EXHIBIT 10.16
LEASE AGREEMENT
(Office)
INDEX
-----
ss SECTION PAGE
-- ------- ----
1. Summary of Terms and Certain Definitions....................... 1
2. Certain Definitions............................................ 2
3. Premises ...................................................... 2
4. Construction of the Base Building.............................. 3
5. Tenant Improvements; Tenant Allowance.......................... 7
6. Term........................................................... 9
7. Permitted Use.................................................. 10
8. Minimum Annual Rent ........................................... 10
9. Operation of Property; Payment of Expenses .................... 11
10. Compliance with Laws........................................... 17
11. Signs ......................................................... 19
12. Alterations and Fixtures ...................................... 21
13. Mechanics' Liens............................................... 22
14. Landlord's Right of Entry...................................... 22
15. Damage by Fire or Other Casualty............................... 23
16. Condemnation................................................... 24
17. Non-Abatement of Rent.......................................... 25
18. Indemnification................................................ 25
19. Waiver of Claims............................................... 25
20. Quiet Enjoyment; Warranty of Title............................. 26
21. Assignment and Subletting...................................... 26
22. Subordination.................................................. 27
23. Recording; Tenant's Certificate................................ 28
i
24. Surrender; Abandoned Property.................................. 28
25. Curing Tenant's Defaults....................................... 29
26. Defaults - Remedies............................................ 29
27. Representations of Tenant...................................... 31
28. Liability of Landlord.......................................... 32
29. Interpretation; Definitions.................................... 32
30. Notices........................................................ 33
31. Option to Extend Term.......................................... 35
32. Expansion Option............................................... 37
33. Right of First Offer........................................... 40
34. Parking........................................................ 41
35. Antenna; Satellite Dish........................................ 41
36. Tenant's Option to Terminate................................... 42
37. Termination of Existing Lease.................................. 42
38. Standards; Curing Landlord's Defaults; Set-off................. 43
39. Hazardous Substances........................................... 43
40. Brokerage Fee.................................................. 44
ii
THIS LEASE AGREEMENT is made by and between LIBERTY PROPERTY LIMITED
PARTNERSHIP, a Pennsylvania limited partnership ("LANDLORD"), with its address
at ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and ONTRACK DATA
INTERNATIONAL, INC., a corporation organized under the laws of Minnesota
("TENANT"), with its address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and is dated as of the date on which this Lease has been fully
executed by Landlord and Tenant.
1. SUMMARY OF TERMS AND CERTAIN DEFINITIONS.
(a) "PREMISES": Approximate rentable square feet: 80,119 (See
Section 2)
(b) "BUILDING": Approximate rentable square feet: 80,119 (See
Section 2)
(c) "TERM": One Hundred Twenty (120) months plus any partial
(ss 5) month from the Commencement Date until the first
day of the first full calendar month during the
Term; See Section 6
(i) "COMMENCEMENT DATE": See Section 6
(ii) "EXPIRATION DATE": See Section 6
(d) MINIMUM RENT (ss 8) & OPERATING EXPENSES (ss 9)
(i) "MINIMUM ANNUAL RENT":
Minimum Annual Minimum Annual
Lease Rent Per Rentable Lease Rent Per Rentable
Year Square Foot Annual Monthly Year Square Foot Annual Monthly
---- ----------------- ------ ------- ---- ----------------- ------ -------
1 $9.950 $797,184.00 $66,432.00 6 $10.986 $880,187.28 $73,348.94
2 $10.149 $813,127.68 $67,760.64 7 $11.205 $897,733.44 $74,811.12
3 $10.352 $829,391.88 $69,115.99 8 $11.429 $915,680.04 $76,306.67
4 $10.559 $845,976.51 $70,498.04 9 $11.658 $934,027.32 $77,835.61
5 $10.770 $862,881.62 $71,906.80 10 $11.891 $952,695.00 $79,391.25
(ii) ESTIMATED "ANNUAL OPERATING EXPENSES": $289,229.64
(Two Hundred Eighty-nine Thousand Two Hundred
Twenty-nine and 64/100 Dollars) estimated for
calendar year 1999 (based on $3.61 per rentable
square foot), payable in monthly installments of
$24,102.47 (Twenty-four Thousand One Hundred Two and
47/100 Dollars), subject to adjustment (ss 9(a))
(e) "PROPORTIONATE SHARE" (ss 9(a)): 100% (Ratio of approximate
rentable square feet in the Premises to approximate rentable
square feet in the Building)
(f) "USE" (ss 4): See Section 7
(g) CONTENTS: This Lease consists of the Index, pages 1 through 45
containing Sections 1 through 40 and the following, all of
which are attached hereto and made a part of this Lease:
Exhibits: "A" - Site Plan "A-1" - Legal Description
"B" - Commencement Certificate Form "C" - Building Rules
"D" - Cleaning Schedule "E" - Estoppel Certificate Form
"F-1" - Scope Drawings "F-2" - Architectural Standards
"F-3" - Minimum Shell Condition Requirements "G" - Exclusions from Operating Expenses
"H" - Substantial Completion Items "I" - Existing Title Encumbrances
"J" - Environmental Information
2
2. CERTAIN DEFINITIONS. In this Lease:
"BUILDING" means the building in which the Premises are located.
"LAND" means that portion of the land on which the Project is situated allocated
to the Building, Building parking, Building driveways, Building setbacks,
landscaping, signage and green space. That portion of the Project area included
in the "Land" shall generally be the area south of the line designated "Limit of
Building A Land" on the Site Plan. The Land shall not include (i) excess land in
the Project being held by Landlord for future development or otherwise not
properly attributable to the Building and its amenities as provided above and
(ii) the ponding area as identified and delineated on the Site Plan as the
"Excluded Pond Area." At the request of either party following substantial
completion of the Base Building and Site Improvements, Landlord and Tenant shall
enter into a written agreement stipulating as to the precise boundaries of the
Land, the square footage of the Land (exclusive of the pond area described
above) and the square footage of the land included in the tax parcel of which
the Land is then a part.
"PREMISES" means approximately 80,119 rentable square feet (subject to
confirmation as provided in Section 4(g) below), consisting of 100% of the
rentable square footage of the Building identified as Building A on the Site
Plan, which Building will be constructed by Landlord in accordance with the
terms and provisions of this Lease.
"PROJECT" means the Flying Cloud Corporate Campus, a business park consisting of
one or more buildings that may be developed by Landlord in accordance with the
Site Plan on a portion of the property legally described on attached EXHIBIT
AA-1".
"PROPERTY" means the Building and the Land.
"SITE PLAN" means the Site Plan attached to this Lease as EXHIBIT "A". Landlord
shall not make any alterations to the Site Plan materially and adversely
affecting Building A or the parking, access or other amenities serving Building
A, without Tenant's prior written consent.
"TENANT'S PROPORTIONATE SHARE" means the percentage obtained by dividing the
rentable square footage of the Premises (as the same may expand or contract
pursuant to the provisions of this Lease) by the rentable square footage of the
Building or Buildings in which the Premises are located. Tenant's initial
Proportionate Share is 100%.
3. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises, together with the nonexclusive right with Landlord and
other occupants of the Building to use all areas and facilities provided by
Landlord for the use of all tenants in the Property including any lobbies,
hallways, driveways, sidewalks and parking, loading and landscaped areas
3
(the "COMMON AREAS"). So long as Tenant is leasing 100% of the rentable square
footage of the Building, Tenant shall have the exclusive use of those Common
Areas exclusively serving the Building, subject only to Landlord's rights of
access and use contemplated in this Lease. So long as Tenant is leasing at least
75% of the rentable square footage of the Building, Landlord will not make any
material alterations to the Common Areas without Tenant's consent, which consent
shall not be unreasonably withheld, conditioned or delayed.
4. CONSTRUCTION OF THE BASE BUILDING.
(a) LANDLORD'S CONSTRUCTION OBLIGATION. Landlord shall construct the
base building ("Base Building") and related site improvements, including, but
not limited to, grading, parking areas, access drives, sidewalks, monument signs
to be constructed by landlord under this Lease and landscaping (the "Site
Improvements") substantially in accordance with the "Approved Plans" (as defined
below) in accordance with the terms and conditions of this Section 4. All
construction shall be done at Landlord's expense in a good and workmanlike
manner, free of mechanic's liens that are not promptly discharged, and shall
comply in all material respects with all applicable laws codes, regulations,
rules and requirements of the governmental authorities having jurisdiction, as
applied, enforced and interpreted as of the date the building permit is issued,
including, but not limited to, all requirements of Title III of the ADA as
applicable to commercial facilities.
(b) PLAN APPROVAL PROCESS. Landlord and Tenant have approved the
following preliminary plans and specifications for the Base Building and Site
Improvements (the "Preliminary Plans"): (1) Scope Drawings listed on attached
EXHIBIT "F-1", Architectural Standards listed on attached EXHIBIT "F-2", and the
Minimum Shell Condition Requirements listed on attached EXHIBIT "F-3". To the
extent there is any conflict between the Scope Drawings or the Architectural
Standards and the Minimum Shell Condition Requirements, the Minimum Shell
Condition Requirements shall control. During the design process, Landlord and
Tenant will hold at least bi-weekly status meetings consisting of the respective
team managers and other appropriate personnel. Landlord will endeavor to provide
Tenant, on or before the date that is 60 days after the date of this Lease,
detailed plans and specifications for the construction of the Base Building and
Site Improvements (the "Construction Plans"). The Construction Plans shall be
consistent with the Preliminary Plans. Within 8 business days after its receipt
of the Construction Plans (or receipt of any modified Construction Plans as
provided below), Tenant shall notify Landlord of its approval or disapproval of
the Construction Plans (which approval shall not be unreasonably withheld), and
if Tenant disapproves the Construction Plans, the revisions that Tenant requires
in order to obtain such approval. It is agreed that Tenant will not object to
Construction Plans to the extent that they conform to the Preliminary Plans;
without limiting the foregoing, specifications included in the Construction
Plans shall be consistent with the high quality materials (taking into account
useful life, future operating costs and maintenance) contemplated in the
Preliminary Plans. As promptly as reasonably possible thereafter, but no later
than 30 days after Tenant's response, Landlord shall submit to Tenant modified
Construction Plans incorporating appropriate revisions. Tenant's approval of the
final Construction Plans shall be evidenced by the signature of Tenant's
authorized representative on the top of each sheet of the
4
approved construction drawings and specifications. The approved construction
drawings and specifications are herein termed the "Approved Plans". If within
the time periods provided above Tenant fails to approve or disapprove any
submittal from Landlord to Tenant, said submittal shall be deemed approved. Once
approved by Tenant, Landlord will not change any of the Approved Plans without
Tenant's consent, which consent shall not be unreasonably withheld, conditioned
or delayed provided such change is not material to the design or quality of the
Base Building or Site Improvements; if such change is material to the design or
quality of the Base Building or Site Improvements, Tenant may withhold its
consent in Tenant's sole discretion.
(c) CONSTRUCTION DEADLINES; REMEDIES. Landlord shall cause the Base
Building and Site Improvements to be substantially completed in accordance with
the requirements of Section 4(a) above on or before MAY 1, 1999, subject only to
(1) any delay caused by Tenant ("Tenant Delay") or (2) any delay caused by Force
Majeure (as defined below).
If Landlord fails to so substantially complete the Base Building and
Site Improvements on or before MAY 1, 1999 (as the same may be extended as a
result of any Tenant Delay or delay caused by Force Majeure), then Tenant shall
receive, for the first 30 days of such delay, two (2) days of gross free rent
for each day of such delay, and after first 30 days of such delay, Tenant shall
receive three (3) days of gross free rent for each day of delay beyond the
initial 30-day delay. In addition, Tenant shall have the right to hold over in
Tenant's Existing Premises (as defined in Section 37 below), at the same rent
and on all of the same terms as provided in Tenant's Existing Lease (as defined
in Section 37 below), until the Commencement Date of this Lease. The foregoing
shall be Tenant's sole and exclusive remedies for any delay in the substantial
completion of the Base Building. During any "free rent" period described above,
Tenant shall be obligated to pay for all utilities used by Tenant.
For purposes of this Section "Force Majeure" delays shall mean the time
lost by Landlord or Landlord's contractors, subcontractors or suppliers due to
floods, fire, tornado, earthquake or other casualties or natural disasters, war
or national emergency, governmental restrictions and limitations or any cause
similar to the foregoing beyond the reasonable control of Landlord or Landlord's
contractors, subcontractors or suppliers, except that the term "Force Majeure"
delays shall expressly exclude delays due to snow, cold weather or similar
adverse weather conditions, strikes or other labor troubles or due to scarcity
or unavailability of fuel, labor or materials (unless directly related to one of
the expressly enumerated causes above).
For purposes of this Section 4, "substantial completion" shall be
deemed to have occurred as of the date Landlord provides Tenant a notice of
substantial completion enclosing: (1) a certificate of substantial completion
signed by Landlord's architect and certifying to Tenant that the Base Building
and Site Improvements have been completed in accordance with the Approved Plans
except for enumerated punch list items, and (2) a copy of a certificate of
occupancy (temporary or permanent) issued by the City of Eden Prairie for the
Base Building. The foregoing notwithstanding, substantial completion shall not
be deemed to occur unless the minimum requirements listed on attached EXHIBIT
"H" are satisfied. Completion of landscaping, monument
5
signs, and completion of the final wearing course of the parking lot shall not
be deemed requirements of substantial completion, but Landlord shall
nevertheless complete such items following substantial completion with
reasonable diligence (but no later than July 1, 1999 unless Landlord and Tenant
otherwise agree) in accordance with the requirements of Section 4(a) above.
Moreover, clause (2) in the first sentence of this paragraph notwithstanding,
and provided that all other conditions of substantial completion set out in this
paragraph are satisfied, the Base Building and Site Improvements shall be deemed
substantially complete if Landlord has satisfied all conditions to obtaining a
certificate of occupancy as such conditions pertain to Landlord's construction
obligations, and the sole reason for a delay in the issuance of such a
certificate is unfinished Tenant improvements or fixturing.
Upon Landlord's delivery to Tenant of a proper notice of substantial
completion, Landlord and Tenant shall jointly perform an inspection of the Base
Building and identify any incomplete items or other elements of work not
materially conforming to the Approved Plans. The list resulting from such
inspection shall be deemed the "punch list." If Landlord has not completed the
punch list items within 45 days of substantial completion or within such
additional reasonable time as may be necessary provided Landlord is proceeding
with all due diligence to cause such punch list items to be corrected, then
Tenant may complete such punch list items and Landlord shall reimburse Tenant
for Tenant's cost of completion, plus an administrative fee of 10% of the cost
thereof.
(d) APPROVAL & CONSTRUCTION CONTINGENCIES. In the event Landlord has
not received all necessary governmental approvals for the development of the
site and the construction of the Base Building and Site Improvements and
commenced construction (meaning the commencement of construction of the Building
footings) of the Base Building on or before JANUARY 1, 1999, either Landlord or
Tenant may terminate this Lease by giving written notice of termination to the
other. Landlord shall use all reasonable efforts to obtain such approvals and
commence construction on or before January 1, 1999.
If either party so terminates the Lease, Tenant shall have the right to
remain in Tenant's Existing Premises (as defined in Section 37 below) pursuant
to Tenant's Existing Lease (as defined in Section 37 below) for any period up to
and including June 30, 2000, at the rental rate provided under the Existing
Lease, or, if such holdover continues beyond the scheduled expiration of the
Existing Lease, at the rental rate in effect at the time of such scheduled
expiration, without any "holdover" increase or premium. In such event, the
Existing Lease shall terminate at 11:59 p.m. on June 30, 2000, or such earlier
date as Tenant may state in a notice of termination given by Tenant to Landlord
at least 90 days prior to the stipulated termination date, which date shall be
the last day of a month.
If either party so terminates the Lease, Landlord shall reimburse
Tenant for the following costs: (i) the following actual out-of-pocket costs
incurred by Tenant in connection with the Premises or this Lease: costs of
architectural and engineering services, real estate consultant fees, project
management fees, telecommunications costs, planning costs, and (ii) reasonable
costs of
6
construction within the Existing Premises (including leasehold improvements
[excluding trade fixtures and equipment] installed in the Existing Premises but
constructed or assembled off-site, such as millwork or specialty items) to
making the Existing Premises suitable for the holdover period.
(e) CHANGE ORDERS. If Tenant requests Landlord's approval of a change
order to modify any portion of Landlord's work from that shown on the Approved
Plans ("Change Order"), Landlord's approval of the Change Order will not be
unreasonably withheld provided the requested change does not result in a
material change in the quality or character of the Project. Landlord shall
respond to any such Tenant proposed Change Order with reasonable promptness
taking into consideration the complexity of the proposal. If Landlord approves a
requested Change Order, Landlord shall prepare and submit to Tenant a written
certification of the Change Order (the "Verification"), which shall state the
amount, if any, of the increase or decrease in the cost (which shall be the
actual costs or savings to Landlord) of Landlord's work as set forth in the
Approved Plans. The Verification will also state Landlord's reasonable estimate
of any delays in completion of Landlord's work expected to result from the
Change Order. Within five business days after Tenant's receipt of the
Verification, Tenant shall approve or reject the same in writing. If the
requested Change Order results in an increase in Landlord's cost or a delay in
the completion of Landlord's work, Tenant shall acknowledge in writing its
consent to the increase and/or delay and to the Change Order before Landlord
shall be obligated to do the work contemplated by the Change Order. If the
increase and/or delay is so approved by Tenant, 90% the amount of the increase
will be paid by Tenant to Landlord within 10 days after completion of the work
covered by the Change Order, with the balance to be paid upon final completion
of the Base Building; savings, if any, resulting from any particular Change
Order shall be netted against the total increases resulting from Change Orders.
If any Change Order requires an additional period of time for completion of
Landlord's Work, all completion deadlines relating to Landlord's construction
obligations will be extended by that same period of time, provided, if Tenant
approves a Change Order, Landlord will be bound by the time frames and amounts
set out in the Verification. Approved Change Orders shall be deemed to be a part
of the Approved Plans.
(f) PRE-COMPLETION TRANSFER OF LANDLORD'S INTEREST. Landlord shall not
sell, transfer or otherwise assign any interest in this Lease or in the Building
or Land prior to Substantial Completion of the Base Building without first
obtaining the written consent of Tenant. The foregoing shall not apply to a
transfer to any successor to the interest of Landlord by merger, a transfer to
any entity acquiring substantially all of the assets of Landlord, or a transfer
to any entity controlled by, controlling or under common control with Landlord
or Liberty Property Trust, all of which may proceed without Tenant's consent,
provided such transfer shall not release Landlord of its obligations hereunder.
(g) CERTIFICATION AS TO "AS BUILT" SQUARE FOOTAGE. Prior to the
Commencement Date, Landlord will cause Landlord's architect to determine the
actual rentable square footage of the Building as constructed, and to deliver to
Landlord and Tenant an appropriate certificate certifying to the as-built
rentable square footage. Such certificate will be conclusive unless objected to
by
7
Landlord or Tenant by written notice to the other party given within 30 days
after receipt of the certificate. If the as-built rentable square footage is
greater than or less than the 80,119 stipulated in Section 1(b), the Minimum
Annual Rent shall be adjusted, as appropriate, based on the Minimum Annual Rent
Per Square Foot set forth in Section 1(d)(i). In such event, Landlord and Tenant
shall enter into an amendment of this Lease setting forth the as-built rentable
square footage of the Building and the adjusted schedule of Minimum Annual Rent.
Rentable square footage shall be measured in accordance with Building Owners and
Managers Association (BOMA) measurement standards for full floor tenants.
(h) LANDLORD'S CONSTRUCTION WARRANTY. Landlord warrants to Tenant for a
period commencing on the date of substantial completion of the Base Building and
Site Improvements and ending one year later that the Base Building and Site
Improvements will be free from improper or defective workmanship and materials.
Landlord further warrants to Tenant for a period commencing on the date of
substantial completion of the Base Building and Site Improvements and ending one
year later that there will be no material defect in the Base Building or Site
Improvements, or any portion thereof, caused by a failure to design the Base
Building or Site Improvements, or any portion thereof, in accordance with all
applicable codes, laws, ordinances, regulations and professional standards of
care in force and as interpreted as of the date of this Agreement.
5. TENANT IMPROVEMENTS; TENANT ALLOWANCE.
(a) BASE BUILDING STATUS; ACCESS FOR TENANT IMPROVEMENTS. On or about
the date (the "TENANT ACCESS DATE") that construction of the Base Building has
progressed to the point that Tenant and Tenant's Agents may proceed with the
construction of the Initial Tenant Improvements without any material
interference with or delay in the construction of the Initial Tenant
Improvements resulting from any uncompleted Landlord's work or the construction
activities of Landlord or Landlord's Agents that cannot be resolved by
reasonable mutual cooperation and sequencing of activities, Landlord shall so
notify Tenant. Landlord shall cause the Tenant Access Date to occur on or before
MARCH 1, 1998, subject to extension only for Tenant Delays or any delay
resulting from Force Majeure. From and after the Tenant Access Date, Tenant and
Tenant's Agents shall have continuous non-exclusive access to the Premises on
the terms described above, at Tenant's own risk, expense (except as expressly
provided herein) and responsibility, for the construction of the Initial Tenant
Improvements without material interference from Landlord or Landlord's Agents.
Tenant and Tenant's Agents will consult and cooperate with Landlord's general
contractor regarding the scheduling of Tenant's work so as to coordinate
Tenant's activities after the Tenant Access Date with any Base Building work
still being performed by Landlord's general contractor and to prevent any
interference on the part of Landlord's Agents with Tenant's work and on the part
of Tenant's Agents with Landlord's work. The foregoing notwithstanding, during
that portion of the pre-Commencement Date period starting with the date that is
60 days after the Tenant Access Date Tenant shall have exclusive access to the
Premises (other than access on the part of Landlord or its Agents to complete
punchlist items,
8
conduct inspections, or complete any items of unfinished work provided such
access does not interfere with or delay Tenant's work).
In connection with such access prior to the Commencement Date, Tenant
shall abide by the terms and conditions of this Lease including carrying the
insurance specified by the Lease, as if the term of this Lease had already
commenced, except that Tenant shall have no obligation to pay the Minimum Annual
Rent, Annual Operating Expenses or utilities until the Commencement Date (as
defined below).
