exv10w15



 





EXHIBIT
10.15




LEASE




     THIS LEASE is made between the Landlord and the Tenant named below effective as of the date
that this Lease is last executed by Landlord and Tenant.



BASIC LEASE TERMS AND INFORMATION




	 	 	 
	Landlord: Southwest Valley Partners,
	 	 
	LLC, an Indiana limited liability company
	 	 
	 
	 	 
	Address for mail and deliveries:
	 	 
	7887 E. Belleview Avenue, Suite 900
	 	 
	Englewood, CO 80111
	 	 
	Attn: Austin W. Lehr
	 	 
	 
	 	 
	Telephone: 720-279-5422
	 	 
	Facsimile: 720-279-5322
	 	 
	Electronic Address: alehr@lauth.net
	 	 
	 
	 	 
	With a copy to:
	 	 
	Lauth Group, Inc.
	 	 
	401 Pennsylvania Parkway
	 	 
	Indianapolis, IN 46280
	 	 
	Attn: General Counsel
	 	 
	Telephone: (317) 575-3098
	 	 
	Facsimile: (317) 564-3098
	 	 
	Electronic Address: vback@lauth.net
	 	 
	 
	 	 
	Tenant: Ulta Salon, Cosmetics &
Fragrance, Inc.
	 	 
	 
	 	 
	Address for mail and deliveries:
	 	 
	Windham Lakes Business Park
	 	 
	1275 Windham Drive
	 	 
	Romeoville, Illinois 60446
	 	 
	Attn: Sr. Vice President of Growth &
Development
	 	 
	 
	 	 
	Telephone: (630) 226-0020
	 	 
	Facsimile: (630) 679-5524
	 	 
	Electronic Address: alelli@ultainc.com
	 	 






 









 






	 	 	 
	With a copy to:
	 	 
	Ulta Salon, Cosmetics & Fragrance, Inc.
	 	 
	Windham Lakes Business Park
	 	 
	1275 Windham Drive
	 	 
	Romeoville, IL 60446
	 	 
	Attn: Alison M. Richter, Real Estate
	 	 
	Attorney
	 	 
	 
	 	 
	Telephone: (630) 771-3708
	 	 
	Facsimile: (630) 679-5524
	 	 
	Electronic Address: arichter@ultainc.com
	 	 
	 
	 	 
	Premises: Approximately 328,995
square feet of bulk distribution space
located within the bulk distribution
building (“Building”) located or to be
constructed at Riverside Business
Center, 4570 West Lower Buckeye Road,
Phoenix, Arizona 85034, which Premises
are depicted on Exhibit “A-1” attached
hereto. The Premises are part of
±31.91 acres of real estate more
particularly described in Exhibit
“A-2” attached hereto and all
improvements located thereon,
including the Building comprised of
approximately 603,910 square feet (the
“Site”). Landlord has the right to
expand the Building or reduce or
increase the amount of common area
land on the Site, in Landlord’s sole
discretion; provided, however, that
without first obtaining the Tenant’s
prior written consent thereto, no such
expansion of the Building or the
common areas shall adversely affect
Tenant’s use of the Premises for the
purposes for which they are leased
pursuant hereto, nor materially
increase the Site Operating Costs.
	 	 
	 
	 	 
	Expansion Premises: Approximately
100,000 square feet of additional bulk
distribution space located within the
Building. Tenant’s option to expand
the Premises to include the Expansion
Premises is set forth in Section 37 of
this Lease.
	 	 
	 
	 	 
	Lease Term:

	 	127 months
	 
	 	 
	Target Fixturing Entry Date:

	 	[***]








 




			
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page has been omitted and filed separately with the Commission. Confidential
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	Target Early Entry Date:
	 	[***]	 	 	 	 
	 
	 	 	 	 	 	 
	Target Commencement Date:
	 	[***]	 	 	 	 
	 
	 	 	 	 	 	 
	Monthly Base Rent Schedule:	 	Month	 	Monthly Amount	 	Annual Amount
	 
	 	 	 	 	 	 
	 
	 	01-12	 	$[***]	 	$[***]
	 
	 	13-24	 	$[***]	 	$[***]
	 
	 	25-36	 	$[***]	 	$[***]
	 
	 	37-48	 	$[***]	 	$[***]
	 
	 	49-60	 	$[***]	 	$[***]
	 
	 	61-72	 	$[***]	 	$[***]
	 
	 	73-84	 	$[***]	 	$[***]
	 
	 	85-96	 	$[***]	 	$[***]
	 
	 	97-108	 	$[***]	 	$[***]
	 
	 	109-120	 	$[***]	 	$[***]
	 
	 	121-127	 	$[***]	 	$[***]
	 
	 	 	 	 	 	 
	Security Deposit:
	 	None	 	 	 	 
	 
	 	 	 	 	 	 
	Outside Broker:	 	For Tenant: Brad Anderson and Bob Crum CB
Richard Ellis
	 
	 	 	 	 	 	 
	 	 	For Landlord: Mark Krison, CB Richard Ellis
	 
	 	 	 	 	 	 
	Permitted Use:	 	Bulk distribution warehouse and incidental
office space
	 
	 	 	 	 	 	 
	Tenant’s Proportionate Share:
	 	54.48%	 	 	 	 
	 
	 	 	 	 	 	 
	Addenda:
	 	None	 	 	 	 






     1. Granting Clause.



          1.1 Lease Term. In consideration of the obligation of Tenant to pay rent as herein
provided and in consideration of the other terms, covenants, and conditions hereof, Landlord leases
to Tenant, and Tenant takes from Landlord, the Premises, to have and to hold for the Lease Term,
subject to the terms, covenants and conditions of this Lease. The Lease Term shall commence on the
date which is [***] after the Early Entry Date, as defined below (the “Commencement Date”) and
shall end on the date that follows the remainder of the month in which the Commencement Date occurs
plus the number of full months in the Lease Term. If a
Tenant Caused Delay (as that term is defined below) causes the Early Entry Date to be later
than the Target Early Entry Date, then for each day that the Early Entry Date is delayed beyond the






 




			
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Confidential treatment has been requested with respect to the omitted
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Target Early Entry Date as a result of a Tenant Caused Delay, the [***] period
between the Early Entry Date and the Commencement Date shall decrease by one (1) day. Beginning on
the Commencement Date, Tenant shall begin paying Base Rent.




          1.2 Fixturing Entry Date: The “Fixturing Entry Date” shall be the date that the
tenant improvements set forth in the Landlord’s Work are sufficiently complete, as reasonably
determined by Landlord, to an extent sufficient to permit Tenant to safely enter the Premises and
install racking, furniture systems, telecommunication cables and other equipment and fixtures
necessary for Tenant’s operations within the Premises. Actual Substantial Completion of Landlord’s
Work, as those terms are defined in Exhibit “B”, is not required for the Fixturing Entry
Date. Landlord shall provide Tenant access to the Premises on the Fixturing Entry Date, and Tenant
may then install racking, furniture systems, telecommunication cable and other equipment necessary
for its operations in the Premises; provided that Tenant shall coordinate all such activities with
Landlord so that such activities do not interfere with Landlord’s Work. Beginning on the Fixturing
Entry Date and during the remainder of the Lease Term (including the period prior to the
Commencement Date), Tenant shall comply with all of the provisions of the Lease; provided, that,
from and after the Fixturing Entry Date until the Early Entry Date, Tenant shall not be obligated
to pay Base Rent or Additional Rent. Landlord shall endeavor to cause the Fixturing Entry Date to
occur on or before [***] (the foregoing date is based on the parties expectation that Landlord will
receive all required building permits in order to perform the Landlord’s Work (as hereinafter
defined) on or before [***], and if there is a delay in the applicable governmental entity issuing
the permits, the foregoing date (and the date in the next sentence) shall be extended one day for
each day until Landlord receives all of the required building permits). [***].




          1.3 Early Entry Date: The “Early Entry Date” shall be the later to occur of
Substantial Completion of Landlord’s Work and [***]. Tenant shall have full access and use of the
Premises on the Early Entry Date and may continue its fixturing activities. Beginning on the Early
Entry Date and until the Commencement Date, Tenant shall be obligated to pay Additional Rent, but
shall not be obligated to pay Base Rent.




     2. Net Lease. It is the intention of the parties that this shall be a triple net
lease, and that the Landlord shall receive the Base Rent and Additional Rent free from all taxes,
charges, expenses, maintenance and repair costs, damages and deductions of every nature and
description, subject to the terms and conditions of this Lease; provided, however, that in no event
shall Tenant be responsible for any portion of Landlord’s general income, franchise, inheritance,
state or gift taxes, or any business license tax or fee imposed upon Landlord by any applicable
governmental agency.



     3. Acceptance of Premises. Landlord shall make all improvements in accordance with the “Final Plans” prepared and
approved by the parties in accordance with Exhibit “B” (the “Landlord’s Work”), based upon
architectural plans and specifications and construction drawings to be prepared by Tenant’s
architect and approved by Landlord pursuant to Exhibit “B”. Landlord shall (i) obtain all
permits and approvals necessary for the completion of





 




			
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Landlord’s Work, and (ii) complete Landlord’s
Work in compliance with all applicable laws, ordinances and regulations. Tenant and Landlord agree
that Landlord’s Work shall be performed by Lauth Construction, LLC, which shall construct
Landlord’s Work on a “cost plus” basis pursuant to which it shall be entitled to receive a fee to
act as general contractor in an amount equal to [***] of the total costs of
Landlord’s Work. In addition, Lauth Construction, LLC shall be reimbursed for its costs incurred
for general conditions and overhead in connection with the performance of Landlord’s Work in an
amount equal to [***] of the costs of Landlord’s Work. Inasmuch as Landlord’s affiliate, Lauth
Construction, LLC, will act as general contractor and will be entitled to the fees and
reimbursements in the foregoing amounts, Landlord shall not receive a construction management fee
for the initial tenant improvements. Tenant acknowledges that it has not relied upon any
statements, representations, agreements, or warranties made by Landlord or Landlord’s agents,
except such as are expressed in this Lease. Landlord shall, at Landlord’s sole cost and expense,
promptly repair, replace and/or restore, if and to the extent applicable, any defects in Landlord’s
Work in accordance with the warranty set forth in Section 6 of Exhibit “B”. In connection
therewith, upon the Commencement Date, Landlord shall provide Tenant with an elevation certificate
from Landlord’s Surveyor evidencing that the Building slab has been constructed at a minimum level
of eighteen inches (18”) above the 100 year flood plain and if, as a result of Landlord’s failure
to construct the Building slab at such elevation, the Tenant incurs any additional insurance
premiums, Landlord shall be responsible for all such additional insurance premiums and related
costs and expenses incurred by Tenant.




     4. Use. The Premises shall be used only for the Permitted Use and for no other
purpose without Landlord’s prior written consent, which consent shall not be unreasonably withheld.
Tenant will use the Premises in a careful, safe and proper manner and will not commit waste,
overload the floor or structure of the Premises or subject the Premises to use that would damage
the Premises. Except as would normally be expected from the use of the Premises for the bulk
storage and distribution of cosmetic products, Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise, or vibrations to emanate from the Premises, or take any
other action that would constitute a nuisance or would disturb, unreasonably interfere with, or
endanger Landlord or any other party. Tenant, at its sole expense, shall use and occupy the
Premises in compliance with all laws, including, without limitation, the Americans With
Disabilities Act, orders, judgments, ordinances, regulations, codes, directives, permits, licenses,
covenants and restrictions now or hereafter applicable to the Premises (collectively, “Legal
Requirements”); provided, however, that Tenant shall not in any event be required to make
structural alterations or modifications to the Building or the common areas within the Site unless
such modifications or alterations are required due to Tenant’s particular use of the Premises. The
Premises shall not be used as a place of public accommodation under the Americans with Disabilities Act or
similar state statutes or local ordinances or any regulations promulgated thereunder, all as may be
amended from time to time. Tenant shall, at its expense, make any alterations or modifications,
within or outside the Premises, that are required by Legal Requirements; provided, however, that
Tenant shall not in any event be required to make structural alterations or modifications to the
Building or the common areas within the Site unless





 




			
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such modifications or alterations are required
due to Tenant’s particular use of the Premises. Tenant will not use or permit the Premises to be
used for any purpose or in any manner that would (a) void any insurance maintained by Landlord with
respect to the Premises; (b) materially increase the insurance risk; (c) cause the disallowance of
any sprinkler credits; (d) be prohibited by any applicable laws, rules regulations, ordinances, or
restrictions of any government entity; or (e) violate any agreements applicable to the Premises to
which Tenant is bound or of which Tenant has notice. If any increase in the cost of any insurance
on the Premises is caused by Tenant’s use or occupation of the Premises, or because Tenant vacates
the Premises, then Tenant shall pay the amount of such increase to Landlord. Landlord hereby
represents to Tenant that, to Landlord’s actual knowledge (without specific investigation or
inquiry), Tenant’s use of the Premises for the bulk storage and distribution of cosmetic products
will not violate any existing laws, rules, regulations, ordinances or restrictions of any
governmental entity applicable to the Premises or result in an increase in the cost of insurance
maintained by Landlord with respect to the Premises, the Building or the Site. Any occupation of
the Premises by Tenant prior to the Commencement Date shall be subject to all obligations of Tenant
under this Lease, except with respect to the payment of Base Rent as set forth in Sections 1.2 and
1.3. Tenant shall comply with and obey all directions of the Landlord, including Rules and
Regulations which are uniformly adopted, changed or modified from time to time by Landlord, all of
which are and will be a part of this Lease as Exhibit “D”; provided, however, that no
changes to such Rules and Regulations shall materially or adversely affect Tenant’s right to use
the Premises for the Permitted Use and, Tenant shall notify Landlord in writing no later than sixty
(60) days after Tenant’s receipt of any change to such Rules and Regulations that any change
materially or adversely affect Tenant’s right to use the Premises for the Permitted Use. In the
event of any discrepancy between the Rules and Regulations and the terms and conditions of this
Lease, the terms and conditions of this Lease shall govern and control. Landlord shall use
reasonable efforts to enforce the Rules and Regulations against other tenants and occupants of the
Site, and Landlord will make reasonable efforts to uniformly apply the Rules and Regulations
consistently to all tenants and occupants of the Site. Landlord represents that, as of the
execution date of this Lease, the Premises is zoned A-1 (Light Industrial District) pursuant to
ZONING ORDINANCE of the City of PHOENIX, ARIZONA Codified through Ord. No. G-4867 (TA-27-05),
adopted Feb. 14, 2007, effective Feb. 14, 2007. (Supplement No. 9, Update 1).




