Document:

EXHIBIT
10.14.1

 

AMENDMENT TO LEASE

 

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

 

RECITALS

 

	
  A.

  	
   

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

  
	
  (“Former Owner”)

  

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

Base Rental Payments

 

	
  Lease Period

  	
   

  	
  Per Annum Base Rent

  Per Rentable Square

  Foot

  	
   

  	
  Per Annum Base Rent

  Per Rentable Square

  Foot If Option A Is

  Applicable

  	
   

  	
  Per Annum Base Rent

  Per Rentable Square

  Foot If Option B Is

  Applicable

  	
   

  
	
  February 1,
  2007 – February 28, 2007

  	
   

  	
  $

  	
   0.00

  	
   

  	
  $

  	
   0.00

  	
   

  	
  $

  	
   0.00

  	
   

  
	
  February 1,
  2007 – January 31, 2009

  	
   

  	
  $

  	
   9.80

  	
   

  	
  $

  	
   9.80

  	
   

  	
  $

  	
   10.05

  	
   

  
	
  February 1,
  2009 – January 31, 2010

  	
   

  	
  $

  	
   10.05

  	
   

  	
  $

  	
   10.05

  	
   

  	
  $

  	
   10.30

  	
   

  
	
  February 1,
  2010 – January 31, 2011

  	
   

  	
  $

  	
   10.30

  	
   

  	
  $

  	
   10.30

  	
   

  	
  $

  	
   10.55

  	
   

  
	
  February 1,
  2011 – February 28, 2012

  	
   

  	
  $

  	
   10.55

  	
   

  	
  $

  	
   10.55

  	
   

  	
  $

  	
   10.80

  	
   

  

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

 

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

17.                                 Miscellaneous.

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

[SIGNATURE
PAGE TO FOLLOW]

 

13

 

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

 

	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
   

  	
  FirstCal Industrial 2
  Acquisition, LLC,

  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  FirstCal 2 Industrial
  Leasing Manager, LLC, a

  Delaware limited liability company and its leasing

  manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  First Industrial, L.P., a
  Delaware limited

  partnership, its sole member

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  First Industrial Realty
  Trust, Inc., a

  Maryland corporation and its sole

  general partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Chris William

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Chris William

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  SR Regional Director

  
								

 

 

	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  
	
   

  	
  ESCHELON
  TELECOM, INC., a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Donahue

  
	
   

  	
  Name:

  	
  Michael A. Donahue

  
	
   

  	
  Title:

  	
  VP Finance and Treasurer

  
				

 

14

 

EXHIBIT A 

 

PLAN A

 

A-1

 

EXHIBIT B 

 

PLAN B

 

B-1

 

EXHIBIT C

 

TENANT OPERATIONS INQUIRY FORM

 

 

	
  1.

  	
  Name of Company/Contact

  	
  Michele Speranza-diforza

  
	
  2.

  	
  Address/Phone 

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

  
	
   

  	
   

  	
  612.436.6621

  
	
  3.

  	
  Provide a brief
  description of your business and operations:

  	
   

  
	
   

  	
  Telecommunications
  services & Products

  
					

 

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

 

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

  	
   

  	
  YES

  	
   

  	
  NO

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

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  YES

  	
   

  	
  NO

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

  	
   

  	
   

  	
   

  	
   

  
	
  c. NPDES or SPDES
  Stormwater Discharge permit

  	
   

  	
  YES

  	
   

  	
  NO

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

  	
   

  	
   

  	
   

  	
   

  
	
  d. EPA Hazardous Waste
  Generator ID Number

  	
   

  	
  YES

  	
   

  	
  NO

  

 

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

 

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

 

	
  Chemical/Waste

  	
   

  	
  Approximate
  Annual

  Quantity Used or

  Generated

  	
   

  	
  Storage
  Container(s)

  (i.e. Drums, Cartons, Totes, 

  Bags, ASTs, USTs, etc)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

C-1

 

EXHIBIT D 

 

WORK LETTER

 

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

 

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

 

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

 

D-1

 

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

 

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

 

