MASTER LEASE AGREEMENT

 

 

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			17
1.3	Term			18
1.4	Options to Renew; Special Notice of Non-Renewal			18
1.5	Use			21
1.6	Survival			21
ARTICLE II		RENTAL AND OPERATING EXPENSES		21
2.1	Rental Payments			21
2.2	Operating Expenses			23
2.3	Real Estate Taxes			29
2.4	Budget; Audit Rights			30
ARTICLE III		BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT		33
3.1	Building Standard and Above Standard Services			33
3.2	Keys and Locks			37
3.3	Graphics and Building Directory			37
3.4	Building Identity; Signage; Exclusivity			38
3.5	Communications Equipment			40
3.6	Building Management			41
ARTICLE IV		CARE OF PREMISES; LAWS, RULES AND REGULATIONS		42
4.1	Care of Leased Premises			42
4.2	Access of Landlord to Leased Premises			42
4.3	Nuisance			43
4.4	Laws and Regulations; Rules of Building			43
4.5	Legal Use and Violations of Insurance Coverage			44
4.6	Environmental Laws			45
4.7	Prohibited Uses			46
ARTICLE V			LEASEHOLD IMPROVEMENTS AND REPAIRS	47
5.1	Leasehold Improvements			47

 

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TABLE OF CONTENTS

(continued)

 

				Page
5.2	Alterations			47
5.3	Non-Removable Improvements			47
5.4	Mechanics Liens			48
5.5	Repairs by Landlord			48
5.6	Repairs by Tenant			49
5.7	Demising Work			49
5.8	Art			51
ARTICLE VI			CONDEMNATION, CASUALTY AND INSURANCE	52
6.1	Condemnation			52
6.2	Damages from Certain Causes			53
6.3	Casualty Clause			53
6.4	Property Insurance			55
6.5	Liability Insurance			55
6.6	Hold Harmless			55
6.7	WAIVER OF RECOVERY			56
ARTICLE VII		DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION		56
7.1	Default and Remedies			56
7.2	Insolvency or Bankruptcy			60
7.3	Negation of Lien for Rent			60
7.4	Attorney’s Fees			61
7.5	No Waiver of Rights			61
7.6	Holding Over			61
7.7	Subordination			62
7.8	Estoppel Certificate			62
7.9	Subsequent Documents			63
7.10	Interest Holder Privileges			63
ARTICLE VIII			SUBLEASING, ASSIGNMENT, LIABILITY, AND CONSENTS	63
8.1	Sublease or Assignment by Tenant			63
8.2	Assignment by Landlord			66

 

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TABLE OF CONTENTS

(continued)

 

			Page
ARTICLE IX		PURCHASE AND SALE	66
9.1	Tenant’s Right of First Refusal to Purchase		66
9.2	Right of First Offer on Sale		67
9.3	Separate Lease		67
ARTICLE X		EXPANSION RIGHTS	68
10.1	Quarterly Availability Reports		68
10.2	Tenant’s Expansion Notice		69
10.3	Landlord Expansion Response		69
10.4	Expansion Space Leases		69
10.5	Excess Basic Rent; Recalculation of Termination Rights		72
10.6	Subordination of Expansion Space Rights		72
10.7	Duration		73
10.8	Disputes		73
ARTICLE XI		CONTRACTION RIGHTS	73
11.1	Contraction Rights		73
11.2	Contraction Rights Exercise Notice		73
11.3	Relocation Rights		74
11.4	Early Termination Rights		74
11.5	Termination Rights		75
11.6	Contraction Premises Rent		75
11.7	Surrender; Contraction Premises Demising Work		76
11.8	Duration		76
11.9	Disputes		76
ARTICLE XII		DISPUTE RESOLUTION	76
12.1	Approval Procedure; Dispute Resolution		76
12.2	Dispute Resolution		77
12.3	Conduct of the Arbitration		78
12.4	Alternative Means of Arbitration with AAA		79
12.5	Mediation; Litigation		79
ARTICLE XIII		TENANT REMEDIES	80
13.1	Limited Offset		80

 

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TABLE OF CONTENTS

(continued)

 

			Page
13.2	Landlord Letter of Credit		80
ARTICLE XIV		MISCELLANEOUS	80
14.1	Notices		80
14.2	Brokers		81
14.3	Binding on Successors		81
14.4	Rights and Remedies Cumulative		81
14.5	Governing Law		81
14.6	Rules of Construction		82
14.7	Authority and Qualification		82
14.8	Severability		82
14.9	Quiet Enjoyment		82
14.10	Limitation of Personal Liability		82
14.11	Memorandum of Lease		82
14.12	Consents		82
14.13	Time of the Essence		83
14.14	Amendments		83
14.15	Entirety		83
14.16	References		83
14.17	Counterpart Execution		83
14.18	No Partnership		83
14.19	Captions		83
14.20	Required Radon Notice		83
14.21	Changes to Properties by Landlord		83
14.22	Storage Space		84
14.23	WAIVER OF JURY TRIAL		84
14.24	Confidential Information		84

 

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EXHIBITS AND SCHEDULES

 

Exhibit A		Leased Premises, Building NRA, Leased Premises NRA and Tenant Occupancy Percentages
Exhibit B-1		Form of Lease Supplement
Exhibit B-2		Form of Amendment to Lease Supplement and Exhibit A
Exhibit C		Form of Confidentiality Agreement
Exhibit D		Form of Subordination, Attornment and Non-Disturbance Agreement
Exhibit E		Form of Estoppel Certificate
Exhibit F		Form of Subtenant Non-Disturbance Agreement
Exhibit G		Form of Separate Lease
Exhibit H		Form of Contraction Assignment
Exhibit I		Form of Contraction Sublease
Exhibit J		Form of Landlord Letter of Credit
Schedule 1		Annual Basic Rent Factor Table
Schedule 2		[Intentionally Omitted]
Schedule 3		Description of Environmental Information
Schedule 4		Description of Tenant’s Art
Schedule 5		Renewal Term Annual Basic Rent Illustration

 

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MASTER LEASE AGREEMENT

 

THIS MASTER LEASE AGREEMENT (this “ Lease ”) is made and entered into on October 1, 2004, by and between FIRST STATES INVESTORS 5200, LLC, a Delaware limited liability company (hereinafter called “ Landlord ”), and BANK OF AMERICA, N.A., a national banking association (hereinafter called “ Tenant ”), with the limited joinder of FIRST STATES GROUP, L.P., a Delaware limited partnership (“ FSG ”).  Any other provision of this Lease to the contrary notwithstanding, this Lease shall automatically and without further action of Landlord or Tenant commence and become effective upon and immediately following the Closing.  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 and FSG 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 Properties and certain other properties not covered by this Lease.

 

B.            FSG has assigned to Landlord FSG’s entire right, title and interest in and to the Properties.

 

C.            Closing under the Purchase Agreement has occurred immediately prior to Landlord’s and Tenant’s execution of this Lease.

 

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:		October 1, 2004.
Expiration Date:		September 30, 2019.
Initial Term:		Commencing on the Commencement Date, and, unless sooner terminated as herein provided, ending on the Expiration Date.
Leased Premises:		All those portions of the Properties identified in the Lease Supplements, as the same are amended from time to time, as being demised and leased to Tenant hereunder, including the identified Net Rentable Areas within the Buildings and, where applicable, the Drive-Through Banking Facilities.  Each time

 

 

		there is an addition to, subtraction from or other change in the configuration of the Leased Premises as herein provided, including pursuant to Section 6.1 (Condemnation), Section 6.3 (Casualty), Article IX (Purchase and Sale), Article X (Expansion Rights) and Article XI (Contraction Rights), Landlord and Tenant, within thirty (30) days following the effective date of the change, shall execute amendments to the applicable Lease Supplements (based upon the form attached as Exhibit B-1 hereto) and to Exhibit A hereto to confirm the configuration and Net Rentable Area of the Leased Premises, Tenant’s Occupancy Percentage in each Building and the Annual Basic Rent for each Leased Premises and, to the extent applicable, any adjustment in Parking Areas and be accompanied by a revised Exhibit A hereto.
Landlord’s Address for Notices:		First States Investors 5200, LLC c/o First States Group, L.P. 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:		Bank of America, N.A. 525 North Tryon 3rd Floor — Corporate Real Estate Department NC1-023-03-03 Charlotte, NC 28255 Attention :  Property Services Fax:  (704) 386-7339
with a copy to:		Bank of America, N.A. 901 Main Street, 68th Floor Dallas, TX 75202-3714 Attention :  Michael F. Hord, Associate General Counsel Fax:  (214) 209-0871
and to:		Trammell Crow Corporate Services, Inc. 2850 North Federal Highway Lighthouse Point, Florida 33064 Attention :  Chuck Dunn, Senior Vice President Fax:  (954) 786-4405

 

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and to:		Jones Lang LaSalle Americas, Inc. 355 South Grand Avenue Suite 4280 Los Angeles, CA 90071 Attention :  John L. Vinnicombe, Executive Vice President Fax:  (213) 680-4933
Interest Holder’s Address for Notices:		Deutsche Bank AG, Cayman Islands Branch 60 Wall Street, 10th Floor New York, New York Attention : Chris Tognola/Tom Traynor Fax:   N/A
with a copy to:		LaSalle Bank National Association 135 South LaSalle Street, Suite 1625 Chicago, Illinois 60603 Attention: Tom Quinlan Fax:   N/A

 

(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) .

 

“ Additional Equipment ” shall have the meaning assigned to such term in Section 3.5 .

 

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

 

“ Affiliate ” or “ Affiliates ” shall mean any person or entity controlling, controlled by, or under common control with another such person or entity.  “ Control ” as used herein shall mean the possession, direct or indirect, or the power to direct or cause the direction, of the management and policies of such controlled person or entity.  The ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote in, the ordinary direction of its affairs, more than fifty percent (50%) of the voting interest in, any person or entity shall be presumed to constitute such control.  In the case of Landlord (if Landlord is a partnership), the term Affiliate shall also include any person or entity

 

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controlling or controlled by or under common control with any general partner of Landlord or any general partner of Landlord’s general partner.

 

“ Affiliate Owned Property ” shall have the meaning assigned to such term in Section 10.1 .