     5. Base Rent. Throughout the Lease Term, Tenant shall pay Base Rent in the amount set
forth above. Tenant promises to pay to Landlord in advance, without demand, deduction or set-off
(except as expressly set forth herein), monthly installments of Base Rent and Additional Rent on or
before the first day of each calendar month commencing on the Commencement Date. If the Lease Term
commences or expires on a date other than the first day or the last day of a calendar month,
respectively, then the Rent payable for such partial calendar month shall be an amount equal to the
monthly installment of Rent otherwise then in effect, divided by the number of days in the
full calendar month during which the Lease Term commences or expires, respectively, and
multiplied by the number of days in the partial calendar month after and including the Commencement
Date or before and including the date of expiration, respectively, and provided, further that the
Rent for any partial calendar month at the commencement of the initial Lease Term shall be payable
on the first day of the first full calendar month during the Lease Term. All sums, liabilities,
obligations and other amounts which Tenant is required to pay or discharge pursuant to this Lease
in addition to Base Rent, including without limitation Tenant’s Proportionate Share of the Site
Operating Costs (as



 









 







hereinafter defined), together with any interest, penalty, or other sum which
may be added for late payment thereof, shall constitute additional rent hereunder (herein called
“Additional Rent”). In the event of any failure on the part of Tenant to pay or discharge any of
the foregoing, after the expiration of all applicable notice and cure periods (if any), Landlord
shall have all rights, powers and remedies provided for herein (or by law or equity or otherwise)
in the case of nonpayment of Base Rent. All payments required to be made by Tenant to Landlord
hereunder shall be payable at such address as Landlord may specify from time to time by written
notice delivered in accordance herewith. The obligation of Tenant to pay Base Rent and Additional
Rent (sometimes hereinafter collectively referred to as “Rent”) and the obligations of Landlord
under this Lease are independent obligations. Tenant shall have no right at any time to abate,
reduce, or set-off any Rent due hereunder, except as specifically provided herein.



     6. Re-measurement. At any time from and after the Early Entry Date until the
Commencement Date, Tenant and Landlord shall each have the right to re-measure the floor area of
the Premises in accordance with Exterior Wall Methodology set forth in the “Standard Methods for
Measuring Floor Area in Industrial Buildings,” as published in October 2004 by the Building Owners
and Managers Association International and the Society of Industrial and Office Realtors. In the
event that the floor area of the Premises as determined by the re-measurement differs from the
floor area of the Premises designated by Landlord, then the Base Rent, Tenant’s Proportionate Share
of the Site Operating Costs and a proportionate share of Tenant’s Allowance and Additional
Allowance (as those terms are defined in Exhibit B attached hereto) shall be recalculated using the
re-measured square footage of the Premises. Recalculation of the Tenant’s Allowance shall be based
on [***] per square foot. Recalculation of Tenant’s Additional Allowance shall be
based on [***] per square foot. Landlord shall make any additional Tenant Allowance and Additional
Allowance available to Tenant. In the case of a reduction in the Tenant Allowance, the reduced
amount shall be taken from the then available Allowance or, if the Allowance has been used by
Tenant, Tenant shall provide Landlord within thirty (30) days after the re-measurement has been
determined either (i) a written notice that Tenant has elected to use the Additional Allowance to
fund the reduced amount (if sufficient funds remain in the Additional Allowance) or (ii) pay to
Landlord the amount. In the case of a reduction in the Additional Allowance, the reduced amount
shall be taken from the then available Additional Allowance or, if the Additional Allowance has
been used by Tenant, Tenant shall, within thirty (30) days after the re-measurement has been
determined, pay to Landlord the amount. In the event that the floor area
of the Premises as determined by the re-measurement differs from the floor area of the
Premises designated by Landlord, the parties shall enter into an amendment to this Lease setting
forth the re-measured square footage in the Premises, the adjusted annual and monthly Base Rent
under this Lease, and the adjusted Tenant’s Proportionate Share of Site Operating Costs. The party
that elects to re-measure the Premises shall be responsible for its costs in connection with the
re-measurement; provided, however, that if Tenant re-measures the Premises and the floor area of
the Premises as re-measured varies from





 




			
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the amount stated in this Lease by more than
[***], then Landlord shall reimburse Tenant for the actual costs incurred by
Tenant to re-measure the Premises.




     7. Late Charges. Any amount not paid by Tenant after its due date, in accordance with
the terms of this Lease, shall bear interest from such due date until paid in full at the lesser of
(a) the highest rate permitted by applicable law or (b) the Prime Rate (as reported in the Wall
Street Journal) of interest (“Prime Rate”) plus ten percent (10%) per annum. It is expressly the
intent of Landlord and Tenant at all times to comply with applicable law governing the maximum rate
or amount of any interest payable on or in connection with this Lease. If applicable law is ever
judicially interpreted so as to render usurious any interest called for under this Lease, or
contracted for, charged, taken, reserved, or received with respect to this Lease, then it is
Landlord’s and Tenant’s express intent that all excess amounts theretofore collected by Landlord be
credited on the applicable obligation (or, if the obligation has been or would thereby be paid in
full, refunded to Tenant), and the provisions of this Lease immediately shall be deemed reformed
and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of
any new document, so as to comply with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder. Landlord, in addition to all other rights and
remedies available to it, may charge Tenant a fee equal to five percent (5%) of the delinquent
payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenant’s
delinquency. Notwithstanding anything contained in the foregoing to the contrary, Landlord hereby
agrees that for the first occurrence of a late payment of Base Rent by Tenant hereunder within any
consecutive twelve (12) month period, Tenant shall not be obligated for the payment of Default
Interest or the late charge described herein unless and until such amounts remain outstanding ten
(10) days after Tenant’s receipt of written notice from Landlord that such amounts are or were due
and payable. If the amounts due are not paid within ten (10) days after Tenant’s receipt of
written notice, Default Interest shall begin accruing on the date the amount was originally due and
payable.



     8. Intentionally Omitted.



     9. Utilities and Site Operating Costs. Landlord shall cause the water and electricity serving the Premises to be submetered.
Tenant shall be solely responsible for the expense of any submetered utility services and shall pay
such utility providers directly. Tenant, at its expense, shall do anything necessary to maintain
the continuation of such services; but nothing contained in this Lease shall constitute any consent
or request by Landlord, express or implied, for the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit the making of any
claim against Landlord or the Premises in respect thereof.



     Notwithstanding anything in this Lease to the contrary, if (i) there occurs an interruption in
utility services to the Premises which is caused by Landlord or its agents or contractors, and (ii)
the restoration of service is entirely within Landlord’s Control (as hereinafter defined), and
(iii) Landlord fails to restore such service within five (5) business days after Tenant provides
Landlord the facsimile notice set forth below of the occurrence of such interruption (or fails to





 




			
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provide alternative temporary sources of service such that the Premises are made tenantable), and
(iv) the Premises are “untenantable” (meaning that Tenant is unable to use such space in the normal
course of its business for the bulk storage and distribution of cosmetic products) then Base Rent
shall abate on a per diem basis for each day beginning with the date which the Premises became
untenantable (“Utility Interruption”). Tenant shall immediately notify Landlord via facsimile and
via reputable national overnight courier of a Utility Interruption. Landlord’s obligations under
this Section 9 are conditioned on Tenant providing the foregoing notices. “Control for purposes of
this Section shall mean that Landlord has the responsibility for providing, reasonably maintaining
and restoring and Landlord possesses everything necessary to restore the service or can reasonably
obtain what is necessary to restore the services. Control shall specifically exclude any
maintenance or repair required to be made or made necessary by the utility service provider (unless
the failure of such utility service provider to maintain or repair is the result of Landlord’s
failure to timely remit payment to the utility provider of any fees or charges in connection with
the provision of such utility services or in connection with any maintenance or repair to be made
by such utility provider, but only if the payment of those monies is a Landlord obligation) or
which is made necessary by any occurrence or set of circumstances constituting Force Majeure. Such
abatement shall be Tenant’s sole remedy for Landlord’s failure to restore service as set forth
above, and Tenant shall not be entitled to damages (consequential or otherwise) as a result
thereof. If utility service lost as a result of a Utility Interruption is not restored within
sixty (60) days from the date the Landlord receives notice of the Utility Interruption from Tenant
and Landlord has not provided alternative temporary sources of service such that the Premises are
made tenantable during such 60-day period, then Tenant shall have the right to elect (which
election shall be made not later than ten (10) business days after the expiration of the foregoing
60-day period) to either (a) continue in possession of the Premises without payment of Base Rent
until such utility service is restored, or (b) immediately terminate this Lease upon written notice
to Landlord. If Tenant fails to provide notice of its election to terminate this Lease within the
ten (10) business day period required in the foregoing sentence, then Tenant shall be deemed to
have elected to continue in possession of the Premises without payment of Base Rent until such
utility services are restored.




     Tenant shall pay to Landlord, as Additional Rent, Tenant’s Proportionate Share of the
operating costs for the Site (the “Site Operating Costs”), which shall consist of all actual costs
and expenses incurred (without Landlord mark up or premium) to maintain all facilities used in the
operation of the Site and its environs as may be determined by Landlord to be reasonably
necessary. All Site Operating Costs shall be determined in accordance with generally accepted
accounting principles which shall be consistently applied, and shall be annualized in new or
refurbished structures that commence operation during a calendar year, by dividing the total costs
by the number of months the structure is in operation, and multiplying that result by twelve (12).
Except to the extent herein otherwise provided, the term “Site Operating Costs” as used herein
shall mean all costs and expenses (but not specific costs which are separately billed to and paid
or reimbursed by specific tenants) of every kind and nature which Landlord shall pay or become
obligated to pay because of, or in connection with the ownership and operation of the Site,
including, but not limited to, the following:




     A. Wages, salaries, fringe benefit costs, payroll taxes, unemployment compensation
payments, workmen’s compensation insurance premiums and other related costs of all on-site
and off-site employees engaged in the operation, maintenance
and



 









 







security of the Site; costs
of building employee uniforms and cleaning thereof; and the management fees payable by
Landlord (excluding brokerage commission for leasing) for management of the Site, not to
exceed five percent (5%) of gross rents received by Landlord.




     B. All labor, supplies and materials used in the operation, cleaning, maintenance,
repair and replacement of the Site and all of its machinery and equipment.




     C. Cost of all management, maintenance and service agreements of the Site and the
equipment therein, including, without limitation, alarm service, trash removal, window
cleaning and maintenance and management and administrative services.




     D. Accounting costs, including the costs of audits by certified public accountants,
pertaining to the management and operation of the Site.




     E. Cost of all insurance, including without limitation, fire, casualty, liability,
rental abatement and terrorism insurance applicable to the Site and Landlord’s personal
property used in connection with the operation and maintenance of the Site (excluding
insurance Tenant is required to maintain pursuant to this Lease); provided however, Tenant
shall not be responsible to pay its proportionate share of increases in casualty insurance
to the extent caused by a violation of Section 43 of this Lease.




     F. All taxes, payments in lieu of taxes, assessments and governmental charges that
accrue against the Site, including without limitation, and the costs of any contest by
Landlord by appropriate legal proceedings of the amount, validity, or application of any
Taxes or liens thereof (collectively referred to as “Taxes”), excluding, however,
local, federal and state taxes on income, estate or death taxes, franchise taxes, and any
taxes imposed or measured on or by the income of Landlord from the operation of the Site or
imposed on Landlord’s profit or receipts in connection with any change of ownership of the
Site; provided, however, that if at any time during the Term the present method of taxation
or assessment shall be so changed that the whole or any part of the taxes, assessments,
levies, impositions, or charges so levied, assessed, or imposed on real estate and the
improvements thereof shall be discontinued and as a substitute therefor, or in lieu thereof
taxes, assessments, levies, impositions, or charges shall be levied, assessed
and/or imposed wholly or partially as a capital levy or otherwise on the rents received
from the Site, such substitute or additional taxes, assessments, levies, impositions, or
charges, to the extent so levied, assessed, or imposed, shall be deemed to be included
within Taxes.




     G. Cost of repairs, replacements and general maintenance of the Site and each part
thereof (excluding repairs, replacements and general maintenance paid by proceeds of
insurance or by Tenant or other third parties, and alterations attributable solely to other
tenants of the Site).




     H. Landscaping and any and all other common area maintenance costs related to public
areas, including sidewalks and landscaping on the Site.



 









 






     I. Amortization of capital improvements made to the Site subsequent to the Commencement
Date of the Lease which may be required by governmental authorities, or which may improve
the operating efficiency of the Site from Landlord’s efforts to reduce operating costs.




     J. Cost of all water, gas, electricity, heat, light, power, telephone, sewer, sprinkler
services, refuse and trash collection, communications infrastructure and other utilities and
services used on all common areas within the Site, except for such utilities provided to
tenants and occupants within the Site whether or not separately submetered as provided
above, and any storm sewer charges or other similar charges for utilities imposed by any
governmental entity or utility provider, together with any taxes, penalties, surcharges or
the like pertaining to the use of the Site.




     K. The cost of the Site’s share of the Riverside Business Center’s common area
maintenance.



     Notwithstanding anything herein to the contrary, Site Operating Costs shall not include the
following:




     (a) amounts paid for capital expenditures, except as provided in Section 9(1) above;




     (b) special tenant inducements;




     (c) any costs for interest or other payments on loans to Landlord;




     (d) expenses incurred in leasing or procuring tenants;




     (e) legal expenses other than those incurred for the general benefit of the Site;




     (f) operating expenses otherwise caused by or resulting from Landlord’s breach of its
obligations under this Lease or any other lease;




     (g) the removal or remediation of pollutants, contaminants or Hazardous Materials, as
such terms are defined by governmental authorities, except such removal or remediation as is
necessitated by Tenant’s or its agent’s actions or inactions;




     (h) any expense resulting from the negligence or willful misconduct of Landlord, its
agents, employees or contractors;




     (i) reserves for anticipated future expenses;




     (j) costs arising from political or charitable contributions;




     (k) costs of any items to the extent Landlord receives reimbursement from insurance
proceeds or from a third party;



 









 






     (l) the expense of extraordinary services provided to other tenants within the Site;




     (m) costs incurred by Landlord in the sale, financing, refinancing, mortgaging, selling
or change of ownership of the Site (or any portion thereof), including brokerage
commissions, attorneys’ and accountants’ fees, closing costs, title insurance premiums,
transfer taxes and interest charges; and




     (n) costs associated with the operation of the business of the entity which constitutes
Landlord, such as entity accounting and legal.



