This Lease
Agreement made as of the 26th day of November, 2008 by and between
Carl Ruedebusch LLC (herein “ Landlord ”) and
Cardiac Science Corporation (“ Tenant ”). For
good and valuable consideration, the receipt and adequacy of which
is acknowledged, Landlord and Tenant hereby agree as
follows:
1. GRANT;
PRIMARY TERM; CERTAIN DEFINED TERMS.
A.
Grant . Landlord hereby leases to Tenant and Tenant hereby
takes from Landlord certain premises known as Deerfield Industrial
Park Property comprising approximately 16.613 acres as described on
Exhibit A , attached hereto and incorporated herein by
reference (the “ Premises ”) on which there is a
building containing approximately 100,000 rentable square feet
being used by Tenant for a combination of light manufacturing,
warehouse and office use (the “ Building ”)
situated as outlined on a diagram of the Premises shown on the Site
Plan attached hereto as Exhibit B and incorporated
herein by reference
B.
Primary Term . To have and to hold the Premises for a term
(the “ Primary Term ”) of one hundred twenty
(120) months commencing on December 1, 2008 (the “
Rent Commencement Date ”) and expiring on the last day
of November, 2018, unless such Primary Term is extended as provided
in Section 5.C. of this Lease.
C. Lease
Year Definitions . For the original Premises, each twelve
(12) month period commencing on December 1 and ending on
November 30 of the immediately following year may be referred
to in this Lease as the “ Original Premises Lease Year
,” including such periods that fall during any extension of
the Primary Term as provided in Section 5.C. of this Lease.
For the First Expansion Space, the twelve (12) month period
commencing on the first (1 st )
day of the month immediately following the date of Substantial
Completion of the First Expansion Space and ending on the last day
of the month that immediately precedes said month in the
immediately following year, and each succeeding twelve
(12) month period thereafter, may each be referred to in this
Lease as the “ First Expansion Lease Year ,”
except that the last First Expansion Lease Year shall end on the
last day of the Primary Term, as such Primary Term may have been
extended as provided in Section 5.C. of this Lease. For the
Second Expansion Space, the twelve (12) month period
commencing on the first (1 st )
day of the month immediately following the date of Substantial
Completion of the Second Expansion Space and ending on the last day
of the month that immediately precedes said month in the
immediately following year, and each succeeding twelve
(12) month period thereafter, may be referred to in this Lease
as a “ Second Expansion Lease Year ” during the
Primary Term (as such Primary Term may have been extended pursuant
to the terms of Section 5.C. of this Lease). Notwithstanding
the foregoing, the term “ Lease Year ,” as it
applies without any reference to the applicable portion of the
Premises, shall mean the Lease Year during any Option Term as it
applies to the entire Premises (as then constituted, including the
Original Premises and, if constructed, either or both of the First
Expansion Space and the Second Expansion Space) and shall mean the
twelve (12) month period commencing on the first day of the
month immediately following the last day of the Primary Term and
ending on the last day of the month that immediately precedes said
month in the
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immediately
following year, and each succeeding twelve (12) month period
thereafter, as well as the same twelve (12) month period in
the past as contemplated in Section 4.A. of this
Lease.
D.
Definition of Rentable Square Feet . The term “
Rentable Square Feet ” as used herein shall mean the
area reasonably determined by Landlord on the basis of the actual
Rentable Square Feet of the applicable portion of the Building,
which shall be done through a measurement of the applicable portion
of the Building once work is completed sufficiently so as to allow
an accurate physical measurement. The term “ Rentable
Square Feet ” or “ Rentable Square Footage
” shall mean the amount of square feet found within the
applicable portion of the Building measured to the exterior surface
of exterior walls and including the area underneath interior walls
and support columns. The parties agree that the Rentable Square
Feet of the Building on the date of this Lease is 100,000 Rentable
Square Feet.
2. RENT FOR
FIRST YEAR OF PRIMARY TERM; RENT PAYMENTS: The rent payable for the
original Premises during the first Original Premises Lease Year
shall be at the rate of Fifty-One Thousand Five Hundred and 00/100
Dollars ($51,500.00) per month, subject to adjustment in accordance
with Section 3 below. All rent payable hereunder shall be paid
to Landlord in lawful currency of the United States at such place
as Landlord may from time to time designate in writing.