 

“ Aggregate FMRV Rent ” shall have the meaning assigned to such term in Section 1.4(c) .

 

“ Aggregate Occupancy Percentage ” shall mean a fraction, expressed as a percentage, the numerator of which is the aggregate Net Rentable Area of the Leased Premises in all of the Properties at the time the determination is made and the denominator of which is the Net Rentable Area of all of the Closing Properties acquired by Landlord (or its Affiliates) from Tenant (or its Affiliates) under the Purchase Agreement, whether or not such Closing Properties are occupied, in whole or in part, by Tenant.

 

“ Agreed Upon Percentage ” shall have the meaning assigned to such term in the Purchase Agreement.

 

“ Agreed Upon Purchase Price ” shall mean, for a Property, the amount calculated as the product of (i) the Purchase Price for all of the Closing Properties under the Purchase Agreement multiplied by (ii) the Agreed Upon Percentage for the Property for which the Agreed Upon Purchase Price is being calculated.

 

“ Alteration Threshold Amount ” shall mean, as to each Property, Five Hundred Thousand Dollars ($500,000.00) in aggregate alteration costs ongoing at any time, provided that (a) so long as Tenant’s Occupancy Percentage at a Major Property is at least fifty percent (50%), the Alteration Threshold Amount for such Major Property shall equal One Million Dollars ($1,000,000.00) in aggregate alterations costs and (ii) the aggregate Alterations Threshold Amount for alteration costs ongoing at all Properties at any time shall not exceed Ten Million Dollars ($10,000,000.00).

 

“ Annual Basic Rent ” shall mean the annual basic rent payable by Tenant for the Leased Premises that are subject, from time to time, to this Lease.  During the Initial Term of this Lease, the Annual Basic Rent for each Property shall equal the Net Rentable Area of the Leased Premises for such Property multiplied by the applicable Annual Basic Rent Factor, except that the Annual Basic Rent for any Short Term Expansion Space shall equal the Fair Market Rental Value of such Short Term Expansion Space as provided in Article X .  During the Renewal Terms of this Lease, the Annual Basic Rent for each Property shall equal the Fair Market Rental Value of the Leased Premises within such Property, subject, if applicable, to the limitations set forth in Section 1.4(c) .  The Annual Basic Rent due under this Lease shall equal the sum of all Annual Basic Rents due with respect to each Property.  Annual Basic Rent shall be re-calculated each time there is a change in the Annual Basic Rent Factor or in Tenant’s Occupancy Percentage for a Property or a required conversion to, or adjustment in, the Fair Market Rental Value of a Property.

 

“ Annual Basic Rent Factor ” shall mean the annual rate per square foot of Net Rentable Area used to calculate the Annual Basic Rent.  A table of Annual Basic Rent Factors, together with scheduled increases and decreases thereto, are set forth on Schedule 1 hereto.

 

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“ Applicable Rate ” shall mean an annual rate of interest equal to the lesser of (i) the Prime Rate plus two percent (2%) and (ii) the maximum contract interest rate per annum allowed by North Carolina law.

 

“ Appraiser ” shall mean an independent professional real estate appraiser, MAI or equivalent, with at least ten (10) years’ experience appraising commercial real estate comparable to the subject Property or Leased Premises, who shall be associated with a nationally-recognized real estate services firm offering appraisal services, with local offices in the region where the subject Property is located, and 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 (it being agreed that an Appraiser that performs residential or commercial property appraisals for Tenant in Tenant’s capacity as a mortgage lender shall not be disqualified from serving as an Appraiser solely as a result of such other relationship with Tenant).

 

“ Approval Matters ” shall have the meaning assigned to such term in Section 12.2(b) .

 

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

 

“ Art ” shall have the meaning assigned to such term in Section 5.8 .

 

“ ATM ” shall mean automated teller machine.

 

“ Average Operating Expenses ” shall mean the amount determined by dividing the aggregate Operating Expenses for all of the Properties by the aggregate Net Rentable Area of all of the Buildings.  The Average Operating Expenses between the Commencement Date and December 31, 2004, shall equal $8.56 per square foot of Net Rentable Area, inclusive of management fees.  Beginning on January 1, 2005, the Average Operating Expenses shall be increased by three percent (3%), subject to adjustment in the final Budget for such calendar year.

 

“ Average Real Estate Taxes ” shall mean the amount determined by dividing the aggregate Real Estate Taxes for all of the Properties by the aggregate Net Rentable Area of all of the Buildings.  The Average Real Estate Taxes between the Commencement Date and December 31, 2004, shall equal $2.12 per square foot of Net Rentable Area.  Beginning on January 1, 2005, the Average Real Estate Taxes shall be increased by three percent (3%), subject to adjustment in the final Budget for such calendar year.

 

“ Award ” shall have the meaning assigned to such term in Section 13.2(c) .

 

“ Banking Center Properties ” shall mean those Properties identified as such on Exhibit A hereto as “Banking Centers,” whether or not such Properties also include a “Motor Bank.”

 

“ Banking ” shall have the meaning assigned to such term in Section 1.5 .

 

“ Binding ADR Dispute ” shall have the meaning assigned to such term in Section 12.2(b) .

 

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

 

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

 

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

 

“ Comparable Buildings ” shall mean, for each Building, a quality, age, location and construction that is comparable to that of other buildings within the metropolitan area within which such Building is located.

 

“ Continuing Term Separate Lease ” shall have the meaning assigned to such term in Section 9.3 .

 

“ Contraction Assignment ” shall mean a lease assignment and assumption agreement substantially in the form attached as Exhibit H hereto entered into by Tenant, as assignor, and FSG or, at FSG’s election, an Affiliate of FSG, as assignee, for all of Tenant’s right, title and interest in and to a Continuing Term Separate Lease at a Property for which Tenant has properly exercised Contraction Rights for the entire Leased Premises within such Property pursuant to Article XI .  If FSG elects to cause an Affiliate of FSG to enter into a Contraction Assignment, FSG shall join in the execution of the Contraction Assignment for the purpose of unconditionally guarantying to Tenant the payment and performance by such Affiliate of all of such Affiliate’s obligations to Tenant under the Contraction Assignment.  Tenant shall be released from all obligations under the Separate Lease to which the Contraction Assignment relates arising on and after the date of execution of the Contraction Assignment.

 

“ Contraction Premises ” shall have the meaning assigned to such term in Section 11.2 .

 

“ Contraction Premises Surrender Date ” shall have the meaning assigned to such term in Section 11.6 .

 

“ Contraction Rights ” shall have the meaning assigned to such term in Section 11.1 .

 

“ Contraction Rights Exercise Notice ” shall have the meaning assigned to such term in Section 11.2 .

 

“ Contraction Sublease ” shall mean a separate, stand alone sublease substantially in the form attached as Exhibit I hereto entered into by Tenant, as sublandlord, and FSG or, at FSG’s election, an Affiliate of FSG, as subtenant, for such portion of the Leased Premises at a Property that is leased by Tenant under a Continuing Term Separate Lease as Tenant has properly exercised Contraction Rights pursuant to Article XI .  If FSG elects to cause an Affiliate of FSG to enter into a Contraction Sublease, FSG shall join in the execution of the Contraction Sublease for the purpose of unconditionally guarantying to Tenant the payment and performance by such Affiliate of all of such Affiliate’s obligations to Tenant under the Contraction Sublease.

 

“ Cost Approved Sublease” shall have the meaning assigned to such term in Section 8.1(h) .

 

“ Coterminous Expansion Space ” shall have the meaning assigned to such term in Section 10.4(b) .

 

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

 

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“ Demising Work ” shall mean the construction by Tenant, if and to the extent required as a result of Tenant’s vacation and surrender of Surrendered Premises to Landlord, of (i) all walls and other work required to demise, separate and secure the Leased Premises from any portion of the Building that is not included within the Leased Premises, (ii) all work, if and to the extent required as a result of such demise, for (a) the creation of multi-tenant access to Building Common Areas, facilities and systems necessary for the general office use of the Surrendered Premises, including multi-tenant access to the mechanical, electrical, plumbing and other utility facilities and systems serving the Surrendered Premises or (b) at Tenant’s sole option, in lieu of creating multi-tenant access to existing Building Common Areas, facilities or systems, Tenant may construct replacements for Building Common Areas, facilities or systems necessary for the general office use of the Surrendered Premises and (iii) to provide proper and lawful means of ingress and egress to the Surrendered Premises.  Notwithstanding the foregoing, Tenant will not be obligated to (i) make any alterations or improvements to demise the Leased Premises on floors of any Buildings that are and shall continue to be leased by Tenant as full floors, (ii) make any alterations or improvements to floors that do not contain any Leased Premises or (iii) bring the Properties into compliance with building codes or other Legal Requirements, except to the extent required by any Governmental Authority as being necessary to perform the Demising Work.  All Demising Work shall be performed in conformity with the requirements of Section 5.7 .

 

“ Drive-Through Banking Facility ” shall mean, for each Property, the portion of the Leased Premises, if any, identified as a Drive-Through Banking Facility in Lease Supplement for such Property.

 

“ Early Termination Fee ” shall mean the amount required to be paid by Tenant to Landlord upon Tenant’s exercise of Early Termination Rights under Section 11.4 calculated as the product of (w) the Agreed Upon Purchase Price for the Property at which the Early Termination Rights are being exercised multiplied by (x) 16.6667 basis points (0.00166667) multiplied by (y) the number of whole or partial months that elapse between the Commencement Date and the Contraction Premises Surrender Date for the Contraction Premises for which the Early Termination Fee is being calculated multiplied by (z) a fraction, the numerator of which is the Net Rentable Area of the Contraction Premises created by Tenant’s exercise of the Early Termination Rights for which the Early Termination Fee is being calculated and the denominator of which is the Net Rentable Area of the Building at which the Early Termination Rights are being exercised.  For purposes of determining the Early Termination Fee required to be paid by Tenant with the Contraction Rights Exercise Notice for any Contraction Premises, Tenant shall assume that the Contraction Premises Surrender Date for such Contraction Premises shall be the date on which Tenant identifies in the Contraction Rights Exercise Notice that Tenant desires to vacate and surrender possession of such Contraction Premises to Landlord.  After the actual Contraction Premises Surrender Date for the Contraction Premises becomes known, the Early Termination Fee shall be recalculated as provided in Section 11.4 .  No Early Termination Fee shall ever become due or payable by Tenant as a result of, or with respect to the Contraction Premises created by, Tenant’s exercise of Relocation Rights under Section 11.3 or Termination Rights under Section 11.5 .