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

 

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

 

D-2

 

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

 

6.                        Delay.

 

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

 

6.1.1.   Change Orders requested or approved by Tenant;

 

6.1.2.   Tenant’s disapproval of a Substitution;

 

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

 

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

 

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

 

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

 

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

 

D-3

 

SCHEDULE 1

 

FINAL PLANS

 

Schedule 1

 

EXHIBIT A

 

Option A - Preliminary

 

 

	
   

  	
  Initials:

  
	
   

  	
   

  
	
   

  	
  Landlord: 

  	
  [ILLEGIBLE]

  
	
   

  	
  Tenant:

  	
   [ILLEGIBLE]

  
				

 

 

EXHIBIT B

Option B- Preliminary

 

 

	
   

  	
  Initials:

  
	
   

  	
   

  
	
   

  	
  Landlord: 

  	
  [ILLEGIBLE]

  
	
   

  	
  Tenant:

  	
   [ILLEGIBLE]EXHIBIT 10.16.1

 

AMENDMENT TO LEASE

 

This Amendment to Lease
(“Amendment”) is made effective as of the 28th day of APRIL, 2005,
by and between PARKSIDE SALT LAKE CORPORATION, a Delaware corporation
(“Landlord”) and ESCHELON TELECOM, INC., a Delaware corporation (“Tenant”) with
reference to the following facts and circumstances.

 

A.       Landlord is the Owner of that certain
building located at 215 South State Street, Salt Lake City, Utah 84111 (the
“Property”).

 

B.        Landlord’s predecessor-in-interest and
Tenant’s predecessor-in-interest entered into a certain Office Lease, dated
December 28, 1999, as amended by that certain Landlord’s Waiver and Consent
dated August 25, 2000 (collectively, the “Lease”) for certain premises
described as Suite 380 (the “Premises”) located in the Property.

 

C.        American Realty Advisors (“Advisor”) is the
real estate investment manager to the Landlord.

 

D.       Landlord and Tenant desire to amend the Lease
upon terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in
consideration of the foregoing facts and circumstances, the mutual covenants
and promises contained herein and after good and valuable consideration, the
receipt and sufficiency of which is acknowledged by each of the parties, the
parties do hereby agree to the following:

 

1.        Definitions. Each capitalized term used in this Amendment shall have the same
meaning as is ascribed to such capitalized term in the Lease, unless otherwise
provided for herein.

 

2.        Expansion Premises. Commencing on July 15, 2005 (the “Expansion
Date”), the Premises shall be expanded to include an additional 11,925 rentable
square feet in Suites 280 and 110, as shown on Exhibit A, attached (the
“Expansion Premises”). Following the Expansion Date, the Premises shall consist
of 18,669 rentable square feet.

 

3.        Term. The term of the Lease is hereby extended for the period commencing on
the Expansion Date and ending on July 14, 2012 (the “Extension Period”). Tenant
acknowledges and agrees that, unless expressly provided for in this Amendment,
Tenant has no right to renew or extend the term after the Extension Period.

 

4.        Rental. The Basic Annual Rent for the Extension Period shall be as follows:

 

1

 

	
  Suite

  Number

  	
   

  	
  Total

  Rentable

  Square

  Feet

  	
   

  	
  Months

  	
   

  	
  Annual Base

  Rent per

  Square Foot

  	
   

  	
  Monthly

  Base Rent

  	
   

  	
  Annual Base

  Rent

  	
   

  
	
  110

  	
   

  	
  1,150

  	
   

  	
  7/15/05-7/14/06

  	
   

  	
  $

  	
  12.50

  	
   

  	
  $

  	
  1,197.92

  	
   

  	
  $

  	
  14,375.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/06-7/14/07

  	
   

  	
  $

  	
  12.88

  	
   

  	
  $

  	
  1,234.33

  	
   

  	
  $

  	
  14,812.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/07-7/14/08

  	
   

  	
  $

  	
  13.27

  	
   

  	
  $

  	
  1,271.71

  	
   

  	
  $

  	
  15,260.50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/08-7/14/09

  	
   

