Document:

exv10w07

 

Exhibit 10.07

ELECTRONIC ARTS INC. AND SUBSIDIARIES

DESCRIPTION OF REGISTRANT’S FISCAL YEAR 2005

EXECUTIVE OFFICER BONUS PLAN

Target annual bonuses are set for each executive officer based upon a
percentage of base salary. Bonuses for executive officers reporting to the
Chief Executive Officer are generally paid in two parts, one of which relates
only to the Company’s earnings results, and one of which is discretionary and
is measured against each individual’s contributions. Other executive officers
have a third part which relates to a specific business unit’s or product’s
financial performance. Bonuses are paid after the end of the fiscal year. If
profits in any period are less than 85 percent of the Company’s plan, no bonus
based on the Company’s performance may be paid for that period. If profits
exceed plan during a period, the bonus rate is accelerated for the incremental
profits above plan, with a maximum of 200 percent payout of the bonus target.exv10w36

 

Exhibit 10.36

FIRST AMENDMENT OF LEASE

          THIS FIRST AMENDMENT OF LEASE (the “Amendment”) dated as of the
23 day of February, 2004 by and between LOUISVILLE COMMERCE REALTY
CORPORATION, a Delaware corporation (“Landlord”) and ELECTRONIC ARTS INC., a
Delaware corporation (“Tenant”).

RECITALS:

          A. Landlord and Tenant entered into that certain Lease dated April 1,
1999 (the “Lease”) demising approximately 250,000 rentable square feet as shown
on Exhibit A thereto (the “Premises”) in the building (the “Building”) situated
at 5000 Commerce Crossings Drive, Louisville, Kentucky.

          B. The parties desire to amend the Lease subject to the terms, covenants
and conditions hereinafter set forth.

          C. Capitalized terms used in this Amendment, unless otherwise defined in
this Amendment, shall have the respective meanings ascribed to them in the
Lease.

AGREEMENTS:

     2. EXTENSION OF LEASE TERM. The Term of the Lease is hereby
extended for a period of six (6) years from May 1, 2004 to April 30, 2010
(“Extended Period”), unless sooner terminated as provided in the Lease.
Paragraph 4 is hereby deleted from the Lease of no further effect.

     3. MONTHLY BASE RENT. The monthly Base Rent for the Premises
shall be as follows:

	 	 	 	 	 	 	 	 	 
	Period
	 	Monthly Base Rent
	 	Annualized Base Rent

	5/1/04 - 10/31/04
	 	$	28,750.00	 	 	$	345,000.00	 
	11/1/04 - 4/30/10
	 	$	57,291.67	 	 	$	687,500.00	 

     Landlord has agreed to a reduction of monthly Base Rent from May 1, 2004
through October 31, 2004 from $57,291.67 to $28,750.00 as shown above;
provided, however, that if at any time prior to May 1, 2006, Tenant fails to
cure a default within the applicable cure period under this Lease, then this
reduction shall immediately become null and void, and within ten (10) days
after request by Landlord, Tenant shall pay to Landlord an amount equal to any
and all monthly Base Rent previously reduced. The reduction of monthly Base
Rent provided herein shall not relieve Tenant from the performance of Tenant’s
other obligations under this Lease, including the obligation to pay on a timely
basis all Rent and all other Additional Rent and other obligations under this
Lease, which shall become due and payable during the Term.

     4. TENANT IMPROVEMENTS. Tenant shall accept the Premises “as
is” with no representations or allowances except: (a) Landlord acknowledges
the existence of cracks in the floor of the Premises, which have been
investigated by Terracon and a copy of such consultant’s written report dated
June 6, 2003 has been provided to Tenant, all at Landlord’s sole cost and
expense; (b) Landlord shall repair those existing cracks in the floor of the
Premises which interfere with Tenant’s use and enjoyment (i.e., those affecting
the smooth operation of a forklift; not hairline cracks), at Landlord’s sole
cost and expense, within one hundred fifty (150) days from the execution hereof
provided Tenant’s Operations Manager allows reasonable access to perform such
work; (c) Landlord and Tenant’s Operations Manager shall conduct quarterly
inspections of the floor and any such future cracks to the floor of the
Premises not caused by Tenant shall be repaired in a commercially reasonable
time period by Landlord at Landlord’s sole cost and expense, with any such
future repairs to be coordinated and planned with Tenant’s Operations Manager;
and (d) Landlord shall be responsible for: (i) performing the work on Exhibit A attached hereto and made a part hereof on or before one hundred
twenty (120) days from the execution hereof assuming no delays occur in the
permitting process; and (ii) providing to Tenant a Tenant Improvement Allowance
of $225,000.00 to reimburse Tenant for refurbishment and renovation of the
existing office space in the Premises and construction of an additional 5,000
square feet of office space within the Premises and such other capital
improvements as may be approved in writing by Landlord (which shall not be
unreasonably withheld, delayed or denied) provided, however, such Tenant
Improvement Allowance must be used before January 1, 2006 and the parties must
execute a Work Letter Agreement substantially in the form of Exhibit “B” attached hereto and made a part hereof. If the cost of the Work (as
defined in the Work Letter Agreement) exceeds $225,000.00, Landlord shall, at
Tenant’s request, provide an additional allowance of up to $50,000.00 provided
Tenant enters into an amendment to the Lease increasing the Base Rent by a sum
sufficient to repay this $50,000.00 (or so much thereof as Tenant requests)
over the remaining Lease Term together with interest thereon at six percent
(6%) per annum. Landlord shall use commercially
reasonable efforts to minimize

 

 

disruptions in Tenant’s work flow and will
make such efforts to schedule contractor work at times convenient to Tenant.