 

“ Early Termination Right ” shall have the meaning assigned to such term in Section 11.4 .

 

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“ Enforcement ” shall have the meaning assigned to such term in Section 7.7 .

 

“ Environmental Information ” shall have the meaning assigned to such term in Section 4.6(a) .

 

“ Environmental Matters ” shall have the meaning assigned to such term in Section 4.6(b) .

 

“ Excess Basic Rent ” shall have the meaning assigned to such term in Section 10.5 .

 

“ Exchange Space ” shall mean the number of square feet, if any, by which the Net Rentable Area of the Minimum Leased Premises exceeds the Net Rentable Area of the Lease Premises.  On the Commencement Date, the Exchange Space shall equal Thirty-Four Thousand Eight Hundred Ninety-One (34,891) square feet.  The Exchange Space shall be recalculated, as of the Commencement Date, following the re-measurement of the Buildings in conformity with the Measurement Standard.  The Exchange Space shall be reduced, from time to time, by the Net Rentable Area of all Expansion Space added to Leased Premises pursuant to Article X (effective, in each such case, as of the date the Expansion Space becomes Leased Premises) and increased, from time to time, by the Net Rentable Area of any Contraction Premises removed from the Leased Premises by Tenant’s exercise of Relocation Rights, but not Early Termination Rights or Termination Rights (effective, in each such case, as of the date the Contraction Premises is no longer Leased Premises).

 

“ Exchange Space Rent ” shall mean the annual Rent payable by Tenant with respect to the Exchange Space calculated as Net Rentable Area of the Exchange Space multiplied by the sum of (i) Annual Basic Rent Factor plus (ii) the Average Operating Expenses plus (iii) the Average Real Estate Taxes.  If the Exchange Space is less than or equal to zero, no Exchange Space Rent shall be due or payable.

 

“ Expansion Rights ” shall have the meaning assigned to such term in Section 10.4 .

 

“ Expansion Space ” shall have the meaning assigned to such term in Section 10.4 .

 

“ Expansion Space Acceptance ” shall have the meaning assigned to such term in Section 10.4 .

 

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

 

“ Event of Default ” shall have the meaning assigned to such term in Section 7.1(a) .

 

“ Fair Market Purchase Value ” shall mean the fair market purchase value, as of the date the determination is made, that would be obtained in an arm’s-length purchase and sale agreement between an informed and willing seller and an informed and willing purchaser, neither of whom is under any compulsion to enter into such transaction.

 

“ Fair Market Rental Value ” shall mean the fair market rental value, as of the date the determination is made, that would be obtained in an arm’s-length net lease (i.e., net of all operating expenses, real estate taxes, utilities and other pass-throughs) between an informed and willing tenant (other than a tenant in possession) and an informed and willing landlord, neither of

 

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whom is under any compulsion to enter into such transaction, for space in Comparable Buildings that is comparable in size, location and quality to the Leased Premises, for a comparable term.  Such Fair Market Rental Value shall be calculated assuming that (i) the Leased Premises are in the condition and state of repair required under the Lease, (ii) Tenant is in compliance with the requirements of the Lease and (iii) Tenant will accept the Leased Premises in “AS-IS” condition.  In determining the Fair Market Rental Value for Property, the Appraiser shall give due consideration, to and make any necessary adjustments to the rentals paid at Comparable Buildings in light of, the following factors: (i) Tenant will not receive, and Landlord will not pay, any tenant improvement, relocation, moving or other allowance, rent abatement or other reduced or free rent period or any other allowance or concession in connection with Tenant’s leasing of the Leased Premises, (ii) except as expressly provided herein with respect to Expansion Space, Tenant’s obligation to pay Rent commences on the date possession of the Leased Premises are delivered to Tenant, (iii) Landlord will not pay any brokers’ fee or commission in connection with Tenant’s leasing of the Leased Premises, (iv) the Landlord’s inclusion, and Tenant’s payment, of amortized capital expenditures in Operating Expenses to the extent provided in this Lease and (v) the creditworthiness of Tenant and the tenants at Comparable Buildings.  For Short Term Expansion Space only, the Fair Market Rental Value shall be determined without regard to the value added by any alterations or improvements made to such space by Tenant after it was added to the Lease Premises as provided in Article X .

 

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

 

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

 

“ Five Year Term Separate Lease ” shall have the meaning assigned to such term in Section 9.3 .

 

“ Floor Common Area ” shall have the meaning assigned to such term in the Measurement Standard.

 

“ FMRV Increment ” shall have the meaning assigned to such term in Section 10.5 .

 

“ FMRV Space ” shall mean space added to the Leased Premises as Expansion Space, but shall not include any Coterminous Expansion Space added to the Leased Premises during the Initial Term.

 

“ Force Majeure Events ” shall mean events beyond Landlord’s or Tenant’s (as the case may be) control, which shall include 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).  The times for performance set forth in this Lease (other than for monetary obligations of a party) shall be extended to the extent performance is delayed by Force Majeure Events.

 

“ FSG ” shall have the meaning assigned to such term in the parties paragraph.

 

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

 

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“ Governmental Authority ” shall mean the United States, the state, county, city and political subdivision in which a 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, for each Property, all gross income generated in connection with such Property, including basic rents, additional rents and other charges collected from Tenant and other tenants or occupants of the Property and income from services, coin operated vending machines and telephones, parking facilities, but excluding (i) security deposits, unless and not 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, (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 ” shall mean 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 in which the Property is located on account of such holiday shall constitute the Holiday under this Lease.

 

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

 

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

 

“ Interest Holder ” shall have the meaning assigned to such term in Section 7.7 .

 

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

 

“ JLL ” shall mean Jones Lang LaSalle Americas, Inc.

 

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“ Land ” shall mean all of the parcels of land identified on Exhibit A on which the Buildings, Common Areas, Drive-Through Banking Facilities, Parking Areas and other elements of the Properties are located.

 

“ Landlord ” shall have the meaning assigned to such term in the parties paragraph.

 

“ Landlord Default ” shall have the meaning assigned to such term in Section 7.1(f) .

 

“ Landlord Designated Submanager ” shall have the meaning assigned to such term in Section 3.6 .

 

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

 

“ Landlord Letter of Credit ” shall have the meaning assigned to such term in Section 13.2 .

 

“ Lease ” shall have the meaning assigned to such term in the parties paragraph.

 

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

 

“ Lease Supplement ” shall mean, for each Property, a supplement to this Lease based upon the form attached as Exhibit B hereto that describes and depicts, in detail, the Leased Premises for such Property and any Landlord or Tenant right or obligations that are specific to that Property, including any emergency generators, uninterrupted power systems, supplemental HVAC systems and other specialty items of whose capacities are dedicated for Tenant’s sole use and that Tenant desires Landlord to maintain, repair and replace, at Tenant’s election, as an Above Standard Service.

 

“ Lease Year ” shall mean a period of one (1) year; provided that the first Lease Year shall commence on the Commencement Date and shall end on September 30, 2005; 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.  The Lease Year for all Properties covered by this Lease shall be the same.

 

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

 

“ MAI ” shall mean Member of the Appraisal Institute.

 

“ Major Dispute ” shall have the meaning assigned to such term in Section 12.2(c) .

 

“ Major Property ” shall mean any Property in which the Building shall contain 50,000 or more square feet of Net Rentable Area.

 

“ Maximum Renewal Term Basic Rent ” shall have the meaning assigned to such term in Section 1.4(c) .

 

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“ Measurement Standard ” shall mean the Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996 , as promulgated by BOMA.

 

“ Minimum Leased Premises ” shall mean the number of square feet determined by multiplying the Net Rentable Area of all of the Closing Properties acquired by Landlord (or its Affiliates) from Tenant (or its Affiliates) under the Purchase Agreement, whether or not such Closing Properties are occupied, in whole or in part, by Tenant, by 0.618.  The Minimum Leased Premises shall be calculated by Landlord and Tenant on the Commencement Date and recalculated, as of the Commencement Date, following the re-measurement of the Buildings in conformity with the Measurement Standard.

 

“ Net Rentable Area ” shall mean, as applicable, the net rentable areas of the Leased Premises and the Buildings, determined in conformity with the Measurement Standard.  The approximate Net Rentable Areas of the Leased Premises and the Buildings are as specified in Exhibit A ; provided that the final and stipulated Net Rentable Areas of the Leased Premises and each of the Buildings shall be re-measured by Landlord on or before December 31, 2004, in conformity with the Measurement Standard.  Once such re-measurement is completed, Landlord and Tenant shall (i) amend the Lease Supplements and Exhibit A to confirm, effective as of the Commencement Date, the correct Net Rentable Areas, Occupancy Percentages and Annual Basic Rents, (ii) recalculate and confirm in writing the Net Rentable Area subject to Termination Rights under Section 11.5 below, (iii) recalculate the Minimum Leased Premises and (iv) recalculate the Annual Basic Rent Factor.

 

“ Non-FMRV Renewal Space ” shall mean, as to each Property during each Renewal Term, the portion of the Renewal Premises at such Property, if any, that is not FMRV Space.

 

“ Non-Removable Improvements ” shall have the meaning assigned to such term in Section 5.3 .

 

“ Notice Parties ” shall mean the parties identified in Section 1.1(a) , and any successor or additional party as a Notice Party may from time to time designate, as parties entitled to receive written notices under this Lease.

 

“ Occupancy Percentage ” shall mean, as to each Building, a fraction, expressed as a percentage, the numerator of which is the Net Rentable Area of the Leased Premises in the Building at the time the determination is made, and the denominator of which is Net Rentable Area of the Building, all as set forth on Exhibit A hereto, as amended from time to time.  The Occupancy Percentage for a Property shall be re re-calculated each time there is a change in the Net Rentable Area of the Leased Premises or the Building at such Property.

 

“ 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) .

 

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

 

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“ Owner ” shall have the meaning assigned to such term in Section 7.7 .

