EXHIBIT 10.4
BUILD-TO-SUIT NET LEASE
between
OPUS NORTHWEST, L.L.C.,
as Landlord
and
▇▇▇▇▇▇▇▇▇▇.▇▇▇,INC.
as Tenant
March 23, 2000
TABLE OF CONTENTS
Page
1. DEFINITIONS AND EXHIBITS............................................... 1
1.1 Definitions....................................................... 1
1.2 Exhibits.......................................................... 8
2. GRANT OF LEASE; RENEWAL OPTIONS........................................ 8
2.1 Demise............................................................ 8
2.2 Quiet Enjoyment................................................... 8
2.3 Landlord and Tenant Covenants..................................... 8
2.4 Memorandum of Term................................................ 8
2.5 Tenant's Renewal Options.......................................... 8
2.6 Tenant's Termination Option....................................... 10
3. CONSTRUCTION; DELIVERY AND ACCEPTANCE OF PREMISES...................... 11
3.1 Landlord's Construction Obligations............................... 11
3.2 Delivery of Possession............................................ 11
3.3 Punch List........................................................ 12
3.4 Representatives................................................... 12
3.5 Design Information................................................ 13
3.6 Shell Plans....................................................... 13
3.7 Shell Construction................................................ 13
3.8 Leasehold Improvements Plans...................................... 13
3.9 Tenant's Cost Proposal............................................ 14
3.10 Construction of Leasehold Improvements; Payment of Tenant's Cost.. 14
3.11 Change Orders..................................................... 15
3.12 Tenant's Delays................................................... 16
3.13 Adjustments Upon Completion....................................... 16
3.14 Tenant's Property................................................. 16
4. RENT.................................................................... 16
4.1 Basic Rent........................................................ 16
4.2 Additional Rent for Taxes and Operating Expenses.................. 17
4.3 Net Lease; Additional Rent........................................ 19
4.4 Terms of Payment.................................................. 19
4.5 Late Payments..................................................... 19
4.6 Right to Accept Payments.......................................... 19
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TABLE OF CONTENTS
(continued)
Page
5. USE, OCCUPANCY AND COMPLIANCE.......................................... 20
5.1 Use............................................................... 20
5.2 Compliance by Landlord............................................ 20
5.3 Compliance by Tenant.............................................. 20
5.4 Contests.......................................................... 20
5.5 Hazardous Substances.............................................. 21
5.6 Americans With Disabilities Act................................... 22
6. SERVICES AND UTILITIES................................................. 22
6.1 Services Provided by Landlord..................................... 22
6.2 Tenant's Utilities................................................ 23
6.3 Interruption of Services.......................................... 23
7. REPAIRS AND MAINTENANCE................................................ 24
7.1 Tenant's Obligations.............................................. 24
7.2 Landlord's Right of Entry......................................... 24
8. INSURANCE, WAIVERS AND INDEMNITY....................................... 24
8.1 Landlord's Insurance.............................................. 24
8.2 Tenant's Insurance................................................ 25
8.3 General Insurance Requirements.................................... 26
8.4 Waivers........................................................... 27
8.5 Landlord's Indemnity.............................................. 27
8.6 Tenant's Indemnity................................................ 27
9. ALTERATIONS; MECHANICS' LIENS.......................................... 27
9.1 Alterations....................................................... 27
9.2 Mechanics' Liens.................................................. 28
10. ASSIGNMENT AND SUBLETTING.............................................. 29
10.1 Permitted Transfers.............................................. 29
10.2 Transfers Requiring Consent...................................... 29
10.3 Deemed Assignments............................................... 29
10.4 Excess Consideration............................................. 29
10.5 General Provisions............................................... 30
ii
TABLE OF CONTENTS
(continued)
Page
11. CASUALTY................................................................ 30
11.1 Termination Options............................................... 30
11.2 Repair Obligations................................................ 31
11.3 Rent Abatement.................................................... 31
12. EMINENT DOMAIN.......................................................... 32
12.1 Termination....................................................... 32
12.2 Award; Restoration................................................ 32
13. END OF TERM............................................................. 33
13.1 Surrender......................................................... 33
13.2 Holding Over...................................................... 34
14. DEFAULTS AND REMEDIES................................................... 34
14.1 General........................................................... 34
14.2 Events of Default................................................. 34
14.3 Landlord's Remedies............................................... 35
14.4 Landlord's Default; Tenant's Remedies............................. 37
15. SUBORDINATION........................................................... 38
15.1 Subordination, Nondisturbance and Attornment...................... 38
15.2 Option to Make Lease Superior..................................... 38
16. SECURITY DEPOSIT........................................................ 38
16.1 Amount and Form................................................... 38
16.2 Use and Restoration............................................... 39
16.3 Transfers......................................................... 39
16.4 Refund............................................................ 40
17. MISCELLANEOUS........................................................... 40
17.1 Roof Installations................................................ 40
17.2 Building Signage.................................................. 40
17.3 Non-competition................................................... 40
17.4 Brokers........................................................... 40
17.5 Estoppel Certificates............................................. 41
iii
TABLE OF CONTENTS
(continued)
Page
17.6 Notices.......................................................... 41
17.7 Actions by Landlord's Agent...................................... 41
17.8 Severability; Governing Law...................................... 41
17.9 Transfers of Landlord's Interest................................. 42
17.10 Headings......................................................... 42
17.11 Complete Agreement; Modification................................. 42
17.12 No Offer......................................................... 42
17.13 Survival......................................................... 42
17.14 Limitation on Landlord's Liability............................... 42
17.15 Tenant's Authority............................................... 43
17.16 No Partnership................................................... 43
17.17 Force Majeure.................................................... 43
17.18 Financial Statements............................................. 43
17.19 Future Covenants................................................. 43
17.20 Binding Effect................................................... 44
17.21 Acquisition Contingency.......................................... 44
Exhibit A LEGAL DESCRIPTION OF THE LAND...................................... A-1
Exhibit B SHELL SPECIFICATIONS............................................... B-1
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BUILD-TO-SUIT NET LEASE
THIS BUILD-TO-SUIT NET LEASE ("Lease") is entered into as of March 23, 2000
by and between the Landlord and Tenant identified in Section 1.1.
1. DEFINITIONS AND EXHIBITS
1.1 Definitions. In this Lease, the following defined terms have the
meanings set forth for them below or in the section of this Lease indicated
below:
"ADA" means the Americans with Disabilities Act, as amended from time
to time.
"Additional Rent" means all amounts required to be paid by Tenant
under this Lease in addition to Basic Rent including, without limitation,
Operating Expenses and Taxes.
"Affiliates" means, with respect to any party, any entities or
individuals that control, are controlled by or are under common control
with such party, together with its and their respective partners,
venturers, directors, officers, shareholders, trustees, trustors,
beneficiaries, agents, employees and spouses.
"Basic Rent" means the Rent payable according to Section 4.1 based on
a rate per square foot of Rentable Area of the Premises applicable during
each Lease Year of the Term as follows:
Rate of Base Rent Per
Lease Year(s) Square Foot of Rentable Area
------------- ----------------------------
1 - 3 $5.50
-------- -------
4 - 5 $5.85
-------- -------
6 - 8 $6.10
-------- -------
9 - 10 $6.45
-------- -------
"Building" means the building containing approximately 100,000 square
feet of Rentable Area to be constructed by Landlord for Tenant upon the
Land according to Section 3.
"Change Order" has the meaning set forth in Section 3.11.
"Commencement Date" means the first day of the Term, which will be the
date that is 15 days after the Delivery Date.
"Covenant Documents" means all grants, declarations or agreements that
are now or hereafter recorded in the real property records of ▇▇▇▇▇▇▇
County, Colorado and that impose or create easements, covenants, conditions
or restrictions on, over, under, through or with respect to property
located within the Project and that relate to the use,
development or improvement of property within the Project, the operation,
maintenance, repair or replacement of landscaping, streets or other
improvements serving property within the Project or the provision of other
utilities or services to property within the Project.
"Delivery Date" means the date on which Landlord delivers possession
of the Premises to Tenant with Landlord's Work Substantially Completed,
which will be the Projected Delivery Date, unless the Delivery Date is
extended according to Section 3.2.
"Design Information" has the meaning set forth in Section 3.5.
"Environmental Laws" means the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., the Comprehensive Environmental Response,
-- ---
Compensation and Liability Act, U.S.C. Section 9601 et seq. (including the
-- ---
so-called "Superfund" amendments thereto), any other applicable Laws
governing or pertaining to any hazardous substances, hazardous wastes,
chemicals or other materials, including, without limitation, asbestos,
polychlorinated biphenyls, radon, petroleum and any derivative thereof or
any common law theory based on nuisance or strict liability.
"Event of Default" has the meaning set forth in Section 14.2.
"Expiration Date" means (i) if the Commencement Date is the first day
of a month, the 10-year anniversary of the day immediately preceding the
Commencement Date; or (ii) if the Commencement Date is not the first day of
a month, the 10-year anniversary of the last day of the month in which the
Commencement Date occurs.
"First Renewal Term" has the meaning set forth in Section 2.5(a).
"Hazardous Substance" means any substance, chemical or material
declared to be, or regulated as, hazardous or toxic under any Environmental
Law or the presence of which may give rise to liability under any
Environmental Law.
"Improvements" means the Building, the Leasehold Improvements and any
other structures, pavement, lighting fixtures or other improvements now or
later constructed or installed upon the Land.
"Interest Rate" means the Prime Rate plus 5% per annum, but if such
rate exceeds the maximum interest rate permitted by law, such rate will be
reduced to the highest rate allowed by law under the circumstances.
"Land" means the real property, located in the Project that is legally
described on Exhibit A and depicted on Exhibit A-1.
---------
"Landlord" means Opus Northwest, L.L.C., a Delaware limited liability
company.
2
"Landlord's Notice Address" means:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Opus Corporation
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
"Landlord's Rent Address" means:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
"Landlord's Representative" means ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or
▇▇▇▇ ▇▇▇▇▇▇▇.
"Landlord's Work" means the construction and installation of the Shell
and the Leasehold Improvements.
"Laws" means any and all present or future federal, state or local
laws, statutes, ordinances, rules, regulations or orders of any and all
governmental or quasi-governmental authorities having jurisdiction,
including, without limitation, Environmental Laws, and the Covenant
Documents.
"Leasehold Improvements" means all leasehold improvements and
installations, in addition to the Shell, that are to be constructed or
installed by Landlord for Tenant according to Section 3.
"Leasehold Improvements Allowance" means an amount equal to $5.00
multiplied by the number of square feet of Rentable Area of the Premises.
"Leasehold Improvements Plans" means construction plans and
specifications for the Leasehold Improvements.
"Lease Year" means each successive period of 12 calendar months during
the Term, ending on the same day and month (but not year, except in the
case of the last Lease Year) as the day and month on which the Expiration
Date will occur. If the Commencement Date is not the first day of a month,
the first Lease Year will be greater than 12 months by the number of days
from the Commencement Date to the last day of the month in which the
Commencement Date occurs.
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"Market Rental Rate" has the meaning set forth in Section 2.5(b).
"Market Escalations" has the meaning set forth in Section 2.5(b).
"Mortgagee" means any mortgagee, ground lessor, trust deed holder or
sale-leaseback lessor of Landlord's interest in the Premises
"Operating Expenses" means all expenses Landlord incurs in any
applicable calendar year to maintain and operate the Premises in accordance
with the terms of this Lease, including, but not limited to, insurance
premiums (including insurance premiums for rent insurance); maintenance and
repair costs (whether capital or not); lighting costs (such as, for
example, lamps, tubes, ballasts and starters); the costs of operating,
maintaining, repairing and replacing the Standard HVAC Equipment (such as,
for example, preventative maintenance contracts and repairs and
replacements), but excluding the cost of utilities (which will be paid for
directly by Tenant) and excluding that portion of the cost of replacing any
Standard HVAC Equipment for which Landlord is responsible, as provided
below; trash and rubbish removal costs; wages payable by Landlord to
employees whose duties are connected with operating and maintaining the
Premises (but only for the portion of the employees' time allocable to work
related to the Premises); amounts payable by Landlord to contractors or
subcontractors for work or services connected with operating and
maintaining the Premises; all costs of uniforms, supplies and materials
used in connection with operating and maintaining the Premises; all payroll
taxes, unemployment insurance costs, vacation allowances, and the cost of
providing disability insurance or benefits, pensions, profit sharing
benefits, hospitalization, retirement or other so-called fringe benefits;
any expense Landlord incurs or its contractors or subcontractors incur
pursuant to Laws or pursuant to any collective bargaining agreement
covering employees; Landlord's cost for all services, supplies, repairs,
replacements or other expenses connected with maintaining and operating the
Premises; reasonable attorneys' fees and costs Landlord incurs in
connection with appealing or contesting real estate or other taxes or
levies; and such other expenses Landlord ordinarily incurs operating and
maintaining the Premises and not specifically described herein, including
management fees in an amount not greater than 3% of all Rent payable by
Tenant hereunder. Operating Expenses also include expenses Landlord incurs
relating to public sidewalks adjacent to the Premises and any pedestrian
walkway system (either above or below ground) or other public facility
which serves the Premises and any assessments, fees or other charges
imposed upon the Premises or upon Landlord as a result of Landlord's
ownership of the Premises under any Covenant Documents. Notwithstanding the
foregoing, Operating Expenses will not include the cost of (1) any repairs
to, or replacements of (whether capital or not), the Building's roof or
structural elements (including foundations, structural columns and beams
and load-bearing walls); (2) correcting or completing any item of
Landlord's Work set forth on the punch list described in Section 3.3 or
performing any Warranty Work pursuant to such section; (3) any items
(including, but not limited to, costs incurred by Landlord for the repair
of damage to the Building) to the extent Landlord receives reimbursement
from insurance proceed or from a third party, however, the deductible
portion of any insured loss may be
4
included in Operating Expenses as provided in Section 8.1(b); (4) interest
or principal payments or any other financing cost on any mortgage or other
indebtedness of Landlord; (5) any item (including, without limitation, the
cost of repairs or the cost of late filing penalties) necessitated directly
and solely by, or resulting directly and solely from, the negligence of, or
breach of this Lease by, Landlord or any of its agents, employees or
independent contractors; (6) overhead and profit increment paid to Landlord
or its Affiliates for goods and/or services to the Premises to the extent
the same exceeds the cost that would have been charged by an unaffiliated
third party on a competitive basis; or any costs included in Operating
Expenses representing an amount paid to a person, firm, corporation or
other entity related to Landlord which is in excess of the amount which
would have been paid in the absence of such relationship; (7) advertising
and promotional expenditures; (8) costs arising from Landlord's charitable
or political contributions; or (9) any work or service performed for any
facility other than the Premises. Further notwithstanding the foregoing, if
during the Term it becomes necessary to replace any Standard HVAC
Equipment, then Landlord will initially pay for the total cost of the
replacement equipment (the "Replacement Cost"), and the Replacement Cost,
together with interest thereon at the Prime Rate in effect at the time
Landlord purchases the replacement equipment plus 2% per annum, will then
be amortized over the useful life of the replacement equipment, as
reasonably determined by Landlord in accordance with generally accepted
accounting principles, and the annual amortization applicable to each year
of the then-remaining Term (not including any then-unexercised Renewal
Term) will be included in Operating Expenses for such year. The inclusion
of such annual amortization in Operating Expenses will not continue into
any Renewal Term that was not exercised at the time Landlord purchased the
replacement equipment; however, the existence of such replacement equipment
at the Premises will be taken into account in determining the Basic Rent
for such Renewal Term in accordance with Section 2.5(b).
"Premises" means the Land and all Improvements.
"Prime Rate" means the prime interest rate as published from time to
time by The Wall Street Journal, with any changes in such rate to be
-----------------------
effective on the date such change is published.
"Project" means the Compark Business Campus located in ▇▇▇▇▇▇▇ County,
Colorado.
"Projected Delivery Date" means October 31, 2000.
"Rent" means Basic Rent and all Additional Rent.
"Renewal Notice" has the meaning set forth in Section 2.5(a).
"Renewal Term" has the meaning set forth in Section 2.5(a).
5
"Rentable Area" means gross building area in square feet, calculated
in accordance with the Standard Method for Measuring Floor Area in Office
Buildings published by the Building Owners and Managers Association
International and approved by the American National Standards Institute,
Inc. on June 7, 1996.
"Second Renewal Term" has the meaning set forth in Section 2.5(a).
"Shell" means those portions of the Building and those additional site
Improvements that are specified on the Shell Specifications.
"Shell Plans" means construction plans and specifications for the
Shell.
"Shell Specifications" means the preliminary specifications for the
Shell set forth on Exhibit B.
---------
"Special HVAC Equipment" means the heating, ventilating, air
conditioning and refrigeration equipment installed in order to provide
heating, ventilation, air conditioning or refrigeration to any areas of, or
equipment within, the Premises that are unique to Tenant's business, such
as, for example, the equipment installed to provide cooling to Tenant's
food refrigeration rooms.
