work (including any work needed to effect compliance with Legal Requirements) in or to any Leasable Areas (or any Common Areas on floors not leased in whole or in part by Tenant), except as to the components of the Base Building located within such Leasable Areas (or, as the case may be, such Common Areas);

 

(E)            any costs of Remedial Work performed to any Leasable Areas (or any Common Areas on floors not leased in whole or in part by Tenant), even if performed to the components of the Base Building located within such Leasable Areas (or, as the case may be, such Common Areas);

 

(F)            any costs (including any costs of repairs or other work) occasioned by fire, windstorm or other casualty (except, subject to the other provisions hereof, to the extent of a commercially reasonable deductible under an insurance policy maintained by Landlord consistent with the provisions of this Lease);

 

(G)            any costs (including any costs of repairs or other work) arising out of any condemnation or proceeding relating thereto;

 

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(H)           marketing, advertising and promotion costs relating to the Property and/or any other costs relating to the development and/or leasing of the Property;

 

(I)             legal fees and disbursements, regardless of the purpose (other than legal fees and disbursements incurred to ascertain the need for, or scope of, Remedial Work or other work required to comply with Legal Requirements, but only if, and to the extent, the costs of such Remedial Work or other work is included within Operating Expenses hereunder);

 

(J)             leasing and brokerage commissions, and any costs and expenses incurred in connection with (i) the negotiation or enforcement of any leases or prospective leases, and/or (ii) any negotiations or disputes with tenants or other occupants of the Property or prospective tenants or other occupants of the Property;

 

(K)           any costs of any lease concessions or inducements, including workletters and work allowances, any costs of obtaining any temporary or permanent certificates of occupancy for any tenant or other occupant(s) and/or any other costs of renovating or otherwise improving or decorating or redecorating any part of the Property (including the Base Building and/or the Common Areas) for any particular tenant(s) or other occupant(s) of the Property;

 

(L)            amortization (except as set forth in Section 2.2(c)(3) )and depreciation;

 

(M)          costs incurred due to the violation by Landlord or any tenant or other person of the terms and conditions of any lease or other agreement pertaining to the Property or of any Legal Requirement;

 

(N)           fines or penalties incurred due to the Property being in violation of Legal Requirements;

 

(O)           costs incurred due to acts of any tenant or other occupant causing an increase in the rate of insurance on the Building or its contents;

 

(P)            any amounts paid to any Landlord Party or any Affiliate of Landlord for goods, services or other items, to the extent such amounts exceed the amounts which would have been paid or incurred for such goods, services or other items if the same had been furnished by unrelated and unaffiliated third parties on a arms-length basis;

 

(Q)           management fees other than those expressly included in Operating Expenses pursuant Section 2.2(c)(1)(viii)  above, as well as (i) any actual or deemed rental payment for a building management office except as expressly included in Operating Expenses pursuant Section 2.2(c)(1)(ix)  above, and (ii) any costs or expenses for services that are normally performed by a management company, without separate charge, when retained under a management agreement providing for a management fee equal to two and one-half percent (2-1/2%) of gross revenues for the property;

 

(R)            principal, points, fees and interest on any Mortgage or other debt;

 

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(S)            rental or other charges under any Overlease (other than rent payable under an Existing Overlease, exclusive of items of additional rent which reflect a pass-through of (i) items included in Real Estate Taxes or (ii) items otherwise included in Operating Expenses hereunder);

 

(T)            general overhead and administration expenses (including any costs and expenses relating to the preparation of partnership, corporate or limited liability company tax or disclosure statements, or other filings relating to the corporate, partnership or other organization status of Landlord or any Landlord Party);

 

(U)           any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord;

 

(V)            any costs or expenses to the extent Landlord is entitled to payment or reimbursement thereof from any tenant or other occupant, insurer or other person (other than from a tenant or other occupant through payment of its proportionate share of Operating Expenses);

 

(W)          any costs incurred in installing, operating and maintaining any specialty facility, including an observatory, broadcasting facilities (other than the Building’s music system, life support and security system), child-care facilities, and, to the extent not available to Tenant (or, if available to Tenant, Tenant nevertheless elects not to, and does not, utilize the same), the costs of any luncheon club, athletic or recreational club or facility;

 

(X)           any expenses in connection with Separate Charge Parking Areas, except to the extent, if any, that such expenses exceed all income in connection with such Separate Charge Parking Areas;

 

(Y)            any fines, penalties, legal judgments or settlements or causes of action by or against Landlord, any Landlord Party or the Property; and

