LEASE AGREEMENT
THIS LEASE AGREEMENT is made this 8th day of September, 1999 (the
"Commencement Date") between ProLogis Development Services Incorporated, a
Delaware corporation, having its principal office at 00000 Xxxx 00xx Xxxxx,
Xxxxxx, Xxxxxxxx 00000 ("Landlord"), and the Tenant named below ("Tenant").
Tenant: xxxxxxxxxxxxxx.xxx llc
Tenant's representative, Xxxxxxx X. Xxxxx, Vice President of Operations
address, and phone no.: 00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Premises: The Land and the Building, together with (x)
any and all other improvements and structures
(now or hereafter erected) on the Land, and
(y) all of Landlord's right, title and
interest in and to all easements, rights and
other matters appurtenant to the Land or the
Building and in and to any land lying in the
bed of any roads adjacent to the Land.
Project: That certain industrial project commonly known
as Xxxxxxx Ranch Trade Center I, which
industrial project is composed of the parcels
of land lying and being in the County of
Washoe, State of Nevada, as more particular
described in Exhibit B annexed hereto,
together with any improvements now or
hereafter erected thereon.
Building: That certain building that is to be erected by
Landlord in accordance with Addendum 2 of this
Lease, which building is to contain
approximately 600,000 rentable square feet of
space.
Land: That certain parcel of land lying and being in
the County of Washoe and State of Nevada, as
more particularly described in Exhibit A
annexed hereto.
Common Area Land: That certain parcel of land lying and being in
the County of Washoe and State of Nevada, as
more particularly described in Exhibit C
annexed hereto.
Tenant's Project
Proportionate
Share: 33.96% (subject to downward adjustment as
provided for under this Lease). Tenant's
Project Proportionate Share has been
calculated based on the fraction, the
numerator of which is the square footage of
the Building (for purposes of this estimate is
deemed to be 600,000) and the denominator of
which is the maximum buildable area contained
within the Project (which maximum buildable
area Landlord represents and warrants is, as
of the Commencement Date, 1,766,727 square
feet, it being agreed that (x) Tenant's sole
remedy in the event of a breach of such
representation and warranty shall be a
re-calculation of Tenant's Project
Proportionate Share and a reduction, both
retroactively and prospectively, in the
Additional Rent for the Common Area Land (as
defined below) and (y) in no event shall
Tenant's Project Proportionate Share ever
exceed 33.96%)
Lease Term: Beginning on the Commencement Date and ending
on the last day of the 120th full calendar
month following the Rent Commencement Date (as
hereinafter defined), the term "Lease Term" to
include any renewal or extension terms.
Rent Commencement
Date: Thirty (30) days following "Substantial
Completion of the Base Building Work" (as such
term is defined in Addendum 2).
Initial Monthly Base
Rent: $174,000.00 (subject to adjustment in
accordance with Addendum 1 and the second
paragraph of Paragraph 4).
2
Initial Estimated Monthly
Additional Rent
Payments for the Common
Area Land: $6,000.00 (which is composed of the
Association Fees (estimated at $1,500), the
Property Management Fee (estimated at $3,000),
and the Insurance Fee (estimated at $1,500),
such terms being defined below)
Initial Estimated Monthly
Base Rent and
Additional Rent for Common
Area Land Payments: $180,000.00
Security Deposit: $180,000.00
Broker: Benchmark Associates, Inc./Xxxxx Xxxx; X.X.
Xxxxxxx Xxxxx/Xxxx Xxxxxxxx
Addenda: Addendum 1 (Base Rent Adjustments); Addendum 2
(Construction); Addendum 3 (Renewal Options);
Addendum 4 (Right of First Offer); Addendum 5
(Letter of Credit)
Granting Clause. In consideration of the terms, covenants, and
conditions hereof, Landlord leases to Tenant, and Tenant takes from Landlord,
the Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.
Acceptance of Premises. Subject to (i) Punch List items (as defined
in Addendum 2), (ii) all of Landlord's obligations and warranties as set forth
in Paragraphs 3, 10, 15, 16, 30 and 43 of this Lease, and (iii) any latent
defects, Tenant shall accept the Premises in its as-is condition as of the Rent
Commencement Date. Except for Punch List Items or as otherwise provided in
Paragraphs 3, 10, 15, 16, 30 and 43 of this Lease, in no event shall Landlord
have any obligation to repair or cure any defects in the Premises (except for
latent defects).
Landlord represents and warrants, to Landlord's knowledge, that:
(i) as of the Commencement Date, there are no deed restrictions, use
restrictions or other restrictive covenants (including, without limitation, the
Declaration (as hereinafter defined) and the other Permitted Encumbrances (as
hereinafter defined)) that would adversely affect Tenant's Intended Use (as
defined below) of the Premises; (ii) on the Rent Commencement Date, Tenant shall
be able to operate in the Premises twenty-four (24) hours a day, seven (7) days
a week, three hundred sixty-five (365) days a year for general warehouse
purposes; (iii) as of the
3
Commencement Date, there are no Legal Requirements or restrictive covenants
(including, without limitation, the Declaration and the other Permitted
Encumbrances) that would affect the ability to construct and operate the
Premises in accordance with the Performance Specifications (as defined in
Addendum 2); (iv) as of the Commencement Date, there are no liens, encumbrances,
security interests, charges, reservations, easements, rights-of-way, restrictive
covenants, conditions, limitations, or any other burden covering or affecting
the Land, other than those (the "Permitted Encumbrances") listed on Exhibit D
annexed hereto and made a part hereof; (v) as of the Commencement Date, the Land
is directly accessible from Old Virginia Road, which is a public road (as shown
on Parcel Map No. 4387) under construction and which is contiguous to the Land;
(vi) as of the Commencement Date, all utility, water and sewer services
necessary for the construction of the Building in accordance with the
Performance Specifications and the operation and use thereof for the Intended
Use are available at the boundaries of the Land; and (vii) as of the
Commencement Date, the Land is zoned OC-I. For purposes of this paragraph,
Landlord's knowledge shall mean the actual knowledge of Xxxxx Xxxxx and Xxxx
Xxxxxx, after appropriate due inquiry and investigation. Landlord represents and
warrants to Tenant that no employee of Landlord has any material knowledge that
is not possessed by Xxxxx Xxxxx or Xxxx Xxxxxx about any of the matters that are
the subject of the representations and warranties contained in the foregoing
clauses (i) through (vii).
Use. Tenant may use the Premises for the following uses twenty-four
(24) hours a day, seven (7) days a week, three hundred sixty-five (365) days a
year (such uses for such time periods, collectively, the "Intended Use"): (i) as
a warehouse facility for the purpose of receiving, shipping, storing, processing
and selling products, materials and merchandise (which may include, without
limitation, the receiving, shipping, storing, processing and selling of books,
books on tape, books on computer disk, books on CD-ROM, magazines, periodicals,
computer software, compact discs and other forms of recorded music and
videotapes, together with any other consumer products), (ii) for general,
executive and administrative offices, and (iii) for all lawful uses ancillary to
the uses described in the preceding clauses (i) and (ii) of this sentence. In
addition, Tenant may use the Premises for any other legally permitted use which
shall not reduce the value of the Project. Tenant shall not permit any
objectionable smoke, dust, gas, noise, or vibrations (other than vibrations from
any generator) to emanate from the Premises, or take any other action, that
would constitute a nuisance or would unreasonably disturb, unreasonably
interfere with, or endanger Landlord or any tenants of the Project. Landlord
acknowledges and agrees that Tenant's Intended Use will not violate any of the
restrictions in the preceding sentence.
Except as otherwise expressly set forth in the Lease, including,
without limitation, Paragraph 43 of the Lease, Tenant shall comply with all
Legal Requirements (as defined below) relating to the Premises. Notwithstanding
the foregoing, if (i) a new Legal Requirement is enacted during the Lease Term,
and (ii) repairs, alterations or modifications to the Premises are necessary and
legally required (i.e. the Premises is not grandfathered) in order for the
Premises to comply with such new Legal Requirement, then Landlord shall make
those necessary repairs, modifications or alterations to the Premises. Upon
completion thereof, (i) Landlord shall furnish Tenant with a statement setting
forth the actual out-of-pocket cost to Landlord of such repairs, modifications
or alterations to the Premises (together with invoices and other evidence
reasonably necessary to corroborate such cost), and (ii) the actual
out-of-pocket cost of such repairs,
4
modifications or alterations to the Premises shall be amortized on a straight
line basis in equal monthly installments over a period equal to the useful life
thereof under GAAP (as defined below), and such monthly installments shall
thereafter be payable by Tenant to Landlord on the first day of each calendar
month during the Lease Term until the sooner of (i) the last day of Lease Term
and (ii) the last day of such useful life (it being agreed that Tenant shall not
be responsible for any portion of such costs that relates to the portion of such
useful life that extends beyond the Lease Term). Any installment payable
pursuant to the preceding sentence for a partial month shall be appropriately
prorated. For purposes of this Lease, the term "Legal Requirements" shall mean
all laws, statutes, codes, ordinances, orders and regulations of any or all of
the federal, state or local government or governmental (or quasi-governmental)
authority having jurisdiction over the Land, the Building and/or the Premises,
whether now or hereafter in force. Tenant shall have the right at its expense to
contest, by appropriate legal proceedings conducted in good faith and with due
diligence, the validity or application, in whole or in part, of any Legal
Requirements with which Tenant is obligated to comply and, so long as such
proceeding is being conducted in good faith and with due diligence and deferral
of compliance does not subject Landlord to civil penalties (unless Tenant elects
to pay such penalties) or criminal prosecution, Tenant may defer compliance
pending the outcome of such contest. Landlord shall, upon request by Tenant,
reasonably cooperate with any such contest (at no expense to Landlord, unless
Tenant pays such expense) and shall promptly execute and deliver to Tenant any
documents, information, consents or other materials required or reasonably
desirable to prosecute such contest. Notwithstanding the fact that the
Commencement Date occurred on the date of this Lease, Tenant shall have no
obligations or liabilities under this Lease unless and until the Rent
Commencement Date occurs, except as and to the extent provided in the next
succeeding sentence; provided, however, that any occupation of the Premises by
Tenant prior to the Rent Commencement Date shall be subject to all obligations
of Tenant under this Lease, except the obligation to pay Base Rent, Additional
Rent for the Common Area Land (as defined below), the Additional Rental Amount
(as defined in Addendum 2), utility charges and Taxes (as defined below).
Notwithstanding the foregoing, if, prior to the Rent Commencement Date, Tenant
occupies any portion of the Building for the conduct of its business for the
Intended Use (as opposed to the prosecution of Tenant's Initial Work (as defined
in Addendum 2) or the use of the Premises for the activities described in the
definition of "Substantial Completion of Base Building Shell" as contained in
the Workletter) for more than 30 days, then Tenant shall pay to Landlord as
additional rent an amount equal to: (i) the initial Base Rent (calculated on a
per diem basis based on a 365 day year), in the event that Tenant so occupies at
least half of the Building; or (ii) one-half of the initial Base Rent
(calculated on a per diem basis based on a 365 day year), in the event that
Tenant so occupies less than one-half of the Building, in each such instance,
for each day in the period commencing 31 days after the first date on which
Tenant so occupies the Premises for the conduct of its business for the Intended
Use and ending on the day before the Rent Commencement Date. No occupancy of any
portion of the Building as described preceding sentence shall (i) be deemed to
be an agreement by Tenant that any portion of the Base Building Work has been
Substantially Completed (as defined in Addendum 2) or (ii) otherwise relieve
5
Landlord from any of its obligations under Addendum 2 (including, without
limitation, its obligation to pay Tenant the Liquidated Damages (as defined in
Addendum 2)).
Base Rent. Tenant shall pay Base Rent in the amount set forth
above. The Security Deposit shall be due and payable on the date hereof, and the
first month's Base Rent and the first monthly installment of estimated
Additional Rent for Common Area Land shall be due and payable on the Rent
Commencement Date. Tenant promises to pay to Landlord in advance, without
demand, deduction or set-off (except as expressly provided in this Lease),
monthly installments of Base Rent on or before the first day of each calendar
month succeeding the Rent Commencement Date. Payments of Base Rent for any
fractional calendar month shall be appropriately prorated. All payments required
to be made by Tenant to Landlord hereunder shall be payable at such address in
the United States as Landlord may specify from time to time by written notice
delivered in accordance herewith. The obligation of Tenant to pay Base Rent and
other sums to Landlord and the obligations of Landlord under this Lease are
independent obligations. Tenant shall have no right at any time to xxxxx, reduce
or set-off any rent due hereunder except as may be expressly provided in this
Lease.
Within ten (10) days after the Substantial Completion of the
Building Shell (as defined in Addendum 2), Landlord, at Landlord's cost and
expense, shall have Landlord's project architect measure the square footage of
the Building from dripline to dripline on each side of the exterior of the outer
walls of the Building. If the measured square footage of the Building (as
finally determined under this paragraph) is less than 600,000 square feet, then
this Lease shall be amended to reflect the actual measured square footage of the
Building, the monthly Base Rent under the Lease shall be reduced (both
retroactively and for the remainder of the Lease Term) by $3.48 per year for
each square foot by which the Building is less than 600,000 square feet, and
Tenant's Project Proportionate Share and Additional Rent for the Common Area
Land shall be adjusted accordingly (both retroactively and for the remainder of
the Lease Term). Within 5 days after Landlord's architect determines the square
footage of the Building in accordance with the method contained in the first
sentence of this paragraph, Landlord shall cause Landlord's project architect to
certify to Landlord and Tenant in writing such determination of the square
footage of the Building. Tenant's architect may review such certification and if
Tenant's architect disputes such measurement, then Landlord's project architect
and Tenant's architect shall use good faith efforts to try and resolve the
dispute over the measurement. In connection therewith, Tenant's architect shall
have the right to measure the Building in accordance with the method of
measurement set forth in the first sentence of this paragraph. If the two
architects are unable to resolve the dispute over the measurement within 15
days, then the two architects shall choose a third architect who is impartial
and independent and the third architect shall measure the total square footage
of the Building in accordance with the terms of this paragraph and the third
architect's measurement of the square footage of the Building shall be final and
binding on both Landlord and Tenant. If the measured square footage of the
Building (as finally determined under this paragraph) is equal to or greater
than 600,000 square feet, then the Lease shall not be amended or modified.
6
Security Deposit. The Security Deposit shall be held by Landlord as
security for the performance of Tenant's obligations under this Lease. The
Security Deposit is not an advance rental deposit or a measure of Landlord's
damages in case of Tenant's default. Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the Security Deposit to
pay delinquent payments due under this Lease, and the cost of any damage,
injury, expense or liability caused by such Event of Default, without prejudice
to any other remedy provided herein or provided by law. Tenant shall pay
Landlord on demand the amount that will restore the Security Deposit to its
original amount. Landlord's obligation respecting the Security Deposit is that
of a debtor, not a trustee; no interest shall accrue thereon. The Security
Deposit shall be the property of Landlord, and unless used by Landlord as set
forth above, shall be paid to Tenant within 30 days of the expiration or
termination of this Lease. Landlord shall be released from any obligation with
respect to the Security Deposit upon transfer of this Lease and the Premises to
a person or entity assuming Landlord's obligations under this Paragraph 5. At
Tenant's election, the Security Deposit may be in the form of an unconditional,
irrevocable letter of credit from a bank reasonably acceptable to Landlord, and
in substantially similar form as attached hereto as Addendum 5 to this Lease or
in another form reasonably acceptable to Landlord. The letter of credit shall
either provide that it shall automatically renew during each year of the Lease
Term or shall otherwise be renewed at least 30 days prior to its expiration
during the term of the Lease (it being agreed that Tenant may elect at any time
to substitute cash for the letter of credit). The letter of credit shall provide
that it may be drawn down upon by Landlord at any time Landlord delivers its
sight draft to the bank, together with a "drawing" request in the form of
Exhibit E annexed hereto. If Landlord sells or conveys the Premises, Tenant
shall, at Landlord's request (and at no expense to Tenant), cooperate in having
the letter of credit transferred to the purchaser. If the letter of credit is
ever drawn upon by Landlord pursuant to the terms of the Lease and Addendum 5 to
the Lease, Tenant shall within ten (10) days thereafter cause the letter of
credit to be restored to its original amount. Landlord shall not draw on the
letter of credit unless and until (i) an Event of Default occurs or (ii) the
expiration or termination of the Lease Term occurs and Tenant has defaulted in
its obligations under Paragraph 21 below.
Additional Rent Payments for the Common Area Land. Landlord will
maintain in good order and repair the Common Area Land and Landlord hereby
grants to Tenant, its agents, employees and invitees the nonexclusive right to
use the Common Area Land in common with other tenants of the Project. Commencing
on the Rent Commencement Date, during each month of the Lease Term, on the same
date that Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12,
as reasonably estimated by Landlord from time to time, of Tenant's Project
Proportionate Share of the projected Additional Rent for the Common Area Land
for the applicable calendar year. Payments thereof for any fractional calendar
month or fractional calendar year shall be appropriately prorated. The term
"Additional Rent for the Common Area Land" means, for any calendar year all or
any part of which occurs during the Lease Term, only the following costs and
expenses: (A) the actual charges or assessments levied against the Premises for
such calendar year pursuant to the Declaration (the "Association Fee") (it being
agreed, however, that (x) the Association Fee for the 12-month period following
the Rent Commencement Date shall, for purposes of this Lease, be capped at $.03
per square foot of the
7
Building and (y) in no event shall the Association Fee include, and in no event
shall Tenant be obligated to pay or reimburse Landlord for, (i) any penalties,
late charges, interest, fines or assessments resulting from a default by
Landlord under the Declaration or (ii) any amounts payable under the Declaration
on account of Capital (as defined below) improvements, repairs or replacements,
other than in connection with landscaping); (B) property management fee equal to
$3,000 per month increased annually by 3% ("Property Management Fee"); and all
(C) of Landlord's insurance cost for both the Premises and the Common Area Land
for such calendar year ("Insurance Fee"). Notwithstanding anything to the
contrary contained herein, Tenant shall not be obligated to pay or reimburse
Landlord for Association Fees on account of any calendar year to the extent that
Association Fees for such calendar year have increased by more than five percent
(5%) per annum, compounded annually on a cumulative basis ("Cap"), from the
Association Fees for (I) in the case of the initial term of this Lease, the
calendar year in which the Rent Commencement Date occurs (it being agreed that
the Association Fee for such first calendar year shall in no event exceed $.03
per square foot of the Building) and (II) in the case of any renewal term, the
calendar year in which the first day of such renewal term occurs (it being
agreed, however, that, for purposes of such renewal term only, the Association
Fee for the calendar year in which the first day of such renewal term occurs
shall not (x) include the cost of any Capital improvements, repairs,
replacements or reserves of any kind, and (y) be subject to the Cap). In no
event shall any Additional Rent for the Common Area Land be payable by Tenant
for, during or on account of any period prior to the Rent Commencement Date. For
purposes of this Lease, a repair, replacement or improvement shall be "Capital"
if, in accordance with generally accepted accounting principles consistently
applied ("GAAP"), the costs associated with such repair, replacement or
improvement are generally capitalized.
Landlord shall provide Tenant within 120 days following the final
day of each calendar year during the Lease Term an itemized statement setting
forth in reasonable detail the actual Additional Rent for Common Area Land for
such year (which statement shall be accompanied by invoices and such other
reasonable corroborating documentation as Tenant may request from time to time).
If Tenant's total estimated payments of Additional Rent for Common Area Land on
account of any such calendar year are less than Tenant's Project Proportionate
Share of actual Additional Rent for the Common Area Land for such year (as
limited by the Cap), then Tenant shall pay the difference to Landlord within 30
days after demand, and if more, then Landlord shall retain such excess and
credit it against Tenant's next payments due on account of Additional Rent for
the Common Area Land (or if there is less than 6 months remaining in the Lease
Term, or if the Lease Term has terminated or expired, Landlord shall refund such
excess to Tenant). The estimated Additional Rent for the Common Area Land set
forth in this paragraph of this Lease and any other operating expenses for the
Premises or for Items as set forth in Paragraph 11 of this Lease are only
estimates, and Landlord makes no guaranty or warranty that such estimates will
be accurate.
Utilities. Tenant shall pay directly to the utility provider
servicing the Premises for all water, gas, electricity, heat, light, power,
telephone, sewer, sprinkler services, refuse and trash collection, and other
utilities and services used on the Premises, all maintenance charges for
utilities, and any storm sewer charges or other similar charges for utilities
imposed by any
8
governmental entity or utility provider, together with any taxes, penalties,
surcharges or the like pertaining to Tenant's use of the Premises. Landlord, as
part of the Base Building Work, shall (x) install all telephone, gas, water,
sanitary sewer and electric utilities in accordance with the Performance
Specifications and in a manner consistent with "Class A" warehouse facilities in
the Reno, Nevada area (provided that in the event of any inconsistency between
such standards, the Performance Specifications shall control) and (y) install
any other utilities that are customarily installed in "Class A" warehouse
facilities in the Reno, Nevada area (excluding any telecommunication equipment
or lines beyond the point of connection to the Building). Prior to the Rent
Commencement Date, Landlord shall at its expense cause all of the utilities
described in the preceding sentence to be separately metered, such that user
charges for such utilities will be charged directly to Tenant by the utility
provider. No interruption or failure of utilities shall result in the
termination of this Lease or the abatement of rent, except as otherwise provided
for in the following paragraph.
Notwithstanding anything to the contrary contained in this Lease,
if an interruption or cessation of utilities results from a cause within the
Landlord's reasonable control and the Premises or any portion thereof are not
usable by Tenant for the conduct of Tenant's business as a result thereof, Base
Rent, the Additional Rental Amount and applicable Additional Rent for Common
Area Land shall be abated for the period which commences three (3) business days
after the date Tenant gives to Landlord notice of such interruption until such
utilities are restored.
Taxes. "Taxes" shall mean all real property taxes, assessments and
governmental charges which shall be levied, assessed or imposed against the
Premises during the Lease Term; the parties hereby acknowledge that the Premises
constitute a separate tax parcel (i.e., Parcel 1 of Parcel 0 xx Xxxxxx Xxx Xx.
0000, XXX: 140-010-09) provided, however, that if, at any time during the Lease
Term, the methods of a taxation prevailing on the date hereof shall be altered
so that in lieu of, in addition to, or as a substitute for, the whole or any
part of the items referred to above now levied, assessed or imposed on real
estate or upon the owner or owners of real estate, there shall be levied,
assessed or imposed any franchise tax, any excise, transaction, sales for
privilege tax, assessment, levy or charge measured by or based, in whole or in
part, upon the rents from the Premises the same shall be included within Taxes,
provided, however, that the terms of the legislation imposing any such tax,
assessment, levy or charge or any other factors, documents or instruments
evidence that such tax, assessment, levy or charge was intended to serve as a
real estate tax. Notwithstanding the foregoing, "Taxes" shall not include: (A)
any inheritance, estate, succession, transfer, gains, mortgage recording, gift,
franchise, corporation, income or profit tax or capital levy; and (B) any
special non-recurring assessments arising as a result of the development of the
Project (and not specifically related to the Premises). Assessments included
within Taxes shall, regardless of how actually paid, be deemed to be paid in the
maximum number of installments permitted by the taxing authority imposing any
such assessment.
Commencing on the Rent Commencement Date and thereafter throughout
the Lease Term, Tenant shall, in the manner set forth in this Paragraph 8, pay
the Taxes for each tax
9
or fiscal year (a "Tax Year") of the relevant taxing authority occurring within
the Lease Term. If, however, (i) the Rent Commencement Date shall occur on a day
other than the first day of any such Tax Year, then the Tenant's payment of
Taxes for such Tax Year shall be a pro-rated amount (computed on a per diem
basis), based upon the number of days within such Tax Year occurring from and
after the Rent Commencement Date, or (ii) the expiration of this Lease shall
occur on a day other than the last day of a Tax Year, then Tenant's payment of
Taxes for such tax or fiscal year shall be a pro-rated amount (computed on a per
diem basis), based upon the number of days within such Tax Year occurring within
the Lease Term.
Landlord shall cause each taxing authority having jurisdiction over
the Premises to send statements for Taxes directly to Tenant and Tenant shall
make timely payment of all such Taxes, subject to the provisions of Paragraph
8(b) hereof. Tenant shall, upon written request of Landlord, furnish Landlord
with (i) evidence that Taxes have been paid in accordance with this Paragraph
8(b) and 8(c) all correspondence sent to, or received by, Tenant from
governmental authorities regarding Taxes. If Landlord is unable to cause any
such taxing authority to render statements for Taxes directly to Tenant, then,
Landlord, at anytime prior to the end of any Tax Year may deliver to Tenant a
statement for Taxes for such Tax Year. Tenant, for each such Tax Year, shall pay
to Landlord the amount set forth on such statement for such Tax Year in equal
installments in the same number of installments as Taxes are required to be paid
to the such taxing authority, with each such installment being due on the later
to occur of (x) the date that is thirty (30) days prior to the due date of the
corresponding installment of Taxes and (y) the date that is ten (10) business
days after the date that Tenant receives the statement from Landlord. Landlord
shall, together with the provision of any statement to Tenant, provide Tenant
with a copy of any tax xxxx to which such statement applies. If there shall be
any increase in Taxes for any Tax Year, whether prior to, during or after such
Tax Year, or if there shall be any decrease in Taxes for any such Tax Year,
whether prior to, during or after such Tax Year, then Tenant's payment for Taxes
for such Tax Year shall be recalculated and (i) if there has been an
underpayment, Tenant shall pay to Landlord, within 30 days after Landlord's
request therefor, the amount of such underpayment, or (ii) if there has been an
overpayment, Landlord shall, within 30 days after Tenant's request therefor,
refund to Tenant the amount of such overpayment.
If with respect to any Tax Year for which Tenant shall have made
payment of Taxes, Landlord shall receive a refund of any portion of Taxes,
Landlord, within 30 days after Tenant's request therefor, shall pay to Tenant
the amount of such refund.
Tenant shall, at its sole cost and expense, have the right to file
a protest with respect to the assessed valuation of the Premises and commence
any administrative or judicial proceeding as may be necessary in connection
therewith. Tenant shall keep Landlord informed of the progress of any such
proceeding, including, by providing copies of any correspondence and other
documents submitted in connection therewith. Landlord, at Tenant's cost and
expense, shall fully cooperate with Tenant with respect to any such protest and
proceeding, including, without limitation, by promptly providing Tenant with
copies of all relevant materials, documents, contracts, invoices and, if
necessary, by attending meetings and/or appearing at proceedings. Tenant shall
indemnify, defend and hold harmless Landlord from and against all
10
liabilities, damages, interest, penalties and expenses (including reasonable
attorneys' fees and expenses), resulting from or incurred in connection with any
such protest or proceeding by Tenant.