During such pre-Commencement Date access, Landlord shall provide
Tenant, without charge, utilities, heat, air conditioning (when reasonably
required by Tenant), general building security, and staging areas. Tenant shall
be responsible at its expense for all trash removal directly related to the
construction of the Initial Tenant Improvements or Tenant's furnishing and
equipping the Premises.
(b) TENANT IMPROVEMENTS. Landlord is responsible for completion of the
Base Building and Site Improvements in accordance with the Approved Plans on the
terms and conditions set forth in this Lease. All other improvements in and to
the Premises required by Tenant shall be completed by Tenant and its
contractor(s), at Tenant's sole expense (subject to reimbursement in the amount
of the Tenant Improvement Allowance as provided in this Section 5), in
accordance with plans and specifications approved in writing by Landlord, which
approval will not be unreasonably withheld, delayed or conditioned (the "Initial
Tenant Improvements"). Tenant shall comply with Sections 12 and 13 of this Lease
and the following conditions with respect to the Initial Tenant Improvements:
(i) Tenant shall obtain Landlord's approval of Tenant's
general contractor, which approval shall not be unreasonably withheld,
conditioned or delayed;
(ii) at least ten (10) days prior to commencement of
construction, Tenant shall deliver to Landlord a certificate of insurance for
each of Tenant's contractors evidencing adequate insurance coverage naming
Landlord as additional insured;
(iii) all construction shall be done in a good and workmanlike
manner and shall comply at the time of completion with all Laws and Requirements
(as defined in Section 10(a)). Tenant shall deliver to Landlord copies of all
certificates of occupancy, permits and licenses required to be issued by any
authority in connection with Tenant's construction.
(c) TENANT IMPROVEMENT ALLOWANCE. Landlord shall provide Tenant a
tenant improvement allowance (the "Tenant Improvement Allowance") in an amount
equal to $4.50 per rentable square foot of the Premises toward Tenant's actual,
out-of-pocket costs incurred for design, architectural, engineering and other
fees (including consulting and project management fees) related to, and for the
hard costs of construction of, the Initial Tenant Improvements. The Tenant
Improvement Allowance shall be disbursed by Landlord in a manner consistent with
typical
9
construction draw procedures; Tenant may submit draw requests not more
frequently than monthly, such requests to be accompanied by such reasonable and
customary documentation as Landlord may require, including lien waivers. Draws
may commence at any time after Lease execution, but may only be submitted for
expenses actually incurred by Tenant. If Landlord defaults in the payment of the
Tenant Improvement Allowance, and such default continues for 5 business days
after written notice of default given by Tenant to Landlord, Tenant may set off
amounts due and unpaid (together with interest at the rate provided in this
Lease) against the installment(s) of Minimum Annual Rent next due.
6. TERM.
(a) COMMENCEMENT DATE. This Lease, and the obligation to pay Minimum
Annual Rent and additional Rent hereunder (subject to any rent-free period as
provided under Section 4(c) above), shall commence on the date (the
"Commencement Date") that is the earlier to occur of:
(i) The Monday following Tenant's occupancy of substantially
all of the Premises for the purpose of conducting Tenant's business in and from
the Premises (Tenant plans to move into and occupy the Building in phases over
several weeks and the fact that Tenant occupies and opens for business in a
part, but less than substantially all, of the Premises shall not in itself
trigger Lease Commencement);
(ii) If Tenant uses a contractor other than Landlord's Base
Building general contractor for the construction of the Initial Tenant
Improvements, the later of (1) 120 days after the Tenant Access Date, or (2) 60
days after the substantial completion of the Base Building and Site
Improvements, it being the intent of the parties that if Tenant uses a
contractor other than Landlord's general contractor, Tenant shall have
nonexclusive and unrestricted (subject to the provisions of Section 5(a) above)
access to the Premises for the 60-day period from 120 days to 60 days prior to
the Commencement Date and exclusive access to the Premises (other than access on
the part of Landlord or its Agents to complete punchlist items, conduct
inspections, or complete any items of unfinished work provided such access does
not interfere with or delay Tenant's work) for the 60-days preceding the
Commencement Date.
(iii) If Tenant uses Landlord's general contractor for the
construction of the Initial Tenant Improvements, the later of (i) the first
Monday following the date that is 60 days after the date of substantial
completion of the Initial Tenant Improvements (exclusive of the installation of
the Tenant's equipment, furniture and personal property; this work is
contemplated to occur during the 60-day period following the substantial
completion of the Initial Tenant Improvements), or (ii) the date of substantial
completion by Landlord of the Base Building and Site Improvements. Tenant shall
use all reasonable diligence to cause substantial completion of the Initial
Tenant Improvements (exclusive of the installation of the Tenant's equipment,
furniture and personal property; this work is contemplated to occur during the
60-day period following the substantial completion of the Initial Tenant
Improvements) to occur within 60 days of the Tenant Access Date. Without
limiting the foregoing, If Tenant uses Landlord's general contractor for the
10
construction of the Initial Tenant Improvements, Tenant shall contract with
Landlord's general contractor, and provide Landlord's general contractor with
construction plans and specifications, material selections and other appropriate
information sufficiently in advance of the Tenant Access Date so that such
general contractor can commence construction of the Initial Tenant Improvements
as of the Tenant Access Date and proceed with construction without delay
resulting from failure of Tenant to timely approve plans or select materials.
Tenant's construction contract shall obligate such general contractor to
substantially complete the Initial Tenant Improvements within 60 days of the
Tenant Access Date. If construction of the Initial Tenant Improvements is
delayed as a result of any such delay caused by Tenant, the Commencement Date
shall be the date this Lease would have commenced but for such delay.
The 60-day period for completion of the Initial Tenant Improvements
contemplated in subsections (ii) and (iii) above shall be extended for delay
resulting from Force Majeure events, applying to Tenant the same definition of
"Force Majeure" applicable to Landlord under Section 4(c) above.
(b) EXPIRATION DATE. The term of this Lease shall expire at 11:59 p.m.
on the last day of the tenth "lease year" (the "Expiration Date"). The first
"lease year" means the period of 12 consecutive full calendar months commencing
on the later of the following two dates (including for the first lease year any
partial month from such date until the first day of the first full calendar
month thereafter): (1) the Commencement Date or (2) the date any "rent free"
period afforded Tenant pursuant to Section 4(c) above expires. Each subsequent
"lease year" means each period of 12 full calendar months thereafter during the
Term. Subject to Section 36 (entitled "Tenant's Option to Terminate"), the
parties intend that Tenant pay rent for 120 full calendar months notwithstanding
any 'rent free" period afforded Tenant following the Commencement Date as a
result of construction delays.
(c) COMMENCEMENT CERTIFICATE. At Landlord's request, Tenant shall
confirm the Commencement Date and the Expiration Date by executing a lease
commencement certificate in the form attached as EXHIBIT "B".
7. PERMITTED USE. Tenant shall occupy and use the Premises for and only for
general office purposes and/or for any other lawful use permitted under
applicable zoning provided that such use is compatible with and appropriate for
a class A suburban office park in the Minneapolis/St. ▇▇▇▇ metropolitan area.
Tenant will use the Premises in such a manner as is lawful, reputable and will
not create a nuisance or otherwise unreasonably interfere with any other
tenant's normal operations or the management of the Building. Tenant shall not
use or permit the use of any portion of the Common Areas for other than their
intended use.
8. MINIMUM ANNUAL RENT. Tenant agrees to pay to Landlord the Minimum Annual Rent
in equal monthly installments in the amount set forth in Section l(d) (as
increased at the beginning of each lease year as set forth in Section l(d)), in
advance, on the first day of each calendar month during the Term, without
notice, demand or setoff (except as expressly provided in this Lease), at
11
Landlord's address designated at the beginning of this Lease unless Landlord
designates otherwise (Landlord shall not require Tenant to pay rent to an
address outside of the United States). If the Commencement Date falls on a day
other than the first day of a calendar month, the rent shall be apportioned pro
rata on a per diem basis for the period from the Commencement Date until the
first day of the following calendar month and shall be paid on or before the
Commencement Date.
9. OPERATION OF PROPERTY; PAYMENT OF EXPENSES.
(a) PAYMENT OF OPERATING EXPENSES. Tenant shall pay to Landlord the
Annual Operating Expenses in equal monthly installments in the amount set forth
in Section l(d) (prorated for any partial month), from the Commencement Date and
continuing throughout the Term on the first day of each calendar month during
the Term, as additional rent, without notice, demand or setoff (except as
expressly provided in this Lease). Landlord shall apply such payments to the
annual operating costs to Landlord of operating and maintaining the Property
during each calendar year of the Term, which costs may include by way of example
rather than limitation: insurance premiums, fees, Impositions, costs for
repairs, maintenance, service contracts, management and administrative fees
(management and administrative fees shall not exceed 3% of the total Minimum
Annual Rent and Operating Expenses payable by Tenant [excluding Impositions and
excluding utilities separately metered to Tenant], and shall be in the nature of
Avalue added A fee for which services such as accounting, ▇▇▇▇-paying and senior
management [i.e. above the level of building manager] are provided),
governmental permits, overhead expenses, costs of furnishing water, sewer, gas,
fuel, electricity, other utility services, janitorial service, trash removal,
security services, landscaping and grounds maintenance, and the costs of any
other items attributable to operating or maintaining any or all of the Property
excluding any costs listed on attached EXHIBIT "G" and any costs which under
generally accepted accounting principles are capital expenditures; provided,
however, that annual operating costs shall include the annual amortization (over
an assumed useful life of fifteen years) of the costs (including financing
charges) of building improvements made by Landlord to the Property that are
required by any governmental authority or, to the extent of the actual reduction
in operating expenses, for the purpose of reducing operating expenses. The
amount of the Annual Operating Expenses set forth in Section 1(d) represents
Landlord's estimate of Tenant's share of the estimated operating costs during
the first calendar year of the Term on an annualized basis; from time to time
(but not more than quarterly) Landlord may adjust such estimated amount if the
estimated operating costs increase or decrease. Tenant's obligation to pay the
Annual Operating Expenses pursuant to this Section 7, and Landlord's obligation
to refund any overpayments, shall survive the expiration or termination of this
Lease. Landlord and Tenant shall, at the request of either party, consult with
each other regarding the level of services to be provided by Landlord and
standard of maintenance to be observed by Landlord with a view toward managing
and controlling Operating Expenses in a reasonable and prudent manner consistent
with the standards observed with respect to comparable class A suburban office
buildings in the Minneapolis/St. ▇▇▇▇ metropolitan area. In no event shall
Landlord be obligated to reduce services or standards of maintenance below those
appropriate and necessary to maintain the Building and Site Improvements in good
condition and repair, consistent with the maintenance
12
standards prevailing among comparable class A suburban office buildings in the
Minneapolis/St. ▇▇▇▇ metropolitan area.
(i) COMPUTATION OF TENANT'S SHARE OF ANNUAL OPERATING COSTS.
After the end of each calendar year of the Term, Landlord shall compute Tenant's
share of the annual operating costs described above incurred during such
calendar year by (A) calculating an appropriate adjustment, using generally
accepted accounting principles, to avoid allocating to Tenant or to any other
tenant (as the case may be) those specific costs which Tenant or any other
tenant has agreed to pay, (B) subject to the provisions set forth below in this
subsection (i), calculating an appropriate adjustment, using generally accepted
accounting principles, to avoid allocating to any vacant space those specific
costs (limited to costs which may vary depending upon the occupancy level of the
Building) which were not incurred for such space; and (C) multiplying the
adjusted annual operating costs by Tenant's Proportionate Share. Any adjustment
or "gross up" pursuant to clause (B) shall be determined as follows: If the
Building is not at least ninety-five percent (95%) occupied by tenants during
all or any portion of a calendar year, or if during all or a portion of any
calendar year Landlord is not furnishing to any tenant or tenants any particular
service, the cost of which, if furnished by Landlord, would be included in
Operating Expenses, then Landlord may elect to make an adjustment for such year
of components of Operating Expenses and the amounts thereof which may vary
depending upon the occupancy level of the Building. Provided such amounts are
otherwise properly includable in Operating Expenses, any such adjustments shall
be deemed costs and expenses paid or incurred by Landlord and included in
Operating Expenses for such year, as if the Building had been ninety-five
percent (95%) occupied during the entire calendar year, Landlord had furnished
such service at its expense for the entire calendar year and Landlord had paid
or incurred such costs and expenses for such year.
(ii) RECONCILIATION. By April 30th of each year (and as soon
as practical after the expiration or termination of this Lease or at any time in
the event of a sale of the Property), Landlord shall provide Tenant with an
itemized statement of the actual amounts included in such annual operating costs
for the preceding calendar year or part thereof, together with a summary of the
manner in which any adjustments made pursuant to Section 9(a)(i) above were
computed. Landlord or Tenant shall pay to the other the amount of any deficiency
or overpayment then due from one to the other or, at Tenant's option, Landlord
shall credit Tenant's account for any overpayment. If Landlord has overestimated
annual operating costs for any calendar year by more than 5%, Landlord shall pay
or, at Tenant's option, credit to Tenant interest on the amounts over-collected
from Tenant at the rate set forth in Section 29 of this Lease.
If at any time during a calendar year Landlord materially increases or
decreases Landlord's estimate of Operating Expenses, Landlord shall, upon
request of Tenant, promptly provide Tenant a detailed written explanation of the
reason for the increase.
Tenant shall also be entitled at any reasonable time during regular
business hours, but no more than once in each calendar year, after giving to
Landlord at least five (5) business days prior
13
written notice, to inspect in Landlord's business office all Landlord's records
necessary to satisfy itself that all charges have been correctly allocated to
Tenant, for any of the four (4) calendar years immediately preceding the year
during which such notice is given (throughout the Term Landlord's books relating
to Operating Expenses shall be maintained on a calendar year basis), and/or to
obtain an audit thereof by an independent certified public accountant (selected
by Tenant with Landlord's written consent, which shall not be withheld
unreasonably) to determine the accuracy of Landlord's certification of the
amount of additional rent charged Tenant. In no event shall Tenant be entitled
to audit the books for any calendar year more than once. If it is determined
that Tenant's liability for additional rent for any such calendar year is less
than the amount which Landlord previously certified to Tenant for such calendar
year, Landlord shall refund promptly to Tenant the amount of the additional rent
paid by Tenant for such calendar year which exceeds the amount for which Tenant
actually is liable, as determined following such audit, together with interest
on such amount at the rate set forth in Section 29 of this Lease. If it is
determined that Tenant's liability for additional rent for any such calendar
year is greater than the amount which Landlord previously certified to Tenant
for such calendar year, Tenant shall promptly pay to Landlord the amount of the
additional rent payable by Tenant for such calendar year which exceeds the
amount which Tenant had previously paid, as determined following such audit.
Tenant shall bear the total cost of any inspection or audit of Landlord's books
and records conducted by Tenant, except that if it is determined that Tenant's
liability for additional rent for such calendar year is less than ninety-seven
percent (97%) of that amount which Landlord previously certified to Tenant for
such calendar year, Landlord shall pay to Tenant the cost of such audit
(provided, however, that Landlord shall not be required to pay the cost of any
audit based on a contingency fee or percentage of the amount recovered for
Tenant).
(b) IMPOSITIONS. As used in this Lease the term "Impositions" refers to
all levies, taxes (including sales taxes and gross receipt taxes) and
installments of assessments (including interest thereon), which are applicable
to the Term, and which are imposed by any authority or under any law, ordinance
or regulation thereof, and the reasonable cost of contesting any of the
foregoing, upon or with respect to the Property or any part thereof, or any
improvements thereto. Except as provided below, Tenant shall pay to Landlord
with the monthly payment of Minimum Annual Rent any Imposition imposed directly
upon this Lease or the Rent (defined in Section 9(g)) or amounts payable by any
subtenants or other occupants of the Premises, or against Landlord because of
Landlord's estate or interest herein. Tenant's Proportionate Share of real
estate taxes and installments of special assessments payable therewith with
respect to the Property shall be paid by Tenant to Landlord on or before the
later of: (1) 15 days after Landlord furnishes Tenant a copy of the tax
statement received from the taxing authority, or (2) 20 calendar days prior to
the due date of the semi-annual installments of such real estate taxes and
special assessments. Notwithstanding any provision to the contrary in this
Lease, Tenant shall not be obligated to pay for any special assessments relating
to the acquisition, original construction or development (including any special
assessments or similar taxes levied as a condition of municipal approvals) of
the Building, Site Improvements or Project, or any special assessments levied or
pending as of the date of this Lease.
14
Tenant acknowledges that the Property might not constitute a separate
and discrete tax parcel. In such event, Tenant shall pay Tenant's Proportionate
Share of the sum of the Land Tax Cost and the Building Tax Cost, as defined and
determined below. "Land Tax Cost" shall mean the total real estate taxes payable
in the year in question allocable to all of the land (exclusive of ponding areas
as provided below) included in the tax parcel of which the Land is a part (based
on the assessed value of all of the land [exclusive of buildings] included in
the tax parcel of which the Land is a part and shown on the applicable tax
statement), prorated to the Land on a strict land-area [exclusive of ponding
areas as provided below] square footage basis. "Building Tax Cost" shall mean
the total real estate taxes payable in the year in question allocable to all of
the buildings included in the tax parcel of which the Building is a part (based
on the total assessed value of the buildings [exclusive of land] included in
said tax parcel and shown on the applicable tax statement) multiplied by a
fraction, the numerator of which is the assessor's estimated value of the
Building, and the denominator of which is the assessor's estimated value of all
of the buildings included in the overall tax parcel. Landlord shall fully
disclose to Tenant the assessor's allocation of the total building portion of
the taxes among the various buildings included in the tax parcel, as and when
such information is provided to Landlord by the assessor. Installments of
special assessments, if any, properly includable in Operating Expenses shall be
apportioned and allocated between the Land and the remainder of the tax parcel
of which the Land is a part based on a strict land-area [exclusive of ponding
areas as provided below] square footage basis, provided, however, that no
special assessment exclusively benefitting a portion of the Project outside of
the Land shall be so allocated to the Land . For purposes of all land-area
calculations in this paragraph, the square footage (as determined in accordance
with the provisions under the definition of "Land" in Section 2 above) of any
ponding areas within the Land or Project shall be excluded from the land-area
square footages used.
Provided Tenant is then leasing not less than 50% of the Building,
Tenant shall have the independent right to contest, at its sole cost and
expense, the valuation of, and real estate taxes assessed against, the Property
for any period falling within the lease Term. Tenant shall provide Landlord
notice of any such contest and copy Landlord on all filings, settlement offers
and counter-offers, correspondence and other documents relating to such contest.
If Tenant is leasing less than 50% of the Building, Tenant shall not initiate
any proceeding to contest or dispute the amount of any real estate taxes or the
assessed value of the Property. However, at the written request of Tenant,
Landlord shall, unless Landlord has reasonable grounds for refusing, bring
proceedings to contest the validity or amount of any real estate taxes or
valuation. Tenant shall cooperate with Landlord with respect to such proceedings
to the extent reasonably necessary and shall pay Landlord Tenant's Proportionate
Share of all reasonable costs, fees and expenses incurred in connection with
such proceedings as additional rent promptly upon being billed.
Nothing herein contained shall be interpreted as requiring Tenant to
pay any income, excess profits, estate or gift, transfer or corporate capital
stock tax imposed or assessed upon Landlord, unless such tax or any similar tax
is levied or assessed in lieu of all or any part of any Imposition or an
increase in any Imposition.
15
If it shall not be lawful for Tenant to reimburse Landlord for any of
the Impositions, the Minimum Annual Rent shall be increased by the amount of the
portion of such Imposition allocable to Tenant, unless prohibited by law.
(c) INSURANCE.
(i) PROPERTY. Landlord shall keep in effect insurance against
loss or damage to the Building or the Property by fire and such other casualties
as may be included within fire, extended coverage and special form insurance
covering the full replacement cost of the Building (but excluding coverage of
Tenant's personal property in, and any alterations [including, but not limited
to, the Initial Tenant Improvements] by Tenant to, the Premises as constituted
from time to time), and such other insurance as Landlord may reasonably deem
appropriate or as may be required from time-to-time by any mortgagee. Provided
Tenant is leasing the entire Building, at the request of Tenant Landlord will
consult with Tenant regarding the amount of any deductible, it being understood
that although a higher deductible will result in lower insurance costs passed
through to Tenant, Tenant will, if and only if Tenant is leasing the entire
Building, be responsible for payment of the deductible in the event of a loss.
The foregoing notwithstanding, Landlord shall not carry casualty insurance with
a deductible in excess of $10,000 ($25,000 in the case of flood and earthquake)
without Tenant's prior written consent. Tenant shall be responsible for insuring
the Initial Tenant Improvements, any other of Tenant's leasehold improvements in
the Premises (as constituted from time to time), and all trade fixtures,
equipment, furnishings and personal property of Tenant on or about the Premises
or Property. Landlord shall carry commercially reasonable builder's risk
insurance with respect to the construction of the Base Building and Site
Improvements.
(ii) TENANT'S LIABILITY INSURANCE. Tenant, at its own expense,
shall keep in effect comprehensive general public liability insurance with
respect to the Premises and the Property, including contractual liability
insurance, with such limits of liability for bodily injury (including death) and
property damage as reasonably may be required by Landlord from time-to-time, but
not less than a combined single limit of $1,000,000 per occurrence and a general
aggregate limit of not less than $2,000,000 (which aggregate limit shall apply
separately to each of Tenant's locations if more than the Premises); however,
such limits shall not limit the liability of Tenant hereunder. The policy of
comprehensive general public liability insurance also shall name Landlord and
Landlord's agent as insured parties with respect to the Premises, shall be
written on an "occurrence" basis and not on a "claims made" basis, shall provide
that it is primary (with respect to the acts or omissions of Tenant or Tenant's
Agents) with respect to any policies carried by Landlord and that any liability
coverage carried by Landlord shall be excess insurance, shall provide that it
shall not be cancelable or reduced without at least 30 days prior written notice
to Landlord and shall be issued in form reasonably satisfactory to Landlord. The
insurer shall be a responsible insurance carrier which is authorized to issue
such insurance and licensed to do business in the state in which the Property is
located and which has at all times during the Term a rating of no less than A
VII in the most current edition of BEST'S INSURANCE REPORTS. Tenant shall
16
deliver to Landlord on or before the Commencement Date, and subsequently
renewals of, a certificate of insurance evidencing such coverage and the waiver
of subrogation described below.
