OFFICE/LIGHT MANUFACTURING LEASE

 

TABLE OF CONTENTS

 

				Page
ARTICLE I DEMISING CLAUSE AND DEFINED TERMS				1
1.1			Demising Clause	1
1.2			Defined Terms	1
ARTICLE II PREMISES AND TERM				3
2.1		The Premises, Common Areas and Parking		3
2.2		Term		3
ARTICLE III RENT				4
3.1		Base Rent		4
3.2		Adjustment for Operating Expenses		4
ARTICLE IV CONSTRUCTION				7
4.1		Leasehold Improvements by Tenant		7
4.2		Alteration by Tenant		10
ARTICLE V LANDLORD’S COVENANTS				11
5.1		Services Furnished by Landlord		11
5.2		Repairs and Maintenance		11
5.3		Quiet Enjoyment		11
5.4		Insurance		12
5.5		Access to Premises		12
5.6		Right to Cease Providing Services		12
5.7		Excise Tax		13
5.8		ADA Compliance		13
ARTICLE VI TENANT’S COVENANTS				14
6.1		Repair and Surrender of Premises		14
6.2		Use; Waste; Nuisance		14
6.3		Assignment; Sublease		15
6.4.		Indemnity		16
6.5		Tenant’s Insurance		17
6.6		Payment of Taxes		17
6.7		Environmental Compliance		17
ARTICLE VII DEFAULT				20
7.1		Events of Default		20
7.2		Remedies Upon Default		21
7.3		Damages		21
7.4		Cumulative Remedies		22

 

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ARTICLE VIII CASUALTY AND EMINENT DOMAIN		22
8.1	Casualty	22
8.2	Eminent Domain	24
ARTICLE IX RIGHTS OF PARTIES HOLDING PRIOR INTERESTS		25
9.1	Subordination	25
ARTICLE X	MISCELLANEOUS	26
10.1	Representations by Tenant and by Landlord	26
10.2	Notices	26
10.3	No Waiver or Oral Modification	26
10.4	Partial Invalidity	26
10.5	Self-Help	27
10.6	Tenant’s Estoppel Certificate	27
10.7	Waiver of Subrogation	28
10.8	All Agreements; No Representations	28
10.9	Brokerage	28
10.10	Successors and Assigns	28
10.11	Construction of Document	29
10.12	Disputes Provisions	29
10.13	Holdover	29
10.14	Late Payment	29
10.15	Force Majeure	29
10.16	Limitation on Liability	30
10.17	Lease not to be Recorded	30
10.18	Option to Extend	30
10.19	Option to Terminate	31
10.20	Right of First Offer to Purchase the Premises	31
10.21	Reasonable Consent	32
10.22	Prior Lease Terminated	33

 

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EXHIBITS

 

There are attached hereto and incorporated as a part of this Lease:

 

EXHIBIT A	Site Plan of Premises
EXHIBIT B	Legal Description of Lot
EXHIBIT C	Notice of Lease Term Dates
EXHIBIT D	Plans for Tenant Improvements
EXHIBIT E	Liens and Encumbrances
EXHIBIT F	Non-Disturbance and Attornment Agreement

 

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ARTICLE I DEMISING CLAUSE AND DEFINED TERMS

 

1.1            Demising Clause .

 

This lease (the “Lease”) is made and entered into by and between Landlord and Tenant, as defined below, as of the Date of Lease. In consideration of the mutual covenants made herein, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises as defined below, on all of the terms and conditions set forth herein.

 

1.2            Defined Terms .

 

The terms listed below shall have the following meanings throughout this Lease:

 

		Section in which Definition First Appears
“LANDLORD”:	Cardigan Investments Limited Partnership	1.1
“MANAGING AGENT”:	Wellington Management, Inc.	3.1
“MANAGING AGENT’S ADDRESS”:	413 Wacouta Street, Suite 350 St. Paul, Minnesota 55101	3.1
“TENANT”:	EMPI, Inc.	1.1
“TENANT’S ADDRESS”:	5255 East River Road
	Minneapolis, Minnesota 55421	3.1
“BUILDING”:	599 Cardigan Road
	Shoreview, Minnesota	2.1
“PREMISES”:	Approximately 93,666 rentable square feet constituting the entire Building and as more particularly shown on Exhibit A attached hereto and the Property.	2.1
“PROPERTY”:	The land (the “Lot”) on which the Building is situated. The Lot is legally described in Exhibit B attached hereto.	2.1

 

