EXHIBIT 10.1
STATE OF NORTH CAROLINA
COUNTY OF WAKE
CONSENT TO SUBLEASE AGREEMENT
As of this 18th day of May, 2001, ROYAL CENTER IC, LLC (hereinafter,
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whether one or more, referred to as the "Landlord"); CIRCUIT CITY STORES, INC.
(hereinafter, whether one or more, referred to as the "Tenant"); and INSPIRE
PHARMACEUTICALS, INC. (hereinafter, whether one or more, referred to as the
"Subtenant") do hereby enter into this Consent to Sublease Agreement.
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a Lease Agreement dated September
3, 1997, as amended (hereinafter the "Lease"), for the leasing of all of that
real property and all improvements located thereon, located at 4222 Emperor
Boulevard, Durham, North Carolina, being more particularly described in
paragraph 1 of the Lease and on Exhibit A attached thereto (hereinafter the
"Premises"); and
WHEREAS, Tenant and Subtenant have entered into a Sublease of the Premises
of even date herewith and in the form attached hereto and, by this reference,
incorporated herein (hereinafter the "Sublease");
NOW, THEREFORE, Landlord does hereby consent to the Sublease in the form
attached hereto, contingent and conditioned upon the following terms and
conditions:
1. Tenant shall not be released in any manner from any of its obligations
or duties under the Lease and shall remain liable therefore. Landlord and
Tenant each represents to Subtenant that to the best of its actual knowledge
there are no uncured events of default under the Lease as of the date hereof,
and each represents that it is not aware of any condition that, with the passage
of time or the giving of notice, or both, would be an event of default under the
Lease.
2. Tenant shall pay to Landlord as additional rent one half all net rents
received by Tenant from Subtenant in excess of the rent payable by Tenant to
Landlord under the Lease, as set forth in Section 22 of the Lease.
3. The Sublease shall be subject to all terms and conditions of the Lease
and no use and occupancy of the Premises shall be permitted by Tenant or
undertaken by Subtenant which is in any way inconsistent with, or violates, the
terms and conditions of the Lease. The parties hereto acknowledge and agree
that all terms of the Lease remain in full force and effect without
modification. Landlord agrees that in the event of any termination of the Lease
by Landlord in accordance with the terms thereof following a default by Tenant,
and provided that Subtenant is in compliance with all terms and conditions of
the Sublease, Landlord shall not disturb Subtenant's possession of the Premises
for the term of the Sublease, Subtenant shall attorn to Landlord, and the
Sublease shall become a direct lease between Landlord and Subtenant, provided
that Subtenant shall have no rights to extend the term of the Sublease beyond
the Expiration Date.
4. Landlord shall not be obligated to Subtenant under any of the
provisions of the Sublease.
5. Subtenant shall indemnify and hold Landlord harmless from and against
any and all claims arising out of (a) Subtenant's use of the Premises or any
part thereof; (b) any activity, work or other thing done, permitted or suffered
by Subtenant in or about the Premises, or any part thereof; (c) any breach or
default by Subtenant in the performance of any of its obligations under the
Sublease; or (d) any act or negligence of the Subtenant, or any officer, agent,
employee, contractor, servant, invitee, or guest of the Subtenant, and in each
case from and against any and all damages, losses, liabilities, lawsuits, costs
and expenses (including reasonable attorneys' fees) arising in connection with
any such claim or claims as described in subparagraphs (a) through (d) above, or
any action brought thereon. Subtenant assumes all risk of damage or loss to its
property or injuries or death to persons in, on, or about the Premises, from all
causes except those for which the law imposes liability on Landlord regardless
of any attempted waiver thereof, and Subtenant hereby waives such claims in
respect thereof against Landlord. The provisions of this paragraph shall
survive the termination or expiration of the Sublease.
6. This consent to Sublease Agreement constitutes an agreement as between
the undersigned, but nevertheless shall not be deemed to constitute a consent to
any future sublease (or any future assignment) and each and every such proposed
future sublease (and any proposed future assignment) shall require the prior
written consent of Landlord, except that Landlord approval shall not be required
for assignments or subleases by the Subtenant that would be permitted without
consent under Paragraph 22 of the Lease if performed by the Tenant.
Subject to the terms and conditions of section 3 of this Consent to
Sublease Agreement, if Landlord so elects, the expiration or termination of the
Lease by the lapse of time or otherwise shall immediately cause the Sublease to
be terminated and of no further force or effect.
7. This Agreement may be executed in two or more counterparts, all of
which taken together shall constitute a single instrument.
8. Landlord consents to the Subtenant's Work (limited as defined in
Paragraph 6 of the Sublease, to the installation of a door to connect the
Subleased Premises and the adjoining space currently leased by Subtenant
directly from Landlord) and Subtenant agrees to restore the Premises at the end
of the term of the Sublease, unless Subtenant and Landlord have agreed to a new
Lease of the Premises to commence at the expiration of the Sublease. All work
shall be coordinated through Landlord or Landlord's designated property manager.
9. Tenant agrees to reimburse Landlord for all expenses incurred by
Landlord in connection with the Sublease and this Consent, including, without
limitation, reasonable attorney's fees incurred by Landlord in connection with
the Sublease and this Consent, as provided in the Lease.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by hand and under seal affixed hereto as of the date first written
above.
[separate signature pages follow]
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LANDLORD:
ROYAL CENTER IC, LLC, a Delaware
limited liability company
By: PRINCIPAL CAPITAL
MANAGEMENT, LLC, a Delaware
limited liability company, its
authorized agent
By: /s/ Bill Bramwell
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Name: Bill Bramwell
Title: Director
C.R.E. Equities
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TENANT:
CIRCUIT CITY STORES, INC.
By: /s/Benjamin B. Cummings, Jr.
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Benjamin B. Cummings, Jr.
Vice President, Real Estate
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SUBTENANT
Inspire Pharmaceuticals, Inc.
By: /s/ M Bennett
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Name: Mary Bennett
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Title: VP Operations
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SUBLEASE
THIS SUBLEASE ("Sublease") is made and entered into as of this 7 day of
May, by and between CIRCUIT CITY STORES, INC., a Virginia corporation
("Sublandlord"), and INSPIRE PHARMACEUTICALS, INC., a Delaware corporation
("Subtenant").
INTRODUCTORY STATEMENT
Sublandlord, as lessee, is the "Tenant," and Petula Associates, Ltd., an
Iowa corporation, as lessor ("Prime Landlord"), is the "Landlord," pursuant to a
certain lease dated September 3, 1997 (the "Prime Lease") for certain space
containing approximately 7,130 square feet, together with Sublandlord's rights
under the Prime Lease to use and enjoy the common areas and facilities
appurtenant thereto as described in the Prime Lease (collectively, the
"Subleased Premises"), described therein and located in a building at 4222
Emperor Boulevard, Durham, North Carolina 27705 (the "Building"). A copy of the
Prime Lease is attached hereto as Exhibit A and incorporated herein by
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reference.
Subtenant desires to sublease the Subleased Premises from Sublandlord and
Sublandlord desires to sublease the Subleased Premises to Subtenant upon,
subject to and in accordance with the terms and conditions of this Sublease.
NOW, THEREFORE, in and for consideration of the Introductory Statement,
which is deemed a material and substantive part of this Sublease, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Subtenant and Sublandlord agree as follows:
1. Sublease. Sublandlord, for and in consideration of the payment of the
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rent and the performance of the covenants set forth in this Sublease, hereby
subleases to Subtenant, and Subtenant hereby subleases from Sublandlord, the
Subleased Premises for a term commencing upon the date of tender of possession
of the Subleased Premises to Subtenant (the "Rent Commencement Date") and
terminating on October 30, 2002 (the "Expiration Date"). It is anticipated that
possession of the Subleased Premises will be tendered to Subtenant by
Sublandlord on or about May 15, 2001. The term of this Sublease and all
obligations of Subtenant with respect to the Subleased Premises shall commence
on the date that possession of the Subleased Premises is tendered by Sublandlord
to Subtenant, provided, however, that this Sublease shall not be effective and
Sublandlord shall not tender possession of the Subleased Premises to Subtenant
prior to receipt by Sublandlord of written approval of this Sublease from Prime
Landlord. Within five (5) days following receipt of the written request
therefor, Subtenant shall enter into a written agreement with Sublandlord
confirming the Commencement Date. If Prime Landlord's consent to this Sublease
is not obtained by May 31, 2001, this Sublease shall be null and void, and
Sublandlord and Subtenant each shall be released from all obligations and
liability to each other hereunder.
2. Rent. Subtenant shall pay to Sublandlord, commencing on the Rent
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Commencement Date and accruing through October 31, 2001, annual rent in the
amount of Seventy Six Thousand Seven Hundred Eighteen and 76/100 Dollars,
payable in equal monthly
installments of Six Thousand Three Hundred Ninety Three and 23/100 Dollars
($6,393.23) per month. Subtenant shall pay to Sublandlord, commencing on
November 1, 2001, and accruing through the Expiration Date, annual rent in the
amount of Seventy Nine Thousand Seventy One and 70/100 Dollars, payable in equal
monthly installments of Six Thousand Five Hundred Eighty Nine and 31/100 Dollars
($6,589.31) per month (all such payments being hereinafter called the "Base
Rent"). All other rent, charges, sums and amounts due hereunder shall be deemed
"Sublease Additional Rent" hereunder, payable by Subtenant. Base Rent and
Sublease Additional Rent shall sometimes be referred to as "Rent."
Payments of Base Rent shall be paid in advance, without demand, deduction,
set-off, recoupment or counterclaim on the first day of each month during the
term of this Sublease from and after the Rent Commencement Date, except that the
first full monthly installment of Base Rent shall be paid when Subtenant
executes and delivers this Sublease. If the Rent Commencement Date is not the
first day of a month, Base Rent shall be prorated on a daily basis based on the
number of days in the month, and the payment for such partial month shall be
paid on the Rent Commencement Date.
3. Operating Expenses. In addition to the Base Rent, Subtenant shall pay
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to Sublandlord, within ten (10) days after receipt of an invoice therefor, an
amount equal to all Additional Rent, as defined in the Prime Lease (including
but not limited to taxes, common area maintenance, and insurance), due and
payable to Prime Landlord under the Prime Lease (collectively, "Operating
Expenses") with respect to each year or partial year during the term of this
Sublease, together with an administrative fee of ten percent (l0)%. Pursuant to
the Prime Lease, Sublandlord is currently reimbursing Prime Landlord for
Operating Expenses by paying estimated installments on account of such Operating
Expenses on the first day of each month and at the end of each calendar year
paying any additional amounts due on account of Operating Expenses or receiving
a refund or credit on account of any overpayments made during such year. Upon
notice from time to time from Sublandlord of the amount of such estimated
installments that Sublandlord is paying to Prime Landlord, Subtenant shall
likewise pay estimated installment payments to Sublandlord, together with the
administrative fee. Any adjustments made with respect to such payments as
provided in the Prime Lease shall also be made between Sublandlord and
Subtenant, and Subtenant shall pay any additional amounts paid by Sublandlord to
Prime Landlord, together with the applicable administrative fee, within ten (10)
days after Sublandlord delivers a statement therefor, together with a copy of
the statement received by Sublandlord from Prime Landlord, or if Subtenant has
overpaid such amount that was actually owed by Prime Landlord for such year,
then Sublandlord shall apply such excess (and credit the applicable
administrative fee) to the amounts of Rent next coming due under this Sublease,
without interest. If such excess payments are not fully credited to Subtenant
by the Expiration Date, Sublandlord shall refund such excess to Subtenant within
thirty (30) days following reconciliation of the account by Prime Landlord after
the Expiration Date, such obligation to survive expiration or termination of
this Sublease. All amounts due and payable by Subtenant to Sublandlord under
this Sublease, in addition to the Base Rent, are "Sublease Additional Rent" and
shall be collectable in the same manner as rent. The Base Rent and all Sublease
Additional Rent are sometimes hereafter collectively referred to in this
Sublease as "Rent."
4. [Intentionally Left Blank]
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5. Use and Compliance with Laws. Subtenant shall use the Subleased
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Premises for general office and warehouse purposes and for no other purpose.
Subtenant, at its sole cost and expense, shall comply with all present and
future laws, rules, orders, regulations, ordinances and requirements of all
federal, state and municipal governments, courts, departments, commissions,
bonds, and offices having jurisdiction over the Subleased Premises, as well as
all lawful rules, orders, and regulations of the board of fire underwriters
having jurisdiction over the Subleased Premises or the carrier of Prime
Landlord's property insurance (together "Laws"), which pertain to the Subleased
Premises, Subtenant's Work (as hereinafter defined) and/or any alterations,
equipment or furnishings in the Subleased Premises.
6. Subtenant's Work. Any alterations, modifications, or changes of any
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kind to the Subleased Premises (any such work, "Subtenant's Work") shall be
subject to Sublandlord's prior approval, not to be unreasonably withheld, and
shall be performed in a good and workmanlike manner, using only new materials or
their equivalent, free and clear of all mechanics' liens and encumbrances, and
in compliance with all Laws and all requirements of the Prime Lease. Sublandlord
hereby consents to the installation of a door between the Subleased Premises and
the adjoining space leased by Subtenant, subject to Subtenant's compliance with
the other requirements of this paragraph. Prior to commencing any work in the
Subleased Premises, Subtenant shall (i) file the requisite plans and
specifications for Subtenant's Work (which shall have been approved in writing
by Sublandlord) with, and obtain all requisite approvals from, Prime Landlord
and all governmental departments or authorities having jurisdiction and any
public utility company having an interest therein and (ii) deliver to
Sublandlord a policy or policies of workman's compensation, liability, property
damage and builder's risk insurance (if applicable) naming Sublandlord and Prime
Landlord as an additional insured as to liability, property damage, and
builder's risk, with limits for all policies as required by the Prime Lease.
