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EXHIBIT 10.25
JMB 103 (2/89)
Triple Net
OFFICE LEASE
THIS LEASE made as of the 28 day of June, 2000, between 222
South Ninth Street
Limited Partnership, a Minnesota limited partnership
("Landlord'), and Capella
Education Company, a Minnesota corporation, whose address is
Suite 550, Towle
Building, 330 Second Avenue South, Minneapolis, Minnesota 55401
("Tenant").
WITNESSETH:
ARTICLE 1
Premises and Term
Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord
that certain space (the "Premises") consisting of (i) the entire
rentable area
of the twentieth floor, one-half (1/2) of the rentable area of
the nineteenth
floor, and one-half (1/2) of the rentable area of the sixteenth
floor
(collectively, the "Initial Premises"), and (ii) the one-half
(1/2) of the
nineteenth floor which was not part of the Initial Premises (the
"19th Floor
Remainder Space") and the one-half (1/2) of the sixteenth floor
which was not
part of the Initial Premises (the "16th Floor Remainder Space,"
the 19th Floor
Remainder Space and the 16th Floor Remainder Space are
collectively referred to
herein as the "Secondary Premises"), as described or shown on
Exhibit A attached
hereto, in the building known as the Piper Jaffray Tower (the
"Building")
located at 222 South Ninth Street, Minneapolis, Minnesota
("Property", as
further described in Article 25), subject to the provisions
herein contained.
The term (the "Term") of this Lease with respect to the Initial
Premises shall
commence on the 1st day of November, 2000 (the "Commencement
Date"), and end on
the 31st day of October, 2005 (the "Expiration Date"), unless
sooner terminated
as provided herein. The term of this Lease with respect to the
Secondary
Premises shall commence on April 1, 2001. The Commencement Date
with respect to
the Secondary Premises shall be subject to adjustment as
provided in Article 4.
Landlord and Tenant have, for purposes of the calculation of
Rent set forth
below, utilized Landlord's calculations of the rentable area of
the Initial
Premises at 46,056 square feet, the rentable area of the 19th
Floor Remainder
Space at 11,356 square feet, the rentable area of the 16th Floor
Remainder Space
at 11,356 square feet, and the rentable area of the Property at
724,734 square
feet. The specified rentable area of the Premises has been
determined by
Landlord through its calculation of the usable area and
multiplication of that
figure by a factor of 1.09. Upon the request of Tenant, Landlord
shall provide
its usable area measurements and rentable area calculations for
the Premises for
Tenant's review (which review shall occur, if at all, within
sixty (60) days of
Tenant's execution of the Lease). If Tenant disagrees with the
rentable area
calculation, it shall provide notice of same to Landlord within
ten (10) days of
receipt of Landlord's calculations. In such event, the parties
shall confer with
Landlord's architect and if they still cannot agree on the
rentable area
calculation within ten (10) days thereafter, the parties shall
submit the matter
to a mutually acceptable third party architect, who shall
perform measurements
and calculations of the usable and rentable areas. If the third
party architect
confirms Landlord's calculations within 400 rentable square
feet, Tenant shall
pay all costs associated with the third party architect. If the
measurement
differs by more than 400 rentable square feet, Landlord shall
pay such costs. In
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either case, the parties shall be bound by the determination of
the third party
architect. In making its calculations, the third party architect
shall apply
current BOMA measurement standards utilized for Class A
buildings in the
Minneapolis downtown market. If applicable, the parties shall
execute an
amendment to the Lease, setting forth the revised rentable
square feet of the
Premises, and the Rent shall be adjusted by such amendment
retroactively to the
Commencement Date to reflect such adjusted _____ble square feet.
As to any
partial floors that may be occupied by Tenant under this Lease,
________
table/usable factor shall not exceed 1.15.
ARTICLE 2
BASE RENT
Tenant shall pay Landlord monthly Base Rent as set forth in the
following
table, in advance on or before the first day of each calendar
month during the
Term, except that Base Rate for the first full calendar month
for which Base
Rent shall be due, shall be paid on the Commencement Date.
<TABLE>
<CAPTION>
Monthly Base Rent per
Lease Period Annual Base Rent Base Rent Square Foot
----------------------------------- ----------------
------------- -------------
<S> <C> <C> <C>
November 1, 2000 - October 31, 2001 $ 587,214.00 $ 48,934.50 $
12.75
November 1, 2001 - October 31, 2002 $ 893,984.00 $ 74,498.67 $
13.00
November 1, 2002 - October 31, 2003 $ 911,176.00 $ 75,931.33 $
13.25
November 1, 2003 - October 31, 2004 $ 928,368.00 $ 77364.00 $
13.50
November 1, 2004 - October 31, 2005 $ 945,560.00 $ 78,796.67 $
13.75
</TABLE>
The annual Base Rent and monthly Base Rent listed above for the
period
from November 1, 2000 through October 31, 2001 is the annual
Base Rent and
monthly Base Rent for the Initial Premises only. Such figure
shall be adjusted
proportionately for the Secondary Premises based on the date
that Tenant takes
occupancy of the Secondary Premises as set forth in Article
4.
If the Term commences on a day other than the first day of a
calendar
month, or ends on a day other than the last day of a calendar
month, then the
Base Rent for such month shall be prorated on the basis of the
ratio of the
number of days of such month that are included within the Term
to the total
number of days in such month.
ARTICLE 3
ADDITIONAL RENT
(A) TAXES. Tenant shall pay Landlord an amount equal to Tenant's
Prorate
Share of Taxes in the manner described below. The terms "Taxes"
and "Tenant's
Prorata Share" shall have the meanings specified therefor in
Article 25.
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(B) OPERATING EXPENSES. Tenant shall pay Landlord an amount
equal to
Tenant's Prorata Share of Operating Expenses in the manner
described below. The
terms "Operating Expenses" and "Tenant's Prorata Share" shall
have the meanings
specified therefor in Article 25.
(C) INTENTIONALLY OMITTED.
(D) MANNER OF PAYMENT. Taxes and Operating Expenses shall be
paid in the
following manner:
(i) Landlord may reasonably estimate in advance the amounts
Tenant
shall owe for Taxes and Operating Expenses for any full or
partial calendar year of the Term. In such event, Tenant
shall
pay such estimated amounts, on a monthly basis, on or before
the first day of each calendar month, together with Tenant's
payment of Base Rent. Such estimate may be reasonably
adjusted
from time to time by Landlord.
(ii) Within 120 days after the end of each calendar year, or
as
soon thereafter as practicable, Landlord shall provide a
statement (the "Statement") to Tenant showing: (a) the
amount
of actual Taxes and Operating Expenses for such calendar
year,
with a listing of amounts for major categories of Operating
Expanses, (b) any amount paid by Tenant towards Taxes and
Operating Expenses during such calendar year on an estimated
basis, and (c) any revised estimate of Tenant's obligations
for Taxes and Operating Expenses for the current calendar
year.
(iii) If the Statement shows that Tenant's estimated payments
were
less than Tenant's actual obligations for Taxes and
Operating
Expenses for such year, Tenant shall pay the difference. If
the Statement shows an increase in Tenant's estimated
payments
for the current calendar year, Tenant shall pay the
difference
between the new and former estimates, for the period of
January 1 of the current calendar year through the month in
which the Statement is sent. Tenant shall make such payments
within thirty (30) days after Landlord sends the Statement.
(iv) If the Statement shows that Tenant's estimated payments
exceeded Tenant's actual obligations for Taxes and Operating
Expenses, Tenant shall receive a credit for the difference
against payments of Rent next due. If the Term shall have
expired and no further Rent shall be due, Tenant shall
receive
a refund of such difference, within thirty (30) days after
Landlord sends the Statement.
(v) So long as Tenant's obligations hereunder are not
materially
adversely affected thereby, Landlord reserves the right to
reasonably change, from time to time, the manner or timing
of
the foregoing payments. In lieu of providing one Statement
covering Taxes and Operating Expenses, Landlord may provide
separate statements, at the same or different times.
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No delay by Landlord in providing the Statement (or separate
statements) shall be deemed a default by Landlord or a
waiver
of Landlord's right to require payment of Tenant's
obligations
for actual or estimated Taxes or Operating Expenses.
(E) PRORATION. If the Term commences other than on January 1, or
ends
other than on December 31, Tenant's obligations to pay estimated
and actual
amounts towards Taxes and Operating Expenses for such first or
final calendar
years shall be prorated to reflect the portion of such years
included in the
Term. Such proration shall be made by multiplying the total
estimated or actual
(as the case may be) Taxes and Operating Expenses, for such
calendar years by a
fraction, the numerator of which shall be the number of days of
the Term during
such calendar year, and the denominator of which shall be the
number of days in
such calendar year.
(F) LANDLORD'S RECORDS. Landlord shall maintain detailed
records
respecting Taxes and Operating Expenses and determine the same
in accordance
with sound and generally acceptable accounting and management
practices,
consistently applied. Although this Lease contemplates the
computation of Taxes
and Operating Expenses on a cash basis, Landlord shall make
reasonable and
appropriate accrual adjustments to ensure that each calendar
year includes
substantially the same recurring items. Landlord reserves the
right to change to
a full accrual system of accounting so long as the same is
consistently applied
and Tenant's payment obligation for Taxes or Operating Expenses
over the entire
Term is not increased over the amount that would have been
otherwise payable had
no such change been implemented. Tenant or its representative
shall have the
right to examine such records upon reasonable prior notice
specifying such
records Tenant desires to examine, during normal business hours
at the Building
by sending such notice no later than forty-five (45) days
following the
furnishing of the Statement. Tenant may take exception to
matters included in
Taxes or Operating Expenses Landlord's computation of Tenant's
Prorata Share, or
any other matter impacting upon Tenant's payment obligations
with regard to
Taxes and Operating Expenses by sending notice specifying such
exception and the
reasons therefor to Landlord no later than thirty (30) days
after Landlord makes
such records available for examination. Such Statement shall be
considered
final, except as to matters to which exception is taken after
examination of
Landlord's records in the foregoing manner and within the
foregoing times.
Tenant acknowledges that Landlord's ability to budget and incur
expenses depends
on the finality of such Statement, and accordingly agrees that
time is of the
essence of this Paragraph. If Tenant takes exception to any
matter contained in
the Statement as provided herein, the parties shall refer the
matter to an
accounting firm mutually designated by the parties (or if the
parties cannot
agree as to the accounting firm within thirty (30) days of
Tenant's taking
exception to such matters contained in the Statement, designated
by Landlord,
subject to the criteria that: (i) such accounting firm is a "Big
5" accounting
firm, and (ii) Landlord shall not have had any business
relationship with the
accounting firm within the prior two (2) years), whose
certification as to the
proper amount shall be final and conclusive as between Landlord
and Tenant.
Tenant shall promptly pay the cost of such certification unless
such
certification determines that Tenant was overbilled (based upon
the Statement)
by more than two percent (2%), in which event Landlord shall pay
the cost of
such certification. If such certification indicates that the
amount actually
paid by Tenant, in relation to a matter for which Tenant has
taken exception
pursuant to this Paragraph, exceeds the amount Tenant should
have paid, then
Landlord shall credit the difference against the then next due
payments to be
made by Tenant under this Article 3, or if the Lease has
expired, such amount
shall be refunded to Tenant
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within thirty (30) days of such certification. Pending
resolution of any such
exceptions in the foregoing manner, Tenant shall continue paying
Tenant's
Prorata Share of Taxes and Operating Expenses in the amounts
determined by
Landlord, subject to adjustment after any such exceptions are so
resolved.