"Standard HVAC Equipment" means the heating, ventilating and air
conditioning equipment installed in order to provide ordinary and customary
heating, ventilation and air conditioning to the office and warehouse
portions of the Premises, but excluding any Special HVAC Equipment.
"Substantially Completed" means, with respect to Landlord's Work, that
(a) all utilities called for by the Shell Plans have been installed and
connected to the Premises; (b) all roads necessary to provide access to the
Premises have been graded and paved; (c) all of Landlord's Work
contemplated by Section 3 of this Lease has been substantially completed;
(d) a certificate of occupancy (temporary or final) has been issued by the
appropriate governmental authority permitting use of the Premises for the
use permitted under this Lease (upon Tenant's request, Landlord will
deliver to Tenant a copy of such certificate of occupancy); (e) Landlord
has delivered to Tenant a certificate of completion from Landlord's
architect certifying substantial completion of the matters set forth in the
Shell Plans and the Leasehold Improvements Plans; and (f) any work
remaining to be completed or corrected in the Premises is of such a nature
that it will not materially and adversely interfere with Tenant's use and
occupancy of the Premises and will be able to be completed within 60 days.
"Taxes" means all ad valorem real and personal property taxes and
assessments, special or otherwise, levied upon or with respect to the
Premises, the personal property used in operating the Premises, and the
rents and additional charges payable by Tenant according to this Lease, and
imposed by any taxing authority having jurisdiction; and all taxes, levies
and charges which may be assessed, levied or imposed in replacement of, or
in addition to, all or any part of ad valorem real or personal property
taxes or assessments
6
as revenue sources, and which in whole or in part are measured or
calculated by or based upon the Premises, the leasehold estate of Landlord
or Tenant in and to the Premises, or the rents and other charges payable by
Tenant according to this Lease. Taxes will not include any net income,
franchise, business and occupation, excise, transfer, gift, inheritance or
other similar taxes of Landlord.
"Tax Year" means a 12-month period for which Taxes are assessed.
"Tenant" means HomeGrocer. com, Inc., a Washington corporation.
"Tenant's Cost" means the total cost of preparing the Leasehold
Improvements Plans, obtaining all necessary permits for, and constructing
and installing, the Leasehold Improvements in the Shell, and providing any
required services during construction of the Leasehold Improvements (such
as electricity and other utilities and refuse removal). Landlord and Tenant
agree that Tenant's Cost will include a general contractor's fee payable to
Landlord in an amount equal to 6% of the costs of constructing and
installing the Leasehold Improvements and a cost of general conditions in
an amount equal to 5% of the costs of constructing and installing the
Leasehold Improvements. Tenant's Cost will also include any increases in
Landlord's costs of designing, constructing or installing the Shell that
result from Change Orders requested by Tenant.
"Tenant's Cost Proposal" has the meaning set forth in Section 3.9.
"Tenant's Notice Address" means,
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
Attn: Vice President Operations
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
HomeGrocer. com, Inc.
Attn: Legal Department
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
"Tenant's Representative" means ▇▇▇▇▇ ▇▇▇▇▇, or such additional or
alternative person or persons as may be appointed by Tenant pursuant to
Section 3.4
"Term" means the duration of this Lease, which will be approximately
10 years beginning on the Commencement Date and ending on the Expiration
Date, unless terminated earlier or extended further as provided in this
Lease. The Term will also include any exercised Renewal Term.
"Warranty Work" has the meaning set forth in Section 3.3.
7
1.2 Exhibits. The Exhibits listed below are attached to and incorporated
in this Lease. In the event of any inconsistency between such Exhibits and the
terms and provisions of this Lease, the terms and provisions of the Exhibits
will control. The Exhibits to this Lease are:
Exhibit A - Legal Description of the Land
Exhibit B - Shell Specifications
2. GRANT OF LEASE; RENEWAL OPTIONS
2.1 Demise. Subject to the terms, covenants, conditions and provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises for the Term.
2.2 Quiet Enjoyment. Landlord covenants that, so long as no Event of
Default exists, Tenant will have quiet and peaceful possession of the Premises
during the Term.
2.3 Landlord and Tenant Covenants. Landlord covenants to observe and
perform all of the terms, covenants and conditions applicable to Landlord in
this Lease. Tenant covenants to pay the Rent when due, and to observe and
perform all of the terms, covenants and conditions applicable to Tenant in this
Lease.
2.4 Memorandum of Term. After the occurrence of the Delivery Date, either
party will, upon the other's request, execute and acknowledge a recordable
memorandum setting forth the date on which the Commencement Date occurred or
will occur and the date on which the Expiration Date is scheduled to occur.
2.5 Tenant's Renewal Options.
(a) Renewal Terms. Subject to the terms and provisions of this
-------------
Section 2.5, Tenant, at its option, may extend the Term of this Lease for
one five-year period at the end of the initial Term (the "First Renewal
Term") and, if Tenant exercises its option with respect to the First Renewal
Term, for an additional five-year period at the end of the First Renewal
Term (the "Second Renewal Term"). The First Renewal Term and the Second
Renewal Term are individually referred to herein as a "Renewal Term." To
exercise each such option, Tenant must deliver written notice of the
exercise thereof (a "Renewal Notice") to Landlord no earlier than 14 and no
later than 10 months prior to the expiration of (i) the initial Term, in the
case of Tenant's option with respect to the First Renewal Term, or (ii) the
First Renewal Term, in the case of Tenant's option with respect to the
Second Renewal Term. During each Renewal Term, all of the terms and
provisions of this Lease will apply, except that (1) after the Second
Renewal Term there will be no further right of renewal; (2) the Basic Rent
payable for each month of the first Lease Year of each Renewal Term will be
1/12 of the amount obtained by multiplying the Market Rental Rate in effect
at the time Tenant delivers its Renewal Notice with respect to such Renewal
Term (determined as set forth below) by the Rentable Area of the Premises;
and (3) the Basic Rent payable during the remaining Lease Years of each
Renewal Term will be subject to increase in accordance with the Market
Escalations in effect at the time Tenant delivers its Renewal Notice
(determined as set forth below).
8
(b) Market Rental Rate and Market Escalations. As used herein, "Market
-----------------------------------------
Rental Rate" means a rental rate per square foot of Rentable Area per year
equal to the prevailing first year rental rate then being obtained by
landlords of buildings comparable to the Building in the market area of
southeast suburban Denver in which the Project is located under leases of
comparable space for a comparable term (the "Comparable Transactions");
provided, however, that (i) in determining the Market Rental Rate, there
will be an adjustment to such prevailing rental rate (amortized, without
interest, equally over the subject Renewal Term) to account for (A) any
tenant improvement allowances, free rent concessions, brokerage commissions
or other tenant inducements that are required to be paid by the landlords
in the Comparable Transactions in order to achieve such prevailing rental
rate but which will not be required to be paid by Landlord with respect to
the subject Renewal Term under this Lease, and (B) the value of air
conditioning equipment and other leasehold improvements (but excluding
Tenant's trade fixtures) then existing at the Premises but which do not
exist in the premises demised in the Comparable Transactions; and (ii) in
no event will the Market Rental Rate for any Renewal Term be less than the
annual rate at which Basic Rent was payable by Tenant for the immediately
preceding Lease Year of the Term. "Market Escalations" means both the
rate(s) and frequency by which, in Comparable Transactions, the Market
Rental Rate is increased during the terms of such transactions (for
example, the rental rate may be increased by 3% every other year, or by 2%
every year, or by 4% after two years and by 3% after four years, etc.).
Landlord and Tenant will, for a period of 30 days from and after the date
on which Tenant delivers its Renewal Notice, meet with each other and
negotiate in good faith to agree upon the then-current Market Rental Rate
and the then current Market Escalations acceptable to both parties. If the
parties are unable to agree upon the Market Rental Rate and Market
Escalations during such 30-day period, then, Landlord will, within seven
days after the expiration of such 30-day period, deliver to Tenant a
written determination of the Market Rental Rate and Market Escalations as
determined by Landlord ("Landlord's Determination"). Tenant will have 14
days from the date of Landlord's delivery of Landlord's Determination to
notify Landlord of Tenant's acceptance of Landlord's Determination or
deliver to Landlord Tenant's written determination of the Market Rental
Rate and Market Escalations ("Tenant's Determination"). If Tenant does not
deliver Tenant's Determination to Landlord within such 14-day period,
Tenant will be deemed to have accepted Landlord's Determination and the
rental rate and escalations set forth in Landlord's Determination will be
the Market Rental Rate and Market Escalations. If Tenant does deliver
Tenant's Determination within such 14-day period, then Landlord and Tenant
will have an additional 10 days from the date of delivery of Tenant's
Determination to negotiate a Market Rental Rate and Market Escalations
acceptable to both Landlord and Tenant. If no agreement can be reached as
to the Market Rental Rate and Market Escalations within such 10-day period,
then within seven days after such 10-day period expires, Landlord and
Tenant will mutually appoint a commercial leasing broker that has at least
10 years full-time experience in the market area. If Landlord and Tenant
are unable to mutually agree on a broker, either of the parties to this
Lease, after giving five days prior notice to the other party, may apply to
the then president of the Denver Board of Realtors for the selection of a
broker who meets the foregoing qualifications, which selection will be
9
made within three days. The broker selected by the president of the Board
of Realtors will be a person who has not previously acted in any capacity
for either party and who meets the foregoing experience qualifications. The
broker will, within 10 days of his or her appointment, review Landlord's
Determination and Tenant's Determination of the Market Rental Rate and the
Market Escalations and such other information as he or she deems necessary
and will determine whether Landlord's Determination or Tenant's
Determination of the Market Rental Rate and the Market Escalations is more
reasonable. The broker will immediately notify the parties of his or her
determination. The Market Rental Rate and Market Escalations determined by
Landlord or Tenant and selected as the more reasonable by the broker will
be the Market Rental Rate and Market Escalations used to determine the
Basic Rent for the subject Renewal Term. Each of the parties will bear 1/2
the cost of the broker.
(c) Limitation on Tenant's Rights. Tenant will have no right to extend
-----------------------------
the Term and a Renewal Notice will be ineffective if an Event of Default
exists at the time such notice is given. Any termination of this Lease
terminates all rights under this Section 2.5.
2.6 Tenant's Termination Option. Tenant, at its option, will have the one
time right to terminate this Lease (the "Termination Option") effective as of
the last day of the fifth Lease Year (the "Early Termination Date"); provided
that: (a) Tenant gives written notice to Landlord of Tenant's exercise of the
Termination Option no earlier than 14 months and no later than l0 months prior
to the Early Termination Date; (b) simultaneously with delivering such notice of
Tenant's exercise of the Termination Option to Landlord, Tenant pays to Landlord
a termination payment in the amount of $750,000; and (c) notwithstanding the
provisions of Section 13.1, on or before the Early Termination Date, Tenant
removes from the Premises all Leasehold Improvements and equipment installed
therein for Tenant's use (including, without limitation, the Special HVAC
Equipment) that Landlord, at its option, specifies in a notice given to Tenant
within 45 days after delivery of Tenant's notice exercising the Termination
Option and Tenant repairs all damage caused by such removal. If Tenant exercises
the Termination Option, makes the termination payment and removes all Leasehold
Improvements and equipment required to be removed in accordance with the
provisions of this Section 2.6, then this Lease will terminate on the Early
Termination Date, whereupon Tenant will surrender the Leased Premises in
accordance with Section 13.1 (except as otherwise provided above), and both
parties will thereafter be relieved of any obligations under this Lease that
would otherwise have accrued subsequent to the Early Termination Date, except
for those obligations which expressly survive any termination of this Lease. At
Landlord's option, Tenant will have no right to exercise the Termination Option
pursuant to this Section 2.6 if an Event of Default exists at the time Tenant
delivers its notice of exercise of the Termination Option. If Tenant fails to
exercise the Termination Option as provided above, then the Termination Option
and this Section 2.6 will automatically and immediately become null and void and
of no further force or effect.
10
3. CONSTRUCTION; DELIVERY AND ACCEPTANCE OF PREMISES
3.1 Landlord's Construction Obligations. Subject to and in accordance with
the provisions of this Section 3, Landlord will (i) at Landlord's sole cost and
expense, design, construct and install the Shell on the Land; and (ii) at
Landlord's cost up to the amount of the Leasehold Improvements Allowance, and
otherwise at Tenant's sole cost and expense, design, construct and install the
Leasehold Improvements. Landlord will be solely responsible for obtaining all
necessary permits from all applicable governmental and quasi-governmental
agencies having jurisdiction for Landlord's Work. Landlord has estimated that
Landlord's Work will be Substantially Completed by the Projected Delivery Date;
however, Landlord agrees to use reasonable efforts (utilizing ordinary and
customary construction practices) to cause Landlord's Work to be Substantially
Completed as much in advance of the Projected Delivery Date as practicable.
Tenant agrees to reasonably cooperate with such efforts.
3.2 Delivery of Possession. If Landlord is unable to deliver exclusive
possession (i.e., free and clear of any other occupants or rights of occupancy,
but subject to the rights of Landlord under this Lease and the rights of others
under the Covenant Documents) of the Premises with the Landlord's Work
Substantially Completed by the Projected Delivery Date, then, except as provided
below, Landlord will not be in default or liable in damages to Tenant, nor will
the obligations of Tenant be affected, provided, however, that (i) the Delivery
Date will be extended automatically by one day for each day of the period after
the Projected Delivery Date to the day on which Landlord tenders exclusive
possession of the Premises to Tenant with Landlord's Work Substantially
Completed, less any portion of that period attributable to Tenant's delays as
more particularly described in Section 3.12; and (ii) if Landlord does not
tender exclusive possession of the Premises to Tenant with the Landlord's Work
Substantially Completed on or before March 30, 2001 (pins any period of delay
caused by Tenant's delays as more particularly described in Section 3.12),
Tenant will have the right to terminate this Lease by delivering written notice
of termination to Landlord not more than 30 days after such tender deadline
date. Upon a termination under clause (ii) above, each party will, upon the
other's request, execute and deliver an agreement in recordable form containing
an acknowledgement of the termination of this Lease; neither Landlord nor Tenant
will have any further obligations to each other, including, without limitation,
any obligations to pay for work previously performed in the Premises; all
improvements to the Premises will become and remain the property of Landlord;
and Landlord will refund to Tenant any sums paid to Landlord by Tenant in
connection with the Lease, including, without limitation, any payments to
Landlord of portions of Tenant's Cost, prepaid Rent and the Security Deposit.
Such postponement of the commencement of the Term and termination and refund
right will be in full settlement of all claims that Tenant might otherwise have
against Landlord by reason of Landlord's failure to cause Landlord's Work to be
Substantially Completed by the Projected Delivery Date. If Landlord delivers
possession of the Premises with the Landlord's Work Substantially Completed
prior to the Projected Delivery Date, then Tenant may either accept such
delivery (in which case such date will be the Delivery Date hereunder) or may
refuse to accept delivery until any date selected by Tenant that is no later
than the Projected Delivery Date. Landlord agrees to permit Tenant to enter the
Premises for purposes of installing Tenant's trade fixtures and equipment (but
not for the conduct of Tenant's regular business) prior to the Delivery Date to
the extent such
11
entry will not interfere with Landlord's completion of Landlord's Work and
Landlord agrees to use all reasonable efforts (without interfering with
customary construction scheduling or incurring extraordinary costs such as
overtime) to make such entry for such purposes possible by approximately 45 days
prior to Delivery Date. Such early entry for fixturing purposes will not
constitute Tenant's acceptance of possession of the Premises or any portion
thereof. Tenant will also have the right to occupy the Premises for completing
such installation of fixtures and equipment, for furnishing the Premises, for
stocking the Premises with Tenant's inventory and for the regular conduct of
Tenant's business during the period from the Delivery Date to the Commencement
Date and, during such period, all of the parties' rights and obligations under
this Lease will apply as if the Term had commenced (including, without
limitation, Tenant's obligation to pay Additional Rent for Taxes and Operating
Expenses); provided that Tenant will have no obligation to pay any Basic Rent
until the Commencement Date.
3.3 Punch List. Tenant's taking possession of any portion of the Premises
will be conclusive evidence that such portion of the Premises was in good order
and satisfactory condition, and that all of Landlord's Work in or to such
portion of the Premises was satisfactorily completed, when Tenant took
possession, except as to items requiring repair or completion identified on a
punch list prepared and signed by Landlord's Representative and Tenant's
Representative after an inspection of the Premises by both such parties made
within 15 days after the Delivery Date and except as to any Warranty Work.
