EXHIBIT 10.24
LEASE
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THIS LEASE is entered into and made as of March 4, 1999 by and between
WAM!NET INC., a Minnesota corporation ("Landlord"), and SILICON GRAPHICS, INC.,
a Delaware corporation ("SGI"), on behalf of itself and its wholly-owned
subsidiary, CRAY RESEARCH, L.L.C., a Delaware limited liability company ("Cray")
(SGI and Cray are collectively referred to hereinafter as "Tenant").
WITNESSETH:
Landlord, in consideration of the rents and covenants hereinafter set
forth, does hereby demise, let and lease to Tenant, and Tenant does hereby hire,
take and lease from Landlord, on the terms and conditions hereinafter set forth,
the following described rentable area, hereinafter called the "Premises", to
have and to hold the same, with all appurtenances specified herein, for the term
hereinafter specified.
1. DESCRIPTION OF THE PREMISES
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(a) Premises. The "Premises" will initially include all buildings and
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common areas comprising the Cray Research campus located at 655 Lone Oak
Parkway, in the City of Eagan, County of Dakota, State of Minnesota (hereinafter
called the "Project"), consisting of approximately 480,724 square feet of
rentable area within Buildings A, D, E and F, as more particularly shown on
Exhibit A attached hereto and made a part hereof. Landlord and Tenant
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acknowledge that said total rentable area of the Project includes approximately
93,756 square feet of interior common area. During the Term, Tenant shall also
have the right to use all personal property of Landlord currently located in the
Premises. At such times that the rentable area of the Premises is reduced, said
personal property currently located therein shall remain in the vacated portions
of the original Premises and Tenant shall no longer have the right to use the
same. All such personal property shall be surrendered to Landlord in the same
condition as on the Commencement Date (as hereinafter defined) subject to
ordinary and reasonable wear and tear.
(b) Reduction of Rentable Area.
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(1) On or before March 15, 1999, Tenant shall vacate all of
Building A, which includes approximately 62,107 square feet of rentable area, as
shown on Exhibit B-1 attached hereto and made a part hereof, in which event the
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Premises shall consist of approximately 418,617 square feet of rentable area.
(2) On or before May 15, 1999, Tenant shall vacate approximately
92,821 square feet of rentable area located within Building E as shown on
Exhibit B-2 attached hereto and made a part hereof, in which event the Premises
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shall consist of
approximately 325,796 square feet of rentable area (which calculation of
rentable area includes approximately 67.8% of the square footage of the interior
common area).
(3) As of June 1, 2001, Tenant shall vacate approximately 220,000
square feet of rentable area located within Buildings E and F as shown on
Exhibit B-3 attached hereto and made a part hereof, in which event the Premises
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shall consist of approximately 105,796 square feet of rentable area (which
calculation of rentable area includes approximately 22.0% of the square footage
of the interior common area); provided, however, that if, on or before June 1,
2000, Tenant delivers to Landlord a revised plan to vacate all or any portion of
the Premises, Landlord and Tenant shall meet and confer and negotiate in good
faith to amend this Lease to allow Tenant to vacate additional rentable area
within the Premises, and the Premises shall be further reduced with regard to
the rentable area so vacated by Tenant, which additional reduction shall be
effective as of the later of the date vacated by Tenant or June 1, 2001.
(4) Landlord and Tenant shall equally share any and all costs
necessary to separate the remaining Premises from the rentable area vacated by
Tenant as provided in subsections (1), (2) and (3) above, including (a) the cost
of constructing such demising walls, corridors, heating, ventilation, and air
conditioning modifications, utility installations and security systems as agreed
upon by Landlord and Tenant (collectively, the "Demising Improvements"), and (b)
the cost to remove the Demising Improvements upon expiration or earlier
termination of this Lease. Tenant shall construct the Demising Improvements in
a good and workmanlike manner and in compliance with applicable laws and
building codes. Prior to constructing the Demising Improvements, Landlord and
Tenant shall meet and confer in good faith for purposes of agreeing upon the
Demising Improvements and the cost thereof. If at any time Landlord and Tenant
are unable to so agree after using reasonable efforts, then either party shall
have the right to deliver notice to the other party of such disagreement (the
"Notice of Disagreement"). The parties shall continue to use good faith efforts
to agree for five (5) business days after delivery of the Notice of
Disagreement, and within said period shall provide to each other their
respective Demising Improvements proposal. If the parties are unable to reach
agreement within said period, Landlord and Tenant shall each promptly identify
an architect or other qualified design professional. Said two (2) architects
(or other qualified design professionals) shall promptly mutually select a third
architect or other qualified design professional (the "Expert"). The Expert
shall review and analyze each parties' Demising Improvements proposal and shall
be required to select one of the two proposals, as the Expert deems appropriate.
Said decision of the Expert shall be final and binding on Landlord and Tenant,
unless Landlord and Tenant mutually agree otherwise in writing.
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(c) Common Areas. Tenant shall have the non-exclusive right to use
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all common areas of the Project, including, without limitation, sidewalks,
driveways, parking areas, corridors, cafeterias, lobbies, recreational
facilities and other amenities, in accordance with the terms of this Lease.
2. TERM
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The term of this Lease (the "Term") shall commence on March 4, 1999
(the "Commencement Date") and end on May 31, 2004 (the "Expiration Date"),
unless sooner terminated as provided in this Lease. Effective as of June 1,
2001 and on each June 1 thereafter until June 1, 2003, Tenant shall have the
option to terminate this Lease by delivering to Landlord at least six (6)
months' prior written notice of termination (which notice shall be delivered not
sooner than June 1, 2001, providing a termination date of not sooner than six
(6) months thereafter).
3. RENT
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(a) Base Rent. No Base Rent shall be payable with respect to the
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period from the Commencement Date through May 31, 1999. From June 1, 1999
through May 31, 2001, Tenant shall pay to Landlord, at the address listed below
in Paragraph 25, Base Rent for the Premises in the amount of Twelve Dollars
($12.00) per square foot of rentable area per year, which is equal to Three
Million Nine Hundred Nine Thousand Five Hundred Fifty-two and no/100 Dollars
($3,909,552.00), payable in equal monthly installments of Three Hundred Twenty
Five Thousand Seven Hundred Ninety-six and no/100 Dollars ($325,796.00) in
advance, on or before June 1, 1999 and continuing on or before the first day of
each and every month thereafter throughout said period of the Term. With
respect to the portion of the Premises which Tenant continues to occupy under
this Lease from and after June 1, 2001, the Base Rent shall be in the amount of
Twelve and 60/100 Dollars ($12.60) per square foot of rentable area per year,
payable in monthly installments at the rate of One and 05/100 Dollars($1.05) per
square foot of rentable area per month. If the Commencement Date shall be a day
other than the first day of a calendar month or the Expiration Date shall be a
day other than the last day of a calendar month, the Base Rent installment for
such first or last fractional month shall be prorated accordingly, based on a
thirty (30) day month. Tenant's obligation to pay Base Rent and any and all
other amounts due hereunder is a separate and independent covenant and
obligation. Tenant shall pay all Base Rent and all other amounts as shall
become due from and payable by Tenant to Landlord under this Lease at the times
and in the manner provided herein, without abatement and without notice, demand,
setoff or counterclaim.
(b) Taxes and Operating Expenses. Tenant shall pay as additional rent
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Tenant's Proportionate Share (as defined below) of all Taxes (as defined below)
and Operating Expenses (as
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defined below), which shall accrue and be due and payable from and after the
Commencement Date as provided hereinbelow.
(1) Definitions.
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a. "Tenant's Proportionate Share" of Operating Expenses
shall mean the percentage determined by dividing the then existing
rentable area of the Premises by the total rentable area within the
Project. From the Commencement Date through May 31, 1999, Tenant's
Proportionate Share shall be one hundred percent (100%) and,
commencing on June 1, 1999 through May 31, 2001, Tenant's
Proportionate Share shall be sixty-seven and eight tenths percent
(67.8%). If the rentable area of the Premises is reduced in
accordance with the terms of this Lease, then Tenant's Proportionate
Share shall be adjusted to be the percentage determined by a fraction,
the numerator of which is the reduced rentable area of the Premises,
and the denominator of which is 480,724. Notwithstanding any contrary
or inconsistent provision herein, for the period of the Term from the
Commencement Date until June 1, 1999, Tenant's Proportionate Share
shall be fixed at one hundred percent (100%), irrespective of Tenant's
use or occupancy of the Premises.
b. "Taxes" shall mean all real estate taxes, installments
of special assessments, sewer charges, transit taxes, taxes based upon
receipt of rent and any other federal, state or local governmental
charge, general, special, ordinary or extraordinary (excluding income,
franchise, or other taxes based upon Landlord's income or profit,
unless imposed in lieu of real estate taxes) which shall now or
hereafter be levied, assessed or imposed against the Project and shall
apply to said obligations at such time in which said obligations are
accrued or levied. Taxes shall not include any additional taxes
attributable to the improvement of any portion of the Project occupied
by Landlord or any other tenant (besides Tenant). Tenant shall be
obligated to pay one hundred percent (100%) of all Taxes attributable
to the improvement of any portion of the Premises by or on behalf of
Tenant.
c. "Operating Expenses" shall mean all of Landlord's costs
and expenses of operation and maintenance of the Project and the
surrounding walks, driveways, parking lots, recreational facilities
and other amenities and landscaped areas (within the area described or
shown in Exhibit "A") as determined by Landlord in accordance with
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generally accepted accounting principles or other recognized
accounting practices, consistently applied, including by way of
illustration and not limitation: costs (including
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attorneys' fees) incurred in connection with any good faith contest of
Taxes (but only to the extent of savings resulting from such contest);
insurance premiums for the insurance required to be maintained by
Landlord as provided herein and such other insurance as is otherwise
typically maintained by owners of class-A office buildings in the
Minneapolis/St. Paul metropolitan area; personal property taxes on
personal property used in the Project by Landlord in operating or
maintaining the Project; water, electrical and other utility charges
other than the separately billed electrical and other charges
described in Paragraph 7 hereof; the charges of any property manager
or independent contractor who, under a contract with Landlord, or its
representatives, does any of the work of operating, maintaining or
repairing of the Project (which shall not exceed the approximate
amount, per square foot, of such charges paid for property management
of comparable properties in the Minneapolis-St. Paul metropolitan
area), service and other charges incurred in the operation and
maintenance of the elevators and the heating, ventilation and air
conditioning system; cleaning services; tools and supplies; landscape
maintenance costs; building security services; license and permit
fees; wages, bonuses and related employee benefits payable to the
onsite employees of Landlord (but only to the extent such employees
are engaged in the management or maintenance of the Project, and then
only if neither Cray nor SGI is responsible for serving as, or
engaging the services of, the property manager of the Project) or its
property management agent; such other costs and expenses which would,
under generally accepted accounting principles applicable to real
estate leasing transactions, be regarded as operating and maintenance
costs and expenses. If Landlord shall install a labor saving device,
equipment or such other improvement intended to improve the operating
efficiency of any system within the Project (such as an energy
management computer system) then Landlord may add to Operating
Expenses of the Project, in each year during the useful life of such
installed device or equipment, an amount equal to the lesser of (i)
annual depreciation or amortization allowance of the cost of such
installed device or equipment as determined in accordance with
applicable regulations of the Internal Revenue Service or generally
accepted accounting principles, or (ii) the savings in Operating
Expenses that results from such installation. Notwithstanding the
preceding to the contrary, Operating Expenses shall not include any of
the following-described expenses: any costs incurred by Landlord in
connection with the construction of any alterations, additions or
improvements for the sole benefit of Landlord or other occupants of
the Project;
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financing and refinancing costs, including interest on debts relating
to mortgage loans and rental fees under any ground or underlying
leases; business or income taxes; depreciation or amortization expense
(except as provided herein); costs in excess of the insurance
deductible (which deductible shall in no event exceed $50,000.00)
incurred by Landlord in connection with repairs and restorations
following the occurrence of a casualty loss; leasing commissions and
other costs of leasing incurred by Landlord; costs of restoring the
building or other improvements following a taking or transfer in lieu
thereof; costs incurred by Landlord as a result of Landlord making new
improvements to rentable area in the part of the Project that is
occupied by Landlord, which are made to cause the Project to comply
with applicable laws, ordinances, building codes, rules or
regulations, and which improvements are not required as a result of
improvements made by Tenant to the Premises; costs in excess of the
insurance deductible incurred as a result of the negligent or
intentional acts of Landlord or other occupants of the Project; and
costs which would be capitalized under generally accepted accounting
principles (except as otherwise provided herein). Operating Expenses
shall, in any event, include the cost of necessary or appropriate
capital repairs and replacements to the Project, which shall be
amortized on a monthly basis over the useful life of the capital item
on a straight-line basis.
