Exhibit 10.16
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
1. Basic Provisions ("Basic Provisions").
1.1 Parties. This Lease ("Lease"), dated March 8, 2002 ("Effective Date"), is
made by and between ORIX Otay, LLC, an Illinois limited liability company
("Landlord") and FACTORY 2-U STORES, INC., a Delaware corporation ("Tenant")
(collectively the "Parties," or individually a "Party").
1.2 Premises; Land; Improvements. For purposes of this Lease, the "Premises"
shall mean, collectively: (i) the "Land," which for purposes hereof shall mean
that certain real property more particularly described on Exhibit "A" attached
hereto, containing approximately 31.32 acres of area, located in the Otay Mesa
area in the City of San Diego, County of San Diego, State of California; (ii)
the "Improvements" (as defined in the Work Letter attached hereto as Exhibit "B"
(the "Work Letter")), which includes that certain 1-story concrete tilt-up
warehouse/distribution building containing approximately 600,000 rentable square
feet to be constructed by Landlord on the Land under the terms of this Lease
(the "Building"), all parking areas, driveways and entrances and exits to public
streets and landscaped areas located on the Land, and (iii) all easements and
other public and private rights now or hereafter appurtenant to the Land and the
Improvements.
1.3 Lease Term. The initial term of this Lease (the "Original Term") shall be
for twelve (12) years and three (3) months, commencing on the Commencement Date,
as that term is defined in Paragraph 3, below, and ending on the last day of the
calendar month in which the date which is one hundred forty-seven (147) months
thereafter falls, subject to early termination as provided in this Lease or
extension pursuant to Paragraph 47 below (the "Expiration Date"). In the event
that Tenant elects to extend the Original Term by exercising one or more of the
Options to Extend (defined in Paragraph 47.1 below), the Expiration Date shall
mean the last day of the final exercised Option Term (defined in Paragraph 47.1
below) subject to early termination as provided in this Lease. The Original Term
and any Option Term (which results from Tenant's exercise of an Option to Extend
pursuant to Paragraph 47 below) are collectively referred to herein as the
"Lease Term" or the "Term."
1.4 Base Rent.
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(a) Base Rent. The monthly base rent ("Base Rent") payable by Tenant under this
Lease during the Original Term shall be as set forth below in this Paragraph
1.4(a) for the Lease Months (as defined in Paragraph 1.4(b) below) during the
Original Term. The Base Rent shall be payable on or before the first day of each
calendar month during the Lease Term in accordance with the requirements of
Paragraph 4.
Lease Months During
Original Term Monthly Installment of Base Rent
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1-3 "Early Occupancy Period" (defined in Paragraph 4.3 below).
4-63 The product of (i) 0.105 (the "Base Rent Factor")
and (ii)one-twelfth (1/12) of the Improvement Costs (as
defined in the Work Letter)(each such monthly installment
is referred to herein as "First Period Monthly Base
Rent"). Based upon the initial pro forma budget for
Improvements Costs, the initial pro forma First Period
Monthly Base Rent shall be $214,375.00 per month (the
"Pro Forma First Period Monthly Base Rent"), which Pro
Forma First Period Monthly Base Rent shall be subject to
adjustment pursuant to Section 2.3 of the Work Letter.
64-123 The sum of (i) First Period Monthly Base Rent and (ii) an
amount equal to twelve and one-half percent (12 1/2%) of
the First Period Monthly Base Rent (collectively "Second
Period Monthly Base Rent").
124-Last The sum of (i) the Second Period Monthly Base Rent and
(ii) an amount equal to eleven and three-quarters percent
(11-3/4%) of the Second Period Monthly Base Rent.
(b) The term "Lease Month(s)" shall mean each calendar month during the Lease
Term subject to proration, if applicable, in accordance with Paragraph 4.2
below.
1.5 Intentionally Omitted.
1.6 Letter of Credit.
(a) Pursuant to Paragraph 5 below, (i) concurrently with the delivery by
Landlord to Escrow Holder of the Additional Deposit and the Due Diligence
Approval (each defined in the Purchase Agreement (defined in the Work Letter))
and delivery to Tenant in cash of an amount equal to the Reimbursed Costs
(defined below) pursuant to Paragraph 2.2.4(d), Tenant shall deliver to Landlord
an original irrevocable letter of credit in the amount of One Million Dollars
($1,000,000.00) and otherwise conforming to the requirements of Paragraph 5
applicable to the Pre-Closing LC (the "Pre-Closing LC").
(b) On or before the Closing Date (defined in the Purchase Agreement), Tenant
shall cause to be issued to Landlord an additional irrevocable letter of credit
(in substitution for the Pre-Closing LC) in the amount of the LC Amount (defined
in Paragraph 5.1(c) below) (the "Primary LC") and otherwise conforming to the
requirements of Paragraph 5 applicable to the Primary LC; provided, however,
that as a condition of Tenant's obligation to deliver the Primary LC to
Landlord, concurrently with such delivery, Landlord shall return the Pre-Closing
LC to Tenant.
1.7 Agreed Use. The Premises shall be used for warehouse, distribution, light
manufacturing and office uses and all legally permitted uses incidental thereto
(the "Agreed Use").
1.8 Broker.
The following real estate broker and brokerage relationship
exist in this transaction. The Staubach Company represents Tenant exclusively as
Tenant's real estate broker (the "Broker"), and no other brokerage relationship
exists in this transaction (See Paragraph 15(b).
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1.9 Addresses for Notices. The addresses for notices of the Parties under
this Lease shall be as follows:
(a) If to Landlord: ORIX Otay, LLC
c/o ORIX Real Estate Equities, Inc.
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(b) If to Tenant: Factory 2-U Stores, Inc.
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Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
At all times with a copy to: Factory 2-U Stores, Inc.
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Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
At all times with a copy to: Paul, Hastings, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, LLP
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Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
1.10 Exhibits and Riders. Attached hereto are Exhibits "▇," "▇," "C," "D,"
"E," "F," and "G" all of which constitute a part of this Lease.
2. Premises.
2.1 Letting. Subject only to (i) its acquisition of the Land pursuant to the
provisions of the Purchase Agreement (defined in the Work Letter), and (ii) the
terms, covenants and conditions of this Lease, (a) Landlord hereby leases to
Tenant, and Tenant hereby leases from Landlord, the Premises, for the Lease
Term, at the rental, and upon (and subject to) all of the terms, covenants and
conditions set forth in this Lease, and (b) Landlord agrees to cause the
Improvements to be constructed pursuant to the terms of the Work Letter and (c)
except as otherwise expressly provided for in the Work Letter or in this Lease,
Landlord shall not be obligated to make any repairs, replacements or
improvements (whether structural or otherwise) of any kind or nature to the
Premises in connection with, or in consideration of, this Lease.
2.2 Development of the Premises.
2.2.1 Acquisition of the Land.
(a) Tenant and Sunroad Otay Partners, L.P. are the purchaser and seller
("Seller"), respectively, under the Purchase Agreement (defined in the Work
Letter). Pursuant to Paragraph 19 of the Purchase Agreement, Tenant is permitted
to assign each and all of its rights and obligations under the Purchase
Agreement to Landlord (without the consent of the Seller under the Purchase
Agreement) at any time following delivery to Seller of a fully executed copy of
this Lease.
(b) Promptly following full execution of this Lease by Landlord and Tenant (and
concurrently with Landlord's delivery to Escrow Holder of the Approval Notice
(defined in the Purchase Agreement) and Landlord's delivery to Tenant of the
Reimbursed Costs pursuant to Paragraph 2.2.4(d)), Landlord and Tenant shall
execute and deliver to Seller (and to one another) an original counterpart of
the Assignment of Purchase Agreement (defined in the Work Letter) (and shall
deliver to Seller a copy of this Lease), and Tenant shall deliver to Landlord
the Pre-Closing LC pursuant to Paragraph 1.6(a) of this Lease.
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(c) Landlord shall use its commercially reasonable good faith efforts (which is
a material inducement for Tenant to enter into this Lease) to diligently pursue
all governmental approvals and entitlements required or necessary for
development and construction of the Premises in accordance with this Lease,
provided that Tenant shall use its commercially reasonable good faith efforts to
cooperate with Landlord to facilitate said pursuit.
(d) Subject to the provisions of this Paragraph 2.2, Landlord shall acquire fee
title to the Land in accordance with the provisions of the Purchase Agreement,
provided that Tenant shall use its commercially reasonable good faith efforts to
cooperate with Landlord to facilitate said acquisition.
2.2.2 Engagement of Architects and Consultants.
In order to facilitate construction of the Improvements in
accordance with the timing needs of Landlord and Tenant, Tenant has an oral
agreement with "Contractor's Architect" (as defined in the Work Letter) to
prepare the Construction Drawings (defined in the Work Letter) and Contractor's
Architect is in the course of preparing the Construction Drawings. Tenant also
has a written agreement with ▇▇▇▇▇▇-▇▇▇▇ & Associates, Inc. ("▇▇▇▇▇▇-▇▇▇▇") with
respect to engineering due diligence for the acquisition of the Land and
construction of the Improvements. Concurrently with the Parties' execution and
delivery of the Assignment of the Purchase Agreement pursuant to Paragraph
2.2.1, (i) Tenant shall endeavor to ensure that Contractor's Architect and
▇▇▇▇▇▇-▇▇▇▇ shall each deliver to "Contractor" (defined in the Work Letter) a
letter of agreement (each a "Letter Agreement") pursuant to which Contractor's
Architect and ▇▇▇▇▇▇-▇▇▇▇ shall assume (and agree to perform) all of the accrued
and prospective obligations then owed by Contractor's Architect and ▇▇▇▇▇▇-▇▇▇▇
to Tenant under their respective agreements, (ii) Landlord shall cause
Contractor to engage Contractor's Architect and ▇▇▇▇▇▇-▇▇▇▇ to continue to
perform their obligations pursuant to their respective agreements, and (iii)
Tenant shall assign all of its rights with respect to, and Landlord shall assume
(or cause Contractor to assume), in a writing satisfactory to Tenant and
Landlord, all of Tenant's accrued obligations to ▇▇▇▇▇▇-▇▇▇▇ and Contractor's
Architect with respect to preparation of the Construction Drawings and
performance of engineering and due diligence for acquisition of the Land.
2.2.3 Pursuit of Entitlements; Development Schedule. Landlord and Tenant have
previously commenced pursuit of, and, subject to the terms of Paragraph 2.2.5,
Landlord shall continue to pursue, all governmental approvals and entitlements
required for development, construction and use of the Improvements on a basis
consistent with this Lease and the Work Letter (collectively, the
"Entitlements").
2.2.4 Due Diligence and Other Performance under the Purchase Agreement by
Landlord.
(a) Commencing promptly following execution of this Lease, Landlord shall
continue its due diligence investigation with respect to acquisition of the Land
and development of the Improvements for occupancy by Tenant pursuant to the
provisions of this Lease for completion on or before February 26, 2002,
including without limitation, for itself and on behalf of Tenant, conducting a
review of the Seller's books and records described in Section 5.1.4 of the
Purchase Agreement and review and negotiation of all of the matters described in
Paragraph 5.1.1 of the Purchase Agreement (including, without limitation,
negotiation of the Approved Property Subdivision Map, the Approved Subdivision
Improvement Agreement, and the Improvement Agreement (each of which are defined
in the Purchase Agreement).
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(b) Landlord shall promptly keep Tenant informed of all material events,
notices, communications and due diligence review results and progress during the
Due Diligence Period and prior to the Closing under the Purchase Agreement and
shall make arrangements for representatives of Tenant to have the opportunity to
attend and participate in all material meetings involving Contractor's
Architect, ▇▇▇▇▇▇-▇▇▇▇, the Seller, the City and other relevant parties prior to
the Closing. In turn, Tenant shall make commercially reasonable efforts to
promptly cooperate with all of Landlord's requests for coordination with
Contractor's Architect, the Seller, the City and ▇▇▇▇▇▇-▇▇▇▇ to permit
Landlord's pursuit of the due diligence investigation and the Entitlements (on
behalf of Tenant) and the performance under the Purchase Agreement at all times
through the Closing.
(c) On or before February 26, 2002, Landlord and Tenant shall meet to review the
results of Landlord's due diligence review as contemplated by this Section
2.2.4. Subject to Paragraph 2.2.5, provided Tenant has previously assigned the
Purchase Agreement to Landlord and has delivered to Landlord the Pre-Closing LC,
Landlord shall to deliver to Seller and Escrow Holder (as appropriate) on or
before 5:00 p.m., San Diego time, February 26, 2002 the Approval Notice (defined
in Paragraph 5.1.8 of the Purchase Agreement) required to maintain the Purchase
Agreement in full force and effect as of the expiration of the Due Diligence
Period. Subject to the provisions of Paragraph 2.2.5, Landlord shall (i) timely
deliver to Escrow Holder all cash deposits (other than the Initial Deposit and
the Additional Deposit previously delivered by Tenant to Seller), including,
without limitation, the Extension Deposits (defined in the Purchase Agreement)
required or permitted to be made by Landlord as the purchaser under the Purchase
Agreement in order to have additional time to obtain the Approvals and/or
maintain the Purchase Agreement in full force and effect, (ii) deliver to Escrow
Holder and Seller, the Notice to Proceed and the Final Deposit (each as defined
in Paragraph 3.6 of the Purchase Agreement), (iii) timely perform each of the
purchaser's obligations under Paragraphs 5.1, 13.1 and 13.2 of the Purchase
Agreement and (iv) otherwise take all commercially reasonable steps as shall
otherwise be necessary to maintain the Purchase Agreement in full force and
effect.
(d) Concurrently with Tenant's assignment of the Purchase Agreement and delivery
of the Pre-Closing LC to Landlord and Landlord's delivery to Escrow Holder of
the Approval Notice, Landlord shall deliver to Tenant (by wire transfer) in
immediately available funds the amount of Seven Hundred Two Thousand One Hundred
Twenty-Nine Dollars ($702,129.00) (the "Reimbursed Costs") representing the
Initial Deposit and the Additional Deposit plus a portion (described on Exhibit
"C" attached hereto) of Tenant's out-of-pocket expenses (actually paid by
Tenant) (including, without limitation, architectural, engineering, legal and
entitlements expenses) in connection with the transaction contemplated hereunder
and due diligence costs of Tenant.
2.2.5 Termination of Purchase Agreement and this Lease.
2.2.5.1 Grounds.
Landlord shall have the right to terminate this Lease and the
Purchase Agreement (subject to the circumstances set forth in Paragraph 2.2.5.4)
at any time (subject to the provisions of this Section 2.2.5) prior to closing
("Closing") its purchase of the Land under the Purchase Agreement (or if
specified below, prior to an earlier date specified below) for only one or more
of the following reasons:
(a) Site Specific Due Diligence Problems. Landlord reasonably determines prior
to the expiration of the Due Diligence Period that acquisition of the Land is
not commercially feasible due solely to one or more specific site-specific
issues relating to (i) the condition or physical characteristics of the Land,
(ii) the nature, timing, conditions, exactions or status of the Entitlements (or
any adverse zoning or land use condition), or (iii) the condition of title to
the Land. Notwithstanding any provision of this Lease to the contrary, if Tenant
reasonably determines that any fact discovered concerning the physical condition
of the Land, title to the Land or the nature, timing or conditions of the
Entitlements (other than purely economic conditions) is materially inconsistent
with its good faith objectives for (or materially reduces the benefits of its
prospective) use and occupancy of the Premises, Tenant may, by delivery of
written notice to Landlord prior to expiration of the Due Diligence Period,
require Landlord to promptly terminate the Purchase Agreement.
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(b) Sale of Tenant. There shall occur any sale of all or substantially all of
the assets of Tenant, any sale of all or substantially all of the outstanding
stock of Tenant, or any merger or reorganization of Tenant occurring prior to
the Closing Date (defined in the Purchase Agreement) which results in a
reduction in the net worth of Tenant (or any corporate successor to Tenant)
(immediately following such sale, merger or reorganization), as generally
determined in accordance with such filings as made by Tenant to the Securities
and Exchange Commission, from the net worth of Tenant set forth in Tenant's most
recent Form 10-Q filed by Tenant with the Securities and Exchange Commission for
the calendar quarter ending October 31, 2001; provided, however, that Landlord's
right to terminate this Lease under this Paragraph 2.2.5.1(b) shall
automatically terminate (and shall be of no further force or effect)
concurrently with Landlord's delivery of the Notice to Proceed (defined in the
Purchase Agreement).
(c) Material Financial Decline. There shall occur any decline in Tenant's
Stockholders Equity ("Stockholders Equity") (as calculated in Tenant's audited
financial statements dated May, 2001 (the "May Financials") reported in any Form
10-K or Form 10-Q filing by Tenant prior to the Closing Date (defined in the
Purchase Agreement) in an amount greater than forty percent (40%) of the
Stockholders Equity of Tenant reported in the May Financials; provided, however,
that Landlord's rights to terminate this Lease under this Paragraph 2.2.5.1 (c)
shall automatically terminate (and shall be of no further force or effect)
concurrently with Landlord's delivery of the Notice to Proceed.
(d) Bankruptcy. There shall occur any voluntary filing in bankruptcy by Tenant
occurring prior to the Closing Date (defined in the Purchase Agreement), or any
involuntary filing in bankruptcy against Tenant occurring prior to the Closing
Date which is not dismissed within sixty (60) days thereafter.
(e) Tenant Breach. Prior to the Closing Date, there shall occur any Tenant
Breach of this Lease under Paragraph 13.1; provided, that nothing contained in
this Paragraph 2.2, shall limit Landlord's remedies under Paragraph 13.2 for a
Tenant Breach occurring on or after the Closing.
(f) Nonissuance of the Approvals. The nonissuance or disapproval of the
Approvals (defined in the Purchase Agreement) under circumstances where no
further extensions of the Closing are permitted under the Purchase Agreement
under any circumstances without payment of an extension fee.
(g) Seller Default. Landlord terminates the Purchase Agreement on account of the
existence of a material Seller default under the Purchase Agreement (which
entitles Landlord to so terminate the Purchase Agreement pursuant to the
provisions thereof).
2.2.5.2 Substitute Purchase Agreement. In the event Landlord shall terminate the
Purchase Agreement (or Tenant shall require Landlord to terminate the same)
pursuant to Paragraph 2.2.5.1(a): (a) the parties shall cooperatively work
together in good faith until April 15, 2002 to attempt to identify a new site to
be substituted for the Land ("Alternate Site"); (b) in the event that the
Parties do identify (prior to April 15, 2002, or any later date on which both
Parties, in the exercise of their sole and absolute discretion, shall agree) an
Alternate Site which is acceptable in good faith to both Parties (and with
respect to which all terms relating to the acquisition and development thereof
are acceptable to both Parties), the Parties shall promptly execute and deliver
an amendment to this Lease ("Alternate Site Amendment") addressing the issues
raised by the acquisition of such Alternate Site, including, without limitation,
the schedule of development and construction therefor; and (c) in the event that
the Parties do not execute and deliver an Alternate Site Amendment prior to
April 15, 2002, at any time following April 15, 2002, either Party hereto may
(in the exercise of such Party's sole and absolute discretion) terminate this
Lease, effective upon delivery of written notice to the other party hereto.
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2.2.5.3 Termination of this Lease.
(a) In the event that this Lease shall be terminated by Landlord pursuant to
Paragraph 2.2.5.1(b), (c), (d) or (e): (i) Tenant shall, in satisfaction of all
liabilities and obligations owed to Landlord hereunder, reimburse Landlord,
within the earlier of the date of reassignment of the Purchase Agreement by
Landlord to Tenant under Paragraph 2.2.5.4 below, or thirty (30) days of receipt
by Tenant of Landlord's reasonably detailed invoice therefor (which shall
enclose reasonable supporting documentation), for all out-of-pocket expenses
incurred in any manner prior to the date of such termination by Landlord in
connection with the negotiation and performance of this Lease, and pursuit of
purchase of the Land including, without limitation, all costs incurred in
pursuit of any Entitlements and all Improvement Costs (defined in the Work
Letter) so paid or incurred, all deposits under the Purchase Agreement not
refunded to Landlord, and any extension payments under the Purchase Agreement
and including the Reimbursed Costs ("Landlord's Out of Pocket Expenses"), (ii)
immediately upon delivery of such reimbursement (in accordance with the
preceding clause (i)) by Tenant to Landlord, Landlord shall return the
Pre-Closing LC to Tenant, and (iii) upon performance by the Parties under the
preceding clauses (i) and (ii), subject to the provisions of Paragraph 2.2.5.4,
all other obligations of each Party hereto to the other Party hereunder shall
automatically terminate and be of no further force or effect. In the event that
Tenant shall not fully reimburse Landlord for Landlord's Out of Pocket Expenses
within the applicable period described in clause (i) above, Landlord may draw
under the Pre-Closing LC an amount equal to its unreimbursed Landlord Out of
Pocket Expenses. To the extent the Pre-Closing LC does not fully reimburse
Landlord in full for Landlord's Out of Pocket Expenses, Landlord may pursue
against Tenant payment by Tenant for any such deficiency and Tenant shall remain
liable for its obligations to Landlord for any remaining unpaid Landlord's Out
of Pocket Expenses.
(b) In the event that this Lease shall be terminated by either Landlord or
Tenant under Paragraph 2.2.5.1(a), Paragraph 2.2.5.1(f) or Paragraph 2.2.5.2,
(i) Tenant shall reimburse Landlord, within thirty (30) days of receipt by
Tenant of a reasonably detailed invoice from Landlord therefor, for fifty
percent (50%) of all fees and expenses incurred or reimbursed by Landlord in
favor of Contractor's Architect and ▇▇▇▇▇▇-▇▇▇▇ in connection with the site due
diligence and preparation of the Construction Drawings, (ii) within the time
period specified in clause (i), Tenant shall reimburse Landlord for $100,000.00
of the Reimbursed Costs previously delivered by Landlord to Tenant, (iii) each
Party shall bear all of their other costs and expenses (without further
reimbursement by the other Party hereto), (iv) the Parties shall perform their
respective obligations under Paragraph 2.2.5.4, and, provided Landlord receives
all of the amounts owed to Landlord described in clauses (i), (ii) and (iii)
above, Landlord shall return the Pre-Closing LC to Tenant and (v) each and all
of the other rights and obligations of the Parties hereunder (other than under
clauses (i), (ii) (iii) and (iv) above) shall automatically terminate and shall
be of no further force or effect. In the event that this Lease is terminated by
Landlord under this Paragraph 2.2.5.3(b), and Tenant does not fully reimburse
Landlord as required under this Paragraph 2.2.5.3(b) within the time period
specified above, Landlord may draw under the Pre-Closing LC an amount equal to
the amounts still owed to Landlord by Tenant pursuant to this Paragraph
2.2.5.3(b).
(c) In the event that this Lease is terminated by Landlord under Paragraph
2.2.5.1(g), (i) Tenant shall reimburse Landlord for $100,000.00 of the
Reimbursed Costs previously delivered by Landlord to Tenant, (ii) Landlord
shall, immediately following receipt of such reimbursement in full from Tenant,
return the Pre-Closing LC to Tenant, (iii) each Party shall bear all of their
remaining costs and expenses (without further reimbursement by the other Party
hereto) and (iv) each and all of the other rights and obligations of the Parties
hereunder (other than under clauses (i), (ii) and (iii) above) shall
automatically terminate and shall be of no further force or effect.
(d) Notwithstanding any provision of this Paragraph 2.2 to the contrary, in the
event that the Land is not acquired by Landlord under the Purchase Agreement due
to either (i) breach of Landlord's obligations under the Purchase Agreement
(provided that any termination of this Lease by Landlord pursuant to Paragraphs
2.2.5.1(a), (b), (c), (d), (e), (f) and (g) shall in no case constitute such a
breach) or (ii) any material breach of Landlord's obligations under Paragraph
2.2 of this Lease, in addition and without prejudice to any other rights or
remedies Tenant may otherwise have with respect thereto hereunder, at law or in
equity, Tenant shall have no obligation to reimburse Landlord for any amount
relating to this Lease, the Purchase Agreement, the Property or any transaction
relating thereto, the preparation of plans for the Premises or any other matter
in connection therewith.