Landlord will repair or complete all items set forth on such punch list with
reasonable promptness. Landlord will not be responsible for any items of damage
caused by Tenant, its agents, independent contractors or suppliers. Landlord
covenants to repair or replace, at Landlord's expense and as "Warranty Work,"
any defective item of Landlord's Work of which Tenant notifies Landlord within
one year after the Delivery Date and that requires repair or replacement as a
result of (i) any failure to construct the Shell in material compliance with the
Shell Plans; (ii) any failure to construct the Leasehold Improvements in
material compliance with the Leasehold Improvements Plans; or (iii) any
defective materials or workmanship. Within 10 days after the expiration of the
above-described one-year warranty period, Landlord will assign to Tenant any
manufacturers' or subcontractors' warranties or guaranties that are still then
in effect with respect to the Shell or the Leasehold Improvements, except for
any such warranties or guaranties relating to any portions of the Premises which
Landlord is required under this Lease to maintain and repair at Landlord's
expense. No promises to construct, alter, remodel or improve the Premises have
been made by Landlord to Tenant other than as may be expressly stated in this
Lease.
3.4 Representatives. Landlord appoints Landlord's Representative to act
for Landlord in all matters covered by this Section 3. Tenant appoints Tenant's
Representative to act for Tenant in all matters covered by this Section 3. All
inquiries, requests, instructions, authorizations and other communications with
respect to the matters covered by this Section 3 will be made to Landlord's
Representative or Tenant's Representative, as the case may be. Tenant will not
make any inquiries of or requests to, and will not give any instructions or
authorizations to, any other employee or agent of Landlord, including Landlord's
architect, engineers and contractors or any of their agents or employees, with
regard to matters covered by this Section 3. Either party may change its
representative at any time by three days' prior written notice to the other
party.
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3.5 Design Information. On or before April 10, 2000, Tenant will submit to
Landlord all information in addition to the Shell Specifications necessary for
preparation of the Shell Plans and the Leasehold Improvements Plans (the "Design
Information"). Each day after such date until Tenant has provided such Design
Information will be a day of Tenant's delay.
3.6 Shell Plans. Promptly after receipt of all Design Information,
Landlord will cause its architect to prepare the Shell Plans based on the Shell
Specifications and the submitted Design Information, provided that,
notwithstanding anything set forth in this Lease to the contrary, Landlord's
architect will not be obligated to include in the Shell Plans, and Landlord will
not be obligated to include in the Shell, any items that do not comply with
Laws. Within five business days after receipt of the proposed Shell Plans,
Tenant will either approve the same in writing or notify Landlord in writing of
how the proposed Shell Plans are inconsistent with the Shell Specifications or
the Design Information and how the Shell Plans must be changed in order to make
them consistent with the Shell Specifications and the Design Information. Each
day following the 5th business day after the proposed Shell Plans are submitted
to Tenant until Tenant approves them or delivers such notice of objections will
be a day of Tenant's delay. Upon receipt of Tenant's notice of objections,
Landlord will cause its architect to prepare revised Shell Plans according to
such notice and submit the revised Shell Plans to Tenant. Upon submittal to
Tenant of the revised Shell Plans, and upon submittal of any further revisions,
the procedures described above will be repeated. If the original Shell Plans, or
any revisions thereof, are consistent with the Shell Specifications and the
Design Information, then each day following Landlord's receipt of Tenant's
notice of any objections until the day on which Landlord receives Tenant's
written approval of the Shell Plans will be a day of Tenant's delay.
3.7 Shell Construction. At such time as the Shell Plans have been approved
in writing by both Landlord and Tenant, Landlord will cause the Shell to be
constructed or installed on the Land in a good and workmanlike manner and
according to the approved Shell Plans and all applicable Laws.
3.8 Leasehold Improvements Plans. Promptly after receipt of all Design
Information, Landlord will cause an architect selected by Landlord and approved
by Tenant (which approval will not be unreasonably withheld or delayed and which
approval will be deemed given if Tenant does not notify Landlord to the contrary
within three business days after Landlord notifies Tenant of its proposed
architect), to prepare the Leasehold Improvements Plans based on the submitted
Design Information. Within five business days after receipt of the proposed
Leasehold Improvements Plans, Tenant will either approve the same in writing or
notify Landlord in writing of how the proposed Leasehold Improvements Plans are
inconsistent with the Design Information and how the Leasehold Improvements
Plans must be changed in order to make them consistent with the Design
Information. Each day following the 5th business day after the proposed
Leasehold Improvements Plans are submitted to Tenant until Tenant approves them
or delivers such notice of objections will be a day of Tenant's delay. Upon
receipt of Tenant's notice of objections, Landlord will cause its architect to
prepare revised Leasehold Improvements Plans according to such notice and submit
the revised Leasehold Improvements Plans to Tenant. Upon submittal to Tenant of
the revised Leasehold Improvements Plans, and upon submittal of any further
revisions, the procedures described above
13
will be repeated. If the original Leasehold Improvements Plans, or any revisions
thereof, are consistent with the Design Information, then each day following
Landlord's receipt of Tenant's notice of any objections until the day on which
Landlord receives Tenant's written approval of the Leasehold Improvements Plans
will be a day of Tenant's delay.
3.9 Tenant's Cost Proposal. At such time as Leasehold Improvements Plans
that have been approved in writing by both Landlord and Tenant have been
prepared, Landlord will (i) obtain at least three bids for each of the major
trades that will be involved in the construction of the Leasehold Improvements,
unless less than three qualified subcontractors exist for a given trade, in
which case Landlord will obtain a bid from all qualified subcontractors of such
trade, or unless a portion of the Leasehold Improvements will be both designed
and built by a single design/build contractor, in which case Landlord will
obtain the bid of such design/build contractor; (ii) using the lowest qualified
bid from each of the bids so received, prepare a proposed budget for all items
to be included in Tenant's Cost ("Tenant's Cost Proposal"); and (iii) submit
copies of all such bids and Tenant's Cost Proposal to Tenant for Tenant's review
and approval. Tenant, at Tenant's option, may either approve Tenant's Cost
Proposal in writing or elect to eliminate or revise one or more items of
Leasehold Improvements shown on the Leasehold Improvements Plans so as to reduce
Tenant's Cost Proposal and then approve in writing the reduced Tenant's Cost
Proposal (based on the revised Leasehold Improvements Plans). In connection with
Tenant's approval of Tenant's Cost Proposal, Tenant will also have the right to
reasonably approve all subcontractors that Landlord proposes to use. Tenant's
approval of Tenant's Cost Proposal will be deemed also to be Tenant's approval
of the subcontractors whose bids are included in Tenant's Cost Proposal. If
Tenant desires to use a different subcontractor than the one recommended by
Landlord and included in the Tenant's Cost Proposal prepared by Landlord, Tenant
will so notify Landlord as a part of Tenant's response to Tenant's Cost Proposal
and then Tenant's Cost Proposal will be modified as necessary to reflect the bid
of the alternate subcontractor selected by Tenant. Landlord will apply the
Leasehold Improvements Allowance to Tenant's Cost. Tenant will be responsible
for payment of any portion of Tenant's Cost that exceeds the Leasehold
Improvements Allowance. Tenant will receive no credit or other payment for any
unused portion of the Leasehold Improvements Allowance. Each day following the
5th business day after Tenant's receipt of Tenant's Cost Proposal until the day
on which Landlord has received Tenant's written approval of Tenant's Cost
Proposal will be a day of Tenant's delay, Prior to entering into any subcontract
for the Leasehold Improvements, Landlord will deliver to Tenant a copy of the
proposed subcontract for Tenant's review and approval, which approval will not
be unreasonably withheld or delayed and which approval will be deemed given if
Tenant does not notify Landlord to the contrary within three business days after
delivery of the proposed subcontract with Landlord's request for approval.
3.10 Construction of Leasehold Improvements; Payment of Tenant's Cost. At
such time as Tenant has approved Tenant's Cost Proposal, Landlord will cause the
Leasehold Improvements to be constructed or installed in the Shell in a good and
workmanlike manner and according to the Leasehold Improvements Plans and all
applicable Laws. During construction of the Leasehold Improvements, Landlord
will use all reasonable efforts (without interfering with customary construction
scheduling or incurring extraordinary costs such as overtime) to
14
coordinate with Tenant and Tenant's vendors for the delivery and installation of
Tenant's trade fixtures and equipment. As construction progresses, Landlord will
make monthly payments for the costs thereof out of the Leasehold Improvements
Allowance, provided that prior to making any payment, Landlord will prepare or
obtain, as applicable, and deliver to Tenant's Representative the following: (i)
invoices from Landlord and from all subcontractors requesting payment reflecting
the amount due for work performed or materials supplied during the preceding
month; (ii) a certificate of the architect for the Leasehold Improvements
confirming that the work for which payment is requested has been completed and
the materials for which payment is requested have been delivered to the
Premises; and (iii) copies of lien releases for all work paid for with the last
month's payments. Tenant's Representative will have three business from delivery
of the foregoing materials to review the same and to verify that the work for
which payment is sought has been completed; if Tenant does not notify Landlord
to the contrary within such three business day period, Tenant will be deemed to
have approved payment and Landlord will be free to make the requested payments
(but the failure of Tenant's Representative to respond will not constitute a
waiver of any of Tenant's other rights hereunder with respect to the proper
completion of the Leasehold Improvements). Landlord will withhold a 10%
retainage from all payments to subcontractors of trades from which retainage is
customarily withheld in the construction industry and will not pay such
retainage to any such subcontractor until all punch list work required to be
performed by such subcontractor has been satisfactorily completed. At such time
as Landlord has paid in full the Leasehold Improvements Allowance, Tenant will
pay Landlord the amount, if any, by which Tenant's Cost exceeds the Leasehold
Improvements Allowance in monthly installments, with each such installment due
within 30 days after receipt from Landlord of the payment request materials
described above. Tenant may also withhold a 10% retainage from its payments for
trades from which retainage is customarily withheld pending completion of any
punch list items. Throughout construction of the Leasehold Improvements and for
a period of six months after Substantial Completion thereof, Tenant will have
the right, during normal business hours and upon reasonable prior notice, to
audit such construction and all of Landlord's books and records relating thereto
to verify that that such construction and all payments therefor are in
accordance with the applicable contracts.
3.11 Change Orders. Tenant's Representative may authorize changes in
Landlord's Work during construction only by written instructions to Landlord's
Representative on a form approved by Landlord. All such changes will be subject
to Landlord's prior written approval, which will not be unreasonably withheld,
delayed or conditioned so long as the proposed change will not increase
Landlord's costs or have a substantial adverse effect on the construction
schedule. Prior to commencing any change, Landlord will prepare and deliver to
Tenant, for Tenant's approval, a change order ("Change Order") identifying the
total cost of such change, which will include associated architectural,
engineering and construction contractor's fees, and the total time that will be
added to the construction schedule by such change. Landlord will deliver each
Change Order to Tenant within five business days after Tenant's request
therefor, except in cases of extraordinary change where the necessary
information is not available to Landlord within such period. If Tenant fails to
approve such Change Order within 10 days after delivery by Landlord, Tenant will
be deemed to have withdrawn the proposed change and Landlord will not proceed to
perform the change. Upon Landlord's receipt of Tenant's approval, Landlord will
proceed to perform the change.
15
3.12 Tenant's Delays. As provided in Section 3.2, the Delivery Date will
not occur until Landlord has Substantially Completed Landlord's Work; provided,
however, that if Landlord is delayed in substantially completing Landlord's Work
as a result of: (a) any Tenant delays described in Sections 3.5, 3.6, 3.8, 3.9
or 3.10; (b) any Change Orders or changes in any drawings, plans or
specifications requested by Tenant; (c) Tenant's failure to review or approve in
a timely manner any item requiring Tenant's review or approval; or (d) any other
act or omission of Tenant or Tenant's architects, engineers, contractors or
subcontractors (all of which will be deemed to be delays caused by Tenant), then
the Delivery Date will only be extended under Section 3.2 until the date on
which Landlord would have Substantially Completed the performance of such work
but for such delays.
3.13 Adjustments Upon Completion. As soon as practicable after the
completion of the Shell, Landlord will cause its architect to measure and
certify to Landlord and Tenant the Rentable Area of the Premises, and Tenant
will have the right, at its cost, to have such measurement verified. Upon the
request of either party, Landlord and Tenant will execute a certificate
confirming such Rentable Area (as so verified by Tenant, if Tenant elects to do
so) and the actual amounts (based on such Rentable Area) of the Basic Rent
payable per month during each Lease Year of the Term and the actual amount of
the Leasehold Improvements Allowance. Tenant will pay any additional Basic Rent
or Tenant's Cost owing, or Landlord will refund any Basic Rent or Tenant's Cost
previously overpaid by Tenant, upon the execution of such certificate.
3.14 Tenant's Property. Subject to Section 9.1 (to the extent
applicable), Tenant at its own expense will provide, install and maintain, and
may substitute and alter from time to time, all trade fixtures, equipment and
personal property in addition to the Leasehold Improvements reasonably required
to enable it to conduct its business at the Premises (collectively, "Tenant's
Property"). Tenant's Property will remain the property of Tenant and Tenant may
remove all or part thereof at any time during the Term, subject to the
provisions of Section 13.1. Tenant will repair at its own expense any damage to
the Premises caused by the removal of Tenant's Property by Tenant, ordinary wear
and tear and damages from casualty excepted. Tenant's Property will not be
subject to and will be free of any lien (other than a judgment lien) for the
payment of rent by Tenant or for the performance of any other obligation of
Tenant under this Lease.
4. RENT
4.1 Basic Rent. Commencing on the Commencement Date and then throughout
the Term, Tenant agrees to pay Landlord Basic Rent according to the following
provisions. Basic Rent during each Lease Year of the Term will be payable in
monthly installments in an amount equal to 1/12 of the amount obtained by
multiplying the rate of Basic Rent for such Lease Year set forth in the
definition of Basic Rent in Section 1.1 (or, in the case of Lease Years during
any Renewal Term, as determined in accordance with Section 2.5) by the number of
square feet of Rentable Area of the Premises, in advance, on or before the first
day of each and every month during the Term. If the Commencement Date is a date
other than the first day of a calendar month or if the Term ends on a date other
than the last day of a calendar month, Landlord will
16
prorate monthly Basic Rent for the first month of the Term or the last month of
the Term, as the case may be, based upon the ratio that the number of days of
the Term within such month bears to the total number of days in such month.
4.2 Additional Rent for Taxes and Operating Expenses. Tenant agrees to
pay Landlord, as Additional Rent, in the manner provided below for each calendar
year that contains any part of the Term, the Taxes and Operating Expenses for
such calendar year.
(a) Estimated Taxes and Operating Expenses. Prior to the Delivery
--------------------------------------
Date (with respect to the calendar year in which the Term commences) and
then prior to the commencement of each calendar year within the Term
thereafter (with respect to such ensuing calendar year), Landlord will
provide Tenant with a written estimate for such calendar year of (i) the
total amount of Taxes and Operating Expenses; and (ii) the monthly payments
of Additional Rent payable by Tenant during such calendar year for Taxes
and Operating Expenses. Landlord will not increase its estimate of Taxes
and Operating Expenses for any calendar year to an amount that is greater
than 105% of the prior calendar year's actual Taxes and Operating Expenses
unless Landlord has reasonable grounds to believe that a greater increase
is probable and provides written substantiation to Tenant of such grounds.
(b) Payment of Additional Rent. Commencing on the Delivery Date,
--------------------------
Tenant will pay, as Additional Rent and, from and after the Commencement
Date, together with Tenant's monthly Basic Rent payment, Taxes and
Operating Expenses for each calendar year, as estimated by Landlord, in
equal monthly installments, in advance, on the first day of each month
during each applicable calendar year. If Landlord delivers its estimate for
a calendar year to Tenant after the first day of January of such year,
Tenant will continue to pay on the basis of the prior calendar year's
estimate until the month after the month in which the estimate for the
current year is delivered. In the month Tenant first pays based on
Landlord's new estimate, Tenant will pay to Landlord 1/12 of the difference
between the new estimate and the prior year's estimate for each month which
has elapsed since the beginning of the current calendar year.
(c) Re-estimates of Excess Taxes and Operating Expenses. From time
---------------------------------------------------
to time during any applicable calendar year, Landlord may re-estimate Taxes
and Operating Expenses if Landlord has reasonable grounds to believe that
the prior estimate is inaccurate, and in such event Landlord will notify
Tenant in writing of such re-estimate in the manner set forth above,
include with such notice written substantiation of the grounds for the re-
estimate, and recalculate Tenant's monthly installments of estimated Taxes
and Operating Expenses for the then remaining balance of such calendar year
in an amount sufficient to pay the re-estimated amount over the balance of
such calendar year. Landlord will appropriately credit Tenant for payments
made by Tenant pursuant to the previous estimate.