(2) Payment of Taxes. Tenant shall pay to Landlord Tenant's
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Proportionate Share of all Taxes on or before the later of (i) the twentieth
(20th) day prior to the date the applicable Taxes are due and payable or (ii)
the tenth (10th) day following Landlord's written demand therefor (which demand
shall be accompanied by a copy of the related tax bill or other accurate
statement of the amount of the Taxes). Subject to the foregoing and subject to
rights of Landlord to contest or dispute Taxes, Landlord shall pay the Taxes to
the applicable taxing authority(ies) on or before the date they are due and
payable.
(3) Payment of Operating Expenses. Landlord shall deliver to Tenant
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a written estimate of the Operating Expenses and the portion thereof payable by
Tenant for the ensuing year or portion thereof. On or before the first day of
each month during the Term, Tenant shall pay such estimated amount of Tenant's
annualized share of such Operating Expenses in twelve (12) equal monthly
installments, in advance. Following the expiration of each calendar year,
Landlord shall furnish Tenant a statement showing in reasonable detail the
actual Operating Expenses for the preceding calendar year. Within thirty (30)
days after service of the aforementioned statement, Tenant shall pay to
Landlord, or Landlord shall credit against the next rent payment or payments due
from Tenant, as the case may be, the
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difference between Tenant's actual Proportionate Share of Operating Expenses for
the preceding calendar year and the amount of Operating Expenses paid by Tenant
during such year. If this Lease shall commence, expire or be terminated on any
date other than the last day of a calendar year, then Tenant's Proportionate
Share of Operating Expenses and Taxes for such partial calendar year shall be
prorated on the basis of the number of days during the year this Lease was in
effect in relation to the total number of days in such year. Without limiting
other obligations of Tenant which shall survive the expiration of the Term, the
obligations of Tenant to pay Operating Expenses and Taxes shall survive the
expiration of the Term. Subject to the foregoing obligation of Tenant to pay its
Proportionate Share of Operating Expenses, and subject to the right of Landlord
to contest or dispute all or any part of the Operating Expenses, Landlord shall
pay the Operating Expenses on or before the date they are due and payable.
(4) Audit. Tenant or its accountants shall have the right to inspect,
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at reasonable times and locations and in a reasonable manner, during the ninety
(90) day period following the delivery of Landlord's statement of Operating
Expenses for a given calendar year, such of Landlord's books and records as
pertain to and contain information concerning such costs and expenses in order
to verify the amounts thereof; unless Tenant takes written exception to any item
within ninety (90) days after the furnishing of the statement, such statement
shall be considered as final and accepted by Tenant; if Tenant shall dispute any
item or items included in the determination of Landlord's Operating Expenses for
a given calendar year, and such dispute is not resolved by the parties hereto
within sixty (60) days after the date on which Tenant gives written notice to
Landlord of the disputed items, then either party may, within thirty (30) days
thereafter, request that a firm of certified public accountants mutually
selected by Landlord and Tenant render an opinion as to whether or not the
disputed item or items may properly be included in the determination of
Landlord's Operating Expenses of the Project for such year; and the opinion of
such firm on the matter shall be conclusive and binding upon the parties hereto;
the fees and expenses incurred in obtaining such an opinion shall be borne by
Tenant unless: (aa) Landlord's statement contains errors aggregating more than
four percent (4%) of the Operating Expenses for the Project; and (bb) neither
Cray nor SGI is responsible for serving as, or engaging the services of, the
property manager of the Project.
(c) Net Lease. Landlord and Tenant intend that this Lease shall be
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deemed and construed to be a "net lease," and Base Rent, Operating Expenses,
Taxes and all other charges, costs and sums to be paid by Tenant hereunder shall
be paid to Landlord absolutely net and without any charges, assessments,
impositions, expenses or deductions of any kind or nature whatsoever, except as
otherwise explicitly stated in this Lease.
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(d) Service Charge. Tenant's failure to pay any monetary payment
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required of Tenant hereunder within ten (10) days of the due date therefor shall
result in the imposition of a service charge for such late payment in the amount
of two percent (2%) of the amount due. In addition, any sum not paid within
thirty (30) days of the due date therefor shall bear interest at a rate equal to
the greater of eighteen percent (18%) per annum or the then-current prime rate
(as listed in the "Money Rates" section of the Wall Street Journal) plus two
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percent (2%) per annum (or such lesser percentage as may be the maximum amount
permitted by law) from the date due until paid.
4. TENANT FINISH IMPROVEMENTS
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Tenant accepts the Premises in "AS IS, with all faults" condition,
with no representations or warranties of any kind by or on behalf of Landlord
with regard to the Premises. Landlord shall have no obligation to construct any
tenant improvements or make any other changes to the Premises except as
expressly provided herein.
5. CABLE PLANT
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Tenant shall have the right to maintain and to exclusively use all
existing cable plant and any related facilities and equipment located within the
Buildings to the extent serving solely the Premises. Tenant shall have the
right to use such cable plant and such related facilities and equipment in the
same manner in which Tenant has previously used the same prior to the sale and
transfer of the Project by Tenant to Landlord. Such maintenance shall be
performed with due care by qualified professionals, in a good workmanlike
manner, and shall be carried out in a manner which will not unreasonably
interfere with the use of the cable plant and related facilities and equipment
by Landlord.
Landlord shall have the right to maintain and to exclusively use all
existing cable plant and any related facilities and equipment located within the
Buildings to the extent not serving solely the Premises. Landlord and Tenant
shall split the existing cable plant as mutually agreed to serve the Premises
and the balance of the Project. Landlord and Tenant shall meet within thirty
(30) days after the date hereof to establish plans to so split the existing
cable plant.
6. USE OF THE PREMISES
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(a) Specific Use. The Premises shall be used exclusively for purposes
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of general, administrative and sales office, research and development, training
and for any other lawful purpose incidental thereto, and shall not be used for
any other purpose; provided, however, that Tenant shall have the right to use
the Premises in a manner consistent with the uses to
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which Tenant has put the Premises during the period prior to the sale and
transfer of the Project to the Landlord.
(b) Covenants Regarding Use. In connection with its use of the
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Premises, Tenant agrees to do the following:
(1) Tenant shall use the Premises and conduct its business thereon in
a safe, careful, reputable and lawful manner; shall keep and maintain the
Premises in as good a condition as they were on the Commencement Date, subject
to ordinary and reasonable wear and tear, and shall make all necessary repairs
to the Premises other than those which Landlord is obligated to make as provided
elsewhere herein.
(2) Tenant shall not commit, nor allow to be committed, in, on or
about the Premises, the Buildings or the Project, any act of waste, including
any act which might deface, damage or destroy the Project, Buildings, or any
part thereof; use or permit to be used on the Premises any equipment or other
thing which might cause injury to person or property; permit any objectionable
or offensive noise or odors to be emitted from the Premises.
(3) Tenant shall not overload the floors of the Premises beyond their
designed weightbearing capacity. Notwithstanding the foregoing sentence to the
contrary, but subject to Paragraph 10(b) hereof, Tenant shall have the right to
continue to use the Premises in the same manner as Tenant has used the Premises
prior to the sale and transfer of the Premises to Landlord.
(4) Tenant shall not use the Premises, nor allow the Premises to be
used, for any purpose or in any manner which would invalidate any policy of
insurance now or hereafter carried on the Project or increase the rate of
premiums payable on any such insurance policy. Should Tenant fail to comply
with this covenant, Landlord may require Tenant to reimburse Landlord as
additional rent for any increase in premiums charged during the term of this
Lease on the insurance carried by Landlord on the Premises and attributable to
the use being made of the Premises by Tenant. Notwithstanding the foregoing
provisions of this subsection (4) to the contrary, Tenant shall have the right
to continue to use the Premises in the same manner as Tenant has used the
Premises prior to the sale and transfer of the Premises to Landlord.
(c) Compliance with Laws. Tenant shall not use or permit the use of
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any part of the Premises for any purpose prohibited by law. Tenant shall, at
Tenant's sole expense, comply with all laws, statutes, ordinances, rules,
regulations and orders of any federal, state, municipal or other governmental
agency thereof having jurisdiction over and relating to the use of the Premises,
except that Tenant shall not be responsible for or required to make structural
repairs to the Buildings or the
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Premises unless, they are required as a result of Tenant's use or improvement of
the Premises from and after the Commencement Date, or Tenant's negligence or
willful misconduct.
(d) Compliance with Project Rules and Regulations. Landlord and
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Tenant shall comply with and conform to the rules and regulations attached to
this Lease, made a part hereof and marked Exhibit "C".
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(e) Compliance with Zoning. Tenant knows the character of its
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operation in the Premises and that applicable zoning ordinances and regulations
are of public record. Tenant shall have sole responsibility for its compliance
therewith, and Tenant's inability so to comply shall not be cause for Tenant to
terminate this Lease.
7. UTILITIES AND OTHER BUILDING SERVICES
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(a) Services to be Provided. Landlord shall furnish Tenant with the
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following utilities and building services to the extent reasonably necessary for
Tenant's use and occupancy of the Premises or as may be required by law or
directed by governmental authority:
(1) Heating, ventilation and air conditioning;
(2) Electricity for lighting and operating business machines and
equipment in the Premises and the common areas and facilities of the Buildings;
(3) Water for lavatory and drinking purposes;
(4) Automatic elevator service;
(5) Washing of interior and exterior windows;
(6) Replacement of all lamps, bulbs, starters and ballasts used
in the Project;
(7) Cleaning and maintenance of the common areas and facilities
of the Project and the walks, driveways, parking lots and landscaped areas
within the Project, including the removal of rubbish and snow; and
(8) Repair and maintenance of the Project and certain systems
within the Premises to the extent specified in Paragraph 10(a) hereof.