  	
  $

  	
  13.67

  	
   

  	
  $

  	
  1,310.04

  	
   

  	
  $

  	
  15,720.50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/09-7/14/10

  	
   

  	
  $

  	
  14.08

  	
   

  	
  $

  	
  1,349.33

  	
   

  	
  $

  	
  16,192.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/10-7/14/11

  	
   

  	
  $

  	
  14.50

  	
   

  	
  $

  	
  1,389.58

  	
   

  	
  $

  	
  16,675.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/11-7/14/12

  	
   

  	
  $

  	
  14.94

  	
   

  	
  $

  	
  1,431.75

  	
   

  	
  $

  	
  17,181.00

  	
   

  
	
  280

  	
   

  	
  10,775

  	
   

  	
  7/15/05-7/14/06

  	
   

  	
  $

  	
  15.75

  	
   

  	
  $

  	
  14,142.19

  	
   

  	
  $

  	
  169,706.25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/06-7/14/07

  	
   

  	
  $

  	
  16.22

  	
   

  	
  $

  	
  14,564.21

  	
   

  	
  $

  	
  174,770.50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/07-7/14/08

  	
   

  	
  $

  	
  16.71

  	
   

  	
  $

  	
  15,004.19

  	
   

  	
  $

  	
  180,050.25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/08-7/14/09

  	
   

  	
  $

  	
  17.21

  	
   

  	
  $

  	
  15,453.15

  	
   

  	
  $

  	
  185,437.75

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/09-7/14/10

  	
   

  	
  $

  	
  17.73

  	
   

  	
  $

  	
  15,920.06

  	
   

  	
  $

  	
  191,040.75

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/10-7/14/11

  	
   

  	
  $

  	
  18.26

  	
   

  	
  $

  	
  16,395.96

  	
   

  	
  $

  	
  196,751.50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7/15/11-7/14/12

  	
   

  	
  $

  	
  18.81

  	
   

  	
  $

  	
  16,889.81

  	
   

  	
  $

  	
  202,677.75

  	
   

  
	
  380

  	
   

  	
  6,744

  	
   

  	
  7/15/05-7/14/12

  	
   

  	
  $

  	
  19.00

  	
   

  	
  $

  	
  10,678.00

  	
   

  	
  $

  	
  128,136.00

  	
   

  

 

2

 

5.        Conditional Rent. Provided that Tenant has faithfully
performed all of the terms and conditions of the Lease and this Amendment,
Landlord agrees to abate Tenant’s obligation to pay Basic Annual Rent on Suites
105 and 280 for July 15, 2005 through March 14, 2006 (the “Conditional Rent”).
Notwithstanding the foregoing, however, during such abatement period. Tenant
shall still be responsible for the payment of all Additional Rent payable under
this Lease. In the event of a default at any time during the Term, in addition
to any other remedies to which Landlord may be entitled, Landlord shall be
entitled to recover the Conditional Rent (i.e., the amount of the Conditional
Rent shall not be deemed to have been abated, but shall become immediately due
and payable as unpaid Rent earned, but due at the time of such default).

 

6.        Additional Rent. Throughout the Extension Period, Tenant’s
Share for the calculation of Operating Expenses, payable as Additional Rent
subject to the provisions of this Section 6, shall be 9.82%. Additionally, the
Base Year throughout the Extension Period shall be the 2005 calendar year and
for the purpose of calculating Tenant’s Additional Rent, Controllable Operating
Costs shall not increase by more than four percent (4%) per year in the
aggregate over the Term. “Controllable Operating Costs” shall mean Operating
Expenses other than insurance, utilities and security.

 

7.        Parking. Notwithstanding anything in the Lease to the contrary, during the
Extension Period Tenant shall have the right to use four (4) covered reserved
parking spaces at a rate of $85.00 per space per month in locations designated
by Landlord, twenty (20) covered unreserved parking spaces at a rate of $65.00
per space per month in locations designated by Landlord, fifteen (15)
unreserved spaces on the surface lot adjacent to the Building at a rate of
$18.00 per space per month, and one (1) reserved space in the Building
contractor lot at no charge to Tenant. Notwithstanding the foregoing, Tenant’s
obligation to pay rent for the parking spaces shall be abated for July 15, 2005
through July 14, 2006.