(iii) LANDLORD'S LIABILITY INSURANCE. Landlord will maintain
comprehensive general public liability insurance with respect to the Property,
including contractual liability insurance, with such limits of liability for
bodily injury (including death) and property damage, equal to or greater than
the minimum limits for the liability insurance to be carried by Tenant under
this Section. The insurer shall be a responsible insurance carrier which is
authorized to issue such insurance and licensed to do business in the state in
which the Property is located and which has at all times during the Term a
rating of no less than A VII in the most current edition of BEST'S INSURANCE
REPORTS. At Tenant's request, Landlord will provide Tenant with a certificate or
certificates evidencing such insurance.
(iv) WAIVER OF SUBROGATION. Landlord and Tenant shall have
included in their respective property insurance policies waivers of their
respective insurers' right of subrogation against the other party.
(d) REPAIRS AND MAINTENANCE; COMMON AREAS; BUILDING MANAGEMENT.
(i) Tenant at its sole expense shall maintain the Premises in
a neat and orderly condition.
(ii) Landlord, shall make all necessary repairs (including,
but not limited to, repairing defects in the design or construction of the Base
Building or Site Improvements) to the Premises, the Common Areas and any other
improvements located on the Property. Landlord shall operate and manage the
Property and shall maintain all Common Areas and any paved areas appurtenant to
the Property in a clean and orderly condition. Tenant shall promptly notify
Landlord of any conditions known to Tenant that require repair. Landlord shall
maintain and repair the Property in a manner consistent with the standards
prevailing in comparable class A suburban office buildings in the
Minneapolis/St. ▇▇▇▇ metropolitan area.
(iii) Notwithstanding anything herein to the contrary, repairs
and replacements to the Property including the Premises made necessary solely by
Tenant's particular or unique use or occupancy (as opposed to typical general
office use or occupancy), or alteration of, or Tenant s installation in or upon
the Property or by any act or omission of Tenant or its Agents shall be made at
the sole expense of Tenant to the extent not covered by any applicable insurance
proceeds paid to Landlord. Tenant shall not bear the expense of any repairs or
replacements to the Property arising out of or caused by Landlord's or any other
tenant's use, occupancy or alteration of, or by Landlord's or any other tenant's
installation in or upon, the Property or by any act or omission of Landlord or
any other tenant or Landlord's or any other tenant's Agents.
(e) UTILITIES. All utilities serving the Premises shall be separately
metered to the Premises (such metering to be installed at Landlord's expense)
and, to the extent permissible,
17
directly billed to Tenant by the applicable utility company. Heating,
ventilation and air conditioning systems serving the Premises will be designed
and constructed by Landlord to be under Tenant's control and may be used on such
days and during such hours as Tenant may determine in its discretion. Provided
Landlord constructs the Premises in accordance with the mechanical and
electrical specifications included in the Approved Plans, Tenant shall not place
loads on any of the building systems in excess of the capacity for which they
were designed.
Tenant shall pay all separately metered utility charges as and when
billed to Tenant, without delinquency. Landlord shall not be responsible or
liable for any interruption in utility service not arising out of any act or
omission of Landlord, nor shall such interruption affect the continuation or
validity of this Lease. Landlord will make all reasonable efforts to cause
service to be restored as soon as possible after any interruption.
(f) JANITORIAL SERVICES. Landlord will provide Tenant with trash
removal and janitorial services pursuant to a cleaning schedule attached as
Exhibit "D". Tenant shall have the right to modify the services scheduled on
Exhibit "D" with Landlord's consent, which consent shall not be unreasonably
withheld, delayed or conditioned. Tenant may, by written notice to Landlord,
elect to provide, at its sole cost or expense, all or a portion of its own
janitorial services to the Premises, provided that Tenant at all times maintains
janitorial standards that are consistent with those prevailing in comparable
class A suburban office buildings.
(g) "RENT." The term "RENT" as used in this Lease means the Minimum
Annual Rent, Annual Operating Expenses and any other additional rent or sums
payable by Tenant to Landlord pursuant to this Lease, all of which shall be
deemed rent for purposes of Landlord's rights and remedies with respect thereto.
Tenant shall pay all Rent due to Landlord within 30 days after Tenant is billed,
unless otherwise provided in this Lease, and interest shall accrue on all sums
due but unpaid within such time at the rate provided in Section 29. All
scheduled monthly payments of Minimum Annual Rent and estimated Annual Operating
Expenses not paid when due shall bear interest from the due date at the rate
provided in Section 29.
10. COMPLIANCE WITH LAWS.
(a) LANDLORD'S OBLIGATIONS. Except as expressly provided in Section
10(b), Landlord shall be responsible for maintaining the Base Building,
including any restroom facilities and exterior areas constructed by Landlord as
part of Landlord's initial work, in compliance with all applicable laws,
ordinances, notices, orders, rules, regulations and requirements regulating the
Property during the Term (as the same may be amended, the "LAWS AND
REQUIREMENTS"). The foregoing shall not be construed to obligate Landlord to
comply with changes in Laws and Requirements unless and until the time
compliance is required under the applicable Laws and Requirements. Following the
initial construction of the Base Building, all capital expenditures made by
Landlord with respect to complying with Laws and Requirements may be amortized
over a stipulated useful life of fifteen years, and, notwithstanding any
provision in this Lease to the
18
contrary, such annual amortization of such costs (including reasonable interest)
may be included in Operating Expenses.
(b) TENANT'S OBLIGATIONS. Tenant shall use and occupy the Premises and
Common Areas in compliance with all Laws and Requirements and the building rules
attached as Exhibit "C", as reasonably amended by Landlord from time to time,
(the "BUILDING RULES").
Moreover, Tenant shall bear the entire cost and expense of complying
with Laws and Requirements (i) relating to Tenant's unique or particular use or
occupancy of the Premises and which would not be applicable to Tenant if Tenant
were a typical general office user, (ii) relating to the Initial Tenant
Improvements or any alterations to the Premises made by or on behalf of Tenant,
(iii) relating to any property or equipment of Tenant placed or installed on the
Premises (other than standard office equipment), (iv) triggered by any
alterations (other than alterations performed by Landlord necessary to implement
any express expansion or contraction options provided Tenant in this Lease) to
the Premises made by or on behalf of Tenant (provided, however, that any
required update of Base Building elements to existing Laws and Requirements
applicable to office users and office buildings generally that may be triggered
by Tenant alterations shall be Landlord's obligation, subject to inclusion of
the costs thereof in Operating Expenses as provided in Section 10(a) above), or
(v) resulting from any act or omission of Tenant or any employees, agents,
contractors, licensees or invitees ("AGENTS") of Tenant.
(c) ACCESSIBILITY REGULATIONS. The parties acknowledge that the
Americans With Disabilities Act of 1990 (42 U.S.C. ' 1201 et seq.) and
regulations and guidelines promulgated thereunder, as all of the same may be
amended and supplemented from time to time (collectively referred to herein as
the "ADA") establish requirements under Title III of the ADA ('Title III")
pertaining to business operations, accessibility and barrier removal, and that
such requirements may be unclear and may or may not apply to the Premises and
the Building depending on, among other things: (1) whether Tenant's business
operations are deemed a "place of public accommodation" or a "commercial
facility," (2) whether compliance with such requirements is "readily achievable"
or "technically infeasible," and (3) whether a given alteration affects a
"primary function area" or triggers so-called "path of travel" requirements. The
parties acknowledge and agree that Tenant has been provided an opportunity to
review the plans and specifications for the construction of the Base Building
and Site Improvements from the perspective of Tenant's intended use and
occupancy, that Tenant will prepare and review the plans and specifications for
the Initial Tenant Improvements for Tenant's use and occupancy, and that Tenant
has independently determined that such plans and specifications are in
conformance with ADA Accessibility Guidelines ("ADAAG") and any other
requirements of the ADA, except that, notwithstanding the foregoing, Landlord,
and not Tenant, shall be responsible for causing the Base Building and Site
Improvements to be designed and constructed in compliance with Title III of the
ADA as applicable to commercial facilities. Tenant further acknowledges and
agrees that to the extent that Landlord prepared, reviewed or approved any of
those plans and specifications, such action shall in no event be deemed any
representation or warranty that the same comply with any requirements of the
ADA, except that Landlord warrants that the Base Building and Site
19
Improvements will comply with the requirements of Title III of the ADA
applicable to commercial facilities as applied, enforced and interpreted as of
the date the building permit is issued. Notwithstanding anything to the contrary
in this Lease, the parties hereby agree to allocate responsibility for Title III
compliance as follows: (a) Landlord shall be responsible to construct and
maintain the Base Building and Site Improvements in compliance with Title III of
the ADA as applicable to commercial facilities, (b) Tenant shall be responsible
for all other Title III compliance and costs in connection with the Premises,
the Initial Tenant Improvements or any work performed or to be performed by or
on behalf of Tenant in the Premises under or in connection with this Lease
(other than alterations separately performed by Landlord or alterations
performed by Landlord necessary to implement any express expansion or
contraction options provided Tenant in this Lease), and (c) Landlord shall
perform, and Tenant shall be responsible for the cost of, any so-called Title
III "path of travel" requirements triggered solely by any construction
activities or alterations in the Premises by or on behalf of Tenant as
referenced in clause (b) above. Except as set forth above with respect to
Landlord's Title III obligations, Tenant shall be solely responsible for all
other requirements under the ADA relating to the Tenant or any affiliates or
persons or entities related to the Tenant (collectively, "Affiliates"),
operations of the Tenant or Affiliates, or the Premises, including, without
limitation, requirements under Title I of the ADA pertaining to Tenant's
employees. Nothing in this subsection (c) shall be construed to excuse or limit
Landlord's obligation pursuant to Section 4(a) of this Lease to construct the
Base Building and Site Improvements in accordance with all local building codes
as applied, enforced and interpreted as of the date the building permit is
pulled.
(d) ENVIRONMENTAL. Tenant shall comply, at its sole expense, with all
Laws and Requirements as set forth above, all manufacturers' instructions and
all requirements of insurers relating to the treatment, production, storage,
handling, transfer, processing, transporting, use, disposal and release of
hazardous substances, hazardous mixtures, chemicals, pollutants, petroleum
products, toxic or radioactive matter (the "RESTRICTED ACTIVITIES") by Tenant or
Tenant's Agents. Tenant shall deliver to Landlord copies of all Material Safety
Data Sheets or other written information, if any, prepared by manufacturers,
importers or suppliers of any chemical and all notices, filings, permits and any
other written communications, if any, from or to Tenant and any entity
regulating any Restricted Activities.
(e) NOTICE. If at any time during or after the Term, Landlord or Tenant
becomes aware of any inquiry, investigation or proceeding regarding the
Restricted Activities affecting or concerning the Property or activities
conducted thereon or becomes aware of any claims, actions or investigations
regarding the ADA affecting or concerning the Property, such party shall give
the other party written notice, within 5 days after first learning thereof,
providing all available information and copies of any notices.
11. SIGNS. Except for signs which are located wholly within the interior of the
Premises and not visible from the exterior of the Premises, no signs shall be
placed on the Property without the prior written consent of Landlord. All signs
installed by Tenant shall be maintained by Tenant in
20
good condition and Tenant shall remove all such signs at the termination of this
Lease and shall repair any damage caused by such installation, existence or
removal.
The foregoing notwithstanding, and subject to the terms and conditions
below, Tenant shall have the right to procure, install and maintain, at Tenant's
sole cost and expense, the following identification signage (with Tenant's logo
type and colors) on or about the Building:
(a) Up to two signs on the top or exterior of the Building;
(b) Up to two monument signs to be located around the Building in the
area between the parking lot curb line and the Building, it being agreed that so
long as no other tenant in the Project shall construct signs between the street
and the outside edge of the parking lot curb (the "Park Perimeter"), Tenant's
monument signage shall not be placed in the Park Perimeter.
The design, size and location of all Tenant signage, other than the
exterior building signage described in subsection (a) above, shall be consistent
with Landlord's sign criteria set forth in the materials entitled "Identity/Sign
System Standards, Liberty Property Trust" ("Landlord's Sign Criteria"), a copy
of which has been provided to Tenant, and otherwise subject to Landlord's
approval, which approval shall not be unreasonably withheld, conditioned or
delayed. With respect to the permitted exterior Building signage contemplated in
subparagraph (a) above, Tenant shall have discretion regarding the size and
design of the signage subject to the following: (i) the signage must be
compatible with and appropriate to a single-tenant class A suburban office
building, as reasonably determined by Landlord based on the standards generally
prevailing with respect to such buildings, (ii) the signage must be designed and
installed in a manner that will not adversely affect any Building structures,
systems or amenities, as reasonably determined by Landlord and (iii) single
panel plastic backlit signs are prohibited. Upon the expiration or termination
of this Lease, Tenant shall remove the signage and shall repair any damage
occasioned by such removal.
Tenant shall cause all Tenant signage to comply with all applicable
laws and ordinances, provided that this provision shall not prevent Tenant from
seeking a variance or conditional use permit for any non-complying signage
approved by Landlord. Landlord will not oppose any such variance or conditional
use permit.
In addition, Landlord shall construct, at no cost to Tenant, one of
Landlord's typical monument signs in the Park Perimeter at each of two access
driveways to the Building. Tenant understands that such signage must conform to
Landlord's Sign Criteria (as defined above in this Section). If Tenant desires
any upgrade in the size or quality of Landlord's standard monument signage,
Tenant shall bear the entire expense of such upgrade. Landlord's name and
Tenant's name will be included on the monument signs described in this
paragraph.
If, pursuant to the exercise of the contraction rights provided in
Tenant's extension options or otherwise, Tenant at any time is leasing less than
100% of the rentable square footage of the
21
Building, Landlord shall have a limited right to cause Tenant to reasonably
scale back its signage rights hereunder to a level approximately consistent with
the signage being afforded to comparable tenants in the Project, so as to afford
signage for other significant tenants or occupants of the Building appropriate
to the respective percentage of the Building occupied by Tenant and such other
tenants or occupants.
12. ALTERATIONS AND FIXTURES.
(a) Tenant shall have the right to install its trade fixtures in the
Premises, provided that no such installation or removal thereof shall materially
and adversely affect any structural portion of the Property or any utility
lines, communications lines, equipment or facilities in the Building serving any
tenant other than Tenant. At the expiration or termination of this Lease and at
the option of Landlord or Tenant, Tenant shall remove such installation(s) and,
in the event of such removal, Tenant shall repair any damage caused by such
installation or removal; if Tenant, with Landlord's written consent, elects not
to remove such installation(s) at the expiration or termination of this Lease,
all such installations shall remain on the Property and become the property of
Landlord without payment by Landlord.
(b) Tenant shall have the right to make the following alterations in
and to the Premises without Landlord's consent: nonstructural additions,
alterations or improvements (collectively, "alterations") which, taken as a
whole, (i) do not exceed $100,000, excluding the Initial Tenant Improvements,
(ii) do not materially and adversely affect the HVAC, mechanical, electrical,
plumbing or other Building systems and do not otherwise materially and adversely
impact the Building, and (iii) are appropriate to a class A suburban office
building devoted primarily to office uses. The foregoing notwithstanding, Tenant
shall not be required to obtain Landlord's consent with respect to normal
interior redecorating or refinishing, such as re-painting walls or replacing
wall coverings or floor coverings.
Tenant will not make alterations in or to the Premises or Property
other than those permitted under the preceding paragraph without first obtaining
the written consent of Landlord, which consent shall not be unreasonably
withheld, delayed or conditioned. Tenant shall pay any reasonable out-of-pocket
costs incurred by Landlord to third parties for any required
architectural/engineering reviews, provided that Tenant shall not be required to
reimburse Landlord for such costs relating to Landlord's review of the plans and
specifications for the Initial Tenant Improvements.
In making any alterations (including alterations for which Landlord's
consent is not required), (i) Tenant shall deliver to Landlord the plans,
specifications and necessary permits, together with certificates evidencing that
Tenant's contractors and subcontractors have adequate insurance coverage naming
Landlord and Landlord's agent as additional insureds, at least 10 days prior to
commencement thereof, (ii) such alterations shall not impair the structural
strength of the Building or any other improvements or reduce the value of the
Property or materially and adversely affect any utility lines, communications
lines, equipment or facilities in the Building
22
serving any tenant other than Tenant, (iii) Tenant shall comply with Section 13
and (iv) the occupants of the Building and of any adjoining property shall not
be unreasonably disturbed thereby.
All alterations to the Premises by Tenant shall be the property of
Tenant until the expiration or termination of this Lease; at that time all such
alterations shall remain on the Property and become the property of Landlord
without payment by Landlord unless Landlord gives written notice to Tenant to
remove the same, in which event Tenant will remove such alterations and repair
any resulting damage. The foregoing notwithstanding, Tenant shall not be
required to remove (i) the Initial Tenant Improvements, (ii) any alteration for
which Tenant has requested and received from Landlord prior to the performance
of the alteration, a written determination by Landlord that Landlord will not
require the removal of the alteration, and (iii) any alterations that are
compatible with and appropriate to a class A suburban office building devoted
primarily to office uses, provided, however, that Landlord nevertheless reserves
the right to require removal of structural alterations and alterations to
restroom areas. Landlord agrees to provide the written determination
contemplated under clause (ii) above on or before the date that is 10 business
days following the receipt by Landlord of Tenant's request together with plans
and specifications for the proposed alteration.
13. MECHANICS' LIENS. Tenant shall pay promptly any contractors and materialmen
who supply labor, work or materials to Tenant at the Property and shall take all
steps permitted by law in order to avoid the imposition of any mechanic's lien
upon all or any portion of the Property. Should any such lien or notice of lien
be filed for work performed for Tenant other than by Landlord, Tenant shall bond
against or discharge the same within 30 days after Tenant has notice that the
lien or claim is filed regardless of the validity of such lien or claim.
Landlord shall pay promptly any contractors and materialmen who supply
labor, work or materials to Landlord at the Property and shall take all steps
permitted by law in order to avoid the imposition of any mechanic's lien upon
all or any portion of the Property that could attach to or have priority over
Tenant's interest in the Property. Should any such lien or notice of lien be
filed for work performed for Landlord, Landlord shall bond against or discharge
the same within 30 days after Landlord has notice that the lien or claim is
filed regardless of the validity of such lien or claim.
Throughout this Lease the term "MECHANIC'S LIEN" is used to include any
lien, encumbrance or charge levied or imposed upon all or any portion of,
interest in or income from the Property on account of any mechanic's, laborer's,
materialman's or construction lien or arising out of any debt or liability to or
any claim of any contractor, mechanic, supplier, materialman or laborer and
shall include any mechanic's notice of intention to file a lien given to
Landlord or Tenant, any stop order given to Landlord or Tenant, any notice of
refusal to pay naming Landlord or Tenant and any injunctive or equitable action
brought by any person claiming to be entitled to any mechanic's lien.
23
14. LANDLORD'S RIGHT OF ENTRY. Tenant shall permit Landlord and its Agents to
enter the Premises at all reasonable times following not less than 24 hours
notice (except in the event of an emergency), for the purpose of inspection,
maintenance or making repairs, alterations or additions (Landlord shall not make
any alterations or additions to the Building or Site Improvements that are not
contemplated under this Lease without first obtaining Tenant's written consent,
which consent shall not be unreasonably withheld, delayed or conditioned) as to
exhibit the Premises for the purpose of sale or mortgage and, during the last 9
months of the Term, to exhibit the Premises to any prospective tenant. The
requisite notice prior to entry contemplated above may be given by telephone or
other informal means. Except in the event of an emergency, Tenant shall have the
right to have an employee or representative of Tenant accompany Landlord and its
Agents to the extent necessary and appropriate to protect and limit access to
trade secrets or other confidential information of Tenant and Tenant's
customers. Moreover, Tenant shall be entitled to designate, by written notice to
Landlord, portions of the Premises as "Secured Areas" which Landlord may not
enter except in the presence of Tenant's authorized personnel or in emergencies
or following a default. If Tenant designates any area as a "Secured Area" or
"Secured Room" on plans submitted and approved by Landlord, such plans shall
constitute the written notice required pursuant to the preceding sentence. In an
emergency situation, Landlord, as well as the applicable emergency personnel,
shall have the right to access the Secured Areas by any means and using any
force as may be reasonable under the circumstances without liability to Tenant
of any kind therefor. Tenant may install locks and security devices therefor,
provided that Tenant shall, upon Landlord's request during normal business
hours, provide an authorized person to escort Landlord or its employees in
inspecting the Secured Areas and provided Tenant delivers to Landlord keys and
other information necessary to access such Secured Areas at the expiration or
earlier termination of the Lease Term. Tenant's installation of any such locks
and security devices shall be performed in accordance with Section 12 of this
Lease. Landlord will make reasonable efforts not to inconvenience Tenant or
interfere with Tenant's business in exercising the foregoing rights, but shall
not be liable for any loss of occupation or quiet enjoyment thereby occasioned.
15. DAMAGE BY FIRE OR OTHER CASUALTY.
(a) If the Premises or Building and/or Site Improvements shall be
damaged or destroyed by fire or other casualty, Tenant promptly shall notify
Landlord and Landlord, subject to the conditions set forth in this Section,
shall repair such damage and restore the Premises, Building and/or Site
Improvements to substantially the same condition in which they were immediately
prior to such damage or destruction, but not including the repair, restoration
or replacement of the Initial Tenant Improvements or other fixtures or
alterations installed by Tenant. Landlord shall notify Tenant in writing, within
30 days after the date of the casualty, if Landlord anticipates that the
restoration will take more than 180 days from the date of the casualty to
complete; in such event, either Landlord or Tenant may terminate this Lease
effective as of the date of casualty by giving written notice to the other
within 10 days after Landlord's notice. Further, if a casualty occurs during the
last 12 months of the Term or any extension thereof, Landlord may cancel this
Lease unless Tenant has the right to extend the Term for at least 3 more years
and does so within 30 days after the date of the casualty.
24
(b) Landlord shall maintain a 12 month rental coverage endorsement or
other comparable form of coverage as part of its fire, extended coverage and
special form insurance. Tenant will receive an abatement of its Minimum Annual
Rent and Annual Operating Expenses to the extent the Premises are rendered
untenantable.
16. CONDEMNATION.
(a) TERMINATION. If (i) all of the Premises are taken by a condemnation
or otherwise for any public or quasi-public use, (ii) any part of the Premises
or Property is so taken and the remainder thereof is insufficient for the
reasonable operation of Tenant's business or (iii) any of the Property is so
taken, and, in Landlord's opinion, it would be impractical or the condemnation
proceeds are insufficient to restore the remainder of the Premises or Property,
then this Lease shall terminate and all unaccrued obligations hereunder shall
cease as of the day before possession is taken by the condemnor.