(b) Additional Services. If Tenant uses any other utilities or
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building services in addition to those identified above or uses any of the above
utilities or building services in frequency, scope, quality or quantities
greater than normally required by the other tenant(s) in the Project (including
Landlord), then the incremental cost thereof shall be borne by
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Tenant, who shall reimburse Landlord monthly for the same as provided in
Paragraph 7(d) hereof. If Landlord or any other tenant of the Project uses any
other utilities or building services in addition to those identified above or
uses any of the above utilities or building services in frequency, scope,
quality or quantities greater than normally required by Tenant, then the
incremental cost thereof shall be excluded from Operating Expenses for purposes
of this Lease, to be effective as of such time that Landlord is made aware of
such additional use.
If Landlord determines that Tenant has installed or connected any
machinery or equipment that exceeds the designed load capacity of the Project's
electrical system or is incompatible therewith, then Landlord shall have the
right, as a condition to granting its consent, to make such modifications to any
utility system or other parts of the Project or the Premises, or to require
Tenant to make such modifications to the equipment to be installed or connected,
as is reasonably necessary before such equipment may be so installed or
connected. The cost of any such modifications shall be borne by Tenant, who
shall reimburse Landlord for the same (or any portion thereof paid by Landlord)
as provided in Paragraph 7(d) hereof. This paragraph shall not apply to any
machinery or equipment that exists as of the Commencement Date.
(c) Interruption of Services. Tenant understands, acknowledges and
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agrees that any one or more of the utilities or building services identified
above may be interrupted by reason of accident, emergency or other causes beyond
Landlord's control, or may be discontinued or diminished temporarily by Landlord
or other persons until certain repairs, alterations or improvements can be made;
that Landlord does not represent or warrant the uninterrupted availability of
such utilities or building services; and that any such interruption, unless
caused by the intentionally wrongful act of Landlord shall not be deemed an
eviction or disturbance of Tenant's right to possession, occupancy and use of
the Premises or any part thereof, or render Landlord liable to Tenant in damages
by abatement of rent or otherwise, or relieve Tenant from the obligation to
perform its covenants under this Lease.
(d) Payment for Utilities and Buildings Services. The cost of
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additional utilities and other building services furnished by Landlord at the
request of Tenant or as a result of Tenant's activities as provided in Paragraph
7(b) hereof shall be borne by Tenant, who shall be separately billed therefor
and who shall reimburse and pay Landlord monthly for the same as additional
rent, at the same time the next monthly installment of Base Rent and other
additional rent is due. Tenant agrees to give reasonable advance notice, in
writing, to Landlord of its request for additional services.
(e) Computer Areas. Landlord and Tenant shall each be responsible for
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their own utilities consumption costs associated
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with their respective computer areas within Building E. Tenant acknowledges that
its computer area is located on Level 2 of Building E. Within thirty (30) days
after the date hereof, representatives of Landlord and Tenant shall meet to
establish the method for determining respective responsibility for such
utilities costs. If the parties are unable to mutually agree within said thirty
(30) days then, at Landlord's option, (i) each party's large electrical
equipment, such as computers, shall be separately submetered, and/or (ii) each
party's computer areas shall be separately submetered, to determine electrical
consumption. In such event, each party shall be responsible for all costs and
expenses of the submetered electricity supplied to their respective computer
areas and, if necessary, Tenant's Proportionate Share of the balance of the
electricity costs shall be equitably adjusted. The costs of installing any such
submeters in Tenant's computer area shall be borne by Tenant. The costs of
installing any such submeters in Landlord's computer area shall be borne by
Landlord.
8. PARKING
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Tenant and its employees, agents, contractors, invitees and guests
shall have the non-exclusive right to park vehicles in the parking areas of the
Project on an undesignated basis at no additional charge to Tenant or its
employees, agents, contractors, invitees and guests.
9. SIGNS
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Subject to the terms and conditions of this Paragraph 9, Tenant shall
have the right to retain and maintain signs, advertisements, and notices on or
in the Project or on or about the Premises which have existed prior to the
Commencement Date; provided, however, that Landlord and Tenant shall mutually
agree on the signage to be installed by Tenant in the Project from and after the
Commencement Date. Tenant shall not inscribe, paint, affix or display any
additional signs, advertisements, or notices without the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed. Upon
the expiration or early termination of this Lease, Tenant shall remove all of
its signs and shall repair and restore any damage or injury in connection
therewith, at Tenant's sole expense. Landlord shall have the right to erect
and/or otherwise install such signage as desired by Landlord, provided that it
complies with city ordinances and other applicable laws and regulations. If
city ordinances or other applicable laws or regulations impose restrictions or
limitations preventing Landlord from installing signage in size and quantity
equaling in area and visibility Tenant's existing signage, then Tenant agrees to
share and/or reduce the size and/or quantity of its signs to the extent
necessary to allow Landlord to install legal and conforming signage equaling in
area and visibility Tenant's existing signage. Landlord shall pay all costs and
expenses for Landlord's signage. Landlord shall also pay the cost, if any, of
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modifying Tenant's existing signage if necessary to allow Landlord to install
Landlord's signage as permitted by this paragraph. Any new directional signs on
the Project shall be subject to the mutual approval of Landlord and Tenant,
which shall not be unreasonably withheld or delayed.
10. REPAIRS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS AND FIXTURES
------------------------------------------------------------
(a) Repair and Maintenance of Project. Landlord shall keep and
---------------------------------
maintain in good order, condition and repair the roof, exterior and interior
loadbearing walls (including any plate glass windows comprising a part thereof),
foundation, basement, the common areas and facilities of the Project and the
electrical, plumbing, heating, ventilation and air conditioning systems serving
the Premises and other parts of the Project. The cost of all noncapitalized
repairs required to be made by Landlord shall be an Operating Expense of the
Project (unless such non-capitalized repairs are required to be made by the
negligence, misuse, or default of Landlord, its employees or agents, or the
negligence, misuse or default of other occupants of the Project or their
employees or agents) unless made necessary by the negligence, misuse or default
of Tenant, its employees or agents, in which event they shall be borne by
Tenant, who shall be separately billed and shall reimburse Landlord for the same
as Additional Rent.
(b) Repair and Maintenance of Premises. Except as provided in
----------------------------------
Paragraph 10(a) hereof, Tenant shall, at its own expense, keep and maintain the
Premises in good order, condition and repair at all times during the Term,
subject to damage by casualty loss and Tenant shall promptly repair all damage
to the Premises and replace or repair all damaged or broken fixtures, equipment
and appurtenances with materials equal in quality and class to the original
materials, and within any reasonable period of time. If in any one event the
cost of such repair or replacement is estimated to exceed Ten Thousand and
no/100 Dollars ($10,000.00), then such repair or replacement shall be under the
supervision and subject to the approval of Landlord. If Tenant fails to do so,
Landlord may, but need not make such repairs and replacements, and Tenant shall
pay Landlord the cost thereof within thirty (30) days following Landlord's
written demand therefor, plus an amount equal to fifteen percent (15%) of any
costs or expenses paid by Landlord, in order to reimburse Landlord for overhead,
general conditions, fees and other costs and expenses arising from Landlord's
actions or involvement.
(c) Alterations or Improvements. During the Term, Tenant shall have
---------------------------
the right to make such alterations, additions or improvements to the Premises
("Improvements") as deemed necessary or desirable by Tenant, provided that such
Improvements are constructed in accordance with the terms and conditions of this
subsection (c). However, Tenant shall not make any Improvements of a structural
nature without obtaining Landlord's prior written consent. At the time Tenant
desires to make any
-13-
Improvements with a cost in excess of Fifty Thousand and no/100 Dollars
($50,000.00), Tenant shall submit (i) a general plan or layout to Landlord for
Landlord's review and (ii) an express written notice that Landlord must notify
Tenant within fifteen (15) days if Landlord will require Tenant to remove such
Improvements prior to the Expiration Date, and, within fifteen (15) days
following receipt of such plan and notice, Landlord shall notify Tenant in
writing if Landlord will require Tenant to remove such Improvements prior to the
Expiration Date ("Removal Notice"). Tenant shall not have the right to make any
Improvements to or on the common areas of the Project. All Improvements shall be
made in compliance with all applicable laws and building codes, in a good and
workmanlike manner and in quality equal to or better than the original
construction of the Project. Tenant shall promptly pay all costs attributable to
such Improvements and shall indemnify, defend and hold harmless Landlord from
and against any mechanic's liens or other liens or claims filed or asserted as a
result thereof and against any costs or expenses which may be incurred as a
result of building code violations attributable to such work. Tenant shall
promptly repair any damage to the Premises or the Project caused during the
construction of such Improvements. Landlord shall give proper notice to Tenant
of any possible claim with respect to which Tenant's obligation to indemnify,
defend and hold harmless Landlord may apply and Tenant shall have the right to
defend any such claim with counsel of Tenant's choosing. All Improvements made
by Tenant to the Premises during the Term shall remain the property of Tenant
and Tenant shall be entitled to all depreciation and amortization of costs in
connection therewith. Prior to surrender of the Premises to Landlord, Tenant
shall remove any Improvements identified by Landlord for removal in the Removal
Notice and, at Landlord's request provided at least fifteen (15) days prior to
the Expiration Date or earlier termination of the Lease, such other Improvements
constructed by Tenant during the Term which were not submitted to Landlord for
its prior review. Any damage caused by such removal shall be repaired at
Tenant's cost and expense. Notwithstanding the preceding to the contrary, Tenant
shall have no obligation to remove any Improvements that existed on the
Commencement Date, or any Improvements that Tenant installed during the Term and
which Landlord did not identify for removal following Landlord's review of the
general plans. In the event Tenant so fails to remove any Improvements that
Tenant is obligated to remove, Landlord may have same removed and the Premises
so repaired at Tenant's expense. If any Improvements to the Premises cause the
need for additional alterations or improvements to any other part of the Project
or the Premises, including, but without limitation, any system(s) of the Project
and/or any other changes to comply with applicable codes, ordinances or other
laws (collectively, "Additional Improvements"), the installation of such
Additional Improvements shall be subject to the terms and conditions of this
subsection (c) and Tenant shall be required to pay the cost of installing such
Additional Improvements.
-14-
(d) Trade Fixtures. Any trade fixtures installed on the Premises by
--------------
Tenant at its own expense during the Term, such as movable partitions, counters,
shelving, showcases, mirrors and the like may, and, at the request of Landlord,
shall be removed on the Expiration Date or earlier termination of this Lease,
provided that Tenant is not then in default, that Tenant bears the cost of such
removal, and further that Tenant repair at its own expense any and all damage to
the Premises resulting from the original installation of and subsequent removal
of such trade fixtures. If Tenant fails so to remove any and all such trade
fixtures from the Premises on the Expiration Date or earlier termination of this
Lease, all such trade fixtures shall become the property of Landlord unless
Landlord elects to require their removal, in which case Tenant shall promptly
remove same and restore the Premises to their prior condition. In the event
Tenant so fails to remove same, Landlord may have same removed and the Premises
so repaired to their prior condition at Tenant's expense.