Insurance. (a) Landlord, throughout the Lease Term, shall maintain
(i) commercial liability insurance, including a contractual liability
endorsement, and (ii) all risk property insurance covering the full replacement
cost of the Building. All insurance to be maintained by Landlord pursuant to
this Paragraph 9, (i) shall be carried in favor of Landlord and shall name
Tenant as an additional insured (for commercial liability insurance only), (ii)
shall be in such form normally carried by prudent owners of premises similarly
situated, due regard given to the type of premises (i.e., size, age, condition),
its construction and its use and occupancy, (iii) shall be issued by domestic
insurance companies, licensed to do business in the State of Nevada and having a
Best's rating of AVIII or better or the then equivalent of such rating and
having a policyholders surplus of at least $100,000,000, and (iv) shall be
written on policies which have a term of not less than one year, and which shall
provide that no cancellation, non-renewal, change or reduction in the coverages
afforded under said policies will be effective until at least thirty (30) days'
prior written notice of such cancellation or reduction has been given to Tenant.
Certificates of the foregoing insurance shall be delivered by Landlord to Tenant
on or prior to the Rent Commencement Date Landlord may, but is not obligated to,
maintain such other insurance and additional coverages as it may deem reasonably
necessary, including, but not limited to, rent loss insurance; provided,
however, such other insurance and additional coverage shall be consistent (in
both type and limit) with insurance maintained in connection with industrial
warehouse buildings owned by institutional landlords in the Reno, Nevada area.
The cost of all insurance maintained by Landlord under this Paragraph 9 shall be
competitive with the cost of comparable insurance available from other insurance
carriers. The Project or Building may be included in a blanket policy (in which
case the cost of such insurance allocable to the Project or Building will be
reasonably allocated by Landlord based upon the insurer's cost calculations),
provided that such blanket policy (i) complies in all respects with the terms of
this Xxxxxxxxx 0, (xx) expressly identifies the Premises as being covered by
such blanket insurance policy, and (iii) does not provide for any possibility of
reduction of coverage by reason of any damage to any other property named in
such blanket insurance policy.
Tenant, at its expense, shall maintain during the Lease Term: all
risk property insurance covering the full replacement cost of all property and
improvements installed or placed in the Premises by Tenant at Tenant's expense;
worker's compensation insurance with no less than the minimum limits required by
law; employer's liability insurance with such limits as required by law; and
commercial liability insurance, with a minimum limit of $1,000,000 per
occurrence and a minimum umbrella limit of $1,000,000, for a total minimum
combined general liability and umbrella limit of $2,000,000 for property damage,
personal injuries, or deaths of persons occurring in or about the Premises.
Landlord may from time to time require reasonable increases in any such limits,
such increases to be consistent with the insurance limits required by comparable
landlords at comparable projects. The commercial liability policies shall name
Landlord as an additional insured, insure on an occurrence and not a claims-made
basis, be issued by insurance companies which are domestic insurance companies,
licensed to do business
11
in the State of Nevada and having a Best's rating of AVIII or better or the then
equivalent of such rating and having a policyholders surplus of at least
$100,000,000, not be cancelable unless 30 days prior written notice shall have
been given to Landlord, contain a hostile fire endorsement and a contractual
liability endorsement and provide primary coverage to Landlord (any policy
issued to Landlord providing duplicate or similar coverage shall be deemed
excess over Tenant's policies). Such policies or certificates thereof shall be
delivered to Landlord by Tenant upon the earlier of (i) the Rent Commencement
Date, or (ii) the date Tenant occupies the Premises for any reason whatsoever,
including without limitation, the date Tenant enters onto the Premises to
conduct the Initial Tenant Work and upon each renewal of said insurance.
The all risk property or comparable insurance obtained by Landlord
and Tenant shall include a waiver of subrogation by the insurers and all rights
based upon an assignment from its insured, against Landlord or Tenant, their
officers, directors, members, employees, managers, agents, invitees and
contractors, in connection with any loss or damage thereby insured against.
Neither party nor its officers, directors, employees, members, managers,
invitees or agents shall be liable to the other for loss or damage caused by any
risk coverable by all risk property insurance, and each party waives any claims
against the other party, and its officers, directors, employees, members
managers, invitees and agents for such loss or damage. The failure of a party to
insure its property shall not void this waiver.
Subject to Tenant's rent abatement rights contained in Paragraph 7
above, Landlord and its agents and employees shall not be liable for, and Tenant
hereby waives all claims against such parties for, business interruption and
losses occasioned thereby sustained by Tenant or any person claiming through
Tenant resulting from any accident or occurrence in or upon the Premises or the
Project from any cause whatsoever, including without limitation, damage caused
in whole or in part, directly or indirectly, by the negligence of Landlord or
its agents, contractors or employees, it being agreed that the foregoing release
of liability and waiver shall apply only to the extent that such business
interruption and losses can be covered by customary business interruption
insurance.
Tenant and its subtenants, assignees, invitees, employees, members
and agents shall not be liable for, and Landlord hereby waives all claims
against Tenant and its subtenants, assignees, invitees, employees, members and
agents for loss of rents derived from the Premises sustained by Landlord or any
person claiming through Landlord resulting from any accident or occurrence in or
upon the Premises or in or about the Project from any cause whatsoever,
including, without limitation, damage caused in whole or in part, directly or
indirectly, by the negligence of Tenant or its subtenants, assignees, invitees,
employees, contractors, members or agents, it being agreed that the foregoing
release of liability and waiver shall apply only to the extent such rent
interruption and losses can be covered by customary rental interruption
insurance.
Landlord's Repairs. For the Lease Term, Landlord shall maintain,
repair, and replace, at its expense, the following portions of the Premises
(such portions of the Premises being collectively the "Landlord's Structural
Obligations"): (i) all utility lines servicing the Premises to
12
the points of connection within the Building, (ii) all elements of the roof,
including the roof membrane and the skylights, and (iii) all elements of the
slab, foundation, floor, footings, piers and exterior walls of the Building so
that such Landlord's Structural Obligations are in good condition, reasonable
wear and tear excluded, and, subject to the provisions of Paragraph 9(c) above,
any damage or injury to the Building or Premises (including, without limitation,
the slab and the structure of the Premises) caused by the negligence and/or
willful misconduct of Tenant, its agents, contractors, employees and invitees
excluded. Notwithstanding anything to the contrary contained in the foregoing in
clause (iii) above, it is the stated intent of Landlord and Tenant that the
Landlord shall not be responsible for maintaining or repairing cracks and other
surface repair items in the slab or floor caused by normal wear and tear and/or
normal forklift traffic over the slab or floor (it being agreed, however, that
nothing in this sentence shall be deemed to limit Landlord's obligations under
Paragraph 43 below). Subject to Paragraph 43, the term "walls" as used in this
Paragraph 10 shall not include windows, glass or plate glass, doors or overhead
doors, special store fronts, dock bumpers, dock plates or levelers, or office
entries. Tenant shall promptly give Landlord written notice of any repair
required by Landlord pursuant to this Paragraph 10, after which Landlord shall
have a reasonable opportunity to repair. Subject to the provisions of Paragraph
9(c) above, Landlord shall also be responsible for any damage to the Premises
caused by the negligence or willful misconduct of Landlord or its agents,
employees or contractors at the Premises.
In the event of an emergency (being defined for purposes hereof as
an imminent threat of injury to persons or material damage to Tenant's
equipment, inventory or other property at the Premises or any other event that
impedes more than 20% of Tenant's business operations at the Premises, Tenant
shall have the right to make such temporary, emergency repairs to the Premises
as may be reasonably necessary to (x) prevent material damage to Tenant's
equipment, inventory or other property at the Premises, (y) repair an imminent
threat of personal injury to persons at the Premises, or (z) repair the
condition that is the cause of any material impediment to Tenant's business
operations at the Premises; provided Tenant has either (i) notified Landlord's
representative, as soon as possible under the circumstances, of such emergency
by telephone (with subsequent written notice as soon as practicable), and
Landlord has failed to initiate (and diligently continue to pursue all necessary
emergency repairs within twenty-four (24) hours of such notification, or (ii)
Tenant has attempted in good faith to notify Landlord's representative of such
emergency by telephone (with subsequent written notice as soon as practicable)
and has been unsuccessful in its attempts to contact such representative for a
period of twenty-four (24) hours. If because of the circumstances it is
necessary for Tenant to act immediately (i.e. Tenant does not reasonably have
time to notify Landlord), then Tenant may do so without prior notice to Landlord
provided that Tenant uses commercially reasonable efforts to notify Landlord of
such actions as soon as possible. In the event that Tenant makes any emergency
repairs to the Premises in accordance with this paragraph, Landlord shall
reimburse Tenant, up to the Self-Help Maximum (as defined below), for the
actual, reasonable, out-of-pocket third party costs incurred by Tenant (as
evidenced by written invoices or other reasonable evidence) in making such
emergency repairs. The term "Self Help Maximum" shall mean (i) the aggregate sum
of $25,000 for each emergency that occurs during each lease year (other than
Catastrophic Emergencies (as defined below)), such sum to increase each year of
the Lease Term
13
following the first lease year by the percentage increases in the Consumer Price
Index (over the amount of the Consumer Price Index as of the Rent Commencement
Date), or (ii) the aggregate sum of $200,000 for each Catastrophic Emergency
that occurs during each lease year. For purposes hereof, (i) the term
"Catastrophic Emergency" means any emergency with respect to the roof that will
require Tenant to expend more than $25,000 to alleviate such emergency; and (ii)
the term "Consumer Price Index" means the Consumer Price Index for All Urban
Consumers (Revised Series) (CPI-U) All Items, U.S. City Average (1982-1984
equals 100) of the United States Department of Labor, Bureau of Labor
Statistics. If Landlord fails to reimburse Tenant for the reasonable,
out-of-pocket costs incurred by Tenant in making such repairs, up to but not to
exceed the Self Help Maximum with respect to such emergency, within 30 days
after demand therefor, accompanied by supporting evidence of the costs incurred
by Tenant, then Tenant may either (i) bring an action for damages against
Landlord to recover such costs, together with interest thereon at the Interest
Rate from the due date therefor (i.e., the date 30 days after demand), and
reasonable attorney's fees incurred by Tenant in bringing such action for
damages, or (ii) offset such amount against the Base Rent and Additional Rental
Amount due under this Lease, with interest accruing 30 days after such amount
was due. The self help remedy granted to Tenant under this Paragraph in the
event of an emergency is in addition to, and not in lieu or limitation of, any
and all other remedies granted to Tenant under this Lease. Subject to the
provisions of Paragraph 9(c) above, Tenant shall be responsible for any damage
to the Premises caused by the negligence or willful misconduct of Tenant or its
agents, employees or contractors at the Premises.
Tenant's exercise of its right to self help or offset Base Rent and
the Additional Rental Amount shall in no way be an acknowledgment of or be
construed as an agreement by Landlord that such payment (or work) required is
the obligation of Landlord and shall in no way hinder the Landlord from
disputing such claims and Base Rent and Additional Rental Amount offsets by
Tenant. In the event of a dispute, and if Landlord prevails, Tenant shall
promptly reimburse Landlord for all amounts paid by Landlord to Tenant, or any
amounts offset by Tenant or any amounts on which Landlord has prevailed,
whichever is appropriate, plus interest at the Interest Rate from the date the
amount was offset or paid. Further the prevailing party shall be entitled to
reasonable attorneys' fees and costs incurred in the offset dispute.
If and only if requested by Tenant in writing, Landlord shall make
any reasonably necessary Capital repairs or replacements to the Premises for
which Tenant is responsible under Paragraph 11 below. Upon completion thereof,
(i) Landlord shall furnish Tenant with a statement setting forth the actual
out-of-pocket cost to Landlord of any such Capital repairs or replacements
(together with invoices and other evidence reasonably necessary to corroborate
such cost) and (ii) the actual out-of-pocket cost to Landlord of such Capital
repairs or replacements to the Premises shall be amortized on a straight line
basis in equal monthly installments over a period equal to the useful life
thereof under GAAP, and such monthly installments shall thereafter be payable by
Tenant to Landlord on the first day of each calendar month during the Lease Term
until the sooner of (i) the last day of Lease Term and (ii) the last day of such
useful life (it being agreed that Tenant shall not be responsible for any
portion of such costs that relates to the portion of such useful life that
extends beyond the Lease Term).
14
Landlord expressly acknowledges and agrees that the reimbursement obligation
contained in the preceding sentence shall not apply to any Capital repairs or
replacements that Landlord is required to make under (i) any of the other
provisions of this Paragraph 10, or (ii) any of the provisions of Paragraphs 3,
15, 16, 30 and 43 of this Lease. Any installment payable pursuant to the this
paragraph for a partial month shall be appropriately prorated. Landlord shall
competitively bid the performance of such Capital repairs or replacements in
accordance with the Bidding Procedures (as defined in Addendum 2).
Tenant's Repairs. (a) Subject to Landlord's obligations in
Paragraphs 3, 9, 10, 15, 16, 30 and 43, Tenant, at its sole cost and expense,
shall be responsible for the maintenance, repair and replacement of all portions
of the Premises, Building and Land and for all costs and expenses related
thereto (including, without limitation, paving and parking areas, alleys,
driveways, mowing, landscaping, exterior painting, dock and loading areas, truck
doors, plumbing from and after the point of connection to the Building, fire
sprinklers and fire protection systems, entries, doors, windows, interior walls,
and the interior side of demising walls heating, ventilation and air
conditioning systems, lighting, electrical and utility systems from and after
the point of connection to the Building and other mechanical and building
systems; amounts paid to contractors and subcontractors for work or services
performed in connection with any of the foregoing; security services, if any;
and trash collection, sweeping and removal). Except as set forth in the last
paragraph of Paragraph 10 above, such repair and replacements may include
Capital expenditures and repairs whose benefit may extend beyond the Lease Term.
Heating, ventilation and air conditioning systems and other mechanical and
building systems serving the Premises shall be maintained at Tenant's expense
pursuant to maintenance service contracts entered into by Tenant. If, (i) Tenant
fails to make any repair for which Tenant is responsible pursuant to this
Paragraph 11 within thirty (30) days after notice thereof from Landlord (except
in case of emergency) (unless such performance will, due to the nature of the
obligation, require a period of time in excess of thirty (30) days, then after
such period of time as is reasonably necessary) and (ii) Tenant's failure to
make such repair has a material adverse effect on any structural component of
the Building or otherwise results in a hazardous condition, then, Landlord may,
at its option, make such repair, and Tenant shall pay the actual, reasonable,
out-of-pocket third party costs incurred by the Landlord (as evidenced by
written invoices or other reasonable evidence), within 30 days after demand. If
Tenant fails to pay such amount within 30 days after demand, then such amount
shall accrue interest at the Interest Rate.
(b) Notwithstanding anything contained herein to the contrary,
Tenant shall have the right, from time to time and for such periods of time as
Tenant shall desire throughout the Lease Term, to require Landlord (without cost
to Tenant) to provide asset management services to Tenant as may be necessary
for Tenant to maintain the Premises in accordance with the provisions of
Paragraph 11(a) hereof. Such asset management services shall include, but not be
limited to, the hiring of contractors, subcontractors and suppliers on behalf of
Tenant for each of the items of maintenance and repair (each an "Item") for
which Tenant is responsible under Paragraph 11(a) hereof using competitive
bidding procedures with entities which are not affiliated with Landlord (with
each such hiring being subject to Tenant's prior written approval,
15
such approval not to be unreasonably withheld or delayed), appropriately
supervising each such contractor, subcontractor and supplier, and providing
Tenant with such periodic reports, as Tenant may reasonably require, with
respect to each of the Items, and any other management or operational services
reasonably requested by Tenant which are customary for the maintenance and
operation of a first-class warehouse facility in Reno, Nevada (collectively the
"Asset Management Services"). On or before each November 1 during the Lease
Term, Landlord shall provide Tenant with a budget setting forth Landlord's good
faith estimate of the Additional Rent for the Premises (as defined below) for
all Items for the immediately succeeding calendar year. For purposes hereof, the
term "Additional Rent for the Premises" shall mean, for any calendar year all or
any part of which occurs during the Lease Term, the actual, third-party
out-of-pocket costs and expenses incurred by Landlord in connection with all the
Items provided by Landlord with respect to such calendar year. If Tenant
requests that Landlord provide such Asset Management Services, then during each
month of the Lease Term, on the same date that Base Rent is due, Tenant shall
pay Landlord an amount equal to 1/12 of the annual cost, as reasonably estimated
by Landlord from time to time, of the Additional Rent for the Premises for the
Items requested. Notwithstanding the foregoing, in no event shall Tenant be
obligated to pay Additional Rent for the Premises on account of any calendar
year to the extent that the Additional Rent for the Premises for such calendar
year has increased by more than five percent (5%) per annum, compounded annually
on a cumulative basis ("Premises Cap"), from the Additional Rent for the
Premises for (I) in the case of the initial term of this Lease, the first full
calendar year during which Landlord performs the Asset Management Services and
(II) in the case of any renewal term, the calendar year in which the first day
of such renewal term occurs (it being agreed that, for purposes of such renewal
term only, the Additional Rent for the Premises for the calendar year in which
the first day of such renewal term occurs shall not be subject to the Premises
Cap). Notwithstanding anything to the contrary contained herein, if, in
connection with the performance of its obligations under this Paragraph 11(b),
Landlord performs any reasonably necessary Capital repairs or replacements to
the Premises, then the provisions of the last paragraph of Paragraph 10 above,
and not this Paragraph 11(b), shall govern with respect to the reimbursement of
Landlord for such Capital repairs or improvements.
Tenant-Made Alterations and Trade Fixtures. For purposes of this
Lease, the following definitions shall apply:
"Tenant-Made Alteration" shall mean any alteration, addition or
improvement performed by, or to be performed by, Tenant in or about the
Premises.
"Material Tenant-Made Alteration" shall mean any Tenant-Made
Alteration that will have an effect on the structural soundness of the Building,
including, without limitation the slab or floor of the Building, or cause a
penetration of the roof of the Building.
Tenant, without any need to obtain Landlord's consent or approval,
shall have the right to perform any Tenant-Made Alterations in and about the
Premises, other than Material Tenant-Made Alterations. In addition, Tenant, upon
obtaining Landlord's consent, which may be withheld only if a Material
Tenant-Made Alteration would have an adverse affect on the
16
structural soundness of the Building, including, without limitation, the floor
or slab of the Building or invalidate any Landlord roof warranty for the
Building (the "Approval Criteria"), shall have the right to perform Material
Tenant-Made Alterations in and about the Premises. Landlord shall not perform
any alterations in or about the Premises except as otherwise required or
permitted under this Lease. Landlord's approval of Tenant's plans and
specifications for any work or Tenant-Made Alterations performed for or on
behalf of Tenant shall not be deemed to be a representation by Landlord that
such plans and specifications comply with applicable Legal Requirement or
insurance requirements or that the alterations, additions and improvements
constructed in accordance with such plans and specifications will be adequate
for Tenant's use. Landlord and Tenant hereby acknowledge and agree that Tenant's
construction and/or placement of one or more racking systems, a conveyor and
related equipment and any mezzanine structure in the Building and on the
Premises are both Tenant-Made Alterations that do not require Landlord's prior
written consent (and Tenant may, without Landlord's consent, bolt the same to
the slab); provided however, Tenant hereby agrees that upon the expiration or
earlier termination of this Lease, Tenant shall remove, at Tenant's sole cost
and expense, such racking systems, conveyor and related equipment and mezzanine
structures and shall, at Tenant's sole cost and expense, repair any damage to
the Premises caused by Tenant's removal of the racking system (such removal and
repair obligations for the racking system being set forth in and governed by
paragraph (e) below), conveyor system and mezzanine structure.
Tenant, prior to commencing any Material Tenant-Made Alteration,
shall give Landlord written notice thereof, and to the extent that good
construction practice requires plans and specifications to be prepared with
respect to such Tenant-Made Alteration, such notice shall be accompanied by a
copy of such plans and specifications. In the case of any Material Tenant-Made
Alteration, Landlord, within ten (10) business days after its receipt of such
notice, shall either (i) give its written consent to the Material Tenant-Made
alteration, or (ii) deny its consent and request revisions or modifications to
such Material Tenant-Made Alteration (but only if and to the extent that the
proposed Material Tenant-Made Alteration fails to meet the Approval Criteria).
Notwithstanding anything in this Lease to the contrary, if during the Lease
Term, Tenant removes from the Premises any items in the Performance
Specifications (defined in Addendum 2) installed by Landlord at Landlord's cost
and expense as part of the Base Building Work (defined in Addendum 2) ("Base
Improvements"), then, except for the in-rack sprinkler system and heads
referenced in Section 8.1.3 of the Performance Specifications which shall be
excluded from the Base Improvements and which Tenant shall not be obligated to
replace or restore, Tenant, upon or prior to the expiration or sooner
termination of the Lease, shall replace all such Base Improvements it has
removed from the Premises with other items or equipment of comparable size, age,
make and quality to that of the removed Base Improvements (taking into
consideration the condition that such Base Improvements would have been in if
they had remained throughout the Lease Term, it being agreed, however, that if
Tenant removes any Base Improvements that are typical office improvements, then
Tenant, upon the re-installation thereof, shall replace such office improvements
with new office improvements).
Tenant at its own expense may perform all Tenant-Made Alterations
with contractors and subcontractors of Tenant's own choosing. Tenant shall
perform all Tenant-Made
17
Alterations in a good and workmanlike manner and in accordance with all Legal
Requirements. Landlord shall, upon Tenant's request (and at no cost to
Landlord), furnish or execute promptly any documents, information, consents or
other materials which are necessary or reasonably desirable in connection with
Tenant's efforts to obtain any license or permit for the making of any
Tenant-Made Alteration. Landlord shall not be entitled to impose upon Tenant any
charges or fees of any kind (including, without limitation, charges or fees for
profit, overhead, or supervision) in connection with any Tenant-Made
Alterations, except that Tenant shall pay to Landlord, within 30 days after
Tenant's receipt of Landlord's demand therefor, Landlord's reasonable
out-of-pocket costs and expenses of any third party architect or engineer
employed by Landlord for reviewing mechanical and structural plans and
specifications relating to any Material Tenant-Made Alteration. Throughout the
performance of Tenant-Made Alterations, either Tenant or Tenant's general
contractor shall carry (i) commercial general liability insurance, with
completed operation endorsement, for any occurrence in or about the Premises,
with a combined single limit of not less than $1,000,000 and (ii) employer's
liability insurance in the statutory limit. With respect to all such insurance,
Landlord and any mortgagee of the Premises whose name and address have been
furnished to Tenant shall be named as additional insureds. All such insurance
shall be issued by insurers that satisfy the requirements in Paragraph 9.
Throughout the performance of any Tenant-Made Alteration, each contractor and
subcontractor engaged in such Tenant-Made Alteration shall carry worker's
compensation and disability insurance in statutory limits.
Any and all Tenant-Made Alterations made by, or on behalf of,
Tenant in, to or upon the Premises and Tenant's Property (as defined below)
installed on the Premises by (or on behalf of) Tenant, shall remain the property
of Tenant and may be removed from the Premises at any time during the Lease
Term, provided that any damage caused by such removal shall be repaired by
Tenant. Tenant may (subject to the next succeeding sentence) elect not to remove
any or all of its Tenant-Made Alterations, Tenant's Initial Work, its fixtures
or Tenant's Property, in which case the same shall become the property of
Landlord upon Tenant's surrender of the Premises. Notwithstanding the foregoing,
at the expiration or earlier termination of the Term, Tenant shall remove (i)
its movable business equipment and other movable personal property, (ii) any
Extraordinary Fixture (as defined below) in respect of which Landlord, in
accordance with Paragraph (f) below, has not waived (or been deemed to have
waived) its right to cause Tenant to remove, and (iii) any trade fixtures
("Tenant's Trade Fixtures") installed by Tenant in the Building, including the
warehouse racking system to be installed in the Premises by or for Tenant (it
being agreed that (x) in removing any trade fixtures from the Building that are
bolted to the slab, Tenant shall only be required to cut and file the bolts
connecting such trade fixtures to the slab, rather than remove such bolts from
the slab, and (y) Tenant shall not be required to remove the wiring relating to
such trade fixtures that will be imbedded in the slab, behind walls and doors
and below the floor). Moreover, for purposes of this Lease, the term "Tenant's
Property" shall mean all office furniture and equipment, movable partitions,
communications equipment and other articles of movable personal property owned
or leased by Tenant and located in the Premises.
18
Tenant shall have the right from time to time and at any time to
give a notice (each, an "Extraordinary Fixture Advice Notice") to Landlord
requesting Landlord's advice as to whether any proposed Tenant-Made Alteration
will constitute an Extraordinary Fixture. Within 10 business days after
Landlord's receipt of any Extraordinary Fixture Advice Notice, Landlord shall
notify Tenant (each a "Removal Notice") (i) whether, in Landlord's opinion, any
of the alterations, additions or improvements described in such Extraordinary
Fixture Advice Notice constitute an Extraordinary Fixture (and identifying same)
and (ii) which items of those identified as Extraordinary Fixtures, Tenant must
remove at the expiration or earlier termination of this Lease. If Landlord (i)
gives a Removal Notice stating that in Landlord's opinion the alterations,
additions or improvements (or any of them) described in the Extraordinary
Fixture Advice Notice in question constitute an Extraordinary Fixture, but that
Landlord will not require Tenant to remove the same at the expiration or earlier
termination of this Lease, or (ii) fails to give a Removal Notice with respect
to any of the alterations, additions or improvements described in the applicable
Extraordinary Fixture Advice Notice within 10 days after receipt of such
Extraordinary Fixture Advice Notice, then, in either such event, Landlord shall
have waived its right to cause Tenant to remove such alterations, additions or
improvements, and Tenant shall not be obligated to remove the same. For purposes
of this Lease, "Extraordinary Fixture" means an alteration, addition,
improvement or fixture which, at the time of installation, (aa) is not the type
of improvement that is customarily found in a standard warehouse and/or office
installation in the Reno, Nevada area and (bb) is materially more expensive to
remove than the type of improvement that is customarily found in a standard
warehouse and/or office installation in the Reno, Nevada area.