(G) RENT AND OTHER CHARGES. Base Rent, Taxes, Operating
Expenses, and any
other amounts which Tenant is or becomes obligated to pay
Landlord under this
Lease or other agreement entered into in connection herewith,
are sometimes
herein referred to collectively as "Rent," and all remedies
applicable to the
non-payment of Rent shall be applicable thereto. Rent shall be
paid at any
office maintained by Landlord or its agent at the Property, or
at such other
place as Landlord may designate.
ARTICLE 4
COMMENCEMENT OF TERM
On or before March 1, 2001, Tenant shall deliver written notice
(the
"Secondary Premises Notice") to Landlord indicating either (a)
that Tenant
elects to occupy, for the purpose of conducting its business,
the entire
Secondary Premises on April 1, 2001, or (b) that Tenant elects
to occupy, for
the purpose of conducting its business, the 19th Floor Remainder
Space on April
1, 2001, with occupancy, for the purpose of conducting its
business, of the 16th
Floor Remainder Space to begin on October 1, 2001. In the event
that Tenant
elects to occupy only the 19th Floor Remainder Space on April 1,
2001, the term
of the Lease with respect to such space shall commence on April
1, 2001, and the
term of the Lease with respect to the 16th Floor Remainder Space
shall commence
on October 1, 2001. Failure of Tenant to deliver such notice on
or before March
1, 2001 shall be deemed an election by Tenant to occupy only the
19th Floor
Remainder Space on April 1, 2001. Rent shall first be payable on
the entire
Secondary Premises on April 1, 2001 if Tenant has elected to
occupy the entire
Secondary Premises on that date, or on April 1, 2001 for the
19th Floor
Remainder Space and October 1, 2001 for the 16th Floor Remainder
Space, if
Tenant has elected to initially occupy only one-half (1/2) of
the Secondary
Premises.
With the exception of such portion of the Premises on the 16th
floor of
the Building which Landlord must temporarily close in order to
close off the
existing interior stairway between the 16th floor of the
Building and the
adjacent floor, Landlord shall deliver (a) the Initial Premises
to Tenant within
five (5) business days of Landlord's receipt of a fully executed
copy of this
Lease, and (b) the Secondary Premises to Tenant within five (5)
business days
after written request firm Tenant for delivery of same. Tenant
shall be entitled
to commence construction of its improvements in the Secondary
Premises, pursuant
to Exhibit B attached hereto, at any time after delivery of the
Secondary
Premises to Tenant. During any period that Tenant shall be
permitted to enter
any portion of the Premises prior to the Commencement Date other
than to occupy
the same (e.g., to perform alterations or improvements), Tenant
shall comply
with all terms and provisions of this Lease, except those
provisions requiring
the payment of Rent. Tenant shall also have the right to occupy
all or a portion
(as reasonably determined by Tenant) of the 16th Floor Remainder
Space while the
Initial Premises are under construction (which space shall be
made available in
its "as-is" condition) for temporary occupancy without any
obligation for the
payment of Rent with
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respect to the 16th Floor Remainder Space. Landlord shall permit
early entry,
provided the Premises are legally available and Landlord has
completed any work
required under this Lease or any separate agreement entered in
connection
herewith. Notwithstanding the foregoing, if Tenant elects to
take possession of
the Secondary Premises in two phases and Tenant opens for
business in the 16th
Floor Remainder Space prior to October 1, 2001, then Rent shall
commence on such
date and be prorated based on the number of rentable square feet
in the 16th
Floor Remainder Space occupied and opened for business by
Tenant.
ARTICLE 5
CONDITION OF PREMISES
Tenant has inspected the Premises, Property, Systems and
Equipment (as
defined in Article 25), or has had an opportunity to do so, and
agrees to accept
the same "as is" without any agreements, representations,
understandings or
obligations on the part of Landlord to perform any alterations,
repairs or
improvements except for Landlord providing an improvement
allowance as set forth
in the Work Agreement attached hereto as Exhibit B and as
otherwise expressly
provided in any separate agreement that may be signed by the
parties To the
extent that Tenant requires a demising wall between the Initial
Premises and the
19th Floor Remainder Space and/or the 16th Floor Remainder
Space, such demising
wall shall be constructed at Tenant's expense and in accordance
with the
provisions of Section 8 of this Lease. Prior to delivering
possession of the
Initial Premises to Tenant, Landlord shall close off the
existing interior
stairway between the 16th floor of the Building and the adjacent
floor, at
Landlord's sole cost and expense.
ARTICLE 6
USE AND RULES
Tenant shall use the Premises for offices, the preparation of
educational
programs and materials, and related functions inherent in its
on-line
educational program (all of which shall be implemented
consistent with the
Rules, as defined below), including "periodic seminars" (as
defined below), and
for such other purposes as Landlord may specifically authorize
in writing and no
other purpose whatsoever, in compliance with all applicable
Laws, and without
disturbing or interfering with any other tenant or occupant of
the Property. For
purposes of this Lease, the term "periodic seminars" shall mean
seminars of not
more than fifty (50) people per seminar, of a duration not to
exceed two
consecutive days, and occurring not more frequently than one (1)
time in any
calendar month. Landlord's approval of "periodic seminars" shall
in no event be
construed as a representation by Landlord that any such
"periodic seminar" is in
compliance with applicable Laws. Notwithstanding the foregoing,
except for
"periodic seminars," in no event shall Tenant use any portion of
the Premises
for classroom purposes. Tenant shall not use the Premises in any
manner so as to
cause a cancellation of Landlord's insurance policies, or an
increase in the
premiums thereunder. Tenant shall comply with all rules set
forth in Rider One
attached hereto (the "Rules"). Landlord shall have the right to
reasonably amend
such Rules and supplement the same with other reasonable Rules
(not inconsistent
with this Lease or with Tenant's permitted use as set forth in
this Article)
relating to the Property, or the promotion of safety, care,
cleanliness or good
order therein, and all such amendments or new Rules shall be
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binding upon Tenant after five (5) days notice thereof to
Tenant. All Rules
shall be applied on a non-discriminatory basis, but nothing
herein shall be
construed to give Tenant or any other Person (as defined in
Article 25) any
claim, demand or cause of action against Landlord arising out of
the violation
of such Rules by any other tenant, occupant, or visitor of the
Property, or out
of the enforcement or waiver of the Rules by Landlord in any
particular
instance.
ARTICLE 7
SERVICES AND UTILITIES
Landlord shall provide the following services and utilities (the
cost of
which shall be included in Operating Expenses unless otherwise
stated herein or
in any separate rider hereto):
(A) Electricity for standard office lighting fixtures, and
equipment and
accessories customary for offices (up to 280 hours per month)
where: (1) the
connected electrical load of all of the same does not exceed an
average of 4
watts per square foot of the Premises, and (2) the electricity
will be at
nominal 120 volts, single phase (or 110 volts, depending on
available services
in the Building).
(B) Heat and air-conditioning to provide a temperature required,
in
Landlord's reasonable opinion, in accordance with applicable
Law, and consistent
with other similarly situated buildings in downtown Minneapolis,
for occupancy
of the Premises under normal business operations, from 8:00 a.m.
until 6:00 p.m.
Monday through Friday, and Saturdays from 8:00 a.m. until 1:00
p.m., except on
Holidays (as defined in Article 25). Landlord shall not be
responsible for
inadequate air-conditioning or ventilation to the extent the
same occurs because
Tenant uses any item of equipment consuming more than 500 watts
at rated
capacity without providing adequate air-conditioning and
ventilation therefor.
(C) Water for drinking, lavatory and toilet purposes at those
points of
supply provided for nonexclusive general use of other tenants at
the Property.
(D) Customary office cleaning and trash removal service Monday
through
Friday or Sunday through Thursday in and about the Premises.
(E) Operatorless passenger elevator service and freight elevator
service
(subject to reasonable scheduling by Landlord) in common with
Landlord and other
tenants and their contractors, agents and visitors.
(F) Landlord shall seek to provide such extra utilities or
services as
Tenant may from time to time request, if the same are reasonable
and feasible
for Landlord to provide and do not involve modifications or
additions to the
Property or existing Systems and Equipment (as defined in
Article 25), and if
Landlord shall receive Tenant's request within a reasonable
period prior to the
time such extra utilities or services are required. Landlord may
comply with
written or oral requests by any officer or employee of Tenant,
unless Tenant
shall notify Landlord of, or Landlord shall request, the names
of authorized
individuals (up to 3 for each floor on which the Premises are
located) and
procedures for written requests. Tenant shall, for such extra
utilities or
services, pay such charges as Landlord shall from time to time
reasonably
establish based upon Landlord's actual cost of delivery of the
services, plus a
reasonable administrative fee. All
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charges for such extra utilities or services shall be due at the
same time as
the installment of Base Rent with which the same are billed, or
if billed
separately, shall be due within twenty (20) days after such
billing. Landlord's
current charges for after-hour utilities are $18.00 per hour per
floor of the
Building for HVAC cooling and $7.00 per hour per floor of the
Building for
heating.
Landlord may install and operate meters or any other reasonable
system for
monitoring or estimating any services or utilities used by
Tenant materially in
excess of those required to be provided by Landlord under this
Article
(including a system for Landlord's engineer to reasonably
estimate any such
excess usage). If such system indicates such excess services or
utilities,
Tenant shall pay Landlord's reasonable charges for installing
and operating such
system and any supplementary air-conditioning, ventilation,
heat, electrical or
other systems or equipment (or adjustments or modifications to
the existing
Systems and Equipment), and Landlord's reasonable charges for
such amount of
excess services or utilities used by Tenant.
Landlord does not warrant that any services or utilities will be
free from
shortages, failures, variations, or interruptions caused by
repairs,
maintenance, replacements, improvements, alterations, changes of
service,
strikes, lockouts, labor controversies, accidents, inability to
obtain services,
fuel, steam, water or supplies, governmental requirements or
requests, or other
causes beyond Landlord's reasonable control. None of the same
shall be deemed an
eviction or disturbance of Tenant's use and possession of the
Premises or any
part thereof, except as expressly provided herein to the
contrary, or relieve
Tenant from performance of Tenant's obligations under this
Lease. Landlord in no
event shall be liable for damages by reason of loss of profits,
business
interruption or other consequential damages.
Notwithstanding any of the foregoing to the contrary, Landlord
shall
operate and maintain the Building in accordance with all
applicable laws and
regulations, the requirements of Landlord's insurance carriers,
and standards
from time to time prevailing for similarly situated office
buildings of
comparable age and character in downtown Minneapolis. Landlord
shall maintain
all common areas in a first class condition and in good working
order and repair
and shall be responsible for keeping all exterior common areas
reasonably free
and clear of snow, ice and rubbish. Tenant, its successors,
permitted assigns,
permitted subtenants and their employees shall have access to
the Premises at
all times, 24-hours per day, every day of the year during the
Term, subject to
compliance with Landlord's reasonable security measures.
Tenant shall be permitted to utilize a dual electrical power
feed from the
systems serving the 19th and 20th floors of the Building, which
shall be
installed at Tenant's expanse and pursuant to the provisions of
Section 8
hereof.
Subject to matters beyond the reasonable control of Landlord, in
the event
that any of the utilities or services to be provided by Landlord
which are
necessary for Tenant's beneficial use of the Premises should be
unavailable for
a period of three (3) or more consecutive business days, and
such unavailability
materially interferes with Tenant's beneficial use of the
Premises and as a
result thereof, Tenant does not operate its business in all or a
material
portion of the Premises for such three (3) consecutive business
day period, then
Rent shall abate from the end of such three (3) consecutive
business day period
until the earlier of (i) the date when said utility or service
is again
available to Tenant, or (ii) the date when Tenant reopens for
business in such
portion of the Premises.