3. RENT
INCREASES: The monthly rent for the original Premises shall be
increased at the commencement of each and every Original Premises
Lease Year, with the first (1 st )
increase on the first (1 st )
day of the second (2 nd )
Original Premises Lease Year in an amount equal to three percent
(3%) of the monthly rental being paid in the immediately prior
Original Premises Lease Year. Further, the aforementioned annual
increases in monthly rental shall also apply to the First Expansion
Space, with each annual increase in monthly rental being in the
amount equal to three percent (3%) of the monthly rental being paid
in the immediately prior First Expansion Lease Year, with the first
(1 st
) increase on the first (1
st ) day of the second (2 nd )
First Expansion Lease Year. Similarly, the aforementioned annual
increases in monthly rental shall also apply to the Second
Expansion Space, with each annual increase in monthly rental being
in the amount equal to three percent (3%) of the monthly rental
being paid in the immediately prior Second Expansion Lease Year,
with the first (1 st )
increase on the first (1 st )
day of the second (2 nd )
Second Expansion Lease Year. Finally, the aforementioned annual
increases in monthly rental shall also apply to the rent for the
entire Premises (as then constituted, including any expansions to
the Building) during any Option Term of this Lease, with each
annual increase in monthly rental being in the amount equal to
three percent (3%) of the monthly rental being paid in the
immediately prior Lease Year, with the first (1
st ) increase on the first (1
st ) day of the second (2 nd )
Lease Year of each Option Term.
4. OPTION TO
EXTEND AND RIGHT TO TERMINATE:
A. Option
to Extend . Tenant shall have the option to extend this Lease
for Two (2) additional Five (5) year term(s) (the “
Option Terms ”) upon the same conditions applicable to
the Primary Term, except that (i) no additional options to
extend shall be granted past November 30, 2028, unless and only to
the extent that the Primary Term is extended as provided in Section
5.C. of this Lease, (ii) no additional rights to expand the
Building shall be granted, and (iii) the rent
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during the
first (1 st
) Lease Year of each Option Term
shall be set at ninety-five percent (95%) of the Fair Market Rental
Rate (as defined below), provided, however, that the rent during
the first (1 st )
Lease Year of each Option Term as determined above shall be subject
to the following limitations: (x) the rent shall be no less
than the rent paid in the Lease Year that was four (4) Lease
Years prior to the first (1 st )
Lease Year of the then applicable Option Term and be the sum of the
rent paid for the total of the Original Premises and, if built,
either or both the First Expansion Space and the Second Expansion
Space, and (y) the rent shall be no more than one hundred
three percent (103%) of the rent being paid during the immediately
prior Lease Year. Whenever the terms “ Lease term
” or “ term of this Lease ” are used in
this Lease, they shall refer to the Primary Term and any Option
Term for which Tenant has exercised its option to
extend.
Tenant may
exercise any option to extend this Lease by giving notice in
writing to Landlord not more than three hundred sixty
(360) days and no less than two hundred seventy
(270) days before the expiration of the Primary Term or any
prior Option Term, as the case may be. Landlord covenants and
agrees to give Tenant written notice of the date by which such
option must be exercised at least forty-five (45) days but not
more than one hundred twenty (120) days prior to when such
option needs to be exercised (“ Landlord’s Option
Notice ”). Tenant shall not be entitled to exercise any
option to extend this Lease if Landlord’s Option Notice was
given as required but Tenant’s notice is not given as
required herein or if the Tenant is in default of this Lease
pursuant to Section 21 hereof beyond any applicable notice and
cure period or grace period, or if Tenant has been ten (10) or
more days late in payment of its rent and has not cured such late
payments within ten (10) days after written notice on more
than three (3) occasions during any calendar year of this
Lease.