 

(Z)            Real Estate Taxes (as well as any taxes or charges expressly excluded from the definition of Real Estate Taxes, as set forth in Section 2.3(b)  below), and any fines, penalties or interest payable in connection therewith;

 

(AA)        any costs relating to any sale, financing or re-financing relating of, or involving, the Property or any interest in Landlord or any Landlord Party;

 

(BB)         costs of any insurance, other than those expressly included in Operating Expenses pursuant Section 2.2(c)(1)(vii)  above;

 

(CC)         any costs (i) attributable to Landlord’s violation of one or more provisions of this Lease (including any failure by Landlord to comply with the terms of Section 2.2(d)  below), (ii) attributable to Landlord’s default under other lease or other contract relating to the Real Property, or (ii) attributable to Landlord’s willful misconduct or negligence; and

 

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(DD)        any overhead and profit associated with employees of Landlord (or employees of the Property Manager, employed on Landlord’s behalf) who are engaged in the operation, management, repair and maintenance of the Property.

 

(3)            Anything contained in the provisions of Section 2.2(c)(1)  or Section 2.2(c)(2)  above notwithstanding, Operating Expenses shall not include any costs for alterations, repairs and/or replacements or any other costs that are considered capital expenditures under GAAP (including capital improvements, capital repairs, capital equipment and capital tools), except as expressly permitted under the following provisions of this Section 2.2(c)(3) . Operating Expenses shall include the costs incurred by Landlord for any OE Includable Capital Item, but only as amortized over the useful life of such OE Includable Capital Item (determined in accordance with GAAP), together with interest thereon at the Prime Rate ( i.e. , there shall be included in Operating Expenses for each calendar year occurring within the period of the useful life of such OE Includable Capital Item, an amount equal to the sum of all the principal and interest payments which would have been payable during such calendar year under a hypothetical loan (w) in an original principal amount equal to the costs of such OE Includable Capital Item, (x) which was funded on the first day of such useful life and has a term equal in length thereto, (y) bearing interest at the Prime Rate (determined as of the first day of such useful life), and (z) providing for level monthly payments of principal and interest sufficient to fully amortize such loan over its term). As used herein, the term “ OE Includable Capital Item ” shall mean either of the following:

 

(A)           any Remedial Work to the Common Areas (excluding Common Areas on floors not leased in whole or in part by Tenant), but only if (i) Landlord’s failure to perform the Remedial Work constitutes a violation of Legal Requirements, (ii) Landlord is required to perform the Remedial Work by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority, or (iii) Landlord’s failure to perform the Remedial Work would endanger the health, safety or welfare of any person on or about the Property; or

 

(B)            any other repair or replacement of a capital nature, structural and non-structural, ordinary and extraordinary, foreseen and unforeseen, made by Landlord to the Base Building or the Common Areas (excluding Common Areas on floors not leased in whole or in part by Tenant) to the extent necessary to operate, repair and maintain the Property in conformity with the requirements of this Lease and in accordance with the accepted principles of sound property management (determined with reference to the operation, repair and maintenance of Comparable Buildings), excluding, however, any such repair or replacement which (aa) expands the Net Rentable Area of the Property, (bb) except as otherwise expressly required by this Lease, upgrades or improves the general character or quality of the Property, or (cc) was not properly included within the Final Budget (and without a Tenant Budget Objection being noted thereon with respect to the same, other than a Tenant Budget Objection which was subsequently resolved in favor of Landlord).

 

(4)            If (i) any particular item of cost incurred by, or on behalf of Landlord, is only attributable, in part, to the operation, management, repair and maintenance of the Property, and, in part, to the operation, management, repair and maintenance of one or more other properties owned or operated by Landlord or any Affiliates of Landlord, and (ii) such item of

 

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cost is otherwise includable in “Operating Expenses” (based on the foregoing Sections 2.2(c)(1) , (2)  and (3) , sequentially applied ), then item of cost shall be allocated between the Property and such other property or properties, on a fair and equitable basis.

 

(5)            Whenever this Section 2.2(c)  requires that a particular item(s) of cost is to be allocated on a “ fair and equitable basis ”, the same shall be deemed to require that such item(s) of cost be allocated reasonably, (i) using an allocation method based on the comparative measure(s) that best reflect the appropriate portion of such item(s) of cost that should be included within “Operating Expenses” ( e.g. , time, square footage and/or other measure as appropriate), and that is consistently applied from calendar year to calendar year, and (ii) otherwise in a manner that does not result in a profit to Landlord, result in a disproportionate burden to Tenant, or result in a disproportionate benefit to any other person(s) or propert(ies).