(b) PARTIAL TAKING. If there is a condemnation and this Lease has not
been terminated pursuant to this Section, (i) Landlord shall restore the
Property and the improvements which are a part of the Premises to a condition
and size as nearly comparable as reasonably possible to the condition and size
thereof immediately prior to the date upon which the condemnor took possession
and (ii) the obligations of Landlord and Tenant shall be unaffected by such
condemnation except that there shall be an equitable abatement of the Minimum
Annual Rent according to the rental value of the Premises before and after the
date upon which the condemnor took possession and/or the date Landlord completes
such restoration.
(c) AWARD. In the event of a condemnation affecting Tenant, Tenant
shall have the right to make a separate claim against the condemnor for moving
expenses and business dislocation damages, and also for the value of any
leasehold improvements installed or constructed in the Premises by Tenant
(provided Tenant reimburses Landlord for the unamortized value [based on the
initial Lease Term], including interest, of any tenant improvements or tenant
improvement allowance provided by Landlord) to the extent Tenant's right to any
separate award would not be directly deducted from or would not indirectly
reduce the award made to Landlord for the taking of the Base Building, Site
Improvements and/or Land. Except as aforesaid and except as set forth in (d)
below, Tenant hereby assigns all claims against the condemnor to Landlord,
including, but not limited to, any claim for, the value of this Lease.
(d) TEMPORARY TAKING. If all or any part of the Property is subjected
to a taking for temporary use, this Lease shall continue in full force and
effect despite the taking and Tenant shall continue to comply with all of its
obligations pursuant to this Lease, except that Tenant's obligations relating to
use and maintenance of the Premises shall be suspended to the extent compliance
with this Lease is otherwise rendered impossible or impractical as a result of
the temporary taking. Any award arising from a temporary taking shall be
allocated between Landlord and Tenant in accordance with their respective
interests as determined within the taking proceeding.
25
17. NON-ABATEMENT OF RENT. Except as otherwise expressly provided in this Lease,
there shall be no abatement or reduction of the Rent for any cause whatsoever,
and this Lease shall not terminate, and Tenant shall not be entitled to
surrender the Premises.
18. INDEMNIFICATION. Subject to Sections 9(c)(iv) and 19, Tenant will protect,
indemnify and hold harmless Landlord and its Agents from and against any and all
claims, actions, damages, liability and expense (including fees of attorneys,
investigators and experts) in connection with loss of life, personal injury or
damage to property in or about the Premises or arising out of the occupancy or
use of the Premises by Tenant or its Agents or occasioned wholly or in part by
any act or omission of Tenant or its Agents, whether prior to, during or after
the Term, except to the extent such loss, injury or damage was caused by the
negligence of Landlord or its Agents. In case any action or proceeding is
brought against Landlord and/or its Agents by reason of the foregoing, Tenant,
at its expense, shall resist and defend such action or proceeding, or cause the
same to be resisted and defended by counsel (reasonably acceptable to Landlord
and its Agents) designated by the insurer whose policy covers such occurrence or
by counsel designated by Tenant and approved by Landlord and its Agents.
Tenant's obligations pursuant to this Section shall survive the expiration or
termination of this Lease.
Subject to Sections 9(c)(iv) and 19, Landlord will protect, indemnify
and hold harmless Tenant and its Agents from and against any and all claims,
actions, damages, liability and expense (including fees of attorneys,
investigators and experts) in connection with loss of life, personal injury or
damage to property caused to any person in or about the Property occasioned
wholly or in part by the negligence of Landlord or its Agents, except to the
extent such loss, injury or damage was caused by the negligence of Tenant or its
Agents. In case any action or proceeding is brought against Tenant and/or its
Agents by reason of the foregoing, Landlord, at its expense, shall resist and
defend such action or proceeding, or cause the same to be resisted and defended
by counsel (reasonably acceptable to Tenant and its Agents) designated by the
insurer whose policy covers such occurrence or by counsel designated by Landlord
and approved by Tenant and its Agents. Landlord's obligations pursuant to this
Section shall survive the expiration or termination of this Lease.
19. WAIVER OF CLAIMS. Landlord and Tenant each hereby waives all claims for
recovery against the other for any loss or damage which may be inflicted upon
the property of such party even if such loss or damage shall be brought about by
the fault or negligence of the other party or its Agents; provided, however,
that such waivers by Landlord and Tenant shall be limited to loss or damage that
is covered by "special form of loss" or "all risk" property insurance or would
have been covered had such party maintained a "special form of loss" or "all
risk" form of property insurance with such endorsements and coverages as are
customarily maintained by, in the case of Landlord, prudent owners and operators
of real property, and in the case of Tenant, prudent business owners in the same
industry as Tenant. The waivers in this Section will be effective whether or not
the loss was actually covered by insurance. This waiver shall not operate to
relieve Tenant of its obligation to pay the amount of any reasonable
"deductible" in the event of any loss
26
covered by Landlord's property insurance, unless the loss was caused by the
fault or negligence of Landlord.
20. QUIET ENJOYMENT; WARRANTY OF TITLE. Landlord covenants that Tenant, upon
performing all of its covenants, agreements and conditions of this Lease, shall,
on the terms and conditions of this Lease, have quiet and peaceful use and
possession of the Premises as against anyone claiming by or through Landlord or
asserting title paramount to Landlord's. Landlord warrants as of the date hereof
that Landlord is the fee owner of the Property, subject only to the encumbrances
listed on attached EXHIBIT "I".
21. ASSIGNMENT AND SUBLETTING.
(a) LIMITATION. Tenant shall have the right to freely assign this Lease
or sublet all or any part of the Premises to any person or entity at any time
provided that the nature of the tenancy is compatible with and appropriate for a
class A suburban office park in the Minneapolis/St. ▇▇▇▇ metropolitan area.
Tenant may also freely assign this Lease, or sublet all or any part of the
Premises, to any entity controlling, controlled by or under common control with
Tenant or to any successor by merger to the interests of Tenant. Tenant shall
give Landlord prompt notice of any assignment or subletting.
Except as provided above, Tenant shall not sublet the Premises or
assign this Lease, voluntarily or by operation of law, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld. Any
transfer not in conformity with this Section 21 shall be void at the option of
Landlord, and Landlord may exercise any or all of its rights under Section 25. A
consent to one transfer shall not be deemed to be a consent to any subsequent
transfer. Prior to a contemplated assignment or subletting, Tenant may, but
shall be under no obligation to, request a written determination from Landlord
as to whether or not Landlord deems a proposed assignment or subletting
compatible with and appropriate for a class A suburban office park in the
Minneapolis/St. ▇▇▇▇ metropolitan area. Such request shall be in writing, shall
include adequate detail as to the proposed assignee or subtenant and the nature
of its business, and shall include an express warning that if Landlord fails to
respond to such request within 10 business days, Landlord, pursuant to this
Lease, shall be deemed to have approved of the proposed assignment or
subletting. Landlord agrees to provide Landlord's determination within 10
business days of Tenant's request. If Landlord fails to provide its
determination within 10 business days of Tenant's written request (and provided
the request includes the warning notice described above), Landlord shall be
deemed to have approved the proposed assignment or subletting.
(b) CONDITIONS. Notwithstanding the above, the following shall apply to
any transfer, with or without Landlord's consent:
(i) Except as expressly provided below, no transfer shall
relieve Tenant of its obligation to pay the Rent and to perform all its other
obligations hereunder. The acceptance of Rent by Landlord from any person shall
not be deemed to be a waiver by Landlord of any
27
provision of this Lease or to be a consent to any transfer. The foregoing
notwithstanding, in the event of a permitted assignment of this Lease by Tenant
to any successor by merger to the interests of Tenant or in the event of a
permitted assignment to a third party, Tenant shall be released from all
liability under this Lease with respect to matters and obligations arising from
and after the date of the assignment if, and only if, such assignee has a
tangible net worth at the time of the assignment equal to $47,000,000. Such
release must be in writing, and will be issued by Landlord upon receipt of
reasonable documentation from Tenant confirming the net worth of the assignee.
(ii) Any assignment shall be by a written instrument in form
and substance reasonably satisfactory to Landlord which shall (A) include an
assumption of liability by any transferee of all Tenant's obligations arising
from and after the date of the transfer and the transferee's ratification of and
agreement to be bound by all the provisions of this Lease, (B) afford Landlord
the right of direct action against the transferee pursuant to the same remedies
as are available hereunder to Landlord against Tenant and (C) be executed by
Landlord, Tenant and the transferee.
(iii) Except as provided below, in the event that the rent due
and payable by a subtenant under any such permitted sublease (or a combination
of the rent payable under such sublease plus any bonus or other consideration
therefor or incident thereto) exceeds the rent payable under this Lease, or if
with respect to a permitted assignment, permitted license, or other transfer by
Tenant permitted by Landlord or this Lease , the consideration payable to Tenant
by the assignee, licensee, or other transferee exceeds the rent payable under
this Lease, then Tenant shall be bound and obligated to pay Landlord 50% of such
excess rent and other excess consideration, after deduction of "Tenant's Costs"
from such excess rent and other excess consideration. "Tenant's Costs" mean (i)
Annual Minimum Rent and Operating Expenses paid by Tenant during any time the
Premises being assigned or sublet were vacant, (ii) reasonable leasing costs
incurred by Tenant in connection with such assignment or subletting, including
marketing costs, attorneys' fees, leasing commissions, and leasehold
improvements or allowances, and (iii) the unamortized value of all leasehold
improvements constructed by Tenant in the Premises so assigned or sublet. The
excess rent or other excess consideration so payable to Landlord shall be
remitted by Tenant to Landlord within ten (10) days following receipt thereof by
Tenant from such sublessee, assignee, licensee, or other transferee, as the case
may be. The foregoing notwithstanding, Tenant shall not be obligated to pay
Landlord the excess rent or other excess consideration described in this
subsection (i) if Tenant leases from Landlord other additional premises as a
replacement for the Premises so being assigned or sublet, or (ii) in the case of
an assignment or subletting by Tenant to any entity controlled by, under common
control with or controlling Tenant.
22. SUBORDINATION. This Lease shall be subordinate to any first mortgage or
other primary encumbrance now or hereafter affecting the Premises. Although the
subordination is self-operative, within 10 days after written request, Tenant
shall execute and deliver any further commercially reasonable and customary
instruments of attornment and nondisturbance that may be desired by any such
mortgagee ("mortgagee" for purposes of this Section meaning the holder of any
first mortgage or other primary encumbrance, whether or not such encumbrance is
a mortgage)
28
or Landlord. The foregoing notwithstanding, (i) so long as Tenant is not in
default under this Lease, this Lease shall remain in full force and effect and
the mortgagee and any purchaser at a foreclosure sale thereof shall not disturb
Tenant's possession (including expansion options) hereunder, and (ii) the
mortgagee or purchaser at a foreclosure sale shall be bound to recognize all of
the terms and conditions of this Lease and the rights of the Tenant hereunder.
However, any mortgagee may at any time subordinate its mortgage to this Lease,
without Tenant's consent, by giving written notice to Tenant, and thereupon this
Lease shall be deemed prior to such mortgage without regard to their respective
dates of execution and delivery.
23. RECORDING; TENANT'S CERTIFICATE.
(a) All parties will, upon the request of any other party, execute a
short form lease ("Memorandum of Lease"), in a form suitable for recording. Such
Memorandum of Lease will be dated as of the date of this Lease and will disclose
the parties, the Term of this Lease, a description of the Premises and such
other terms and conditions as the parties agree upon. The party requesting the
execution of such Memorandum will bear all costs of the Memorandum, including
any recording fees. All parties will, following any termination of this Lease
and upon the written request of any other party, execute a document setting
forth the date of termination, in a form suitable for recording. Failure of a
party to execute such a document will not affect the termination, and in such
event the party requesting the document may execute and file an affidavit
setting forth the date of termination. The party requesting the execution of a
document setting forth the date of termination will bear all costs thereof,
including any recording fees.
(b) Within 10 days after Landlord's written request from time to time:
(i) Tenant shall execute, acknowledge and deliver to Landlord
a written statement certifying the Commencement Date and Expiration Date of this
Lease, that this Lease is in full force and effect and has not been modified and
otherwise as set forth in the form of estoppel certificate attached as EXHIBIT
"E" or with such modifications as may be reasonably necessary to reflect
accurately the stated facts and/or such other certifications as may be
reasonably requested by a mortgagee or purchaser.
(ii) Tenant shall furnish to Landlord, Landlord's mortgagee,
prospective mortgagee or purchaser reasonably requested financial information.
Tenant shall be excused from this requirement during any period Tenant is a
public company whose stock is traded on a national exchange.
24. SURRENDER; ABANDONED PROPERTY.
(a) Subject to the terms of Sections 12, 15 and 16, at the expiration
or termination of this Lease, Tenant promptly shall yield up in the same
condition, order and repair in which they are required to be kept throughout the
Term, the Premises and all improvements thereto, and all fixtures and equipment
servicing the Building, ordinary wear and tear excepted.
29
(b) Upon or prior to the expiration or termination of this Lease,
Tenant shall remove any of Tenant's personal property from the Property. Any
such personal property remaining thereafter shall be deemed conclusively to have
been abandoned, and Landlord, at Tenant's expense, may remove, store, sell or
otherwise dispose of such property in such manner as Landlord may see fit and/or
Landlord may retain such property as its property. If any part thereof shall be
sold, then Landlord may receive and retain the proceeds of such sale and apply
the same, at its option, against the expenses of the sale, the cost of moving
and storage and any Rent due under this Lease.
(c) If Tenant, or any person claiming through Tenant, shall continue to
occupy the Premises after the expiration or termination of this Lease or any
renewal thereof, such occupancy shall be deemed to be under a month-to-month
tenancy under the same terms and conditions set forth in this Lease, except that
the monthly installment of the Minimum Annual Rent during such continued
occupancy shall be 150% of the amount applicable to the last month of the Term.
Anything to the contrary notwithstanding, any holding over by Tenant without
Landlord's prior written consent shall constitute a default hereunder and shall
be subject to all the remedies available to Landlord.
25. CURING TENANT'S DEFAULTS. If Tenant shall be in default in the performance
of any of its obligations hereunder, Landlord, without any obligation to do so,
in addition to any other rights it may have in law or equity, may elect to cure
such default on behalf of Tenant after written notice (except in the case of
emergency) to Tenant. Tenant shall reimburse Landlord upon demand for any sums
paid or costs incurred by Landlord in curing such default, including interest
thereon from the respective dates of Landlord's incurring such costs, which sums
and costs together with interest shall be deemed additional rent.
26. DEFAULTS - REMEDIES.
(a) TENANT DEFAULTS. It shall be an event of default by Tenant:
(i) If Tenant does not pay in full when due any and all Rent;
(ii) If Tenant fails to observe and perform or otherwise
breaches any other provision of this Lease;
(iii) [Intentionally Deleted]
(iv) If Tenant becomes insolvent or bankrupt in any sense or
makes a general assignment for the benefit of creditors or offers a settlement
to such creditors, or if a petition in bankruptcy or for reorganization or for
an arrangement with creditors under any federal or state law is filed by or
against Tenant, or a ▇▇▇▇ in equity or other proceeding for the appointment of a
receiver for any of Tenant's assets is commenced; provided, however, that any
proceeding brought by anyone other than Landlord or Tenant under any bankruptcy,
insolvency, receivership or similar
30
law shall not constitute a default until such proceeding has continued unstayed
for more than 60 consecutive days.
(b) REMEDIES. Then, and in any such event, Landlord shall have the
following rights:
(i) To charge a late payment fee equal to the greater of $100
or 2% of any amount owed to Landlord pursuant to this Lease which is not paid
within 5 business days after the due date.
(ii) To enter and repossess the Premises, by breaking open
locked doors if necessary, and remove all persons and all or any property
therefrom, by action at law or otherwise, without being liable for prosecution
or damages therefor, and Landlord may, at Landlord's option, make alterations
and repairs in order to relet the Premises and relet all or any part(s) of the
Premises for Tenant's account. Tenant agrees to pay to Landlord on demand any
deficiency that may arise by reason of such reletting. In the event of reletting
without termination of this Lease, Landlord may at any time thereafter elect to
terminate this Lease for such previous breach.
(iii) To accelerate the whole or any part of the Rent for the
balance of the Term, and declare the same to be immediately due and payable.
(iv) To terminate this Lease and the Term without any right on
the part of Tenant to save the forfeiture by payment of any sum due or by other
performance of any condition, term or covenant broken.
(c) GRACE PERIOD. Notwithstanding anything hereinabove stated, neither
party will exercise any available right because of any default of the other,
except those remedies contained in subsection (b)(i) of this Section, unless
such party shall have first given written notice of default to the defaulting
party, and the defaulting party shall have failed to cure the default within 5
business days of such notice in the case of monetary defaults or in the case of
Tenant's failure to take any action with respect to which a time period for
performance is specifically enumerated in this Lease, or within 30 days of such
notice in the case of other nonmonetary defaults; provided, however, that:
(i) No such notice shall be required in the event of any
default enumerated in subsection (a) (iv) of this Section.
(ii) Landlord shall not be required to give notice of default
more than 2 times during any 12-month period; thereafter in such 12-month period
Landlord may declare a default and exercise its remedies without notice, except
that, notwithstanding the foregoing, Landlord will not exercise its remedies
under subsection (b)(iii) [acceleration] unless Landlord first gives Tenant
written notice of such default.
31
(iii) If the default consists of something other than the
failure to pay money which cannot reasonably be cured within 30 days, neither
party will exercise any right if the defaulting party begins to cure the default
within the 30 days and continues actively and diligently in good faith to
completely cure said default.
(iv) Landlord and Tenant agree that any notice given by the
other party pursuant to this Section which is served in compliance with Section
30 shall be adequate notice for the purpose of the noticing party's exercise of
any available remedies.
(d) NON-WAIVER; NON-EXCLUSIVE. No waiver by Landlord or Tenant of any
breach by the other shall be a waiver of any subsequent breach, nor shall any
forbearance by Landlord or Tenant to seek a remedy for any breach by the other
be a waiver by Landlord or Tenant of any rights and remedies with respect to
such or any subsequent breach. Efforts by Landlord or Tenant to mitigate the
damages caused by the other's default shall not constitute a waiver of
Landlord's or Tenant's right to recover damages hereunder. Unless this Lease
expressly so provides to the contrary, no right or remedy herein conferred upon
or reserved to Landlord or Tenant is intended to be exclusive of any other right
or remedy provided herein or by law, but each shall be cumulative and in
addition to every other right or remedy given herein or now or hereafter
existing at law or in equity. No payment by Tenant or Landlord or receipt or
acceptance by Landlord or Tenant of a lesser amount than the total amount due
Landlord or Tenant, as the case may be, under this Lease shall be deemed to be
other than on account, nor shall any endorsement or statement on any check or
payment be deemed an accord and satisfaction, and Landlord or Tenant, as the
case may be, may accept such check or payment without prejudice to such party's
right to recover the balance of the amount due, or such party's right to pursue
any other available remedy.
(e) COSTS AND ATTORNEYS' FEES. If either party commences an action
against the other party arising out of or in connection with this Lease, the
prevailing party shall be entitled to have and recover from the losing party
attorneys' fees, costs of suit, investigation expenses and discovery costs,
including costs of appeal.
27. REPRESENTATIONS OF TENANT. Tenant represents to Landlord and agrees that:
(a) The word "TENANT" as used herein includes the Tenant named above as
well as its successors and assigns, each of which shall be under the same
obligations and liabilities and each of which shall have the same rights,
privileges and powers as it would have possessed had it originally signed this
Lease as Tenant.
(b) If Tenant is a corporation, partnership or any other form of
business association or entity, Tenant is duly formed and in good standing, and
has full corporate or partnership power and authority, as the case may be, to
enter into this Lease and has taken all corporate or partnership action, as the
case may be, necessary to carry out the transaction contemplated herein, so that
when executed, this Lease constitutes a valid and binding obligation enforceable
in accordance with its
32
terms. Tenant shall provide Landlord with corporate resolutions or other proof
in a form acceptable to Landlord, authorizing the execution of this Lease at the
time of such execution.
28. LIABILITY OF LANDLORD. The word "LANDLORD" as used herein includes the
Landlord named above as well as its successors and assigns, each of which shall
have the same rights, remedies, powers, authorities and privileges as it would
have had it originally signed this Lease as Landlord. Any such person or entity,
whether or not named herein, shall have no liability hereunder after it ceases
to hold title to the Premises except for obligations already accrued (and, as to
any unapplied portion of Tenant's Security Deposit, Landlord shall be relieved
of all liability therefor upon transfer of such portion to its successor in
interest) and Tenant shall look solely to Landlord's successor in interest for
the performance of the covenants and obligations of the Landlord hereunder which
thereafter shall accrue. Neither Landlord (from and after the Commencement Date)
nor any principal of Landlord nor any owner of the Property, whether disclosed
or undisclosed, shall have any personal liability with respect to any of the
provisions of this Lease or the Premises, and if Landlord is in breach or
default with respect to Landlord's obligations under this Lease or otherwise
(other than defaults occurring prior to the Commencement Date and relating to
Landlord's construction and completion obligations hereunder), Tenant shall look
solely to the equity of Landlord in the Property and to any rents, income or
proceeds from the Property for the satisfaction of Tenant's claims.
Notwithstanding the foregoing, no mortgagee or ground lessor succeeding to the
interest of Landlord hereunder (either in terms of ownership or possessory
rights) shall be (a) liable for any previous act or omission of a prior landlord
(but shall be subject to any rental offsets relating to acts or omissions of a
prior landlord) or (b) bound by any amendment of this Lease made without its
written consent and made after Tenant shall have been notified of the existence
of such mortgage or ground lease, or by payment by Tenant of Minimum Annual Rent
in advance in excess of one monthly installment.
29. INTERPRETATION; DEFINITIONS.
(a) CAPTIONS. The captions in this Lease are for convenience only and
are not a part of this Lease and do not in any way define, limit, describe or
amplify the terms and provisions of this Lease or the scope or intent thereof.
(b) ENTIRE AGREEMENT. This Lease represents the entire agreement
between the parties hereto and there are no collateral or oral agreements or
understandings between Landlord and Tenant with respect to the Premises or the
Property. No rights, easements or licenses are acquired in the Property or any
land adjacent to the Property by Tenant by implication or otherwise except as
expressly set forth in the provisions of this Lease. This Lease shall not be
modified in any manner except by an instrument in writing executed by the
parties. The masculine (or neuter) pronoun and the singular number shall include
the masculine, feminine and neuter genders and the singular and plural number.