(e) Cabling. During the Term, Tenant shall have the right to install
-------
such cabling in the Premises as deemed necessary or desirable by Tenant, subject
to the terms of this subsection (e). At the time Tenant desires to install any
such cabling, Tenant shall submit (i) a general plan or layout to Landlord for
Landlord's review and (ii) an express written notice that Landlord must notify
Tenant within fifteen (15) days if Landlord will require Tenant to remove such
cabling prior to the Expiration Date. If, within fifteen (15) days following
receipt of such plan and notice, Landlord notifies Tenant in writing that
Landlord will require Tenant to remove such cabling prior to the Expiration
Date, then Tenant shall remove such cabling identified by Landlord prior to the
Expiration Date or earlier termination of the Lease. If Tenant fails to provide
such plan and notice to Landlord prior to installation of the cabling, then
Tenant shall be required to remove such cabling prior to the Expiration Date or
earlier termination of the Lease, unless otherwise notified in writing by
Landlord. If Tenant provided said plan and notice, but Landlord does not notify
Tenant, then upon the Expiration Date or earlier termination of this Lease, such
items shall be deemed to be part of the realty and the property of Landlord (and
shall not be removed or disabled by Tenant). If Landlord so notifies Tenant to
remove any or all of such items, and Tenant fails to remove the same upon the
expiration or earlier termination of this Lease, then Landlord may have the same
removed at Tenant's expense.
(f) Reserved Rights. Landlord reserves the right to decorate and to
---------------
make, at any time or times, at its own expense, repairs, alterations, additions
and improvements, structural or otherwise, in or to the Buildings, the Project
or part thereof, and to perform any acts related to the safety, protection or
preservation thereof, and during such operations to take into and through the
Premises or any part of the Buildings all material and equipment required,
provided that Landlord shall use
-15-
reasonable efforts to cause as little inconvenience or annoyance to Tenant as is
reasonably necessary in the circumstances. Included among Landlord's rights are
rights of Landlord to install security devices, walls, doorways and/or other
improvements as necessary or desirable in Landlord's discretion to adequately
secure space in the Project occupied or used by Landlord or other tenants from
the Premises. Tenant shall cause its employees, agents, customers and invitees
to comply with any security measures reasonably imposed by Landlord.
11. FIRE OR OTHER CASUALTY; CASUALTY INSURANCE
------------------------------------------
(a) Substantial Destruction of the Buildings. If the Buildings in
----------------------------------------
which the Premises is located are substantially destroyed (which, as used
herein, means destruction or damage to at least seventy-five percent (75%) of
said Buildings) by fire or other casualty, either party hereto may, at its
option, terminate this Lease by giving written notice thereof to the other party
within sixty (60) days of such casualty. In such event, Base Rent and
Additional Rent shall be apportioned to and shall cease as of the date of such
casualty. If neither party exercises this option, then the Premises shall be
reconstructed and restored, at Landlord's expense, to substantially the same
condition as they were prior to the casualty.
(b) Substantial Destruction of the Premises. If the Premises are
---------------------------------------
substantially destroyed (which, as used herein, means destruction or damage to
at least seventy-five percent (75%) of the Premises), or rendered wholly
untenantable for the purpose for which they were leased, by fire or other
casualty whether or not the Buildings are substantially destroyed as provided
above, then the parties hereto shall have the following options:
(1) Tenant may elect to terminate the Lease or to require that the
Premises be reconstructed and restored, at Landlord's expense, to substantially
the same condition as the Premises existed prior to the casualty, except for
repair or replacement of Tenant's personal property, equipment and trade
fixtures, which shall remain Tenant's responsibility. This option shall be
exercised by Tenant giving written notice to Landlord within sixty (60) days
after the date of the casualty, and this Lease shall continue in full force and
effect for the balance of the Term upon the same terms, conditions and covenants
as are contained herein. Base Rent and Additional Rent shall be equitably abated
following the occurrence of the casualty.
(2) If the casualty occurs during the last twelve (12) months of
the Term, either party shall have the right and option to terminate its Lease as
of the date of the casualty, which option shall be exercised by written notice
to be given by either party to the other party within thirty (30) days
therefrom. If this option is exercised, rent shall be apportioned to and shall
cease as of the date of the casualty.
-16-
(c) Partial Destruction of the Premises.
-----------------------------------
(1) If the Premises are rendered partially untenantable for the
purpose for which they were leased (which, as used herein, means the Premises
are less than substantially destroyed, as defined in Paragraph 11(b) above) by
fire or other casualty, then such damaged part of the Premises shall be
reconstructed and restored, at Landlord's expense, to substantially the same
condition as it was prior to the casualty. Base Rent and Additional Rent shall
be equitably abated in proportion to the ratio between the number of square feet
which is untenantable compared to the aggregate number of square feet comprising
the Premises. Landlord shall use reasonable diligence in completing such
reconstruction repairs, but in the event Landlord fails to complete the same
within one hundred fifty (150) days from the date of the casualty, Tenant may,
at its option, terminate this Lease upon giving Landlord written notice to that
effect, whereupon both parties shall be released from all further obligations
and liability hereunder.
(2) If the casualty occurs during the last six (6) months of the
Term, either party shall have the right and option to terminate its Lease as of
the date of the casualty, which option shall be exercised by written notice to
be given by either party to the other party within thirty (30) days therefrom.
If this option is exercised, rent shall be apportioned to and shall cease as of
the date of the casualty.
(d) Casualty Insurance.
------------------
(1) Landlord shall at all times during the Term, carry, as an
Operating Expense of the Project, a "Special Forms and Extended Perils" property
insurance policy insuring the Project, including the Premises, against loss or
damage by fire or other casualty (namely, the perils against which insurance is
afforded by the standard fire insurance policy and extended coverage
endorsement) for the full replacement cost thereof; provided, however, that
Landlord shall not be obligated to insure against any loss or damage to personal
property (including, but not limited to, any furniture, machinery, equipment,
goods or supplies) of Tenant or which Tenant may have on the Premises or any
trade fixtures installed by or paid for by Tenant on the Premises or any
additional improvements which Tenant may construct on the Premises. Such policy
shall provide coverage against physical loss, damage and theft and the perils of
fire and extended coverage, including, without limitation, theft, vandalism,
malicious mischief, explosion, collapse and underground hazards, sprinkler
leakage, water damage, storms, subsidence, sinkhole collapse, landslide, and
debris removal. Such property insurance must be from insurance companies rated
at least A:X in the latest Best's Insurance Guide. Upon request, Landlord shall
furnish to Tenant a certificate evidencing the existence of such insurance
coverage and endorsements to such coverage. If changes to Tenant's use or
operation on the
-17-
Premises, or any alterations or improvements made by Tenant pursuant to the
provisions of Paragraph 10(c) hereof result in an increase in the premiums
charged during the Term on the casualty insurance carried by Landlord on the
Project, then the cost of such increase in insurance premiums shall be borne by
Tenant, who shall reimburse Landlord for the same as additional rent after being
billed therefor. If changes to Landlord's use or operation within Project, or
any alterations or improvements made by Landlord (and not on Tenant's behalf)
result in an increase in the premiums charged during the Term on the casualty
insurance carried by Landlord on the Project, then the cost of such increase in
insurance premiums shall be borne by Landlord, and said increase shall be
excluded from Operating Expenses for purposes of this Lease.
(2) Tenant shall at all times during the Term, carry, at its own
expense, property insurance covering its personal property and trade fixtures
installed by or paid for by Tenant or any additional improvements which Tenant
may construct on the Premises, which coverage shall be no less than replacement
value. Tenant shall furnish Landlord with a certificate evidencing that such
coverages are in full force and effect. Such coverages shall not be canceled or
amended on less than thirty (30) days notice to Landlord.
(e) Waiver of Subrogation. This Paragraph 11(e) shall govern any
---------------------
contrary or inconsistent provisions of this Lease. Landlord and Tenant hereby
release each other and each other's employees, agents, customers and invitees
from any and all liability for any loss, damage or injury to property occurring
in, on or about or to the Premises, improvements to the Project or personal
property within the Project, by reason of fire or other casualty which are
covered by applicable standard fire and extended coverage insurance policies.
Because the provisions of this paragraph will preclude the assignment of any
claim mentioned herein by way of subrogation or otherwise to an insurance
company or any other person, each party to this Lease shall give to each
insurance company which has issued to it one or more policies of fire and
extended coverage insurance notice of the terms of the mutual releases contained
in this paragraph, and have such insurance policies properly endorsed, if
necessary, to prevent the invalidation of insurance coverages by reason of the
mutual releases contained in this paragraph.
(f) Calculating Percentages. For purposes of calculating percentages
-----------------------
under Paragraphs 11(a), 11(b) and 11(c), the rentable area of the common areas
allocated to the area of the Premises shall be excluded, and only the actual
rentable area of the Premises, excluding common areas, shall be taken into
account.
-18-
12. GENERAL PUBLIC LIABILITY, INDEMNIFICATION AND INSURANCE
-------------------------------------------------------
(a) At all times during the Term, Landlord and Tenant shall each
carry, at its own expense, for the protection of the other party, one or more
policies of general liability insurance with one or more insurance companies
rated A:X or better in Best's Insurance Guide, providing minimum coverages of
$2,000,000 combined single limit for bodily injury and property damage per
occurrence and location with $5,000,000 aggregate coverage. Such general
liability insurance shall include a separation of insureds/cross liability
endorsement, broad form property damage coverage and afford coverage for
"personal injury" liability. At all times during the Term, Landlord and Tenant
shall each carry comprehensive automobile liability insurance covering all
owned, non-owned and hired automobiles, with limits of not less than $1,000,000
in primary coverage per accident for both bodily injury and property damage
liability. All such insurance policy or policies shall name the other party as
additional insureds and shall provide that they may not be canceled or
materially changed on less than thirty (30) days prior written notice to the
other party. Each party shall furnish the other with certificates of insurance
evidencing such coverages prior to the Commencement Date and prior to the date
of renewal. Should any party fail to carry such insurance and/or furnish to the
other party within ten (10) days following such other party's request a
certificate of insurance evidencing such coverage, such other party shall have
the right to obtain such insurance and collect the cost thereof from the non-
performing party, in which event the non-performing party shall reimburse such
other party for the cost of such coverage within thirty (30) days following such
other party's written demand therefor. Each party shall also provide the other
with certificates evidencing workers' compensation insurance coverage as
required by law and employer's liability coverage for injury, disease and death,
with coverage limits of not less than $1,000,000 per accident. The insurance
coverages required hereby shall be deemed to be additional obligations of each
party and shall not be a discharge or limitation of such party's indemnity
obligations contained hereinbelow.