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2.2.5.4 Landlord Obligations with Respect to the Purchase Agreement.
In the event that this Lease shall be terminated by Landlord
under Paragraphs 2.2.5.1(a), (b), (c), (d) or (e), upon the request of Tenant
(delivered by Tenant to Landlord not later than the date ("Assignment Notice
Date") which is the earlier of (i) ten (10) days following delivery to Tenant by
Landlord of written notice of termination of this Lease; and (ii) one business
day prior to the last date for delivery of the Notice to Proceed required under
the Purchase Agreement (and in the case of Paragraph 2.2.5.1(a), Tenant must
notify Landlord of such assignment)), Landlord shall promptly (not later than
the date ("Reassignment Deadline") five (5) business days thereafter or in any
event the last date for delivering of the Notice to Proceed under the Purchase
Agreement) assign the Purchase Agreement and in connection therewith, take such
action, at no cost or additional liability to Landlord, as may be reasonably
requested of it by Tenant, including, without limitation, the execution and
delivery of assignment documents, in order to provide for the assignment to
Tenant of all of Landlord's rights as the purchaser under the Purchase Agreement
(provided, however, that as a condition of such assignment, Tenant shall be
required to concurrently pay to Landlord in cash by wire transfer the amount of
any cash purchase price deposits of Landlord then on deposit in Escrow in
connection with the Purchase Agreement together with any other amounts owed by
Tenant to Landlord as provided in this Paragraph 2.2) (including, in the event
of termination under Paragraph 2.2.5.1(b), (c), (d) or (e), Landlord's Out of
Pocket Expenses); provided, further, however, that in the case of an intentional
Tenant Breach, including Tenant's failure to maintain the Pre-Closing LC as
required by this Lease (and termination of this Lease on account of such
intentional Tenant Breach under Paragraph 2.2.5.1(e)), Tenant's rights under
this Paragraph 2.2.5.4 shall not be applicable and Landlord shall be entitled to
reimbursement of Landlord's Out of Pocket Expenses pursuant to Paragraph
2.2.5.3(a). In addition, if Tenant fails to timely (i.e., on or before the
Reassignment Deadline) deliver the amounts required by the preceding sentence,
then Landlord shall not be required to so assign the Purchase Agreement to
Tenant, and Landlord may exercise whatever rights or remedies Landlord deems
necessary or appropriate in connection therewith (subject, however, to the
limitations set forth in Paragraphs 2.2.5.3(a) and (b), as applicable),
including, without limitation, closing under (or termination of) the Purchase
Agreement and pursuing reimbursement (including, without limitation, through
draws by Landlord on the Pre-Closing LC as set forth in Paragraph 2.2.5.3) of
any amounts then payable to Landlord by Tenant pursuant to this Paragraph 2.2
2.2.6 Survival. Except as otherwise provided for in this Paragraph 2.2, the
terms of this Paragraph 2.2 shall survive the expiration or earlier termination
of this Lease.
2.3 Intentionally Deleted.
2.4 Condition. In accordance with (and subject to) the provisions of the Work
Letter, Landlord shall deliver the Premises (other than any Fixture Work, as
defined in the Work Letter) to Tenant (and Tenant shall accept the Premises from
Landlord) broom clean and free of debris (other than arising from any Fixture
Work) immediately upon the Commencement Date.
2.5 Acknowledgments. Tenant acknowledges that neither Landlord nor Landlord's
agents or employees has made any oral or written representations or warranties,
express or implied or arising by operation of law, with respect to the condition
of the Premises and the suitability or fitness for the Agreed Use, other than as
expressly set forth in this Lease and the Work Letter. Tenant's acceptance of
the Premises on the Commencement Date shall be on an "AS-IS," "WHERE-IS" basis,
without representation or warranty from Landlord with respect thereto, other
than as expressly set forth in this Lease and the Work Letter.
8
3. Lease Term. Subject to the provisions of Section 7.2.2 of the Work Letter,
the Original Term of this Lease (a) shall commence on the Commencement Date
(defined and calculated pursuant to Section 6.2 of the Work Letter), and (b)
shall end on the Expiration Date, unless sooner terminated as provided herein or
extended pursuant to Paragraph 47 below. Within thirty (30) days after the
Commencement Date, the Parties shall execute and deliver to each other a
Commencement Date Memorandum in the form attached hereto as Exhibit "D"
acknowledging (i) the Commencement Date and Expiration Date, and (ii) subject to
the provisions of Section 2.3 of the Work Letter, the First Period Monthly Base
Rent payable under this Lease. The terms and provisions of this Lease are
effective as of the date of execution of this Lease, except Tenant's obligation
to pay Base Rent (as defined in Paragraph 4.1 below), to the extent set forth in
Paragraph 4.3 hereof, which shall not commence until the Rent Commencement Date.
4. Rent.
4.1 Rent Defined. All monetary obligations of Tenant to Landlord under the terms
of this Lease, including, without limitation, Base Rent and Additional Rent (as
defined below), are deemed to be "Rent." All monetary obligations of Tenant
payable to Landlord under the terms of this Lease which do not constitute Base
Rent are deemed to be "Additional Rent."
4.2 Payment. Tenant shall pay Rent to Landlord in lawful money of the United
States, without notice, offset, abatement or deduction (except as may be
expressly and specifically permitted in this Lease), promptly on or before the
day on which it is due. Rent for any period during the Lease Term hereof which
is for less than one (1) full calendar month shall be prorated based upon the
actual number of days of said month. All payments of Rent shall be paid to ORIX
Real Estate Equities, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or such other entity designated as Landlord's management agent,
if any, and if Landlord so appoints such a management agent, the ("Agent"), or
pursuant to such other directions as Landlord shall designate in this Lease or
otherwise in writing, from time to time, not less than thirty (30) days in
advance of such applicable payment of Rent. No payment by Tenant, or receipt or
acceptance by Agent or Landlord, of a lesser amount than the correct Rent shall
be deemed to be other than a payment on account, nor shall any endorsement or
statement on any check or letter accompanying any payment be deemed an accord or
satisfaction, and Agent or Landlord may accept such payment without prejudice to
its right to recover the balance due or to pursue any other remedy available to
Landlord.
4.3 Early Occupancy Period. Notwithstanding any provision of this Lease to the
contrary, Tenant shall have no obligation to pay Base Rent for the period
consisting of Lease Months one (1) two (2) and three (3) of the Original Term
("Early Occupancy Period").
5. The Letter of Credit.
5.1 The Letter of Credit. Each letter of credit (a "Letter of Credit" or "LC")
described in this Lease or the Work Letter:
(a) shall be an irrevocable and unconditional Letter of Credit substantially in
the form of Exhibit "E" attached hereto; and
(b) shall be issued by The Chase Manhattan Bank or such other commercial bank,
trust company or national bank association having offices for banking and
drawing purposes in the City of San Diego or in the City of Los Angeles and
which (or the parent company of which) has a rating of at least "B" under the
▇▇▇▇▇'▇ rating standards ("Issuing Bank"); and
(c) in the case of the Primary LC, shall be in the amount of Two Million Six
Hundred Thousand and No/100 Dollars ($2,600,000.00) (the "LC Amount"); and
9
(d) shall name Landlord as the beneficiary thereunder; and
(e) shall be for an initial term of not less than one (1) year; and
(f) shall, in the case of the Primary LC, subject to the provisions of Paragraph
5.2, be maintained in full force and effect for ten (10) years from the Rent
Commencement Date; and
(g) shall permit multiple drawings; and
(h) shall be fully transferable by Landlord (provided that Landlord shall bear
at its sole cost and expense all commercially reasonable charges of the Issuing
Bank in connection with any such transfer and Tenant shall pay any excess
charges); and
(i) shall state that drafts drawn under and in compliance with the terms of the
Letter of Credit will by duly honored upon presentation of the original site
draft to the Issuing Bank at an office located in San Diego, California or Los
Angeles, California; and
(j) shall be subject in all respects to the Uniform Customs and Practice for
Documentary Credits (1993 revision), International Chamber of Commerce
Publication No. 500; and
(k) shall conform to the requirements of this Paragraph 5.
5.2 Reductions in Amount.
5.2.1 Reduction Preconditions. As a precondition to any reduction in the LC
Amount, Tenant shall meet each and every of the following "Reduction
Preconditions" prior to such reduction in the LC Amount described in this
Paragraph 5.2: (i) this Lease is in full force and effect, (ii) Tenant is not
then in Breach under this Lease, and (iii) Tenant has not assigned its interest
in this Lease or subleased any portion of the Premises in violation of the terms
of this Lease and such violation remains uncured; provided, however; that in the
event any Reduction Precondition is not satisfied as of a date the reduction in
the LC Amount would otherwise apply, such reduction in the LC Amount shall
automatically apply on the first date such Reduction Preconditions shall be
satisfied.
5.2.2 Scheduled Reductions. Subject to the provisions of this Paragraph 5.2 and
provided the LC Amount is not reduced by the 16.67% Amount (as defined in
Paragraph 5.2.3 below) or the 20% Amount (as defined in Paragraph 5.2.4 below),
on the ninth (9th) anniversary of the Rent Commencement Date the Letter of
Credit Amount of the Primary LC shall be reduced to fifty percent (50%) of the
original LC Amount and on the tenth (10th) anniversary of the Rent Commencement
Date, the Letter of Credit Amount of the Primary LC shall be reduced by an
additional fifty percent (50%) of the original LC Amount (such that the Primary
LC shall be eliminated on such date).
5.2.3 $40,000,000 Net Worth Reductions. Notwithstanding any provision of this
Lease to the contrary, subject to Paragraphs 5.2.4 and 5.2.5, (a) if the
Tangible Net Worth (defined below) of Tenant shall be Forty Million Dollars
($40,000,000.00) or more as of the fifth (5th) anniversary of the Rent
Commencement Date, on such date the LC Amount shall be reduced by an amount
equal to sixteen and two-thirds percent (16.67%) of the original LC Amount (the
"16.67% Amount"), and (b) provided that the Tangible Net Worth of Tenant shall
be equal to or greater than Forty Million Dollars ($40,000,000) (the "$40M
Test") on the sixth (6th), seventh (7th), eighth (8th), ninth (9th) and/or tenth
(10th) anniversary of the Rent Commencement Date, then as of each such
anniversary that the $40M Test is satisfied, the LC Amount shall be reduced by
an amount equal to the 16.67% Amount, such that if the $40M Test shall be
10
satisfied on each of the 5th, ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇ and 10th anniversaries of the
Rent Commencement Date, the LC Amount shall be reduced to zero (in equal annual
reductions) on the 10th anniversary of the Rent Commencement Date. "Tangible Net
Worth" of Tenant as of any particular date shall be equal to the amount
designated as stockholder's equity minus the amount of good will reported in
Tenant's then most recent Form 10-K or Form 10-Q filed with the Securities and
Exchange Commission (or if then more recent, reported in Tenant's most recent
audited financial statements). Notwithstanding anything to the contrary
contained herein, if any reduction in the LC Amount specified in this Paragraph
5.2.3 is given effect, then the reduction in the original LC Amount specified in
Paragraph 5.2.2 for the ninth anniversary of the Rent Commencement Date shall be
effective only if and to the extent the LC Amount then exceeds fifty percent
(50%) of the original LC Amount.
5.2.4 $75,000,000 Net Worth Reductions. Notwithstanding any provision of this
Lease to the contrary, subject to the provisions of Paragraph 5.2.5, (a) if the
Tangible Net Worth of Tenant shall be Seventy-Five Million Dollars
($75,000,000.00) or more as of the fifth (5th) anniversary of the Rent
Commencement Date, on such date the LC Amount shall be reduced by an amount
equal to twenty percent (20%) of the original LC Amount (the "20% Amount") and
(b) provided that the Tangible Net Worth of Tenant shall be equal to or greater
than Seventy-Five Million Dollars ($75,000,000.00) (the "$75M Test") on the
sixth (6th), seventh (7th), eighth (8th) and/or ninth (9th) anniversary of the
Rent Commencement Date, then as of each such anniversary that the $75M Test is
satisfied, the LC Amount shall be reduced by an amount equal to the 20% Amount,
such that if the $75M Test is satisfied on each of the 5th anniversary through
the 9th anniversaries of the Rent Commencement Date, the LC Amount shall be
reduced to zero as of the ninth anniversary of the Rent Commencement Date.
Notwithstanding anything to the contrary contained herein, (i) if any reduction
in the original LC Amount specified in this Paragraph 5.2.4 is given effect as
of a particular applicable anniversary of the Rent Commencement Date, then the
reductions specified in Paragraph 5.2.3 shall not also apply on such applicable
anniversary and (ii) if any reduction in the original LC Amount specified in
this Section 5.2.4 is given effect, then the reduction in the original LC Amount
specified in Paragraph 5.2.2 for the ninth anniversary of the Rent Commencement
Date shall be effective only if and to the extent the LC Amount then exceeds
fifty percent (50%) of the original LC Amount.
5.2.5 Achievement of Investment Grade Rating. If, at any time following delivery
of the Primary LC, Tenant receives an investment grade rate of "BBB-" or better
from Standard & Poor's Corporation (or if Standard & Poor's Corporation no
longer issues such ratings, any comparable rating from another comparable rating
agency) for four (4) consecutive quarters (the "Required Investment Rating"),
(a) Tenant shall no longer, subject to the provisions of this Paragraph 5.2.5,
be required to provide to (or maintain with) Landlord any letter of credit or
comparable security under this Lease and (b) within thirty (30) days of delivery
by Tenant to Landlord of written notice that Tenant has achieved the Required
Investment Rating, Landlord shall return to Tenant the Primary LC.
Notwithstanding the foregoing, in the event Tenant thereafter (following return
of the Primary LC) fails to so maintain such Required Investment Rating,
Landlord may require Tenant to redeliver to Landlord, within thirty (30) days of
delivery to Tenant of Landlord's written request to do so, a Letter of Credit
conforming to the requirements for the Primary LC under this Paragraph 5, with
the LC Amount thereof being the amount which would otherwise then be applicable
pursuant to this Paragraph 5.2 had such Primary LC not been so returned by
Landlord; provided, however, that Tenant shall continue to be eligible
thereafter to qualify for reduction of the LC Amount under and return of the
Primary LC pursuant to this Paragraph 5.2.
5.3 Application of the LC.
(a) Subject to the provisions of Paragraphs 1.6, 5.1 and 5.2, each Letter of
Credit delivered by Tenant to Landlord pursuant to Paragraph 1.6 shall be held
by Landlord as security for the faithful performance by Tenant of each and all
of the terms, covenants, and conditions of this Lease to be kept and performed
by Tenant. Each Letter of Credit shall not be mortgaged, assigned or encumbered
in any manner whatsoever by Tenant without the prior written consent of
11
Landlord, which consent may be withheld in Landlord's sole discretion. If (i)
Tenant commits a Breach of the provisions of this Lease including, but not
limited to, a Breach of the obligations of Tenant relating to the payment of
Rent, (ii) Tenant files a voluntary petition in bankruptcy, (iii) an involuntary
petition in bankruptcy is filed against Tenant and the same is not discharged
within sixty (60) days thereafter or (iv) Tenant fails to renew the Primary LC
at least thirty (30) days before its expiration (and such failure to renew
occurs during that portion of the Term that Tenant is required to maintain the
Primary LC hereunder), or (v) with respect to the Pre-Closing LC, Tenant fails
to reimburse Landlord for any amounts owed to Landlord under Paragraph 2.2
hereof, Landlord may, but shall not be required to, draw upon all or any portion
of any such Letter of Credit to the extent necessary (i) to cover the payment of
any Rent or any other sum in default under this Lease (ii) to cover the payment
of any other amount which Landlord may spend or become obligated to spend as the
result of Tenant's default under this Lease, and/or (iii) subject to the
provisions of Paragraph 2.2, to compensate Landlord for any loss or damage which
Landlord will likely suffer by reason of Tenant's default, including, without
limitation, costs of enforcement and, if this Lease has been terminated by
Landlord on account of Tenant's Breach, any damages under California Civil Code
Section 1951.2 (collectively, "LC Applications"); provided, however,
notwithstanding the foregoing provisions of this Paragraph 5.3(a), in the event
clause (v) above applies, the LC Application with respect thereto shall be
limited to amounts to be reimbursed by Tenant to Landlord under Paragraph 2.2
which remain unpaid. To the extent that Landlord draws upon all or any part of
any Letter of Credit delivered by Tenant to Landlord hereunder for other than
(and to the extent of) an LC Application (a "Disallowed Application"), and if
Landlord does not refund the Disallowed Application to Tenant within 15 days
after demand from Tenant (in which case Tenant shall then restore the Primary LC
to the amount which would have applied but for the Disallowed Application)
Tenant may, without prejudice to its other remedies, deduct the amount of the
Letter of Credit determined to have been drawn by Landlord for the Disallowed
Application, together with interest thereon from the date of the draw at the
Interest Rate, from the Rent next due and owing under the Lease.
(b) The use, application, or retention of the Letter of Credit, or any portion
thereof, by Landlord shall not prevent Landlord from exercising any other right
or remedy provided by this Lease or by law or in equity, it being intended that
Landlord shall not first be required to proceed against any Letter of Credit,
and the Letter of Credit Amount shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled. Any amount of the Letter
of Credit which is drawn upon by Landlord in excess of the LC Applications,
shall be refunded to Tenant. If any portion of the Letter of Credit is drawn
upon for any LC Application, and this Lease is not terminated as a result of a
Tenant Breach, Tenant shall, within ten (10) days after written demand therefor
reinstate the Letter of Credit to the amount then required under this Lease. In
the event of a sale of Landlord's interest in the Premises, (i) Tenant shall
reasonably cooperate (at no expense to Tenant) with any requests for assistance
from Landlord or the purchaser in connection with transfer of the Letter of
Credit to the new landlord as designated by Landlord, or have the Letter of
Credit reissued in the name of the new landlord, and (ii) provided that the new
landlord shall have assumed all of Landlord's obligations under this Lease
pertaining to the Letter of Credit (if applicable), the selling Landlord shall
thereupon be deemed released by Tenant from all liability pertaining to the
Letter of Credit.
(c) Tenant waives all limitations on the rights of Landlord to draw, retain, or
use the proceeds of any Letter of Credit set forth in California Civil Code
Section 1950.7(c).
6. Use.
6.1 Use. Tenant shall use and occupy the Premises only for the Agreed Use and
for no other purpose without the prior written consent of Landlord. Tenant shall
not use, or knowingly permit the use of, the Premises in a manner that (a)
constitutes waste or a nuisance, (b) would impair the structural elements of the
Premises or any of the basic building systems thereof, (c) subject to the
provisions of Sections 6.2 and 6.3 would constitute a violation of Applicable
Requirements (defined below) or any covenant, condition or restriction affecting
the Premises shown in that certain Chicago Title Insurance Company preliminary
title report No. 23066030-U50, dated February 13, 2002, or any matters arising
under Paragraph 41, or (d) would exceed the load bearing capacity of the floor
of the Premises. Landlord shall not unreasonably withhold, condition or delay
its consent to any written request for a modification of the Agreed Use for the
Premises which is legally permitted under applicable laws and is compatible with
comparable industrial light manufacturing and/or warehouse and distribution
facilities located in the Otay Mesa area of San Diego, California (collectively,
the "Comparable Buildings"). If Landlord elects to withhold consent to any
Tenant proposal for modification of the Agreed Use, Landlord shall concurrently
with its notice to Tenant that Landlord elects to withhold its consent include a
reasonable explanation of Landlord's objections to the change in use.
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6.2 Hazardous Substances.
6.2.1 Definitions. As used herein, the term "Hazardous Substance" includes any
hazardous, explosive, radioactive, regulated, biological, or toxic substance,
material or waste which is regulated by any local governmental authority, the
state in which the Premises is located or the United States, including, without
limitation, any material or substance which is (a) defined or listed as a
"hazardous waste," "extremely hazardous waste," "restricted hazardous waste,"
"hazardous substance," "hazardous material," "pollutant" or "contaminant" under
any law, (b) petroleum or a petroleum derivative, (c) a flammable explosive, (d)
a radioactive material, (e) a polychlorinated biphenyl, (f) asbestos or asbestos
containing material, (g) urea, formaldehyde, foam insulation, (h) radon gas or
(i) a Proposition 65 chemical. "Environmental Laws" means any statute, law,
rule, regulation ordinance or order that directly regulates the storage, use,
transportation, release, processing, disposal, presence or remediation of
Hazardous Substances.
6.2.2 Use.
---
Tenant and the Tenant Parties shall (a) not use, generate,
handle, store or transport to or from the Premises any Hazardous Substance other
than Hazardous Substances consistent with (or customary for) the use,
generation, handling, storage or transport of tenants in comparable warehouse,
light manufacturing and/or distribution buildings in the Otay Mesa, San Diego
market, without the prior written approval of Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed, (b) use, store, handle,
generate and transport all Hazardous Substances brought onto or generated at the
Premises by Tenant or by a Tenant Party in accordance with all applicable
Environmental Laws, (c) obtain and maintain in full force and effect all
governmental permits and approvals required under applicable Environmental Laws
as the result of the use, storage, handling, generation or transport of any
Hazardous Substance by Tenant or by a Tenant Party on or about the Premises, (d)
promptly provide Landlord with copies of all such approvals and permits and
copies of all material correspondence received from or given to any governmental
agency or official concerning the release of (or any violation of Environmental
Laws with respect to) Hazardous Substances in, on or about the Premises, and (e)
promptly provide Landlord written notice of any release into the environment of
any Hazardous Substances brought onto or generated at the Premises by Tenant or
a Tenant Party in, on or about the Premises (if any of Tenant's onsite
management or executive management has actual knowledge that such release of
Hazardous Substances has occurred).
6.2.3 Remediation Obligations.
(a) Tenant hereby agrees that reasonably promptly following receipt of written
notice from any applicable governmental agency of the need to do so, Tenant will
remediate (and investigate), at Tenant's sole cost and expense, on a basis
consistent with applicable Environmental Laws, any release into the environment
in, on, or under the Premises of any Hazardous Substance brought onto or
generated at the Premises by Tenant or any Tenant Party which is required to be
remediated under applicable Environmental Laws, to the extent such release of
Hazardous Substance results or resulted from the acts or omissions of Tenant or
any Tenant Party. In those instances where Tenant has a duty to remediate
Hazardous Substances pursuant to the immediately preceding sentence, Tenant
shall, subject to obtaining approval of a remediation plan therefor in
accordance with Paragraph 6.2.3(b), commence such remediation with reasonable
promptness, and thereafter shall pursue at Tenant's sole cost and expense (to
the extent provided in this Section 6.2.3(b)), such remediation to completion
with reasonable promptness. Tenant hereby agrees that any such remediation
required to be performed under this Section 6.2.3 shall be conducted strictly in
compliance with applicable Environmental Laws (the "Cleanup Standard").