The word "including" followed by any specific item(s) is deemed to refer to
examples rather than to be words of limitation. Both parties having participated
fully and equally in the negotiation and preparation of this Lease, this Lease
shall not be more strictly construed, nor any ambiguities in this Lease
resolved, against either Landlord or Tenant.
33
(c) COVENANTS. Except as otherwise expressly provided herein, each
covenant, agreement, obligation, term, condition or other provision herein
contained shall be deemed and construed as a separate and independent covenant
of the party bound by, undertaking or making the same, not dependent on any
other provision of this Lease unless otherwise expressly provided. All of the
terms and conditions set forth in this Lease shall apply throughout the Term
unless otherwise expressly set forth herein.
(d) INTEREST. Wherever interest is required to be paid hereunder, such
interest shall be at the 'prime rate" plus two percent (2%). "Prime rate" herein
means the rate of interest per annum from time to time published in The Wall
Street Journal (or comparable financial publication if The Wall Street Journal
ceases to be published or ceases to publish a prime rate) as the "High Prime
Rate", or the "Prime Rate" if only one "Prime Rate" is published, as the same
may fluctuate from time to time.
(e) SEVERABILITY; GOVERNING LAW. If any provisions of this Lease shall
be declared unenforceable in any respect, such unenforceability shall not affect
any other provision of this Lease, and each such provision shall be deemed to be
modified, if possible, in such a manner as to render it enforceable and to
preserve to the extent possible the intent of the parties as set forth herein.
This Lease shall be construed and enforced in accordance with the laws of the
state in which the Property is located.
(f) "MORTGAGE" AND "MORTGAGEE." The word "mortgage" as used herein
includes any lien or encumbrance on the Premises or the Property or on any part
of or interest in or appurtenance to any of the foregoing, including without
limitation any ground rent or ground lease if Landlord's interest is or becomes
a leasehold estate. The word "mortgagee" as used herein includes the holder of
any mortgage, including any ground lessor if Landlord's interest is or becomes a
leasehold estate. Wherever any right is given to a mortgagee, that right may be
exercised on behalf of such mortgagee by any representative or servicing agent
of such mortgagee.
(g) "PERSON." The word "person" is used herein to include a natural
person, a partnership, a corporation, an association and any other form of
business association or entity.
30. NOTICES. Any notices or election required or permitted to be given or served
by any party hereto upon any other shall be deemed given or served in accordance
with the provisions of this Agreement if said notice or election is to the
parties, with copies, at the addresses listed below, by one of the following
methods: (a) delivered personally; (b) sent by certified or registered mail,
return receipt requested, postage prepaid; (c) sent by reputable overnight
delivery service designated for next business day delivery, with delivery charge
prepaid; or (d) sent by facsimile transmission provided a copy of the notice is
simultaneously sent by method (a), (b) or (c) above. Communications personally
delivered will be deemed received upon delivery, communications sent by
certified mail will be deemed received two (2) business days following the date
of the postmark, communications sent by overnight delivery will be deemed
received on the next business day and communications sent by facsimile will be
deemed received on the day sent if sent
34
on a business day before 3:00 P.M. All other communications sent by facsimile
will be deemed received on the first business day after they are sent.
Communications addressed to the parties shall be sent as follows:
If intended for Tenant:
ONTRACK Data International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: 612/949-4083
and to:
ONTRACK Data International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: 612/949-4083
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, P.A.
Suite 400
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: 612/927-5427
If intended for Landlord:
Liberty Property Limited Partnership
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: 612/375-8958
35
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Center South
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: 612/340-2644
Any party hereto may change its address for the service of notice hereunder by
giving written notice of said change to the other party hereunder in the manner
specified above. By notice to the other, either party may require that copies of
notices be given to any mortgagee or other party designated by Landlord or
Tenant. The giving of notice by a party's attorneys, representatives and agents
under this Section shall be deemed to be the acts of such party; however, the
foregoing provisions governing the date on which a notice is deemed to have been
received shall mean and refer to the date on which a party to this Lease, and
not its counsel or other recipient to which a copy of the notice may be sent, is
deemed to have received the notice.
31. OPTION TO EXTEND TERM. Provided that at the time of such notice of exercise
and at the time of the commencement of the applicable extension term, there
exists no monetary default (beyond any applicable notice and cure period in this
Lease) and no default described in Section 26(a)(iv), Tenant shall have the
right and option, exercisable by giving Landlord prior written notice thereof at
least nine (9) months in advance of the applicable Expiration Date, to extend
the Term (for all or a portion of the PremisesBas described in subsection (d)
below) for up to three (3) additional consecutive periods of thirty-six (36)
months each, the first such extended term or any subsequent extended term to
begin on the Expiration Date of the initial Term or the Expiration Date of any
previous extended term, as the case may be. Such extension shall be under the
same terms and conditions as provided in this Lease except as follows:
(a) all references to the Term in this Lease shall be deemed to mean
the Term as extended pursuant to this Section;
(b) there shall be no further options to extend the Term except as
expressly provided herein;
(c) Minimum Annual Rent for each Lease Year of the extension terms
shall be as follows:
36
First Extension:
Lease Year Annual Minimum Rent
---------- Per Rentable Sq. Ft.
--------------------
11 $12.129
12 $12.371
13 $12.619
Second Extension:
Lease Year Annual Minimum Rent
---------- Per Rentable Sq. Ft.
--------------------
14 $12.871
15 $13.129
16 $13.391
Third Extension:
Lease Year Annual Minimum Rent
---------- Per Rentable Sq. Ft.
--------------------
17 $13.659
18 $13.932
19 $14.211
(d) With respect to any extension option, Tenant may elect to extend
this Lease, on the terms and conditions stated above, for all or less than all
of the Premises then being leased by Tenant under this Lease. If Tenant desires
to extend this Lease for less than the entire Premises then being leased by
Tenant, Tenant shall include in its extension notice a detailed description of
the space in which Tenant is extending. In no event shall Tenant extend with
respect to less than 20,000 rentable square feet, and in no event shall Tenant
leave Landlord with less than 20,000 rentable square feet within the Building.
Moreover, any portion of the Premises that Tenant so surrenders to Landlord in
connection with an extension as to less than all of the Premises must be (1)
Leasable Space (as that term is defined below) and (2) must be surrendered to
Landlord in the condition required under this Lease with respect to surrender of
space at the expiration or termination of this Lease. If Tenant so extends for
less than all of the then Premises, Tenant and Landlord shall each pay one-half
of the cost of constructing any demising wall between the space surrendered and
the Premises retained by Tenant.
"Leasable Space" as used in this Lease means space that is located, configured
and sized in such a manner that, in Landlord's reasonable judgment, such space
has appropriate access to entrances
37
and restroom facilities, is useable for general office purposes and is
marketable to a general office user.
(e) if Tenant should exercise the extension option(s), at the request
of either party Landlord and Tenant shall execute and deliver an amendment to
the Lease documenting the terms, covenants and conditions applicable to the
extension term, as provided herein.
32. EXPANSION OPTION. Landlord presently intends, but shall have no obligation
other than as expressly provided in this Section with respect to Building B, to
develop at least three additional buildings in the Project, identified as
Buildings B (consisting of buildings B-1 and B-2), C and D, substantially as
shown on the Site Plan. Landlord hereby grants Tenant the right and option to
lease all or a portion of Building B on the terms and conditions provided in
this Section. Landlord agrees that it shall construct Building B, if at all,
after the construction of the Premises (Building A), Building C and Building D,
unless the earlier construction of Building B is requested by Tenant pursuant to
the exercise of its expansion option provided in this Section. Following the
construction of Buildings A, C and D, Landlord may construct all or a portion of
Building B at any time (Landlord agrees that if only a portion of Building B is
so constructed, Landlord will construct Building B-2 before constructing
Building B-1), and shall have no obligation to wait for Tenant to exercise its
expansion option with respect thereto. If Landlord constructs or proposes to
construct all or a portion of Building B absent Tenant's exercise of its
expansion rights hereunder, such portion of Building B to be so constructed
shall nevertheless be subject to Tenant's right of first offer set forth in
Section 33 below. If Landlord constructs only a portion of Building B prior to
Tenant's exercise, if any, of its expansion rights, Tenant's expansion option
under this Section 32 shall continue with respect to the remainder (i.e.
unconstructed portion) of Building B.
Tenant shall have the option at any time to cause Landlord to construct
Building B, and lease the "Building B Expansion Space" to Tenant, if all of the
following conditions are met:
(a) There is not then existing any monetary default (beyond any
applicable notice and cure period in this Lease) or default described in Section
26(a)(iv);
(b) Tenant is then leasing all or substantially all of Building A,
Tenant is not planning to vacate, assign or sublet any of the space in Building
A at the time Tenant expands into Building B.
(c) Tenant delivers to Landlord written notice exercising its right to
Lease the Building B Expansion Space, which notice shall specify the rentable
square footage in Building B that Tenant is committing to Lease. Said notice
shall not specify less than 25,000 rentable square feet. Moreover, said notice
shall not specify more than 50,000 rentable square feet unless Tenant, in such
notice, elects to expand into all of Building B. Landlord presently contemplates
that Building B will contain approximately 80,000 rentable square feet. If
Landlord decides to increase the size of Building B in excess of 80,000 rentable
square feet, the 50,000 ceiling noted above shall be increased by the amount of
such excess. In no event, however, shall Landlord be required to
38
construct more than the actual rentable square footage committed to by Tenant in
Tenant's notice of exercise.
If Tenant timely exercises the Building B Expansion Space option as
provided above, Landlord and Tenant shall enter into a lease of the Building B
Expansion Space containing the following terms:
(a) Landlord will be obligated to construct the Building B base
building and related site improvements, including parking areas and driveways,
within 9 months of the date such lease is entered into by Landlord and Tenant,
subject only to delays outside of the reasonable control of Landlord. Building B
shall be of a type and quality comparable to Building A so as to keep the
relative cost (adjusted for changes in the costs of labor and materials) per
rentable square foot of Building B comparable to that of Building A.
(b) The term of the lease for the Building B Expansion Space shall not
be less than five (5) years, commencing upon the substantial completion of
Landlord's construction of the Building B Expansion Space. If less than 5 years
remains on the Term of this Lease (including any extension options exercised by
Tenant as of the commencement date of the lease for the Building B Expansion
Space), then the Term of this Lease (Section 36 [Tenant's Option to Terminate]
notwithstanding) shall be extended so that this Lease shall be co-terminus with
the term of the lease for the Building B Expansion Space. If the Term is so
extended, any unexercised and unexpired options to extend the Term under Section
31 shall be pushed out so that the full extension term, if exercised, would
commence as of the expiration of the Term or extended Term, as the case may be,
as extended pursuant to this subsection (b). If such extension term, as pushed
back, goes beyond lease year 19, Minimum Annual Rent for subsequent lease years
shall continue to increase at 2% per annum. For example, if Tenant entered into
a five-year lease for the Building B Expansion Space commencing at the beginning
of year eight of the ten-year initial Term of this Lease, the Term of this Lease
would be extended through year twelve, and the first three-year extension term
would commence, if exercised, at the beginning of year thirteen (and the
scheduled rental rates under Section 31 for years 13 through 15 would apply to
the first extension term).
(c) The Annual Minimum Rent for the first lease year shall be an amount
equal to the product of (i) the "Expansion Building Costs" (as defined below),
multiplied by (ii) the "Finance Rate" (as defined below), appropriately
apportioned to the Building B Expansion Space based on Tenant's Proportionate
Share if the Building B Expansion Space does not include 100% of the building
constructed. The Annual Minimum Rent for each lease year subsequent to the first
lease year shall be an amount equal to 102% of the scheduled Annual Minimum Rent
for the immediately preceding lease year.
"Expansion Building Costs" means all of the out-of-pocket costs
incurred by Landlord with respect to the acquisition and construction of
Building B and related site improvements, including the cost of purchasing the
land appropriately allocated to Building B and the Building B site improvements
(which allocation shall be consistent with the manner in which the Land was
39
allocated to Building A), Landlord's actual cost of carry of such land,
including real estate taxes, from the time of its acquisition through the
substantial completion of Landlord's construction, title and recording fees,
legal fees, architectural and engineering fees, all government fees and utility
connection charges, construction costs and expenses, including costs of
constructing landscaping, required parking and access drives and related site
improvements, signage, brokerage fees, a development fee equal to 2% of such
costs (exclusive of real estate taxes and construction interest), construction
interest at 8.75% and a construction contingency not to exceed 2%. Expansion
Building Costs will not include any costs or expenses relating to defaults by
Landlord, claims or penalties arising from Landlord's intentional wrongdoing ,
negligent acts or omissions or violations of law, or costs of grading,
utilities, site work or other improvements not related to Building B and its
related site improvements or otherwise primarily benefitting another parcel or
building.
Prior to entering into a lease for the Building B Expansion Space,
Landlord and Tenant shall have agreed upon a budget of the Expansion Building
Costs, based on plans and specifications for the Expansion Building approved by
Landlord and Tenant. If Landlord and Tenant are unable to agree upon such
budget, Landlord shall not be obligated to construct the Building B Expansion
Space and neither Landlord nor Tenant shall have any obligation to enter into
such lease.
The foregoing notwithstanding, the cost of any leasehold improvements
constructed by landlord in and to the Building B Expansion Space and the cost of
any brokerage fees payable with respect to the lease of the Building B Expansion
Space may be amortized on a straight line basis, without interest, over the term
of the lease for the Building B Expansion Space, and in such case the annual
amortized cost shall be added to the Minimum Annual Rent, provided, however,
that the total expenses that may be so amortized shall not exceed an amount
which will result in annual amortized costs in excess of $1.60 per rentable
square foot.
The "Finance Rate" shall be a number determined by adding 350 basis
points to the actual yield, on the date of Tenant's notice of exercise, from
U.S. Treasury Notes or Bonds having a term equal to the term of the lease for
the Building B Expansion Space, provided, however, that if the Finance Rate as
determined above would yield a result of less than 10%, the Finance Rate shall
be the lower of (i) 10% or, (ii) 400 basis points above the actual yield, on the
date of Tenant's notice of exercise, from US Treasury Notes or Bonds having a
term equal to the term of the lease for the Building B Expansion Space.
(d) The lease for the Building B Expansion Space will otherwise be on
the substantially the same basic terms and conditions as provided in this Lease,
except that, unless otherwise agreed upon in writing by Landlord and Tenant, (1)
there will be no rent concessions, inducements, allowances or similar provisions
applicable to the Building B Expansion Space, and (2) there shall be no
extension, renewal, offer, expansion or similar rights.
40
The rights of Tenant under this section shall not be severed from the
Lease or separately sold, assigned or transferred, and will expire according to
the terms of this section, or upon the termination of the Lease, whichever
occurs first.
33. RIGHT OF FIRST OFFER. In the event any space in the Building or, if and when
constructed or proposed to be constructed, in any other buildings in the
Project, becomes available for lease at any time during the Term of this Lease,
Landlord shall give Tenant written notice of the availability of such space for
lease (the "Offer Space"). Tenant shall have the right, at its option, to lease
all or a portion (subject to the conditions set out below) of such Offer Space
provided (a) Tenant delivers to Landlord written notice exercising its right to
lease such Offer Space within 15 business days of receipt of Landlord's notice
of availability of such Offer Space, (b) Tenant is not in default in any
material respect under this Lease at the time Tenant exercises its right to
lease such Offer Space and at the time Tenant is to take possession of such
Offer Space, (c) if Tenant exercises its right to lease less than all of the
Offer Space, then (i)Tenant shall take at least 10,000 rentable square feet,
(ii) the remainder of the Offer Space not taken by Tenant shall not be less than
5,000 rentable square feet, and (iii) the remainder of the Offer Space not taken
by Tenant must be "Leasable Space" (as defined in Section 31(d) above) . If
Tenant fails to exercise timely its right to lease such Offer Space with respect
to a particular notice of availability given by Landlord, Landlord shall be free
to lease such Offer Space to such person or entity, and on such terms and
conditions, as Landlord may choose (provided, however, if Landlord has not
leased all such Offer Space on or before the date that is six months from the
date such Offer Space was first offered to Tenant, Landlord shall re-offer the
remaining Offer Space to Tenant on the terms and conditions of this Section). If
Tenant elects to exercise its right to lease such Offer Space, the terms,
conditions and covenants applicable to such Offer Space shall be as set forth in
this Lease, except that the Offer Space shall be delivered to Tenant in an "as
is" condition and the Minimum Annual Rent regarding such space shall be as
follows: (1) if the Offer Space is previously unoccupied space, the Annual
Minimum Rent shall be determined pursuant to the formula provided in Subsection
32(c) above, and (2) if the Offer space is previously occupied space, the
Minimum Annual Rent shall be Minimum Annual Rent that was scheduled to be paid
(without addition of any amounts due to any default, failure, wrongful act or
omission of such tenant) by the prior tenant of such Offer Space during the last
full month in which such tenant paid or was to pay full Minimum Annual Rent
during the term of the applicable lease, and such Minimum Annual Rent shall
increase 2% per annum commencing at the end of the first lease year of such
Offer Space. The commencement date for the lease covering such space shall be
the date following the exercise of such option on which such space is first made
available to Tenant. If Tenant exercises its right to lease such space, Landlord
and Tenant shall execute and deliver an appropriate amendment to this Lease
regarding the lease of such space. The rights of Tenant under this section shall
not be severed from the Lease or separately sold, assigned or transferred, and
will expire according to the terms of this section, or upon the termination of
the Lease, whichever occurs first.
Any provision to the contrary in this Section notwithstanding, with respect to
Buildings B and C, the right of first offer granted Tenant under this Section
shall be prior to the rights of any other present or future tenant of the
Project, and, with respect to any buildings constructed in the Project
41
other than Buildings B and C, the right of first offer granted Tenant under this
Section shall be subject and subordinate to any expansion options, rights of
first offer, rights of first refusal and the like that Landlord may now or in
the future grant to any other present or future tenant of the Project.
34. PARKING. Landlord shall provide, and Tenant shall be entitled to the use of,
five (5) parking spaces for each 1,000 rentable square feet of the Premises.
Such parking shall be nonexclusive, undesignated and unreserved parking provided
as part of the Building's common area parking facilities, provided, however,
that so long as Tenant is leasing 100% of the Building, Tenant shall have the
right, at its expense, to sign all or any portion of the parking allocated to
the Building to limit it to Tenant's employees, visitors and business invitees.
Landlord shall not allocate any of the parking provided to Tenant under this
Section to any other building in the Project or to any other tenant of the
Project. If Tenant is leasing less than 100% of the Building, Landlord will
afford Tenant such rights to exclusive or designated parking as are consistent
with those afforded to comparable tenants in the Project.
35. ANTENNA; SATELLITE DISH. Tenant shall have the right to install, maintain
and repair, for Tenant's own use, communications antennae, satellite dishes
and/or similar communications equipment (such antennae, dishes and all related
equipment is herein collectively termed the "Antenna") on the roof of the
Building under and subject to the following conditions:
(a) Tenant shall comply with all Laws and Requirements, including,
without limitation, any applicable Federal Communication Commission rules,
regulations and guidelines.
(b) Tenant shall obtain Landlord's prior approval of the location of
the Antenna on the Property and of the specifications for the Antenna and the
installation thereof, which approval will not be unreasonably withheld,
conditioned or delayed. Tenant agrees to consult with Landlord's roofing
contractor prior to installation and strictly to comply with the roofing
contractor's reasonable recommendations and requirements. Tenant shall pay all
reasonable out-of-pocket costs incurred by Landlord to a third party in
connection with the Antenna including without limitation all architectural,
engineering and contractors' fees. Landlord agrees that it will not seek
independent architectural or engineering review provided Tenant uses an
architect and/or engineer approved in advance by Landlord. At least 3 business
days prior to installation, Tenant shall notify Landlord of the date and time of
the installation.
(c) Tenant shall maintain the Antenna in a safe, good and orderly
condition. The installation, maintenance, repair and removal of the Antenna
shall be performed at Tenant's sole expense in a manner which will not impair
the integrity of, damage or adversely affect the warranty applicable to, the
roof or any other portion of the Property.
(d) Tenant's indemnification of Landlord pursuant to Section 18 of this
Lease also applies to the Antenna and Tenant's use of any portion of the
Property therefor. Without limiting the foregoing, Tenant solely shall be
responsible for any damages or injury caused by or in any
42
way relating to the Antenna, including, but not limited to, damage or injury
caused by reason of the Antenna collapsing or being blown from the roof or any
other portion of the Property.
(e) The Antenna shall remain the property of Tenant, and upon the
expiration or earlier termination of this Lease or of Tenant's rights under this
Section, Tenant shall remove the Antenna, shall repair, at Tenant's expense, any
damage resulting from such removal, and shall restore the Building to its
condition existing prior to the installation of the Antenna, normal wear and
tear and casualty excepted. Without limiting the foregoing, Tenant shall repair
all damage and mounting holes so as to leave the roof weatherproof. Landlord
shall have the right to have its roofing contractor supervise the removal of any
such equipment affixed to the roof, at Tenant's expense, but which charges shall
not exceed a reasonable amount for such services.
(f) The Antenna shall be for the personal use of Tenant, and the rights
of Tenant under this section shall not be severed from the Lease or separately
sold, assigned or transferred.
36. TENANT'S OPTION TO TERMINATE. Tenant shall have the right and option,
exercisable by giving Landlord a minimum of nine (9) months prior written notice
thereof, to terminate this Lease effective as of the expiration of the sixth
lease year and by paying Landlord on the effective date of termination a sum
equal to (i) the total rentable square feet of the Premises, multiplied by (ii)
$4.86. Tenant shall pay all Rent under the Lease and abide by all of the terms
and conditions of the Lease through and including such early termination date.
37. TERMINATION OF EXISTING LEASE. Tenant is currently leasing the following
premises (the "Existing Premises") from Landlord:
(a) ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ consisting
of approximately 6,970 rentable square feet;
(b) Approximately 40,898 rentable square feet in the Westwood IV
Building, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇;
pursuant to the following leases (whether one or more, the "Existing Lease"):
(a) Lease dated December 11, 1997 by and between Landlord and
Tenant (▇▇▇▇▇▇▇ ▇▇▇▇ premises), as extended by letter
agreement dated April 15, 1998;
(b) Lease dated November 2, 1988 between Lyndale Associates, as
the original landlord, and Ontrack Computer Systems, Inc., as
tenant, as amended, and as extended by letter agreement dated
April 15, 1998.
