EXHIBIT 10.14.1

 

AMENDMENT TO LEASE

 

This Amendment to Lease (the “Amendment”) is made as of the 15th day of
February, 2006, by and between FirstCal Industrial 2 Acquisition, LLC, a
Delaware LLC, as landlord (“Landlord”) and Eschelon Telecom, Inc., a Delaware
corporation, as tenant (“Tenant”).

 

RECITALS

 

A.

 

Landlord is the successor in interest to Duke Realty Limited Partnership, an
Indiana limited partnership .

(“Former Owner”)

 

 

B.                 Former Owner originally owned the real property commonly
known as 6160 Golden Hills Drive, Golden Valley, Minnesota 55416 (the
“Property”), and on September 29, 2005, Landlord acquired fee simple title to
the Property from the Former Owner.

 

C.                 Tenant is the successor in interest to Cady Communications, a
Minnesota corporation (“Former Tenant”).

 

D.                Former Owner, as landlord, entered into a certain Lease, dated
May 25, 1999, with Former Tenant (the “Original Lease”), and pursuant to the
Original Lease, Former Tenant leased from the Former Owner approximately 33,246
rentable square feet in the Property (the “Leased Premises”).

 

E.                 On September 29, 2005, Former Owner assigned to Landlord
Former Owner’s entire right, title and interest in, to and under the Original
Lease.

 

F.                 Former Tenant assigned to Tenant Former Tenant’s interest in
and under the Original Lease.

 

G.                 Landlord and Tenant now desire to modify and amend the
Original Lease.

 

NOW, THEREFORE, in consideration of the terms and provisions of this Amendment,
Landlord and Tenant hereby modify and amend the Original Lease, as follows:

 

1.             Recitals. All of the Recitals set forth above are hereby
incorporated into the body of this Amendment, as though separately and
specifically set forth herein.

 

2.             Defined Terms and Conflict. Any capitalized terms used, but not
defined, in this Amendment shall be deemed to have the meanings respectively
ascribed to those terms in the Original Lease. In the event of any conflict
between the terms and provisions of the Original Lease and those of this
Amendment, the terms and provisions of this Amendment shall control, in all
events.

 

3.             Extension of Lease Term. The Lease Term is hereby extended for a
period of Five (5) year(s) and one (1) month from February 1, 2007, so that the
extended Lease Term shall expire on February 29, 2012 (the “Extended Expiration
Date”). The period of time from the expiration of the Lease Term described in
the Original Lease through the Extended Expiration Date is hereinafter referred
to as the “Extended Lease Term.”

 

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4.             Minimum Annual Rent. During the Extended Lease Term, the Minimum
Annual Rent and the Monthly Rental Installments of Base Rent shall be calculated
based on the following per annum and per rentable square foot rates:

 

Base Rental Payments

 

Lease Period

 

Per Annum Base Rent
Per Rentable Square
Foot

 

Per Annum Base Rent
Per Rentable Square
Foot If Option A Is
Applicable

 

Per Annum Base Rent
Per Rentable Square
Foot If Option B Is
Applicable

 

February 1, 2007 – February 28, 2007

 

$

 0.00

 

$

 0.00

 

$

 0.00

 

February 1, 2007 – January 31, 2009

 

$

 9.80

 

$

 9.80

 

$

 10.05

 

February 1, 2009 – January 31, 2010

 

$

 10.05

 

$

 10.05

 

$

 10.30

 

February 1, 2010 – January 31, 2011

 

$

 10.30

 

$

 10.30

 

$

 10.55

 

February 1, 2011 – February 28, 2012

 

$

 10.55

 

$

 10.55

 

$

 10.80

 

 

5.             Basic Lease Provisions and Definitions. (a) During the Extended
Lease Term, the following portions of Section 1.01 of the Original Lease are
hereby deleted and, in lieu thereof, the following are instead substituted:

 

Section 1.01B.       The term “Rentable Area” shall mean the number of rentable
square feet comprising the Leased Premises as of February 1, 2007, after either
(a) Tenant’s delivery of the Commitment Letter (defined below) or (b)
implementation of Plan A which shall consist of 19,652 square feet of office and
9,171 square feet of warehouse for a total of 28,823 square feet or Plan B which
shall consist of 20,926 square feet of office and 8,069 square feet of warehouse
for a total of 28,995, as the case may be (and as each is defined below).
Landlord shall use commercially reasonable standards, consistently applied, in
determining the Rentable Area and the rentable area of the Building. Landlord’s
determination of Rentable Area shall conclusively be deemed correct for all
purposes hereunder.

 

Section 1.01D and E.            The terms “Minimum Annual Rent” and “Monthly
Rental Installment” shall be based upon the rates set forth in Section 4 above.

 

Section 1.01G.  The term “Lease Term” shall mean the “Extended Lease Term” as
set forth in Section 3 above.

 

Section 1.01K.  The term “Broker” shall mean Todd Braufman of Equis Corporation.

 

(b)           The following parts of the Original Lease are hereby deleted and,
the lieu thereof, the following is instead substituted:

 

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Section 1.01M.               Until further notice, the name and address of
Landlord shall be FirstCal Industrial 2 Acquisition, LLC, c/o First Industrial
Realty Trust, Inc., 7625 Golden Triangle Drive, Suite T, Eden Prairie, Minnesota
55344.

 

6.             Tenant’s Insurance. Section 9.02 of the Original Lease is hereby
deleted and, in lieu thereof, the following is instead substituted:

 