13
(b) In any case where Tenant is required by Landlord (pursuant to the provisions
of this Lease) or by any other party to remediate (or bear the cost of
remediating) any Hazardous Substance in, on, under or about the Premises, Tenant
shall be permitted: (i) subject to reasonable participation by Landlord, to
supervise the investigation of the extent of the release into the environment of
the Hazardous Substance in question, (ii) subject to the provisions of this
Paragraph 6.2.3, to structure and negotiate the terms of any remediation plan
with respect to such release of Hazardous Substances to be submitted to and
approved by the governmental authorities having jurisdiction under applicable
Environmental Laws, provided, however, except in the case of an Emergency
(defined in Paragraph 7.4(a) below) (in which case Landlord's prior approval
shall not be required), each such remediation plan shall be subject to the prior
written approval of Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed, and (iii) subject to reasonable participation by
Landlord, to supervise the actual remediation of such Hazardous Substance
contamination. In connection with the foregoing, Tenant shall be provided with
reasonable access to all portions of the Premises relevant to the foregoing
activities, provided that Tenant agrees to repair any damage to the Premises
caused by such activities (provided that any such access after expiration or
termination of this Lease shall be subject to an access agreement reasonably
required by Landlord). Landlord and its agents and employees shall have the
right following reasonable prior notice to Tenant to either or both (a) enter
the Premises; (b) inspect and monitor Tenant's compliance with all obligations
of Tenant under Paragraph 6.2 relating in any way to the generation, transport,
storage, use, treatment or disposal of Hazardous Substances on, at, in or from
the Premises or any portion thereof, and (c) conduct tests with respect to the
presence (or remediation) of Hazardous Substances; provided, however, that
Landlord shall use commercially reasonable efforts to minimize any interference
with Tenant's business operations resulting from such activities of Landlord and
shall promptly restore any damage to the Premises caused by its testing. In the
event any such remediation plan described in this Paragraph 6.2.3 (b)
contemplates that such remediation will extend beyond the Term, Landlord may
elect to complete, or cause to be completed, at Tenant's sole cost and expense,
the portion of such remediation work to be performed after the expiration of the
Term. In the event Tenant fails to commence to perform and thereafter diligently
pursue to completion any remediation required to be performed by Tenant under
this Paragraph 6.2, and such failure continues (following delivery of written
notice of such failure to Tenant) for the applicable period described in
Paragraph 13.1 (or in the event of an Emergency, three (3) business days),
Landlord shall, in addition to Landlord's rights and remedies hereunder, have
the right, but not the obligation, to perform and/or complete such remediation
work, at Tenant's sole cost and expense, at Landlord's sole election upon
written notice to Tenant.
(c) As to any Hazardous Substance (i) released into the environment in, on,
under or about the Premises prior to the Commencement Date for any reason (other
than any Hazardous Substance so released which is required to be remediated by
Tenant pursuant to the express terms of Paragraph 6.2) or (ii) released into the
environment in, on, under or about the Premises as the result of the negligence
or misconduct of Landlord or any of its agents, employees, contractors or
Affiliates and which is required to be remediated under applicable Environmental
Laws, Landlord shall (without any cost or expenses to Tenant), subject to
obtaining approval of the remediation plan described below, promptly commence
(or cause to be commenced) such remediation with reasonable promptness following
the receipt of written notice from Tenant or any applicable governmental agency
of the requirement under applicable Environmental Laws for such remediation, and
thereafter shall pursue such remediation of such released Hazardous Substances
to completion pursuant to a remediation plan consistent with the Cleanup
Standard, approved by all appropriate regulatory agencies (and if such
remediation would have an adverse impact on Tenant's use and enjoyment of the
Premises and would occur or continue at any time following the Commencement
Date, reasonably approved in advance by Tenant which approval shall not be
unreasonably withheld, conditioned or delayed by Tenant) and in compliance with
all applicable Environmental Laws.
6.2.4 Landlord's Obligations. In the event any release into the environment of
Hazardous Substances occurs in, on, under or about the Premises prior to the
Commencement Date for any reason or occurs at any time in, on, under or about
the Premises as the result of the negligence or willful misconduct of Landlord
or any of its agents, employees, contractors or Affiliates, subject to Tenant's
obligations under Paragraph 6.2, Tenant shall have no responsibility or
liability whatsoever to Landlord with respect to the existence or remediation of
such contamination, and Landlord shall take all steps reasonably necessary to
assure that such Hazardous Substances (and Landlord's investigation and
remediation thereof) shall not materially interfere with Tenant's use and
enjoyment of the Premises or the operation of Tenant's business thereon.
14
6.2.5 Survival. Notwithstanding any provision to the contrary contained in this
Lease, the provisions of this Paragraph 6.2 shall survive the expiration or
earlier termination of this Lease.
6.3 Compliance with Law Requirements.
6.3.1 Tenant's Compliance with Laws. Subject to the provisions of Paragraph 6.2
and this Paragraph 6.3, Tenant shall, at its sole cost and expense, comply with
all local, state, and federal laws, rules, codes, regulations, requirements and
orders now or hereafter in force (collectively, "Applicable Requirements")
pertaining to the Premises and Tenant's use of the Premises; provided, however,
that notwithstanding any provision of this Lease to the contrary, (a) no portion
of this Paragraph 6.3 (including, without limitation, this Paragraph 6.3.1)
shall impose any obligations or liability on either Landlord or Tenant with
respect to compliance with Environmental Laws applicable in any way to the
Premises (or to any Hazardous Substances in, on, under or about the Premises),
(b) the provisions of this Paragraph 6.3.1 shall in no way limit or modify the
obligations of Tenant to perform its obligations expressly provided in Paragraph
6.2 with respect to compliance with Environmental Laws, (c) all references in
this Lease to "Applicable Requirements" shall include, with respect to Tenant,
Tenant's obligations to comply with Environmental Laws under the express
provisions of Paragraph 6.2 and (d) the liabilities and obligations of each of
Tenant and Landlord under this Lease with respect to compliance with
Environmental Laws and otherwise concerning the presence of Hazardous Substances
in, at or on the Premises are provided in Paragraph 6.2 hereof. If any license
or permit is required for the conduct of Tenant's business in the Premises,
Tenant, at its expense, shall procure such license prior to the date required
under Applicable Requirements, and shall maintain such license or permit in good
standing throughout the Term (to the extent so required). Tenant shall give
prompt notice to Landlord of any written notice it receives from any
governmental agency or official of the alleged violation of any Applicable
Requirements with respect to the Premises and the use or occupation thereof.
6.3.1.1 Improvements Compliance.
Subject to the provisions of Paragraphs 6.2.2 and 6.2.3 and the Work
Letter, Landlord shall cause, at Landlord's sole cost and expense, the
Improvements to be in compliance with all Applicable Requirements in effect on
the Commencement Date of this Lease to the extent provided in the Work Letter
(the "Initial Landlord Compliance Obligation"). If and to the extent that at any
time during the Term, either Landlord or Tenant discovers a violation of such
Initial Landlord Compliance Obligation (which violation existed as of the
Commencement Date of this Lease), Landlord shall, at its sole cost and expense,
promptly cure such violation; provided, however, that (i) the provisions of this
Paragraph 6.3 shall in no way limit or modify the obligations of Landlord to
perform its obligations expressly provided in Paragraph 6.2 with respect to
compliance with Environmental Laws and (ii) all references in this Lease to
"Applicable Requirements" shall include, with respect to Landlord, Landlord's
obligations to comply with Environmental Laws under the express provisions of
Paragraph 6.2.
6.3.1.2 Changes In Applicable Requirements Following the Commencement Date.
(a) Subject to the provisions of this Paragraph 6.3, in the event that following
the Commencement Date of this Lease, new Applicable Requirements are adopted
which require modifications, alterations, changes, additions, deletions or
improvements to the Improvements (collectively, "Law Changes") Tenant shall
cause such Law Changes to be made promptly and diligently; provided, however,
that if and to the extent such Law Changes relate directly to the Landlord
Replacement Items (defined in Paragraph 7.2), Landlord shall be responsible to
make and effect directly such Law Changes promptly and diligently.
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(b) If and to the extent any such Law Change to the Improvements constitutes a
capital item under generally accepted accounting principles, consistently
applied ("GAAP") as reasonably determined by Landlord and Tenant (a "Capital
Item"), the total out-of-pocket cost and expense (incurred by Tenant and
Landlord in effecting and completing such Capital Item) with respect to such Law
Change pursuant to this Paragraph 6.3.1.2 ("Law Change Capital Cost") shall be
allocated between Landlord and Tenant on the basis of the reasonable useful life
(as determined under GAAP) of the Capital Item in question (expressed in terms
of full calendar months) and the then (as of the date of completion of the
Capital Item) remainder of the Original Term (or if applicable, Option Term)
(expressed in terms of full calendar months), with the Tenant to bear (and pay
to Landlord), for each month of the Original Term remaining following such
completion of the Capital Item in question an amount equal to the Monthly
Amortization Amount (defined below) for such Capital Item; provided, however,
that, notwithstanding the foregoing, (i) if and to the extent a particular Law
Change shall be applicable to (or any existing Applicable Requirements are
imposed or invoked which shall be applicable to) (A) the Premises by reason of a
special use or occupancy by Tenant of all or any portion of the Premises (which
would not otherwise be applicable to the Premises if the Premises were devoted
to general warehouse, distribution or light industrial use), (B) any office
improvements within the Premises (which are not structural and are not part of
the Building systems), or (C) Fixture Work, Tenant's Fixtures or Tenant's
personal property, then to such extent, Tenant shall bear all of the Law Change
Capital Costs relating to such Law Change or such application of Applicable
Requirements, and (ii) to the extent the Law Change Capital Costs resulting from
a particular Law Change relate to modification of an Alteration (defined below)
of the Improvements (in existence as of the Commencement Date), Tenant shall
bear such Law Change Capital Costs without allocation to Landlord of any portion
of the Law Change Capital Costs in question. For purposes of clarification, (i)
in the event a Law Change is triggered by an Alteration, "Law Change Capital
Cost" shall not include any portion of the cost of installing or implementing
the Alteration in question which does not relate to effecting compliance with
the Law Change in question, and (ii) the only obligations of Landlord under this
Lease (other than pursuant to the Work Letter) with respect to compliance with
Applicable Requirements in connection with any modification, alteration, change,
deletion or improvement to the Improvements are (A) set forth in Paragraph
6.3.1.1, (B) are set forth in the proviso to Paragraph 6.3.1.2(a) or (C) relate
to Landlord's obligation to pay Law Change Capital Costs under this Paragraph
6.3.1.2. The "Monthly Amortization Amount" for each Capital Item shall mean the
amount necessary to fully amortize, in equal monthly payments (of principal and
interest, with interest at an annual interest rate equal to the prime rate as
reported by Bank of America NTSA plus two percent (2%) per annum (the "Lending
Rate")) over the reasonable useful life of the Capital Item in question. For
example, if it is assumed that the Law Change Capital Costs of a particular
Capital Item are $10,000, there are 30 full calendar months remaining in the
Original Term as of completion of the Capital Item, the reasonable useful life
of the Capital Item is 100 full calendar months and the applicable Lending Rate
shall be nine percent (9%) per annum, the Monthly Amortization Amount shall be
$142.50.
(c) In addition, in the event that the reasonable useful life of a particular
Capital Item shall extend beyond the Original Term (if the Capital Item in
question is completed during the Original Term) or beyond the first Option Term
(if it is completed during the first Option Term) and Tenant subsequently
extends the Term pursuant to Paragraph 47 (through the end of the first Option
Term or the Second Option Term, as the case may be), prior to the commencement
of the ensuing Option Term, Tenant shall continue to pay to Landlord in cash
during such Option Term (or until the reasonable useful life of the Capital Item
in question shall expire, if such expiration shall occur during such Option
Term) an amount equal to Monthly Amortization Amount of such Capital Item.
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Notwithstanding any provision of this Lease to the contrary,
in the event a particular Law Change is required by reason of an Alteration to
the Improvements proposed or made by Tenant (that would not otherwise be
required under Applicable Requirements if such Alteration were not so made or
requested) (or in the event such Alteration triggers the imposition of
Applicable Requirements in effect on the Commencement Date compliance with which
would not otherwise be required if such Alteration were not so made or
requested) during the last two (2) years of the Term (which shall include any
additional Option Terms for which the Option to Extend with respect thereto has
been duly exercised by Tenant) (or in the event such Alteration triggers the
imposition of Applicable Requirements in effect on the Commencement Date which
would not otherwise be required if such Alteration were not so made or
requested), Tenant shall bear the sole cost relating to such Law Change or
compliance under any Applicable Requirements relating to (or triggered by) such
Law Change.
(d) In performing any compliance with law obligations under this Paragraph 6.3,
each Party may utilize any "grandfather" exemption, variance, hardship exemption
or similar relief mechanism available under the Applicable Requirements.
7. Maintenance; Repairs, Trade Fixtures and Alterations.
7.1 Tenant's Obligations:
(a) In General. Subject to the provisions of Paragraphs 6.3, 7.2, 7.3, 9, and
14, and subject to Landlord's obligations under the Work Letter, Tenant shall,
at Tenant's sole expense, maintain and repair (and if necessary, replace (other
than any Landlord Replacement Items)) in good condition, reasonable wear and
tear and the negligence or misconduct of the Landlord Parties (defined in
Paragraph 8.7(a)) excepted, the Building, the Improvements and the Premises and
every part thereof, including, without limitation, all driveways, landscaping,
sidewalks, parking areas, signs, retaining walls, fences, outdoor lighting,
walkways, and parkways located on the Land, the Improvements, all Alterations,
and all other all systems, equipment, improvements, utility installations and
facilities in, on and/or serving the Building and/or Premises (collectively,
"Tenant's Maintenance Obligations"). Tenant shall perform Tenant's Maintenance
Obligations so as not to render void or inapplicable any warranty (delivered to
Tenant) with respect to the Improvements.
(b) Landlord's Right to Make Repairs. Without limitation of Paragraphs 13.1 and
13.2 hereof, in the event Tenant fails to perform its maintenance and repair
obligations under Paragraph 7.1, such failure shall be deemed a Tenant Default
and if such failure continues for thirty (30) days (or in the case of an
emergency, one (1) business day) following Tenant's receipt of written notice
from Landlord stating with particularity the nature of the failure, Landlord
shall have the right to perform such failed obligation of Tenant at Tenant's
expense; provided, however, if the nature of the maintenance or repair
obligation in question is such that it cannot, with the exercise of reasonable
diligence, be completed within thirty (30) days of Tenant's receipt of
Landlord's notice, Landlord shall not have the right to undertake any such
maintenance or repairs at Tenant's expense, if Tenant commences the maintenance
or repairs in question within said 30-day period and thereafter diligently and
continuously prosecutes the same to completion. Landlord shall be entitled to
prompt reimbursement by Tenant of Landlord's costs and expenses in taking such
action, plus interest at the Interest Rate (without any need for further notice
referenced in Section 13.4) during the period from the date Landlord incurs such
costs and expenses until such time as payment is made by Tenant.
(c) Service Contracts. During the Term, Tenant shall, at Tenant's sole cost and
expense, procure and maintain service contracts for the HVAC system, the parking
lot and the roof in reasonable customary form, and with an qualified contractor
approved in advance by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed.
7.2 Landlord's Obligations.
(a) Subject to the provisions of Paragraphs 6.3, 7.1, 7.5, 9, and 14, and
subject to Landlord's obligations under Work Letter, during the Lease Term,
Landlord shall maintain and repair (and if necessary, replace), reasonable wear
and tear and the negligence or misconduct of Tenant Parties (defined in
Paragraph 8.7(b) excepted, the Building's foundation (excluding flooring and
excluding any Fixture Work or Tenant's Trade Fixtures), structural elements of
the Building (i.e. footings, load-bearing walls, support steel beams), and
structural portions of the Building roof (but not the roof membrane)
(collectively, "Landlord Replacement Items"). It is the intention of the Parties
that the terms of this Lease govern the respective obligations of the Parties as
to maintenance and repair of the Premises, and they expressly waive the benefit
of any statute now or hereafter in effect to the extent it is inconsistent with
the terms of this Lease. The Parties acknowledge that the foregoing provisions
of Paragraphs 7.1 and 7.2 shall not apply to any repairs required as a result of
fire or other casualty, which shall be governed by the provisions of Paragraph 9
below.
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(b) Notwithstanding any provision of this Lease to the contrary, Landlord shall,
at its sole cost and expense, (i) repair or cause to be repaired any defects in
the labor or materials of the Improvements of which Tenant gives Landlord
written notice within one (1) year following the Commencement Date and (ii) use
reasonable efforts to enforce any warranty with respect to defects in labor and
materials in the Improvements having a warranty period under the Construction
Contract (defined in the Work Letter) of longer than one (1) year (where Tenant
gives Landlord timely written notice within such warranty period of such
defects).
7.3 Capital Repairs and Replacements.
(a) Notwithstanding any provision of Paragraph 7.1 to the contrary, but subject
to the provisions of Paragraphs 6.3, 7.2, the Work Letter and this Paragraph
7.3, in the event that the performance of any maintenance or repair obligation
of Tenant under Paragraph 7.1 shall require the performance of a Capital Item
with respect to part of the Improvements, other than with respect to any
Excluded Items (as defined in Paragraph 7.3(b) below), the actual out-of-pocket
cost and expense of the Party or Parties performing such Capital Item (as to
such Capital Item) ("Capital Item Costs") shall be allocated between Landlord
and Tenant as follows:
(i) Subject to Tenant's obligation to pay the Monthly Amortization Amount for
Capital Items under subparagraph (ii) below, and the provisions of Paragraphs
6.3.1.2(b) and 7.3(b), Landlord shall pay for all Capital Item Costs. If Tenant
shall perform the Capital Item in question, Landlord shall reimburse Tenant for
all Capital Item Costs paid by Tenant to unrelated third parties in connection
therewith within thirty (30) days of receipt by Landlord of a written invoice
therefor and customary lien waivers in connection therewith (accompanied by
reasonable evidence of the expenditure in question); provided, however, that in
the case where Tenant shall perform the Capital Item in question, (A) except in
the case of an Emergency (in which case Tenant may commence the performance of
the Capital Item immediately following delivery to Landlord of one (1) business
day's advance written notice), Tenant shall not commence the performance of the
Capital Item in question until thirty (30) days (10 days if the Capital Item
affects performance of the HVAC system ("HVAC Capital Items")) shall have
elapsed following the date that Tenant shall have delivered to Landlord a
written description of the Capital Item in question and the nonbinding detailed
bids of two (2) qualified contractors for the cost of performing the Capital
Item, and (B) Landlord shall have the right, exercisable by delivery of written
notice to Tenant during such thirty (30) day period (ten (10) day period in the
case of HVAC Capital Items) to elect to perform the Capital Item directly (in
which case Landlord shall, during such 30 day period (or 10 day period in the
case of HVAC Capital Items) engage a qualified contractor to commence such
performance and to thereafter diligently pursue the same to completion). The
performance of any Capital Item by Tenant under this Paragraph 7.3(a) shall be
conducted in a commercially reasonable manner (as to all aspects thereof,
including cost) and so as to not create a Design Problem.
(ii) In turn, commencing with the first day of the month the Capital Item in
question is completed (with the parties to make a retroactive adjustment if the
relevant cost information for calculation of the Monthly Amortization Amount is
not immediately available) and continuing on the first day of each calendar
month thereafter until the earlier of (A) the expiration of the reasonable
useful life of the Capital Item in question and (B) the expiration or earlier
termination of this Lease, Tenant shall pay to Landlord, as Additional Rent, an
amount equal to the Monthly Amortization Amount (calculated on the basis set
forth in Paragraph 6.3.1.2 above) for such Capital Item (and the Capital Item
Costs with respect thereto).
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(b) Notwithstanding any provision of this Paragraph 7.3 to the contrary,
Landlord shall not be required to bear any Capital Item Costs (and Tenant shall
bear such Capital Item Costs) to the extent the amount of such Capital Item
Costs (or the need to perform the Capital Item in question) (i) is due to the
failure of Tenant to implement a maintenance program for such Capital Item
consistent with commercially reasonable standards and in conformity with this
Lease, (ii) relates to any Tenant's Fixtures, Fixture Work or Tenant's personal
property, (iii) is due to any negligence or misconduct of Tenant or (iv) relates
to the repair or replacement of any Alteration of the original Improvements (as
of the Commencement Date) which itself is not a replacement of part of the
original Improvements (collectively, the "Excluded Items").
7.4 Tenant's Right to Make Repairs.
(a) If Tenant delivers written notice to Landlord of an event or circumstance
which requires the action of Landlord with respect to the Landlord Replacement
Items under Paragraph 6.2 or Paragraph 7.2, and Landlord fails to perform such
action as required by the terms of this Lease and such failure continues for
thirty (30) days (or in the case of an Emergency, one (1) business day) after
receipt of such written notice from Tenant, stating with particularity the
nature of the failure, Tenant may proceed to take the required action upon
delivery of an additional ten (10) business days (or in the case of an
Emergency, two (2) business days) notice to Landlord specifying that Tenant is
taking such required action; provided however, if the nature of the obligation
in question is such that it cannot, with the exercise of reasonable diligence,
be completed within thirty (30) days of Landlord's receipt of Tenant's notice,
Tenant shall not have the right to undertake any such action at Landlord's
expense, if Landlord commences the action in question within said 30-day period
and thereafter diligently and continuously prosecutes the same to completion. If
Landlord does not deliver a detailed written objection to Tenant within thirty
(30) days after receipt of an invoice from Tenant of its costs of taking such
required action which Tenant claims should have been taken by Landlord, which
invoice from Tenant sets forth a reasonably particularized breakdown of its
costs and expenses in connection with taking such action on behalf of Landlord,
and if such action was required under the terms of this Lease to be taken by
Landlord at Landlord's cost (without obligation for reimbursement (other than
amortization payments) from Tenant), then subject to the provisions of Paragraph
7.3, Tenant shall be entitled to prompt reimbursement by Landlord of Tenant's
costs and expenses in taking such action plus interest at the Interest Rate
applicable to the Monthly Amortization Amount during the period from the date
Tenant pays such costs and expenses until such time as payment is made by
Landlord. If Landlord does not so reimburse Tenant within thirty (30) days after
receipt of an invoice by Tenant of its costs of taking action which Tenant
claims should have been taken by Landlord, then without prejudice to Tenant's
other rights and remedies Tenant shall be entitled to deduct from all Rent next
due and owing by Tenant under this Lease, an amount equal to that set forth in
the invoice together with interest thereon at the Interest Rate from the date
Tenant incurs such costs until fully deducted from Rent. The term "Emergency"
shall mean a condition that creates an imminent, material threat to life or of
material damage to property, or material impairment or full interruption of
Tenant's business operations in the Premises.
(b) In addition, in the event that an amount payable by Landlord to Tenant under
Paragraph 6.3 or under Paragraph 7.3 is not paid when due thereunder, such
amount shall bear interest at the Interest Rate, and without prejudice to
Tenant's other rights and remedies, Tenant shall have the right to deduct such
amount from Rent next due and owing hereunder until such amount has been
deducted in its entirety.
7.5 Trade Fixtures; Alterations.
(a) The term "Trade Fixtures" shall mean Tenant's trade fixtures and equipment
(not constituting part of the Improvements and otherwise not paid for by
Landlord) installed in the interior of the Building that can be removed without
doing damage to the Building (that cannot be reasonably repaired thereafter by
Tenant). The term "Alterations" shall mean any modification, alteration of the
Improvements or any part thereof (including the Building systems and equipment
and all utility and other systems and equipment of or serving the Building
and/or Premises), whether by addition or deletion, made following Substantial
Completion of the Improvements; provided, that the Work Letter (and not this
Paragraph 7.5) shall govern the initial installation of the Fixture Work. Tenant
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may, without the need to obtain the consent or approval of Landlord, make any
Alteration that is interior only and does not affect the Building Systems and
Equipment or the Building structural elements, and does not exceed $100,000 in
cost. Any other Alteration shall require the consent of Landlord as provided
herein. All Alterations requiring the consent of Landlord pursuant to this Lease
are referred to herein as "Consent Alterations." For purposes of this Lease,
"Design Problem" shall mean any Alteration proposed by Tenant which (a)
adversely affects the Building Systems and Equipment or affects the Building
structural elements, (b) is not in compliance with Applicable Requirements or
(c) affects the exterior appearance of the Building or (d) would render void or
inapplicable the provisions of any then effective warranty with respect to the
Improvements. Tenant may not make any Consent Alteration without first procuring
the prior written consent of Landlord to such Alterations, which consent shall
be requested by Tenant not less than fifteen (15) days prior to the commencement
thereof, and which consent shall not be unreasonably withheld or conditioned by
Landlord. Notwithstanding the foregoing, it shall not be considered unreasonable
for Landlord to withhold its consent if and to the extent the proposed
Alteration would create or cause a Design Problem. In the event Tenant proposes
to make a Consent Alteration, Tenant's notice regarding the proposed Consent
Alteration shall include reasonable plans and specifications for the Consent
Alteration in question. Landlord shall grant or withhold its consent to any
proposed Consent Alterations within fifteen (15) days of receipt of Tenant's
notice together with plans and specifications and other supporting documentation
describing such Alteration; Landlord's failure to respond within fifteen (15)
days of a second notice given after receipt by Tenant of such information and
the lapse of such fifteen (15) day period shall be deemed to evidence Landlord's
approval with respect to the Consent Alteration for which consent is requested.