 

“ Parking Areas ” shall mean, as to each Property, the exclusive and non-exclusive parking areas and facilities for the Property as indicated on the Lease Supplement for the Property, together with any connecting walkways, covered walkways, tunnels, or other means of access to the Building, and any additional minor improvements now or hereafter located on the Land related to the foregoing facilities.

 

“ PAVS Contraction Premises ” shall have the meaning assigned to such term in Section 5.7(h) .

 

“ PAVS Expansion Premises ” shall have the meaning assigned to such term in Section 5.7(h) .

 

“ Pre-Committed Space ” shall have the meaning assigned to such term in Section 10.2(a) .

 

“ Preliminary Drawings ” shall have the meaning assigned to such term in Section 5.7(b) .

 

“ Preliminary Space Plan ” shall have the meaning assigned to such term in Section 5.7(a) .

 

“ Prime Rate ” shall mean the “prime rate” announced by Bank of America, N.A., 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).

 

“ Prior Lease ” shall mean that certain Master Lease Agreement dated June 30, 2003, by and between First States Investors 5000A LLC, as landlord, and Tenant, as tenant, as amended,

 

“ Prohibited Uses ” shall have the meaning assigned to such term in Section 4.7 .

 

“ Property ” shall mean the Land, the Buildings, the Common Areas, including the Parking Areas, any Drive-Through Banking Facilities, and any and all additional improvements now or hereafter located on the Land that serve the Buildings, the Common Areas, including the Parking Areas, any Drive-Through Banking Facilities or the tenants of the Building generally.

 

“ Purchase Agreement ” shall mean that certain Agreement of Sale and Purchase dated September 27, 2004, by and between Tenant, as seller, and FSG, as purchaser, as amended.  Immediately prior to the Closing, FSG shall assign to Landlord, and Landlord shall assume, all of FSG’s rights, titles and interests under the Purchase Agreement, it being understood that FSG shall not be released from its obligations under the Purchase Agreement as a result of such assignment.

 

“ Purchase Agreement Vacate Space ” shall mean the “Vacate Space” as such term is defined in the Purchase Agreement.

 

“ Purchase Price ” shall have the meaning assigned to such term in the Purchase Agreement.

 

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

 

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“ Quarterly Availability Report ” shall have the meaning assigned to such term in Section 10.1.

 

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

 

“ Relocation Rights ” shall have the meaning assigned to such term in Section 11.3 .

 

“ Relocation Rights Exercise Period ” shall have the meaning assigned to such term in Section 10.4(a) .

 

“ Remedial Work ” shall mean the removal, relocation, elimination, remediation or encapsulation of Hazardous Materials from all or any portion of the Leased Premises or the Common Areas and, to the extent thereby required, the reconstruction and rehabilitation of the Leased Premises or the Common Areas pursuant to, and in compliance with this Lease.

 

“ Renewal Option(s) ” shall have the meaning assigned to such term in Section 1.4(a) .

 

“ Renewal Option Notice Date ” shall mean, with respect to a Renewal Option, the date on which Tenant sends written notice of exercise of such Renewal Option to Landlord as provided in Section 1.4(d) .

 

“ Renewal Premises ” shall have the meaning assigned to such term in Section 1.4(c) .

 

“ Renewal Terms ” shall have the meaning assigned to such term in Section 1.4(a) .

 

“ Rent ” shall mean Annual Basic Rent, Excess Basic Rent, if any, Exchange Space Rent, if any, and Additional Rent.

 

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

 

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

 

“ ROFO Eligible Conditions ” shall have the meaning assigned to such term in Section 9.2(a) .

 

“ ROFO Eligible Property ” shall have the meaning assigned to such term in Section 9.2(a) .

 

“ SAR ” shall mean Strategic Alliance Realty.

 

“ SEC ” shall have the meaning assigned to such term in Section 14.24 .

 

“ 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 One Billion Dollars ($1,000,000,000.00) and (ii) Tenant’s long-term senior unsecured debt obligations are rated at least BBB (or its equivalent) by S&P and Baa2 (or its equivalent) by Moody’s at of that date; provided that if Tenant is rated by only one of S&P or

 

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Moody’s, such obligations shall have such rating from S&P or Moody’s, as the case may be, and a comparable rating from another nationally-recognized rating agency.

 

“ Separate Lease ” shall mean a separate, stand alone lease for a Property substantially in the form attached as Exhibit G hereto entered into by the purchaser of such Property, as landlord, and Tenant, as tenant, as provided in Section 9.3 , which may be either Continuing Term Separate Leases or Five Year Term Separate Leases.

 

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

 

“ Short Term Expansion Space ” shall have the meaning assigned to such term in Section 10.4 .

 

“ Sublet Space ” shall have the meaning assigned to such term is Section 8.1(b) .

 

“ Subtenant Non-Disturbance Agreement ” shall mean a written agreement substantially in the form attached as Exhibit F hereto among Landlord, Tenant, the subtenant under a Cost Approved Sublease and any Interest Holders pursuant to which Landlord and such Interest Holders agree not to disturb such subtenant’s possessory and other rights under the Cost Approved Sublease, and such subtenant agrees to attorn to and recognize Landlord, notwithstanding any expiration or earlier termination of the Term of this Lease prior to the expiration or earlier termination of the term of the Cost Approved Sublease, except to the extent that such possessory or other rights can be disturbed or terminated as provided in the Cost Approved Sublease.

 

“ Surrendered Premises ” shall mean, as applicable, any Purchase Agreement Vacate Space or Contraction Premises for which Tenant is required to perform Demising Work.

 

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

 

“ TCCS ” shall mean Trammell Crow Corporate Services, Inc.

 

“ Tenant ” shall have the meaning assigned to such term in the parties paragraph.

 

“ Tenant’s Business Equipment ” shall have the meaning assigned to such term in Section 5.3 .

 

“ Tenant Designated Submanager ” shall have the meaning assigned to such term in Section 3.6 .

 

“ Tenant Expansion Notice ” shall have the meaning assigned to such term in Section 10.2 .

 

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

 

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

 

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

 

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

 

“ Termination Rights ” shall have the meaning assigned to such term in Section 11.5 .

 

“ Third Party Offer ” shall have the meaning assigned to such term in Section 9.1 .

 

“ Transfer Notice ” shall have the meaning assigned to such term in Section 8.1(b) .

 

“ Unused Relocation Rights Area ” shall have the meaning assigned to such term in Section 10.5 .

 

“ URR Agreement ” shall mean that certain Master Agreement Regarding Leases dated as of October 1, 2004, between FSG and Tenant pursuant to which FSG granted to Tenant certain “Universal Relocation Rights” as more fully therein provided.

 

“ VARA ” shall mean the Visual Artists Rights Act of 1990, as amended.

 

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,” “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 terms “include” and “including”, whenever used herein, shall mean “including without limitation” or “including but not limited to,” 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, and (v) the term “alterations” shall mean any alterations, additions, removals and/or any other changes.

 

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.  The initial Leased Premises are described in Exhibit A hereto and in the Lease Supplements.  Tenant shall be entitled to the following as appurtenances to the Leased Premises, all at no cost to Tenant, other than as provided in Section 2.2 or Section 3.1 below: (a) the right to use, and to permit Tenant’s employees and invitees to use (i) on an exclusive basis, the dedicated Parking Areas, if any, identified on the Lease Supplements and the elevator lobbies, corridors, restrooms, telephone, electric and other utility closets on floors leased entirely by Tenant and (ii) on a non-exclusive basis (in common with Landlord and other tenants or occupants of the Property, and their respective employees and invitees), the balance of the Parking Areas and all the other Common Areas (excluding Floor Common Areas, systems and facilities on and/or serving floors that do not include Leased Premises, but including risers wherever located throughout the Buildings); (b) 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 , 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 Project, including the non-exclusive right to use any walkways, tunnels, and skywalks connected to the Project; and (c) all other rights and benefits provided to Tenant with respect to the Project pursuant to this Lease (including the rights granted to Tenant

 

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(c)           The Annual Basic Rent to be paid by Tenant for the Leased Premises at a Property during a Renewal Term (any such premises, the “ Renewal Premises ”) shall equal the Fair Market Rental Value of such Renewal Premises during such Renewal Term as determined by the parties or, in the absence of their agreement, determined by appraisal as expressed below; provided that the Annual Basic Rent payable during a Renewal Term for Non-FMRV Renewal Space at all Properties that contain Renewal Premises, computed on an aggregate basis, shall not be greater than the amount determined by multiplying (i) the aggregate Net Rentable Area of the Non-FMRV Renewal Space by (ii) the Annual Basic Rent Factor for the applicable Renewal Term as set forth on Schedule 1 hereto (the amount so determined, the “ Maximum Renewal Term Basic Rent ”).  If the aggregate Fair Market Rental Values of the Non-FMRV Renewal Space at all Properties (collectively, the “ Aggregate FMRV Rent ”) exceeds the Maximum Renewal Term Basic Rent, the Fair Market Rental Values of the Non-FMRV Renewal Space at each Property shall be proportionately reduced by multiplying each such Fair Market Rental Values by a fraction, expressed as a decimal, the numerator of which is the Maximum Renewal Term Basic Rent and the denominator of which is the Aggregate FMRV Rent, so that the Annual Basic Rent for the Non-FMRV Renewal Space shall, in the aggregate, equal the Maximum Renewal Term Basic Rent.  With respect to FMRV Space that is part of Renewal Premises, the Annual Basic Rent shall always be the Fair Market Rental Value of such FMRV Space.  An illustration of how Annual Basic Rent is determined during a Renewal Term is attached as Schedule 5 hereto.

 

(d)           Within thirty (30) days following the Renewal Option Notice Date, Landlord shall deliver to Tenant, a proposal setting forth Landlord’s determination of the Fair Market Rental Value for the Renewal Premises during the applicable Renewal Term.  For thirty (30) days thereafter, Landlord and Tenant shall negotiate in good faith to reach agreement as to the Fair Market Rental Value for the Renewal Premises.  Tenant’s leasing of the Renewal Premises shall be upon the same terms and conditions as set forth in this Lease, except (i) the Annual Basic Rent during the Renewal Term shall be determined as specified in Sections 1.4(c)  and (e)  and (ii) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  Once established, the Annual Basic Rent for the applicable Renewal Term will remain fixed for each five (5) year Renewal Term, and be paid monthly in advance.