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Further, should a condition exist in the Premises as to which
Landlord has
the obligation of repair hereunder, and should such condition
have an adverse
and immediate material impact upon Tenant's ability to use the
Premises for the
purposes set forth in Article 6, Tenant may give notice to
Landlord of such
condition. If, within ten (10) business days of receipt of such
notice by
Landlord, Landlord has not commenced and continuously and
diligently proceeded
to rectify such condition, then Tenant shall have the right to
separately
contract for such repair and upon the successful completion of
such repair, to
invoice Landlord for the reasonable costs incurred by Tenant in
such repair.
Tenant shall not have the right to perform its own repairs if
the cause of
Landlord's delay in completion of such repairs is beyond the
reasonable control
of Landlord. Tenant shall not have the right to offset or deduct
the cost of
such repair from any Rent due under this Lease.
ARTICLE 8
ALTERATIONS AND LIENS
Tenant shall make no material additions, changes, alterations
or
improvements (the "Work") to the Premises or the Systems and
Equipment (as
defined in Article 25) pertaining to the Premises without the
prior written
consent of Landlord, which consent shall not be unreasonably
withheld or
delayed. For purposes of this provision an item of Work shall
not be deemed
"material" if the item will not affect or alter the Systems and
Equipment and
shall have a cost during any twelve (12) consecutive month
period of less than
$20,000, or shall involve purely decorative changes to the
Premises (i.e.
installation of wall or floor coverings). Landlord's consent
shall also not be
required for the installation or removal of any modular
furnishings or
alterations incidental to the installation or removal thereof.
However, as to
the foregoing, Tenant shall still provide Landlord with prior
notice as set
forth below of the Work to be performed. Landlord may impose
reasonable
requirements as a condition of such consent including without
limitation the
submission of plans and specifications for Landlord's prior
written approval,
obtaining necessary permits, posting bonds, obtaining insurance,
prior approval
of contractors, subcontractors and suppliers, prior receipt of
copies of all
contracts and subcontracts, contractor and subcontractor lien
waivers,
affidavits listing all contractors, subcontractors and
suppliers, use of union
labor (if Landlord uses union labor), affidavits from engineers
acceptable to
Landlord stating that the Work will not adversely affect the
Systems and
Equipment or the structure of the Property, and requirements as
to the manner
and times in which such Work shall be done. All Work shall be
performed in a
good and workmanlike manner and all materials used shall be of a
quality
comparable to or better than those in the Premises and Property
and shall be in
accordance with plans and specifications approved by Landlord,
and Landlord may
require that all such Work be performed under Landlord's
supervision. In all
cases, Tenant shall pay Landlord a reasonable fee to cover
Landlord's overhead
in reviewing Tenant's plans and specifications and performing
any supervision of
the Work. If Landlord consents or supervises, the same shall not
be deemed a
warranty as to the adequacy of the design, workmanship or
quality of materials,
and Landlord hereby expressly disclaims any responsibility or
liability for the
same. Landlord shall under no circumstances have any obligation
to repair,
maintain or replace any portion of the Work.
Tenant shall keep the Property and Premises free from any
mechanic's,
materialman's or similar liens or other such encumbrances in
connection with any
Work on or respecting the
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Premises not performed by or at the request of Landlord, and
shall indemnify and
hold Landlord harmless from and against any claims, liabilities,
judgments, or
costs (including attorneys' fees) arising out of the same or in
connection
therewith. Tenant shall give Landlord notice at least twenty
(20) days prior to
the commencement of any Work on the Premises (or such additional
time as may be
necessary under applicable Laws), to afford Landlord the
opportunity of posting
and recording appropriate notices of non-responsibility. Tenant
shall remove any
such lien or encumbrance by bond or otherwise within thirty (30)
days after
written notice by Landlord, and if Tenant shall fail to do so,
Landlord may pay
the amount necessary to remove such lien or encumbrance, without
being
responsible for investigating the validity thereof. The amount
so paid shall be
deemed additional Rent under this Lease payable upon demand,
without limitation
as to other remedies available to Landlord under this Lease.
Nothing contained
in this Lease shall authorize Tenant to do any act which shall
subject
Landlord's title to the Property or Premises to any liens or
encumbrances
whether claimed by operation of law or express or implied
contract. Any claim to
a lien or encumbrance upon the Property or Premises arising in
connection with
any Work on or respecting the Premises not performed by or at
the request of
Landlord shall be null and void, or at Landlord's option shall
attach only
against Tenant's interest in the Premises and shall in all
respects be
subordinate to Landlord's title to the Property and
Premises.
ARTICLE 9
REPAIRS
Except for customary cleaning and trash removal provided by
Landlord under
Article 7, and damage covered under Article 10, Tenant shall
keep the Premises
in good and sanitary condition, working order and repair
(including without
limitation, carpet, wall-covering, doors, plumbing and other
fixtures,
equipment, alterations and improvements within and solely
serving the Premises
[other than Systems and Equipment] whether installed by Landlord
or Tenant). In
the event that any repairs, maintenance or replacements are
required, Tenant
shall promptly arrange for the same either through Landlord for
such reasonable
charges as Landlord may from time to time establish, or such
contractors as
Landlord generally uses at the Property or such other
contractors as Landlord
shall first approve in writing, and in a first class,
workmanlike manner
approved by Landlord in advance in writing. If Tenant does not
promptly make
such arrangements, Landlord may, but need not, make such
repairs, maintenance
and replacements, and the costs paid or incurred by Landlord
therefor shall be
reimbursed by Tenant promptly after request by Landlord. Tenant
shall indemnify
Landlord and pay for any repairs, maintenance and replacements
to areas of the
Property outside the Premises, caused, in whole or in part, as a
result of
moving any furniture, fixtures, or other property to or from the
Premises, or by
Tenant or its employees, agents, contractors, or visitors
(notwithstanding
anything to the contrary contained in this Lease). Except as
provided in the
preceding sentence, or for damage covered under Article 10,
Landlord shall keep
the common areas of the Property in good and sanitary condition,
working order
and repair (the cost of which shall be included in Operating
Expenses, as
described in Article 25, except as limited therein).
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ARTICLE 10
CASUALTY DAMAGE
If the Premises or any common areas of the Property providing
access
thereto shall be damaged by fire or other casualty, Landlord
shall use available
insurance proceeds to restore the same. Such restoration shall
be to
substantially the condition prior to the casualty, except for
modifications
required by zoning and building codes and other Laws or by any
Holder (as
defined in Article 25), any other modifications to the common
areas deemed
desirable by Landlord (provided access to the Premises is not
materially
impaired), and except that Landlord shall not be required to
repair or replace
any of Tenant's furniture, furnishings, fixtures or equipment,
or any
alterations or improvements in excess of any work performed or
paid for by
Landlord under the initial Work Agreement attached hereto as
Exhibit B or under
any separate agreement signed by the parties in connection
herewith. Landlord
shall not be liable for any inconvenience or annoyance to Tenant
or its
visitors, or injury to Tenant's business resulting in any way
from such damage
or the repair thereof. However, Landlord shall allow Tenant a
proportionate
abatement of Rent during the time and to the extent the Premises
are unfit for
occupancy for the purposes permitted under this Lease and not
occupied by Tenant
as a result thereof (unless Tenant or its employees or agents
caused the damage
and then only to the extent such Rent abatement is not covered
by Landlord's
insurance). Notwithstanding the foregoing to the contrary,
Landlord may elect to
terminate this Lease by notifying Tenant in writing of such
termination within
sixty (60) days after the date of damage (such termination
notice to include a
termination date providing at least ninety (90) days for Tenant
to vacate the
Premises), if the Property shall be materially damaged by Tenant
or its
employees or agents, or if the Property shall be damaged by fire
or other
casualty or cause such that: (a) repairs to the Premises and
access thereto
cannot reasonably be completed within 180 days after the
casualty without the
payment of overtime or other premiums, (b) more than 40% of the
Premises is
affected by the damage, and fewer than 15 months remain in the
Term, as it nay
have been extended, or any material damage occurs to the
Premises during the
last 12 months of the Term, as it may have been extended, (c)
any Holder (as
defined in Article 25) shall require that the insurance proceeds
or any portion
thereof be used to retire the Mortgage debt (or shall terminate
the ground
lease, as the case may be), or (d) the cost of the repairs,
alterations,
restoration or improvement work would exceed 25% of the
replacement value of the
Building. Tenant agrees that Landlord's obligation to restore,
and the abatement
of Rent provided herein, shall be Tenant's sole recourse in the
event of such
damage, although if Landlord has not, within sixty (60) days
after the date of
damage, given notice to Tenant of its intent to perform or not
perform repairs,
Tenant shall have the right to terminate the Lease by notice to
Landlord. The
abatement of Rent under this provision shall be based upon the
ratio of the
portion of the Premises damaged or otherwise rendered
untenantable to the total
rentable square footage of the Premises at the time of such
casualty. Tenant
acknowledges that this Article represents the entire agreement
between the
parties respecting damage to the Premises or Property.
ARTICLE 11
INSURANCE, SUBROGATION, AND WAIVER OF CLAIMS
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Tenant shall maintain during the Term Commercial General
Liability
insurance, with limits of not less than $2,000,000 per
occurrence for personal
injury, bodily injury or death, or property damage or
destruction (including
loss of use thereof). Such insurance shall be primary and any
insurance carried
by Landlord or any other insured shall be excess and
noncontributory. Tenant
shall also maintain during the Term workers' compensation
insurance as required
by statute, employer's liability insurance in an amount of not
less than
$500,000 per occurrence, and primary, noncontributory,
"all-risk" property
damage insurance covering Tenant's personal property, business
records, fixtures
and equipment, for damage or other loss caused by fire or other
casualty or
cause including, but not limited to, vandalism and malicious
mischief, theft,
water damage of any type, including sprinkler leakage, bursting
or stoppage of
pipes, explosion, business interruption, and other insurable
risks in amounts
not less than the full insurable replacement value of such
property and full
insurable value of such other interests of Tenant (subject to
reasonable
deductible amounts). Landlord shall, as part of Operating
Expenses, maintain
during the Term Commercial General Liability insurance, with
limits of not less
than $2,000,000 per occurrence for personal injury, bodily
injury or death, or
property damage or destruction (including loss of use thereof).
Landlord shall
also, as part of Operating Expanses, maintain during the Term
workers'
compensation insurance as required by statute, and primary,
non-contributory,
extended coverage or "all-risk" property damage insurance, in an
amount equal to
at least ninety percent (90%) of the full insurable replacement
value of the
Property (exclusive of the costs of excavation, foundations and
footings, and
such risks required to be covered by Tenant's insurance, and
subject to
reasonable deductible amounts), or such other amount necessary
to prevent
Landlord from being a co-insured, and such other coverage as
Landlord shall deem
appropriate or that may be required by any Holder (as defined in
Article 25).
Tenant shall provide Landlord with certificates, evidencing such
coverage
(and, with respect to liability coverage, showing Landlord and
such other
parties that Landlord shall designate from time to time as
additional insureds)
prior to the Commencement Date, which shall state that such
insurance coverage
may not be changed or canceled without at least twenty (20) days
prior written
notice to Landlord, and shall provide renewal certificates to
Landlord at least
twenty (20) days prior to expiration of such policies. Except as
provided to the
contrary herein, any insurance carried by Landlord or Tenant
shall be for the
sole benefit of the party carrying such insurance. Any insurance
policies
hereunder may be "blanket polices," provided that payments made
in connection
with other properties covered by such blanket policies shall not
diminish the
insurance amounts required hereunder. All insurance required
hereunder shall be
provided by responsible insurers and Tenant's insurer shall have
a rating of at
least A- and IX in the then current edition of Best's Key Rating
Insurance guide
and shall otherwise be reasonably acceptable to Landlord. By
this Article,
Landlord and Tenant intend that their respective property loss
risks shall be
borne by responsible insurance carriers to the extent above
provided, and
Landlord and Tenant hereby agree to look solely to, and seek
recovery only from,
their respective insurance carriers in the event of a property
loss to the
extent that such coverage is agreed to be provided hereunder.