 

8.        Automatic Expansion. Provided no default has occurred, Tenant
shall, once such space becomes available, expand into approximately 1,000
additional contiguous rentable square feet on the first (lst) floor
of the Building, in a location selected by Landlord from the expansion areas
shown on Exhibit A attached hereto (the “Expansion Space”). Tenant shall
take the Expansion Space subject to all of the same terms and conditions of the
Lease, including, but not limited to, the then current rental rate.
Additionally, Landlord hereby agrees to make improvements in the Expansion
Space so that the Expansion Space shall be in the same condition as the
Premises upon the date Tenant expands into the Expansion Space. Tenant shall
expand into the Expansion Space upon substantial completion of Landlord’s
improvement work in the Expansion Space and both parties shall execute an
amendment to the Lease setting forth the terms of the expansion.

 

Any termination of the Lease
shall terminate all rights of Tenant with respect to the Expansion Space. The
rights of Tenant with respect to the Expansion Space shall not be severable
from the Lease, nor may such rights be assigned or otherwise conveyed in
connection with any permitted assignment of the Lease. Landlord’s consent to
any assignment of the Lease shall not be construed as allowing an assignment or
a conveyance of such rights to any assignee.

 

The Lease shall not be void
or voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting from any delay in delivering possession of the Expansion Space to
Tenant, but abatement of the Basic Annual Rental attributable to the Expansion
Space from the

 

3

 

date of Tenant’s automatic
expansion to the date of actual delivery of the Expansion Space, shall
constitute full settlement of all claims that Tenant might have against
Landlord by reason of the Expansion Space not being delivered upon the date of
Tenant’s acceptance of Landlord’s offer.

 

If the Lease or Tenant’s
right to possession of the Premises shall terminate in any manner whatsoever
before Tenant shall exercise the right herein provided, or if Tenant shall have
subleased the Premises or assigned the Lease with respect to all or any portion
of the Premises, then immediately upon such termination, sublease, or
assignment, the right herein granted shall simultaneously terminate and become
null and void. Such right is personal to Tenant and non-transferable. UNDER NO
CIRCUMSTANCES WHATSOEVER SHALL THE ASSIGNEE UNDER A COMPLETE OR PARTIAL
ASSIGNMENT OF THE LEASE, OR A SUBTENANT UNDER A SUBLEASE OF THE PREMISES, HAVE
ANY RIGHT TO EXERCISE THE RIGHT GRANTED HEREIN.

 

9.        Cancellation Option.     Provided no default has occurred and Tenant
has given notice on or before December 14, 2009 (the “Notice Deadline”), Tenant
shall have the option to cancel its obligations under this Lease effective as
of June 14, 2010 by making a payment to Landlord upon the exercise of the
cancellation option equal to the sum of (a) Landlord’s unamortized deal costs
(i.e. leasehold improvements, commissions, etc.) associated with this Amendment
based upon an interest rate of ten percent (10%) per annum, with such
amortization commencing after (i) the date any Conditional Rent has ceased
(with respect to the initial costs incurred by Landlord); and (ii) the date any
such costs are incurred by Landlord (if Tenant has expanded the Premises prior
to such termination) plus (b) $57,051.84 (collectively the “Termination Fee”).

 

10.      Renewal Option.

 

a.         Tenant shall have one (1) personal and
non-transferable option to renew the term of the Lease for a period of five (5)
years. The renewal term shall begin June 15, 2012. Tenant shall have the right
to exercise the renewal option conferred herein by giving Landlord notice at
least one hundred eighty (180) days, but not more than two hundred seventy
(270) days, prior to the expiration of the Extension Period; provided that, at
the time of exercise and as of the commencement of the renewal term (i) no
default has occurred; and (ii) Tenant has not sublet any portion of the
Premises or assigned all or any portion of the Lease.