Subtenant agrees that it will cause its contractors and subcontractors to
confine their activities to the construction staging area reasonably designated
by Sublandlord. Subtenant shall conduct its construction in a manner calculated
to cause the least possible interference to the operations in the remainder of
the Building. Subtenant shall, during the construction, maintain one trash dump
site within the construction staging area and shall require its contractors to
deposit all debris at such site. Subtenant shall cause such trash to be removed
as necessary. Subtenant agrees to comply with any requirements which Sublandlord
may impose with respect to the performance of Subtenant's Work which are
reasonably necessary for the safety and convenience of the other occupants of
the Building and the employees and invitees thereof but Subtenant alone shall be
solely responsible and liable for all loss or damage, including bodily injury,
in connection with Subtenant's Work suffered by Subtenant, its agents,
contractors, and their respective employees and invitees.
7. Assignment and Subletting. Subtenant shall not assign this Sublease or
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sublet the Subleased Premises, in whole or in part, without the prior written
consent of Sublandlord, which consent may be withheld in Sublandlord's sole
discretion, and if required, the prior written consent of the Prime Landlord;
and Subtenant shall not permit Subtenant's interest in this Sublease to be
vested in any third party by operation of law or otherwise.
8. Relationship to Prime Lease.
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(a) Subtenant represents that it has read and is familiar with the
terms of the Prime Lease. This Sublease is subject and subordinate
to Prime Lease. Except as may be inconsistent with the express
terms of this Sublease, all the terms, covenants and conditions in
the Prime Lease contained herein shall be applicable to this
Sublease with the same force and effect as if Sublandlord under
this Sublease were the lessor under the Prime Lease and Subtenant
under this Sublease were the lessee under the Prime Lease.
Notwithstanding the foregoing, the following provisions of the
Prime Lease will not be applicable to Subtenant's occupancy
hereunder: Section 2(c) relating to plan approval, Section 4(a)
relating to minimum rent, Section 22, relating to assignment and
subletting, and Section 32, relating to leasing commission. In
addition, Subtenant shall have no right under Section 13
(casualty) or Section 19 (condemnation) to terminate the Prime
Lease, or under Exhibit G to extend the term of the Prime Lease,
all of such rights being reserved to Sublandlord. Sublandlord
agrees that it will not exercise its right to extend the term of
the Prime Lease pursuant to Exhibit G. In case of any breach of
this Sublease by Subtenant, Sublandlord shall have all the rights
against Subtenant as would be available to the lessor under the
Prime Lease against the lessee under the Prime Lease if such
breach were by the lessee thereunder.
(b) Subtenant assumes and agrees to perform the lessee's obligations
under the Prime Lease during the term, except as set forth above.
Subtenant shall not commit or suffer any act or omission that will
violate any of the provisions of the Prime Lease.
(c) Sublandlord shall exercise due diligence in attempting to cause
Prime Landlord to perform its obligations under the Prime Lease
for the benefit of Subtenant. Upon receipt of written notice from
Subtenant asserting that Prime Landlord is not performing its
obligations, under the Prime Lease, Sublandlord shall notify Prime
Landlord, but Sublandlord shall not be liable to Subtenant if
Prime Landlord continues not to perform such obligations.
(d) Upon receipt of the corresponding payment of Base Rent and
Sublease Additional Rent from Subtenant, Sublandlord covenants to
make all payments of Minimum Rental and Additional Rent, as
defined in the Prime Lease.
9. Services. Notwithstanding anything contained herein to the contrary,
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the only services or rights to which Subtenant is entitled under this Sublease
are those to which Sublandlord is entitled under the Prime Lease.
10. Breach of Prime Lease. Neither Sublandlord nor Subtenant shall do, nor
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permit anything to be done, which would cause the Prime Lease to be amended,
modified, terminated or forfeited by reason of any right of termination or
forfeiture reserved or vested in the Prime
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Landlord under the Prime Lease. Each party shall indemnify and hold the other
harmless from and against all claims of any nature whatsoever by reason of any
breach or default on the part of the indemnifying party as a result of which the
Prime Lease may be terminated or forfeited; provided, however, that
Sublandlord's indemnity shall not extend to claims resulting from any breach or
default under the Prime Lease that is caused by the failure of Subtenant to
perform its obligations hereunder.
11. Termination of Prime Lease.
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A. Termination Prior to Expiration Date of Sublease. If for any
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reason the term of the Prime Lease shall have terminated prior to
the Expiration Date of this Sublease, this Sublease shall
thereupon be terminated and Sublandlord shall not be liable to
Subtenant by reason thereof provided however, that if the Prime
Lease terminates as a result of a default or breach by
Sublandlord or Subtenant under this Sublease and/or the Prime
Lease, then the defaulting party shall be liable to the
nondefaulting party for the damage suffered as a result of such
termination.
B. Casualty or Condemnation. In the event of termination of the
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Prime Lease as a result of any casualty to or condemnation of the
Prime Lease Premises, the Sublease shall be terminated effective
on the date of termination of the Prime Lease and Subtenant shall
have no claim against Sublandlord or any right to insurance or
condemnation proceeds in connection therewith. In the event of
casualty or condemnation, if the Prime Lease is not terminated,
then this Sublease shall continue in effect if the Prime Lease is
not terminated, and the applicable provisions of the Prime Lease
shall govern.
12. Indemnity.
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A. Indemnification. Subtenant indemnifies and shall hold Sublandlord
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and Prime Landlord harmless from and defend Sublandlord and Prime
Landlord against any and all claims or liability for any injury
or death to any person or damage to any property whatsoever:
(i) either (a) occurring in, on, or about the Subleased Premises
during the term of this Sublease or while Subtenant is in
possession of the Subleased Premises, or (b) occurring in,
on, or about any facilities (including, without limitation,
elevators, stairways, passageways or hallways) the use of
which Subtenant may have in conjunction with other tenants
of the Building, when such injury, death, or damage shall be
caused in part or in whole by the act, neglect, or fault of,
or omission of any duty with respect to the same by
Subtenant, its agents, employees, contractors, invitees,
licensees, tenants, or assignees during the term of this
Sublease or while Subtenant is in possession of the
Subleased Premises;
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(ii) arising from any work or anything whatsoever done by or
benefiting the Subtenant in or about the Subleased
Premises or from transactions of the Subtenant concerning
the Subleased Premises (except the acts of Sublandlord or
Prime Landlord, as the case may be, performed hereunder or
the employees, contractors or agents of either of them,
respectively);
(iii) arising from any breach or default on the part of the
Subtenant in the performance of any covenant or agreement
on the part of the Subtenant to be performed pursuant to
the terms of this Sublease; or
(iv) otherwise arising from any act or neglect of the
Subtenant, or any of its agents, employees, contractors,
invitees, licensees, tenants or assigns; and from and
against all costs, expenses, reasonable counsel fees, and
court costs incurred or assessed in connection with any or
all of the foregoing. Furthermore, in case any action or
proceeding is brought against Sublandlord or Prime
Landlord by reason of any claims or liability, Subtenant
agrees to cause such action or proceeding to be defended
at Subtenant's sole cost and expense by counsel reasonably
satisfactory to Sublandlord and Prime Landlord, as the
case may be (defense by counsel selected by the insurer
providing insurance coverage required under the terms of
this Sublease to be deemed satisfactory to Sublandlord
where, in Sublandlord's reasonable judgment, the interests
of Sublandlord and Subtenant are sufficiently identical to
make joint defense reasonable). The provisions of this
Sublease with respect to any claim or liability occurring
or caused prior to any expiration or termination of this
Sublease shall survive such expiration or termination.
B. Liability of Sublandlord. Sublandlord and Prime Landlord shall not
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be liable to Subtenant or to any persons, firm, corporation or
other business association claiming by, through, or under
Subtenant for failure to furnish or for delay in furnishing any
service provided for in this Sublease or in the Prime Lease,
respectively, and no such failure or delay by Sublandlord, or
Prime Landlord, as the case may be, shall be an actual or
constructive eviction of Subtenant, nor shall any such failure or
delay operate to relieve Subtenant from the prompt and punctual
performance of each and all of the covenants to be performed
herein by Subtenant; nor for any latent defects in the Subleased
Premises or the Building; nor for defects in the cooling, heating,
electric, water, elevator or other apparatus or systems or for
water discharged from sprinkler systems, if any, or from water
pipes and plumbing facilities in the Building; nor for the theft,
mysterious disappearance or loss of any property of Subtenant
whether from the Sublease Premises or any part of the Building;
nor from
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interference, disturbance, or acts to or with the Subtenant by
third parties, including, without limitation, other tenants of the
Building and any such occurrences shall not constitute an actual
or constructive eviction of Subtenant. The foregoing shall not
limit any right Subtenant may have to recover damages from
Sublandlord or Prime Landlord, as the case may be, as a result of
the gross negligence or willful misconduct in failing to provide
any such services required from either of them, respectively,
under this Sublease and/or Prime Lease. Sublandlord hereby
indemnifies Subtenant for any cost, claim, or liability incurred
by Subtenant as a result of Sublandlord's breach of the provisions
of the Prime Lease; provided, however, that such indemnity shall
not extend to any such breach arising from Subtenant's failure to
perform its obligations hereunder.
13. Release of Claims and Waiver of Subrogation. Subtenant hereby releases
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and waives its rights of recovery against the Prime Landlord under the Prime
Lease to the extent that Sublandlord waived its rights of recovery against the
Prime Landlord under the Prime Lease, and Subtenant and Sublandlord shall be
jointly entitled to the benefit of Prime Landlord's waiver under the Prime Lease
of its right of recovery. Neither Sublandlord nor Subtenant shall be liable to
the other or to any insurance company (by way of subrogation or otherwise)
insuring the other party for any loss of or damage to any building, structure or
other tangible property, or any resulting loss of income, or losses under
worker's compensation laws, even though such loss or damage might have been
caused by the negligence of such party, its agents or employees, if any such
loss or damage is covered by insurance benefiting the party suffering such loss
or damage, to the extent of the proceeds of such insurance. Subtenant and
Sublandlord will cause its insurance carriers to include waiver of subrogation
clauses or endorsements in favor of the Prime Landlord and Sublandlord.
14. Late Charges. If payment of any Base Rent or Sublease Additional Rent
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shall not have been paid by the tenth (10/th/) day after the date on which such
amount was due and payable, Subtenant shall pay, as a late charge, an amount
equal to five percent (5%) of the overdue payment, as reimbursement of
Sublandlord's expenses incurred as a result of Subtenant's failure to make
prompt payment, plus interest at the rate of one and one-half percent on the
amount overdue per calendar month or any part thereof (or the then maximum
lawful interest rate, if less), from the date on which such amount was due until
the date of payment. Interest for any month shall be payable as an Sublease
Additional Rent on the first day of the following month.
15. Brokerage. Subtenant agrees that Subtenant shall pay, and shall
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indemnify, defend and hold harmless, Sublandlord from and against, any claims
made by any broker or other person for a brokerage commission, finder's fee, or
similar compensation, by reason of or in connection with this Sublease, and any
loss, liability, damage, cost and expense (including without limitation,
reasonable attorneys' fees) in connection with such claims if such broker or
other person claims to have had dealings with Subtenant. Sublandlord agrees to
indemnify, defend and hold harmless, Subtenant from and against, any claims made
by any broker or other person for a brokerage commission, finder's fee, or
similar compensation, by reason of or in connection with the Prime Lease, to the
extent such broker or other person claims to have had dealings with Sublandlord
in connection therewith.
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16. Security. Subtenant shall deposit with Sublandlord the sum of $6535.83
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as security for the performance and observance by Subtenant of the obligations
on the part of Subtenant to be performed. Said sum shall not bear interest.
Sublandlord shall have the right, without notice to Subtenant, and regardless of
the exercise of any other remedy Sublandlord may have by reason of a default, to
apply any part of said deposit to cure any monetary default of Subtenant
(including but not limited to reimbursement to Sublandlord of costs incurred in
curing a default by Subtenant hereunder), and, if Sublandlord does so, Subtenant
shall upon demand deposit with Sublandlord the amount applied so that
Sublandlord shall have the full amount of the security at all times during the
term of this Sublease. If Subtenant shall fail to make such deposit, Sublandlord
shall have the same remedies for such failure as Sublandlord has for a default
in the payment of Rent. Within forty five (45) days after the Expiration Date,
Sublandlord agrees to provide Subtenant with an accounting of any amounts
deducted from such security deposit to correct defaults by Subtenant hereunder,
and to return to Subtenant the security deposit or portion thereof not subject
to such deduction.
17. Defaults of Subtenant.
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(a) Event of Default. Each of the following events shall constitute
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an "Event of Default" by Subtenant under this Sublease:
(i) If Subtenant fails to pay any installment of Base Rent
within three (3) days after it is due and payable;
(ii) If Subtenant fails to pay any other Rent or any other
charge required to be paid by Subtenant hereunder within
three (3) days after Sublandlord delivers notice that the
same is due and payable.
(iii) If Subtenant fails to maintain insurance required hereunder
or fails to timely deliver any estoppel certificate
required hereunder;
(iv) If Subtenant fails to perform or observe any other term,
provision, covenant, condition or requirement of this
Sublease on the part of Subtenant to be performed or
observed, and such failure continues for fifteen (15) days
after written notice from Sublandlord (except that such
fifteen (15) day period shall be extended for such
additional period of time (not to exceed an additional
twenty (20) days) as may reasonably be necessary to cure
such Event of Default, if such Event of Default, by its
nature, cannot be cured within such fifteen (15) day
period, provided that Subtenant commences to cure such
Event of Default (and so notifies Sublandlord in writing)
within such fifteen (15) day period and is, at all times
thereafter, in the process of diligently curing the same);
or
(v) If Subtenant abandons the Subleased Premises.
8
(b) Remedies. Upon the occurrence of an Event of Default, Sublandlord
--------
shall have the same rights and remedies as to Subtenant and the
Subleased Premises as Prime Landlord would have following the
occurrence of an event of default by Sublandlord as tenant under
the Prime Lease.
18. Waiver of Jury Trial and Right to Counterclaim. Sublandlord and
----------------------------------------------
Subtenant each hereby waives trial by jury in any summary or other action,
proceeding or counterclaim arising out of or in any way connected with this
Sublease, the relationship of Sublandlord and Subtenant, the Premises or the use
and occupancy thereof, and any claim of injury or damages. Subtenant also hereby
waives all right to assert or interpose a counterclaim (other than a compulsory
counterclaim) in any summary proceeding or other action or proceeding or other
action to recover or obtain possession of the Premises.
