EXHIBIT 10.12
▇▇▇▇▇▇▇ & Co.
Office Lease Agreement
Cover Page
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This Standard Office Lease Agreement has been filled in for submission to your
attorney for legal approval. No representation or recommendation is made by
▇▇▇▇▇▇▇ & Co. or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Lease or the transaction relating thereto;
and both Landlord and Tenant shall rely solely upon the advice of their own
legal counsel as to the legal and tax consequences of this lease.
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TENANT: Total Sports, Inc.
DATED: December 1, 1998
For the purposes of this lease Agreement by and between First Raleigh Telex, LLC
("Landlord"), by its agent, ▇▇▇▇▇▇▇ & Co., and Total Sports, Inc. ("Tenant"),
the terms set forth below, when preceded by a capital letter, shall have the
meaning set forth in this Cover Page and in the Lease.
I Tenant and Landlord Information
A. Landlord: First Raleigh Telex, LLC
a North Carolina Limited Liability Company
B. Tenant: Total Sports, Inc.
a North Carolina Corporation
C. Tenant's Notice Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
D. Tenant's Representative: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
II Description of Premises
A. Building: Total Sports Building
B. Business Hours: Twenty-four (24) hours a day, seven (7) days a
week
C. Premises: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇.▇.
Second Floor = 4,662 square feet
Third floor = 4,670 square feet
Fourth Floor = 4,670 square feet
Fifth Floor = 4,670 square feet
Basement = 4,215 square feet
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Total = 22,887 square feet
D. Permitted Use: General office use.
III Term
A. Commencement Date: April 1, 1999
B. Expiration Date: June 30, 2009
IV Rent
A. Advance Rent: Ten Thousand Dollars ($10,000.00) is due upon
execution for rent for the early occupancy of
floors five and the basement for the period
December 18, 1998 through March 31, 1999.
B. Base Annual Rent: Two Hundred Ninety Nine Thousand Seventy Six and
72/100 Dollars ($299,076.72).
C. Base Rental Rate: Thirteen and 76/100 Dollars ($13.76) per square
foot for the second, third, fourth and fifth
floors and Ten Dollars ($10.00) per square foot
for the basement space. Total base rent for the
first year is Two Hundred Ninety Nine Thousand
Seventy Six and 72/100 Dollars ($299,076.72).
D. Monthly Installment of
Base Annual rent: Twenty-four Thousand Nine Hundred Twenty Three and
06/100 Dollars ($24,923.06).
E. Security Deposit: Twenty-four Thousand Nine Hundred Twenty Three and
06/100 Dollars (24,923.06).
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V Adjustments
A. Adjustment Period
Consumer Price Index: On January 1 of each year, base rent shall be
escalated by a three percent (3%) fixed increase.
B. Base Period Consumer
Price Index: The Consumer Price Index as established for the
month of _____N/A________.
C. CPI Escalator: _______Three__________ Percent (_3_%).
D. Base Operating and Real
Estate Tax Expenses: To the extent operating and real estate tax
expenses exceed $5.50 per square foot, Tenant
shall pay its prorata share of the increases.
E. Tenant's Pro Rata Share: ______Seventy-nine_______ Percent (_79%) of the
Building. Total rentable square footage is
____28,821.
VI Miscellaneous
A. Broker: N/A.
B. Special Conditions None.
C. Exclusive Rights Right of first refusal to lease the first floor of
the building.
Tenant: Landlord:
Total Sports, Inc. First Raleigh Telex, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title: President/COO
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Date: August 8, 1999
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(Please Print or Type)
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Table of Contents
ARTICLE I PREMISES
ARTICLE II USE
ARTICLE III TERM
ARTICLE IV COMPLETION OF PREMISES
Section 4.01 Substantial Completion
Section 4.02 Notice
Section 4.03 Inspection and Punchlist
Section 4.04 Delayed Possession
Section 4.05 Landlord Improvements
ARTICLE V RENT AND SECURITY
Section 5.01 Base Rent
Section 5.02 CPI Adjustment
Section 5.03 Expense and Tax Escalations
Section 5.04 Personal Property Tax
Section 5.05 Security Deposit
ARTICLE VI AFFIRMATIVE OBLIGATIONS
Section 6.01 Compliance with Laws
Section 6.02 Services and Utilities
Section 6.03 Repairs and Maintenance
ARTICLE VII NEGATIVE OBLIGATIONS
Section 7.01 Alterations
Section 7.02 Assignment and Subleasing
ARTICLE VIII INSURANCE
Section 8.01 Insurance
Section 8.02 Indemnification
Section 8.03 Limitation of Landlord's Liability
ARTICLE IX LOSS OF PREMISES
Section 9.01 Damages
Section 9.02 Condemnation
ARTICLE X DEFAULT
Section 10.01 Tenant's Default
Section 10.02 Landlord's Remedies
Section 10.03 Self-Help
Section 10.04 Survival
ARTICLE XI NON DISTURBANCE
Section 11.01 Subordination
Section 11.02 Estoppel Certificate
Section 11.03 Quiet Possession
ARTICLE XII LANDLORD'S RIGHTS
Section 12.01 Rules
Section 12.02 Mechanic's Liens
Section 12.03 Right to Enter
Section 12.04 Holdover
Section 12.05 Signs
Section 12.06 Right to Relocate
ARTICLE XIII MISCELLANEOUS
Section 13.01 Broker's Warranty
Section 13.02 Attorneys' Fees
Section 13.03 Notices
Section 13.04 Partial Invalidity
Section 13.05 Waiver
Section 13.06 Binding on Successors
Section 13.07 Governing Law
Section 13.08 Lease not an Offer
Section 13.09 Recording
Section 13.10 Survival of Remedies
Section 13.11 Authority of Parties
Section 13.12 Business Days
Section 13.13 Entire Agreement
Section 13.14 Definition of Lease
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EXHIBITS
Exhibit A Floor Plan
Exhibit B Building
Exhibit C Land
Exhibit D Landlord Improvements
Exhibit E Rules and Regulations
RIDER A
RIDER B
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▇▇▇▇▇▇▇ & Co.
Office Lease
--------------------------------------------------------------------------------
This Standard Office Lease Agreement has been filled in for submission to your
attorney for legal approval. No representation or recommendation is made by
▇▇▇▇▇▇▇ & Co. or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Lease or the transaction relating thereto;
and both Landlord and Tenant shall rely solely upon the advice of their own
legal counsel as to the legal and tax consequences of this lease.
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This Lease ("Lease") is made December, 1998, between First Raleigh Telex,
LLC ("Landlord") and Total Sports, Inc. ("Tenant"). Landlord is a Limited
Liability Company, organized under the laws of North Carolina, with principal
offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE 1
PREMISES
1.01 Premises. Landlord leases to Tenant Floors 2, 3, 4 and 5 and the basement
of ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Premises") as
outlined on the Floor Plans attached as Exhibit A. The Premises consists of
approximately 22,887 square feet of rentable space in the building ("Building")
in which the Premises are located. The Building is shown as Exhibit B and is
located on the land described in Exhibit C ("Land"). The Premises contain the
fixtures, improvements, and other property now installed plus any Landlord
Improvements required by Section 4.05 and Exhibit D.
1.02 Common Areas. Tenant and its agents, employees, and invitees have the non-
exclusive right with others designated by Landlord to the free use of the common
areas ("Common Areas") in the Building and on the Land for the Common Areas'
intended and normal purpose. Common Areas include elevators, sidewalks, parking
areas, driveways, hallways, stairways, public bathrooms, common entrances,
lobby, and other similar public areas and access ways. Landlord may change the
Common Areas if the changes do not materially and unreasonably interfere with
Tenant's access to or use of the Premises.
ARTICLE II
USE
Tenant shall use the Premises for general office use, unless Landlord gives its
advance written consent to another use. Landlord warrants that applicable laws,
ordinances, regulations, and restrictive covenants permit the Premises to be
used for general offices. Tenant shall not create a nuisance or use the
Premises for any immoral or illegal purposes.
ARTICLE III
TERM
The Lease begins ("Commencement Date") on the earlier of: April 1, 1999
The Lease ends ("Expiration Date") at 11:59 p.m. on the last day of the calendar
month ten (10) years following the Commencement Date, unless terminated earlier
under this Lease. Within thirty (30) days after the Commencement Date, the
parties shall confirm in writing the Commencement and Expiration Dates.
ARTICLE IV
COMPLETION OF PREMISES
ARTICLE V
RENT AND SECURITY
5.01 Base Rent. Tenant shall pay to Landlord Base Rent during the Term, as
follows:
Months: Annual Base Rent: Monthly Base Rent:
April 1, 1999 through December 31, 1999 $299,076.72 $24,923.06
January 1, 2000 through December 31, 2000 $308,049.02 $25,670.75
January 1, 2001 through December 31, 2001 $317,290.49 $26,440.87
January 1, 2002 through December 31, 2002 $326,809.21 $27,234.10
January 1, 2003 through December 31, 2003 $336,613.48 $28,051.12
January 1, 2004 through December 31, 2004 $346,711.89 $28,892.66
January 1, 2005 through December 31, 2005 $357,113.24 $29,759.44
January 1, 2006 through December 31, 2006 $367,826.64 $30,652.22
January 1, 2007 through December 31, 2007 $378,861.44 $31,571.79
January 1, 2008 through December 31, 2008 $390,227.28 $32,518.94
January 1, 2009 through June 30, 2009 $401,934.10 $33,494.51
With _____N/A______(___%) percent annual escalations
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The Base Rent shall be paid:
(a) without advance notice, demand, offset, or deduction;
(b) by the first day of each month during the Term; and
(c) to Landlord at its address set forth in Section 13.03 or as Landlord
may specify in writing to Tenant.
If the Term does not begin on the first day or end on the last day of a month,
the Base Rent for that partial month shall be prorated by multiplying the
monthly Base Rent by a fraction, the numerator of which is the number of days of
the partial month included in the Term and the denominator of which is the total
number of days in the full calendar month.
If Tenant fails to pay part or all of the Base Rent by the fifth (5th) day of
the month due, it is past due, the Tenant shall also pay:
(a) a late charge equal to four percent (4%) of the unpaid Base Rent and
Additional Rent, plus
(b) interest at eighteen percent (18%) per annum or the maximum then
allowed by applicable law, whichever is less, on the remaining unpaid
past due balance, retroactive to the date originally due until paid.