The parties each
hereby waive all rights and claims against such other for such
losses, and waive
all rights of subrogation of their respective insurers, provided
such waiver of
subrogation shall not affect the right of the insured to recover
thereunder. The
parties agree that their respective insurance policies are now,
or shall be,
endorsed such that said waiver of subrogation shall not affect
the right of the
insured to recover thereunder, so long as no material additional
premium is
charged therefor.
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ARTICLE 12
CONDEMNATION
If the whole or any material part of the Premises or Property
shall be
taken by power of eminent domain or condemned by any competent
authority for any
public or quasi-public use or purpose, or if any adjacent
property or street
shall be so taken or condemned, or reconfigured or vacated by
such authority in
such manner as to require the reconstruction or remodeling of
any material part
of the Premises or such portion of the Property as would render
the Premises no
longer reasonably usable by Tenant, or if Landlord shall grant a
deed or other
instrument in lieu of such taking by eminent domain or
condemnation, Landlord
shall have the option to terminate this Lease upon ninety (90)
days notice,
provided such notice is given no later than 180 days after the
date of such
taking, condemnation, reconfiguration, vacation, deed or other
instrument.
Tenant shall have reciprocal termination rights if the whole or
any material
part of the Premises is permanently taken, or if access to the
Premises is
(other than on a temporary basis where alternative access to the
Premises is
still available to Tenant)materially impaired. Landlord shall be
entitled to
receive the entire award or payment in connection therewith,
except that Tenant
shall have the right to file any separate claim available to
Tenant for any
taking of Tenant's personal property and fixtures belonging to
Tenant and
removable by Tenant upon expiration of the Term, and for moving
expenses (so
long as such claim does not diminish the award available to
Landlord or any
Holder, and such claim is payable separately to Tenant). All
Rent shall be
apportioned as of the date of such termination, or the date of
such taking,
whichever shall first occur. If any part of the Premises shall
be taken, and
this Lease shall not be so terminated, the Rent shall be
proportionately abated.
ARTICLE 13
RETURN OF POSSESSION
At the expiration or earlier termination of this Lease or
Tenant's right
of possession, Tenant shall surrender possession of the Premises
in the
condition required under Article 9, ordinary wear and tear and
casualty damage
(provided that, with respect to any casualty damage, Tenant
provides Landlord
with any insurance proceeds received by Tenant for such casualty
not
attributable to Tenant's furniture, fixtures, and equipment,
plus an amount
equal to Tenant's deductible under its insurance) excepted, and
shall surrender
all keys, any key cards, and any parking stickers or cards, to
Landlord, and
advise Landlord as to the combination of any locks or vaults
then remaining in
the Premises, and shall remove all trade fixtures, equipment,
furnishings and
personal property. All improvements, fixtures and other items in
or upon the
Premises (except trade fixtures, equipment, furnishings and
personal property
belonging to Tenant), whether installed by Tenant or Landlord,
shall be
Landlord's property and shall remain upon the Premises, all
without
compensation, allowance or credit to Tenant. However, if prior
to such
termination or within ten (10) days thereafter Landlord so
directs by notice,
Tenant shall promptly remove such of the foregoing items as are
designated in
such notice and restore the Premises to the condition prior to
the installation
of such items; provided, Landlord shall not require removal of
customary office
improvements installed pursuant to any separate agreement signed
by both parties
in connection with entering this Lease, or installed by Tenant
with Landlord's
written approval (except as expressly required by Landlord
in
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connection with granting such approval). However, under no
circumstances shall
Landlord require Tenant to remove improvements installed in
conjunction with the
initial occupancy by Tenant of any portion of the Premises,
provided that such
improvements were installed in conformance, in all material
respects, with the
approved Plans (as defined in Exhibit B). If Tenant shall fail
to perform any
repairs or restoration, or fail to remove any items from the
Premises required
hereunder, Landlord may do so, and Tenant shall pay Landlord the
cost thereof
upon demand. All property removed from the Premises by Landlord
pursuant to any
provisions of this Lease or any Law may be handled or stored by
Landlord at
Tenant's expense, and Landlord shall in no event be responsible
for the value,
preservation or safekeeping thereof. All property not removed
from the Premises
or retaken from storage by Tenant within thirty (30) days after
expiration or
earlier termination of this Lease or Tenant's right to
possession, shall at
Landlord's option be conclusively deemed to have been conveyed
by Tenant to
Landlord as if by bill of sale without payment by Landlord.
Unless prohibited by
applicable Law, Landlord shall have a lien against such property
for the costs
incurred in removing and storing the same.
ARTICLE 14
HOLDING OVER
Unless Landlord expressly agrees otherwise in writing, Tenant
shall pay
Landlord 150% of the amount of Base Rent then applicable (or the
highest amount
permitted by Law, whichever shall be less), plus Tenant's
Prorata Share of Taxes
and Operating Expenses prorated on per diem basis for each day
Tenant shall
retain possession of the Premises or any part thereof after
expiration or
earlier termination of this Lease. If such holdover, without
consent, continues
for more than fifteen (15) days, then Tenant shall also be
obligated for the
payment of (a) amounts payable by Landlord to third parties on
account of such
holdover by Tenant, and (b) direct damages sustained by Landlord
on account of
such holdover by Tenant. The foregoing provisions shall not
serve as permission
for Tenant to holdover, nor serve to extend the Term (although
Tenant shall
remain bound to comply with all provisions of this Lease until
Tenant vacates
the Premises, and shall be subject to the provisions of Article
13).
Notwithstanding the foregoing to the contrary, at any time
before or after
expiration or earlier termination of the Lease, Landlord may
serve notice
advising Tenant of the amount of Rent and other terms required,
should Tenant
desire to enter a month-to-month tenancy (and if Tenant shall
hold over more
than one full calendar month after such notice, Tenant shall
thereafter be
deemed a month-to-month tenant, on the terms and provisions of
this Lease then
in effect, as modified by Landlord's notice, and except that
Tenant shall not be
entitled to any renewal or expansion rights contained in this
Lease or any
amendments hereto).
ARTICLE 15
NO WAIVER
No provision of this Lease will be deemed waived by either party
unless
expressly waived in writing signed by the waiving party. No
waiver shall be
implied by delay or any other act or omission of either party.
No waiver by
either party of any provision of this Lease shall be deemed a
waiver of such
provision with respect to any subsequent matter relating to
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such provision, and Landlord's consent or approval respecting
any action by
Tenant shall not constitute a waiver of the requirement for
obtaining Landlord's
consent or approval respecting any subsequent action. Acceptance
of Rent by
Landlord shall not constitute a waiver of any breach by Tenant
of any item or
provision of this Lease. No acceptance of a lesser amount than
the Rent herein
stipulated shall be deemed a waiver of Landlord's right to
receive the full
amount due, nor shall any endorsement or statement on any check
or payment or
any letter accompanying such check or payment be deemed an
accord and
satisfaction, and Landlord may accept such check or payment
without prejudice to
Landlord's right to recover the full amount due. The acceptance
of Rent or of
the performance of any other term or provision from any Person
other than
Tenant, including any Transferee, shall not constitute a waiver
of Landlord's
right to approve any Transfer.
ARTICLE 16
ATTORNEYS' FEES AND JURY TRIAL
In the event of any litigation between the parties, the
prevailing party
shall be entitled to obtain, as part of the judgment, all
reasonable attorneys'
fees, costs and expenses incurred in connection with such
litigation, except as
may be limited by applicable Law. In the interest of obtaining a
speedier and
less costly hearing of any dispute, the parties hereby each
irrevocably waive
the right to trial by jury.
ARTICLE 17
PERSONAL PROPERTY TAXES, RENT TAXES AND OTHER TAXES
Tenant shall pay prior to delinquency all taxes, charges or
other
governmental impositions assessed against or levied upon
Tenant's fixtures,
furnishings, equipment and personal property located in the
Premises. Tenant
shall pay any rent tax or sales tax, service tax, transfer tax
or value added
tax, or any other applicable tax on the Rent or services herein.
To the extent
that any Work in the Premises (beyond the initial improvements
installed in
conjunction with Tenant's occupancy) have a value materially
greater than the
tenant improvements installed by the average tenant in the
Building, and if the
taxing authorities separately assess such additional
improvements, Tenant shall
reimburse Landlord for the tax associated with such additional
improvements.
ARTICLE 18
REASONABLE APPROVALS
Whenever Landlord's approval or consent is expressly required
under this
Lease (including Article 21) or any other agreement between the
parties,
Landlord shall not unreasonably withhold or delay such approval
or consent
(reasonableness shall be a condition to Landlord's enforcement
of such consent
or approval requirement, and not a covenant), except for matters
affecting the
structure, safety or security of the Property, or the appearance
of the Property
from any common or public areas.
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ARTICLE 19
SUBORDINATION, ATTORNMENT AND MORTGAGEE PROTECTION
Subject to the provisions of a subordination, non-disturbance
and
attornment agreement in the form of Exhibit C attached hereto,
to be entered
into between Tenant and the Holder, this Lease is subject and
subordinate to all
Mortgages (as defined in Article 25) now or hereafter placed
upon the Property,
and all other encumbrances and matters of public record
applicable to the
Property. If any foreclosure proceedings are initiated by any
Holder or a deed
in lieu is granted (or if any ground lease is terminated),
Tenant agrees, upon
written request of any such Holder or any purchaser at
foreclosure sale, to
attorn and pay Rent to such party and to execute and deliver any
instruments
necessary or appropriate to evidence or effectuate such
attornment (provided
such Holder or purchaser shall agree to accept this Lease and
not disturb
Tenant's occupancy, so long as Tenant does not default and fail
to cure within
the time permitted hereunder). However, in the event of
attornment, no Holder
shall be: (i) liable for any act or omission of Landlord, or
subject to any
offsets or defenses which Tenant might have against Landlord
(prior to such
Holder becoming Landlord under such attornment), (ii) liable for
any security
deposit or bound by any prepaid Rent not actually received by
such Holder, or
(iii) bound by any future modification of this Lease not
consented to by such
Holder under circumstances in which Landlord is required to
obtain the consent
of the Holder, but such consent has not been provided (with
Tenant to be
provided with notice of any such Holder refusal to grant consent
when such
consent is required). Any Holder (as defined in Article 25) may
elect to make
this Lease prior to the lien of its Mortgage, by written notice
to Tenant, and
if the Holder of any prior Mortgage shall require, this Lease
shall be prior to
any subordinate Mortgage. Tenant agrees to give any Holder by
certified mail,
return receipt requested, a copy of any notice of default served
by Tenant upon
Landlord, provided that prior to such notice Tenant has been
notified in writing
(by way of service on Tenant of a copy of an assignment of
leases, or otherwise)
of the address of such Holder. Tenant further agrees that if
Landlord shall have
failed to cure such default within the times permitted Landlord
for cure under
this Lease, any such Holder whose address has been provided to
Tenant shall have
an additional period of thirty (30) days in which to cure (or
such additional
time as may be required due to causes beyond such Holder's
control, including
time to obtain possession of the Property by power of sale or
judicial action)
subject to Tenant's right to exercise its remedies under Article
7, which Tenant
may utilize whether or not Holder has obtained possession or
control of the
Property. Tenant shall execute such documentation as Landlord
may reasonably
request from time to time, in order to confirm the matters set
forth in this
Article in recordable form.