     5. RENEWAL OPTION. Tenant shall have three (3) consecutive
options, (each a “Renewal Option”) to renew the Term with respect to all (but
not less than all) of the Premises demised under or pursuant to this Lease for
additional terms (each a “Renewal Term”) of five (5) years each, commencing on
the day immediately following the expiration date of the Term or Renewal Term
then in effect, under the following terms and conditions and subject to there
being no material adverse change in Tenant’s financial condition:

(a) Tenant gives Landlord written notice of its intent to exercise
the Renewal Option (“Notice of Intent”) no earlier than the date
which is three hundred sixty five (365) days prior to the expiration
date of the Term and no later than the date which is two hundred
seventy (270) days prior to the expiration date of the Term or
applicable Renewal Term, as the case may be.

(b) Tenant is not in breach or default under this Lease either on
the date Tenant gives its Notice of Intent or exercises the Renewal
Option or at any time through and including the proposed
commencement date of the Renewal Term.

(c) If Tenant timely and properly gives its Notice of
Intent in accordance with the provisions hereof:

(i) The Base Rent payable for the first Renewal Term shall be
based on ninety-five percent (95%) of the then prevailing
market rent (the “Prevailing Market Rent”) for similar
institutional quality bulk warehouse space with a minimum 28’
clear height located within a radius of ten (10) miles of the
Premises (the “Relevant Market”). The Base Rent for the
second and third Renewal Terms shall be equal to the
Prevailing Market Rent in the Relevant Market. In no event
shall the rental rate for any Renewal Term be less than the
adjusted rental rate payable under this Lease on the
expiration date of the Term then in effect.

(ii) “Prevailing Market Rent” is further defined to mean the
annual net rental rate per square foot, in the Relevant
Market, for leases comparable to this Lease for space
comparable to the Premises that a willing landlord would
accept and a willing tenant would pay under a lease then being
entered into, taking into account such factors as are then
being offered to third party tenants such a remodeling
credits, tenant improvement allowances, quality, age and
location of the applicable building, rental concessions,
relative operating expenses, relative services provided, size
of tenant, the base year for pass-through expenses, the value
of the tenant improvements already in place in the Premises at
the commencement of the applicable Renewal Period, lease
commissions saved or incurred, and moving allowances.

(iii) Within thirty (30) days after receipt by Landlord of
Tenant’s Notice of Intent to exercise a Renewal Option,
Landlord shall advise Tenant in writing of its determination
of the Prevailing Market Rent on a rentable square foot basis
as of the beginning of the applicable Renewal Term. Within
thirty (30) days of receipt of Landlord’s notice, Tenant shall
advise Landlord, in writing, whether or not Tenant accepts or
rejects the Prevailing Market Rate proposed by Landlord. Each
party hereby agrees to make its determination of the
Prevailing Market Rent in good faith and in a commercially
reasonable manner. Tenant’s failure to accept or reject in
writing the Prevailing Market Rent proposed by Landlord within
thirty (30) days of receipt of Landlord’s notice shall be
deemed Tenant’s rejection of Landlord’s estimate of the
Prevailing Market Rent. Tenant shall have the right to
negotiate with Landlord the Prevailing Market Rent proposed by
Landlord during such thirty (30) day period. Each party shall
negotiate with the other in a good faith, commercially
reasonable manner and hereby agrees to meet, upon the written
request of the other at the Premises or another location
mutually agreed upon by Landlord and Tenant during such thirty
(30) day period.

(iv) If Tenant rejects, or is deemed to have rejected,
Landlord’s estimate of the Prevailing Market Rent within
thirty (30) days after receipt of Landlord’s notice, then
within ten (10) business days after Tenant’s rejection (the
“Initial Appointment Period”) Landlord and Tenant shall each
appoint and employ, at its respective cost, a commercial real
estate broker (who shall be licensed by the State of Kentucky
and have at least ten (10) years of full-time commercial real
estate brokerage experience in the Louisville, Kentucky
metropolitan area) or an appraiser having an MAI

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designation for at least five (5) years to determine the
Prevailing Market Rent in the Relevant Market. If the two (2)
persons so appointed are unable to agree on the Prevailing
Market Rent in the Relevant Market within ten (10) business
days after the last was appointed (the “Initial Determination
Period”), they shall meet promptly and attempt to agree upon
and designate a third person meeting the same qualifications
set forth above. If the two persons so appointed are unable
to agree on the third person within five (5) business days
after the expiration of the Initial Determination Period,
either Landlord or Tenant, after giving five (5) days written
notice to the other, may apply to the Presiding Judge of the
Circuit Court of Jefferson County, Kentucky, for the selection
of a third person meeting the qualifications stated above.
Landlord and Tenant shall each bear one-half of the cost of
the appointment of the third person and of that person’s fee.
Within ten (10) business days after the selection of the third
person, the three shall attempt to agree upon the Prevailing
Market Rent for the Relevant Market. If the three are unable
to agree upon the Prevailing Market Rent for the Relevant
Market within ten (10) business days after selection of the
third person, then the third person shall make his or her
determination within such time by selecting either the
Prevailing Market Rent designated by the person appointed by
Landlord or the Prevailing Market Rent designated by the
person appointed by Tenant (i.e., no averaging). After the
Prevailing Market Rent for the Relevant Market has been
determined (the “Final Determination”), the Landlord and
Tenant shall be immediately notified in writing.