 

b.        The renewal option shall be subject to all of
the terms and conditions contained in the Lease, except that rent during each
renewal term shall be Market Rent. “Market Rent” shall be the anticipated rate
in effect for the Premises as of the commencement of the renewal term, together
with any market rate increases during the renewal term, based upon the rents
generally in effect for new leases of space in the area in which the building
is located of equivalent quality, size, utility and location, and taking into
account the length of the renewal term and the credit standing of Tenant. In no
event shall the Market Rent be less than the rent in effect for the immediately
preceding term. Landlord shall lease the Premises to Tenant in their
then-current condition, and Landlord shall not provide to Tenant any allowances
(e.g., moving allowance, construction allowance, free rent or the like) or
other tenant inducements, except Landlord shall provide a refurbishment

 

4

 

allowance of $5.00 per
rentable square foot. In the
event that Tenant shall exercise an option to renew the Lease, then the Market
Rent shall be agreed upon in a meeting of the parties hereto held at least
ninety (90) days prior to the expiration of the Extension Period. If the
parties are able to agree on an amount of rent that is mutually satisfactory,
then such agreements shall be placed in writing and shall be signed by the
parties hereto and shall thereupon become a part of the Lease.

 

c.         If the parties hereto are unable to agree
upon the rent at least thirty (30) days prior to the commencement of the
renewal term, then the disagreement shall be promptly submitted to arbitration
as provided below.

 

d.        Failure of Tenant properly to exercise any
option herein granted shall be construed as a waiver of all options herein
granted, and the Lease shall then terminate at the expiration of the Extension
Period.

 

e.         If the parties do not agree upon the Market
Rent within the stipulated time, no later than five (5) business days following
the expiration of the stipulated time, each party shall select an arbitrator
having not less than ten (10) years’ actual experience in the commercial real
estate brokerage business, and the arbitrators so selected shall immediately
meet for the purpose of hearing and deciding the dispute and fixing the
relevant rate of rent. If the two arbitrators selected cannot agree on the
rental rate within ten (10) business days after appointment (the “Initial
Review Period”), but the rental rates differ by less than five percent (5%), the
rental rate shall be the average of the two rates. If the rental rates differ
by more than five percent (5%), no later than five (5) business days following
the expiration of the Initial Review Period, the two arbitrators shall select a
third arbitrator with qualifications similar to their own. Within ten (10)
business days following appointment, the third arbitrator shall select one of
the two rental rates promulgated by the first two arbitrators as the rental
rate for the renewal period. If the arbitrators cannot agree on the third
arbitrator, they shall petition the presiding judge of the local state court
having jurisdiction to appoint such arbitrator to act as an umpire between the
arbitrators selected by Landlord and Tenant. The decision of the third arbitrator
or presiding judge, as the case may be, shall be binding on both parties.
Landlord and Tenant shall each be responsible to pay their respective
arbitrators and will share equally the cost of the third arbitrator.

 

f.         Except as expressly set forth herein, Tenant
shall have no option to renew the Lease.

 

11.                  Signage. Landlord shall pay all costs of fabrication and installation of
Building standard letters with Tenant name and suite number at the main
entrance to the Premises and one (1) line on the Building directory to display
Tenant’s name and location in the Building. Any changes to the signage
initially provided by Landlord shall be at Tenant’s expense. Additionally,
Tenant may install, at Tenant’s sole cost and expense, Building signage similar
to the Building signage presently installed by Fidelity Investments, provided
Tenant has obtained Landlord’s prior written consent to such signage.

 

5

 

12.               Building Services. Landlord hereby agrees to provide Tenant,
upon Tenant’s written request, with up to twenty (20) hours per month during
the Extension Period of HVAC services during hours not listed in Section 9.1 of
the Lease at no charge. Any additional HVAC service requested by Tenant beyond
the twenty (20) hours listed herein shall be at Landlord’s standard rate for
such after-hours service.

 

13.               Tenant Improvements. Landlord hereby agrees to construct the
Tenant Improvements enumerated in Exhibit B attached hereto.