ARTICLE 20
ESTOPPEL CERTIFICATE
Tenant shall from time to time, within twenty (20) days after
written
request from Landlord, execute, acknowledge and deliver a
statement (i)
certifying that this Lease is unmodified and in full force and
effect or, if
modified, stating the nature of such modification and certifying
that this Lease
as so modified, is in full force and effect (or if this Lease is
claimed not to
be in force and effect, specifying the ground therefor) and any
dates to which
the Rent has been paid in advance, and the amount of any
Security Deposit, (ii)
acknowledging
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that there are not, to Tenant's knowledge, any uncured defaults
on the part of
Landlord hereunder, or specifying such defaults if any are
claimed, and (iii)
certifying such other matters as Landlord may reasonably
request, or as may be
requested by Landlord's current or prospective Holders,
insurance carriers,
auditors, and prospective purchasers. Any such statement may be
relied upon by
any such parties. If Tenant shall fail to execute and return
such statement
within the time required herein, Tenant shall be deemed to have
agreed with the
matters set forth therein.
ARTICLE 21
ASSIGNMENT AND SUBLETTING
(A) TRANSFERS. Except as otherwise specifically provided herein,
Tenant
shall not, without the prior written consent of Landlord, which
consent shall
not be unreasonably withheld, as further described below: (i)
assign, mortgage,
pledge, hypothecate, encumber, or permit any lien to attach to,
or otherwise
transfer, this Lease or any interest hereunder, by operation of
law or
otherwise, (ii) sublet the Premises or any part thereof, or
(iii) permit the use
of the Premises by any Persons (as defined in Article 25) other
than Tenant, its
employees, its agents and invitees (all of the foregoing are
hereinafter
sometimes referred to collectively as "Transfers" and any Person
to whom any
Transfer is made or sought to be made is hereinafter sometimes
referred to as a
"Transferee"). If Tenant shall desire Landlord's consent to any
Transfer, Tenant
shall notify Landlord in writing, which notice shall include:
(a) the proposed
effective date (which shall not be less than 30 nor more than
180 days after
Tenant's notice), (b) the portion of the Premises to be
Transferred (herein
called the "Subject Space"), (c) the terms of the proposed
Transfer and the
consideration therefor, the name and address of the proposed
Transferee, and a
copy of all documentation pertaining to the proposed Transfer,
and (d) current
financial statements of the proposed Transferee certified by an
officer, partner
or owner thereof, and any other reasonably required information
to enable
Landlord to determine the financial responsibility, character,
and reputation of
the proposed Transferee, nature of such Transferee's business
and proposed use
of the Subject Space, and such other information as Landlord may
reasonable
require. Any Transfer made without complying with this Article
shall, be null,
void and of no effect. Whether or not Landlord shall grant
consent, Tenant shall
pay $300.00 towards Landlord's review and processing expenses,
as well as any
reasonable legal fees incurred by Landlord, within thirty (30)
days after
written request by Landlord.
(B) APPROVAL. Landlord will not unreasonably withhold its
consent (as
provided in Article 18) to any proposed Transfer of the Subject
Space to the
Transferee on the terms specified in Tenant's notice. The
parties hereby agree
that it shall be reasonable under this Lease and under any
applicable Law for
Landlord to withhold consent to any proposed Transfer where one
or more of the
following applies (without limitation as to other reasonable
grounds for
withholding consent): (i) the Transferee is of a character or
reputation or
engaged in a business which is not consistent with the quality
of the Property,
or would be a significantly less prestigious occupant of the
Property than
Tenant, (ii) the Transferee intends to use the Subject Space for
purposes which
are not permitted under this Lease, (iii) the Subject Space is
not regular in
shape with appropriate means of ingress and egress suitable for
use in
accordance with any applicable Law, (iv) the Transferee is
either a government
(or agency or instrumentality thereof) or an occupant of the
Property, (v) the
proposed Transferee
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does not have a reasonable financial condition in relation to
the obligations to
be assumed in connection with the Transfer, or (vi) Tenant has
committed and
failed to cure a Default at the time Tenant requests consent to
the proposed
Transfer.
(C) TRANSFER PREMIUM. If Landlord consents to a Transfer, and as
a
condition thereto which the parties hereby agree is reasonable,
Tenant shall pay
Landlord fifty percent (50%) of any Transfer Premium derived by
Tenant from such
Transfer. "Transfer Premium" shall mean all rent, additional
rent or other
consideration paid by such Transferee in excess of the Rent
payable by Tenant
under this Lease (on a monthly basis during the Term, and on a
per rentable
square foot basis, if less than all of the Premises is
transferred), after
deducting the reasonable expenses incurred by Tenant for any
changes,
alterations and improvements to the Premises, any other economic
concessions or
services provided to the Transferee, and any customary brokerage
commissions
paid in connection with the Transfer. If part of the
consideration for such
Transfer shall be payable other than in cash, Landlord's share
of such non-cash
consideration shall be in such form as is reasonably
satisfactory to Landlord.
The percentage of the Transfer Premium due Landlord hereunder
shall be paid
within ten (10) days after Tenant receives any Transfer Premium
from the
Transferee.
(D) RECAPTURE. Notwithstanding anything to the contrary
contained in this
Article, Landlord shall have the option, by giving written
notice to Tenant
within thirty (30) days after receipt of Tenant's notice of any
proposed
Transfer, to indicate its intention to recapture the subject
Space. Upon receipt
of Landlord's notice indicating its intention to recapture the
portion of the
Premises subject to the proposed Transfer, Tenant may, upon
delivery of notice
to Landlord within five (5) business days thereafter, rescind
its intention to
proceed with the proposed Transfer. If Tenant does not so
rescind, Landlord's
recapture notice shall be deemed to cancel and terminate this
Lease with respect
to the Subject Space as of the date stated in Tenant's notice as
the effective
date of the proposed Transfer (or at Landlord's option, shall
cause the Transfer
to be made to Landlord or its agent, in which case the parties
shall execute the
Transfer documentation promptly thereafter). If this Lease shall
be cancelled
with respect to less than the entire Premises, the Rent reserved
herein shall be
prorated on the basis of the number of rentable square feet
retained by Tenant
in proportion to the number of rentable square feet contained in
the Premises,
this Lease as so amended shall continue thereafter in full force
and effect, and
upon request of either party, the parties shall execute written
confirmation of
the same.
(E) TERMS OF CONSENT. If Landlord consents to a Transfer: (a)
the terms
and conditions of this Lease, including among other things,
Tenant's liability
for the Subject Space, shall in no way be deemed to have been
waived or
modified, (b) such consent shall not be deemed consent to any
further Transfer
by either Tenant or a Transferee, (c) no Transferee shall
succeed to any rights
provided in this Lease or any amendment hereto to extend the
Term of this Lease,
expand the Premises, or lease additional space, any such rights
being deemed
personal to Tenant, (d) Tenant shall deliver to Landlord
promptly after
execution, an original executed copy of all documentation
pertaining to the
Transfer in form reasonably acceptable to Landlord, and (e)
Tenant shall furnish
upon Landlord's request a complete statement, certified by an
independent
certified public accountant, or Tenant's chief financial
officer, setting forth
in detail the computation of any Transfer Premium Tenant has
derived and shall
derive from such Transfer. Landlord or its authorized
representatives shall have
the right at all reasonable
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times to audit the books, records and papers of Tenant relating
to any Transfer,
and shall have the right to make copies thereof. If the Transfer
Premium
respecting any Transfer shall be found understated, Tenant shall
within thirty
(30) days after demand pay the deficiency, and if understated by
more than 2%,
Tenant shall pay Landlord's costs of such audit. Any sublease
hereunder shall be
subordinate and subject to the provisions of this Lease, and if
this Lease shall
be terminated during the term of any sublease, Landlord shall
have the right to:
(i) treat such sublease as canceled and repossess the Subject
Space by any
lawful means, or (ii) require that such subtenant attorn to and
recognize
Landlord as its landlord under any such sublease. If Tenant
shall Default and
fail to cure within the time permitted for cure under Article
23(A), Landlord is
hereby irrevocably authorized, as Tenant's agent and
attorney-in-fact, to direct
any Transferee to make all payments under or in connection with
the Transfer
directly to Landlord (which Landlord shall apply towards
Tenant's obligations
under this Lease) until such Default is cured.
(F) CERTAIN TRANSFERS. For purposes of this Lease, the term
"Transfer"
shall also include (a) if Tenant is a partnership, the
withdrawal or change,
voluntary, involuntary or by operation of law, of a majority of
the partners, or
a transfer of a majority of partnership interests, within a
twelve month period,
or the dissolution of the partnership, and (b) if Tenant is a
closely held
corporation (i.e., whose stock is not publicly held and not
traded through an
exchange or over the counter), the dissolution, merger,
consolidation or other
reorganization of Tenant, or within a twelve month period: (i)
the sale or other
transfer of more than an aggregate of 50% of the voting shares
of Tenant (other
than to immediate family members by reason of gift or death) or
(ii) the sale,
mortgage, hypothecation or pledge of more than an aggregate of
50% of Tenant's
net assets. Notwithstanding any of the foregoing to the
contrary, no Transfer
shall be deemed to exist based upon: (i) Tenant's participation
in a private
placement or public offering of its securities (even if
involving in excess of
fifty percent (50%) of the voting shares of Tenant); or (ii)
Tenant's providing
an overall lien on its assets in conjunction with corporate
financing, provided
that same have no reasonable business purpose other than to
circumvent
Landlord's rights pursuant to this Article 21.
(G) RELATED ENTITIES. Notwithstanding anything to the contrary
in this
Article 21, Tenant may, upon not less than five (5) days prior
written notice to
Landlord, permit any corporations or other business entities
which are
controlled by, or under common control with Tenant, or a parent,
subsidiary
division or corporation controlled by or controlling Tenant, a
successor
corporation related to Tenant by merger or consolidation, or the
purchaser of
substantially all of Tenant's assets or stock (a "Related
Entity") to sublet all
or part of the Premises or receive an assignment of the Lease,
provided that (i)
Tenant shall not be in default under this Lease, (ii) prior to
such subletting
or assignment, as the case may be, Tenant furnishes Landlord
with the name of
any such Related Entity, together with a certification of
Tenant, and such other
proof as Landlord may reasonably request, that such subtenant or
assignee, as
the case may be, is a Related Entity of Tenant and continues to
remain such
during the Term. Landlord shall have the right, at any
reasonable time, to
examine such books and records of Tenant as may be necessary to
establish that
such sublessee or assignee, as the case may be, remains a
Related Entity of
Tenant. Such subletting or assignment shall not relieve Tenant
of any of
Tenant's liability or obligations under this Lease. For the
purposes hereof,
"control" shall mean the power to directly or indirectly direct
or cause the
direction of the management or policies of such corporation or
entity.
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<PAGE>
ARTICLE 22
RIGHTS RESERVED BY LANDLORD
Except to the extent expressly limited herein, Landlord reserves
full
rights to control the Property (which rights may be exercised
without subjecting
Landlord to claims for constructive eviction, abatement of Rent,
damages or
other claims of any kind), including more particularly, but
without limitation,
the following rights:
(A) To change the name or street address of the Property;
install and
maintain signs on the exterior and interior of the Property;
retain at all
times, and use in appropriate instances (subject to the
limitations set forth in
this Lease, keys to all doors within and into the Premises;
grant to any Person
the right to conduct any business or render any service at the
Property, whether
or not it is the same or similar to the use permitted Tenant by
this Lease; and
have access for Landlord and other tenants of the Property to
any mail chutes
located on the Premises according to the rules of the United
States Postal
Service.