6.1 Tenant shall purchase, at its own expense, and keep in force at all times
during the Lease Term the policies of insurance set forth below (collectively,
“Tenant’s Policies”). All Tenant’s Policies shall (a) be issued by an insurance
company with a Best’s rating of A or better and otherwise reasonably acceptable
to Landlord and shall be licensed to do business in the state in which the
Leased Premises is located; (b) provide that said insurance shall not be
canceled or materially modified unless 30 days’ prior written notice shall have
been given to Landlord; (c) provide for deductible amounts that are reasonably
acceptable to Landlord (and its lender, if applicable) and (d) otherwise be in
such form, and include such coverages, as Landlord may reasonably require. The
Tenant’s Policies described in (i) and (ii) below shall (1) provide coverage on
an occurrence basis; (2) name Landlord (and its lender, if applicable) as
additional insured; (3) provide coverage, to the extent insurable, for the
indemnity obligations of Tenant under this Lease; (4) contain a separation of
insured parties provision; (5) be primary, not contributing with, and not in
excess of, coverage that Landlord may carry; and (6) provide coverage with no
exclusion for a pollution incident arising from a hostile fire. All Tenant’s
Policies (or, at Landlord’s option, Certificates of Insurance and applicable
endorsements, including, without limitation, an “Additional Insured-Managers or
Landlords of Premises” endorsement) shall be delivered to Landlord prior to the
Commencement Date and renewals thereof shall be delivered to Landlord’s
corporate and regional notice addresses at least 30 days prior to the applicable
expiration date of each Tenant’s Policy. In the event that Tenant fails, at any
time or from time to time, to comply with the requirements of the preceding
sentence. Landlord may (A) order such insurance and charge the cost thereof to
Tenant, which amount shall be payable by Tenant to Landlord upon demand, as
Additional Rent or (B) impose on Tenant, as Additional Rent, a monthly
delinquency fee, for each month during which Tenant fails to comply with the
foregoing obligation, in an amount equal to five percent (5%) of the Monthly
Rental Installments then in effect. Tenant shall give prompt notice to Landlord
and Agent of any bodily injury, death, personal injury, advertising injury or
property damage occurring in and about the Property.

 

Tenant shall purchase and maintain, throughout the Term, a Tenant’s Policy(ies)
of: (i) commercial general or excess liability insurance, including personal
injury and property damage, in the amount of not less than $2,000,000.00 per
occurrence, and $5,000,000.00 annual general aggregate, per location; (ii)
comprehensive automobile liability insurance covering Tenant against any
personal injuries or deaths of persons and property damage based upon or arising
out of the ownership, use, occupancy or maintenance of a motor vehicle at the
Premises and all areas appurtenant thereto in the amount of not less than
$1,000,000, combined single limit; (iii) commercial property insurance
(including reasonable business interruption limits) covering Tenant’s Property
(at its full replacement cost); (iv) workers’ compensation insurance per the
applicable state statutes covering all employees of Tenant; and if Tenant
handles, stores or utilizes Hazardous Substances in its business operations, (v)
pollution legal liability insurance.

 

 

 

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7.             Landlord’s Insurance. The following is hereby added as an
additional Section 9.03:

 

During the Lease Term, Landlord shall maintain the following types of insurance,
in the amounts specified below (the cost of which shall be included in Operating
Expenses): (a) commercial property insurance policy covering the Building (at
its full replacement cost), but excluding Tenant’s personal property; (b)
commercial general public liability insurance covering Landlord for claims
arising out of liability for bodily injury, death, personal injury, advertising
injury and property damage occurring in and about the Building and otherwise
resulting from any acts and operations of Landlord, its agents and employees;
(c) rent loss insurance; and (d) any other insurance coverage deemed appropriate
by Landlord or required by Landlord’s lender. All of the coverages described in
(a) through (d) shall be determined from time to time by Landlord, in its sole
discretion. All insurance maintained by Landlord shall be in addition to and not
in lieu of the insurance required to be maintained by the Tenant.

 

8.             Waiver of Subrogation. Section 8.02 of the Original Lease is
hereby deleted and, in lieu thereof, the following is instead substituted:

 

Notwithstanding anything to the contrary in this Lease, Landlord and Tenant
mutually waive their respective rights of recovery against each other and each
other’s officers, directors, constituent partners, members, agents and
employees, and Tenant further waives such rights against (a) each lessor under
any ground or underlying lease encumbering the Property and (b) each lender
under any mortgage or deed of trust or other lien encumbering the Property (or
any portion thereof or interest therein), to the extent any loss is insured
against or required to be insured against under this Lease, including, but not
limited to, losses, deductibles or self-insured retentions covered by Landlord’s
or Tenant’s commercial property, general liability, automobile liability or
workers’ compensation policies described above. This provision is intended to
waive, fully and for the benefit of each party to this Lease, any and all rights
and claims that might give rise to a right of subrogation by any insurance
carrier. Each party shall cause its respective insurance policy(ies) to be
endorsed to evidence compliance with such waiver.

 

9.             Late Charges and Default Interest. Section 3.04 of the Original
Lease is hereby deleted and, in lieu thereof, the following is instead
substituted:

 

Tenant acknowledges that Landlord shall incur certain additional unanticipated
administrative and legal costs and expenses if Tenant fails to timely pay any
payment required hereunder. Therefore, in addition to the other remedies
available to Landlord hereunder, if any payment required to be paid by Tenant to
Landlord hereunder shall not be paid within five (5) days of the date such
payment was due, Tenant shall pay a late fee equal to five percent (5%) of the
delinquent payment. If a payment remains delinquent beyond the expiration of any
applicable cure period, the delinquent amount shall bear interest (from the date
on which the cure period expires through the date on which the delinquency is
paid, in full, inclusive of interest) at the rate of five percent (5%) per annum
above the “prime” or “reference” or “base” rate (on a per annum basis) of
interest publicly announced as such, from time to time, by JPMorgan Chase Bank
N.A. (the “Default Rate”). The various rights, remedies and elections of
Landlord reserved, expressed or contained herein are cumulative and no one of
them shall be deemed exclusive of the others as of such other rights, remedies,
options or elections as are now or may hereafter be conferred upon Landlord by
law.

 

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10.           Financial Information. Section 16.09 of the Original Lease is
hereby deleted and, in lieu thereof, the following is hereby substituted:

 

As of the date of this Amendment, Tenant is a publicly traded entity; therefore,
Landlord acknowledges and agrees that, if and to the extent that Landlord
desires financial information concerning Tenant, Landlord shall examine and
review any and all of the publicly-available information concerning Tenant and
Tenant shall not be required to provide any other financial information to
Landlord. If, however, at any time during the Lease Term, Tenant is no longer a
publicly traded entity, then from time to time during the Lease Term, but not
more than once per six (6) month period (except in the event that Tenant is in
default under this Lease or in the event that Landlord is pursuing a sale or
refinancing of the Property), Tenant shall deliver to Landlord information and
documentation describing and concerning Tenant’s financial condition, and in
form and substance reasonably acceptable to Landlord, within ten (10) business
days following Landlord’s written request therefor. Upon Landlord’s request,
Tenant shall provide to landlord the most currently available audited financial
statement of Tenant; and if no such audited financial statement is available,
then Tenant shall instead deliver to Landlord its most currently available
balance sheet and income statement. Furthermore, upon the delivery of any such
financial information from time to time during the Lease Term, Tenant shall be
deemed to automatically represent and warrant to Landlord that the financial
information delivered to Landlord is true, accurate and complete, and that there
has been no adverse change in the financial condition of Tenant since the date
of the then-applicable financial information.