(v) If either Landlord or Tenant fails or refuses to appoint
its representative within the Initial Appointment Period, and
thereafter fails or refuses to appoint its representative
within five (5) days of receiving written notice from the
other party of such failure or refusal (which notice shall be
given at or after the expiration of the Initial Appointment
Period), then the person appointed by the other party as
provided herein shall be the sole person for purposes of
determining the Prevailing Market Rent for the Relevant
Market, and the determination of such person shall be binding
on the parties to the same degree as if three had been
appointed pursuant to subsection (c)(iv) above.

(vi) Tenant shall, if at all, exercise the Renewal Option by
delivering written notice of such election to Landlord on the
earlier to occur of (1) one hundred and fifty (150) days prior
to the expiration of the then current Term of this Lease or
the then current Renewal Term of this Lease, as the case may
be, or (2) on or before thirty (30) days after receipt by
Tenant of the Final Determination. If Tenant fails to timely
exercise any applicable Renewal Option, then the applicable
Renewal Option and any subsequent Renewal Options, if any,
shall terminate and be of no further force and effect.

(vii) Tenant shall have no further options to renew the Term
of this Lease beyond the expiration date of the third Renewal
Term.

(viii) Landlord will not be required to give any refurbishing
allowance, leasehold improvement allowance or other economic
concession in connection with the exercise of any option.

(ix) Except as otherwise provided herein, all of the terms and
provisions of this Lease shall remain the same and in full
force and effect during the Renewal Term.

	 	(d)	 	If Tenant timely and properly exercises a Renewal
Option, Landlord and Tenant shall execute and deliver an
amendment to this Lease reflecting the lease of the Premises by
Landlord to Tenant for the Renewal Term on the terms provided
above, which amendment shall be executed and delivered prior to
the commencement date of the Renewal Term.
	 
	 	(e)	 	Each Renewal Option shall automatically terminate
and become null and void and of no force or effect upon the
earlier to occur of (1) the expiration or termination of this
Lease, (2) the lawful termination of Tenant’s right to
possession of the Premises, (3) Tenant’s failure to occupy the
Premises and conduct operations therein, (4) the failure of
Tenant to timely or properly exercise the Renewal Option, (5)
the occurrence of an Event of Default by Tenant under the
Lease, or (6) Tenant’s exercise of its Cancellation Option.

     6. CANCELLATION OPTION. Tenant shall have the option (the
“Cancellation Option”) to terminate this Lease effective April 30, 2007 (the
“Termination Date”) upon the following terms and conditions:

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     A. Landlord receives written notice from Tenant on or before January 1,
2007 of its election to cancel the Lease;

     B. Tenant is not in default under this Lease either on the date Tenant
exercises the Cancellation Option or at any time prior to the Termination Date;
and

     C. Tenant pays to Landlord concurrently with its exercise of the
Cancellation Option a cancellation fee in an amount equal to the unamortized
actual costs of the Lease including the work described on Exhibit A,
all tenant improvement allowances, and all brokerage commissions for the
Premises calculated with a six percent (6%) interest rate.

     In the event Tenant timely and properly exercises the Cancellation Option,
the Term shall terminate effective as of the Termination Date. Rent shall be
paid through and apportioned as of the Termination Date and neither Landlord
nor Tenant shall have any rights, estates, liabilities or obligations accruing
under this Lease after the Termination Date, except such rights and liabilities
which, by the terms of this Lease, are obligations either of Landlord or Tenant
which can survive the expiration of the Lease. The Cancellation Option shall
automatically terminate and become null and void upon:

               (w) the failure of Tenant to timely or properly exercise the Cancellation
Option;

               (x) the assignment or sublease of the Premises or any part thereof by
Tenant to any non-affiliated entity; or

               (y) the lawful termination of Tenant’s right to possession of the
Premises.

     7. EXPANSION; RIGHT OF FIRST REFUSAL FOR OTHER SPACE. Subject
to Landlord’s ability in a commercially reasonable manner to demise the portion
of the expansion space which becomes available, the rights of existing tenants
whose leases pre-date this Amendment, credit approval by Landlord and provided
Tenant is not in default under this Lease at the time the expansion space
becomes available, or at any time through and including execution of a lease
amendment by the Landlord for the subject space, Landlord shall use
commercially reasonable efforts to accommodate Tenant’s growth needs within the
Building.