Tenant shall, at its sole cost and expense, cause to be performed all
Alterations in compliance with all Applicable Requirements and in conformity
with all applicable warranties. Any Alterations shall be performed at Tenant's
sole cost and expense, in a good and workmanlike manner with good and sufficient
materials. Landlord shall have the right to inspect and monitor the construction
of any Alterations, and Tenant shall promptly upon completion furnish Landlord
with as-built plans and specifications for all Alterations. Tenant shall obtain
all necessary permits and certificates in connection with any Alteration.
(b) Mechanics' Liens. Tenant shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Tenant at or for
use on the Premises (other than any of the same arising out of any work
performed by, or at the direction of, Landlord), which claims are secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Tenant shall remove any mechanics' lien, materialmens' lien, stop notice of
similar lien or any other encumbrance filed or recorded against the Premises or
Landlord's interest therein by bond or otherwise within 30 days after written
notice by Landlord. Nothing contained in this Lease shall authorize Tenant to do
any act which shall subject Landlord's title to the Building or Premises to any
liens or encumbrances whether claimed by operation of law or express or implied
contract.
7.6 Ownership; Removal; Surrender; and Restoration:
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(a) Ownership. Subject to Landlord's right to require removal as provided in
Paragraph 7.6(b) below, all Trade Fixtures and Alterations made by or on behalf
of Tenant and not removed by Tenant at the end of the Term shall, at the
expiration or termination of this Lease, become the property of Landlord and be
surrendered by Tenant with the Premises.
(b) Removal. By delivery to Tenant of written notice from Landlord at the time
Landlord shall grant its consent thereto, Landlord may require that any or all
Consent Alterations be removed by Tenant by the expiration or termination of
this Lease and any other Alterations not constituting Consent Alterations made
by or on behalf of Tenant that Landlord requests be removed; provided, however,
that notwithstanding any provision of this Lease to the contrary, (i) other than
the Platform Improvements (which Landlord may require Tenant to remove at the
expiration of the Term), Landlord may not require removal of any of the
Improvements constructed in the Premises pursuant to the Work Letter (or any
reasonable replacement for any of such Improvements) and (ii) Landlord (A) shall
not be permitted to require Tenant to remove any Alterations which are general
office improvements (to the extent all office improvements not to be removed do
not exceed 18,000 square feet in area, are contiguous with the initial office
improvements (but not in the mezzanine), or are located in the corners of the
Building) or (B) any loading docks (in addition to those provided as part of the
original Improvements) which are of the same size as the initial loading docks.
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(c) Surrender/Restoration. Tenant shall surrender the Premises by the Expiration
Date or any earlier termination date, with all of the Improvements, thereof
broom clean and free of debris, reasonable wear and tear, damage from casualty
resulting in termination of this Lease, condemnation resulting in termination of
this Lease and the negligent acts of Landlord excepted. Subject to Paragraph
7.6(a) above, all Trade Fixtures and Tenant's personal property shall remain the
property of Tenant and shall be removed by Tenant and Tenant shall repair any
damage to the Premises caused thereby.
8. Insurance; Indemnity.
8.1 Payment For Insurance. Tenant shall pay directly for all policies of
insurance required to be carried by Tenant pursuant to Paragraphs 8.2(a), 8.4(a)
and 8.4(c). Tenant shall reimburse Landlord for its out-of-pocket expenses paid
for by Landlord in maintaining the policies of insurance described in Paragraphs
8.2(b), 8.3(a) (subject to the limitations contained therein) and 8.3(b) within
thirty (30) days of Tenant's receipt of a reasonably detailed invoice
(accompanied by reasonable supporting documentation); provided, however, that
premiums for policy periods for insurance maintained by Landlord commencing
prior to or extending beyond the Lease Term shall be prorated to correspond to
the Lease Term. Tenant shall be liable for any deductible amount in the event of
a claim against any insurance policy described in Paragraph 8.2(a), 8.2(b)
(provided that Tenant's obligation shall be limited to commercially reasonable
deductibles), Paragraph 8.3(b) (subject to the limitations set forth in said
Paragraph) and Paragraph 8.4. In addition, Tenant shall within ten (10) days of
receipt from Landlord of any invoice therefor (accompanied by reasonable
evidence of the costs in question and the deductible requirement in question),
pay to Landlord the amount of any deductible suffered by Landlord with respect
to a particular loss covered under the All Risk Insurance (defined below);
provided, however, that Tenant shall not be required to pay to Landlord more
than Twenty Thousand Dollars ($20,000.00) in deductible amounts with respect to
any one casualty event.
8.2 Liability Insurance:
(a) Carried by Tenant. Tenant shall obtain and keep in force a Commercial
General Liability policy of insurance in customary form (a "CGL Policy" or "CGL
Insurance") protecting against claims for bodily injury, personal injury and
property damage based upon or arising out of the use, occupancy or maintenance
of the Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$5,000,000 per occurrence with an "Additional Insured-Managers or Landlords of
Premises Endorsement" and an "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire, naming Landlord,
its agents, affiliates, assignees and lenders as Additional Insureds. The policy
shall not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage to the extent customary for liability
assumed under this Lease as an "insured contract" for the performance of
Tenant's indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Tenant nor relieve Tenant of any
obligation hereunder. All liability insurance carried by Tenant shall be primary
to and not contributory with any similar insurance carried by Landlord, whose
insurance shall be considered excess insurance only.
(b) Carried by Landlord. Landlord shall maintain, at Tenant's cost (pursuant to
Paragraph 8.1), a CGL Policy in the form and amount as described in Paragraph
8.2(a) (with Landlord to have the right to have deductibles with respect
thereto), in addition to, and not in lieu of, the insurance required to be
maintained by Tenant.
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8.3 Property Insurance of Building and Improvements.
(a) Landlord shall obtain and keep in force, at Tenant's cost, a policy or
policies of "All Risk" insurance ("All Risk Insurance") in the name of Landlord,
with loss payable to Landlord and any Lenders insuring loss or damage to the
Improvements (including without limitation, all Alterations thereto), provided,
however, that notwithstanding the foregoing, such All Risk Insurance shall not
cover Tenant's Trade Fixtures, Fixture Work and Tenant's personal property,
which items shall be insured by Tenant under Paragraph 8.4 below. The amount of
such All Risk Insurance to be obtained by Landlord shall be equal to the full
replacement cost of the Improvements, as the same shall exist from time to time,
but in no event more than the commercially reasonable and available insurable
value thereof. Subject to the provisions of this Paragraph 8.3, if and to the
extent the coverage is reasonably available at a commercially reasonable cost,
such policy or policies shall (i) insure against all risks of direct physical
loss or damage, including coverage for flood, debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Improvements as the result
of a covered loss, and (ii) waivers of subrogation. Notwithstanding any
provision of this Lease to the contrary, Landlord may (but shall not be required
to) maintain coverage for damage to the Improvements by earthquake or any other
risk of loss not typically covered under an All Risk Insurance policy
(collectively, the "Excluded Risks") but if Landlord elects to maintain such
coverage, Tenant shall not be required to reimburse (directly or indirectly)
Landlord for any deductible with respect to the Excluded Risks or for any
portion of the cost of such coverage exceeding Twelve Thousand Dollars
($12,000.00) per year.
(b) Landlord shall also carry rental loss insurance (in customary form)
providing coverage for losses in Rent hereunder, for a period not to exceed
twelve (12) months, resulting from damage to the Premises by reason of a
casualty risk required to be covered under the All Risk Insurance policy to be
obtained by Landlord under Paragraph 8.3(a).
8.4 Tenant's Insurance:
(a) Property Damage. Tenant shall obtain and maintain All Risk Insurance
coverage on all of Tenant's personal property, Fixture Work and Trade Fixtures
in or about the Premises. Such insurance shall be full replacement cost
coverage, with reasonable deductibles.
(b) No Representation of Adequate Coverage. Landlord makes no representation
that the limits or forms of coverage of insurance specified herein are adequate
to cover Tenant's property, business operations or obligations under this Lease.
(c) Additional Insurance. If at any time during the Lease Term, Tenant or any
subtenant or assignee of Tenant conducts operations in, on or about the Premises
involving boilers, pressure apparatus or other equipment the operation of which
is generally covered by "boiler and pressure apparatus liability insurance," and
if at that time, most comparable tenants in Comparable Buildings are required to
provide such insurance coverage under comparable circumstances, Tenant shall
procure and maintain in full force and effect with respect to the Premises,
boiler and pressure apparatus liability insurance in reasonably customary form
and amount.
8.5 Insurance Policies. Insurance required herein shall be by companies
maintaining during the policy term a "General Policyholders Rating" of at least
B+VII, as set forth in the most current issue of "Best's Insurance Guide."
Tenant shall not do or knowingly permit to be done anything which invalidates
the required insurance policies (or shall bear the cost of any increase in
premium resulting therefrom). Tenant shall, prior to entry on the Premises (and
in all events no later than the Commencement Date), deliver to Landlord
certificates evidencing the existence and amounts of the insurance required to
be carried by Tenant hereunder. Tenant shall, at least thirty (30) days prior to
the expiration of such policies, furnish Landlord with evidence of renewals or
"insurance binders" evidencing renewal thereof. All certificates of insurance to
be provided hereunder shall contain an endorsement that the insurer thereunder
shall endeavor to notify each insured and additional insured thereunder thirty
(30) days in advance of any cancellation of the policy in question. Such
policies shall be for a term of at least one (1) year, or the length of the
remaining Lease Term, whichever is less.
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8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Tenant and Landlord each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
under Paragraphs 8.3 and 8.4(a). The effect of such releases and waivers is not
limited by the amount of insurance carried or required, or by any deductibles
applicable hereto. The Parties agree to have their respective All Risk property
damage insurance carriers waive any right to subrogation that such companies may
have against Landlord or Tenant, as the case may be.
8.7 Indemnification and Waiver.
(a) Waiver. Subject to the provisions of this Lease, Tenant hereby assumes all
risk of damage to property or injury to persons in or upon the Premises from any
cause whatsoever and agrees that Landlord, its partners and their respective
lenders, officers, agents, servants, and employees (collectively, the "Landlord
Parties") shall not be liable for any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant or
by other persons claiming through Tenant, except to the extent caused by
Landlord's default under this Lease or the negligence or willful misconduct of
Landlord or any of the Landlord Parties (provided, however, that Landlord shall
not be responsible for any damage to the extent such damage is covered by
insurance required to be carried by Tenant under this Lease).
(b) Tenant's Indemnity. Subject to the provisions of this Lease, Tenant shall
indemnify, defend, protect, and hold harmless Landlord and the Landlord Parties
from any and all claims, loss, cost, damage, expense and liability (including
without limitation court costs and reasonable attorneys' fees) (collectively,
"Costs and Damages") incurred in connection with or arising from (1) any cause
in or on the Premises following the Commencement Date prior to the expiration of
the Term (or any holdover period, whichever later occurs) or any holdover period
(to the extent coverable under the type of CGL Insurance required to be carried
by Tenant under Paragraph 8.2(a)) or (2) subject to the terms of the last
sentence of Paragraph 8.7(c) below, any negligence or willful misconduct of
Tenant or any person claiming by, through or under Tenant, its partners,
sublessees, licensees and their respective officers, agents, contractors, and
employees (collectively, "Tenant Parties") (whether or not coverable by Tenant's
insurance) or (3) any default by Tenant under this Lease, in or on or about the
Premises during the Lease Term, provided that, except as set forth below, the
terms of the foregoing indemnity shall not apply to the extent such Claims,
Costs and Damages arise from the negligence or willful misconduct of Landlord or
any of the Landlord Parties. Notwithstanding the foregoing, because Tenant must
carry insurance pursuant to Paragraph 8.4(a)) above to cover its personal
property and all Trade Fixtures within the Premises, Tenant hereby agrees to
protect, defend, indemnify and hold Landlord harmless from any Claim, Cost or
Damage with respect to any such property within the Premises, to the extent such
Claim, Claims and Damages are coverable by customary All Risk Insurance, even if
resulting from the negligence or willful misconduct of Landlord or the Landlord
Parties.
(c) Landlord's Indemnity. Landlord shall indemnify, defend, protect, and hold
harmless Tenant and the Tenant Parties from any and all Claims, Costs and
Damages incurred in connection with or arising from (i) any negligent acts or
willful misconduct of Landlord or any of the Landlord Parties in, on, or about
the Premises (subject to the terms of the last sentence of Paragraph 8.7(b)
above) prior to the expiration of the Term (or any holdover period, whichever
later occurs) (or) (ii) any default by Landlord under this Lease provided that,
except as set forth below, the terms of the foregoing indemnity shall not apply
to the extent such Claims, Costs and Damages arise from the negligence or
willful misconduct of Tenant or the Tenant Parties in connection with the Tenant
Parties' activities in, on, or about the Premises. Notwithstanding the
foregoing, because Landlord is required to maintain pursuant to the terms of
Paragraph 8.3(a) above All Risk Insurance on the Improvements, Landlord hereby
agrees to protect, defend, indemnify and hold Tenant harmless from any Claims,
Costs and Damages (exclusive of deductibles to the extent to be borne by Tenant
pursuant to Paragraph 8.1) with respect to the Improvements to the extent such
Claims, Costs and Damages are covered by the All Risk Insurance required to be
carried by Landlord under Paragraph 8.3(a), even if resulting from the negligent
acts or willful misconduct of Tenant or the Tenant Parties.
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(d) Waiver of Consequential Damages. Notwithstanding any provision of this Lease
to the contrary, neither Landlord nor Tenant shall be liable to the other Party
for any consequential damages for any breach or default (or any other matter)
under this Lease, provided that this sentence shall not be applicable to any
consequential damages which may be incurred by Landlord relating to or in
connection with any holdover by Tenant following the expiration of the Lease
Term, subject to and in accordance with the provisions of Paragraph 26 hereof.
8.8 Survival. Each Party's agreement to indemnify and hold the other Party
harmless pursuant to Paragraph 8.7 above is not intended to and shall not
relieve any insurance carrier of its obligations under policies required to be
carried pursuant to the provisions of this Lease. The foregoing provisions of
this Paragraph 8 shall survive the expiration or earlier termination of this
Lease.
9. Damage or Destruction.
9.1 Definitions:
(a) "Premises Damage" shall mean damage or destruction to the Improvements
(including, without limitation, and all Alterations), other than the Tenant's
Trade Fixtures, Fixture Work and personal property.
(b) "Insured Loss" shall mean damage or destruction to Improvements (including,
without limitation, all Alterations), other than Tenant's Trade Fixtures,
Fixture Work and personal property, which is caused by an event required to be
covered by the All Risk Insurance described in Paragraph 8.3(a), irrespective of
any deductible amounts or coverage limits involved.
(c) "Restoration Cost" shall mean the cost to repair or rebuild the Improvements
(including, without limitation, all Alterations) (other than Tenant's Trade
Fixtures, Fixture Work and personal property) at the time of the damage and
destruction thereof to their condition existing immediately prior to such
damage, including demolition, debris removal and upgrading required by the
operation of Applicable Requirements, and without deduction for depreciation.
9.2 Restoration. Subject to the provisions of Paragraphs 9.3, 9.4 and 9.5, if,
during the Term, there is any Premises Damage to any portion of the Improvements
(but not Tenant's Trade Fixtures, Fixture Work or personal property, which shall
be Tenant's obligation to repair at Tenant's sole cost and expense) then
Landlord shall, at Landlord's expense subject to Paragraph 9.3(a), promptly and
diligently repair and restore the Improvements so damaged to the condition of
such Improvements in existence immediately prior to such damage as soon as
reasonably possible and this Lease shall continue in full force and effect;
provided, however, that Tenant shall, at Tenant's election, make the repair of
any damage or destruction to the Improvements the total Restoration Cost of
which is reasonably estimated by Tenant to be Ten Thousand Dollars ($10,000.00)
or less, and, in such event following ten (10) days prior written notice to
Landlord (to the extent Landlord is required to pay for or perform such item
under the Lease), Landlord shall reimburse Tenant for all Restoration Costs (not
exceeding $10,000 per casualty event) incurred by Tenant with respect to such
repair within thirty (30) days of Landlord's receipt of a reasonably detailed
invoice therefor (accompanied by reasonable supporting documentation). Landlord
shall be entitled to the full proceeds of any insurance coverage for the
Improvements, whether carried by Landlord or Tenant, for damage to the Premises.
Notwithstanding anything to the contrary contained herein, in the event (and to
the extent) of (i) the occurrence of damage or destruction to the Premises that
requires the repair or restoration of any Alteration (to the extent the same is
not just a replacement of an original Improvement) and (ii) the cost of such
repair or restoration is not covered by the insurance required to be carried by
Landlord (or otherwise carried by Landlord), Landlord shall not be required to
undertake or bear the cost of such repair or restoration.
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9.3 Landlord Right to Terminate.
(a) In the event that there is any Premises Damage to any portion of the
Improvements during the Term which is not an Insured Loss under circumstances
where the Restoration Cost of such damage to the Improvements (not otherwise
covered by insurance proceeds or funds provided by Tenant) exceeds (a
"Restoration Cost Deficiency") Five Hundred Thousand Dollars ($500,000.00),
which amount shall be reduced to $250,000.00 in the last two years of the Term
(the "Damage Threshold"), Landlord shall have the right, exercisable by delivery
to Tenant of written notice of termination within seventy-five (75) days of
Landlord's discovery of the Premises Damage in question, to terminate this Lease
effective upon the date sixty (60) days following delivery to Tenant of such
notice of termination (which notice shall describe in reasonable detail the
grounds for such termination (and attach reasonable supporting documentation
therefor)); provided, however, that in the event Tenant shall receive any such
notice of termination, (i) Tenant shall have the right (but not the obligation)
to render such termination of this Lease void and ineffective (and to reinstate
this Lease in full force and effect) by delivering to Landlord, within thirty
(30) days of Tenant's receipt of Landlord's notice of termination, Tenant's
written agreement to contribute (together with evidence of the security for such
payment if reasonably required by Landlord), at Tenant's expense, the funds
required to reduce the applicable Restoration Cost Deficiency to an amount equal
to the Damage Threshold, and (ii) in any case, Tenant shall have the right to
extend the effective date of any such termination for up to sixty (60)
additional days (as selected by Tenant) by delivery of written notice to
Landlord within thirty (30) days of Tenant's receipt of Landlord's notice of
termination.
(b) If, at any time during the last two (2) years of the Term (which shall
include any Option Term for previously exercised Options to Extend; provided,
that Tenant may exercise any remaining unexercised Option to Extend (in
accordance with Paragraph 47 hereof) within thirty (30) days of receipt of
Landlord's notice under this Paragraph 9.3(b) and in such case, the Option Term
with respect thereto shall also be included), there is any Premises Damage,
rendering at least twenty-five percent (25%) of the Improvements untenantable
and its repair or restoration requires more than one hundred twenty-(120) days
to complete, then Landlord may terminate this Lease at any time within ninety
(90) days of Landlord's discovery of the damage effective ninety (90) days
following the date of delivery to Tenant of a written notice of termination.
9.4 Tenant's Right to Terminate. Tenant shall have the right to terminate this
Lease (a) in the event at any time during the Term there occurs any Premises
Damage to any portion of the Improvements by any form of casualty event which
(i) renders, more than thirty-five percent (35%) of the Improvements
untenantable or inoperable for the operation of Tenant's business and (ii)
cannot reasonably be fully restored to its condition existing immediately prior
to such damage or destruction within eleven (11) months of both Landlord's and
Tenant's discovery of the Premises Damage in question, which right shall be
exercisable by Tenant by delivery to Landlord of written notice of termination
(which shall specify the effective date of termination, which may be up to 120
days following the date of delivery of the notice) at any time within ninety
(90) days after Landlord's discovery of the damage, and (b) if at any time
during the last two (2) years of the Lease Term, there is any Premises Damage
rendering at least twenty-five percent (25%) of the Improvements untenantable
and its repair or restoration requires more than one hundred twenty (120) days
to complete, Tenant may terminate this Lease at any time within ninety (90) days
of Tenant's discovery of such damage by delivery to Landlord of up to ninety
(90) (but not less than thirty (30)) days' written notice of termination.
9.5 Abatement of Rent; Tenant's Remedies.
(a) Abatement of Rent. If the Premises or the Improvements are partially or
totally destroyed or damaged by any casualty event, Base Rent and Additional
Rent shall be abated in proportion to the degree of interference and disruption
of Tenant's use and enjoyment of the Premises from the date such damage or
destruction occurs until the date the repair or restoration of the Improvements
is substantially complete.
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(b) Remedies. If Landlord shall be obligated to repair or restore the Premises
and/or the Improvements under this Paragraph 9 and does not commence, in a
substantial and meaningful way, such repair or restoration within seventy-five
(75) days after such obligation shall accrue, and such failure shall continue
for ten (10) days following delivery by Tenant to Landlord and such Lenders of
written notice of such failure, Tenant shall have the right to elect to perform
the Landlord's restoration obligations, in which case, Tenant shall be
reimbursed by Landlord within thirty (30) days of Tenant's written request
therefor, for all of the Tenant's good faith costs and expenses incurred in
performing such obligations or Tenant may, at any time prior to the commencement
of such repair or restoration, give written notice to Landlord and to any
Lenders of which Tenant has actual notice, of Tenant's election to terminate
this Lease on a date (selected by Tenant) not less than thirty (30) days
following the giving of such notice. If Tenant gives such notice and such repair
or restoration is not commenced within thirty (30) days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within said thirty (30) day period, this Lease shall
continue in full force and effect. The term "commence" under this Paragraph
9.5(b) shall mean either the unconditional authorization of the preparation of
the required plans, or the beginning of the actual work on the Premises,
whichever first occurs. In addition, if neither Landlord nor Tenant elect to
terminate this Lease and the casualty damage in question has not been repaired
within twelve (12) months after the date of notice from Tenant to Landlord of
the discovery of damage (subject to Force Majeure and delays caused by Tenant),
then Tenant shall have the right, within five (5) business days of the end of
such period, and thereafter during the first five (5) business days of each
calendar month following the end of such period until such time as the repairs
in question are completed, to terminate this Lease by notice to Landlord (the
"Damage Termination Notice"), effective as of a date set forth in the Damage
Termination Notice (the "Damage Termination Date"), which Damage Termination
Date shall not be less than five (5) business days following the end of such
period or each such month, as the case may be. Notwithstanding the foregoing, if
Tenant delivers a Damage Termination Notice to Landlord, then Landlord shall
have the right to suspend the occurrence of the Damage Termination Date for a
period ending thirty (30) days after the delivery by Tenant of the Damage
Termination Notice by delivering to Tenant, within five (5) business days of
Landlord's receipt of the Damage Termination Notice, a certificate of Landlord's
contractor responsible for the repair of the damage certifying that it is such
contractor's good faith judgment that the repairs shall be substantially
completed, within thirty (30) days after delivery by Tenant of the Damage
Termination Notice. If such repairs shall be substantially completed prior to
the expiration of such 30-day period, then the Damage Termination Notice shall
be of no force or effect, but if the repairs are not substantially completed
within such 30-day period, then this Lease shall terminate upon the expiration
of such 30-day period.