B. Fair
Market Rental Rate . For the purposes of this Lease, the term
“ Fair Market Rental Rate ” shall mean the
annual amount per rentable square foot that a comparable landlord
of a comparable building with a comparable vacancy factor has
accepted in comparable transactions between non-affiliated parties
from new, non-expansion, non-renewal and non-equity tenants of
comparable credit-worthiness, for comparable space, for a
comparable use, for a comparable period of time for the Dane County
and Madison, Wisconsin metro market (“ Comparable
Transactions ”). In any determination of Comparable
Transactions appropriate consideration shall be given to the annual
rental rates per rentable square foot, the standard of measurement
by which the rentable square footage is measured, the ratio of
rentable square feet to usable square feet, the type of escalation
clause, abatement provisions reflecting free rent, brokerage
commissions which would be payable by Landlord in similar
transactions, length of the lease term, size and location of
premises being leased, tenant improvement allowances, and other
generally applicable conditions of tenancy for such Comparable
Transactions. No later than thirty (30) days after Landlord
has delivered Landlord’s Option Notice, Tenant shall notify
Landlord of whether Tenant is preliminarily planning on exercising
its option to extend and directing the determination of the Fair
Market Rental Rate (“ Tenant’s Preliminary
Notice ”). Within fifteen (15) business days after
Tenant’s Preliminary Notice, Landlord shall notify Tenant in
writing of Landlord’s good faith estimate of the Fair Market
Rental Rate. Tenant shall, within ten (10) business days
following receipt of same, notify Landlord in writing of the
acceptance or rejection of the proposed Fair Market Rental Rate,
which notice shall include, if Tenant objects to Landlord’s
determination, Tenant’s own determination of the Fair Market
Rental Rate. If Tenant fails to respond within such period, then
Tenant shall be deemed to have rejected
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Landlord’s determination of the Fair
Market Rental Rate as set forth in Landlord’s notice. In the
event Tenant objects by timely providing written notice to Landlord
(or is deemed to have rejected such determination), Landlord and
Tenant shall attempt to agree upon such Fair Market Rental Rate
using good faith efforts. If Landlord and Tenant fail to reach
agreement within fifteen (15) business days following
Tenant’s delivery of its objection to (or deemed rejection
of) Landlord’s Fair Market Rental Rate (the “
Outside Agreement Date ”), then such determination
shall be determined in accordance with the immediately following
paragraph.
Within five
(5) business days after the Outside Agreement Date, Landlord
and Tenant shall each appoint an impartial, reputable, licensed
real estate broker who has been active in leasing buildings similar
to the Premises in the Madison, Wisconsin metro market during the
immediately-preceding five (5) year period (a “
Qualified Broker ”). Each of the two Qualified Brokers
shall then, within thirty (30) days after their appointment
determine the Fair Market Rental Rate for the Premises (based on
the criteria identified in the first paragraph of this
Section 4.B. above) and deliver the results to each of
Landlord and Tenant. In the event that the higher of the two
determinations is 5% or less different than the lower of the two
determinations then the Fair Market Rental Rate shall be the
average (mean) of the two. In the event that the higher of the
two determinations is greater than 5% different than the lower of
the two determinations then the two Qualified Brokers shall, within
five (5) business days after the last of the two Qualified
Broker determinations is delivered, select a third Qualified
Broker, who shall, within ten (10) Business Days after his or
her appointment decide which of the two Qualified Broker
determinations is the appropriated determination of the Fair Market
Rental Rate based on the criteria identified in the first paragraph
of this Section 4.B. above. Landlord and Tenant shall each pay
any fees for the services of the Qualified Broker retained by them
and for one-half of the fees for the third Qualified
Broker.
C. Right
to Terminate . Subject to the terms of this Section, Tenant
shall have the right to terminate this Lease in advance of the
expiration of the Primary Term of this Lease effective at anytime
after the last day of the seventy-eighth (78
th ) month following the Rent Commencement Date.