Signs. Subject to the Declaration (as defined below) and any
applicable Legal Requirements, Tenant may install any exterior lights,
decorations, balloons, flags, pennants, banners, or painting, or erect or
install any signs, windows or door lettering, placards, decorations, or
advertising media of any type which can be viewed from the exterior of the
Premises, without Landlord's prior written consent. Upon surrender or vacation
of the Premises, Tenant, at its sole cost and expense, shall remove all signs
and repair, paint, and/or replace the building facia surface to which its signs
are attached. Tenant shall obtain all applicable governmental permits and
approvals for sign and exterior treatments (and Landlord shall cooperate with
Tenant in connection therewith, including, without limitation, by signing any
applications in connection therewith). Subject to the Declaration, any
applicable Legal Requirements and Landlord's reasonable approval, Tenant may
place directional signs as appropriate throughout the Project for the benefit of
its customers. Landlord represents to Tenant that, to Landlord's knowledge, as
of the Commencement Date, other than the Declaration, there are no other signage
restrictions or controls that adversely affect Tenant's ability to install any
signage on the Building. Landlord agrees to use commercially reasonable efforts
to obtain a variance from the necessary parties to enhance the signage size on
the east half of the Building facing Highway 395. For purposes of this
paragraph, Landlord's knowledge shall mean the actual knowledge of Xxxxx Xxxxx
and Xxxx Xxxxxx, after due investigation and inquiry. Landlord represents and
warrants to Tenant that no employee of Landlord has any material knowledge that
is not possessed by Xxxxx Xxxxx or Xxxx Xxxxxx about any of the matters that are
the subject of the representations and warranties contained in this paragraph.
19
Parking. Intentionally deleted.
Restoration. If the Building shall be partially or totally damaged
or destroyed by fire or other casualty, then, unless this Lease is terminated as
hereinafter provided, and whether or not the damage or destruction shall have
resulted from the fault or neglect of Tenant or its employees, agents,
contractors or invitees, Landlord, at its sole expense, shall perform Landlord's
Restoration Work (as hereinafter defined) with reasonable dispatch and
continuity. For purposes hereof, the term "Landlord's Restoration Work" shall
mean all of the work necessary to repair and restore the Premises (including,
without limitation, all the building systems) to substantially the same
condition as that in which they were in immediately prior to the happening of
the fire or other casualty (it being agreed that Landlord's Restoration Work
shall not include the repair and restoration of (w) any Tenant-Made Alterations,
(x) Tenant's Initial Work installed by Tenant, (y) any Tenant's Trade Fixtures,
and/or (z) any Tenant's Property). Notwithstanding anything to the contrary in
this Paragraph 15, in the event a fire or other casualty to the Premises occurs
that is covered by the all risk insurance referenced in Paragraph 9(a) above,
Tenant shall, within 30 days after demand therefor, pay to Landlord the lesser
of (i) the amount of any deductible in respect of the insurance adjustment
relating to such fire or other casualty and (ii) $25,000 (it being agreed that,
in any event, the payment of such amount by Tenant is not a condition precedent
to any of Landlord's obligations under this Paragraph 15).
If the Premises shall be partially damaged or destroyed or rendered
untenantable or inaccessible as a result of a fire or other casualty, then the
Base Rent, the Additional Rental Amount and all other rent payable under this
Lease (including any amounts payable under Sections 6 and 8 above) shall be
abated in proportion to the area of the Premises that has been rendered
untenantable, inaccessible or unfit for Tenant's use and occupancy for the
period from the date of such damage or destruction until the earlier of (a) the
last day of a reasonable period (beginning on the date on which Landlord's
Restoration Work is substantially completed and Tenant has reasonable access to
the Premises) for Tenant to repair and restore any Tenant's Initial Work,
Tenant-Made Alterations, Tenant Trade Fixtures and Tenant's Property damaged as
a result of such fire or other casualty and (b) the date on which Tenant
reoccupies the Premises (or such portion thereof) for the normal conduct of its
business (as opposed to the repair or restoration of any of Tenant's Initial
Work, Tenant's Trade Fixtures, Tenant-Made Alterations or Tenant's Property). If
the Premises shall be totally damaged or destroyed or rendered untenantable or
inaccessible, then the Base Rent, the Additional Rental Amount and all other
rent payable under this Lease (including any amounts payable under Sections 6
and 8 above) shall xxxxx from the date of the damage or destruction until the
earlier of (a) the last day of a reasonable period (beginning on the date on
which Landlord's Restoration Work is substantially completed and Tenant has
reasonable access to the Premises) for Tenant to repair and restore any Tenant's
Initial Work, Tenant-Made Alterations, Tenant Fixtures and Tenant's Property
damaged as a result of such fire or other casualty and (b) the date on which
Tenant reoccupies the Premises (or such portion thereof) for the normal conduct
of its business (as opposed to the repair or restoration of any of Tenant's
Initial Work, Tenant's Trade Fixtures, Tenant-Made Alterations or Tenant's
Property).
20
If the Building or any portion thereof shall be damaged or
destroyed by fire or other casualty, then Landlord, within thirty (30) days
after the occurrence of the fire or other casualty, shall furnish to Tenant an
estimate (the "Estimate"), prepared and certified by an architect selected by
Landlord and reasonably acceptable to Tenant, of the date (the "Estimated Date")
by which Landlord expects (in good faith) the Landlord's Restoration Work to be
completed. If the Estimated Date shall be a date later than one hundred eighty
(180) days after the date of the fire or other casualty, then Tenant may, at its
option, terminate this Lease by giving written notice to Landlord within thirty
(30) days after Tenant's receipt of the Estimate. In any case where the Estimate
does not give rise to Tenant's termination right as aforesaid (as well as any
case where Tenant does not elect to exercise its termination right as
aforesaid), Tenant shall have the right to terminate this Lease, if for any
reason, Landlord's Restoration Work is not completed by the Outside Restoration
Date (as defined below). Tenant may exercise the termination right described in
the preceding sentence by delivering written notice thereof to Landlord at any
time following the Outside Restoration Date and prior to the date Landlord
completes Landlord's Restoration Work. If Tenant terminates this Lease as
provided in this Paragraph 15, then such termination shall be effective on the
date specified in Tenant's notice of termination but no later than one hundred
eighty (180) days after the date of such notice as if said date were the date
fixed for the expiration of the Lease Term. Any Base Rent, Additional Rental
Amount or other amounts paid by Tenant for a period beyond the date of
termination of this Lease or for any period of abatement shall promptly be
refunded by Landlord to Tenant. For purposes of this Lease, the term "Outside
Restoration Date", with respect to any fire or other casualty, shall mean the
Estimated Date for the Landlord's Restoration Work in connection with such fire
or other casualty; provided, however, that the Outside Restoration Date shall be
postponed by one day for each day that Landlord is actually delayed in
completing such Landlord's Restoration Work as a result of one or more Force
Majeure Events (but in no event shall the Outside Restoration Date be extended
by Force Majeure Events by more than 60 days) or any delays caused by Tenant,
its agents, employees, consultants, contractors and invitees.
If (i) the Building shall be damaged or destroyed by fire or other
casualty during the last 12 months of the then current Lease Term, (ii) the
Estimate indicates that Landlord's Restoration Work will require a period of
time which exceeds 20% of the then remaining Lease Term, and (iii) Tenant, on or
prior to the date of the fire or other casualty shall not have elected to extend
the then current Lease Term in accordance with the provisions of Addendum 3
hereto (assuming Tenant had the right to do so), then and in such events, either
Landlord or Tenant shall have the right, to be exercised by written notice to
the other party given within thirty (30) days the electing party's receipt of
the Estimate, to terminate this Lease. If either party terminates this Lease as
provided in this Paragraph 15, then such termination shall be effective on the
date specified in such party's notice of termination but no later than one
hundred eighty (180) days after the date of such notice as if said date were the
date fixed for the expiration of the Lease Term; and any Base Rent, Additional
Rental Amount or other amounts paid by Tenant for a period beyond the date of
such termination of this Lease or for any period of abatement shall promptly be
refunded by Landlord to Tenant.
21
Notwithstanding anything to the contrary contained in Paragraph 15
above, if Tenant, within thirty (30) days after its receipt of a termination
notice from Landlord given pursuant to Paragraph 15 above, shall elect to extend
the then current term of this Lease in accordance with the provisions of
Addendum 3 hereto (assuming Tenant has the right to do so), then Landlord's
termination notice shall be rendered null and void, this Lease shall remain in
full force and effect, and Landlord, at its sole expense, shall perform
Landlord's Restoration Work.
If the named Landlord herein (i.e., ProLogis Development Services
Incorporated) shall transfer its interest in the Premises to a third party,
then, from and after the effective date of such transfer, the following
provision of this Section 15(f) shall apply:
For purposes of this Lease, the term the "Depository" shall
mean any commercial bank having a net worth of at least $500,000,000 as
designated by Landlord and approved by Tenant (which approval shall not
be unreasonably withheld, conditioned or delayed). All funds held by
Depository shall at all times be deposited in trust for the benefit of
Landlord and Tenant pursuant to the terms of this Lease in an account or
accounts maintained in the State of Nevada.
All insurance required to be maintained by Landlord under
Section 9 above shall name the Depository as the loss payee. All
insurance proceeds to be paid (the "Deposited Sums") in connection with
any insurance to be maintained by Landlord under such Section 9 shall be
paid to the Depository. In the event, and to the extent, that Landlord is
required to perform any Landlord's Restoration Work, the Depository shall
disburse such proceeds to Landlord, from time to time and as and to the
extent Landlord's Restoration Work progresses, but not more often than
monthly upon receipt of a request therefor prepared by Landlord and
consented to in writing by Tenant, which consent shall not be
unreasonably withheld or delayed, provided that Landlord shall have
provided Tenant with the following:
A certificate of Landlord (1) requesting payment
of a specified amount of the Deposited Sums to Landlord or
to persons whose names and addresses shall be stated, (2)
describing in reasonable detail the services or materials
theretofore applied to Landlord's Restoration Work, (3)
stating that such specified amount does not exceed the cost
of the services and materials previously supplied, and (4)
stating that the cost of the services and materials has not
been previously made the basis of any withdrawal of any of
the Deposited Sums; and
A certificate of an engineer or architect selected
and paid by Landlord who shall be reasonably satisfactory to
Tenant, stating (1) that the services and materials
described in the accompanying certificate of Landlord were
necessary or appropriate to Landlord's Restoration Work, (2)
that the amount specified in such certificate of Landlord is
not in excess of the cost of the services and materials
supplied,
22
(3) the additional amount, if any, estimated as being
required to complete and pay for Landlord's Restoration
Work, and (4) that the work theretofore has been done in
accordance with the plans and specifications thereof.
(III) After the completion of and payment for Landlord's
Restoration Work, the balance, if any, of the Deposited Sums shall be
paid first to Tenant, up to the amount that Tenant shall have paid to
Landlord pursuant to Section 9 above (i.e., the amount of the deductible
paid by Tenant to Landlord), and the balance to Landlord.
(IV) Upon the designation of the Depository or the
substitution of a new Depository, the parties and the Depository shall
execute an agreement, in form reasonably satisfactory to the Depository,
which shall provide that the Depository shall receive, hold and disburse
any monies deposited with it pursuant to and in accordance with the terms
of this Lease
Condemnation. If any part of the Premises should be taken for any
public or quasi-public use under governmental law, ordinance, or regulation, or
by right of eminent domain, or by private purchase in lieu thereof (a "Taking"
or "Taken"), and the Taking (a) is of more than (i) 20% of the rentable area of
the Building or (ii) 20% of the parking area on the Land or (b) would otherwise
prevent or materially interfere with Tenant's use of the Premises for the normal
conduct of its business, then upon written notice by Tenant this Lease shall
terminate and Base Rent and all other sums payable under this Lease shall be
apportioned as of said date. If part of the Premises shall be Taken, and this
Lease is not terminated as provided above, the Base Rent and all other sums
payable under this Lease payable hereunder during the unexpired Lease Term shall
be reduced to such extent as may be fair and reasonable under the circumstances
and Landlord shall proceed with due diligence to perform any work necessary to
restore the remaining portions of the Premises to the condition that they were
in immediately prior to the Taking, or as near thereto as possible. In the event
of the Taking of the entire Premises, this Lease shall terminate as of the date
of such Taking. In the event of any such Taking, Landlord shall be entitled to
receive the entire price or award from any such Taking without any payment to
Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if any, in such
award. Tenant shall have the right, to the extent that same shall not diminish
Landlord's award, to make a separate claim against the condemning authority (but
not Landlord) for such compensation as may be separately awarded or recoverable
by Tenant for moving expenses, the unamortized amount of any Tenant-Made
Alterations, damage to Tenant's Trade Fixtures and Tenant's Property, if a
separate award for such items is made to Tenant.
Assignment and Subletting. Without Landlord's prior written consent
which may only be withheld pursuant to the terms set forth below, Tenant shall
not assign this Lease or enter into a sublease that demises more than 300,000
rentable square feet of the Building (any such sublease being a "Triggering
Sublease") or mortgage, pledge, or hypothecate its leasehold interest, and any
attempt to do any of the foregoing shall be void and of no effect.
Notwithstanding the above, without Landlord's prior written consent, Tenant may
(x) assign this
23
Lease or sublet the entire Premises, or any part thereof, to any Tenant
Affiliate, or (y) sublet the Premises to any third party other than pursuant to
a Triggering Sublease. The term "Tenant Affiliate" shall mean an entity that is
a Qualified Business Group Holder, a Related Entity or a Successor. The term
"Qualified Business Group Holder" means any entity that acquires all or
substantially all of the business of any division of, or other operational group
within, Tenant, which division or other operational group occupied space in the
Premises prior to such acquisition (including an entity created pursuant to a
spin-off of such division or other group, or an entity acquiring such business
pursuant to an out-sourcing program). The term "Related Entity" means any
corporation or other business entity that controls, is controlled by or is under
common control with Tenant. For purposes of the preceding sentence, "control"
means either (i) ownership or voting control, directly or indirectly, of 30% or
more of the voting stock, membership, partnership interests or other beneficial
ownership interests of the entity in question or (ii) the power (whether by
contract or otherwise) to direct the management and policies of such entity.
Notwithstanding the foregoing, Landlord acknowledges and agrees that each of (a)
Xxxxxx & Xxxxx, Inc., (b) Bertelsmann, Inc. and (c) any entity that controls, or
is controlled by, or is under common control with either Xxxxxx & Noble, Inc. or
Bertelsmann, Inc. (with control having the meaning described in the preceding
sentence) shall, for all purposes of this Section 17 constitute a Related Entity
at all times during the Lease Term. The term "Successor" means any one of the
following: (i) an entity resulting from a merger, consolidation, reorganization
or recapitalization of or with Tenant or (ii) a purchaser (or other transferee)
of all or substantially of (a) Tenant's assets and all or substantially all of
such Tenant's liabilities (including the liabilities of Tenant hereunder) or (b)
the stock, membership, or partnership interest in Tenant. Tenant shall reimburse
Landlord for all of Landlord's reasonable out-of-pocket expenses in connection
with any assignment or sublease.
If Tenant desires to assign this Lease other than to a Tenant
Affiliate, or enter into a Triggering Sublease other than with a Tenant
Affiliate, then Tenant shall give Landlord notice (each, a "Transfer Notice") of
such desire. Each Transfer Notice shall be accompanied by a statement setting
forth in reasonable detail the identity of the proposed assignee or subtenant,
the nature of its business and its proposed use of the Premises. Landlord shall
approve or disapprove a proposed assignment or Triggering Sublease described in
any Transfer Notice within 10 business days after Landlord's receipt of such
Transfer Notice and the information required pursuant to the provisions of the
preceding sentence. If Landlord fails to approve or disapprove such proposed
assignment or Triggering Sublease within such 10 business day period, then such
proposed assignment or Triggering Sublease shall be deemed approved.
Notwithstanding anything in this Paragraph 17 to the contrary, if there is an
assignment or sublease involving any portion of the Premises, Tenant covenants
to promptly notify Landlord of such assignment or sublease within thirty (30)
days after such assignment or sublease becomes effective and to set forth in
reasonable detail the identity of the proposed assignee or subtenant, the nature
of its business and its use of the Premises. Landlord may withhold its consent
to any proposed assignment or any Triggering Sublease for only one of the
following reasons:
(i) if the proposed assignee or subtenant will use Hazardous
Materials in materially larger quantities or of materially greater environmental
risk than the Hazardous Materials used
24
by Tenant at the Premises and Tenant will not execute Landlord's standard
environmental addendums attached hereto as Exhibit G to this Lease; 8.
(ii) the proposed assignee or subtenant has a poor record or
reputation pertaining to environmental matters; and
(iii) if the proposed assignee or subtenant's use of the Premises
is in violation of the Declaration or Legal Requirements.
Any approved assignment or sublease shall be expressly subject to
the terms and conditions of this Lease. Tenant shall provide to Landlord all
information concerning the assignee or sublessee as Landlord may reasonably
request.
Notwithstanding any assignment or subletting under this Lease,
including, without limitation, any assignment or sublease (including a
Triggering Sublease and any other type of sublease) to a Tenant Affiliate or to
an independent third party, Tenant shall at all times remain fully responsible
and liable for the payment of the rent (including, without limitation, Base Rent
and Additional Rent) and for compliance with all of Tenant's other obligations
under this Lease (regardless of whether Landlord's approval has been obtained
for any such assignments or sublettings). Except in connection with an
assignment to a Tenant Affiliate, in the event that Tenant shall receive rent
and any bonus or other consideration due and payable by an assignee (or a
combination of the rental payable under such assignment plus any bonus or other
consideration therefor or incident thereto) and such amount exceeds the rental
payable under this Lease (after deducting required tenant improvements,
reasonable brokerage fees, and reasonable attorney's fees and the net,
unamortized or undepreciated cost of Tenant's Initial Work, Tenant's Trade
Fixtures, Tenant's Property and any Tenant-Made Alterations, determined on the
basis of Tenant's Federal income tax returns), then Tenant shall be bound and
obligated to pay Landlord as additional rent hereunder 50% of all such excess
rental and other excess consideration within 10 days following receipt thereof
by Tenant. Tenant shall be entitled to receive 100% of all profits from a
sublease of the Premises.
If this Lease is assigned or if the Premises is subleased (whether
in whole or in part) or in the event of the mortgage, pledge, or hypothecation
of Tenant's leasehold interest or grant of any concession or license within the
Premises or if the Premises is occupied in whole or in part by anyone other than
Tenant, then upon an Event of Default by Tenant hereunder Landlord may collect
rent from the assignee, sublessee, mortgagee, pledgee, party to whom the
leasehold interest was hypothecated, concessionee or licensee or other occupant
and apply the amount collected to the next rent payable hereunder; and all such
rentals collected by Tenant shall be held in trust for Landlord and immediately
forwarded to Landlord. No such transaction or collection of rent or application
thereof by Landlord, however, shall be deemed a waiver of these provisions or a
release of Tenant from the further performance by Tenant of its covenants,
duties, or obligations hereunder.
25
Indemnification. (a) Except for the negligence or willful
misconduct of Landlord, its agents, employees or contractors, and to the extent
permitted by law, Tenant covenants and agrees to indemnify, defend and hold
harmless Landlord, and Landlord's agents and employees, from and against any and
all losses, liabilities, damages, costs and expenses (including attorneys' fees)
resulting from claims by third parties for injuries or death to any person
occurring in or about the Project and arising from the use and occupancy of the
Premises or from the negligence or willful misconduct of Tenant, its subtenants,
assignees, employees, contractors, invitees and agents. The furnishing of
insurance required hereunder shall not be deemed to limit Tenant's obligations
under this Paragraph 18.
(b) Except for the negligence or willful misconduct of Tenant, any
assignee or subtenant of Tenant, or their agents, employees or contractors, and
to the extent permitted by law, Landlord covenants and agrees to indemnify and
save Tenant, its employees and agents harmless of and from any and all claims,
costs, expenses and liabilities, including, without limitation, attorneys' fees,
arising on account of or by reason of claims by third parties for injuries or
death to persons resulting from the negligence or willful misconduct of Landlord
or its agents, employees, or contractors; subject, however, to the provisions of
the last paragraph of Paragraph 25 of this Lease. This indemnity does not cover
claims arising from the presence or release of Hazardous Materials.
(c) If any claim that is within the scope of any indemnity set
forth in this Lease is asserted against any indemnified party, or any legal
action with respect to any such claim is commenced against an indemnified party,
such indemnified party shall promptly notify the indemnifying party. The
indemnifying party shall have the right to assume the defense with counsel
chosen by the indemnifying party subject to the approval of the indemnified
party (such approval not to be unreasonably withheld) or by the indemnifying
party's insurance company. If the indemnifying party so assumes the defense, the
indemnifying party shall not be responsible for the fees of any separate counsel
employed by the indemnified party.
Inspection and Access. Landlord and its agents, representatives,
and contractors may, upon reasonable prior notice to Tenant (except in the case
of an emergency), enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any purpose that relates to the performance of Landlord's
obligations under this Lease. Landlord and Landlord's representatives may, upon
reasonable prior notice to Tenant, enter the Premises during business hours for
the purpose of showing the Premises to prospective purchasers and, during the
last 9 months of the Lease Term, to prospective tenants. Tenant may request that
any entry pursuant to this paragraph be at a reasonably convenient time other
than the time specified in Landlord's notice or that such entry be during hours
other than during business hours on business days (except in an emergency). Such
rights of entry shall be subject to Tenant's reasonable security regulations or
procedures, provided that Tenant shall have given Landlord prior written notice
thereof. Tenant shall have the right to designate one or more portions of the
Premises as "security areas" and if Tenant does so designate one or more
portions of the Premises as "security areas", then Landlord shall not have
access to such designated security areas, unless Landlord is accompanied by a
26
representative of Tenant. During the prosecution and immediately after the
completion of any repairs that Landlord is so required or permitted to make,
Landlord shall clean the Premises and shall remove any tools, equipment,
supplies and debris therefrom. Landlord shall not store materials or tools in
the Premises in connection with any such repairs and construction and shall not
bring onto the Premises any materials in excess of those materials reasonably
necessary to effect the repairs to be performed that day. Landlord shall use
commercially reasonable efforts to minimize interference with Tenant's business
operations on the Premises upon a Landlord entry onto the Premises.
Quiet Enjoyment. Tenant shall, subject to the terms of this Lease,
at all times during the Lease Term, have peaceful and quiet enjoyment of the
Premises against any person claiming by, through or under Landlord.
Surrender. Upon termination of the Lease Term or earlier
termination of Tenant's right of possession, Tenant shall surrender the Premises
to Landlord in compliance with the applicable provisions of Sections 12(b),
12(c) and 12(e) above and broom clean and in good order, condition and repair,
ordinary wear and tear, damages for which Landlord is responsible under this
Lease, and casualty loss and condemnation excepted. Any Tenant's Property,
Extraordinary Fixture, Tenant-Made Alterations and Tenant's Trade Fixtures not
removed by Tenant as permitted or required herein on the expiration or within 15
days after the termination of this Lease shall be deemed abandoned and may be
stored, removed, and disposed of by Landlord at Tenant's expense (except that
any Tenant-Made Alterations, any Extraordinary Fixtures, any Tenant's Trade
Fixtures and any items of Tenant's Property that Tenant was not required to
remove and that Landlord so stores, removes or disposes of shall be stored,
removed and disposed of at Landlord's expense, rather than at Tenant's expense),
and Tenant waives all claims against Landlord for any damages resulting from
Landlord's retention and disposition of such property. All obligations of Tenant
and Landlord hereunder not fully performed as of the termination of the Lease
Term shall survive the termination of the Lease Term, including without
limitation, indemnity obligations, payment obligations with respect to
Additional Rent for the Common Area Land and obligations concerning the
condition and repair of the Premises.
Holding Over. If Tenant retains possession of the Premises after
the termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Base Rent for the holdover period, an amount equal to the
following (i) 150% of the Base Rent in effect on the termination date, computed
on a monthly basis for each month or part thereof during such holding over for
the first 60 days following the expiration of the Lease Term, (ii) 200% of the
Base Rent in effect on the termination date, computed on a monthly basis for
each month or part thereof during such holding over for the period commencing 61
days following the expiration of the Lease Term and ending 60 days later, (iii)
250% of the Base Rent in effect on the termination date, computed on a monthly
basis for each month or part thereof during such holding over for the period
commencing 122 days following the expiration of the
27
Lease Term and ending 60 days later, (iv) 300% of the Base Rent in effect on the
termination date, computed on a monthly basis for each month or part thereof
during such holding over for the period commencing 183 days following the
expiration of the Lease Term and ending when Tenant's holdover ends. All other
payments shall continue under the terms of this Lease. The amounts payable
pursuant to the two preceding sentences shall constitute the sole amounts for
which Tenant shall be responsible in the case of such a holdover, and in no
event shall Tenant be liable for any damages suffered by Landlord as a result
thereof. No holding over by Tenant, whether with or without consent of Landlord,
shall operate to extend this Lease except as otherwise expressly provided, and
this Paragraph 22 shall not be construed as consent for Tenant to retain
possession of the Premises.
Events of Default. Each of the following events shall be an event
of default ("Event of Default") by Tenant under this Lease:
Tenant shall fail to pay any installment of Base Rent or any
other payment required herein when due, and such failure shall
continue for a period of 5 business days after notice from Landlord
to Tenant that such payment was due.
Tenant or any guarantor or surety of Tenant's obligations
hereunder shall (A) make a general assignment for the benefit of
creditors; (B) commence any case, proceeding or other action
seeking to have an order for relief entered on its behalf as a
debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts or seeking appointment of a
receiver, trustee, custodian or other similar official for it or
for all or of any substantial part of its property (collectively a
"proceeding for relief").
Any insurance required to be maintained by Tenant pursuant
to this Lease shall be canceled or terminated or shall expire or
shall be reduced or materially changed, except, in each case, as
permitted in this Lease and after 3 days' prior notice by Landlord.
Intentionally deleted.
Tenant shall attempt or there shall occur any assignment or
other transfer of Tenant's interest in or with respect to this
Lease except as otherwise permitted in this Lease and such failure
shall go uncured for a period of five (5) business days after
notice from Landlord to Tenant.
Tenant shall fail to discharge or bond any lien placed upon
the Premises in violation of this Lease within 45 days after notice
of any such lien or encumbrance is filed against the Premises.
Tenant shall fail to comply with any provision of this Lease
other than those specifically referred to in this Paragraph 23, and
except as otherwise expressly provided herein, such default shall
continue for more than 30 days after Landlord shall have given
28
Tenant written notice of such default, provided that if any such
failure cannot be remedied within such 30 day period, Tenant shall
have failed to commence such remedy within such 30 day period and
to diligently continue to pursue such remedy.
Landlord's Remedies. Upon each occurrence of an Event of Default
and so long as such Event of Default shall be continuing, Landlord may at any
time thereafter at its election: terminate this Lease or Tenant's right of
possession, (but Tenant shall remain liable as hereinafter provided) and/or
pursue any other remedies at law or in equity except to the extent expressly
limited hereby. Upon the termination of this Lease or termination of Tenant's
right of possession, it shall be lawful for Landlord, without formal demand or
notice of any kind, to re-enter the Premises by summary dispossession
proceedings or any other legal proceeding and to remove Tenant and all persons
and property therefrom. If Landlord re-enters the Premises, Landlord shall have
the right to keep in place and use, or remove and store, all of the furniture,
fixtures and equipment at the Premises.