19. Notices. In every instance in which notice is required hereunder, such
-------
notice shall be in writing and shall be personally delivered, sent by commercial
messenger services, with signed receipt, or sent by certified or registered
mail, return receipt requested, addressed as follows:
If to Sublandlord: Circuit City Stores, Inc.
9950 Mayland Drive
Richmond, Virginia 23233-1464
Fax Number: (804) 527-4186
Attn: Vice President -- Real Estate
If to Subtenant: Inspire Pharmaceuticals, Inc.
4222 Emperor Boulevard, Suite 470
Durham, North Carolina 27703-8466
Attention: Ms. Mary Bennett
If to Prime Landlord: Petula Associates, Ltd.
711 High Street
Des Moines, Iowa 50392
Attention: Burce K. Bruene
All notices sent by mail or commercial messenger service shall be deemed
given the second day after the same are deposited with the mail or messenger
service. Either party may change the address or fax number to which notices to
it are to be sent by sending written notice of such new address or fax number to
the other party.
20. Insurance. Subtenant shall carry a policy or policies of insurance
---------
that satisfies the requirements of the lessee under the Prime Lease. Liability
policies shall name Prime Landlord and Sublandlord as additional insured, and
said policies shall include an endorsement for contractual liability or
assumption of risk pursuant this Sublease and, except for workers' compensation
policy, shall include a waiver of subrogation rights in the favor of Prime
Landlord and Sublandlord. Said policies, or certificates thereof shall be
delivered to Sublandlord by
9
Subtenant upon commencement of the term of this Sublease and upon each renewal
and/or modification of insurance. Subtenant shall carry special form insurance
insuring Subtenant's improvements and its betterments to the Subleased Premises
and any and all furniture, equipment, supplies, and other property owned,
leased, held, or possessed by it and contained in the Subleased Premises; said
insurance coverage to be an amount equal to the full replacement cost of such
improvements and property.
21. Hazardous Materials. Sublandlord represents and warrants that it has
-------------------
not used, manufactured, or stored hazardous or toxic materials in the Subleased
Premises in violation of any federal, state, or local environmental laws or
regulations. Subtenant shall not use or store, or permit the use or storage of
any substance that violates any federal, state or local environmental laws or
regulations.
22. Utilities. To the extent not included in Operating Expenses, Subtenant
---------
will pay for any utility service at the Subleased Premises used by Subtenant.
23. Condition of the Subleased Premises. Subtenant acknowledges that
-----------------------------------
Subtenant has inspected the Subleased Premises and hereby accepts the Subleased
Premises in its existing condition "AS IS," "WHERE IS" and "WITH ALL FAULTS,"
broom clean and free of debris, inside and outside, and of personal property not
being transferred to Subtenant by Bill of Sale of even date herewith. Without
limiting the foregoing, Sublandlord makes no representation or warranty that the
Subleased Premises comply with Laws. Subtenant acknowledges that Sublandlord has
afforded Subtenant the opportunity for, and that Subtenant has undertaken, full
and complete investigations, examinations, and inspections of the Subleased
Premises and has determined that the Subleased Premises are suitable for
Subtenant's intended use, and represents that Subtenant shall bear full
responsibility for any special requirements in connection with Subtenant's use
of the Subleased Premises. Sublandlord shall not have any obligation to make any
repairs or improvements to the Subleased Premises as a condition of delivery of
the Subleased Premises under this Sublease.
24. Successors and Assigns. The provisions of this Sublease, except as
----------------------
herein otherwise specifically provided, shall extent to, bind and inure to the
benefit of the parties hereto and their respective personal representatives,
heirs, successors and permitted assigns. In the event of any assignment or
transfer of the leasehold estate under the Prime Lease, the transferor or
assignor, as the case may be, shall be and hereby is entirely relieved and freed
of all obligations under this Sublease. Notwithstanding anything to the contrary
provided in this Sublease, it is specifically understood and agreed that (i)
there shall be absolutely no personal liability on the part of Sublandlord or
any of its successors-in-interest with respect to any of the terms, covenants,
and conditions of this Sublease except with respect to liability arising from
the gross negligence or willful misconduct of Sublandlord, and (ii) Subtenant
shall look solely to the equity of the Sublandlord or such successor-in-interest
in the Subleased Premises, or the leasehold estate of Sublandlord or of such
successor in the Subleased Premises, as the case may be, for the satisfaction of
each and ever remedy of Subtenant in the event of any breach by Sublandlord or
by such successor-in-interest of any of the terms, covenants, and conditions of
this Sublease to be performed by Sublandlord. Such exculpation of personal
liability is absolute and without any exception whatsoever.
10
25. Time of Essence. Time is of the essence of this Sublease.
---------------
26. No Waiver. No delay or failure by either party to exercise or enforce
---------
any of its rights or remedies shall constitute a waiver of any such rights or
remedies. If either party institutes legal or administrative proceedings against
the other, and a compromise or settlement thereof is made, the same shall not
constitute a waiver of the other party's obligations to comply with any
covenant, agreement or condition of this Sublease except as specifically set
forth in such compromise. Neither party shall be deemed to have waived any
obligations by the other unless such waiver expressly is set forth in a written
instrument signed by both parties. If either party waives any default by the
other, such waiver shall not be construed as a waiver of any covenant, condition
or agreement set forth in this Sublease except as to the specific circumstances
described in such written waiver.
27. Entire Agreement. This Sublease and any Exhibits or Addenda hereto
----------------
contain the entire agreement by the parties hereto and there are no promises,
agreements, conditions, undertakings or warranties or representations, between
them other than as herein or therein set forth. This Sublease may be amended
only by a written amendment duly executed by Sublandlord and Subtenant.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
executed pursuant to due authority, and witness further the following signatures
and seals.
[Signatures follows]
11
CIRCUIT CITY STORES, INC.
By: /s/ Benjamin B. Cummings, Jr.
----------------------------------
Benjamin B. Cummings, Jr.
Vice President, Real Estate
ATTEST:
/s/ [ILLEGIBLE]
------------------------------------- (Seal)
(Assistant) Secretary
12
SUBTENANT
Inspire Pharmaceuticals, Inc.
By: /s/ Gregory J. Mossinghoff
-----------------------------------
Name: Gregory J. Mossinghoff
---------------------------------
Title: Senior Vice President, Chief
Business Officer, Secretary and
Treasurer
--------------------------------
ATTEST:
/s/ Brena Stuven Tart (Seal)
--------------------------------------
Notary
13
LEASE AGREEMENT
BY AND BETWEEN
PETULA ASSOCIATES, LTD.
(AS LANDLORD)
AND
CIRCUIT CITY STORES, INC.
(AS TENANT)
TABLE OF CONTENTS
-----------------
Page
----
1. DESCRIPTION OF PREMISES............................................................ 1
2. TERM; COMMENCEMENT DATE; PLAN APPROVAL PROCESS..................................... 1
3. RENTAL............................................................................. 3
4. [Intentionally Deleted]............................................................ 6
5. ALTERATIONS AND IMPROVEMENTS BY TENANT............................................. 6
6. USE OF PREMISES.................................................................... 7
7. TAXES ON LEASE AND TENANT'S PROPERTY............................................... 8
8. FIRE AND EXTENDED COVERAGE INSURANCE............................................... 8
9. LANDLORD'S COVENANT TO REPAIR AND REPLACE.......................................... 9
10. TENANT'S COVENANT TO REPAIR........................................................ 9
11. TRADE FIXTURES AND EQUIPMENT....................................................... 10
12. UTILITIES.......................................................................... 10
13. DAMAGE OR DESTRUCTION OF PREMISES.................................................. 11
14. GOVERNMENTAL ORDERS................................................................ 11
15. MUTUAL WAIVER OF SUBROGATION....................................................... 12
16. SIGNS AND ADVERTISING.............................................................. 12
17. INDEMNIFICATION AND LIABILITY INSURANCE............................................ 13
18. LANDLORD'S RIGHT OF ENTRY.......................................................... 13
19. EMINENT DOMAIN..................................................................... 13
20. EVENTS OF DEFAULT AND REMEDIES..................................................... 14
21. SUBORDINATION...................................................................... 15
22. ASSIGNING AND SUBLETTING........................................................... 15
23. TRANSFER OF LANDLORD'S INTEREST.................................................... 16
i
24. COVENANT OF QUIET ENJOYMENT........................................................ 17
25. ESTOPPEL CERTIFICATES.............................................................. 17
26. PROTECTION AGAINST LIENS........................................................... 17
27. MEMORANDUM OF LEASE................................................................ 17
28. FORCE MAJEURE...................................................................... 17
29. REMEDIES CUMULATIVE -- NONWAIVER................................................... 18
30. HOLDING OVER....................................................................... 18
31. NOTICES............................................................................ 18
32. LEASING COMMISSION................................................................. 19
33. MISCELLANEOUS...................................................................... 19
34. SEVERABILITY....................................................................... 20
35. REVIEW OF DOCUMENTS................................................................ 20
ii
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (the "Lease") made and entered into as of the 3rd day
of September, 1997, by and between PETULA ASSOCIATES, LTD., an Iowa corporation,
hereinafter called "Landlord"; and CIRCUIT CITY STORES, Inc., a Virginia
Corporation, hereinafter called "Tenant":
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the mutual covenants and agreements contained herein,
the parties hereto agree for themselves, their successors and assigns, as
follows:
1. DESCRIPTION OF PREMISES.
-----------------------
Landlord hereby leases to Tenant, and Tenant hereby accepts and rents from
Landlord, that certain office/warehouse space (the "Premises") containing
approximately 7,130 rentable square feet known as Suite ____ located in the
building known as Royal Center II (the "Building") on a tract of land located at
4222 Emperor Boulevard, Durham, North Carolina, in Imperial Center Business
Park; more particularly described on Exhibit "A" attached hereto; together with
----------
(i) the nonexclusive right to use all driveways, sidewalks and other common
facilities furnished by Landlord from time to time, (ii) a minimum of three (3)
surface parking spaces per 1,000 rentable square feet of the Premises, and (iii)
the right, subject to Landlord's approval not to be unreasonably withheld, to
park Tenant's delivery trucks in the area immediately behind the Premises more
particularly described as the "Dock Area" on Exhibit B attached hereto;
provided, however, Tenant shall be exclusively responsible for the cost and
installation of any concrete pad necessary for any tractor trailer to be parked
within the Dock Area. Notwithstanding the foregoing, Tenant's employees may park
in the Dock Area from time to time during temporary employee training sessions
conducted by Tenant at the Premises. The Premises are shown outlined in red on
the building plan attached hereto as Exhibit "B".
-----------
2. TERM; COMMENCEMENT DATE; PLAN APPROVAL PROCESS.
----------------------------------------------
a. Term.
----
Unless otherwise adjusted as hereinbelow provided, the term of this Lease
(the "Term") shall commence on October 15, 1997 (the "Commencement Date") and
shall end at midnight on the date (the "Expiration Date") which is five (5) full
years from the Commencement Date (as same may be adjusted as hereinbelow
provided). Tenant shall have the option to extend the Term in accordance with
Exhibit "G" attached hereto and incorporated herein by reference. As used
- -----------
herein, the term "Lease Year" shall mean each consecutive twelve-month period of
the Term, beginning with the Commencement Date (as same may be adjusted as
hereinbelow provided) or any anniversary thereof. Notwithstanding anything
contained herein to the contrary, in the event the Commencement Date is a day
other than the first day of a calendar month, the Term shall be extended and
shall expire on that date which is five (5) full years from the first day of the
first full calendar month immediately following the Commencement Date.
b. Commencement Date.
-----------------
The Term of this Lease shall commence on the earlier of: (a) the date
Tenant, or any person occupying any portion of the Premises with Tenant's
permission, commences business operations from the Premises, provided, however,
for purposes hereof, Tenant's installation of furniture, fixtures and equipment
within the Premises shall not be deemed the commencement of business operations;
or (b) the first (1st) business day following the date of Landlord's delivery of
the Premises to Tenant upfitted in accordance with the Plans (as hereinafter
defined) for improvments to the Premises (the "Tenant Improvements") or the date
on which Landlord would have delivered the Premises to Tenant upfitted in
accordance with the Plans but for delays within the control of Tenant, including
without limitation, delays attributable to Tenant's failure to review and
approve the Space Plans (as hereinafter defined) in the time and manner herein
required and/or change orders requested by Tenant. It is anticipated that
Landlord shall deliver the Premises upfitted in accordance with the Plans to
Tenant on that date which is ten (10) full weeks following the full execution of
this Lease (the "Target Date").
c. Plan Approval Procedures.
------------------------
Landlord has delivered the initial space plans for the design and upfitting
of the Premises (the "Space Plans") to Tenant for Tenant's review and approval.
Once approved, the final Space Plans (the "Final Plans") will be attached hereto
as Exhibit F. Within fifteen (15) days after the Final Plans are approved,
---------
Landlord shall prepare the construction drawings for the Tenant Improvements
(the "Plans"), which shall be substantially consistent with the Final Plans. In
the event either Landlord or Tenant shall claim that the other party has failed
to perform it obligations under this Paragraph, such party shall give notice to
the nonperforming party on the next business day and such notice must identify
with specificity the action or inaction which constitutes such party's failure
to perform.
Landlord shall be entitled to deliver the Premises to Tenant upon
substantial completion of the Tenant Improvements shown on the Plans in a good
and workmanlike manner, such substantial completion to be certified by
Landlord's engineer or architect inspecting the work. "Substantial Completion"
shall include the completion of all items of work that cannot be completed while
Tenant is in possession of the Premises without materially inconveniencing
Tenant. Prior to Tenant's occupancy of the Premises, the parties shall agree on
certain "punchlist" items to be completed after Tenant's occupancy, and Landlord
agrees to complete such punchlist items promptly after occupancy but in no event
more than sixty (60) days after the date Tenant takes possession of the
Premises. If Landlord for any reason whatsoever cannot deliver possession of the
Premises to Tenant on or before the Target Date as hereinabove specified, this
Lease shall not be void or voidable nor shall Landlord be liable to Tenant for
any loss or damages resulting therefrom; but in that event, except to the extent
that any such delay has been caused by Tenant or its agents, employees,
contractors or subcontractors (hereinafter collectively referred to as "Tenant's
Invitees"), the Commencement Date shall be adjusted to be the date when
Landlord does in fact deliver possession of the Premises to Tenant.