 

11.           Hazardous Substances Reporting. The following is hereby added as
an additional Section 15.08:

 

Tenant shall immediately give Landlord written notice of both (a) any suspected
or potential breach of Tenant’s obligations under Article 15 upon learning of
the presence of or any release of any Hazardous Substances in, on, to or from
the Leased Premises or the Property, and (b) Tenant’s receipt of any notices
from governmental agencies pertaining to Hazardous Substances which may affect
the Premises or the Property. Tenant has delivered to Landlord (or shall deliver
to Landlord, on or before the commencement of the Renewal Term), a completed
Tenant Operations Inquiry, in the form attached hereto as Exhibit “C” and Tenant
hereby warrants the accuracy and completeness of the information set forth
therein. Such Tenant Operations Inquiry shall be revised by Tenant and delivered
to Landlord from time to time upon Landlord’s written request therefor but not
more than once per six (6) month period (except in the event that Tenant is in
default under this Lease). The obligations of Tenant hereunder shall survive the
expiration of earlier termination, for any reason, of this Lease.

 

12.           Option to Renew. Section 16.12 of the Original Lease is hereby
deleted and, in lieu thereof, the following is instead substituted:

 

16.12.1 Tenant shall have the option (“Renewal Option”) to renew this Lease with
respect only to the entirety of the Leased Premises, as it is comprised and
configured on February 1, 2007, for two (2) additional and consecutive terms of
five (5) years each (each, a “Renewal Term”), on all the same terms and
conditions set forth in this Lease, except that Base Rent during each Renewal
Term shall be equal to Fair Market Rent (as defined in Section 16.12.2 below).
Tenant shall deliver written notice to Landlord of Tenant’s election to exercise
the Renewal Option (“Renewal

 

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Notice”) not less than six (6) months, nor more than nine (9) months, prior to
the expiry date of the original Term (or the first Renewal Term, as the case may
be); and if Tenant fails to timely deliver the Renewal Notice to Landlord, then
Tenant shall automatically be deemed to have irrevocably waived and relinquished
the then-applicable Renewal Option. If Tenant fails to timely exercise the first
Renewal Option, then Tenant shall have no further Renewal Option.

 

16.12.2    “Fair Market Rent” shall be determined by Landlord, in its sole, but
good faith, discretion based upon the annual base rental rates then being
charged (as of the date on which Tenant delivers the then-applicable Renewal
Notice) in the industrial submarket sector of the geographic area where the
Building is situated for comparable space and for a lease term commencing on or
about the commencement date of the then-applicable Renewal Term and equal in
duration to the then-applicable Renewal Term, taking into consideration: the
geographic location, quality and age of the building; the location and
configuration of the relevant space within the applicable building; the extent
of service to be provided to the proposed tenant thereunder; applicable
distinctions between “gross” lease and “net” leases; the creditworthiness and
quality of Tenant; leasing commissions; free rent; tenant improvements
allowances; moving allowances; and any other relevant term or condition in
making such evaluation, as reasonably determined by Landlord. Landlord shall
notify Tenant of Landlord’s determination of Fair Market Rent for the
then-applicable Renewal Term, in writing (the “Base Rent Notice”) within fifteen
(15) business days after receiving the Renewal Notice.

 

16.12.3    Tenant shall then have fifteen (15) business days after Landlord’s
delivery of the Base Rent Notice in which to advise Landlord, in writing (the
“Base Rent Response Notice”) whether Tenant (i) is prepared to accept the Fair
Market Rent established by Landlord in the then-applicable Base Rent Notice and
proceed to lease the Premises, during the applicable Renewal Term, at that Fair
Market Rent; or (ii) elects to withdraw and revoke its Renewal Notice, whereupon
the then-applicable Renewal Option shall automatically be rendered null and
void; or (iii) elects to contest Landlord’s determination of Fair Market Rent.
In the event that Tenant fails to timely deliver the Base Rent Response Notice,
then Tenant shall automatically be deemed to have elected (i) above.
Alternatively, if Tenant timely elects (ii), then this Lease shall expire on the
original expiry date of the initial Term or the expiry date of the initial
Renewal Term, as the case may be. If, however, Tenant timely elects (iii), then
the following provisions shall apply:

 

16.12.3.1 The Fair Market Rent shall be determined by either the Independent
Brokers or the Determining Broker, as provided and defined below.

 

16.12.3.2 Within ten (10) business days after Tenant delivers its Base Rent
Response Notice, electing (iii), each of Landlord and Tenant shall advise the
other, in writing (the “Arbitration Notice”) of both (i) the identity of the
individual that each of Landlord and Tenant, respectively, is designating to act
as Landlord’s or Tenant’s, as the case may be, duly authorized representative
for purposes of the determination of Fair Market Rent pursuant to this Section
16.12.3 (the “Representatives”); and (ii) a list of three (3) proposed licensed
real estate brokers, any of which may serve as one of the Independent Brokers
(collectively, the “Broker Candidates”). Each Broker Candidate:

 

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(A)            shall be duly licensed in the jurisdiction in which the Premises
is located;

 

(B)             shall have at least five (5) years’ experience, on a full-time
basis, leasing industrial space (warehouse/distribution/ancillary office) in the
same general geographic area as that in which the Premises is located, and at
least three (3) of those five (5) years of experience shall have been
consecutive and shall have elapsed immediately preceding the date on which
Tenant delivers the Renewal Notice; and

 

(C)             shall be independent and have no then-pending (as of the date
Landlord or Tenant designates the broker as a Broker Candidate) brokerage
relationship, formal or informal, oral or written, with any or all of Landlord,
Tenant, and any affiliates of either or both of Landlord and Tenant (“Brokerage
Relationship”), nor may there have been any such Brokerage Relationship at any
time during the two (2) year period immediately preceding the broker’s
designation, by Landlord or Tenant, as a Broker Candidate.

