This Office Lease Agreement involves
Title: OFFICE BUILDING LEASE
Industry: Insurance (Accident and Health) Sector: Financial
OFFICE BUILDING LEASE
THIS OFFICE BUILDING LEASE (“ Lease ”) is dated solely for referenced purposes as of this 29 th day of June, 2007, by and between WCCP I FINANCE DRIVE, LLC , an Arizona limited liability company, EDI OCEAN, LLC , a California limited liability company, WRM INVESTMENTS, LLC , an Arizona limited liability company, and PVP INVESTMENTS, LLC , a Delaware limited liability company (collectively, the “ Landlord ”), and HEALTH NET OF ARIZONA, INC., an Arizona corporation (“ Tenant ”).
A. Landlord is the “Buyer” under that certain Agreement of Purchase and Sale and Initial Escrow Instructions, dated as of June 14, 2007, under which Tenant is the “Seller” (the “ Sale Contract ”).
B. Pursuant to the Sale Contract, Landlord has purchased that certain real property located in the County of Pima, State of Arizona, commonly known as 930, 940 and 950 North Finance Drive, Tucson, Arizona, as described on Exhibit B attached hereto.
C. As of the “Closing Date” under the Sale Contract, Tenant desires to continue to occupy 26,097 rentable square feet, consisting of all 12,434 rentable square feet of space on the first (1 st ) floor and 13,663 rentable square feet on the first (2 nd ) floor (the “ Premises ”), within the building commonly known as 950 North Finance Drive, Tucson, Arizona (the “ Building ”), as shown on Exhibit A attached hereto.
D. Landlord and Tenant desire to set forth their understanding with respect to Tenant’s lease of the Premises following the Closing Date, and their respective rights, duties and obligations pertaining thereto, all upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration paid by each of the parties hereto to the other, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby covenant and agree as follows:
1. Premises; Project . Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term and upon the conditions and agreements hereinafter set forth. The Building, plus the other buildings located in the Project (collectively with the Building, the “ Buildings ”), the parking areas and other common areas serving the Buildings, and the parcel(s) of land on which such Buildings and common areas are located or hereinafter referred to as the “ Project ”.
2. Term .
(a) Initial Term The initial term (“ Initial Term ”) of this Lease shall begin on June 29, 2007 (the “ Commencement Date ”). If the Commencement Date is on or before June 29, 2007, then the Initial Term shall expire on the date that is the last day of the twelfth (12 th ) full calendar month following the Commencement Date. If the Commencement Date is after June
29, 2007, and if Tenant so elects (which election shall be at Tenant’s sole option and exercised, if at all, upon written notice to Landlord delivered within thirty (30) days of the Commencement Date), the Initial Term shall expire on the date that is the last day of the forty-eighth (48th) full calendar month following the Commencement Date. If Tenant does not so elect within such thirty (30) day period, then the Initial Term shall expire on the date that is the last day of the twelfth (12 th ) full calendar month following the Commencement Date. “Initial Term” as used in this Lease shall mean either the twelve (12)-month or the forty-eight (48) month period specified above, depending upon Tenant’s election.
(b) Extension Terms . Upon not less than one hundred eighty (180) days prior written notice, Tenant shall have the option to extend the Initial Term for two (2) periods of one (1) year each (each, an “ Extension Term ”), which extension shall be upon all the terms and conditions of this Lease, except with regard to Base Rent, which shall be the amount specified in Article 3 below. The Initial Term, plus the Extension Term(s), if any, shall be referred to in this Lease as the “ Term ”. Tenant further agrees that, during the Extension Terms only, the Term is subject to earlier termination by Landlord upon not less than one hundred eighty (180) days’ written notice to Tenant to accommodate the expansion needs of Government Employees Insurance Company, a Maryland corporation.