Notwithstanding the foregoing, in the event Landlord does not achieve
substantial completion of the Premises on or before that date which is thirty
(30) days following the Target Date (the "Outside Delivery Date") (such date to
be delayed one (1) day for each day that substantial completion is delayed by
(i) Tenant's delay in reviewing and approving the Plans, (ii) changes to the
Plans requested by Tenant, and (iii) other force majeure delays and matters
outside Landlord's reasonable control including without limitation, delays in
obtaining required permits from appropriate governmental authorities), Tenant
shall be entitled to one (1) day of free Minimum Rental for every one (1) day of
delay in delivering the Premises to Tenant beyond the Outside Delivery Date, as
adjusted.
2
(RENTS)
INTENTIONALLY DELETED
3
(b) Additional Rental. [Intentionally Deleted]
-----------------
(c) Tenant's Share of Taxes.
-----------------------
Tenant shall pay an amount equal to Tenant's "proportionate share" of any
ad valorem taxes (or any tax hereafter imposed in lieu thereof) imposed upon the
Building and the Premises. Tenant's "proportionate share" of the taxes, of the
insurance premiums and of common area maintenance costs, as described below,
shall be a fraction, the numerator of which shall be the number of rentable
square feet within the Premises and the denominator of which shall be the number
of rentable square feet within the Building. Tenant's share of taxes shall be
paid as provided in subparagraph (f) below. Provided, any increase in ad valorem
taxes on the Premises as a result of alterations, additions or improvements made
by, for or on account of Tenant shall be reimbursed by Tenant to Landlord within
thirty (30) days after receipt of written demand therefor.
(d) Tenant's Share of Insurance Premiums.
------------------------------------
Tenant shall pay an amount equal to Tenant's "proportionate share" of any
premiums charged for fire and extended coverage and liability insurance with all
endorsements carried by Landlord on the Building payable for any calendar year
(including any applicable partial calendar year), provided such premiums are not
a direct result of another tenant's use of its premises in the Building.
Tenant's proportionate share of premiums shall be paid as provided in
subparagraph (f) below.
(e) Tenant's Share of Common Area Operating and Maintenance Costs.
-------------------------------------------------------------
Tenant shall pay an amount equal to Tenant's "proportionate share" of the
reasonable costs for operating and maintaining the Building's common areas,
including, but not limited to, building management, the cost of grass mowing,
shrub care and general landscaping, irrigation systems, maintenance and repair
to parking and loading areas, driveways, sidewalks, exterior lighting, garbage
collection and disposal, common water and sewer, common plumbing, common signs
and other facilities shared by the various tenants in the Building, and of the
Building's share of the common area operating and maintenance costs for the
entire Business Park. Landlord shall use good faith efforts to keep the
operating and maintenance costs in line with costs for other similarly situated
buildings in the Raleigh/Durham market, taking into account rent and other
relevant factors. Tenant's proportionate share shall be paid as provided in
subparagraph (f) below. For purposes hereof, the expenses identified in
subparagraphs (c), (d) and (e) of this Section shall be deemed the "Tenant
Expenses."
(f) Payment of Proportionate Shares.
-------------------------------
Tenant shall pay to Landlord each month, along with Tenant's installments
of Minimum Rental (and Additional Rental, if applicable) a sum equal to one-
twelfth (1/12) of the amount estimated by Landlord (in its reasonable
discretion) as Tenant's proportionate share of the taxes, insurance premiums and
common area maintenance costs for each calendar year. For the first calendar
year beginning with January 1, the amount of the estimated proportionate share
of all taxes, insurance premiums and common area maintenance costs for Tenant
shall be One and 55/100 Dollars ($1.55) per rentable square foot of the Premises
per annum, payable in advance in equal monthly installments. Landlord will make
reasonable efforts to provide Tenant with Landlord's estimate of Tenant's
proportionate shares amount for the upcoming calendar year on or before December
15 of each calendar year during the term hereof. If Landlord fails to notify
Tenant of Tenant's revised proportionate shares amount by such date, Tenant
shall continue to pay the monthly installments of the proportionate shares
amount, if any, last payable by
4
Tenant until notified by Landlord of such new estimated amount. No later than
May 1 of each calendar year of the Term, Landlord shall deliver to Tenant a
written statement setting forth the actual amount of Tenant's proportionate
shares for taxes, insurance premiums and all common area maintenance costs for
the preceding calendar year. Tenant shall pay the total amount of any balance
due shown on such statement within thirty (30) days after its delivery. In the
event such annual costs decrease for any such year, Landlord shall reimburse
Tenant for any overage paid and the monthly rental installments for the next
period shall be reduced accordingly, but not below the Minimum Rental. For the
calendar year in which this Lease commences, the proportionate shares shall be
prorated from the Commencement Date through December 31 of such year. Further,
Tenant shall be responsible for the paying of all proportionate shares of taxes,
insurance premiums and common area maintenance costs for the calendar year in
which the Term expires, prorated from January 1 thereof through the Expiration
Date. Upon Landlord's final determination of the taxes, insurance premiums and
common area maintenance costs for the calendar year in which the Term expires,
Landlord shall reimburse Tenant for any overpayment or shall notify Tenant of
any underpayment, in which event Tenant shall pay such shortfall to Landlord
within thirty (30) days of such notice, the foregoing obligations to survive
termination or expiration of this Lease.
Tenant may audit Landlord's records and all information pertaining to
Tenant Expenses in order to verify the accuracy of Landlord's determination of
Tenant's proportionate share of same provided that:
(i) Tenant must give notice to Landlord of its election to undertake said
audit within one hundred twenty (120) days after receipt of the statement of the
actual amount of Tenant's proportionate share for the preceding calendar year
from Landlord;
(ii) Such audit will be conducted only during regular business hours at the
office where Landlord maintains records of Tenant Expenses and only after Tenant
gives Landlord fourteen (14) days' advance written notice;
(iii) Tenant shall deliver to Landlord a copy of the results of such audit
within fifteen (15) days of its receipt by Tenant and no such audit shall be
conducted if any other tenant of the Building has conducted an independent audit
for the time period Tenant intends to audit and Landlord furnishes to Tenant a
copy of the results of such audit;
(iv) No audit shall be conducted at any time that Tenant is in default of
any of the terms of this Lease;
(v) No subtenant shall have any right to conduct an audit and no assignee
shall conduct an audit for any period during which such assignee was not in
possession of the Premises; and
(vi) Such audit review by Tenant shall not postpone or alter the liability
and obligation of Tenant to pay any amounts due under the terms of this Lease.
Within thirty (30) days after Tenant's receipt of such audit, Tenant must
give notice to Landlord of any disputed amounts and identify all items being
contested in Landlord's statement of Tenant's proportionate share of Tenant
Expenses. If Landlord and Tenant cannot agree upon any such item as to which
Tenant shall have given such notice, the dispute shall be resolved by an audit
by a major accounting firm mutually acceptable to Landlord and Tenant and the
cost of said audit shall be paid by the non-prevailing party; provided however,
Tenant will not be considered the "prevailing
5
party" for purposes of this paragraph unless the accounting firm's audit reveals
an overcharge by Landlord in excess of five percent (5%) of Tenant's
proportionate share of Tenant Expenses for the particular calendar year in
question.
Any adjustment required as a result of any audit shall be made by
adjustment to Tenant's proportionate share of Tenant Expenses so that said
adjustment is fully made (or recovered) in equal installments over the twelve
(12) month period immediately following the final resolution of said audit.
(g) Documentary Tax.
---------------
Landlord represents that there is currently no documentary stamp tax, sales
tax or any other tax or similar charge (exclusive of any income tax payable by
Landlord as a result hereof) which will be levied on the rental, leasing or
letting of the Premises, however, in the event that any such charge or tax,
whether local, state or federal, becomes applicable to the rental, leasing or
letting of the Premises and is required to be paid due to the execution hereof
or otherwise with respect to this Lease or the payments due hereunder, the cost
thereof shall be borne by Tenant and shall be paid promptly and prior to same
becoming past due. Tenant shall provide Landlord with copies of all paid
receipts respecting such tax or charge promptly after payment of same.
(h) Late Payment.
------------
If any monthly installment of Minimum Rental, Additional Rental (if any) or
any other sum due and payable pursuant to this Lease remains due and unpaid ten
(10) days after said amount becomes due, Tenant shall pay as additional rent
hereunder a late payment charge equal to Two Hundred Fifty and No/100 Dollars
($250.00). All unpaid rent and other sums of whatever nature owed by Tenant to
Landlord under this Lease shall bear interest from the tenth (10th) day after
the due date thereof until paid at the lesser of two percent (2%) per annum
above the "prime rate" as published in the Wall Street Journal from time to time
(the "Prime Rate"). Acceptance by Landlord of any payment from Tenant hereunder
in an amount less than that which is currently due shall in no way affect
Landlord's rights under this Lease and shall in no way constitute an accord and
satisfaction. Notwithstanding anything contained herein to the contrary, Tenant
shall have no obligation to pay any late fee in connection with its payment of
the first monthly installment of Minimum Rent and Additional Rent (if any)
following the Commencement Date so long as the first monthly installment is paid
before the second monthly installment of same becomes due.
4. [Intentionally Deleted]
5. ALTERATIONS AND IMPROVEMENTS BY TENANT.
--------------------------------------
Tenant shall make no structural changes respecting the Premises or the
Building and shall make no changes of any kind respecting the Premises or the
Building that are visible from the exterior of the Premises without Landlord's
consent, such consent not to be unreasonably withheld. Any other nonstructural
changes or other alterations, additions, or improvements to the Premises shall
be made by or on behalf of Tenant only with the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed.
Landlord's consent shall not be required for the erection of movable partitions,
shelving (other than built-in shelving) or standard office decorations. All
alterations, additions or improvements, including without limitation all
partitions, walls, railings, carpeting, floor and wall coverings and other
fixtures (excluding, however, Tenant's trade fixtures as described in the
paragraph entitled "Trade Fixtures and Equipment" below ) made by, for, or at
the direction of Tenant
6
shall, when made, become the property of Landlord if Landlord so elects at the
time Landlord gives its consent thereto, and shall remain upon the Premises at
the expiration or earlier termination of this Lease.
Notwithstanding anything contained herein to the contrary, all alterations
and improvements undertaken by Tenant shall be consistent with the then-existing
quality, color scheme (where appropriate), general asthetic appearance and tenor
of the balance of the Building and, in any event, Landlord may withhold its
consent to any proposed alteration or improvement by Tenant unless Tenant agrees
to remove said improvement at the end of the Term and/or restore the Premises to
the condition in which it existed prior to the undertaking of the proposed
alteration or improvement.
6. USE OF PREMISES.
---------------
(a) Tenant shall use the Premises only for general office or warehouse
purposes and for standard training of its employees and for no other purposes.
Tenant shall comply with all laws, ordinances, orders, regulations or zoning
classifications of any lawful governmental authority, agency or other public or
private regulatory authority (including insurance underwriters or rating
bureaus) having jurisdiction over the Premises. Landlord represents and warrants
that the Premises will comply in all material respects with all such laws,
regulations and requirements as of the Commencement Date and any noncompliance
shall not have a material adverse impact on Tenant's use or occupancy of the
Premises or the health or safety of Tenant or Tenant's Invitees. Tenant shall
not do any act or follow any practice relating to the Premises which shall
constitute a nuisance or detract in any way from the reputation of the Building
as a real estate development comparable to other comparable buildings in the
Raleigh/Durham market taking into account rent and other relevant factors.
Tenant's duties in this regard shall include allowing no noxious or offensive
odors, fumes, gases, smoke, dust, steam or vapors, or any loud or disturbing
noise or vibrations to originate in or emit from the Premises.
(b) Without limiting the generality of (a) above, and excepting only office
supplies and cleaning materials used by Tenant in its ordinary day to day
business operations (but not held for sale, storage or distribution) and
customarily used in facilities such as the Building, and then only to the extent
used, stored (but not any bulk storage), transported, and disposed of strictly
in accordance with all applicable laws, regulations and manufacturer's
recommendations, the Premises shall not be used for the treatment, storage,
transportation to or from, use or disposal of toxic or hazardous wastes,
materials, or substances, or any other substance that is prohibited, limited or
regulated by any governmental or quasi-governmental authority or that, even if
not so regulated, could or does pose a hazard to health and safety of the
ocoupants of the Building or surrounding property (collectively "Hazardous
Substances"). In addition, Tenant shall be liable for, and shall indemnify and
hold Landord harmless from, all costs, damages and expenses (including
reasonable attorney's fees) incurred in connection with the use, storage,
discharge or disposal of any Hazardous Substances by Tenant or Tenant's
Invitees. Landlord represents and warrants that to the best of its actual
knowledge without independent investigation, the Premises are free of Hazardous
Substances and will be free of Hazardous Substances (except for customary
cleaning materials) as of the Commencement Date.
(c) Except for possible restrictions with respect to signage (which Tenant
agrees to abide by in connection with its use of the Premises), there are
currently no restrictive covenants relating to the Building.
7
(d) Tenant shall exercise due care in its use and occupancy of the Premises
and shall not commit or allow waste to be committed on any portion of the
Premises; and at the expiration or earlier termination of this Lease, Tenant
shall deliver the Premises to Landlord in as good condition on the date of
completion of the Tenant Improvements in the Premises, ordinary wear and tear,
fire or other casualty, condemnation and acts of God alone excepted.
(e) Tenant shall save Landlord harmless from any claims, liabilities,
penalties, fines, costs, expenses or damages resulting from the failure of
Tenant to comply with the provisions of this paragraph 6. This indemnification
shall survive the termination or expiration of this Lease.