 

16.12.3.3.                Within five (5) business days after each of Landlord
and Tenant delivers its Arbitration Notice to the other, Landlord and Tenant
shall cause their respective Representatives to conduct a telephonic meeting at
a mutually convenient time. At that meeting, the two (2) Representatives shall
examine the list of six (6) Broker Candidates and shall each eliminate two (2)
names from the list on a peremptory basis. In order to eliminate four (4) names,
first, the Tenant’s Representative shall eliminate a name from the list and then
the Landlord’s Representative shall eliminate a name therefrom. The two (2)
Representatives shall alternate in eliminating names from the list of six (6)
Broker Candidates in this manner until each of them has eliminated two (2)
names. The two (2) Representatives shall immediately contact the remaining two
(2) Broker Candidates (the “Independent Brokers”), and engage them, as behalf of
Landlord and Tenant, to determine the Fair Market Rent in accordance with the
provisions of this Section 16.12.3.

 

16.12.3.4 The Independent Brokers shall determine the Fair Market Rent within
fifteen (15) days of their appointment. Landlord and Tenant shall each make a
written submission to the Independent Brokers, advising of the rate and any
then-applicable concessions that should be included in Fair Market Rent,
including, but not limited to, free rent and a refurbishment allowance, that the
submitting party believes should be the Fair Market Rate, together with whatever
written evidence or supporting data that the submitting party desires in order
to justify its desired rate of Fair Market Rent; provided, in all events,
however, that the aggregate maximum length of each party’s submission shall not
exceed ten (10) pages (each such submission package, a “FMR Submission”). The
Independent Brokers shall be obligated to choose one (1) of the parties’
specific proposed rates of Fair Market Rent, without being permitted to
effectuate any compromise position.

 

16.12.3.5 In the event, however, that the Independent Brokers fail to reach
agreement, within twenty (20) days after the date on which both Landlord and
Tenant deliver the FMR Submissions to the Independent Brokers (the “Decision
Period”), as to which of the two (2) proposed rates of Fair Market Rent should
be selected, then, within five (5) days after the expiration of the

 

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Decision Period, the Independent Brokers shall jointly select a real estate
broker who (x) meets all of the qualifications of a Broker Candidate, but was
not included in the original list of six (6) Broker Candidates; and (y) is not
affiliated with any or all of (A) either or both of the Independent Brokers and
(B) the real estate brokerage companies with which either or both of the
Independent Brokers is affiliated (the “Determining Broker”). The Independent
Brokers shall engage the Determining Broker on behalf of Landlord and Tenant
(but without expense to the Independent Brokers), and shall deliver the FMR
Submissions to the Determining Broker within five (5) days after the date on
which the Independent Brokers select the Determining Broker pursuant to the
preceding sentence (the “Submission Period”).

 

16.12.3.6 The Determining Broker shall make a determination of the Fair Market
Rent within fifteen (15) days after the date on which the Submission Period
expires. The Determining Broker shall be required to select one of the parties’
specific proposed rates of Fair Market Rent, without being permitted to
effectuate any compromise position; provided, however, that in the event that
the rates of Fair Market Rent proposed by each of Landlord and Tenant in their
respective FMR Submissions differ by no more than five percent (5.0%), then the
Determining Broker shall have right, but not the obligation, to average the two
(2) proposed rates of Fair Market Rent in order to conclusively determine Fair
Market Rent.

 

16.12.3.7 The decision of the Independent Brokers or the Determining Broker, as
the case may be, shall be conclusive and binding on Landlord and Tenant, and
neither party shall have any right to contest or appeal such decision. Judgment
may be entered, in a court of competent jurisdiction, upon the decision of the
Independent Brokers or the Determining Broker, as the case may be.

 

16.12.3.8 In the event that the initial Term or the first Renewal Term, as the
case may be, expires and the then-applicable Renewal Term commences prior to the
date on which the Independent Brokers or the Determining Broker, as the case may
be, renders their/its decision as to the Fair Market Rent, then from the
commencement date of that Renewal Term through the date on which the Fair Market
Rent is determined under this Section 16.12 (the “Determination Date”), Tenant
shall pay monthly Base Rent to Landlord at the same rate of monthly Base Rent in
effect immediately preceding the commencement date of the then-applicable
Renewal Term; provided, however, that in the event that the Determination Date
does not occur within fifteen (15) days after the date on which the
then-applicable Renewal Term commences, then commencing with the sixteenth (16th
) day of that Renewal Term, Tenant shall pay monthly Base Rent to Landlord at a
rate that is 105% of the rate of monthly Base Rent in effect as of the date
immediately preceding the date on which then then-applicable Renewal Term
commences (the “Temporary Base Rent”); and within ten (10) business days after
the Determination Date, Landlord shall pay to Tenant, or Tenant shall pay to
Landlord, whatever sum that Landlord or Tenant, as the case may be, owes the
other (the “Catch-Up Payment”), based on the Base Rent (including, but not
limited to, Temporary Base Rent), actually paid and the Fair Market Rent due (as
determined, by the Independent Brokers or the Determining Broker, as the case
may be) during that portion of the Renewal Term that elapses before the Catch-Up
Payment is paid, in full (together with interest thereon, as provided below).
The Catch-Up

 

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Payment shall bear interest at the Default Rate from the date each monthly
component of the Catch-Up Payment would have been due, had the Fair Market Rent
been determined prior to the commencement of the Renewal Term, through the date
on which the Catch-Up Payment is paid, in full (inclusive of interest thereon).

 

16.12.3.9 The party whose proposed rate of Fair Market Rent is not selected by
the Independent Brokers or the Determining Broker, as the case may be, shall
bear all costs of all counsel, experts or other representatives that are
retained by both parties, together with all other costs of the arbitration
proceeding described in this Section 16.3, including, without limitation, the
fees, costs and expenses imposed or incurred by any or all of the Independent
Brokers and the Determining Broker, except that, in the event the Determining
Broker does not select one of the parties’ specific proposed rates of Fair
Market Rent but instead effectuates a compromise position (only as permitted
pursuant to Section 16.12.3.6), each party shall pay its own costs of counsel,
experts or other representatives, together with its share of the costs of the
arbitration proceeding described in this Section 16.3, including, without
limitation, the fees, costs and expenses imposed or incurred by the Independent
Determining Broker.