Tenant’s right to terminate this Lease pursuant to this
Section may only be exercised if all of the following requirements
are satisfied: (i) Tenant is not at that time in default with
respect to any of the terms and provisions of this Lease and has
not subsequently defaulted in any of Tenant’s obligations
under this Lease past any applicable cure period through the
effective date of the early termination, (ii) Tenant has not
provided an Expansion Notice to Landlord for the Second Expansion
Option, (iii) Tenant delivers a written notice to Landlord
notifying Landlord that Tenant is terminating this Lease pursuant
to this Section, which notice shall be provided at least eighteen
(18) months before the proposed date of termination pursuant
to this Section, and (iv) along with the foregoing described
written notice to Landlord Tenant shall deliver to Landlord a
termination fee in the amount of the following, as applicable,
(a) if Tenant has not provided an Expansion Notice to Landlord
for the First Expansion Option, the termination fee shall be an
amount equal to the unamortized portion of the real estate
brokerage commission paid by Landlord to CresaPartners —
West, Inc. (“ CresaPartners ”) in connection
with this Lease (with the commission being amortized on a straight
line basis over the Primary Term and the calculation of the
unamortized amount shall be performed on a per day basis), or
(b) if Tenant has provided an Expansion Notice to Landlord for
the First Expansion Option, the termination fee shall be the sum of
the following amounts (x) the unamortized portion of the real
estate brokerage commission paid by Landlord to CresaPartners in
connection with this Lease
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(with the
commission being amortized on a straight line basis over the
Primary Term and the calculation of the unamortized amount to be
performed on a per day basis), plus (y), the unamortized portion of
the real estate brokerage commission paid by Landlord to
CresaPartners (or its successors and/or assigns) in connection with
the expansion into the First Expansion Space (with the commission
being amortized on a straight line basis over the period commencing
on the date that Tenant starts paying rent for the First Expansion
Space and ending on the last day of the Primary Term, and the
calculation of the unamortized amount to be performed on a per day
basis), and plus (z) the unamortized portion of the First
Expansion Tenant Improvement Amount (with the First Expansion
Tenant Improvement Amount being amortized over the period
commencing on the date that Tenant starts paying rent for the First
Expansion Space and ending on the last day of the seventy-eighth
(78 th
) month following the date that
Tenant starts paying rent for the First Expansion Space, and the
calculation of the unamortized amount to be performed on a monthly
basis, as described below). The term “ First Expansion
Tenant Improvement Amount ” shall mean the amount equal
to fifteen dollars ($15) times the Rentable Square Feet of the
First Expansion Space with the unamortized amount outstanding
accruing interest at the rate of seven percent (7%) per annum with
the calculation of interest assuming that the amortized portions
are reduced from the unamortized portions along with interest on a
monthly basis. For example, with respect to the First Expansion
Tenant Improvement Amount, if Tenant occupied 20,000 Rentable
Square Feet through the First Expansion Option on the first day of
the second Original Premises Lease Year and terminates this Lease
on the last day of the sixth (6 th )
Original Premises Lease Year, the unamortized amount of the First
Expansion Tenant Improvement Amount would be $28,210.70 ($15 x
20,000 = $300,000 amortized over seventy-eight (78) months at
7% interest results in $28,210.70 remaining unamortized at the end
of the seventh (7 th )
Original Premises Lease Year, as such calculations are shown in
more detail on Exhibit D attached hereto).
A.
Expansion Notice . Subject to the First Expansion Conditions
and the Second Expansion Conditions (as defined below and as
applicable), if Tenant desires to expand the Building for either of
the expansion options contemplated herein, then Tenant shall
provide a written request to Landlord (the “ Expansion
Notice ”), which written notice shall contain the
approximate size (in Rentable Square Feet) of the expansion desired
by Tenant and the desired occupancy date for such space, provided,
however, that such occupancy date shall be no earlier than twelve
(12) months after the date the Expansion Notice is delivered
by Tenant to Landlord. Tenant may not revoke an Expansion Notice
once delivered to Landlord.