7. TAXES ON LEASE AND TENANT'S PROPERTY.
------------------------------------
(a) Landlord represents that there are currently no taxes, documentary
stamps or assessments of any nature which will be imposed or assessed upon this
Lease, Tenant's occupancy of the Premises or Tenant's trade fixtures, equipment,
machinery, inventory, merchandise or other personal property located on the
Premises and owned by or in the custody of Tenant; provided, however, in the
event any such charge or tax becomes appliable to this Lease, Tenant's occupancy
of the Premises or Tenant's equipment, Tenant shall be fully responsible for the
payment of same and shall pay such amount as promptly as all such taxes or
assessments may become due and payable without any delinquency.
(b) Landlord shall pay, subject to reimbursement from Tenant as provided in
the paragraph entitled "Rental" of this Lease, all ad valorem property taxes
which are now or hereafter assessed upon the Building and the Premises, except
as otherwise expressly provided in this Lease.
8. FIRE AND EXTENDED COVERAGE INSURANCE.
------------------------------------
Landlord shall maintain and pay for fire and casualty special form "all
risk" insurance, with extended coverage, covering the Building equal to at least
eighty percent (80%) of the replacement cost thereof. Tenant shall not do or
cause to be done or permit on the Premises or in the Building anything deemed
extrahazardous on account of fire and Tenant shall not use the Premises or the
Building in any manner which will cause an increase in the premium rate for any
insurance in effect on the Building or a part thereof. If, because of anything
done, caused to be done, permitted or omitted by Tenant or Tenant's Invitees,the
premium rate for any kind of insurance in effect on the Building or any part
thereof shall be raised, Tenant shall pay Landlord on demand the amount of any
such increase in premium which Landlord shall pay for such insurance and if
Landlord shall demand that Tenant remedy the condition which caused any such
increase in an insurance premium rate, Tenant shall remedy such condition within
five (5) days after receipt of such demand. So long as Tenant uses the Premises
in compliance with the terms and conditions of this Lease, such operations will
not cause an increase in Landlord's insurance premiums. Tenant shall maintain
and pay for all fire and extended coverage insurance on its contents in the
Premises, including trade fixtures, equipment, machinery, merchandise or other
personal property belonging to or in the custody of Tenant.
Notwithstanding anything herein to the contrary, Landlord reserves the
right for itself, successors and assigns to self-insure against any risk
required hereunder to be insured or otherwise assumed by Landlord so long as any
such program of self-insurance affords the same coverage of risks and benefits
which would be afforded in the event Landlord procured insurance from a third-
party insurer.
8
9. LANDLORD'S COVENANT TO REPAIR AND REPLACE.
-----------------------------------------
(a) During the Term, Landlord shall be responsible only for repairs or
replacements to the roof, exterior walls, structural members (including
foundation and subflooring of the Premises) and for the central plumbing and
electrical systems serving the entire Building up to the respective applicable
points of entry of same into the Premises except for repairs or replacements
caused by the negligence, misconduct, or acts or omissions of Tenant or Tenant's
Invitees unless such amounts are paid to Landlord pursuant to an insurance
policy. Landlord shall maintain such items in material compliance with
applicable laws, regulations, ordinances and codes or alternatively, any non-
compliance shall not materially impair Tenant's use and enjoyment of the
Premises or constitute a threat or danger to the health or safety of Tenant or
Tenant's Invitees. Landlord's repairs and replacements shall be made as soon as
reasonably possible using due diligence and reasonable efforts, taking into
account in each instance all circumstances surrounding the repair or
replacement including without limitation, the materiality of the repair or
replacement to Tenant's use and operation of its business within the Premises
and a relation thereof to the enjoyment of same, such period not to exceed sixty
(60) days after receiving written notice from Tenant of the need for repairs. If
Landlord defaults in the performance of its obligation to repair as set forth
above, Tenant may elect to perform such repair and recover the costs thereof
from Landlord, such reimbursement to be due within thirty (30) days after a
presentation of a bill therefor with such supporting documentation as Landlord
may reasonably require. If Landlord cannot, using due diligence, complete its
repairs within one hundred eighty (180) days after written notice from Tenant,
then (unless (i) the need for such repairs or replacements is the result of the
negligence, misconduct or intentional acts or omissions of Tenant or Tenant's
Invitees or (ii) Tenant has elected to perform such repair on Landlord's behalf,
in which event Tenant shall not be entitled to terminate this Lease) Tenant may
terminate this Lease effective upon thirty (30) days' prior written notice,
without prejudice to Landlord's rights to receive payment from Tenant for
uninsured damages caused directly or indirectly by Tenant or Tenant's Invitees.
If the need for such repairs or replacements is the result of the negligence,
misconduct or intentional acts or omissions of Tenant or Tenant's Invitees, and
the expense of such repairs or replacements are not fully covered and paid by
Landlord's insurance, then Tenant shall pay Landlord the full amount of expenses
not covered. Landlord's duty to repair or replace as prescribed in this
paragraph shall be Tenant's sole remedy and shall be in lieu of all other
warranties or guaranties of Landlord, express or implied.
(b) Landlord shall not be liable for any failure to make any repairs or to
perform any maintenance required of Landlord hereunder unless such failure shall
persist for an unreasonable period of time after written notice from Tenant
setting forth the need for such repair(s) or replacement(s) in reasonable detail
has been received by Landlord. Except as set forth in the paragraph of this
Lease, entitled "Damage or Destruction of Premises", there shall be no abatement
of rent. Except to the extent caused by the gross negligence or willful
misconduct of Landlord or its agents, there shall be no liability of Landlord by
reason of any injury to or interference with Tenant's business arising from the
making of any repairs, replacements, alterations or improvements to any portion
of the Building or the Premises, or to fixtures, appurtenances and equipment
therein.
10. TENANT'S COVENANT TO REPAIR.
--------------------------
Tenant shall be responsible for the repair, replacement and maintenance in
good order and condition of all parts and components of the Premises (other than
those specified for repair, replacement and maintenance by Landlord above),
including without limitation the plumbing, wiring, electrical systems, HVAC
system, glass and plate glass, equipment and machinery constituting fixtures,
unless such repairs of replacements are required as a result of the negligence,
misconduct or intentional acts or
9
omissions of Landlord, its agent(s), employee(s) or invitee(s) in which event
Landlord shall be responsible for such repairs. At the end of the Term, Tenant
shall return the Premises to Landlord in as good condition as they were when
received, excepting only normal wear and tear, acts of God and repairs required
to be made by Landlord hereunder. Tenant's duty to maintain the HVAC system
shall specifically include the duty to enter into and maintain at Tenant's sole
expense during the entire term of this Lease a contract for the routine and
periodic maintenance and regular inspection of such HVAC system, the
replacement of filters as recommended and the performance of other recommended
periodic servicing in accordance with applicable manufacturer's standards and
recommendations. Such contract: (a) shall be with a reputable contractor
reasonably satisfactory to Landlord; (b) shall satisfy the requirements for
routine and periodic maintenance, if any, necessary to keep all applicable
manufacturer's warranties in full force and effect; and (c) shall provide that
in the event this Lease expires or is earlier terminated for any reason
whatsoever that said contract shall be immediately terminable by Landlord or
Tenant without any cost, expense or other liability on the part of Landlord.
Notwithstanding the foregoing and except as set forth below, Tenant shall have
no obligation to make repairs or replacements of a capital nature to the
Premises or its HVAC or utility systems, unless the need for such repair arises
from the neglect, willful misconduct or abuse of Tenant, its employees, agents
or contractors. Landlord shall be responsible for all such capital maintenance
and repairs at Landlord's expense; provided, however, Landlord shall be entitled
to amortize the cost of such capital improvements over the useful life of such
improvement, and Tenant shall reimburse Landlord for such amortized cost
annually in the form of Additional Rent.
11. TRADE FIXTURES AND EQUIPMENT.
----------------------------
Prior to installation, Tenant shall furnish to Landlord notice of all trade
fixtures and equipment of a permanent nature which it intends to install within
the Premises and the installation of same shall be subject to Landlord's
consent, not to be unreasonably withheld. So long as no Event of Default has
occurred and is continuing hereunder, any trade fixtures and equipment installed
in the Premises at Tenant's expense and identified by Tenant in notice to
Landlord shall remain Tenant's personal property and Tenant shall have the right
at any time during the Term to remove such trade fixtures and equipment. Upon
removal of any trade fixtures or equipment, Tenant shall immediately restore the
Premises to substantially the same condition in which it existed when received
by Tenant, ordinary wear and tear, condemnation and acts of God alone excepted.
Any trade fixtures not removed by Tenant at the expiration or an earlier
termination of the Lease shall, at Landlord's sole election, either (i) become
the property of Landlord, in which event Landlord shall be entitled to handle
and dispose of same in any manner Landlord deems fit without any liability or
obligation to Tenant or any other third party with respect thereto, or (ii) be
subject to Landlord's removing such property from the Premises and storing same,
all at Tenant's expense and without any recourse against Landlord with respect
thereto. Without limiting the generality of the foregoing, the following
property shall in no event be deemed to be "trade fixtures" and Tenant shall not
remove any such property from the Premises under any circumstances, regardless
of whether installed by Landlord or Tenant: (a) any air conditioning, air
ventilating or heating fixtures or air conditioning, air ventilating or heating
equipment; (b) any lighting fixtures or lighting equipment; (c) any carpeting or
other permanent floor coverings; (d) any paneling or other wall coverings; (e)
plumbing fixtures and plumbing equipment; or (f) permanent shelving.
12. UTILITIES.
---------
Tenant shall pay for all utilities or services related to its use of the
Premises including without limitation electricity, gas, heat, water, sewer,
telephone and janitorial services. To the extent that water and/or usage are
not separately metered for the Premises, Tenant shall pay its proportionate
share
10
of the applicable charges therefor, with such proportionate share being as
defined in subparagraph 3(c), and the manner for payment thereof shall be as set
forth in subparagraph 3(f). Landlord shall not be responsible for the stoppage
or interruption of utilities services other than as required by its limited
covenant to repair and replace set forth above, nor shall Landlord be liable for
any damages caused by or from the plumbing and sewer systems except to the
extent caused by the gross negligence or willful misconduct of Landlord or its
agents.
13. DAMAGE OR DESTRUCTION OF PREMISES.
---------------------------------
If the Premises are damaged by fire or other casualty, but are not rendered
untenantable for Tenant's business, either in whole or in part, Landlord shall
cause such damage to be repaired without unreasonable delay and the Annual
Rental shall not abate. If by reason of such casualty the Premises are rendered
untenantable for Tenant's business, either in whole or in part, Landlord shall
cause the damage to be repaired or replaced without unreasonable delay, and, in
the interim, the Annual Rental shall be proportionately reduced as to such
portion of the Premises as is rendered untenantable. Any such abatement of rent
shall not, however, create an extension of the Term. Provided, however, if by
--------- -------
reason of such casualty, the Premises are rendered untenantable in some material
portion, and Landlord, in its reasonable estimation, determines that the amount
of time required to repair the damage using due diligence is in excess of one
hundred eighty (180) days, then either party shall have the right to terminate
this Lease by giving written notice of termination within thirty (30) days after
the date of casualty, and the Annual Rental shall abate as of the date of such
casualty in proportion to the part of the Premises rendered untenantable.
Notwithstanding the foregoing, in the event the casualty giving rise to an
election to terminate is caused by the negligence, misconduct or acts or
omissions of Tenant or Tenant's Invitees, Tenant shall have no right to
terminate this Lease. Notwithstanding the other provisions of this paragraph, in
the event there should be a casualty loss to the Premises to the extent of fifty
percent (50%) or more of the replacement value of the Premises or if the
Premises is rendered untenantable for the conduct of Tenant's business
operations during the last Lease Year of the Term or any extended term, as
determined by Landlord in the exercise of its reasonable discretion, either
party may, at its option, terminate this Lease by giving written notice within
thirty (30) days after the date of the casualty and the Annual Rental shall
abate as of the date of such notice. Except as provided herein, Landlord shall
have no obligation to rebuild or repair in case of fire or other casualty, and
no termination under this paragraph shall affect any rights of Landlord or
Tenant hereunder because of prior defaults of the other party. Tenant shall give
Landlord immediate notice of any fire or other casualty in the Premises.
14. GOVERNMENTAL ORDERS.
-------------------
Except as herein set forth regarding compliance of the physical structure
of the Premises with the requirements of all applicable laws and regulations,
including the Americans with Disabilities Act and the implementing regulations
(the "ADA") as of the Commencement Date. Tenant agrees, at its own expense, to
comply promptly with all requirements of any legally constituted public
authority that may be in effect from time to time made necessary by reason of
Tenant's use or occupancy of the Premises. Landlord agrees to comply promptly
with any such requirements if not made necessary by reason of Tenant's use or
occupancy. With regard to the physical Structure of the Premises and the
Building, Landlord agrees to use good faith and due diligence to undertake those
actions that are "readily achievable" (as such term is defined in the ADA) in
order to attempt to bring the physical structure of the Premises and the
Building in compliance with the applicable requirements of the ADA in effect as
of the Commencement Date. If it is determined that for any reason Landlord shall
have failed to cause the physical structure of the Premises and the Building to
be brought into compliance with the ADA as of the Commencement Date (to at least
the minimum extent required under applicable regulations then in
11
effect), then Landlord, as its sole obligation, will take the action(s)
necessary to cause the physical structure of the Premises to so comply, and
Tenant acknowledges and agrees that Landlord has and shall have no other
obligation or liability whatsoever to Tenant, or to anyone claiming by or
through Tenant, regarding any failure of the Premises or the activities therein
to comply with the applicable requirements of the ADA. Landlord and Tenant
agree, however, that if in order to comply with any of the above requirements,
the cost to Landlord or Tenant, as the case may be, shall exceed a sum equal to
one (1) year's rent, then the party who is obligated to comply with such
requirements is privileged to terminate this Lease by giving written notice of
termination to the other party, which termination shall become effective sixty
(60) days after receipt of such notice, and which notice shall eliminate the
necessity of compliance with such requirement by the party giving such notice,
unless the party receiving such notice of termination shall, before termination
becomes effective, pay to the party giving notice all costs of compliance in
excess of one (1) year's rent, or secure payment of said sum in a manner
satisfactory to the party giving notice. Notwithstanding anything contained
herein to the contrary, it is agreed that: (a) Tenant is exclusively responsible
for all compliance with all requirements of any legally constituted public
authority in the event non-compliance-relates to Tenant's use of, or operations
from, the Premises and (b) in the event of non-compliance for which Landlord is
responsible. Landlord shall not be deemed in breach of this Lease if such non-
compliance does not materially impair Tenant's use of the Premises or threaten
or endanger the health or safety of Tenant or Tenant's Invitees or impose
liability upon Tenant under the ADA.