(d) Adjustment of Actual Taxes and Operating Expenses. Upon
-------------------------------------------------
completion of each calendar year, Landlord will determine the actual amount
of Taxes and Operating
17
Expenses for such calendar year and deliver a written certification of such
actual amounts to Tenant after the end of each calendar year. If Tenant has
paid less than the actual Taxes and Operating Expenses for any calendar
year, Tenant will pay the balance of Taxes and Operating Expenses within 10
days after receiving Landlord's statement. If Tenant has paid more than the
actual Taxes and Operating Expenses for any calendar year, Landlord will
credit such excess against the next monthly installment or installments of
Rent payable by Tenant to Landlord or, if there are no further installments
of Rent due, refund such excess. If the Delivery Date occurs on other than
the first day of a Tax Year or if the Term expires or otherwise terminates
on other than the last day of a Tax Year, Taxes for the Tax Year in which
the Delivery Date occurs or the Term ends, as the case may be, will be
prorated between Landlord and Tenant, based on the most recent levy and
most recent assessment. Such proration will be subsequently adjusted when
the actual bills become available for Taxes for the Tax Year for which
Taxes were prorated. Landlord will also adjust pro rata actual Operating
Expenses for any fractional calendar year occurring during the Term based
upon the number of days of the Term during such calendar year as compared
to 365 days The parties' obligations under this Section 4.2 will survive
the expiration of the Term or other termination of this Lease.
(e) Tenant's Right to Inspect and Audit. Upon reasonable notice to
-----------------------------------
Landlord, Tenant, or its authorized representatives, will have the right to
inspect the books and records of Landlord pertaining to projected or actual
Taxes or Operating Expenses. In addition, Tenant may upon reasonable prior
notice to Landlord given within 30 days after the delivery by Landlord of
any annual statement referred to in Section 4.2(d) above, have any or all
of Landlord's books and records relating to Taxes and/or Operating Expenses
for the calendar year covered by such statement audited. If such audit is
performed by an independent certified public accountant who is not
regularly engaged by either Landlord or Tenant and is reasonably approved
by both parties, and if such audit determines that such annual statement
overstated Taxes and Operating Expenses by more than 4% of the total
thereof as determined by such audit, Landlord will reimburse Tenant for the
reasonable costs incurred by Tenant for such audit within 30 days after
receipt of a copy of the audit report. In addition, if such an audit
reveals any overpayment or underpayment by Tenant for the year audited,
within 30 days after the audit report is delivered to Landlord and Tenant,
Landlord will correct its statement for such year and credit Tenant with
the amount of any overpayment and Tenant will pay to Landlord the amount of
any underpayment.
(f) Tenant's Right to Contest Taxes. Tenant will have the right to
-------------------------------
contest any Taxes payable by Tenant pursuant to this Lease, provided that
Tenant continues to pay to Landlord all amounts due under this Lease with
respect to Taxes when and as the same are due notwithstanding the pendency
of any such contest. However, if applicable Laws permit the withholding of
payment without delinquency, Landlord will, upon Tenant's written request
(which must be made at least 60 days prior to the due date of the subject
payment of Taxes), withhold payment of any Taxes that Tenant is contesting
until such time as payment thereof (or of such Taxes as the same may be
reduced by such contest) is required to be made by applicable Laws in order
to avoid delinquency. Tenant will notify
18
Landlord within 5 business days of the commencement of any such contest. So
long as Tenant complies with the terms of this Section, Tenant will have
the right, in connection with any such contest, at its sole expense, to
institute and prosecute, in food faith and, with due diligence and in
Landlord's name if necessary, any appropriate proceedings, and Landlord
will, at Tenant's expense, fully cooperate with Tenant's efforts to contest
any such Taxes.
4.3 Net Lease; Additional Rent. It is the intent of the parties that the
Basic Rent provided in this Lease will be, except as otherwise expressly
provided in this Lease, a net payment to Landlord and that, in addition to Basic
Rent, Tenant will pay Additional Rent for Operating Expenses and Taxes according
to Section 4.2, the cost of all utilities consumed at the Premises according to
Section 6.2, and the cost of all repairs and maintenance required to be
performed by Tenant according to Section 7.1. It is the intention of the parties
that, except as otherwise expressly provided herein, this Lease will not be
terminable for any reason by Tenant, and that Tenant will not be entitled to any
abatement of, or reduction in, any Rent payable under this Lease.
4.4 Terms of Payment. All Rent will be paid to Landlord in lawful money
of the United States of America, at Landlord's Rent Address or to such other
person or at such other place as Landlord may from time to time designate in
writing, without notice or demand and without right of deduction, abatement or
setoff, except as otherwise expressly set forth herein. Except to the extent
otherwise expressly provided herein, Tenant's covenants to pay Basic Rent and
Additional Rent are independent of any other covenant, condition, provision or
agreement herein contained.
4.5 Late Payments. Any payment of Rent which is not received within five
days after it is due will be subject to a late charge equal to 5% of the unpaid
payment, or $100.00, whichever is greater. This amount is in compensation of
Landlord's additional cost of processing late payments. In addition, any Rent
which is not paid when due will accrue interest at the Interest Rate from the
date on which it was due until the date on which it is paid in full with accrued
interest. Notwithstanding the foregoing, for the first time in any calendar year
that Tenant fails to make any payment within five days after its due date, such
late charge and interest will not apply unless Tenant fails to make such payment
within 10 days after delivery of Landlord's notice of such failure to pay.
Landlord will not be required to give Tenant such notice more than once in any
calendar year prior to assessing such late charge and interest.
4.6 Right to Accept Payments. No receipt by Landlord of an amount less
than Tenant's full amount due will be deemed to be other than payment "on
account," nor will any endorsement or statement on any check or any accompanying
letter effect or evidence an accord and satisfaction. Landlord may accept such
check or payment without prejudice to Landlord's right to recover the balance or
pursue any right of Landlord. No payments by Tenant to Landlord after the
expiration or other termination of the Term, or after the giving of any notice
(other than a demand for payment of money) by Landlord to Tenant, will
reinstate, continue or extend the Term or make ineffective any notice given to
Tenant prior to such payment. After notice or commencement of a suit, or after
final judgment granting Landlord possession of the Premises,
19
Landlord may receive and collect any sums of Rent due under this Lease, and such
receipt will not void any notice or in any manner affect any pending suit or any
judgment obtained. Any amounts received by Landlord may be allocated to any
specific amounts due from Tenant to Landlord as Landlord determines.
5. USE, OCCUPANCY AND COMPLIANCE
5.1 Use. Tenant may use the Premises for any and all uses and purposes
that are from time to time permitted by Laws. Tenant will not keep anything on
or about the Premises which would invalidate any insurance policy required to be
carried on the Premises by Landlord or Tenant pursuant to this Lease. Tenant
will not cause or permit to exist any public or private nuisance on or about the
Premises.
5.2 Compliance by Landlord. Landlord will, at its sole expense, keep and
maintain the Building's roof and structural elements (including foundations,
structural columns and beams and load-beating walls) in a condition that is in
compliance with all applicable Laws, except (subject to Section 8.4) for damages
caused by the negligence of Tenant, its agents, employees, contractors or
invitees. Such obligation will include, without limitation, the obligation to
make such changes to the Building's roof and structural elements (including
foundations, structural columns and beams and load-beating walls) as may be
required from time to time by applicable Laws, except for changes required by
virtue of a change in use of the Premises by Tenant or by any alterations or
other modifications to the Premises undertaken by Tenant.
5.3 Compliance by Tenant. Tenant will comply with all Laws applicable to
the use and occupancy of the Premises during the Term, including, without
limitation, obtaining and maintaining all licenses and permits required to
operate Tenant's business. Tenant will, at its sole expense, keep and maintain
the all of Premises (excluding those portions of the Building that Landlord is
obligated to maintain in compliance with Laws pursuant to Section 5.2, except
for damages to such portions caused by the negligence of Tenant, its agents,
employees, contractors or invitees, which damages Tenant will be required to
repair) in a condition that is in compliance with all applicable Laws. Such
obligation will include, without limitation, the obligation to make such changes
to the Premises, whether interior or exterior, as may be required from time to
time by applicable Laws (excluding changes to those portions of the Building
that Landlord is obligated to maintain in compliance with Laws pursuant to
Section 5.2, except for changes required by virtue of a change in use of the
Premises by Tenant or by any alterations or other modifications to the Premises
undertaken by Tenant, which changes Tenant will be required to make).
5.4 Contests. Landlord and Tenant will each have the right, however, to
contest or challenge by appropriate proceedings the enforceability of any Law or
its applicability to the Premises or the use or occupancy thereof by Tenant or a
Subtenant so long as Landlord or Tenant, as applicable, diligently prosecutes
the contest or challenge to completion and, in the event Landlord or Tenant, as
applicable, loses the contest or challenge, thereafter abides by and conforms to
such Law. In the event of Landlord's or Tenant's challenge or contest of such
Law, Landlord or Tenant, as applicable, may elect not to comply with such Law
during such challenge
20
or contest; provided, however, that such election not to comply will not result
in any material risk of forfeiture of the other party's interest in the
Premises. Landlord and Tenant will indemnify and hold the other party harmless
from and against all claims, damages or judgments resulting from any such
election not to comply.
5.5 Hazardous Substances.
(a) Tenant's Covenants. Tenant will not cause any Hazardous
------------------
Substance to be located on the Premises and will not conduct or authorize
the use, generation, transportation, storage, treatment or disposal at the
Premises of any Hazardous Substance other than as may be in compliance with
Environmental Laws and (i) contained in ordinary quantifies of products
used by Tenant for ordinary cleaning of the Premises and associated
janitorial supplies; (ii) contained in ordinary quantities of customary
office supplies (such as copier toner and cleaner) used by Tenant for its
office operations at the Premises; or (iii) contained in packaged products
intended for resale to customers of Tenant's order-by-internet home-
delivery grocery distribution warehouse business. If Tenant desires to
conduct or authorize the use, generation, transportation, storage,
treatment or disposal at the Premises of any Hazardous Substances other
than those expressly permitted above, Tenant must first obtain Landlord's
written consent, which consent may be withheld in Landlord's sole
discretion. If the presence, release, threat of release, placement on or in
the Premises or the generation, transportation, storage, treatment or
disposal at the Premises of any Hazardous Substance as a result of Tenant's
use or occupancy of the Premises (i) gives rise to liability (including,
but not limited to, a response action, remedial action or removal action)
under Environmental Laws; (ii) causes a significant public health effect;
or (iii) pollutes or threatens to pollute the environment, Tenant will
promptly take any and all remedial and removal action necessary to clean up
the Premises and mitigate exposure to liability arising from the Hazardous
Substance, in compliance with Environmental Laws.
(b) Tenant's Indemnity. Tenant will indemnify, defend and hold
------------------
Landlord harmless from and against all damages, costs, losses, expenses
(including, without limitation, actual reasonable attorneys' fees and
engineering fees) arising from or attributable to (i) the existence of any
Hazardous Substance at the Premises as a result of the acts of Tenant or
its agents, employees or contractors or Tenant's use and occupancy of the
Premises, and (ii) any breach by Tenant of any of its covenants contained
in this Section 5.5.
(c) Landlord's Representations and Covenant. Landlord represents to
---------------------------------------
Tenant, to Landlord's current actual knowledge (without duty of
investigation), and except as otherwise disclosed in the environmental site
assessment report made with respect to the Premises and certain adjacent
property for Landlord by ▇▇▇▇▇▇*▇▇▇▇▇▇ and dated November 24, 1999, a copy
of which has been delivered to Tenant, that there are no Hazardous
Substances present on the Premises as of the date of this Lease in any
manner or quantity that violates any Environmental Laws. Landlord further
represents to Tenant that it has not received any Environmental Notices (as
defined below) as of the date of
21
this Lease. Landlord covenants that Landlord will not cause any Hazardous
Substances to be incorporated into the Building during its construction
(except standard building materials incorporated in compliance
Environmental Laws) and that, as of the Delivery Date, the Improvements
will not contain any (i) electrical transformers or other equipment
containing polychlorinated biphenyl in excess of 50 parts per million; (ii)
asbestos in any form; or (iii) urea formaldehyde foam insulation.
(d) Landlord's Indemnity. Landlord will indemnify, defend and hold
--------------------
Tenant harmless from and against all damages, costs, losses, expenses
(including, without limitation, actual reasonable attorneys' fees and
engineering fees) arising from or attributable to (i) the existence of any
Hazardous Substance at the Premises as a result of the acts of Landlord or
its agents, employees or contractors, and (ii) any breach by Landlord of
any of its representations or covenants contained in this Section 5.5.
(e) Environmental Notices. Each party will immediately provide the
---------------------
other with telephone notice, followed by written notice, of any complaint,
order or other notice with regard to Hazardous Substances issued by any
governmental entity or any other third party with respect to the Premises
or the Project ("Environmental Notices").
(f) Survival. The parties' obligations under this Section 5.5 will
--------
survive the expiration of the Term or other termination of this Lease.
5.6 Americans With Disabilities Act. Tenant will, at its expense, cause
its operation of any business within the Premises to comply with the ADA.
Landlord will cause Landlord's Work to be designed and constructed in accordance
with the ADA. If any work (such as an alteration made pursuant to Section 9.1)
is performed by, through or under Tenant, Tenant will, at Tenant's expense,
cause such work to be designed and constructed in compliance with the ADA.
6. SERVICES AND UTILITIES
6.1 Services Provided by Landlord. During the Term, Landlord will
operate, maintain and repair the Premises (except for any such operation,
maintenance or repair which is expressly the obligation of Tenant pursuant to
this Lease) according to those standards from time to time prevailing for
comparable office/warehouse facilities in the area in which the Premises are
located. Landlord will provide the following services according to such
standards, the costs of which will be included in Operating Expenses to the
extent provided in the definition thereof in Section 1.1:
(a) Maintenance and Repairs. Maintenance (excluding routine
-----------------------
janitorial services), repair and replacement, as necessary, of the
Building's roof and structural elements (including foundations, structural
columns and beams and load-bearing walls), the exterior of the Building,
the lobbies, corridors and restrooms in the Building, the Building's
plumbing and electrical systems and the Standard HVAC Equipment, except
(subject to Section 8.4) for damages caused by the negligence of Tenant,
its agents, employees, contractors or invitees. Landlord will commence any
maintenance or repairs
22
required of Landlord under this Lease as soon as possible after being
notified of the need for such maintenance or repair.
(b) Electrical Energy. Electrical energy for lighting the Premises
-----------------
and operating Planned Equipment (as used in this Lease, "Planned Equipment"
means those items of equipment that the Shell electrical system and the
Standard HVAC Equipment are designed to accommodate pursuant to the Shell
Plans and the Leasehold Improvements Plans). Tenant will not install in the
Premises any equipment which requires electrical energy or any electrical
circuits in excess of the energy or circuits available for Planned
Equipment without Landlord's written consent, which consent Landlord will
not unreasonably withhold. Tenant will pay all costs of installing
facilities necessary to furnish such excess electrical energy for such
equipment and for such increased electrical energy usage. Landlord will
replace all electric lighting bulbs and tubes and all ballasts and starters
within the Premises.
(c) Heating and Air Conditioning. Heating, ventilating and air
----------------------------
conditioning the portions of the Premises served by the Standard HVAC
Equipment at such times and at such temperatures as may be reasonably
established by Tenant (Tenant will have the right, subject to the design
limitations of the Standard HVAC Equipment, to establish the hours and days
of HVAC operations and the temperatures at which the interior portions of
the Premises served by the Standard HVAC Equipment will be maintained
during the hours of HVAC operation) for comfortable use and occupancy under
normal business operations with Planned Equipment. If Tenant installs any
machines, equipment or devices in the Premises that do not constitute
Planned Equipment and such machines, equipment or devices cause the
temperature in any part of the Premises to exceed the temperature the
Standard HVAC Equipment would be able to maintain in the Premises were it
not for such machines, equipment or devices, then Landlord reserves the
right to install supplementary air conditioning units in the Premises, and
Tenant will pay Landlord all costs of installing, operating and maintaining
such supplementary units.
(d) Water. Hot and cold water from the regular Building outlets for
-----
lavatory and restrooms and for drinking purposes.
(e) Parking Facilities and Landscaped Areas. Maintenance in good
---------------------------------------
order, condition and repair, of the parking facilities, driveways,
sidewalks and landscaped areas on the Premises. Landlord will keep such
driveways, sidewalks and parking facilities free from any unreasonable
accumulation of snow.
6.2 Tenant's Utilities. Tenant will pay, before delinquency, directly to
the provider, for all separately metered or separately charged utilities
(electricity, natural gas, telecommunications, water, sewer and any other
utility requirements of Tenant) provided to the Premises or to Tenant. Landlord
will not include such mounts as Operating Expenses.