     In addition, Landlord shall, subject to the rights of existing tenants
whose leases predate this Amendment, give Tenant a right of first refusal in
both this Building and (for so long as Landlord owns it) the building located
at 11400 Interchange Drive, Louisville, Kentucky, subject to the following
conditions. Landlord shall provide Tenant with written notice that Landlord
has received from a third party a serious expression of interest on terms which
Landlord may accept which notice shall specify the applicable business terms
relating to the space. Within ten (10) days of such notification, Tenant shall
notify Landlord in writing sent with postage prepaid thereon that it elects to
exercise its right of first refusal for the space. If Tenant does not so
notify Landlord, Tenant will be deemed to have forever waived its right of
first refusal respecting that space unless: (ii) Landlord fails to enter into
a lease for the expansion space with the third party expressing a serious
interest in the space within ninety (90) days following the date of Landlord’s
written notice to Tenant or (ii) if the applicable business terms of such
proposed lease of space become more favorable than that specified in Landlord’s
written notice to Tenant in either of which cases Tenant’s right of first
refusal hereunder shall be reinstated and in full force and effect.

          The rights of Tenant under this paragraph are personal and may not be
assigned to or exercised by any other party. In the event Tenant exercises the
Right of First Refusal, Landlord and Tenant shall promptly execute and deliver
a new lease for such space on substantially the same lease form as this Lease
with only such modifications as are necessary to reflect those business terms
presented to Tenant. If Tenant fails to execute and deliver such lease
consistent with the foregoing within fifteen (15) days after receipt by Tenant
of the subject lease, then Tenant’s previous exercise of its right of first
refusal to lease the offered space shall be deemed null and void and Landlord
shall thereafter have the right to let any and all of the space to any third
party tenant(s).

          This Right of First Refusal shall automatically terminate upon the earlier
to occur of (i) the expiration or termination of this Lease, (ii) the lawful
termination of Tenant’s right to possession of the Premises, (iii) Tenant’s
failure to occupy the Premises and conduct operations therein, (iv) the
occurrence of an Event of Default under the Lease or (v) the Tenant’s exercise
of its Cancellation Option.

     8. MISCELLANEOUS REVISIONS TO LEASE. The Lease is hereby
modified as follows:

	 	(a)	 	Paragraph 11 is hereby amended by adding the
following: “The amount of the Additional Rent payable by
Tenant under Paragraph 11 of the Lease, due to Tenant’s
percentage share of Operating Costs, shall be limited.
Property taxes, assessments from Commerce Crossings Owners
Association, insurance expenses, snow removal,
contract price increases due to governmentally mandated items
(such as prevailing

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	 	 	 	wage agreements), and utility expenses
shall not be subject to such limitation as such costs are not
controllable by Landlord. The remaining Operating Costs
(“Controllable Costs”) used to calculate Tenant’s obligation
shall not be increased by more than three percent (3%)
cumulative per calendar year on a compounded basis. For
example, and not by way of limitation, if for any calendar
year, Landlord’s Controllable Costs are one hundred five
percent (105%) of the Controllable Costs for the immediately
preceding calendar year (i.e., a five percent (5%) increase),
Tenant shall be responsible for its share of those
Controllable Costs only up to one hundred three percent (103%)
of Landlord’s Controllable Costs for the previous calendar
year; provided, however, that Tenant shall be responsible for
its share of the two percent (2%) difference in subsequent
calendar years to the extent Landlord’s Controllable Costs for
a particular calendar year are less than one hundred three
percent (103%) of the Controllable Costs for the immediately
preceding calendar year.”
	 
	 	(b)	 	Paragraph 16 is hereby amended by adding the
following: “Tenant shall at its expense have the right
throughout the Term to install and change its prototype signage
including colors, fonts, etc. on the exterior of the Premises
in accordance with Tenant’s then existing company standards
subject to compliance with all applicable governmental
regulations and the rules of the Commerce Crossings Owners
Association.”

     9. NO BROKERS. Each party represents and warrants to the other
that it has not dealt with any real estate broker, salesman or finder in
connection with this Amendment and no other person initiated or participated in
the negotiation of this Amendment or is entitled to any commission or other
payment in connection herewith except Harry K. Moore & Son, Inc., Fortis Group
Commercial Real Estate and The Staubach Company for whom Landlord shall be
solely responsible. Tenant agrees to indemnify, defend and hold Landlord and
Landlord’s property manager, harmless from and against any loss, cost,
liability or expense, including reasonable attorney’s fees, suffered or
incurred as a result of claims, liens, demands or actions for brokerage
commissions, finder’s fees or similar fees from any other third party asserting
to have acted for or on behalf of the Tenant in connection with this Amendment.

     10. RATIFICATION AND BINDING EFFECT. Except as amended by the
terms of this Amendment, all of the terms, covenants and conditions of the
Lease, and the rights and obligations of the Landlord and Tenant thereunder
shall remain in full force and effect and hereby are ratified and affirmed.
This Amendment of shall be binding upon and inure to the benefit of Landlord,
Tenant and their respective successors and permitted assigns.

     11. EXHIBITS. All exhibits attached hereto are incorporated
herein by reference and made a part hereof.

     12. 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 executed by the parties and delivered by Landlord
to Tenant.

          IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
of Lease as of the date first above written.