B. First
Expansion Option . Subject to the First Expansion Conditions,
Tenant shall have the right to have Landlord expand the
Building’s square footage for Tenant to Lease through an
expansion of no less than 20,000 Rentable Square Feet and not to
exceed 60,000 Rentable Square Feet (provided, however, that the
original Building and all expansions, including those still to be
completed, taken together shall not to exceed 200,000 Rentable
Square Feet) with a completion date to be provided by Tenant
(subject to the minimum time for construction as provided in
Section 5.A. above), provided that the Expansion Notice is
provided by Tenant to Landlord no later than the last day of the
thirtieth (30 th )
month after the Rent
5
Commencement
Date (the “ First Expansion Option ”). The Lease
terms applicable to the First Expansion Option, if exercised, will
be as follows:
(i)
Planning and Construction . The approximate location of
First Expansion Option space is shown on Exhibit E
attached hereto. Within fifteen (15) days after Tenant
provides its Expansion Notice, the parties shall meet to discuss
the details of the expansion and Tenant agrees to participate in
any subsequent meetings requested by Landlord in order for final
plans and specifications to be developed for the First Expansion
Option space, which plans and specifications shall be approved by
both Landlord and Tenant. The First Expansion Option space, once
finally determined as to the size and location, is hereinafter
referred to as the “ First Expansion Space .” In
developing the scope of work to be performed by Landlord for the
First Expansion Space, it is acknowledged that the First Expansion
Space shall only be developed for production and warehouse space
and that the ratio of the production and warehouse space shall be
on a 50%/50% basis (unless otherwise mutually agreed by the parties
in writing), and that the scope of Landlord’s work shall be
to a level of fit and finish consistent with that which is
necessary to support Tenant’s permitted use, including
without limitation, all elements of utility, power, HVAC, fire
protection, and plumbing, and shall not exceed the scope of work as
outlined on Exhibit F attached hereto. For the
avoidance of doubt, Landlord shall bear all costs associated with
the First Expansion Space, including without limitation
construction, materials, architecture and engineering costs. Any
additional work required for Tenant’s use of the First
Expansion Space shall be performed at Tenant’s sole cost and
expense. Tenant shall have the right, at Tenant’s own cost
and expense, to engage its own space planner and any engineers
and/or consultants of its choice, subject to Landlord’s
reasonable approval, to prepare preliminary space plans and working
drawings. Subject to Permitted Delays (as defined below) and the
minimum time for construction as provided in Section 5.A.
above, Landlord shall Substantially Complete the First Expansion
Space within the time period provided in Tenant’s Expansion
Notice.
(ii)
Term . Provided that Tenant’s Expansion Notice is
timely provided to Landlord, the Term of this Lease shall not be
affected by Tenant’s exercise of the First Expansion Option.
The Term for both the Original Premises and the First Expansion
Space shall expire or be extended together (and may not be
separated), unless this Lease is terminated early as provided in
Section 4.C. of this Lease.
(iii)
Rent . Tenant shall commence paying rent for the First
Expansion Space on the date that is thirty (30) days after
Substantial Completion of the First Expansion Space (the “
First Expansion Rent Commencement Date ”). The rent
amount for the first First Expansion Lease Year (as defined in
Section 1.C. of this Lease) shall be based on the
following:
a. If Tenant
provides its Expansion Notice during the first Original Premises
Lease Year and with a scheduled Substantial Completion date no
later than twelve (12) months after the date the Expansion
Notice is provided, then the annual rent (payable in twelve
(12) equal monthly installments) for the First
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Expansion Space
for the First Expansion Lease Year will be Six and 61/100 ($6.61)
times the Rentable Square Feet of the First Expansion Space. For
the avoidance of doubt, the annual rent for the First Expansion
Lease Year shall be as set forth in the preceding sentence even if
the actual Substantial Completion date occurs after the scheduled
Substantial Completion date.
b. If Tenant
provides its Expansion Notice within the second (2
nd ) Original Premises Lease Year and with a
scheduled Substantial Completion date no later than twelve (12)
months after the date the Expansion Notice is provided, then the
annual rent (payable in twelve (12) equal monthly
installments) for the First Expansion Space for the First Expansion
Lease Year will be Six and 81/100 ($6.81) times the Rentable Square
Feet of the First Expansion Space. For the avoidance of doubt, the
annual rent for the First Expansion Lease Year shall be as set
forth in the preceding sentence even if the actual Substantial
Completion date occurs after the scheduled Substantial Completion
date.