(b) Except for any loss, damage, or injury to person or property
caused by the negligence or intentional misconduct of Landlord, Landlord's
agents, employees, contractors, invitees or guests, Tenant shall be responsible
for, shall insure against, and shall indemnify Landlord and hold it harmless
from, any and all liability for any loss, damage or injury to person or
property, arising out of use, occupancy or operations of Tenant and occurring
in, on or about the Premises and Tenant hereby releases Landlord from any and
all liability for the same. Tenant's obligation to indemnify Landlord hereunder
shall include the duty to defend against any claims asserted by reason of such
loss, damage or injury and to pay any judgments, settlements, costs, fees and
expenses, including attorneys' fees, incurred in connection therewith. Landlord
shall give prompt written notice to Tenant of the occurrence of any loss,
damage, or injury to
-19-
which Tenant's duty to indemnify and hold harmless the Landlord may pertain and
Tenant shall have the right to defend any claim asserted by any party with
respect to such loss, damage, or injury through counsel of Tenant's selection.
(c) Except for any loss, damage, or injury to person or property
caused by the negligence or intentional misconduct of Tenant, or Tenant's
agents, employees, contractors, invitees or guests, Landlord shall be
responsible for, shall insure against, and shall indemnify Tenant and hold it
harmless from, any and all liability for any loss, damage or injury to person or
property occurring in, on or about the common areas and facilities for the
Project and the use, occupancy or operations of Landlord and occurring in, on or
about any portion of the Project occupied by Landlord, and Landlord hereby
releases Tenant from any and all liability for the same. Landlord's obligation
to indemnify Tenant shall include the duty to defend against any claims asserted
by reason of such loss, damage or injury and to pay any judgments, settlements,
costs, fees and expenses, including attorneys' fees, incurred in connection
therewith. Tenant shall give prompt written notice to Landlord of the
occurrence of any loss, damage, or injury to which Landlord's duty to indemnify
and hold harmless the Tenant may pertain and Landlord shall have the right to
defend any claim asserted by any party with respect to such loss, damage, or
injury through counsel of Landlord's selection.
(d) Landlord and its partners, shareholders, affiliates, officers,
agents, servants and employees shall not be liable for any damage to person,
property or business resulting from the loss of use thereof sustained by Tenant
or by any other persons due to the Buildings or any part thereof or any
appurtenances thereof becoming out of repair, or due to the happening of any
accident or event in or about the Buildings, including the Premises, or due to
any act or neglect of any tenant or occupant of the Buildings or of any other
person. This provision shall apply particularly, but not exclusively, to damage
caused by gas, electricity, snow, ice, frost, steam, sewage, sewer gas or odors,
fire, water or by the bursting or leaking of pipes, faucets, sprinklers,
plumbing fixtures and windows and shall apply without distinction as to the
person whose act or neglect was responsible for the damage and whether the
damage was due to any of the causes specifically enumerated above or to some
other cause. Tenant agrees that except as set forth below in this subsection
(d), all personal property located in the Premises or placed by Tenant or on
behalf of Tenant upon loading docks, receiving and holding areas, or freight
elevators of Buildings, shall be at the risk of Tenant only, and that Landlord
shall not be liable for any loss or damage thereto or theft thereof.
-20-
13. EMINENT DOMAIN
--------------
If the whole or any part of the Premises or Project (including parking
areas) shall be taken for public or quasipublic use by a governmental authority
under the power of eminent domain or shall be conveyed to a governmental
authority in lieu of such taking, and if such taking or conveyance shall cause
the remaining part of the Premises to be untenantable and inadequate for use by
Tenant for the purpose for which they were leased, then Tenant may, at its
option, terminate this Lease as of the date Tenant is required to surrender
possession of the Premises as a result of such taking. If a part of the
Premises or Project shall be taken or conveyed but the remaining part is
tenantable and adequate for Tenant's use, then this Lease shall be terminated as
to the part taken or conveyed as of the date Tenant surrenders possession;
Landlord shall make such repairs, alterations and improvements as may be
necessary to render the part not taken or conveyed tenantable; and the rent
shall be reduced in proportion to the part of the Premises so taken or conveyed.
Tenant shall not have the right to assert a claim against the governmental
authority exercising its power of eminent domain based upon the value of
Tenant's leasehold interest. All compensation awarded for such taking or
conveyance shall be the property of Landlord without any deduction therefrom for
any present or future estate of Tenant and Tenant hereby assigns to Landlord all
its right, title and interest in and to any such award. However, Tenant shall
have the right to recover from the governmental authority, but not from
Landlord, such compensation as may be awarded to Tenant on account of the
interruption of Tenant's business, moving and relocation expenses and
depreciation to and removal of Tenant's trade fixtures and personal property.
14. LIENS
-----
If, because of any act or omission of Tenant or anyone claiming by,
through, or under Tenant (other than Landlord), any mechanic's lien or other
lien shall be filed against the Premises or the Project for work performed by or
on behalf of Tenant (whether or not such lien is valid or enforceable as such),
Tenant shall, at its own expense, cause the same to be discharged of record
within a reasonable time, not to exceed sixty (60) days after the date of filing
thereof, and shall also defend and indemnify Landlord and hold it harmless from
any and all claims, losses, damages, judgments, settlements, cost and expenses,
including attorneys' fees, resulting therefrom or by reason thereof. If such
lien is not discharged of record within sixty (60) days after the date of filing
thereof, Landlord, at its sole option, may take all action necessary to release
and remove such lien (without any duty to investigate the validity thereof) and
Tenant shall promptly upon notice reimburse Landlord for all sums, costs and
expenses (including reasonable attorneys' fees and Landlord's Costs) incurred by
Landlord in connection with such lien.
-21-
15. RENTAL, PERSONAL PROPERTY AND OTHER TAXES
-----------------------------------------
(a) Tenant shall pay before delinquency any and all taxes,
assessments, fees or charges (hereinafter referred to as "taxes"), including any
sales, gross income, rental, business occupation or other taxes, levied or
imposed upon Tenant's business operation in the Premises and any personal
property or similar taxes levied or imposed upon Tenant's trade fixtures,
leasehold improvements or personal property located within the Premises. In the
event any such taxes are charged to the account of, or are levied or imposed
upon the property of Landlord, Tenant shall reimburse Landlord for the same as
additional rent. Notwithstanding the foregoing, Tenant shall have the right to
contest in good faith any such tax and to defer payment, if required, until
after Tenant's liability therefor is finally determined.
(b) If any tenant finish improvements, trade fixtures, alterations or
improvements or business machines and equipment located in, on or about the
Premises, regardless of whether they are installed or paid for by Landlord or
Tenant and whether or not they are affixed to and become a part of the realty
and the property of Landlord, are assessed for real property tax purposes at a
valuation higher than that at which other such property in other space in the
Project is assessed, then Tenant shall reimburse Landlord as additional rent for
the amount of real property taxes shown on the appropriate county official's
records as having been levied upon the Project or other property of Landlord by
reason of such excess assessed valuation.
16. ASSIGNMENT AND SUBLETTING
-------------------------
Tenant may not assign or otherwise transfer its interest in this Lease
or sublet the Premises or any part thereof without the prior written consent of
Landlord. Tenant shall notify Landlord thirty (30) days in advance of its
intent to transfer, assign or sublet all or any portion of the Premises and
shall, at the time Tenant requests Landlord's approval, provide Landlord with
financial information on the proposed assignee or subtenant. Landlord shall
have the right to grant or withhold its consent to a proposed assignment or
subletting in Landlord's sole discretion; however, Landlord shall not have the
right to unreasonably withhold its consent with respect to any assignment or
sublease requested by Tenant hereunder, provided that (i) the request is for an
assignment or sublease to one assignee or subtenant (as applicable), and (ii)
there is currently no other sublease in effect and (iii) the Tenant's interest
in this Lease has not previously been assigned more than once. Without
limitation, in determining whether to withhold its consent with respect to an
assignment or subleasing request to which said reasonableness standard applies,
Landlord shall have the right to give due regard to the proposed assignee's or
subtenant's financial situation, reputation, and specific proposed use, as well
as security issues and the impact on common areas. In any
-22-
event, Tenant shall reimburse Landlord for fees and expenses incurred by
Landlord (including expert and attorneys' fees) in reviewing any proposed
assignment or subletting. In the event of any such assignment or subletting,
Tenant shall nevertheless at all times remain fully responsible and liable for
the payment of rent and the performance and observance of all of Tenant's other
obligations under the terms, conditions and covenants of this Lease. No
assignment or subletting of the Premises or any part thereof shall be binding
upon Landlord unless such assignee or subtenant delivers to Landlord an
instrument (in recordable form, if requested) containing an agreement of
assumption of all of Tenant's obligations under this Lease and Landlord executes
a consent form. Upon the occurrence of an event of default after the expiration
of any applicable notice and cure period herein, if all or any part of the
Premises are then assigned or sublet, Landlord, in addition to any other
remedies provided by this Lease or by law, may, at its option, collect directly
from the assignee or subtenant all rent becoming due to Landlord by reason of
the assignment or subletting, and Landlord shall have a security interest in all
property on the Premises to secure payment of such sums. Landlord, at its
option, may also recapture any sublet space in the event of default. Any
collection by Landlord from the assignee or subtenant shall not be construed to
constitute a novation or release of Tenant from the further performance of its
obligations under this Lease. Any rents received by Tenant from the assignment
or subletting of the Premises which exceed rents payable by Tenant hereunder
shall be immediately paid to Landlord as additional compensation. Landlord
shall, at its option, have the right to recapture all or any part of the
Premises Tenant proposes to assign or sublet upon notice from Tenant of its
intent to assign or such sublet part of the Premises. Landlord shall have the
right to transfer and assign, in whole or in part, all its rights and
obligations hereunder and in the Buildings, the Project and all other property
referred to herein, and upon such transfer, the transferor shall have no further
liability hereunder and Tenant shall attorn to any such transferee. Landlord
hereby consents to the sublease(s), if any, described in Exhibit "D" attached
-----------
hereto and made a part hereof. Landlord hereby consents to the merger of Cray
into SGI.
17. SUBORDINATION OF LEASE TO MORTGAGES
-----------------------------------
This Lease shall be subject and subordinate to any mortgage or similar
encumbrances, including ground or underlying leases, whether presently existing
or hereafter voluntarily placed upon the Project or the Premises, including any
renewals, extensions or modifications thereof, provided that, with respect to
any such encumbrances hereafter placed on the Project or Premises, the holder of
such encumbrance enters into a non-disturbance and attornment agreement with
Tenant in a customary form, including, among other provisions, an agreement that
Tenant's possession of the Premises will not be disturbed in the event of
mortgage foreclosure or other similar exercise of
-23-
remedies, so long as Tenant is not in default hereunder after the expiration of
any applicable notice and cure periods. Tenant shall, at Landlord's request,
execute and deliver within ten (10) days to Landlord, without cost, a
subordination, non-disturbance and attornment agreement for purposes of
confirming the subordination of this Lease.
18. DEFAULTS AND REMEDIES
---------------------
(a) Default by Tenant. The occurrence of any one or more of the
-----------------
following events shall be a default and breach of this Lease by Tenant:
(1) Tenant shall fail to pay any installment of Base Rent, Taxes,
Operating Expenses or additional rent within ten (10) days after written notice
that the same is due and payable;
(2) Tenant shall fail to perform or observe any term, condition,
covenant or obligation required to be performed or observed by it under this
Lease for a period of thirty (30) days after written notice thereof from
Landlord; provided, however, that if the term, condition, covenant or obligation
to be performed by Tenant is of such nature that the same cannot reasonably be
performed within such thirty (30) day period, such default shall be deemed to
have been cured if Tenant commences such performance within said thirty day
period and thereafter diligently completes the same;
(3) Tenant shall abandon the Premises; or
(4) Tenant makes an assignment for the benefit of creditors; or
substantially all of Tenant's assets in, on or about the Premises or Tenant's
interest in this Lease are attached or levied upon under execution (and Tenant
does not discharge the same within sixty (60) days thereafter).