6.3 Interruption of Services. No interruption in, or temporary stoppage
of, any of the above-described services required to be provided by Landlord that
is caused by reasons beyond Landlord's reasonable control (such as the making,
in a commercially reasonable
23
manner, of any repairs that Landlord is required to make hereunder; the making
of any renewals, improvements or alterations by Tenant or by third parties;
strikes, lockouts, labor controversy or accidents; or inability to obtain fuel
or supplies), will constitute an eviction or disturbance of Tenant's use and
possession of the Premises, or render Landlord liable for damages, by abatement
of Rent or otherwise, or relieve Tenant from any obligation described in this
Lease. In no event will Landlord be required to provide any heat, air
conditioning, electricity or other service which exceeds that permitted by
involuntary guidelines or by any Laws. However, in the event that, due to
reasons within Landlord's reasonable control, any utilities or services required
to be furnished by Landlord to the Premises pursuant to this Section 6 are
interrupted, disrupted or terminated and such interruption, disruption or
termination prevents the normal conduct of Tenant's business at the Premises for
a continuous period of three business days, then the Basic Rent will equitably
▇▇▇▇▇, based upon the portion or portions of the Premises so affected by the
interruption, disruption or termination, for so long as such utilities or
services remain so interrupted, disrupted or terminated for such reasons.
7. REPAIRS AND MAINTENANCE
7.1 Tenant's Obligations. Tenant will, at its expense (a) maintain,
repair and replace as necessary the Special HVAC Equipment and all other
portions of the Premises, except those portions thereof that Landlord is
obligated to maintain, repair and replace pursuant to Sections 6.1(a) and (e),
in as good order, condition and repair as they were at the time Tenant took
possession of the Premises, ordinary wear and tear and damage from fire and
other casualties excepted; (b) keep the Premises free of insects, rodents,
vermin and other pests; (c) provide such janitorial services to the Building as
may be necessary for the operation of Tenant's business and (d) promptly repair,
restore and replace, to Landlord's reasonable satisfaction, all uninsured damage
or injury to the Premises caused by the willful acts or negligence of Tenant,
its agents, employees, contractors or invitees. All such repairs, restorations
and replacements will be equal in quality and class to the original work and
will comply with all requirements of this Lease.
7.2 Landlord's Right of Entry. For purposes of performing Landlord's
obligations under Section 6.1, or any of Tenant's obligations under Section 7.1
that Tenant fails to perform within the cure period provided in Section 14.2, or
to inspect the Premises, Landlord may enter the Premises upon at least 48 hours'
prior notice to Tenant (except in cases of actual or suspected emergency, in
which case no prior notice will be required) without liability to Tenant for any
loss or damage incurred as a result of such entry (except to the extent caused
by Landlord's negligence or willful misconduct), provided that Landlord will
take all reasonable and necessary steps in connection with such entry to
minimize any disruption to Tenant's business or its use of the Premises.
8. INSURANCE, WAIVERS AND INDEMNITY
8.1 Landlord's Insurance. During the period from the Delivery Date to the
Commencement Date and then throughout the Term, Landlord will provide and keep
in force the following insurance, the costs of which will be included in
Operating Expenses:
24
(a) bodily injury and property damage liability insurance relating
to Landlord's operation of the Premises, with a combined single occurrence
limit of not less than $5,000,000.00; such insurance will be on a
commercial general liability form including, without limitation, personal
injury and assumed contractual liability for the performance by Landlord
of the indemnity agreements set forth in Section 8.5; such liability
insurance will include cross liability and severability of interests
clauses or endorsements; unless otherwise approved in writing by Tenant,
such policy will have a deductible of $5,000.00 or less and will not have
a retention or self-insurance provision;
(b) all risk or equivalent property insurance (including fire and
standard extended coverage perils, leakage from fire protective devices
and other water damage) covering loss or damage to the Improvements
(including the Shell and the Leasehold Improvements, but excluding any
alterations made to the Premises by Tenant, Tenant's fixtures,
furnishings, equipment, inventory, personal property, documents, files and
work products) on a full replacement cost basis, excluding excavations,
footings and foundations, and with a deductible not in excess of $5,000.00
unless otherwise approved by Tenant (upon the occurrence of any casualty,
the amount expended by Landlord to satisfy such deductible will be
included in Operating Expenses);
(c) loss of rental income insurance in the amount of one year's
Basic Rent and Additional Rent for Taxes and Operating Expenses;
(d) if any boiler or machinery is operated in the Premises, boiler
and machinery insurance;
(e) worker's compensation insurance insuring against and satisfying
Landlord's obligations and liabilities under the worker's compensation
laws of the State of Colorado and employers' liability insurance in the
limit of $100,000/500,000/100,000;
(f) if Landlord operates owned, hired or nonowned vehicles on the
Premises, comprehensive automobile liability will be carried at a limit of
liability not less than $1,000,000.00 combined bodily injury and property
damage; and
(g) such other insurance as is then maintained by prudent owners Of
buildings similar to the Building and that Landlord reasonably elects to
obtain or any Building mortgagee requires.
Insurance effected by Landlord under Sections 8.1(b), (c) and (d) will permit
the release of Tenant from certain liability under Section 8.4.
8.2 Tenant's Insurance. During the period from the Delivery Date to the
Commencement Date and then throughout the Term, Tenant will provide and keep in
force the following insurance:
(a) bodily injury and property damage liability insurance relating
to Tenant's business (carried on, in or from the Premises) and Tenant's
use and occupancy, with a
25
combined single occurrence limit of not less than $5,000,000.00; such
insurance will be on a commercial general liability form including,
without limitation, personal injury and assumed contractual liability for
the performance by Tenant of the indemnity agreements set forth in Section
8.6; Landlord and its mortgagee will be named as an additional insureds in
the policy providing such liability insurance, which will include cross
liability and severability of interests clauses or endorsements; unless
otherwise approved in writing by Landlord, such policy will have a
deductible of $5,000.00 or less and will not have a retention or self-
insurance provision;
(b) all risk or equivalent property insurance (including fire and
standard extended coverage perils, leakage from fire protective devices
and other water damage) covering loss or damage to any alterations made to
the Premises by Tenant, Tenant's fixtures, furnishings, equipment,
inventory, personal property, documents, files and work products in the
Premises on a full replacement cost basis in amounts sufficient to prevent
Tenant from becoming a coinsurer and subject only to such deductibles and
exclusions as Landlord may reasonably approve;
(c) if any boiler or machinery is operated in the Premises, boiler
and machinery insurance;
(d) worker's compensation insurance insuring against and satisfying
Tenant's obligations and liabilities under the worker's compensation laws
of the State of Colorado and employers' liability insurance in the limit
of $100,000/500,000/100,000; and
(e) if Tenant operates owned, hired or nonowned vehicles on the
Premises, comprehensive automobile liability will be carried at a limit of
liability not less than $1,000,000.00 combined bodily injury and property
damage.
Insurance effected by Tenant under Sections 82(b) and (c) will permit the
release of Landlord from certain liability under Section 8.4.
8.3 General Insurance Requirements. All insurance required to be
maintained by Landlord or Tenant pursuant to Sections 8.1 and 8.2 will be
maintained with insurors licensed to do business in the State of Colorado and
having a Best's Key Rating of at least A-XII. Landlord and Tenant will file with
the other, on or before the Delivery Date and at least 10 days before the
expiration date of expiring policies, such copies of either current policies or
certificates as may be reasonably required to establish that the insurance
coverage required by Sections 8.1 and 8.2 is in effect from time to time and
that the insuror(s) have agreed to give the other party at least 30 days notice
prior to any cancellation of, or material modification to, the required
coverage. Landlord and Tenant will cooperate with each Other in the collection
of any insurance proceeds which may be payable in the event of any loss,
including the execution and delivery of any proof of loss or other actions
required to effect recovery. All commercial general liability and property
policies required to be maintained by either party hereunder will be written as
primary policies, not contributing with and not supplemental to any coverage
that the other party may carry.
26
8.4 Waivers. Except to the extent caused by the willful or negligent act
or omission or breach of this Lease by Landlord or anyone for whom Landlord is
legally responsible, Landlord and its Affiliates will not be liable or in any
way responsible for, and Tenant waives all claims against Landlord and its
Affiliates for, any loss, injury or damage suffered by Tenant or others relating
to (a) loss or theft of, or damage to, property of Tenant or others; (b) injury
or damage to persons or property resulting from fire, explosion, failing
plaster, escaping steam or gas, electricity, water, rain or snow, or leaks from
any part of the Improvements or from any pipes, appliances or plumbing, or from
dampness; or (c) damage caused by persons on or about the Premises, or caused by
the public or by construction of any private or public work. Landlord and its
Affiliates will not be liable or in any way responsible to Tenant for, and
Tenant waives all claims against Landlord and its Affiliates for, any loss,
injury or damage that is insured or required to be insured by Tenant under
Section 8.2(b) or (c). Tenant and its Affiliates will not be liable or in any
way responsible to Landlord for, and Landlord waives all claims against Tenant
and its Affiliates for, any loss, injury or damage that is insured or required
to be insured by Landlord under Section 8.1(b), (c) or (d).
8.5 Landlord's Indemnity. Subject to Sections 6.3 and 8.4 and except to
the extent caused by the willful or negligent act or omission or breach of this
Lease by Tenant or anyone for whom Tenant is legally responsible, Landlord will
indemnify and hold Tenant harmless from and against any and all liability, loss,
claims, demands, damages or expenses (including reasonable attorneys' fees) due
to or arising out of any willful or negligent act or omission or breach of this
Lease by Landlord or anyone for whom Landlord is legally responsible. Landlord's
obligations under this Section 8.5 will survive the expiration or early
termination of the Term.
8.6 Tenant's Indemnity. Except to the extent caused by the willful or
negligence act or omission or breach of this Lease by Landlord or anyone for
whom Landlord is legally responsible, Tenant will indemnify and hold Landlord
harmless from and against any and all liability, loss, claims, demands, damages
or expenses (including reasonable attorneys' fees) due to or arising out of any
accident or occurrence on or about the Premises during the Term (including,
without limitation, accidents or occurrences resulting in injury, death,
property damage or theft) or any willful or negligent act or omission of or
breach of this Lease by Tenant or anyone for whom Tenant is legally responsible.
Tenant's obligations under this Section 8.6 will survive the expiration or early
termination of the Term.
9. ALTERATIONS; MECHANICS' LIENS
9.1 Alterations. Tenant will not make any modifications, improvements,
alterations, additions or installations in or to the Premises that affect the
Building's structure or its mechanical systems, or that will cost more than
$50,000.00 in any calendar year, without Landlord's prior written consent, which
consent will not be unreasonably withheld, conditioned or delayed. Tenant will
notify Landlord prior to making any modifications, improvements, alterations,
additions or installations in or to the Premises (referred to in this section as
the "work"), regardless of whether Landlord's consent is required in connection
with such work. Along with any request for Landlord's consent and at least 15
days before commencement of any work or delivery of any materials to be used in
any work to the Premises, Tenant will furnish
27
Landlord with plans and specifications, estimated commencement and completion
dates, the name and address of Tenant's general contractor, and the necessary
permits and licenses. Landlord will have the right to post notices of non-
responsibility or similar notices on the Premises in order to protect the
Premises against any liens resulting from such work. Tenant agrees to indemnify,
defend and hold Landlord harmless from any and all claims and liabilities of any
kind and description which may arise out of or be connected in any way with such
work. Tenant will pay the cost of all such work, and also the cost of painting,
restoring or repairing the Premises occasioned by such work. Upon completion of
the work, Tenant will furnish Landlord with contractor's affidavits that include
full and final waivers of liens and receipts for all amounts due for labor and
materials. In the case of any work that required Landlord's consent, Tenant will
also provide Landlord with as-built plans and specifications of the Premises as
altered by such work. All work will comply with all insurance requirements and
all applicable Laws (including, without limitation, the ADA) and will be
constructed in a good and workmanlike manner, using materials of first-class
quality and free and clear of all liens or claims therefor. Tenant will permit
Landlord to inspect construction operations in connection with any such work in
accordance with Section 7.2. Landlord's approval of any plans for any
modifications, improvements, alterations, additions or installations proposed by
Tenant will not constitute a representation that the same will comply with Laws
or be fit for any particular purpose; such approval will merely constitute
Landlord's consent to construct or install the same in the Premises.
9.2 Mechanics' Liens. Tenant will not permit any mechanic's lien or other
lien to be filed against the Premises by reason of any work performed by or for,
or material furnished to, Tenant (including, without limitation, any work
undertaken by Tenant pursuant to Section 9.1). If any such lien is filed at any
time against the Premises, Tenant will cause the same to be discharged of record
(which discharge may, at Tenant's option, be effected by bonding over such lien
in accordance with applicable law) within 30 days after delivery of notice from
Landlord concerning the filing of such lien. If Tenant fails to discharge any
such lien within such period, then, in addition to any other right or remedy of
Landlord, Landlord may, but will not be obligated to, discharge the same by
paying to the claimant the amount claimed to be due or by procuring the
discharge of such lien as to the Premises by deposit in the court having
jurisdiction of such lien, the foreclosure thereof or other proceedings with
respect thereto, of a cash sum sufficient to secure the discharge of the same,
or by the deposit of a bond or other security with such court sufficient in
form, content and amount to procure the discharge of such lien, or in such other
manner as is now or may in the future be provided by present or future Laws for
the discharge of such lien as a lien against the Premises. Any amount paid by
Landlord, or the value of any deposit so made by Landlord, together with all
costs, fees and expenses in connection therewith (including reasonable
attorney's fees of Landlord), together with interest thereon at the Interest
Rate, will be repaid by Tenant to Landlord on demand by Landlord and if unpaid
may be treated as Additional Rent. Notwithstanding the foregoing, if Tenant
desires to contest any such lien, Tenant may do so provided that, within 15 days
after Landlord notifies Tenant of the filing thereof, Tenant notifies Landlord
of Tenant's intention to do so and, until such time as Tenant causes such lien
to be removed by the payment thereof or by bonding over such lien in the manner
provided by law, posting with Landlord such security as Landlord may reasonably
request to provide funds with which Landlord may discharge such lien in the
event Tenant is
28
unsuccessful in its contest and then fails to discharge such lien. Tenant will
indemnify and defend Landlord against and save Landlord and the Premises
harmless from all losses, costs, damages, expenses, liabilities, suits,
penalties, claims, demands and obligations, including, without limitation,
reasonable attorney's fees resulting from the assertion, filing, foreclosure or
other legal proceedings with respect to any such mechanic's lien or other lien.
10. ASSIGNMENT AND SUBLETTING
10.1 Permitted Transfers. Tenant may, upon notice to Landlord but without
obtaining Landlord's consent, assign this Lease or sublet all or any portion of
the Premises to (i) any of Tenant's Affiliates; or (ii) any entity into which or
with which Tenant may be merged or consolidated, or any entity that purchases
substantially all of Tenant's assets, provided that the surviving
entity/transferee or purchaser has a tangible net worth that is at least equal
to the lesser of $100,000,000 or Tenant's net worth immediately prior to the
merger/consolidation or asset purchase transaction. Tenant may reincorporate in
a different state provided that there is no material change to the financial
structure or financial position of the company.
10.2 Transfers Requiring Consent. Except as expressly permitted by Section
10.1, Tenant will not assign this Lease or sublet all or any portion of the
Premises to any assignee or subtenant without first obtaining Landlord's written
consent, which consent will not be unreasonably withheld, conditioned or
delayed. If Tenant desires to effect an assignment or subletting that will
require Landlord's consent, Tenant will seek such written consent of Landlord by
a written request therefor, setting forth the date (which will not be less than
15 days after date of Tenant's notice) on which Tenant desires to assign this
Lease or to sublet all or any portion of the Premises, all of the major terms of
the proposed assignment or sublease, the consideration to be paid by the
assignee or subtenant, the name and address of the proposed assignee or
sublessee and its proposed use of the Premises, copies of the proposed
assignee's or subtenant's financial statements (to the extent available), and
the proposed form of assignment or sublease.
10.3 Deemed Assignments. Any change in the partners or members of Tenant,
if Tenant is a partnership or limited liability company, or, if Tenant is a
corporation, any transfer of any or all of the shares of stock of Tenant,
resulting in a change in the identity of the person or persons owning a majority
of equity or voting interests in Tenant as of the date of this Lease, will be
deemed to be an assignment within the meaning of this Section 10. However, none
of the following sales or transfers will constitute an assignment requiting
Landlord's consent pursuant to this Section 10: (a) a transfer of the stock or
partnership or membership interests of Tenant at any time that Tenant is a
publicly held entity whose equity interests are traded on a national stock
exchange; (b) any merger or consolidation transaction expressly permitted under
Section 10.1; (c) any transfer or sale of stock solely among existing
shareholders; (d) any transfer or sale of stock pursuant to Tenant's stock
option programs; or (e) a private sale of stock wherein the existing
shareholders of Tenant retain over 50% of the voting interests in Tenant.