c. If Tenant
provides its Expansion Notice within the third (3
rd ) Original Premises Lease Year, but in no event
may such Expansion Notice be provided later than the last day of
the thirtieth (30 th )
month after the Rent Commencement Date, and with a scheduled
Substantial Completion date no later than twelve (12) months
after the date the Expansion Notice is provided, then the annual
rent (payable in twelve (12) equal monthly installments) for
the First Expansion Space for the First Expansion Lease Year will
be Seven and 01/100 ($7.01) times the Rentable Square Feet of the
First Expansion Space. For the avoidance of doubt, the annual rent
for the First Expansion Lease Year shall be as set forth in the
preceding sentence even if the actual Substantial Completion date
occurs after the scheduled Substantial Completion date.
d. If Tenant
provides its Expansion Notice at any time before the last day of
the thirtieth (30 th )
month after the Rent Commencement Date, but Tenant’s
scheduled Substantial Completion is more than twelve
(12) months after the date the Expansion Notice is provided
(however, in no event will Tenant have the right to expand pursuant
to the First Expansion Option with an anticipated Substantial
Completion date later than the last day of the forty-second
(42 nd
) month after the Rent Commencement
Date), then the annual rent (payable in twelve (12) equal
monthly installments) for the First Expansion Space for the First
Expansion Lease Year will be (1) Six and 61/100 ($6.61) times
the Rentable Square Feet of the First Expansion Space where the
scheduled Substantial Completion date is during the second
(2 nd
) Original Premises Lease Year,
(2) Six and 81/100 ($6.81) times the Rentable Square Feet of
the First Expansion Option Space where the scheduled Substantial
Completion date is during the third (3 rd )
Original Premises Lease Year, (3) Seven and 01/100 ($7.01)
times the Rentable Square Feet of the First Expansion Space where
the scheduled Substantial Completion date is during the fourth
(4 th
) Original Premises Lease Year. For
the avoidance of doubt, the annual rent for the First Expansion
Lease Year shall be as set forth in the
7
preceding
sentence even if the actual Substantial Completion date occurs
after the scheduled Substantial Completion date.
Exhibit C attached hereto provides an example of the rent
payments described herein, assuming that the Expansion Notice is
provided by Tenant for the First Expansion Option on the last day
of the second (2 nd )
Original Premises Lease Year, the First Expansion Space is 30,000
Rentable Square Feet, and the First Expansion Rent Commencement
Date is the first (1 st )
day of the fourth (4 th )
Original Premises Lease Year.
(iv)
Substantial Completion and Occupancy . The Term “
Substantial Completion ” shall mean the stage of
construction of the First Expansion Space such that (1) a
certificate of occupancy (permanent or temporary) has been issued
from the local municipality for the First Expansion Space,
(2) all material building systems are in good working order
such that Tenant can operate its business from the First Expansion
Space, and (3) only industry standard punch list items are
left to be completed. During the thirty (30) day period
between the date of Substantial Completion and the First Expansion
Rent Commencement Date, Tenant shall have the right occupy the
First Expansion Space and to move in and install, at Tenant’s
sole cost and expense, Tenant’s furniture, fixtures, trade
fixtures, personal property, and telecommunications wiring and
equipment.
(v)
Amendment to Lease . Once all of the plans and
specifications are finalized for the First Expansion Space,
Landlord and Tenant shall prepare in good faith and enter into an
Amendment to this Lease documenting the exact size and location of
the First Expansion Space, the rent to be paid upon Substantial
Completion and such other matters as may be necessary and/or
appropriate in documenting the expansion, provided, however, that
no such other provisions shall be inconsistent with the terms of
this Lease.