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“PERMITTED USES”:	Office, warehouse, light manufacturing and uses permitted by the City of Shoreview consistent with Section 6.3 and 6.8.	6.3
“TENANT’S PERCENTAGE”:	100%	3.2
“PARKING SPACES”:	Tenant will have exclusive access to and use of all of the parking spaces on the Property. See Exhibit A .	2.1
“SCHEDULED COMMENCEMENT
DATE”:	November 1, 1996, or first day Tenant occupies and conducts business from the Building, whichever comes first.	2.2
“TERM”:	Ten (10) years, with two (2) options to renew for five (5) years each.	2.2
“BASE RENT”:

 

	Years		Term		Annual Base Rent
	Years 1 - 10		Initial		$	327,831
	Years 11 - 15		1st Renewal		$	421,497
	Years 16 - 20		2nd Renewal		$	515,163		3.1

 

“ESTIMATE OF
TENANT’S OPERATING
EXPENSES”:		$228,545.04 (1995 budget) plus 100% of utilities. These are estimates only.		3.2
“SECURITY DEPOSIT”:		None
“BROKER(S)”:		Woodbridge Partners, Inc.		10.9
“DATE OF LEASE”:		The date on which both parties have executed the Lease.		1.1
“PUBLIC LIABILITY
INSURANCE AMOUNTS”:		Combined Single Limit-$3,000,000 which includes umbrella coverage per occurrence and in the aggregate.		6.6

 

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“TENANT IMPROVEMENT COSTS”:	All costs Tenant incurs relating to constructing the Tenant Improvements as defined in Section 4.1(a), including, without limitation, costs related to materials, equipment, labor, electrical costs, permits and all fees paid to architects and other consultants.
“AMORTIZATION OF TENANT IMPROVEMENT COSTS”:	The amortization of the Tenant Improvement Costs over a ten (10) year period at interest of ten percent (10%) per annum.

 

ARTICLE II PREMISES AND TERM

 

2.1            The Premises, Common Areas and Parking .

 

(a)            Premises . The Premises leased hereby are comprised of the entire Building which presently contains approximately 93,666 rentable square feet as more particularly shown on Exhibit A , which will be expanded as part of the Tenant Improvements and the Property.

 

(b)            Parking . Tenant shall be entitled to use all of the parking spaces in the Building’s parking area(s). Tenant acknowledges that its use of the parking spaces shall be solely for Tenant’s employees, agents and visitors and Landlord and its agents. Landlord shall not be liable to Tenant, and this Lease shall not be affected, if any parking rights of Tenant hereunder are impaired by any law, ordinance or other governmental regulation imposed after the Date of Lease.

 

(c)            Parking Lot Repairs . Landlord shall make any necessary repairs or replacement to the parking lot throughout the Term. Tenant and Landlord agree that Landlord shall include the costs of any and all such repairs or replacements in Tenant’s Share of Operating Expenses as defined in Section 3.2 below and only to the extent provided therein.

 

2.2            Term .

 

(a)            Commencement . The Commencement Date shall be the earlier of November 1, 1996 or the date Tenant occupies and conducts business in any portion of the Premises. Notwithstanding the foregoing to the contrary, Tenant shall have the right of access to and use of the Premises for the period commencing on the Date of Lease through the date prior to the Commencement Date for the purpose of constructing the Tenant Improvements to the

 

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Premises as provided in this Lease. This Lease shall be in full force and effect from and after the Date of Lease, except that (other than as provided in Section 3.3) Tenant shall not have any obligation prior to the Commencement Date to pay Base Rent, Tenant’s Share of Operating Expenses (except for electricity) or any other amounts due under the terms of this Lease by Tenant to Landlord.

 

ARTICLE III RENT

 

3.1            Base Rent .

 

Tenant shall pay the Base Rent each month in advance on the first day of each calendar month during the Term and a proportionate part of such monthly installment shall be payable for any fraction of a calendar month occurring at the beginning or end of the Term. All payments shall be made to Landlord c/o Managing Agent at Managing Agent’s Address or such other place as Landlord may designate in writing, without prior demand and without abatement, deduction or offset, except as hereinafter provided. All charges to be paid by Tenant hereunder, other than Base Rent, shall be considered additional rent for the purposes of this Lease, and the words “rent” or “Rent” as used in this Lease shall mean both Base Rent and such additional rent unless the context specifically or clearly indicates that only the Base Rent is referenced.

 

3.2            Adjustment for Operating Expenses .

 

(a)            Tenant’s Share of Operating Expenses . For each calendar year Tenant shall pay Landlord as additional rent, one hundred percent (100%) of the Operating Expenses for the Building (“Tenant’s Share of Operating Expenses”). Tenant’s Share of Operating Expenses as of 1995 was estimated to be $228,545.04 per year plus utilities. For any partial Fiscal Year at the beginning or end of the Term, Tenant’s Share of Operating Expenses shall be adjusted proportionately for the part of the Fiscal Year falling within the Term.