     Landlord shall estimate the Site Operating Costs annually, and written notice thereof shall be
given to Tenant prior to the Commencement Date and prior to, or within a reasonable time after, the
beginning of each calendar year. Tenant shall pay Tenant’s Proportionate Share of the estimated
Site Operating Costs in twelve (12) equal monthly installments payable on the first day of each
month as part of the Rent. On the expiration or earlier termination of the Lease Term, Landlord
shall have the right to adjust the Site Operating Costs based on year to date information, with
Tenant to pay Landlord, within fifteen (15) days after receipt of notice thereof, any increase in
the estimate attributable to the period before the Lease Term expiration. Within a reasonable
period of time after the end of each calendar year, even in cases where the Lease terminated in the
prior year, Landlord shall render to Tenant a statement (“Year-End Statement”) showing the actual
Site Operating Costs for the operation of the Site during the prior calendar year, setting forth a
computation of Tenant’s Proportionate Share of the Site Operating Costs for the portion of the year
covered by the Lease Term. Within fifteen (15) days after receipt of Year-End Statement, Tenant
shall pay Landlord, or Landlord shall credit to Tenant, as the case may be, the difference between
the actual Site Operating Costs for the preceding calendar year and the estimated Site Operating
Costs paid by Tenant during such year. If the Lease shall commence, expire, or be terminated on
any date other than the last date of the calendar year, then the Site Operating Costs for such
partial year shall be prorated on the basis of the number of days during the year the Lease was in
effect in relation to the total number of days in such year. In such event, if Tenant owes
Landlord, then such payment shall be made in a lump sum. If Landlord owes Tenant, then Tenant’s
account shall be credited in the same way Tenant paid its estimated Site Operating Costs, or other
payment, at Landlord’s sole discretion.



     Tenant may engage its own certified public accountants (“Tenant’s Accountants”) to verify the
accuracy of the Year-End Statement upon fifteen (15) days prior written notice to Landlord,
provided that such audit shall be accomplished within one (1) year following Tenant’s receipt of
the Year-End Statement and at the expiration of such one (1) year period, Tenant shall have no
further rights to audit the applicable Year-End Statement. Tenant’s Accountants shall be entitled
to examine the books and records of Landlord for the applicable Lease year to the extent they are
available at such time, which examination shall be conducted during the regular business hours of
Landlord at the office where Landlord maintains such books and records. Tenant shall deliver to
Landlord copies of all audits, reports or other results from its examination within fifteen (15)
days after receipt thereof by Tenant. If the Tenant’s Proportionate Share of the Site Operating
Costs has been overstated, then Landlord shall promptly reimburse to Tenant the amount of such
overstatement. All costs incurred by Tenant for Tenant’s accountant shall be paid by Tenant;
provided, however, that if the amount of any overstatement by Landlord is



 









 







greater than five percent
(5%) of the total Site Operating Costs for the period audited, then Landlord shall reimburse Tenant
its actual, reasonable third party expenses related to the audit. Notwithstanding any pending
dispute, Tenant shall continue to pay Landlord the amount of the estimated monthly deposits until
such amount has been determined to be incorrect.



     10. Taxes. All capital levies or other taxes assessed or imposed on Landlord upon the
Rent payable to Landlord under this Lease and any franchise tax, excise, transaction, sales or
privilege tax, assessment, levy or charge measured by or based, in whole or in part, upon such
Rents from the Premises or any portion thereof shall be paid by Tenant or upon demand; provided,
however, in no event shall Tenant be liable for any net income taxes imposed on Landlord unless
such net income taxes are in substitution for any Taxes payable hereunder. If any such tax or
excise is levied or assessed directly against Tenant, then Tenant shall be responsible for and
shall pay the same at such times and in such manner as the taxing authority shall require. Tenant
shall be liable for all taxes levied or assessed against any personal property or fixtures placed
in the Premises, whether levied or assessed against Landlord or Tenant. Tenant shall furnish to
Landlord evidence of payment of any amount payable under this Paragraph before the same is due and
shall furnish to Landlord, within ten (10) days after written demand by Landlord, proof of the
payment of any other amount which is the obligation of Tenant hereunder. Tenant shall satisfy the
requirements of any public or private incentives, abatements or other benefits awarded to Tenant or
the Premises, so long as Tenant is aware or otherwise has knowledge of such requirements, and
Tenant shall indemnify and hold Landlord harmless from any loss, cost or damage, including but not
limited to reasonable attorneys fees resulting at any time during the Lease Term as a result of
Tenant’s failure to satisfy such requirements. Incentives, abatements or other benefits awarded to
Tenant shall belong to Tenant. If the real property tax on the Site increases, Landlord may or
Tenant may, if reasonable grounds exist therefor, contest the real property tax on the Site. If
Tenant’s contest of the real property taxes on the Site results in an increase in taxes on the Site
or the Building, Tenant shall be responsible to pay the full amount of such increases until the
termination of this Lease or until such taxes are subsequently reduced, whichever occurs first. If
Tenant’s contest of the real property taxes on the Site results in a decrease in taxes, Landlord
shall reimburse Tenant for the reasonable costs incurred by Tenant in connection with such contest,
not to exceed the amount of any tax savings realized as a result of such contest. The costs
Landlord incurs to contest real property taxes on the Site shall qualify as
a Site Operating Cost, but not to exceed the amount of any tax savings realized as a result of
such contest. Landlord hereby covenants and agrees that, in order to enable Tenant to timely
contest any real property tax increase, Landlord shall provide copies of all annual notices of
valuation received from the applicable taxing authority sufficiently in advance of the date by
which any tax appeal or contest must be filed.



     11.  Insurance.




          11.1 Landlord’s Insurance. Landlord shall at all times during the Lease Term carry,
at its expense but as a Site Operating Cost, a policy of (a) general commercial liability insurance
with respect to all common areas within the Site, including not less than $2,000,000.00 combined
single limit for both bodily and property damage, and (b) property insurance which insures the Site
and Building, including the Premises, against loss or damage by fire or other casualty (namely, the
perils against which insurance is afforded by a standard special risk insurance policy at
replacement cost; provided, however, that Landlord shall not be responsible




 









 




for, and shall not be
obligated to insure against, any loss of or damage to any personal property of Tenant or which
Tenant may have in the Building or the Premises or any Trade Fixtures (as hereinafter defined)
installed by or paid for by the Tenant on the Premises or any additional improvements which Tenant
may construct on the Premises, and Landlord shall not be liable for any loss or damage to such
property, except to the extent arising from the gross negligence or willful misconduct of Landlord
and its employees, agents, customer and invitees. If any Tenant-Alterations or Trade Fixtures made
by Tenant pursuant to Section 16 result in an increase in the premiums charged during the Lease
Term on the casualty insurance carried by Landlord on the Building, 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 separately billed therefor.




          11.2 Landlord’s Responsibility. Landlord shall assume the risk of, be responsible
for, have the obligation to insure against, and indemnify Tenant and hold it harmless for, from and
against, any and all liability for any loss of or damage or injury to person (including death
resulting therefrom) or property (other than Tenant’s property as provided in Section 11.1)
occurring in, or about the common areas, regardless of cause, except for that caused by the
negligence of, intentional act or omission or breach of this Lease by Tenant and its employees,
agents, customers and invitees. Landlord’s obligation to indemnify Tenant hereunder shall include
the duty to defend against any claims asserted by reason of such loss, damage or injury and to pay
any judgment, settlements, costs, fees and expenses, including attorneys’ fees, incurred in
connection therewith.




          11.3 Tenant’s Insurance. Tenant, in order to enable it to meet its obligation to
insure against the liabilities specified in this Lease, shall at all times during the Lease Term
carry, at its own expense, for the protection of Tenant, Landlord and Landlord’s management agent,
as their interest may appear, one or more policies of general public liability and property damage
insurance, issued by one or more insurance companies reasonably acceptable to Landlord, with the
following minimum coverages:





     A. Worker’s Compensation — minimum statutory amount.




     B. Commercial General Liability Insurance, including not less than $2,000,000, combined
single limit for both bodily and property damage.




     C. Special Risk Insurance, for the full cost of replacement of Tenant’s property.



     Tenant’s insurance shall provide primary coverage to Landlord when any policy issued to
Landlord provides duplicate or similar coverage, and in such circumstance Landlord’s policy will be
excess over Tenant’s policy. Tenant may provide the insurance required hereunder through one or
more blanket insurance policies covering the Premises and other locations of Tenant.



     Such insurance policy or policies shall name Landlord and Landlord’s management agent as
additional insureds and shall provide that they may not be canceled on less than thirty (30) days’
prior written notice to Landlord. Tenant shall furnish Landlord with Certificates of Insurance
evidencing such coverage. Should Tenant fail to carry such insurance and furnish



 









 







Landlord with
such Certificates of Insurance within thirty (30) days of Tenant’s receipt of Landlord’s written
request to do so, or if any such insurance is cancelled for any reason, Landlord shall have the
right to obtain such insurance and collect the cost thereof from Tenant as Additional Rent.



     Notwithstanding anything contained herein to the contrary, so long as Tenant maintains a
tangible net worth of at least $125 million, which net worth shall be evidenced by a certificate
executed by a principal officer of Tenant, Tenant shall have the right to self-insure for Tenant’s
liability and special risk insurance required to be insured pursuant to the terms of this Lease.
Tenant shall notify Landlord in writing thirty (30) days prior to self-insuring any risk. To the
extent Tenant self-insures any risk, the waiver of subrogation that would otherwise apply to
Tenant’s insurer shall apply to Tenant. Lastly, if Tenant self-insures any risk, Landlord may
request (and Tenant shall deliver) a certificate executed by a principal officer of Tenant showing
Tenant’s current or most recent quarter-ending tangible net worth. If Tenant is a publicly traded
company at the time Landlord requests a certificate regarding Tenant’s net worth, Tenant shall
supply financial statements certified as correct by a principal officer of Tenant. Tenant shall
not be required to deliver a certificate more often than two times each calendar year. Finally,
Tenant shall immediately inform Landlord if Tenant’s tangible net worth falls below $125 million,
and if Tenant’s tangible net worth falls below $125 million, Tenant shall, as promptly as possible
(but in no event later than thirty (30) days after Tenant becomes aware that its tangible net worth
has so declined), secure the insurance required by this Lease and provide a copy thereof to
Landlord.



     Before commencing the construction of any repairs, alterations or improvements to the
Premises, Tenant shall deposit with Landlord certificates of worker’s compensation insurance and
liability insurance of Tenant’s general contractor, or if none, from each of Tenant’s independent
contractors prior to the commencement of any work. Such contractors’ liability insurance shall be
in an amount not less than $1,000,000 per occurrence, or such greater amount as Landlord may
reasonably require from time to time, and shall name as additional insureds, Landlord, Landlord’s
management company and Landlord’s lender. The liability insurance shall be on a general commercial
liability form, shall cover all hazards related to any work performed
by any such contractor on the Premises, and such additional insurance coverage shall apply as
primary insurance with respect to any other insurance afforded to Landlord, Landlord’s management
company and Landlord’s lender, and such policy will not seek contribution from any and all
insurance afforded to Landlord, Landlord’s management company or Landlord’s lender, whether as
additional insureds or otherwise.



          11.4 Tenant’s Responsibility. Tenant shall assume the risk of, be responsible for,
have the obligation to insure against, and indemnify Landlord and hold it harmless for, from and
against any and all liability for any loss of or damage or injury to any person (including death
resulting therefrom) or property occurring in, or about the Premises, regardless of cause, except
for any loss or damage from fire or other casualty as provided in Section 11.1 and except to the
extent caused by the gross negligence or intentional misconduct of Landlord and its employees,
agents, customers and invitees; 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 judgment,
settlements, costs, fees and expenses, including attorneys’ fees, incurred in




 









 




connection therewith.
Notwithstanding anything herein to the contrary, Tenant shall bear the risk of any loss or damage
to its property as provided in Section 11.1.



In addition, if Tenant’s breach of this Lease effects an increase in the premiums payable by
another tenant in the Building with respect to that tenant’s liability insurance or special risk
insurance, which increase is evidenced by a certificate from that tenant’s insurance carrier
provided by Tenant, then Tenant shall either reimburse the affected tenant for such increased
premiums or reimburse Landlord if Landlord reimbursed the affected tenant such increase in
premiums.




          11.5 Waiver of Subrogation. Landlord and Tenant hereby release each other and each
other’s employees, agents, customers and invitees from any and all liability for any loss of or
damage to property occurring in, on or about or to the Premises, the Site, the Building or personal
property within the Building by reason of fire or other casualty which could be insured against
under a standard fire and extended coverage insurance policy, regardless of cause, including
negligence of Landlord or Tenant and their respective employees, agents, customers and invitees,
and agree that such insurance carried by either of them shall contain a clause whereby the insurer
waives its right of subrogation against the other party. Because the provisions of this Section
11.5 are intended to preclude the assignment of any claim mentioned herein by way of subrogation or
otherwise to an insurer 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 provisions of this Section 11.5 and have such insurance policies properly endorsed, if
necessary, to prevent the invalidation of such insurance by reason of the provisions of this
Section 11.5.




     12. Restoration. If at any time during the Lease Term the Premises are damaged by a
fire or other casualty, Landlord shall notify Tenant within sixty (60) days after such damage as to
the amount of time Landlord reasonably estimates it will take to restore the Premises (“Damage
Notice”). If the restoration time is reasonably estimated to exceed one hundred eighty (180) days,
then either
Landlord or Tenant may elect to terminate this Lease upon written notice to the other party
given no later than thirty (30) days after Landlord’s notice; provided that Landlord also
terminates the leases of all other similarly-situated tenants in the Building. If the Premises are
damaged by a fire or other casualty and: (a) the damage to the Premises exceeds 50% of the
replacement cost thereof (excluding foundations and footings), as estimated by Landlord; or (b)
such damage occurs during the last two (2) years of the Lease Term, regardless of the extent of
damage to the Premises; or (c) Landlord is required to pay any insurance proceeds arising out of
such fire or casualty to Landlord’s mortgagee, then Landlord, in its discretion, may terminate this
Lease upon written notice to Tenant no later than thirty (30) days after Landlord’s Damage Notice.
If the damage occurs during the last two (2) years of the Lease Term and Landlord elects to
terminate this Lease solely pursuant to clause (b) above, Tenant shall have the right to nullify
Landlord’s termination notice by providing written notice to Landlord that it is electing to
exercise its then next successive extension option. In addition, if the damage occurs during the
last two (2) years of the Lease Term and Landlord does not elect to terminate this Lease pursuant
to clause (b) above, then Tenant shall have the right to elect to terminate this Lease by written
notice to Landlord but only if such damage materially and adversely affects Tenant’s ability to use
the Premises for the purposes for which they are leased hereby, and such damage or destruction was
not caused by Tenant, its sublessee(s), their agents,



 









 







contractors or invitees, and Tenant and
Landlord reasonably determines that, after the completion of repairs to and restoration of the
Premises by Landlord, less than one (1) year will be remaining in the Lease Term. If Landlord does
not elect to terminate this Lease or if Landlord reasonably estimates that restoration will take
one hundred eighty (180) days or less (except in the event of termination by Landlord), then
Landlord shall promptly restore the Premises to the condition existing immediately prior to such
damage and destruction, excluding the Tenant-Made Alterations or Trade Fixtures and improvements
paid for by Tenant whether or not installed by Landlord, subject to receipt of sufficient insurance
proceeds, delays arising from the collection of insurance proceeds or from Force Majeure (as
hereinafter defined) events. Tenant at Tenant’s expense shall promptly perform, subject to delays
arising from the collection of insurance proceeds, or from Force Majeure events, all repairs or
restoration not required to be done by Landlord. As part of its Additional Rent for Site Operating
Costs, Tenant shall pay to Landlord with respect to any damage to the Building the amount of
Tenant’s Proportionate Share of any commercially reasonable deductible maintained by Landlord under
Landlord’s insurance policy within thirty (30) days after presentment of Landlord’s invoice. Base
Rent for the portion of the Premises rendered untenantable by the damage shall be abated on a
reasonable basis from the date of damage until the completion of the repair. Additional Rent shall
not abate during the period of repair and restoration unless Tenant is unable to utilize any
portion of the Premises as a result of the damage or destruction which gave rise to the abatement
of Base Rent, in which event Additional Rent shall also abate on a pro rata basis based on the
untenantable portion until such time as the repairs are completed and the restored Premises are
delivered by Landlord to Tenant.