 

(e)           If Landlord and Tenant are unable to reach a definitive agreement as to the Fair Market Rental Value applicable to Renewal Premises within sixty (60) days following the Renewal Option Notice Date, the Fair Market Rental Value will be submitted for resolution in accordance with the provisions of this Section 1.4(e) .  Within seventy-five (75) days following the Renewal Option Notice Date (or, if later, within fifteen (15) days following the date on which either Landlord or Tenant notifies the other party in writing that such notifying party desires to have the Annual Basic Rent for a Renewal Term determined by appraisal), Landlord and Tenant shall each select and engage an Appraiser to determine the Fair Market Rental Value of the Renewal Premises.  If either party fails to select and engage an Appraiser within such time, 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 Arbitrator as required under the Lease and will be deemed to have waived certain rights granted to it under the Lease unless it selects an Arbitrator within five (5) business days, the Fair Market Rental Value will be determined by the Appraiser engaged by the other

 

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party.  Each Appraiser shall prepare an appraisal report and submit it to both Landlord and Tenant within thirty (30) days following the date on which the last Appraiser was selected.  If the higher of the two appraisals of Fair Market Rental Value does not exceed one hundred five percent (105%) of the lower of the two appraisals of Fair Market Rental Value, then the average of the two (2) appraisals shall be the Fair Market Rental Value for the Renewal Premises.  If the higher of the two appraisals of Fair Market Rental Value exceeds 105% of the lower of the two appraisals of Fair Market Rental Value, then within seven (7) days after receipt by Landlord and Tenant of both appraisal reports, the Appraisers selected by Landlord and Tenant shall agree on a third Appraiser to determine Fair Market Rental Value.  The third Appraiser shall not perform a third appraisal, but shall, within ten (10) days after his or her designation, select one (1) of the two (2) appraisals already performed, whichever of the two appraisals the third Appraiser determines to be closest to Fair Market Rental Value, as the controlling determination of the Fair Market Rental Value.  The decision of the third Appraiser shall be conclusive, and, subject to the limitations expressed in Section 1.4(c) , shall be the Fair Market Rental Value for the Renewal Premises for the Renewal Term.  Each party shall pay the costs of its Appraiser and one-half of the cost of the third Appraiser.  The instructions to the Appraisers with respect to the determination of the Fair Market Rental Value applicable to such space will be to determine the Fair Market Rental Value for such space as of the relevant Renewal Term, assuming that such space will be leased on an “AS-IS” basis.  Within thirty (30) days following the determination of the Fair Market Rental Value, Tenant shall elect one (1) of the following options:  (A) to revoke the exercise of the subject Renewal Option, in which event, the Term of this Lease for the Leased Premises to which the notice of revocation applies shall automatically, and without further action of Landlord or Tenant, expire on the later of (1) the expiration of the then existing Term or (2) the last day of the calendar month that is six (6) months following the month in which Tenant’s notice of revocation was given to Landlord or (B) to renew the Lease at the rate to be determined in accordance with this Section 1.4(e)  after the Fair Market Rental Value has been determined by appraisal.  If Tenant fails to exercise any of the foregoing options within the thirty (30) day period, Tenant shall be deemed to have elected option (A).  If Tenant has elected option (B), Tenant thereby shall have irrevocably exercised its right to renew the Term and Tenant may not thereafter withdraw the exercise of the Renewal Option; in such event the renewal of this Lease (as to the Renewal Premises) shall be upon the same terms and conditions of this Lease, except (i) the Annual Basic Rent during the Renewal Term shall be determined in accordance with the foregoing provisions and (ii) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  If the Annual Basic Rent for a Renewal Term has not been determined prior to the commencement of such Renewal Term, Tenant shall pay to Landlord as of the commencement of the Renewal Term the same Annual Basic Rent as Tenant was paying immediately prior to the commencement of the Renewal Term, subject to adjustment upon final determination.  Once established, the Annual Basic Rent for the Renewal Term will remain fixed for each five (5) year Renewal Term, and be paid monthly in advance.

 

(f)            Notwithstanding anything to the contrary contained in this Section 1.4 , subject to the provisions of Section 1.4(a)  above, Tenant’s failure to give the required renewal notice with respect to the Leased Premises within a Property in conformity with the requirements of Section 1.4(b)  shall render the upcoming and all subsequent Renewal Options for such Leased Premises, if there be any, null and void.

 

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1.5   Use .  Each of the Leased Premises may be used and occupied by Tenant (and its permitted assignees and subtenants) only for banking and related uses and general business office purposes and such other lawful purposes as are consistent with banking and general office uses being made from time to time by tenants of the Building.  In addition and without limitation of the foregoing, Tenant may maintain (for use by Tenant and its employees, customers, and invitees):  (a) conference and/or meeting facilities, (b) libraries, (c) non-retail coffee bars, (d) support staff facilities (including word processing and copy facilities), (e) lunchrooms 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 vault, (i) telephone call centers, (j) retail banking facilities and (k) as to each Property, any lawful purpose for which such Property was used on the Commencement Date.  Notwithstanding the foregoing, throughout the Term, Tenant shall not use, or permit the use of, the Leased Premises (or any part thereof) for any Prohibited Uses.  Tenant is not obligated to maintain occupancy in all or any portion of the Leased Premises.  For purposes of this Section 1.5 , the term “banking” shall be deemed to include all traditional banking activities as well as the sale of insurance and annuities of all types, trust services, investment and financial advice, and the sale of securities.  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.

 

ARTICLE II

RENTAL AND OPERATING EXPENSES

 

2.1   Rental Payments .

 

(a)           Beginning on the Commencement Date, Tenant shall pay Annual Basic Rent, Excess Basic Rent, if any, Exchange Space Rent, if any, 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 and Exchange Space Rent, if any, 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 .  Unless otherwise specified herein, Excess Basic Rent and Above Standard Services Rent shall be payable twenty (20) days following Landlord’s submission to Tenant of an invoice therefor.

 

(b)           Beginning on the Commencement Date, and continuing throughout the Term of this Lease, Tenant shall pay Annual Basic Rent and Exchange Space Rent, if any, to Landlord.  The Annual Basic Rent payment made by Tenant on the Commencement Date shall equal Five Hundred Fifty-Eight Thousand & 00/100 Dollars ($558,000) plus the amount set forth on Schedule 1 hereto.  Thereafter, Annual Basic Rent shall be as set forth on Schedule 1 hereto. 

 

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Annual Basic Rent shall be adjusted from time to time each time there is a change in the Annual Basic Rent Factor or in Tenant’s Occupancy Percentage for a Property.  From and after the expiration of the Initial Term through the expiration of the Renewal Term(s) (to the extent Tenant renews and extends this Lease pursuant to Section 1.4 hereof), Tenant shall pay Annual Basic Rent at the rate determined in accordance with the provisions of Section 1.4 .

 

(c)           Intentionally Omitted.

 

(d)           Throughout the Initial Term of this Lease, but not thereafter, Tenant shall pay Excess Basic Rent, if any, to Landlord to the extent that the same is due and payable pursuant to Section 10.5 .  Excess Basic Rent, if any, shall be paid annually, in arrears, for each Lease Year during the Initial Term.  Within ninety (90) days following the expiration of each Lease Year during the Initial Term, Landlord shall advise Tenant in writing of the Excess Basic Rent, if any, payable by Tenant for the prior Lease Year and provide Tenant with a detailed calculation of the same.

 

(e)           If the Term commences for any portion of the Leased Premises on a day other than the first day of a calendar month, or if the Term for any portion of the Leased Premises expires on other than the last day of a calendar month, then all installments of Rent that are payable on a monthly basis with respect to such portion of the Leased Premises shall be prorated for the month in which such Term commences or terminates, as the case may be, and the installment or installments so prorated for the month in which such Term commences or terminates, as the case may be, shall be paid in advance.  Said installments for such prorated month or months shall be calculated by multiplying the monthly installment for the affected portion of the Leased Premises by a fraction, the numerator of which shall be the number of days such Rent accrues during said commencement or expiration month, as the case may be, and the denominator of which shall be the actual number of days in the month.  If the Term commences for any portion of the Leased Premises, or if the Term expires on other than the first day of a calendar year, then all Rent payable on an annual basis shall be prorated for such commencement or expiration year, as the case may be, by multiplying such Rent by a fraction, the numerator of which shall be the number of days of the Term during the commencement or expiration year, as the case may be, and the denominator of which shall be the actual number of days in such commencement or expiration 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(e)  shall survive the expiration or termination of this Lease.

 

(f)            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.  All Rent owed by Tenant to Landlord under this Lease shall bear interest from the date due thereof until payment is received by Landlord at the Applicable Rate; provided that Landlord shall not be entitled to receive interest during the first thirty (30) days following the payment due date on any overdue amount for which Landlord receives a late charge as

 

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provided in Section 2.1(g) .  All 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.  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.

 

(g)           Tenant recognizes that late payment of any Rent will result in administrative and other expense to Landlord.  Therefore, other remedies for nonpayment of Rent notwithstanding, (i) in the event any installment of Annual Basic Rent is not received by Landlord 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) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord a late charge equal to two and one half (2½%) percent of the past due installment of Annual Basic Rent, and (ii) in the event any payment of Excess Basic Rent, if any, or Additional Rent is not received by Landlord within five (5) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord an additional charge in an amount equal to the lesser of Two Thousand Five Hundred Dollars ($2,500.00) or one percent (1%) of the overdue amount.  Any notice of overdue payment for which Tenant shall be subject to a late charge shall 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; provided that Tenant shall remit the amount of the deficiency promptly upon and, in any extent, within five (5) business days following Tenant’s receipt of written notice from Landlord that the same is past due.  All additional charges described herein are not intended as a penalty, but are intended to liquidate the damages so occasioned to Landlord and to reimburse Landlord for Landlord’s additional costs in processing such late payment, which amounts shall be added to the Rent then due.

 

(h)           Rent received by Landlord shall be applied by Landlord in the following order:  (i) Annual Basic Rent, (ii) Tenant’s Operating Expense Share, (iii) Tenant’s Tax Share, (iv) Excess Basic Rent, if any, (v) Above Standard Services Rent and (vi) to any remaining items of Rent that are due and unpaid.  Subject to the foregoing limitations, Tenant may, by written notice to Landlord with any Rent payment, direct how Rent is to be allocated among one or more Properties.