10.4 Excess Consideration. If Tenant effects an assignment or sublease
that is not one permitted by Section 10.1 or 10.3, then Landlord will be
entitled to receive 50% of the
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amount by which the consideration required to be paid by the transferee for the
use and enjoyment of Tenant's rights under this Lease (after deducting from such
consideration Tenant's reasonable costs incurred in effecting the assignment or
sublease, including, without limitation, real estate commissions, attorneys'
fees and tenant improvement expenses) exceeds the Rent payable by Tenant to
Landlord allocable to the transferred space. Such percentage of such amount will
be payable to Landlord at the time(s) Tenant receives the same from its
transferee (whether in monthly installments, in a lump sum, or otherwise). In
the event such consideration is payable in installments over the term of the
subletting or assignment, Tenant's costs of effecting the subletting or
assignment will be deducted from such consideration payments in equal amortized
installments over such period to determine the amount of the excess
consideration payable to Landlord.
10.5 General Provisions. No subletting or assignment by Tenant hereunder,
regardless of whether the same requires Landlord's consent, will release or
discharge Tenant of or from any liability, whether past, present or future,
under this Lease, and Tenant will continue to be fully liable hereunder. The
sublessee or assignee will agree in a form reasonably satisfactory to Landlord
to comply with and be bound by all of the terms, covenants, conditions,
provisions and agreements of this Lease to the extent of the space sublet or
assigned, and Tenant will deliver to Landlord promptly after execution an
executed copy of each such sublease or assignment and such an agreement of
compliance by each such sublessee or assignee. Consent by Landlord to any
assignment of this Lease or to any subletting of the Premises will not be a
waiver of Landlord's rights under this Section 10 as to any subsequent
assignment or subletting. Any sale, assignment, mortgage, transfer or subletting
of this Lease which is not in compliance with the provisions of this Section 10
will be of no effect and void. Landlord's right to assign its interest in this
Lease will remain unqualified. Landlord may charge Tenant for Landlord's actual
costs, up to a maximum of $1,000.00, for attorneys' fees and administrative
expenses incident to a review of any documentation related to any proposed
assignment or subletting by Tenant with respect to which Landlord's consent is
required and requested.
11. CASUALTY
11.1 Termination Options. If the Improvements are damaged by fire or other
casualty Landlord will, within 45 days after learning of such damage, notify
Tenant in writing of the time necessary to repair or restore such damage, as
estimated by Landlord's architect, engineer or contractor. If such damage
occurred during the 12-month period that ends on the Expiration Date, and if
such estimate states that repair or restoration of all of such damage that was
caused to the Improvements cannot be completed within the lesser of (i) 180 days
from the date of the damage; or (ii) the number of days then remaining in the
Term, then Tenant or Landlord will have the option to terminate this Lease. If
such damage occurred prior to the 12-month period that ends on the Expiration
Date, and if such estimate states that repair or restoration of all of such
damage that was caused to the Improvements cannot be completed within 270 days
from the date of the damage, then Tenant or Landlord will have the option to
terminate this Lease. If such damage is not insured against by the insurance
policies required to be maintained by Landlord according to Section 8.1, then
Landlord will have the option to terminate this Lease (unless Tenant notifies
Landlord, within 15 days after receipt of Landlord's
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notice of termination, as provided below, that Tenant will pay for all costs of
repairing and restoring the damage that are in excess of any available insurance
proceeds, in which case Landlord's exercise of such right of termination will be
deemed void and Tenant will be obligated to pay for such costs as they are
incurred and to provide such reasonable assurance of payment as may be required
by Landlord's contractor). Any option to terminate granted above must be
exercised by written notice to the other party given within 10 days after
Landlord delivers to Tenant the notice of estimated repair time. If either party
exercises its option to terminate this Lease, the Term will expire and this
Lease will terminate 10 days after notice of termination is delivered; provided,
however, that Rent for the period commencing on the date of such damage until
the date this Lease terminates will be reduced to the reasonable value of any
use or occupation of the Premises by Tenant during such period and Landlord will
be entitled to all proceeds of the insurance policy described in Section 8.2(b)
applicable to any damaged alterations in the Premises.
11.2 Repair Obligations. If the Improvements are damaged by fire or other
casualty and neither party terminates this Lease according to Section 11.1, then
Landlord will repair and restore such damage with reasonable promptness, subject
to delays for insurance adjustments and delays caused by matters beyond
Landlord's control. Landlord will have no liability to Tenant and Tenant will
not be entitled to terminate this Lease if such repairs and restoration are not
in fact completed within the estimated time period, provided that Landlord
promptly commences and diligently pursues such repairs and restoration to
completion and provided further that, if Landlord fails to complete such repairs
and restoration within 270 days after the date of the damage, Tenant may
terminate this Lease by notice given to Landlord within 20 days after the
expiration of such 270-day period. In no event will Landlord be obligated to
repair, restore or replace any of the property required to be insured by Tenant
according to Section 8.2; however, if Tenant and Landlord so agree, Landlord
will, in connection with its repair and restoration of such damage, repair and
restore the damage, if any, caused to any or all of the alterations required to
be insured by Tenant according to Section 8.2(b). In such event, Landlord will
be entitled to all proceeds of the insurance policy described in Section 8.2(b)
applicable to the alterations that Landlord will repair or restore.
11.3 Rent Abatement. If any fire or casualty damage renders the Premises
untenantable and if this Lease is not terminated according to Section 11.1, then
Rent will ▇▇▇▇▇ beginning on the date of such damage. Such abatement will end on
the date Landlord has substantially completed the repairs and restoration
Landlord is required to perform according to Section 11.2. Such abatement will
be in an amount bearing the same ratio to the total amount of Rent for such
period as the untenantable portion of the Premises bears to the entire Premises.
In no event will Landlord be liable for any inconvenience or annoyance to Tenant
or injury to the business of Tenant resulting in any way from damage caused by
fire or other casualty or the repair of such damage, provided however that, to
the extent Tenant remains in possession of a portion of the Premises, Landlord
will take all reasonable steps to minimize the disruption to Tenant's business
and use of such portion of the Premises during the period of repair.
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12. EMINENT DOMAIN
12.1 Termination. If the whole of the Premises is taken by any public
authority under the power of eminent domain, this Lease will terminate as of the
day possession is taken by such public authority. If more than 15% of the floor
area of the Building is taken, or if so much of the Land is taken that Tenant is
permanently deprived of the use of (i) so much of its loading dock facilities
(including access thereto and parking therefor) that Tenant cannot continue its
business at substantially the same level and scope as before the taking; or (ii)
more than 20% of the parking spaces previously available on the Land (and such
spaces cannot be reconstructed on the remaining Land or any adjacent land
acquired by Landlord for that purpose within 90 days after Tenant is so deprived
of such use), by any public authority under the power of eminent domain, then
Tenant may, by notice to Landlord, terminate this Lease as of the day possession
is taken by such public authority. In case of any such termination, Landlord
will make a pro rata refund of any prepaid Rent. All damages awarded for such
taking under the power of eminent domain or any like proceedings will belong to
and be the property of Landlord, Tenant hereby assigning to Landlord its
interest, if any, in such award.
12.2 Award; Restoration. Anything in this Section l2 to the contrary
notwithstanding, Tenant will have the right to prove in any condemnation
proceedings and to receive any separate award which may be made for (a) damages
to or condemnation of any alterations or improvements paid for and installed by
Tenant or Tenant's movable trade fixtures and equipment; (b) moving expenses;
(c) loss of goodwill; (d) business interruption; and (e) loss of value, as a
result of such taking, of Tenant's fixtures, equipment and inventory, provided,
however, Tenant will in no event have any right to receive any award for its
interest in this Lease or for loss of its leasehold. Anything in this Section 12
to the contrary notwithstanding, in the event of a partial condemnation of the
Premises where this Lease is not terminated, (i) Landlord will, at its sole cost
and expense, restore the Premises (including any alterations or improvements
installed by Landlord and Tenant) to a complete architectural unit (but
Landlord's restoration obligations will be limited to the extent of the
condemnation award for restoration made available to Landlord), and (ii) the
Basic Rent provided for herein (1) shall equitably ▇▇▇▇▇ during the period of
restoration to the extent the Premises are rendered untenantable by the taking
in a manner that will be corrected by restoration; and (2) during the period
from and after the date of delivery of possession pursuant to such proceedings
to the termination of this Lease will be reduced by (A) in the case of a taking
of any portion of the Building, a sum equal to the product of the Basic Rent
provided for herein multiplied by a fraction, the numerator of which is the
Rentable Area of the portion of the Building that was taken, and the denominator
of which is the Rentable Area of the entire Building prior to such taking; and
(B) in the case of a taking of any portion of the Premises excluding the
Building, a sum equal to the product of the Basic Rent provided for herein
multiplied by a fraction, the numerator of which is the fair market value of the
portion of the Premises, excluding the Building, that was taken, and the
denominator of which is the fair market value of the entire Premises, excluding
the Building, prior to such taking.
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13. END OF TERM
13.1 Surrender. On the last day of the Term, or on the sooner termination
thereof, Tenant will peaceably surrender the Premises in good condition and
repair (ordinary wear and tear and damage by casualty excepted), consistent with
Tenant's duty to make repairs as herein provided. Tenant will give written
notice to Landlord at least 30 days prior to vacating the Premises for the
express purpose of arranging a meeting with Landlord for a joint inspection of
the Premises (provided that Tenant's failure to do so will not constitute a
default hereunder). On or before the last day of the Term, or the date of sooner
termination thereof, Tenant will, at its sole cost and expense, remove all of
its personal property and trade fixtures and equipment from the Premises
(including, without limitation, Tenant's Property, as defined in Section 3.14,
and Tenant's personal property installed on the roof of the Building pursuant to
Section 17.1 below) and repair all damage to the Premises caused by such
removal. All property not removed will be deemed abandoned. Tenant hereby
appoints Landlord its agent to remove all property of Tenant not so removed from
the Premises upon termination of this Lease and to cause its transportation and
storage for Tenant's benefit, all at the sole cost and risk of Tenant, and
Landlord will not be liable for damage, theft, misappropriation or loss thereof,
nor will Landlord be liable in any manner in respect thereto. Tenant will
reimburse Landlord upon demand for any expenses incurred by Landlord with
respect to removal, transportation or storage of abandoned property and with
respect to restoring such Premises to good order, condition and repair. All
modifications, improvements, alterations, additions and fixtures, other than
Tenant's trade fixtures and equipment, which have been made or installed by
either Landlord or Tenant upon the Premises (excluding any of the same that were
made or installed by Tenant and then subsequently removed by Tenant in
accordance with Section 9.1), will remain the property of Landlord (in the case
of improvements made by Landlord) or become the property of Landlord (in the
case of improvements made by Tenant) upon the expiration of the Term and will be
surrendered with the Premises as a part thereof, except that Tenant will, at its
expense and prior to the expiration of the Term, remove from the Premises (and
repair all damage caused by such removal) (a) any alterations which required
Landlord's consent to make pursuant to Section 9.1 and which Landlord, at the
time it gave its consent to such installation, required that Tenant remove at
the end of the Term; (b) any alterations which did not require Landlord's
consent to make pursuant to Section 9.1 but which are atypical in a distribution
center environment and which Landlord requires Tenant to remove by notice
delivered within five business days after the joint inspection described above
(or, in the event the parties fail to hold such joint inspection, prior to the
expiration of the Term); and (c) if applicable, any items required to be removed
by Landlord pursuant to Section 2.6. If the Premises are not surrendered
promptly at the end of the Term or sooner termination thereof without Landlord's
written permission to not so surrender the Premises, Tenant will indemnify
Landlord against loss or liability resulting from delay by Tenant in so
surrendering the Premises, including, without limitation, claims made by any
succeeding tenants founded on such delay and any attorneys' fees resulting
therefrom. Tenant will promptly surrender all keys for the Premises to Landlord
at the place then fixed for the payment of Rent and will inform Landlord of
combinations on any vaults, locks and safes left on the Premises. Tenant's
obligations under this Section 13.1 will survive the termination of this Lease
or expiration of the Term.
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13.2 Holding Over. In the event Tenant remains in possession of the
Premises after expiration of this Lease, Tenant will be deemed to be occupying
the Premises without claim of right, and Tenant will pay Landlord for all costs
arising out of loss or liability resulting from delay by Tenant in so
surrendering the Premises as above provided and will pay a charge for each day
of occupancy in an amount equal to 150% of the Basic Rent (on a daily basis)
payable immediately prior to such expiration, plus 100% of all Additional Rent
(also on a daily basis).
14. DEFAULTS AND REMEDIES
14.1 General. All rights and remedies of Landlord and Tenant enumerated in
this Lease are cumulative and are not intended to be exclusive of any other
remedies or means of redress at law or in equity to which either party may be
lawfully entitled in case of any breach or threatened breach by the other party
of any provision of this Lease. The failure of either party to insist in any one
or more cases upon the strict performance of any of the covenants of this Lease
or to exercise any option herein contained will not be construed as a waiver or
relinquishment for the future of such covenant or option. A receipt by Landlord
of Rent with knowledge of the breach of any covenant hereof (other than breach
of the obligation to pay the portion of such Rent paid) will not be deemed a
waiver of such breach, and no waiver by either party of any provisions of this
Lease will be deemed to have been made unless expressed in writing and signed by
such party. Each party agrees to pay, upon demand, all of the other party's
costs, charges and expenses, including the reasonable fees and out-of-pocket
expenses of counsel, agents, and others retained, incurred in successfully
enforcing the other party's obligations under this Lease.
14.2 Events of Default. Each of the following events will constitute an
"Event of Default" under this Lease:
(a) Failure to Pay Rent. Tenant fails to pay Basic Rent or any other
-------------------
Rent payable by Tenant under the terms of this Lease when due, and such
failure continues for 10 days after notice is given by Landlord to Tenant
of such failure (provided that, with respect to monthly installments of
Basic Rent and monthly installments of Additional Rent for Operating
Expenses and Taxes, Tenant will only be entitled to two notices of such
failure during any calendar year and if, after two such notices are given
in any calendar year, Tenant fails, during such calendar year, to pay any
further monthly installment of Basic Rent when due, such failure will
constitute an Event of Default hereunder without any further notice from
Landlord or additional cure period).
(b) Failure to Perform Other Obligations. Tenant breaches or fails to
------------------------------------
comply with any provision of this Lease applicable to Tenant other than a
covenant to pay Rent, and such breach or noncompliance continues for a
period of 30 days after notice thereof is given by Landlord to Tenant; or,
if such breach or noncompliance cannot be reasonably cured within such 30-
day period, Tenant does not commence to cure such breach or noncompliance
within such 30-day period or, after commencing to cure such breach or
noncompliance, does not thereafter diligently pursue such cure in good
faith to completion.
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(c) Execution and Attachment Against Tenant. Tenant's interest under
---------------------------------------
this Lease or in the Premises is taken upon execution or by other process
of law directed against Tenant, or is subject to any attachment by any
creditor or claimant against Tenant and such attachment is not discharged
or disposed of within 60 days after levy.
(d) Bankruptcy or Related Proceedings. Tenant files a petition in
---------------------------------
bankruptcy or insolvency, or for reorganization or arrangement under any
bankruptcy or insolvency Laws, or voluntarily takes advantage of any such
Laws by answer or otherwise, or dissolves or makes a general assignment for
the benefit of creditors, or involuntary proceedings under any such Laws or
for the dissolution of Tenant are instituted against Tenant, or a receiver
or trustee is appointed for the Premises or for all or substantially all of
Tenant's property, and such involuntary proceedings are not dismissed or
such receivership or trusteeship vacated within 60 days after such
institution or appointment.
14.3 Landlord's Remedies. Time is of the essence for the performance of
obligations by Tenant hereunder. If any Event of Default occurs, Landlord will
have the right, at Landlord's election, then or at any later time, to exercise
any one or more of the following remedies:
(a) Cure by Landlord. Landlord may, at Landlord's option but without
----------------
obligation to do so, and without releasing Tenant from any obligations
under this Lease, make any payment or take any action as Landlord deems
necessary or desirable to cure any Event of Default in such manner and to
such extent as Landlord in good ▇▇▇▇▇ ▇▇▇▇▇ necessary or desirable. Tenant
will pay Landlord, upon demand, all advances, costs and expenses of
Landlord in connection with making any such payment or taking any such
action, including reasonable attorney's fees, together with interest at the
Interest Rate, from the date of payment of any such advances, costs and
expenses by Landlord.
(b) Termination of Lease and Damages. Landlord may terminate this
--------------------------------
Lease, effective at such time as may be specified by notice to Tenant, and
demand (and, if such demand is refused, recover) possession of the Premises
from Tenant. In such event, Landlord will be entitled to recover from
Tenant, as damages for loss of the bargain and not as a penalty, an
aggregate sum equal to (i) all unpaid Basic Rent and other Rent for any
period prior to the termination date of this Lease (including interest from
the due date to the date of the award at the Interest Rate); plus (ii) the
present value at the time of termination (calculated by discounting on a
monthly basis at a discount rate equal to the rate payable on U.S. Treasury
securities offered at the time of award having a maturity closest to the
date on which the Term would have expired but for such termination) of the
amount, if any, by which (A) the aggregate of the Basic Rent and all other
Rent payable by Tenant under this Lease that would have accrued for the
balance of the Term after termination, exceeds (B) the amount of such Basic
Rent and other Rent which could reasonably be recovered by reletting the
Premises for the remainder of the Term at the then-current fair rental
value; plus (iii) interest on the amount described in (ii) above from the
termination date to the date of the award at the Interest Rate.