15. MUTUAL WAIVER OF SUBROGATION.
----------------------------
For the purpose of waiver of subrogation, the parties mutually release and
waive unto the other all rights to claim damages, costs or expenses for any
injury to property caused by a casualty or any other matter whatsoever in, on or
about the Premises if the amount of such damage, cost or expense has been paid
to such damaged party under the terms of any policy of insurance. All insurance
policies carried with respect to this Lease, if permitted under applicable law,
shall contain a provision whereby the insurer waives, prior to loss, all rights
of subrogation against either Landlord or Tenant.
16. SIGNS AND ADVERTISING.
-------------------
(a) Landlord will install, at Tenant's expense, a tenant identification
sign for Tenant in accordance with Building standards, such sign to be located
at or near the Tenant's front entrance to the Premises within the Building. In
addition, Landlord agrees to install, at Tenant's expense, a suite
identification sign of size, style and material reasonably acceptable to
Landlord at or near the rear entrance to the Premises.
(b) In order to provide architectural control for the Building and
Business Park, Tenant shall not install any exterior signs, marquees,
billboards, outside lighting fixtures and/or other decorations on `the Premises.
Landlord shall have the right to remove any such sign or other decoration and
restore fully the Premises at the cost and expense of Tenant if any such
exterior work is done without Landlord's prior written approval, which approval
Landlord shall be entitled to withhold or deny in its sole discretion. Tenant
shall not permit, allow or cause to be used in, on or about the Premises any
sound production devices, mechanical or moving display devices, bright lights,
or other advertising media, the effect of which would be visible or audible from
the exterior of the Premises.
12
17. INDEMNIFICATION AND LIABILITY INSURANCE.
---------------------------------------
(a) Tenant shall indemnify and save Landlord harmless against any and all
claims, suits, demands, actions, fines, damages, and liabilities, and all costs
and expenses thereof (including without limitation reasonable attorneys' fees)
arising out of injury to persons (including death) or tangible property
occurring in, on or about, or arising out of the Premises or other areas in the
Building if caused or occasioned wholly or in part by any act(s) or omission(s)
of Tenant or Tenant's Invitees, except if caused by any act(s) or omission(s) on
the part of Landlord. The non-prevailing party shall also pay all costs,
expenses and reasonable attorneys' fees that may be incurred by the prevailing
party in enforcing the agreements of this Lease, whether incurred as a result of
litigation or otherwise. Tenant shall give Landlord immediate notice of any such
happening causing injury to persons or tangible property,
(b) At all times during the term of this Lease, Tenant shall at its own
expense keep in force adequate public liability insurance under the terms of a
commercial general liability policy (occurrence coverage) in the amount of not
less than One Million and No/lOO Dollars ($1,000,000.00) single limit and Two
Million and No/lOO Dollars ($2,000,000.00) aggregate coverage with such
company(ies) rated B+1X or better in the most current issue of Best's Insurance
Reports and licensed to do business in the State of North Carolina and naming
Landlord as an additional insured (and, if requested by Landlord from time to
time, naming Landlord's mortgagee as an additional insured). Such insurance
shall include, without limitation, personal injury and contractual liability
coverage for the performance by Tenant of the indemnity agreements set forth in
this Lease. Tenant shall first furnish to Landlord certificates of insurance
evidencing the required coverage prior to the Commencement Date and thereafter
prior to each policy renewal date. All policies required of Tenant hereunder
shall contain a provision whereby the insurer is not allowed to cancel or change
materially the coverage without first giving thirty (30) days' written notice to
Landlord.
(c) Landlord shall keep in force during the Term insurance in the same
amounts as set forth in subparagraph (b) above covering the Common Areas of the
Building.
18. LANDLORD'S RIGHT OF ENTRY.
-------------------------
Landlord, and those persons authorized by it, shall have the right to enter
the Premises at all reasonable times and upon reasonable notice for the purposes
of making repairs, making connections, installing utilities, providing services
to the Premises or for any other tenant, making inspections or showing the same
to prospective tenants (during the last six (6) months of the Term or at any
time after Tenant has, vacated the Premises), purchasers and/or tenders, as well
as at any time in the event of emergency involving possible injury to property
or persons in or around the Premises or the Building.
19. EMINENT DOMAIN
--------------
If any substantial portion of the Premises is taken under the power of
eminent domain (including any conveyance made in lieu thereof) or if such taking
shall materially impair the normal operation of Tenant's business, then either
party shall have the right to terminate this Lease by giving written notice of
such termination within thirty (30) days after such taking. If neither party
elects to terminate this Lease, Landlord shall repair and restore the Premises
to the best possible tenantable condition and the Annual Rental shall be
proportionately and equitably reduced as of the date of the taking. All
compensation awarded for any taking (or the proceeds of a private sale in lieu
thereof) shall be the property of Landlord whether such award is for
compensation for damages to the Landlord's or Tenant's interest in the Premises,
and Tenant hereby assigns all of its interests in any such award to Landlord;
provided, however,
13
Landlord shall not have any interest in any separate award made to Tenant for
loss of business, moving expense or the taking of Tenant's trade fixtures or
equipment if a separate award for such items is made to Tenant and if such
separate award does not reduce the award to Landlord.
20. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
(a) Upon the occurrence of any one or more of the following events (the
"Events of Default," any one an "Event of Default"), the party not in default
shall have the right to exercise any rights or remedies available in this Lease,
at law or in equity. Events of Default shall be:
(1) Tenant's failure to pay any rental or other sum of money payable
hereunder within five (5) business days after written notice thereof,
provided Tenant shall not be entitled to more than two (2) such notices per
Lease Year;
(ii) Failure by either party to perform any other of the terms,
covenants or conditions contained in this Lease if not remedied within
thirty (30) days after receipt of written notice thereof, or if such
default cannot be remedied within such period, such party does not within
thirty (30) days after written notice thereof commence such act or acts as
shall be necessary to remedy the default and shall not thereafter
diligently prosecute such cure and complete such act or acts within ninety
(90) days after written notice thereof;
(iii) Tenant shall become bankrupt or insolvent, or file any debtor
proceedings, or file pursuant to any statute a petition in bankruptcy or
insolvency or for reorganization, or file a petition for the appointment of
a receiver or trustee for all or substantially all of Tenant's assets and
such petition or appointment shall not have been set aside within sixty
(60) days from the date of such petition or appointment, or if Tenant makes
an assignment for the benefit of creditors, or petitions for or enters into
an arrangement; or
(iv) Tenant allows its leasehold estate to be taken under any writ of
execution and such writ is not vacated or set aside within thirty (30)
days.
(b) In addition to its other remedies, Landlord, upon an Event of Default
by Tenant, shall have the immediate right, after any applicable grace period
expressed herein, to terminate and cancel this Lease and/or terminate Tenant's
right of possession, to reenter and remove all persons and properties from the
Premises and store all such property (without liability therefor) at Tenant's
expense for a reasonable period of time, after which Landlord may dispose of
such property as it deems fit, all without being guilty of trespass or being
liable for any damages caused thereby. If Landlord reenters the Premises, it may
either terminate this Lease or, from time to time without terminating this
Lease, terminate Tenant's right of possession and make such alterations and
repairs as may be necessary or appropriate to relet the Premises and relet the
Premises upon such terms and conditions as Landlord deems advisable without any
responsibility on Landlord whatsoever to account to Tenant for any surplus rents
collected. No retaking of possession of the Premises by Landlord shall be deemed
as an election to terminate this Lease unless a written notice of such intention
is given by Landlord to Tenant at the time of reentry; but, notwithstanding any
such reentry or reletting without termination, Landlord may at any time
thereafter elect to terminate for such previous default. In the event of an
elected termination by Landlord, whether before or after reentry, Landlord may
recover from Tenant damages. including the costs of recovering the Premises and
any costs incurred in reletting the Premises, and Tenant shall
14
remain liable to Landlord for the total Annual Rental (which may at Landlord's
election be accelerated to be due and payable in full as of the Event of Default
and recoverable as damages in a lump sum) as would have been payable by Tenant
hereunder for the remainder of the term discounted at the Prime Rate to its then
present value, less the rentals actually received from any reletting or, at
Landlord's election, less the reasonable rental value of the Premises for the
remainder of the Term discounted at the Prime Rate to its then present value. In
determining the Annual Rental which would be payable by Tenant subsequent to
default, the Annual Rental for each Lease Year of the unexpired term shall be
equal to the Annual Rental payable by Tenant for the last Lease Year prior to
the default. If any rent owing under this Lease is collected by or through an
attorney, Tenant agrees to pay Landlord's reasonable attorneys' fees to the
extent allowed by applicable law. Landlord shall be required to reasonably
mitigate its damages.
(c) In the event Tenant vacates, abandons or fails to operate in the
Premises, or any substantial part thereof, for a period of sixty (60)
consecutive days any time during the Term, Landlord may elect at any point
thereafter to terminate this Lease upon written notice to Tenant and recapture
possession of the Premises, in which event the parties hereto shall have no
further rights or obligations hereunder except for those obligations accruing
prior to the effective date of said termination.
21. SUBORDINATION.
-------------
This Lease is subject and subordinate to any and all mortgages or deeds of
trust currently existing on the property of which the Premises is a part, and
this clause shall be self-operative without any further instrument necessary to
effect such subordination; however, if requested by Landlord, Tenant shall
promptly execute and deliver to Landlord any such certificate(s) in a
commercially reasonable form as Landlord may reasonably request evidencing the
subordination of this Lease to or the assignment of this Lease as additional
security for such mortgages or deeds of trust; provided, further, upon Tenant's
request, Landlord shall use reasonable efforts to obtain a non-disturbance
agreement in a commercially reasonable form from any such mortgagee, trustee or
beneficiary currently having an interest in all or any portion of the Premises.
Subject to the condition precedent that Landlord provide Tenant with a non-
disturbance agreement in a commercially reasonable form in favor of Tenant from
any mortgagee, trustee or beneficiary, this Lease shall be subject and
subordinate to any mortgage or deed of trust which may hereafter encumber the
property of which the Premises is a part. Tenant's obligations under this Lease
shall continue in full force and effect notwithstanding any such default
proceedings under a mortgage or deed of trust and shall attorn to the mortgagee,
trustee or beneficiary of such mortgage or deed of trust, and their successors
or assigns, and to the transferee under any foreclosure or default proceedings
and subject to the terms of the non-disturbance agreement, the mortgagee,
trustee or beneficiary or their successors or assigns shall be bound by all of
the obligations of Landlord under this Lease which accrue after such foreclosure
or default proceeding. Tenant will, upon request by Landlord, execute and
deliver to Landlord or to any other person designated by Landlord, any
instrument or instruments in a commercially reasonable form required to give
effect to the provisions of this paragraph.
22. ASSIGNING AND SUBLETTING.
------------------------
Except with respect to an assignment or sublease to a Tenant Affiliate (as
hereinafter defined) which shall only require thirty (30) days' advance written
notice to Landlord, Tenant shall not assign, sublet, mortgage, pledge or
encumber this Lease, the Premises, or any interest in the whole or in any
portion thereof, directly or indirectly, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed. In the
event of any assignment, sublease, mortgage, pledge or encumbrance, Tenant
shall: (i) remain primarily liable for the performance of all terms of this
Lease, (ii)
15
pay all reasonable costs, including without limitation, attorney's fees,
incurred by Landlord in connection with such assignment, sublease or mortgage,
and (iii) except in the event of an assignment or sublease to a Tenant
Affiliate, pay to Landlord one-half (1/2) of any rental or any fees or charges
received by Tenant (less any reasonable, actual expenses incurred by Tenant in
connection with the assignment, sublease or mortgage) in excess of the Annual
Rental payable to Landlord hereunder as further rental under this Lease.
Landlord's consent to one assignment or sublease will not waive the requirement
of its consent to any subsequent assignment or sublease as required herein. For
purposes of this Paragraph 21, a Tenant Affiliate shall mean an entity owned or
controlled by Tenant or which owns or controls Tenant or any entity which
results from a merger or consolidation with Tenant and for purposes hereof,
"owned or controlled by" shall mean ownership of more than a fifty percent (50%)
interest in such entity.
If Landlord's consent to an assignment of this Lease or subletting of all
or a part of the Premises is required, Tenant shall submit to Landlord, in
writing, (i) the name of the proposed assignee or sublessee, (ii) current
financial statements, if any, available to Tenant disclosing the financial
condition of the proposed assignee or subtenant, (iii) the nature of the
business of the proposed assignee or sublessee, and its proposed use of the
Premises (any assignment or subletting being subject to restrictions on use
contained in this Lease, the violation of which by the proposed assignee or
sublessee shall constitute absolute grounds for Landlord's denial of the
requested assignment or subletting, such grounds not being the exclusive grounds
for denial under clause (iii)) and (iv) the proposed commencement date of the
assignment or subletting, together with a copy of the proposed assignment or
sublease. Within fifteen (15) days after its receipt of such notice, Landlord
shall either approve or disapprove such proposed assignment or sublease in
writing. Landlord's failure to notify Tenant within such fifteen (15) day period
shall be deemed an approval of such proposal.
Notwithstanding anything in this Lease to the contrary, Tenant further
agrees that any assignment or sublease shall be subject to the following
additional limitations: (i) in no event may Tenant assign this Lease or sublet
all or any portion of the Premises to an existing Tenant of the Business Park or
its subtenant or assignee (unless Landlord consents to such assignment or
sublease); (ii) in no event shall the proposed subtenant or assignee be a person
or entity with whom Landlord or its agent is negotiating and to or from whom
Landlord, or its agent, has given or received any written or oral proposal
within the past six (6) months regarding a lease of space in the Business Park;
and (iii) Tenant shall not publicly advertise the rate for which Tenant is
willing to sublet the Premises; and all public advertisements of the assignment
of the Lease or sublet of the Premises, or any portion thereof, shall be subject
to prior written approval by Landlord, such approval not to be unreasonably
withheld or delayed. Said public advertisement shall include, but not be limited
to, the placement or display of any signs or lettering on the exterior of the
Premises or on the glass or any window or door of the Premises or in the
interior of the Premises if it is visible from the exterior.