(b) Remedies of Landlord. Upon the occurrence of any event of default
--------------------
set forth in Paragraph 18(a) hereof, Landlord shall have the following rights
and remedies, in addition to those allowed by law, any one or more of which may
be exercised without further notice to or demand upon Tenant:
(1) Landlord may reenter the Premises and cure any default of
Tenant, in which event Tenant shall reimburse Landlord as additional rent for
any costs and expenses which Landlord may incur to cure such default.
(2) Landlord may terminate this Lease as of the date of such
default, in which event: (A) neither Tenant nor any person claiming under or
through Tenant shall thereafter be entitled to possession of the Premises, and
Tenant shall immediately thereafter surrender the Premises to Landlord; (B)
Landlord may reenter the Premises and dispossess Tenant or any
-24-
other occupants of the Premises by summary proceedings, ejectment or otherwise,
and may remove their effects, without prejudice to any other remedy which
Landlord may have for possession or arrearages in rent; and (C) notwithstanding
the termination of this Lease, Landlord may either declare all rent which would
have been due under this Lease for the balance of the Term or exercised renewal
period to be immediately due and payable, whereupon Tenant shall be obligated to
pay the same to Landlord, together with all loss or damage which Landlord may
sustain by reason of such termination and reentry, or relet all or any part of
the Premises for a term different from that which would otherwise have
constituted the balance of the Term and for rent and on terms and conditions
different from those contained herein, whereupon Tenant shall be obligated to
pay to Landlord as liquidated damages the difference between the rent provided
for herein and that provided for in any lease covering a subsequent reletting of
the Premises, for the period which would otherwise have constituted the balance
of the Term, together with all of Landlord's costs and expenses for preparing
the Premises, for reletting, including all repairs, tenant finish improvements,
marketing costs, broker's and attorney's fees, and all loss or damage which
Landlord may sustain by reason of such termination, reentry and reletting, it
being expressly understood and agreed that the liabilities and remedies
specified above shall survive the termination of this Lease. Notwithstanding
anything to the contrary herein contained, Landlord shall not have a duty to
mitigate its damages following Tenant's default under this Lease.
(3) Landlord may terminate Tenant's right of possession of the
Premises and may repossess the Premises by unlawful detainer action, by taking
peaceful possession or otherwise, without terminating this Lease, in which event
Landlord may, but shall be under no obligation to, relet the same for the
account of Tenant, for such rent and upon such terms as shall be satisfactory to
Landlord. For the purpose of such reletting, Landlord is authorized to
decorate, repair, remodel or alter the Premises. If Landlord fails to so relet
the Premises, Tenant shall pay to Landlord as damages a sum equal to the rent
which would have been due under this Lease for the balance of the Term or
exercised renewal period as such rent shall become due and payable hereunder
from time to time during the Term. If the Premises are relet and a sufficient
sum shall not be realized from such reletting after paying all of the costs and
expenses of all decoration, repairs, remodeling, alterations and additions and
the expenses of such reletting and of the collection of the rent accruing
therefrom to satisfy the rent provided for in this Lease, Tenant shall satisfy
and pay the same upon demand therefor from time to time. Tenant shall not be
entitled to any rents received by Landlord in excess of the rent provided for in
this Lease.
(4) Landlord may sue for injunctive relief or to recover damages
for any loss resulting from the breach.
-25-
Any agreement for an extension of the Term or any additional period
thereafter shall not thereby prevent Landlord from terminating this Lease for
any reason specified in this Lease. If any such right of termination is
exercised by Landlord during the Term or any extension thereof, Tenant's right
to any further extension shall thereby be automatically canceled. Any such
right of termination of Landlord contained herein shall continue during the Term
and any subsequent extension hereof.
(c) Default by Landlord and Remedies of Tenant. It shall be a default
------------------------------------------
and breach of this Lease by Landlord if it shall fail to perform or observe any
term, condition, covenant or obligation required to be performed or observed by
it under this Lease for a period of thirty (30) days after notice thereof from
Tenant; provided, however, that if the term, condition, covenant or obligation
to be performed by Landlord is of such nature that the same cannot reasonably be
performed within such thirty (30) day period, such default shall be deemed to
have been cured if Landlord commences such performance within said thirty-day
period and thereafter diligently completes the same. Upon the occurrence of any
such default, Tenant may sue for injunctive relief or to recover damages for any
loss resulting from the breach, but Tenant shall not be entitled to terminate
this Lease or withhold or abate any rent due hereunder.
(d) NonWaiver of Defaults. The failure or delay by either party
---------------------
hereto to enforce or exercise at any time any of the rights or remedies or other
provisions of this Lease shall not be construed to be a waiver thereof, nor
affect the validity of any part of this Lease or the right of either party
thereafter to enforce each and every such right or remedy or other provisions.
No waiver of any default and breach of this Lease shall be held to be a waiver
of any other default of breach. The receipt of rent by Landlord at a time after
rent is due under this Lease shall not be construed as a waiver of such default.
The receipt by Landlord of less than the full rent due shall not be construed to
be other than a payment on account of rent then due, nor shall any statement on
Tenant's check or any letter accompanying Tenant's check be deemed an accord and
satisfaction, and Landlord may accept such payment without prejudice to
Landlord's right to recover the balance of the rent due or to pursue any other
remedies provided in this Lease. No act or omission by Landlord or its
employees or agents during the term of this Lease shall be deemed an acceptance
of a surrender of the Premises, and no agreement to accept such a surrender
shall be valid unless in writing and signed by Landlord.
(e) Attorney's Fees. If Tenant defaults in the performance or
---------------
observance of any of the terms, conditions, covenants or obligations contained
in this Lease and Landlord places the enforcement of all or any part of this
Lease, the collection of any rent due or to become due or the recovery of
possession of the Premises in the hands of an attorney, or if Landlord incurs
any fees or out-of-pocket costs in any
-26-
litigation, negotiation or transaction in which Tenant causes Landlord (without
Landlord's fault) to be involved or concerned, Tenant agrees to reimburse
Landlord for the attorney's fees and costs incurred thereby, whether or not suit
is actually filed.
19. BANKRUPTCY OR INSOLVENCY
------------------------
(a) If a petition is filed by, or an order for relief is entered
against Tenant under Chapter 7 of the Bankruptcy Code and the trustee of Tenant
elects to assume this Lease for the purpose of assigning it, such election or
assignment, or both, may be made only if all of the terms and conditions of
subparagraphs (b) and (d) below are satisfied. To be effective, an election to
assume this Lease must be in writing and addressed to Landlord, and in
Landlord's business judgment, all of the conditions hereinafter stated, which
Landlord and Tenant acknowledge to be commercially reasonable, must have been
satisfied. If the trustee fails so to elect to assume this Lease within sixty
(60) days after his appointment, this Lease will be deemed to have been
rejected, and Landlord shall then immediately be entitled to possession of the
Premises without further obligation to Tenant or the trustee and this Lease
shall be terminated. Landlord's right to be compensated for damages in the
bankruptcy proceeding, however, shall survive such termination.
(b) If Tenant files a petition for reorganization under Chapters 11 or
13 of the Bankruptcy Code, or if a proceeding filed by or against Tenant under
any other chapter of the Bankruptcy Code is converted to a Chapter 11 or 13
proceeding and Tenant's trustee or Tenant as debtor-in-possession fails to
assume this Lease within sixty (60) days from the date of the filing of such
petition or conversion, then the trustee or the debtor-in-possession shall be
deemed to have rejected this Lease. To be effective any election to assume this
Lease must be in writing addressed to Landlord and, in Landlord's business
judgment, all of the following conditions, which Landlord and Tenant acknowledge
to be commercially reasonable, must have been satisfied:
(1) The trustee or the debtor-in-possession has cured or has
provided to Landlord adequate assurance, as defined in this subparagraph (b),
that:
a. The trustee will cure all monetary defaults under this
Lease within ten (10) days from the date of assumption
b. The trustee will cure all nonmonetary defaults under
this Lease within thirty (30) days from the date of assumption.
(2) The trustee or the debtor-in-possession has compensated
Landlord, or has provided Landlord with adequate
-27-
assurance, as hereinafter defined, that within ten (10) days from the date of
assumption Landlord will be compensated for any pecuniary loss it has incurred
arising from the default of Tenant, the trustee, or the debtor-in-possession, as
recited in Landlord's written statement of pecuniary loss sent to the trustee or
debtor-in-possession.
(3) The trustee or the debtor-in-possession has provided Landlord
with adequate assurance of the future performance of each of Tenant's
obligations under this Lease; provided, however, that:
a. From and after the date of assumption of this Lease, the
trustee or the debtor-in-possession shall pay the Base and Additional
Rents payable under this Lease in advance in equal monthly
installments on each date that such Rents are payable.
b. The trustee or debtor-in-possession shall also deposit
with Landlord, as security for the timely payment of Rent, an amount
equal to three (3) months' Base Rent and other monetary charges
accruing under this Lease;
c. If not otherwise required by the terms of this Lease,
the trustee or the debtor-in-possession shall also pay in advance, on
each day that any installment of Base Rent is payable, one-twelfth
(1/12) of Tenant's annual Taxes, Operating Expenses, and other
obligations under this Lease; and
d. The obligations imposed upon the trustee or the debtor-
in-possession will continue for Tenant after the completion of
bankruptcy proceedings.
(4) Landlord has determined that the assumption of this Lease
will not:
a. Breach any provision in any other lease, mortgage,
financing agreement, or other agreement by which Landlord is bound
relating to the Property, Buildings or Project in which the Premises
is located; or
b. Disrupt, in Landlord's judgment, the occupant mix or
occupant consistency of the Buildings or Project or any other attempt
by Landlord to provide or exclude a specific variety of occupants in
the Buildings or Project which, in Landlord's judgment, would be most
beneficial to all of the tenants thereof (including Landlord) and
would enhance the security, image, reputation, and profitability
thereof.
-28-
(5) For purposes of this subparagraph (b), "adequate assurance"
means that:
a. Landlord determines that the trustee or the debtor-in-
possession has, and will continue to have, sufficient unencumbered
assets, after the payment of all secured obligations and
administrative expenses, to assure Landlord that the trustee or the
debtor-in-possession will have sufficient funds timely to fulfill
Tenant's obligations under this Lease and to keep the Premises
properly staffed with sufficient employees to conduct a fully
operational, actively promoted business in the Premises; and
b. An order shall have been entered segregating sufficient
cash payable to Landlord and/or a valid and perfected first lien and
security interest shall have been granted in property of Tenant,
trustee, or debtor-in-possession which is acceptable in value and kind
to Landlord, to secure to Landlord the obligation of the trustee or
debtor-in-possession to cure all monetary and nonmonetary defaults
under this Lease within the time periods set forth above.