(B) To enter the Premises at reasonable hours for reasonable
purposes,
including inspection and supplying cleaning service or other
services to be
provided Tenant hereunder, to show the Premises to current and
prospective
mortgage lenders, ground lessors, insurers, and prospective
purchasers, tenants
and brokers, at reasonable hours, and if Tenant shall abandon
the Premises at
any time, or shall vacate the same during the last 3 months of
the Term, to
decorate, remodel, repair, or alter the Premises.
(C) To limit or prevent access to the Property, shut down
elevator
service, activate elevator emergency controls, or otherwise take
such action or
preventative measures deemed necessary by Landlord for the
safety of tenants or
other occupants of the Property or the protection of the
Property and other
property located thereon or therein, in case of fire, invasion,
insurrection,
riot, civil disorder, public excitement or other dangerous
condition, or threat
thereof.
(D) To decorate and to make alterations, additions and
improvements,
structural or otherwise, in or to the Property or any part
thereof, and any
adjacent building, structure, parking facility, land, street or
alley (including
without limitation changes and reductions in corridors, lobbies,
parking
facilities and other public areas and the installation of
kiosks, planters,
sculptures, displays, escalators, mezzanines, and other
structures, facilities,
amenities and features therein, and changes for the purpose of
connection with
or entrance into or use of the Property in conjunction with any
adjoining or
adjacent building or buildings, now existing or hereafter
constructed). In
connection with such matters, or with any other repairs,
maintenance,
improvements, or alterations, in or about the Property, Landlord
may erect
scaffolding and other structures reasonably required, and during
such operations
may enter upon the Premises and take into and upon or through
the Premises, all
materials required to make such repairs, maintenance,
alterations or
improvements, and may close public entry ways, other public
areas, restrooms,
stairways or corridors so long as such work does not
unreasonably materially and
permanently interfere with Tenant's access to or use of the
Premises.
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In connection with entering the Premises to exercise any of the
foregoing
rights, Landlord shall: (a) provide reasonable advance written
or oral notice to
Tenant's on-site manager or other appropriate person (except in
emergencies, or
for routine cleaning or other routine matters), (b) take
reasonable steps to
minimize any interference with Tenant's business, and (c) not
show the Premises
to prospective tenants other than during the last nine (9)
months of the Term
(or otherwise with Tenant's specific consent).
ARTICLE 23
LANDLORD'S REMEDIES
(A) DEFAULT. The occurrence of any one or more of the following
events
shall constitute a "Default" by Tenant, which is not cured
within any applicable
time permitted for cure below, shall give rise to Landlord's
remedies set forth
in Paragraph (B), below: (i) failure by Tenant to make when due
any payment of
Rent, unless such failure is cured within ten (10) days after
notice; (ii)
failure by Tenant to observe or perform any of the terms or
conditions of this
Lease to be observed or performed by Tenant other than the
payment of Rent, or
as provided below, unless such failure is cured within thirty
(30) days after
notice, or such shorter period expressly provided elsewhere in
this Lease
(provided, if the nature of Tenant's failure is such that more
time is
reasonably required in order to cure, Tenant shall not be in
Default if Tenant
commences to cure within such period and thereafter reasonably
seeks to cure
such failure to completion); (iii) failure by Tenant to comply
with the Rules,
unless such failure is cured within five (5) days after notice
(provided, if the
nature of Tenant's failure is such that more time is reasonably
required in
order to cure, Tenant shall not be in Default if Tenant
commences to cure within
period and thereafter reasonably seeks to cure such failure to
completion); (iv)
the failure to take possession of the Premises within sixty (60)
days after the
Commencement Date; (v) (a) making by Tenant or any guarantor of
this Lease
("Guarantor") of any general assignment for the benefit of
creditors, (b) filing
by or against Tenant or any Guarantor of a petition to have
Tenant or such
Guarantor adjudged a bankrupt or a petition for reorganization
or arrangement
under any Law relating to bankruptcy (unless, in the case of a
petition filed
against Tenant or such Guarantor, the same is dismissed within
sixty (60) days,
(c) appointment of a trustee or receiver to take possession of
substantially all
of Tenant's assets located on the Premises or of Tenant's
interest in this
Lease, where possession is not restored to Tenant within thirty
(30) days, (d)
attachment, execution or other judicial seizure of substantially
all of Tenant's
assets located on the Premises or of Tenant's interest in this
Lease, (e)
Tenant's or any Guarantor's convening of a meeting of its
creditors or any class
thereof for the purpose of effecting a moratorium upon or
composition of its
debts, or (f) Tenant's or any Guarantor's insolvency or
admission of an
inability to pay its debts as they mature; or (vi) any
material
misrepresentation herein, or material misrepresentation or
omission in any
financial statements or other materials provided by Tenant or
any Guarantor in
connection with negotiating or entering this Lease or in
connection with any
Transfer under Article 21. Failure to comply with the same term
or condition of
this Lease, which failure is either monetary in nature or a
material term or
condition of this Lease, on four (4) occasions during any twelve
(12) month
period shall cause any failure to comply with such term or
condition during the
succeeding twelve month period, at Landlord's option, to
constitute an incurable
Default, if Landlord has given Tenant notice of each such
failure within ten
(10) days after each such
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<PAGE>
failure occurs. The notice and cure periods provided herein are
in lieu of, and
not in addition to, any notice and cure periods provided by
Law.
(B) REMEDIES. If a Default occurs and is not cured within any
applicable
time permitted under Paragraph (A), Landlord shall have the
rights and remedies
hereinafter set forth, which shall be distinct, separate and
cumulative with and
in addition to any other right or remedy allowed under any Law
or, other
provisions of this Lease:
(i) Landlord may terminate this Lease, repossess the Premises
by
detainer suit, summary proceedings or other lawful means,
and
recover as damages a lump sum of money equal to: (a) any
unpaid Rent as of the termination date including interest at
the Default Rate calculated from the date each item of
unpaid
Rent was first payable hereunder (as defined in Article 25),
plus (b) any unpaid Rent which would have accrued after the
termination date, less such loss of Rent the Tenant proves
could have been reasonably avoided, discounted to present
value at an assumed interest rate equal to six percent (6%)
per annum. Landlord shall also be entitled to recover all
Costs of Reletting (as defined in Paragraph F). For purposes
of computing the amount of Rent herein that would have
accrued
after the time of award, Tenant's Prorata Share of Taxes and
Operating Expenses shall be projected, based upon the
average
rate of increase, if any, in such items from the
Commencement
Date through the time of award.
(ii) If applicable Law permits, Landlord may terminate
Tenant's
right of possession and repossess the Premises by detainer
suit, summary proceedings or other lawful means, without
terminating this Lease (and if such Law permits, and
Landlord
shall not have expressly terminated the Lease in writing,
any
termination shall be deemed a termination of Tenant's right
of
possession only). In such event, Landlord may recover: (a)
any
unpaid Rent as of the date possession is terminated,
including
interest at the Default Rate, (b) any unpaid Rent which
accrues during the Term from the date possession is
terminated
through the time of award (or which may have accrued from
the
time of any earlier award obtained by Landlord through the
time of award), including interest at the Default Rate
calculated from the date each item of unpaid Rent was first
payable hereunder, less any Net Re-Letting Proceeds (as
defined in Paragraph F) received by Landlord during such
period. Landlord shall also be entitled to recover all Costs
of Reletting (as defined in Paragraph F). Landlord may bring
suits for such amounts or portions thereof, at any time or
times as the same accrue or after the same have accrued, and
no suit or recovery of any portion due hereunder shall be
deemed a waiver of Landlord's right to collect all amounts
to
which Landlord is entitled hereunder, nor shall the same
serve
as any defense to any subsequent suit brought for any amount
not theretofore reduced to judgment.
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<PAGE>
(C) MITIGATION OF DAMAGES. If Landlord terminates this Lease or
Tenant's
right to possession, Landlord shall use reasonable efforts to
mitigate
Landlord's damages, and Tenant shall be entitled to submit proof
of such failure
to mitigate as a defense to Landlord's claims hereunder. If
Landlord has not
terminated this Lease or Tenant's right to possession, Landlord
shall have no
obligation to mitigate, and may permit the Premises to remain
vacant or
abandoned; in such case, Tenant may seek to mitigate damages by
attempting to
sublease the Premises or assign this Lease (subject to Article
21).
(D) SPECIFIC PERFORMANCE, COLLECTION OF RENT AND ACCELERATION.
Landlord
shall at all times have the rights and remedies (which shall be
cumulative with
each other and cumulative and in addition to those rights and
remedies available
under Paragraph (B), above or any Law or other provision of this
Lease), without
prior demand or notice except as required by applicable Law: (i)
to seek any
declaratory, injunctive or other equitable relief, and
specifically enforce this
Lease, or restrain or enjoin a violation or breach of any
provision hereof, and
ii) to sue for and collect any unpaid Rent which has accrued.
Notwithstanding
anything to the contrary contained in this Lease, to the extent
not expressly
prohibited by applicable Law, in the event of any Default by
Tenant not cured
within any applicable time for cure hereunder, Landlord may
terminate this Lease
or Tenant's right to possession in accordance with Paragraphs
(B)(i) and (ii)
above.
(E) LATE CHARGES AND INTEREST. Tenant shall pay, additional
Rent, a
service charge of Two Hundred Dollars ($200.00) for bookkeeping
and
administrative expenses, if Rent is not received within ten (10)
days after its
due date. In addition, any Rent paid more than five (5) days
after due shall
accrue interest from the due date at the Default Rate (as
defined in Article
25), until payment is received by Landlord. Such service charge
and interest
payments shall not be deemed consent by Landlord to late
payments, nor a waiver
of Landlord's right to insist upon timely payments at any time,
nor a waiver of
any remedies to which Landlord is entitled as a result of the
late payment of
Rent.
(F) CERTAIN DEFINITIONS. "Net Re-Letting Proceeds" shall mean
the total
amount of rent and other consideration paid by any Replacement
Tenants, less all
Costs of Re-Letting, during a given period of time. "Costs of
Re-Letting" shall
include without limitation, all reasonable costs and expenses
incurred by
Landlord for any repairs, maintenance, changes, alterations and
improvements to
the Premises, brokerage commissions, advertising costs,
reasonable attorneys'
fees, any customary free rent periods or credits, tenant
improvement allowances,
take-over lease obligations and other customary, necessary or
appropriate
economic incentives required to enter leases with Replacement
Tenants, and costs
of collecting rent from Replacement Tenants. "Replacement
Tenants" shall mean
any Persons (as defined in Article 25) to whom Landlord relets
the Premises or
any portion thereof pursuant to this Article. The amount of `Net
Re-Letting
Proceeds' shall be increased by any amounts that Tenant
reasonably demonstrates
would have been received by Landlord with regard to the
Premises, but which
Landlord has not received due to its negligent actions.
(G) OTHER MATTERS. No re-entry or repossession, repairs,
changes,
alterations and additions, reletting, acceptance of keys from
Tenant, or any
other action or omission by Landlord shall be construed as an
election by
Landlord to terminate this Lease or Tenant's right to
possession, or accept a
surrender of the Premises, nor shall the same operate to
release
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<PAGE>
Tenant in whole or in part from any of Tenant's obligations
hereunder, unless
express written notice of such intention is sent by Landlord or
its agent to
Tenant. To the fullest extent permitted by Law, all rent and
other consideration
paid by any Replacement Tenants shall be applied: first, to the
Costs of
Re-Letting, second, to the payment of any Rent theretofore
accrued, and the
residue, if any, shall be held by Landlord and applied to the
payment of other
obligations of Tenant to Landlord as the same become due (with
any remaining
residue, after full discharge of Tenant's obligations, to be
retained by
Landlord). Rent shall be paid without any prior demand or notice
therefor
(except as expressly provided herein) and without any deduction,
set-off or
counterclaim, or relief from any valuation or appraisement laws.