If Landlord elects, or is required pursuant hereto, to repair and restore the Premises, and
Landlord has failed to substantially complete such repair and restoration within one hundred eighty
(180) days from the Damage Notice (subject to Force Majeure and Tenant-Caused Delay), then Tenant
shall be entitled to provide notice of the failure thereof to Landlord. In the event Landlord
thereafter fails to substantially complete such repair and restoration within sixty (60) days after
Tenant’s delivery of notice to Landlord (subject to Force Majeure and Tenant-Caused Delay)
(“Required Restoration Date”), then, in that event, Tenant shall have the right to elect to
either of the following (which election must be made by a written notice delivered to Landlord no
later than ten (10) business days after the Required Restoration Date): (a) immediately terminate
this Lease upon written notice to Landlord, or (b) complete such repairs and restorations to the
Premises as soon as reasonably possible after the Required Restoration Date (subject to Force
Majeure), in which event Landlord shall make immediately available to Tenant (whether the funds are
held by Landlord or an escrow agent) all insurance proceeds received by Landlord for the
restoration of the Premises beyond the amount necessary to reimburse Landlord for the costs
Landlord incurred in restoring the Premises, together with the deductible maintained by Landlord
under Landlord’s insurance policy. Tenant shall be entitled to particular funds upon providing a
written demand therefore that is accompanied by supporting documentation reasonably requested by
Landlord or the escrow holder, which may include, but is not limited to, third party invoices and
lien waivers. If such amounts are not paid over to Tenant within thirty (30) days of Tenant’s
properly supported written request therefor, Tenant may offset the same, together with interest at
a per-annum rate equal to Prime Rate plus ten percent (10%), from the next and subsequent
installments of Base Rent payable under this Lease until the foregoing amount is fully offset.
Notwithstanding the foregoing, Landlord’s obligation to pay over amounts under this Section 12 is
subject to the rights of the then current lender of the Building.


 









 






If Tenant has failed to
substantially complete such repair and restoration within one hundred eighty (180) days from the
Required Restoration Date, Landlord may provide written notice to Tenant that Landlord will
complete the work. In that case, Tenant shall reasonably cooperate with Landlord to promptly
transition or terminate (as determined by Landlord), all third party contracts related to the work,
and Landlord shall be entitled to access all remaining funds and Tenant shall reimburse Landlord
the amount of the deductible actually paid to Tenant and not spent on the repair or restoration.




     13. Condemnation. If (a) substantially all of the improvements constituting a part of
the Premises, or (b) all of the access points to the Site or the Premises, or (c) all but one
access point to the Site (unless alternate access to the Site is provided to Tenant so at least two
(2) Site access points exist at all times), or (d) a substantial portion of the truck parking
spaces within the Site should be taken for any public or quasi-public use under governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a
“Taking” or “Taken”), and the Taking would prevent or materially interfere with the reasonable
economic use of the Premises by Tenant for the Permitted Use or in Landlord’s reasonable judgment
would materially interfere with or impair its ownership of the Premises, and in the case of taking
access points or truck parking spaces such that Tenant’s use of the Premises is not materially and
adversely effected, then either party upon written notice to the other party, may terminate this
Lease and Rent shall be apportioned as of said date. If this Lease is not terminated as provided
above, then Rent shall be abated on a reasonable basis as to that portion of the Premises rendered
untenantable by the Taking. In the event of any such Taking, Landlord shall be entitled to receive
the entire award, compensation or proceeds from any such Taking without any payment to Tenant, and
Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award. Tenant shall have the
right, to the extent that same shall not diminish Landlord’s award, to make a separate claim
against the condemning authority (but not Landlord) for moving expenses and damage to or loss of
Tenant’s Trade Fixtures.



     14. Indemnification.



          14.1 Tenant Indemnification. Tenant will protect, indemnify and save harmless
Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses)
imposed upon or incurred by or asserted against Landlord by reason of the occurrence or existence
of any of the following during the Lease Term or thereafter (while Tenant is in possession of the
Premises): (a) any accident, injury to or death of persons or loss of or damage to property
occurring on or about the Premises or any common areas, or any part thereof or occurring on or
about the adjoining sidewalks, curbs, loading docks, stairs, vaults and vault space, if any,
streets or ways as a result of or in connection with Tenant’s use or occupancy of the Premises, (b)
any occupancy, use, nonuse or condition of the Site or any part thereof resulting from the use or
occupancy of the Premises by Tenant, its sublessees, their agents or contractors or invitees, (c)
any failure on the part of Tenant to perform or comply with any of the terms of this Lease, or (d)
performance of any labor or services or the furnishing of any materials or other property, at the
request of Tenant, its agents, employees or contractors. In case any action, suit or proceeding is
brought against Landlord by reason of any such occurrence, Tenant, upon Landlord’s request, and at
Tenant’s expense, shall resist and defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by Tenant and




 









 




reasonably approved by Landlord. The
obligations of Tenant under this Paragraph shall survive any termination of this Lease. The
furnishing of insurance required hereunder shall not be deemed to limit Tenant’s obligations under
this Paragraph.




          14.2 Landlord Indemnification. Landlord will protect, indemnify and save harmless
Tenant for, from and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses)
imposed upon or incurred by or asserted against Tenant by reason of the occurrence or existence of
any of the following during the Lease Term or thereafter (while Tenant is in possession of the
Premises): (a) any accident, injury to or death of persons or loss of or damage to property
occurring at the Site (but outside of the Premises) and arising from the negligence or willful
misconduct of Landlord, and (b) any damage to the extent caused by any failure on the part of
Landlord to perform or comply with any of the terms of this Lease. In case any action, suit or
proceeding is brought against Tenant by reason of any such occurrence, Landlord, upon Tenant’s
request, and at Landlord’s expense, shall resist and defend such action, suit or proceeding or
cause the same to be resisted and defended by counsel designated by Landlord and reasonably
approved by Tenant. The obligations of Landlord under this Paragraph shall survive any termination
of this Lease. The furnishing of insurance required hereunder shall not be deemed to limit
Landlord’s obligations under this Paragraph.




     15. Repairs.



          15.1 Tenant Repairs. Except as otherwise set forth in this Lease, Tenant, at its
expense, shall promptly make all repairs and replacements of every kind and nature, whether
foreseen or unforeseen, which may be required to be made upon or in connection with the Premises,
and Landlord shall not be required to make any repair, whether foreseen or unforeseen,
or to maintain any of the Premises in any way. In addition, Tenant shall repair or replace,
subject to Landlord’s direction and supervision, any damage to the Site caused by Tenant, any
assignees claiming by, through, or under Tenant, any subtenants claiming by, through, or under
Tenant, and any of their respective agents, contractors, employees and invitees, except to the
extent covered by insurance hereunder. Any repair or replacement shall be performed at the
Tenant’s expense by contractors approved by Landlord, or at Landlord’s option, by Landlord. Such
repair and replacement obligation applies to capital expenditures and repairs whose benefit may
extend beyond the Lease Term. Heating, ventilation and air conditioning (“HVAC”) systems and other
mechanical and building systems serving the Premises shall be maintained at Tenant’s expense
pursuant to maintenance service contracts entered into by Tenant. The scope of services and
contractors under such maintenance contracts shall be reasonably approved by Landlord. In the
event that Tenant is required to replace any HVAC unit during the term of this Lease, then the cost
of such unit shall be amortized over its useful life as determined in accordance with generally
accepted accounting principles, as reasonably determined by Landlord, and if such useful life
extends beyond the term of this Lease and all Extension Terms, Landlord shall, upon the termination
of this Lease, reimburse Tenant for the unamortized costs of such HVAC unit upon the date of
termination. If Tenant fails to perform any repair or replacement for which it is responsible
within thirty (30) days after receipt of written notice from Landlord to do so, Landlord may
perform such work and be reimbursed by Tenant within thirty (30) days after written demand
therefor. Subject to the Restoration and Condemnation Paragraphs, and any other applicable
provisions of this Lease, Tenant shall bear the full cost of




 









 




any repair or replacement to any part
of the Premises that results from damage caused by Tenant, its agents, contractors, or invitees and
any repair that benefits only the Premises. If any present or future improvements to the Premises
are made or authorized to be made by Tenant, its agents or employees, and such improvements shall
encroach upon any property or street adjacent to the Premises, or shall violate any agreement or
condition contained in any restrictive covenant affecting or applicable to the Premises, or shall
impair the rights of others under any easement or right-of-way to which the Premises are subject,
then as soon as reasonably possible after written request of Landlord, Tenant, at its cost and
expense, shall take such action as shall be necessary to remove such encroachments or end such
violation or impairment. Notwithstanding the foregoing, Tenant shall not be required to remove any
such encroachments if Tenant has or obtains such easements, licenses or similar rights as may be
necessary to permit such encroachments to remain.




          15.2 Landlord Repairs. Landlord shall maintain, at its expense, the structural
soundness of the roof, foundations, and exterior walls of the Site and all common areas within the
Site in good repair, reasonable wear and tear and damages caused by Tenant, its agents and
contractors excluded; provided, however, that Landlord’s costs of maintenance and repair of the
common areas may be included within Site Operating Costs as provided and subject to the limitations
thereon set forth in Section 9 above; and provided, further, that Landlord shall also make all such
repairs and restorations which may be required as a result of any patent or latent defects in
Landlord’s Work pursuant to Landlord’s warranty set forth in Section 6 of Exhibit “B”. The
term “walls” as used in this Section shall not include windows, glass or plate glass, doors or
overhead doors, special store fronts, dock bumpers, dock plates or levelers, or office entries.
Tenant shall promptly give Landlord written notice of any repair required by Landlord pursuant to
this Section, after which Landlord shall have a reasonable opportunity to repair; provided,
however, that Landlord shall in any event have commenced and diligently
pursue all such repairs to completion within thirty (30) days after receipt of Tenant’s
written notice therefor; provided, further, that if such repairs are not capable of being completed
within said 30-day period, then Landlord shall have such additional period of time as may be
reasonably necessary to complete such repairs so long as Landlord commences such repairs within
said thirty (30) day period and diligently pursues such repairs to completion. If the repairs
required to be made by Landlord materially and adversely affect Tenant’s use of the Premises for
its Permitted Use and Tenant’s notice clearly and conspicuously labels the repair a “Critical
Repair” and summarizes the requirements of this Section, Landlord shall commence and diligently
pursue such repairs to completion within five (5) business days after receipt of the foregoing
written notice from Tenant and, if Landlord fails to commence and diligently pursue such repairs
within said five (5) business day period, Tenant shall have the right to elect to perform such
repairs on behalf of Landlord, the actual, reasonable costs of which shall be reimbursed by
Landlord to Tenant within thirty (30) days after Landlord’s receipt of a written invoice or
statement therefor from Tenant and, if such costs and expenses are not so reimbursed to Tenant
within said 30-day period, Tenant shall have the right to offset the same, together with interest
at a per-annum rate equal to the Prime Rate plus ten percent (10%), from the next and subsequent
installments of Base Rent payable under this Lease until the foregoing amount is fully offset.




     16. Tenant-Made Alterations and Trade Fixtures. Tenant may make interior alterations
and improvements to the Premises that are not structural or mechanical in nature and will not
diminish the value of the Premises as of the expiration of the Lease Term. Any



 









 







alterations and
improvements desired to be made to the Premises by Tenant which are structural or mechanical in
nature, which would diminish the value of the Premises as of the expiration of the Lease Term, or
which require the issuance of a building permit by any applicable governmental entity, may be made
only in accordance with plans and specifications which have been previously submitted to and
approved in writing by Landlord, which approval shall not be unreasonably withheld or delayed.
Notwithstanding anything contained herein to the contrary, but subject to the restrictions and
limitations set forth in Section 4 above, Landlord consents to: (i) interior, non-structural
changes by Tenant that do not effect any of the structural elements of the Building (including, but
not limited to, the roof, floor or columns) or overload the floor or exceed the capacity or
allocation of utilities to the Premises; and (ii) cosmetic changes by Tenant without any
limitation, subject to the other terms and conditions of this Lease. Tenant shall provide Landlord
prompt written notice prior to commencing any changes pursuant to (i) in the foregoing sentence
with a collective cost of more than $100,000. A failure to comply with the foregoing notice
obligations will result in an Event of Default if Tenant fails to provide such notice within the
Notice and Cure period provided in Section 22.G of this Lease. Any alterations or improvements
made by or on behalf of Tenant to the Premises (“Tenant-Made Alterations”) shall become part of the
Premises. Tenant shall cause, at its expense, all Tenant-Made Alterations to comply with insurance
requirements and with Legal Requirements and shall construct at its expense any alteration or
modification required by Legal Requirements as a result of any Tenant-Made Alterations. All
Tenant-Made Alterations shall be made in accordance with all applicable laws, regulations and
building codes, in a good and workmanlike manner and of quality equal to or better than the
original construction- of the Premises. Tenant, at its own cost and expense and without Landlord’s
prior approval, may erect such shelves, bins, machinery and trade fixtures (collectively “Trade
Fixtures”) in the ordinary course of its business provided that such items do not alter the basic
character of the Premises, do not overload or damage the Premises, and may be removed without
injury to the Premises, and the construction, erection, and installation thereof complies with all
Legal Requirements and with Landlord’s requirements set forth above. Tenant, at its expense, shall
remove its Trade Fixtures and shall immediately repair any damage caused by such removal, prior to
the expiration or earlier termination of this Lease; provided, however, that in the event this
Lease is terminated due to Tenant’s default, any Trade Fixture or equipment purchased by Tenant
with an allowance from Landlord shall remain the property of Landlord, except for any Trade
Fixtures or equipment Landlord directs Tenant to remove. Notwithstanding anything in the
foregoing, implied or expressed to the contrary, Landlord has not consented to any work that would
permit the making of any claim against Landlord or the Premises in respect thereof. Landlord shall
be entitled to post on or about the Premises notices of non-responsibility pursuant to all
applicable laws, regulations and building codes. Tenant agrees that any alterations or
improvements it makes to the Premises shall be constructed in accordance with applicable laws,
including the fire code, and any additional requirements of Landlord’s insurance carrier in order
to maintain the then-current level and type of insurance without otherwise causing an increase in
premium due to the quality or type of construction or fire suppressant system. If Tenant fails to
meet the foregoing obligation and Landlord’s or another tenant in the Building’s insurance premiums
increase as a result of that failure, Tenant shall be responsible to reimburse Landlord or the
other tenant (as applicable) the amount of the increase in insurance premiums attributable to the
failure.