 

(d)            Landlord shall use its reasonable efforts to make payments on account of Operating Expenses in a time and manner to obtain the appropriate discounts or rebates available.  Landlord shall operate the Property in an efficient manner and exercise reasonable efforts to minimize Operating Expenses consistent with maintaining services at a level consistent with Comparable Buildings.

 

(e)            If, during any calendar year, the Property is less than ninety five (95%) occupied, then appropriate adjustments shall be made (on a consistent basis from calendar year to calendar year) to those components of Operating Expenses which vary with Building occupancy, so as to calculate Operating Expenses as though the Building had been ninety five percent (95%) occupied during such calendar year. The percentage of Building occupancy during any calendar year shall be determined by adding together the total leased space on the first day of each month during such year and dividing by twelve (12). The foregoing notwithstanding, for any calendar year, Landlord shall not recover from Tenant and other the tenants and occupants of the Property, collectively, an amount in excess of one hundred percent (100%) of the total Operating Expenses with respect to the Property.

 

(f)             Within ninety (90) days after the end of each calendar year during the Term or as soon thereafter as possible in the exercise of reasonable diligence (but, in all events, not later than one hundred twenty (120) days after the end of the calendar year), Landlord shall provide Tenant a statement (the “ Operating Expense Statement ”) prepared by Landlord (i) showing Operating Expenses for such calendar year broken down by component expenses, in reasonable detail, (ii) calculating Tenant’s Operating Expense Share for such calendar year, and (iii) reconciling the same with the Monthly Estimated OE Payments for such calendar year. The Operating Expense Statement shall be accompanied by a written certification of Landlord’s controller, or other financial officer knowledgeable of the facts certified to therein, certifying to Tenant that, to the best of his or her knowledge, the Operating Expense Statement has been prepared in accordance with the definitions and provisions pertaining to Operating Expenses contained in this Lease. If, for any calendar year, the Operating Expense Statement indicates that Tenant’s Operating Expense Share exceeds the Monthly Estimated OE Payments theretofore made (any such excess being herein called an “ OE Underpayment ”), then Tenant shall pay the amount thereof to Landlord within thirty (30) days after delivery of the Operating Expense Statement. If, for any calendar year, the Operating Expense Statement indicates that the Monthly Estimated OE Payments theretofore made exceed the Tenant’s Operating Expense Share (any

 

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such excess being herein called an “ OE Overpayment ”), then Landlord, together with such Operating Expense Statement, shall pay the amount thereof to Tenant; it being further agreed that if OE Overpayment exceeds five percent (5%) of Tenant’s Operating Expense Share, then Landlord, together with its aforesaid payment to Tenant in the amount of the OE Overpayment, shall also pay to Tenant interest thereon, computed at the Prime Rate, for the period from July 1 st  of calendar year to which the Operating Expense Statement relates to the date that Landlord makes such aforesaid payment.

 

(g)            (1)            If, for any calendar year, Landlord shall fail to deliver an Operating Expense Statement on or prior to the date that is one hundred twenty (120) days after the end of the calendar year, then (i) Landlord shall still be obligated to deliver an Operating Expense Statement for such calendar year, and (ii) Landlord, together with such Operating Expense Statement, shall refund to Tenant the amount of such OE Overpayment, together with interest on the amount thereof at the Applicable Rate (rather than at the Prime Rate as provided in Section 2.2(f)  above) for the period from July 1 st  of calendar year to which the Operating Expense Statement relates to the date that Landlord makes such refund.

 

(2)            After delivery of an Operating Expense Statement for any calendar year, Landlord shall have the right to amend the same, subject, however, to the following provisions of this Section 2.2(g)(2) . Notwithstanding any other provision of this Lease, Landlord shall be estopped from amending, and hereby waives the right to amend, any Operating Expense Statement not amended by Landlord within two (2) years after the end of the calendar year to which said Operating Expense Statement applies, nor shall Landlord have the right through any other procedures or mechanism to collect any Operating Expense not included on the pertinent Operating Expense Statement after the second (2 nd ) anniversary of the last day of the calendar year to which said Operating Expense Statement applies, unless before said second (2 nd ) anniversary Landlord has delivered to Tenant a revised Operating Expense Statement reflecting such revised Operating Expense (with a reasonably detailed explanation of the reasons for any such revision) and made a written demand for payment of said Operating Expense.