 

(i)            In those instances for which the right of offset is expressly provided, 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 as expressed in Article XIII .

 

2.2   Operating Expenses .

 

(a)           During each month of the Term of this Lease, on the same date that Annual Basic Rent is due, Tenant shall pay to Landlord, as Additional Rent, an amount equal to one-twelfth

 

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(1/12) of the annual cost of Tenant’s Occupancy Percentage of the Operating Expenses for the Properties as hereinafter provided (the amount so payable by Tenant, “ Tenant’s Operating Expense Share ”).  Tenant agrees the amount of Operating Expenses may be estimated by Landlord for the upcoming calendar year.  Landlord reserves the right to reasonably re-estimate Operating Expenses (and Tenant’s monthly installments of Tenant’s Operating Expense Share on account thereof) up to one (1) time each calendar year; provided that any re-estimation made during the course of any calendar year for purposes of adjusting Tenant’s monthly installments falling due during the same calendar year shall be made on not less than ninety (90) days’ prior notice to Tenant, which notice shall include documentation that evidences and supports, in reasonable detail, the basis and need for Landlord’s re-estimation of Operating Expenses.  Any overpayment or underpayment of Tenant’s Operating Expense Share shall be reconciled after the period for which estimated payments have been made by Tenant as expressed in Section 2.2(f) .

 

(b)                                “ Operating Expenses ,” for each calendar year, shall mean all expenses and costs of every kind and nature (other than as set forth in Section 2.2(c) ) that have accrued for a particular calendar year, as reasonably allocated by Landlord and, except as otherwise expressly provided herein, computed in accordance with GAAP, on an accrual basis and incurred in connection with the servicing, repairing, maintenance and operation of the Properties during each calendar year, including the expenses and costs set forth in items (i) through (xiii) below:

 

(i)            wages and salaries, including taxes, insurance and benefits, of all persons engaged in operations, on-site property management, maintenance or access control, as reasonably allocated by Landlord (excluding, however, executive personnel of Landlord, senior to the property manager, and personnel to the extent engaged in the development and/or leasing of the Properties);

 

(ii)           replacement costs, whether acquired or leased, of tools and equipment and all costs of materials and supplies, to the extent used in operations, maintenance and access control, as reasonably allocated by Landlord;

 

(iii)                                cost of all utilities, including electricity, water, gas, steam and sewer charges, except to the extent, if any, that the cost thereof is separately metered and billed to Tenant or any other occupants of the Properties or recovered by Landlord (or for which Landlord is entitled to reimbursement, even if not actually collected by Landlord) from Tenant or any other occupants of the Properties as Above Standard Services Rent or otherwise;

 

(iv)          cost of repairing, maintaining and cleaning the Common Areas of the Properties and the furniture and furnishings therein;

 

(v)           cost of all maintenance and service agreements and the equipment therein, 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)          cost of repairs and general maintenance (excluding repairs, alterations and general maintenance to the extent covered by proceeds of condemnation or insurance);

 

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(vii)         the cost, amortized over the useful life of the asset in accordance with GAAP, with interest at Landlord’s then prevailing borrowing rate, of all repairs and replacements of a capital nature, structural and non-structural, ordinary and extraordinary, foreseen and unforeseen, made by Landlord to any Building or the Common Areas (excluding Floor Common Area on floors not leased in whole or in part by Tenant), all to the extent necessary to operate, repair and maintain the Properties in conformity with the requirements of this Lease and in accordance with the accepted principles of sound management practices (and in conformance with GAAP) as applied to the operation, repair and maintenance of Comparable Buildings, but excluding (aa) costs to expand the Net Rentable Area of any Property, (bb) except as otherwise expressly required by this Lease, costs to upgrade or improve the general character or quality of any Property or (cc) for any Property when Tenant’s Occupancy Percentage is greater than thirty-five percent (35%), costs to replace (and not repair or maintain) any major equipment or system unless approved by Tenant in a final Budget;

 

(viii)                        the cost of all insurance premiums (a) required to be obtained by Landlord pursuant to this Lease or (b) customarily obtained by the owners of Comparable Buildings, including the cost of casualty and liability insurance, rental loss insurance for the Property, insurance on Landlord’s personal property located in and used in connection with the operation of the Property and insurance covering losses resulting from perils and acts of terrorism on terms specified in Article VI or as otherwise specified from time to time by Landlord;

 

(ix)                                fair market management fees to the property manager for the Property and fair market rentals for a reasonably sized management office (if located in the Property); provided that in no event shall Operating Expenses include any costs attributable to a Building leasing office, and any space used for leasing and management functions shall be reasonably allocated between leasing and management functions for purposes of the pass-through of rental of the on-site management office;

 

(x)                                   costs of Remedial Work to the Common Areas (excluding Floor Common Areas on floors not leased in whole or in part by Tenant); provided that Landlord shall not be permitted to include any such costs as Operating Expenses unless (A) Landlord’s failure to perform the Remedial Work constitutes a violation of Legal Requirements, (B) 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 (C) Landlord’s failure to perform the Remedial Work would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Properties;

 

(xi)                                HVAC service for the Common Areas (excluding Floor Common Areas on floors not leased in whole or in part by Tenant) as reasonably determined by Landlord using a consistently applied method of allocation;

 

(xii)                             the cost of operating, repairing, maintaining and cleaning the Parking Areas; and

 

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(xiii)         the cost of rental (a) under any ground or underlying lease or leases existing on the Commencement Date for all or any portion of any Property and (b) under any ground or other underlying lease or leases hereafter entered into by Landlord for Parking Areas and other Common Area facilities that are made available for Tenant’s use and are, in fact, used by Tenant, but only for so long as Tenant continues such use.

 

For purposes of this Section 2.2(b) , the phrase “as reasonably allocated by Landlord” shall mean as allocated by Landlord on a reasonable and consistent basis based upon time, square footage or other comparative measure that fairly reflects the Property’s appropriate share of such costs and in a manner that does not result in a profit to Landlord or result in a disproportionate burden to Tenant.

 

(c)                                  Anything in the foregoing provisions hereof to the contrary notwithstanding, Operating Expenses shall not include the following:

 

(i)            repairs or other work occasioned by fire, windstorm or other casualty, the costs of which are reimbursed to Landlord by insurers (or would have been so reimbursed to Landlord if Landlord had been in full compliance with the insurance provisions of this Lease) or by Governmental Authorities in eminent domain or by others; provided that in the event of a loss, the amount of the loss not reimbursed (including the amount of applicable deductibles) shall be includable in Operating Expenses;

 

(ii)           marketing costs, leasing commissions, broker fees, legal fees, costs and disbursements and other expenses incurred in connection with negotiations or disputes with tenants and prospective tenants, or other occupants of the Properties and all other legal fees, whether or not in connection with the foregoing;

 

(iii)          costs incurred in renovating or otherwise improving or decorating or redecorating space for tenants or other occupants of the Properties or vacant space in the Buildings (including any allowances or inducements made to the tenants and prospective tenants or other occupants or any costs for Remedial Work or compliance with Legal Requirements for such tenants or such space);

 

(iv)          except to the extent that the same are expressly provided in Section 2.2(b) , costs incurred by Landlord for alterations and replacements and other costs incurred of a capital nature, including capital improvements, capital repairs, capital equipment and capital tools that are considered capital expenditures under GAAP;

 

(v)           amortization (except as set forth in Section 2.2(b)(vii) ) and depreciation;

 

(vi)          expenses in connection with providing Above Standard Services or similar services or benefits that are not Building Standard Services to Tenant or to any other occupants of the Properties;

 

(vii)         costs incurred due to the violation by Landlord or any tenant or other person (other than Tenant, its agents, employees or contractors) of the terms and conditions of any lease or other agreement pertaining to the Properties or of any Legal Requirement;

 

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

 

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

 

(x)                                   overhead and profit increment and other fees (including management fees or rental for a management office) paid to Landlord or subsidiaries or affiliates of Landlord or its partners for services on or to the Property, to the extent that the costs of such services exceed competitive costs for such services rendered by persons or entities of similar skill, competence and experience, other than Affiliates of Landlord;

 

(xi)                                property management fees at any Property in excess of two and one-half percent (2.5%) of Gross Revenues for such Property; except that for all Tenant Managed Properties, all property management fees shall be excluded from Operating Expenses, and, in lieu thereof, (A) Tenant shall be solely responsible for paying the property management fees due the Tenant Designated Submanager and (B) Tenant shall pay Landlord a property management fee equal to one percent (1%) of Gross Revenue for such Tenant Managed Property that is paid by Tenant minus one and one-half percent (1.5%) of Gross Revenue, if any, for such Tenant Managed Property that is paid by non-Tenant sources;

 

(xii)                             principal, points, fees and interest on any debt;

 

(xiii)                          rental under any ground or underlying lease or leases hereafter entered into by Landlord, except for rentals under leases for Parking Areas or other Common Area facilities that are made available for Tenant’s use and are, in fact, used by Tenant;

 

(xiv)                          Landlord’s general overhead and administration expenses;

 

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

 

(xvi)                          any cost or expense to the extent Landlord is entitled to payment or reimbursement from any tenant (including Tenant), insurer or other person (other than through payment of its proportionate share of Operating Expenses) or for which any tenant (including Tenant) pays third persons;

 

(xvii)                       costs incurred in installing, operating and maintaining any specialty facility such as an observatory, broadcasting facilities (other than the Building’s music system, life support and security system), 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, net of revenues generated thereby;

 

(xviii)                    Intentionally Omitted;

 

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Landlord within three (3) 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 third anniversary of the last day of the calendar year to which said Operating Expense Statement applies, unless before said third 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.

 

(g)           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 2.4 .  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 Real Estate Taxes for each Property that become due and payable during the Term of this Lease as hereinafter provided.  Landlord shall deliver to Tenant a copy of each Real Estate Tax invoice received by Landlord, together with a written statement (“ Tax Statement ”) setting forth (i) the amount of the Real Estate Taxes set forth on the invoice, (ii) the Property for which such Real Estate Taxes relate and (iii) Tenant’s Occupancy Percentage of such Real Estate Taxes, prorated on a per diem basis if only a part of the period for which such Real Estate Taxes relate falls within the Term of this Lease and, with respect to Real Estate Taxes for which a discount is available for early payment, discounted to reflect 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 (the amount so payable by Tenant with respect to each such invoice and in the aggregate, as applicable, “ Tenant’s Tax Share ”).  Tenant shall pay Tenant’s Tax Share to Landlord within thirty (30) days following Tenant’s receipt of the Tax Statement evidencing same.