     17. Signage. Landlord and Tenant intend that Tenant shall have the right to the
maximum available signage that applicable governmental entities will allow for the Building,



 









 







including signage at the top of the Building, entryway and employee entrance signage and truck
directional signage (including a sign at the Southwest entrance directing truck traffic to other
entrances) to the Premises, based on the portion of the Building then leased to Tenant. If any of
the access points to the Site are subject to a Taking, Tenant shall have the right to install
additional truck directional signage reasonably necessary to ensure drivers of trucks know the
appropriate route(s) to access Tenant’s facility. All exterior signs shall be subject to
Landlord’s reasonable approval and conform in all respects to Landlord’s reasonable requirements
and to all applicable covenants, restrictions and government regulations. Landlord hereby
expressly approves of Tenant’s sign plans and specifications proposed for the Premises which are
set forth in Exhibit “F” attached hereto and incorporated herein by this reference;
provided, however, that such approval is subject to Tenant’s compliance with all applicable
government regulations. Such signage license is personal to Tenant and may not be assigned or
transferred except in connection with a permitted assignment of this Lease. Such signage license
shall automatically terminate upon the termination or expiration of this Lease. Tenant shall be
responsible for the cost of the design, permitting, fabrication, installation and maintenance of
all Tenant exterior signage, including power distribution if desired by Tenant. Tenant shall
remove all Tenant exterior signage at the expiration or termination of this Lease and shall cause
any damage to the Building area where the sign was located to be fully repaired.



     18. Assignment and Subletting. Without Landlord’s prior written consent, which shall not be unreasonably withheld,
conditioned or delayed, Tenant shall not assign this Lease or sublease the Premises or grant any
concession or license within the Premises, and any attempt to do any of the foregoing shall be void
and of no effect; provided, however, that Landlord’s prior consent shall not be required in
connection with any of the following (provided Tenant shall still provide Landlord with prior
written notice and shall promptly provide Landlord with any information on the Assignee or the
transaction as Landlord may reasonably request):




     (a) The public or private offering of stock in Tenant;




     (b) An assignment in connection with the sale of all or substantially all of Tenant’s
assets to a corporation or other entity whose tangible net worth satisfies Landlord’s then
applicable requirements for leases of premises within the Site of a size and nature of use
consistent with the Premises;




     (c) An assignment of this Lease or sublease of the Premises to a parent, or subsidiary
or other affiliate of Tenant or to the surviving entity in the event of any merger or
consolidation involving Tenant; or




     (d) Subleases of portions of the Premises (not to exceed twenty-five percent (25%) of
the area of the Premises in the aggregate) to licensees, vendees or independent contractors
of Tenant in the ordinary course of Tenant’s business.



     If Landlord’s consent is required hereunder, Tenant shall reimburse Landlord for all of
Landlord’s reasonable out-of-pocket expenses in connection with any assignment or sublease, not to
exceed an amount equal to $1,000.00 per request. Notwithstanding any assignment or subletting,
Tenant and any guarantor or surety of Tenant’s obligations under this Lease shall at all times
remain fully responsible and liable for the payment of the Rent and for compliance with



 









 







all of
Tenant’s other obligations under this Lease (regardless of whether Landlord’s approval has been
obtained for any such assignments or sublettings); provided, however, that in the event any such
assignee has a tangible net worth at the time of the assignment of $150,000,000.00 or more and
positive net earnings for the preceding three (3) calendar quarters (with such financial
information evidenced by such documentation as may be reasonably requested by Landlord), then
Tenant shall be released from all future duties and obligations under this Lease from and after the
effective date of such assignment. In the event that the rent due and payable by a sublessee or
assignee (or a combination of the rental payable under such sublease or assignment plus any bonus
or other consideration therefor or incident thereto) exceeds the Rent payable under this Lease,
then Tenant shall be bound and obligated to pay Landlord as Additional Rent hereunder fifty percent
(50%) of all such excess rental and other excess consideration within ten (10) days following
receipt thereof by Tenant after deduction of Tenant’s reasonable costs incurred in connection
therewith. Without in any way limiting Landlord’s right to refuse to consent to any assignment of
this Lease or sublease of the Premises, if Landlords consent is required hereunder, Landlord
reserves the right to refuse to give such consent if in Landlord’s opinion (i) the Premises may be
materially and adversely affected in any way; (ii) the business reputation of the proposed assignee
or subtenant is unacceptable in the community in which the Premises is located; or (iii) the
financial worth or creditworthiness of the proposed assignee is
less than that which would be reasonably acceptable to Landlord if it were to enter into a new
lease for the Premises directly with such assignee.



     If this Lease be assigned or if the Premises be subleased (whether in whole or in part) or in
the event of the mortgage, pledge or hypothecation of Tenant’s leasehold interest or grant of any
concession or license within the Premises or if the Premises be occupied in whole or in part by
anyone other than Tenant, then upon a default by Tenant hereunder Landlord may collect Rent from
the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold interest was hypothecated,
concessionee or licensee or other occupant and, except to the extent set forth in the preceding
Paragraph, apply the amount collected to the Rent payable hereunder; and all such rentals collected
by Tenant shall be held in trust for Landlord and immediately forwarded to Landlord. No such
transaction or collection of Rent for application thereof by Landlord, however, shall be deemed a
waiver of these provisions or a release of Tenant from the further performance by Tenant of its
covenants, duties or obligations hereunder. Tenant hereby acknowledges and agrees that any
rejection by Tenant of the Lease in any bankruptcy case shall constitute a termination of the
Lease, which event shall also terminate any sublease of the Premises, whether in part or in whole.
Notwithstanding any such rejection, in the event that Tenant continues to occupy the Premises after
such rejection, the parties agree that the most current Rent, as defined hereunder, shall and does
constitute the reasonable value for the occupancy of the Premises.



     19. Inspection and Access. Landlord and its agents, representatives and contractors
may enter the Premises at any reasonable time to inspect the Premises and to make such repairs as
may be required or permitted pursuant to this Lease and for any other business purpose; provided,
Landlord shall take all reasonable measures necessary to avoid or reduce any adverse affect on
Tenant’s use of the Premises resulting from such access and activity. Landlord and Landlord’s
representatives may enter the Premises during business hours for the purpose of showing the
Premises to prospective purchasers and, during the last year of the Lease Term, to prospective
tenants. Landlord may, during the last year of the Lease Term, erect a suitable sign



 









 







on the
Premises stating the Premises are available to let or for sale. Landlord may grant easements, make
public dedications, designate common areas and create restrictions on or about the Site, provided
that no such easement, dedication, designation or restriction materially interferes with Tenant’s
use or occupancy of the Premises or the common areas of the Site or causes an increase in Tenant’s
costs of operation within the Premises. At Landlord’s request, Tenant shall execute such
instruments as may be necessary for such easements, dedications or restrictions.



     20. Surrender. Upon the expiration of the Lease Term or earlier termination of
Tenants right of possession, Tenant shall surrender the Premises to Landlord in the same condition
as received, broom clean, ordinary wear and tear and casualty loss and condemnation covered by the
Restoration and Condemnation Paragraphs excepted. Any Trade Fixtures, Tenant-Made Alterations and
property not so removed by Tenant as permitted or required herein shall be deemed abandoned and may
be stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims
against Landlord for any damages resulting from
Landlord’s retention and disposition of such property. All obligations of Tenant hereunder
not fully performed as of the termination of the Lease Term shall survive the termination of the
Lease Term, including without limitation, indemnity obligations, and obligations concerning the
condition and repair of the Premises. Any property, fixtures or equipment purchased, in part or in
whole, with monies from Landlord, whether such monies are paid directly by Landlord or result from
a Tenant allowance under the Lease, belongs to and is property of Landlord and shall remain on the
Premises, unless Landlord directs Tenant otherwise to remove such items, in which event Tenant
shall promptly remove such items at Tenant’s sole cost and expense.



     21. Holding Over. If Tenant retains possession of the Premises after the termination
of the Lease Term, unless otherwise agreed in writing, such possession shall be, at Landlord’s
will, subject to immediate termination by Landlord at any time, and all of the other terms and
provisions of this Lease (excluding any expansion or renewal option or other similar right or
option) shall be applicable during such holdover period, except that Tenant shall pay Landlord from
time to time, upon demand, as Base Rent for the holdover period, an amount equal to 150% of the
Base Rent in effect on the termination date, computed on a monthly basis for each month or part
thereof during such holding over. All other payments shall continue under the terms of this Lease.
In addition, Tenant shall be liable for all damages incurred by Landlord as a result of such
holding over. No holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided.



     22. Events of Default. Each of the following events shall be an event of default
(“Event of Default”) by Tenant under this Lease:




     A. Tenant shall fail to pay any installment of Base Rent, Additional Rent or any other
payment required herein when due; provided that, for the first such occurrence within any
twelve (12) month period, Landlord shall first provide Tenant with written notice of such
payment default and such first occurrence shall not constitute an Event of Default unless
the amount due is still outstanding ten (10) days after Tenant’s receipt of the written
notice from Landlord.



 









 






     B. Tenant or any guarantor or surety of Tenant’s obligations hereunder shall (A) make a
general assignment for the benefit of creditors; (B) commence any case, proceeding or other
action seeking to have an order for relief entered on its behalf as a debtor or adjudicate
it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or of any
substantial part of its property (collectively a “proceeding for relief”); (C) become the
subject of any proceeding for relief which is not dismissed within sixty (60) days of its
filing or entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or surety is
an individual) or be dissolved or otherwise fail to maintain its legal existence (if Tenant,
guarantor or surety is a corporation, partnership or other entity).




     C. Any insurance required to be maintained by Tenant pursuant to this Lease shall be
cancelled or terminated or shall expire or shall be reduced or materially changed, except,
in each case, as permitted in this Lease, and such insurance is not replaced by Tenant as
soon as reasonably possible, but in no event later than thirty (30) days after cancellation,
termination or expiration with insurance otherwise in compliance with this Lease in
accordance with any applicable notice and cure period. Landlord agrees that it will not
terminate the Lease for Tenant’s failure to comply with this subsection 22.C. until Landlord
has provided Tenant with written notice of Tenant’s failure to comply with this subsection
and Tenant has failed to cure the default within thirty (30) days after receipt of the
notice; provided, if such default cannot be cured within said thirty (30) day period, then
if Tenant commences and diligently pursues a cure until the default is cured within that
thirty (30) day period, Landlord may not terminate this Lease for Tenant’s failure to comply
with this subsection.




     D. [Intentionally deleted.]




     E. Tenant’s assignment, subleasing or other transfer of Tenant’s interest in or with
respect to this Lease except as otherwise permitted in this Lease.




     F. Tenant shall fail to discharge or bond over (in a manner that fully discharges the
lien from the Premises) any lien placed upon the Premises in violation of this Lease within
thirty (30) days after Tenant receives written notice that the lien or encumbrance has been
filed against the Premises. Landlord agrees that it will not terminate the Lease for
Tenant’s failure to comply with this subsection 22.F. until Landlord has provided Tenant
with written notice of Tenant’s failure to comply with this subsection and Tenant has failed
to cure the default within thirty (30) days after receipt of the notice; provided, if such
default cannot be cured within said thirty (30) day period, then if Tenant commences and
diligently pursues a cure until the default is cured within that thirty (30) day period,
Landlord may not terminate this Lease for Tenant’s failure to comply with this subsection.




     G. Tenant shall fail to comply with any provision of this Lease other than those
specifically referred to in this Paragraph 22, and such default shall continue for more than
thirty (30) days after Landlord shall have given Tenant written notice of such default;
provided, that if such default cannot be cured within said thirty (30) day period,



 









 







then if
Tenant fails to commence within that thirty (30) day period and diligently pursue a cure
until the default is cured, then it shall not qualify as an Event of Default.



     The parties agree that any notice of an Event of Default shall clearly and conspicuously
state that it is a notice concerning an Event of Default.



     23. Landlord’s Remedies. Upon each occurrence of an Event of Default and so long as
such Event of Default shall be continuing, Landlord may at any time thereafter at its election
terminate this Lease or Tenant’s right of possession (but Tenant shall remain liable as hereinafter
provided), and/or pursue any other remedies at law or in equity. Upon the termination of this
Lease or termination
of Tenant’s right of possession, it shall be lawful for Landlord, without formal demand or
notice of any kind, to reenter the Premises by summary dispossession proceedings or any other
action or proceeding authorized by law and to remove Tenant and all persons and property therefrom.
If Landlord re-enters the Premises, Landlord shall have the right to keep in place and use, or
remove and store, all of the furniture, fixtures and equipment at the Premises.



     If Landlord terminates this Lease, Landlord may recover from Tenant the sum of: (i) all Base
Rent, Additional Rent and all other amounts accrued hereunder to the date of such termination; (ii)
the cost of reletting the whole or any part of the Premises, including without limitation,
brokerage fees and/or leasing commissions incurred by Landlord, costs of removing and storing
Tenant’s or any other occupant’s property, costs of repairing, altering, remodeling, or otherwise
putting the Premises into condition acceptable to a new tenant or tenants; (iii) all reasonable
expenses incurred by Landlord in pursuing its remedies, including reasonable attorneys’ fees and
court costs; and (iv) the then present value of the Base Rent, Additional Rent and other amounts
payable by Tenant under this Lease as would otherwise have been required to be paid by Tenant to
Landlord during the period following the termination of this Lease measured from the date of such
termination to the expiration date stated in this Lease, less any amounts reasonably obtained by
Landlord as a result of mitigation pursuant to Legal Requirements. Such present value shall be
calculated at a discount rate equal to the 90-day U. S. Treasury bill rate at the date of such
termination.



     If Landlord terminates Tenant’s right of possession (but not this Lease), Landlord may, but
shall be under no obligation to, relet the Premises for the account of Tenant for such rent and
upon such terms as shall be satisfactory to Landlord without thereby releasing Tenant from any
liability hereunder and without demand or notice of any kind to Tenant. For the purpose of such
reletting Landlord is authorized to make any repairs, changes, alterations, or additions in or to
the Premises as Landlord deems reasonably necessary or desirable without notice to Tenant. If the
Premises are not relet, then Tenant shall pay to Landlord as damages a sum equal to the amount of
the Rent reserved in this Lease for such period or periods, plus the cost of recovering possession
of the Premises (including attorneys’ fees and costs of suit), the unpaid Base Rent, Additional
Rent and other amounts accrued hereunder at the time from time to time. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect in writing to terminate
this Lease for such previous breach.



     Any law, usage, or custom to the contrary notwithstanding, Landlord shall have the right at
all times to enforce the provisions of this Lease in strict accordance with the terms hereof.