 

(h)            Any Operating Expense Statement or other notice from Landlord pursuant to this Section 2.2 shall be subject to Tenant’s rights of review and audit set forth in Section 2.5 hereof. Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Operating Expense Statement or other notice.

 

2.3          Real Estate Taxes

 

(a)            Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Occupancy Percentage of each component of Real Estate Taxes as same becomes due and payable from time to time for each fiscal period fixed by any taxing authority with respect to such component of Real Estate Taxes (each a “ Fiscal Period ”) that occurs during the Term as hereinafter provided (the amount so payable by Tenant for such component being herein called “ Tenant’s Tax Share ”). In respect of any Fiscal Period that begins prior to the first day of the Term, or ends later than the last day of the Term, the Tenant’s Tax Share shall be prorated to correspond to that portion of such Fiscal Period occurring within the Term. Tenant shall pay Tenant’s Tax Share for each such Fiscal Period pursuant to the following provisions:

 

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(1)            For the first Fiscal Period occurring during the Term ( i.e. , the Fiscal Period within which the Commencement Date occurs), Tenant’s Tax Share shall be paid on the Commencement Date (and, if applicable, adjusted) pursuant to the apportionment provisions of the Purchase Agreement.

 

(2)            For each subsequent Fiscal Period, upon receipt of any invoice or bill for such component of Real Estate Taxes, Landlord shall deliver to Tenant a written statement (the “ Tax Statement ”) which shall (A) set forth (i) the amount of such Real Estate Tax component (determined consistent with definition of Real Estate Taxes set forth below and the invoices in respect of such component theretofore received by Landlord), (ii) Tenant’s Tax Share (consistent therewith, and assuming the then applicable Tenant’s Occupancy Percentage), and (iii) the due date of such component of Real Estate Taxes, and (B) include a copy of such invoice or bill.  Tenant, within thirty (30) days after its receipt such Tax Statement shall pay to Landlord the amount of Tenant’s Tax Share indicated by the Tax Statement; provided , however , that if such component has a due date that is more than sixty (60) days after the rendering of such Tax Statement, then Tenant may defer the payment of Tenant’s Tax Share until the date that is thirty (30) days prior to the due date of such component of Real Estate Taxes.

 

(3)            If, after the delivery of any Tax Statement for any component of Real Estate Taxes for any Fiscal Period, there shall occur any decrease in such component of Real Estate Taxes in respect of such Fiscal Period (including a decrease therein resulting from any net refund of such component of Real Estate Taxes), then Landlord shall promptly (and, in all events, within thirty (30) days after such decrease shall become effective) furnish to Tenant a revised Tax Statement for such component of Real Estate Taxes for such Fiscal Period. If any revised Tax Statement shall set forth a Tenant’s Tax Share that is less than that set forth on the previous Tax Statement, then Landlord, together with its delivery of the revised Tax Statement, shall pay to Tenant the amount of the difference between the Tenant’s Tax Share set forth on the previous Tax Statement and the Tenant’s Tax Share set forth on the revised Tax Statement.

 

(4)            If, after the delivery of a Tax Statement for any component of Real Estate Taxes for any Fiscal Period, there shall occur any increase in the Real Estate Taxes in respect of such Fiscal Period (including any increase therein resulting from an assessment or rate adjustment), then, and in each such case, Landlord may furnish to Tenant a revised Tax Statement for such component of Real Estate Taxes for such Fiscal Period. If any revised Tax Statement shall set forth a Tenant’s Tax Share that is greater than that set forth on the previous Tax Statement, then Tenant, within thirty (30) days after the delivery of such revised Tax Statement, shall pay to Landlord the difference between the Tenant’s Tax Share set forth on the revised Tax Statement and the Tenant’s Tax Share set forth on the previous Tax Statement.

 

(b)            “ Real Estate Taxes ” shall mean all real estate taxes, assessments and other governmental levies and charges, general and special, ordinary or extraordinary, of any kind and nature (including any interest on such assessments whenever the same are permitted to be paid in installments) which may presently or hereafter be imposed, levied or assessed by any lawful taxing authorities upon or against the whole, or any part, of the Property, including taxes imposed on (i) the gross rents or gross receipts (but not the net income) of the Property and (ii) personal property of Landlord which comprises part of the Property, but only to the extent that the same would be payable if the Property were the only property of Landlord.  If at any time

 