	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 
	LOUISVILLE COMMERCE REALTY

CORPORATION, a Delaware corporation	 	ELECTRONIC ARTS INC., a Delaware
corporation
	 
 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	/s/ Tara A. Andrews	 	By:	 	/s/ Ken Kappner
	

	 	 	 	

	 	 	 	

	

	 	Name:
	 	Tara A. Andrews
	 	Name:	 	Ken Kappner
	

	 	 	 	 	 	 	 	

	

	 	Its:
	 	Vice President
	 	Its:	 	VP Operations
	

	 	 	 	 	 	 	 	

EXHIBIT A     -          Landlord’s Work

EXHIBIT B     -          Work Letter Agreement

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EXHIBIT “A”

IMPROVEMENTS TO BE PROVIDED BY LANDLORD

Site Finishes:

	 	•	 	Parking for an additional fifty (50) spaces

Loading:

	 	•	 	Install three (3) 9’ x 10’ loading docks with manual doors
	 
	 	•	 	Install three (3) docks equipped with 6’ x 8’ mechanical
levelers (minimum of 30,000 pound capacity), seals, bumpers,
automatic dock-locks with “go/no go” lights, safety/ventilation
chain-link gates and interior dock spotlights
	 
	 	•	 	Equip fifteen (15) existing doors with safety/ventilation
chain-link gates.
	 
	 	•	 	Install secure area fencing around outbound doors and trailer
storage area on the north side of the Building if such is approved by
Commerce Crossings Owners Association and all governmental
authorities.

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EXHIBIT “B”

WORK LETTER AGREEMENT

[Tenant Performs Work]

     This Work Letter Agreement (“Work Letter”) is executed simultaneously with
that certain First Amendment of Lease (the “Lease”) between ELECTRONIC ARTS
INC., a Delaware corporation, as “Tenant”, and LOUISVILLE COMMERCE REALTY
CORPORATION, a Delaware corporation, as “Landlord”, relating to demised
premises (“Premises”) in the building at 5000 Commerce Crossings Drive,
Louisville, Kentucky (the “Building”), which Premises are more fully identified
in the Lease. Capitalized terms used herein, unless otherwise defined in this
Work Letter, shall have the respective meanings ascribed to them in the Lease.

     For and in consideration of the agreement to lease the Premises and the
mutual covenants contained herein and in the Lease, Landlord and Tenant hereby
agree as follows:

     1. Work. Tenant, at its sole cost and expense, shall perform,
or cause to be performed, the work (the “Work”) in the Premises provided for in
the Approved Plans (as defined in Paragraph 2 hereof). Subject to Tenant’s
satisfaction of the conditions specified in this Work Letter Agreement, Tenant
shall be entitled to Landlord’s Contribution (as defined in Paragraph 8[b]
below).

     2. Pre-Construction Activities.

     (a) Prior to beginning any Work, Tenant shall submit the
following information and items to Landlord for Landlord’s review
and approval:

     (i) itemized statement of estimated construction
cost, including fees for permits and architectural and
engineering fees.

     (ii) The names and addresses of Tenant’s
contractors to be engaged by Tenant for the Work
(individually, a “Tenant Contractor,” and collectively,
“Tenant’s Contractors”). Landlord has the right to
approve or disapprove all or any one or more of Tenant’s
Contractors. Landlord may, at its election and within
15 days from the date hereof, designate a list of
approved contractors for performance of those portions
of work involving electrical, mechanical, plumbing,
heating, air conditioning or life safety systems, from
which Tenant must select its contractors for such
designated portions of work.

     (iii) Certified copies of insurance policies or
certificates of insurance as hereinafter described.
Tenant shall not permit Tenant’s Contractors to commence
work until the required insurance has been obtained and
certified copies of policies or certificates have been
delivered to Landlord.

     (iv) The Plans (as hereinafter defined) for the
Work, which Plans shall be subject to Landlord’s
approval in accordance with Paragraph 2(b) below.

   Tenant will update such information and items by notice to Landlord of any
changes.

     (b) As used herein the term “Approved Plans” shall mean the
Plans (as hereinafter defined), as and when approved in writing by
Landlord. As used herein, the term “Plans” shall mean the full and
detailed architectural and engineering plans and specifications
covering the Work (including, without limitation, architectural,
mechanical and electrical working drawings for the Work). The Plans
shall be subject to Landlord’s approval and the approval of all
local governmental authorities requiring approval of the Work and/or
the Approved Plans. Landlord shall give its approval or disapproval
(giving general reasons in case of disapproval) of the Plans within
thirty (30) days after their delivery to Landlord. Landlord agrees
not to unreasonably withhold its approval of said Plans; provided,
however, that Landlord shall not be deemed to have acted
unreasonably if it withholds its approval of the Plans because, in
Landlord’s reasonable opinion: the Work as shown in the Plans is
likely to adversely affect Building systems, the structure of the
Building or the safety of the Building and/or its occupants; the
Work as shown on the Plans might impair Landlord’s ability to
furnish services to Tenant or other tenants; the Work would increase
the cost of operating the Building; the Work would violate any
governmental laws, rules or ordinances (or interpretations thereof);
the Work contains or uses hazardous or toxic materials or
substances; the Work would adversely affect the appearance of the
Building; the Work might adversely affect another tenant’s premises;
or the Work is prohibited by any mortgage or trust deed encumbering
the Building. The foregoing reasons, however, shall not be
exclusive of the reasons for which Landlord may withhold consent,
whether or not such other reasons are similar or dissimilar to the
foregoing. If Landlord notifies Tenant that changes are required to
the final Plans submitted by Tenant, Tenant shall, within thirty
(30) days thereafter, submit to Landlord, for its approval, the
Plans amended in accordance with the changes so required. The Plans
shall also be revised, and the Work shall be changed, all at
Tenant’s cost and expense, which shall be included as part of
Landlord’s Contribution under Paragraph 8(a), to incorporate any
work required in the Premises by any local governmental field
inspector. Landlord’s approval of the Plans shall in no way be
deemed to be (i) an acceptance or approval of any element therein
contained which is in violation of any applicable laws, ordinances,
regulations or other governmental requirements, or (ii) an assurance
that work done pursuant to the

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Approved Plans will comply with all applicable laws (or with
the interpretations thereof) or satisfy Tenant’s objectives and
needs.