 

(b)            Operating Expenses Estimate . Before each Fiscal Year, and from time to time as Landlord deems appropriate, Landlord shall give Tenant an estimate of the expected Operating Expenses for the Property for the coming Fiscal Year, and a calculation of the estimated amount of Tenant’s Share of Operating Expenses. Tenant shall pay one-twelfth of the estimated amount of Tenant’s Share of Operating Expenses with each monthly payment of Base Rent. No later than ninety (90) days after the end of each Fiscal Year, Landlord shall give Tenant a statement (the “Operating Expense Statement”) showing the actual Operating Expenses for that Fiscal Year, a calculation of the actual amount of Tenant’s Share of Operating Expenses, and a summary of amounts already paid by Tenant pursuant to this Section 3.2. Any underpayment by Tenant shall be made up by cash payment to Landlord within thirty (30) days after delivery of the Operating Expense Statement; any overpayment shall be paid to Tenant within thirty (30) days after delivery of the Operating Expense Statement or, at Landlord’s option, shall be credited against the Base Rent next due under this Lease, provided that any overpayment shall be paid in cash to Tenant within thirty (30)

 

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days if the Term has ended. No delay by Landlord in providing any Operating Expense Statement shall be deemed a waiver of Tenant’s obligation to pay Tenant’s Share of Expenses. Notwithstanding anything in this paragraph to the contrary, Landlord waives all rights to collect additional rent under the provisions of this paragraph if Landlord fails to provide the Operating Expense Statement within six (6) months after the end of the Fiscal Year. Tenant and its agents have the right of access to and review of the portion of Landlord’s books and records relating to the Building’s Operating Expenses.

 

Landlord shall employ Wellington Management, Inc. (“WMI”) as the property manager during the Term and any renewal term of this Lease. Tenant shall have the right to require the Landlord to terminate WMI, or successor property manager, upon sixty (60) days’ prior written notice from Tenant to Landlord if Stephen B. Wellington, Jr. (i) no longer holds a controlling interest in WMI or the successor property manager or (ii) is not actively involved in the day to day operations of WMI or the successor property manager. In such event, Tenant shall have the right, together with the Landlord to interview prospective property managers and negotiate the services and fees to be provided by such property managers. Landlord may appoint the new property manager, subject to the approval of Tenant, which approval shall not be unreasonably withheld or delayed.

 

(c)            Definitions . As used herein, the following terms used in this Subsection 3.2 shall have the following meanings for purposes of this Lease:

 

(i)             The term “Fiscal Year” means a calendar year.

 

(ii)            The term “Operating Expenses” means the total cost of operation of the Property, including, without limitation: (i) Taxes, as defined below; (ii) premiums for insurance carried with respect to the Property; (iii) all costs of supplies, materials, equipment, and utilities including all electricity used in or related to the operation, maintenance, and repair of the Property or any part thereof excepting those items used in the construction or installation of capital improvements (improvements that must be capitalized for federal income tax purposes); (iv) all labor costs, including without limitation, salaries, wages, payroll and other taxes, unemployment insurance costs and employee benefits excepting those used for capital improvements; (v) all maintenance, management, janitorial, legal, accounting, and service agreement costs related to the Property or any part thereof, including, without limitation, service contracts with independent contractors; (vi) the annual portion of the amortization of the costs (including interest of ten (10%) percent per annum) of improvements to the Property that are designed only to increase safety or reduce Operating Expenses or are required to comply with legal requirements imposed after the initial completion of the Building, all such improvements to be amortized over the useful life of the improvement, subject to the limitations as hereinafter provided.

 

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Furthermore, if said improvements are undertaken to reduce operating expenses, the amount passed through to Tenant as an Operating Expense shall be the lesser of the annual reduction in Operating Expenses or the annual portion of the amortization of the cost of said improvement over its useful life. Any of the above services may be performed by Landlord or its affiliates, provided that fees for the performance of such services shall be reasonable and competitive with fees charged by unaffiliated entities for the performance of such services in comparable buildings in the area. Operating Expenses must be reasonably necessary for the operation of the Property, commercially reasonable and market competitive. Tenant will have the right to participate in the development and review of the annual budget for Operating Expenses before it is finalized.