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during the Term the present system of ad valorem taxation of real property is changed or supplemented so that in lieu of, or in addition to, the ad valorem tax on real property, there shall be assessed on Landlord or the Property any new tax which, by its nature, is imposed in substitution for, or in lieu of, the whole or any part of a tax which would otherwise have constituted a Real Estate Tax, such new tax shall be included within the term Real Estate Taxes , but only to the extent that the same would be payable if the Property were the only property of Landlord. Such new taxes may include, but shall not be limited to, a capital levy or other tax on the gross rents or gross receipts (but not the net income) of the Property or similar tax, assessment, levy or charge measured by or based, in whole or in part, upon any such gross rents or gross receipts.  Notwithstanding anything herein-above contained to the contrary, Real Estate Taxes shall never include (i) any transfer, sales, excise or similar taxes ( e.g. , realty transfer taxes, sales taxes, recording taxes, etc.), (ii) taxes and assessments imposed, levied or assessed upon or against any personal property of tenants or other occupants of the Building (or any other personal property not included within the term Property hereunder), (iii) federal, state and local taxes on income, (iv) death taxes (including estate and inheritance taxes), (v) franchise taxes and the like (including unincorporated business taxes, etc.), (vi) any other taxes imposed or measured on or by the net income of Landlord or the net income from the operation of the Property, (vii) any other taxes attributable to the corporate, partnership or other organization status of Landlord or any Landlord Party (including filing fees, etc.), or (viii) any other taxes imposed in connection with any (direct or indirect) change of ownership of the Property. In addition, and notwithstanding anything herein-above contained to the contrary: (1)  Real Estate Taxes shall be deemed reduced by the amount thereof, if any, that is attributable to the value of leasehold improvements of any other tenant of the Building hereafter made (or leasehold improvements already existing and separately charged as an expense to be paid by such tenant) to the extent the same exceed the value of the other leasehold improvements generally found in the Building; (2) any Real Estate Taxes for which a discount is available for early payment shall be deemed reduced by the greatest possible discount available to Landlord for such early payment, regardless of when such taxes are actually paid and regardless of whether Landlord actually obtains a discount for early payment; (3)  Real Estate Taxes , for any Fiscal Period, shall include only the amounts actually due and payable during such Fiscal Period (determined net of any abatements, credits or offsets with respect thereto); and (4) in the case of Real Estate Taxes that may be paid in installments, only the amount of each installment due and payable during a Fiscal Period shall be included in Real Estate Taxes for such Fiscal Period.

 

(c)            The rights and obligations of the parties with respect to the contest or appeal of the validity or amount of Real Estate Taxes by appropriate proceedings (any such contest or appeal being herein called a “ RE Tax Contest ”) shall be as follows:

 

(1)            Landlord, for any Fiscal Period, may, on its own initiative, bring a RE Tax Contest (any such RE Tax Contest being herein called a “ Landlord Initiated Contest ”). For each applicable Fiscal Period, Landlord shall advise Tenant, in writing, as to whether it will elect to bring a Landlord Initiated Contest sufficiently in advance of the applicable deadlines for bringing RE Tax Contests such that Tenant can effectively exercise, or refrain from exercising, its rights under the following provisions of Section 2.3(c)(2) .  If Landlord shall elect to bring a Landlord Initiated Contest, then Landlord shall timely and diligently bring and prosecute such Landlord Initiated Contest, and keep Tenant advised of the progress thereof. The costs of any Landlord Initiated Contest shall, subject to the provisions of Section 2.3(c)(4) , be borne by Landlord.

 

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(2)            If, for any Fiscal Period, (i) Landlord shall elect not to bring a Landlord Initiated Contest, and (ii) Tenant’s Occupancy Percentage is at least twenty-five percent (25%), then Tenant may, by notice to Landlord, require that Landlord bring a RE Tax Contest for such Fiscal Period (any such RE Tax Contest being herein called a “ Tenant Required Contest ”). If Tenant shall require Landlord to bring a Tenant Required Contest, then Landlord shall timely and diligently bring and prosecute such Tenant Required Contest, and keep Tenant advised of the progress thereof. The costs of any Tenant Required Contest shall, subject to the provisions of Section 2.3(c)(4) , be borne by Tenant.