     (c) No Work shall be undertaken or commenced by Tenant in the
Premises until (i) Tenant has delivered, and Landlord has approved,
all items set forth in Paragraph 2(a) above, (ii) all necessary
building permits have been applied for and obtained by Tenant, and
(iii) to the extent the cost of the Work exceeds $225,000, Tenant
has deposited immediately available funds equal to such excess cost
with Landlord.

     3. Delays. In the event Tenant fails to deliver or deliver in
sufficient and accurate detail the information required under Paragraph 2 above
on or before the respective dates specified in said Paragraph 2, or in the
event Tenant, for any reason, fails to complete the Work on or before December
31, 2005, Tenant shall be responsible for Rent and all other obligations set
forth in the Lease regardless of the degree of completion of the Work on such
date, and no such delay in completion of the Work shall relieve Tenant of any
of its obligations under the Lease.

     4. Charges and Fees. Tenant shall pay Landlord a supervisory
fee in an amount equal to three percent (3%) of the direct cost of the
materials and labor for the Work (and all change orders with respect thereto)
to defray Landlord’s administrative and overhead expenses incurred to review
the Plans and coordinate with Tenant’s on-site project manager the staging and
progress of the Work. This fee shall be included as part of Landlord’s
Contribution under Paragraph 8(a) hereof.

     5. Change Orders. All changes to the Approved Plans requested
by Tenant must be approved by Landlord in advance of the implementation of such
changes as part of the Work. All delays caused by Tenant-initiated change
orders, including, without limitation, any stoppage of work during the change
order review process, are solely the responsibility of Tenant and shall cause
no delay in the commencement of the Lease or the Rent and other obligations
therein set forth. All increases in the cost of the Work beyond $225,000
(together with such additional sum as may be deposited by Tenant pursuant to
Paragraph 2(c) above) resulting from such change orders shall be borne by
Tenant.

     6. Standards Of Design And Construction And Conditions Of Tenant’s
Performance. All work done in or upon the Premises by Tenant shall be
done according to the standards set forth in this Paragraph 6, except as the
same may be modified in the Approved Plans approved by or on behalf of Landlord
and Tenant.

     (a) Tenant’s Approved Plans and all design and construction of
the Work shall comply with all applicable statutes, ordinances,
regulations, laws, codes and industry standards, including, but not
limited to, requirements of Landlord’s fire insurance underwriters.

     (b) Tenant shall, at its own cost and expense, which shall be
included as part of Landlord’s Contribution under Paragraph 8(a),
obtain all required building permits and occupancy permits.
Tenant’s failure to obtain such permits shall not cause a delay in
the obligation to pay Rent or any other obligations set forth in the
Lease.

     (c) Tenant’s Contractors shall be licensed contractors, capable
of performing quality workmanship and working in harmony with
Landlord’s contractors and subcontractors and with other contractors
and subcontractors in the Building. All work shall be coordinated
with any other construction or other work in the Building in order
not to adversely affect construction work being performed by or for
Landlord or its tenants.

     (d) If the Work is not completed in accordance with the
Approved Plans and the terms of this Work Letter Agreement, then
Landlord shall have the right, but not the obligation, to perform,
on behalf of and for the account of Tenant, any work which pertains
to patching of the Work. If the cost to Landlord would cause
Landlord to incur expenditures in excess of Landlord’s Contribution
set forth in Paragraph 8(a), then Tenant shall promptly reimburse
Landlord for such excess costs.

     (e) Tenant shall use only new, first-class materials in the
Work, except where explicitly shown in the Approved Plans. All Work
shall be done in a good and workmanlike manner. Tenant shall obtain
contractors’ warranties of at least one (1) year duration from the
completion of the Work against defects in workmanship and materials
on all work performed and equipment installed in the Premises as
part of the Work.

     (f) Tenant and Tenant’s Contractors shall make all efforts and
take all steps appropriate to assure that all construction
activities undertaken comport with the reasonable expectations of
all tenants and other occupants of a fully-occupied (or
substantially fully occupied) institutional grade bulk warehouse
building and do not unreasonably interfere with the operation of the
Building or with other tenants and occupants of the Building.
Tenant and Tenant’s Contractors shall take all precautionary steps
to minimize dust, noise and construction traffic, and to protect
their facilities and the facilities of others affected by the Work
and to properly police same. Construction equipment and materials
are to be kept within the Premises and delivery and loading of
equipment and materials shall be done at such locations and at such
time as Landlord shall direct so as not to burden the construction
or operation of the Building.

     (g) Landlord shall have the right to order Tenant or any of
Tenant’s Contractors who violate the requirements imposed on Tenant
or Tenant’s Contractors in performing work to cease

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work and remove its equipment and employees from the Building.
No such action by Landlord shall delay the obligation to pay Rent or
any other obligations therein set forth.