3. Base Rent .
(a) Generally . The Base Rent, as defined in this Article 3, and Additional Rent, as provided in Article 4, shall be payable in monthly installments in advance without notice on the first day of each calendar month, with the first installment being due on the Commencement Date. In the event the Term of this Lease commences or ends on a day other than the first day of a calendar month, then the Base Rent for such periods shall be prorated in the proportion that the number of days this Lease is in effect during such periods bears to thirty (30), and such Base Rent shall be paid at the commencement of such periods. For purposes of this Lease, Base Rent and Additional Rent, together with any other monetary sums that may be owed by Tenant under this Lease, shall hereinafter be collectively referred to as “Rent”. If no specific time frame is established elsewhere in this Lease as to the payment of any item of Additional Rent, such Additional Rent shall be paid within fifteen (15) days after Landlord’s demand therefor. If any payment of Rent is not received by Landlord within ten (10) days after written notice of delinquency to Tenant, Tenant shall pay to Landlord on demand as a late charge an additional amount equal to five percent (5%) of the overdue payment. Any statement of square footage set forth in this Lease or the exhibits hereto, or that may have been used in calculating Base Rent or Tenant’s other monetary obligations, is an approximation. Landlord and Tenant agree that said approximation is fair and reasonable and the Base Rent and Additional Rent are not subject to revision if the actual square footage is determined to be more or less.
(b) Initial Term . During the Initial Term, Tenant shall pay to Landlord the following base rent (“ Base Rent ”):
|Monthly Base Rent||
Annual Base Rent per Square
Foot of Rentable Area
Months 01 – 12
Months 13 – 24*
Months 25 – 36*
Months 37 – 48*
|*||Applicable only if Tenant elects forty-eight (48) month Initial Term pursuant to Section 2(a) above.|
(c) Extension Terms . During each of the Extension Terms, the monthly Base Rent shall be calculated using an Annual Base Rent per Square Foot of Rentable Area equal 103% of the Annual Base Rent per Square Foot of Rentable Area in effect prior to the commencement of such Extension Term.
4. Additional Rent . In addition to the Base Rent reserved in Article 3 herein, Tenant shall pay Landlord “Additional Rent”, which term shall be defined to include the following:
(a) Any sum owed by Tenant as Excess Expenses pursuant to Article 9 below; and
(b) Any sum owed for separately metered utilities.
5. Use of Premises .
(a) Tenant shall use and occupy the Premises for general office use and any other legally permitted uses related thereto and for no other purpose. Tenant shall not do or permit anything to be done in, on or about the Premises which would unreasonably obstruct or interfere with the rights of other tenants or occupants of the Building, or use or allow the Premises to be used for any immoral, unlawful or objectionable purpose, nor shall Tenant maintain or permit any nuisance or commit or suffer to be committed any waste in, on or about the Premises.
(b) Tenant shall not cause or permit the release or disposal of any hazardous substances, wastes or materials, or any medical, special or infectious wastes (which substances, wastes and materials are sometimes hereinafter collectively referred to as “ Hazardous Substances ”), on or about the Premises or the Building of which they are a part. Hazardous substances, wastes or materials shall include those which are defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 USC Section 9601 et seq .; the Resource Conservation and Recovery Act, as amended, 42 USC Section 6901 et seq .; and the Toxic Substances Control Act, as amended, 15 USC Section 2601 et seq . Tenant shall comply with all rules and policies set by Landlord, and with all federal, state and local laws, regulations and ordinances which govern the use, storage, handling and disposal of hazardous substances, wastes or materials. Tenant shall indemnify, defend and hold Landlord harmless for, from and against any and all loss, cost, damage, claim, expense or liability arising out of or connected with Tenant’s failure to comply with the terms of this Article 5, which terms shall survive the expiration or earlier termination of this Lease.
6. Building Services .
(a) Utilities and Services . All utilities for the Premises which are not separately metered as well as all utilities for the common areas of the Building and maintenance services will be provided by Landlord, subject, however, to reimbursement pursuant to Article 9 below. Heat and air-conditioning (“ HVAC ”) required to be furnished by Landlord will be furnished whenever the same shall, in Landlord’s reasonable judgment, be required for Tenant’s comfortable use and occupancy of the Premises during the Building’s Standard Hours (the “ Building’s Standard Hours ” shall mean Monday through Friday, 8:00 a.m. to 6:00 p.m., holidays excluded). In addition, Landlord shall provide janitorial services to the Premises and common areas of the Building, in a manner generally consistent with similar office buildings. Throughout the Term, Landlord also shall furnish to Tenant (i) operable restrooms for general use of tenants of the Building, (ii) hot and cold water for lavatory and drinking purposes; (iii) elevator service (if applicable), in common with other tenants, to the floor on which the Premises are located, and (iv) replacement of Building-standard light bulbs and fluorescent tubes, provided that the cost of such bulbs and tubes shall be paid by Tenant. All services shall be consistent with those provided in other first-class office buildings in the geographic area in which the Building is located. Tenant agrees to pay all separately metered utilities required and used by Tenant in the Premises. Landlord reserves the privilege of stopping any or all of such services in case of accident or breakdown, or for the purpose of making alterations, repairs or improvements, and shall not be liable for the failure to furnish or delay in furnishing any or all of such services when same is caused by or is the result of strikes, labor disputes, labor, fuel or material scarcity, or governmental or other lawful regulations or requirements, or the failure of any corporation, firm or person with whom the Landlord may contract for any such service, or for any service incident thereto, to furnish same, or is due to any cause other than the negligent act or omission of Landlord; and the failure to furnish any of such services in such event shall not be deemed or construed as an eviction or relieve Tenant from the performance of any of the obligations imposed upon Tenant by this Lease (including the obligation to pay Rent). Landlord shall not be responsible to the Tenant for loss of property in or from the Premises, or for any damage done to furniture, furnishings or effects therein, however occurring, except where such damages occur through the negligent act or omission of Landlord and Tenant’s insurance proceeds do not compensate Tenant for such loss or damage; nor shall Landlord be responsible should any equipment or machinery break down or for any cause cease to function properly on account of any such interruption of service. Tenant shall be solely responsible for and shall promptly pay all charges for telephone and other communication services.