 

14.               No Defenses. Tenant and Landlord affirm that, as of the date of execution of this
Amendment, no default or breach by Landlord or Tenant exists under the Lease
and Tenant and Landlord have no defenses, offsets or counterclaims that could
be asserted in an action by Landlord or Tenant to enforce Landlord’s or
Tenant’s remedies under the Lease.

 

15.               Broker. Tenant represents to Landlord that except for Strategic Commercial
Realty (the “Broker”), Tenant has not dealt with any real estate broker,
salesperson or finder in connection with this Amendment, and no other such
person initiated or participated in the negotiation of this Amendment or is
entitled to any commission in connection herewith. Tenant hereby agrees to
indemnify, defend and hold Landlord, its property manager and their respective
employees harmless from and against any and all liabilities, claims, demands,
actions, damages, costs and expenses (including attorneys fees) arising from
either (a) a claim for a fee or commission made by any broker [, other than the
Broker,] claiming to have acted by or on behalf of Tenant in connection with
this Amendment, or (b) a claim of, or right to lien under the statutes of the
state in which the Premises are located (the “State”) relating to real estate
broker liens with respect to any such broker retained by Tenant.

 

16.               Submission. Submission of this Amendment by Landlord to Tenant for examination
and/or execution shall not in any manner bind Landlord and no obligations on
Landlord shall arise under this Amendment unless and until this Amendment is
fully signed and delivered by Landlord and Tenant; provided, however, the
execution and delivery by Tenant of this Amendment to Landlord shall constitute
an irrevocable offer by Tenant of the terms and conditions herein contained,
which offer may not be revoked for thirty (30) days after such delivery.

 

17.               Limit of Liability. Neither Landlord nor any principal of
Landlord nor any owner of the Property, whether disclosed or undisclosed, shall
have any personal liability with respect to any of the provisions of the Lease,
as hereby amended, or the Premises, and if Landlord is in breach or default
with respect to Landlord’s obligations under the Lease, as hereby amended, or
otherwise, Tenant shall look solely to the equity interest of Landlord in the
Property for the satisfaction of Tenant’s remedies or judgments.

 

18.                 Miscellaneous.

 

a.         Notices. Both parties confirm
their notice addresses to be us follows

 

	
   

  	
  If to Landlord: Parkside Salt Lake Corporation

  
	
   

  	
   

  	
  c/o American Realty
  Advisors

  801 North Brand Boulevard, Suite 800

  

 

6

 

	
   

  	
   

  	
  Glendale, CA 91203 

  Attention: Stanley lezman 

  Telecopy: 818-545-8460

  	 

	 
	
   

  	
   

  	
   

  
	
   

  	
  If to Tenant:

  	
   

  	
  Eschelon Telecom, Inc.

  730 Second Avenue South, Suite 900

  Minneapolis, MN 55402

  Telecopy: 612.436.6702

  	 

						

 

b.        Time of Essence. Time is of the essence of this Amendment
and each and every turn and provision hereof.

 

c.         Modification. A modification of any provision herein
contained, or any other amendment to this Amendment, shall be effective only if
the modification or amendment is in writing and signed by both Landlord and
Tenant.

 

d.        Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

e.         Number and Gender. As used in this Amendment, the neuter
includes masculine and feminine, and the singular includes the plural.

 

f.         Governing Law. This Amendment shall be governed by,
interpreted under and construed and enforced in accordance with the laws of
Utah applicable to agreements made and to be performed wholly within Utah.

 

g.        Construction. Headings at the beginning of each Section
and subsection are solely for the convenience of the parties and are not a part
of this Amendment. Except as otherwise provided in this Amendment, all exhibits
referred to herein are attached hereto and are incorporated herein by this
reference. Unless otherwise indicated, all references herein to Articles,
Section, subsections, paragraphs, subparagraphs or provisions are to those in
this Amendment. Any reference to a paragraph or Section herein includes all
subparagraphs or subsections thereof. This Amendment shall not be construed as
if it had been prepared by only Landlord or Tenant, but rather as if both
Landlord and Tenant had prepared the same. In the event any portion of this
Amendment shall be declared by any court of competent jurisdiction to be
invalid, illegal or unenforceable, such portion shall be deemed severed from
this Amendment, and the remaining parts hereof shall remain in full force and
effect, as fully as though such invalid, illegal or unenforceable portion had
never been part of this Amendment.