 









 







The
failure of Landlord at any time to enforce its rights under this Lease strictly in accordance with
same shall not be construed as having created a custom in any way or manner contrary to the
specific terms, provisions, and covenants of this Lease or as having modified the same. Tenant and
Landlord further agree that forbearance or waiver by Landlord to enforce its rights pursuant to
this Lease or at law, or in equity, shall not be a waiver of Landlord’s right to enforce one or
more of its rights in connection with any subsequent default. A receipt by Landlord of rent or
other payment with knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been
made unless expressed in writing and signed by Landlord. To the greatest extent permitted by law,
Tenant waives the service of notice of Landlord’s intention to re-enter as provided for in any
statute, or to institute legal proceedings to that end, and also waives all
right of redemption in case Tenant shall be dispossessed by a judgment or by warrant of any
court or judge. The terms “enter,” “reenter,” “entry” or “re-entry,” as used in this Lease, are
not restricted to their technical legal meanings. Any reletting of the Premise shall be on such
terms and conditions as Landlord in its sole discretion may determine (including, without
limitation, a term different than the remaining Lease Term, rental concessions, alterations and
repair of the Premises, lease of less than the entire Premises to any tenant and leasing any or all
other portions of the Project before reletting the Premises). Landlord shall not be liable, nor
shall Tenant’s obligations hereunder be diminished because of, Landlord’s failure to relet the
Premises or collect rent due in respect of such reletting. Notwithstanding the foregoing, Landlord
shall use reasonable efforts to mitigate its damages in accordance with Legal Requirements.



     24. Limitation of Liability of Landlord. Landlord shall not be in default hereunder
unless Landlord fails to perform any of its obligations hereunder within thirty (30) days after
written notice from Tenant specifying such failure (unless a shorter cure period is expressly
provided in this Lease, in which event the shorter period shall apply, and unless such performance
will, due to the nature of the obligation, require a period of time in excess of thirty (30) days,
then after such period of time as is reasonably necessary). All obligations of Landlord hereunder
shall be construed as covenants, not conditions; and Tenant may not terminate this Lease for breach
of Landlord’s obligations hereunder except as otherwise expressly set forth in this Lease. All
such obligations of Landlord under this Lease will be binding upon Landlord only during the period
of its ownership of the Premises and not thereafter, provided that Landlord’s successor assumes
this Lease in writing. The term “Landlord” in this Lease shall mean only the owner, for the time
being of the Premises, and in the event of the transfer by such owner of its interest in the
Premises, such owner shall thereupon be released and discharged from all obligations of Landlord
thereafter accruing, but such obligations shall be binding during the Lease Term upon each new
owner for the duration of such owner’s ownership. Any liability of Landlord under this Lease shall
be limited solely to its interest in the Premises, and in no event shall any personal liability be
asserted against Landlord in connection with this Lease nor shall any recourse be had to any other
property or assets of Landlord. IN NO EVENT SHALL TENANT BE ENTITLED TO CONSEQUENTIAL OR
INCIDENTAL DAMAGES SHOULD LANDLORD BE FOUND LIABLE FOR AN UNCURED DEFAULT OR FAILURE TO MEET ITS
OBLIGATIONS HEREUNDER.



     25. Waiver of Jury Trial. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE,
BETWEEN



 









 







LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.



     26. Subordination. So long as Tenant is provided with a Subordination, Nondisturbance
and Attornment Agreement substantially in the form to be agreed to by Landlord and Tenant no later
than thirty
(30) days after the execution of this Lease (which form shall then be attached as Exhibit
“G”) this Lease and Tenant’s interest and rights hereunder are and shall be subject and
subordinate at all times to the lien of any mortgage, now existing or hereafter created on or
against the Premises, and all amendments, restatements, renewals, modifications, consolidations,
refinancing, assignments and extensions thereof, without the necessity of any further instrument or
act on the part of Tenant. Tenant’s obligation to pay Rent is conditioned on Tenant’s receipt on
or before the Commencement Date of a Subordination, Nondisturbance and Attornment Agreement
executed by Landlord and its lender. Tenant agrees, at the election of the holder of any such
mortgage, to attorn to any such holder. Tenant agrees upon demand to execute, acknowledge and
deliver such instruments, confirming such subordination and such instruments of attornment as shall
be requested by any such holder. Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant,
and thereupon this Lease shall be deemed prior to such mortgage without regard to their respective
dates of execution, delivery or recording and in that event such holder shall have the same rights
with respect to this Lease as though this Lease had been executed prior to the execution, delivery
and recording of such mortgage and had been assigned to such holder. The term “mortgage” whenever
used in this Lease shall be deemed to include deeds of trust, security assignments and any other
encumbrances, and any reference to the “holder” of a mortgage shall be deemed to include the
beneficiary under a deed of trust. Upon request by Tenant, Landlord will obtain and deliver to
Tenant a nondisturbance agreement from Landlord’s then existing mortgagee (if any) for the benefit
of Tenant, in form and substance substantially in accordance with Exhibit “G” attached
hereto and incorporated herein by reference.



     27. Mechanic’s Liens. Tenant has no express or implied authority to create or place
any lien or encumbrance of any kind upon, or in any manner to bind the interest of Landlord or
Tenant in the Site or the Premises or to charge the Rent payable hereunder for any claim in favor
of any person dealing with Tenant, including those who may furnish materials or perform labor for
any construction or repairs. Tenant covenants and agrees that it will pay or cause to be paid all
sums legally due and payable by it on account of any labor performed or materials furnished in
connection with any work performed on the Premises and that it will indemnify and hold Landlord
harmless from all loss, cost or expense based on or arising out of asserted claims or liens against
the leasehold estate or against the interest of Landlord in the Site or the Premises or under this
Lease. Tenant shall give Landlord immediate written notice of the placing of any lien or
encumbrance against the Site or the Premises and cause such lien or encumbrance to be discharged
(or bonded over in a manner that fully discharges the lien from the Site and the Premises) within
thirty (30) days of the filing or recording thereof; provided, however, Tenant may contest such
liens or encumbrances as long as such contest prevents foreclosure of the lien or encumbrance and
Tenant causes such lien or encumbrance to be bonded or insured over in a manner satisfactory to
Landlord within such 30 day period.



 









 





     28. Estoppel Certificates.



          28.1 Tenant agrees, from time to time, within ten (10) business days after written request of
Landlord, to execute and deliver to Landlord, or Landlord’s designee, any estoppel certificate
requested by Landlord, stating that this Lease is in full force and effect, the date to which Rent
has been paid, that Landlord is not in default hereunder (or specifying in detail the nature of
Landlord’s default), the expiration date of this Lease and such other matters pertaining to this
Lease as may be reasonably requested by Landlord. Landlord’s written request shall clearly and
conspicuously state that Tenant shall be subject to a $[***] per business day
penalty if the certificate is delivered late. Tenant’s obligation to furnish each estoppel
certificate in a timely fashion is a material inducement for Landlord’s execution of this Lease.
If Tenant does not execute and deliver the estoppel certificate as requested within the time
provided, Tenant shall be obligated to pay Landlord a penalty of $[***] per business day thereafter
for each business day the certificate is late.




          28.2 Landlord agrees within ten (10) business days after written request of Tenant, to execute
and deliver to Tenant, or Tenant’s designee, any estoppel certificate requested by Tenant, stating
that this Lease is in full force and effect, the date to which Rent has been paid, that, to
Landlord’s actual knowledge, Tenant is not in default hereunder (or specifying in detail the nature
of Tenant’s default) and the expiration date of this Lease. Tenant’s written request shall clearly
and conspicuously state that Landlord shall be subject to a $[***] per business day penalty is the
certificate is delivered late. If Landlord does not execute and deliver the estoppel certificate
as requested within the time provided, Landlord shall be obligated to pay Tenant a penalty of
$[***] per business day thereafter for each business day the certificate is late.




     29. Environmental Requirements. Except for Hazardous Materials contained in products
used by Tenant in de minimis quantities for ordinary cleaning purposes in compliance with
Environmental Requirements (as hereinafter defined), and except for Tenant’s cosmetics products,
fragrances, nail polish removers, deodorants and aerosols which are stored within the Premises as
part of Tenant’s Permitted Use (which shall be stored, handled and transported to and from the
Premises in accordance with all applicable Environmental Requirements), Tenant shall not permit or
cause any party to bring any Hazardous Materials upon the Premises or transport, store, use,
generate, manufacture or release any Hazardous Material in or about the Premises except in
compliance with all applicable Environmental Requirements. Tenant, at its sole cost and expense,
shall operate its business in the Premises in compliance with all Environmental Requirements, and
shall remediate as and to the extent required by all applicable Environmental Requirements any
Hazardous Materials released on, under, to or from the Premises by Tenant, its sublessees, their
agents, employees, contractors, subtenants or invitees. Tenant shall complete and certify to
disclosure statements as reasonably requested by Landlord from time to time relating to Tenant’s
transportation, storage, use, generation, manufacture, or release of Hazardous Materials on the
Premises. The term “Environmental Requirements” means all applicable past, present and future
statutes, regulations, ordinances, rules, codes, judgments, orders or other similar enactments of
any governmental authority or agency





 




			
	[***]:	 	Certain information
on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted
portions.




 









 









regulating or relating to health, safety or environmental
conditions on, under, or about the Premises or the environment, including without limitation,
the following: the Comprehensive Environmental Response, Compensation and Liability Act; the
Resource and Conservation Recovery Act; and all state and local counterparts thereto, and any
regulations or policies promulgated or issued thereunder. The term “Hazardous Material(s)” means
and includes (i) any substance, material, waste, pollutant or contaminant listed or defined as
hazardous or toxic under any Environmental Requirements; (ii) asbestos; (iii) petroleum, including
crude oil or any fraction thereof and (iv) natural gas or synthetic gas usable for fuel (or
mixtures of natural gas and such synthetic gas). As defined in Environmental Requirements, Tenant
is and shall be deemed to be the “operator” of Tenant’s “facility” and the “owner” of all Hazardous
Materials brought on the Premises by Tenant, its sublessees, their agents, employees, contractors
or invitees, and the wastes, by-products, or residues generated, resulting or produced therefrom.
In connection with such use of Hazardous Materials, Tenant shall comply with all Legal Requirements
and shall be responsible for and indemnify Landlord with respect to all matters arising as a result
of such use. Tenant shall notify Landlord, in writing, of any new Hazardous Materials it intends
to use on the Premises, which items shall be subject to Landlord’s reasonable prior approval.




     Tenant shall indemnify, defend, and hold Landlord harmless for, from and against any and all
losses (including, without limitation, diminution in value of the Premises and loss of rental
income from the Premises), claims, demands, actions, suits, damages (including, without limitation,
punitive damages), expenses (including, without limitation, remediation, removal, repair,
corrective action or cleanup expenses), and costs (including, without limitation, reasonable
attorneys’ fees, consultant fees or expert fees and including, without limitation removal or
management of any asbestos brought into the Premises or disturbed in breach of the requirements of
this Paragraph 29, regardless of whether such removal or management is required by law) which are
brought or recoverable against, or suffered or incurred by Landlord as a result of Tenant’s failure
to comply with all Environmental Requirements or any other breach of the requirements under this
Paragraph by Tenant, its sublessees, their agents, employees, contractors, assignees or invitees,
regardless of whether Tenant had knowledge of such noncompliance; provided, however, Tenant’s
indemnification obligations shall not extend to cover damages to the extent arising from Landlord’s
failure to comply with Environmental Requirements or from the existence of Hazardous Materials
within the Site as of the Fixturing Entry Date, provided Tenant’s indemnification obligations shall
extend to cover damages arising from Tenant’s failure to comply with Environmental Requirements for
preexisting Hazardous Materials after Tenant’s discovery of (a) any preexisting Hazardous
Materials, or (b) Landlord’s failure to comply with any Environmental Requirements. The
obligations of Tenant under this Paragraph shall survive any termination of this Lease.
Notwithstanding the foregoing, Tenant shall have no responsibility in connection with any
preexisting Hazardous Materials in the Premises or within the Site and, in connection therewith,
Landlord hereby represents and warrants to Tenant that, to the best of Landlord’s actual knowledge,
there are no existing Hazardous Materials within the Premises or the Site.



     Landlord shall have access to, and a right to perform inspections and tests of, the Premises
to determine Tenant’s compliance with Environmental Requirements, its obligations under this
Paragraph, or the environmental condition of the Premises. Access shall be granted to Landlord
upon Landlord’s prior notice to Tenant and at such times so as to minimize, so far as



 









 







may be
reasonable under the circumstances, any disturbance to Tenant’s operations. Such
inspections and tests shall be conducted at Landlord’s expense, unless such inspections or
tests reveal that Tenant has not complied with any Environmental Requirement, in which case Tenant
shall reimburse Landlord for the reasonable cost of such inspection and tests. Landlord’s receipt
of or satisfaction with any environmental assessment in no way waives any rights that Landlord
holds against Tenant. Should it be determined, in Landlord’s reasonable opinion, that Hazardous
Materials are being stored, used, or disposed of in the Premises in violation of any applicable
Environmental Requirement, then Tenant shall immediately take such corrective action as may be
required pursuant to such Environmental Requirements and, if Tenant shall fail to take such
corrective action in accordance with all applicable Environmental Requirements within the sooner of
(i) the time frame required pursuant to such Environmental Requirements and (ii) three (3) business
days, Landlord shall have the right to perform such work and Tenant shall promptly reimburse
Landlord for any and all costs paid by Landlord in connection with said work. If at any time
during or after the Lease Term, the Premises or Building are found to be so contaminated or subject
to said conditions as a result of Tenant’s breach of the terms of this Lease, Tenant shall
diligently institute proper and thorough cleanup procedures at Tenant’s sole cost. Before taking
any action to comply with Environmental Requirements or to clean up Hazardous Materials
contaminating the Premises or Building, Tenant shall submit to Landlord a plan of action, including
any and all plans and documents required by any Environmental Requirements to be submitted to a
governmental authority (collectively a “plan of action”). Such plan of action must be implemented
by a licensed environmental contractor. Before Tenant begins the actions necessary to comply with
Environmental Requirements or to clean up contamination from Hazardous Materials, Landlord must
have (a) approved the nature, scope and timing of the plan of action, and (b) approved any and all
covenants and agreements to effect the plan of action; provided, however, that any plan of action
which is approved by any applicable environmental agency pursuant to any applicable Environmental
Requirement shall be deemed to satisfy Landlords requirements with respect thereto. Landlord
hereby agrees that it will use commercially reasonable efforts to require the same or substantially
the same covenants with respect to the use, storage and transportation of Hazardous Materials from
all tenants within the Site as are set forth in this Lease.