Upon the Commencement Date of this Lease, the Existing Lease shall terminate. At
the request of either party, Landlord and Tenant shall enter into an agreement
stipulating as to the termination date of the Existing Lease.
43
38. STANDARDS; CURING LANDLORD'S DEFAULTS; SET-OFF . If (i) Landlord shall be in
default of any of its maintenance and repair obligations under the Lease or
shall fail to provide any of the services to be provided by Landlord under this
Lease, and (ii) such default interferes with Tenant's use and occupancy of the
Premises for the conduct of Tenant's business therein, and (iii) Tenant gives
Landlord written notice specifying the nature of the default, and (iv) Landlord
fails to cure such default within 10 business days (or within a period of 72
hours if an emergency or shorter reasonable period if Landlord fails to timely
remove snow) after Landlord receives Tenant's notice (or within such reasonable
additional time as may be necessary to cure such default provided Landlord
commences such cure within said period and thereafter diligently prosecutes such
cure to completion), then Tenant may, without any obligation to do so, cure such
default on behalf of Landlord. Landlord shall reimburse Tenant within 30 days of
demand for any out-of-pocket sums paid or costs incurred by Tenant in curing
such default, together with an administrative fee equal to 10% of such costs,
plus interest at the rate specified in Section 29 and reasonable attorneys fees,
if any (collectively, "Tenant's Cost of Cure"), which demand shall be
accompanied by invoices or other reasonable documentation evidencing amounts
incurred by Tenant. If Landlord fails to reimburse Tenant within said 30-day
period, Tenant shall have the right to set-off Tenant's Cost of Cure against the
monthly installments of Minimum Annual Rent next due under the Lease, until
Tenant shall have recovered in full Tenant's Cost of Cure, provided, however, in
no event, except as provided in the following sentence, shall Tenant be entitled
to set-off in any month more than 15% of the scheduled installment of Minimum
Annual Rent for such month. The preceding sentence notwithstanding, during the
last 12 months of the Term (including any extension option exercised by Tenant),
Tenant may offset against Minimum Annual Rent such amount as necessary for
Tenant to recover in full Tenant's Cost of Cure prior to the expiration of this
Lease. To the extent Tenant's Cost of Cure include items properly includable in
Operating Expenses, Landlord may include such amounts reimbursed by Landlord or
set off by Tenant in Operating Expenses, but only to the extent of the amount
the repair or service would have cost Landlord had Landlord or its vendor
performed it. Landlord's reimbursement obligations under this Section shall
survive the expiration or termination of this Lease.
39. HAZARDOUS SUBSTANCES. The term "Hazardous Substances", as used in this
Section, means pollutants, contaminants, toxic or hazardous wastes or any other
substances, the removal of which is required or the use of which is restricted,
prohibited or penalized by an "Environmental Law", which term means any federal,
state or local law or ordinance relating to pollution or the protection of the
environment.
Landlord agrees to indemnify and hold Tenant harmless from any and all claims,
causes of action, damages, penalties and costs (including attorneys' fees,
consultant fees and related expenses) (collectively, "claims") which may be
asserted against or incurred by Tenant resulting from: (a) the presence of any
Hazardous Substance on or in the Project as of the date hereof or caused or
permitted by Landlord or Landlord's Agents (without being caused or permitted by
Tenant) after the date hereof; or (b) any violation or alleged violation of any
Environmental Law existing as of the date hereof or caused or permitted by
Landlord or Landlord's Agents (without being caused or permitted by Tenant)
after the date hereof. Anything to the contrary in this Lease
44
notwithstanding, Landlord shall have no obligation to indemnify Tenant with
respect to any claim by third parties (including, but not limited to employees
of Tenant) relating to any substances that are not legally deemed Hazardous
Substances under applicable Environmental Laws as enacted and interpreted as of
the date hereof. Landlord shall, however, be obligated at Landlord's expense, to
comply with any requirements of any Environmental Laws relating to the removal,
management or other treatment of any substances which, although not legally
deemed a Hazardous Substance under Environmental Laws as enacted and interpreted
as of the date hereof, are determined to be a Hazardous Substance in the future
as a result of new or changed Environmental Laws.
Landlord represents and warrants to Tenant that all environmental
reports and studies relating to the Property which are in the possession of or
known to Landlord as of the date of this Lease are listed on attached EXHIBIT
"J". Landlord represents and warrants to Tenant that, except as disclosed in the
information listed on Exhibit J, Landlord has no knowledge of the presence of
Hazardous Substances on or in the Project or of any violations or alleged
violations of Environmental Laws with respect to the Project. References to
Landlord's knowledge in this paragraph mean the actual knowledge as of the date
hereof of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President of Liberty Property Trust.
40. BROKERAGE FEE. Landlord shall pay a brokerage fee of $3.00 per rentable
square foot of the initial Premises to The Keewaydin Group, Inc. ("Keewaydin").
Such fee shall be payable one half upon Lease execution and one half upon
commencement of Minimum Annual Rent. The fee payable upon execution shall relate
to the square footage stated in Section 1(a) and the fee shall be adjusted
either up or down based on actual square footage of the Building as constructed.
In addition, the Landlord shall pay Keewaydin a brokerage fee of $3.00 per
rentable square foot (this rate applies to leases of three years or more; for
leases of less than three years, the commission will be reduced pro rata, e.g.
the commission for a 2-year lease would be $2.00 per square foot) for all space
committed to, or taken by, Tenant within the first six lease years following
Tenant's initial occupancy (provided that Tenant has not notified Landlord in
writing that it has retained an unrelated real estate agent to represent it in
connection with such renewal and further provided that Landlord is not obligated
to and does not pay a fee to such unrelated real estate agent. No fee shall be
payable with respect to space taken after the sixth lease year or upon
extensions of the Term of the Lease unless a separate agreement is reached at
that time. Keewaydin may assign any rights to collect brokerage fees to Tenant.
Tenant shall be permitted to pay any past due brokerage commissions to Keewaydin
and offset any such payments against the monthly installments of Minimum Annual
Rent next due under the Lease, until Tenant shall have recovered in full any
past due brokerage commissions so paid by Tenant. Within 10 business days of
Landlord's request, Tenant shall deliver to Landlord a written statement signed
by Tenant and Keewaydin certifying that there are no brokerage commissions
payable hereunder by Landlord that are due and unpaid, or, if that is not the
case, certifying to amounts due and unpaid.
45
IN WITNESS WHEREOF, and in consideration of the mutual entry into this
Lease and for other good and valuable consideration, and intending to be legally
bound, Landlord and Tenant have executed this Lease.
LANDLORD:
Date signed: , 1998 LIBERTY PROPERTY LIMITED
----------------- PARTNERSHIP
By: Liberty Property Trust, Sole General
Partner
By:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice
President
TENANT:
Date signed: , 1998 ONTRACK DATA INTERNATIONAL, INC.
-----------------
By:
------------------------------------
Its:
-------------------------------
46
EXHIBIT A
[SITE PLAN - Flying Cloud corporate campus]
EXHIBIT A-1
LEGAL DESCRIPTION
Outlot C, Staring Lake Clubs Courts and Villages, and that part of the vacated
Public Street (former Columbine Road Extension) as dedicated in the plat of
Research Farm 2nd Addition, lying Easterly of the following described line:
Commencing at the Northwest corner of Outlot C, Staring Lake Clubs
Courts and Villages, according to the record plat thereof; thence
Southerly 148.22 feet along the West line of said Outlot C having a
radius of 952.73 feet and a central angle of 8 degrees 54 minutes 49
seconds to the East line of said Public Street and the point of
beginning of said line to be described; thence Southerly 11.78 feet
along the Southerly extension of said West lien having a central angle
of 0 degrees 42 minutes 31 seconds to a point of compound curvature;
thence Southerly 120.71 feet along a 533.58 foot radius curve having a
central angle of 12 degrees 57 minutes 41 seconds to the intersection
with a line drawn parallel with and distant 35 feet Easterly from the
centerline of Columbine Road as dedicated in said plat of Staring Lake;
thence Southerly 80.27 feet along said parallel line having a radius of
946.73 feet and a central angle of 4 degrees 51 minutes 29 seconds to
the South line of said Public Street and there terminating. The
following portion being registered property:
That part of Outlot C, Staring Lake Clubs Courts and Villages,
lying Northerly of the center line of the former County Road
No. 2 as delineated in the plat of Research Farm Addition, and
that part of the Public Street (Columbine Road Extension) as
dedicated in the plat of Research Farm 2nd Addition, lying
Easterly of the following described line:
Commencing at the Northwest corner of Outlot C,
Staring Lake Clubs Courts and Villages, according to
the record plat thereof; thence Southerly 148.22 feet
along the West line of said Outlot C having a radius
of 952.73 feet and a central angle of 8 degrees 54
minutes 49 seconds to the East line of said Public
Street and the point of beginning of said line to be
described; thence Southerly 11.78 feet along the
Southerly extension of said West line having a
central angle of 0 degrees 42 minutes 31 seconds to a
point of compound curvature; thence Southerly 120.71
feet along a 533.58 foot radius curve having a
central angle of 12 degrees 57 minutes 41 seconds to
the intersection with a line drawn parallel with and
distant 35 feet Easterly from the centerline of
Columbine Road as dedicated in said plat of Staring
Lake; thence Southerly 80.27 feet along said parallel
line having a radius of 946.73 feet and a central
angle of 4 degrees 51 minutes 29 seconds to the South
line of said Public Street and there terminating.
Hennepin County, Minnesota
EXHIBIT "B"
LEASE COMMENCEMENT CERTIFICATE
The undersigned, as duly authorized officers and/or representatives of
LIBERTY PROPERTY LIMITED PARTNERSHIP ("Landlord") and __________ ("Tenant"),
hereby agree as follows with respect to the Lease Agreement (the "Lease")
between them for premises located at ____________________ (the "Premises"):
1. DATE OF LEASE: __________, 19__
2. COMMENCEMENT DATE: __________, 19__
3. RENT COMMENCEMENT DATE: __________, 19__ [based on period of
gross free rent, if any, contemplated in Section 4(c) of the
Lease]
4. EXPIRATION DATE: __________, 19__
5. Rent and operating expenses due on or before the Commencement
Date (or Rent Commencement Date, as applicable) for the period
from the Commencement Date until the first day of the next
calendar month (Not applicable if the Commencement Date is the
first day of the calendar month):
APPORTIONED MINIMUM RENT: $_______________
APPORTIONED OPERATING EXPENSES: $_______________
TOTAL: $_______________
Thereafter regular monthly payments due in the following
amounts until adjusted in accordance with the Lease:
MONTHLY RENT INSTALLMENT: $_______________
MONTHLY OPERATING PAYMENT: $_______________
TOTAL MONTHLY PAYMENT: $_______________
5. Tenant certifies that, as of the date hereof, (a) the Lease is
in full force and effect and has not been amended, (b) Tenant
has no offsets or defenses against any provision of the Lease
except as set forth on Schedule A attached, if any and (c)
Landlord has substantially completed any improvements to be
performed by Landlord in accordance with the Lease, excepting
the Punch List items set forth on Schedule B attached hereto
and initialed by Landlord and Tenant, if any.
B-1
IN WITNESS WHEREOF, Landlord and Tenant, intending to be legally bound,
have executed this Certificate as of __________, 19__.
LANDLORD:
LIBERTY PROPERTY LIMITED
PARTNERSHIP
By: Liberty Property Trust, Sole General
Partner
By:
--------------------------------
Name:
Title:
TENANT:
Witness/Attest:
----------------------------------------
By:
---------------------------------- ------------------------------------
Name:
Title:
B-2
EXHIBIT C
RULES AND REGULATIONS
SINGLE STORY BUILDING
1. Except for the placement of appropriate trash containers, Tenant
shall not block or obstruct any entries, passages, doors, loading docks of the
Building, or place, empty or throw any rubbish, letter, trash or material of any
nature into such areas, or permit such areas to be used at any time except for
ingress or egress of Tenant.
2. Except as otherwise contemplated or permitted under the Lease,
Tenant shall not install or operate any refrigerating, heating or air
conditioning apparatus or carry on any mechanical operation or bring into the
Premises any inflammable fluids or explosives without written permission of
Landlord.
3. Tenant shall not use the Premises for housing, lodging or
residential purposes or for the cooking or preparation of food (other than in
employee break rooms, coffee stations and similar kitchenette areas for Tenant's
employees) without written permission of Landlord.
4. Subject to the express provisions of this Lease regarding Landlord's
access to the Premises, including the provisions relating to Tenant's "Secure
Areas," Landlord may at all times keep a pass key to the Premises and Tenant
shall provide any keys required to be provided to the fire department or other
governmental authority. All keys shall be delivered to Landlord promptly upon
termination of this Lease. The term "keys" in this paragraph shall include
access cards, access codes and the like.
5. Tenant shall not permit the operation of any musical or
sound-producing instruments or device which may be heard outside the Premises,
or which may emanate electrical waves or x-rays or other emissions which will
impair radio or television broadcasting or reception from or in the Building, or
be hazardous to health, well-being or condition of persons or property.
6. All plate and other glass now in the Premises or building which is
broken through cause attributable to Tenant, customers, visitors or invitees
shall be replaced by and at expense of Tenant under the direction of Landlord.
7. Tenant shall give Landlord prompt notice of all accidents to or
defects in air conditioning equipment, plumbing, lighting electric facilities or
any part of appurtenance of the Premises.
8. The plumbing facilities shall not be used for any other purpose than
that for which they are constructed, and no foreign substance of any kind shall
be thrown therein, and the
expense of any breakage, stoppage or damage resulting from a violation of this
provision shall be borne by Tenant, who shall have caused it.
9. Except as otherwise contemplated or permitted under the Lease, no
signs showcases or other articles shall be put in front of or affixed to any
part of the exterior of the Building, without prior written consent of Landlord.
10. The access of Tenant, its vendors or invitees to the roof shall be
coordinated through Landlord so that Landlord will be informed of, and may
monitor if it chooses, the persons gaining access to the roof and the activities
conducted thereon.
11. If the Premises shall become infested with vermin, roaches, or
other undesirable creatures, Tenant will promptly notify Landlord and Landlord
shall cause the Premises to be professionally treated.
12. Except as otherwise contemplated or permitted under the Lease,
Tenant shall not install any antenna or aerial wires, radio or television
equipment or any other type of equipment outside of the Building without
Landlord's prior approval in writing and upon such terms and conditions as may
be specified by Landlord in each and every instance.
13. Tenant shall not make or permit any use of the Premises or the
Building which, directly or indirectly, is forbidden by law, ordinance or
governmental or municipal regulation, code or order to which may be disreputable
or dangerous to life, limb or property.
14. No outside storage of any material, pallets, trailers, disabled
vehicles, etc., will be permitted including but not limited to trash, except in
approved containers. Tenant shall ensure that all trash is properly contained to
avoid from being blown about the property.
15. Tenant shall not allow a fire or bankruptcy sale or any auction to
be held on the Premises, or allow the Premises to be used for the storage of
merchandise held for sale to the general public.
16. Canvassing, soliciting, distribution of hand-bills or any other
written material peddling in the Building and the complex are prohibited, and
each Tenant shall cooperate to prevent the same.
17. Except as otherwise contemplated or permitted under the Lease,
Tenant, its employees and invitees, agree not to park in those stalls designated
for a restricted use, i.e., handicapped parking, visitor parking or parking
designated for a specific tenant other than Tenant.
18. Tenant shall not possess any weapons, explosives, combustibles or
other hazardous devices in or about the Building and/or Premises, without the
prior written approval of
C-2
Landlord. The foregoing notwithstanding, Tenant may maintain armed security in
or about the Premises in cases of emergency, disaster, failure of Tenant's
security systems or other reasonable circumstances; Tenant shall give Landlord
notice of the presence of armed security, which notice shall be given, except in
the case of an emergency, prior to the deployment of armed security.
19. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
20. Except as otherwise contemplated or permitted under the Lease,
skylights, windows, doors and transoms, shall not be covered or obstructed by
Tenant, and Tenant shall not install any window covering which would affect the
exterior appearance of the Building, except as approved in writing by Landlord.
Should the Landlord establish a building standard window treatment, Tenant shall
not remove or change such window treatment without Landlord's prior written
consent.
21. Any low voltage writing added in the Premises and the Building to
serve Tenant's telephone, computer, security monitoring, etc., requirements,
shall be installed in accordance with the local, state and federal codes and
ordinances and clearly identified.
22. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any Lease on premises in the complex. In
the event of any conflict between these Rules and Regulations and the terms and
conditions of the Lease, the terms and conditions of the Lease shall control.
23. Landlord reserves the right to rescind, suspend or modify any rules
or regulations and to make such other rules and regulations as, in Landlord's
reasonable judgment, may from time to time be needed for the safety, care,
maintenance, operation and cleanliness of the Property. Notice of any action by
landlord referred to in this paragraph, given to Tenant, shall have the same
force and effect as if originally made a part of the foregoing lease. New rules
or regulations will not, however, be unreasonably inconsistent with the proper
and rightful enjoyment of the Premises by Tenant under the lease. No
modification to or amendment of these Rules and Regulations shall be deemed an
amendment or modification of the terms of the Lease.
C-3
EXHIBIT D
CLEANING AND JANITOR SERVICES
Landlord shall furnish cleaning and janitor services to the Project as described
below:
DAILY:
* Sweep, dry mop or vacuum, as appropriate, all floor areas;
remove material such as gum and tar which has adhered to the
floor.
* Empty waste baskets and containers; remove all trash from the
Leased Premises.
* Dust all horizontal surfaces with treated dust cloth,
including furniture, files, equipment, that can be reached
without a ladder.
* Damp wipe all telephones, including dials and crevices.
* Spot wash to remove smudges, marks and fingerprints from such
areas as walls, equipment, doors, partitions and light
switches within reach.
* Wash water fountains, chalkboards, cafeteria tables and
chairs.
* Damp mop all non-resilient floors such as concrete, terrazzo
and ceramic tile. Damp mop floors using detergent
disinfectant.
* Clean freight and passenger elevator cabs and landing doors.
* Clean mirrors, soap dispensers, shelves, wash basins, exposed
plumbing, dispenser and disposal container exteriors, using
detergent disinfectant and water. Damp wipe all ledges, toilet
stalls and toilet doors.
* Clean toilets and urinals with detergent disinfectant,
beginning with seats and working down. Pour one ounce of bowl
cleaner into urinal after cleaning and do not flush.
* Furnish and refill all soap, toilet, sanitary napkin and towel
dispensers.
* Clean all baseboards.
* Remove all litter from parking area and grounds.
WEEKLY:
* Spot clean carpet stains.
* Wash glass in building directory, entrance doors and frames
and show windows, both sides.
* Spot wash interior partition glass and door glass to remove
smudge marks.
* Sweep all stair areas.
* Brush all fabric covered chairs with a lint brush.
* Vacuum edges and corners.
MONTHLY:
* Scrub and recondition resilient floor areas using buffable
non-slip type floor finish.
* Clean all area roof drains.
* Wash all interior glass, both sides.
* Wash all stairwell landings and treads.
QUARTERLY:
* High dust all horizontal and vertical surfaces not reached in
nightly cleaning, such as pipes, light fixtures, door frames,
picture frames and other wall hangings.
* Wash all ceramic tile walls in restroom by hand.
* Vacuum or dust all books in place.
* Wash and polish vertical terrazzo or marble surfaces.
* Damp wash diffusers, vents, grills, and other such items,
including surrounding wall or ceiling areas that are spoiled.
* Vacuum all ceiling and wall air supply and exhaust diffusers
or grills.
D-2
SEMI-ANNUALLY:
* Dust all storage areas, including shelves and contents, such
as supply and stock closets, and damp mop floor areas.
* Strip and refinish all resilient floor areas using buffable
non-slip floor finish.
* Shampoo all carpeted areas.
* Wash building perimeter glass, outside only.
ANNUALLY:
* Wash light fixtures, including reflectors, globes, diffusers
and trim.
* Wash walls in corridors, lounges, classrooms, demonstration
areas, cafeterias and washrooms.
* Clean all vertical surfaces not attended to during nightly,
weekly, quarterly, or semi-annual cleaning.
* Wash building perimeter glass, inside only.
D-3
EXHIBIT "E"
TENANT ESTOPPEL CERTIFICATE
Please refer to the documents described in Schedule I hereto, (the
"Lease Documents") including the "Lease" therein described; all defined terms in
this Certificate shall have the same meanings as set forth in the Lease unless
otherwise expressly set forth herein. The undersigned Tenant hereby certifies
that it is the tenant under the Lease. Tenant hereby further acknowledges that
it has been advised that the Lease may be collaterally assigned in connection
with a proposed financing secured by the Property and/or may be assigned in
connection with a sale of the Property and certifies both to Landlord and to any
and all prospective mortgagees and purchasers of the Property, including any
trustee on behalf of any holders of notes or other similar instruments, any
holders from time to time of such notes or other instruments, and their
respective successors and assigns (the "Mortgagees") that as of the date hereof:
1. The information set forth in attached Schedule 1 is true and
correct.
2. Tenant is in occupancy of the Premises and the Lease is in full
force and effect, and, except by such writings as are identified on Schedule 1,
has not been modified, assigned, supplemented or amended since its original
execution, nor are there any other agreements between Landlord and Tenant
concerning the Premises, whether oral or written.
3. All conditions and agreements under the Lease to be satisfied or
performed by Landlord have been satisfied and performed, except matters, if any,
listed on Part N of Schedule 1.
4. Tenant is not in default under the Lease Documents, Tenant has not
received any notice of default under the Lease Documents, and, to Tenant's
knowledge, there are no events which have occurred that, with the giving of
notice and/or the passage of time, would result in a default by Tenant under the
Lease Documents.
5. Tenant has not paid any Rent due under the Lease more than 30 days
in advance of the date due under the Lease and Tenant has no rights of setoff,
counterclaim, concession or other rights of diminution of any Rent due and
payable under the Lease except as set forth in Schedule 1.
6. To Tenant's knowledge and except matters, if any, listed on Part N
of Schedule 1, there are no uncured defaults on the part of Landlord under the
Lease Documents, Tenant has not sent any notice of default under the Lease
Documents to Landlord, and there are no events which have occurred that, with
the giving of notice and/or the passage of time, would result in a default by
Landlord thereunder, and that at the present time Tenant has no claim against
Landlord under the Lease Documents.