If Landlord terminates this Lease, Landlord may recover from Tenant
the sum of: all Base Rent and all other amounts accrued hereunder to the date of
such termination; the cost of reletting the whole or any part of the Premises,
including without limitation brokerage fees and/or leasing commissions incurred
by Landlord, and costs of removing and storing Tenant's or any other occupant's
property, repairing, altering, remodeling, or otherwise putting the Premises
into condition acceptable to a new tenant or tenants, and all reasonable
expenses incurred by Landlord in pursuing its remedies, including reasonable
attorneys' fees and court costs; and the excess of the then present value of the
Base Rent and other amounts payable by Tenant under this Lease as would
otherwise have been required to be paid by Tenant to Landlord during the period
following the termination of this Lease measured from the date of such
termination to the expiration date stated in this Lease, over the then present
value of the aggregate fair market rental value for the same period which Tenant
establishes Landlord can reasonably expect to recover by reletting the Premises
for such period, taking into consideration the availability of acceptable
tenants and other market conditions affecting leasing. Such present values shall
be calculated at a discount rate equal to the 90-day U.S. Treasury xxxx rate at
the date of such termination.
If Landlord terminates Tenant's right of possession (but not this
Lease), Landlord may relet the Premises for the account of Tenant for such rent
and upon such terms as shall be satisfactory to Landlord without thereby
releasing Tenant from any liability hereunder and without demand or notice of
any kind to Tenant. For the purpose of such reletting Landlord is authorized to
make any repairs, changes, alterations, or additions in or to the Premises as
Landlord deems reasonably necessary or desirable. If the Premises are not relet
for any period or periods, then Tenant shall pay to Landlord as liquidated
damages a sum equal to the amount of the rental reserved in this Lease for such
period or periods as and when such rents are due under this Lease in respect of
such period or periods, plus the cost of recovering possession of the Premises
(including attorneys' fees and costs of suit), the unpaid Base Rent and other
amounts accrued hereunder at the time of repossession, and the costs incurred in
any attempt by Landlord to relet the Premises. If the Premises are relet and a
sufficient sum shall not be realized from
29
such reletting [after first deducting therefrom, for retention by Landlord, the
unpaid Base Rent accrued as of the date of such re-letting and other amounts
accrued hereunder at the time of reletting, the cost of recovering possession
(including attorneys' fees and costs of suit), all of the costs and expense of
repairs, changes, alterations, and additions, the expense of such reletting
(including without limitation brokerage fees and leasing commissions) and the
cost of collection of the rent accruing therefrom] to satisfy the rent provided
for in this Lease to be paid, then Tenant shall pay, as liquidated damages, the
amount of any such deficiency between the Base Rent and all other amounts due
under this Lease for the applicable period prior to the scheduled expiration
date of this Lease and the net amount, if any, of the rents collected on account
of the lease or leases of the Premises for each month of the same period. Any
liquidated damages payable pursuant to this paragraph shall be paid in monthly
installments by Tenant on the first day of each month of the unexpired Lease
Term. Any such payments due Landlord shall be made upon demand therefor from
time to time and Tenant agrees that Landlord may file suit to recover any sums
falling due from time to time. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect in writing to terminate
this Lease for such previous breach. Notwithstanding anything contained herein
to the contrary, if Landlord terminates Tenant's right to possession without
terminating the Lease after an Event of Default, Landlord shall use commercially
reasonable efforts to relet the Premises; provided, however, (a) Landlord shall
not be obligated to accept any tenant proposed by Tenant, (b) Landlord shall
have the right to lease any other space controlled by Landlord first, and (c)
any proposed tenant shall meet all of Landlord's leasing criteria.
Exercise by Landlord of any one or more remedies hereunder granted
or otherwise available shall not be deemed to be an acceptance of surrender of
the Premises and/or a termination of this Lease by Landlord, whether by
agreement or by operation of law, it being understood that such surrender and/or
termination can be effected only by the written agreement of Landlord and
Tenant. Any law, usage, or custom to the contrary notwithstanding, either party
shall have the right at all times to enforce the provisions of this Lease in
strict accordance with the terms hereof; and the failure of either party at any
time to enforce its rights under this Lease strictly in accordance with same
shall not be construed as having created a custom in any way or manner contrary
to the specific terms, provisions, and covenants of this Lease or as having
modified the same. Tenant and Landlord further agree that forbearance or waiver
by either party to enforce its rights pursuant to this Lease or at law or in
equity, shall not be a waiver of either party's right to enforce one or more of
its rights in connection with any subsequent default. A receipt by Landlord of
rent or other payment with knowledge of the breach of any covenant hereof shall
not be deemed a waiver of such breach, and no waiver by either party of any
provision of this Lease shall be deemed to have been made unless expressed in
writing and signed by either party. The terms "enter," "re-enter," "entry" or
"re-entry," as used in this Lease, are not restricted to their technical legal
meanings. Any reletting of the Premises shall be on such terms and conditions as
Landlord in its sole discretion may determine (including without limitation a
term different than the remaining Lease Term, rental concessions, alterations
and repair of the Premises, lease of less than the entire Premises to any tenant
and leasing any or all other portions of the Project before reletting the
Premises). Notwithstanding anything to the contrary contained in this Lease,
except as and to the extent otherwise set forth in this Paragraph
30
24, Landlord hereby waives any right it may have under Nevada law (whether
statutory, common law or otherwise) to accelerate Base Rent, the Additional
Rental Amount or Additional Rent for the Common Area Land.
Notwithstanding any provisions of this Lease to the contrary, to
the extent permitted by applicable law, in no event shall either party be liable
to the other for consequential damages, even in cases of negligence, willful
misconduct or breach of this Lease, and each party hereby waives and releases
the other party from any and all liability for consequential damages suffered by
either party under this Lease.
Tenant's Remedies/Limitation of Liability. Except as otherwise
expressly set forth in this Lease, Landlord shall not be in default hereunder
unless Landlord fails to perform any of its obligations under this Lease
(including, without limitation, its obligations under Paragraphs 10 and 43 of
this Lease and its obligations with respect to any Punch List items) within 7
days after receipt of written notice from Tenant specifying such failure (unless
such performance will, due to the nature of the obligation, require a period of
time in excess of 7 days, then provided that Landlord commences such performance
within such seven (7) day period, Landlord shall have as much time as is
reasonably necessary as long as Landlord diligently pursues such performance, up
to a maximum amount of 150 days). All obligations of Landlord hereunder shall be
construed as covenants, not conditions. If Landlord is in default hereunder,
Tenant's remedies shall include, without limitation, the right (a) to take
commercially reasonable actions to cure such default on behalf of and at the
sole cost and expense of Landlord, in which event Landlord shall reimburse
Tenant for its reasonable, out-of-pocket costs and expenses incurred and paid in
connection therewith within 30 days after Tenant's delivery to Landlord of an
invoice therefor, together with reasonable supporting documentation for such
reasonable costs and expenses, and/or (b) to exercise any other actions
available at law or to bring an action for injunctive relief, and/or (c) to
bring an action for damages. If Landlord fails to reimburse Tenant for the
reasonable costs, fees and expenses incurred by Tenant in taking curative
actions under clause (a) above within 30 days after demand therefor, Tenant may
bring an action for damages against Landlord to recover such costs, fees and
expenses, together with interest thereon at the Interest Rate from the due date
therefor (i.e. the date 30 business days after demand), and reasonable
attorney's fees incurred by Tenant in bringing such action for damages. Upon
Tenant obtaining a court ordered judgment against Landlord for damages as
described herein, Tenant may offset such amounts together with interest at the
Interest Rate from the due date therefor (being the date that is 30 days
following Landlord's receipt of a demand therefor) against the Base Rent,
Additional Rental Amount and all other amounts payable hereunder. Additionally,
if Landlord is in default under this Lease during the last six (6) months of the
Lease Term (including any renewals or extensions of the Lease Term), Tenant
exercises its right of self help under this Paragraph 25, and Landlord does not
timely reimburse Tenant for such costs and expenses incurred by Tenant in taking
such curative actions, then Tenant may pay its Base Rent and Additional Rental
Amount for the remainder of the Lease Term (up to six months only) into an
escrow account managed by an independent third party until the matter is decided
by a court of law.
31
Tenant's exercise of its right to self help or to offset Base Rent
and the Additional Rental Amount or to escrow Base Rent and the Additional
Rental Amount under this Paragraph 25 shall in no way be an acknowledgment of or
be construed as an agreement by Landlord that such payment (or work) required is
the obligation of Landlord and shall in no way hinder the Landlord from
disputing such claims and Base Rent and Additional Rental Amount offsets and
escrows by Tenant. In the event of a dispute, and if Landlord prevails, Tenant
shall promptly reimburse Landlord for all amounts paid by Landlord to Tenant, or
any amounts offset or escrowed by Tenant or any amounts on which Landlord has
prevailed, whichever is appropriate, plus interest at the Interest Rate from the
date the amount was offset, escrowed or paid. Further the prevailing party shall
be entitled to reasonable attorneys' fees and costs incurred in the offset or
escrow dispute.
All obligations of Landlord under this Lease will be binding upon
Landlord only during the period of its ownership of the Premises and not
thereafter. The term "Landlord" in this Lease shall mean only the owner, for the
time being of the Premises, and in the event of the transfer by such owner of
its interest in the Premises, such owner shall thereupon be released and
discharged from all obligations of Landlord thereafter accruing, and the new
owner shall automatically be deemed to have assumed all obligations of
"Landlord" under the Lease commencing from the Commencement Date.
Any liability of Landlord for a default by Landlord under the
Lease, or a breach by Landlord of any of its obligations under the Lease, shall
be limited solely to its interest in the Project, and in no event shall any
personal liability be asserted against Landlord in connection with the Lease nor
shall any recourse be had to any other property or assets of Landlord. If Tenant
obtains a final court ordered judgment against Landlord, then Landlord's
interest in the Project shall be deemed to include: (i) the rents or other
income from the Project received by Landlord, (ii) the net proceeds received by
Landlord from the sale, financing or other disposition of all or any part of
Landlord's right, title and interest in the Project, (iii) the net proceeds
received by Landlord from any condemnation or conveyance in lieu of condemnation
of all or any portion of the Project, and (iv) the net proceeds of insurance
received by Landlord from any casualty loss of all or any portion of the
Project.
Waiver of Jury Trial. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL
BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
Subordination. Landlord represents and warrants that, as of the
date hereof, (i) there are no mortgages that constitute a lien or charge on the
whole or any portion of the Land, other than that certain mortgage (the
"Existing Mortgage"), dated June 11, 1998, made by Landlord's
predessor-in-interest in favor of ProLogis Trust, in the original principal
amount of $25,269,697.00, (ii) there are no ground or underlying leases covering
the whole or any portion
32
of the Land or the Building, and (iii) ProLogis Trust, a Maryland real estate
investment trust, is the holder of the Existing Mortgage. Simultaneously with
the execution of this Lease, Landlord shall obtain for and deliver to Tenant an
agreement in the form annexed hereto as Exhibit H from the present holder of the
Existing Mortgage. With respect to any mortgage (each a "Future Mortgage") that
hereafter become a lien or charge upon the Premises, Tenant agrees to
subordinate this Lease to the lien of such Future Mortgage, by written
agreement, but only if, simultaneously therewith, the holder of such Future
Mortgage executes and delivers to Tenant (whether as part of the agreement of
subordination or otherwise) a Non-Disturbance Agreement (as defined below). As
used in this Lease, the term "Non-Disturbance Agreement" shall mean an agreement
between the holder of a Future Mortgage and Tenant either in the form annexed
hereto as Exhibit H, or in such other form as shall be proposed by such holder
of a Future Mortgage, as long as such other form, as compared to the form
annexed hereto as Exhibit H does not, in any material respect, increase the
obligations or liabilities of Tenant or decrease the rights or remedies of
Tenant, and, in all cases, in recordable form. Notwithstanding the foregoing
provisions of this Paragraph 27, in no event shall Tenant be required to
subordinate this Lease to the lien of any Future Mortgage if the holder of such
Future Mortgage is an affiliate of Landlord. If Tenant and any mortgagee enter
into a Non-Disturbance Agreement and such Non-Disturbance Agreement contains a
provision that requires that the Tenant, upon request of such mortgagee, pay
directly to such mortgagee any or all Base Rent and additional rent thereafter
coming due under this Lease, then, whether or not Landlord is a party to such
Non-Disturbance Agreement, (i) Landlord hereby authorizes Tenant to pay directly
to such mortgagee all Base Rent and additional rent thereafter coming due under
this Lease, without any further authorization by Landlord and notwithstanding
any protest by Landlord, and (ii) Landlord hereby agrees that any sums paid by
Tenant to such mortgagee pursuant to such mortgagee's request shall be deemed to
have been paid by Tenant to Landlord under this Lease, and Tenant shall have no
liability to Landlord whatsoever for any sums so paid by Tenant directly to such
mortgagee, whether or not Landlord protest the same.
Mechanic's Liens. Tenant has no express or implied authority to
create or place any lien or encumbrance of any kind upon, or in any manner to
bind the interest of Landlord or Tenant in, the Premises or to charge the
rentals payable hereunder for any claim in favor of any person dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs. Tenant covenants and agrees that it will pay or cause
to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises and that it will save and hold Landlord harmless from all loss, cost or
expense based on or arising out of asserted claims or liens against the
leasehold estate or against the interest of Landlord in the Premises or under
this Lease as a result of any such amount payable by Tenant. Tenant shall give
Landlord immediate written notice of the placing of any lien or encumbrance
against the Premises and cause such lien or encumbrance to be discharged or
bonded within 45 days of the notice of the filing or recording thereof;
provided, however, Tenant may contest such liens or encumbrances as long as such
contest prevents foreclosure of the lien or encumbrance and Tenant causes such
lien or encumbrance to be bonded or insured over in a manner satisfactory to
Landlord within such 45 day period.
33
Estoppel Certificates. Both parties agree, from time to time,
within 20 days after request of the other, to execute and deliver to the other,
or the other's designee, an estoppel certificate reasonably requested by the
other, stating that this Lease is in full force and effect, the date to which
rent has been paid, that to the best knowledge of the certifying party, the
other party is not in default hereunder (or specifying in detail the nature of
the other's default), the termination date of this Lease and such other matters
pertaining to this Lease as may be requested by the other (provided that the
matters requested are reasonable and customary). If (i) either party (the
"certifying party") fails or refuses to execute and deliver an estoppel
certificate in a form annexed hereto as Exhibit I to the other party within
twenty (20) days after the certifying party receives such estoppel certificate,
and (ii) such failure continues for five (5) days after the certifying party
receives notice of such failure, then the certifying party shall automatically
and without further act be deemed to have certified that the information set
forth in such estoppel certificate is true and correct.
Environmental Requirements. Except for Hazardous Material contained
in products used by Tenant (i) in de minimis quantities for ordinary cleaning,
(ii) in de minimis quantities for office purposes and (iii) in de minimis
quantities for warehouse purposes, Tenant shall not cause or permit its agents,
employees, subtenants, contractors or invitees to bring any Hazardous Material
upon the Premises or transport, store, use, generate, manufacture or release any
Hazardous Material in or about the Premises without Landlord's prior written
consent. Tenant, at its sole cost and expense, shall operate its business in the
Premises in strict compliance with all Environmental Requirements (defined
below) and shall remediate in a manner in compliance with Environmental
Requirements any Hazardous Materials released on or from the Project by Tenant,
its agents, employees, contractors, subtenants or invitees. Tenant shall
complete and certify to Landlord disclosure statements as reasonably requested
by Landlord from time to time (but not more often than twice in any calendar
year) relating to Tenant's transportation, storage, use, generation, manufacture
or release of Hazardous Materials on the Premises. The term "Environmental
Requirements" means all applicable present and future statutes, regulations,
ordinances, rules, codes, judgments, orders or other similar enactments of any
governmental authority or agency regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the environment,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act; the Resource Conservation and Recovery
Act; and all state and local counterparts thereto, and any regulations or
policies promulgated or issued thereunder. The term "Hazardous Materials" means
and includes any substance, material, waste, pollutant, or contaminant listed or
defined as hazardous or toxic, under any Environmental Requirements, asbestos
and petroleum, including crude oil or any fraction thereof, natural gas liquids,
liquified natural gas, or synthetic gas usable for fuel (or mixtures of natural
gas and such synthetic gas). As defined in Environmental Requirements, Tenant is
and shall be deemed to be the owner of all Hazardous Materials brought on the
Premises by Tenant, its agents, employees, contractors or invitees, and the
wastes, by-products, or residues generated, resulting, or produced therefrom.
34
Subject to the provisions of Article 24 hereof, Tenant shall
indemnify, defend, and hold Landlord harmless from and against any and all
losses (including, without limitation, diminution in value of the Premises or
the Project and loss of rental income from the Project), claims, demands,
actions, suits, damages (including, without limitation, punitive damages),
expenses (including, without limitation, remediation, removal, repair,
corrective action, or cleanup expenses), and costs (including, without
limitation, reasonable attorneys' fees, consultant fees or expert fees and
including, without limitation, removal or management of any asbestos brought
into the property or disturbed in breach of the requirements of this Paragraph
30), which are brought or recoverable against, or suffered or incurred by
Landlord as a result of any release of Hazardous Materials for which Tenant is
obligated to remediate as provided above or any other breach of the requirements
under this Paragraph 30 by Tenant, its agents, employees, contractors,
subtenants, assignees or invitees, regardless of whether Tenant had knowledge of
such noncompliance. The obligations of Tenant under this Paragraph 30 shall
survive any termination of this Lease.
Landlord shall have access to, and a right to perform reasonable
inspections and tests of the Premises to determine Tenant's compliance with
Environmental Requirements (but not more often than once in any calendar year),
its obligations under this Paragraph 30, or the environmental condition of the
Premises. Access shall be granted to Landlord upon Landlord's prior notice to
Tenant and at such times and in such a manner so as to minimize, so far as may
be reasonable under the circumstances, any disturbance to Tenant's operations.
Such inspections and tests shall be conducted at Landlord's expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement in a manner which materially and adversely affects the value of the
Premises or the Project, in which case Tenant shall reimburse Landlord for the
reasonable cost of such inspection and tests. Landlord's receipt of or
satisfaction with any environmental assessment in no way waives any rights that
Landlord holds against Tenant.
Notwithstanding anything to the contrary in this Paragraph 30,
Tenant shall have no liability of any kind to Landlord as to Hazardous Materials
on the Premises caused or permitted by: (i) Landlord, its agents, employees,
contractors or invitees; or (ii) any other tenants in the Project or their
agents, employees, contractors, subtenants, assignees or invitees; or (iii) any
other person or entity located outside of the Premises or the Project.
If: (i) Hazardous Materials are hereafter discovered on the Project
during Landlord's (or any affiliate of Landlord's) ownership of the Project (or
the relevant portion thereof, including the Premises), and such Hazardous
Materials were not introduced onto the Project by Tenant or its agents,
employees, contractors, subtenants or invitees, and the presence of such
Hazardous Materials results in any contamination, damages, or injury to the
Premises that materially and adversely affects Tenant's occupancy or use of the
Premises or human health, or (ii) Landlord, its agents, contractors or employees
release any Hazardous Materials onto the Premises; then, in either such event,
Landlord shall promptly take all actions at its sole expense as are necessary to
remediate such Hazardous Materials as required by Environmental Requirements in
order to permit Tenant to use and occupy the Premises for the Intended Use and
without restrictions or
35
limitations on such use and occupancy that were not imposed on such use and
occupancy prior to the discovery of such Hazardous Materials. Actual or
threatened action or litigation by any governmental authority is not a condition
prerequisite to Landlord's obligations under this paragraph. If Landlord fails
to commence such remediation or if Landlord commences such remediation and fails
to diligently prosecute same to completion, then Tenant, as its sole and
exclusive remedies with respect to the matters referred to in clause (i) of this
paragraph only, (it being understood that Tenant's remedies shall not be so
limited in the event of an occurrence under clause (ii) of this paragraph) may
either: (a) terminate this Lease by written notice (a "Termination Notice") to
Landlord after expiration of 30 days following a notice to Landlord that Tenant
intends to terminate this Lease if Landlord does not promptly commence or
diligently prosecute the remediation to completion within such 30 day period; or
(b) commence an action against Landlord to enforce Landlord's obligations
hereunder. Base Rent and Additional Rent for Common Area Land shall be equitably
adjusted if and to the extent and during the period the Premises are unsuitable
for Tenant's business as the result of the presence of Hazardous Materials as
hereinabove described. Notwithstanding anything herein to the contrary, if
Landlord within ten (10) days after its receipt of a Termination Letter obtains
a letter from the appropriate governmental authority that no further remediation
is required prior to the effective date of any such termination, then such
termination shall be null and void and this Lease shall remain in full force and
effect.
Landlord represents and warrants, to Landlord's knowledge, that as
of the Commencement Date, except for information contained in the Phase I
Environmental Assessment Report dated August 21, 1997, as amended by letter
report dated June 9, 1998 and prepared by XXXXX International Incorporated,
there has not been (i) any violation of Environmental Requirements pertaining to
the Land, or (ii) any release of Hazardous Materials on the Land. For purposes
of this paragraph, Landlord's knowledge shall mean the actual knowledge of Xxxx
Xxxxx and Xxxx Xxxxxx, without any duty of inquiry or investigation. Landlord
represents and warrants to Tenant that no employee of Landlord has any material
knowledge that is not possessed by Xxxxx Xxxxx or Xxxx Xxxxxx about any of the
matters that are the subject of the representations and warranties contained in
this paragraph.
Rules and Regulations. Tenant shall, at all times during the Lease
Term and any extension thereof, comply with the rules and regulations attached
hereto. In the event of any conflict between said rules and regulations and
other provisions of this Lease, the other terms and provisions of this Lease
shall control. Landlord shall not have any liability or obligation for the
breach of any rules or regulations by other tenants in the Project.
Security Service. Tenant acknowledges and agrees that, while
Landlord may patrol the Project, Landlord is not providing any security services
with respect to the Premises and that Landlord shall not be liable to Tenant
for, and Tenant waives any claim against Landlord with respect to, any loss by
theft or any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or any other breach of security with
respect to the Premises.
36
Force Majeure. Neither Landlord nor Tenant shall be held
responsible for delays in the performance of its obligations hereunder when
caused by any of the following events to the extent beyond the applicable
party's reasonable control: strikes, lockouts, labor disputes, acts of God
(which for purposes of the performance by Landlord of the Base Building Work,
shall include weather delays, but only if and to the extent that weather delays
exceed 21 days on a cumulative basis or to such extent as there is a continual
weather delay beyond 7 consecutive days), inability to obtain labor or materials
or reasonable substitutes therefor, new governmental restrictions that are
promulgated after the Rent Commencement Date, governmental regulations that are
promulgated after the Rent Commencement Date, governmental controls that are
enacted after the Rent Commencement Date, delay in issuance of permits (provided
(x) that Landlord complies with industry standard in the submittal process of
such permits to the appropriate governmental authority and (y) with respect to
the Base Building Work, such delay shall be governed by Section 2.02(f) of
Addendum 2, rather than this definition), enemy or hostile governmental action,
civil commotion, fire or other casualty (any of the foregoing events, "Force
Majeure"). Notwithstanding the foregoing in this Paragraph 33, in no event shall
any of the following events constitute an event of Force Majeure (and the
applicable party shall not be relieved of its obligations hereunder as a result
thereof): (i) any financial inability of either party to perform its obligations
under this Lease, (ii) any contractor or subcontractor defaults, (iii) any
inability of Landlord to timely perform its obligations under Addendum 2 as a
result of (x) any delays in obtaining (or failure to obtain) any consents,
approvals or authorizations that are required to be obtained under the
Declaration, (y) any term, condition or provision of the Declaration that
affects the ability of Landlord to timely perform such obligations or (z) any
act, or failure to act, by the Declarant, the ALC or the TCMA (as all such terms
are defined in the Declaration).
Entire Agreement. This Lease (together with all of the exhibits and
addenda attached hereto) and the guaranty delivered to Tenant by Prologis Trust
on the date hereof constitute the complete agreement of Landlord and Tenant with
respect to the subject matter hereof. No representations, inducements, promises
or agreements, oral or written, have been made by Landlord or Tenant, or anyone
acting on behalf of Landlord or Tenant, which are not contained herein or in
such guaranty, and any prior agreements, promises, negotiations, or
representations are superseded by this Lease and such guaranty. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.
Severability. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.
Brokers. Landlord and Tenant represent and warrant to the other
that neither has dealt with any broker,
37
agent or other person in connection with this transaction and that no broker,
agent or other person brought about this transaction, other than the broker, if
any, set forth on the first page of this Lease, and Landlord and Tenant agree to
indemnify and hold the other harmless from and against any claims by any other
broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Landlord or Tenant with regard to
this leasing transaction. Landlord and Tenant hereby acknowledge and agree that
the broker(s) referenced on the first page of this Lease shall be entitled to a
leasing commission from Landlord by virtue of this Lease, which leasing
commission shall be deemed earned and shall be paid by Landlord to said
broker(s) in accordance with, and subject to the terms of, a separate written
agreement.
Miscellaneous. Any payments or charges due from Tenant to Landlord
hereunder shall be considered rent for all purposes of this Lease.
This Lease may be executed in one or more counterparts each of
which shall together constitute a single document.
All notices required or permitted to be given under this Lease
shall be in writing and shall be sent by registered or certified mail, return
receipt requested, or by a reputable national overnight courier service, postage
prepaid, or by hand delivery addressed to the parties at their addresses on the
signature page, and (i) in the case of notices to Landlord, with a copy sent to
Landlord at 00000 Xxxx 00xx Xxxxx, Xxxxxx, Xxxxxxxx 00000, and (ii) in the case
of notices to Tenant, with a copy sent to: (aa) xxxxxxxxxxxxxx.xxx llc, 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxxxx X. Xxxxx, Vice President
of Operations, and (bb) Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx X. Xxxxx, Esq.
Either party may by notice given aforesaid change its address for all subsequent
notices. Except where otherwise expressly provided to the contrary, notice shall
be deemed given upon receipt or refusal of receipt.
Except as otherwise expressly provided in this Lease or as
otherwise required by law, in any instance in this Lease for which Landlord's
consent or approval is required, such consent or approval shall not be
unreasonably withheld, conditioned or delayed.
Intentionally deleted.
Landlord, at anytime after the date hereof and within ten (10) days
after its receipt of a request therefor, shall execute, acknowledge and deliver
to Tenant (i) a memorandum of lease in respect of this Lease, sufficient for
recording and in form of Exhibit J annexed hereto and made a part hereof, which
memorandum may be recorded by Tenant, and (ii) any other instrument(s) necessary
to the effective recordation of such memorandum of lease. Simultaneously with
the execution of such a memorandum of lease, Tenant shall execute and deliver to
Landlord an instrument (the "Release") releasing such memorandum of lease from
the applicable real property records; provided, however, that the Release shall
be held in escrow by a third party law firm reasonably acceptable to Landlord
and Tenant, and shall not be released from escrow
38
until the expiration or sooner termination of this Lease (and Landlord, Tenant
and the escrow agent shall execute a mutually agreeable escrow agreement to that
effect).
The normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Lease or any exhibits or amendments hereto. (n) (o) The
submission by Landlord to Tenant of this Lease shall have no binding force or
effect, shall not constitute an option for the leasing of the Premises, nor
confer any right or impose any obligations upon either party until execution of
this Lease by both parties.
Words of any gender used in this Lease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions inserted
in this Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.
If Tenant fails to pay Landlord any Base Rent or other amounts due
under this Lease by the date such amount is due (any such failure, a
"Non-Payment Event") and such failure shall continue for a period of ten (10)
days after written notice (each, a "Late Notice"), then such past due amount
shall bear interest at the Interest Rate (as defined below) from the due date
therefor until the date paid. Notwithstanding the preceding sentence, if (and
only if) (a) a Non-Payment Event occurs and continues for five (5) days and (b)
within the 365-day period preceding the date of such occurrence, at least two
other Non-Payment Events shall have also occurred in respect of which Tenant
shall have received Late Notices, then (x) Landlord shall have no obligation to
give to Tenant a Late Notice in respect of the Non-Payment Event in question,
and (y) the past due amount in connection with such Non-Payment Event shall bear
interest at the Interest Rate from the due date therefor until the date paid,
and (z) Tenant shall pay Landlord a late charge equal to three percent (3%) of
the past due amount. For purposes hereof, the term "Interest Rate" shall mean
the lesser of (i) two percent (2%) above the so-called annual "Base Rate" of
interest publicly announced by Citibank, N.A., New York, New York (or any
successor thereof) from time to time, as its interest rate charged for unsecured
loans to its corporate customers, but in no event greater than the highest
lawful rate from time to time in effect and (ii) the highest rate permitted by
applicable law. It is expressly the intent of Landlord and Tenant at all times
to comply with applicable law governing the maximum rate or amount of any
interest payable on or in connection with this Lease. If applicable law is ever
judicially interpreted so as to render usurious any interest called for under
this Lease, or contracted for, charged, taken, reserved, or received with
respect to this Lease, then it is Landlord's and Tenant's express intent that
all excess amounts theretofore collected by Landlord or Tenant, as the case may
be, be credited on the applicable obligation (or, if the obligation has been or
would thereby be paid in full, refunded to Tenant or Landlord as the case may
be), and the provisions of this Lease immediately shall be deemed reformed and
the amounts thereafter collectible hereunder reduced, without the necessity of
the execution of any new document, so as to comply with the applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
hereunder.
39
Construction and interpretation of this Lease shall be governed by
the laws of the state in which the Project is located, excluding any principles
of conflicts of laws.
Time is of the essence as to the performance of Tenant's and
Landlord's obligations under this Lease.
All exhibits and addenda attached hereto are hereby incorporated
into this Lease and made a part hereof.
Within two (2) years from the Commencement Date, upon Tenant's
request, from time to time within such two (2) year period, Landlord shall
provide up to $60,000.00 of Insight software logistics consulting services to
Tenant at no cost to Tenant.
Landlord's Lien/Security Interest. Intentionally deleted.
Limitation of Liability of Trustees, Shareholders, and Officers of
ProLogis Trust. Any obligation or liability whatsoever of ProLogis Trust, a
Maryland real estate investment trust, which may arise at any time under this
Lease or any obligation or liability which may be incurred by it pursuant to any
other instrument, transaction, or undertaking contemplated hereby shall not be
personally binding upon, nor shall resort for the enforcement thereof be had to
the property of, its trustees, directors, shareholders, officers, employees or
agents, regardless of whether such obligation or liability is in the nature of
contract, tort, or otherwise.
Restriction on Transfer of the Premises. Landlord hereby covenants
and agrees that Landlord shall not, without Tenant's prior written consent,
which consent may be withheld by Tenant in its sole and absolute discretion,
sell, convey or otherwise transfer its interests in the Premises prior to the
Rent Commencement Date In the event of a breach by Landlord of the covenant
contained in this Xxxxxxxxx 00, Xxxxxx, in addition to any and all other rights
and remedies which Tenant may have against Landlord under this Lease, at law or
in equity, shall be entitled to terminate this Lease upon ten (10) days' prior
written notice to Landlord and, upon such termination, this Lease shall
terminate and be of no further force and effect. Landlord and Tenant hereby
represent and warrant to each other that the Landlord's restriction on transfer
of the Premises as set forth herein shall in no event restrict Landlord from
transferring its ownership interests in the Premises and this Lease at any time
following the Rent Commencement Date.
Intentionally omitted.
Corporate Authority. Tenant represents and warrants that (i) it has
full corporate right and authority to lease the Premises from Landlord and to
otherwise enter into this Lease on the terms and conditions set forth herein and
(ii) the officer executing this Lease on behalf of Tenant has the full corporate
right, authority and power to execute and deliver this Lease on behalf of
Tenant. Landlord represents and warrants that (i) it is the sole owner in fee
simple of the Land, (ii) it has full corporate right and authority to lease the
Premises to Tenant and to otherwise enter
40
into this Lease on the terms and conditions set forth herein and (iii) the
officer executing this Lease on behalf of Landlord has the full right, authority
and power to execute and deliver this Lease on behalf of Landlord.
Warranties. Landlord warrants and covenants to Tenant that, upon
the Rent Commencement Date, the Base Building Work will be free from defects in
workmanship and material for the twenty-four (24) month period ("Warranty
Period") following the Rent Commencement Date. In amplification and not in
limitation of the preceding sentence, if at anytime during the Warranty Period,
any of the Base Building Work (including any equipment and/or materials
installed at the Premises in connection with the Base Building Work) (a) is
found to be defective, or (b) requires adjustment due to a defect or such
adjustment is customary in connection with the installation and initial
operation of such portion of the Base Building Work (e.g., a building system
which requires periodic adjustment in connection with the installation and "fine
tuning" of such system to make such system fully operational), or (c) fails to
conform to any Legal Requirements that were enacted prior to the Rent
Commencement Date, then Landlord shall correct such defect, adjustment or
nonconformity promptly after receipt of written notice from Tenant to do so.
Landlord shall bear the costs of correcting such defective or nonconforming Base
Building Work. On or prior to the Rent Commencement Date, (x) Landlord shall
cause Landlord's general contractor to issue all of the general contractor
warranties and guarantees relating to the Base Building Work to both Landlord
and Tenant and (y) Landlord shall deliver to Tenant an original of, and assign
to Tenant, all Landlord's right, title and interest in and to, each of the other
warranties and guarantees shown on Exhibit L annexed hereto, in the forms
annexed hereto, from each of the contractors, subcontractors and suppliers shown
on such warranties and guarantees. Landlord shall cooperate with Tenant, at
Tenant's expense, (unless any such warranty or guaranty relates to an item for
which Landlord is responsible under the terms of this Lease, in which case, such
cooperation shall be at Landlord's expense) in all of Tenant's efforts to
enforce any and all such warranties and/or guarantees (whether or not assigned
or assignable to Tenant).
Notwithstanding the preceding paragraph or anything else in the
Lease to the contrary, if at anytime during the Lease Term (as the same may be
renewed or extended), it is determined that any of the Base Building Work
(including any equipment and/or materials installed at the Premises in
connection with the Base Building Work) was not constructed by Landlord and
delivered to Tenant on the Rent Commencement Date strictly in accordance with
the terms and provisions of the Performance Specifications, then Landlord shall
promptly correct any such matters after receipt of written notice from Tenant to
do so and Landlord shall bear all the costs of correcting such matter; provided,
however, that with respect to the items indicated in the Performance
Specifications as being required to comply with the Performance Specifications
only as of the Rent Commencement Date, Landlord shall have no further
obligations under this paragraph with respect thereto following Tenant's
acceptance of each such item on the Rent Commencement Date (it being agreed that
nothing contained herein shall relieve Landlord of its obligations and
liabilities under the immediately preceding paragraph with respect to each such
item).
41
Attorneys' Fees. In the event of any legal action or proceeding
brought by either party against the other arising out of this Lease, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
costs incurred in such action. Such amounts shall be included in any judgment
rendered in any such action or proceeding.
Declaration. (a) Landlord represents to Tenant that as of the
Commencement Date: (i) Landlord has delivered to Tenant a true and complete copy
(together with all exhibits thereto) of: (x) that certain Final Development
Agreement (the "Development Agreement") dated April 14, 1998, and made between
County of Washoe and Nevada Tri Partners, a memorandum of which was recorded on
May 15, 1999 in the Official Records of Washoe County in Book 5274, Page 734 as
Document No. 2221194; and (y) that certain declaration of covenants, conditions
and restrictions and reservation of easements (the "Covenants") for Xxxxxxx
Ranch Trade Center I (the "Development Agreement" and the "Covenants" are
hereinafter collectively referred to as the "Declaration"); (ii) to Landlord's
knowledge the Declaration has not been modified, amended or terminated; (iii) to
Landlord's knowledge, the Declaration is currently in full force and effect; and
(iv) to Landlord's knowledge, no default exists under the Declaration. For
purposes of this paragraph, Landlord's knowledge shall mean the actual knowledge
of Xxxxx Xxxxx and Xxxx Xxxxxx, after appropriate due inquiry and investigation.
Landlord represents and warrants to Tenant that no employee of Landlord has any
material knowledge that is not possessed by Xxxxx Xxxxx and Xxxx Xxxxxx about
any of the matters that are the subject of the representations and warranties
contained in the foregoing representations and warranties.
Landlord shall throughout the Lease Term: (i) perform and observe
all of the material terms, covenants, provisions and conditions of the
Declaration on Landlord's part to be performed and observed; (ii) defend,
indemnify and hold harmless Tenant from and against any and all claims, demands,
causes of action, suits, actual damages, liabilities and actual expenses of any
nature arising out of or in connection with a default by Landlord under the
Declaration; and (iii) use commercially reasonable efforts (without the
obligation to commence litigation) to cause each of the other tenants and
occupants of any buildings owned by Landlord (or an affiliate of Landlord) and
located within the Project to comply with all of the material covenants,
provisions and conditions of the Declaration.
Landlord shall, immediately upon receipt, forward to Tenant a copy
of any and all notices and/or demands received by Landlord under or pursuant to
the Declaration, which relate to, or could adversely affect, Tenant's use or
occupancy of the Premises, the conduct of Tenant's business therein or Tenant's
rights pursuant to this Lease.
Landlord shall not amend or modify (or consent to any amendment or
modification of) the Declaration if such amendment or modification could
diminish the rights or increase the obligations of Tenant thereunder or under
this Lease, or could adversely affect Tenant's use or occupancy of the Premises
or the conduct of Tenant's business therein, without first obtaining Tenant's
prior written consent, such consent not to be unreasonably withheld or delayed.
Landlord agrees that it will place (or cause to be placed) a provision in all
future leases executed by Landlord (or an affiliate of Landlord) at the Project
setting forth that Landlord's
42
tenants must comply with applicable Legal Requirements and the Declaration.
Additionally, Landlord shall use commercially reasonable efforts (without the
obligation to commence litigation) to enforce the terms and provisions of the
Declaration on other property owned by Landlord (or an affiliate of Landlord)
within the Project.
Landlord shall use commercial reasonable efforts to obtain from the
"Declarant" under the Declaration, within thirty (30) days after the date
hereof, a letter agreement made in favor of Tenant providing for Declarant's
agreement: (i) to make any material modifications or amendments to the
Declaration, without Tenant's reasonable prior approval; and (ii) to provide
Tenant with a copy of any notices of default sent by Declarant to Landlord under
the Declaration simultaneously with the delivery of such notice to Landlord,
provided, however, that Landlord's failure to obtain such letter agreement shall
not be deemed to be a default of Landlord under this Lease. 24.
As between Landlord and Tenant, in the event of any conflict
between the terms and provisions of the Declaration and the terms and provisions
of this Lease, the terms and provisions of this Lease shall control in all
respects.
43
1.
2. IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
3.
4.
5.
6. TENANT: LANDLORD:
xxxxxxxxxxxxxx.xxx llc ProLogis Development Services Incorporated
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxx, Xx.
--------------------------- ---------------------------
Title: Vice President, Operations Title: Senior Vice President
--------------------------- ---------------------------
Address: Address:
00 Xxxxx Xxxxxx, 00xx Xxxxx 00000 Xxxxxxx Xxxx.
Xxx Xxxx, XX 00000 Xxxxxxx, XX 00000
44
Rules and Regulations
1. The sidewalk, entries, and driveways of the Project shall not be
obstructed by Tenant, or its agents, or used by them for any purpose
other than ingress and egress to and from the Premises.
1. Landlord reserves the right to exclude or expel from the Project any
person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs or who shall in any manner do any act in
violation of these Rules and Regulations.
1. No auction, public or private, will be permitted on the Premises or
the Project.
1. The Premises shall not be used for any immoral or illegal purposes
or for any purpose other than that specified in the Lease. No gaming
devices shall be operated in the Premises.
1. Tenant assumes full responsibility for protecting the Premises from
theft, robbery and pilferage.
45
ADDENDUM 1
BASE RENT ADJUSTMENTS
---------------------
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED SEPTEMBER 8, 1999, BETWEEN
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
and
xxxxxxxxxxxxxx.xxx, llc
The monthly Base Rent for Month 1 through Month 60 shall be $174,000,
subject to adjustments as provided in Addendum 2 to the Lease. Once the monthly
Base Rent for Month 1 through Month 60 is determined, then the monthly Base Rent
for Month 61 through Month 120 shall be determined by multiplying the monthly
Base Rent for Month 1 through Month 60 by 113%.
46
ADDENDUM 2
----------
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED SEPTEMBER 8, 1999 BETWEEN
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
and
xxxxxxxxxxxxxx.xxx llc
WORKLETTER
----------
I. DEFINITIONS
1.01. Definitions. All capitalized terms used in this Workletter and
not defined herein shall have the meaning ascribed thereto in the lease (the
"Lease") to which this Workletter is annexed. In addition, for the purposes of
this Workletter the following terms shall have the following meanings:
"Performance Specifications" shall mean those certain
performance specifications and criteria annexed to this Workletter as
Schedule 1, together with all exhibits and attachments thereto
(including, without limitation, the Operational Plan and the Site
Plan), as the same may be modified or supplemented by any Change Order
(as defined below).
"Base Building Work" shall mean all of the work, materials and
equipment necessary to construct the Building and other improvements on
the Land in accordance with the Performance Specifications, using at
least the specifications set forth in the Minimum Design Criteria.
"Base Building Plans" shall mean the scaled, dimensioned and
coordinated architectural and engineering working drawings that will
describe the Base Building Work, as such scaled, dimensioned and
coordinated architectural and engineering working drawings (a) have
been approved (or deemed approved) by Tenant in accordance with Section
2.01(c) below and (b) may be changed in accordance with the provisions
of Section 2.01(e) and Section 2.03 below.
"Minimum Design Criteria" shall mean the minimum design
criteria referenced in Schedule 3 annexed hereto.
"Tenant's Initial Work" shall mean all work, equipment and
improvements which, in Tenant's opinion, are necessary or desirable to
prepare the Premises for Tenant's occupancy, other than the Base
Building Work.
"Milestone" shall have the meaning ascribed to it in Section
2.07 below.
47
"Tenant Late Day" shall mean each day of actual delay suffered
by Landlord in completing any Milestone as a result of one or more of
the following events: (i) each day in any period beginning on the day
after the day on which Tenant is required to furnish a response under
this Workletter and ending on the day on which Tenant furnishes such a
response; (ii) Tenant's improper or negligent interference with
Landlord's obtainment of any Permit (as defined below), Tenant's
improper interference with the work necessary to complete such
Milestone or Tenant's unreasonable withholding of approval to the
Proposed Base Building Plans; (iii) Tenant's failure to comply with its
obligations under this Workletter; (iv) Tenant's failure to obtain the
proper permits and governmental approvals for Tenant's Initial Work; or
(v) the occurrence of one or more Tenant Late Payment Events (as
defined below); provided, however, that no Tenant Late Day shall be
deemed to have occurred unless (x) the Construction Minutes (as defined
below) delivered to Tenant in accordance with Section 2.08(b) below
immediately after the occurrence of the event that is the cause of such
Tenant Late Day state that such occurrence could result in a Tenant
Late Day and (y) the Construction Minutes delivered to Tenant in
accordance with Section 2.08(b) below immediately after the occurrence
of such Tenant Late Day indicate that the same has occurred.
"Substantially Completed" shall mean, with respect to any
portion of the Base Building Work, that such portion of the Base
Building Work has been completed, other than minor details or minor
adjustments (collectively, "Punch List Items") that do not affect
Tenant's ability to occupy the applicable portion of the Premises for
the prosecution of Tenant's Initial Work or, as the case may be, for
the ordinary use of the Building for the Intended Use (it being agreed
that, in any event, Landlord shall nevertheless remain obligated to
complete the Punch List Items applicable to each portion of the Base
Building Work in accordance with the terms and provisions of this
Workletter).
"Substantial Completion of the First-Half Dried-In
Construction" shall mean that all of the following have occurred: (I)
the following work has been completed (in accordance with the
Performance Specifications, the Base Building Plans, all applicable
Legal Requirements and the Declaration) with respect to the eastern
one-half of the Building (the eastern one-half of the Building being
referred to herein as the "Applicable Portion of the Building"): the
exterior walls are erected, the roof structure and roofing work are
complete to the point where the Building is dry, overhead electrical
and mechanical work in the Building is complete to allow fixturizing of
the Building, electrical service to the Building has been energized,
overhead mechanical equipment in the Building has been installed, the
high bay lighting fixtures in the Building have been installed and are
functional, the Building floor has been cleaned and sealed and truck
access to the Building from Old Virginia Road shall be available, (II)
the Applicable Portion of the Building is in such a condition that
Tenant is able to install its racking, conveyor and other equipment,
subject to Tenant obtaining the permits described in the parenthetical
in the immediately succeeding clause (III); and (III) Landlord has
obtained all governmental licenses, permits and approvals with respect
to the Applicable Portion of
48
the Building that may be necessary for Tenant to commence and proceed
with the prosecution of Tenant's Initial Work in the Applicable Portion
of the Building (other than any licenses, permits and approvals
required in connection with Tenant's Initial Work).
"Substantial Completion of the Dried-In Construction" shall
mean that all of the following have occurred: (I) the following work
has been completed (in accordance with the Performance Specifications,
the Base Building Plans, the Declaration and all applicable Legal
Requirements) with respect to the entire Building: the exterior walls
are erected, the roof structure and roofing work are complete to the
point where the Building is dry, overhead electrical and mechanical
work in the Building is complete to allow fixturizing of the Building,
electrical service to the Building has been energized, overhead
mechanical equipment in the Building has been installed, the high bay
lighting fixtures in the Building have been installed and are
functional, the Building floor has been cleaned and sealed and truck
access to the Building from Old Virginia Road shall be available; (II)
the Building is in such a condition that Tenant is able to install its
racking, conveyor and other equipment, subject to Tenant obtaining the
permits described in the parenthetical in the immediately succeeding
clause (III); and (III) Landlord has obtained all governmental
licenses, permits and approvals with respect to the Building that may
be necessary for Tenant to commence and proceed with the prosecution of
Tenant's Initial Work (other than any licenses, permits and approvals
required in connection with Tenant's Initial Work).
"Substantial Completion of the Building Shell" shall mean that
all of the following have occurred: (I) Substantial Completion of the
Dried-In Construction has occurred, (II) an operable restroom has been
installed in the Building; and (III) Landlord has obtained a temporary
certificate of occupancy for the Building that allows delivery and
receipt of goods and products in connection with the Intended Use.
"Substantial Completion of the Base Building Work" shall mean
that all of the following conditions have been satisfied: (I) the Base
Building Work has been Substantially Completed in accordance with the
Performance Specifications, the Base Building Plans, the Declaration
and all applicable Legal Requirements (except for exterior painting and
landscaping work, which shall be completed by Landlord within 30 days
thereafter); (II) Landlord has delivered to Tenant a certificate,
addressed to Tenant and executed by Landlord's architect, stating that
the Base Building Work has been Substantially Completed in accordance
with Performance Specifications, the Base Building Plans, the
Declaration and all applicable Legal Requirements; (III) Landlord has
obtained (and evidenced such obtainment to Tenant's reasonable
satisfaction) (x) a "final" (not a temporary) certificate of occupancy
or its equivalent for the entire Building that permits Tenant to use,
operate and occupy the Premises for the Intended Use, and (y) all other
certificates, permits and approvals with respect to the Building as may
be necessary for Tenant lawfully to use, operate and occupy the
Premises for the Intended Use; (IV) Tenant has vehicular and pedestrian
access to and from the Land via Old Virginia Road at no less than the
access points shown on the Site Plan annexed to the
49
Performance Specifications; and (V) the entire Premises shall be
available for, and tendered to, Tenant for its exclusive use and
possession, broom clean and free of all construction debris, except for
debris relating the completion of any Punch List items or any debris or
other work being conducted in the Premises by Tenant to complete
Tenant's Initial Work.
"Capped Base Building Work Items" shall mean all of the
portions of the Base Building Work that, pursuant to the Performance
Specifications, are subject to a monetary allowance or a monetary cap
(by way of example only, the portions of the Base Building Work
described in Sections 10.1.1 and 8.1.3 of the Performance
Specifications are Capped Base Building Work Items).
II. BASE BUILDING WORK
2.01. Base Building Plans; Permit Submissions. (a) Landlord, promptly
after the date hereof, shall cause Landlord's architect to prepare proposed
scaled, dimensioned and coordinated architectural and engineering working
drawings that describe the Base Building Work (the "Proposed Base Building
Plans"). The Proposed Base Building Plans shall fully incorporate, and shall be
fully consistent with, the Performance Specifications and shall provide for no
less than the specifications set forth in the Minimum Design Criteria. Tenant,
at no cost or expense to Tenant, shall (as and to the extent reasonably
requested by Landlord) cooperate with Landlord and Landlord's architect in
connection with the preparation of the Proposed Base Building Plans and shall
respond to any inquiries of Landlord during the development of the Proposed Base
Building Plans within five (5) days after Tenant's receipt of a written notice
requesting such response.
(b) In connection with the construction of the Base Building Work on a
"fast track" basis, Landlord shall submit the Proposed Base Building Plans to
Tenant for its approval in the following parts on or before the following dates
(and the provisions of this Article II shall apply separately as to each such
part):
Portion of Proposed Base Building Plans Submission Date by Landlord
--------------------------------------- ---------------------------
Preliminary Office Space Plan September 15, 1999
Preliminary Shell Drawings September 13, 1999
---------
Shell Construction Drawings September 24, 1999
---------
Office Space Plan Construction Drawings November 8, 1999
(c) Within five (5) days after receipt by Tenant of any of the
foregoing parts of the Proposed Base Building Plans (together with a notice from
Landlord stating that the same
50
constitute the Proposed Base Building Plans), Tenant (i) shall give its written
approval thereto or (ii) if Tenant reasonably believes that such parts of the
Proposed Base Building Plans (x) are not consistent with, or do not adequately
incorporate, the Performance Specifications and/or do not provide for
specifications that are at least equal to the specifications contained in the
Minimum Design Criteria or (y) do not comply with applicable Legal Requirements
or the Declaration (the "Base Building Plans Approval Criteria"), shall request
in writing revisions or modifications to the Proposed Base Building Plans (but
only to the extent that the same fail to comply with the Base Building Plans
Approval Criteria). If Tenant shall fail to respond with its approval or request
for revisions/modification within the time period(s) provided above, such
failure shall be deemed Tenant's approval of the Proposed Base Building Plans.
Landlord, within five (5) days after its receipt of Tenant's request for
revisions or modifications to the Proposed Base Building Plans shall submit such
revisions or modifications to Tenant. Within five (5) days following receipt by
Tenant of such revisions or modifications, Tenant shall give its written
approval thereto or shall request other revisions or modifications therein (but
relating only to the extent Landlord has failed to comply with Tenant's earlier
requests).
(d) Landlord expressly acknowledges and agrees that (notwithstanding
anything to the contrary in the Lease or this Workletter): (I) If there is any
conflict or inconsistency between the Minimum Design Criteria and any portion of
the Performance Specifications, then (x) such portion of the Performance
Specifications shall govern and control, and (y) the Base Building Plans shall
be prepared, and the Base Building Work shall be performed, in accordance with
such portion of the Performance Specifications (rather than the conflicting
portion(s) of the Minimum Design Criteria); (II) if there is any conflict or
inconsistency between the Base Building Plans and any portion of the Performance
Specifications, then (x) such portion of the Performance Specifications shall
govern and control, and (y) the Base Building Work shall be performed in
accordance with such portion of the Performance Specifications (rather than the
conflicting portion(s) of the Base Building Plans); and (III) Tenant's approval
of the Base Building Plans (or any component thereof or any changes thereto)
shall not in any way (A) be deemed to be an agreement by Tenant that the Base
Building Plans adequately reflect and incorporate the Performance
Specifications, (B) be deemed to be an agreement by Tenant that, upon completion
of the construction thereof, the Premises will be in conformance with the
Performance Specifications, (C) be deemed to be a waiver of, or to otherwise
relieve Landlord from, any of Landlord's obligations in Section 43 of the Lease,
(D) be deemed to be a waiver of, or to otherwise relive Landlord from, any of
Landlord's other obligations in the Lease and this Workletter, or (E) be deemed
to be an agreement that the work contemplated by the Base Building Plans
complies with applicable Legal Requirements or the Declaration.
(e) Landlord shall not make any changes to the Base Building Plans
without the prior written consent of Tenant in each instance, except that
Landlord may make changes to the Base Building Plans without Tenant's consent if
(i) such changes are consistent with the Performance Specifications and (ii)
such changes will not result in any increased architectural or engineering costs
to Tenant in connection with Tenant's Plans (as defined below).
51
(f) Landlord, in accordance with industry standards, (i) shall submit
accurate and complete applications for each of the permits (each, a "Permit"
and, collectively, the "Permits") described on Schedule 4 annexed hereto on or
before the submission date therefor that is specified on such Schedule 4 , and
(ii) shall thereafter take all commercially reasonable action necessary to
obtain each Permit by the anticipated obtainment date therefor that is specified
on such Schedule 4. If Landlord (i) complies with all of its obligations under
the preceding sentence with respect to any Permit and (ii) fails to obtain such
Permit by the anticipated obtainment date therefor (as specified on such
Schedule 4), then each day of actual delay suffered by Landlord in completing
any Milestone as a result of such failure shall constitute an event of Force
Majeure. Notwithstanding anything to the contrary contained in the Lease or this
Workletter, in no event shall Landlord's failure to obtain any permits,
approvals or licenses other than the Permits constitute an event of Force
Majeure.