     Tenant understands and acknowledges that Landlord makes no warranty or representation of any
kind, express or implied, regarding the presence or absence of mold, or regarding the effectiveness
of any architectural or engineering fixture or design for reducing the presence, effect or growth
of mold. Tenant shall, on a monthly basis, inspect all locations within the Premises to determine
whether any mold is present. Tenant shall be solely responsible for taking reasonable measures
necessary to prevent mold within the Premises. Tenant shall promptly take reasonable measures to
prevent the accumulation of moisture on any surfaces and to avoid mold growth. Tenant shall take
all reasonable measures to kill mold located in the Premises, except to the extent covered by
Landlord’s warranty set forth in Section 6 of Exhibit “B”. Tenant shall promptly notify
Landlord in the event Tenant discovers mold on any surface. Landlord and Tenant hereby
specifically agree that Landlord shall not be responsible for any property damage, personal injury,
loss of income, emotional distress, death, loss of use, loss of value or adverse health effects
resulting from mold accumulation regardless of the cause of such accumulation, excluding only
Landlord’s gross negligence and willful misconduct.



 









 





     Landlord shall indemnify, defend and hold Tenant harmless for, from and against any and all
losses, claims, damages, actions, suits, expenses and costs (including, without limitation,
reasonable attorney fees and court costs) incurred by Tenant and arising as a result of (i)
the existence of any Hazardous Materials within the Site as of the Fixturing Entry Date; (ii)
Landlord’s use, disposal, transportation or storage of Hazardous Materials within the Site in
violation of any applicable Environmental Requirements.



     30. Force Majeure. Neither party shall be held responsible for delays in the
performance of its obligations hereunder when caused by strikes, lockouts, unusual weather, labor
disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefor,
governmental restrictions, governmental regulations, governmental controls, delay in issuance of
permits, enemy or hostile governmental action, civil commotion, fire or other casualty, and other
causes beyond the reasonable control of such party (“Force Majeure”). The foregoing shall not
apply to the obligation to pay Rent.



     31. Entire Agreement. This Lease constitutes the complete agreement of Landlord and
Tenant with respect to the subject matter hereof No representations, inducements, promises or
agreements, oral or written, have been made by Landlord or Tenant, or anyone acting on behalf of
Landlord or Tenant, which are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this Lease. This Lease may not be amended
except by an instrument in writing signed by both parties hereto.



     32. Severability. Each provision contained in this Lease shall be construed to be
separate and independent and the breach of any provision by Landlord shall not discharge or relieve
Tenant from Tenant’s obligation to observe and perform each of its obligations under this Lease.
If any clause or provision of this Lease is illegal, invalid or unenforceable under present or
future laws, then and in that event, it is the intention of the parties hereto that the remainder
of this Lease shall not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable,
there be added, as a part of this Lease, a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal, valid and
enforceable.



     33. Brokers. Tenant represents and warrants that it has dealt with no broker, agent
or other person in connection with this transaction and that no broker, agent or other person
brought about this transaction, other than of Mark Krison of CB Richard Ellis (“Landlord’s
Broker”), whose commission shall be paid by Landlord, and Brad Anderson and Bob Crum of CB Richard
Ellis (“Tenant’s Brokers”), who shall be paid a portion of the commission payable to Landlord’s
Broker, pursuant to their separate agreement. Landlord and Tenant agree to indemnify and hold each
other harmless from and against any claims by any other broker, agent or other person claiming a
commission or other form of compensation by virtue of having dealt with Landlord or Tenant, as
applicable, with regard to this leasing transaction.



     34. Quiet Enjoyment. Tenant, if and so long as it pays the Rent and performs and
observes the other terms and covenants as provided in this Lease, shall have the peaceable and
quiet possession of the Premises during the Lease Term free of the claims of Landlord or anyone
claiming by, through or under Landlord, subject to the terms of this Lease.



 









 





     35. Miscellaneous.



          35.1 Any payments or charges due from Tenant to Landlord hereunder shall be considered Rent
for all purposes of this Lease.




          35.2 If and when included within the term “Tenant”, as used in this instrument, there is more
than one person, firm or corporation, each shall be jointly and severally liable for the
obligations of Tenant.




          35.3 All notices required or permitted to be given under this Lease shall be in writing and
shall be sent by a reputable national overnight courier service, postage prepaid, or by hand
delivery addressed to the parties at their addresses specified in the Basic Lease Terms and
Information section of this Lease. Notice shall be deemed given by facsimile if sent to the
facsimile number(s) set forth in the Basic Lease Terms and Information section (as they may be
changed from time to time by written notice to the other party), the sender has proof that the
facsimile was successfully received, and the sender deposits the notice on the same day the
facsimile is sent with a overnight courier prepaid and for overnight delivery on the next possible
date. Either party may by notice given aforesaid change its address for all subsequent notices.
Except where otherwise expressly provided to the contrary, notice shall be deemed given upon
delivery.




          35.4 Except as otherwise expressly provided in this Lease or as otherwise required by law,
Landlord retains the absolute right to withhold any consent or approval.




          35.5 At Landlord’s request (which shall occur no more frequently than once each calendar
quarter (unless the financial condition or actions of Tenant reasonably suggest to Landlord that it
should confirm Tenant’s financial conditional more frequently)), Tenant shall furnish Landlord with
true and complete copies of the most recent annual and quarterly income statements and balance
sheets for Tenant as certified by Tenant, or for any assignee or subtenant of Tenant, and any other
financial information or summaries that Tenant typically provides to its lenders or shareholders.
In addition, Tenant shall deliver to any lender designated by Landlord any financial statements
required by such lender to facilitate the financing or refinancing of the Building or Site. Tenant
represents and warrants to Landlord that each such financial statement is a true and accurate
statement as of the date of such statement. All financial statements shall be confidential and
shall be used only for the purposes set forth in this Lease.




          35.6 This Lease shall not be filed in any public record. Upon the request of either party,
the parties shall execute and file a memorandum of lease, which shall not disclose any of the
financial terms of this Lease.




          35.7 Landlord and Tenant hereby acknowledge and agree that each party hereto (i) is of equal
bargaining strength, (ii) has actively participated in the drafting, preparation and negotiation of
this Lease, (iii) has consulted with such party’s own independent counsel, and such other
professional advisors as such party has deemed appropriate, relative to any and all matters
contemplated under this Lease, and (iv) agree that any rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not apply in the




 









 







interpretation of
this Lease or any exhibits or amendments hereto. This Lease shall not be more strictly enforced
against either party regardless of who was more responsible for its preparation.




          35.8 Landlord and Landlord’s affiliates may use the Tenant or Tenant’s affiliate’s logo and
trademark in Landlord’s and Landlord’s affiliates’ marketing materials as part of a list of
Landlord’s and Landlord’s affiliates’ customers.




          35.9 The submission by Landlord to Tenant of this Lease shall have no binding force or effect,
shall not constitute an option for the leasing of the Premises, nor confer any right or impose any
obligations upon either party until execution of this Lease by both parties.




          35.10 Words of any gender used in this Lease shall be held and construed to include any other
gender, and words in the singular number shall be held to include the plural, unless the context
otherwise requires. The captions inserted in this Lease are for convenience only and in no way
define, limit or otherwise describe the scope or intent of this Lease, or any provision hereof, or
in any way affect the interpretation of this Lease.




          35.11 Construction and interpretation of this Lease shall be governed by the laws of the state
in which the Premises are located, excluding any principles of conflicts of laws.




          35.12 Time is of the essence as to the performance of Tenant’s obligations under this Lease.




          35.13 All exhibits and addenda attached hereto are hereby incorporated into this Lease and
made a part hereof. In the event of any conflict between such exhibits or addenda and the terms of
this Lease, such exhibits or addenda shall control.




     36. Right of First Refusal. Provided there is not then an existing uncured Event of
Default by Tenant, and not in limitation of Tenant’s rights with respect to the Expansion Premises
as set forth in Section 37 below, Tenant shall have a right of first refusal to lease any space
physically adjacent to the Premises within the Building (“ROFR Space”). Upon receipt of a bona
fide written offer, letter of intent or term sheet from a third party that Landlord intends to
accept, Landlord will inform Tenant in writing of said offer and all material terms, which shall
not include confidential information concerning the third party (the “Material Terms”). Tenant
shall then have seven (7) business days after receipt of Landlord’s notification in which to enter
into a binding letter of intent with Landlord to lease the ROFR Space on the same terms and
conditions to which the third party has agreed or upon alternative terms mutually acceptable to
Landlord and Tenant. If Tenant has not executed a mutually agreeable binding letter of intent with
respect to the ROFR Space within seven (7) business days after Tenant’s receipt of Landlord’s
notification, Landlord may then enter into a lease with the third party on terms that are not
materially different from the
Material Terms. The parties agree that Base Rent that is within 95% of the Base Rent included
in the Material Terms and/or a lease term that is not one (1) year shorter than proposed in the
Material Terms is not materially different. If Landlord then offers such third party terms that
are materially different from the Material Terms, Tenant shall again have the right to exercise its
right of first refusal hereunder. Tenant’s right of first refusal shall not apply to space within
the Building that is not physically adjacent to the Premises.



 









 





     37. Expansion Premises. Landlord grants to Tenant a one-time option to expand the
Premises to include approximately one hundred thousand (100,000) square feet of additional space
inside the Building (“Expansion Premises”). Landlord has the flexibility to determine the actual
size and configuration of the Expansion Premises (and Landlord may configure the Expansion Premises
in such a way as to not adversely effect the ability to lease the remaining portion of the Building
on commercially reasonable terms); provided, however, the following factors must be met as a
condition to an acceptable configuration:




     (i) The Expansion Premises must be adjacent to the original Premises;




     (ii) The Expansion Premises must allow for a minimum of 1.975 doors per 10,000 square
feet +/- a total of five (5) doors; and




     (iii) The demising wall between the Expansion Premises and the adjacent space within
the Building shall not have more than two (2) ninety degree (90°) angles.



     Attached to this Lease as Exhibits “I-1” through “1-4” are proposed configurations of
the Expansion Premises which are deemed to be acceptable to Tenant and satisfy the above
conditions. Such examples are intended only to show potential acceptable configurations and as
such, are to be utilized as reference only and shall not be deemed to limit the ability of Landlord
to deliver the Expansion Premises in other configurations so long as they substantially and in all
material respects satisfy the above conditions. If Tenant desires to exercise its right to expand
the Premises to include the Expansion Premises, Tenant shall provide Landlord written notice of its
intent no later than twelve (12) months prior to the date Tenant desires to expand into the
Expansion Space. Landlord shall then inform Tenant whether the Expansion Space is available on the
date Tenant desires to expand into the Expansion Space. If so, Landlord shall inform Tenant in
writing as to the actual dimensions and location of the Expansion Premises, which shall conform to
the requirements set forth above. If not, Landlord will inform Tenant when the Expansion Premises
will become available which date shall in no event be later than the eighty-four (84) months after
the Commencement Date. Tenant’s right to expand into the Expansion Premises shall exist for a
limited period, beginning on the date that is sixty (60) months after the Commencement Date and
ending on the date that is the eighty-four (84) months after the Commencement Date (“Expansion
Premises Period”). If Tenant provides Landlord with proper notice of Tenant’s intent to expand
into the Expansion Premises during the Expansion Premises Period, Landlord shall ensure that the
Expansion Premises is available to Tenant for expansion at some time during the Expansion Premises
Period.



     If Tenant properly exercises the expansion option granted pursuant to this Section, then
Landlord shall deliver the Expansion Premises to Tenant on a date determined by Landlord during the
Expansion Premises Period in its then-current, “as is” condition (such date being the “Expansion
Premises Date”); provided, however, that if the Expansion Premises contains interior tenant
improvements in addition to the “Base Building” improvements, then Landlord shall demolish all such
additional improvements, if and to the extent requested by Tenant in writing, at Landlord’s cost
and expense; provided, further, that Landlord shall not be obligated to demolish or remove any such
improvements which do not materially and adversely affect the Tenant’s use of the Expansion
Premises, provided that the value of such improvements shall not be included for the purposes of
determining the Market Rate rent for the Expansion Premises). Beginning on



 









 







the Expansion Premises
Date, the original term of this Lease for the Premises, including the original Premises, as it may
have previously been expanded, and the Expansion Premises, shall be extended such that the original
term of this Lease shall expire on the date that is the five (5) year anniversary of the Expansion
Premises Date (“Extended Original Term”), and such extension shall be deemed to be an exercise of
one (1) of Tenant’s Options to Renew under Section 38. Prior to the Expansion Premises Date,
Landlord may lease the Expansion Premises to a third party or put it to any other use; provided,
however, that any lease of the Expansion Premises shall not extend past the end of the Expansion
Premises Period unless Tenant has affirmatively elected in writing to waive the expansion right
granted in this Section or Tenant has failed to properly exercise the expansion option granted in
this Section. Landlord shall not be in default under this Lease if Landlord is unable to deliver
the Expansion Premises during the Expansion Premises Period due to the wrongful act of a third
party, including a tenant holding over on a lease that includes the Expansion Premises. In that
case, Landlord shall be obligated to use commercially reasonable efforts to deliver the Expansion
Premises to Tenant as soon as possible, and the Expansion Premises Date shall be the date that
Landlord actually delivers the Expansion Premises to Tenant.



     No later than fifteen (15) months prior to the date Tenant desires to expand into the
Expansion Space, Tenant may (but is not obligated to) make a written request to Landlord to provide
Tenant with Landlord’s proposed Market Rate (as that term is defined below) for the Expansion
Premises on the Expansion Premises Date. If Tenant makes such a request, Landlord shall furnish
Tenant with Landlord’s proposed Market Rate (as well as copy of any third party, non-confidential
information Landlord used in determining the proposed Market Rate) no later than thirty (30) days
after Landlord’s receipt of Tenant’s written request. If Tenant properly exercises the expansion
option pursuant to this Section, then prior to the date Tenant is required to identify an appraiser
(as set forth in this Section) Tenant may (but is not obligated to) provide Landlord with written
notice that Tenant accepts the proposed Market Rate as the Market Rate for the Expansion Space, in
which case that shall be the Market Rate. If Tenant does not provide Landlord with a written
notice that Tenant accepts the proposed Market Rate as the Market Rate for the Expansion Space
during the time period specified in the foregoing sentence, the parties shall either negotiate a
mutually agreeable Market Rate, or if they are unable to do so, the parties shall pursue the
appraisal process outlined in this Section. The Market Rate and related information provided by
Landlord to Tenant under this paragraph shall be treated as confidential by Tenant, shall not be
disclosed by Tenant to any third party and shall not be used by Tenant or any appraiser to advocate
for or set the Market Rate.