7. Except as expressly set forth in Part G of Schedule 1, there are no
provisions for any, and Tenant has no, options with respect to the Premises or
all or any portion of the Property.
E-1
8. Except as set forth on Part M of Schedule 1, no action, voluntary or
involuntary, is pending against Tenant under federal or state bankruptcy or
insolvency law.
9. The undersigned has the authority to execute and deliver this
Certificate on behalf of Tenant and acknowledges that all Mortgagees will rely
upon this Certificate in purchasing the Property or extending credit to Landlord
or its successors in interest.
10. This Certificate shall be binding upon the successors, assigns and
representatives of Tenant and any party claiming through or under Tenant and
shall inure to the benefit of all Mortgagees.
IN WITNESS WHEREOF, Tenant has executed this Certificate this ____ day
of __________, 19__.
----------------------------------------
Name of Tenant
By:
------------------------------------
Title:
---------------------------------
E-2
SCHEDULE 1 TO TENANT ESTOPPEL CERTIFICATE
Lease Documents, Lease Terms and Current Status
A. Date of Lease:
B. Parties:
1. Landlord:
2. Tenant d/b/a:
C. Premises known as:
D. Modifications, Assignments, Supplements or Amendments to Lease:
E. Commencement Date:
F. Expiration of Current Term:
G. Options:
H. Security Deposit Paid to Landlord: $
I. Current Fixed Minimum Rent (Annualized): $
J. Current Additional Rent (and if applicable, Percentage
Rent)(Annualized): $
K. Current Total Rent: $
L. Square Feet Demised:
M. Tenant's Bankruptcy or other Insolvency Actions:
N. Landlord Defaults & Unperformed Landlord Obligations:
E-3
EXHIBIT F-1
[Scope Drawings]
EXHIBIT F-2
ARCHITECTURAL STANDARDS
FOR
ONTRACK DATA INTERNATIONAL, INC.
1. Site Preparation
Mass excavate top soil, organic and soft natural soils to underlying
lean clays or ▇▇▇▇▇ lean clays; stockpile suitable from on-site
material, supplemented with imported granular material; mass excavation
and controlled backfill to bring entire building area to elevation
100.00' (assumed finish floor elevation 101.00'); to be approved by
soils engineer.
2. Earthwork
Excavate to footing depths on controlled backfill; after footings are
poured and foundation walls are laid, backfill with approved material;
rough grade site to subgrade elevations for lawns and paving; after
paving and other site improvements are in place, spread stockpiled
topsoil and fine grade to finish elevations.
3. Paving and Surfacing
(a) Bituminous paving: 7-ton asphaltic concrete paving for all
driveways and 5-ton construction for staff parking lot.
(b) Concrete paving: 4-inch thick light broom finished concrete
sidewalks; 6 by 12 inches light broom finished concrete curb
and gutter at building side of all bituminous pavement.
4. Site Improvements
(a) Irrigation System: Automated underground lawn irrigation
system for lawns and plantings adjacent to building.
5. Landscaping
(a) Topsoil preparation: Rake and drag topsoil provided under
earthwork.
(b) Lawns and grasses: Cultured sod in lawn areas adjacent to
building and at boulevards and between street and entrance
drive.
F-2-1
(c) Trees and shrubs: A sum to be allowed for trees and shrubs;
quantity and species to be determined in final design.
(d) Maintenance: Building owner responsibility.
6. Foundations
(a) Footings (type): Reinforced concrete spread footings;
continuous below frost level at exterior walls and pad type
below mechanical depth for interior columns.
(b) Foundation walls (type and material): Reinforced cast in place
concrete or masonry.
(c) Slabs-on-grade: Welded wire fabric reinforced concrete stabs,
thickened at edges.
7. Exterior Walls
(a) Materials:
(1) Brick veneer with minimum 6 inch by 16 ga. Structural
"C" stud backup cavity wall construction consisting
of 2 inch airspace, 2 inches extruded polystyrene
(minimum R-value = 10) and 1/2" Dens-Glas Gold
sheathing with Tyvek building wrap, or equal.
Interior face of exterior metal stud walls to receive
6 mill poly vapor barrier and drywall to be taped,
floated, sanded and ready to receive final ONTRACK
finishes.
(2) Thermally broken aluminum framed window walls,
U-values listed below.
8. Parapets
(a) Provide integral parapet consistent with the design and makeup
of the exterior wall materials to screen from view all
mechanical equipment.
(b) All roof-top mechanical units shall be screened from view.
Screening may be adjacent to units or may be integral with the
parapet. Screening shall be subject to the reasonable approval
of ONTRACK and shall meet all appropriate codes.
9. Exterior Doors and Frames
(a) Heavy duty aluminum entrance and frames; glazed with 1/4 inch
clear tempered float glass; frames thermally improved; finish:
standard anodized colors to be selected. ONTRACK shall have
the right to select custom colors and shall be responsible for
the incremental cost of such custom colors.
F-2-2
(b) Hollow metal service doors and frames: Insulated flush hollow
metal doors; thermally broken hollow metal frames: finish:
enamel.
10. Windows and Curtainwalls
(a) Windows: Thermal break continuous aluminum fixed strip
windows: 1 inch insulating glass with high efficiency low-E
metallic coating; finish: standard anodized colors to be
selected. ONTRACK shall have the right to select custom colors
and shall be responsible for the incremental cost of such
custom colors. U-values not to exceed 0.36 glass, 0.68 frame;
condensation resistance factor (CRF) not less than 50.
(b) Curtainwalls: Pre-glazed thermally broken system; Wausau or
approved equal; inserts for entrance doors; one inch clear
insulating glass; U-value not to exceed 0.36 glass, 0.68
frame; CRF not less than 55 glass, 73 frame.
11. Roof/Ceiling Assemblies
(a) Roof coverings: Single ply 45 mil EPDM rubber membrane,
loose-laid/ballasted.
(b) Insulating: Tapered polyisocyanurate foam 2-1/2 inch minimum
thickness, minimum R=20, taper for backslopes and crickets.
(c) Roof deck: Metal roof decking on open web steel joists.
(d) Roof drainage: Provide roof and roof overflow drains, overflow
scuppers are not acceptable.
F-2-3
EXHIBIT F-3
MINIMUM SHELL CONDITION REQUIREMENTS
FOR
ONTRACK DATA INTERNATIONAL, INC.
ALL PROPOSALS SHALL, IN ADDITION TO THE ALLOWANCES PROVIDED, INCLUDE THE
FOLLOWING MINIMUM "SHELL CONDITION" IMPROVEMENTS:
1. Floor Finishes
Concrete stab cleaned and leveled to 1/4" tolerance within a 10'0" x
10'0" given area (tolerances are not cumulative, elevator ▇▇▇▇▇ are to
be established elevation 0'0") (FL20). Areas leveled subsequent to
initial pouring of slab to be sealed after setting. Finished surfaces
to be ready to receive carpet, ceramic tile, resilient tile, wood
parquet or stone flooring without additional preparation other than
cleaning.
2. Floor Loading
Floor loads shall be per applicable codes and base building standards
throughout but not less than 50 pounds per square foot dead load plus
20 pounds per square foot for partitions. All areas within the core
perimeter should accommodate 150 pounds per square foot of dead load
and the area immediately adjacent to the core perimeter should
accommodate 100 pounds per square foot dead load.
3. Wall, Column and Perimeter Bulkhead Construction
All perimeter walls, core walls, freestanding and engaged columns and
perimeter top and bottom bulkheads to be furred, drywalled, taped,
floated, sanded, and ready to receive final ONTRACK finishes.
4. Other Perimeter Finishes
Building perimeters shall be fully finished with respect to insulation,
waterproofing, caulking, glazing and metal finishing, including all
required glass replacement (in the event of defects or cracked or
broken panes), glass cleaning on interior and exterior, metal touch up
and cleaning and any other actions required to render the perimeters to
a
F-3-1
tenant-ready condition. Building standard window coverings (1"
mini-blinds) shall be provided and installed by Landlord just before
occupancy.
5. Other Core Finishes
The following shall be required to be completed and installed at
agreeable locations at Landlord's cost:
(a) Women's and men's restrooms. It is anticipated that complete
restrooms shall be located at 3 locations within the premises.
Restrooms should be designed to provide flexibility in
distribution of stalls between men's and women's, and at a
minimum shall provide code required stalls plus 1 for men and
women at each of three restroom locations. Accessible
restrooms shall be provided at each of the three restroom
locations.
(b) Janitor closets;
(c) Electrical closets with service and distribution panelboards
and transformers 480/277V, 120/208V, (See Paragraph 9 below);
(d) Core walls, columns and perimeter bulkhead completed with
finished drywall ready for paint;
(e) Three water coolers shall be provided;
(f) Fire sprinklers as required by code, based on ONTRACK's plans;
(g) Exit signs as required per code, based on ONTRACK's plans;
(h) If the building contains more than one floor, Landlord shall
provide a passenger elevator lobby complete in all respects
including finishes to be reviewed and approved by ONTRACK;
(i) Core corridor doors shall be primed and ready to receive
ONTRACK's finish;
(j) Closures and appropriate looking devices for all exit,
stairwell, and electrical/telephone doors, and closures on
women's/mens toilets. All exterior doors and all stairwell
doors shall have locking and unlocking devices controlled by
Landlord's building management system. Landlord shall, upon
request from ONTRACK and at ONTRACK's cost, also provide an
electronic card access security system as approved by ONTRACK
on all exterior doors. In such event the cost shall not exceed
$10,000.
F-3-2
(k) All ceiling space shall be sufficiently clear of all pipes,
ductwork, etc., to provide for a minimum finished ceiling
height of eleven (11) feet. All base building systems shall be
coordinated such that the intersection of the building
structural system, medium pressure ductwork, the fire
protection system and the base building light fixture will all
fit within the ceiling cavity. Indicated heights shall include
room to place conventional florescent light fixtures at any
(and every) place on the floor;
(l) All pipe sleeves in beams and walls shall be packed airtight
and complete;
(m) Domestic cold water, valved and capped at four locations
within the premises;
(n) Landlord shall provide for all Fire and Life Safety
requirements per City and State codes, including installation
of all required annunciators, strobes and other warning
devices;
(o) All code required general exhaust requirements shall be
provided;
(p) A Certificate of Occupancy shall be obtained by Landlord.
6. Sprinkler System
Sprinkler piping shall be provided to include main runs with crosses to
achieve a 15' x 15' grid for future extensions and locations of branch
piping, drops and heads. Landlord shall provide as many semi-recessed
sprinkler heads as necessary to meet code (presuming ordinary hazard)
to be located, at Landlord's expense, in the suspended acoustical tiles
per OiNTRACK's final space plans, provided that, on average, no more
than 25% of each floor shall be enclosed offices or conference rooms.
Sprinkler heads shall be centered in the ceiling tiles. Landlord shall
provide for concealed heads in 10% of the space and provide a unit
price for adds and deducts on a single unit basis for more or less
concealed heads.
7. Ceilings
Completed and laser-leveled grid suspension system capable of receiving
2'0" x 2'0" exposed t-bar acoustic tile insulation. Ceiling tile must
be 2' x 2' lay-in tegular edge regressed, noncombustible mineral,
foil-backed, fissured, acoustical tile, with a minimum thickness of
3/4", an NRC rating of .55 to .65, an STC rating of 35 to 39, and a
light reflectance rating of LRI. Alternative lay-in ceiling systems
shall be considered provided they meet the above standards. If ONTRACK
accepts Second Look II tiles, it will receive a credit of $.40 per
square foot for all areas in which such tile is used.
F-3-3
8. Light Fixtures
(a) Landlord shall provide 2' x 4' parabolic light fixtures with a
minimum louver depth of 3 inches, electronic ballasts and 10'
plug-in pigtails (manufactured wiring system). Light fixtures
shall be 2 x 4 - 3 lamp fixtures. Fixtures shall be provided
at a rate of one per 80 rentable square feet. Two tube
fixtures will not be acceptable. Bulbs shall be T-8 (FO32/830)
energy saving lamps, or an energy efficient alternative
approved by ONTRACK. Provide units cost for adds and deducts
of lighting fixtures.
(b) The light fixture louver shall create a low level of ceiling
brightness and comply with the requirements of ANSI/IES RP-1
1993.
(c) Fixtures shall be provided in a quantity sufficient to achieve
a minimum of 50 foot candles of maintained light at the
desktop in all areas although it is understood that the
standard recited above will require more fixtures. The higher
standard of the two will be met. Landlord shall provide
electrical distribution from panel boards to junction boxes in
the ceiling to accommodate plug-in pigtails (manufactured
wiring system).
9. Electrical Distribution and Service
As part of the Base Building or shelf condition work, Landlord shall
provide an electrical distribution and service system as follows:
(a) All power shall be provided to ONTRACK's initial space by a
dedicated, separately metered switchboard with surge
suppression.
(b) Basic electrical service of 480/277 volts, 3 phase, 4 wire, 60
cycles through a grounded switchboard suitable for such
service. The electrical service conductor and switchboard
shall be oversized 20% to anticipate possible growth in future
requirements. Switchboard devices shall be selectively
coordinated with a ground fault protection system.
(c) Distribution voltages shall be 480/277 volts, 3 phase, 4 wire
for fluorescent lighting and motors 1/2 horsepower and larger;
and 120/208 volts, 4 wire, 3 phase for receptacle circuits,
small motors and incandescent lighting. Landlord shall provide
all required transformers and an enclosed pad area where the
transformers are located adjacent to the building.
(d) The electrical service shall be sized to provide a minimum of
eight (8) ▇▇▇▇▇ per rentable square foot for ONTRACK's
lighting and receptacles in all areas (other than ONTRACK's
clean room where additional power may be required),
F-3-4
excluding HVAC equipment, special systems, miscellaneous
electrical loads and elevator equipment requirements. All of
ONTRACK's power shall be separately metered.
(e) Power which serves HVAC equipment, special systems,
miscellaneous electrical loads and electrical equipment must
be a separate distribution riser which is not part of the
lighting and receptacle bus duct.
(f) Distribution shall be to one electrical room for approximately
each 15,000 square feet of rentable area. Each electrical room
shall be connected to each other electrical room by suitable
ducts or conduit. Each electrical room must be provided with
an exhaust system.
(g) Circuit breaker panelboards shall be located in each
electrical room (at least one per 40,000 rentable square feet)
to serve electrical loads and the portion of the leased
premises on the floor as follows:
(1) Provide one 480/277 volt panelboard in each
electrical room. Each panelboard shall have 100 amp
main breaker and provision for at least 42 one pole
bolt on breakers. Panelboard shall include at least
one 20 amp circuit breaker per 500 square feet of
usable space (exclusive of the 20% growth
requirement).
(2) In each electrical room provide one 480/277 volt
lighting panelboard, one 75 KVA - K13 dry type
transformer, with 200% neutral. Provide wall space
for one additional 50 KVA transformer and one
additional 120/208 volt panelboard. Each panelboard
shall have a 225 amp main breaker and provisions for
42 one pole bolt-on breakers. Panelboards shall
include at least one 20 amp circuit breaker per 250
square feet of usable space. Each panel shall have
its own main breaker. Panels shall be electronic
grade with metal oxide varistors. Each 120/208 panel
shall be equipped with a 200% neutral, ground and
isolated ground bus.
(3) Panelboards and cabinets shall contain space for 20%
additional circuit breakers for future requirements.
(h) Landlord shall provide, at no cost to ONTRACK, adequate space
in the building or exterior pad space for ONTRACK's 250 KW
diesel generator. Provide empty conduit system to electrical
closets for separate standby power system. Landlord shall
provide an interior room with 24 hour cooling for ONTRACK's 75
KVA UPS system. Landlord shall also provide appropriate fuel
storage system. Landlord shall also provide space to
accommodate sound attenuation, and shall provide large
openings to the outside for air requirement. ONTRACK has not
yet
F-3-5
decided whether or not a full UPS and back-up power system
will be required. Liberty shall, however, design the building
to provide a connection from the backup power location to
ONTRACK's electrical closets.
(i) If required to maintain utility billing power factor of 0.90,
Landlord shall provide power factor correction capacitors
appropriately sized. Capacitors shall be non- PCB filled
complete units with current limiting indicating fuses and
dust-tight enclosures.
(j) The entire electrical system and equipment shall be grounded
in accordance with the National Electrical Code. In addition,
ground counterpoise shall be a 350 MCM ground conductor
installed around the perimeter of the building and connected
to building steel. ONTRACK's switchboard shall be connected to
this ground and a 350 MCM riser run through each ONTRACK
electrical and telephone and data room. Provide in each
electrical, telephone and data room a 1/4" x 2" x 24" ground
bus connected to the 350 MCM ground riser.
(k) Provide a masters label lightening protection system on the
building.
10. Heating, Ventilation and Air-Conditioning ("HVAC")
Landlord shall cause its mechanical and electrical engineers to prepare
the plans for the HVAC distribution system for the leased premises,
which plans shall be subject to the review and approval of ONTRACK and
shall meet the following criteria:
(a) The system shall include the following features:
(1) Outside air economizer, enthalpy-controlled, capable
of 100% outside air.
(3) Minimum outside air provision shall be based on ASHRE
Standard 62-89 (Ventilation for Acceptable Indoor Air
Quality).
(3) Humidification is not required.
(b) The system, including exhaust fans, shall be designed to
conform to ONTRACK's plans and to operate so that sound
transmission levels do not exceed NC40. Landlord shall be
required to take appropriate corrective measures to eliminate
any disturbing noise or vibration of any mechanical equipment
or system furnished and installed by Landlord.
(c) The system shall be designed with roof-top units that will
provide a minimum of one ton of cooling for each 300 rentable
square feet of space in the Premises. Landlord shall provide
one VAV box for each 1500 rentable square feet of
F-3-6
building area. In addition, all conference rooms shall be
separately zoned and all building corners shall be separately
zoned if they contain a private office, and an additional VAV
box shall be added for each such conference room or corner
office.
(d) The system shall be able to efficiently and economically
accommodate 24 hour per day cooling in the company's lab and
clean room facilities. All roof top units shall be high
efficiency with a minimum EER of 12. If roof top units are not
available with an EER of 12, Liberty shall provide such units
with the highest EER rating available provided they shall have
a minimum EER of 9.
(e) The design of the air-conditioning system shall take into
account the following occupancy schedule:
General Offices - One person per 150 usable square feet and
two personal computers per person, assuming each personal
computer generates 850 BTU's.
Meeting and Conference Rooms - One person per 15 usable square
feet.
(f) The occupancy schedule of particular areas shown on ONTRACK's
plans may vary between one person per 50 usable square feel
and one person per 200 usable square feet, provided that the
entire floor division of the leased premises does not assume
more than one person per 150 usable square feet and that such
variances are reasonably distributed. The heating, ventilating
and air-conditioning system shall meet the following design
conditions, at the stated outside design conditions:
(1) Summer - Outdoor conditions 92(degree) Fahrenheit dry
bulb, 75(degree) Fahrenheit wet bulb (2-1/2%
coincidence); indoor conditions 75(degree) Fahrenheit
dry bulb, 50% relative humidity maximum.
(2) Winter - Outdoor conditions minus 19(degree)
Fahrenheit dry bulb; 72(degree) Fahrenheit dry bulb,
inside.
(3) Regardless of the design standards, Landlord shall
(to the extent that it controls the system) operate
the HVAC system to achieve a space temperature of
72(degree) Fahrenheit dry bulb inside whenever
possible.
(4) The air handling unit and distribution system shall
be sized adequately to accommodate all external and
internal heat gains resulting from base building
mechanical systems, from people load and from heat
generated by lighting and miscellaneous equipment
power including up to 4.8 ▇▇▇▇▇ per square foot of
lighting and miscellaneous equipment load.
F-3-7
(g) All interior areas shall be suitably zoned, with independent
zone controls.
(h) Supply outlets and equipment shall be selected for minimum
drafts and noiseless air distribution.
(i) The type and size of the diffusers shall be determined by
Landlord's engineer after consultation with ONTRACK's
architect or engineer.
(j) All supply and/or return ducts shall be equipped with fusible
link dampers as prescribed by applicable laws, if any.
(k) ONTRACK intends to have lunch rooms, clean-rooms, meeting
rooms and conference rooms. The building shall provide
separate heating and cooling zones for each such room. The
heating and cooling of each room will be controlled by a
separate thermostat.
(l) Exhaust fans shall be exhausted to the return air plenum.
Exhaust fans for conference rooms shall be located away from
the conference room to avoid noise levels above those
specified in Section 12 below. Electrical closets shall be
equipped with exhaust fans.
(m) Air filtration shall be provided at each unit by two sets of
particulate filters, one pre-filter set of 30% efficient
filters and one final filter set of at least 65% efficiency.
(n) A direct digital control system (energy management system)
shall be provided with the features listed below as a minimum:
(1) Provide run time status of HVAC equipment.
(2) Control each zone to maintain set-point temperature.
The set-point temperatures shall be adjustable
remotely.
(3) Provide alarms indicating equipment failure, zone
high/low temperatures, etc.
(4) Provide cooling during winter months for ONTRACK HVAC
equipment in computer room, telephone switch rooms,
network and communications closets.
11. Telephone and Data
(a) ONTRACK will construct telephone and data rooms within or
adjacent to the
F-3-8
building core as part of its tenant improvement package.
(b) Liberty shall provide one dedicated 300 square foot Main Point
of Presence (MPOP) room for ONTRACK's telephone and data
service entry into the building. This room shall be used
exclusively by ONTRACK.
(c) Liberty shall also construct one dedicated Alternate Point of
Presence (APOP) room for alternate telephone and data service
entry into the building.
(d) Liberty shall provide one non-exclusive fiber optic hub room
for telephone and data service into the building. The MPOP,
APOP and fiber rooms are not alternates, all will be required.
(e) Landlord shall provide dedicated empty conduits from the
outside of the building near available services to ONTRACK's
MPOP, APOP and fiber hub rooms. Secure empty conduits must be
provided from the MPOP and APOP to each of the ONTRACK
telephone and data rooms within its space and to its expansion
space. Landlord must provide such conduits to serve two
locations on each floor of the building occupied by ONTRACK
and conduits must be provided between each of the two
locations.
(f) Landlord shall provide an adequately sized empty conduit
between the MPOP and the APOP.
12. Acoustical Attenuation Acoustical attenuation shall be designed within
walls separating elevators, toilet rooms, fan rooms, and switchgear
from occupied ONTRACK spaces and five specified rooms within ONTRACK's
space. The system design criteria for ambient noise level in the
ONTRACK's space, when unoccupied, shall meet NC40 standards when all
building systems are operating and standard floor and ceiling finishes
are installed.
