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Exhibit
10.2
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
”).
Recitals:
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
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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 ”):
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Months following the
Commencement Date
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Monthly Base Rent |
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Annual Base Rent per
Square
Foot of Rentable
Area
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Months 01 – 12
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$ |
38,406.09 |
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$ |
17.66 |
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Months 13 – 24*
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$ |
39,558.70 |
* |
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$ |
18.19 |
* |
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Months 25 – 36*
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$ |
40,754.81 |
* |
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$ |
18.74 |
* |
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Months 37 – 48*
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$ |
41,972.68 |
* |
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$ |
19.30 |
* |
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Applicable only if Tenant elects forty-eight (48) month
Initial Term pursuant to Section 2(a) above. |
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(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.
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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
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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.
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(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.
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(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
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