2.03 Change Orders (a) Tenant shall, subject to the provisions of this
Section 2.03, be permitted (i) prior to the completion of the Base Building
Plans, to direct changes to the Performance Specifications (in which event
Landlord shall cause Landlord's architect/engineer to incorporate such changes
into the Proposed Base Building Plans), and (ii) following the completion of the
Base Building Plans, to direct changes to the Performance Specifications and/or
the actual Base Building Plans (in which event Landlord shall cause Landlord's
architect/engineer to incorporate such changes into the Base Building Plans)
(any change described in the preceding clauses (i) and (ii), a "Change Order").
Tenant shall pay to Landlord, within 30 days after Tenant's receipt of a demand
therefor (together with such corroborating materials as may be reasonably
requested by Tenant), Landlord's reasonable out-of-pocket costs and expenses of
any third party architect, engineer, contractor or consultant employed by
Landlord for reviewing any proposed Change Order. Any Change Order requested by
Tenant shall be governed by the following provisions of this Section 2.03.
(b) Price Adjustment/Time Adjustment: If Tenant proposes to make a
Change Order, then Tenant shall notify Landlord in writing of such proposed
Change Order. Within five (5) Business Days after its receipt of any proposed
Change Order, Landlord shall furnish Tenant with a statement (each, a
"Landlord's Change Order Statement") setting forth Landlord's good faith
reasonable estimate of (1) all the costs and expenses that will either be saved
or incurred by Landlord in connection with (x) incorporating the proposed Change
Order into the Base Building Plans and (y) the performance of the work necessary
to perform such proposed Change Order (the "Price Adjustment") and (2) the
number of days (either positive or negative) by which the time required to
complete one or more of the Milestones will be increased or decreased by such
Change Order (such number of days as applicable to any Milestone, the "Time
Adjustment"). Within five (5) Business Days after receipt by Tenant of the
applicable Landlord's Change Order Statement, Tenant shall in writing either (a)
accept the Price Adjustment and the Time Adjustment set forth in Landlord's
Change Order Statement, by signing same and returning it to Landlord (subject to
the final determination of the Price Adjustment and the Time Adjustment in
accordance with the provisions of Sections 2.03(c) and 2.03(d) below,
respectively), or (b) withdraw such Change Order (it being agreed that if Tenant
makes any changes to any Landlord's Change Order Statement and returns it to
Landlord, Tenant shall be
52
deemed to have rejected same). Landlord shall be obligated to implement only
those Change Orders that are accepted by Tenant in accordance with the preceding
sentence. Notwithstanding the foregoing, Landlord does not have to accept any
proposed Change Order (X) that will have an effect (to more than a de minimis
extent) on (i) the footprint of the Building, (ii) the Building elevation (other
than the elevation of the office areas and the cafeteria areas), (iii) the
Building's clear height, or (iv) the Building's structural design or (Y) that
requires Landlord to install any racking system, mezzanine structure, or
conveyor system in the Building. To the extent that Tenant, in connection with
any Change Order, specifies any items that Landlord reasonably indicates in
writing to Tenant are not recommended by Landlord, then Tenant shall assume full
responsibility during the Lease Term for the performance of such items.
Notwithstanding anything to the contrary in this Workletter, in no event shall
there be any Time Adjustment for any of the Change Orders described on Schedule
5 annexed hereto, provided that Tenant requests such Change Order by the outside
date therefor that is specified on such Schedule 5 .
In connection with the Initial Slab Change Order (as defined below),
Landlord and Tenant, promptly after the date hereof, shall employ value
engineering to determine, by September 20, 1999, to what extent the Initial Slab
Change Order in its current scope will be required (in accordance with the
recommendation of Landlord's structural engineer). Landlord shall use reasonable
good faith efforts to eliminate the extent to which the Initial Slab Change
Order is required (it being agreed that in no event shall Landlord be required
to reduce the scope of the Initial Slab Change Order unless Landlord receives
written confirmation from its structural engineer that the reduced scope will be
adequate to accommodate the Performance Specifications). If and to the extent
that Landlord, in the good faith exercise of its judgment, determines that the
Initial Slab Change Order is required, then (notwithstanding anything to the
contrary contained herein) the following provisions shall apply thereto: (i)
Landlord shall competitively bid the work associated with the Initial Slab
Change Order in accordance with the Bidding Procedures (as defined below); (ii)
there shall be no Time Adjustment or Price Adjustment (as such terms are used in
this Workletter) for the Initial Slab Change Order; and (iii) in lieu of there
being a Price Adjustment with respect to the Initial Slab Change Order, the
lesser of the following amounts shall be added to the annual Base Rent (and
increased after the 60th month following the Rent Commencement Date in
accordance with Addendum 1 to the Lease): (a) $27,700 (i.e., 10% of 277,000) and
(b) 10% of the actual out-of-pocket costs incurred by Landlord in performing the
Initial Slab Change Order (in the scope required by Landlord). For purposes
hereof, the term "Initial Slab Change Order" means the change order relating to
the slab that is described on Schedule 5 annexed hereto.
(c) Price Adjustment: For any Change Order, the final Price Adjustment
binding on Landlord and Tenant with respect to such Change Order shall be equal
to (I) in the case of any Change Order that results in an increase in the cost
to Landlord of the Base Building Work, the lesser of (x) the amount of the Price
Adjustment set forth in the Landlord's Change Order Statement, and (y) the
out-of-pocket costs and expenses actually incurred or paid by Landlord in
performing such Change Order; and (II) in the case of any Change Order that
results in a decrease in the cost to Landlord to perform the Base Building Work,
the greater of (x) the amount of the Price Adjustment set forth in the
Landlord's Change Order Statement, and (y) the
53
actual amount by which the cost to Landlord to perform the Base Building Work
was decreased as a result of such Change Order. In no event shall Landlord be
entitled to any supervision, overhead, administration or similar fee or charge
with respect to any Change Order. In connection with any Change Order that
Tenant reasonably believes will result in a positive Price Adjustment in excess
of $10,000, Tenant shall have the right to cause Landlord to competitively bid
the work associated with such Change Order in accordance with the Bidding
Procedures. Landlord shall keep and make available to Tenant itemized records
pertaining to each Price Adjustment. For purposes hereof, the term "Cumulative
Price Adjustment" shall mean the sum of the final Price Adjustments for all
Change Orders, other than (x) any Change Orders ("Non-Fixture Change Orders")
that relate to items of work that, when completed, will not be attached to or
built into the Building and (y) the Initial Slab Change Order. If there is any
dispute relating to the Price Adjustment for a Change Order that results in a
decrease in the cost to Landlord to perform the Base Building Work, then such
dispute shall be resolved by mutual agreement of Landlord's architect and
Tenant's architect; provided, however, that if such architects are unable to
reach mutual agreement within 15 days, then such dispute shall be resolved by
arbitration in accordance with Section 4.01 below (except that the arbitrator
shall be an independent third-party architect having at least 15 years
experience in the area of industrial/warehouse construction)
(d) Time Adjustment: For any Change Order, the final Time Adjustment
binding on Landlord and Tenant in connection with such Change Order shall be
equal to (I) in the case of any Change Order that results in an increase in the
number of days to complete one or Milestones, the lesser of (x) the Time
Adjustment set forth in the applicable Landlord's Change Order and (y) the
number of days by which the time required to complete such Milestone(s) is
actually increased by such Change Order, and (II) in the case of any Change
Order that results in a decrease in the number of days to complete one or more
Milestones, the number of days by which the time required to complete such
Milestone(s) is actually decreased by such Change Order. Any dispute under this
subparagraph (d) shall be resolved by mutual agreement of Landlord's architect
and Tenant's architect; provided, however, that if such architects are unable to
reach mutual agreement within 15 days, then such dispute shall be resolved by
arbitration in accordance with Section 4.01 below (except that the arbitrator
shall be an independent third-party architect having at least 15 years
experience in the area of industrial/warehouse construction). For purposes
hereof, the term "Cumulative Time Adjustment", shall mean, as to any Milestone,
the sum of the final Time Adjustments applicable to such Milestone.
2.04 Capped Base Building Work Items. (a) Landlord shall competitively
bid the work associated with each of the Capped Base Building Work Items in
accordance with the Bidding Procedures. For purposes of this Workletter, the
term "Bidding Procedures" means, with respect to (i) any work to be performed by
Landlord in connection with the Capped Base Building Work Items or (ii) any
other work that, pursuant to this Workletter or the Lease, Landlord is required
to competitively bid (in either case, the "Bid Work"), the following procedures:
Upon approval by Tenant of the applicable portions of the Base Building Plans,
Landlord shall solicit competitive bids for the Bid Work on a fixed price lump
sum basis from a minimum of two (2) qualified bidders (as reasonably determined
by Landlord) who are not affiliated with Landlord, consistent with construction
practices in Reno, Nevada (it being agreed,
54
however, that Landlord shall use commercially reasonable efforts to solicit
competitive bids from at least three (3) qualified bidders, as reasonably
determined by Landlord, who are not affiliated with Landlord). Landlord
simultaneously with the delivery of same to prospective bidders, shall submit
the bid packages and the invitations to bid to Tenant. Landlord shall review the
responsiveness of all bids in the presence of its respective representatives and
consultants (and Tenant and its representatives and consultants may, at Tenant's
option, participate in such review). Tenant and Tenant's representatives and
consultants shall have the right (but not the obligation) to attend and
participate in (i) the opening of the sealed bids and (ii) any meetings between
Landlord and the bidders at which Landlord negotiates the final contract price
(the "Final Contract Price") with each of the bidders. The "Selected Contract
Price" for the work in question shall mean the Final Contract Price of the
lowest responsive bidder (i.e., the lowest bidder that is responsive to bidding
documents), unless Landlord and Tenant agree to select a different bidder, in
which case the Selected Contract Price for such work shall mean the Final
Contract Price of the bidder so selected by Landlord and Tenant.
(b) Upon completion by Landlord of all of the Capped Base Building Work
Items, Landlord shall furnish to Tenant a statement setting forth in reasonable
detail (i) the Selected Contract Price with respect to each of the Capped Base
Building Work Items, and (ii) the aggregate sum (the "Total Cost of the Capped
Items") of the Selected Contract Prices for all of the Capped Base Building Work
Items (which statement shall be accompanied by such corroborating documentation
as Tenant may reasonably request).
(c) If the Total Cost of the Capped Items (as finally determined) shall
exceed the aggregate monetary allowance (the "Aggregate Capped Items Allowance")
allocated to all of the Capped Base Building Work Items under the Performance
Specifications, then the Rent Adjustment Amount (as defined below) shall be
increased by the amount of such excess. If the Total Cost of the Capped Items
shall be less than the Aggregate Capped Items Allowance, then the Rent
Adjustment Amount shall be decreased by the amount by which the Total Cost of
the Capped Items is less than the Aggregate Capped Items Allowances.
2.05 Rent Adjustment; Payments to Landlord. (a) For purposes of this
Workletter, the term "Rent Adjustment Amount" shall mean, subject to Section
2.05(d) below, an amount equal to the sum of the following (as such amount shall
be increased or decreased in accordance with Section 2.04(c) above): (i) an
amount equal to zero, plus (ii) an amount equal to the Cumulative Price
Adjustment, if the Cumulative Price Adjustment is a positive number, or minus
(iii) an amount equal to the Cumulative Price Adjustment, if the Cumulative
Price Adjustment is a negative number.
(b) Within sixty (60) days after both (i) the Cumulative Price
Adjustment has been determined, and (ii) the Total Cost of the Capped Items has
been determined, Landlord shall furnish Tenant with a statement (the "Rent
Adjustment Statement"), certified by Landlord, setting forth the Rent Adjustment
Amount, together with a list of the Price Adjustments used to compute the Rent
Adjustment Amount.
55
(c) If the Rent Adjustment Amount is a positive amount that is less
than or equal to $900,000.00, then the annual Base Rent shall be increased by an
amount equal to 10% of the Rent Adjustment Amount. If the Rent Adjustment Amount
is a positive amount that is more than $900,000.00, then (in lieu of the Base
Rent increase described in the preceding sentence) (a) the annual Base Rent
shall be increased by an amount equal to $90,000.00, and (b) commencing on the
Rent Commencement Date, Tenant shall pay to Landlord as additional rent an
annual amount (the "Additional Rental Amount") equal to 15.86% of the amount by
which the Rent Adjustment Amount exceeds $900,000.00 but is less than or equal
to $2,400,000.00, which annual amount shall be payable in equal monthly
installments on the first day of each calendar month that occurs during the
period commencing on the Rent Commencement Date and ending on the last day of
the initial Lease Term. (i.e., the initial 10 year term of the Lease), and any
Additional Rental Amount payable for any partial calendar month shall be
appropriately prorated. If the Rent Adjustment Amount is a positive amount that
exceeds $2,400,000.00, then (in addition to the amounts described in the
preceding sentence) Tenant, within 30 days after demand therefor, shall pay to
Landlord the amount of such excess (without duplication of any of the amounts
payable pursuant to the immediately following subparagraph (d)).
(d) Notwithstanding the foregoing, if either (I) (A) Tenant requests
and accepts a Change Order that will result in an increase in the cost to
Landlord of the Base Building Work, and (B) at the time such Change Order is
accepted, the sum of all the final Price Adjustments is a positive amount that
exceeds $2,400,000, or (II) Tenant requests and accepts a Change Order that is a
Non-Fixture Change Order, then (instead of adding the cost of such work to the
Rent Adjustment Amount as provided above) the following provisions shall apply
to such Change Order:
(i) Tenant, as and to the extent the work necessary to perform
such Change Order is completed, shall pay to Landlord the cost
of such work in progress payments (but no more often than
monthly), each of which progress payments shall be due and
payable to Landlord within 15 days after Tenant's receipt of
the following (collectively, a "Disbursement Request"): (x) an
invoice from Landlord requesting payment of a specified
portion of the cost of such work and describing in reasonable
detail the services or materials furnished in connection with
such work, and (y) a certificate from Landlord's architect (on
an appropriate AIA Form), certifying (1) that the services and
materials for which payment is being sought were necessary or
appropriate in connection with such work, (2) that the amount
specified in such invoice of Landlord is not in excess of the
cost of the services and materials supplied in connection with
such work and (3) that such work was completed in accordance
with the Base Building Plans and the Performance
Specifications.
(ii) Notwithstanding anything to the contrary contained
herein, in no event shall any of the amounts paid by Tenant
pursuant to this Section 2.05(d) be included in the
calculation of the Rent Adjustment Amount (and thereby added
to the Base Rent).
56
(iii) If Tenant fails to pay Landlord any amount due under
this Section 2.05(d) within 15 days after its receipt of a
Disbursement Request therefor, then such amount shall bear
interest at the Interest Rate from the due date therefor until
paid. If Tenant fails to pay Landlord any amount due under
this Section 2.05(d) within 25 days after its receipt of a
Disbursement Request therefor, and such failure continues for
5 days after Xxxxxxx X. Xxxxx (or his successor) receives
written notice of such failure, then such failure shall
constitute a "Tenant Late Payment Event".
(e) If the Rent Adjustment Amount is a negative amount that is less
than or equal to $900,000.00, then the annual Base Rent shall be decreased by an
amount equal to 10% of the Rent Adjustment Amount. There shall be no other
decrease in the annual Base Rent (other than the preceding sentence) if the Rent
Adjustment Amount is a negative amount, including, without limitation, if the
Rent Adjustment Amount is a negative amount greater than $900,000.
(f) Promptly after the Rent Adjustment Amount is determined in
accordance with this Section 2.05, a retroactive adjustment in Base Rent shall
be made and the appropriate payment shall be made by one party hereto to the
other.
2.06. Performance of Base Building Work. Landlord, at its sole cost and
expense (except as and to the extent expressly set forth above), shall perform
the Base Building Work. Landlord shall commence the Base Building Work promptly
after the date hereof and shall prosecute the same with diligence and continuity
until completion, using only new first-class materials. Landlord shall perform
the Base Building Work in accordance with (i) the Performance Specifications,
(ii) the Base Building Plans, (ii) all Change Orders approved by Tenant, (iii)
good construction practices, (iv) the Minimum Design Criteria and (v) all Legal
Requirements and the Declaration. Landlord shall at its sole cost and expense
obtain all proper zoning and land development approvals from all necessary
governmental authorities for the prosecution of the Base Building Work. Landlord
shall also obtain (i) the building permit and all other permits, licenses and
inspections necessary for the proper prosecution and completion of the Base
Building Work and (ii) all permits and licenses (including a permanent
certificate of occupancy or its equivalent) necessary for Tenant lawfully to use
and occupy the Premises pursuant to the Lease for the Intended Use. Landlord
shall pay for, as part of the Base Building Work, the cost of the building
permit and all other permits, licenses (including a permanent certificate of
occupancy), impact fees and inspections necessary for the proper prosecution and
completion of Base Building Work. In amplification and not in lieu of the
foregoing, (x) Landlord shall be responsible to obtain and pay for all
improvements (including, without limitation egress lines, fire extinguishers,
and emergency and exit lighting) necessary to obtain all such permits, licenses
and inspections and (y) all requirements of any governmental authority or other
governing body with respect to off-site improvements are to be provided by and
are the responsibility of Landlord at its sole cost and expense. Notwithstanding
anything in this Lease or Workletter to the contrary, Tenant shall be solely
responsible, at its sole cost and expense, to obtain any and all permits
necessary in connection with Tenant's Initial Work.
57
2.07. Milestones and Milestone Dates. (a) Each of the following stages
of completion of the Base Building Work is herein called a "Milestone": (I)
Substantial Completion of the First-Half Dried-In Construction (hereinafter, the
"First Milestone"); (II) Substantial Completion of the Dried-In Construction
(hereinafter, the "Second Milestone"); (III) Substantial Completion of the
Building Shell (hereinafter, the "Third Milestone"); and (IV) Substantial
Completion of the Base Building Work (hereinafter, the "Fourth Milestone"). None
of the foregoing Milestones shall be deemed to have been completed unless and
until Tenant shall have received a statement, certified by Landlord's architect,
stating that the Milestone in question has been completed and setting forth the
date on which such Milestone was completed. Landlord shall use commercially
reasonable efforts to give Tenant at least 5 days prior notice of Landlord's
anticipated completion of each Milestone.
(b) Landlord shall complete the First Milestone on or prior to February
23, 2000 (the "First Milestone Completion Date"); provided, however, that the
First Milestone Completion Date shall be postponed beyond February 23, 2000 for
each day that Landlord is actually delayed in completing the First Milestone as
a result of (x) one or more Tenant Late Days that occur between the date hereof
and the completion of the First Milestone and (y) one or more Force Majeure
Events that occur between the date hereof and the completion of the First
Milestone. Moreover, the First Milestone Completion Date shall be (aa) further
postponed by the number of days equal to the Cumulative Time Adjustment
applicable to the First Milestone, if such Cumulative Time Adjustment is a
positive number or (bb) accelerated by the number of days equal to the
Cumulative Time Adjustment applicable to the First Milestone, if such Cumulative
Time Adjustment is a negative number. Landlord shall complete the Second
Milestone on or prior to March 15, 2000 (the "Second Milestone Completion
Date"); provided, however, that the Second Milestone Completion Date shall be
postponed beyond March 15, 2000 for each day that Landlord is actually delayed
in completing the Second Milestone as a result of (x) one or more Tenant Late
Days that occur between the date hereof and the completion of the Second
Milestone and (y) one or more Force Majeure Events that occur between the date
hereof and the completion of the Second Milestone. Moreover, the Second
Milestone Completion Date shall be (aa) further postponed by the number of days
equal to the Cumulative Time Adjustment applicable to the Second Milestone, if
such Cumulative Time Adjustment is a positive number or (bb) accelerated by the
number of days equal to the Cumulative Time Adjustment applicable to the Second
Milestone, if such Cumulative Time Adjustment is a negative number. Landlord
shall complete the Third Milestone on or prior to March 31, 2000 (the "Third
Milestone Completion Date"); provided, however, that the Third Milestone
Completion Date shall be postponed beyond March 31, 2000 for each day that
Landlord is actually delayed in completing the Third Milestone as a result of
(x) one or more Tenant Late Days that occur between the date hereof and the
completion of the Third Milestone and (y) one or more Force Majeure Events that
occur between the date hereof and the completion of the Third Milestone.
Moreover, the Third Milestone Completion Date shall be (aa) further postponed by
the number of days equal to the Cumulative Time Adjustment applicable to the
Third Milestone, if such Cumulative Time Adjustment is a positive number or (bb)
accelerated by the number of days equal to the Cumulative Time Adjustment
applicable to the Third Milestone, if such Cumulative Time Adjustment is a
negative
58
number. Landlord shall complete the Fourth Milestone on or prior to April 15,
2000 (the "Fourth Milestone Completion Date"); provided, however, that the
Fourth Milestone Completion Date shall be postponed beyond April 15, 2000 for
each day that Landlord is actually delayed in completing the Fourth Milestone as
a result of (x) one or more Tenant Late Days that occur between the date hereof
and the completion of the Fourth Milestone and (y) one or more Force Majeure
Events that occur between the date hereof and the completion of the Fourth
Milestone. Moreover, the Fourth Milestone Completion Date shall be (aa) further
postponed by the number of days equal to the Cumulative Time Adjustment
applicable to the Fourth Milestone, if such Cumulative Time Adjustment is a
positive number or (bb) accelerated by the number of days equal to the
Cumulative Time Adjustment applicable to the Fourth Milestone, if such
Cumulative Time Adjustment is a negative number. Notwithstanding anything to the
contrary in the Lease or this Workletter, in no event shall Landlord be deemed
to have been actually delayed in causing any Milestone to occur by a Force
Majeure Event unless Landlord, within ten (10) business days after the
occurrence of such event of Force Majeure, shall notify Tenant of such event of
Force Majeure or such Force Majeure Event shall be set forth in the Construction
Minutes delivered to Tenant in accordance with Section 2.08(b) below and of the
fact that the same is going to delay Landlord in causing such Milestone to
occur. For purposes of this Workletter, the painting and landscape work shall be
substantially completed no later than May 15, 2000 and shall not be included as
part of the Base Building Work to be completed by the Fourth Milestone
Completion Date.
(c) The term "Milestone Completion Date" shall mean (as the case may
be) (i) with respect to the First Milestone, the First Milestone Completion
Date; (ii) with respect to the Second Milestone, the Second Milestone Completion
Date; (iii) with respect to the Third Milestone, the Third Milestone Completion
Date; and (iv) with respect to Fourth Milestone, the Fourth Milestone Completion
Date. If Landlord shall fail for any reason to complete any Milestone by the
Milestone Completion Date applicable thereto (as such Milestone Completion Date
may be postponed pursuant to the express provisions of Section 2.07(b) above),
then, for each day that any Milestone is not completed by the Milestone
Completion Date applicable thereto (as such Milestone Completion Date may be
postponed pursuant to the express provisions of Section 2.07(b) above), Landlord
shall pay to Tenant the following amounts (collectively the "Liquidated
Damages"):
(A) For each of the first fourteen (14) days that Landlord fails
to complete any Milestone by the Milestone Completion Date
applicable thereto, Landlord shall pay to Tenant $5,800
(representing 1 day's Base Rent); and
(B) If such Milestone is not completed by the fourteenth day
(14th) following the Milestone Completion Date applicable
thereto, then (in addition to the amount set forth in the
preceding clause (A)), Landlord shall pay to Tenant an amount
equal to the product of (i) $17,400 (representing 3 day's Base
Rent), multiplied by (ii) the number of days in the period
commencing on the fifteenth (15th) day following such
Milestone Completion Date, and ending on the forty-second
(42nd) day
59
following such Milestone Completion Date, during which such
Milestone remains uncompleted; and
(C) If such Milestone is not completed by the forty-third (43rd)
day following the Milestone Completion Date applicable
thereto, then (in addition to the amounts set forth in the
preceding clauses (A) and (B)), Landlord shall pay to Tenant
an amount equal to the product of (i) $11,600 (representing 2
day's Base Rent), multiplied by (ii) the number of days in the
period commencing on the forty-third (43rd) day following such
Milestone Completion Date, and ending on the sixty-third
(63rd) day following such Milestone Completion Date, during
which such Milestone remains uncompleted; and
(D) If such Milestone is not completed by the sixty-fourth (64th)
day following the Milestone Completion Date applicable
thereto, then (in addition to the amounts set forth in the
preceding clauses (A), (B) and (C)), Landlord shall pay to
Tenant an amount equal to the product of (i) $5,800
(representing 1 days' Base Rent), multiplied by (ii) the
number of days in the period commencing on such sixty-fourth
(64th) day and ending on the date (if ever) on which such
Milestone is completed.
Tenant hereby acknowledges and agrees that (except as provided in the
immediately succeeding sentence) the Liquidated Damages shall be Tenant's sole
and exclusive remedy under this Lease or at law or in equity for Landlord's
failure to complete the Milestones by the Milestone Completion Dates, Tenant
hereby waiving all other remedies available to Tenant under this Lease or at law
or in equity (except as provided in the immediately succeeding sentence) in the
event Landlord fails to timely meet the Milestone Completion Dates.
Notwithstanding the preceding sentence, Tenant shall be entitled to the remedy
of specific performance if Landlord fails to complete any Milestone by the
Milestone Completion Date applicable thereto. Landlord and Tenant hereby agree
that it would be impracticable or extremely difficult to affix damages if
Landlord fails to meet the Milestone Completion Dates as set forth above and the
Liquidated Damages represent a reasonable estimate of Tenant's damages. All
amounts payable by Landlord to Tenant under this Section 2.07(c) shall be paid
within thirty (30) days after a demand therefor. If Landlord fails to pay Tenant
all or any portion of any amount due under this Section 2.07(c) by the due date
therefor, then such past due amount shall bear interest at the Interest Rate
from the due date therefor until the date paid, and Tenant may deduct and
set-off such amount (together with such interest) until exhausted, against all
Base Rent and any other amounts due and payable under the Lease (at Tenant's
option, before or after the expiration of any other offsets or credits in
Tenant's favor). The obligations of Landlord under this Section 2.07(c) shall
survive the termination, cancellation or expiration of the Lease.
2.08. Inspection and Monitoring by Tenant; Construction Meetings; "As
Built" Drawings. (a) Tenant, Tenant's architect, Tenant's engineers, Tenant's
contractors, Tenant's representatives, and any agents of Tenant shall have
access to the Building at all times during business hours, and at all other
reasonable times upon reasonable prior written notice, in order to
60
inspect the Base Building Work and monitor the progress thereof. Tenant may have
a representative present at the Premises at all times during the performance of
the Base Building Work.
(b) From and after the date hereof, Landlord shall conduct weekly
construction meetings (to be held on Tuesday of each week) to discuss the
performance and progress of the Base Building Work; Landlord shall use
commercially reasonable efforts to give Tenant reasonable advance notice of each
such meeting and Tenant's representatives shall have the right to attend such
meetings. Landlord, within two (2) business days after each such weekly
construction meeting, shall deliver to the representatives of Tenant set forth
on Schedule 6 annexed hereto (at their addresses set forth on such Schedule 6) a
copy of the minutes (the "Construction Minutes") of each such construction
meeting, which minutes Landlord shall cause to be prepared by its contractor.