 

Notwithstanding the foregoing to the contrary, Operating Expenses shall not include the Excluded Expenses, as hereinafter defined. The term “Excluded Expenses” shall include any Landlord overhead (property management fees to affiliates excepted), costs and expenses relating to defective design or construction of the Building, Landlord’s negligence or that of its employees, agents, or contractors, real estate taxes based on a minimum assessment agreement to the extent such taxes are greater than they would otherwise be assessed, leasing commissions, repair costs paid by insurance proceeds or by any tenant or third party, any and all depreciation expense, any debt service, cost of capital improvements except as specifically set forth above, any and all repairs and improvements related to structural portions of the Building, repair and improvements to the exterior walls, replacement of HVAC units, including new units installed by Tenant, and roof repair or maintenance costs in excess of $1,800 per Fiscal Year (adjusted upward three percent (3%) annually beginning in 1997) (the “Roof Repair Cap”).

 

(iii)                              The term “Taxes” means any form of assessment, rental tax, license tax, business license fee, levy, charge, tax or similar imposition imposed by any authority having the power to tax including any city, county, state or federal government, or any school, agricultural, lighting, library, drainage or other improvement or special assessment district, as against the Property or any part thereof or any legal or equitable interest of Landlord therein, or against Landlord by virtue of its interest therein, and any reasonable costs incurred by Landlord in any proceeding for abatement thereof, including, without limitation, attorneys’ and consultants’ fees, and regardless of whether any abatement is obtained. Landlord’s income and franchise taxes shall not be included in “Taxes”. All assessments must be amortized over the

 

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longest term permitted by the local government authority and only the current amortization of such assessment is to be included in Operating Expenses. If Landlord or Tenant decides to proceed with a tax protest relating to the abatement of taxes, the other party’s approval shall be required, said approval to be timely and not unreasonably withheld. Landlord will be responsible for any and all special assessments relating to the construction of the proposed railroad crossing project. Landlord shall exercise reasonable efforts to promote and encourage the construction of such project.

 

3.3            Payment for October, 1996 .

 

In addition to the Base Rent and Operating Expenses payable with respect to the Term, Tenant shall pay to Landlord with respect to that portion of the month of October, 1996 preceding the Commencement Date an amount equal to one-half (1/2) of the Base Rent and Operating Expenses which would have been payable by Tenant with respect to such portion of the month of October, 1996 preceding the Commencement Date, had the Commencement Date occurred on October 1, 1996. On or prior to October 1, 1996, Tenant shall pay to Landlord an amount equal to one-half (1/2) of the monthly Base Rent and estimated Operating Expenses for the full month of October, 1996. Upon occupying and conducting business from the Premises, Tenant shall pay to Landlord the balance of the Base Rent and estimated Operating Expenses payable for the portion of the month of October, 1996 falling within the Term (being an additional amount equal to one-half (1/2) of the Base Rent and estimated Operating Expenses attributable on a pro-rata basis to the portion of the month of October, 1996 falling on and after the Commencement Date).

 

ARTICLE IV CONSTRUCTION

 

4.1            Leasehold Improvements by Tenant .

 

(a)            Tenant’s Work . At its expense, Tenant shall cause the Premises to be built-out substantially in accordance with final plans (the design development drawings and specifications relating to the Tenant Improvements) to be signed by the Landlord and Tenant and attached hereto as Exhibit D (the “Final Plans”). The work to be constructed in accordance with the Final Plans is hereinafter referred to as the “Tenant Improvements” and shall be at a total cost, including all soft costs relating to the Tenant Improvements, including, without limitation, architect fees, legal fees and permits, to Tenant of no less than One Million Dollars ($1,000,000). Tenant shall pay all of the costs associated with preparing such Final Plans. Landlord shall not be responsible for interior design costs including, e.g., furniture, office systems, etc., all of such costs shall be the sole responsibility of Tenant. Tenant shall cause the Tenant Improvements to be installed with all due diligence in accordance with the Final Plans by Kraus-Anderson Construction, Inc. in a first-class workmanlike manner. Tenant shall use reasonable efforts to substantially complete

 

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the Tenant Improvements as soon as possible after the date it receives possession of the Property, which in no event shall be later than the Date of Lease. Once installed, the Tenant Improvements shall be part of the Premises and the sole property of Landlord, except that Tenant may remove from the Premises its personal property, equipment, trade fixtures, furniture and moveable partitions. Landlord shall have no obligation to improve the Premises prior to the Commencement Date, except as hereinbefore provided, and, thereafter, only as specifically required by this Lease.