(b) Maintenance and Repairs . At all times during the Initial Term or any extension thereof, Landlord, shall promptly and in a workmanlike manner perform all maintenance and make all repairs and replacements required, in the opinion of Landlord, to keep the Premises and the Building in good order, condition and repair. Without limiting the general nature of Landlord’s repair and maintenance obligations, Landlord specifically agrees that at all times it will maintain the structural portions of the Building, including the foundation, floor/ceiling slabs, roof, curtain wall, exterior glass and mullions, columns, beams, shafts (including elevator shafts), stairs, parking areas, stairwells, escalators, elevator cabs, plazas, pavement, sidewalks, curbs, entrances, landscaping, artwork, sculptures, washrooms, mechanical, electrical and telephone closets in all common areas and public areas (collectively “ Building Structure ”) and the mechanical, electrical, life safety, plumbing, sprinklers systems and HVAC systems (“ Building Systems ”) in first class condition and repair and shall operate the Building as a first-class office building. Notwithstanding anything contrary in the Lease, Tenant
shall not be required to make any repairs to, modifications of, or additions to the Building Structure and/or the Building Systems except and to the extent required because of Tenant’s unique use of all or a portion of the Premises for other than normal and customary business office operations.
(c) Access Impairment . Notwithstanding anything in this Section 6 or any other provision of this Lease to the contrary, in the event Tenant’s access to or use, enjoyment and occupancy of the Premises is impaired by reason of the negligence or intentional acts of Landlord or its agents or employees, then the payment of Rent shall be abated to the extent of and during the period of such impairment. Furthermore, if such impairment is substantial and continues for a period of sixty (60) days or more, Tenant shall have the right to terminate the Lease by written notice to Landlord within five (5) days of the end of such 60-day period. As used herein, the following terms shall have the following meanings: (i) Tenant’s access to or use, enjoyment and occupancy of the Premises shall be deemed “impaired” if for a period of ten (10) consecutive business days after written notice to Landlord it shall be impossible or commercially impracticable for Tenant to conduct business from the Premises or any portion thereof; (ii) such impairment shall be deemed to be caused by the “negligence or intentional acts of Landlord or its agents or employees” to the extent that such impairment results from an intentional act of Landlord or a negligent act of Landlord; and (iii) an impairment shall be deemed to be “substantial” if more than fifty percent (50%) of the Premises becomes untenantable or unusable under the foregoing standards.
(d) HVAC Unit Replacement . Notwithstanding any provision of this Lease to the contrary, Landlord agrees that it shall replace all of the HVAC units currently serving the Building (the “ HVAC Replacement Work ”). The HVAC Replacement Work shall be completed within ninety (90) days of the Commencement Date. If Landlord fails to complete the HVAC Replacement Work within such ninety (90)-day period, then in addition to all other rights and remedies that Tenant may have under this Lease, at law or in equity, Landlord and Tenant agree that Base Rent due after the expiration of such ninety (90)-day period shall abate until Landlord delivers reasonable evidence to Tenant that the HVAC Replacement Work has been completed.