5.03 Expense and Tax Escalations. Base Rent shall be adjusted on each
anniversary of the Commencement Date by increasing the Base Rent paid during the
preceding year by an amount equal to the Tenant's pro rata share of the increase
of Operating Expenses and Real Estate Taxes as defined hereinafter.
(a) Definitions.
(i) "Base Operating and Real Estate Tax Expenses" means Five &
50/100_($5.50) Dollars per square foot.
(ii) "Tenant's Pro Rata Share" means seventy-nine and two-tenths
(79.2%) percent, which is calculated by dividing the
rentable square footage of the Premises (numerator) by the
rentable square footage of the Building (denominator), and
expressing the fraction as a percentage.
(iii) "Property" means the Building and its equipment and
systems, and the Land.
(iv) "Real Estate Taxes" means real property taxes and currently
due installments of assessments, special or otherwise,
imposed upon the Property, and reasonable legal fees,
costs, and disbursements incurred for proceedings to
contest, determine, or reduce Real Estate Taxes, but only
to the extent the Real Estate Taxes are reduced, but shall
exclude federal, state or local income taxes, franchise,
gift, transfer, excise, capital stock, estate, succession,
or inheritance taxes, and penalties or interest for late
payment of Real Estate Taxes.
(v) "Operating Expenses" means Landlord's operating expenses
that are reasonable, actual and necessary, out-of-pocket
(except Landlord may use its normal accrual method of
accounting), obtained at competitive prices, and that are
directly attributable to the operation, maintenance,
management, and repair of the Property, as determined under
generally accepted accounting principles consistently
applied, including:
(1) salaries, and other compensation; payroll taxes,
vacation, holiday, and other paid absences; and
welfare, retirement, and other fringe benefits
that are paid to employees, independent
contractors, or agents of Landlord engaged in the
operation, repair, management, or maintenance of
the Property;
(2) repairs and maintenance of the Property and the
cost of supplies, tools, materials, and equipment
for Property repairs and maintenance, that under
generally accepted accounting principles
consistently applied, would not be capitalized;
(3) premiums and other charges incurred by Landlord
for insurance on the Property and for its
employees including:
-a- fire insurance, extended coverage
insurance, and earthquake, windstorm, hail,
and explosion insurance;
-b- public liability and property damage
insurance;
-c- elevator insurance;
-d- workers' compensation insurance;
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-e- boiler and machinery insurance; sprinkler
leakage, water damage, water damage legal
liability insurance; burglary, fidelity,
and pilferage insurance on equipment and
materials;
-f- insurance Landlord is required to carry
under this Lease; and
-g- other insurance as is customarily carried
by operators of comparable office buildings
in the Raleigh, North Carolina area;
(4) costs incurred for inspection and servicing,
including all outside maintenance contracts
necessary or proper for the maintenance of the
Property, such as janitorial and window cleaning,
rubbish removal, exterminating, water treatment,
elevator, electrical, plumbing, and mechanical
equipment, and the cost of materials, tools,
supplies, and equipment used for inspection and
servicing;
(5) costs incurred for electricity, water, gas, fuel,
or other utilities;
(6) sales, use, and excise taxes on goods and services
purchased by Landlord, but Tenant's pro rata share
shall exclude prepaid services that are not used
by Landlord;
(7) license, permit, and inspection fees;
(8) auditor's fees for public accounting;
(9) legal fees, costs, and disbursements;
(10) management fees to a person or entity other than
Landlord (provided, such person or entity may be
affiliated with Landlord);
(11) the annual amortization over its useful life with
a reasonable salvage value on a straight-line
basis of (i) the costs of any capital improvements
made by Landlord and required by any changes in
applicable laws, rules, or regulations of any
governmental authorities; or (ii) the costs of any
equipment or capital improvements made by
Landlord, as a labor-saving measure or to
accomplish other savings in operating, repairing,
managing, or maintaining of the Property, but only
to the extent of the savings; or (iii) the costs
of any exterior window draperies provided by
Landlord and the carpeting in the Common Areas;
(12) any costs for substituting work, labor, materials,
or services in place of any of the above items, or
for any additional work, labor, materials,
services or improvements to comply with any
governmental laws, rules, regulations, or other
requirements applicable to the Property, that, at
the time of substitution or addition, are
considered operating expenses under generally
accepted accounting principles consistently
applied;
(13) other costs reasonably necessary to operate,
repair, manage, and maintain the Property in a
manner and condition consistent with comparable
office buildings in the Raleigh, North Carolina
area; and
(14) Operating Expenses exclude:
-a- leasing commissions, costs, disbursements,
and other expenses incurred for leasing,
renovating, or improving space for tenants;
-b- costs incurred by Landlord in discharging
its obligations under Section 4.05 and
Exhibit D;
-c- costs (including permit, license, and
inspection fees) incurred in renovating,
improving, decorating, painting, or
redecorating vacant space or space for
tenants;
-d- Landlord's cost of electricity or other
service sold to tenants for which Landlord
is to be reimbursed as a charge over the
Base Rent and Additional Rent payable under
the lease with that tenant;
-e- depreciation and amortization on the
Building except as expressly permitted
elsewhere in this Lease;
-f- costs of a capital nature including capital
improvements, capital repairs, capital
equipment, and capital tools, as determined
under generally accepted accounting
principles consistently applied, except
that the annual amortization of these costs
shall be included to the extent expressly
permitted elsewhere in this Lease;
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-g- costs incurred because the Landlord or other tenant violated
the terms of any lease (including without limitation legal
fees and disbursements);
-h- interest on debt or amortization payments on mortgages or
deeds of trust or any other debt for borrowed money;
-i- advertising and promotional expenditures; and
-j- repairs or other work needed because of fire, windstorm, or
other casualty or cause insured against by Landlord or to
the extent Landlord's insurance provided coverage insurance;
-k- other expenses that under generally accepted accounting
principles consistently applied would not be considered
normal maintenance, repair, management, or operation
expenses.
-l- fines or penalties incurred by Landlord;
-m- mortgage or ground rent uses.
(vi) "Adjustment Period" means each calendar year or partial calendar
year occurring during the Term.
(b) Credits/Reimbursements. Operating Expenses shall be reduced by
reimbursements, credits, discounts, reductions, or other allowances
received or receivable by Landlord for items of cost included in
Operating Expenses, except reimbursements to the Landlord by tenants
under this Article V.
(c) Tax Refund. If Landlord receives a refund of any portion of Real Estate
Taxes that were included in the Real Estate Taxes paid by Tenant, then
Landlord shall reimburse Tenant its pro rata share of the refunded
taxes, less any expenses that Landlord reasonably incurred to obtain the
refund.
(d) Substituted Taxes. If any non-Real Estate Taxes are imposed against the
Landlord in substitution for any Real Estate Taxes, then the substituted
tax shall be considered a Real Estate Tax. Conversely, if any additional
Real Estate Taxes are imposed in substitution for any non-Real Estate
Taxes (that are not Substituted Taxes) they shall not be considered Real
Estate Taxes.
(e) Payment by Landlord. Subject to reimbursement under this Article V,
Landlord shall pay the Property's Operating Expenses and Real Estate
Taxes before delinquency.
(f) Payment by Tenant. If the Operating Expenses and Real Estate Taxes, when
combined for any Adjustment Period, exceed Base Operating and Real
Estate Tax Expense ("Operating and Real Estate Tax Expense Increase"),
then Tenant agrees to pay Landlord as Additional Rent, Tenant's Pro Rata
Share of the Operating and Real Estate Tax Expense Increase.
(g) Manner of Payment.
(i) Within one hundred twenty (120) days after each Adjustment Period
ends, or as soon as reasonably practical, Landlord shall give
Tenant an itemized statement ("Statement") showing in reasonable
detail the:
(1) actual Operating Expenses and Real Estate Taxes for the
Adjustment Period;
(2) the Operating and Real Estate Tax Expense Increase for
the Adjustment Period;
(3) the amount of Tenant's Pro Rata Share of the Operating
and Real Estate Tax Expense Increase; and
(4) the amount Tenant owes toward the Operating and Real
Estate Tax Expense Increase.
Any Additional Rent due, including interest and penalty, shall
survive the Expiration Date.
(ii) During any Adjustment Period that is less than a complete
calendar year, unless this Lease was terminated because of
Tenant's default, Tenant's obligation for Additional Rent for
those Adjustment Periods shall be prorated by multiplying the
Additional Rent for the Adjustment Period by a fraction expressed
as a percentage, the numerator of which is the number of days of
the Adjustment Period included in the Term and the denominator of
which is 365.
5.04 Personal Property Tax. Before delinquency Tenant shall pay taxes assessed
during the Term against trade fixtures or personal property placed by Tenant in
the Premises. If these taxes are assessed against the Building, Tenant shall pay
its share of the taxes to Landlord within ten (10) days after receiving
Landlord's written statement setting forth the amount of taxes applicable to
Tenant's property and the basis for the charge to
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Tenant. Tenant's failure to pay within the ten-day period shall entitle Landlord
to the same remedies it has upon Tenant's failure to pay Base Rent or Additional
Rent.
5.05 Security Deposit. The Tenant has deposited Twenty-four Thousand, Nine
Hundred Twenty Three and 06/100 Dollars ($24,923.06) (Security Deposit) with
Landlord to secure Tenant's performance of its Lease obligations. If Tenant
defaults Landlord may, after giving five) days advance notice to Tenant,
without prejudice to Landlord's other remedies, apply part or all of the
Security Deposit to cure Tenant's default. If Landlord so uses part or all of
the Security Deposit, then Tenant shall within ten (10) days after written
demand, pay Landlord the amount used to restore the Security Deposit to its
original amount. The deposit shall be placed in an escrow account. Interest
shall accrue to Tenant. Any part of the Security Deposit not used by Landlord as
permitted by this paragraph shall be returned to Tenant within thirty (30) days
after the Lease ends.
ARTICLE VI
AFFIRMATIVE OBLIGATIONS
6.01 Compliance with Laws.
(a) Landlord's Compliance. Landlord warrants, that on the Commencement
Date, the Premises will comply with all applicable laws, ordinances,
rules, and regulations of governmental authorities ("Applicable
Laws"). During the Term, Landlord shall comply with all Applicable
Laws regarding the Premises and Building except to the extent Tenant
must comply under Section 6.01(b).