The Construction Minutes of each such weekly construction meeting shall clearly
specify (i) any events that have occurred since the previous weekly construction
meeting (or, in the case of the first such meeting, since the date hereof) that
could result in a Tenant Late Day and (ii) any Tenant Late Days that have
occurred since the previous weekly meeting (or, in the case of the first such
meeting, since the date hereof).
(c) Landlord shall use commercially reasonable efforts to (i) keep
Tenant apprised of the progress of the Base Building Work on at least a weekly
basis, (ii) promptly notify Tenant of any actual or anticipated delays, and
(iii) promptly notify Tenant of any problems or anticipated problems with
respect to the Base Building Work or any portion thereof. Landlord shall
maintain at the Premises for inspection by Tenant and Tenant's architect during
Business Hours one record copy of (i) the Base Building Plans, together with all
field notes and changes of Landlord's contractor marked on said plans during the
course of construction, (ii) the progress schedule, any progress schedules
prepared by any subcontractor, and all updates, supplements and amendments
thereto; (iii) specifications and samples prepared in connection with the Base
Building Work; and (iv) all drawings, diagrams, schedules, brochures and other
data or information specially prepared for or otherwise provided in connection
with the Base Building Work to illustrate some portion of the Base Building Work
or any product, material or system to be installed or utilized in connection
therewith. All of the foregoing shall be maintained in good order and marked
currently to record all changes made during construction of the Building and the
Parking Area. Within ninety (90) days after the Base Building Work is
Substantially Completed, Landlord shall deliver to Tenant four (4) copies of
"as-built" drawings and plans for the Base Building Work showing all changes
made during the course of performing the Base Building Work, together with four
(4) copies of an "as-built" survey of the Building, the parking area and the
Land showing all existing easements, rights of way, building set-back lines and
improvements. Landlord shall also furnish to Tenant, promptly after completion
thereof, two complete sets of shop drawings and operation and maintenance
manuals with respect to the Base Building Work.
2.09 Correcting Base Building Punch List Items and Defective Work. (a)
Within five (5) business days following the later to occur of (i) Substantial
Completion of the Base Building Work and (ii) the date that is ten (10) days
after Tenant receives notice that such
61
Milestone has been (or is about to be) completed, Landlord and Tenant shall
jointly inspect the Base Building Work and shall jointly compose a Punch List of
items needing completion (it being agreed, however, that if it is not possible
to determine at such time whether any components of the Base Building Work have
been completed, because of seasonal reasons or otherwise, then Landlord and
Tenant, as soon as practicable after such determination can be made, shall
inspect such components and compose a Punch List of items with respect thereto
needing completion). Within thirty (30) days after any Punch List is so
composed, Landlord shall install, complete, repair or otherwise remedy all such
items listed on such Punch List; provided, however, that it shall not be an
event of default if, because of the nature of the work at issue, Landlord cannot
complete such work within such thirty (30) day period, as long as Landlord
commences such work within such thirty day period and thereafter diligently
prosecutes the same to completion.
2.10 Outside Termination Date. If for any reason (including Force
Majeure Events) Substantial Completion of the Base Building Work does not occur
by the Limitation Date (as defined below), then, in addition to Liquidated
Damages and the right to specific performance (but excluding all other rights
and remedies available to Tenant at law or in equity or otherwise under this
Lease), Tenant shall have the right, at any time after the Limitation Date, but
prior to the date upon which Substantial Completion of the Base Building Work
occurs, to terminate the Lease by serving written notice to Landlord, in which
event the Lease shall terminate and be deemed null and void. The failure of
Tenant to exercise its right of termination hereunder shall not relieve Landlord
of its obligation to cause the Substantial Completion of the Base Building Work
to occur or be deemed a waiver of the other remedies available to Tenant under
this Workletter (i.e., the Liquidated Damages and specific performance). For
purposes hereof, the term "Limitation Date" shall mean October 31, 2000;
provided, however, that the Limitation Date shall be postponed by one day for
each Tenant Late Day that occurs prior to the Substantial Completion of the Base
Building Work.
2.11 Acceptance. Within thirty (30) days after the Rent Commencement
Date, Landlord and Tenant shall execute and deliver to Landlord a letter
confirming the Rent Commencement Date.
2.12 Miscellaneous. (a) Landlord acknowledges that Tenant will use
non-union labor in connection with its prosecution of Tenant's Initial Work, and
in no event shall the utilization of such labor constitute a Tenant Late Day.
Landlord shall use only non-union contractors for the Base Building Work and
will insure that there will be no labor disputes relative to the prosecution of
Tenant's Initial Work.
(b) Landlord hereby designates Xxxx Xxxxxx to serve as Landlord's
representative and Tenant hereby designates Xxxxx Xxxxxxxx to serve as Tenant's
representative during the design and construction of the Base Building Work. All
communications between Landlord and Tenant relating to the design and
construction of the Base Building Work shall be forwarded to or made by such
party's representative.
62
(c) Any dispute with respect to this Workletter (other than any
disputes under Section 2.01(c) above) that is not resolved by the parties within
15 days shall be settled by arbitration in accordance with Section 4.01 of this
Workletter.
(d) Landlord represents and warrants that, to Landlord's knowledge,
based on Exhibit 1 to the Performance Specifications, smoke curtains, in-rack
sprinklers and fire proofing of steel are not required in order for the Premises
to comply with Legal Requirements (other than in-rack sprinklers in the
multi-level Pallet Pick Mezzanine area and bin supported mezzanine area). For
purposes of this paragraph, Landlord's knowledge shall mean the actual knowledge
of Xxxxx Xxxxx and Xxxx Xxxxxx, after appropriate due inquiry and investigation.
Landlord represents and warrants to Tenant that no employee of Landlord has any
material knowledge that is not possessed by Xxxxx Xxxxx or Xxxx Xxxxxx about any
of the matters that are the subject of the representation and warranty contained
in this paragraph.
(e) For purposes of this Article II, the term "Legal Requirements" (as
defined in the Lease) shall include, without limitation, all onsite and offsite
drainage requirements, zoning, seismic (except as and to the extent set forth in
the Performance Specifications), NFPA and ADA requirements.
63
III. Tenant's Initial Work
3.01. Tenant's Initial Work; Preparation and Approval of Tenant's
Plans. Except as and to the extent otherwise set forth in this Article III, the
installation, performance and removal of Tenant's Initial Work shall be governed
by Section 12 of the Lease (as if the same were Tenant-Made Alterations). If any
portion of Tenant's Initial Work shall constitute a Material Tenant-Made
Alteration, then Tenant, at its expense, shall prepare and submit to Landlord
(i) architectural drawings of such portion of Tenant's Initial Work and (ii)
specifications for such portion of Tenant's Initial Work (such architectural
drawings and specifications are herein collectively referred to as the "Tenant's
Plans"). Within ten (10) days after receipt by Landlord of Tenant's Plans,
Landlord (i) shall give its written approval thereto or (ii) if Landlord
reasonably believes that the work set forth on Tenant's Plans will have an
adverse effect on the structural integrity of the Building or will penetrate the
roof and thereby invalidate the roof warranty (the "Tenant's Initial Work
Approval Criteria"), shall request revisions or modifications to the Tenant's
Plans (but only to the extent the same fail to comply with the Tenant's Initial
Work Approval Criteria). Tenant may thereafter submit such revisions or
modifications to Landlord. Within seven (7) days following receipt by Landlord
of such revisions or modifications, Landlord shall give its written approval
thereto or shall request other revisions or modifications therein (but relating
only to the extent Tenant has failed to comply with Landlord's earlier
requests). The preceding two sentences shall be implemented repeatedly until
Landlord gives its written approval to the Tenant's Plans. If Landlord shall
fail to respond to Tenant's Plans with its approval or request for
revisions/modification within the time period(s) provided above, such failure
shall be deemed Landlord's approval of Tenant's Plans. The Tenant's Plans as
approved or deemed approved by Landlord shall herein be referred to as the
"Final Tenant's Plans". At any time after the Final Tenant's Plans are approved
(or deemed approved) by Landlord and thereafter throughout Tenant's prosecution
of the Tenant's Initial Work, Tenant shall be permitted to direct changes in the
Tenant's Initial Work (it being agreed, however, that Tenant must obtain
Landlord's consent in accordance with the foregoing provisions of this Section
3.01(a) before prosecuting any such change that constitutes a Material
Tenant-Made Alteration, and the foregoing approval provisions of this Section
3.01(a) shall be applied to such proposed change). Tenant, at Tenant's option,
may submit the Tenant's Plans to Landlord for its approval in one or more parts
(and, in any case where the same are submitted in more than one part, the
provisions of this Article III shall apply separately as to each such part).
Landlord, at no cost to Tenant, shall cooperate (and cause Landlord's architect
and contractor to cooperate) with Tenant and Tenant's architect in preparing the
Tenant's Plans.
(b) Notwithstanding anything to the contrary in the Lease or this
Workletter, in no event shall Tenant be required to obtain Landlord's prior
consent in connection with (i) the installation of Tenant's racking systems in
the Building, (ii) the installation of any mezzanine in the Building, (iii) the
installation of any conveyors or other equipment in the Building or (iv) the
installation in the Building of any of the other items shown on the Operational
Plan attached to the Performance Specifications as Exhibit 1.
64
(c) Commencing on Substantial Completion of the First-Half Dried-In
Construction and thereafter throughout Landlord's prosecution of the Base
Building Work, Tenant shall be permitted upon the Premises and may,
simultaneously with Landlord's prosecution of the Base Building Work, prosecute
Tenant's Initial Work. Without limiting the generality of the foregoing,
Landlord shall permit Tenant to bring and store on the Premises all equipment,
supplies and other property required or appropriate in connection with Tenant's
Initial Work, and shall furnish temporary power to the Premises. Notwithstanding
anything herein to the contrary, Tenant shall be solely responsible, at its sole
cost and expenses, for obtaining any and all applicable permits, approvals and
licenses in connection with Tenant's Initial Work. Tenant does hereby agree to
assume all risk of loss or damage to its machinery, equipment, fixtures, and
other personal property, except for any loss or damage resulting from the
negligence or willful misconduct of Landlord or its agents, employees or
contractors and to indemnify, defend, and hold Landlord harmless from any and
all liability, loss, or damage arising from any injury to the property of
Landlord, its contractors, subcontractors, or materialmen, and any death or
personal injury to any person or persons arising out of such occupancy or
installation, except to the extent that any such liability, loss, or damage is
occasioned by the negligence or willful misconduct of Landlord or its agents,
employees or contractors. To the extent Tenant uses any of Landlord's
contractors or subcontractors in connection with the installation of its
improvements, Tenant acknowledges and agrees that Landlord's work shall take
priority over that of the Tenant and that Tenant shall not divert Landlord's
contractors or subcontractors from the performance of their work obligations for
Landlord.
(d) Landlord shall from time to time, upon request of Tenant,
supply, at no additional charge to Tenant, architectural services to assist
Tenant with its office layout and design in the Building (including, without
limitation, electrical, phone, data lines, etc.).
IV. ARBITRATION
Except as otherwise provided in this Workletter, any dispute under this
Workletter shall be resolved by arbitration in accordance with the Commercial
Arbitration Rules (Expedited Procedures) of the American Arbitration
Association, subject to the requirement that a single arbitrator unaffiliated
with either party shall decide each matter in dispute within 15 days of the date
of his selection, based solely upon the written statements of position submitted
by each party. The parties consent to the jurisdiction of any appropriate court
to enforce these arbitration provisions and to enter judgments upon the decision
of the arbitration. Unless otherwise required by state law, arbitration shall be
conducted in the Reno, Nevada area. In the event of an arbitration, the losing
party shall pay the cost of arbitrator and the arbitration, but each party shall
bear its own attorneys' fees and costs in preparing for and participating in
such arbitration.
65
ADDENDUM 3
FOUR RENEWAL OPTIONS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED AS OF SEPTEMBER 8, 1999, BETWEEN
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
AND
XXXXXXXXXXXXXX.XXX LLC
(a) Provided that as of the time of the giving of the First Extension Notice no
Event of Default exists, then Tenant shall have the right to extend the Lease
Term for an additional term of five (5) years (such additional term is
hereinafter called the "First Extension Term") commencing on the day following
the expiration of the Lease Term (hereinafter referred to as the "Commencement
Date of the First Extension Term"). Tenant shall give Landlord notice
(hereinafter called the "First Extension Notice") of its election to extend the
term of the Lease Term at least nine (9) months prior to the scheduled
expiration date of the Lease Term.
(b)
(c) Provided that as of the time of the giving of the Second Extension Notice no
Event of Default exists and provided Tenant has exercised its option for the
First Extension Term; then Tenant shall have the right to extend the Lease Term
for an additional term of five (5) years (such additional term is hereinafter
called the "Second Extension Term") commencing on the day following the
expiration of the First Extension Term (hereinafter referred to as the
"Commencement Date of the Second Extension Term"). Tenant shall give Landlord
notice (hereinafter called the "Second Extension Notice") of its election to
extend the term of the Lease Term at least nine (9) months prior to the
scheduled expiration date of the First Extension Term.
(d)
(e) Provided that as
of the time of the giving of the Third Extension Notice no Event of Default
exists and provided Tenant has exercised its option for the Second Extension
Term; then Tenant shall have the right to extend the Lease Term for an
additional term of five (5) years (such additional term is hereinafter called
the "Third Extension Term") commencing on the day following the expiration of
the Second Extension Term (hereinafter referred to as the "Commencement Date of
the Third Extension Term"). Tenant shall give Landlord notice (hereinafter
called the "Third Extension Notice") of its election to extend the term of the
Lease Term at least nine (9) months prior to the scheduled expiration date of
the Second Extension Term.
(f)
(g) Provided that as of the time of the giving of
the Fourth Extension Notice no Event of Default exists and provided Tenant has
exercised its option for the Third Extension Term; then Tenant shall have the
right to extend the Lease Term for an additional term of five (5) years (such
additional term is hereinafter called the "Fourth Extension Term") commencing on
the day following the expiration of the Third Extension Term (hereinafter
referred to as the "Commencement Date of the Fourth Extension Term"). Tenant
shall give Landlord notice
66
(hereinafter called the "Fourth Extension Notice") of its election to extend the
term of the Lease Term at least nine (9) months prior to the scheduled
expiration date of the Third Extension Term.
(h)
(i) The Base Rent payable by Tenant to Landlord during the First Extension Term
shall be equal to the greater of: (i) the Base Rent applicable during the last
year of the initial Lease Term; and (ii) the lesser of: (1) 97% of the then
prevailing market rate for comparable space in the Project and comparable
buildings in the vicinity of the Project taking into account all relevant
factors; (2) the product obtained by multiplying the Base Rent for the twelve
(12) month period immediately prior to the relevant extension term by a
fraction, the denominator of which is the CPI in effect on the date that is five
(5) years prior to the "Commencement Date" of the then applicable extension term
and the numerator of which is the CPI most recently published prior to the date
that Landlord sends Landlord's Rent Notice (as hereinafter defined); and (3)
115% of the Base Rent in effect for the twelve (12) month period immediately
prior to the "Commencement Date" of the First Extension Term.
(j)
(k) The Base Rent payable by Tenant to Landlord during the Second Extension Term
shall be equal to the greater of: (i) the Base Rent applicable during the last
year of the First Extension Term; and (ii) the lesser of: (1) 97% of the then
prevailing market rate for comparable space in the Project and comparable
buildings in the vicinity of the Project taking into account all relevant
factors; (2) the product obtained by multiplying the Base Rent for the twelve
(12) month period immediately prior to the relevant extension term by a
fraction, the denominator of which is the CPI in effect on the date that is five
(5) years prior to the "Commencement Date" of the then applicable extension term
and the numerator of which is the CPI most recently published prior to the date
that Landlord sends the Landlord Rent Notice; and (3) 115% of the Base Rent in
effect for the twelve (12) month period immediately prior to the "Commencement
Date" of the Second Extension Term.
(l)
(m) The Base Rent payable by Tenant to Landlord during the Third Extension Term
shall be equal to the greater of: (i) the Base Rent applicable during the last
year of the Second Extension Term; and (ii) 100% of the then prevailing market
rate for comparable space in the Project and comparable buildings in the
vicinity of the Project taking into account all relevant factors.
(n)
(o) The Base Rent payable by Tenant to Landlord during the Fourth Extension Term
shall be equal to the greater of: (i) the Base Rent applicable during the last
year of the Third Extension Term; and (ii) 100% of the then prevailing market
rate for comparable space in the Project and comparable buildings in the
vicinity of the Project taking into account all relevant factors.
(p)
(q) Within fifteen (15) days after Landlord's receipt of each Extension Notice
(but, in no event, earlier then the date that is eight (8) months and fifteen
(15) days prior to the anticipated "Commencement Date" of the relevant Extension
Term), Landlord shall notify ("Landlord's Rent Notice") Tenant of its
determination of the Base Rent under each of the formula set forth above as may
be applicable to such extension term, and Tenant shall advise Landlord of any
objection (a "Tenant Objection Notice") to the Base Rent amounts contained in
Landlord's Rent Notice within fifteen (15) days after Tenant's receipt of
Landlord's Rent Notice. Failure to
67
respond within the fifteen (15) day period shall constitute Tenant's acceptance
of such Base Rent, provided that Landlord shall have included a statement in
Landlord's Rent Notice that Tenant's failure to respond to Landlord's Rent
Notice within fifteen (15) days shall be deemed to be Tenant's acceptance of the
Base Rent set forth in Landlord's Rent Notice. In addition, Tenant shall have
the right, within such fifteen (15) day period, to rescind the applicable
Extension Notice, in which event, the Lease Term (as the same may have been
previously extended) shall expire on the then scheduled expiration date and
Tenant shall have no further rights to extend the Lease Term. If Tenant sends
Landlord a Tenant Objection Notice, then Landlord and Tenant shall commence
negotiations to attempt to agree upon the Base Rent within thirty (30) days
after Landlord's receipt of Tenant Objection Notice. If the parties cannot agree
on the Base Rent for such extension term, each acting in good faith but without
any obligation to agree, then the Lease Term shall not be extended and shall
terminate on its scheduled termination date and Tenant shall have no further
right hereunder or any remedy by reason of the parties' failure to agree unless
Tenant invokes the arbitration procedure provided below to determine the Base
Rent for such extension term by sending Landlord notice of Tenant's election
within five (5) business days after the expiration of such thirty (30) day
period.
(r)
(s) Arbitration to determine the Base Rent (including the then prevailing market
rate) shall be in accordance with the Arbitration Rules of the American
Arbitration Association. Unless otherwise required by state law, arbitration
shall be conducted in the metropolitan area where the Project is located by a
single arbitrator unaffiliated with either party, which arbitrator shall have at
least ten (10) years' experience in commercial leasing in Reno, Nevada and shall
be a member of the American Institute of Certified Real Estate Appraisers.
Landlord and Tenant shall each submit to the arbitrator their respective
proposal of the Base Rent, including the then prevailing market rate, together
with any and all information that each such party believes is relevant to the
determination of the Base Rent, including the then prevailing market rent, as
applied to an extension of this Lease, provided, however, that the amount of the
Base Rent contained in Landlord's Rent Notice shall be the amount submitted by
Landlord to the arbitrator as Landlord's proposal. The arbitrator must choose
between Landlord's proposal and the Tenant's proposal and may not compromise
between the two or select some other amount. The cost of the arbitration shall
be paid by Landlord if the then prevailing market rate is that proposed by
Landlord and by Tenant if the then prevailing market rate is that proposed by
Tenant. If the arbitrator has not determined the Base Rent as of the end of the
Lease Term or applicable extension term thereof, Tenant shall pay 105 percent of
the Base Rent in effect under the Lease as of the end of the Lease Term or the
applicable extension term thereof until Base Rent is determined as provided
herein. Upon such determination, Landlord and Tenant shall make the appropriate
adjustments to the payments between them.
(t)
(u) The parties consent to the jurisdiction of any appropriate court to enforce
the arbitration provisions of this Addendum and to enter judgment upon the
decision of the arbitrator.
(v)
(w) Except for the Base Rent as determined above and except as otherwise
expressly provided for in Articles 6 and 10 of the Lease, Tenant's occupancy of
the Premises during the applicable
68
extension term shall be on the same terms and conditions as are in effect
immediately prior to the expiration of the initial Lease Term or the applicable
extension term.
(x)
(y) If Tenant does not send the applicable Extension Notice within the period
set forth in Paragraph (a), (b), (c) or (d), Tenant's right to extend the Lease
Term shall automatically terminate. Time is of the essence as to the giving of
the applicable extension notice as set forth herein and the notice of Tenant's
objection under Paragraph (i).
(z)
(aa) Except as otherwise agreed to in writing by Landlord or Tenant, Landlord
shall have no obligation to refurbish or otherwise improve the Premises for the
applicable extension term. Except as otherwise provided for herein and under the
Lease, the Premises shall be tendered on the commencement date of the applicable
extension term in "as-is" condition.
(bb)
(cc) If the Lease is extended for the applicable extension term, then Landlord
shall prepare and Tenant shall execute an amendment to the Lease confirming the
extension of the Lease Term and the other provisions applicable thereto.
(dd)
(ee) If Tenant exercises its right to extend the term of the Lease for the
applicable extension term pursuant to this Addendum, the term "Lease Term" as
used in the Lease, shall be construed to include, when practicable, the
applicable extension term except as provided in Paragraph (l) above.
69
ADDENDUM 4
RIGHT OF FIRST OFFER
--------------------
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED SEPTEMBER 8, 1999, BETWEEN
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
and
XXXXXXXXXXXXXX.XXX LLC
(a) For purposes hereof, the term "Offer Space" shall mean the Premises
or any portion thereof.
(b) Landlord hereby agrees that if, from time to time and at any time
during the Lease Term (as the same may be renewed or extended), Landlord desires
to convey all or any portion of the Offer Space, then Landlord shall so notify
Tenant (each, an "Offer Notice"), which notice shall contain the following
information: (i) the proposed sales price; (ii) the desired closing date, which
shall not be less than forty-five (45) days after the date Tenant receives the
applicable Offer Notice; and (iii) all of the other material economic terms and
conditions that are material to a sale of such Offer Space. Each Offer Notice
shall constitute an offer to Tenant to purchase the Offer Space covered thereby
(the "Right of First Offer to Purchase") on the terms and conditions set forth
in such Offer Notice including, without limitation, the sales price set forth
therein.
(c) Tenant shall have fifteen (15) business days to accept such an
offer with respect to any Offer Space. If Tenant fails to accept such an offer
with respect to any Offer Space within such fifteen (15) business day period,
then (1) Tenant shall be deemed to have rejected such offer, and (2) Landlord,
for a period of one (1) year from the date of the applicable Offer Notice, shall
be free to sell such Offer Space to any prospective purchaser (which sale shall
be subject to this Lease, if the Offer Space comprises the Premises), for a
price of not less than ninety five percent (95%) of the net effective sales
price set forth in the applicable Offer Notice and otherwise on terms and
conditions no more materially advantageous to the purchaser than the terms and
conditions set forth in such Offer Notice and in the event of such sale Tenant
shall have no further right with respect to the Offered Space under this
Addendum 4. If such Offer Space is not sold and title thereto transferred within
such one (1) year period (for a price of not less than ninety five percent (95%)
of the net effective sales price set forth in the Offer Notice and otherwise on
terms and conditions no more materially advantageous to the purchaser than the
terms and conditions set forth in the Offer Notice), then Tenant's Right of
First Offer to Purchase such Offer Space shall remain in full force and effect
(i.e., Landlord shall again offer such Offer Space to Tenant in accordance with
the foregoing). If (x) Tenant rejects or is deemed to have rejected any offer to
sell any Offer Space in accordance with this Addendum and (y) within twelve (12)
months after such rejection Landlord desires to sell such Offer Space to a third
party on terms and conditions (the "New Offer Terms") that are materially more
advantageous (economically) to such third party than the terms and conditions
contained in the Offer Notice in question (including, without limitation, if
Landlord desires to sell such Offer Space to a third
70
party for a net effective sales price that is less than ninety five percent
(95%) of the net effective sales price for such Offer Space, as set forth in the
applicable Offer Notice) then Landlord, before conveying such Offer Space to
such third party, shall again offer such Offer Space to Tenant in accordance
with the foregoing provisions of this Addendum on the New Offer Terms.
(c) If Tenant accepts any such offer for any Offer Space, Landlord and
Tenant (or any designee of Tenant) shall close title to such Offer Space in
accordance with and pursuant to the terms and conditions set forth in the Offer
Notice. In connection therewith, Landlord and Tenant promptly shall enter into a
customary contract of sale that incorporates the terms and provisions set forth
in the Offer Notice.
71
ADDENDUM 5
FORM OF LETTER OF CREDIT
------------------------
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED _____________________, 1999, BETWEEN
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
and
xxxxxxxxxxxxxx.xxx, llc
[LETTERHEAD OF LETTER OF CREDIT BANK]
[DATE]
ProLogis Development Services Incorporated
00000 Xxxx 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Legal Department
Re: Irrevocable Transferrable Letter of Credit
No.____________________________
Beneficiary:
By order of our client, ____________________ (the "Applicant"), we
hereby establish this Irrevocable Transferrable Letter of Credit No. ________ in
your favor for an amount up to but not exceeding the aggregate sum of Two
Hundred Eight Thousand Five Hundred and No/100 Dollars ($208,500.00) (as reduced
from time to time in accordance with the terms hereof, the "Letter of Credit
Amount"), effective immediately, and expiring on the close of business at our
office at the address set forth above one year from the date hereof unless
renewed as hereinafter provided.
Funds under this Letter of Credit are available to you on or prior to
the expiry date against presentation by you of your (i) sight drafts drawn on us
in the form of Annex 1 hereto, indicating this Letter of Credit number and (ii)
request in the form of Annex 2 hereto (such sight draft and request, together
referred to as a "Drawing Request"), sight draft(s), completed and signed by one
of your officers. Presentation of your Drawing Requests may be made by you to us
at the address set forth above or may be made by facsimile transmission, to the
following facsimile number ___________. You may present to us one or more
Drawing Requests from time to time prior to the expiry date in an aggregate
amount not to exceed the Letter of Credit Amount
72
then in effect (it being understood that the honoring by us of each Drawing
Request shall reduce the Letter of Credit Amount then in effect).
This Letter of Credit will be automatically renewed for a one-year
period upon the expiration date set forth above and upon each anniversary of
such date, unless at least sixty (60) days prior to such expiration date, or
prior to any anniversary of such date, we notify both you and the Applicant in
writing by certified mail that we elect not to so renew the Letter of Credit.