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(c) Repossession and Reletting. Landlord may reenter and take
--------------------------
possession of all or any part of the Premises, with process of law but
without additional demand or notice unless required by applicable Laws, and
repossess the same and expel Tenant and any party claiming by, through or
under Tenant, and remove the effects of both using such force for such
purposes as may be necessary, without being liable for prosecution for such
action or being deemed guilty of any manner of trespass, and without
prejudice to any remedies for arrears of Rent or right to bring any
proceeding for breach of covenants or conditions. No such reentry or taking
possession of the Premises by Landlord will be construed as an election by
Landlord to terminate this Lease unless a notice of such intention is given
to Tenant. No notice from Landlord or notice given under a forcible entry
and detainer statute or similar Laws will constitute an election by
Landlord to terminate this Lease unless such notice specifically so states.
Landlord reserves the right, following any reentry or reletting, to
exercise its right to terminate this Lease by giving Tenant such notice, in
which event the Lease will terminate as specified in such notice. After
recovering possession of the Premises, Landlord will use reasonable efforts
to relet the Premises on commercially reasonable terms and conditions.
Landlord may make such repairs, alterations or improvements as Landlord
considers appropriate to accomplish such reletting, and Tenant will
reimburse Landlord upon demand for all reasonable costs and expenses,
including attorneys' fees, which Landlord may incur in connection with such
reletting. Landlord may collect and receive the rents for such reletting
but Landlord will in no way be responsible or liable for any inability to
relet the Premises or to collect any rent due upon such reletting. Landlord
may apply the same first to the payment of such expenses as Landlord may
have incurred in recovering possession of the Premises, including
attorneys' fees and expenses for putting the same into good order and
condition or preparing or altering the same for re-rental to the extent
Landlord deems necessary or desirable and all other expenses, commissions
and charges paid, assumed or incurred by Landlord in or about reletting the
Premises and then to the fulfillment of the covenants of Tenant hereunder.
Any such reletting herein provided for may be for the remainder of the Term
or any renewal term of this Lease, as originally granted, or for a longer
or shorter period; Landlord will have the right to change the character and
use made of the Premises, and Landlord will not be required to accept any
substitute tenant offered by Tenant or to observe any instructions given by
Tenant about reletting. Regardless of Landlord's recovery of possession of
the Premises, so long as this Lease is not terminated Tenant will continue
to pay (and Landlord may recover, if Tenant fails to do so), on the dates
specified in this Lease, the Basic Rent and other Rent which would be
payable for the remainder of the Term (excluding any Renewal Term with
respect to which Tenant has not exercised its option under Section 2.5) if
such repossession had not occurred, less a credit for the net amounts, if
any, actually received by Landlord through any reletting of the Premises.
(d) Bankruptcy Relief. Nothing contained in this Lease will limit or
-----------------
prejudice Landlord's right to prove and obtain as liquidated damages in any
bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding, an amount equal to the maximum allowable by any Laws governing
such proceeding in effect at the time when
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such damages are to be proved, whether or not such amount be greater, equal
or less than the amounts recoverable, either as damages or Rent, under this
Lease.
14.4 Landlord's Default; Tenant's Remedies. Time is of the essence for the
performance of obligations by Landlord hereunder. If, during the Term, Landlord
defaults in fulfilling any of its covenants, obligations or agreements set forth
in this Lease, Tenant may give Landlord notice of such default and, if at the
expiration of 30 days after delivery of such notice, such default continues to
exist, or in the event of a default which cannot with due diligence be cured
within a period of 30 days, if Landlord fails to proceed promptly after the
delivery of such notice and with all due diligence to commence to cure the same
and thereafter to prosecute the curing of such default with all due diligence to
completion as soon as reasonably possible, then Tenant will be entitled (a)
subject to the limitations set forth below, to cure any default by Landlord
hereunder and, if the default involves an obligation the costs of which Landlord
(and not Tenant, through inclusion in Operating Expenses or otherwise) is
required to pay, to invoice Landlord for the costs incurred by Tenant in so
doing, plus interest at the Interest Rate from the date such costs are paid by
Tenant to the date reimbursed by Landlord with interest, and if Landlord fails
to pay such invoice within 10 days from delivery thereof, to offset the amounts
due from Landlord against the next ensuing payment(s) of Basic Rent due
hereunder; or (b) to exercise any right or remedy available to Tenant at law or
in equity by reason of such default, except to the extent expressly waived or
limited by the terms of this Lease. Notwithstanding the foregoing, in the event
of a bona fide emergency, if Landlord fails to perform an obligation under this
Lease within one business day after delivery of notice thereof from Tenant
(which notice must include reference to this emergency provision), Tenant may
cure such failure and expend up to a maximum of $2,000 per emergency matter in
so doing; if the default involves an obligation that Landlord is required to pay
for under this Lease, then Tenant may invoice Landlord for amount expended to
effect the emergency cure and, if Landlord fails to pay such invoice within 15
days, Tenant may offset the amount thereof against Basic Rent. Notwithstanding
any other provision of this Lease to the contrary, with respect to any provision
of this Lease which grants Tenant the right to deduct or offset any expenses
incurred by Tenant from its payments due Landlord hereunder, after the
expiration of Landlord's applicable notice and cure period, Tenant must first
advise Landlord by notice that Tenant will effect its remedy of deduction or
offset and thereafter Tenant will only be permitted to offset against each
monthly installment of Basic Rent hereunder an amount not exceeding 25% of the
amount of such installment of Basic Rent and Tenant will not be entitled to
offset any amounts against any other Rent under any circumstances. If such
monthly offset does not total the aggregate amount of Tenant's expenses which
are allowable for offset, the remaining balance thereof may be carried forward
and offset against future installments of Basic Rent, but Tenant may never
offset more than 25% of any monthly installment of Basic Rent. Further
notwithstanding the foregoing, if Tenant has been notified of the name and
address of any Mortgagee, then Tenant will not exercise any remedy as a result
of Landlord's default unless and until Tenant has given any such Mortgagee, by
registered or certified mail, a copy of any notice of default served upon
Landlord simultaneously with the delivery of notice to Landlord. Tenant further
agrees that if Landlord fails to cure such default within the time period
prescribed above, then such Mortgagee will have an additional 30-day period to
cure such default or if such default cannot be cured within that time, then such
additional time as may be necessary if within such 30-day period such Mortgagee
has
37
commenced and is diligently pursuing the cure of such default (including, but
not limited to, commencement of foreclosure proceedings, if necessary to effect
such cure).
15. SUBORDINATION
15.1 Subordination, Nondisturbance and Attornment. This Lease will be
subject and subordinate to any mortgage, deed of trust, ground lease or sale-
leaseback now or hereafter placed upon the Premises by Landlord, and to
amendments, replacements, renewals and extensions thereof, provided that as long
as Tenant is not in default in the payment of Rent and the performance of all
covenants, agreements and conditions to be performed by Tenant under this Lease,
and provided that Tenant attorns to the party acquiring title to the Premises as
a result of the foreclosure, termination or transfer in lieu thereof of any such
mortgage, deed of trust, ground lease or sale-leaseback (so long as such
acquiring party is obligated for the performance of all obligations of Landlord
hereunder required to be performed from and after such acquisition), then
neither Tenant's right to quiet enjoyment under this Lease, nor the right of
Tenant to continue to occupy the Premises and to conduct its business thereon,
in accordance with the terms of this Lease, will be interfered with by the
holder of any such mortgage, deed of trust, ground lease or sale-leaseback, by
any successor thereto or any successor to Landlord as a result of the
foreclosure or termination thereof or transfer in lieu thereof, or by virtue of
any such foreclosure, termination or transfer. Such subordination will be
effective without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination. However,
Tenant agrees at any time hereafter, within 10 business days after delivery of
Landlord's written request, to execute and deliver any instruments, releases or
other documents, in form reasonably satisfactory to Tenant, that may be
reasonably required for the purpose of subjecting and subordinating this Lease,
as above provided, to the lien of any such mortgage, deed of trust, ground lease
or sale-leaseback, provided the same include the nondisturbance provisions and
covenant to perform Landlord's obligations set forth above.
15.2 Option to Make Lease Superior. Notwithstanding anything contained in
Section 15.1, in the event the holder of any mortgage, deed of trust, ground
lease or sale-leaseback instrument at any time elects to have this Lease
constitute a prior and superior lien to its mortgage, deed of trust, ground
lease or sale-leaseback instrument, then, and in such event, upon any such
holder or Landlord notifying Tenant to that effect in writing, this Lease will
be deemed prior and superior in lien to such mortgage, deed of trust, ground
lease or sale-leaseback instrument, whether this Lease is dated prior to or
subsequent to the date of such mortgage, deed of trust, ground lease or sale-
leaseback instrument, and Tenant will execute such agreement in form reasonably
acceptable to Tenant as may be reasonably requested by such holder to confirm
such superior status.
16. SECURITY DEPOSIT
16.1 Amount and Form. Upon execution of this Lease, Tenant will deposit
$850,000 with Landlord (such amount, as the same may be reduced in accordance
with the provisions hereof, and whether in the form of cash or a letter of
credit, as provided herein, is referred to as the "Security Deposit"). Landlord
and Tenant intend the Security Deposit to be used solely as
38
security for Tenant's faithful and diligent performance of all of Tenant's
obligations under this Lease. The Security Deposit will remain in Landlord's
possession for the entire Term, and Landlord will not be required to segregate
it from Landlord's general funds. Tenant will not be entitled to any interest on
the Security Deposit. Provided that no Event of Default or event which, with the
giving of notice or the passage of time, or both, could become an Event of
Default then exits, at the end of each Lease Year during the initial 10-year
Term, the amount of the Security Deposit required hereunder will be reduced as
follows: (a) at the end of each of the first through the fifth Lease Years the
amount of the Security Deposit will be reduced by $100,000; and (b) at the end
of each of the sixth through the 10th Lease Years, the amount of the Security
Deposit will be reduced by $60,000. Upon each permitted reduction in the amount
of the Security Deposit, Landlord will refund to Tenant the reduction amount if
the Security Deposit is then in the form of cash or will permit Tenant to reduce
the amount of the letter of credit by the reduction amount if the Security
Deposit is then in the form of a letter of credit. Tenant may provide the
Security Deposit in the form of a letter of credit, provided that (i) the form
of the letter of credit and the issuing bank are reasonably acceptable to
Landlord; (ii) the letter of credit provides that Landlord may draw the entire
amount thereof upon presentation of Landlord's sight draft accompanied by a
certification by Landlord that an Event of Default has occurred under this
Lease; and (iii) at least 30 days prior to the expiration of an existing letter
of credit, Tenant will cause the same to be renewed through issuance and
delivery to Landlord of a substitute letter of credit meeting the requirements
hereof and issued in the amount then-required hereunder (and not in any reduced
amount that may become applicable thereafter), and if Tenant fails to timely
deliver such substitute, then Landlord may draw the entire amount of the
existing letter of credit prior to its expiration. Upon any drawing of a letter
of credit posted as the Security Deposit, the proceeds will be held and applied
by Landlord pursuant to the terms hereof as if Tenant had deposited the Security
Deposit in cash.
16.2 Use and Restoration. Upon the occurrence of an Event of Default by
Tenant under this Lease, Landlord may, at its option, use, apply or retain all
or any part of the Security Deposit for the payment of (1) any Rent in arrears;
(2) any expenses Landlord may incur as a direct or indirect result of Tenant's
failure to perform; and (3) any other losses or damages Landlord may suffer as a
direct or indirect result of Tenant's failure to perform. If Landlord so uses or
applies all or any portion of the Security Deposit, Landlord will notify Tenant
of such use or application and Tenant will, within 10 days after the date of
Landlord's notice, deposit with Landlord a sum sufficient to restore the
Security Deposit to the amount held by Landlord immediately prior to such use or
application. Tenant's failure to so restore the Security Deposit within 30 days
after deliver of Landlord's written demand therefor will constitute an Event of
Default.
16.3 Transfers. Tenant will not assign or encumber the Security Deposit
without Landlord's express written consent. Neither Landlord nor its successors
or assigns will be bound by any assignment or encumbrance unless Landlord has
given its consent. Landlord will have the right, at any time and from time to
time, to transfer the Security Deposit to any purchaser or lessee of the entire
Building. Upon any such transfer, and upon delivery to Tenant of a copy of the
purchaser's or lessee's written acknowledgment of its receipt of the Security
Deposit and agreement to perform all of Landlord's obligations arising hereunder
from and after the transfer
39
date, Tenant agrees to look solely to the new owner or lessee for the return of
the Security Deposit.
16.4 Refund. Landlord will refund the Security Deposit, or any balance
remaining after application thereof by Landlord pursuant to Section 16.2, to
Tenant within 60 days after the expiration or early termination of the Term and
Tenant's vacation and surrender of the Premises to Landlord in the condition
required by Section 13.1. Landlord may withhold from such refund a reasonable
estimate of the amount that will be due from Tenant pursuant to Section 4.2(d)
for the last year of the Term, pending final settlement between the parties with
the applicable Taxes, assessments and charges are determined for such year.
17. MISCELLANEOUS
17.1 Roof Installations. Subject to obtaining Landlord's prior written
approval as to any specific installation, which approval will not be
unreasonably withheld, conditioned or delayed, Tenant will have the right, at
its expense, to install (a) antennas and satellite dishes; (b) refrigeration
equipment; or (c) heating, ventilating and air conditioning equipment, on the
roof of the Building, provided that any such installation will be effected in a
manner that (1) complies with all applicable Laws (including, without
limitation, zoning Laws and the Covenant Documents); and (2) does not void or
otherwise impair any warranties covering the roof. Landlord will not charge
Tenant any additional Rent for any such use of the Building's roof. Tenant will
not enter into any license or sublease permitting a licensee or subtenant to use
the roof of the Building, except that Tenant may permit a bona fide subtenant of
premises within the Building to use a portion of the roof in connection with
such subtenant's use of its sublet premises within the Building.
17.2 Building Signage. In addition to the monument sign described in the
Shell Specifications (which will be for the exclusive use by Tenant), Tenant
will have the right, at its expense, to install, in a manner and location
reasonably designated by Landlord, one exterior identification sign on the
Building. The size, design and graphics of such sign will be subject to the
Covenant Documents and approval by ▇▇▇▇▇▇▇ County. Landlord will not install,
erect or maintain any signs on the Premises during the Term, except that
Landlord may erect a "For Rent" sign during the last nine months of the Term;
provided, however, that such sign will not obstruct any sign of Tenant or
interfere unreasonably with the conduct of Tenant's business at the Premises.
17.3 Non-competition. Landlord agrees that, so long as no uncured Event of
Default by Tenant exists under this Lease and Tenant is occupying and operating
the Premises for an order-by-internet home-delivery grocery business ("Tenant's
Use"), Landlord will not permit any tenant under any lease of other premises
owned by Landlord within Lots 1, 2, 3, 4 and 5 of the same filing of the Project
as that within which the Premises are located to use such premises for Tenant's
Use.
17.4 Brokers. Landlord will pay the commission due to ▇▇▇ ▇▇▇▇/CB ▇▇▇▇▇▇▇
▇▇▇▇▇, Inc. in connection with the negotiation and execution of this Lease.
Landlord will also pay to Tenant an amount equal to $2.19 multiplied by the
number of square feet of the Rentable Area of
40
the Premises to compensate Tenant for the services of its leasing consultant
with respect to this Lease; 50% of such amount will be paid to Tenant upon
execution and delivery of this Lease and the remaining 50% will be paid on the
Commencement Date. Tenant and Landlord will indemnify and hold each other
harmless from all damages paid or incurred by the indemnified party resulting
from any claims asserted against the indemnified party by brokers, agents or
leasing consultants claiming through the indemnifying party.
17.5 Estoppel Certificates. Tenant agrees, from time to time, upon not
less than 10 business days' prior written request by Landlord, to deliver to
Landlord a statement in writing certifying, to Tenant's actual knowledge (i)
this Lease is unmodified and in full force and effect (or if this Lease is not
in full force and effect, so stating, of if there have been modifications, that
the Lease as modified is in full force and effect and stating the
modifications); (ii) the dates to which Basic Rent and other Rent have been
paid; (iii) Landlord is not in default in any provision of this Lease or, if in
default, the nature thereof specified in detail; (iv) the amount of monthly
Basic Rent currently payable by Tenant; (v) the amount of any prepaid Rent; (vi)
that Tenant has taken possession of the Premises (if Tenant has in fact done so)
and that Landlord has performed all of its obligations under Section 3 with
respect to the design, construction and installation of the Shell and the
Leasehold Improvements, or if there are any such obligations remaining to be
performed, specifying the same in detail; and (vii) such other matters as may be
reasonably requested by Landlord or any Mortgagee or prospective purchaser of
the Premises.