     (h) All use of common areas is subject to scheduling by
Landlord and the rules and regulations of the Building. Tenant
shall arrange and pay for removal of construction debris and shall
not place debris in the Building’s waste containers.

     (i) Tenant shall permit access to the Premises, and the Work
shall be subject to inspection, by Landlord and Landlord’s
architects, engineers, contractors and other representatives, at all
times during the period in which the Work is being constructed and
installed and following completion of the Work.

     (j) Tenant shall proceed with its work expeditiously,
continuously and efficiently, and shall use its best efforts to
complete the same on or before December 31, 2005. Tenant shall
notify Landlord upon completion of the Work and shall furnish
Landlord and Landlord’s title insurance company with such further
documentation as may be necessary under Paragraphs 8 and 9 below.

     (k) Tenant shall have no authority to deviate from the Approved
Plans in performance of the Work, except as authorized by Landlord
and its designated representative in writing. Tenant shall furnish
to Landlord “as-built” drawings of the Work within thirty (30) days
after completion of the Work.

     (l) Tenant shall impose on and enforce all applicable terms of
this Work Letter Agreement against Tenant’s architect and Tenant’s
Contractors.

     7. Insurance And Indemnification.

     (a) In addition to any insurance which may be required
under the Lease, Tenant shall secure, pay for and maintain or cause
Tenant’s Contractors to secure, pay for and maintain during the
continuance of construction and fixturing work within the Building
or Premises, insurance in the following minimum coverages and the
following minimum limits of liability:

     (i) Worker’s Compensation and Employer’s Liability
Insurance with limits of not less than $500,000.00, or
such higher amounts as may be required from time to time
by any Employee Benefit Acts or other statutes
applicable where the work is to be performed, and in any
event sufficient to protect Tenant’s Contractors from
liability under the aforementioned acts.

     (ii) Comprehensive General Liability Insurance
(including Contractors’ Protective Liability) in a
combined single limit amount of not less than
$3,000,000. Such insurance shall provide for explosion
and collapse, completed operations coverage and broad
form blanket contractual liability coverage and shall
insure Tenant’s Contractors against any and all claims
for bodily injury, including death resulting therefrom,
and damage to the property of others and arising from
its operations under the contracts whether such
operations are performed by Tenant’s Contractors or by
anyone directly or indirectly employed by any of them.

     (iii) “All-risk” builder’s risk insurance upon the
entire Work to the full insurable value thereof. This
insurance shall include the interests of Landlord and
Tenant (and their respective contractors and
subcontractors of any tier to the extent of any
insurable interest therein) in the Work and shall insure
against the perils of fire and extended coverage and
shall include “all-risk” builder’s risk insurance for
physical loss or damage including, without duplication
of coverage, theft vandalism and malicious mischief. If
portions of the Work are stored off the site of the
Building or in transit to said site are not covered
under said “all-risk” builder’s risk insurance, then
Tenant shall effect and maintain similar property
insurance on such portions of the Work. Any loss
insured under said “all-risk” builder’s risk insurance
is to be adjusted with Landlord and Tenant and made
payable to Landlord, as trustee for the insureds, as
their interests may appear.

     All policies (except the worker’s compensation policy) shall be endorsed
to include as additional insured parties the parties listed on, or required by,
the Lease, Landlord’s property manager, contractors, Landlord’s architects, and
their respective owners, beneficiaries, partners, directors, officers,
employees and agents, and such additional persons as Landlord may designate.
The waiver of subrogation provisions contained in the Lease shall apply to all
insurance policies (except the worker’s compensation policy) to be obtained by
Tenant pursuant to this paragraph. The insurance policy endorsements shall
also provide that all additional insured parties shall be given thirty (30)
days’ prior written notice of any reduction, cancellation or non-renewal of
coverage (except that ten (10) days’ notice shall be sufficient in the case of
cancellation for non-payment of premium) and shall provide that the insurance
coverage afforded to the additional insured parties thereunder shall be primary
to any insurance carried independently by said additional insured parties.
Additionally, where applicable, each policy shall contain a cross-liability and
severability of interest clause.

     (b) Without limitation of the indemnification provisions
contained in the Lease, to the fullest extent permitted by law
Tenant agrees to indemnify, protect, defend and hold harmless

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Landlord, the parties listed, or required by, the Lease to be
named as additional insureds, Landlord’s property manager,
contractors, Landlord’s architects, and their respective
beneficiaries, partners, directors, officers, employees and agents,
from and against all claims, liabilities, losses, damages and
expenses of whatever nature arising out of or in connection with the
Work or the entry of Tenant or Tenant’s Contractors into the
Building and the Premises, including, without limitation, mechanic’s
liens, the cost of any repairs to the Premises or Building
necessitated by activities of Tenant or Tenant’s Contractors, bodily
injury to persons (including, to the maximum extent provided by law,
claims arising under the Kentucky Structural Work Act) or damage to
the property of Tenant, its employees, agents, invitees, licenses or
others. It is understood and agreed that the foregoing indemnity
shall be in addition to the insurance requirements set forth above
and shall not be in discharge of or in substitution for same or any
other indemnity or insurance provision of the Lease.