(vi)
First Expansion Conditions . Unless a Lease Amendment is
fully signed by both Landlord and Tenant documenting the expansion
pursuant to the First Expansion Option, then Tenant’s right
to expand into the First Expansion Space pursuant to this
Section 5.B. of the Lease shall be subject to the following
conditions precedent (the “ First Expansion Conditions
”): (1) Tenant’s Expansion Notice must be provided
before the last day of the thirtieth (30 th )
month after the Rent Commencement Date, (2) Tenant must
specify an anticipated Substantial Completion date no later than
the last day of the forty-second (42 nd )
month after the Rent Commencement Date, subject to the minimum time
for construction as provided in Section 5.A. above,
(3) this Lease must be in full force and effect and Tenant may
not be in default of this Lease (beyond any applicable cure period)
at the time the Expansion Notice is provided nor may Tenant
subsequently default in any of Tenant’s obligations under
this Lease past any applicable cure period, and (4) Tenant
must sign an Amendment to the Lease to document the expansion into
the First Expansion Space within forty-five (45) days after
the Expansion Notice is provided by Tenant. If any one or more of
the First Expansion Conditions are not met, at Landlord’s
reasonable option, Tenant’s Expansion Notice shall be invalid
and Tenant’s right to expand pursuant to said Expansion
Notice shall be null and void and be of no further force and
effect.
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C. Second
Expansion Option . Following the Rent Commencement Date and
continuing until the last day of the Primary Term of this Lease,
and subject to the Second Expansion Conditions (as defined below),
Tenant shall have the right to have Landlord expand the
Building’s square footage for Tenant to Lease through an
expansion of Building to up to a total Building size (the original
Building and all expansions, including those still to be completed,
taken together) not to exceed 200,000 Rentable Square Feet with a
completion date to be provided by Tenant (subject to the minimum
time for construction as provided in Section 5.A. above) (the
“ Second Expansion Option ”). The Lease terms
applicable to the Second Expansion Option, if exercised, will be as
follows:
(i)
Planning and Construction . The approximate location of
Second Expansion Option space is shown on Exhibit G
attached hereto. Within fifteen (15) days after Tenant
provides its Expansion Notice, the parties shall meet to discuss
the details of the expansion and Tenant agrees to participate in
any subsequent meetings requested by Landlord in order for final
plans and specifications to be developed for the Second Expansion
Option space, which plans and specifications shall be approved by
both Landlord and Tenant. The Second Expansion Option space, once
finally determined as to the size and location, is hereinafter
referred to as the “ Second Expansion Space ”.
Landlord agrees to competitively bid the construction of the Second
Expansion Space using subcontractors approved by Tenant, which
approval shall not be unreasonably withheld or delayed. For the
avoidance of doubt, Landlord shall bear all costs associated with
the Second Expansion Space, including without limitation
construction, materials, architecture and engineering costs. Tenant
shall have the right, at Tenant’s own cost and expense, to
engage its own space planner and any engineers and/or consultants
of its choice, subject to Landlord’s reasonable approval, to
prepare preliminary space plans and working drawings. Subject to
Permitted Delays (as defined below) and the minimum time for
construction as provided in Section 5.A. above, Landlord
agrees to Substantially Complete the Second Expansion Space within
the time period provided in Tenant’s Expansion
Notice.
(ii)
Term . If Tenant expands the Building for Tenant pursuant to
the Second Expansion Option, then the Primary Term of this Lease
shall be no less than seventy-eight (78) months commencing on
the anticipated date of Substantial Completion of the Second
Expansion Space, and such extended Primary Term may only end on the
last day of a month. If the Primary Term of this Lease will be less
than seventy-eight (78) months on the anticipated date of
Substantial Completion of the Second Expansion Space, then the
Primary Term shall be extended so that the Primary Term is extended
to expire on the last day of the seventy-eighth (78
th ) month following the anticipated date of
Substantial Completion of the Second Expansion Space. Further, if
Tenant’s anticipated Substantial Completion date included in
its Expansion Notice is earlier than the last day of the fifth
(5 th
) Original Premises Lease Year, than
the Primary Term shall be extended to expire on the last day of the
seventy-eighth (78 th )
month following the first day of the fifth (5
th ) Original Lease Year. The Term for both the
Original Premises and, if built, either or both of First Expansion
Space and the Second Expansion Space shall expire or be extended
together (and may not be separated). If Tenant expands the
Building
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pursuant to the
Second Expansion Option, Tenant’s right to terminate this
Lease pursuant to Section 4.C. of this Lease shall be null and void
(no longer available for Tenant to exercise) on the date that
Tenant provides is Expansion Notice for the Second Expansion
Option.