 

Except to the extent attached hereto as Exhibit D and hereby approved, Tenant shall submit the Final Plans to the Landlord as soon as they are completed for Landlord’s approval, which approval shall not be unreasonably withheld or delayed. In the event the Landlord fails to approve or object to such plans by written notice to Tenant within five (5) days of Landlord’s receipt of such Final Plans, then the Landlord shall have been deemed to have approved such Final Plans.

 

Tenant shall enter into a construction contract with Kraus-Anderson Construction, Inc. (the “Construction Contract”) and shall perform all of its obligations thereunder in timely fashion. Tenant agrees to indemnify, defend and hold harmless Landlord from and against any and all claims for amounts due Kraus-Anderson Construction, Inc. under the Construction Contract, including, without limitation, Landlord’s reasonable attorneys’ fees.

 

Tenant will cause the architect to certify to Landlord upon completion of the Tenant Improvements, that such Tenant Improvements have been constructed substantially in accordance with the Final Plans, as modified by change orders pursuant to subparagraph (c) hereof.

 

Tenant agrees to assign to Landlord Tenant’s rights under the Construction Contract and any warranties relating to equipment which is a part of the Tenant Improvements (if they are assignable) to the extent such assignment is necessary in Landlord’s reasonable opinion to protect the Landlord with regard to any condition of the Building which involves the Tenant Improvements constructed pursuant to the Construction Contract. Tenant will cooperate with Landlord in its pursuit of any claims under the Construction Contract or the Warranties.

 

(b)            Tenant Improvement Cost . Tenant agrees to pay all costs associated with constructing the Tenant Improvements pursuant to the terms of the Construction Contract. Tenant shall pay all costs incurred as a result of any change orders signed by Tenant affecting the Final Plans. Tenant agrees that the Tenant Improvements and all other costs Tenant incurs relating to such improvements, including, without limitation, architectural and legal fees, permits and insurance shall not be less than One Million Dollars ($1,000,000).

 

Notwithstanding the foregoing to the contrary, Landlord agrees to reimburse Tenant for the following amounts paid by Tenant to Kraus-Anderson Construction, Inc.: (i) $35,350.00 for improvements to the parking lot as specified in Northwest Asphalt’s proposal dated April 29, 1996 and (ii) $28,195.00 for upgrades to mechanical and HVAC systems and

 

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removal of abandoned equipment. Landlord shall reimburse Tenant for such amounts within ten (10) days after Tenant’s payment of such amounts and notice to Landlord requesting reimbursement. If Landlord fails to so reimburse Tenant, Tenant shall be entitled to offset the amounts due to it from Landlord pursuant to this paragraph 4.1(c) against the next ensuing rent payment(s) due under the Lease.

 

(c)            Changes in Final Plans . It is anticipated that changes may need to be made to the Final Plans and Tenant may make such changes without the Landlord’s consent, unless such changes reduce the total costs of the Tenant Improvements and other costs as provided in subparagraph (b) above to less than One Million Dollars ($1,000,000), affect the structural integrity of the Building, reduce the size or change the configuration of the Premises, or affect the mechanical, electrical, or HVAC systems serving the Building, in which event the Landlord’s consent shall be required, which consent will not be unreasonably withheld or delayed. Any changes to the Final Plans must be in compliance with all building codes and local ordinances. Tenant shall pay any additional costs required to implement any such changes, including without limitation, architectural fees and construction cost increases. If Tenant’s request for changes in the Final Plans results in a delay of the Commencement Date beyond October 1, 1996, Tenant shall agree to start paying Base Rent and additional rent as of October 1, 1996.

 

(d)            Interior Furnishings . Landlord shall not be required to furnish professional interior design services to Tenant and shall not be required to pay for professional interior design services engaged by Tenant. Further, Tenant’s interior furnishings, i.e., telephones, and moveable equipment, shall be the sole responsibility of Tenant.

 

(e)            Landlord Responsibility . Landlord shall reimburse Tenant for any increases in the cost of Tenant Improvements which result from conditions in the Building which were known to or should have been known by the Landlord and Landlord failed to disclose such conditions to Tenant or Landlord’s contractor prior to Landlord entering into the Construction Contract. For example, such increased costs could result from a failure to disclose information relating to the design of the Building, problems with the Building or the mechanical, electrical or HVAC systems serving the Building, the structural integrity of any component of the Building, condition of the roof, or existence of certain types of environmental conditions, such as the presence of asbestos in the Building. Landlord agrees that it will be responsible for and reimburse Tenant for any increases in the cost of Tenant Improvements which result from the existing asbestos conditions in the Building and, if necessary, Landlord, at its sole cost and expense, will cause the asbestos conditions to be addressed appropriately, including, without limitation, the removal or encapsulation of the asbestos. If Landlord fails to so reimburse Tenant, Tenant shall be entitled to offset the amounts due to it from Landlord pursuant to this paragraph 4.1(c) against the next ensuing rent payment(s) due under the Lease. Tenant agrees to direct its contractor to use reasonable and diligent efforts not to disturb or expose any asbestos-containing materials which do not pose any health danger unless disturbed or exposed.