(b) Tenant's Compliance. Tenant shall comply with all Applicable Laws (i)
regarding the physical condition of the Premises, but only to the
extent the Applicable Laws pertain to the particular manner in which
Tenant uses the Premises; or (ii) that do not relate to the physical
condition of the Premises but relate to the lawful use of the Premises
and with which only the occupant can comply, such as laws governing
maximum occupancy, workplace smoking, and illegal business operations,
such as gambling. Notwithstanding the foregoing, Tenant shall comply
with any requirements imposed under the Americans with Disabilities
Act of 1990 ("ADA") which relate exclusively to the Premises.
6.02 Services and Utilities.
(a) Services. Landlord shall provide at its expense, subject to
reimbursement under Section 5.03:
(i) Heating, ventilation, and air conditioning ("HVAC") for the
Premises during business hours to maintain temperatures for
comfortable use and occupancy;
(ii) Automatic passenger elevators providing adequate service
leading to the floor on which the Premises are located;
(iii) Janitorial services to the Premises (all business days,
Monday through Friday);
(iv) Hot and cold water sufficient for drinking, lavatory, toilet,
and ordinary cleaning purposes;
(v) Electricity to the Premises at all times that provides
electric current in reasonable amounts necessary for normal
office use, lighting, and HVAC;
(vi) Replacement of lighting tubes, lamp ballasts, and bulbs;
(vii) Extermination and pest control when necessary; and
(viii) Maintenance of Common Areas in a manner consistent with other
comparable office buildings in the Raleigh, North Carolina
area. The maintenance shall include cleaning, HVAC,
illumination, snow shoveling, deicing, repairs, replacements,
lawn care, and landscaping.
(b) Business Hours. "Business Hours" means: twenty-four (24) hours a day,
seven (7) days a week.
(c) 24 Hour Access. Tenant, its employees, agents, and invitees shall have
access to the Premises, twenty-four (24) hours a day, seven (7) days a
week. During non business hours Landlord may restrict access by
requiring persons to show a badge or identification card issued by
Landlord. Landlord shall not be liable for denying entry to any person
unable to show the proper identification. Landlord may temporarily
close the Building if required in an emergency. Landlord shall use its
best efforts to close the Building during non business hours only. If,
however, the Building must be closed during business hours, then the
Base Rent and Additional Rent shall ▇▇▇▇▇ during any closing that
lasts more than twenty-four (24) hours.
(d) Extra Services. Landlord, shall have the right to monitor the Tenant's
use of electricity consumption within the Premises. Whenever Landlord
knows that any tenant (including Tenant) is using extra services
because of either non business-hours use or high electricity
consumption installations, Landlord may directly charge that tenant
for the extra use and exclude those charges from Operating Expenses.
Extra services include:
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(i) Excess Utility Use. Tenant shall not place or operate in the
Premises any electrically operated equipment or other machinery,
other than typewriters, personal computers, adding machines,
reproduction machines, and other machinery and equipment
normally used in offices, unless Tenant receives Landlord's
advance written consent. Landlord shall not unreasonably
withhold or delay its consent, but Landlord may require payment
for the extra use of electricity caused by operating this
equipment or machinery. Landlord may require that special, high
electricity consumption installations of Tenant such as computer
or reproduction facilities (except personal computers or normal
office photocopy machines) be separately sub-metered for
electrical consumption at Tenant's cost.
(ii) Payment. Tenant's charges for the utilities provided under (i)
and (ii) above shall be one hundred and ten percent (110%) of
Landlord's actual cost of labor and utilities and shall be
Additional Rent.
Tenant's failure to pay the charges in (i) and (ii) above within
thirty (30) days of receiving a proper and correct invoice shall
entitle Landlord to the same remedies it has upon Tenant's
failure to pay Base Rent.
(e) Interruption of Services. Landlord does not warrant that any services
Landlord supplies will not be interrupted. Services may be interrupted
because of accidents, repairs, alterations, improvements, or any
reason beyond the reasonable control of Landlord, and such an
interruption shall not:
(i) be considered an eviction or disturbance of Tenant's use and
possession of the Premises;
(ii) relieve Tenant from performing Tenant's Lease obligations.
6.03 Repairs and Maintenance.
(a) Tenant's Care of Premises. Tenant shall:
(i) keep the Premises and fixtures in good order;
(ii) make repairs or replacements to the Premises or Building
needed because of Tenant's misuse or negligence, except to the
extent that the repairs or replacements are covered by
Landlord's insurance or the insurance Landlord is required to
carry under this Lease, whichever is greater;
(iii) repair and replace special equipment or decorative treatments
installed by or at Tenant's request and that serve the
Premises only, except
(1) to the extent the repairs or replacements are needed
because of Landlord's misuse or primary negligence, and
are not covered by Tenant's insurance or the insurance
Tenant is required to carry under this Lease, whichever
is greater; or
(2) if the Lease is terminated under Article IX (Loss of
Premises); and
(iv) not commit waste.
(b) Landlord's Repairs. Except for repairs and replacements that Tenant
must make under paragraph 6.03(a), Landlord shall pay for and make all
other repairs and replacements to the Premises, Common Areas and
Building (including Building fixtures and equipment). Landlord shall
make the repairs and replacements to maintain the Building in a
condition consistent with other comparable office buildings in the
Raleigh, North Carolina area. This maintenance shall include the roof,
foundation, exterior walls, interior structural walls, all structural
components, and all systems, such as mechanical, electrical, HVAC, and
plumbing.
(c) Time for Repairs. Repairs or replacements required under Sections
6.03(a) or 6.03(b) shall be made within a reasonable time (depending
on the nature of the repair or replacement needed) after receiving
notice or having actual knowledge of the need for a repair or
replacement. Failure of Landlord to make repairs within a reasonable
time (normal maintenance versus emergency) shall be considered a
Landlord default.
(d) Surrendering the Premises. Upon the Expiration Date or earlier
termination of this Lease, Tenant shall surrender the Premises to
Landlord in the same condition that the Premises were in on the
Commencement Date except for:
(i) ordinary wear and tear;
(ii) damage by the elements, fire, and other casualty unless Tenant
would be required to repair under paragraph 6.03(a);
(iii) condemnation;
(iv) damage arising from any cause not required to be repaired or
replaced by Tenant; and
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(v) alterations as permitted by this Lease unless consent was
conditioned on their removal.
On surrender Tenant shall remove from the Premises its personal
property, trade fixtures, and any alterations required to be removed
under Section 7.01 and repair any damage to the Premises caused by the
removal. Any items not removed by Tenant as required above shall be
considered abandoned. Landlord may dispose of abandoned items as
Landlord chooses and ▇▇▇▇ Tenant for the cost of their disposal, minus
any revenues received by Landlord for their disposal.
ARTICLE VII
NEGATIVE OBLIGATIONS
7.01 Alterations.
(a) Definitions. "Alterations" means alterations, additions,
substitutions, installations, changes, and improvements, but excludes
minor decorations and the Improvements Landlord is to make under
Section 4.04 and Exhibit D.
(b) Consent. Tenant shall not make Alterations without the Landlord's
advance written consent. Landlord's consent shall not be unreasonably
withheld or unduly conditioned or delayed for nonstructural interior
Alterations to the Premises that do not adversely affect the
Building's appearance, value, and structural strength.
(c) Conditions of Consent. Landlord may condition its consent in Section
7.01(b) on all or any part of the following:
(i) Tenant shall furnish Landlord with reasonably detailed plans
and specifications of the Alterations as requested by Tenant.
(ii) The Alterations shall be performed and completed-
(1) in accord with the submitted plans and specifications
approved by Tenant and Landlord.
(2) in a workmanlike manner,
(3) in compliance with all applicable laws, regulations,
rules, ordinances, and other requirements of
governmental authorities,
(4) using new materials and installations at least equal in
quality to the original Building materials and
installations,
(5) by not disturbing the quiet possession of the other
tenants,
(6) by not interfering with the construction, operation, or
maintenance of the Building, and
(7) with due diligence;
(iii) Tenant shall use workers and contractors who Landlord employs
or approves in writing, which approval shall not be
unreasonably withheld or unduly conditioned or delayed;
(iv) Tenant shall modify plans and specifications because of
reasonable conditions set by Landlord after reviewing the
plans and specifications;
(v) Tenant's contractors shall carry builder's risk insurance in
an amount then customarily carried by prudent contractors and
workers' compensation insurance for its employees in
statutory limits, naming Landlord as an additional insured,
to the extent its interest may appear;
(vi) Tenant's workers or contractors shall work in harmony and not
unreasonably interfere with Landlord's workers or contractors
or other tenants and their workers or contractors;
(vii) For alterations in excess of Five Thousand Dollars
($5,000.00) Tenant shall, at Landlord's sole option, supply a
lien and completion bond, bank letter of credit, or other
security satisfactory to Landlord, in an amount equal to the
estimated cost to insure Landlord against materials and
mechanics' liens and against completion of the Alterations;
(viii) Tenant shall give Landlord at least fifteen (15) days advance
notice before beginning any alterations so that Landlord may
post or record notices of nonresponsibility;
(ix) Upon demand Tenant shall give Landlord evidence that it
complied with any condition set by Landlord;
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(x) If Tenant completes alterations, Tenant shall give Landlord
complete as-built mylar drawings, if any, of the
Alterations after they are finished; and
(xi) Upon the request of Landlord, which request must be given
at the time of consent to the Alterations, Tenant shall
remove any unusual additions, alterations and repair any
damage from their removal by the Expiration Date.
(d) Payment and Ownership of the Alterations. Alterations made under this
paragraph shall be at Tenant's expense. The Alterations shall belong
to Landlord when this Lease ends except for those Alterations required
by Landlord to be removed by Tenant, if any, under Section
7.01(c)(xi). Nevertheless, Tenant may remove its furniture and other
personal property (unless same is affixed to the premises or is
otherwise a fixture) if Tenant promptly repairs all damage caused by
their removal.
7.02 Assignment and Subleasing.
(a) Consent Required. Tenant shall not transfer, mortgage, encumber,
assign, or sublease all or part of the Premises without Landlord's
advance written consent. Landlord's consent to any assignment or
sublease shall not be unreasonably withheld or unduly conditioned or
delayed.