 

(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, assessed or confirmed by any lawful taxing authorities which may become due and payable out of or for, or which may become a lien or charge upon or against the whole, or any part, of the Properties, including taxes imposed on (i) the gross rents or gross receipts (but not the net income) of the Properties and (ii) personal property in the Properties owned by Landlord and used in connection with the Properties, but only to the extent that the same would be payable if the Properties were the only property of Landlord.  If at any time 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 Properties any tax of any nature that is imposed in whole or in part, in substitution for, addition to, or in lieu of any tax that would otherwise constitute a Real Estate Tax, such tax shall be included within the term “Real Estate Taxes,” but only to the extent that the same would be payable if the Properties were the only

 

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property of Landlord.  Such taxes may include a capital levy or other tax on the gross rents or gross receipts (but not the net income) of the Properties or similar tax, assessment, levy or charge measured by or based, in whole or in part, upon any such gross rents or gross receipts.  There shall be excluded from Real Estate Taxes (i) any realty transfer or similar taxes imposed on Landlord, (ii) taxes and assessments attributable to the personal property of other tenants, (iii) federal, state and local taxes on income, (iv) death taxes, (v) franchise taxes and (vi) any taxes (but not including ad valorem property taxes) imposed or measured on or by the net income of Landlord from the operation of the Property or imposed in connection with any change of ownership of the Property.  In no event shall Real Estate Taxes be included on the amount, if any, by which 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) exceed the value of leasehold improvements generally found in the Building.  In the case of Real Estate Taxes that may be paid in installments, only the amount of each installment accruing during a calendar year shall be included in Real Estate Taxes during each calendar year.

 

(c)           At Tenant’s request so long as Tenant’s Occupancy Percentage at a Property is at least thirty-five percent (35%), Landlord shall contest or appeal the validity or amount of Real Estate Taxes for such Property by appropriate proceedings.  Landlord may also contest or appeal the validity or amount of Real Estate Taxes for any Property on Landlord’s own initiative.  Tenant shall pay as Additional Rent Tenant’s Occupancy Percentage of Landlord’s reasonable, out of pocket expenses incurred in any such appeal.  Real Estate Taxes with respect to a Property that is the subject of an appeal filed by or on behalf of Landlord shall be paid on the basis of the amount reflected in the tax bill and shall not be adjusted until the final determination of the appeal.  Within thirty (30) days following such final determination, Landlord will refund to Tenant, or Tenant shall pay to Landlord, as applicable, the difference, if any, between Tenant’s Tax Share payments previously made by Tenant and the finally determined amount of Tenant’s Tax Share.

 

(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 2.4 .  Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Tax Statement or other notice.

 

2.4   Budget; Audit Rights .

 

(a)           On or before June 1 of each calendar year during the Term of this Lease, Landlord shall deliver to Tenant for Tenant’s review and comment, a written estimate in reasonable detail of the projected budget for Operating Expenses and Real Estate Taxes for each Property for the next succeeding calendar year (the “ Budget ”).  The Budget shall show (i) the estimated amount of Operating Expenses, Tenant’s Operating Expense Share, Real Estate Taxes and Tenant’s Tax Share for each Property, for the next succeeding calendar year, (ii) the estimated amount for each major category of expense that is expected to be included in Operating Expenses for each Property during the next succeeding calendar year, including on a Property by Property basis, any items that constitute capital expenditures in accordance with this Lease and the amount thereof to be amortized during such calendar year, (iii) the estimated rates to be charged by Landlord for Above Standard Services for each Property for which Tenant has requested the

 

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same during the next succeeding calendar year and (iv) the actual amounts for all such items for the prior calendar year.  It is understood and agreed by Landlord and Tenant that the Operating Expenses and Real Estate Taxes in the Budget shall be estimated on a reasonable good faith basis taking into consideration, among other things, the actual Operating Expenses and Real Estate Taxes for the then current calendar year, a good faith estimate of the rate of cost increases during the then current calendar year, the actual known prospective increases to each item in the Budget and a good faith estimate for contingencies for the next succeeding calendar year.  Tenant may disapprove a portion of a proposed Budget only if such portion of the Budget fails to reflect the reasonable and necessary Operating Expenses and Real Estate Taxes to operate, repair and maintain the Properties in conformity with the requirements of this Lease and in accordance with the accepted principles of sound management practices as applied to the operation, repair and maintenance of Comparable Buildings; provided that for any Property when Tenant’s Occupancy Percentage is greater than thirty-five percent (35%), (i) Tenant may disapprove Landlord’s decision to replace (and not repair or maintain) any major equipment or system unless Landlord establishes, by certification of a qualified engineer for whom Tenant has no reasonable objection, that the equipment or system in question is beyond its useful life and that continued repair or maintenance (and not replacement) is not commercially practicable and (ii) Tenant may require Landlord to replace (and not repair or maintain) any major equipment or system if Tenant establishes, by certification of a qualified engineer for whom Landlord has no reasonable objection, that the equipment or system in question is beyond its useful life and that continued repair or maintenance (and not replacement) is not commercially practicable.  If Tenant disapproves a portion of a proposed Budget, Tenant shall so notify Landlord in writing, which notification shall state, in reasonable detail, the item or items of the proposed Budget disapproved by Tenant and the basis for such disapproval.  Landlord and Tenant shall negotiate in good faith to resolve any differences concerning any proposed Budget.  Landlord shall deliver to Tenant the proposed final Budget for the next succeeding calendar year and the calculation of Tenant’s Occupancy Percentage thereof on or before July 15 of each calendar year; provided that if Tenant fails to approve a proposed Budget on or before July 1 of a preceding calendar year, and if the parties have been unsuccessful in their efforts to resolve any disagreements, either Landlord or Tenant may at any time thereafter submit the Budget for the next calendar year (or any portion thereof) to dispute resolution in accordance with the provisions of Article XII of this Lease, and, in such event, Landlord shall deliver the final Budget to Tenant within thirty (30) days following the completion of the dispute resolution process.  Notwithstanding the foregoing, (i) if the dispute resolution process regarding the Budget is not completed by January 1 of the calendar year to which such proposed Budget relates, then (A) the costs set forth on the proposed Budget shall be used for all items not the subject of a dispute, and (B) to the extent applicable, the prior year’s budgeted costs shall be used for all items of a proposed Budget that are the subject of a dispute and (ii) in the event that the actual Operating Expenses or Real Estate Taxes incurred by Landlord during a calendar year exceed Landlord’s estimated Operating Expenses and Real Estate Taxes (including contingencies) for such year as set forth on an approved Budget, Landlord may prepare and submit a revised Budget to Tenant for Tenant’s review and approval (but not more frequently than once during any calendar year).  Upon completion of the dispute resolution process, the new year’s Budget shall be correspondingly adjusted and Tenant’s monthly payment of Tenant’s Operating Expense Share shall likewise be adjusted.  If Landlord determines during the course of a calendar year that a Building is in need of capital repairs, replacements or improvements that are not included in the approved Budget for such Building

 

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for such calendar year, Landlord shall so advise Tenant, and Tenant shall review and approve or disapprove the proposed capital repair, replacement or improvement in conformity with the procedures outlined in this Section 2.4(a)  as if such repair, replacement or improvement were originally included by Landlord as part of the budget process described above.

 

(b)           Tenant, at Tenant’s sole cost and expense, shall have the right, to be exercised by notice given to Landlord within three (3) years after receipt of an Operating Expense Statement, Tax Statement or other invoice, to audit and/or inspect that portion of Landlord’s books and records pertaining to such Operating Expenses, Real Estate Taxes or other components of Additional Rent, as applicable, for such calendar year; provided such audit and/or inspection commences within ninety (90) days after Tenant’s notice to Landlord and thereafter proceeds reasonably to conclusion, and further provided that Tenant may audit any single year only once unless Landlord has subsequently made revisions to any Operating Expense Statement, Tax Statement or other components of Additional Rent that impact Tenant’s Operating Expense Share, Tenant’s Tax Share or other Additional Rent payment.  Tenant may conduct such audit and/or inspection of Landlord’s books with Tenant’s own employees, or through an accountant or other agent selected by Tenant, or both in combination.  Tenant shall require any accountant or agent selected by Tenant to conduct or assist in such audit and/or inspection to execute and deliver to Landlord a confidentiality agreement substantially in the form attached hereto as Exhibit C .  Landlord agrees to cooperate in good faith with Tenant in the conduct of any such audit and/or inspection, and to make Landlord’s books and records of and relating to Operating Expenses, Real Estate Taxes or other components of Additional Rent, as applicable, available to Tenant or Tenant’s agents at one (1) single location.  If Tenant’s audit and/or inspection shows that Landlord’s calculation of Tenant’s Operating Expense Share, Tenant’s Tax Share or other components of Additional Rent for the audited/inspected calendar year or years (which shall in no event be prior to the two (2) calendar years immediately preceding the most recently completed calendar year) was overstated by more than four percent (4%) with respect to any Property, then Landlord shall pay, within thirty (30) days after Tenant’s request, Tenant’s actual reasonable audit/inspection out-of-pocket fees applicable to the audit/inspection of said calendar year statements for such Property.  Upon completion of the audit and/or inspection, if the calculation of Tenant’s Operating Expense Share, Tenant’s Tax Share or other components of Additional Rent indicates that Tenant overpaid Rent for any audited calendar year, Landlord shall pay Tenant (in the form of a credit against Rent next due or, upon expiration of this Lease, in the form of Landlord’s check within thirty (30) days after the completion of such audit and/or inspection) an amount equal to such overpayment.  In the event of any such audit or inspection, Landlord shall cause the books and records to be made available during such normal business hours as are prescribed by Landlord at Landlord’s headquarters or main office, which shall be located in the continental United States.  In any case, should Landlord disagree with the results of Tenant’s audit, Landlord and Tenant shall refer the matter to a mutually acceptable independent certified public accountant, who shall work in good faith with Landlord and Tenant to resolve the discrepancy.  The fees and costs of such independent accountant to which such dispute is referred shall be borne by the unsuccessful party and shall be shared pro rata to the extent each party is unsuccessful as determined by such independent certified public accountant, whose decision shall be final and binding.