 

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4.2            Alteration by Tenant .

 

(a)            Landlord’s Consent . Tenant shall not make any alterations, decorations, additions, installations, substitutes or improvements after the Commencement Date (hereinafter collectively called “Alterations”) in and, to the Premises, without first obtaining Landlord’s written consent. Landlord shall not unreasonably withhold or delay its consent; provided, however, that Landlord shall have no obligation to consent to Alterations of a structural nature that would violate the Certificate of Occupancy for the Premises or any applicable law, code or ordinance or the terms of any superior lease or mortgage affecting the Property. Tenant shall pay Landlord’s reasonable costs of reviewing or inspecting any proposed Alterations.

 

(b)            Workmanship . All work on any Alterations shall be done at reasonable times in a first-class workmanlike manner, by contractors approved by Landlord, according to plans and specifications previously approved by Landlord, which approval will not be unreasonably withheld or delayed. All work shall be done in compliance with all applicable laws, regulations, and rules of any government agency with jurisdiction, and with all regulations of the Board of Fire Underwriters or any similar insurance body or bodies. Tenant shall be solely responsible for the effect of any Alterations on the Building’s structure and systems, notwithstanding that Landlord has consented to the Alterations, and shall reimburse Landlord on demand for any costs incurred by Landlord by reason of any faulty work done by Tenant or its contractors. Upon completion of any Alterations, Tenant shall provide Landlord with a complete set of “as-built” plans.

 

(c)            Liens . Tenant shall keep the Property and Tenant’s leasehold interest therein free of any liens or claims of liens, and shall discharge any such liens within ten days of their filing. Before commencement of any work, if the contractor is other than Kraus- Anderson Construction, Inc., Tenant’s contractor shall provide any payment, performance and lien indemnity bond reasonably required by Landlord, and Tenant shall provide evidence of such insurance as Landlord and Tenant may reasonably require, naming Landlord and Tenant as an additional insured. Tenant shall indemnify and defend Landlord and hold it harmless from and against any cost, claim, or liability arising from any work done by or at the direction of Tenant. Notwithstanding the foregoing to the contrary, Tenant will have the right to contest the validity of any liens so long as Tenant provides Landlord with adequate security against said liens, Tenant first notifies the Landlord in writing immediately upon the imposition of the lien and at least fifteen (15) days before Tenant commences any such contest, Tenant proceeds promptly and diligently with regard to such contest and there is no danger of Tenant’s or Landlord’s interest in the Premises being forfeited or lost.

 

(d)            Removal . All Alterations affixed to the Premises by Tenant with Landlord’s consent shall, become part thereof and remain therein at the end of the Term unless at the time Landlord consents to the Alterations Landlord requires Tenant to remove such Alterations at the end of the Term. If Landlord requires Tenant to remove any Alterations, Tenant shall do so and shall pay the cost of removal and any repair required by such

 

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removal. All of Tenant’s personal property, trade fixtures, equipment, furniture, movable partitions, and any Alterations not affixed to the Premises shall remain Tenant’s property.

 

ARTICLE V LANDLORD’S COVENANTS

 

5.1            Services Furnished by Landlord .

 

(a)            Services; Heating; Cooling . Landlord shall furnish services, utilities, facilities and supplies equal in quality to those customarily provided by landlords in buildings of a similar design in the area in which the Property is located.

 

(b)            Electricity . Tenant’s use of electrical energy in the Premises shall not at any time exceed the capacity of any of the electrical conductors or equipment in or otherwise serving the Premises. In the event Landlord consents to any additional electrical use, Tenant shall be responsible for any and all costs associated with such additional use.

 

(c)            Graphics and Signage . Landlord shall provide, at Tenant’s expense, identification of Tenant’s name at the main entrance door to the Premises. In addition, Tenant will have the right to install and maintain, at its expense, exterior signage which is in compliance with all local ordinances, including, without limitation, payment of all permits.