9.6 Termination-Advance Payments. Upon termination of this Lease pursuant to
this Paragraph 9, an equitable adjustment shall be made concerning advance Base
Rent and any other advance payments made by Tenant to Landlord.
9.7 Waive Statutes. Landlord and Tenant agree that the terms of this Lease shall
govern the effect of any damage to or destruction of the Premises and hereby
waive the provisions of any present or future statute to the extent inconsistent
herewith, including California Civil Code Sections 1932(2) and 1933(4).
9.8 Notification. Tenant shall give prompt written notice to Landlord of any
fire or other casualty to any part of the Premises of which any of Tenant's
onsite management or Tenant's executive management has actual knowledge.
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10. Real Property Taxes.
10.1 Definition of Real Property Taxes.
10.1.1 Inclusions. Subject to the provisions of Paragraph 10.1.2, as used
herein, the term "Real Property Taxes" shall include any form of assessment;
real estate, general, special, ordinary or extraordinary, or rental levy or tax
(other than inheritance, personal income or estate taxes); and/or license fee
imposed upon or levied against any legal or equitable interest of Landlord in
the Premises, Landlord's right to other income therefrom, and/or Landlord's
business of leasing, by any authority having the power to tax and where the
funds are generated with reference to the Premises address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises is located. The
term "Real Property Taxes" shall also include any tax, fee, levy, assessment,
penalty, or charge, or any increase therein, imposed by reason of events
occurring during the Lease Term, including but not limited to, a change in the
ownership of the Premises, or any portion thereof, and/or any improvements
constructed on or at the Premises.
10.1.2 Exclusions. Notwithstanding any provision of this Lease to the contrary,
in no case shall Real Property Taxes include any of the following: (i) any
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance or succession taxes, estate taxes, federal and state income taxes,
or any other taxes to the extent applicable to Landlord's general or net income
(as opposed to rents or receipts), (ii) penalties incurred as a result of
Landlord's negligence, inability or unwillingness to make payments of, and/or to
file any tax or informational returns with respect to, any Real Property Taxes,
when due (unless due to Tenant's failure to pay), or (iii) any special
assessments or other taxes from any city, county, state or federal government or
agency or quasi-governmental agency), participation in which is voluntary (and
when Tenant has not consented in writing to such participation, in the exercise
of its sole discretion).
10.2 Payment of Taxes. Tenant shall pay the Real Property Taxes applicable to
the Premises during the Lease Term. All such payments shall be made prior to any
delinquency date therefor; provided that Landlord shall provide to Tenant all
bills for such Real Property Taxes (not separately provided to Tenant) not less
than thirty (30) days prior to the delinquency date therefor. Tenant shall
promptly furnish Landlord with reasonable evidence that such taxes have been
paid. If any such Real Property Taxes shall cover any period of time prior to or
after the expiration or termination of this Lease, such Real Property Taxes
shall be prorated to cover only that portion of the period that this Lease is in
effect, and Landlord shall reimburse Tenant (within thirty (30) days of such
expiration or termination) for any overpayment. If Tenant shall fail to pay any
required Real Property Taxes in accordance with this Paragraph 10.2, except
where Tenant is contesting the same in good faith, and such failure continues
for thirty (30) days after delivery to Tenant by Landlord of written notice of
such failure, Landlord shall have the right to pay the same, and Tenant shall
reimburse Landlord therefor within thirty (30) days of receipt of demand
therefor. Tenant shall have the right to contest in good faith Real Property
Taxes applicable to the Premises, provided no penalties, interest or liens are
assessed against the Premises (or Tenant shall agree to indemnify Landlord for
the same).
10.3 Joint Assessment. If the Premises are not separately assessed, Tenant's
liability shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed. Landlord and
Tenant shall reasonably cooperate to cause the Premises to be separately
assessed from all other real property owned by Landlord.
10.4 Personal Property Taxes. Tenant shall pay, prior to delinquency, all taxes
assessed against and levied upon the Trade Fixtures, and all furnishings,
equipment and personal property of Tenant. When reasonably possible, Tenant
shall cause such property to be assessed and billed separately from the real
property of Landlord.
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11. Utilities. Subject to the provisions of the Work Letter, Tenant shall be
solely responsible for providing the Premises with, and for paying for, all
water, gas, heat, light, power, telephone, telecommunication, trash disposal,
sewer and other utilities and services required or desired for the Premises,
together with any taxes thereon; provided, however, that in all cases Landlord
shall reasonably cooperate with Tenant's efforts to procure any utility services
desired by Tenant. Tenant shall contract directly with and pay directly to the
utility companies and service providers for such utilities and services.
12. Assignment and Subletting.
12.1 Landlord's Consent Required:
(a) Subject to the provisions of this Paragraph 12, Tenant shall not voluntarily
or by operation of law assign, transfer, mortgage or encumber (collectively,
"assign or assignment") or sublet all or any part of Tenant's interest in this
Lease or in the Premises without Landlord's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. No consent by
Landlord to a particular assignment, sublease or mortgage shall constitute
consent or approval of any subsequent assignment, sublease or mortgage.
Notwithstanding anything to the contrary contained in this Paragraph 12, in no
event may Tenant assign, sublease or license this Lease or the Premises to any
entity whatsoever if, at the time of such assignment, mortgage, transfer, pledge
or sublease, Tenant is in Breach under this Lease (and such Breach remains
uncured). No consent by Landlord to any assignment or sublease shall be deemed
to release Tenant from its obligations hereunder and Tenant shall remain fully
liable for performance of all obligations under this Lease.
(b) Except as expressly provided in Paragraph 12.1(c) below, a change in the
control of Tenant shall constitute an assignment requiring Landlord's consent;
provided, however that the provisions of this Paragraph 12.1(b) shall not apply
(and such change of control shall not constitute an "assignment" hereunder) in
the case of any transfers in stock or other interests in Tenant occurring at any
time during which Tenant is publicly traded on any national or regional stock or
securities exchange or on any over-any-counter market (a "Reporting Company").
The transfer, on a cumulative basis, of all legal and beneficial title and
interest in and to fifty percent (50%) or more of the outstanding voting stock
of Tenant within a single twelve (12) month period shall constitute a change in
control for this purpose.
(c) Notwithstanding any provision of this Lease to the contrary, Tenant may
assign this Lease or sublease all or part of the Premises without receipt of
Landlord's consent, (and without application of any provision of this Paragraph
12) to an entity which acquires all or substantially all of the stock or assets
of Tenant, an entity which is the resulting entity of a merger or consolidation
of Tenant with another entity, or an entity which is controlled by, controls, or
is under common control with, Tenant (each of such entities shall be referred to
hereinafter as an "Affiliate"), so long as: (i) any such sublease or assignment
shall be subject and subordinate to the terms and provisions of this Lease; (ii)
any such Affiliate assignee assumes in a writing delivered to Landlord all of
the obligations of Tenant accruing after the effective date of the assignment
under this Lease; and (iii) no such assignment or sublease shall release Tenant
from any of its obligations under this Lease. "Control" as used in this
Paragraph 12 (c) shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person or
entity, or ownership of any sort. Tenant shall notify Landlord of any such
assignment or sublease promptly following consummation of such transaction.
(d) Any assignment or subletting for which Landlord's consent is required under
this Paragraph 12 (a "Consent Transfer") effected without Landlord's consent
hereunder shall be a Default (as defined in Paragraph 13.1 below) curable after
notice to Tenant pursuant to Paragraph 13.1(c).
(e) Upon prior written notice to Landlord, Tenant may also allow any person or
company which is a client or customer of Tenant or which is providing service to
Tenant or one of Tenant's clients to occupy as a licensee or sublessee portions
of the Premises without such occupancy being deemed a sublease or license
transaction governed by this Paragraph 12, as long as: (i) all such occupancies
shall not occupy, in the aggregate, more than twenty percent (20%) of the
Building; (ii) such occupancy shall be subject and subordinate to the terms and
provisions of this Lease; and (iii) no such occupancy shall release Tenant from
any of its obligations under this Lease.
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12.2 Terms and Conditions Applicable to Assignment and Subletting:
(a) Regardless of Landlord's consent, any assignment or subletting shall not
release Tenant of any obligations hereunder.
(b) Landlord may accept Rent or performance of Tenant's obligations from any
person other than Tenant pending approval or disapproval of an assignment. No
acceptance of Rent or performance shall constitute a waiver or estoppel of
Landlord's right to exercise its remedies for Tenant's Default or Breach (as
defined in Paragraph 13.1 below).
(c) Landlord's consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.
(d) Each request for Landlord's consent to a Consent Transfer shall be in
writing, accompanied by reasonable customary information including, without
limitation, information regarding the financial responsibility of the proposed
assignee or subtenant accompanied by a term sheet or other written description
of the primary economic terms of the proposed Consent Transfer ("Transfer
Notice"). Tenant shall promptly provide a copy of the sublease or assignment
documents to Landlord upon execution thereof.
(e) Notwithstanding any provision of this Lease to the contrary, (i) Landlord
may not withhold its consent to any Consent Transfer on the basis of (A) the
economic terms of the proposed Consent Transfer except relating to the
transferee's financial condition or (B) the fact that the terms of the Consent
Transfer shall permit further subleasing, subject to compliance with the
provisions of this Paragraph 12 and (ii) any request for Landlord's consent to a
Consent Transfer conforming to the provisions of Paragraph 12.2(d) with respect
to which no written response from Landlord is received by Tenant within ten (10)
days following submission to Landlord by Tenant of such request for consent (and
accompanying information described in clause (d) above) shall conclusively be
deemed approved and consented to by Landlord.
(f) Notwithstanding any provision of this Lease to the contrary, in no case
shall Landlord be permitted (or have the right to require Tenant to agree to
allow Landlord) (as a condition of its consent to a Consent Transfer or
otherwise) to physically recapture any space proposed to be sublet or assigned
or to share in any of the proceeds or profits of any such assignment or
sublease.
(g) If Landlord consents to any proposed Consent Transfer pursuant to the terms
of this Paragraph 12, Tenant may within six (6) months after Landlord's consent,
but not later than the expiration of said six-month period, enter into such
Consent Transfer upon substantially the same terms and conditions as are set
forth in the Transfer Notice furnished by Tenant to Landlord requesting
Landlord's consent to such assignment or subletting, provided that if there are
any material changes in the terms and conditions from those specified in such
notice such that Landlord would initially have been entitled to refuse its
consent to such assignment or subletting under this Paragraph 12, Tenant shall
again submit the assignment or subletting to Landlord for its approval, under
Paragraph 12.2.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Tenant to
comply with or perform any of the provisions of this Lease. A "Breach" is
defined as the occurrence of one or more of the following Defaults, and the
failure of Tenant to cure such Default within the applicable grace period
(following delivery of written notice to Tenant) set forth below:
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(a) The failure of Tenant to make any payment of Rent required to be made by
Tenant hereunder, to Landlord, when due, where such failure continues for a
period of five (5) business days following delivery of written notice of such
failure to Tenant.
(b) The failure by Tenant to provide (i) subordination documents conforming to
the requirements of Paragraph 30, or (ii) an "Estoppel Certificate" (defined in
Paragraph 16(a) below) conforming to the requirements of Paragraph 16, where any
such failure continues for a period of ten (10) business days following delivery
to Tenant of written notice of such failure by Landlord.
(c) A Default by Tenant, other than those described in Paragraphs 13.1(a) or
(b), where such Default continues for a period of thirty (30) days after
delivery by Landlord of written notice of such Default; provided, however, that
if the nature of Tenant's Default is such that more than thirty (30) days are
reasonably required for its cure, then the same shall not be deemed to be a
Breach if Tenant commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion, provided however, if a
Default under this clause (c) relates to an Arbitration Matter (defined below)
and is subject to dispute as to whether such Default exists, then such
determination shall be subject to arbitration under Paragraph 48 hereof.
All notices to be given pursuant to this Paragraph 13.1 shall
be in addition to, and not in lieu of, the notice requirements of California
Code of Civil Procedure Section 1161.
13.2 Remedies. In the event of a Breach, Landlord may, with or without further
notice or demand, and without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such Breach:
(a) Terminate Tenant's right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately surrender
possession to Landlord. In such event Landlord shall be entitled to recover from
Tenant: (i) the unpaid Rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Tenant proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
Rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Tenant proves could be reasonably avoided; and (iv)
any other amount reasonably necessary to compensate Landlord for all the
detriment proximately caused by the Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including but not limited to the cost of recovering possession
of the Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, and reasonable attorneys' fees. In the event
Landlord terminates this Lease pursuant to Paragraph 13.2(a), Landlord shall use
reasonable efforts to mitigate damages. The worth at the time of award of the
amount referred to in clauses (i) and (ii) above shall be calculated with
interest at the Interest Rate. The worth at the time of award of the amount
referred to in clause (iii) above shall be computed by discounting such amount
at the discount rate of the Federal Reserve Bank of the District within which
the Premises are located at the time of award plus one percent (1%). Efforts by
Landlord to mitigate damages caused by Tenant's Breach of this Lease shall not
waive Landlord's right to recover damages under this Paragraph 13. If
termination of this Lease is obtained through the provisional remedy of unlawful
detainer, Landlord shall have the right to recover in such proceeding any unpaid
Rent and damages as are recoverable therein, or Landlord may reserve the right
to recover all or any part thereof in a separate suit.
(b) Landlord shall have the remedy set forth in California Civil Code Section
1951.4; i.e., Landlord may continue the Lease and Tenant's right to possession
and recover the Rent as it becomes due.
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(c) Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of Tenant's right to
possession shall not relieve Tenant from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the Lease
Term hereof or by reason of Tenant's occupancy of the Premises.
13.3 Late Charges. Tenant hereby acknowledges that late payment by Tenant of
Rent will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Landlord by any Lender. Accordingly, if (a)
any regularly scheduled monthly payment of Rent shall not be received by
Landlord within ten (10) days after the same is due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord a one-time late
charge equal to three and one-half percent (3-1/2%) of each such overdue amount;
provided, however, that in the case of the first such late payment during any
twelve (12) month period, such late charge shall not be due unless Tenant's
delinquency with respect thereto continues for five (5) days after written
notice thereof is delivered to Tenant (without the requirement for the ten (10)
day period referenced above) and (b) any other form of Rent shall not be
received by Landlord within ten (10) days after receipt by Tenant of written
notice that such amount is delinquent, Tenant shall pay to Landlord a one-time
late charge equal to three and one-half percent (3 1/2%) of such overdue amount.
The parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of such late payment.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant's Default or Breach with respect to such overdue amount, nor prevent
the exercise of any of the other rights and remedies granted hereunder.
13.4 Interest. Any monetary payment due Landlord hereunder, other than late
charges, not received by Landlord, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which Landlord
delivers to Tenant written notice that the same is delinquent, shall bear
interest from the date when due, as to scheduled payments, or the thirty-first
(31st) day after it was due as to non-scheduled payments. The interest
("Interest") charged shall be equal to the prime rate reported in the Wall
Street Journal as published closest prior to the date when due plus three and
one half percent (3.5%) ("Interest Rate"), but shall not exceed the maximum rate
allowed by law.
13.5 Default by Landlord. The occurrence of any of the following shall
constitute a material default (a "Landlord Default") of this Lease by Landlord:
(i) any failure by Landlord to make any payment required to be made by Landlord
hereunder when due, where such failure continues for thirty (30) days after
delivery of written notice of such failure by Tenant to Landlord or (ii) any
material failure by Landlord to perform or comply with any other material
provision of this Lease, to be performed or complied with by Landlord, where
such failure continues for thirty (30) days after delivery of written notice of
such failure by Tenant to Landlord; provided, however, that if the nature of
such default is such that the same cannot reasonably be cured within such thirty
(30) day period, there shall not be a Landlord Default if Landlord shall, within
thirty (30) days of such notice, commence such cure, and thereafter diligently
prosecute such cure to completion.
14. Condemnation.
14.1 Generally. If the Premises is taken under the power of eminent domain or
sold under the threat of the exercise of said power (collectively
"Condemnation"), this Lease shall terminate as to the part taken as of the date
the condemning authority takes title or possession, whichever first occurs. In
the event of a Condemnation which permanently leaves an insufficient portion of
the Premises for the operation of Tenant's business from the Premises, Tenant
may, at Tenant's option, which shall be exercised in writing within ninety (90)
days after Tenant shall have received written notice of such taking (or in the
absence of such notice, within ninety (90) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession or title. If Tenant so elects to terminate this
Lease, Base Rent and Additional Rent shall be prorated as of the date of
termination. Condemnation awards and/or payments shall be the property of
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Landlord, whether such award shall be made as compensation for diminution in
value of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Tenant shall be entitled to compensation through a
separate award from the condemning authority for (i) Tenant's relocation
expenses, (ii) Tenant's loss of business goodwill, (iii) damages resulting from
the cessation or interruption of Tenant's business, (iv) Tenant's personal
property and/or Trade Fixtures, but not the Platform Improvements, and (v) 50%
of the "bonus value" of Tenant's leasehold interest in this Lease actually
awarded by the condemning authority. All Alterations made to the Premises by
Tenant after the Commencement Date at Tenant's own expense (without any
contribution from Landlord by means of an improvement allowance or otherwise),
for purposes of Condemnation only, shall be considered the property of the
Tenant and Tenant shall be entitled to any and all compensation which is payable
therefor.
14.2 No Termination. In the event that this Lease is not terminated pursuant to
▇▇▇▇▇▇▇▇▇ ▇▇.▇, ▇▇▇▇▇▇▇▇ shall, with reasonable diligence, proceed to restore
(to the extent permitted by all Applicable Requirements and covenants,
conditions and restrictions then applicable to the Premises) the Improvements to
a complete functioning unit of substantially the same proportionate usefulness,
design and construction existing immediately prior to the date of the
Condemnation. In such case, Base Rent and Additional Rent under this Lease shall
be proportionately based upon the nature of the space taken (Building space,
storage, parking area) and upon the proportion which the portion taken bears to
the area of the Premises immediately prior to such Condemnation.
14.3 Waiver of Statutory Provisions. Landlord and Tenant agree that the
provisions of this Paragraph 14 and the remaining provisions of this Lease shall
exclusively govern the rights and obligations of the parties with respect to any
Condemnation of any portion of the Premises, and each of them hereby waives any
statutory or common law rights or provisions inconsistent herewith.
15. Broker.
(a) Tenant and Landlord each represent and warrant to the other that it has had
no dealings with any person, firm, broker or finder (other than the Broker) in
connection with this Lease, and that no one other than said named Broker is
entitled to any commission or finder's fee in connection herewith. Tenant and
Landlord do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs, expenses
and attorneys' fees reasonably incurred with respect thereto. The foregoing
indemnification shall survive the termination or expiration of this Lease.
(b) Subject to the terms and conditions of that certain Commission Agreement
dated March ___, 2002 by and between __________________ _________ and The
Staubach Company, in the event either or both Options to Extend (defined below)
is properly exercised by Tenant in accordance with Paragraph 47, as to each such
exercise of the Option to Extend, Landlord shall pay to Tenant's Broker, a
brokerage commission equal to three and one-third (3-1/3%) of the Base Rent
payable by Tenant with respect to the Option Term in question, one-half of which
shall be payable on such proper exercise and one-half of which shall be payable
upon actual commencement of the Option Term in question. The obligations of
Landlord set forth in this Paragraph 15(b) shall be enforceable against the
Landlord as provided in this Paragraph 15(b) by Tenant's Broker as an intended
third party beneficiary, and in the event of any dispute between Landlord and
Tenant's Broker with respect thereto, the nonprevailing party shall pay to the
prevailing party its attorneys' fees (in accordance with Paragraph 31) (as if
Tenant's Broker were a Party hereto).
16. Estoppel Certificates:
(a) Each Party (as "Responding Party") shall within twenty (20) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver (on the basis of the Responding Party's actual
knowledge, without inquiry or investigation), to the Requesting Party a
statement in writing (the "Estoppel Certificate") in form similar to Exhibit "F"
attached hereto, plus such additional factual information as may be reasonably
requested by the Requesting Party.
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(b) If Landlord desires to finance, refinance, ground lease or sell the
Premises, or any part thereof, Tenant shall deliver to any potential lender,
ground lessor or purchaser designated by Landlord such publicly available,
previously reported financial statements as may be reasonably required by such
lender or purchaser, including but not limited to Tenant's financial statements
for the past three (3) years provided, however, that if Tenant shall be
privately held, any such financial statements shall be such financial statements
as shall then be in the possession of Tenant (if then in the possession of
Tenant, CPA audited statements, but, if audited statements shall not then be in
the possession of Tenant, Tenant's internally prepared financial statements, as
certified to the actual knowledge of Tenant's treasurer or chief financial
officer). All financial statements not publicly available shall be received by
Landlord and such lender, partner or purchaser in confidence and Landlord shall
cause such recipients to maintain the confidentiality of the same and to use the
same only for the purposes herein set forth.
17. Landlord Definition/Continuing Liability.
(a) Landlord shall have the absolute right to transfer all or
any portion of its interest in the Premises. Subject to the provisions of
Paragraph 5.3(b) and this Paragraph 17, the term "Landlord" as used herein shall
mean the owner or owners at the time in question of the fee title to the
Premises and in the event of a transfer of all of Landlord's legal and
beneficial title or interest in the Premises, the prior Landlord shall be
relieved of any liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Landlord.
(b) Notwithstanding any provision of this Lease to the
contrary, (i) the original Landlord, ORIX Otay, LLC, an Illinois limited
liability company ("Original Landlord") shall at all times have personal
liability (with full recourse to the assets of Original Landlord) for
performance of each and all of the construction obligations of the Landlord
under the Work Letter as the same may be amended from time to time (the
"Construction and Development Obligations") and shall continue to be primarily
liable to Tenant for the performance of each and all of the Construction and
Development Obligations, notwithstanding the occurrence of any transfer of all
or any portion of Original Landlord's interest in the Premises or in this Lease.
18. Severability. If any provision of this Lease shall be invalid or
unenforceable, the remainder of this Lease shall not be affected but shall be
enforced to the extent permitted by law.
19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. Subject to the provisions of Paragraph 17, the
obligations of Landlord under this Lease shall not constitute personal
obligations of Landlord, the individual partners or members of Landlord or its
or their individual partners, members, directors, officers, managing members,
officers or shareholders ("Landlord Owners") and Tenant shall look to the
Premises (and all sales and refinancing proceeds and all insurance and/or
condemnation proceeds relating to the Premises or this Lease) and to no other
assets of Landlord (or of the Landlord Owners) for the satisfaction of any
liability of Landlord with respect to this Lease.
21. Time of Essence. Time is of the essence for this Lease. If the time for
performance hereunder falls on a Saturday, Sunday or a day that is recognized as
a holiday in the State of California, then such time shall be deemed extended to
the next day that is not a Saturday, Sunday or holiday in the State of
California.
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22. No Prior or Other Agreements. All prior understandings and agreements
between the Parties are merged in this Lease, which alone fully and completely
expresses the agreement of the Parties with respect to any matter mentioned
herein. No agreement shall be effective to modify this Lease, in whole or in
part, unless such agreement is in writing, and is signed by the Party against
whom enforcement of said change or modification is sought.