(iii)
Rent . Tenant shall commence paying rent for the Second
Expansion Space on the date that is thirty (30) days after
Substantial Completion of the Second Expansion Space (the “
Second Expansion Rent Commencement Date ”). The annual
rent amount (payable in twelve (12) equal monthly installments) for
the first (1 st )
Second Expansion Lease Year (as defined in Section 1.E. of
this Lease) shall be determined based upon the total amount of all
of Landlord’s Project Costs (as defined below) multiplied by
nine and one-quarter percent (9-1/4%). The term “
Landlord’s Project Costs ” shall mean all of the
following Landlord’s costs, expenses and fees in constructing
the Second Expansion Space: (a) the following hard and soft
costs (the “ Hard and Soft Costs ”) (1) all
architectural and engineering fees, (2) permits and approvals
costs and fees, and third party consulting fees,
(3) construction costs, including demolition costs,
(4) grading, storm water management and landscaping costs,
(5) costs in expanding the parking lot, (6) inspection
and plan checking fees, (7) attorneys’ fees and costs,
(8) insurance costs, (9) loan fees and costs, and construction
interest costs, (10) real estate brokerage fees paid to
CresaPartners (or its successors or assigns), if any,
(11) costs for an on-site job superintendant paid to the
general contractor, and (12) any other actual out-of-pocket
costs incurred by Landlord in connection with constructing the
Second Expansion Space, as well as (b) the following fees as a
percentage of the Hard and Soft Costs (1) a general
contractors fee in the amount equal to ten percent (10%) of the sum
of all Hard and Soft Costs, and (2) a development fee payable
to Landlord in the amount equal to five percent (5%) of the sum of
all the Hard and Soft Costs. Landlord’s Project Costs shall
be provided to Tenant on an open-book basis. Tenant shall have the
right to engage its own project manager, at Tenant’s own cost
and expense.
Exhibit C attached hereto provides an example of the rent
payments and the extension of the Primary Term assuming that the
Expansion Notice is provided by Tenant for the Second Expansion
Option on the last day of the fifth (5 th )
Original Premises Lease Year, Landlord’s Project Costs for
the Second Expansion Space equaled $5,600,000, and the Second
Expansion Rent Commencement Date is the first (1
st ) day of the Seventh (7 th )
Original Premises Lease Year.
(iv)
Substantial Completion and Occupancy . The Term “
Substantial Completion ” shall mean the stage of
construction of the Second Expansion Space such that (1) a
certificate of occupancy (permanent or temporary) has been issues
from the local municipality for the Second Expansion Space,
(2) all material building systems are in good working order
such that Tenant can operate its business from the Second Expansion
Space, and (3) only industry standard punch list items are
left to be completed. During the thirty (30) day period
between the date of Substantial Completion and the Second Expansion
Rent Commencement Date, Tenant shall have the right occupy the
Second Expansion Space and to move in and install, at
Tenant’s sole cost and expense,
10
Tenant’s
furniture, fixtures, trade fixtures, personal property, and
telecommunications wiring and equipment.
(v)
Amendment to Lease . Once all of the plans and
specifications are finalized for the Second Expansion Space,
Landlord and Tenant shall prepare in good faith and enter into an
Amendment to this Lease documenting the exact size and location of
the Second Expansion Space, the rent to be paid upon Substantial
Completion and such other matters as may be necessary and/or
appropriate in documenting the expansion, provided, however, that
no such other provisions shall be inconsistent with the terms of
this Lease.
(vi)
Second Expansion Conditions . Unless a Lease Amendment is
fully signed by both Landlord and Tenant documenting the expansion
pursuant to the Second Expansion Option, then Tenant’s right
to expand into the Second Expansion Space pursuant to this
Section 5.C. of the Lease shall be subject to the following
conditions precedent (the “ Second Expansion
Conditions ”): (1) Tenant’s Expansion Notice
must be provided after the Rent Commencement Date and no later than
before the last day of the original Primary Term, (2) this Lease
must be in full force and effect and Tenant may not be in default
of this Lease beyond any applicable cure period at the time of the
Expansion Notice is provided nor may Tenant subsequently
defau
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