 

5.2            Repairs and Maintenance .

 

Landlord shall repair and maintain, at its sole cost and expense and not as a part of Operating Expenses, the structural portions of the Building and the exterior walls of the Building (excluding exterior windows and glazing). Landlord shall also, at its sole cost and expense and not as a part of Operating Expenses, replace all or any portion of the roof that needs to be replaced rather than to be repaired and replace the heating, ventilating and air conditioning systems servicing the Premises, including the systems installed as part of Tenant Improvements. Landlord agrees to enter into an HVAC contract with a contractor mutually satisfactory to both Landlord and Tenant. Notwithstanding the foregoing, if any maintenance, repair or replacement is required because of any act, omission or neglect of duty by Tenant or its agents, employees, or contractors (excluding Kraus-Anderson Construction, Inc. relating to the Tenant Improvements if the architect’s certificate has been provided to Landlord as provided in paragraph 4.1(a)) the cost thereof shall be paid by Tenant to Landlord as additional rent within thirty (30) days after billing therefor, subject to the waiver of subrogation provided in Section 10.7.

 

5.3            Quiet Enjoyment .

 

Upon Tenant’s paying the rent and performing its other obligations, Landlord shall permit Tenant to peacefully and quietly hold and enjoy the Premises, subject to the provisions hereof.

 

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5.4                                  Insurance .

 

Landlord shall insure on an all-risk basis the full replacement cost of the Property, including the Building (including, without limitation the Tenant Improvements and alteration), against damage by fire and standard extended coverage perils, and shall carry public liability insurance on the Premises, all in such reasonable amounts with such reasonable deductibles as would be carried by a prudent owner of a similar building in the area and with such higher limits, broader coverage or smaller deductibles as may be requested by Tenant. Landlord shall cause Tenant to be named as an additional insured under the foregoing insurance required to be maintained by the Landlord. Landlord may carry any other forms of insurance as it or its mortgagee may deem advisable. Tenant shall have no right to any proceeds from such policies, except to the extent of the unamortized Tenant Improvement Costs as determined pursuant to the amortization of Tenant Improvement Costs as of the date of a casualty if such proceeds are not used to restore such Tenant Improvements as provided in paragraph 8.1 hereof. Landlord shall not carry any insurance on any of Tenant’s personal property, furniture, fixtures, equipment and moveable partitions and shall not be obligated to repair or replace any of such property, unless said repair or replacement is caused by LandLord’s negligence or that of its employees or agents.

 

5.5                                  Access to Premises .

 

Landlord shall have reasonable access to the Premises to inspect Tenant’s performance hereunder and to perform any acts required of or permitted to Landlord herein, including without limitation, the right to make any repairs or replacements Landlord deems necessary and the right to show the Premises to prospective tenants during the last nine months of the term. Landlord shall at all times have a key to the Premises, and Tenant shall not change any existing lock, nor install any additional lock without Landlord’s prior consent. Except in the case of any emergency, any entry into the Premises by Landlord shall be on reasonable advance notice, and shall be scheduled in such a manner so as to cause the least amount of interference with Tenant’s business as possible.

 

5.6                                  Right to Cease Providing Services .

 

In connection with any repairs, alterations or additions to the Property or the Premises, or any other acts required of or permitted to Landlord herein, Landlord may suspend service of the Building’s utilities, facilities or supplies, provided that Landlord shall use reasonable diligence to restore such services, facilities or supplies as soon as possible and subject to Force Majeure as defined in Section 10.15 below. If Landlord suspends any such services for more than two (2) business days, Tenant’s Rent obligation shall be proportionately reduced during the time of such reduction or suspension. No such reduction or suspension permitted by this Section 5.6 shall constitute an actual or constructive eviction or disturbance of Tenant’s use or possession of the Premises which shall give Tenant the right terminate this Lease by written notice to Landlord, unless such reduction or suspension

 

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exceeds sixty (60) days and results in more than twenty-five (25%) percent of the Premises being unusable.

 

5.7                                  Excise Tax .

 

If at any time during the Lease term, under the laws of the State in which the Property is located, any political subdivision thereof, or any other governmental authority, a tax or excise on rents or other tax (excluding income tax), however described, including but not limiting to assessments, charges or fees required to be paid, by way of substitution for or as a supplement to real estate taxes, or any other tax on rent or profits is substitution for or as a supplement to a tax levied against the property, building, or the personal property, shall be levied or assessed against Landlord on account of the rental expressly reserved hereunder, then Tenant will pay to Landlord as additional rent said tax or excise so due on the rent.