23. Notices. In order to be effective, each and every notice required or
permitted to be given with respect to this Lease shall be in writing and shall
be delivered to the address of the intended Party as specified in Paragraph 1.9
above. Notices shall be deemed properly delivered and received (i) when and if
personally delivered, (ii) the same day when and if sent by confirmed facsimile,
or (iii) the day of delivery to the other Party if deposited with Federal
Express, UPS, or comparable commercial overnight courier service which makes
delivery tracking information available to the Parties. Notices may be delivered
on behalf of the Parties by their respective attorneys. In the event of a change
of address by either Party, such Party shall give written notice thereof to the
other Party in accordance with the foregoing. Notwithstanding the foregoing, the
requirements of this Paragraph 23 shall be subject to, to the extent applicable,
Section 8.6 of the Work Letter.
24. Waivers. No waiver by Landlord or Tenant of the default or breach of any
term, covenant or condition hereof by the other party, shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent default or
breach by such party of the same or of any other term, covenant or condition
hereof. Landlord's consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Landlord's consent to, or approval of, any
subsequent or similar act by Tenant, or be construed as the basis of an estoppel
to enforce the provision or provisions of this Lease requiring such consent. The
acceptance of Rent by Landlord shall not be a waiver of any Default or Breach by
Tenant.
25. Recording. Either Landlord or Tenant shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease, substantially in the form attached hereto as Exhibit "G," for recording
purposes, but no such memorandum of lease shall be recorded until after Landlord
obtains fee title to the Land. The Party requesting recordation shall be
responsible for payment of any fees and transfer taxes applicable thereto.
26. No Right To Holdover. Subject to the provisions of this Paragraph 26, if
Tenant holds over after the expiration or earlier termination of this Lease,
without the express consent of Landlord, such tenancy shall be a tenancy at
sufferance only, and shall not constitute a renewal hereof or an extension for
any further term, and in such case Base Rent shall be payable (a) for the first
month of any such holdover at a monthly rate equal to one hundred twenty-five
percent (125%) of the Base Rent applicable during the last rental period of the
Lease Term and (b) beyond the first month of any such holdover at a monthly rate
equal to one hundred and fifty percent (150%) of the Base Rent applicable during
the last rental period of the Lease (prorated in the case of partial months on
the basis of a 30-day month), and in addition, Tenant shall pay to Landlord all
direct and consequential damages sustained by Landlord by reason of such
holdover, provided, however, that Tenant shall not be liable to Landlord for
consequential damages sustained by Landlord during the first thirty (30) days
following the expiration of this Lease. Nothing contained herein shall be
construed as consent by Landlord to any holding over by Tenant and shall not
constitute a waiver of or limit or exclude any of Landlord's rights or remedies
under this Lease, at law or in equity.
27. Cumulative Remedies. Unless expressly provided for otherwise herein, no
remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative at law or in equity.
28. Construction of Agreement. In construing this Lease, all headings and titles
are for the convenience of the parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by one
of the Parties, but rather according to its fair meaning as a whole, as if both
Parties had prepared it.
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29. Binding Effect; Choice of Law. Except as otherwise expressly provided for in
this Lease, this Lease shall be binding upon, and inure to the benefit of, the
Parties, their personal representatives, successors and permitted assigns and be
governed by and construed in accordance with the laws of the State of
California. Any litigation between the Parties hereto concerning this Lease
shall be initiated in the city, county, state or federal district court, as
applicable, in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Provided that Tenant is provided with a subordination, non-disturbance and
attornment agreement in a commercially reasonable form which (i) does not modify
the economic terms of this Lease (or materially modify any other provision
hereof) and (ii) recognizes all of Tenant's prospective and accrued rights under
this Lease with respect to (A) the Letters of Credit and any matter relating to
Capital Items under this Lease and (B) any default occurring before foreclosure
(or delivery of a deed in lieu of foreclosure) (collectively, "Foreclosure
Transfer") of a security instrument defined below) which continues after such
Foreclosure Transfer ("SNDA") duly executed by the holder of any ground leases,
deeds of trust, mortgages security interests (collectively, "Security
Instruments") affecting the Premises, this Lease is and shall be subject and
subordinate at all times to the security interests evidenced by the Security
Instruments. Notwithstanding any provision of this Lease to the contrary, (a)
Landlord shall not permit any Security Instrument to be recorded against the
Premises or otherwise become prior to the lien of this Lease (without providing
to Tenant an SNDA) prior to the earlier of the time of recordation of the
Memorandum of this Lease described in Paragraph 25 (provided Tenant causes such
Memorandum to be executed in recordable form, by Tenant within ten (10) business
days after Landlord's request if such Memorandum was not previously recorded) or
the date of Tenant's occupancy of the Premises for the conduct of business, and
(b) in the event Landlord shall breach its obligations under clause (a), and
Landlord shall not cure such breach (by causing such Security Instrument to be
subordinate to this Lease or by providing Tenant an SNDA conforming to the
requirements of this Paragraph 30) within thirty (30) days following receipt by
Landlord of written notice from Tenant of such breach, without prejudice to its
other rights and remedies, Tenant shall have the right to terminate this Lease,
exercisable by delivery of written notice to Landlord at any time after such
breach and expiration of such thirty (30) day period.
30.2 Subject to the provisions of this Paragraph 30, upon the delivery by
Landlord to Tenant of an SNDA in the form and substance required by this
Paragraph 30 duly executed and acknowledged by each of the holder(s) of the
security interests set forth in each future Security Instrument (and if required
by the terms of the SNDA, executed and acknowledged by Landlord), this Lease
shall be subject and subordinate to each such future Security Instrument
hereafter in force against the Land, the Improvements and/or the Building or any
part thereof, if any, and to all renewals, extensions, modifications,
consolidations and replacements thereof, and to all advances made or hereafter
to be made upon the security of each such Security Instrument.
30.3 Subject to the provisions of this Paragraph 30 (and the provisions of the
SNDAs to be delivered hereunder), Tenant agrees to attorn to the holder(s) of
the security interests set forth in the Security Instruments or any successors
thereto upon any such foreclosure sale or deed in lieu thereof, if so requested
to do so by such holder (provided that such attornment is consistent with the
terms of the applicable SNDA).
31. Attorneys' Fees. If any Party brings an action or proceeding to enforce the
terms hereof or to declare rights hereunder, the Prevailing Party (as hereafter
defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys' fees. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment. The term, "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The attorneys' fees
award shall not be computed in accordance with any court fee schedule, but shall
be such as to fully reimburse all attorneys' fees reasonably incurred.
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32. Landlord's Access; Showing Premises. Subject to the provision of this Lease,
Landlord and Landlord's agents, employees, consultants and Lenders shall have
the right to enter the Premises at any time, in the case of an Emergency, and
otherwise at reasonable times upon prior reasonable notice for the purpose of:
(i) showing the same to prospective purchasers, ground landlords or lenders, or
(during the last twelve (12) months of the Lease Term to prospective tenants);
(ii) making such alterations, repairs, improvements or additions to the Premises
as required by this Lease; and (iii) inspecting the condition of the Premises
and/or compliance by Tenant with Tenant's obligations under this Lease. Subject
to the provisions of this Paragraph 32 and the provisions of this Lease, all
such activities shall be without abatement of Rent or liability to Tenant;
provided however, such entry by Landlord shall (i) be coordinated in advance
with Tenant to minimize any disruption of Tenant's operations and any damage to
Tenant's property, and (ii) be accomplished as expeditiously as reasonably
possible and in a manner so as to cause as little interference to Tenant (and as
little damage to the property of Tenant) as reasonably possible (provided
further that Landlord shall promptly replace at Landlord's cost all property of
the Tenant Parties so damaged).
33. Signs.
Landlord hereby agrees that Tenant, at Tenant's sole cost and
expense, shall have the right during the Lease Term to install such
identification signage and/or logo signage on the walls and/or fences of the
Building and/or install such monument signs (the "Signage") as Tenant may
desire, provided that, in each instance, Tenant shall obtain Landlord's prior
written approval therefor, which approval shall not be unreasonably withheld,
conditioned or delayed. The Signage shall comply with all Applicable
Requirements and shall be installed and maintained by Tenant, at Tenant's sole
cost and expense, in a commercially reasonably manner. Within thirty (30) days
of the expiration or earlier termination of the Lease, Tenant shall, at Tenant's
sole cost and expense, cause the Signage to be removed from the Building, and
the portion(s) of the Building on which the Signage was located to be restored
to their condition existing prior to the installation of the Signage. If Tenant
fails to so remove the Building Signage and restore the area of the portion(s)
of the Building on which the Building Signage was located as provided in this
Paragraph 33 within such period, then Landlord may perform such work on behalf
of Tenant and all good faith costs and expenses incurred by Landlord in
connection therewith shall constitute Additional Rent under this Lease and shall
be paid by Tenant to Landlord within thirty (30) days of demand. Tenant's rights
under this Paragraph 33 shall be freely transferable by Tenant to any assignee
of this Lease or any sublessee of any portion of the Premises but such transfer
shall not diminish Tenant's obligations hereunder, including the obligation to
comply with all Applicable Requirements. The removal and restoration obligations
of Tenant as provided in this Paragraph 33 shall survive the expiration or
earlier termination of this Lease.
34. Termination; Merger. Unless specifically stated otherwise in writing by
Landlord, the voluntary or other surrender of this Lease by Tenant, the mutual
termination or cancellation hereof, or a termination hereof by Landlord for
Breach by Tenant, shall automatically terminate any sublease or lesser estate in
the Premises, except as otherwise provided herein.
35. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld, conditioned or delayed.
36. Auctions. Tenant shall not conduct, nor permit to be conducted, recurring
auctions upon the Premises without Landlord's prior written consent. Landlord
shall not be obligated to exercise any standard of reasonableness in considering
any request for such multiple auctions.
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37. Quiet Possession. Subject to payment by Tenant of the Rent and performance
of all of the covenants, conditions and provisions on Tenant's part to be
observed and performed under this Lease, Tenant shall have quiet possession and
quiet enjoyment of the Premises during the Lease Term.
38. Intentionally Deleted.
39. Intentionally Deleted.
40. Security Measures. Tenant hereby acknowledges that the rental payable to
Landlord hereunder does not include the cost of guard service or other security
measures, and that Landlord shall have no obligation whatsoever to provide same.
41. Reservations. Subject to the provisions of this ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇
reserves to itself the right, from time to time, to grant such easement and
dedications affecting the Premises as Landlord may reasonably require; provided,
however, that notwithstanding any provision of this Lease to the contrary in the
event such easement or dedication shall (i) adversely affect any use by Tenant
of any portion of the Premises, (ii) limit the size or dimensions of the
Premises, (iii) impose any material additional cost, obligation or liability
risk on Tenant or any Tenant Party, (iv) adversely affect the availability,
scope, intensity or cost of any utility or other service to the Premises, such
easement or dedication shall require the prior written consent of Tenant, which
consent shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding anything to the contrary contained herein, Landlord may grant
any easement or dedication to the extent necessary for construction or
completion of the Improvements pursuant to the Work Letter, or to the extent
required by any public utility company or otherwise as is necessary to comply
with any Applicable Requirements, subject to Tenant's prior written consent
which shall not be unreasonably withheld, conditioned, or delayed, but, Tenant
shall not withhold or condition its consent to the extent such withholding or
conditioning of consent would cause Landlord not to comply with Applicable
Requirements.
42. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay plus interest as otherwise
required in this Lease.
43. Authority. If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each Party represents and warrants to
the other Party that each individual executing this Lease on behalf of such
Party is duly authorized to execute and deliver this Lease on such Party's
behalf.
44. Offer. Preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
45. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification.
46. Multiple Parties. If more than one person or entity is named herein as
either Landlord or Tenant, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
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47. Options to Extend Term.
47.1 Grant. Provided that this Lease is in full force and effect, Landlord
hereby grants to Tenant two (2) consecutive options (each, an "Option to
Extend") to extend the Original Term of this Lease for a period of five (5)
years each (each, an "Option Term"). Each Option to Extend must be exercised by
Tenant, if at all, only by a written exercise notice delivered by Tenant to
Landlord on or before the date which is twelve (12) months, but not more than
twenty-four (24) months, prior to the end of the Original Term or the end of the
first Option Term, as applicable. Notwithstanding anything herein to the
contrary, (a) Tenant shall not be entitled to exercise an Option to Extend
pursuant to this Paragraph 47 if (i) Tenant is in Breach of its obligations
under this Lease (and such Breach remains uncured) at the time Tenant exercises
its option to extend by written notice thereof to Landlord or (ii) following
Tenant's exercise of its Option to Extend but prior, to the first day of the
applicable Option Term, Tenant is in Breach of its obligations under this Lease
and (b) the Options to Extend shall be exercisable only by Tenant or a permitted
assignee of Tenant's entire interest in this Lease pursuant to Paragraph 12
hereof.
47.2 Terms. If Tenant properly and timely exercises the applicable Option to
Extend, the Original Term of this Lease, or first Option Term, as the case may
be, shall be extended by the applicable Option Term, and all of the terms,
covenants and conditions of this Lease shall remain unmodified and in full force
and effect during the applicable Option Term, except that the monthly Base Rent
payable by Tenant pursuant to Paragraph 1.4(a) during (i) the first thirty-six
(36) months of first Option Term shall be equal to the product of (A) 1.065 and
(B) the monthly Base Rent payable by Tenant during the last full Lease Month of
the Original Term; (ii) the final twenty-four (24) months of the first Option
Term shall be equal to the product of (A) 1.1025 and (B) the monthly Base Rent
payable during the last month of the immediately preceding thirty-six (36) month
period, (iii) during the first thirty-six (36) months of the second Option Term
shall be equal to the product of (A) 1.065 and (B) the monthly Base Rent payable
by Tenant during the last month of the first Option Term and (iv) the final
twenty-four (24) months of the second Option Term shall be equal to the product
of (A) 1.1025 and (B) the monthly Base Rent payable during the last month of the
immediately preceding thirty-six (36) month period. Base Rent during the Option
Term includes consideration from Tenant to Landlord for Landlord's obligation to
pay a brokerage commission in accordance with Paragraph 15(b) of this Lease.
48. Arbitration. The provisions of this Paragraph contain the sole and exclusive
method, means and procedure to resolve any and all disputes or disagreements
between the Parties, (including whether any particular matter constitutes, or
with the passage of time (and, if applicable, the failure of a Party hereto to
cure the same) would constitute a Breach) which (A) pertain to other than the
payment of Base Rent under this Lease and involve an amount less than $100,000;
or (B) pertain to performance of either party under, or interpretation of the
provisions of, the Work Letter or (C) at the election of Tenant only (within the
time periods specified in this Paragraph 48), pertain to whether any Law Change
constitutes a Capital Item under Paragraph 6.3 and/or whether a particular
repair or restoration of the Improvements constitutes a "Capital Item" under
Paragraph 7.3; provided that nothing contained herein shall prevent Landlord
from pursuing its rights and remedies with respect to the matters described in
this Clause (C) if Tenant does not so elect arbitration. Except as otherwise
expressly set forth herein, all disputes identified in (A), (B), or (C) above
("Arbitration Matters") arising in connection with this Lease shall be finally
settled in San Diego, California under the Rules of the American Arbitration
Association ("AAA") by three (3) arbitrators appointed in accordance with said
Rules. The parties hereby irrevocably waive any and all rights to the contrary
and shall at all times conduct themselves in strict, full, complete and timely
accordance with the provisions of this Paragraph. Any and all attempts to
circumvent the provisions of this provision shall be absolutely null and void
and of no force or effect whatsoever. Notwithstanding the terms of this
Paragraph 48 and pursuant to the provisions of Article 23 of the AAA rules, at
any time before and after a Notice of Dispute is presented, the Parties shall be
free to apply to any court of competent jurisdiction for interim or conservatory
measures (including temporary conservatory injunctions). The Parties acknowledge
and agree that any such action by a party shall not be deemed to be a breach of
such party's obligation to arbitrate all disputes under this Paragraph 48
(pertaining to an Arbitration Matter) or infringe upon the powers of any
arbitration panel. As to any matter (other than matters solely involving the
payment of money ("Money Matters")) submitted to arbitration hereunder to
determine whether it would, with the passage of time, constitute a Breach, such
38
passage of time shall not commence to run until any such affirmative
determination, so long as it is simultaneously determined by the Arbitration
Panel that the challenge of such matter as a potential Breach was made in good
faith. As to Money Matters submitted to arbitration to determine whether such
matter would, with the passage of time, constitute a Breach, such passage of
time shall not commence to run in the event that the party which is obligated to
make the payment does in fact make the payment to the other party. Such payment
can be made "under protest," which shall occur when such payment is accompanied
by a good-faith notice stating why the Party has elected to make a payment under
protest. Such protest will be deemed waived unless the subject matter identified
in the protest is submitted to arbitration as set forth below. The Parties
acknowledge that only those matters described in the first sentence of this
Paragraph 48 above shall be submitted to arbitration and all other matters
(including, without limitation, matters pertaining to Landlord's exercise of any
unlawful detainer rights pursuant to California law or rights or remedies used
by Landlord to gain possession of the Premises or terminate Tenant's right of
possession of the Premises in accordance with this Lease and Applicable Laws;
provided, however, the determination of whether there is a default of a
particular obligation relating to an Arbitration Matter shall be subject to
Arbitration hereunder) shall be adjudicated in the court of appropriate
jurisdiction.
(a) Arbitration Panel. Any arbitration called for under this Paragraph 48 shall
be conducted in accordance with the following procedures (which shall govern in
the event of a conflict with the AAA Rules). Within thirty (30) days after
delivery of written notice ("Notice of Dispute") of the existence and nature of
any dispute given by any Party to the other Party, and unless otherwise provided
herein in any specific instance, the Parties shall each appoint an independent
arbitrator from a list of prospective arbitrators supplied by AAA to both
Parties. In the event that any Party fails to so act, such appointment and
notification shall be made as quickly as possible for such Party by the AAA.
Within ten (10) days after such appointment and notice, such arbitrators shall
appoint a third arbitrator from a list of prospective arbitrators supplied by
the AAA to both Parties (together with the first two (2) arbitrators,
"Arbitration Panel") and shall deliver written notice of the identity of such
arbitrator and a copy of his or her written acceptance of such appointment to
each of the Parties. In the event that agreement cannot be reached on the
appointment of a third arbitrator within such period, such appointment and
notification shall be made, upon the application of either Party, as quickly as
possible by the AAA. In the event of any subsequent vacancies or inabilities to
perform among the Arbitration Panel, the arbitrator or arbitrators involved
shall be replaced in accordance with the provisions of this Paragraph as if such
replacement was an initial appointment to be made under this Paragraph within
the time constraints set forth in this Paragraph, measured from the date of
notice of such vacancy or inability, to the person or persons required to make
such appointment, with all the attendant consequences of failure to act timely
if such appointed person is a party hereto.
(b) Duty. Consistent with the provisions of this Paragraph, the members of the
Arbitration Panel shall utilize their utmost skill and shall apply themselves
diligently and impartially so as to hear and decide, by majority vote, the
outcome and resolution of any dispute or disagreement submitted to the
Arbitration Panel as promptly as possible, but in any event on or before the
expiration of thirty (30) days after the appointment of all three (3) members of
the Arbitration Panel. None of the members of the Arbitration Panel shall have
any liability whatsoever for any acts or omissions performed or omitted in good
faith pursuant to the provisions of this Paragraph.
(c) Authority. The Arbitration Panel shall (i) enforce and interpret the rights
and obligations set forth in this Lease to the extent not prohibited by law,
(ii) fix and establish any and all rules as it shall consider appropriate in its
sole and absolute discretion to govern the proceedings before it, including any
and all rules of discovery, procedure and/or evidence, and (iii) make and issue
any and all orders, final or otherwise, and any and all awards, as a court of
competent jurisdiction sitting at law or in equity could make and issue, and as
it shall consider appropriate in its sole and absolute discretion, including the
awarding of monetary damages (but shall not award consequential damages to
either Party and shall not award punitive damages), the awarding of reasonable
attorneys' fees and costs to the prevailing party as determined by the
Arbitration Panel and the issuance of injunctive relief. If the Party against
whom the award is issued complies with the award, within the time period
established by the Arbitration Panel, then no Breach will be deemed to have
occurred, unless the Breach pertained to Money Matters, and Tenant or Landlord
failed to make such payment under protest.
39
(d) Appeal. The decision of the Arbitration Panel shall be final and binding,
may be confirmed and entered by any court of competent jurisdiction at the
request of any Party and may not be appealed to any court of competent
jurisdiction or otherwise except upon a claim of fraud on the part of the
Arbitration Panel, or on the basis of a mistake as to the applicable law. The
Arbitration Panel shall retain jurisdiction over any dispute until its award has
been implemented, and judgment on any such award may be entered in any court
having appropriate jurisdiction.
(e) Compensation. Each member of the Arbitration Panel shall be compensated for
any and all services rendered under this Paragraph at a rate designated by the
AAA, plus reimbursement for any and all reasonable expenses incurred and
documented in connection with the rendering of such services, payable in full
promptly upon conclusion of the proceedings before the Arbitration Panel. Such
compensation and reimbursement shall be borne by the non-prevailing Party as
determined by the Arbitration Panel in its sole and absolute discretion.
49. WAIVER OF TRIAL BY JURY. THE LANDLORD AND THE TENANT, TO THE FULLEST EXTENT
THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BROUGHT BY ANY PARTY TO THIS LEASE WITH RESPECT TO THIS LEASE, THE
PREMISES, OR ANY OTHER MATTER RELATED TO THIS LEASE OR THE PREMISES.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Lease as of the Effective Date.
LANDLORD: TENANT:
ORIX OTAY, LLC, FACTORY 2-U STORES, INC.,
an Illinois limited liability company a Delaware corporation
By: ORIX Real Estate Equities, Inc., By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
a Delaware corporation Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its:Managing Member Title: Executive Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Named Printed: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President Title: Corporate Secretary
40
Exhibit "A"
Premises Legal Description
[To be Attached]
Exhibit "B"
Work Letter
THIS WORK LETTER ("Work Letter") is entered into as of this
8th day of March, 2002, by and ORIX OTAY, LLC, an Illinois limited liability
company ("Landlord"), and FACTORY 2-U STORES, INC., a Delaware corporation
("Tenant").
R E C I T A L S :
A. Landlord and Tenant have entered into that certain Single Tenant Net
Lease for the Premises, and this Work Letter is attached to the Lease as Exhibit
"B." The Work Letter is incorporated into the Lease by this reference.
Capitalized terms not defined in this Work Letter shall have the meanings given
to such terms in the Lease.
B. The Parties now desire to enter into this Work Letter in accordance
with the terms and conditions set forth below.
SECTION 1
CONSTRUCTION DOCUMENTS
1.1 Contractor's Architect. Hill Pinckert & Associates, Inc. ("Contractor's
Architect"), shall act as the Contractor's Architect with respect to the design
and construction of the "Improvements" (defined in Section 1.2.1 below).
Concurrently with (i) the delivery by Contractor's Architect of its Letter
Agreement to Contractor in accordance with Paragraph 2.2.2 of the Lease and (ii)
the delivery by ▇▇▇▇▇▇-▇▇▇▇ & Associates ("▇▇▇▇▇▇-▇▇▇▇") of its letter agreement
to Contractor in accordance with Paragraph 2.2.2 of the Lease, Landlord or
"Contractor" (defined in Section 3.1 below) shall assume all of Tenant's
obligations to the Contractor's Architect and to ▇▇▇▇▇▇-▇▇▇▇ with respect to
preparation of the Construction Drawings (defined in Section 1.2.2 below) and
performance of engineering and due diligence for the Premises in a writing
satisfactory to both Landlord and Tenant as set forth in Paragraph 2.2.2 of the
Lease.