7. Alterations; Condition of Premises .
(a) Alterations . Tenant shall not make any changes, alterations, improvements or additions to the Premises (collectively, “ Alterations ”), or attach or affix any articles thereto without Landlord’s prior written consent, not to be unreasonably withheld, conditioned or delayed. In no event shall Landlord’s consent be required for any single non-structural Alteration costing less than Twenty-five Thousand Dollars ($25,000.00) or for the installation or removal of decorations. All Alterations which may be made by Landlord or Tenant (except trade fixtures and office furniture and equipment owned by Tenant) shall not be removed by Tenant, but shall become and remain the property of Landlord. All Alterations (as permitted by Landlord) shall be at Tenant’s sole expense (except as provided in Section 7(c) below) and at such times and in such manner as Landlord may approve. Any mechanics’ or materialmen’s lien for which Landlord has received a notice of intent to file or which has been filed against the Premises or the Building arising out of work done for, or materials furnished to Tenant, shall be discharged, bonded over, or otherwise satisfied by Tenant within twenty (20) days following the date Tenant receives notice that the lien has been filed.
(b) Condition of Premises . Tenant shall accept the Premises in an “as is” condition on the date the Term commences and Landlord shall have no obligation to improve, alter, remodel or otherwise modify the Premises prior to Tenant’s occupancy. Tenant has had an opportunity to inspect the Premises and to have its architects, engineers, or other consultants inspect the Premises. Tenant, pursuant to its inspection of the Premises, has found the Premises’ current state of repair, condition and maintenance without further improvements by Landlord to be sufficient for Tenant’s use. Nothing in this Section 7(b) shall in any way alter or modify any of the representations, warranties, or obligations of Tenant under the Agreement of Purchase and Sale pursuant to which Tenant, as Seller, has previously conveyed the Project to Landlord, as Buyer.
8. Insurance; Indemnity .
(a) During the Term hereof Tenant shall maintain commercial general liability insurance on the Premises of at least $1,000,000 per occurrence, $2,000,000 aggregate. As evidence thereof, on or before the Commencement Date, Tenant shall provide to Landlord with copies of certificates of insurance evidencing such coverage during the Term. Such certificates must name Landlord, any mortgagee of Landlord, any other parties designated by Landlord, as additional insureds. Tenant shall also maintain “all risk” (or “special form”) property insurance on all property owned or used by Tenant in the Premises.
(b) Landlord shall maintain commercial general liability insurance throughout the Term, with a minimum combined single limit of liability of at least $2,000,000 for personal injuries or deaths of persons occurring in or about the Building or Project. In addition, Landlord shall maintain a policy of property insurance covering the Building (including the leasehold improvements constructed by Landlord), in an amount equal to not less than ninety percent (90%) of the replacement cost of the Building. Such policies shall, to the extent applicable, meet all the requirements of Tenant’s property insurance policy under the Lease.
(c) Tenant shall and hereby does indemnify, protect, defend and hold Landlord harmless for, from and against any and all loss, cost, damage, claim, expense or liability arising from: (i) Tenant’s use of the Premises or the conduct of Tenant’s business or profession; (ii) any activity, work, or thing done, permitted or suffered by the Tenant in or about the Premises; (iii) any breach or default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease; or (iv) any negligent acts or omissions of Tenant, or of Tenant’s agents or employees. Tenant shall and hereby does further indemnify, defend and hold Landlord harmless for, from and against all costs, attorneys’ fees, expenses and liabilities incurred in connection with any such claim or any action or proceeding brought thereon. In case any action or proceeding is brought against Landlord by reason of any such claim, Tenant upon notice from Landlord, shall defend same at Tenant’s expense by counsel reasonably satisfactory to Landlord. Notwithstanding anything in this Section 8 to the contrary, in no event shall Tenant be required to defend, save harmless or indemnify Landlord from any liability arising from any special or consequential damages.
(d) Landlord shall and hereby does indemnify, protect, defend and hold Tenant harmless for, from and against any and all loss, cost, damage, claim, expense or liability arising from: (i) any activity, work, or thing done, permitted or suffered by Landlord in or about the Project; (ii) any breach or default in the performance of any obligation on Landlord’s part to be performed under the terms of this Lease; or (iv) any negligent acts or omissions of Landlord, or of Landlord’s agents or employees. Landlord shall and hereby does further indemnify, defend and hold Tenant harmless for, from and against all costs, attorneys’ fees, expenses and liabilities incurred in connection with any such claim or any action or proceeding brought thereon. In case any action or proceeding is brought against Tenant by reason of any such claim, Landlord upon notice from Tenant, shall defend same at Landlord’s expense by counsel reasonably satisfactory t