(c) In the event this Lease is assumed by a trustee appointed for
Tenant or by Tenant as debtor-in-possession under the provisions of subparagraph
(b) above and, thereafter, Tenant is either adjudicated bankrupt or files a
subsequent petition for arrangement under Chapter 11 of the Bankruptcy Code,
then Landlord may, at its option, terminate this Lease and all the tenant's
rights under it, by giving written notice of Landlord's election so to
terminate.
(d) If the trustee or the debtor-in-possession has assumed this Lease,
pursuant to subparagraph (a) or (b) above, to assign or to elect to assign
Tenant's interest under this Lease or the estate created by that interest to any
other person, such interest or estate may be assigned only if the intended
assignee has provided adequate assurance of future performance, as defined in
this subparagraph (d), of all of the terms, covenants, and conditions of this
Lease.
(1) For purposes of this subparagraph (d), "adequate assurance of
future performance" means that Landlord has ascertained that each of the
following conditions has been satisfied:
a. The assignee has submitted a current financial statement,
audited by a certified public accountant, which shows a net worth and
working capital in amounts determined by Landlord to be sufficient to
assure the future performance by the assignee of the tenant's
obligations under this Lease;
-29-
b. If requested by Landlord, the assignee will obtain
guarantees, in form and substance satisfactory to Landlord (i.e.
letter(s) of credit), from one or more persons who satisfy Landlord's
standards of creditworthiness; and
c. Landlord has obtained consents or waivers from any third
parties which may be required under any lease, mortgage, financing
arrangement, or other agreement by which Landlord is bound, to enable
Landlord to permit such assignment.
(e) When, pursuant to the Bankruptcy Code, the trustee or the debtor-
in-possession is obligated to pay reasonable use and occupancy charges for the
use of all or part of the Premises, it is agreed that such charges will not be
less than the Base Rent as defined in this Lease, plus additional rent and other
monetary obligations of Tenant included herein.
(f) Neither Tenant's interest in this Lease nor any estate of Tenant
created in this Lease shall pass to any trustee, receiver, assignee for the
benefit of creditors, or any other person or entity, nor otherwise by operation
of law under the laws of any state having jurisdiction of the person or property
of Tenant, unless Landlord consents in writing to such transfer. Landlord's
acceptance of Rent or any other payments from any trustee, receiver, assignee,
person, or other entity will not be deemed to have waived, or waive, either the
requirement of Landlord's consent or Landlord's right to terminate this Lease
for any transfer of Tenant's interest under this Lease without such consent.
20. ACCESS TO THE PREMISES
----------------------
Landlord, its employees and agents and any mortgagee of the Project
shall have the right to enter any part of the Premises following at least
twenty-four (24) hours' written notice (except in the event of an emergency, in
which case only such notice as is reasonably possible shall be required) for the
purposes of examining or inspecting the same, showing the same to prospective
purchasers, mortgagees or tenants and for making such repairs, alterations or
improvements to the Premises or the Project as Landlord may deem necessary or
desirable. Notwithstanding anything to the contrary herein contained, Landlord
agrees that it shall not unreasonably interfere with the use of the Premises by
Tenant and shall use diligent and good faith efforts to preserve all
confidentiality of Tenant. If (i) Landlord is unable to timely gain access to
the Premises due to Tenant's security or other reasons within Tenant's control,
and (ii) Landlord incurs loss or damage as a result, for example (but without
limitation) due to a ruptured pipe or other repair problem, then Tenant shall be
obligated to reimburse Landlord within ten (10) days after demand for any such
loss or damage to
-30-
the extent insurance proceeds are not recovered by Landlord for the same.
21. SURRENDER OF PREMISES
---------------------
Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises to Landlord, together with all keys, access cards,
alterations, improvements, and other property as provided elsewhere herein, in
broom clean condition and in good order, condition and repair, except for
ordinary wear and tear, damage created by casualty loss and damage which Tenant
is not obligated to repair, failing which Landlord may restore the Premises to
such condition at Tenant's expense, which shall be payable upon demand. Subject
to the provisions of Paragraph 10(d) hereof, upon such expiration or termination
Tenant's trade fixtures, furniture and equipment shall remain Tenant's property,
and if Tenant shall not then be in default under this Lease, Tenant shall have
the right to remove the same prior to the expiration or earlier termination of
this Lease, Tenant shall promptly repair any damage caused by any such removal,
and shall restore the Premises to the condition existing prior to the
installation of the items so removed. Any of Tenant's trade fixtures, furniture
or equipment not so removed shall be considered abandoned and may be retained by
Landlord or be destroyed or disposed of at Tenant's expense. All reference to
trade fixtures shall be as described in Paragraph 10(d) hereof.
22. HOLDING OVER
------------
(a) If Tenant remains in possession of the Premises without the
written consent of Landlord after the expiration or earlier termination of this
Lease, Tenant shall be deemed to hold the Premises as a tenant at will subject
to all of the terms, conditions, covenants and provisions of this Lease (which
shall be applicable during the holdover period), except that the Base Rent shall
be increased to 125% of the last current Base Rent. In addition, Tenant shall be
liable to Landlord for all damages occasioned by such holding over. Tenant shall
vacate and surrender the Premises to Landlord upon Tenant's receipt of notice
from Landlord to vacate. No holding over by Tenant, whether with or without the
written consent of Landlord, shall operate to extend this Lease except as
otherwise expressly provided herein.
(b) Notwithstanding the preceding subsection (a) to the contrary, but
applicable only with respect to space that Tenant was to have vacated before
June 1, 2001, Tenant may extend the term of this Lease for a period of up to six
(6) months by providing Landlord with written notice of exercise at least ninety
(90) days prior to the expiration or earlier termination of the Lease (that is,
such notice must be delivered by not later than March 1, 2001), in which event
Tenant shall remain a tenant subject to the same terms and conditions of this
Lease, including
-31-
the payment of Base Rent equal to 105% of the last current Base Rent.
(c) Notwithstanding the preceding subsection (a) to the contrary,
applicable in situations other than as set forth in the preceding subsection
(b), Tenant may extend the term of this Lease for a period of up to three (3)
months by providing Landlord with written notice of exercise at least ninety
(90) days prior to the expiration or earlier termination of the Lease, in which
event Tenant shall remain subject to the same terms and conditions of this
Lease, including the payment of Base Rent equal to one hundred five percent
(105%) of the last current Base Rent. The rights granted to Tenant under this
subsection (c) shall not be available with respect to any space for which Tenant
exercised the rights available under the preceding subsection (b).
23. QUIET ENJOYMENT
---------------
Except as provided in Paragraph 22 hereof to the extent that it may be
applicable, if and so long as Tenant pays the prescribed rent and performs or
observes all of the terms, conditions, covenants and obligations of this Lease
required to be performed or observed by it hereunder, Tenant shall at all times
during the term hereof have the peaceable and quiet enjoyment, possession,
occupancy and use of the Premises without any interference from Landlord or any
person or persons claiming the Premises by, through or under Landlord, subject
to any mortgages, underlying leases or other matters of record to which this
Lease is or may become subject provided that any such mortgagees shall be
required to provide Tenant with a nondisturbance agreement allowing Tenant to
remain in the Premises under the terms of this Lease in the event of a default
under the mortgage by Landlord.
24. PROPERTY MANAGEMENT AGREEMENT
-----------------------------
Concurrently with the execution and delivery of this Lease, Landlord,
as owner, and SGI, as property manager, have entered into that certain Property
Management Agreement of even date herewith under which SGI is to manage the
Project for Landlord. The parties do not intend that any provision of this
Lease shall give to Landlord, any independent right with respect to management
of the Project which is inconsistent with the provisions of the Property
Management Agreement. The parties acknowledge that a condition of the validity
and effectiveness of this Lease is Landlord's and SGI's agreement to enter into
the Property Management Agreement; however, termination of the Property
Management Agreement shall have no effect on the continuing effectiveness of
this Lease.
-32-
25. NOTICE AND PLACE OF PAYMENT
---------------------------
(a) All rent and other payments required to be made by Tenant to
Landlord shall be delivered or mailed to Landlord' at the address set forth
below or any other address Landlord may specify from time to time by written
notice given to Tenant.
(b) All payments required to be made by Landlord to Tenant shall be
delivered or mailed to Tenant at the address set forth in Paragraph 25(c) hereof
or at any other address within the United States as Tenant may specify from time
to time by written notice given to Landlord.
(c) Any notice, demand or request required or permitted to be given
under this Lease or by law shall be deemed to have been given if reduced to
writing and mailed by Registered or Certified mail, postage prepaid, to the
party who is to receive such notice, demand or request at the address set forth
below or at such other address as Landlord or Tenant may specify from time to
time by written notice. When delivering such notice, demand or request shall be
deemed to have been given as of the date it was so delivered.
Landlord: Tenant:
WAM!NET Inc. Silicon Graphics, Inc.
6100 West 110th Street 2011 North Shoreline Boulevard
Minneapolis, MN 55438 Mountain View, CA 94043-1389
ATTN: Edward J. Driscoll III M/S 720
ATTN: Manager, Corporate Facilities
With copies to: With copies to:
WAM!NET INC. Silicon Graphics, Inc.
6100 West 110th Street 2011 North Shoreline Boulevard
Minneapolis, Minnesota 55438 Mountain View, CA 94043-1389
Attention: Legal Counsel Attention: Legal Services
and
Thomas P. Stoltman, Esq. Ronald A. Zamansky, Esq.
Larkin, Hoffman, Daly & Lindgren, Ltd. Zamansky Professional Association
1500 Norwest Financial Center 3901 IDS Tower
7900 Xerxes Avenue South 80 South Eighth Street
Minneapolis, MN 55431 Minneapolis, MN 55402
26. MISCELLANEOUS GENERAL PROVISIONS
--------------------------------
(a) Payments Deemed Rent. Any amounts of money to be paid by Tenant
--------------------
to Landlord pursuant to the provisions of this Lease, whether or not such
payments are denominated "rent" or "additional rent" and whether or not they are
to be periodic or recurring, shall be deemed rent or additional rent for
purposes
-33-
of this Lease; and any failure to pay any of same as provided in Paragraph 18(a)
hereof shall entitle Landlord to exercise all of the rights and remedies
afforded hereby or by law for the collection and enforcement of Tenant's
obligation to pay rent. Tenant's obligation to pay any such rent or additional
rent pursuant to the provisions of this Lease shall survive the expiration or
other termination of this Lease and the surrender of possession of the Premises
after any holdover period.
(b) Estoppel Letters. Tenant shall, within ten (10) days following
----------------
written request from Landlord, execute, acknowledge and deliver to Landlord or
to any lender, purchaser or prospective lender or purchaser designated by
Landlord a written statement in a form provided by Landlord certifying (i) that
this Lease is in full force and effect and unmodified (or, if modified, stating
the nature of such modification), (ii) the date to which rent has been paid,
(iii) that there are not, to Tenant's knowledge, any uncured defaults (or
specifying such defaults if any are claimed), and (iv) such further matters
regarding this Lease and/or the Premises customarily included in estoppel
letters or certificates as may be reasonably requested by Landlord, provided
that disclosure of confidential information by Tenant shall not be required.