17.6 Notices. All notices required or permitted under this Lease must be
in writing and will only be deemed properly given and received (i) when actually
given and received, if delivered in person to a party who acknowledges receipt
in writing; or (ii) one business day after deposit with a private courier or
overnight delivery service, if such courier or service obtains a written
acknowledgment of receipt; or (iii) three business days after deposit in the
United States mails, certified or registered mail with return receipt requested
and postage prepaid. All such notices must be transmitted by one of the methods
described above to the party to receive the notice at, in the case of notices to
Landlord, Landlord's Notice Address, and in the case of notices to Tenant, the
applicable Tenant's Notice Address, or, in either case, at such other
address(es) as either party may notify the other of according to this Section
17.6
17.7 Actions by Landlord's Agent. All rights and remedies of Landlord
under this Lease or that may be provided by law may be executed by Landlord in
its own name, individually, or in the name of its agent, and all legal
proceedings for the enforcement of any such rights or remedies, including those
set forth in Section 14, may be commenced and prosecuted to final judgment and
execution by Landlord in its own name or in the name of its agent.
17.8 Severability; Governing Law. If any term or provision of this Lease
is to any extent held invalid or unenforceable, the remaining terms and
provisions of this Lease will not be affected thereby, but each term and
provision of this Lease will be valid and enforced to the fullest extent
permitted by law. This Lease will be construed and enforced in accordance with
the laws of the State of Colorado.
41
17.9 Transfers of Landlord's Interest. The term "Landlord" as used in this
Lease, so far as covenants or obligations on the part of Landlord are concerned,
will be limited to mean and include only the owner or owners of the Premises at
the time in question, and in the event of any transfer or conveyance, provided
either that the transferee agrees in writing (a copy of which will be provided
to Tenant upon request) to perform all of Landlord's obligations hereunder
arising from and after the transfer or that the transferee is required to
perform such obligations under applicable Laws, the then grantor will be
automatically freed and released from all personal liability accruing from and
after the date of such transfer or conveyance as respects the performance of any
covenant or obligation on the part of Landlord contained in this Lease to be
performed, it being intended hereby that the covenants and obligations contained
in this Lease on the part of Landlord will be binding, subject to Section 17.14,
on the then Landlord only during and in respect to its period of ownership. In
the event of a sale or conveyance by Landlord of the Premises, provided either
that the transferee agrees in writing (a copy of which will be provided to
Tenant upon request) to perform all of Landlord's obligations hereunder arising
from and after the transfer or that the transferee is required to perform such
obligations under applicable Laws, the same will operate to release Landlord
from any future liability upon any of the covenants or conditions herein
contained and in such event Tenant agrees to look solely to the responsibility
of the successor in interest of Landlord in and to this Lease. This Lease will
not be affected by any such sale or conveyance, and Tenant agrees to attorn to
the purchaser or grantee, provided either that the purchaser or grantee agrees
in writing (a copy of which will be provided to Tenant upon request) to perform
all of Landlord's obligations hereunder arising from and after the sale or
conveyance or that the purchaser or grantee is required to perform such
obligations under applicable Laws.
17.10 Headings. The marginal or topical headings of the several sections
are for convenience only and do not define, limit or construe the contents of
such sections.
17.11 Complete Agreement; Modification. All of the representations and
obligations of the parties are contained in this Lease and no modification,
waiver or amendment of this Lease or of any of its conditions or provisions will
be binding upon a party unless in writing signed by such party.
17.12 No Offer. The submission of this document for examination does not
constitute an offer to lease, or a reservation of, or option for, the Premises.
This document becomes effective and binding only upon the execution and delivery
hereof by the proper officers of Landlord and Tenant.
17.13 Survival. In addition to those obligations set forth in this Lease
that expressly survive the expiration or earlier termination of the Term, all
obligations of Landlord and Tenant hereunder that, by their nature, cannot be
fully performed prior to the expiration or earlier termination of the Term will
survive the expiration or earlier termination of the Term.
17.14 Limitation on Landlord's Liability. Tenant agrees to look solely to
Landlord's interest in the Premises for the recovery of any judgment from
Landlord, it being agreed that Landlord, and if Landlord is a partnership, its
partners whether general or limited, and if
42
Landlord is a corporation, its directors, officers or shareholders, and if
Landlord is a limited liability company, its managers or members, will never be
personally liable for any such judgment.
17.15 Tenant's Authority. Tenant will furnish to Landlord promptly upon
demand, a corporate resolution evidencing the due authorization of Tenant to
enter into this Lease.
17.16 No Partnership. This Lease will not be deemed or construed to create
or establish any relationship or partnership or joint venture or similar
relationship or arrangement between Landlord and Tenant hereunder.
17.17 Force Majeure. Whenever a period of time is herein prescribed for
action to be taken by either party, such party will not be liable or responsible
for, and there will be excluded from the Computation of any such period of time,
any delays due to strikes, riots, acts of God, shortages of labor or materials,
war, governmental laws, regulations or restrictions or any other causes of any
kind whatsoever which are beyond the reasonable control of such party. A lack of
funds, however, will never be deemed beyond a party's reasonable control.
17.18 Financial Statements. Tenant acknowledges that it has provided
Landlord with its financial statement as a material inducement to Landlord's
agreement to lease the Premises to Tenant, and that Landlord has relied on the
accuracy of such financial statement in entering into this Lease. Tenant
represents and warrants that the information contained in such financial
statement is true, complete and correct in all material aspects. Except during
any time that Tenant constitutes a publicly-traded entity whose financial
statements are available for public inspection, Tenant will make available to
Landlord or to any prospective Mortgagee or purchaser of the Premises, within 10
days from request by Landlord, audited financial statements of Tenant or any
guarantor, provided, that Landlord or any such prospective Mortgagee or
purchaser agrees to maintain such statements in confidence, and provided further
that if audited financial statements of Tenant are not available at the time of
such request, Tenant may deliver unaudited statements prepared in accordance
with generally accepted accounting principles consistently applied and certified
to be true and correct by Tenant's chief financial officer. Tenant will have no
obligation to provide such financial statements more than once in any calendar
year.
17.19 Future Covenants. Landlord agrees that it will not execute or
consent to any future grants, declarations or agreements that may be hereafter
recorded and that impose or create easements, covenants or restrictions on,
over, under, through or with respect to property located within the Project if
the same would materially and adversely affect Tenant's ingress to or egress
from the Premises or would materially and adversely affect Tenant's operation of
a home-delivery grocery distribution warehouse business at the Premises. Tenant
acknowledges that Landlord intends to enter into a Covenant Document that will
permit the owners (and their tenants or other permittees) of both the Land and
the property adjacent thereto on the east to use the common access to such
properties from the adjacent street to the south and the common driveway
consisting of approximately 35 feet on each side of the border between the Land
and such adjacent property for purposes of ingress, egress and truck maneuvering
(but not for parking) and will provide for the sharing of the costs of
maintaining such access and driveway.
43
Tenant further acknowledges that such an agreement will not be deemed to
materially and adversely affect Tenant's ingress, egress or the conduct of its
business.
17.20 Binding Effect. The covenants and agreements herein contained will
bind and inure to the benefit of Landlord and its successors and assigns, and
Tenant and its permitted successors and assigns.
17.21 Acquisition Contingency. Landlord has disclosed to Tenant that, as
of the date of this Lease, Landlord has not yet acquired title to the Land.
Landlord covenants to proceed in good faith to consummate its acquisition of the
Land. However, if Landlord does not acquire title to the Land by May 15, 2000
due to (i) a default by the seller thereof under its contract with Landlord
which default is not within Landlord's control; or (ii) a good faith failure to
satisfy a condition precedent to Landlord's obligation to purchase under such
contract, then Landlord may terminate this Lease by notice to Tenant given at
any time prior to Landlord's acquisition of such title or June 15, 2000,
whichever occurs first, and upon such termination, (a) all prepaid Rent, the
Security Deposit and all other amounts theretofore paid by Tenant to Landlord
hereunder will be refunded to Tenant; (b) the amount paid by Landlord to Tenant
for leasing consultant services pursuant to Section 17.4 will be refunded by
Tenant to Landlord; (c) Tenant will have no obligation to reimburse Landlord for
any costs incurred by Landlord in designing or constructing the Shell or the
Leasehold Improvements; and (d) except as provided above in this Section 17.21,
both parties will be relieved of any further obligations hereunder. In addition,
if Landlord has not acquired title to the Land by July 31, 2000 for any reason
other than a default by Tenant under this Lease, then Tenant may terminate this
Lease by notice to Landlord given at any time prior to Landlord's acquisition of
such title and, upon the timely giving of such notice, this Lease will terminate
in accordance with the foregoing clauses (a) through (d).
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first set forth above.
LANDLORD: TENANT:
OPUS NORTHWEST, L.L.C., a HOMEGROCER. COM, INC., a
Delaware limited liability company Washington corporation
By: /s/ [ILLEGIBLE] By: /s/ ▇.▇. ▇▇▇▇▇▇▇
------------------- ---------------------------------
Vice President Its: SR.V.P. Operations
---------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Its: Sr. VP and Corporate Secretary
---------------------------------
44
Exhibit A
---------
LEGAL DESCRIPTION OF THE LAND
A parcel of land located in the Northwest Quarter and the Northeast Quarter of
Section 6, Township 6 South, Range 66 West of the 6th P.M., County of ▇▇▇▇▇▇▇,
State of Colorado, more particularly described as follows:
Beginning at the Northwest ▇▇▇▇▇ of said Northeast Quarter of Section 6, then S
89(Degree)40'35" W, along the north line of said Northwest Quarter of Section 6,
a distance of 57.41 feet; thence S 00(Degree)03'40" E a distance of 580.20 feet;
thence N 89(Degree)56'20" E a distance of 538.50 feet; thence N 00(Degree)03'40"
W a distance of 582.74 feet to the north line of said Northeast Quarter of
Section 6; thence S 89(Degree)40'04" W, along said north line, a distance of
481.09 feet to the point of beginning. The basis of bearings for the foregoing
description assumes the north line of said Northeast Quarter runs N
89(Degree)40'04" E.
Landlord and Tenant acknowledge that, prior to Landlord's acquisition of the
Land, the seller thereof will cause the same to be subdivided (and the parties
anticipate that the Land will become ▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇). At such time as such plat has been recorded, the parties
agree to execute an amendment to this Lease substituting for the above legal
description a new legal description for the Land based on such recorded plat,
with the Land for such purposes being the lot shown on such plat that has
boundaries substantially in accordance with those set forth above.
▇-▇
▇▇▇▇▇▇▇ ▇-▇
[FLOOR PLAN APPEARS HERE]
Exhibit B
---------
SHELL SPECIFICATIONS
General Site Requirements
Access
------
A. Separate employee and truck entrances required. Entrances shall be located
such that they do not create any other adverse traffic situations with the
streets or other parking areas.
B. Allow for one (1) 20-yard container for trash and cardboard with easy
access for pick-up and drop-off by local vendor.
C. All required fire lanes shall be provided per local regulations.
Delivery Truck Parking Requirements
-----------------------------------
A. On-site delivery truck parking shall accommodate 80 spaces with 20 spaces
provided at the dock area and 60 spaces in the parking area.
B. Typical parking stall dimensions shall be 28'd x 12'w. There shall be a
clear drive of 34' for maneuvering.
C. Parking for 4 semi-trailers must also be accommodated up to 65' in length.
Receiving docks shall be located such that the driver of the tractor-
trailer has direct visual contact with the docks while backing in, i.e.
docks at left of approach.
D. All internal and access roads shall be paved.
E. Truck parking shall be for Tenant's exclusive use.
Employee Parking
----------------
A. Site shall meet ADA and local code for number of parking spaces and shall
accommodate the forecast of at least 200 striped spaces (includes office
personnel).
B. All visitor and employee access roads and parking areas shall be paved.
C. Employee parking shall be for Tenant's exclusive use.
Site Security
-------------
Intentionally left blank.
B-1
Base Building Spec
High Level Space Summary
------------------------
-------------------------------------------------------------------------------------------------
Type of Space Minimum Size Minimum Clear Height
-------------------------------------------------------------------------------------------------
Office 10,000sf 9'-0"
-------------------------------------------------------------------------------------------------
Shipping/Receiving Dock 14,000sf 22'-0" to 28'-0"
-------------------------------------------------------------------------------------------------
Shopping Area 50,000sf 22'-0" to 28'-0"
-------------------------------------------------------------------------------------------------
Produce Prep. And Misc. 3,000sf no restriction
-------------------------------------------------------------------------------------------------
Cooler/Freezer Area 28,000sf 22'-0" to 28'-0"
-------------------------------------------------------------------------------------------------
TOTAL 105,000sf
-------------------------------------------------------------------------------------------------
*Depth of building perpendicular to dock door opening should be a minimum of 200
feet and would be optimal at 250 feet.
*Column spacing should be maximum achievable. Bays of 40 ft are acceptable.
*Battery charging area and conveyor compressor room are part of the 105,000sf
and should be included in a detailed space summary of the building.
Floor Requirements
------------------
A. If new, coordinate freezer/slab requirements prior to placing of slabs,
i.e. sub slab insulation.
B. Slab on grade design shall be 6" thick, 4,000psi and shall be FF50/FL30
minimum in levelness. Soil compaction below must be at least 3,000psf.
C. Provide Tenant requested sealant. The cost associated with Landlord's
standard (one coat) sealant will be credited to the Leasehold Improvement
cost..
Loading Docks
-------------
A. Door Quantity: Provide a minimum of 20 shipping dock doors, 4 receiving
dock doors, and 1 ramp door.
B. Door Size/Spacing: Typical doors shall be steel, 8'-6" wide x 9'-0" high
and be vertical roll-up in operation. Doors shall be spaced 12'-6" on
center. Door at ramp shall be 10'-0" wide x 12'-0" high and be a motor
driven steel vertical roll-up door.
B-2
Door Criteria
Vehicle Door Size Center to Dock Truck Clear Total Yard
Type Center Height Length Drive Aisle (min)
-------------------------------------------------------------------------------------------------------
Shipping 8'-6"x 9'* 12'-0" 38" 28' 34' 63'
Van
-------------------------------------------------------------------------------------------------------
Receiving 8'-6"x 9' 14'-0" 48" 65' 65' 130'
Truck
-------------------------------------------------------------------------------------------------------
Ramp 10'x 12' ▇/▇ ▇▇▇▇▇ ▇/▇ ▇/▇ ▇/▇
-------------------------------------------------------------------------------------------------------
A. Canopy: Provide a continuous canopy over all dock doorways.
B. Dock Height: 20 shipping dock bays shall be at +/- 38" and the 4 receiving
docks shall be at +/- 48".
C. Mechanical Dock Levelers: provide 3 levelers at the receiving docks.
Levelers shall be 7' wide x 8' long and have a minimum capacity of 25,000
lbs.
D. Dock Ramp: Provide 1 dock ramp with rough broom finish and a landing at the
top prior to entering the building. Maximum slope not to exceed 6%.
Structural Requirements
Roof structure will be capable of accommodating approximately twenty (20) - 10
ton mechanical units, antennas and 1,000 LB point loads for conveyor
connections. The cost associated with providing the 1,000 LB point load will be
a Leasehold Improvement cost.
Mechanical Requirements
HVAC Requirements
-----------------
A. Air changes are to be per governing code requirements.
Potable Water
-------------
A. A 3" main supply will be provided and metered to the building. The costs
associated with increasing the supply from 2" to 3" will be included as a
Leasehold Improvement cost.
B-3
Waste Lines
-----------
A. Provide 6' sewer main into building.
Natural Gas
-----------
A. Gas line supporting typical warehouse use will be stubbed to the building.
Fire Protection
---------------
A. Landlord will provide a fire protection allowance of $.70 per rentable
square foot for construction of Tenant's sprinkler system.
Electrical Requirements
Overall Electrical Power
------------------------
A. Provide a 4 wire, 4,000 amps @ 480v, 3ph, service with a dedicated ground
(includes HVAC). The cost associated with increasing the service from 3,000
to 4,000 amps will be included as a Leasehold Improvement cost.
Break Room
----------
Intentionally left blank.
Truck Charging
--------------
Intentionally left blank.
Lighting Requirements
---------------------
A. Site/Yard: 1 fc average each
Emergency Generator - Transfer Switch Only
------------------------------------------
Intentionally left blank.
B-4
Telephone
---------
A. Provide one (1) 3" conduit from point of presence to the telephone panel to
accommodate T1 phone service. Point of presence shall be within 250 feet of
the telephone panel. Maximum number of 90 bends not to exceed two (2).
B. All conduit shall be provided with pull cords.
Server Room
-----------
Intentionally left blank.
Data Cabling
------------
Intentionally left blank.
Health Department Requirements (Verify with Local Health Department)
Intentionally left blank.
B-5