 

16.12.3.10               Unless otherwise expressly agreed in writing, during
the period of time that any arbitration proceeding is pending under this Section
16.12.3, Landlord and Tenant shall continue to comply with all those terms and
provisions of this Lease that are not the subject of their dispute and
arbitration proceeding, most specifically including, but not limited to,
Tenant’s monetary obligations under this Lease; and, with respect to the payment
of Base Rent during that portion of the Renewal Term that elapses during the
pendency of any arbitration proceeding under this Section 16.12.3, the
provisions of Section 16.12.3.8 shall apply.

 

16.12.3.11               During any period of time that an arbitration is
pending or proceeding under this Section 16.12.3, Tenant shall have no right to
assign this Lease or enter into any sublease for all or any portion of the
Premises, notwithstanding any provision to the contrary in this Lease.
Furthermore, if this Lease requires that Landlord perform any tenant improvement
work in connection with the then-applicable Renewal Term, Landlord shall be
relieved of any such obligation during the pendency of any arbitration
proceeding under this Section 16.12.3.

 

16.12.4    The Renewal Option is granted subject to all of the following
conditions:

 

(a)                     As of the date on which Tenant delivers its Renewal
Notice and continuing through the commencement date of the Renewal Term, this
Lease shall be in full force and effect and no act or omission shall occur
which, with the giving of notice or the passage of time, or both, shall
constitute a breach or default by Tenant under this Lease.

 

(b)                    There shall be no further right of renewal after the
expiration of the second Renewal Term.

 

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(c)                     The Renewal Option is personal to Tenant. In the event
that Tenant assigns its interest under this Lease or subleases all or any
portion of the Premises, whether or not in accordance with the requirements of
Article 11, and whether directly or indirectly, the provisions of this Section
16.12.3 shall not be available to, or run to the benefit of, and may not be
exercised by, any assignee or sublessee.

 

(d)                    Unless Tenant delivers a Commitment Notice pursuant to
Section 14 below, then the Tenant’s Renewal Option shall only apply to the
Reduced Premises.

 

13.           Construction of Tenant Improvements. Landlord shall provide an
allowance for Tenant Improvements as set forth in this Section 13 as follows:

 

(a)                     Landlord shall provide an allowance in a maximum amount
of eight dollars ($8.00) per rentable square foot of the Reduced Premises
(defined below), unless, prior to the TI Allowance Commencement Date (defined
below), Tenant delivers a Commitment Notice to continue to lease the entirety of
the currently existing Leased Premises throughout the Extended Lease Term, in
which event such allowance shall be based upon the rentable square footage of
the entire Leased Premises (the “Allowance”) to be used only for the following
purposes: (i) for refurbishment of the Reduced Premises or the Leased Premises,
as the case may be, (ii) to reconfigure furniture at the Reduced Premises or the
Leased Premises, as the case may be, and (iii) to demise the Reduced Premises
from the Relinquished Space or the Additional Space, as the case may be (if
applicable);

 

(b)                    Tenant acknowledges that Landlord has agreed to perform
the Tenant Improvements as set forth in the Work Letter attached hereto as
Exhibit C (the “Work Letter”). Except as otherwise specifically provided in
either or both of this Lease and the Work Letter, Landlord shall not be
obligated to make any repairs, replacement or improvements of any kind or nature
to the foregoing in connection with, or in consideration of, this Lease, nor
shall Landlord be required to expend any monies pursuant to the Work Letter in
excess of the Allowance.

 

(c)                     Landlord shall have no obligation to construct any of
the Tenant Improvements unless and until the first to occur of (a) February 1,
2007, being the commencement date of the Extended Lease Term or (b) the date on
which Landlord and a third party tenant enter into an AS Lease, as defined
below, and (c) the date on which Plan A is implemented (whichever of (a), (b) or
(c) is applicable, the “TI Allowance Commencement Date”).

 

(d)                    All rights of Tenant and obligations of Landlord
contained in this Section 13 and the Work Letter shall apply solely if, as of
the TI Allowance Commencement Date, this Lease shall be in full force and effect
and no act or omission shall occur which, with the giving of notice or the
passage of time, or both, shall constitute a breach or default by Tenant under
this Lease.

 

(e)                     Within thirty (30) days following substantial completion
of, and payment in full for, the Tenant Improvements (“Substantial Completion
and Payment”), and to the extent that unexpended funds remain available in the
Allowance,

 

10

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Landlord shall pay to Tenant, as an allowance for Tenant’s purchase of
additional personal property to be utilized for Tenant’s business operations in
the Leased Premises, including, but not limited to, furniture and equipment, and
to otherwise provide Tenant with funds to facilitate the cleaning and
redecorating of the Leased Premises, an amount equal to the lesser of (i) the
then-remaining and unexpended portion of the Allowance; and (ii) a sum equal to
the product of (x) $2.00 and (y) the Rentable Area as of February 1, 2007.

 