(b) Reasonableness. The Landlord's consent shall not be considered
unreasonably withheld if:
(i) the proposed subtenant's or assignee's financial
responsibility does not meet the same criteria Landlord
uses to select comparable Building tenants;
(ii) the proposed subtenant's or assignee's business is not
suitable for the Building considering the business of the
other tenants and the Building's prestige; or
(iii) the proposed use is inconsistent with the use permitted by
Article II.
(c) Procedure.
(i) Tenant must provide Landlord in writing:
(1) the name and address of the proposed subtenant or
assignee;
(2) the nature of the proposed subtenant's or
assignee's business it will operate in the
Premises;
(3) the terms of the proposed sublease or assignment;
and
(4) reasonable financial information so that Landlord
can evaluate the proposed subtenant or assignee.
(ii) Landlord shall, within ten (10) business days after
receiving the information under Section 7.02(c)(i), give
notice to Tenant to permit or deny the proposed sublease or
assignment. If Landlord denies consent, it must explain the
reasons for the denial. If Landlord does not give notice
within the ten (10) business-day period, then Tenant may
sublease or assign part or all of the Premises upon the
terms described in the information submitted by Tenant
under Section 7.02(c)(i).
(d) Affiliates. Notwithstanding Section 7.02(a), (b), and (c), Tenant may
assign or sublease part or all of the Premises without Landlord's
consent to:
(i) any corporation or partnership that controls, is controlled
by, or is under common control with, Tenant; or
(ii) any corporation resulting from the merger or consolidation
with Tenant or to any entity that acquires all of Tenant's
assets or stock as a going concern of the business that is
being conducted on the Premises, as long as the assignee or
sublessee is a bona fide entity and assumes the obligations
of Tenant.
(e) Conditions. Any subleases and assignments by Tenant are also subject
to the following:
(i) The terms of this Lease;
(ii) The term of any sublease shall not extend beyond the Term;
(iii) Tenant shall remain liable for all Lease obligations;
(iv) Consent to one sublease or assignment does not waive the
consent requirements for future assignments or subleases;
and
(v) Any consideration ("Excess Consideration") received by
Tenant from an assignment or sublease that exceeds the
amount Tenant must pay Landlord, which amount is to be
prorated where a part of the Premises is subleased or
assigned, shall also be paid to
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Landlord. Tenant shall pay fifty percent (50%) of this
Excess Consideration to Landlord at the end of each
calendar month during which Tenant collects any Excess
Consideration. Each payment shall be sent with a detailed
statement showing the total consideration paid by the
subtenant or assignee. Landlord shall have the right to
audit Tenant's books and records to verify the accuracy of
the detailed statement.
ARTICLE VIII
INSURANCE
8.01 Insurance.
(a) Landlord's Building Insurance. Landlord shall keep the Building,
including the Landlord Improvements insured against damage and
destruction by fire, earthquake, vandalism, and other perils in the
amount of the full replacement value of the Building, as the value may
exist from time to time.
(b) Property Insurance. Each party shall keep its personal property and
trade fixtures in the Premises and Building insured with "all risks"
insurance in an amount to cover one hundred percent (100%) of the
replacement cost of the property and fixtures. Tenant shall also keep
any non-Building-standard improvements made to the Premises at
Tenant's request insured to the same degree as Tenant's personal
property. Tenant's property insurance shall also provide for business
interruption/extra expense coverage in sufficient amounts.
(c) Liability Insurance. Each party shall maintain contractual and
comprehensive general liability insurance, including limits of no less
than $1,000,000 per occurrence/$2,000,000 aggregate per location
subject to 1,000 deductible contractual liability covering the
indemnities specified herein. This policy must be written on an
occurrence basis.
Policy shall be endorsed to name Landlord as additional insured.
Definition of additional insured shall include all Partners, Officers,
Directors, Employees, agents and representatives of the named entity
including its managing agent. Further, coverage for the additional
insured shall apply on a primary basis irrespective of any other
insurance, whether collectible or not.
(d) Workers Compensation and Employee Liability Insurance. Affording
coverage under the Workers Compensation laws of the State of North
Carolina and Employers Liability coverage subject to a limit of no
less than $100,000 each employee, $100,000 each accident, $500,000
policy limit.
(e) Umbrella Liability Insurance. Tenant shall maintain umbrella liability
insurance at not less than a $2,000,000 limit providing excess
coverage over all limits and coverage noted in Sections 8.01.c and
8.01.d above. This policy shall be written on an occurrence basis.
(f) Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant hereby waive and release each
other of and from any and all right of recovery, claim, action or
cause of action, against each other, their agents, officers and
employees, for any loss or damage that may occur to the Premises,
improvements to the Building, or personal property within the
Building, by reason of fire or the elements, regardless of cause or
origin, including negligence of Landlord or Tenant and their agents,
officers and employees. Landlord and Tenant agree immediately to give
their respective insurance companies which have issued policies of
insurance covering all risk of direct physical loss, written notice of
the terms of the mutual waivers contained in this Section, and to have
the insurance policies properly endorsed, if necessary, to prevent the
invalidation of the insurance coverage by reason of the mutual
waivers. The waiver does not apply to claims caused by a party's
willful misconduct.
If despite a party's best efforts it cannot find an insurance company
meeting the criteria in Section 8.01(f) that will give the waiver at
reasonable commercial rates, then it shall give notice to the other
party within thirty (30) days after the Commencement Date. The other
party shall then have thirty (30) days to find an insurance company
that will issue the waiver. If the other party also cannot find such
an insurance company, then both parties shall be released from their
obligations to obtain the waiver.
(g) Increase in Insurance. If due to Tenant's particular use of the
Premises, Landlord's insurance rates are increased, Tenant shall pay
the increase. In addition, the amounts of coverage required by this
Lease are subject to review by Landlord at the end of each Adjustment
Period. At each review, if necessary to maintain the same level of
coverage that existed on the Commencement Date, the amounts of
coverage shall be increased to the lesser of:
(i) the amounts of coverage carried by prudent landlords and
tenants of comparable office buildings in the Raleigh,
North Carolina area; or
(ii) twenty-five percent (25%) higher than the previous
insurance amounts.
(h) Insurance Criteria. Insurance policies required by this Lease shall:
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(i) be issued by insurance companies licensed to do business in
the state of North Carolina with general policyholder's
ratings of at least A and a financial rating of at least XI
in the most current Best's Insurance Reports available on
the date of this Lease;
(ii) name the non procuring party as an additional insured as
its interest may appear (other landlords or tenants may
also be added as additional insureds in a blanket policy);
(iii) provide that the insurance not be canceled or materially
changed in the scope or amount of coverage unless thirty
(30) days' advance notice is given to the non procuring
party;
(iv) be primary policies - not as contributing with, or in
excess of, the coverage that the other party may carry;
(v) be permitted to be carried through a "blanket policy" or
"umbrella" coverage;
(vi) have property deductibles not greater than $5,000; and
(vii) be maintained during the entire Term.
(i) Evidence of Insurance. By the Commencement Date and upon each renewal
of its insurance policies, Tenant shall give copies of certificates of
insurance to Landlord. The certificate shall specify amounts, types of
coverage, the waiver of subrogation, and the insurance criteria listed
in Section 8.01(f). The policies shall be renewed or replaced and
maintained by Tenant. If Tenant fails to give the required certificate
within thirty (30) days after the notice of demand for it, Landlord
may obtain and pay for that insurance, but is not obligated to do so,
and receive reimbursement from the party required to have the
insurance.
8.02 Indemnification.
(a) Tenant's Indemnity. Tenant indemnifies, defends, and holds Landlord
harmless from claims, including but not limited to claims:
(i) for personal injury, death, or property damage;
(ii) for incidents occurring in or about the Premises or
Building; and
(iii) caused by the negligence or willful misconduct of Tenant,
its agents, employees, or invitees.
When the claim is caused by the joint negligence or willful misconduct
of Tenant and Landlord or Tenant and a third party unrelated to
Tenant, except Tenant's agents, employees, or invitees, Tenant's duty
to defend, indemnify, and hold Landlord harmless shall be in
proportion to Tenant's allocable share of the joint negligence or
willful misconduct.
(b) Landlord's Indemnity. Landlord indemnifies, defends, and holds Tenant
harmless from claims:
(i) for personal injury, death, or property damage;
(ii) for incidents occurring in or about the Premises or
Building; and
(iii) caused by the negligence or willful misconduct of Landlord,
its agents, employees, or invitees.
When the claim is caused by the joint negligence or willful misconduct
of Landlord and Tenant or Landlord and a third party unrelated to
Landlord, except Landlord's agents, employees, or invitees, Landlord's
duty to defend, indemnify, and hold Tenant harmless shall be in
proportion to Landlord's allocable share of the joint negligence or
willful misconduct.
(c) Release of Claims. Notwithstanding Section 8.02(a) and (b), the
parties release each other from any claims either party ("Injured
Party") has against the other to the extent the claim is covered by
the Injured Party's insurance.
8.03 Limitation of Landlord's Liability.
(a) Transfer of Premises. If the Building is sold or transferred,
voluntarily or involuntarily, Landlord's Lease obligations and
liabilities accruing after the transfer shall be the sole
responsibility of the new owner, and if
(i) the new owner expressly agrees in writing to assume
Landlord's obligations; and
(ii) the Tenant's funds in the hands of Landlord, such as the
Security Deposit, shall be given to the new owner.
(b) Liability for Money Judgment. If Landlord, its employees, officers,
directors or partners are ordered to pay Tenant a money judgment
because of Landlord's default, Tenant's sole remedy to satisfy the
judgment shall be to execute against Landlord's interest in the
Building and Land,
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including the rents and profits therefrom. Under no circumstance will
Landlord, or its officers, directors, partners or employees be
personally liable for any money judgment.
ARTICLE IX
LOSS OF PREMISES
9.01 Damages.
(a) Definition. "Relevant Space" means:
(i) the Premises, excluding Tenant's fixtures installed by or
at the request of Tenant;
(ii) access to the Premises; and
(iii) any part of the Building that provides essential services
to the Premises.