Landlord may
apply payments received from Tenant to any obligations of Tenant
then accrued,
without regard to such obligations as may be designated by
Tenant. Landlord
shall be under no obligation to observe or perform any provision
of this Lease
on its part to be observed or performed which accrues after the
date of any
Default by Tenant hereunder not cured within the times permitted
hereunder. The
times set forth herein for the curing of Defaults by Tenant are
of the essence
of this Lease. Tenant hereby irrevocably waives any right
otherwise available
under any Law to redeem or reinstate this Lease.
ARTICLE 24
LANDLORD'S RIGHT TO CURE
If Landlord shall fail to perform any term or provision under
this Lease
required to be performed by Landlord, Landlord shall not be
deemed to be in
default hereunder nor subject to any claims for damages of any
kind, unless such
failure shall have continued for a period of thirty (30) days
after written
notice thereof by Tenant; provided, if the nature of Landlord's
failure is such
that more than thirty (30) days are reasonably required in order
to cure,
Landlord shall not be in default if Landlord commences to cure
such failure
within such thirty (30) day period, and thereafter diligently
and continuously
pursues such cure to completion. The aforementioned periods of
time permitted
for Landlord to cure shall be extended for any period of time
during which
Landlord is delayed in, or prevented from, curing due to fire or
other casualty,
strikes, lock-outs or other labor troubles, shortages of
equipment or materials,
governmental requirements, power shortages or outages, acts or
omissions by
Tenant or other Persons not under the control of Landlord, and
other causes
beyond Landlord's reasonable control. If Landlord shall fail to
cure within the
times permitted for cure herein, Landlord shall be subject to
such remedies as
may be available to Tenant (subject to the other provisions of
this Lease);
provided, in recognition that Landlord must receive timely
payments of Rent and
operate the Property, Tenant shall have no right to withhold,
set-off, or abate
Rent based solely upon Landlord's failure to cure.
ARTICLE 25
CAPTIONS, DEFINITIONS AND SEVERABILITY
The captions of the Articles and Paragraphs of this Lease are
for
convenience of reference only and shall not be considered or
referred to in
resolving questions of interpretation. If any term or provision
of this Lease
shall be found invalid, void, illegal, or unenforceable with
respect to any
particular Person by a court of competent jurisdiction, it
24
<PAGE>
shall not affect, impair or invalidate any other terms or
provisions hereof, or
its enforceability with respect to any other Person, the parties
hereto agreeing
that they would have entered into the remaining portion of this
Lease
notwithstanding the omission of the portion or portions adjudged
invalid, void,
illegal, or unenforceable with respect to such Person.
(A) "Building" shall mean the structure identified in Article I
of this
Lease.
(B) Intentionally omitted.
(C) "Default Rate" shall mean twelve percent (12%) per annum, or
the
highest rate permitted by applicable Law, whichever shall be
less.
(D) "Holder" shall mean the holder of any Mortgage at the time
in
question, and where such Mortgage is a ground lease, such term
shall refer to
the ground lessor.
(E) "Holidays" shall mean all federally observed holidays,
including New
Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day,
Christmas Day, and such other holidays as are from time to time
determined by
Landlord to be generally applicable to the Property, consistent
with other
similarly situated office buildings in downtown Minneapolis.
(F) "Landlord" and "Tenant" shall be applicable to one or more
Persons as
the case may be, and the singular shall include the plural, and
the neuter shall
include the masculine and feminine; and if there be more than
one, the
obligations thereof shall be joint and several. For purposes any
provisions
indemnifying or limiting the liability of Landlord, the term
"Landlord" shall
include Landlord's present and future partners, beneficiaries,
trustees,
officers, directors, employees, shareholders, principals,
agents, affiliates,
successors and assigns.
(G) "Law" shall mean all federal, state, county and local
governmental and
municipal laws, statutes, ordinances, rules, regulations, codes,
decrees, orders
and other such requirements, applicable equitable remedies and
decisions by
courts in cases where such decisions are considered binding
precedents in the
state in which the Property is located, and decisions of federal
courts applying
the Laws of such State.
(H) "Mortgage" shall mean all mortgages, deeds of trust, ground
leases and
other such encumbrances now or hereafter placed upon the
Property or Building,
or any part thereof, and all renewals, modifications,
consolidations,
replacements or extensions thereof, and all indebtedness now or
hereafter
secured thereby and all interest thereon.
(I) "Operating Expenses" shall mean all expenses, costs and
amounts (other
than Taxes) of every kind and nature which Landlord shall pay
during any
calendar year any portion of which occurs during the Term,
because of or in
connection with the ownership, management, repair, maintenance,
restoration and
operation of the Property, including without limitation, any
amounts paid for:
(a) utilities for the Property, including but not limited to
electricity, power,
gas, steam, oil or other fuel, water, sewer, lighting, heating,
air conditioning
and ventilating, (b) permits, licenses and certificates
necessary to operate,
manage and lease
25
<PAGE>
the Property, (c) insurance applicable to the Property, not
limited to the
amount of coverage Landlord is required to provide under this
Lease, (d)
supplies, tools, equipment and materials used in the operation,
repair and
maintenance of the Property, (e) accounting, legal, inspection,
consulting,
concierge and other services, (f) any equipment rental (or
installment equipment
purchase or equipment financing agreements), or management
agreements (including
the cost of any management fee actually paid thereunder and the
fair rental
value of any office space provided thereunder, up to customary
and reasonable
amounts), (g) wages, salaries and other compensation and
benefits (including the
fair value of any parking privileges provided) for all persons
engaged in the
operation, maintenance or security of the Property, and
employer's Social
Security taxes, unemployment taxes or insurance, and any other
taxes which may
be levied on such wages, salaries, compensation and benefits,
(h) payments under
any easement, operating agreement, declaration, restrictive
covenant, or
instrument pertaining to the sharing of costs in any planned
development, and
(i) operation, repair, and maintenance of all Systems and
Equipment and
components thereof (including replacement of components),
janitorial service,
alarm and security service, window cleaning, trash removal,
elevator
maintenance, cleaning of walks, parking facilities and building
walls, removal
of ice and snow, replacement of wall and floor coverings,
ceiling tiles and
fixtures in lobbies, corridors, restrooms and other common or
public areas or
facilities, maintenance and replacement of shrubs, trees, grass,
sod and other
landscaped items, irrigation systems, drainage facilities,
fences, curbs, and
walkways, re-paving and re-striping parking facilities, and roof
repairs. If the
Property is not fully occupied during all or a portion of any
calendar year,
Landlord may, in accordance with sound accounting and management
practices,
determine the amount of variable Operating Expenses (i.e., those
items which
vary according to occupancy levels) that would have been paid
had the Property
been fully occupied, and the amount so determined shall be
deemed to have been
the amount of variable Operating Expenses for such year.
Notwithstanding the
foregoing, Operating Expenses shall not, however, include:
(i) depreciation, interest and amortization on Mortgages,
and
other debt costs or ground lease payments, if any; legal
fees
in connection with leasing, tenant disputes or enforcement
of
leases; real estate brokers' leasing commissions;
improvements
or alterations to tenant spaces; the cost of providing any
service directly to and paid directly by, any tenant; any
costs expressly excluded from Operating Expenses elsewhere
in
this Lease; costs of any items to the extent Landlord
receives
reimbursement from insurance proceeds or from a third party
(such proceeds to be deducted from Operating Expenses in the
year in which received);
(ii) capital expenditures, except those: (a) made primarily
to
reduce Operating Expenses, or to comply with any Laws or
other
governmental requirements, or (b) for replacements (as
opposed
to additions or new improvements) of non-structural items
located in the common areas of the Property required to keep
such areas in good condition; provided, all such permitted
capital expenditures (together with reasonable financing
charges) shall be amortized for purposes of this Lease over
the shorter of: (i) their useful lives, or (ii) the period
during which the reasonably estimated savings in Operating
Expenses equals the expenditures, and
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<PAGE>
(iii) the cost of marketing tenant spaces, costs incurred by
Landlord in preparing rentable space for occupancy, payments
of principal, penalties, fees or other charges (as well as
interest) on any mortgages or other encumbrances on the
Property or rent under any ground lease, wages, salaries or
other compensation paid to any executive employee of
Landlord
or the property manager ranking above the on-site property
manager, any cost or expense representing an amount paid for
products or services to a person or entity related to or
affiliated with Landlord which is in excess of the fair
market
value of such services and products, all costs resulting
from
the delivery to other tenants of the Building of services
substantially greater in quantity or higher in quality than
those delivered to Tenant, any bad debt expense or bad debt
reserve or costs of correcting defects in the initial design
or construction of the Building. The management fee payable
shall not exceed 3% of the Building's gross rentals. Any
refunds or rebates on account of insurance paid during the
Term, for which Tenant paid Team's Prorata Share for same,
shall be credited to Tenant's obligation for the payment of
Operating Expenses, notwithstanding the time limits set
forth
in Article 3(F).
(J) "Person" shall mean an individual, trust, partnership, joint
venture,
association, corporation, and any other entity.
(K) "Property" shall mean the Building, and any common or public
areas or
facilities, easements, corridors, lobbies, sidewalks, loading
areas, driveways,
landscaped areas, skywalks, parking garages and lots, and any
and all other
structures or facilities operated or maintained in connection
with or for the
benefit of the Building, and all parcels or tracts of land on
which all or any
portion of the Building or any of the other foregoing items are
located, and any
fixtures, machinery, equipment, apparatus, Systems and
Equipment, furniture and
other personal property located thereon or therein and used in
connection
therewith, whether title is held by Landlord or its affiliates.
Possession of
areas necessary for utilities, services, safety and operation of
the Property,
including the Systems and Equipment (as defined in Article 25),
fire stairways,
perimeter walls, space between the finished ceiling of the
Premises and the slab
of the floor or roof of the Property there above, and the use
thereof together
with the right to install, maintain, operate, repair and replace
the Systems and
Equipment, including any of the same in, through, under or above
the Premises in
locations that will not materially interfere with Tenant's use
of the Premises,
are hereby excepted and reserved by Landlord, and not demised to
Tenant. If the
Building shall be part of a complex, development or group of
buildings or
structures collectively owned or managed by Landlord or its
affiliates or
collectively managed by Landlord's managing agent, the Property
shall, at
Landlord's option also be deemed to include such other of those
buildings or
structures as Landlord shall from time to time designate, and
shall initially
include such buildings and structures (and related facilities
and parcels on
which the same are located) as Landlord shall have incorporated
by reference to
the total square footage of the Property in Article 1. However,
no inclusion of
other such buildings and structures (and related facilities and
parcels on which
the same are located) within the definition of Property (and the
allocation of
the costs of such other properties hereunder) shall increase the
amount payable
by Tenant hereunder for Taxes or Operating Expenses.
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(L) "Rent" shall have the meaning specified therefor in Article
3(G).
(M) "Systems and Equipment" shall mean any plant, machinery,
transformers,
duct work, cable, wires, and other equipment, facilities, and
systems designed
to supply heat, ventilation, air conditioning and humidity or
any other services
or utilities, or comprising or serving as any component or
portion of the
electrical, gas, steam, plumbing, sprinkler, communications,
alarm, security, or
fire/life/safety systems or equipment, or any other mechanical,
electrical,
electronic, computer or other systems or equipment for the
Property.