14.           Additional Space and Retained Space. Tenant has advised Landlord
that Tenant wishes to relinquish its lease, occupancy and possession of a
portion of its existing Leased Premises. Landlord has advised Tenant that a
third party that is already an existing tenant in the Building, with leased
premises contiguous to a portion of the existing Leased Premises (the “Adjacent
Tenant”) may be interested in expanding its own existing leased premises to
incorporate a portion of Tenant’s existing Leased Premises, in the manner
depicted with diagonal lines on Exhibit “A” attached hereto and incorporated
herein by this reference (such expansion by the Adjacent Tenant and
corresponding reduction in the Leased Premises, “Plan A”). Landlord shall have
the right to pursue negotiations with the Adjacent Tenant to document and
implement Plan A at any time prior to February 1, 2007, on whatever terms
Landlord deems acceptable, in its sole discretion. If, at any time prior to
February 1, 2007, Landlord advises Tenant that Plan A will be implemented
(subject to the notice requirement imposed in the following grammatical
paragraph), then at Landlord’s direction, Tenant will promptly enter into a
further amendment to this Lease in order to irrevocably and unconditionally
relinquish any and all right to possession of that portion of the existing
Leased Premises depicted with diagonal lines on Exhibit “A” (the “Relinquished
Space”), and to appropriately adjust the Rentable Area, the Base Rent and
Tenant’s Proportionate Share in order to reflect the reduced rentable square
footage comprising the resulting Leased Premises. In the event, however, that
Landlord fails to implement Plan A on or before February 1, 2007, then effective
of that date, the existing Leased Premises shall automatically be modified so as
to reduce the existing Leased Premises by 4,251 rentable square feet (the
“Additional Space”), as depicted on Exhibit “B” attached hereto and incorporated
herein by this reference (such reduction in the Leased Premises, “Plan B”), and
if Plan B is applicable, then Landlord and Tenant shall promptly enter into a
further amendment to this Lease in order to memorialize the reduced Rentable
Area of the Leased Premises, and corresponding adjustments in the Base Rent and
Tenant’s Proportionate Share. (The Leased Premises, as reduced pursuant to Plan
A or Plan B, whichever is applicable, is sometimes referred to as the “Reduced
Premises”). If, at any time prior to February 1, 2007, Landlord concludes, in
its sole, but reasonable, discretion, that Plan A will not be implemented on or
before February 1, 2007 (such date on which Landlord makes such determination,
the “Plan A Abandonment Date”), then, promptly following the Plan A Abandonment
Date, Landlord shall engage an independent leasing broker to market the
Additional Space for lease to an independent third party. Landlord shall use
reasonable and good faith efforts to lease the Additional Space to such a third
party prior to February 1, 2007 and on terms acceptable to Landlord in its sole,
but reasonable, discretion. In the event that Landlord elects to enter into a
lease with a third party tenant for the Additional Space (the “AS Lease”), then
upon execution and delivery of the AS Lease, this Lease shall automatically be
amended (effective as of the commencement date of the AS Lease) so as to reduce
the rentable square footage of the Leased Premises pursuant to Plan B, and
Landlord and Tenant shall promptly thereafter enter into a further amendment to
this Lease to reflect the reduction in the Rentable Area and the corresponding
adjustment and reduction in the Base Rent and Tenant’s Proportionate Share so as
to reflect the Reduced Premises. In the event that Landlord fails, for any
reason, to enter into the AS Lease on or before February 1, 2007, then Plan B
shall be implemented, as provided above.

 

11

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Notwithstanding the foregoing, however, Tenant shall have the unilateral right
at any time prior to the first to occur of (i) the implementation of Plan A,
(ii) the execution and delivery of the AS Lease by Landlord and the third party
tenant; and (ii) February 1, 2007, to deliver written notice to Landlord,
advising Landlord that Tenant unconditionally elects to continue to lease the
entire Leased Premises, inclusive of the Relinquished Space and the Additional
Space, throughout the Lease term, including the Extended Lease Term (the
“Commitment Notice”). From and after Tenant’s delivery of the Commitment Notice,
Landlord shall have no further right to implement Plan A nor any obligation to
market the Additional Space for lease to a third party, and Tenant shall be
obligated to reimburse Landlord for all (if any) reasonable, documented
out-of-pocket costs and expenses that either or both of Landlord and its leasing
broker incurred in connection with the marketing and potential leasing of the
Additional Space (the “Leasing Costs”); provided, however, that the maximum
aggregate amount of Leasing Costs that Tenant shall be obligated to pay to
Landlord is $1,500.00. Tenant shall pay the Leasing Costs to Tenant within ten
(10) days after Landlord’s written demand therefor (delivered with reasonable
evidence of the Leasing Costs). Landlord shall not enter into either (1) any
lease amendment with the Adjacent Tenant to implement Plan A; or (2) the AS
Lease without first providing Tenant with at least ten (10) days’ notice of
Landlord’s intent to enter into either of (1) or (2), as the case may be, and
Tenant shall have the right to deliver a Commitment Notice to Landlord within
such ten (10) day period, whereupon Landlord shall not implement Plan A or enter
into the AS Lease, as the case may be, but instead, Tenant shall be
unconditionally obligated to continue leasing the entire Leased Premises
(inclusive of the Relinquished Space and the Additional Space) throughout the
Lease term, including the Extended Lease Term, and Tenant shall also be required
to reimburse Landlord for the Leasing Costs, as provided above.

 

15.           Broker. Section 16.06 of the Original Lease is hereby deleted and,
in lieu thereof, the following is instead substituted:

 

Tenant covenants, warrants and represents that TODD BRAUFMAN of Equis
Corporation was the only broker to represent Tenant in the negotiation of this
Lease (“Tenant’s Broker”). Landlord shall be solely responsible for paying the
commission of Tenant’s Broker pursuant to a separate agreement. Each party
agrees to and hereby does defend, indemnify and hold the other harmless against
and from any brokerage commissions or finder’s fees or claims therefor by a
party claiming to have dealt with the indemnifying party and all costs, expenses
and liabilities in connection therewith, including, without limitation,
reasonable attorneys’ fees and expenses, for any breach of the foregoing. The
foregoing indemnification shall survive the termination or expiration of this
Lease.

 

16.           Waiver of Trial by Jury. THE LANDLORD AND THE TENANT, TO THE
FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BROUGHT BY ANY PARTY TO THIS LEASE WITH RESPECT TO THIS
LEASE, THE LEASED PREMISES, OR ANY OTHER MATTER RELATED TO THIS LEASE OR THE
LEASED PREMISES.

 

17.                                 Miscellaneous.

 

17.1  Entire Agreement. This Amendment constitutes the entire understanding
between the parties with respect to the transaction contemplated herein, and all
prior or contemporaneous oral agreements, understandings, representations and
statements, and

 

12

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all prior written agreements, understandings, letters of intent and proposals
are merged into this Amendment. Except as otherwise expressly provided herein,
neither this Amendment nor any provisions hereof may be waived, modified,
amended, discharged or terminated except by an instrument in writing signed by
the party against which the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.

 

17.2             No Recording. Neither this Amendment nor any memorandum thereof
shall be recorded and the act of recording by Tenant shall be deemed a default
by Tenant hereunder.

 

17.3             Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Minnesota.