(b) Repair of Damage. If the Relevant Space is damaged in part or whole
from any cause and the Relevant Space can be substantially repaired
and restored within one hundred eighty (180) days from the date of the
damage using standard working methods and procedures, Landlord shall
at its expense promptly and diligently repair and restore the Relevant
Space to substantially the same condition as existed before the
damage. This repair and restoration shall be made within one hundred
eighty (180) days from the date of the damage unless the delay is due
to causes beyond Landlord's reasonable control.
If the Relevant Space cannot be repaired and restored within the one
hundred eighty (180) day period, then either party, may, within thirty
(30) days after determining that the repairs and restoration cannot be
made within one hundred eighty (180) days, terminate the Lease by
giving notice to the other party. Nevertheless, if the Relevant Space
is not repaired and restored within one hundred eighty (180) days from
the date of the damage, then Tenant may terminate the Lease at any
time within thirty (30) days after the one hundred eightieth (180th)
day. Tenant shall not be able to terminate this Lease if its willful
misconduct causes the damage unless Landlord is not promptly and
diligently repairing and restoring the Relevant Space.
(c) Determining the Extent of Damage. If the parties cannot agree in
writing whether the repairs and restoration will take more than one
hundred eighty (180) days to make, then the determination will be
reasonably made by Landlord's architect.
(d) Abatement. Unless the damage is caused by Tenant's willful misconduct,
the Base Rent and Additional Rent shall ▇▇▇▇▇ in proportion to that
part of the Premises that is unfit for use in Tenant's business. The
abatement shall consider the nature and extent of interference to
Tenant's ability to conduct business in the Premises and the need for
access and essential services. The abatement shall continue from the
date the damage occurred until ten (10) business days after Landlord
completes the repairs and restoration to the Relevant Space or the
part rendered unusable and notice to Tenant that the repairs and
restoration are completed, or until Tenant again uses the Premises or
the part rendered unusable, whichever is first.
(e) Tenant's Property. Notwithstanding anything else in this Article IX,
Landlord is not obligated to repair or restore damage to Tenant's
trade fixtures, furniture, equipment, or other personal property, or
any Tenant improvements.
(f) Damage to Building. If:
(i) more than twenty percent (20%) of the Building is damaged
and the Landlord decides not to repair and restore the
Building;
(ii) any mortgagee of the Building shall not allow adequate
insurance proceeds for repair and restoration;
(iii) the damage is not covered by Landlord's insurance; or
(iv) the Lease is in the last twelve (12) months of its Term,
then Landlord may terminate this Lease. To terminate,
Landlord must give notice to Tenant within thirty (30) days
after the Landlord knows of the damage. The notice must
specify the termination date, which shall be at least
thirty (30) but not more than sixty (60) days after the
date notice is given.
(g) Termination. If either party terminates this Lease as permitted above,
then this Lease shall end on the day specified in the termination
notice. The Base Rent, Additional Rent, and other charges shall be
payable up to the termination date and shall account for any
abatement. Landlord shall promptly refund to Tenant any prepaid,
unaccrued Base Rent and Additional Rent, accounting for any abatement,
plus Security Deposit, if any, less any sum then owing by Tenant to
Landlord.
9.02 Condemnation.
(a) Definitions. The terms "eminent domain," "condemnation," "taken," and
the like in Section 9.02 include takings for public or quasi-public
use and private purchases in place of condemnation by any authority
authorized to exercise the power of eminent domain.
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(b) Entire Taking. If the entire Premises or the portions of the Building
required for reasonable access to, or the reasonable use of, the
Premises are taken by eminent domain, this Lease shall automatically
end on the earlier of:
(i) the date title vests; or
(ii) the date Tenant is dispossessed by the condemning
authority.
(c) Partial Taking. If the taking of a part of the Premises materially
interferes with Tenant's ability to continue its business operations
in substantially the same manner and space then Tenant may terminate
this Lease on the earlier of:
(i) the date when title vests;
(ii) the date Tenant is dispossessed by the condemning
authority; or
(iii) sixty (60) days following notice to Tenant of the date when
vesting or dispossession is to occur.
If there is a partial taking and this Lease continues, then the Lease
shall end as to the part taken and the Base Rent and Additional Rent
shall ▇▇▇▇▇ in proportion to the part of the Premises taken and
Tenant's pro rata share shall be equitably reduced.
(d) Termination by Landlord. If title to a part of the Building other than
the Premises is condemned, and in the Landlord's reasonable opinion,
the Building should be restored in a manner that materially alters the
Premises, Landlord may terminate this Lease by giving notice to
Tenant. Termination notice shall be given within sixty (60) days
following the date title vested. This Lease shall end on the date
specified in the termination notice, which date shall be at least
thirty (30) days but not more than ninety (90) days after the notice
is given.
(e) Rent Adjustment. If the Lease is terminated as provided in Sections
9.02(b), (c), or (d), then the Base Rent, Additional Rent, and other
charges shall be payable up to the date, and shall account for any
abatement. Landlord, considering any abatement, shall promptly refund
to Tenant any prepaid, unaccrued Base Rent and Additional Rent plus
Security Deposit, if any, less any sum then owing by Tenant to
Landlord.
(f) Repair. If the Lease is not terminated as provided for in Sections
9.02(b), (c), or (d), then Landlord at its expense shall promptly
repair and restore the Premises to the condition that existed
immediately before the taking, except for the part taken, to render
the Premises a complete architectural unit, but only to the extent of
the:
(i) condemnation award received for the damage; and
(ii) the Landlord's original obligation under Section 4.05 and
Exhibit D.
(g) Awards and Damages. Landlord reserves all rights to damages paid
because of any partial or entire taking of the Premises. Tenant
assigns to Landlord any right Tenant may have to the damages or award.
Tenant may make claim for, and shall be entitled to retain, any award
for the value of the leasehold estate. Notwithstanding anything else
in this Paragraph 9.02(g), Tenant may claim and recover from the
condemning authority a separate award for Tenant's moving expenses,
business dislocation damages, Tenant's personal property and fixtures,
the unamortized costs of leasehold improvements paid for by Tenant,
excluding the Landlord's Improvements, and any other award that would
not substantially reduce the award payable to Landlord. Each party
shall seek its own award, as limited by this provision, at its own
expense, and neither shall have any right to the award made to the
other.
(h) Temporary Condemnation. If part or all of the Premises are condemned
for a limited period of time not to exceed 90 days ("Temporary
Condemnation"), this Lease shall remain in effect. The Base Rent and
Additional Rent and Tenant's obligations for the part of the Premises
taken shall ▇▇▇▇▇ during the Temporary Condemnation in proportion to
the part of the Premises that Tenant is unable to use in its business
operations as a result of the Temporary Condemnation. Landlord shall
receive the entire award for any Temporary Condemnation.
ARTICLE X
DEFAULT
10.01 Tenant's Default.
(a) Defaults. Each of the following constitutes a default ("Default"):
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(i) Tenant's failure to pay Base Rent or Additional Rent within
five (5) days after written notice from Landlord that the
rent is past due and payable;
(ii) Tenant's failure to pay Base Rent or Additional Rent within
five (5) days after the due date, at any time during a
calendar year in which Tenant has already received two (2)
notices of its failure to pay Base Rent or Additional Rent
by the due date;
(iii) Tenant's failure to perform or observe any other Tenant
obligation after a period of thirty (30) business days or
the additional time, if any, that is reasonably necessary
to promptly and diligently cure the failure, after it
receives notice from Landlord setting forth in reasonable
detail the nature and extent of the failure and identifying
the applicable Lease provision(s);
(iv) Tenant's abandoning or vacating the Premises;
(v) Tenant's failure to vacate or stay any of the following
within sixty (60) days after they occur:
(1) a petition in bankruptcy is filed by or against
Tenant;
(2) Tenant is adjudicated as bankrupt or insolvent;
(3) a receiver, trustee, or liquidator is appointed
for all or a substantial part of Tenant's
property; or
(4) Tenant makes an assignment for the benefit of
creditors.
10.02 Landlord's Remedies.
(a) Remedies. Landlord in addition to the remedies given in this Lease or
under the law, may do any one or more of the following if Tenant
commits a Default under Section 10.01:
(i) end this Lease, and Tenant shall then surrender the
Premises to Landlord; or
(ii) enter and take possession of the Premises pursuant to
summary process of law and remove Tenant, with or without
having ended the Lease.
(b) No Surrender. Landlord's exercise of any of its remedies or its
receipt of Tenant's keys shall not be considered an acceptance or
surrender of the Premises by Tenant. A surrender must be agreed to in
writing signed by both parties.
(c) Rent. If Landlord terminates this Lease or Tenant's right to possess
the Premises because of a Default, Landlord may hold Tenant liable
for Base Rent, Additional Rent, and other indebtedness accrued to the
date the Lease expires or is terminated. Tenant shall also be liable
for the Base Rent, Additional Rent and other indebtedness that
otherwise would have been payable by Tenant during the remainder of
the Term had there been no default, reduced by any sums Landlord
receives by reletting the Premises during the Term. Landlord must use
commercially reasonable efforts to re-let the Premises during the
remainder of the term.
(d) Other Expenses. Tenant shall also be liable for that part of the
following sums paid by Landlord and attributable to that part of the
Term ended due to Tenant's Default:
(i) reasonable broker's fees incurred by Landlord for reletting
part or all of the Premises prorated for that part of the
reletting Term ending concurrently with the then current
Term of this Lease;
(ii) the cost of removing and storing Tenant's property;
(iii) the cost of repairs, alterations, and remodeling necessary
to put the Premises in a condition reasonably acceptable to
a new Tenant; provided, however, landlord shall reasonably
attempt to negotiate for reimbursement of tenant
improvements for new tenant within new lease; and
(iv) other necessary and reasonable expenses incurred by
Landlord in enforcing its remedies, including, without
limitation, reasonable attorneys fees.
(e) Payment. Tenant shall pay the sums due in Sections 10.02(c) and (d)
within thirty (30) days of receiving Landlord's proper and correct
invoice for the amounts.
(f) Reletting. Landlord may reasonably relet for a shorter or longer
period of time than the Lease Term and make any necessary repairs or
alterations. Landlord may relet on any reasonable terms including a
reasonable amount of free rent.
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10.03 Self-Help. If Tenant defaults, Landlord may, without being obligated and
without waiving the Default, cure the Default, and may enter the Premises to do
so. Tenant shall pay Landlord, upon demand, as Additional Rent, all costs,
expenses and disbursements incurred by Landlord.