13. Loading Dock A single loading dock most be provided. Such loading dock
must be enclosed and equipped with dock leveler, seals and lights.
F-3-9
EXHIBIT G
EXCLUSIONS FROM OPERATING EXPENSES
FOR
ONTRACK DATA INTERNATIONAL, INC.
1. Original Construction
All costs incurred in connection with or directly related to the
original construction (as distinguished from operation, repair, and
maintenance) of the Project.
2. Initial Development
Legal and other fees, leasing commissions, advertising expenses and
other costs incurred in connection with acquisition of the land, or the
original development or original leasing of the Project.
3. Costs Caused by Construction
Any expenses incurred during construction of the Site Improvements or
Building or any improvements therein in excess of those that would be
expended if construction were completed and the building were fully
occupied.
4. Equipment and Systems Leasing
The costs of renting or leasing anything other than items, the purchase
price of which could be included in Operating Expenses hereunder.
5. Hazardous Substances
All costs related to the removal of substances or materials from the
Building, Site Improvements or the Project which are presently, or at
any time in the future may be, deemed hazardous.
6. Compliance with Laws
The cost of changes to the Building or Site Improvements in compliance
with any laws, statutes, ordinances, rules, or directives, except as
otherwise expressly permitted under the Lease, including Sections 9(a)
(entitled "Payment of Operating Expenses") and 10 of the Lease
(entitled, "Compliance with Laws").
G-1
7. Employee Limitation
All costs for any employees above the rank of building manager and
reasonable allocation of the costs of all employees at or below the
rank of building manager whose duties include work on other buildings
or projects or on activities the costs of which are otherwise excluded
from operating costs.
8. Management and Accounting Services
Other than a specifically agreed upon management fee, all costs and
expenses associated with management and accounting services for the
Project including but not limited to all expenses of a centralized
office, the wages, salaries, bonuses, and benefits of all management
personnel, costs of preparation and handling of accounts receivable and
accounts payable, and the payment of any rent, operating expenses, or
taxes for an on-site management office.
9. Capital Costs
The costs (or any amortization thereof) of any alteration, addition,
change, replacement, improvement, repair, or other item which are
properly capitalized under either generally accepted accounting
principles or under federal income tax accounting principle, except as
otherwise expressly permitted under the Lease, including Sections 9(a)
(entitled "Payment of Operating Expenses") and 10 of the Lease
(entitled, "Compliance with Laws").
10. Depreciation
Any charge for depreciation or amortization of any of the improvements,
except as otherwise expressly permitted under the Lease, including
Sections 9(a) (entitled "Payment of Operating Expenses") and 10 of the
Lease (entitled, "Compliance with Laws").
11. Ground Leases and Easements
Any charges for ground leases or other underlying leases, easements, or
any other similar or dissimilar use fees or other costs related to the
use of the land.
12. Financing Costs
Financing and refinancing costs, interest on debt or amortization
payments on any mortgage or mortgages.
G-2
13. Correcting Defects
Costs of correcting defects in the design or construction of the Base
Building or Site Improvements, the major Base Building systems or the
material used in the construction of the Base Building or Site
Improvements (including latent defects in the Base Building or Site
Improvements or the inadequacy of design of the Base Building or Site
Improvements) or in the Base Building equipment or appurtenances
thereto.
14. Damage by Other Tenants
The cost of any repair to remedy damage caused by or resulting from the
negligence of any other tenants in the Project, including their agents,
servants, employees, or invitees, together with the costs and expenses
incurred by Landlord in attempting to recover such costs.
15. Leasing Costs
All costs related to any leasing or releasing of the Project. In the
event the building management company is responsible for leasing or
re-leasing of the Building a reasonably allocable share of the
management fee shall be therefore excluded.
16. Improvements to Rentable Areas
Costs incurred in renovating or otherwise improving or decorating or
redecorating space (including painting, carpet shampooing, drapery
cleaning and wall washing) for tenants or other occupants in the
Building or vacant rentable space in the Building or costs related
thereto and costs incurred by Landlord, whether or not reimbursed to
Landlord, by other tenants in connection with maintenance or repair of
above-shell condition improvements.
17. Bad Debts or Rent Loss
A bad debt loss, rent loss or reserves for bad debts or rent loss,
provided, however, the cost of purchasing rent loss insurance to cover
losses occasioned by a casualty shall not be excluded.
18. Affiliates - Excessive Payments
Any item of cost, including a building management fee, which represents
an amount paid to an affiliate of Landlord or an affiliate of any
partner or shareholder of Landlord, or to the building management
company or an affiliate of the building management company, to the
extent the same is in excess of the lowest reasonable cost of said item
or service in an arms length transaction. For the purposes hereof
"affiliate" shall include subsidiaries of Landlord or any person or
entity that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with Landlord
or the building management company.
G-3
19. Bad Faith Payments - Kickbacks
Costs or expenses incurred by Landlord which represent amounts spent by
Landlord or its agents in bad faith and an amount equal to any costs
which represent any payments received by Landlord or the building
manager, or the employees or officers of either, from suppliers of
goods or services as kick-backs, finders fees, expediting fees, or
other similar and dissimilar fees.
20. Operation of Landlord's Business; Preservation of Asset
Any and all costs (including legal fees and costs of lawsuits)
associated with the operation of the business of the entity which
constitutes Landlord or preservation of the Landlord's interest in the
Building; excluded items shall specifically include, but shall not be
limited to, formation of the entity, internal accounting and legal
matters, including but not limited to preparation of tax returns and
financial statements and gathering of data therefor, costs of defending
any lawsuits with any mortgagee, costs of selling, syndication,
financing, mortgaging or hypothecating any of the Landlord's interest
in the Project, costs of any disputes between Landlord and its
employees (if any), costs of disputes between Landlord and managers of
the project, costs of collecting rent or other charges, and costs of
disputes between Landlord and tenants within the project including,
without limitation, the Tenant.
21. Tenant Specific Costs
All costs and expenses arising solely out of the specific needs or
character of a particular tenant or such tenant's officers, employees,
agents or customers, whether or not Landlord recovers such costs from
such tenant. And, any increased costs resulting from Landlord
permitting third parties to use the common elements of the Project for
income producing activities.
22. Disproportionate Costs; Excess Services
All costs and expenses resulting from the delivery to other tenants of
services, utilities, or the use of Building facilities or other
benefits which are either greater in quantity or higher in quality than
those delivered to Tenant regardless of whether or not the cost of such
services is recovered by Landlord.
23. Excess HVAC
Landlord's costs of excess electricity, incremental heating,
ventilation or air conditioning and other services sold or provided to
tenants which are greater than those provided to Tenant whether or not
Landlord is entitled to be reimbursed by such tenants.
G-4
24. Landlord's Negligence
Any expense incurred as a result of the negligence of Landlord, its
agents, servants, or employees or arising out of Landlord's negligent
failure to manage the Project consistently with the standards required
by the Lease.
25. Insurance on Above Standard Tenant Improvements
Any cost or expense for insurance against loss due to damage or
destruction resulting from fire or an extended coverage risk to
improvements within rentable areas in the Project if, and to the
extent, the improvements are not paid for by Landlord.
26. Reimbursed Costs
Any items not otherwise excluded to the extent Landlord is reimbursed
therefore by insurance or otherwise compensated, including direct
reimbursement by any tenant, less the out-of-pocket cost of collection.
27. Interest and Penalties
All interest or penalties incurred as a result of Landlord's failure to
pay any costs or taxes as the same shall become due.
28. Duplicate Charges
Any costs which would duplicate other costs theretofore included in
Operating Expenses.
29. Rent Insurance
The cost of rent insurance which insures against rent loss for a period
in excess of 24 months.
G-5
EXHIBIT H
LIBERTY/ONTRACK LEASE
LIST OF MINIMUM ELEMENTS REQUIRED
FOR "SUBSTANTIAL COMPLETION" OF THE
BASE BUILDING AND SITE IMPROVEMENTS
MINIMUM ELEMENTS:
1. All parking areas must be completed including lighting,
traffic control signs, curbing and first lift of black top.
2. All exterior walkways between building and curb, entrances,
exits, driveways and loading docks must be finished and
functional.
3. All exterior surfaces of the building shall be fully completed
(except only minor punch list items) and shall be completely
weather tight in accordance with the Approved Plans.
4. All Building doors, windows, locks and other points of ingress
and egress shall be lockable and all locks (other than Tenant
installed security systems) shall be completed, functional and
under the control of Tenant.
5. All base building mechanical systems serving any portion of
the Building shall be completed and fully functioning as
designed (except only minor punch list items not materially
affecting functionality), including, without limitation,
sprinklers, plumbing, electrical and HVAC systems.
6. All interior portions of Building entries and exits, all rest
room facilities and other elements which would be common
elements if the Building were occupied on a multi-tenant basis
shall be complete and functional (except only minor punch list
items not materially affecting functionality).
The foregoing list does not, and is not intended to, define "substantial
completion"; pursuant to Article 4 of the Lease, "substantial completion" shall
not be deemed to have occurred until the foregoing minimum elements are
satisfied and Landlord has obtained the requisite architect's certificate and
certificate of occupancy required under the fourth paragraph of Section 4(c) of
the Lease.
H-1
EXHIBIT I
EXISTING TITLE ENCUMBRANCES
1. Real estate taxes for and payable in the year 1998, first half paid, second
half due October 15, 1998.
2. Drainage and utility easement(s) as shown on the recorded plat of
Staring Lake Clubs Courts and Villages and Research Farm 2nd Addition.
3. Resolution dated November 5, 1996, filed of record December 30, 1996,
as Document Nos. 2773427 (T) and 6669002 (A).
4. Rights of Access as contained in Deed Document No. 2733662.
5. Notice of Lis Pendens for highway purposes as contained in Document No.
1993044.
6. Drainage and utility easements as retained in Vacation, Document Nos.
5741642 and 2149455.
Note: The following items do not affect the Property, but do however appear on
the Certificate of Title for the Property; Landlord has no obligation to cause
these items to be removed from the Certificate of Title:
Easement dated August 7, 1996, filed of record August 13, 1996, as
Document No. 2733665 (T).
Easement contained in Book 1545 Deed page 162 and Book 126
Miscellaneous page 160.
I-1
EXHIBIT J
ENVIRONMENTAL INFORMATION
1. ▇▇▇▇▇▇▇ Ecological Resources Wetlands Delineation Report dated December
5, 1995.
2. Phase I Environmental Site Assessments issued by American Engineering
testing dated December 15, 1996.
3. Report of Geotechnical Exploration and Review dated December 20, 1995.
4. Phase I Environmental Site Assessment issued by Northern Environmental
dated July 22, 1996.
5. Limited Subsurface Investigation Report, issued by Northern
Environmental dated August 2, 1996.
6. Revised Limited Subsurface Investigation Report, issued by Northern
Environmental dated August 5, 1996.
7. U.S. Department of Agriculture Wetlands Determination Review Memorandum
dated August 5, 1996.
8. Minnesota Pollution Control Agency Approval of Response Action Plan,
dated November 22, 1996.
9. Minnesota Department of Agriculture Approval of Agricultural Chemical
Incident Remedial Investigation dated November 26, 1996.
J-1
FIRST AMENDMENT TO LEASE
This Amendment ("Agreement") is made as of the _____ day of
January, 1999 by and between LIBERTY PROPERTY LIMITED PARTNERSHIP, a
Pennsylvania limited partnership ("Landlord"), and ONTRACK DATA INTERNATIONAL,
INC., a corporation organized under the laws of Minnesota ("Tenant").
BACKGROUND:
A. Landlord and Tenant are parties to that certain Lease dated as of
September 21, 1998, for certain premises to be constructed by Landlord in the
Flying Cloud Corporate Campus, Eden Prairie, Minnesota.
B. Tenant has requested and Landlord has agreed, subject to the terms
and conditions set forth below, to reduce the size of the Premises to be
initially constructed by Landlord.
C. Landlord and Tenant desire to amend the Lease to reduce the rentable
area of the Premises and modify certain other provisions of the Lease, all as
provided below.
AMENDMENT:
Now therefore, for good and valuable consideration, the
receipt and legal sufficiency of which the parties acknowledge, the parties
agree as follows:
1. PREMISES. The rentable area of the Premises is hereby reduced from
80,119 rentable square feet to 62,200 rentable square feet. All references in
the Lease to the Premises containing 80,119 rentable square feet are hereby
amended to read 62,200 rentable square feet.
2. SITE PLAN. The Site Plan attached to the Lease as EXHIBIT "A" is
hereby replaced with the Site Plan attached hereto as ATTACHMENT 1. All
references in the Lease to Exhibit "A" or to the Site Plan shall mean the Site
Plan attached hereto as Attachment 1.
3. SCOPE DRAWINGS. The Scope Drawings attached to the Lease as EXHIBIT
"F-1" are hereby replaced with the Scope Drawings attached hereto as ATTACHMENT
2. All references in the Lease to Exhibit "F-1" or to the Scope Drawings shall
mean the Scope Drawings attached hereto as Attachment 2.
4. MINIMUM ANNUAL RENT AND ESTIMATED ANNUAL OPERATING EXPENSES. Section
1(d) of the Lease is hereby amended and restated in its entirety as follows:
"d. MINIMUM RENT (ss 8) & OPERATING EXPENSES (ss 9)
(i) "MINIMUM ANNUAL RENT":
Minimum Annual Minimum Annual
Lease Rent Per Rentable Lease Rent Per Rentable
Year Square Foot Annual Monthly Year Square Foot Annual Monthly
---- ------------------ ------ ------- ---- ----------------- ------ -------
1 $11.450 $712,190.04 $59,349.17 6 $12.642 $786,332.40 $65,527.70
2 $11.679 726,433.80 60,536.15 7 $12.895 802,068.96 66,839.08
3 $11.913 740,988.60 61,749.05 8 $13.152 818,054.40 68,171.20
4 $12.151 755,792.16 62,982.68 9 $13.415 834,413.04 69,534.42
5 $12.394 770,906.79 64,242.23 10 $13.684 851,144.76 70,928.73
(ii) ESTIMATED "ANNUAL OPERATING EXPENSES": $224,541.96
(Two Hundred Twenty-four Thousand Five Hundred
Forty-one and 96/100 Dollars) estimated for calendar
year 1999 (based on $3.61 per rentable square foot),
payable in monthly installments of $18,711.83
(Eighteen Thousand Seven Hundred Eleven and 83/100
Dollars), subject to adjustment (ss 9(a))"
5. PARKING. Consistent with the provisions of Section 34 of the Lease
(entitled "Parking"), Landlord will provide five (5) parking spaces for each
1,000 rentable square feet of the Premises, for a total of 311 spaces based on
the reduced size of the Premises. Landlord will preserve the ability to expand
the parking area in order to maintain the 5 spaces per 1,000 square foot ratio
in the event Tenant exercises its expansion option provided for in SECTION 9
below.
6. CONSTRUCTION DEADLINES; REMEDIES.
6.1 The date of substantial completion of the Base Buildings and
Site Improvements (see the first paragraph of Section 4(c) of
the Lease) shall be JUNE 1, 1999, not May 1, 1999.
6.2 Any provision of the Lease to the contrary notwithstanding, no
penalty shall be incurred by Landlord in the event Landlord
fails to achieve substantial completion by June 1, 1999.
Accordingly, the second paragraph of SECTION 4(c) of the Lease
is hereby amended and restated in its entirety as follows:
"If Landlord fails to so substantially complete the
Base Building and Site Improvements on or before JUNE
1, 1999 (as the same may be extended as a result of
any Tenant Delay or delay caused by Force Majeure or
any other reason outside of Landlord's control), then
Tenant shall have the right to hold over in Tenant's
Existing Premises (as defined in Section 37 below),
at the same rent and on all of the same terms as
provided in Tenant's Existing Lease (as defined in
Section 37 below), until the Commencement Date of
this Lease. The foregoing shall be Tenant's sole and
exclusive remedy for any delay in the substantial
completion of the Base Building."
2
7. APPROVAL AND CONSTRUCTION CONTINGENCIES. SECTION 4(d) of the Lease
(entitled "Approval & Construction Contingencies") is hereby deleted in its
entirety.
8. TENANT ACCESS DATE. The Tenant Access Date (as defined in SECTION
5(a) of the Lease) is hereby extended to APRIL 1, 1999.
9. EXPANSION OPTION. Tenant shall have the option at any time during
the Term to cause Landlord to expand the original Premises (Building A) to
approximately 80,000 rentable square feet and lease the expansion space (the
"Building A Expansion Space") to Tenant, subject to all of the terms and
conditions of this Section 9.
A. The following are the conditions precedent to Tenant's right to
exercise its Building A Expansion Option:
(i) Tenant must deliver to Landlord written notice exercising its right
to Lease the Building A Expansion Space;
(ii) Tenant, at the time of such notice, must not be in monetary
default (beyond any applicable notice and cure period in this Lease) or default
described in Section 26(a)(iv); and
(iii) Tenant, at the time of such notice, must be leasing all or
substantially all of Building A, and Tenant must not be planning to vacate,
assign or sublet any of the space in Building A at the time Tenant expands into
the Building A Expansion Space.
B. If Tenant properly exercises the Building A Expansion Option as
provided above, Landlord and Tenant shall enter into a lease or amendment to
this Lease with respect to the Building A Expansion Space containing the
following terms:
(i) Landlord will be obligated to construct the Building A Expansion
Space and requisite parking and other related site improvements, if any, within
9 months of the date such lease or amendment to lease is entered into by
Landlord and Tenant, subject only to delays outside of the reasonable control of
Landlord. The design, exterior materials and quality of the Building A Expansion
Space shall be consistent with the remainder of the Building A base building so
as to keep the relative cost (adjusted for changes in the costs of labor and
materials) per rentable square foot of the Building A Expansion Space comparable
to that of the remainder of Building A.
(ii) The term of the lease for the Building A Expansion Space shall
commence upon the substantial completion of Landlord's construction of the
Building A Expansion Space (the "Building A Expansion Space Commencement Date"),
and shall expire upon the expiration or termination of the Term of this Lease;
provided, however, that if less than 5 years remains on the Term of this Lease
(including any extension options exercised by Tenant as of the Building A
Expansion Space Commencement Date), then the Term of this Lease (Section 36
[Tenant's
3
Option to Terminate] notwithstanding) shall be extended so that this Lease and
the lease of the Building A Expansion Space shall expire on the fifth
anniversary of the Building A Expansion Space Commencement Date or such other
date as to which Landlord and Tenant may mutually agree. If the Term is so
extended, any unexercised and unexpired options to extend the Term under Section
31 of the Lease shall be pushed out so that the full extension term, if
exercised, would commence as of the expiration of the Term or extended Term, as
the case may be, as extended pursuant to this subsection (b). If such extension
term, as pushed back, goes beyond lease year 19, Minimum Annual Rent for
subsequent lease years shall continue to increase at 2% per annum. For example,
if Tenant entered into a five-year lease for the Building A Expansion Space
commencing at the beginning of year eight of the ten-year initial Term of this
Lease, the Term of this Lease would be extended through year twelve, and the
first three-year extension term would commence, if exercised, at the beginning
of year thirteen (and the scheduled rental rates per rentable square foot under
Section 31 for years 13 through 15 would apply to the first extension term with
respect to the original Premises).
(iii) The Annual Minimum Rent for the Building A Expansion Space for
the first lease year shall be an amount equal to the product of (i) the
"Building A Expansion Costs" (as defined below), multiplied by (ii) the "Finance
Rate" (as defined below). The Annual Minimum Rent for the Building A Expansion
Space for each lease year subsequent to the first lease year shall be an amount
equal to 102% of the scheduled Annual Minimum Rent for the immediately preceding
lease year.
"Building A Expansion Costs" means all of the out-of-pocket costs
incurred by Landlord with respect to the construction of the Building A
Expansion Space and related site improvements, including, but not limited to,
architectural and engineering fees, all government fees and utility connection
charges, construction costs and expenses, including costs of constructing
landscaping, required parking and related site improvements, if any, signage,
brokerage fees, a development fee equal to 2% of such costs (exclusive of
construction interest), construction interest at 8.75% and a construction
contingency not to exceed 2%. Building A Expansion Costs will not include any
costs or expenses relating to land acquisition, defaults by Landlord, claims or
penalties arising from Landlord's intentional wrongdoing , negligent acts or
omissions or violations of law, or costs of grading, utilities, site work or
other improvements not related to Building A and its related site improvements
or otherwise primarily benefitting another parcel or building.
The "Finance Rate" shall be the greater of (i) a number determined by
adding 350 basis points to the actual yield, on the date of Tenant's notice of
exercise, from U.S. Treasury Notes or Bonds having a term equal to the term of
the lease for the Building A Expansion Space, or (ii) 10% per annum.
Prior to entering into a lease for the Building A Expansion Space,
Landlord and Tenant shall have agreed upon a budget of the Building A Expansion
Costs, based on plans and specifications for the Building A Expansion Space
approved by Landlord and Tenant. If
4
Landlord and Tenant are unable to agree upon such budget, Landlord shall not be
obligated to construct the Building A Expansion Space and neither Landlord nor
Tenant shall have any obligation to enter into such lease or lease amendment for
the Building A Expansion Space. Except as expressly provided herein or otherwise
clearly inapplicable, any such lease for the Building A Expansion Space shall be
on the same terms and conditions as the original Lease.
10. BROKERAGE FEE. The brokerage fee payable by Landlord to the
Keeywaydin Group, Inc., pursuant to Section 40 of the Lease regarding the
initial Premises shall remain at the same square foot rate set forth in Section
40 (i.e. $3.00 per rentable square foot), but shall be calculated based on the
reduced square footage of the Premises.
11. LEASE IN FULL FORCE. Except as expressly amended by this Agreement,
all of the terms and conditions the Lease remain unmodified and continue in full
force and effect. All capitalized terms used herein and not separately defined
herein shall bear the meaning assigned to them in the Lease.
The parties have executed this First Amendment as of the date stated in
the opening paragraph of this Amendment.
LANDLORD:
Date signed: , 1999 LIBERTY PROPERTY LIMITED
----------------- PARTNERSHIP
By: Liberty Property Trust, Sole General
Partner
By:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice
President
TENANT:
Date signed: , 1999 ONTRACK DATA INTERNATIONAL, INC.
-----------------
By:
------------------------------------
Its:
-------------------------------
5