 

17.4             Construction of Agreement. In construing this Amendment, all
headings and titles are for the convenience of the parties only and shall not be
considered a part of this Amendment. Whenever required by the context, the
singular shall include the plural and the masculine shall include the feminine
and vice versa. This Amendment shall not be construed as if prepared by one of
the parties, but rather according to its fair meaning as a whole, as if both
parties had prepared it. All (if any) Exhibits attached hereto are incorporated
in this Amendment by reference thereto.

 

17.5             Partial Invalidity. The provisions of this Amendment shall be
deemed independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity of
enforceability of any other provision hereof.

 

17.6             Counterparts; Facsimile. This Amendment may be executed in
multiple counterparts and shall be valid and binding with the same force and
effect as if all parties had executed the same Amendment. A fully executed
facsimile copy of this Amendment shall be effective as an original.

 

[SIGNATURE PAGE TO FOLLOW]

 

13

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IN WITNESS WHEREOF, the parties executed this Amendment as of the
                day of January, 2006.

 

 

LANDLORD:

 

 

 

 

FirstCal Industrial 2 Acquisition, LLC,
a Delaware limited liability company

 

 

 

By:

FirstCal 2 Industrial Leasing Manager, LLC, a
Delaware limited liability company and its leasing
manager

 

 

 

 

By:

First Industrial, L.P., a Delaware limited
partnership, its sole member

 

 

 

 

 

By:

First Industrial Realty Trust, Inc., a
Maryland corporation and its sole
general partner

 

 

 

 

 

 

By:

/s/ Chris William

 

 

 

 

Name:

Chris William

 

 

 

 

Title:

SR Regional Director

 

 

 

TENANT:

 

 

 

 

ESCHELON TELECOM, INC., a Delaware corporation

 

 

 

By:

/s/ Michael A. Donahue

 

Name:

Michael A. Donahue

 

Title:

VP Finance and Treasurer

 

14

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EXHIBIT A

 

PLAN A

 

A-1

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EXHIBIT B

 

PLAN B

 

B-1

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EXHIBIT C

 

TENANT OPERATIONS INQUIRY FORM

 

 

1.

Name of Company/Contact

Michele Speranza-diforza

2.

Address/Phone

 730 2nd Ave S # 900, Minneapolis, MN 55402

 

 

612.436.6621

3.

Provide a brief description of your business and operations:

 

 

Telecommunications services & Products

 

4.                          Will you be required to make filings and notices or
obtain permits as required by Federal and/or State regulations for the
operations at the proposed facility? Specifically:

 

a. SARA Title III Section 312 (Tier II) reports

 

YES

 

NO

(> 10,000lbs. of hazardous materials STORED at any one time)

 

 

 

 

b.SARA Title III Section 313 (Tier III) Form R reports

 

YES

 

NO

(> 10,000lbs. of hazardous materials USED per year)

 

 

 

 

c. NPDES or SPDES Stormwater Discharge permit

 

YES

 

NO

(answer “No” if “No-Exposure Certification” filed)

 

 

 

 

d. EPA Hazardous Waste Generator ID Number

 

YES

 

NO

 

5.             Provide a list of chemicals and wastes that will be used and/or
generated at the proposed location.

 

Routine office and cleaning supplies are not included. Make additional copies if
required.                  N/A

 

Chemical/Waste

 

Approximate Annual
Quantity Used or
Generated

 

Storage Container(s)
(i.e. Drums, Cartons, Totes,
Bags, ASTs, USTs, etc)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C-1

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EXHIBIT D

 

WORK LETTER

 

This Work Letter (this “Work Letter”) is incorporated into and made a part of
the Lease. All terms not defined herein shall have the meanings set forth in the
Lease. In the event of any conflict between the terms and provisions of the
Lease and those of this Work Letter, the terms and provisions of this Work
Letter shall control, in all events.

 

1.                 Performance of Work. Landlord shall cause to be performed, in
accordance with the terms of this Work Letter, (a) if Plan A is applicable,
those certain Tenant Improvements depicted in the plans, specifications and
working drawings described in Schedule 1 attached hereto and made a part hereof
(the “Plan A Final Plans”); or (b) if Plan B is applicable, those certain Tenant
Improvements depicted in the plans, specifications and working drawings
described in Schedule 2 attached hereto and made a part hereof (the “Plan B
Final Plans;” references to the Final Plans shall mean the Plan A Final Plans or
the Plan B Final Plans, as applicable). All Tenant Improvements shall be
performed in a good and workmanlike manner, using new first grade quality
materials. Landlord shall be responsible to obtain all necessary governmental
and municipal approvals and permits required as a condition precedent to the
performance and installation of the Tenant Improvements, and all costs and
expenses incurred by Landlord pursuant to this sentence shall be deemed to
constitute Work Cost, as defined below. The Final Plans have been prepared by
LHB Architects (“Architect”). All work required for the construction and
installation of the Tenant Improvements (“Work”) shall be performed only by
Landlord’s contractor (the “Contractor”). Landlord shall select the Contractor.
Landlord shall obtain bids from three (3) contractors who are able to perform
the Work. Tenant shall, in its sole, but reasonable, discretion and with the
assistance and approval of Landlord, select the Contractor based on the bid
price, quality of service, delivery date and prior working relationship with
Tenant. Landlord shall use its good faith efforts to cause the Landlord
Improvements to be substantially completed within ninety (90) days after the
date on which the Work commences (the “Scheduled Commencement Date”). The costs
to construct the Tenant Improvements, including, but not limited to, the cost to
prepare the Final Plans (collectively, the “Work Cost”), shall be paid for by
Landlord (except as otherwise specifically set forth below): provided, however,
that in no event shall Landlord be obligated to pay a Work Cost in excess of the
Allowance, and, to the extent the Work Cost exceeds the Allowance, Tenant shall
be solely responsible for (and, if necessary, promptly reimburse Landlord for)
any such excess amount (“Excess Work Cost”). For purposes of the Lease, any
Excess Work Cost shall constitute Additional Rent.