 

5.8                                  ADA Compliance .

 

Landlord and Tenant acknowledge that, in accordance with the provisions of the Americans with Disabilities Act (the “ADA”), responsibility for compliance with the terms and conditions of Title III of the ADA may be allocated as between Landlord and Tenant. Notwithstanding anything to the contrary contained in the Lease, Landlord and Tenant agree that the responsibility for compliance with the ADA shall be allocated as follows: (i) Tenant shall be responsible for compliance with the provisions of Title III of the ADA for any and all alterations made within the Building if Tenant constructs such alterations, without the assistance of the Landlord, regardless of whether Landlord consents to such alterations; and (ii) Landlord shall be responsible for compliance with the provisions of Title III of the ADA for the Property and exterior of the Building, unless such compliance is required as a result of Tenant Improvements, in which event Tenant shall be responsible for such compliance. Landlord and Tenant each agree to indemnify, defend and hold each other harmless from and against any claims, damages, costs and liabilities arising out of Landlord’s or Tenant’s failure, or alleged failure, as the case may be, to comply with Title III of the ADA within the areas for which each is responsible hereunder, which indemnification obligation shall survive the expiration or termination of this lease, Landlord and Tenant each agree that the allocation of responsibility for ADA compliance shall not require Landlord or Tenant to supervise, monitor or otherwise review the compliance activities of the other with respect to its assumed responsibilities for ADA compliance as set forth herein. The foregoing allocation of responsibility for ADA compliance between Landlord and Tenant, and the obligations of Landlord and Tenant established by such allocations, shall supersede any other provisions of the lease that may contradict or otherwise differ from the requirements of this Section.

 

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ARTICLE VI TENANT’S COVENANTS

 

6.1            Repair and Surrender of Premises .

 

Tenant shall keep the Premises in good order and condition, and shall promptly repair any damage to the Premises or the rest of the Property (including all glass in windows and in exterior walls) caused by the negligent or unintentional acts or omissions of Tenant or its agents, employees, or invitees, licensees or independent contractors, subject to the waiver of subrogation as provided in paragraph 10.7. At the end of the Term, Tenant shall peaceably yield up the Premises in good order, repair and condition, except for reasonable wear and tear and insurable casualty. Tenant shall remove its own property and (if required by Landlord) any Alterations, repairing any damage caused by such removal and restoring the Premises and leaving them clean and neat. Any property not so removed shall be deemed abandoned and immediately shall become the property of Landlord which may be retained by Landlord or may be removed and disposed of by Landlord in such manner as Landlord shall determine and Tenant shall pay Landlord the entire cost and expense incurred by Landlord in effecting such removal and disposition and in making any incidental repairs and replacements to the Premises.

 

6.2            Use; Waste; Nuisance .

 

(a)            General Use . Tenant shall use the Premises only for the Permitted Uses, and shall not use or permit the Premises to be used in violation of any law or ordinance or any certificate of occupancy issued for the Building or the Premises. Tenant shall not cause, maintain or permit any nuisance in, on or about the Premises, or commit or allow any waste in or upon the Premises.

 

(b)            Obstructions . Tenant shall not obstruct any portion of the Property outside the Premises, and shall not, except as otherwise previously approved by Landlord, place or permit any signs, curtains, blinds, shades, awnings, aerials or flagpoles, or the like, visible from outside the Premises. Landlord’s approval will not be unreasonably withheld or delayed.

 

(c)            Floor Load . Tenant shall not place a load upon the floor of the Premises exceeding the load per square foot such floor was designed to carry, as determined by Landlord or its structural engineer.

 

(d)            Compliance with Insurance Policies . Tenant shall not keep or use any article in the Premises, or permit any activity therein, which is prohibited by any insurance policy covering the Building and Leasehold Improvements, or would result in an increase in the premiums thereunder; provided, however, that Landlord’s insurance shall cover Tenant’s Permitted Uses.

 

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6.3            Assignment; Sublease .

 

Tenant shall not assign its rights under this Lease or sublet the whole or any part of the Premises without Landlord’s prior written consent. Landlord’s consent will not be unreasonably withheld or delayed. In addition, Landlord acknowledges that its consent to an assignment or sublease shall not be conditioned upon (i) the duration of the proposed sublease so long as said term does not extend beyond the term of this Lease and any applicable renewal term, (ii) the financial condition or ability of the proposed sublessee, or (iii) the economic terms and conditions of such sublease. In the event that Landlord grants such consent, Tenant shall remain primarily liable to Landlord for the payment of all rent and for the full performance of the obligations under this Lease. Any assignment or subletting which does not conform with this Section 6.3 shall be void and a default hereunder. Notwithstanding the foregoing, Tenant may, without Landlord’s consent, assign or sublet the Premises to its parent corporation or any subsidiary thereof, if any, or assign or sublet the Premises to any entity that acquires all or substantially all of Tenant’s assets or controlling interest