 

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ARTICLE III

BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT

 

3.1   Building Standard and Above Standard Services .  During the Term, Landlord shall furnish the following services to Tenant:

 

(a)                                   Building Standard Services .  Landlord shall furnish the following services to Tenant during the Term (“ Building Standard Services ”), all of which shall comply with and shall be subject to Legal Requirements and, except as expressly provided to the contrary in this Section 3.1(a)  or in any Lease Supplement, shall be equal to or exceed services customarily provided for Comparable Buildings:

 

(i)            At all times, hot (i.e., thermostat set in the range of 105° to 110° Fahrenheit for comfort and energy conservation purposes but with the capability to produce hot water for specified purposes at 140° Fahrenheit if requested by Tenant) and cold domestic water in all restrooms, drinking fountains, kitchen and pantry areas within the Leased Premises and all common use restrooms, kitchen and pantry areas at locations provided for general use;

 

(ii)           During Building Operating Hours, HVAC sufficient to maintain temperatures that are reasonably required for comfortable use and occupancy of all portions of the Leased Premises designed for occupancy by persons; provided that Landlord shall have the right, but not the obligation, at Landlord’s sole cost and expense, to install and operate such utility submeters as Landlord deems necessary to measure utility demand and usage within and outside the Leased Premises (and, in such event, (A) Tenant shall pay Tenant’s allocable share of any such submetered costs as Additional Rent at Landlord’s actual cost of providing the same, without mark-up and reflecting the largest possible bulk-purchase or other discounts available to Landlord from the utility provider and (B) all such submetered utility costs shall be excluded from Operating Expenses as provided in Section 2.2(b)(iii) );

 

(iii)          Electric lighting service for all Common Areas, including the Parking Areas, in conformity with the practices for each Property on the Commencement Date as set forth in the applicable Lease Supplement;

 

(iv)          Janitorial service to the Leased Premises in conformity with the janitorial specifications for each Property as set forth in the applicable Lease Supplement;

 

(v)           Access control services for the Properties and the Buildings providing Tenant and its employees access to the Leased Premises and the Common Areas at all times; provided that Tenant shall have the right, at Tenant’s sole cost and expense, to install and operate such additional access control systems as it shall determine desirable for the purpose of limiting access to or within the Leased Premises, so long as any additional access control systems installed by Tenant are monitored and maintained by Tenant at Tenant’s sole expense;

 

(vi)          At all times, dedicated electrical capacity, transformed to a panel box located in the core of each floor of the Leased Premises or to the location of the panel

 

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boxes servicing the Leased Premises on the Commencement Date, in an amount not less than the dedicated capacity available to the Leased Premises on the Commencement Date; provided that Landlord shall have the right, but not the obligation, at Landlord’s sole cost and expense, to install and operate such utility submeters as Landlord deems necessary to measure utility demand and usage within and outside the Leased Premises (and, in such event, (A) Tenant shall pay Tenant’s allocable share of any such submetered costs as Additional Rent at Landlord’s actual cost of providing the same, without mark-up and reflecting the largest possible bulk-purchase or other discounts available to Landlord from the utility provider and (B) all such submetered utility costs shall be excluded from Operating Expenses as provided in Section 2.2(b)(iii) );

 

(vii)         Security for the Projects, Buildings and Common Areas, including any Parking Areas, substantially similar to the security services existing immediately prior to the Commencement Date; provided that Tenant is solely responsible for compliance with all Legal Requirements in effect from time to time pertaining to banking security systems, devices, services, equipment and procedures for the Leased Premises and that Landlord shall have no responsibility or liability therefor; further provided that at Major Properties, for so long as Tenant’s Occupancy Percentage at such Major Property is fifty percent (50%) or greater, Tenant shall have the right, at Tenant’s election, to assume responsibility for and provide security for such Major Properties and the Buildings and Common Areas thereat, including any Parking Areas.  The security services provided by Tenant shall be at a level substantially similar to the level of security services existing at the Major Property immediately prior to the Commencement Date or, if greater, at a level then commensurate with Comparable Buildings.  The cost of providing security at such Major Properties shall be paid (or reimbursed to Tenant) by Landlord as an Operating Expense, except that if Tenant desires security services in excess of those commensurate with the prevailing standard as provided above, Tenant shall bear the cost for such additional security as Above Standard Services Rent.

 

(viii)        All bulb replacement in all Common Areas and Building Standard bulb replacement in the Leased Premises, it being understood that replacement of all fluorescent, incandescent, halogen and other types of bulbs in all fixtures existing in the Leased Premises as of the Commencement Date shall be deemed to be Building Standard and that Landlord shall not be obligated to replace any bulbs in Tenant’s furniture or furnishings in the Leased Premises;

 

(ix)           At all times, elevator cab passenger service to the Leased Premises, subject to temporary cessation for ordinary repair and maintenance (but as to each floor of the Leased Premises, such temporary cessation for ordinary repair and maintenance shall not occur simultaneously for all passenger cabs serving such floor), and to security measures or other means of controlling access imposed by Landlord after Building Operating Hours, on Holidays and during times when life safety systems override normal building operating systems;

 

(x)            Maintenance and cleaning of the Properties, Building and Common Areas, including the Common Areas on each floor of the Building on which any part of the

 

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Leased Premises are situated, the Parking Areas and all exterior landscaped areas in and around the Property;

 

(xi)           During Building Operating Hours, shared access to and use of, in common with Landlord and other tenants of the Building, a loading dock facility for the Building (if and to the extent that such facility exists on the Commencement Date), subject to such reasonable rules and regulations as are promulgated by Landlord from time to time pursuant to Section 4.4 ;

 

(xii)          At all times, sanitary sewer service to the Leased Premises and Common Areas facilities; and

 

(xiii)         Trash removal from the Property at designated locations.

 

All costs incurred by Landlord in connection with providing Building Standard Services shall be included in Operating Expenses.

 

The foregoing provisions of this Section 3.1(a)  notwithstanding, the enumeration of particular building services is not a representation or agreement by Landlord that each Building Standard Service is available in specific quantities or amounts, or to particular standards or specifications at each Property.  Landlord and Tenant acknowledge that Tenant owned and operated each of the Properties prior to the Commencement Date and Tenant is fully aware of the capabilities and limitations of the Building systems.  Nothing herein shall be deemed to be a covenant or agreement of Landlord, or a representation or warranty of Landlord, express or implied, that Landlord shall improve the level of service provided by existing Property systems.  With respect to the Building Standard Services referenced in Section 3.1(a)(i), (ii), (v) and (ix) , Landlord shall furnish such services in such quantities and at such levels that are at least equal to the quantities and levels being furnished at each Property immediately prior to the Commencement Date, with Tenant acknowledging and agreeing that Landlord shall not be required to provide during the Term greater quantities or higher levels of service than is capable of being provided with the machinery, equipment and systems that existed immediately prior to the Commencement Date and that Landlord has no obligation to replace or improve such machinery, equipment or systems other than in the ordinary course as may be consistent with sound building management practices or as required by Section 5.5 .

 

(b)                                  If Tenant requires electrical energy for use in the Leased Premises in excess of the capacities described in Section 3.1(a)(vi) , and if electric energy for such additional requirements is available to Landlord, Landlord shall, upon Tenant’s request and at Tenant’s sole cost and expense, furnish and install such additional wires, risers, conduits, feeders, switchboards and circuit panels as reasonably may be required to supply such additional requirements of Tenant.  If any portions of the Leased Premises or any of Tenant’s electrical equipment requires HVAC service in excess of Building Standard HVAC service, the same shall be installed, or the installation supervised by Landlord, on Tenant’s behalf, and Tenant shall pay all design, installation, submetering, repair, maintenance, replacement and operating costs relating thereto, unless such HVAC service is used in common with other tenants of the Building, in which event such costs shall be reasonably allocated by Landlord among Tenant and such other tenants.  The location and specifications of any such supplemental HVAC units shall be subject to Landlord’s

 

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prior written approval, which approval may not be unreasonably withheld or delayed.  In connection with the operation of any supplemental HVAC units serving the Leased Premises, to the extent a particular Property shall have available chilled water capacity, during Building Operating Hours Tenant may use such available chilled water for said supplemental HVAC units, and Landlord shall not charge Tenant for such service.  If Tenant shall require chilled water service in amounts not otherwise available or during other than Building Operating Hours, Tenant shall pay Landlord for the cost of providing such services as Above Standard Services Rent.

 

(c)           If and to the extent requested by Tenant from time to time and to the extent the same are reasonably available, Landlord shall provide Tenant with services in excess of Building Standard Services as described in Section 3.1(a)  (“ Above Standard Services ”).  All of the costs incurred by Landlord in connection with providing any special Tenant services shall be paid by Tenant as Above Standard Services Rent, including costs that would not have been incurred but for Tenant’s request for Above Standard Services.  Landlord’s charges for Above Standard Services shall be established and revised from time to time by Landlord on a Property by Property basis; provided that at no time shall Landlord’s charges for Above Standard Services exceed Landlord’s actual out-of-pocket costs, nor shall Landlord (i) include any overhead or profit in the calculation of Above Standard Services costs or (ii) charge Tenant at a higher rate for Above Standard Services than Landlord charges any other tenant of a Building for comparable services.  All amounts collected by Landlord from Tenant and any other party to provide Above Standard Services or similar services shall be used to reduce Operating Expenses to the extent that the cost of providing the same were included in the calculation of Operating Expenses.

 

(d)           Landlord shall furnish Tenant at least twenty four (24) hours prior written notice of any non-emergency suspension or interruption in the Building Standard Services scheduled by Landlord for routine repairs or maintenance; provided that if such suspension or interruption will render the Building Common Areas or the Leased Premises inaccessible, without electric power, without cold domestic water or sanitary sewer service or otherwise untenantable in the ordinary course, Landlord shall endeavor to provide Tenant with not less than ninety (90) days’ prior notice thereof.

 

(e)           To the extent the services described in this Section 3.1 require electricity, water or other utility services supplied by public utilities, Landlor