     Beginning on the Expansion Premises Date, the Base Rent under the Lease for the Expansion
Premises only shall equal a fair market rental rate for the Expansion Premises (including a market
tenant allowance for the Expansion Premises, the costs to be incurred by Landlord to prepare the
Expansion Premises for Tenant (including demolition costs) and applicable commissions) taking into
account the current “as is” condition (“Market Rate”), which shall be determined within thirty (30)
days after Landlord informs Tenant as to the projected Expansion Premises Date. If Landlord and
Tenant, acting in good faith, cannot agree on a Market Rate for the Expansion Premises for the
Extended Original Term within the above-stated thirty (30) day period, then Tenant shall provide
Landlord with written notice of the name of an appraiser selected by Tenant to determine the Market
Rate for the Expansion Premises. Within fifteen (15) days after Tenant provides such notice,
Landlord shall provide written notice



 









 







to Tenant of the name of an appraiser selected by Landlord to
determine the Market Rate for the Expansion Premises. The two appraisers shall then jointly
determine the Market Rate for the Expansion Premises for the Extended Original Term and provide a
written report of same to Landlord and Tenant. If the two appraisers cannot agree on a Market Rate
within fifteen (15) days after Tenant receives notice from Landlord identifying its appraiser, then
the two appraisers shall jointly select a third appraiser, which third appraiser shall solely
determine the Market Rate for the Expansion Premises for the Extended Original Term and provide a
written report of same to Landlord and Tenant within thirty (30) days of his or selection. Such
determination of the Market Rate by the third appraiser shall be binding on Landlord and Tenant.
Each party shall pay the cost of its appraiser and one-half (1/2) the cost of the third appraiser.
The appraisers shall be M.A.I. appraisers unless Landlord and Tenant otherwise agree in writing.
If Landlord fails to choose an appraiser as provided above, then the appraiser chosen by Tenant
shall be deemed to be acceptable to Landlord. If Tenant fails to choose an appraiser as provided
above, then the appraiser chosen by Landlord shall be deemed to be acceptable to Tenant.



     Beginning on the Expansion Premises Date, the Premises for all purposes under this Lease shall
include the original Premises and the Expansion Premises.



     The exercise of the option to expand the Premises to include the Expansion Premises is
Tenant’s sole responsibility. If Tenant does not exercise the option to expand the Premises to
include the Expansion Premises within the Expansion Premises Period allowed, the option shall be
null, void and of no further force or effect.



     Once the Market Rate is set, the Base Rent shall be a blended rate that reflects the Base Rent
for the Premises, as well as the Base Rent for the Expansion Premises, and Tenant’s Proportionate
Share of Operating Expenses shall increase to include the space in the Expansion Premises.
Increases in the blended Base Rent shall continue through the Extended Original Term as provided
under the Initial Term and shall apply to the Base Rent for the Premises and the Expansion
Premises.



     38. Option To Renew. Landlord grants to Tenant an option to extend the Lease Term for
three (3) additional terms of five (5) years each (the “Extended Term”), commencing on the
expiration date of the original Lease Term, upon the same terms and conditions as set forth in this
Lease, except as provided in this Section with respect to Base Rent; provided, however, that no
Event of Default
by Tenant has occurred that has not been cured at any time such option is to be exercised.
The Base Rent for the Extended Term shall equal the Market Rate for the Premises in “as is”
condition, which shall be determined within thirty (30) days after Tenant exercises its option to
extend the Lease Term. The Base Rent shall be determined for the entire Premises, including the
Expansion Premises, if applicable. The Base Rent may be adjusted upwards, but in no event shall be
adjusted downwards from the preceding year’s Base Rent, based on the determination of the Market
Rate applicable to the Premises. The Base Rent for the entire Premises, including the Expansion
Premises if applicable, during any Extended Term shall increase in accordance with the amount
determined at the time the Market Rate is set, which shall be at least [***] per
twelve (12) month period. If Landlord and Tenant cannot agree





 




			
	[***]:	 	Certain information
on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted
portions.





 









 




on a Market Rate for the Extended
Term within the above-stated thirty (30) day period, then Tenant shall provide Landlord with
written notice of the name of an appraiser selected by Tenant to determine the Market Rate for the
Premises. Within fifteen (15) days after Tenant provides such notice, Landlord shall provide
written notice to Tenant of the name of an appraiser selected by Landlord to determine the Market
Rate for the Premises. The two appraisers shall then jointly determine the Market Rate for the
Premises for the Extended Term and provide a written report of same to Landlord and Tenant. If the
two appraisers cannot agree on a Market Rate for the Premises within fifteen (15) days after Tenant
receives notice from Landlord identifying its appraiser, then the two appraisers shall jointly
select a third appraiser, which third appraiser shall solely determine the Market Rate for the
Extended Term and provide a written report of same to Landlord and Tenant within thirty (30) days
of his or selection. Such determination of the Market Rate by the third appraiser shall be binding
on Landlord and Tenant. Each party shall pay the cost of its appraiser and one-half (1/2) the cost
of the third appraiser. The appraisers shall be M.A.I. appraisers unless Landlord and Tenant
otherwise agree in writing. If Landlord fails to choose an appraiser as provided above, then the
appraiser chosen by Tenant shall be deemed to be acceptable to Landlord. If Tenant fails to choose
an appraiser as provided above, then the appraiser chosen by Landlord shall be deemed to be
acceptable to Tenant. Should Tenant elect to exercise any option for an Extended Term, Tenant
shall do so by providing written notice to Landlord at least twelve (12) months before the
expiration of the Lease Term or the then current Extended Term for which an option has been
exercised. If Tenant does not exercise an option to extend the Lease Term or the then Extended
Term within the period allowed, all unexercised options to renew shall be null, void and of no
further force or effect.




     No later than fifteen (15) months prior to the date Tenant desires to exercise the option to
extend the Lease Term or the then Extended Term, Tenant may (but is not obligated to) make a
written request to Landlord to provide Tenant with Landlord’s proposed Market Rate (as that term is
defined below) for the Extended Term. If Tenant makes such a request, Landlord shall furnish
Tenant with Landlord’s proposed Market Rate (as well as copy of any third party, non-confidential
information Landlord used in determining the proposed Market Rate) no later than thirty (30) days
after Landlord’s receipt of Tenant’s written request. If Tenant properly exercises the option to
extend the Lease Term or the then Extended Term, then prior to the date Tenant is required to
identify an appraiser (as set forth in this Section) Tenant may (but is not obligated to) provide
Landlord with written notice that Tenant accepts the proposed Market Rate as the
Market Rate for the Extended Term, in which case that shall be the Market Rate. If Tenant
does not provide Landlord with a written notice that Tenant accepts the proposed Market Rate as the
Market Rate for the Extended Term during the time period specified in the foregoing sentence, the
parties shall either negotiate a mutually agreeable Market Rate, or if they are unable to do so,
the parties shall pursue the appraisal process outlined in this Section. The Market Rate and
related information provided by Landlord to Tenant under this paragraph shall be treated as
confidential by Tenant, shall not be disclosed by Tenant to any third party and shall not be used
by Tenant or any appraiser to advocate for or set the Market Rate.



     39. Tenant-Caused Delay. The following shall constitute “Tenant-Caused Delay”: (i)
failure of the Tenant to meet its obligations under the Lease during the time specified; (ii)
Tenant’s or its agents’ willful or negligent interference with the work being performed by Landlord
or its agents; or (iii) Tenant’s conduct as described in “Exhibit B”, Section 4(d).



 









 





     40. Impact Fee Credits. Landlord hereby assigns to Tenant any and all impact fee
credits, fee waivers or rebates provided, or which may be provided, by the City of Phoenix or the
State of Arizona in connection with the location of Tenant’s business operations within the
Premises. In the event that Landlord receives the benefit of any such impact fee credits, fee
waivers or rebates as a result of the location of Tenant’s business within the Premises, Landlord
shall promptly remit to Tenant the benefit to Tenant in the form of a check, net of any costs
incurred by Landlord to obtain, maintain or otherwise relating to the benefits.



     41. Common Areas; Parking. Landlord hereby covenants and agrees that Tenant shall
have the right, at all times during the term of this Lease, as may be extended, to utilize all
common areas within the Site for pedestrian and vehicular ingress and egress and all other purposes
consistent with the manner in which the particular common areas are constructed, maintained and
operated for the mutual benefit of the tenants and occupants of the Site (including the right to
have trucks travel over all of the drives of the Site to access Tenant’s loading and unloading area
on the North side of the Premises); provided, Tenant’s use shall not unfairly disadvantage other
tenants in the Building (provided the parties agree that normal truck traffic over dedicated
vehicular drives around the Building will not disadvantage other tenants of the Building) and
excluding any space exclusively dedicated to another tenant of the Building. In addition, and
notwithstanding anything contained herein to the contrary, Landlord hereby covenants and agrees
that at all times during the term of this Lease, it shall maintain a vehicular parking ratio within
the Site of open, undedicated spaces of one (1) space per 2,000 square feet of leasable space
within the Site. Landlord shall stripe the truck area on the South side of the Premises for
vehicle parking such that there shall be one (1) space per 1,000 square feet of the Premises, with
those spaces being located on the South and West sides of the Building. Landlord agrees that the
parking described as “Ulta Parking” on Exhibit “A-1” is dedicated for Tenant’s use. Tenant
shall notify Landlord if third parties are utilizing Tenant’s dedicated parking spaces, in which
case, Landlord shall use reasonable efforts to cause those third parties to not use Tenant’s
dedicated parking spaces.
Tenant may physically designate its dedicated parking spaces, subject to Landlord’s prior
reasonable approval of the manner and aesthetics of any designation. Moreover, at all times from
and after the Commencement Date, Landlord shall provide to Tenant, for Tenant’s exclusive use and
at no additional cost or expense to Tenant, at least thirty (30) truck trailer parking spaces
within the Site and, in the event Tenant elects to expand the Premises into the Expansion Premises,
Landlord shall provide an additional ten (10) truck trailer parking spaces within the common areas
of the Site for Tenant’s exclusive use and at no additional cost or expense to Tenant.



     42. Waiver of Landlord’s Lien. Landlord hereby acknowledges that Tenant’s lender
requires that Landlord waive any and all rights Landlord may have in and to Tenant’s personal
property, furnishings, equipment, inventory, products and the like within the Premises. In
connection therewith, Landlord hereby waives any and all rights and liens, including, without
limitation, Landlord’s statutory landlord’s lien, in and to Tenant’s personal property,
furnishings, equipment, inventory, products and the like stored or located within the Premises at
any time during the Lease Term and, in connection therewith, shall, concurrently with the execution
of this Lease, execute that Landlord’s Waiver and Consent in the form attached hereto as
Exhibit “H”, and the execution and delivery of such Landlord’s waiver shall be a condition
precedent to Tenant’s obligations under this Lease.



 









 





     43. Construction of Improvements in Adjacent Space. Landlord agrees that it shall
perform any other Tenant build out in the Building in accordance with all applicable laws,
including the fire code and any additional requirements of Landlord’s insurance carrier. If
Landlord fails to meet the foregoing obligation and Tenant’s insurance premiums increase as a
result of that failure, Landlord shall be responsible to reimburse Tenant the amount of the
increase in insurance premiums attributable to the failure. Landlord agrees that it shall obligate
any other tenant in the Building under their lease to construct any of that tenant’s improvements
in accordance with all applicable laws, including the fire code and any additional requirements of
Landlord’s insurance carrier in order to maintain the then current level and type of insurance
without otherwise causing an increase in premium due to the quality or type of construction or fire
suppressant system. If Landlord fails to meet the foregoing obligation and Tenant’s insurance
premiums increase as a result of that failure, Landlord shall be responsible to reimburse Tenant
the amount of the increase in insurance premiums attributable to the failure, and Landlord may
pursue the other tenant for those costs. If another tenant fails to meet its obligation to
construct any of that tenant’s improvements in accordance with all applicable laws, including the
fire code and any additional requirements of Landlord’s insurance carrier, and Tenant’s insurance
premiums increase as a result of that failure, Landlord shall use all reasonable efforts to cause
that tenant to reimburse Tenant the amount of the increase in insurance premiums attributable to
the failure, and if that fails, Landlord shall reimburse the amount to Tenant and Tenant shall
cooperate with Landlord to obtain that amount from the other tenant.



     44. Tenant Use of Common Area. Tenant may access and use the common area depicted on Exhibit “A-1” as “Staging
Area” for staging and storage of trucks and trailers and shall not otherwise use the area for
outside storage. Tenant may open, close and lock the gates that may exist in that area from time
to time. Tenant’s use of the common area described in this Paragraph is exclusive; however,
Landlord and applicable governmental authorities shall have access to the common area at all times
and shall be provided the ability to unlock the gates immediately in the case of any emergency.
Other than in the case where Landlord needs emergency access, Landlord shall provide Tenant with
prior reasonable oral notice before accessing the “Staging Area”. If Landlord needs access to the
“Staging Area” in order to perform construction or repairs, it shall provide Tenant with prior
written notice.



     45. Memorandum of Lease. Upon the execution of the Lease both parties shall execute
the Memorandum of Lease in the form attached at Exhibit J hereto. Contemporaneous with the
execution of the Memorandum of Lease, both parties shall execute the Release of the Memorandum of
Lease in the form attached as Exhibit K attached hereto, which shall be held in trust by Landlord
until the date that the Lease expires or terminates. Upon expiration or termination of the Lease,
Tenant hereby authorizes Landlord to record the Release of Memorandum of Lease.



 









 





     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first
above written.



	 	 	 	 	 	 	 	 	 	 	 
	TENANT:

	 	 	 	 	 	 LANDLORD:	 
	 
	 	 	 	 	 	 	 	 	 	 
	ULTA SALON, COSMETICS &
FRAGRANCE, INC., a Delaware
corporation	 	 	 	SOUTHWEST VALLEY PARTNERS, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Alex J. Lelli, Jr.
	 	 	 	By:
	 	/s/ Michael S. Curless	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Printed:

	 	Alex J. Lelli, Jr.
	 	 	 	Printed:
	 	Michael S. Curless	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	Senior Vice President,
Growth & Development
	 	 	 	Title:
	 	Executive Vice President	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Execution Date: June 14, 2007	 	 	 	Execution Date: June 21, 2007	 	 






 









 







EXHIBITS
INTENTIONALLY OMITTED.

 

AVAILABLE UPON REQUEST.





List of Exhibits




	 	 	 	 	 
	Exhibit “A-1”

	 	—
	 	Depiction of the Premises
	 
	 	 	 	 
	Exhibit “A-2”

	 	—
	 	Legal Description of the Site
	 
	 	 	 	 
	Exhibit “B”

	 	—
	 	Construction Work
	 
	 	 	 	 
	Exhibit “C”

	 	—
	 	Acceptance and Commencement Agreement
	 
	 	 	 	 
	Exhibit “D”

	 	—
	 	Rules and Regulations
	 
	 	 	 	 
	Exhibit “E”

	 	—
	 	[Intentionally Deleted]
	 
	 	 	 	 
	Exhibit “F”

	 	—
	 	Signage Proposal
	 
	 	 	 	 
	Exhibit “G”

	 	—
	 	Subordination, Non-disturbance and Attornment Agreement
	 
	 	 	 	 
	Exhibit “H”

	 	—
	 	Landlord’s Waiver and Consent
	 
	 	 	 	 
	Exhibit “I-1” – “1-4”

	 	—
	 	Acceptable Configurations of Expansion Premises
	 
	 	 	 	 
	Exhibit “J”

	 	—
	 	Memorandum of Lease
	 
	 	 	 	 
	Exhibit “K”

	 	—
	 	Release of Memorandum of Lease