 

(3)            If, for any calendar year, Tenant’s Occupancy Percentage is at least ninety percent (90%), then Tenant may, by notice to Landlord, require Landlord to permit Tenant the sole and exclusive right to bring a RE Tax Contest for such Fiscal Period (any such RE Tax Contest being herein called a “ Tenant Controlled Contest ”). For each applicable Fiscal Period, Tenant shall advise Landlord, in writing, as to whether it will elect to require Landlord to permit Tenant the sole and exclusive right to bring a RE Tax Contest for such Fiscal Period sufficiently in advance of the applicable deadlines for bringing RE Tax Contests such that Landlord can effectively exercise, or refrain from exercising, its rights under the provisions of Section 2.3(c)(1) . If Tenant shall require Landlord to permit Tenant to bring a Tenant Controlled Contest, then Tenant shall timely and diligently bring and prosecute such Tenant Controlled Contest, and keep Landlord advised of the progress thereof. Tenant may bring any Tenant Controlled Contest in Landlord’s name; and Landlord shall cooperate with Tenant in bringing and prosecuting such Tenant Controlled Contest. The costs of any Tenant Controlled Contest shall, subject to the provisions of Section 2.3(c)(4) , be borne by Tenant.

 

(4)            If, for any Fiscal Period, any RE Tax Contest shall result in a reduction in Real Estate Taxes for such calendar year, then, after the final determination of such RE Tax Contest, the aggregate refund monies received thereon (including any amounts paid in respect of interest thereon) shall applied as follows: (i) first, the same may be retained by or paid to the party or parties bearing the costs of such RE Tax Contest, up to (but not in excess of) the reasonable out-of-pocket costs incurred by such party or parties (and, as among the parties, if applicable, in the same proportion as they bear such costs); and (ii) second, the balance thereof, shall be deemed a “net refund” of Real Estate Taxes for such Fiscal Period. Within thirty (30) days after such final determination, Landlord shall issue a revised Tax Statement as required under Section 2.3(a)(4)  above reflecting Real Estate Taxes after such net refund.

 

(5)            During the pendency of any RE Tax Contest, Tenant shall continue to make payments of Additional Rent due pursuant to the foregoing provisions of this Section 2.3 .

 

(d)            Any Tax Statement or other notice from Landlord pursuant to this Section 2.3 shall be subject to Tenant’s rights of review and audit set forth in Section 2.5 .  Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Tax Statement or other notice.

 

2.4          Budget

 

(a)            On or before June 1st of each calendar year during the Term, Landlord shall deliver to Tenant for Tenant’s review and comment, a projected Budget for the next succeeding

 

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Contemplated OE Includable Capital Item, set forth in Landlord’s proposed Budget, is in fact an OE Includable Capital Item.

 

(c)            Landlord and Tenant shall negotiate in good faith to resolve all Tenant Budget Objections with respect to the proposed Budget. If the parties shall be unsuccessful in their efforts to resolve all Tenant Budget Objections, then, subject to the provisions of the next succeeding sentence, all disputes with respect Tenant Budget Objections shall be resolved in accordance with the provisions of Article XII of this Lease. Notwithstanding the foregoing, and without regard to any arbitration result, it is agreed that (i) with respect to any Tenant Budget Objection described in Section 2.4(b)(1)  above, Landlord shall have the right to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, as opposed to performing ordinary repairs and/or maintenance with respect to such major component of the Base Building, if Landlord establishes, by certification of a qualified engineer reasonably acceptable to Tenant, that such component of the Base Building is beyond its useful life and that continued repair or maintenance (as opposed to replacement) is not commercially practicable (it being agreed that in any such case that Landlord, pursuant to this clause (i), establishes the right to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, Tenant may still object to the characterization of such item as an OE Includable Capital Item for purposes of Section 2.2(c)(3)  hereof, but only if the same otherwise fails to meet one or more of the requirements of an OE Includable Capital Item as delineated in such Section 2.2(c)(3)  hereof), and (ii) with respect to any Tenant Budget Objection described in Section 2.4(b)(2)  above, Tenant shall have the right to require Landlord to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, as opposed to performing ordinary repairs and/or maintenance with respect to such major component of the Base Building, if Tenant establishes, by certification of a qualified engineer reasonably acceptable to Landlord, that such component of the Base Building is beyond its useful life and that continued repair or maintenance (as opposed to replacement) is not commercially practicable (it being agreed that in any such case that if Tenant, pursuant to this clause (ii), requires Landlord to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, Tenant may not object to the characterization of such item as an OE Includable Capital Item for purposes of Section 2.2(c)(3)  hereof).

 

(d)            Within thirty (30) days after the resolution of all Tenant Budget Objections (by agreement of the parties or otherwise as contemplated by Section 2.4(c)  above), Landlord shall prepare and deliver to Tenant the final Budget for the Budget Year, which final Budget shall reflect the resolution of all Tenant Budget Objections (such final Budge