1.2 Improvements.
1.2.1 Improvements Defined. As used in this Work Letter and in the Lease, the
"Improvements" shall mean (a) the shell improvements for the Building (defined
in Paragraph 1.2 of the Lease), (b) tenant improvements within the Building
which are Landlord's obligation to construct hereunder, (c) the "Platform
Improvements," which shall consist of those platform improvements (including a
walk-way) necessary to facilitate Tenant's access to the materials handling
system at a mezzanine level, including, without limitation, lighting and
sprinkler systems attached to such platform structure, (d) off-site and on-site
engineering and the work and improvements related thereto, and (e) subject to
the provisions of this Work Letter, all of the elements, facilities and
characteristics specified in the Improvements Specifications attached hereto as
Schedule "1" (collectively, the "Baseline Specifications") all to the extent
such items referenced in clauses (a) through (e) above are or will be identified
on the Approved Construction Documents (defined in Section 1.2.2 below) as
modified by any Changes (defined in Section 5.1 below) or Required Changes
(defined in Section 1.2.5 below) hereunder. In no event shall the Improvements
include any improvements or improvement work to be installed or performed by or
on behalf of the Tenant (other than by or for Landlord) (the "Fixture Work")
with respect to computer or specialized wiring, telephone cabling, racking and
the materials handling systems and any furniture or other Tenant personal
property.
1.2.2 Preparation of Approved Construction Documents. Landlord and Tenant each
acknowledge that they have approved the Baseline Specifications attached hereto
as Schedule "1." Contractor's Architect shall prepare the architectural drawings
and specifications and Contractor shall cause the engineering plans, the
specifications and construction drawings to be prepared for the Improvements
(collectively, the "Construction Drawings") based upon and incorporating the
Baseline Specifications attached hereto (as the same may be modified hereunder).
Tenant shall be permitted, subject to coordination with Landlord and Contractor,
to consult with Contractor's Architect. Landlord and Tenant hereby acknowledge
and agree that the Baseline Specifications (as the same may be modified as
herein provided) will be the basis to complete the Construction Drawings. The
Construction Drawings proposed and prepared by Contractor and Contractor's
Architect shall be submitted to Tenant for its approval in accordance with the
requirements below when such Construction Drawings are 30% complete, 60%
complete, 90% complete and 100% complete, as reasonably determined by Landlord.
Except to the extent approved by Tenant pursuant to this Section 1.2.2, and
subject to Section 1.2.1, the Construction Drawings shall be consistent with the
Baseline Specifications. Tenant shall have seven (7) business days from each
Landlord delivery of the Construction Drawings to advise Landlord whether or not
Tenant approves such delivery of the Construction Drawings, which approval shall
not be unreasonably withheld, conditioned or delayed; provided, however that
Tenant may disapprove, in its reasonable discretion, any part of any such
Construction Drawings delivery which is not reasonably inferable from the
Baseline Specifications in connection therewith, or at any other time prior to
approval of the Approved Construction Drawings, Tenant may require a change in
the Construction Drawings, provided, however, that Tenant may not request any
change that would result in a material change in the scope of the work
identified by the Baseline Specifications attached hereto without Landlord's
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. If Tenant requests a change in, or reasonably disapproves, any
Construction Drawings, Landlord shall use reasonable efforts to respond to such
change or disapproval as soon as reasonably practical. Tenant shall then have
five (5) days to review and approve such changes and any subsequent changes to
the Construction Drawings as revised. Tenant shall deliver a reasonable response
to any reasonable request by Landlord for information pertaining to the
materials handling system requesting a response on March 15, 2002 or later on
not less than five (5) business days prior written notice. The final
Construction Drawings for the Improvements proposed by Landlord and approved by
Tenant, as provided herein, and as modified by any Change or Required Change
implemented after such approval by Tenant (each as hereinafter defined) shall be
referred to herein collectively as the "Approved Construction Documents."
1.2.3 Permits. Once Landlord has obtained the Approved Construction Documents
(or prior thereto, if appropriate), Landlord shall cause Contractor to apply for
and pursue the issuance of a building permit for, and all permits or approvals
required by governmental authorities having jurisdiction over, the Improvements
(collectively, the "Improvements Approvals").
1.2.4 Completion. Subject to the terms of the Lease and this Work Letter,
Landlord shall cause the Contractor to complete the construction and
installation of the Improvements in accordance with the Approved Construction
Documents and all Applicable Requirements (defined in Paragraph 6.3 of the
Lease) in effect on the date of Substantial Completion (defined in Section 6.2
below) of the Improvements.
1.2.5 Required Changes. Notwithstanding anything to the contrary contained in
this Work Letter, subject to the provisions of this Section 1.2.5, Landlord
shall be entitled to make changes to the Baseline Specifications, Construction
Drawings or the Approved Construction Documents, to the extent such changes
("Required Changes") (i) are necessitated by any applicable building codes and
other state, federal, city or county requirements of any governmental (or
quasi-governmental or administrative) code, rule, regulation, law, approval or
other authority, or (ii) are in connection with off-site improvements and are
required to be addressed or implemented by the Improvement Approvals (or other
governmental requirements not included in the Baseline Specifications),
provided, however, in each case of a Required Change, Landlord shall use
commercially reasonable efforts (consistent with Landlord's obligations to
comply with Applicable Requirements) to minimize the scope and the amount of
additional Improvements Costs (defined in Section 2.2 below) resulting from such
Required Change. Promptly following receipt of notice of each material Required
Change, Landlord shall notify Tenant of the same.
B-2
SECTION 2
DESIGN AND CONSTRUCtiON COSTS
2.1 Design and Construction Costs for Improvements. Subject to the terms of the
Lease and this Work Letter, Landlord shall pay the entire cost of designing and
constructing the Improvements in accordance with the Approved Construction
Documents and all Applicable Requirements.
2.2 Improvement Costs Defined.
2.2.1 Inclusions.
Subject to the provisions of Section 2.2.2 below, the term
"Improvement Costs" shall mean the sum of the following (and only the
following):
2.2.1.1.1 Purchase Agreement Costs. All amounts paid by Landlord as purchaser
pursuant to the provisions of that certain Agreement for Purchase and Sale and
Joint Escrow Instructions dated January 30, 2002 entered into between Sunroad
Otay Partners, L.P., a California limited partnership ("Seller") and Tenant, as
amended (as so amended, the "Purchase Agreement"), (to be assigned to Landlord
by Tenant pursuant to that certain Assignment of Purchase Agreement ("Assignment
of Purchase Agreement") in the form of Schedule "2" attached hereto), including,
without limitation, the purchase price for the Land (and any ▇▇▇▇▇▇▇ money
deposits) thereunder. Notwithstanding any provision of the Lease to the
contrary, neither Tenant nor Landlord shall amend the Purchase Agreement (i) in
any manner which will increase such amounts payable to Seller under the Purchase
Agreement, or (ii) in any other material manner, without the prior written
consent of the other party hereto, which consent shall not be unreasonably
withheld, conditioned or delayed.
2.2.1.1.2 Other Purchase Costs. All amounts paid by Landlord to independent
third parties for title reports, survey costs, title insurance and endorsements,
escrow fees and costs, closing costs, recording fees, documentary transfer
taxes, due diligence investigations and reports and due diligence insurance
costs relating to the acquisition of the Land by Landlord under the Purchase
Agreement.
2.2.1.1.3 Entitlements Costs. All amounts paid and/or reimbursed by Landlord
and/or any corporation or entity controlling, controlled by, or under common
control with Landlord, (collectively, Landlord's "Affiliates") to independent
third parties, including, without limitation, governmental entities, engineers
and lobbyists, in connection with (or on account of) the application for,
negotiation and/or pursuit of, and issuance of all governmental or utility
company permits, approvals, agreements, or entitlements, including, without
limitation, any exaction, fee or other payment paid with respect thereto, costs
in connection with complying with all laws, ordinances, rules and regulations
and the cost of any onsite or offsite improvement (or bond therefor) required
and paid in connection with the development and construction of the Improvements
contemplated by the Lease.
2.2.1.1.4 Improvements Design and Engineering Fees and Expenses. All fees and
other payments paid to Contractor's Architect under the Contractor's Architect
agreement, and all fees and expenses payable to independent third party
engineers and other consultants, including, without limitation, ▇▇▇▇▇▇-▇▇▇▇
(collectively, "Landlord's Consultants") in connection with the acquisition of
the Land and the design and engineering of the Improvements, and including,
without limitation, preparation of the Baseline Specifications and Drawings, the
Construction Drawings, the Approved Construction Documents and in connection
with any Changes or Required Changes thereto.
B-3
2.2.1.1.5 Improvements Construction Contract. All amounts paid by Landlord to
the Contractor including under the Construction Contract or paid directly to
subcontractors, material suppliers or other applicable parties with respect to
the development and construction of the Improvements, provided that to the
extent such parties are not included under the Construction Contract, such
parties (and the amount and purpose of the payment) shall have been previously
approved by Tenant, which approval shall not be unreasonably withheld.
2.2.1.1.6 Tenant Due Diligence Cost Reimbursement. Reimbursed Costs
(defined in Paragraph 2.2.4(d) of the Lease) paid to Tenant under the Lease.
2.2.1.1.7 Brokerage Commissions. The amount of commission paid by Landlord to
The Staubach Company ("Tenant's Broker") for the Original Term of the Lease and
for acquisition of the Land under a separate agreement between Landlord and
Tenant's Broker. Notwithstanding any provision of the Lease to the contrary, any
commission paid to Tenant's Broker (or any other broker) with respect to any
Extension Term hereunder shall not be included within Improvement Costs.
2.2.1.1.8 Cost of Capital. Subject to the provisions of Section 6.3(c) and
Section 7.2.2 of this Work Letter, a cost of capital charge ("Cost of Capital
Charge") equal to (x) four and one-half percent (4.5%) per annum (the
"Applicable Rate") calculated on a daily basis (and prorated in the case of
partial periods, on the basis of a 360 day year) of (y) all Improvement Costs
(other than Cost of Capital Charges) paid by Landlord, from the date each such
Improvement Cost is so paid by Landlord until the Commencement Date; provided,
however, that Cost of Capital Charges shall also include an amount equal to
interest at the Applicable Rate on the total Improvement Costs paid or incurred
as of the Commencement Date for the first month of the Early Occupancy Period
(defined in Paragraph 4.3 of the Lease).
2.2.1.1.9 Development Fee. Landlord's development fee (the "Development Fee")
in the amount of Five Hundred Thousand Dollars ($500,000.00).
2.2.1.1.10 Attorney Fees. Subject to Section 2.2.2(f) hereof, Landlord's
attorneys fees and expenses incurred in connection with (i) negotiating and
reviewing the Purchase Agreement and any amendments thereto, and closing the
purchase of the Land thereunder, (ii) pursuing the Entitlements, (iii)
negotiating contracts with Contractor's Architect, ▇▇▇▇▇▇-▇▇▇▇, the Contractor,
Landlord's Consultants and any other third party consultants participating in
the acquisition of the Land and the design and/or construction of the
Improvements.
2.2.1.1.11 If and to the extent consulting with independent third party
consultants is reasonably required by Landlord in connection with the Fixture
Work due to special issues raised by or special features of such Fixture Work),
Landlord's out-of-pocket expenses incurred in retaining such consultants for
such purposes.
2.2.1.1.12 Building permits, testing and inspection fees (and other governmental
or utility assessments and connection fees) relating to the Improvements.
B-4
2.2.1.1.13 Any property taxes or other assessments for the Premises accruing
prior to the Commencement Date (and for which Landlord is responsible to pay)
and not reimbursed by the Seller under the Purchase Agreement.
2.2.1.1.14 Any costs for utilities incurred by Landlord or Contractor in
connection with Tenant's access to the Premises under Section 8.6 prior to the
Rent Commencement Date.
2.2.1.1.15 Title insurance premiums for the Premises and fees payable on account
of any construction escrow for disbursement of proceeds for construction of the
Improvements.
2.2.1.1.16 Any costs (which would be Improvement Costs if applicable to the
Premises) related to the Alternate Site, if any.
2.2.1.1.17 Any costs for insurance required to be provided by Landlord under the
Lease and this Work Letter prior to the Commencement Date.
2.2.1.1.18 Any Tenant Delay Costs (defined in Section 7.1 below).
2.2.1.1.19 Any reasonable costs incurred in connection with any
audit of all or any portion of the Improvement Costs.
2.2.1.1.20 Subject to Section 2.2.2 hereof, all other out-of-pocket costs
relating to the development of the Premises and the Improvements prior to the
Rent Commencement Date which Landlord may incur, which costs shall be subject to
Tenant's reasonable approval.
2.2.2 Exclusions to Improvement Costs.
Notwithstanding any provision of this Work Letter to the
contrary, the term "Improvement Costs" shall not include any of the following:
2.2.2.1.1 Brokerage Commissions. Except for the brokerage commissions
specifically described in Section 2.2.1(g) above, any commission or fee payable
to any broker or finder, including, without limitation, any of the same which
relate to any permanent, construction, mezzanine, unsecured, secondary or other
financing for or relating to the Premises.
2.2.2.1.2 Financing Costs. Except for the amounts specifically described in
Section 2.2.1(h) above, any costs, payments, fees, interest or other expenses of
any kind relating to the cost of capital or any form of financing, secured or
unsecured, for the Premises, or any portion thereof, including, without
limitation, any permanent, construction, acquisition, mezzanine, unsecured,
secondary or other financing.
2.2.2.1.3 Internal Administration Costs. Any internal or overhead costs of
Landlord (or any Affiliate thereof), including, without limitation, rent,
utilities, staff compensation, office supplies and the like; provided that this
Section 2.2.2(c) shall not apply to the costs described in Sections 2.2.1(h) and
(i).
B-5
2.2.2.1.4 Payments to Landlord and Affiliates. No payments to (that are to be
retained by) Landlord and its Affiliates other than the Development Fee and Cost
of Capital Charges described in Sections 2.2.1(i) and (h) above.
2.2.2.1.5 Attorneys' Fees. Any attorney fees, costs or expenses relating to (i)
any financing of the Premises or (ii) negotiation of the Lease or procurement of
the Letter of Credit or any other purpose not specifically identified in Section
2.2.1(j).
2.2.2.1.6 Costs Unrelated to the Property. Any cost or expense not specified in
this Section 2.2.2 and not directly related to (i) the acquisition, development,
design or construction of the Premises or (ii) the Lease (but excluding those
costs and expenses set forth in Section 2.2.1).
2.3 Final/Actual Improvement Costs and Calculation of Base Rent. Following
Landlord's completion of the Improvements pursuant to this Work Letter and
Landlord's calculation of actual Base Rent, Landlord shall provide a reasonably
detailed notice (together with reasonable supporting documentation) to Tenant
setting forth Landlord's calculation of the First Period Monthly Base Rent
payable pursuant to Paragraph 1.4(a) of the Lease (the "Base Rent Notice").
Within thirty (30) days of its receipt of such Base Rent Notice, Tenant shall,
by a written notice delivered to Landlord, either agree to the Base Rent as
calculated by Landlord under the Base Rent Notice, or dispute such Landlord's
calculation of First Period Monthly Base Rent. Any dispute under this Section
2.3 shall be subject to binding arbitration under Paragraph 48 of the Lease. The
parties acknowledge that the sum of $214,375.00 per month ("Pro Forma First
Period Monthly Base Rent") is the current pro forma calculation of such First
Period Monthly Base Rent, based upon the current pro forma budget for
Improvement Costs. Commencing with the date (pursuant to Paragraphs 1.4(a) and
4.3 of the Lease) Tenant is required to commence the payment of Base Rent under
the Lease ("Rent Commencement Date") and until the actual amount of First Period
Monthly Base Rent is finalized under this Section 2.3, Tenant shall pay the Pro
Forma First Period Monthly Base Rent (unless the amount of the actual First
Period Monthly Base Rent shall be finalized prior to the Rent Commencement Date,
in which case such amount shall be paid by Tenant as the First Period Monthly
Base Rent from and after the Rent Commencement Date). In the event that (i) the
actual First Period Monthly Base Rent is determined to be in excess of Pro Forma
First Period Monthly Base Rent, then Tenant shall pay to Landlord the total
amount of monthly excess (the excess of actual First Period Monthly Base Rent
over Pro Forma First Period Monthly Base Rent) for each Lease Month for which
Tenant has previously paid First Period Monthly Base Rent in accordance with the
Pro Forma First Period Monthly Base Rent within thirty (30) days following final
determination of the actual First Period Monthly Base Rent under this Section
2.3, or (ii) alternatively, if the final determination of First Period Monthly
Base Rent under this Section 2.3 reflects that Tenant has overpaid First Period
Monthly Base Rent for such prior Lease Months (based upon the Pro Forma First
Period Monthly Base Rent), then Landlord shall credit against the Rent next
coming due under the Lease the total amount of any such overpayment (of Pro
Forma First Period Monthly Base Rent in excess of actual First Period Monthly
Base Rent) (until such overpayment shall be exhausted).
2.4 Allocation of Cost Responsibility.
2.4.1 Improvements Costs Generally. All Improvements Costs (a) are utilized,
pursuant to Section 2.2 above, to calculate Base Rent and (b) are not (other
than through payment of Base Rent pursuant to the provisions of the Lease and
other than as set forth in this Work Letter) reimbursable by Tenant to Landlord.
B-6
2.4.2 Impact of the Improvements Guaranteed Maximum Amount.
(a) The Improvements Guaranteed Maximum Amount (defined in Section 3.2(d)
below), shall be adjusted by the following:
(i) The aggregate increase or decrease, as applicable, in the Improvements
Guaranteed Maximum Amount, if any, resulting from all Changes to the Baseline
Specifications, the Construction Drawings or the Approved Construction Documents
required either by Tenant pursuant to Section 5.1 below or resulting from any
Required Change.
(ii) The aggregate increase in the Improvements Guaranteed Maximum Amount
(including the "General Conditions" (defined in Section 3.2(d)(iii) below), if
any, payable to the Contractor under the Construction Contract to the extent
resulting from "Tenant Delays" (defined in Section 7.1 below) and "Force Majeure
Delays" (defined in Section 7.3 below) (to the extent consistent with Landlord's
general practices with respect to comparable guaranteed maximum construction
contracts).
(iii) The increase or decrease, as the case may be, in the Improvements
Guaranteed Maximum Amount, resulting from the increase or decrease in the actual
cost of any allowance item in comparison to the allowance amount set forth in
the original Construction Contract or any change orders thereunder.
(iv) Building permits, testing and inspection fees relating to the Improvements.
(v) The costs of implementing and utilizing overtime in the schedule for the
work in order to meet the Target Substantial Completion Date (as defined in
Section 6.3 below), to the extent authorized by Section 6.3.
(b) The Improvements Guaranteed Maximum Amount includable within Improvements
Costs pursuant to Section 2.2 above shall also be decreased by fifty percent
(50%) of the "savings" (from the Improvements Guaranteed Maximum Amount under
the Construction Contract) achieved under the Construction Contract as
anticipated under Section 3.2 below (provided, to the extent the actual
"savings" provision of the actual Construction Contract ultimately executed with
the Contractor shall vary from a 50/50 split, an appropriate adjustment shall be
made in the application of this clause (b)).
SECTION 3
THE CONTRACTOR
3.1 Contractor. ▇▇▇▇▇▇ Companies shall serve as the general contractor
("Contractor") that shall perform the construction work for the Improvements.
Landlord may elect to replace, in its sole discretion, the Contractor with
either ▇▇▇▇▇▇▇ Construction Company or ▇▇▇▇▇▇▇ Construction Company at any time,
subject to the prior written approval of Tenant, which approval shall not be
unreasonably withheld, conditioned or delayed. Landlord's election to replace
the Contractor shall not relieve Landlord from its obligations hereunder.
B-7
3.2 Construction Contract.
(a) Landlord shall enter into a design/build "guaranteed maximum amount"
construction contract (the "Construction Contract") with the Contractor on a
basis consistent with the requirements of this Work Letter (and otherwise
containing commercially reasonable provisions) for the construction and
installation of the Improvements in accordance with the Approved Construction
Documents and all Applicable Requirements.
(b) Landlord shall use commercially reasonable efforts to include in the
Construction Contract commercially reasonable provisions which (i) provide
commercially reasonable incentives for the Contractor to Substantially Complete
all Improvements in accordance with the requirements of this Work Letter on or
before March 20, 2003 (with the period of time following commencement of
construction within which the Contractor shall agree to so achieve Substantial
Completion being referred to herein as the "Contract Time"); and (ii) provide
commercially reasonable financial penalties (which, to the extent received by
Landlord, shall reduce Improvements Costs) in the event the Improvements are not
Substantially Complete within the Contract Time (and such failure is a breach of
the Contractor's Contract Time obligations under the Construction Contract).
Notwithstanding anything to the contrary contained herein, Tenant recognizes
that following the acquisition of the Land by Landlord, Tenant's sole remedy
with respect to Landlord's failure to complete the Improvements on or before the
Outside Termination Date (defined in Section 6.3.2 below) shall be to terminate
the Lease pursuant to Section 6.3.2 hereof.
(c) During design development with respect to the Construction Drawings,
Landlord shall cause the Contractor to competitively bid each major trade or
component and to otherwise reasonably assist Tenant to "value engineer" the
Construction Drawings (and the Improvements themselves). Tenant shall have the
right to review bids obtained with respect to only those items falling within
those certain trade categories that involve a cost of Fifty Thousand Dollars
($50,000.00) or more (each, a "Tenant Bid Item"). Landlord shall cause
Contractor to obtain and deliver to Landlord and Tenant for their review at
least two (three, in the case of Tenant Bid Items in excess of $50,000) final
competitive bids (each a "Bid") from qualified subcontractors in connection with
each Tenant Bid Item. Landlord shall select the lowest competitive bid in each
case, except where it has a commercially reasonable purpose in selecting a
higher bid which commercially reasonable purpose may include the quality and
availability of materials, the reputation of the party submitting the bid, and
whether or not the bid meets the applicable construction schedule and timing for
the construction and completion.
(d) The "Improvements Guaranteed Maximum Amount" under the Construction Contract
shall be subject to the prior written approval of Tenant, which approval shall
not be unreasonably withheld, conditioned or delayed. In the event Tenant shall
not so approve the Improvements Guaranteed Maximum Amount, and the Parties shall
not otherwise agree, the "Improvements Guaranteed Maximum Amount" shall mean
with respect to the Construction Contract the sum of each of the following:
(i) the total of all fixed amount subcontract bids (for all trades and
components of the Improvements);
(ii) the total of all allowances under the Construction Contract for the
Improvements (allowances shall apply to each of the items described on Schedule
"3" attached hereto and to any additional items approved by Tenant, which
approval shall not be unreasonably withheld, conditioned or delayed;
B-8
(iii) the Contractor's General Conditions with respect to the Improvements. The
Contractor's "General Conditions" for the Improvements shall be consistent with
Schedule "4" attached hereto;
(iv) the Contractor's Contingency with respect to the Improvements. The
Contractor's "Contingency" for the Improvements shall be $140,000;
(v) the Contractor's Fees with respect to the Improvements. The Contractor's
"Fees" with respect to the Improvements (including with respect to all Changes)
under the Construction Contract shall be 3.75% of the total "cost of the work"
under the Construction Contract;
(vi) any costs for insurance required to be carried by Contractor under the
Construction Contract; and
(vii) amounts payable by the Contractor to Contractor's Architect, ▇▇▇▇▇▇-▇▇▇▇
and any other consultants reasonably approved in advance by Tenant for services
and reimbursable expenses.
(e) Landlord shall carry and maintain (or cause the Contractor to carry and
maintain under the Construction Contract) from and after the date of acquisition
of the Land through the Rent Commencement Date insurance consistent with
Landlord's normal practices for comparable projects; provided it may also carry
earthquake insurance during construction of the Improvements.