23. TRANSFER OF LANDLORD'S INTEREST.
-------------------------------
If Landlord shall sell, assign or transfer all or any part of its interest
in the Premises or in this Lease to a successor in interest which expressly
assumes the obligations of Landlord hereunder, then Landlord shall thereupon be
released or discharged from all covenants and obligations accruing thereafter,
and Tenant shall look solely to such successor in interest for performance of
all of Landlord's obligations and such successor shall be obligated to perform
all of Landlord's obligations under this Lease which accrue after the date of
such transfer. Tenant's obligations under this Lease shall in no manner be
affected by Landlord's sale, assignment, or transfer of all or any part of such
interest(s) of Landlord, and Tenant shall thereafter attorn and look solely to
such successor in interest as the Landlord hereunder.
16
24. COVENANT OF QUIET ENJOYMENT.
---------------------------
Landlord represents that it has full right and authority to lease the
Premises and Tenant shall peacefully and quietly hold and enjoy the Premises for
the full term hereof so long as no Event of Default occurs hereunder.
25. ESTOPPEL CERTIFICATES.
---------------------
Within twenty (20) business days after a request by Landlord. Tenant shall
deliver a written estoppel certificate, in form supplied by or acceptable to
Landlord, certifying any facts that are then true with respect to this Lease,
including without limitation that this Lease is in full force and effect, that
no Event of Default exists on the part of Landlord or Tenant, that Tenant is in
possession, that Tenant has commenced the payment of rent, and that Tenant
claims no defenses or offsets with respect to payment of rentals under this
Lease. Likewise, within ten (10) business days after a request by Tenant,
Landlord shall deliver to Tenant a similar estoppel certificate covering such
matters as are reasonably required by Tenant.
26. PROTECTION AGAINST LIENS.
------------------------
Tenant shall do all things necessary to prevent the filing of any
mechanics', materialmen's or other types of liens whatsoever, against all or any
part of the Premises by reason of any claims made by, against, through or under
Tenant. If any such lien is filed against the Premises, Tenant shall either
cause the same to be discharged of record within thirty (30) days after notice
of filing or, if Tenant in its discretion and in good faith determines that such
lien should be contested, it shall furnish such security as may be necessary to
prevent any foreclosure proceedings against the Premises during the pendency of
such contest. If Tenant shall fail to discharge such lien within said time
period or fail to furnish such security, then Landlord may at its election, in
addition to any other right or remedy available to it, discharge the lien by
paying the amount claimed to be due or by procuring the discharge by giving
security or in such other manner as may be allowed by law. If Landlord acts to
discharge or secure the lien then Tenant shall immediately reimburse Landlord
for all sums paid and all costs and expenses (including reasonable attorneys'
fees) incurred by Landlord involving such lien together with interest on the
total expenses and costs at an interest rate equal to the Prime Rate plus two
percent (2%).
27. MEMORANDUM OF LEASE.
-------------------
If requested by Tenant, Landlord shall execute a recordable Memorandum or
Short Form Lease, prepared at Tenant's expense, specifying the exact term of
this Lease and such other terms as the parties shall mutually determine.
28. FORCE MAJEURE.
-------------
In the event Landlord or Tenant shall be delayed, hindered or prevented
from the performance of any act required hereunder, by reason of governmental
restrictions, scarcity of labor or materials, strikes, fire, or any other
reasons beyond its reasonable control, the performance of such act shall be
excused for the period of delay, and the period for performance of any such act
shall be extended as necessary to complete performance after the delay period.
However, the provisions of this paragraph shall in no way be applicable to
Tenant's obligations to pay Annual Rental or any other sums, monies, costs,
charges or expenses required by the Lease.
17
29. REMEDIES CUMULATIVE--NONWAIVER.
------------------------------
Unless otherwise specified in this Lease, no remedy of Landlord or Tenant
shall be considered exclusive of any other remedy, but each shall be distinct,
separate and cumulative with other available remedies. Each remedy available
under this Lease or at law or in equity may be exercised by Landlord or Tenant
from time to time as often as the need may arise. No course of dealing between
Landlord and Tenant or any delay or omission of Landlord or Tenant in exercising
any right arising from the other party's default shall impair such right or be
construed to be a waiver of a default.
30. HOLDING OVER.
------------
If Tenant remains in possession of the Premises or any part thereof after
the expiration of the Term, whether with or without Landlord's acquiescence,
Tenant shall be deemed only a tenant at will and there shall be no renewal of
this Lease without a written agreement signed by both parties specifying such
renewal. The "monthly" rental payable by Tenant during any such tenancy at will
period shall be one hundred fifty percent (150%) of the monthly installments of
Annual Rental payable during the final Lease Year immediately preceding such
expiration. Tenant shall also remain liable for any and all damages, direct and
consequential, suffered by Landlord as a result of any holdover without
Landlord's unequivocal written acquiescence.
31. NOTICES.
-------
Any notice allowed or required by this Lease shall be deemed to have been
sufficiently served if the same shall be in writing and placed in the United
States mail, via certified mail or registered mail, return receipt requested,
with proper postage prepaid or delivered by a nationally recognized overnight
courier, and addressed as follows:
AS TO LANDLORD: Petula Associates, Ltd.
Commercial Real Estate Equities
711 High Street
Des Moines, IA 50392
Attention: Bruce K. Bruene
WITH A COPY TO: Tri Properties
Yorkshire Property Manager
1009 Slater Road, Suite 110
Durham, NC 27703
Attention: David M. Adams
AS TO TENANT: Circuit City Stores, Inc.
9950 Mayland Drive
Richmond, VA 23233
Attention: Vice President--Real Estate
18
WITH A COPY TO: Circuit City Stores, Inc.
9950 Mayland Drive
Richmond, VA 23233
Attention: Corporate Secretary
The addresses of Landlord and Tenant and the party, if any, to whose
attention a notice or copy of same shall be directed may be changed or added
from time to time by either party giving notice to the other in the prescribed
manner.
32. LEASING COMMISSION.
------------------
Landlord and Tenant represent and warrant each to the other that they have
not dealt with any broker(s) or any other person claiming any entitlement to any
commission in connection with this transaction except Corporate Realty Advisors
(the "Broker"). Landlord and Tenant agree to indemnify and save each other
harmless from and against any and all claims, suits, liabilities, costs,
judgments and expenses, including reasonable attorneys' fees, for any leasing
commissions or other commissions, fees, charges or payments resulting from or
arising out of their respective actions in connection with this Lease except as
to Broker. Landlord agrees to be responsible for the leasing commission due
Broker pursuant to a separate written agreement between Landlord and Broker, and
to hold Tenant harmless respecting same.
33. MISCELLANEOUS.
-------------
(a) Rules and Regulations.
---------------------
Landlord shall have the right from time to time to prescribe reasonable
rules and regulations (the "Rules and Regulations") for Tenant's use of the
Premises and the Building. A copy of Landlord's current Rules and Regulations
respecting the Premises and the Building is attached hereto as Exhibit "D".
-----------
Tenant shall abide by and actively enforce on all its employees, agents,
invitees and licensees such regulations including without limitation rules
governing parking of vehicles in designated areas, provided Tenant has received
written copies of such regulations and any amendments or revisions thereto.
(b) Evidence of Authority.
---------------------
If requested by Landlord, Tenant shall furnish appropriate legal
documentation evidencing the valid existence and good standing of Tenant and the
authority of any parties signing this Lease to act for Tenant.
(c) Limitation of Landlord's Liability.
----------------------------------
If Landlord shall fail to perform any covenant, term or condition of this
Lease upon Landlord's part to be performed within thirty (30) days (unless
another time period is set forth hereinafter) after written notice from Tenant
(unless such condition is incapable of being cured within said thirty (30) day
period, in which event it shall not be deemed a default so long as Landlord is
diligently pursuing the completion of same), and, as a consequence of such
default, Tenant shall recover a mony judgment against Landlord, such judgment
shall be satisfied solely out of the interest of Landlord in the Building
19
(including rents and profits therefrom); and neither Landlord nor, if Landlord
be a partnership, any of the partners comprising Landlord shall have any
personal liability for any deficiency. It is understood and agreed that in no
event shall Tenant or any person claiming by or through Tenant have the right to
levy execution against any property of Landlord other than its interest in the
Building as hereinbefore expressly provided.
(d) Nature and Extent of Agreement.
------------------------------
This Lease, together with all exhibits hereto, contains the complete
agreement of the parties concerning the subject matter, and there are no oral or
written understandings, representations, or agreements pertaining thereto which
have not been incorporated herein. This Lease creates only the relationship of
landlord and tenant between the parties, and nothing herein shall impose upon
either party any powers, obligations or restrictions not expressed herein. This
Lease shall be construed and governed by the laws of the state in which the
Premises are located.
(e) Binding Effect.
--------------
This Lease shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns. This Lease
shall not be binding on Landlord until executed by a Vice President of Landlord
and delivered to Tenant. No amendment or modification to this Lease shall be
binding upon Landlord unless same is in writing and executed by a Vice President
of Landlord.
(f) Captions and Headings.
---------------------
The captions and headings in this Lease are for convenience and reference
only, and they shall in no way be held to explain, modify, or construe the
meaning of the terms of this Lease.
(g) Security Deposit. [Intentionally Deleted]
----------------
(h) Right to Relocate. [Intentionally Deleted]
-----------------
(i) Lease Review.
------------
The submission of this Lease to Tenant for review does not constitute a
reservation of or option for the Premises, and this Lease shall become effective
as a contract only upon execution and delivery by Landlord and Tenant.
(j) Principal Mutual Approval. [Intentionally Deleted]
-------------------------
34. SEVERABILITY.
------------
If any term or provision of this Lease or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and enforced to the fullest extent permitted by law
notwithstanding the invalidity of any other term or provision hereof.
35. REVIEW OF DOCUMENTS.
-------------------
20
If, following the execution of this Lease, either party hereto requests
that the other party execute any document or instrument that is other than (i) a
document or instrument the form of which is attached hereto as an exhibit, (ii)
a document that solely sets forth facts or circumstances that are then existing
------
and reasonably ascertainable by the requested party with respect to the lease,
or (iii) amendments to this Lease or other standard business documents reviewed
by either party in the ordinary course of its business, then the party making
such request shall be responsible for paying the out-of-pocket costs and
expenses, including without limitation, the attorneys fees, incurred by the
requested party in connection with the review (and, if applicable, the
negotiations) related to such document(s) or instrument(s), regardless of
whether such document(s) or instrument(s) is (are) ever executed by the
requested party. In the event the requesting party is Tenant, all such costs and
expenses incurred by Landlord in connection with its review and negotiation of
any such document(s) or instrument(s) shall be deemed to be additional rental
due hereunder and shall be payable by Tenant promptly upon demand.
21
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
and sealed pursuant to authority duly given as of the day and year first above
written.
"LANDLORD"
PETULA ASSOCIATES, LTD.
By: /s/ Frank G. Sullivan
--------------------------------
FRANK G. SULLIVAN
Vice President
"TENANT"
CIRCUIT CITY STORES, [NC.
By: /s/ Benjamin B. Cummings, Jr.
--------------------------------
Vice President
22
STATE OF Iowa
COUNTY OF Palk
This 3rd day of September, 1997, personally came before me Frank Sullivan,
who, being by me duly sworn, says that he is Vice President of Petula
Associates, Ltd., an Iowa corporation, and that said writing was signed by him,
in behalf of said corporation by its authority duly given, and acknowledged the
said writing to be the act and deed of said corporation.
/s/ Jeanne K. Prue
----------------------------
Notary Public
[NOTARIAL SEAL]
My Commission expires:
[STAMP]
STATE OF VIRGINIA
COUNTY OF HENRICO
This 1/st/ day of August, 1997, personally came before me Benjamin B.
Cummings, Jr. who, being by me duly sworn, says that he is Vice President of
CIrcuit City Stores, Inc., and that said writing was signed by him, in behalf of
said corporation, by its authority duly given, and acknowledged the said writing
to be the act and deed of said corporation.
/s/ Joyce C. Woodson
------------------------------
Notary Public
[NOTARIAL SEAL]
My Commission expires:
5/31/99
- --------------------------
23
EXHIBIT "A"
-----------
LEGAL DESCRIPTION OF BUILDING SITE
[TO BE SUPPLIED)
[SITE PLAN]
Royal Center
Imperial Center, North Carolina
EXHIBIT "B"
----------
(ATTACH PORTION OF PLANS AND OUTLINE
THE PREMISES IN RED INK FOR IDENTIFICATION PURPOSES)
[SITE PLAN]
BUILDING 300 PLAN
EXHIBIT "C"
[INTENTIONALLY DELETED]
EXHIBIT "D"
RULES AND REGULATIONS
The following rules and regulations have been adopted by the Landlord for
the care, protection and benefit of the Building and for the general comfort and
welfare of the tenants. These Rules and Regulations shall remain in full force
and effect until Tenant is notified in writing by Landlord of any changes and
amendments. To the extent any if the Rules and Regulations set forth herein are
inconsistent with the provisions of the Lease, the terms and conditions of the
Lease shall prevail.
1. The sidewalks, entrances, halls, passages, elevators and stairways
shall not be obstructed or used by Tenant for any other purpose than for ingress
and egress. All loading and unloading of goods, furniture, fixtures, equipment
and supplies shall be done only in areas and through entrances designated for
such purposes.
2. Toilet rooms and other plumbing facilities shall not be used for any
purpose other than those for which they are constructed and no foreign substance
of any kind shall be disposed of therein. All repairs required due to breakage,
stoppage or damage resulting from a violation of this provision shall be at
Tenant's sole expense.