This Letter of Credit sets forth in full the terms of our undertaking
and such undertaking shall not in any way be modified, amended or amplified by
reference to any document or instrument referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates, and
no such reference shall be deemed to incorporate herein by reference any
document or instrument.
All bank charges and commissions incurred in this transaction are for
the Applicant's account.
This Letter of Credit is transferrable by you and your successors and
assigns any number of times in its entirety and not in part, but only by
delivery to us of a Notice of Assignment in the form of Annex 3 hereto.
We hereby agree with the drawers, endorsers, and bona fide holders of
drafts drawn under and in compliance with the terms of this Letter of Credit
that such drafts will be duly honored upon presentation to the drawee from our
own funds and not the funds of the Applicant and shall be available to such
drawers, endorsers, and bona fide holders, as the case may be, on or before
noon, New York time, on the Business Day (defined below) next following the date
on which such drafts are received by us. "Business Day" shall mean any day which
is not a Saturday, Sunday or day on which we are required or authorized by law
to be closed in New York, New York.
To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Commercial Documentary Credits
(1993 Revision), I.C.C. Publication No. 500 (the "UCP 500") and as to matters
not governed by the UCP 500, this Letter of Credit shall be governed by and
construed in accordance with the laws of the State of New York.
Very truly yours,
[NAME OF LETTER OF CREDIT BANK]
By:
---------------------------------
Name:
Title:
73
ANNEX 1
SIGHT DRAFT
______________ , 199_
For value received, at sight pay to the order of [Name of Landlord],
the sum of [Amount in words] [Amount in Figures] United States Dollars drawn
under [Name of Letter of Credit Bank] Irrevocable Transferrable Letter of Credit
No. ________ dated _________________, 199_____.
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
By:
---------------------------------
Name:
Title:
74
75
ANNEX 2
DRAWING REQUEST
_________ ,199_
[NAME AND ADDRESS OF LETTER
OF CREDIT BANK]
Re: Irrevocable Transferrable Letter of Credit No._______ (the "Letter
of Credit")
The undersigned (the "Beneficiary"), hereby certifies to [Name of
Letter of Credit Bank] (the "Issuer") that:
(a) The Beneficiary is making a request for payment in lawful currency
of the United States of America under Irrevocable Transferrable Letter of Credit
No. (the "Letter of Credit") in the _______________ amount of $___________.
(b) The Letter of Credit Amount (as defined in the Letter of Credit) as
of the date hereof and prior to payment of the amount demanded in this Drawing
Request is $___________ . The amount requested by this Drawing Request does not
exceed the Letter of Credit Amount.
[(c) Demand is made for payment under the Letter of Credit as a result
of the occurrence and continuation of an Event of Default (as defined in the
Lease Agreement).]
Please wire transfer the proceeds of the drawing to the following
account of the Beneficiary at the financial institution indicated below:
____________________________________
____________________________________
____________________________________
Unless otherwise defined, all capitalized terms used herein have the
meanings provided in, or by reference in, the Letter of Credit.
76
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Drawing Request as of the ___ day of _______________, 199__.
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
By:
------------------------------------------
Name:
Title:
77
ANNEX 3
NOTICE OF ASSIGNMENT
____________, 199_
[NAME AND ADDRESS OF
LETTER OF CREDIT BANK]
Re: Irrevocable Transferable Letter of Credit No.
The undersigned (the "Beneficiary"), hereby notifies [Name of Letter of
Credit Bank] (the "Issuer") that it has irrevocably assigned the
above-referenced Letter of Credit to ______________ (the "Assignee") with an
address at ________________ effective as of the date the Issuer receives this
Notice of Assignment. The Assignee acknowledges and agrees that the Letter of
Credit Amount may have been reduced pursuant to the terms thereof, and that the
Assignee is bound by any such reduction.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Notice of Assignment as of this _____ day of _______, 199_.
PROLOGIS DEVELOPMENT SERVICES INCORPORATED
By:
------------------------------------------
Name:
Title:
Agreed:
[Assignee]
____________________
78
79
80
Exhibit A to Lease Agreement
----------------------------
[Diagram]
81
Exhibit B to Lease Agreement
----------------------------
[Diagram]
82
Exhibit C to Lease Agreement
----------------------------
[Diagram]
83
Exhibit D to Lease Agreement
----------------------------
Those encumbrances listed on Schedule B to the Preliminary Report
#992107340, dated as of July 29, 1999, of Xxxxxxx Title of Northern Nevada,
Reno, Nevada, but only to the extent such encumbrances pertain to Parcel 1 of
Parcel Map. No. 3487 filed in the office of the County Recorder of Washoe
County, State of Nevada, on March 19, 1999 as File No. 2318611; provided,
however, that (notwithstanding the foregoing) the following exceptions described
on said Schedule B do not encumber the Property and shall not constitute
Permitted Encumbrances: 5, 6 and 21.
84
Exhibit E to Lease Agreement
----------------------------
DRAWING REQUEST
______________, 199__
[NAME AND ADDRESS OF LETTER
OF CREDIT BANK]
Re: Irrevocable Transferrable Letter of Credit No. ____ (the "Letter of Credit")
The undersigned (the "Beneficiary"), hereby certifies to [Name of
Letter of Credit Bank] (the "Issuer") that:
(a) The Beneficiary is making a request for payment in lawful currency
of the United States of America under Irrevocable Transferrable Letter of Credit
No. ____ (the "Letter of Credit") in the amount of $ ________.
(b) The Letter of Credit Amount (as defined in the Letter of Credit) as
of the date hereof and prior to payment of the amount demanded in this Drawing
Request is $__________ . The amount requested by this Drawing Request does not
exceed the Letter of Credit Amount.
(c) Demand is made for payment under the Letter of Credit as a result
of the occurrence and continuation of an Event of Default (as defined in the
Lease Agreement).
Please wire transfer the proceeds of the drawing to the following
account of the Beneficiary at the financial institution indicated below:
__________________________
__________________________
__________________________
Unless otherwise defined, all capitalized terms used herein have the
meanings provided in, or by reference in, the Letter of Credit.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Drawing Request as of the ___ day of _______________, 199__.
__________________________
By: __________________________
Name:
Title:
85
Exhibit F to Lease Agreement
----------------------------
[Intentionally Omitted]
86
Exhibit G to Lease Agreement
----------------------------
STORAGE AND USE OF PERMITTED HAZARDOUS MATERIALS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED __________, 19__, BETWEEN
_________________________
and
_________________________
Permitted Hazardous Materials and Use.
Tenant has requested Landlord's consent to use the Hazardous Materials
listed below in its business at the Premises (the "Permitted Hazardous
Materials"). Subject to the conditions set forth herein, Landlord hereby
consents to the Use (hereinafter defined) of the Permitted Hazardous Materials.
Any Permitted Hazardous Materials on the Premises will be generated, used,
received, maintained, treated, stored, or disposed in a manner consistent with
good engineering practice and in compliance with all Environmental Requirements.
Permitted Hazardous Materials (including maximum quantities):
______________
______________
______________
The storage, uses or process involving the Permitted Hazardous
Materials (the "Use") are described below.
Use [If limited to receiving and storage, so specify]:
______________
______________
______________
No Current Investigation. Tenant represents and warrants that
it is not currently subject to an inquiry, regulatory investigation, enforcement
order, or any other proceeding regarding the generation, use, treatment,
storage, or disposal of a Hazardous Material.
Notice and Reporting. Tenant immediately shall notify Landlord
in writing of any spill, release, discharge, or disposal of any Hazardous
Material in, on or under the Premises or the Project. All reporting obligations
imposed by Environmental Requirements are strictly the responsibility of Tenant.
Tenant shall supply to Landlord within 5 business days after Tenant
87
first receives or sends the same, copies of all claims, reports, complaints,
notices, warnings or asserted violations relating in any way to Tenant's use of
the Premises.
Indemnification. Tenant's indemnity obligation under the Lease with
respect to Hazardous Materials shall include indemnification for the
liabilities, expenses and other losses described therein as a result of the Use
of the Hazardous Materials or the breach of Tenant's obligations or
representations set forth above. It is the intent of this provision that Tenant
be strictly liable to Landlord as a result of the Use of Hazardous Materials
without regard to the fault or negligence of Tenant, Landlord or any third
party.
Disposal Upon Lease Termination. At the expiration or earlier
termination of the Lease, Tenant, at its sole cost and expense, shall: (i)
remove and dispose off-site any drums, containers, receptacles, structures, or
tanks storing or containing Hazardous Materials (or which have stored or
contained Hazardous Materials) and the contents thereof; (ii) remove, empty, and
purge all underground and above ground storage tank systems, including connected
piping, of all vapors, liquids, sludges and residues; and (iii) restore the
Premises to its original condition. Such activities shall be performed in
compliance with all Environmental Requirements and to the satisfaction of
Landlord. Landlord's satisfaction with such activities or the condition of the
Premises does not waive, or release Tenant from, any obligations hereunder.
88
Exhibit H to Lease Agreement
----------------------------
89
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
-------------------------------------------------------
THE STATE OF NEVADA ss.
ss.
COUNTY OF WASHOE ss.
THIS AGREEMENT is made as of September 8, 1999, among Prologis Trust,
formerly known as Security Capital Industrial Trust ("Lender"),
xxxxxxxxxxxxxx.xxx llc (hereinafter called "Tenant"), and ProLogis Development
Services Incorporated (hereinafter called "Landlord").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Lender has made or has agreed to make loans to Landlord (the
"Loan"), to be evidenced by promissory notes executed by Landlord payable to the
order of each Lender (the "Notes"), bearing interest as therein specified;
WHEREAS, the Notes are secured by, among other things, a Deed of Trust,
Security Agreement, Financing Statement and Assignment of Rental (the "Deed of
Trust"), creating a first lien upon that certain tract of real property
described in Exhibit A attached hereto (the "Property"), and an Assignment of
Leases and Rents (all such security instruments and all security instruments now
or hereafter executed between Landlord and Lender in connection with the Loan,
the Notes, or the Property, and all renewals, extensions, modifications, and/or
increases thereof to be referred to hereinafter collectively as the "Collateral
Documents");
90
WHEREAS, Tenant and Landlord have executed that certain written lease,
dated the 8th day of September, 1999 (the "Lease"), a memorandum of which was
recorded as Document No. _________________, Official Records, Washoe County,
Nevada, covering all or a portion of the Property (the "Demised Premises");
WHEREAS, Tenant and Landlord have requested that Lender agree that it
will not disturb Tenant's possession of the Demised Premises and Lender has
agreed to do so provided that Tenant expressly subordinates the Lease and all of
Tenant's rights thereunder to the Collateral Documents and the liens and
security interests created thereby and that Tenant agrees to attorn to Lender or
a subsequent purchaser of the Demised Premises;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby expressly acknowledged, Lender, Landlord, and
Tenant hereby agree as follows:
Subordination. The Lease and all of Tenant's rights thereunder are,
shall be, shall remain, and are expressly made subordinate and inferior to the
liens and security interests created by the Collateral Documents, and Tenant
also agrees that the liens and security interests created by the Collateral
Documents shall be and remain prior and superior to the Lease and to all of the
rights of the Tenant thereunder, regardless of how often or in what manner the
Notes, together with the liens securing the same, and any of the Collateral
Documents, may be renewed, extended, increased, changed, or altered.
Non-Disturbance. So long as Tenant is not in default in the payment of
basic rent or percentage rent or additional rent (each as applicable under the
Lease) beyond any applicable notice and grace periods provided for under the
Lease or in the performance of any of the terms, covenants, or conditions of the
Lease on Tenant's part to be performed beyond any applicable notice and grace
periods provided for under the Lease, Tenant's use and possession of the Demised
Premises and Tenant's rights and privileges under the Lease, or any extensions
91
or renewals thereof approved by Lender, shall not be terminated, diminished or
interfered with or affected in any manner by Lender in the exercise of any of
its rights under the Deed of Trust or otherwise, (ii) Tenant's occupancy of the
Demised Premises shall not be disturbed by Lender in any manner in the exercise
of any of Lender's rights under the Collateral Documents during the term of the
Lease or any such extensions or renewals thereof, and (iii) Lender will not join
Tenant as a party defendant in any action or proceeding for the purpose of
terminating Tenant's interest and estate under the Lease because of any default
by Landlord, as grantor, under the Deed of Trust or otherwise.
Attornment. In the event that any proceedings are brought for the
foreclosure of the Deed of Trust or if the Demised Premises are conveyed to
Lender by deed in lieu of foreclosure, Tenant shall attorn to Lender or the
purchaser upon any such conveyance or foreclosure sale or trustee's sale and
shall recognize Lender or such purchaser as Landlord under the Lease. Such
attornment shall be effective and self-operative without the execution of any
further instrument on the part of either of the parties hereto. Tenant agrees,
however, to execute and deliver at any time and from time to time, upon the
request of Landlord or of any holder(s) of any of the indebtedness or other
obligations secured by the Deed of Trust and other Collateral Documents or any
such purchaser (1) any instrument or certificate, reasonably requested by
Landlord or of such holder(s) or such purchaser, which may be necessary or
appropriate in any such foreclosure proceeding or otherwise to evidence such
attornment, and (2) an instrument of certificate regarding the status of the
Lease, consisting of statements, if true, (i) that the Lease is in full force
and effect, (ii) the date through which rentals have been paid, (iii) the date
of the commencement of the term of the Lease, (iv) the nature of any amendments
or modifications to the Lease, (v) that, to the best of Tenant's knowledge, no
default, or state of facts, which with the passage of time or notice would
constitute a default, exists on the part of either party to the Lease, and (vi)
the date on which payment of additional rents and/or percentage rents, if any,
are due under the terms of the Lease.
92
Lender's Obligations. If Lender shall succeed to the interest of
Landlord under the Lease in any manner, of if any purchaser acquires the Demised
Premises upon any foreclosure of the Deed of Trust or any trustee's sale under
the Deed of Trust, Lender or such purchaser, as the case may be, in the event of
attornment shall have the same remedies by entry, action, or otherwise in the
event of any default by Tenant in the payment of rent or additional rent or in
the performance of any of the terms, covenants, and conditions of the Lease on
Tenant's part to be performed that Landlord had or would have had if Lender or
such purchaser had not succeeded to the interest of Landlord. From and after any
such attornment, Lender or such purchaser shall be bound to Tenant under all of
the terms, covenants, and conditions of the Lease as if Lender or such purchaser
had executed the Lease as Landlord, and Tenant shall from and after the
succession to the interest of Landlord under the Lease by Lender or such
purchaser have the same remedies against Lender or such purchaser for the breach
of an agreement contained in the Lease that Tenant might have had under the
Lease against the Landlord if Lender or such purchaser had not succeeded to the
interest of Landlord, provided further, however, that Lender or such purchaser
shall not be:
(a) liable for any action or omission of any prior landlord
(including Landlord), it being understood, however, that (i)
the foregoing is not intended to relieve Lender or such
purchaser of any liability arising by reason of its acts or
omissions from and after the date that it succeeds to the
interests of Landlord, including a continuation of the failure
of the prior Landlord to perform its obligations under the
Lease; and (ii) the foregoing shall in no way diminish
Tenant's Express Set-Off Rights (as hereinafter defined), even
if such rights exist by reason of circumstances occurring
before the date on which Lender or such purchaser succeeds to
Landlord's interest under the Lease; or
(a) bound by any rent which Tenant might have paid for more than
the current month to any prior landlord (including Landlord);
or
93
(a) bound by any amendment or modification of the Lease made
without its written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; or
(a) subject to any offsets or defenses which Tenant might be
entitled to assert against Landlord it being understood,
however, that the foregoing shall in no way diminish Tenant's
Express Set-Off Rights, even if such rights exist by reason or
circumstances occurring before the date on which Purchaser
acquires Landlord's interest in the Lease; or
(a) liable for any security deposits except to the extent received
from Landlord.
Notwithstanding the foregoing, in the event that Lender or any such
purchaser is an affiliate or is otherwise related to Landlord (or any prior
Landlord) then in such event, clauses 4(a) - 4(e) hereof shall have no
application and in the event that such Lender or purchaser shall succeed to the
interests of Landlord under the Lease then such Lender or purchaser shall be
responsible for all of the obligations of Landlord under the Lease as if such
Lender or purchaser shall have originally executed the Lease as the landlord
thereunder.
For purposes of this Agreement, the term "Tenant's Express Set-Off
Rights" shall mean Tenant's rights to any abatement, credit or setoff that are
expressly provided for in the Lease or the exhibits annexed thereto, regardless
of whether such rights arise by reason of a failure or default by Landlord or a
failure or default by a Lender or a purchaser.
No Waiver. Nothing herein contained is intended, nor shall it be
construed, to abridge or adversely affect any right or remedy of Landlord
provided for under the Lease in the event of default by Tenant in the payment of
any rent or in the performance of any of the terms, covenants or conditions of
the Lease on Tenant's part to be performed.
94
Notices. Any notice or communication required or permitted hereunder
shall be given in writing, sent by United States mail, postage prepaid,
registered or certified mail, addressed as follows:
To Lender: ProLogis Trust
00000 X. 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Legal Department
To Tenant: Xxxxxx & Xxxxx/Xx.xxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
To Landlord: ProLogis Development Services Incorporated
00000 X. 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Legal Department
or to such other address or in care of such other person as hereinafter shall be
designated in writing by the applicable party, and shall be deemed to have been
given as of the date of deposit in an official receptacle of the United States
mail in the manner aforesaid.
Governing Law. The validity and construction of this Agreement shall be
governed by the laws of the State of Nevada.
95
Modifications and Successors. This Agreement may not be modified orally
or in any manner other than by an agreement in writing signed by the parties
hereto or their respective successors in interest. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, their successors and
assigns, and any purchaser or purchasers at foreclosure of the Demised Premises,
and their respective heirs, personal representatives, successors and assigns.
Counterparts. This Agreement may be executed in several counterparts,
and all so executed shall constitute one agreement, binding on all parties
hereto, notwithstanding that all parties are not signatories to the original or
the same counterpart.
96
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Lender:
ProLogis Trust
By: /s/ Xxxxx Xxxxx
--------------------------
Name: Xxxxx Xxxxx
--------------------------
Title: Senior Vice President
--------------------------
LANDLORD:
ProLogis Development Services Incorporated
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
--------------------------
Title: Senior Vice President
--------------------------
TENANT:
xxxxxxxxxxxxxx.xxx llc
______________________
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------
Title: Vice President, Operations
--------------------------
97
THE STATE OF __________ ss.
ss.
COUNTY OF _____________ ss.
This instrument was acknowledged before me on this ______ day of
______________, 19___, by ________________________________________ of
__________________________, a ____________________________, on behalf of said
___________.
_______________________
Notary Public Signature
(PERSONALIZED SEAL, if any)
THE STATE OF __________ ss.
ss.
COUNTY OF _____________ ss.
This instrument was acknowledged before me on this ______ day of
_______________, 19___, by ________________________________________ of
_____________________________________, on behalf thereof.
_______________________
Notary Public Signature
(PERSONALIZED SEAL, if any)
98
THE STATE OF __________ ss.
ss.
COUNTY OF _____________ ss.
This instrument was acknowledged before me on this _______ day of
__________________, 19___, by ________________________________ of
_________________________________________________, on behalf thereof.
_______________________
Notary Public Signature
(PERSONALIZED SEAL, if any)
99
Exhibit A to Exhibit H to Lease Agreement
-----------------------------------------
Parcel 1 of PARCEL MAP NO. 3487, according to the map thereof, filed in
the office of the County Recorder of Washoe County, State of Nevada, on March
19, 1999 as File No. 2318611, and any and all existing or future improvements
located thereon.
100
Exhibit I to Lease Agreement
----------------------------
Form of Tenant's Estoppel Certificate
[Letterhead of Tenant]
[Date]
[Name and Address of Landlord]
Re: Lease (the "Lease", dated ____________, between
_________________ ("Landlord") and _____________________
("Tenant") Premises:
Dear Sir or Madam:
Tenant hereby certifies the following information as of the date of
this certificate:
1. The Lease is in full force and effect and has not been
modified, supplemented, or amended, except as set forth on
Schedule I annexed hereto.
101
2. The Base Rent due under the Lease has been paid through
____________.
3. Except as otherwise provided in the Lease or on Schedule II
annexed hereto, no payment of Base Rent or additional rent has
been paid by Tenant more than thirty days in advance.
4. Except as set forth on Schedule III annexed hereto, to the
best of Tenant's knowledge, as of the date hereof, Landlord is
not in default under the terms of the Lease.
[TENANT]
By: _____________________________
Name:
Title:
102
Form of Tenant's Estoppel Certificate
-------------------------------------
[Letterhead of Landlord]
[Date]
[Name and Address of Tenant]
Re: Lease (the "Lease", dated ____________, between
_________________ ("Landlord") and _____________________
("Tenant") Premises:
Dear Sir or Madam:
Landlord hereby certifies the following information as of the date of
this certificate:
1. The Lease is in full force and effect and has not been
modified, supplemented, or amended, except as set forth on
Schedule I annexed hereto. ----------
2. The Base Rent due under the Lease has been paid through
____________.
103
3. Except as otherwise provided in the Lease or on Schedule II
annexed hereto, no payment ----------- of Base Rent or
additional rent has been paid by Tenant more than thirty days
in advance.
4. Except as set forth on Schedule III annexed hereto, to the
best of Tenant's knowledge, as of the date hereof, Landlord is
not in default under the terms of the Lease.
[LANDLORD]
By: _____________________________
Name:
Title:
104
Exhibit J to Lease Agreement
----------------------------
RECORD AND RETURN TO:
--------------------
Xxxxx Xxxxxxx, Esq.
Xxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
PROPERTY DESCRIPTION
--------------------
Parcel 0 xx Xxxxxx Xxx Xx. 0000, XXX: 000-000-00
County of Washoe
State of Nevada
Memorandum of Lease
This Memorandum of Lease is made the 8th day of September, 1999, by and
between PROLOGIS DEVELOPMENT SERVICES INCORPORATED, a Delaware corporation,
having its principal office at 00000 Xxxx 00xx Xxxxx, Xxxxxx, Xxxxxxxx 00000
105
("Landlord") and xxxxxxxxxxxxxx.xxx llc, a Delaware limited liability company
having an office at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Tenant").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Landlord (as successor in interest to SCI Development Services
Incorporated) is the sole owner in fee simple of the piece, parcel or tract of
land lying and being in the County of Washoe and State of Nevada, more
particularly described in Schedule I annexed hereto (the "Land");
WHEREAS, Landlord, as landlord, and Tenant, as tenant, have entered
into a lease, dated September 8, 1999 (the "Lease"), covering the Land and all
improvements now or hereafter erected thereon (including, without limitation,
that certain building (the "Building") that is to be erected by Landlord on the
Land and that is to contain approximately 600,000 square feet of space);
WHEREAS, the Land and the Building are part of that certain industrial
project (the "Project") commonly known as Xxxxxxx Ranch Trade Center I, which
industrial project is composed of the parcels of land lying and being in the
County of Washoe, State of Nevada, as more particular described in Schedule II
annexed hereto, together with any improvements now or hereafter erected thereon;
and
WHEREAS, Landlord and Tenant desire to have a Memorandum of Lease
recorded in the official public records of real property of Washoe County,
Nevada.
106
NOW, THEREFORE, Landlord and Tenant hereby state the following for
recording:
I.
Description of Premises
The premises demised by the Lease (the "Premises") consist of, inter
alia, the Land and the Building, together with (x) any and all other
improvements and structures (now or hereafter erected) on the Land, and (y) all
of Landlord's right, title and interest in and to all easements, rights and
other matters appurtenant to the Land or the Building and in and to any land
lying in the bed of any roads adjacent to the Land.
II.
Date of Commencement and Term of Lease
1. The Commencement Date of the Lease is September 8, 1999. The Rent
Commencement Date (as defined in the Lease) will occur 30 days after the
Substantial Completion of the Base Building Work (as defined in the Lease),
which is estimated to occur on or before April 15, 2000, subject to certain
delays, as provided in the Lease.
2. The initial term of the Lease will commence on the Commencement Date
and shall end on the last day of the 120th full calendar month following the
Rent Commencement Date.
107
III.
Extension Terms
Tenant may extend the term of the Lease for four (4) additional
extension terms of five (5) years each, upon the terms and conditions set forth
in the Lease.
IV.
Right of First Offer
Tenant has a right of first offer to purchase the Premises, upon the
terms and conditions set forth in the Lease.
V.
Signage
Tenant has the right, subject to the terms and conditions of the Lease,
to place directional signs as appropriate throughout the Project for the benefit
of its customers.
108
VI.
Other Provisions
Notice is hereby given that the Lease contains additional terms,
covenants, conditions and provisions not set forth in or referred to in this
Memorandum of Lease.
* * * * *
THIS MEMORANDUM OF LEASE IS NOT A COMPLETE SUMMARY OF THE LEASE. The
provisions of this Memorandum of Lease shall not be construed to interpret, vary
or modify the terms, covenants, conditions or provisions of the Lease and in the
event of any conflict between the terms hereof and the terms of the Lease, the
terms of the Lease shall control. A true copy of the Lease is located at the
Premises.
[Remainder of Page Intentionally Blank]
109
EXECUTED IN MULTIPLE COUNTERPARTS each of which shall have the force
and effect of an original, as of the day and year first above written.
TENANT: LANDLORD:
xxxxxxxxxxxxxx.xxx llc ProLogis Development Services Incorporated
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxx, Xx.
------------------------------ -----------------------------
Title: Vice President, Operations Title: Senior Vice President
--------------------------- ----------------------
Address: Address:
00 Xxxxx Xxxxxx, 00xx Xxxxx 00000 Xxxxxxx Xxxx.
Xxx Xxxx, XX 00000 Xxxxxxx, XX 00000
110
Schedule I to Exhibit J
-----------------------
Parcel 1 of PARCEL MAP NO. 3487, according to the map thereof, filed in
the office of the County Recorder of Washoe County, State of Nevada, on March
19, 1999 as File No. 2318611.
111
Schedule II to Exhibit J
------------------------
Parcels 1 and 2 of PARCEL MAP NO. 3487, according to the map thereof,
filed in the office of the County Recorder of Washoe County, State of Nevada, on
March 19, 1999 as File No. 2318611.
Parcels 1 and 2 of PARCEL MAP NO. 3488, according to the map thereof,
filed in the office of the County Recorder of Washoe County, State of Nevada, on
March 19, 1999 as File No. 2318612.
An easement for temporary access as set forth in an instrument recorded
June 16, 1998, as Document No. 2221195 of Official Records.
An easement for sanitary sewer as set forth in an instrument recorded
June 16, 1998, as Document No. 2221193 of Official Records.
112
Exhibit K to Lease Agreement
----------------------------
[Intentionally Omitted]
113
Exhibit L to Lease Agreement
----------------------------
[Forms of Warranties and Guarantees]
114