10.04 Survival. The remedies permitted by this Article X and the parties'
indemnities in Section 8.02 shall survive the Expiration Date or earlier
termination of this Lease.
ARTICLE XI
NON DISTURBANCE
11.01 Subordination.
(a) Mortgages. Subject to Section 11.01(b), this Lease is subordinate to
prior or subsequent mortgages covering the Building contingent upon
execution of a non-disturbance agreement by mortagee. Landlord shall
obtain a non-disturbance agreement from subsequent lienholders in
favor of Tenant.
(b) Foreclosures. If any mortgage is foreclosed, then:
(i) This Lease shall continue;
(ii) Tenant's quiet possession shall not be disturbed if Tenant
is not in Default;
(iii) Tenant will attorn to and recognize the mortgagee or
purchaser at foreclosure sale (Successor Landlord) as
Tenant's landlord for the remaining Term; and
(iv) The Successor Landlord shall not be bound by:
(1) any payment of Base Rent or Additional Rent for
more than one month in advance, except the
Security Deposit and free rent, if any, specified
in the Lease,
(2) any amendment, modification, or ending of this
Lease without Successor Landlord's consent after
the Successor Landlord's name is given to Tenant
unless the amendment, modification, or ending is
specifically authorized by the original Lease and
does not require Landlord's prior agreement or
consent, and
(3) any liability for any act or omission of a prior
Landlord.
(c) Self-Operating. This Section 11.01 is self-operating. However,
Landlord and Tenant shall promptly execute and deliver any documents
needed to confirm this arrangement.
11.02 Estoppel Certificate.
(a) Obligation. Tenant shall from time to time, within ten (10) business
days after receiving a written request from Landlord, execute and
deliver to Landlord a written statement which may be relied upon by
Landlord and any third party with whom the Landlord is dealing and
which shall certify:
(i) the accuracy of the Lease document;
(ii) the Commencement and Expiration Dates of the Lease;
(iii) that the Lease is unmodified and in full effect or in full
effect as modified, stating the date and nature of the
modification;
(iv) whether to the Tenant's knowledge the Landlord is in
default or whether the Tenant has any claims or demands
against Landlord, and, if so, specifying the Default,
claim, or demand; and
(v) to other correct and reasonably ascertainable facts that
are covered by the Lease terms.
(b) Remedy. The Tenant's failure to comply with its obligations in
Section 11.02(a) shall be a Default, except that the cure period for
this Default shall be five (5) business days after the Tenant
receives notice of the Default.
11.03 Quiet Possession. If Tenant is not in default, and subject to the Lease
terms, Landlord warrants that Tenant's peaceable and quiet enjoyment of the
Premises shall not be disturbed by anyone claiming by or through Landlord.
ARTICLE XII
LANDLORD'S RIGHTS
12.01 Rules 14
(a) Rules. Tenant, its employees and invitees, shall comply with:
(i) the Rules attached as Exhibit E; and
(ii) reasonable modifications and additions to the Rules adopted
by Landlord.
(b) Conflict with Lease. If a Rule issued under Section 12.01(a) conflicts
with or is inconsistent with any Lease provision, the Lease provision
controls.
(c) Enforcement. Although Landlord is not responsible for another tenant's
failure to observe the Rules, Landlord shall not unreasonably enforce
the Rules against Tenant.
12.02 Mechanic's Liens.
(a) Discharge Lien. Tenant shall, within twenty (20) days after receiving
notice of any mechanic's lien for material or work claimed to have
been furnished to the Premises on Tenant's behalf and at Tenant's
request:
(i) discharge the lien; or
(ii) post a bond equal to the amount of the disputed claim with
companies reasonably satisfactory to Landlord.
If Tenant posts a bond, it shall contest the validity of the lien.
Tenant shall indemnify, defend, and hold Landlord harmless from losses
incurred from these liens.
(b) Landlord's Discharge. If Tenant does not discharge the lien or post
the bond within the twenty (20) day period, Landlord may pay any
amounts, including interest and legal fees, to discharge the lien.
Tenant shall then be liable to Landlord for the amounts paid by
Landlord as Additional Rent.
(c) Consent not Implied. This Section 12.02 is not a consent to subject
Landlord's property to these liens.
12.03 Right to Enter.
(a) Permitted Entries. Landlord and its agents, servants, and employees
may enter the Premises at reasonable times, and at any time if an
emergency, without charge, liability, or abatement of Base Rent, to:
(i) examine the Premises;
(ii) make repairs, alterations, improvements, and additions
either required by the Lease or advisable to preserve the
integrity, safety, and good order of part or all of the
Premises or Building;
(iii) provide janitorial and other services required by the
Lease;
(iv) comply with Applicable Laws;
(v) show the Premises to prospective lenders or purchasers;
(vi) post notices of non responsibility;
(vii) remove any Alterations made by Tenant in violation of
Section 7.01; and
(viii) post "For Sale" signs and, during the one hundred twenty
(120) days immediately before this Lease ends, post "For
Lease" signs.
(b) Entry Conditions. Notwithstanding Section 12.03(a), entry is
conditioned upon Landlord:
(i) giving Tenant at least twenty-four (24) hours advance
notice, except in an emergency;
(ii) promptly finishing any work for which it entered; and
(iii) causing the least practical interference to Tenant's
business.
12.04 Holdover.
(a) Holdover Status. If Tenant continues occupying the Premises after the
Term ends ("Holdover") then:
(i) if the Holdover is with Landlord's written consent, it
shall be a month-to-month tenancy, terminable on thirty
(30) days advance notice by either party. Tenant shall pay
at the beginning of each month Base Rent and Additional
Rent that is five percent (5%) higher
15
than the amount due in the last full month immediately
preceding the Holdover period unless Landlord specifies a
lower or higher Rent and Additional Rent in the written
consent;
(ii) if the Holdover is without Landlord's written consent,
then Tenant shall be a tenant-at-sufferance. Tenant shall
pay by the first day of each month twice the amount of
Base Rent and Additional Rent due in the last full month
immediately preceding the Holdover period and shall be
liable for any damages suffered by Landlord because of
Tenant's Holdover, Landlord shall retain its remedies
against Tenant who holds over without written consent.
(b) Holdover Terms. The Holdover shall be on the same terms and
conditions of the Lease except:
(i) the Term;
(ii) Base Rent and Additional Rent;
(iii) the extension Term is deleted;
(iv) the Quiet Possession provision is deleted;
(v) Landlord's obligation for services and repairs is
deleted; and
(vi) consent to an assignment or sublease may be unreasonably
withheld and delayed.
12.05 Signs. Tenant shall not place or have placed any other signs, listings,
advertisements, or any other notices anywhere in the Building without Landlord's
prior written consent.
ARTICLE XIII
MISCELLANEOUS
13.02 Attorney's Fees. In any litigation between the parties regarding this
Lease, the losing party shall pay to the prevailing party all reasonable
expenses and court costs including attorneys' fees incurred by the prevailing
party. A party shall be considered the prevailing party if:
(a) it initiated the litigation and substantially obtains the relief it
sought, either through a judgment or voluntary action before (after
it is scheduled) trial or judgment;
(b) the other party withdraws its action without substantially obtaining
the relief it sought; or
(c) it did not initiate the litigation and judgment is entered for
either party, but without substantially granting the relief sought.
13.03 Notices. Unless a Lease provision expressly authorizes verbal notice,
all notices under this Lease shall be in writing and sent by registered or
certified mail, postage prepaid, or by overnight delivery as follows:
To Tenant: Total Sports, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
To Landlord: First Raleigh Telex, LLC and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
c/o ▇▇▇▇▇▇▇ & Co. Manager
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ First Raleigh Telex
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Suite 600
(▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Property Management
Either party may change these persons or addresses by giving notice as provided
above. Tenant shall also give required notices to Landlord's mortgagee after
receiving notice from Landlord of the mortgagee's name and address. Notice
shall be considered and three business days after deposit in the mail.
13.04 Partial Invalidity. If any Lease provision is invalid or unenforceable to
any extent, then except that provision, the remainder of this Lease shall
continue in effect and be enforceable to the fullest extent permitted by law.
16
3.05 Waiver. The failure of either party to exercise any of its rights is not
a waiver of those rights. A party waives only those rights specified in writing
and signed by the party waiving its rights.
13.06 Binding on Successors. This Lease shall bind the parties' heirs,
successors, representatives, and permitted assigns.
13.07 Governing Law. This Lease shall be governed by the laws of the state in
which the Building is located.
13.08 Lease Not an Offer. Landlord gave this Lease to Tenant for review. It is
not an offer to lease. This Lease shall not be binding unless signed by both
parties and an originally signed counterpart is delivered to Tenant by July 31,
1999.
13.09 Recording. Recording of this Lease is prohibited except as allowed in
this paragraph. At the request of either party, the parties shall promptly
execute and record, at the cost of the requesting party, a short form memorandum
describing the Premises and stating this Lease's Term, its Commencement and
Expiration Dates, and other information the parties agree to include.
13.10 Survival of Remedies. The parties' remedies shall survive the expiration
or termination of this Lease when caused by the Default of the other party.
13.11 Authority of Parties. Each party warrants that it is authorized to enter
into the Lease, that the person signing on its behalf is duly authorized to
execute the Lease, and that no other signatures are necessary.
13.12 Business Days. Business day means Monday through Friday inclusive,
excluding holidays identified at Section 6.02(b). Throughout this Lease,
wherever "days" are used the term shall refer to calendar days. Wherever the
term "business days" is used the term shall refer to business days.
13.13 Entire Agreement. This Lease contains the entire agreement between the
parties about the Premises and Building. Except for the Rules for which Section
12.01(a) controls, this Lease shall be modified only by a writing signed by both
parties.
13.14 Definition of Lease. This Lease consists of the following:
(a) Title Page;
(b) Table of Contents;
(c) Articles I through XIII;
(d) Signature Page;
(e) Rider containing Option To Extend
Rider B containing Guarantee of Lease Obligations
(f) Exhibits A through E.
17
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease the
day and year first above written.