(N) "Taxes" shall mean all federal, state, county, or local
governmental
or municipal taxes, fees, charges or other impositions of every
kind and nature,
whether general, special, ordinary or extraordinary (including
without
limitation, real estate taxes, general and special assessments,
transit taxes,
water and sewer rents, taxes based upon the receipt of rent
including gross
receipts or sales taxes applicable to the receipt of rent or
service or value
added taxes (unless required to be paid by Tenant under Article
17), personal
property taxes imposed upon the fixtures, machinery, equipment,
apparatus,
Systems and Equipment, appurtenances, furniture and other
personal property used
in connection with the Property which Landlord shall pay during
any calendar
year, any portion of which occurs during the Term (without
regard to any
different fiscal year used by such government or municipal
authority) because of
or in connection with the ownership, leasing and operation of
the Property.
Notwithstanding the foregoing, there shall be excluded from
Taxes all excess
profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and
succession taxes, estate taxes, federal and state income taxes,
and other taxes
to the extent applicable to Landlord's general or net income (as
opposed to
rents, receipts or income attributable to operations at the
Property). If the
method of taxation of real estate prevailing at the time of
execution hereof
shall be, or has been altered, so as to cause the whole or any
part of the taxes
now, hereafter or heretofore levied, assessed or imposed on real
estate to be
levied, assessed or imposed on Landlord, wholly or partially, as
a capital levy
or otherwise, or on or measured by the rents received therefrom,
then such new
or altered taxes attributable to the Property shall be included
within the term
"Taxes," except that the same shall not include any enhancement
of said tax
attributable to other income of Landlord. Any expenses incurred
by Landlord in
attempting to protest, reduce or minimize Taxes shall be
included in Taxes in
the calendar year such expenses are paid. Tax refunds shall be
deducted from
Taxes in the year they are received by Landlord, but if such
refund shall relate
to taxes paid in a prior year of the Term, and the Lease shall
have expired,
Landlord shall mail Tenant's Prorata Share of such net refund
(after deducting
expenses and reasonable attorneys' fees), to Tenant's last known
address. If
Taxes to which such refund applied for any period during the
Term or any
extension thereof, shall be increased after payment thereof by
Landlord, for any
reason including without limitation or reassessment by
applicable governmental
or municipal authorities, Tenant shall pay Landlord upon demand
Tenant's Prorata
Share of such increased Taxes. Tenant shall pay increased Taxes
whether Taxes
are increased as a result of increases in the assessment or
valuation of the
Property (whether based on a sale, change in ownership or
refinancing of the
Property or otherwise), increases in the tax rates, reduction or
elimination of
any rollbacks or other deductions available under currant law,
scheduled
reductions of any tax abatement, as a result of the elimination,
invalidity or
withdrawal of any tax abatement, or for any other cause
whatsoever.
Notwithstanding the foregoing, if any Taxes shall be paid based
on assessments
or bills by a governmental or municipal authority using a fiscal
year other than
a calendar year, Landlord may elect to
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average the assessments or bills for the subject calendar year,
based on the
number of months of such calendar year included in each such
assessment or bill.
Tenant's contribution to expenses and reasonable attorneys' fees
associated with
a contest as to the Taxes shall be equal to Tenant's Prorata
Share applied to
the total of such expenses and fees.
(O) "Tenant's Prorata Share" of Taxes and Operating Expenses
shall be the
rentable area of the Premises divided by the rentable area of
the Property,
excluding any parking facilities. Tenant acknowledges that the
"rentable area of
the Premises" under this Lease includes the usable area, without
deduction for
columns or projections, multiplied by a load or conversion
factor, to reflect a
share of certain areas, which may include lobbies, corridors,
mechanical,
utility, janitorial, boiler and service rooms and closets,
restrooms, and other
public, common and service areas. Except as provided expressly
to the contrary
herein, the "rentable area of the Property" shall include all
rentable area of
all space leased or available for lease at the Property, which
Landlord may
reasonably re-determine from time to time, to reflect
re-configurations,
additions or modifications to the Property. If the Property or
any development
of which it is a part, shall contain non-office uses, Landlord
shall have the
right to determine in accordance with sound accounting and
management
principles, Tenant's Prorata Share of Taxes and Operating
Expenses for only the
office portion of the Property or of such development, in which
event, Tenant's
Prorata Share shall be based on the ratio of the rentable area
of the Premises
to the rentable area of such office portion. Similarly, if the
Property shall
contain tenants who do not participate in all or certain
categories of Taxes or
Operating Expenses on a prorata basis, Landlord may exclude the
amount of Taxes
or Operating Expenses, or such categories of the same, as the
case may be,
attributable to such tenants, and exclude the rentable area of
their premises,
in computing Tenant's Prorata Share so long as such adjustments
do not increase
the amount of Taxes or Operating Expenses otherwise payable by
Tenant hereunder
had such tenants participated in all or certain categories of
Taxes or Operating
Expenses on a prorata basis. If the Property shall be part of or
shall include a
complex, development or group of buildings or structures
collectively owned or
managed by Landlord or its affiliates or collectively managed by
Landlord's
managing agent, Landlord may allocate Taxes and Operating
Expenses within such
complex, development or group, and between such buildings and
structures and the
parcels on which they are located, in accordance with sound
generally acceptable
accounting and management principles. In the alternative,
Landlord shall have
the right to determine, in accordance with sound accounting and
management
principles, Tenant's Prorata Share of Taxes and Operating
Expenses based upon
the totals of each of the same for all such buildings and
structures, the land
constituting parcels on which the same are located, and all
related facilities,
including common areas and easements, corridors, lobbies,
sidewalks, elevators,
loading areas, parking facilities and driveways and other
appurtenances and
public areas, in which event Tenant's Prorata Share shall be
based on the ratio
of the rentable area of the Premises to the rentable area of all
such buildings.
To the extent that the rentable square footage of the Premises
changes during
any calendar year (or other period during which the allocation
of Taxes and
Operating Expenses to tenants of the Building occurs),
adjustments shall be made
to Tenant's Prorata Share to properly account for the allocation
of Taxes and
Operating Expenses based upon the rentable area of the Premises
prior to such
change and the rentable area of the Premises thereafter.
29
<PAGE>
ARTICLE 26
CONVEYANCE BY LANDLORD AND LIABILITY
In case Landlord or any successor owner of the Property or the
Building
shall convey or otherwise dispose of any portion thereof in
which the Premises
are located, to another Person (and nothing herein shall be
construed to
restrict or prevent such conveyance or disposition), such other
Person shall
thereupon be and become landlord hereunder and shall be deemed
to have fully
assumed and be liable for all obligations of this Lease to be
performed by
Landlord which first arise after the date of conveyance,
including the return of
any Security Deposit, and Tenant shall attorn to such other
Person, and Landlord
or such successor owner shall, from and after the date of
conveyance, be free of
all liabilities and obligations hereunder not then incurred. The
liability of
Landlord to Tenant for any default by Landlord under this Lease
or arising in
connection herewith or with Landlord's operation, management,
leasing, repair,
renovation, alteration, or any other matter relating to the
Property or the
Premises, shall be limited to the interest of Landlord in the
Property (and the
rental proceeds thereof). Tenant agrees to look solely to
Landlord's interest in
the Property (and the rental proceeds thereof) for the recovery
of any judgment
against Landlord, and Landlord shall not be personally liable
for any such
judgment or deficiency after execution thereon. The limitations
of liability
contained in this Article shall apply equally and inure to the
benefit of
Landlord's present and future partners, beneficiaries, officers,
directors,
trustees, shareholders, agents and employees, and their
respective partners,
heirs, successors and assigns. Under no circumstances shall any
present or
future general or limited partner of Landlord (if Landlord is a
partnership), or
trustee or beneficiary (if Landlord or any partner of Landlord
is a trust) have
any liability for the performance of Landlord's obligations
under this Lease.
Notwithstanding the foregoing to the contrary, Landlord shall
have personal
liability for insured claims, beyond Landlord's interest in the
Property (and
rental proceeds thereof), to the extent of Landlord's liability
insurance
coverage available for such claims.
ARTICLE 27
INDEMNIFICATION
Except to the extent arising from the intentional or negligent
acts of
Landlord or Landlord's agents or employees, Tenant shall defend,
indemnify and
hold harmless Landlord from and against any and all claims,
demands,
liabilities, damages, judgments, orders, decrees, actions,
proceedings, fines,
penalties, costs and expenses, including without limitation,
court costs and
reasonable attorneys' fees arising from or relating to any loss
of life, damage
or injury to person, property or business occurring in or from
the Premises, or
caused by or in connection with any violation of this Lease or
use of the
Premises or Property by, or any other act or omission of,
Tenant, any other
occupant of the Premises, or any of their respective agents,
employees,
contractors or business invitees. Without limiting the
generality of the
foregoing, Tenant specifically acknowledges that the indemnity
undertaking
herein shall apply to claims in connection with or arising out
of any "Work" as
described in Article 8, the installation, maintenance, use or
removal of any
"Lines" located in or serving the Premises as described in
Article 29, and the
transportation, use, storage, maintenance, generation,
manufacturing, handling,
disposal, release or discharge of any "Hazardous Material"
as
30
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described in Article 30 (whether or not any of such matters
shall have been
theretofore approved by Landlord), except to the extent that any
of the same
arises from the intentional or negligent acts of Landlord or
Landlord's agents
or employees. Notwithstanding any of the foregoing to the
contrary, Tenant shall
not in any way be required to indemnify or hold Landlord
harmless against any
damage or injury resulting from any material breach by Landlord
of its
obligations under this Lease, or resulting from the negligence
or willful
misconduct of Landlord, or its agents, servants, contractors or
employees.
Landlord shall defend, indemnify and hold Tenant harmless from
and against any
and all claims, demands, liabilities, damages, judgments,
orders, decrees,
actions, proceedings, fines, penalties, costs and expenses,
including without
limitation, court costs and reasonable attorneys' fees, arising
in any way out
of the negligence or intentional acts of Landlord, its agents,
servants or
employees, or from Landlord's violation of laws, ordinances, or
governmental
orders of any kind or resulting from Landlord's breach of the
Lease, which
breach is not cured within the applicable time period provided
in the Lease.
ARTICLE 28
SAFETY AND SECURITY DEVICES, SERVICES AND PROGRAMS
The parties acknowledge that safety and security devices,
services and
programs provided by Landlord, if any, while intended to deter
crime and ensure
safety, may not in given instances prevent theft or other
criminal acts, or
ensure safety of persons or property. The risk that any safety
or security
device, service or program may not be effective, or may
malfunction, or be
circumvented by a criminal, is assumed by Tenant with respect to
Tenant's
property and interests, and Tenant shall obtain insurance
coverage to the extent
Tenant desires protection against such criminal acts and other
losses, as
further described in Article 11. Tenant agrees to cooperate in
any reasonable
safety or security program developed by Landlord or required by
law. Landlord
will permit the installation by Tenant of additional card key
readers to provide
access to the Premises from the elevator lobbies or common
corridors and in the
Building fire stairs, which readers may be connected to the
Building card key
access system. Tenant shall pay the costs of supplying,
installing, maintaining
and connecting such readers to the Building system, but no other
charges shall
be imposed upon Tenant with regard to the operation of that
system. The Building
will provide a reasonable number of access cards with
programming free upon
occupancy. Additional cards or changes will be implemented based
upon the
following costs:
(i) $6.00 to program or delete an existing card;
(ii) $16.00 for unreturned "lost" cards;
(iii) $6.00 to provide and program a new card; or
(iv) $22.00 for a replacement card and reprogramming.
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ARTICLE 29
COMMUNICATIONS AND COMPUTER LINES
Tenant may install, maintain, replace, remove or use any
communications or
computer wires, cables and related devices (collectively the
"Lines") at the
Property in or
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