3. Tenant shall not do anything in the Premises, or bring or keep
anything therein, which shall in any way conflict with any law, ordinance, rule
or regulation affecting the occupancy and use of the Premises, which are or may
hereafter be enacted or promulgated by any public authority or by the Board of
Fire Underwriters.
4. Tenant shall at all times maintain an adequate number of suitable fire
extinguishers on the Premises for use in case of local fires, including
electrical fires.
5. Tenant shall keep the Premises heated at a temperature sufficiently
high to prevent freezing of water in pipes and fixtures.
6. Except as otherwise expressly permitted in the Lease, trucks shall not
be allowed to remain overnight in the common area whether loaded, unloaded or
otherwise, without Landlord's prior written consent.
7. All garbage and refuse shall be placed for collection in containers
specified by Landlord outside the Premises or Building. Tenant shall pay the
cost or removal of any of Tenant's refuse or rubbish.
8. Tenant shall, at Tenant's expense, provide for regular pest
extermination to the Premises and shall provide Landlord with a copy of such
extermination contract.
9. In order to insure proper use and care of the Premises, neither the
Tenant nor agent nor employee of Tenant shall:
(a) Allow any furniture, packages or articles of any kind to remain
in corridors except for short periods incidental to moving same in or out
of Building or to cleaning or rearranging occupancy of leased space.
(b) Mark or defile elevators, toilet rooms, walls, windows, doors or any
part of the Building.
(c) Except for "seeing-eye" dogs, keep animals or birds on the Premises.
(d) Deposit waste paper, dirt of other substances in corridors, stairways,
elevators, toilets, restrooms, or any other part of the Building not leased by
Tenant.
(e) Except for pictures, wall hangings and other customary decorations and
items which would not cause permanent damage to the structural elements of the
Building, fasten any article, drill holes, drive nails or screws into walls,
floors, doors, or partitions or otherwise mark or deface them by paint, papers
or otherwise, without Landlord's prior written consent.
(f) Operate any machinery within the Building except customary warehouse,
training and office equipment, such as computers, dictaphones, calculators,
electric typewriters, televisions, video cassette recorders and the like.
Special equipment or machinery used in the trade or profession of the Tenant may
be operated only with Landlord's prior written consent.
(g) Leave Premises unoccupied without locking all exterior doors and
turning off all water outlets.
(h) Burn any trash, refuse, debris or garbage of any kind in or about the
Premises or Building.
(i) Attach awnings, air conditioning units or other fixtures to the
outside walls or window sills, or otherwise affix such so as to project from the
Premises or Building without Landlord's prior written consent.
(j) Except for Tenant's installation of a key card security system,
install additional locks or bolts of any kind on any doors or windows of the
Premises without Landlord's prior written consent. On the termination of
Tenant's tenancy, Tenant shall deliver to Landlord all keys to the Premises,
either furnished to or otherwise procured by Tenant.
(k) Install or operate any engine, boiler, machinery, or stove, or use oil
or any burning fluid (other than gas) for heating, warming or lighting, or use
any lighting other than incandescent or fluorescent electric lights, on the
premises without Landlord's prior written consent. All stoves permitted in the
Premises shall be placed and installed according to city ordinances. No articles
deemed extra hazardous on account of fire, and no explosives, shall be brought
into the Premises.
(l) Use loudspeakers, televisions, radios or other devices in such a
manner as to be heard outside the Premises, or make, or permit to be made, any
unseeming or disturbing noises, nuisance or other activity objectionable to
other tenants.
(m) Use the Premises for the purpose of lodging or sleeping rooms, or for
any illegal purposes.
(n) Install any aerial, antenna, satellite dish or other equipment or
structure on the roof or exterior wall of the Premises, or on the grounds
without, in each instance, the prior
2
written consent of Landlord. Any installation so made without such prior
written consent shall be subject to removal without notice at any time, at
Tenant's expense.
10. Landlord shall have the right to prohibit any advertising by Tenant
which, in its opinion, shall damage the reputation of the Building or its
desirability, and upon written notice from Landlord, Tenant shall discontinue
any such advertising.
11. Except for deliveries in the ordinary course of Tenant's business,
Landlord reserves the right to designate the time when and method whereby
freight, furniture, safes, goods, merchandise and other articles may be brought
into, moved or taken from the Building and the Premises leased by Tenant; and
workmen employed, designated or approved by Landlord must be employed by Tenants
for repairs, painting, material moving and other similar work that may be done
on the Premises.
12. Tenant will reimburse Landlord for the cost of repairing any damage to
the Premises or other parts of the Building caused by Tenant or the agents or
employees of Tenant, including replacing any glass broken.
13. Tenant shall not install in the Premises any metal safes or permit any
concentration of excessive weight in any portion thereof without first having
obtained the written permission of Landlord.
14. Landlord reserves the right at all times to exclude newsboys,
loiterers, vendors, solicitors and peddlers, from the Building or common area
and to require registration, satisfactory identification and credentials from
all person seeking access to any part of the Building or common area outside of
ordinary business hours. Ordinary business hours shall mean Monday through
Friday, 8:00 a.m. to 6:00 p.m., except on legal holidays. Landlord shall
exercise its best judgment in the execution of such control but shall not be
held liable for the granting or refusal of such access. Landlord reserves the
right to exclude the general public from the building after ordinary business
hours and on weekends and holidays.
15. The attaching of wires to the outside of the Building is absolutely
prohibited, and no wires shall be run or installed in any part of the Building
without the Landlord's permission and direction.
16. Requests for services of janitors or other Building employees must be
made to the Landlord. Agents or employees of Landlord shall not perform any work
or do anything outside of their regular duties unless under special instructions
from Landlord.
17. Signs or any other Tenant identification shall be in accordance with
building standard signage. No signs of any nature shall be placed in the windows
so as to be visible from the exterior of the Building. All signs not approved in
writing by Landlord shall be subject to removal without notice.
18. Except as otherwise set forth in the Lease, any improvements or
alterations to the Premises by Tenant shall be approved in advance by Landlord
and all such work, if approved, shall be done at Tenant's sole expense under the
supervision of Landlord.
19. Tenant shall have a non-exclusive right to use of all driveways and
parking areas designated for Tenant and Tenant's employees, if deemed necessary
by Landlord.
3
20. If additional drapes or window decorations are desired by Tenant,
they shall be approved by Landlord and installed at Tenant's expense under the
direction of Landlord. Lining on drapes visible from the exterior shall be of a
color approved by Landlord.
21. The possession of weapons, including concealed handguns, is strictly
forbidden on the Premises and Building.
22. Tenant shall not use nor permit the use of the common area by its
employees, agents or invitees for the purpose of displaying or selling personal
property, automobiles, equipment, furniture, fixtures, merchandise or any other
item whether owned by Tenant or its employees, agents or invitees.
23. Landlord reserves the right to rescind, amend, alter or waive any of
the foregoing rules and regulations at any time in a reasonable and
nondiscriminatory manner, or make such other reasonable and non-discriminatory
rules and regulations as, in its sole judgment it deems necessary, desirable or
proper for its best interest and for the best interests of the tenants, or as
may from time to time be necessary for the safety, care and cleanliness of the
Premises, the Building or adjacent areas, and for the preservation of good order
therein. Any such recission, amendment, alteration or waiver of any rules or
regulations or creation of any such new rules or regulations shall be effective
five (5) days after all tenants have been given written notice thereof. Landlord
shall not be responsible to any tenant for the non-observance or violation by
any other tenant of any of these rules and regulations at any time.
4
EXHIBIT "E"
-----------
TENANT IMPROVEMENTS
Landlord will supervise the design, construction and installation of the initial
Tenant Improvements in the Premises in accordance with the Plans. In the event
that either prior to the commencement of the installation of the Tenant
Improvements or at any time during or following the installation of the Tenant
Improvements, Tenant requests any change to the aforementioned Plans which has
resulted or might result in an increase in the cost of the installation of such
Tenant Improvements, Tenant shall promptly deliver the necessary funds to defray
such excess cost to Landlord no later than thirty (30) days after Landlord
demands same. Notwithstanding the foregoing, any change order(s) requested by
Tenant which will result in an increase in the cost of the construction and
installation of the Tenant Improvements shall be agreed to in advance by
Landlord and Tenant, and Tenant shall be obligated to pay Landlord any increase
in the cost of the construction and installation of the Tenant Improvements.
5
EXHIBIT "F"
-----------
FINAL PLANS
(To be appended to the Lease upon
approval of same by Landlord and Tenant)
6
EXHIBIT "G"
-----------
1. Notice and Exercise. Provided no Event of Default has occurred and is
-------------------
continuing under this Lease, Tenant is hereby granted the option to extend
the Term once for an additional period of five (5) years (the "Extenstion
Term") commencing upon the expiration of the initial Term on the same terms
and conditions (except as provided in this Section) as contained in the
other provisions of this Lease. This option shall be exercised only by
delivery of written notice (the "Renewal Notice") to Landlord no later than
seven (7) months prior to the scheduled Expiration Date referred to in
Paragraph 2 of this Lease. The Minimum Rental for the Premises shall be the
greater of: (i) the Minimum Rental during the last Lease Year of the
initial Term, or (ii) the then fair market rental ("Market Rate")
applicable to the Premises. Upon Landlord's receipt of Tenant's election to
extend the Term as herein provided, Landlord shall notify Tenant in writing
of Landlord's determination of the Minimum Rental for the Extension Term.
If Tenant disagrees with the Minimum Rental specified by Landlord for the
Extension Term, and Landlord and Tenant cannot, using good faith reasonable
efforts, agree upon a mutually acceptable Minimum Rental for the Extension
Term, Tenant may, as Tenant's sole right and remedy, revoke its election to
extend the Term by so notifying Landlord in writing within thirty (30) days
following Landlord's receipt of the Renewal Notice (the "Tenant Review
Period"). In the event Landlord and Tenant cannot agree upon a mutually
acceptable Minimum Rental for the Extension Term and Tenant fails to revoke
its election to extend the Term prior to the expiration of the Tenant
Review Period, the Minimum Rental for the Extension Term shall be
determined in accordance with Section 2 hereunder, and such determination
shall be final and binding upon both Landlord and Tenant. Notwithstanding
anything contained herein to the contrary, upon the expiration of the
Tenant Review Period, Tenant shall have no right to rescind or otherwise
revoke its election to extend the Term. Tenant's occupancy of the Premises
during any renewal period shall be subject to all other terms and
conditions of this Lease, expressly including without limitation, the
obligation to pay Tenant's proportionate share of the taxes, insurance
premiums and common area maintenance costs.
2. Determination of Market Rate. For purposes of this Exhibit "G", the term
---------------------------- -----------
"Market Rate" shall mean the annual amount per rentable square foot that
comparable landlords of comparable buildings have accepted in then-current
transactions between non-affiliated parties from new, non-expansion, non-
renewal (unless the lease involved a procedure invoked by landlord and
tenant for a 100% determination, of "fair market rental") and non-equity
tenants of comparable credit-worthiness, for comparable space, for a
comparable use, for a comparable period of time ("Comparable
Transactions"). In any determination of Comparable Transactions appropriate
consideration shall be given to the annual rental rates per rentable square
foot, the standard of measurement by which the rentable square footage is
measured, the ratio of rentable square feet to usable square feet, the type
of escalation clause implemented, the extent of tenant's liability under
the lease, abatement provisions reflecting free rent and/or no rent during
the period of construction or subsequent to the commencement date as to the
space in question, parking considerations, length of the lease term, size
and location of premises being leased, building standard work letter and/or
tenant improvement allowances, if any, or any other tenant concessions and
other generally applicable conditions of tenancy for such Comparable
Transactions. The intent is that Tenant will obtain the same rent and other
economic benefits that Landlord would otherwise give in Comparable
Transactions and that Landlord will make,
7
and receive the same economic payments and concessions that Landlord would
otherwise make, and receive in Comparable Transactions.
Upon expiration of the Tenant Review Period, Landlord and Tenant shall each
place in a separate sealed envelope their final proposal as to Market Rate and
such determination shall be submitted to arbitration in accordance with
subsections (a) through (e) below.
(a) Landlord and Tenant shall meet with each other within five (5) business
days of the expiration of the Tenant Review Period and exchange the sealed
envelopes and then open such envelopes in each other's presence. If Landlord and
Tenant do not mutually agree upon the Market Rate within one (1) business day of
the exchange and opening of envelopes, then, within ten (10) business days of
the exchange and opening of envelopes Landlord and Tenant shall agree upon and
jointly appoint a single arbitrator who shall by profession be a real estate
appraiser, lawyer or broker who shall have been active over the five (5) year
period ending on the date of such appointment in the leasing of comparable
commercial properties in the vicinity of the Building. Neither Landlord nor
Tenant shall consult with such broker or lawyer as to his or her opinion as to
Market Rate prior to the appointment. The determination of the arbitrator shall
be limited solely to the issue of whether Landlord's or Tenant's submitted
Market Rate for the Premises is the closer to the actual Market Rate for the
Premises as determined by the arbitrator, taking into account the requirements
of this Section 2. Such arbitrator may hold such hearings and require such
briefs as the arbitrator, in his or her sole discretion, determines as
necessary. In addition, Landlord or Tenant may submit to the arbitrator with a
copy to the other party within five (5) business days after the appoinunent of
the arbitrator any market data and additional information that such party deems
relevant to the determination of Market Rate ("MR Data") and the other party may
submit a reply in writing within five (5) business days after receipt of such MR
Data.
(b) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to whether the parties shall use Landlord's or
Tenant's submitted Market Rate, and shall notify Landlord and Tenant of such
determination.
(c) The decision of the arbitrator shall be binding upon Landlord and
Tenant.
(d) If Landlord and Tenant fail to agree upon and appoint an arbitrator,
then the appointment of the arbitrator shall be made by the Presiding Judge of
the Superior Court, or, if he or she refuses to act, by any judge having
jurisdiction over the parties.
(e) The cost of arbitration shall be paid by Landlord and Tenants equally.
Immediately after the Minimum Rental for the applicable Extension Period is
determined pursuant to this Exhibit, Landlord and Tenant shall execute an
amendment to the Lease stating the new Minimum Rental in effect.
8