 

h.        Integration of Other Agreements. This Amendment, the Lease and prior
amendments set forth the entire agreement and understanding of the parties with
respect to the matters set forth herein and supersedes all previous written or
oral understandings, agreements, contracts, correspondence and documentation
with respect thereto. Any oral representation or modifications concerning this
Amendment shall be of no force or effect.

 

7

 

i.          Duplicate Originals; Counterparts. This Amendment may be executed in any
number of duplicate originals, all of which shall be of equal legal force and
effect. Additionally, this Amendment may be executed in counterparts, but shall
become effective only after a counterpart hereof has been executed by each
party; all said counterparts shall, when taken together, constitute the entire
single agreement between parties.

 

j.          Days. The term “days,” as used herein shall mean actual days occurring,
including Saturdays, Sundays and holidays. The term “business days” shall mean
days other than Saturdays, Sundays and holidays. If any item must be accomplished
or delivered hereunder on a day that is not a business day, it shall be deemed
to have been timely accomplished or delivered if accomplished or delivered on
the next following business day.

 

k.         Further Assurances. Landlord and Tenant each agree to execute
any and all other documents and to take any further actions reasonably
necessary to consummate the transactions contemplated hereby.

 

l.          Joint and Several liability. If Tenant consists of two (2) or more
parties, each of such parties (and each of Tenant’s general partners) shall be
liable for Tenant’s obligations under this Amendment, and all documents
executed in connection herewith, and the liability of such parties shall be
joint and several. Additionally, the obligations and liabilities hereunder of
the general partners or other appropriate persons or entities that comprise
Tenant, if any, are and shall be joint and several.

 

m.        No Third Party Beneficiaries. Except as otherwise provided herein, no
person or entity shall be deemed to be a third party beneficiary hereof, and
nothing in this Amendment, (either expressed or implied) is intended to confer
upon any person or entity, other than Landlord and/or Tenant (and their
respective nominees, successors and assigns), any rights, remedies, obligations
or liabilities under or by reason of this Amendment.

 

n.        Full Force and Effect. The Lease, as amended hereby, shall
continue in full force and effect, subject to the terms and provisions thereof
and hereof. In the event of any conflict between the terms of the Lease and the
terms of this Amendment, the terms of this Amendment shall control.

 

o.        ERISA. Tenant has been informed that a specified pension plan may have an
interest in the Property. Tenant hereby represents and warrants that it is not
a party in interest to such plan, within the meaning of Section 3(14) of the
Employee Retirement Income Security Act of 1974, as amended.

 

8

 

IN WITNESS WHEREOF, this
Amendment is executed as of the day and year aforesaid.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  PARKSIDE SALT LAKE CORPORATION, a 

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Coor

  
	
   

  	
  Printed Name:

  	
   David Coor

  
	
   

  	
  Title:

  	
  Asst. Manager

  
	
   

  	
  Date:

  	
  4.28.05

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
  ESCHELON TELECOM, INC., a Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Donahue

  
	
   

  	
  Printed Name:

  	
  Michael A. Donahue

  
	
   

  	
  Title:

  	
  VP Finance and Treasurer

  
	
   

  	
  Date:

  	
  4/28/05

  
						

 

9

 

EXHIBIT A

 

The Expansion Premises

 

 

 

10

 

 

11

 

EXHIBIT B 

 

TENANT IMPROVEMENTS

 

1.         Preparation of Working Drawings.

 

(a)       Landlord shall retain an architect/space
planner (“Architect”) to prepare the construction drawings for the Tenant
Improvements, along with an engineering consultant (“Engineer”) to prepare all
plans and engineering working drawings related to the structural, mechanical,
electrical, plumbing, HVAC, life-safety, and sprinkler work for the Tenant
Improvements.