LANDLORD: First Raleigh Telex, LLC (SEAL)
SIGNATURE:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (SEAL)
------------------------------------
DATE: August 8, 1999
------------------------------
WITNESS: BY: /s/ ▇▇▇▇ ▇▇▇▇
--------------------------------
NAME: ▇▇▇▇ ▇▇▇▇
------------------------------
TITLE: Executive Assistant
-----------------------------
DATE: August 8, 1999
------------------------------
TENANT: Total Sports, Inc.
SIGNATURE:
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
NAME: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
TITLE: President/COO
-----------------------------
DATE: August 8, 1999
------------------------------
ATTEST BY:_________________________________
NAME:_______________________________
TITLE:______________________________
DATE:_______________________________
[AFFIX CORPORATE SEAL]
18
RIDER
THIS RIDER constitutes a part of the Lease to which it is attached. In the
event of a conflict between this Rider and the provisions of the Lease, the
Rider will govern and control.
Right of First Refusal
Tenant shall have the first right of refusal to lease any space in the building
that shall become available for lease subsequent to the commencement of this
Lease. In the event Landlord receives a bona fide offer to lease space in the
building from a third party tenant, Landlord shall promptly notify Tenant in
writing of such offer, and then Tenant shall have the right to match the terms
of the proposed third party lease by giving written notice to Landlord of
Tenant's intent to lease the premised not later than five business days from the
date Tenant is notified of the third party lease proposal. In the event Tenant
refuses to lease the space offered then Landlord may lease the space to the
third party tenant, but Tenant shall have the ongoing right of first refusal in
the future.
19
Exhibit A
Figure 1. Floorplan
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
[Schematic of Floorplan]
20
Exhibit A
Figure 2. Floorplan
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
[Schematic of Floorplan]
21
Exhibit A
Figure 3. Floorplan
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
[Schematic of Floorplan]
22
Exhibit A
Figure 4. Floorplan
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
[Schematic of Floorplan]
23
Exhibit A
Figure 5. Floorplan
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Mall, Basement
[Schematic of Floorplan]
24
Exhibit B
BUILDING
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
[Schematic of Building]
25
Exhibit C
Land
BEGINNING at a point, said point being the control of a brick building, said
point having N.C. Grid Coordinates of Y=737,930.371 X=2,106,947.179, said point
located North 78 (degrees) 43' 09" West a distance of 372.31 feet from a brass
plug located at the northeast corner of the intersection of East ▇▇▇▇▇▇ Street
and Wilmington Street, and said point being the northwest corner of the
technical rights of way of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇; then
running with the wall line of the brick building the following courses: North 87
(degrees) 46' 12" West a distance of 82.17 feet to a point; North 02 (degrees)
13'48" East a distance of 67.5 feet to a point; South 87 (degrees) 46' 12" East
a distance of 82.17 feet to a point; then South 02 (degrees) 13'48" West a
distance of 67.5 feet to the point and place of BEGINNING, having 5,546.5 square
feet (0.1273 acres) and being the property located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in
Raleigh, Wake County, North Carolina, as shown on survey dated September 16,
1998 by Al Prince & Associates, P.A. This property is the same property
described in a Deed dated January 1, 1973 from First Union National Bank North
Carolina to National Investment Company, recorded at Book 2164, Page 231, Wake
County Registry.
Save and except that portion of the above referenced property previously
conveyed by Special Warranty Deed dated May 21, 1998 and recorded in Book 8067,
Page 116, Wake County Registry.
Together with all of the land conveyed by First Union National Bank of North
Carolina to National Investment Company by Deed dated January 1, 1973 and
recorded in book 2164, Page 228, Wake County Registry.
Together with all rights and subject to those certain party wall agreements
recorded in:
(1) Book 147, Page 462
(ii) Book 151, Page 229
(iii) Book 391, Page 517
(iv) Book 438, Page 204
(v) Book 561, Page 111
26
Exhibit D
LANDLORD IMPROVEMENTS
Landlord shall provide to Tenant a Tenant Improvement Allowance as follows:
Basement: $10.00 per square foot or $ 42,150.00
Second Floor: $10.00 per square foot or $ 46,620.00
Third Floor $10.00 per square foot or $ 46,700.00
Fourth Floor $10.00 per square foot or $ 46,700.00
Fifth Floor $10.00 per square foot or $ 46,700.00
Total Allowance Amount: $228,870.00
The Tenant shall be solely responsible for all costs associated with Tenant
Improvement in the Premises above and beyond the above Total Amount. Landlord
at is option may amortize the excess expenditures over the lease term at an
interest rate of ten percent (10%) per annum, with payments made monthly to
Landlord by Tenant.
27
Exhibit E
RULES AND REGULATIONS
(1) Access to Common Areas of the Property. Landlord may from time to time
establish security controls for the purpose of regulating access to the
common areas of the property. Tenant shall abide by all such security
regulations so established and agrees to always leave clear access for
vehicular traffic through all parking lots, loading areas and driveways.
(2) Protecting Demised Premises. Before leaving the Demised Premises
unattended, Tenant shall close and securely lock all doors or other means
of entry to the Demised Premises.
(3) Building Directories. The directories of the building shall be used
exclusively for the display of the name and location of tenants only and
will be provided at the expense of Landlord. Any company names and/or name
changes requested by Tenant to be displayed in the directories must be
approved by Landlord and, if approved, will be provided at the sole expense
of Tenant.
(4) Large Articles. Furniture, freight and other large or heavy articles may be
brought into the building in a manner so as to not damage the property and
always at Tenant's sole responsibility. All damage done to the building,
its furnishings, fixtures or equipment by moving or maintaining such
furniture, freight or articles shall be repaired at the expense of Tenant.
(5) Signs. Tenant shall not paint, display, inscribe, maintain or affix any
sign, placard, picture, advertisement, name, notice, lettering or direction
on any part of the outside or inside of the building, or on any part of the
inside of the Demised Premises which can be seen from the outside of the
Demised Premises, without the written consent of Landlord, and then only
such name or names or matter and in such color, size, style, character and
material as shall be first approved by Landlord in writing. Landlord
reserves the right to remove at Tenant's expense all matter other than that
above provided for without notice to Tenant.
(6) Compliance with Laws. Tenant shall comply with all applicable laws,
ordinances, governmental orders or regulations and applicable orders or
directions from any public office or body having jurisdiction, whether now
existing or hereinafter enacted with respect to the Demised Premises and
the use or occupancy thereof. Tenant shall not make or permit any use of
the Demised Premises which directly or indirectly is forbidden by law,
ordinance, governmental regulations or order or direction of applicable
public authority, or which may be dangerous to person or property.
(7) Hazardous Materials. Tenant shall not use or permit to be brought into the
Demised Premises or the building any flammable oils or fluids, or any
explosive or other articles deemed hazardous to persons or property, or do
or permit to be done any act or thing which will invalidate or which if
brought in would be in conflict with any insurance policy covering the
building or its operation, or the Demised Premises, or any part of either,
and will not do or permit to be done anything in or upon the Demised
Premises, or bring or keep anything therein, which shall not comply with
all rules, orders, regulations or requirements of any organization,
bureaus, department or body having jurisdiction with respect thereto (and
Tenant shall at all times comply with all such rules, orders, regulations
or requirements), or which shall increase the rate of insurance on the
building, its appurtenances, contents or operation.
(8) Defacing Demised Premises and Overloading. Tenant shall not place anything
or allow anything to be placed in the Demised Premises near the glass or
any door, partition, wall or window which may be unsightly from outside the
Demised Premises. Tenant shall not place or permit to be placed any article
of any kind on any window ledge or on the exterior walls; blinds, shades,
awnings or other forms of inside or outside window ventilators or similar
devices shall not be placed in or about the outside windows in the Demised
Premises except to the extent that the character, shape, color material and
make thereof is approved by Landlord. Tenant shall not do any painting or
decorating in the Demised Premises or install any floor coverings in the
Demised Premises or make, paint, cut or drill into, or in any way deface
any part of the Demised Premises or building without in each instance
obtaining the prior written consent of Landlord. Tenant shall not overload
any floor or part thereof in the Demised Premises, or any facility in the
building or any public corridors or elevators therein by bringing in or
removing any large or heavy articles and, Landlord may direct and control
the location of safes, files, and all other heavy articles and, if
considered necessary by Landlord, require supplementary supports at
Tenant's expense of such material and dimensions necessary to properly
distribute the weight.
(9) Obstruction of Public Areas. Tenant shall not, whether temporarily,
accidentally or otherwise, allow anything to remain in, place or store
anything in, or obstruct in any way, any sidewalk, court, passageway,
entrance, or shipping area. Tenant shall lend its full cooperation to keep
such areas free from all obstruction and in a clean and sightly condition,
and move all supplies, furniture and equipment as soon as received directly
to the Demised Premises, and shall move all such items and waste (other
than waste customarily removed by building employees) that are at any time
being taken from the Demised Premises directly to the areas designated for
disposal. All courts, passageways, entrances, exits, elevators, escalators,
stairways, corridors, halls and roofs are not for the use of the general
public and Landlord shall in all cases retain the right to control and
prevent access thereto by all persons whose presence in the judgment of
Landlord shall be prejudicial to the safety, character, reputation and
interest of the building and its tenants provided, however, that nothing
herein contained shall be construed to prevent such access to persons with
whom Tenant deals within the normal course of Tenant's business unless such
persons are engaged in illegal activities.
(10) Additional Locks. Tenant shall not attach or permit to be attached
additional locks or similar devices to any door or window, change any
existing locks or the mechanism thereof, or make or permit to be made any
keys for any door other than those provided by Landlord. Upon termination
of this lease or of Tenant's possession, Tenant shall surrender all keys to
the Demised Premises. Tenant shall be solely responsible for the costs of
all locks and keys other than the original set in the premises as of the
date of occupancy.
28
(11) Communications or Utility Connections. If Tenant desires signal, alarm or
other utility or similar service connections installed or changed, Tenant
may install or change the same without the approval of Landlord, but at
Tenant's expense. Tenant shall not install in the Demised Premises any
equipment which requires a substantial amount of electrical current without
the advance written consent of Landlord. Tenant shall ascertain from
Landlord the maximum amount of load or demand for or use of electrical
current which can safely be permitted in the Demised Premises, taking into
account the capacity of the electric wiring in the building and the Demised
Premises, taking into account the capacity of the electric wiring in the
building and the Demised Premises and the needs of other tenants in the
building, and shall not in any event connect a greater load than that which
is safe.