Any such statement may be relied upon by any prospective purchaser or mortgagee
of all or any part of the Project. Tenant's failure to deliver such statement
within such period shall be conclusive upon Tenant that this Lease is in full
force and effect and unmodified, and that there are no uncured defaults in
Landlord's performance hereunder.
(c) Memorandum of Lease. If requested by Landlord or Tenant, a
-------------------
memorandum of lease, containing the information required by applicable law
concerning this Lease shall be prepared, executed by both parties and filed for
record in the office of the county recorder in Dakota County, Minnesota.
(d) Claims for Fees. Each party hereto shall indemnify and hold
---------------
harmless the other party for any and all liability incurred in connection with
the negotiation or execution of this Lease for any real estate broker's
commission or finder's fee which has been earned by a real estate broker or
other person on such party's behalf. Each party represents to the other that
each party has retained corporate real estate advisors and that each party shall
be responsible for the fees of their own advisors.
(e) Applicable Law. This Lease and all matters pertinent thereto
--------------
shall be construed and enforced in accordance with the laws of the State of
Minnesota.
(f) Entire Agreement. This Lease, including all Exhibits, Riders and
----------------
Addenda, constitutes the entire agreement between the parties hereto regarding
the subject matter hereof and may not be modified except by an instrument in
writing
-34-
executed by the parties hereto. Notwithstanding anything to the contrary herein
contained, the parties acknowledge that the Landlord has entered into the
Property Management Agreement with Tenant or SGI.
(g) Binding Effect. This Lease and the respective rights and
--------------
obligations of the parties hereto shall inure to the benefit of and be binding
upon the successors and assigns of the parties hereto as well as the parties
themselves; provided, however, that Landlord, its successors and assigns shall
be obligated to perform Landlord's covenants under this Lease only during and in
respect of their successive periods as Landlord during the term of this Lease.
(h) Severability. If any provision of this Lease shall be held to be
------------
invalid, void or unenforceable, the remaining provisions hereof shall not be
affected or impaired, and such remaining provisions shall remain in full force
and effect.
(i) No Partnership. Landlord shall not, by virtue of the execution of
--------------
this Lease or the leasing of the Premises to Tenant, become or be deemed a
partner of Tenant in the conduct of Tenant's business on the Premises or
otherwise.
(j) Headings, Gender, etc. As used in this Lease, the word "person"
---------------------
shall mean and include, where appropriate, an individual, corporation,
partnership or other entity; the plural shall be substituted for the singular,
and the singular for the plural, where appropriate; and words of any gender
shall include any other gender. The topical headings of the several paragraphs
of this Lease are inserted only as a matter of convenience and reference, and do
not affect, define, limit or describe the scope or intent of this Lease.
(k) No Right to Change Buildings Address. Landlord shall have no
------------------------------------
right to change the street address of the Buildings occupied by Tenant without
the prior written consent of Tenant. Landlord reserves the right to change the
name of the Project and/or any Building(s) therein.
(l) Execution by Landlord. Submission of this instrument to Tenant,
---------------------
or Tenant's agents or attorneys, for examination or signature does not
constitute or imply an offer to lease, reservation of space, or option to lease,
and this Lease shall have no binding legal effect until execution hereof by both
Landlord and Tenant.
(m) Time of Essence. Time is of the essence of this Lease and each of
---------------
its provisions.
(n) Year 2000 Disclaimer. Landlord and Tenant each hereby disclaims
--------------------
any liability for any and all damages, injuries or other losses, whether
ordinary, special, consequential, punitive or otherwise, arising out of,
relating to or in
-35-
connection with (a) the failure of any automated, computerized and/or software
system or other technology used in, on or about the Project or relating to the
management or operation of the Project to accurately receive, provide or process
date/time data (including, but not limited to, calculating, comparing and
sequencing) both before and after September 9, 1999 and before, after, during
and between the years 1999 A.D. and 2000 A.D., and leap year calculations and/or
(b) the malfunction, ceasing to function or providing of invalid or incorrect
results by any such technology as a result of date/time data. The foregoing
disclaimer shall apply to any such technology used in, on or about the Project
or that affect the Project, whether or not such technology is within the control
of Landlord or Tenant or their respective agents or representatives. THE
FOREGOING DISCLAIMER INCLUDES A DISCLAIMER BY LANDLORD OF ALL WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE MATTERS DESCRIBED
HEREIN, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
(o) Drafting Party. The parties represent that they have been
--------------
represented by legal counsel in the negotiation and preparation of this Lease
and that their respective attorneys have substantially participated in the
drafting of this Lease. The parties agree that the rule of construction
regarding ambiguities being construed against the drafting party shall not
apply. Changes from any prior drafts of this Lease shall not be used in
interpreting any of the provisions of this Lease.
(p) Counterparts; Facsimile Signatures. This Lease may be executed in
----------------------------------
one or more counterparts, each of which shall be deemed an original and together
which shall constitute one document. Facsimile signatures on this Lease shall
be deemed valid and acceptable; however, any party executing this Lease by
facsimile signature shall immediately deliver not less than three (3) hard copy
originals to the other party.
27. SECURITY DEPOSIT
----------------
(a) Landlord initially waives the requirement that Tenant pay a
security deposit to Landlord. If on more than one occasion during the Term,
Tenant fails to pay any installment of rent or any other charges required to be
paid to Landlord hereunder and such failure continues beyond the period given to
cure such default as set forth in paragraph 18(a) hereof, Landlord may by notice
to Tenant require the immediate delivery, for security deposit purposes, of a
letter of credit (the "Letter of Credit") for a sum equal to one (1) month of
the then gross rent for the Premises (the "Security Deposit"). The Letter of
Credit shall be held as security for the performance and observance by Tenant of
all of its obligations under the terms, conditions and covenants of this Lease
throughout the Term of this Lease. If Tenant performs and observes all of the
terms, conditions and covenants of this Lease which are required to be performed
and observed by it, Landlord shall return the Letter of
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Credit to Tenant (within thirty (30) days) after the Expiration Date or after
Tenant surrenders possession of the Premises, whichever is later. In the event
of a default by Tenant in the payment of rent or the performance or observance
of any of the other terms, conditions or covenants of this Lease, then Landlord
may, at its option and without notice, draw on the Letter of Credit and apply
all or any part of the Security Deposit in payment of such rent or to cure any
other such default; and if Landlord does so, Tenant shall, upon request, deposit
with Landlord the amount so applied (in cash or by an additional Letter of
Credit) so that Landlord will have on hand at all times throughout the Term of
this Lease the full amount of the Security Deposit. Landlord shall not be
required to hold the Security Deposit (if cash) as a separate account, but may
commingle it with Landlord's other funds. The use, application or retention of
the Security Deposit or any portion thereof by Landlord shall not prevent
Landlord from exercising any other right or remedy provided by this Lease or by
law (it being intended that Landlord shall not first be required to proceed
against the Security Deposit) and shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled. The Letter of Credit shall
be issued by Norwest Bank or U.S. Bank or their successors, or such other
financial institution as is mutually agreeable to Landlord and Tenant. The
Letter of Credit shall be a so-called "standby" letter of credit, in writing and
signed by the issuer, in form and content reasonably acceptable to Landlord,
conspicuously stating that it is a letter of credit and expressly stating that
it is irrevocable and that it is transferable to the successors and assigns of
Landlord under this Lease. In the event that the Letter of Credit is not
transferable to such successors and assigns, Tenant agrees to cause the issuance
of a substitute letter of credit (meeting the requirements of this paragraph)
and issued for the benefit of each such successor or assign.
(b) In the event of a sale or any other transfer of the Project,
Landlord shall have the right to transfer the Security Deposit to its purchaser
and, provided that the purchaser assumes liability for the return (if
applicable) of the Security Deposit, Landlord shall thereupon be released by
Tenant from all responsibility for the return of such deposit; and Tenant agrees
to look solely to such purchaser for the return of such deposit. In the event
of an assignment of this Lease, the Security Deposit shall be deemed to be held
by Landlord as a deposit made by the assignee, and Landlord shall have no
further responsibility for the return of such deposit to the assignor.
28. HAZARDOUS SUBSTANCES
--------------------
(a) Tenant covenants that Tenant, with respect to its use and
operation on the Premises and within the Project, will remain in compliance with
all applicable federal, state and local statutes, ordinances, regulations, rules
and other laws presently in force or hereafter enacted relating to public
health, safety,
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protection of the environment, environmental quality, contamination and clean-up
of hazardous materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Resource, Conservation and Recovery Act of 1976, as amended, and state superfund
and environmental clean-up statutes and all rules and regulations presently or
hereafter enacted ("environmental laws"). Tenant will not cause or knowingly
permit any violations or other failures to comply with environmental laws on or
about the Premises. As used above, the term "hazardous materials" shall mean and
include all hazardous and toxic substances, waste or materials, any pollutant or
contaminant, including, without limitation, asbestos, PCBs, petroleum and
petroleum-based products and raw materials that are included under or regulated
by any environmental laws. Tenant shall not release, generate, manufacture,
store, treat, transport or dispose of any hazardous material on or about the
Project or any part thereof; however, Tenant may store, transport and use such
hazardous materials as historically used by Tenant in the ordinary course of the
operation of its business in compliance with all applicable environmental laws.
Tenant will immediately notify Landlord and provide copies upon receipt of all
written complaints, claims, citations, demands, inquiries, reports or notices
relating to the condition of the Premises or compliance with environmental laws.
Tenant shall maintain all required records and file any necessary documents with
the appropriate agencies relating to the use, storage or transportation of any
hazardous materials on, to, from or about the Premises. Tenant shall indemnify,
defend (with counsel reasonably acceptable to Landlord and at Tenant's sole
cost), and hold Landlord harmless from and against all losses, liabilities,
obligations, penalties, claims, demands, judgments, costs and other damages,
that may be imposed upon, incurred by or asserted or awarded against Landlord in
connection with or arising from or out of: (i) the release or other deposit
during the Term of this Lease of any hazardous material by Tenant, its
employees, agents or contractors on, in, under or affecting all or any portion
of the Project; (ii) any breach of any obligation or agreement of Tenant in this
Paragraph; and/or (iii) any violation or claim of violation by Tenant of any
environmental law occurring during the Term of this Lease. This indemnification
obligation shall survive the termination of this Lease.
(b) Landlord shall indemnify, defend (with counsel reasonably
acceptable to Tenant and at Landlord's sole cost), and hold Tenant harmless from
and against all losses, liabilities, obligations, penalties, claims, demands,
judgments, costs and other damages, that are suffered or incurred by Tenant and
caused by the release or other deposit of any hazardous material by Landlord,
its employees, agents or contractors (excluding Tenant) which Tenant proves was
released or deposited by Landlord, on, in, under or affecting all or any portion
of the Project. This indemnification obligation shall survive the termination
of this Lease.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first above written.
LANDLORD: TENANT:
WAM!NET INC. SILICON GRAPHICS, INC.
By: /s/ Allen L. Witters By: /s/ William M. Kelly
----------------------------- -----------------------------
Its: Chief Technology Officer Its: Senior Vice President
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