 

(b)      Landlord shall prepare a space plan for the
Tenant Improvements that includes a layout and designation of all offices,
rooms and other partitioning, their intended use, and equipment to be contained
therein (the “Space Plan”), and shall deliver the Space Plan to Tenant for
Tenant’s approval. Tenant shall notify Landlord whether it approves the Space
Plan within three (3) business days after Landlord’s submission thereof. If
Tenant disapproves of such Space Plans, then Tenant shall notify Landlord
thereof specifying in reasonable detail the reasons for such disapproval.
Landlord shall revise such Space Plans in accordance with Tenant’s reasonable
objections and submit the revised Space Plans to Tenant for its review and
approval. Tenant shall notify Landlord in writing whether it approves of the
revised Space Plans within two (2) business days after its receipt thereof. If
Tenant fails to notify Landlord that it disapproves of the initial Space Plans
within three (3) business days (or, in the case of revised Space Plans, within
two (2) business days) after the submission thereof, then Tenant shall be
deemed to have approved the Space Plans in question.

 

(c)       Following the date on which the Space Plans
are approved (or deemed approved) by Tenant, Landlord shall cause the Architect
and Engineer to prepare final working drawings of the Tenant Improvements and
deliver the same to Tenant for its review and approval (which approval shall
not be unreasonably withheld, delayed or conditioned). Tenant shall notify
Landlord whether it approves of the submitted working drawings within three (3)
business days after Landlord’s submission thereof. If Tenant disapproves of
such working drawings, then Tenant shall notify Landlord thereof specifying in
reasonable detail the reasons for such disapproval. Landlord shall revise such
working drawings in accordance with Tenant’s objections and submit the revised
working drawings to Tenant for its review and approval. Tenant shall notify
Landlord in writing whether it approves of the revised working drawings within two
(2) business days after its receipt thereof. If Tenant fails to notify Landlord
that it disapproves of the initial working drawings within three (3) business
days (or, in the case of resubmitted working drawings, within two (2) business
days) after the submission thereof, then Tenant shall be deemed to have

 

12

 

approved the working
drawings in question. The approved working drawings arc hereinafter referred to
as the “Approved Working Drawings.”

 

2.        Construction. Following approval of the Approved Working
Drawings, Landlord shall construct the Tenant Improvements in substantial
accordance with the Approved Working Drawings.

 

3.        Warranties. Landlord shall use reasonable efforts to obtain a warranty from Landlord’s
contractor against defects in materials and workmanship for one (l) year
following substantial completion of the Tenant Improvements. Landlord hereby
assigns to Tenant all warranties and guaranties by the contractor, and Tenant
hereby waives all claims against Landlord relating to, or arising out of the
construction of, the Tenant Improvements.

 

4.        Miscellaneous.

 

(a)       Provided the same will not interfere with the
Landlord work, Landlord shall allow Tenant access to the Expansion Premises
thirty (30) days prior to the substantial completion of the Tenant Improvements
for the purpose of installing Tenant’s equipment or fixtures (including
Tenant’s data and telephone equipment) in the Expansion Premises. Additionally,
Landlord shall provide Tenant an allowance up to $19,224.00, upon receiving
copies of paid receipts, to reimburse Tenant for moving expenses.

 

(b)       Unless otherwise indicated, all references
herein to a “number of days” shall mean and refer to calendar days. If any item
requiring approval is timely disapproved by Landlord, the procedure for
preparation of the document and approval thereof shall be repeated until the
document is approved by Landlord.

 

(c)       Notwithstanding any provision to the contrary
contained in this Lease, if a default by Tenant has occurred at any time prior
to substantial completion of the Tenant Improvements, then (i) in addition to
all other rights and remedies granted to Landlord pursuant to this Lease,
Landlord shall have the right to cause the contractor to cease the construction
of the Expansion Premises (in which case, Tenant shall be responsible for any
delay in substantial completion caused by such work stoppage); and (ii) all
other obligations of Landlord under the terms of this Exhibit shall be forgiven
until such time, if any, as such default may be cured.

 

13

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