(12) Office of the Building. Service requirements of Tenant will be attended to
only upon application at the office of ▇▇▇▇▇▇▇ & Co. Employees of Landlord
shall not perform any work outside of their duties unless under special
instructions from Landlord.
(13) Restrooms. The restrooms, toilets, urinals, vanities and the other
apparatus shall not be used for any purpose other than that for which they
were constructed and no foreign substance of any kind whatsoever shall be
thrown therein and the expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by Tenant who, or
whose employees or invitees, shall have caused it.
(14) Intoxication. Landlord reserves the right to exclude or expel from the
building any person who, in the judgment of Landlord, is intoxicated or
under the influence of liquor or drugs, or who shall in any manner do any
act in violation of any of the rules and regulations of the building.
(15) Nuisances and Certain Other Prohibited Uses. Tenant shall not (a) install
or operate any internal combustion engine, boiler, machinery,
refrigerating, heating or air conditioning apparatus in or about the
Demised Premises; (b) engage in any mechanical business, utilize any
article or thing, or engage in any service in or about the Demised Premises
or building, except those ordinarily embraced within the permitted use of
the Demised Premises specified in Article 7; (c) use the Demised Premises
for housing, lodging, or sleeping purposes; (d) place any antennae on the
roof or on or in any part of the inside or outside of the building other
than the inside of the Demised Premises, or place a musical or sound
producing instrument or device inside or outside the Demised Premises which
may be heard outside the Demised Premises; (e) use any illumination or
power for the operation of any equipment or device other than electricity;
(f) operate any electrical device from which may emanate electrical waves
which may interfere with or impair radio or television broadcasting or
reception from or in the building or elsewhere; (g) bring or permit to be
in the building complex any bicycle or other vehicle, or dog (except in the
company of a blind person) or other animal or bird; (h) make or permit any
objectionable noise or odor to emanate from the Demised Premises; (i)
disturb, solicit or canvass any occupant of the building; (j) do anything
in or about the Demised Premises tending to create or maintain a nuisance
or do any act tending to injure the reputation of the building.
(16) Solicitation. Tenant shall not make any room-to-room canvass to solicit
business from other tenants in the building and shall not exhibit, sell or
offer to sell, use, rent or exchange any products or services in or from
the Demised Premises unless ordinarily embraced within the Tenant's use of
the Demised Premises specified herein and specific authority granted in the
lease agreement.
(17) Energy Conservation. Tenant shall not waste electricity, water, heat or
air conditioning and agrees to cooperate fully with Landlord to assure the
most effective operation of the building's heating and air conditioning,
and shall not allow the adjustment (except by Landlord's authorized
building personnel) or any controls.
(18) Building Security. Upon entry to or exit from the building the exterior
building doors and suite entry door(s) should be kept locked at all times
to assist in security. The janitorial service (if any) shall, upon
completion of its duties, lock all building doors. Problems in building
and suite security should be directed to ▇▇▇▇▇▇▇ & Co.
(19) Parking. Parking is in designated parking areas only. There should be no
vehicles in "no parking" zones or at curbs. Handicapped spaces are for
handicapped persons and the Police Department will ticket unauthorized
(unidentified) cars in handicapped spaces. No vehicles may be abandoned or
repaired on the property, and vehicles requiring extended parking should be
identified to Landlord.
(20) Janitorial Service. Tenants will remove excessive trash from inside and
outside their premises and shall deposit same in the dumpsters provided by
Landlord. Any large volume of trash resulting from delivery of furniture,
equipment, etc., should be removed by the delivery company, Tenant, or
Landlord at Tenant's expense. Any requests for extraordinary trash removal
should be directed to ▇▇▇▇▇▇▇ & Co. at 832-1110.
(21) Landlord reserves the right to make such other reasonable Rules and
Regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building and the Land, and for the
preservation of good order therein.
29
FIRST AMENDMENT TO LEASE AGREEMENT
To Lease Dated: December 1, 1998
AGREEMENT, made this 16th day of July, 1999, by and between FIRST RALEIGH
TELEX, LLC (hereinafter called Landlord) and TOTAL SPORTS, INC. (hereinafter
called Tenant).
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a written agreement of Lease
bearing date of December 1, 1998 (hereinafter called The Lease Agreement),
whereby Landlord leased to Tenant and Tenant hired from Landlord approximately
22,887 square feet known as FIRST RALEIGH TELEX BUILDING, 234 Fayetteville
Street Mall, located in the City of Raleigh, Wake County, North Carolina, for
the term of ten (10) years three (3) months from April 1, 1999 and ending June
30, 2009.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto with the intent
to be legally bound, hereby agree as follows:
1. Premises: the premises shall be expanded in size to include the first
--------
floor space of the building containing approximately 4,123 rentable square
feet. Tenant's prorata share of the building will be ninety five percent
(95%).
2. Commencement Date: the rent on the expansion space on the first floor will
-----------------
commence on the date Tenant takes possession of the expansion space or
November 1, 1999, whichever occurs first. Partial month occupancy shall be
prorated
3. Tenant Improvements: Landlord shall provide Tenant an upfit allowance of
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Forty One Thousand Two Hundred Thirty & no/100 Dollars ($41,230.00) , or
Ten Dollars per square foot, for the renovation of the expansion space.
Landlord will pay up to the allowance amount for costs and expenses
incurred by Tenant for Tenant's work in the expansion space. Reimbursements
to Tenant will be made within fifteen (15) days of receipt of valid
invoices from contractors, subcontractors or service providers.
4. Rent: To incorporate the expansion space, Tenant's rent shall be increased
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by $4,810.17 per month or $57,722.00 per year. Escalations in rent shall
occur at the same rate (three percent (3%) and on the same schedule as
stated in the Lease.
5. Term: The term for the 4,123 square foot expansion space shall be from the
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commencement date defined above until June 30, 2009.
6. Option to Purchase:
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(a) Landlord does hereby grant to Tenant or Tenant's assignee an option to
purchase the Building and the Landlord's interest under this Lease,
upon the terms and conditions herein set forth.
(b) Tenant must exercise the option to purchase, if it is to be exercised
at all, during the period from July 1, 1999 to June 30, 2000,
hereinafter referred to as the "Option Period."
(c) In order to exercise the option to purchase herein granted, Tenant
must give written notice of the exercise of the option to Landlord and
Landlord must receive the same during the Option Period, time being of
the essence, and if not so given and received, this option shall
automatically expire. At the same time the option is exercised, Tenant
must deliver to Landlord a proposed purchase and sale agreement for
the Building (a "Purchase Agreement") executed by Tenant, together
with an ▇▇▇▇▇▇▇ money deposit ("▇▇▇▇▇▇▇ Money") in the form of a
cashier's check for Fifty Thousand and 00/100 Dollars ($50,000.00)
made payable to Landlord. Upon execution of the Purchase Agreement by
Landlord, Landlord may deposit the ▇▇▇▇▇▇▇ Money into its account. The
▇▇▇▇▇▇▇ Money shall be applied to the purchase price at the time of
closing and shall be refundable to Tenant only upon default by
Landlord and proper termination of the Purchase Agreement by Tenant.
(d) The provisions of Article X, including the provision relating to
default of Tenant set forth in Section 10.01 of this Lease are
conditions of this option.
(e) If Tenant shall exercise the option to purchase during the Option
Period, the transfer of title to Tenant and the payment of the
purchase price to Landlord shall occur within forty-five (45) days of
the date of notice, and until that time the terms of the Lease shall
remain in full force and effect.
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(f) The purchase price to be paid by Tenant to Landlord for the Premises,
if Tenant exercises its option to purchase, shall be the fair market
value of the property as determined by mutual agreement or, in the
event Tenant and Landlord are unable to agree upon fair market value,
by the "three appraiser method." The "three appraiser method" means
that fair market value shall be determined by an appraiser mutually
agreed upon by Landlord and Tenant and having at least five (5) years
experience in performing commercial real estate appraisals of office
buildings in the Raleigh, North Carolina market. In the event Landlord
and Tenant are unable to agree upon an appraiser or disagree as to the
value of the first appraisal obtained, then each party shall then
select and pay for its own commercial real estate appraiser with at
least five (5) years experience in appraising office buildings in the
Raleigh, North Carolina market. If the lower appraisal is not within
ten percent (10%) of the higher appraisal, the two appraisers shall
then jointly select a third commercial real estate appraiser having at
least five (5) years experience in appraisal of office buildings in
the Raleigh, North Carolina market, whose appraisal shall conclusively
be deemed the fair market value of the Building. The cost of the third
appraisal shall be borne equally by Landlord and Tenant.
(g) Within ten (10) days of the date the option to purchase is exercised,
Landlord and Tenant shall give instructions to consummate the sale to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ who shall act as escrow holder, on the
normal and usual escrow forms then used by such escrow holder, as
follows:
(i) Escrow shall close on the date previously called for in
paragraph (e) of this Addendum;
(ii) Landlord shall deposit the check referred to in paragraph (C)
of this Addendum into escrow upon opening thereof, with the
balance of the purchase price to be deposited into escrow one
day prior to the close of escrow;
(iii) Landlord shall convey to Tenant title to the Premises subject
only to mortgages and deeds of trust of record (the debt that
such instruments secure shall constitute a credit against the
purchase price), and easements, subsurface mineral rights and
restrictions of record. Any other liens and encumbrances shall
be removed prior to close of escrow at the expense of Landlord;
(iv) Escrow fees shall be shared equally;
(v) Interest, if any, operating expenses and rents will be prorated
to the close of escrow;
(vi) The cost of a standard title insurance policy to be issued to
Tenant shall be paid by Tenant;
(vii) The parties agree to execute any additional instructions as are
normal and usual;
(viii) All real estate transfer taxes shall be paid by Landlord;
(ix) All other expenses of the conveyance shall be apportioned
according to custom in the area.
Except as expressly modified by this Amendment and as heretofore modified,
all terms and provisions of the Lease Agreement are hereby ratified and
confirmed and shall remain in full force and effect through the term of the
Lease.
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IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their respective
hands and seals the day and year first above written.
WITNESS Landlord: FIRST RALEIGH TELEX, LLC
/s/ ▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title:
Attest: Tenant: TOTAL SPORTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Assistant (Corporate Secretary)
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Title: President/COO
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(AFFIX CORPORATE SEAL)
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