(f) Contractor (and/or the applicable subcontractor, with respect to those
warranties for HVAC equipment and the roof described below) shall guarantee or
warrant in the Construction Contract to Tenant and Landlord that the
Improvements shall be free from any defects for a period of one (1) year from
the date of Substantial Completion of the Improvements; provided, however, that
the warranty with respect to the HVAC equipment shall be for at least five (5)
years (following Substantial Completion) and the warranty for the roof shall be
for fifteen (15) years. All such warranties or guarantees as to materials or
workmanship of or with respect to the Improvements that extend beyond such one
(1) year period shall be contained in the Construction Contract and shall be
written such that such guarantees or warranties shall be enforceable by Landlord
but in the event that Landlord terminates its efforts to enforce such guarantees
or warranties pursuant to Paragraph 7.2(b) of the Lease, Landlord shall either
assign or permit Tenant to enforce such guarantees or warranties.
SECTION 4
TENANT INSURANCE
4.1 Tenant Insurance Requirements.
4.1.1 General Coverages. During all periods that Tenant, its contractors,
subcontractors or agents enter the Premises prior to the Commencement Date,
Tenant shall maintain the commercial general liability insurance required to be
maintained by Tenant pursuant to Paragraph 8 of the Lease. All of Tenant's
contractors, subcontractors and agents entering the Premises pursuant to Section
8.6 shall carry worker's compensation insurance covering all of their respective
employees, and shall also carry commercially reasonable automobile and public
liability insurance.
4.1.2 General Terms. Certificates for all insurance carried pursuant to this
Section 4.1 shall be delivered to Landlord before any entry by Tenant or its
contractors, subcontractors or agents onto the Premises pursuant to Section 8.6.
All such policies of insurance must contain a provision that the company writing
said policy shall endeavor to give Landlord thirty (30) days' prior written
notice of any cancellation of such insurance. Tenant shall maintain or cause to
be maintained all of the foregoing insurance coverage in force until the
Commencement Date. All policies for liability insurance carried under this
B-9
Section 4.1 shall insure Landlord, Landlord's Lenders, Contractor and Tenant, as
their interests may appear. All such insurance, except Workers' Compensation,
maintained by Tenant's Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance and that any other insurance maintained by Landlord is excess
and noncontributing with the insurance required hereunder. The requirements for
the foregoing insurance shall not derogate from the provisions for
indemnification under the Lease. Nothing contained herein shall limit the
requirements and provisions in the Lease relating to Tenant's insurance
obligations.
SECTION 5
TENANT changes
5.1 Changes in the Approved Construction Documents. Tenant may in good faith
request reasonable changes to the Approved Construction Documents (a "Proposed
Change"), and, in such event, Tenant shall provide Landlord written notice
detailing with reasonable specificity the Proposed Change. In the event Tenant
requests a Change, Landlord shall promptly deliver to Tenant the following: (i)
the Contractor's estimate of the change in Improvements Costs resulting from
such proposed Change, (ii) an estimate of the number of days of Tenant Delay
Period (defined in Section 7.1 below), if any, which would result from
implementation of the Change (including the delay in Substantial Completion, if
any, required for Landlord to consider such Change), (iii) any Tenant Delay
Costs (defined in Section 7.2.1 below) to be incurred in connection with such
Change, and (iv) notice either of Landlord's (A) approval of the Proposed Change
(not to be unreasonably withheld or conditioned), or (B) disapproval of the
Proposed Change, in which event Landlord's notice shall specify in reasonable
detail the reasons for Landlord's disapproval. Tenant shall have the right,
within three (3) business days after receipt from Landlord of such information,
to notify Landlord whether or not Tenant elects to make such Proposed Change;
provided, however, that if Landlord has disapproved of such Proposed Change,
then Tenant shall have the right to elect to make such Proposed Change only if
Tenant makes revisions to the Proposed Change to eliminate the reasonable
grounds specified by Landlord for disapproval of such Proposed Change. If no
such election is made by Tenant within said three (3) business day period, then
Tenant shall be deemed to have elected not to make the applicable Proposed
Change. If Tenant desires to make the Proposed Change in question, Tenant shall
deliver a written notice (the "Construction Document Change Notice") to
Landlord, setting forth in detail the Proposed Change Tenant desires to make to
the Approved Construction Documents and, if applicable, Tenant's approval of the
costs thereof and the associated Tenant Delay Period (which Tenant Delay Period
shall consist of the estimate provided to Tenant by Landlord during the approval
process for such Proposed Change). Any Proposed Change that is set forth in a
Construction Document Change Notice shall be deemed to be a "Change" for
purposes of the Lease and this Work Letter.
5.2 Governmental Compliance. The Improvements shall comply in all respects with
the following: applicable building codes and other state, federal, city or
quasi-governmental laws, codes, ordinances and regulations in effect on the
Commencement Date, as each may apply according to the rulings of the controlling
public official, agent or other person.
5.3 Inspection by Tenant. Tenant (and Tenant's Agents) shall have the right,
subject to Tenant's indemnification obligation under Section 8.6 below and upon
prior reasonable notice to Landlord, to inspect, on a not-to-interfere basis,
the Improvements at all reasonable times; provided, however, that Tenant's
failure to inspect the Improvements shall in no event constitute a waiver of any
of Tenant's rights hereunder (or under the Lease) nor shall Tenant's inspection
of the Improvements constitute Tenant's approval of the same (except to the
extent specifically provided in the Lease and this Work Letter).
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5.4 Tenant's Meetings. Commencing upon execution of the Lease, Landlord shall
hold regular meetings, at a reasonable time, with the Contractor regarding the
progress of the preparation of Construction Drawings, bidding and value
engineering of the Improvements and the construction of the Improvements, which
meetings shall be held at Tenant's office prior to commencement of construction
and at the Premises after commencement of construction (or, in any event, at
such other place as Landlord and Tenant may mutually agree), and Tenant shall
receive reasonable prior notice of, and shall have the right to attend, all such
meetings. Tenant shall be permitted to invite any necessary third party
consultants as are needed for coordination of the work for the Improvements.
5.5 Completion. At the conclusion of construction of the Improvements, (i)
Landlord shall cause the Contractor (A) to update the Approved Construction
Documents as modified under this Work Letter as to the mechanical drawing
portion thereof, and to provide field-grade ▇▇▇▇-ups of the Approved
Construction Documents to reflect all changes made to the Approved Construction
Documents during the course of construction, and (B) to deliver to Tenant two
(2) sets of reproducibles of such updated Approved Construction Documents,
together with any permits or similar documents issued by governmental agencies
in connection with the construction of the Improvements, within sixty (60) days
following issuance of a certificate of occupancy for the Premises, and (ii)
Landlord shall deliver to Tenant a copy of all warranties, and guaranties
received by Landlord from Contractor relating to the Improvements.
SECTION 6
SUBSTANTIAL COMPLETION; COMMENCEMENT DATE
6.1 Commencement Date. Subject to the provisions of Section 6.3(c) and Section
7.2.2 below, the Commencement Date shall occur on the date that Substantial
Completion of the Improvements is achieved and written notice thereof is
delivered to Tenant.
6.2 Definition of Substantial Completion of the Improvements. For purposes of
this Work Letter, "Substantial Completion" and "Substantially Complete" and
other references herein and in the Lease to substantial completion shall mean,
subject to the provisions of this Section 6.2, the date upon which: (i) the
completion of construction of the Improvements except for minor details of
construction and decoration and minor mechanical adjustments which do not
materially interfere with Tenant's use of the Premises (the "Punch List Items");
(ii) Tenant has been tendered by Landlord access to, possession of and ability
to occupy the Premises (for purposes of conducting the Fixture Work); (iii)
Landlord has secured confirmation of completion of the Improvements (other than
Fixture Work) and delivered to Tenant a copy of a certificate of occupancy or
its equivalent for the Premises; and (iv) Landlord has provided Tenant access to
636 finished parking spaces and 136 finished trailer storage spaces on the
Premises. Within ten (10) days of Substantial Completion of the Improvements,
Landlord shall cause the Contractor to inspect the Premises and the Improvements
with a representative of Tenant and reasonably complete a list of the Punch List
Items, and Landlord and Tenant shall both execute such list to indicate their
approval thereof. Landlord shall cause the Contractor to promptly commence and
diligently pursue to completion the correction and completion of the Punch List
Items, so that the Punch List Items are completed within thirty (30) days after
the completion of each such list subject to Force Majeure Delays or Tenant
Delays, or as soon thereafter as is reasonably practicable, taking into account
Tenant's move into the Premises. Tenant shall not be entitled to commence
business occupancy of the Premises for purposes of conducting its business (as
opposed to the installation of the Fixture Work and furniture) until Tenant has
participated in preparation of the Punch List Items.
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6.3 Delay in Substantial Completion.
(a) Landlord agrees to use commercially reasonable efforts to cause Substantial
Completion of the Improvements to occur by the date ("Target Substantial
Completion Date") of April 14, 2003, subject to extension for Force Majeure
Delays, Tenant Delays, and delays due to the inability to obtain the building
permit (and any other permits or approvals required to commence construction) on
or before July 1, 2002. In the event that, despite such commercially reasonable
efforts, Landlord determines on or after January 1, 2003 that it will be unable
for any reason to cause Substantial Completion of the Improvements to occur on
or before June 1, 2003, Landlord shall have the right, upon written notice to
Tenant, to (i) require Contractor to reasonably hire and employ overtime
construction assistance to achieve such date, the additional cost of which shall
be deemed to be an Improvement Cost. Any such notice shall specify, as
applicable, Landlord's estimate of the increase to Improvement Costs resulting
from Contractor's overtime work and Landlord's revised Target Substantial
Completion Date.
(b) In addition, in the event on or after January 1, 2003 (but not later than
February 15, 2003), Landlord determines in good faith, based upon completion and
critical path schedules then being provided by Contractor, that the then
anticipated date of Substantial Completion of the Improvements is a date later
than the then effective Outside Termination Date (defined below) (which is
subject to extension pursuant to Section 6.3(c) below), Landlord may propose (by
delivery (not later than February 15, 2003) of written notice of such proposed
date to Tenant (an "Outside Termination Date Revision Notice")) that the Outside
Termination Date under Section 6.3(c) be extended to the date ("New Outside
Termination Date") one (1) business day following the date that the Contractor
then estimates will be the date Substantial Completion of the Improvements will
be achieved (which date shall also be subject to extension pursuant to clause
(i) of the last sentence of Section 6.3(c) below). Within ten (10) business days
of Tenant's receipt of such Outside Termination Date Revision Notice, Tenant may
elect, by delivery of written notice to Landlord, to terminate this Lease; if
Tenant does not so terminate this Lease within such ten (10) business days,
Tenant shall be deemed to have accepted the New Outside Termination Date
(specified in the Outside Termination Date Revision Notice) as the revised
Outside Termination Date.
(c) Notwithstanding any provision of this Work Letter or the Lease to the
contrary, (i) in the event that Landlord shall not achieve Substantial
Completion on or before August 1, 2003 (which date shall be subject to extension
as provided in clauses (i) and (ii) of the last sentence of this Section 6.3(c))
(the "Outside Termination Date"), Landlord shall immediately notify Tenant in
writing (the "Revised Date Notice") of the date the Contractor then estimates
will be the date of Substantial Completion (which estimated date is referred to
as the "Revised Date") and Tenant shall have, subject to the provisions of this
Section 6.3(c), as its sole and absolute remedy hereunder and under the Lease
(for such failure to achieve Substantial Completion by such date), the right to
terminate the Lease ("Tenant's Termination Right") by delivery of written notice
of termination ("Termination Notice") to Landlord (which Termination Notice
shall be effective upon receipt by Landlord of such notice provided that
Substantial Completion is not achieved prior to delivery to Landlord of the
Termination Notice) at any time which is following such failure to timely
achieve Substantial Completion but is not later than fifteen (15) business days
following receipt by Tenant of Landlord's Revised Date Notice, (ii) in the event
that Tenant shall not terminate this Lease pursuant to the preceding clause (i),
the Revised Date specified in the Revised Date Notice shall automatically be
deemed to be the new Outside Termination Date (unless Tenant shall elect (a
"2004 Election"), by delivery of written notice to Landlord within the fifteen
(15) business day period described in clause (i), to require that the
Commencement Date shall be not earlier than January 1, 2004, in which case the
new Outside Termination Date shall be the later of such Revised Date and January
1, 2004), and in the event that Landlord shall fail to achieve Substantial
Completion on or before such new Outside Termination Date, the rights and
obligations of Tenant and Landlord with respect to such failure shall be the
same as those applicable under this Section 6.3(c) with respect to Landlord's
failure to achieve Substantial Completion on or before the earlier Outside
Termination Date (before revision pursuant to clause (ii)), and (iii) the
process provided in the preceding provisions of this Section 6.3(c) shall be
repeated until Substantial Completion is achieved or this Lease is terminated
pursuant to this Section 6.3(c) (whichever event shall first occur); provided,
B-12
however, in any event, if Substantial Completion is not achieved by March 31,
2004, Tenant and, provided Landlord is not in default of its obligations under
this Work Letter with respect to achievement of Substantial Completion,
Landlord, shall each have the right to terminate this Lease at any time which is
after March 31, 2004 and is prior to achievement of Substantial Completion by
delivery of written notice to the other Party hereto. Notwithstanding any
provision of this Work Letter to the contrary, in the event that there shall be
a 2004 Election by Tenant hereunder, there shall be no Cost of Capital Charges
included within Improvements Costs with respect to the period following the
Revised Date specified in Landlord's first Revised Date Notice. The Outside
Termination Date (or the New Outside Termination Date, as the case may be) shall
be extended (i) one (1) day for each day of Tenant Delay Period, (ii) as
provided in Section 6.3(b) and (iii) as provided in this Section 6.3(c).
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇; TENANT DELAYS; TENANT DELAY COSTS
7.1 Tenant Delays.
-------------
For purposes of this Work Letter, subject to the provisions of
this Section 7.1, the term "Tenant Delay" shall mean: (a) Tenant's failure to
timely comply with any of its obligations under this Work Letter; or
(b) Tenant's failure to timely take any action expressly required under this
Work Letter or to timely approve any matter expressly requiring Tenant's
approval pursuant to this Work Letter; or
(c) Any Change requested (and approved) by Tenant pursuant to Section 5.1 in the
Approved Construction Documents; or
(d) Any act or omission of Tenant, or of any person, firm or corporation
employed by Tenant or any of its representatives, agents, contractors or
subcontractors, occurring on or about the Premises prior to the Commencement
Date.
Notwithstanding anything to the contrary in this Section 7.1, in the case of any
claim of a "Tenant Delay," Landlord shall give Tenant written notice of the
failure or other act or omission causing the Tenant Delay in question, and no
Tenant Delay shall be deemed to have occurred if Tenant cures such failure or
other action within twenty-four (24) business hours of receipt of such notice.
The term "Tenant Delay Period" shall mean, with respect to a particular Tenant
Delay, the period (expressed in calendar days) of any actual delay in
achievement of Substantial Completion of the Improvements (measured by the
impact on the critical path to Substantial Completion) caused by such Tenant
Delay.
7.1.2 Special Rules for Tenant Delay. Notwithstanding any provision of this Work
Letter or the Lease to the contrary, in no event shall the Commencement Date be
affected or deferred on account of any Tenant Delays and, except as provided in
Section 7.2.2 below, in no event shall the Rent Commencement Date be affected or
deferred on account of any Tenant Delays.
B-13
7.2 Tenant Delay Costs.
7.2.1 Definition. "Tenant Delay Costs" shall be the following:
----------
7.2.1.1 Improvements Changes. Any increase in the Improvements Guaranteed
Maximum Amount under the Construction Contract occurring following the initial
calculation of the Improvements Guaranteed Maximum Amount thereunder as the
result of a Change in the Baseline Specifications, the Construction Drawings or
the Approved Construction Documents requested and approved by Tenant pursuant to
Section 5.1.
7.2.1.2 Tenant Delays. Any costs for rescheduling work, inspection fees or any
other cost (reasonably approved by Tenant) (other than costs of capital or
financing costs) incurred by Landlord in constructing the Improvements hereunder
on account of a Tenant Delay.
7.2.2 Application.
(a) Any Tenant Delay Costs incurred by Landlord under Section 7.2.1 (and
actually paid by Landlord) shall constitute an Improvements Cost under Section
2.2 above. From and after the first sixty (60) days, in the aggregate, of Tenant
Delay Period, the Applicable Rate (defined in Section 2.2 above) for the period
of any additional days of Tenant Delay Period (after the first sixty days) shall
be adjusted to increase from 4.5% per annum to 10.67 % per annum applicable to
all Improvement Costs.
(b) Notwithstanding any other provision of this Work Letter or the Lease to the
contrary, in the event there are more than one hundred fifty (150) days, in the
aggregate, of Tenant Delay Period, the Rent Commencement Date shall be
accelerated one (1) day for each Excess Tenant Delay Day (defined below). An
"Excess Tenant Delay Day" means each day of Tenant Delay Period in excess of one
hundred fifty (150) days, in the aggregate, of Tenant Delay Period. For example,
if the Rent Commencement Date would be May 15, 2004 (without adjustment for
Tenant Delay Period) and there were one hundred ninety-five (195) days of Tenant
Delay Period, the Rent Commencement Date shall be accelerated forty-five (45)
days to April 1, 2004.
7.3 Force Majeure Delays. For purposes of this Work Letter, the term "Force
Majeure Delay" shall mean only an actual delay in Substantial Completion,
resulting from strikes, lockouts or labor disputes, shortage of fuel, inability
to obtain labor or materials or reasonable substitutions therefore, fire, damage
or destruction to the Project, explosion, casualty, flood, hurricane, tornado,
inclement weather not reasonably foreseeable by the Contractor at the time of
commencement of construction; acts of God or the public enemy, sabotage, acts of
terrorism, war, invasion, insurrection, rebellion, civil unrest, riots or
earthquakes, and delays in obtaining permits or other governmental approvals to
the extent caused by a delay in the issuance of permits or other approvals by
the applicable governmental agencies generally, and not by the specifics of the
Construction Drawings or Landlord's actions in attempting to obtain such permits
or approvals and other similar causes beyond the reasonable control of Landlord;
provided, however, that no delay in the Substantial Completion by reason of any
negligence, or default (under this Lease, the Construction Contract or any
subcontract) of Contractor, any direct or indirect subcontractor or agent
thereof, or of Landlord or any agent or contractor thereof shall qualify as a
"Force Majeure Delay."
B-14
Section 8
MISCELLANEOUS
8.1 Tenant's Representative. Tenant has designated ▇▇▇▇ ▇▇▇▇ as its sole
representative with respect to the matters set forth in this Work Letter, who,
until further notice to Landlord, shall have full authority and responsibility
to act on behalf of the Tenant as required in this Work Letter.
8.2 Landlord's Representative. Landlord has designated ▇▇▇▇▇ ▇▇▇▇▇ as its sole
representative with respect to the matters set forth in this Work Letter, who,
until further notice to Tenant, shall have full authority and responsibility to
act on behalf of the Landlord as required in this Work Letter.
8.3 Notwithstanding any provision Paragraph 23 of the Lease (Notices) to the
contrary, notices required or permitted to be given prior to the Commencement
Date under Sections 1.2.2, 3.2(c), 5.1, 5.3, 5.4 and 5.5 of this Work Letter
shall be deemed to have been given if such notices arose in the context of
Tenant's meetings, including pursuant to Section 5.4 of this Work Letter or were
delivered to the address of the intended Party as specified below (in lieu of
delivery to the addresses specified in Paragraph 1.10 of the Lease), provided,
however, that notwithstanding the foregoing in no event shall this Section 8.3
apply to any notice to be given under Section 2.3 , including, without
limitation, the Base Rent Notice, or to any notice to be given under Section
6.3:
Tenant's Representative: ▇▇▇▇ ▇▇▇▇
Factory 2-U Stores, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Landlord's Representative: ▇▇▇▇ ▇▇▇▇▇▇
ORIX Real Estate Equities, Inc.
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8.4 Time of the Essence of This Work Letter. Time is of the essence
of this Work Letter. Unless otherwise indicated, all references herein to a
"number of days" shall mean and refer to calendar days.
8.5 Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in the Lease, if a Breach as described in the Lease occurs at any time
on or before Substantial Completion of the Improvements, then (i) in addition to
all other rights and remedies granted to Landlord pursuant to the Lease,
Landlord shall have the right to cause the Contractor to cease the construction
of the Improvements (in which case, Tenant shall be responsible for any delay in
Substantial Completion caused by such work stoppage and all liens and other
costs incurred by Landlord thereby).
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8.6 Tenant's Access. Landlord shall permit Tenant and Tenant's agents or
independent contractors to enter the Premises prior to the Commencement Date, in
order that Tenant may perform the Fixture Work, subject to the terms and
conditions of this Section 8.6. Tenant shall give Landlord not less than five
(5) days prior written notice requesting access to the Premises, which notice
shall contain and/or shall be accompanied by: (a) a description of the work to
be performed by those persons and entities for whom and which such access is
being required; the names, itemized by trade, of who will be present in the
Premises; (b) upon the reasonable request of Landlord, copies of all contracts
pertaining to the performance of the work for which such early access is being
requested; (c) copies of all plans and specifications pertaining to the work for
which such access is being requested; (d) upon the request of Landlord, copies
of all licenses and permits required in connection with the performance of the
work for which such access is being requested; and (e) certificates of insurance
naming Landlord and Contractor as additional insured/loss payees as applicable
in form reasonably acceptable to Landlord. All of the foregoing shall be subject
to Landlord's written approval, which approval may be withheld in Landlord's
reasonable discretion. Entry onto the Premises on account of such Improvements
shall be subject to the condition that (i) Tenant and Tenant's agents,
employees, representatives, invitees, contractors, subcontractors, workmen,
mechanics and suppliers shall work in reasonable harmony and not unreasonably
interfere with Landlord, Contractor and their respective agents and contractors
in doing its work in, to, or on the Premises; (ii) Tenant shall maintain, in
full force and effect, the insurance policy or policies required under the
Lease, and shall cause the Contractor to be designated as an Additional Insured;
(iii) Tenant shall pay for any utilities required solely by Tenant in connection
with Tenant's early access to the Premises; and (iv) the entry under this
Section 8.6 of Tenant and Tenant's agents, employees, representatives, invitees,
contractors, subcontractors, workmen, mechanics and suppliers shall not
interfere with or delay Substantial Completion of the Improvements or issuance
of the certificate of occupancy. If at any time such entry or occupancy shall
cause or threaten to cause such disharmony or interference, Landlord, in
Landlord's reasonable discretion, shall have the right to withdraw and cancel
(to the extent reasonably necessary to eliminate such disharmony or
interference) such license upon 24 hours' prior written notice to Tenant. Tenant
agrees that any such entry into and occupancy of the Premises shall be deemed to
be under all of the terms, covenants, conditions and provisions of the Lease,
except as to the covenant to pay Rent. Tenant further agrees that to the extent
permitted by law, Landlord and its principals shall not be liable in any way for
any injury or death to any person or persons, loss or damage to any of Tenant's
work and installations made in the Premises or loss or damage to property placed
therein prior to the Commencement Date, the same being at Tenant's sole risk,
unless such occurrence is due to Landlord's or Landlord's agents' gross
negligence or willful misconduct. Tenant agrees to indemnify, defend and hold
harmless Landlord from and against all actions, claims, demands, costs, damages,
penalties or expenses of any kind (including, without limitation, attorneys'
reasonable fees), which may be brought or made against Landlord, or which
Landlord may pay or incur, by reason of the Tenant's early access to the
Premises pursuant to this Section 8.6.
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IN WITNESS WHEREOF, this Work Letter is executed as of the
date first written above.
LANDLORD: TENANT:
ORIX OTAY, LLC FACTORY 2-U STORES, INC.,
an Illinois limited liability company a Delaware corporation
By: ORIX Real Estate Equities, Inc.,
a Delaware corporation
Its: Managing Member By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name Printed: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name Printed: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Corporate Secretary
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