 

2.                 Change Orders. From time to time after the date of the
Amendment, Tenant may notify Landlord of changes that Tenant proposes be made to
the Final Plans (a “Change Order”). Promptly upon Tenant’s delivery to Landlord
of a Change Order, Landlord shall notify Tenant (“Change Order Notice”) of both:
(i) any estimated increase in the Work Cost due to the Change Order, and (ii)
any estimated delay (an “Estimated Delay”) in the Scheduled Commencement Date if
the Change Order is implemented. Tenant shall notify Landlord of its final
approval or disapproval of the Change Order within two (2) business days after
Landlord delivers to Tenant the applicable Change Order Notice (“Change Order
Response Period”). If Tenant fails to timely notify Landlord of its approval or
disapproval of any proposed Change

 

D-1

--------------------------------------------------------------------------------

 

Order, Tenant shall be deemed to have automatically disapproved that particular
Change Order and Landlord shall not proceed to implement any of the changes
specified therein. If Tenant timely notifies Landlord of its approval of the
Change Order, then the cost of such Change Order shall be added to the Work Cost
and paid for from the Allowance, to the extent that Allowance proceeds are
available; however, as provided above, Tenant remains solely responsible for any
Excess Work Cost. In such event, any delay in the Scheduled Commencement Date
resulting from the performance of the work described in the relevant Change
Order shall be deemed a Delay Event (defined below).

 

3.                 Substitutions. From time to time after the date of the Lease,
Landlord may notify Tenant of any proposed substitutions (“Substitutions”) in
the materials or designs described in the Final Plans that Landlord determines
are reasonably necessary to avoid delays in the Scheduled Commencement Date (a
“Substitution Notice”). The Substitutions shall be of substantially the same
character and quality as those described in the Final Plans. Any Substitution
Notice shall describe in reasonable detail: (i) the nature of the Substitutions,
(ii) any estimated increase in the Work Cost, if Tenant approves the
Substitutions, and (iii) any estimated delay in the Scheduled Commencement Date
if Tenant disapproves the Substitutions. Tenant shall notify Landlord of its
approval or disapproval of the Substitutions within three (3) business days
after Landlord delivers the relevant Substitution Notice to Tenant
(“Substitution Response Period”). If Tenant fails timely to notify Landlord of
its approval or disapproval, Tenant shall be deemed to have automatically
disapproved the Substitutions described in the relevant Substitution Notice. If
Tenant disapproves or is deemed to have disapproved the Substitutions, Landlord
shall not implement the Substitutions and any delay in the Scheduled
Commencement Date resulting therefrom shall be deemed a Delay Event. If Tenant
timely approves a Substitution, then, within three (3) business days of the
expiration of the relevant Substitution Response Period, Tenant shall pay
Landlord the amount of any increase in the Work Cost (as set forth in the
relevant Substitution Notice) in accordance with Paragraph 4 of this Work
Letter, and upon receipt of such payment, Landlord shall implement the
Substitutions.

 

4.                 Payment of Additional Work Cost. As provided above, Tenant
shall be responsible for the payment of any increase in the Work Cost resulting
from an approved Change Order or Substitution if the cost of such Change
Order(s) and/or Substitution(s) exceeds the amount of the Allowance and,
therefore, constitutes Excess Work Cost.

 

5.                 Substantial Completion Date and Punch List Items. The
Architect shall determine the date on which the construction and installation of
the Work Items are substantially completed in substantial accordance with the
Final Plans, as such Final Plans may be modified by any Change Orders and
Substitutions (“Substantial Completion Date”). The Architect shall certify to
Landlord and Tenant, in writing, the Substantial Completion Date (“Substantial
Completion Notice”). Within five (5) days after the Architect delivers the
Substantial Completion Notice, Tenant and Landlord (and the Architect, if
Landlord so desires) shall inspect the Premises to determine those items, if
any, that Landlord and Tenant determine to be unfinished, but which do not
materially impair Tenant’s use or occupancy of the Premises (the “Punch List
Items”). Tenant shall accept possession of the Tenant Improvements and Landlord
shall promptly thereafter complete the Punch List Items, it being understood
that Landlord shall use reasonable efforts to so complete those Punch List Items
within forty-live (45) days after the

 

D-2

--------------------------------------------------------------------------------

 

Substantial Completion Date. At Landlord’s request from time to time, Tenant
will furnish Landlord with written statements acknowledging the completion of
the Punch List Items. Any disputes as to the nature or existence of any Punch
List Item or as to the substantial completion of the Landlord Improvements shall
be resolved by reasonable and joint decision of the Architect and a duly
licensed Minnesota architect selected by Tenant.

 

6.                        Delay.

 

6.1.     Delay Events: The Scheduled Commencement Date may be delayed from time
to time due to any or all of the following events (collectively, “Delay
Events”):

 

6.1.1.   Change Orders requested or approved by Tenant;

 

6.1.2.   Tenant’s disapproval of a Substitution;

 

6.1.3.   Any act of Tenant or its agents, employees or contractors that
interferes with the Work;

 

6.1.4.   Any delay due to, or in connection with, materials specified by Tenant
to be procured from a particular source, including, without limitation, any
delivery delays or delays relating to the quality or other characteristics of
such materials;

 

6.1.5.   Any delay of any applicable governmental authority to issue appropriate
permits for construction of the Landlord Improvements and a certificate of
occupancy (or comparable certification) for the Premises upon substantial
completion of the Work Items; and

 

6.1.6.   A matter arising or occurring under Section 17.4 of the Lease.

 

7.                 Limit on Landlord’s Liability. Without limitation of
Landlord’s limitation of liability set forth in the Lease, Landlord shall not be
liable for any damage caused to Tenant due to a delay as a result of a Delay
Event in the delivery of the Tenant Improvements to Tenant.

 

D-3

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SCHEDULE 1

 

FINAL PLANS

 

Schedule 1

--------------------------------------------------------------------------------

 

EXHIBIT A

 

Option A - Preliminary

 

[g22342kmi001.jpg]

 

 

Initials:

 

 

 

Landlord:

[ILLEGIBLE]

 

Tenant:

 [ILLEGIBLE]

 

--------------------------------------------------------------------------------

 

EXHIBIT B

Option B- Preliminary

 

[g22342kmi002.jpg]

 

 

Initials:

 

 

 

Landlord:

[ILLEGIBLE]

 

Tenant:

 [ILLEGIBLE]

--------------------------------------------------------------------------------