     8. Landlord’s Contribution.

     Landlord agrees to disburse Landlord’s Contribution (and any excess
funds as may be deposited by Tenant) for payment to Tenant’s Contractors and
payment of all other costs associated with the Work as the Work progresses as
follows:

     (a) Landlord shall make a dollar contribution in the
amount of $225,000.00 (“Landlord’s Contribution”) for
application to the extent thereof to the cost of the Work. If
the cost of the Work exceeds Landlord’s Contribution, Tenant
shall have sole responsibility for the payment of such excess
cost (subject to Paragraph 4 of the Lease) to Landlord prior
to commencing any Work. Tenant shall, from time to time,
deposit funds in amounts sufficient to pay the costs of the
Work to the extent such costs exceed $225,000 (plus any
previously deposited funds). If the cost of the Work is less
than Landlord’s Contribution, Tenant shall not be entitled to
any payment or credit for such excess amount. Notwithstanding
anything herein to the contrary, Landlord may deduct from
Landlord’s Contribution any amounts due Landlord or its
architects or engineers under this Work Letter before
disbursing any other portion of Landlord’s Contribution.

     (b) As the Work progresses, Tenant shall submit (no more
frequently than once a month) a request for disbursement
accompanied by such contractor’s affidavits, tenant (owner)
statements, partial and final waivers of lien, architect’s
certificates and any additional documentation which may be
reasonably requested by Landlord. Such submittal shall
constitute Tenant’s representation that the Work performed to
date is in accordance with the Approved Plans and has been
done to Tenant’s satisfaction. Landlord reserves the right to
inspect the status of such Work so as to ensure that funds on
hand (including Landlord’s Contribution) are sufficient to pay
for the Work remaining to be done. If any mechanic’s lien is
filed in connection with the Work and such lien is not
released by Tenant through bonding, payment or otherwise
within 30 days following notice to Tenant of the filing
thereof, Landlord may use and disburse the funds to pay for
the Work or remove the lien without Tenant’s consent.

     (c) Upon completion of the Work, Tenant shall furnish
Landlord with full and final waivers of liens and contractors’
affidavits and statements, in such form as may be reasonably
required by Landlord and Landlord’s title insurance company,
if any, from all parties performing labor or supplying
materials or services in connection with the Work showing that
all of said parties have been compensated in full and waiving
all liens in connection with the Premises and Building.

     9.  Miscellaneous.

     (a) Time is of the essence of this Work Letter Agreement.

     (b) Any person signing this Work Letter Agreement on behalf of
Landlord and Tenant warrants and represents he has authority to sign
and deliver this Work Letter Agreement and bind the party on behalf
of which he has signed.

     (c) If Tenant fails to make any payment relating to the Work as
required hereunder, Landlord, at its option, may complete the Work
pursuant to the Approved Plans and continue to hold Tenant liable
for the costs thereof and all other costs due to Landlord in excess
of Landlord’s Contribution set forth in Paragraph 8(a). Tenant’s
failure to pay any amounts owed by Tenant hereunder when due or
Tenant’s failure to perform its obligations hereunder shall also
constitute a default under the Lease and Landlord shall have all the
rights and remedies granted to Landlord under the Lease for
nonpayment of any amounts owed thereunder or failure by Tenant to
perform its obligations thereunder.

     (d) Notices under this Work Letter shall be given in the same
manner as under the Lease.

     (e) The headings set forth herein are for convenience only.

- 10 -

 

     (f) This Work Letter sets forth the entire agreement of Tenant
and Landlord regarding the Work. This Work Letter may only be
amended if in writing, duly executed by both Landlord and Tenant.

     (g) All amounts due from Tenant hereunder shall be deemed to be
Rent due under the Lease.

     (h) Whenever any consent or approval is required hereunder,
such consent or approval shall not be unreasonably withheld, delayed
or denied.

     10. On-Site Project Manager. Tenant hereby designates John Hefty
(or such other person as Tenant may later specify in writing to Landlord) as an
on-site project manager, who will be charged with the task of performing daily
supervision of the Work. Such on-site manager shall be familiar with all rules
and regulations and procedures of the Building and all personnel of the
Building engaged directly or indirectly in the management, operation and
construction of the Building. Such on-site project manager shall be
accountable and responsible to Tenant and to Landlord and, where necessary,
shall serve as a liaison between Landlord and Tenant with respect to the Work.
The entire cost and expense of the on-site project manager shall be borne and
paid for by Tenant (subject to Tenant’s right to use all or any part of
Landlord’s Contribution to reimburse Tenant for the same.)

     11. Exculpation of Landlord and Property Manager.
Notwithstanding anything to the contrary contained in this Work Letter
Agreement, it is expressly understood and agreed by and between the parties
hereto that:

     (a) The recourse of Tenant or its successors or assigns
against Landlord with respect to the alleged breach by or on the
part of Landlord of any representation, warranty, covenant,
undertaking or agreement contained in this Work Letter Agreement
(collectively, “Landlord’s Work Letter Undertakings”) shall extend
only to Landlord’s interest in the real estate of which the Premises
demised under the Lease are a part (hereinafter, “Landlord’s Real
Estate”) and not to any other assets of Landlord or its owners; and

     (b) Except to the extent of Landlord’s interest in Landlord’s
Real Estate, no personal liability or personal responsibility of any
sort with respect to any of Landlord’s Work Letter Undertakings or
any alleged breach thereof is assumed by, or shall at any time be
asserted or enforceable against, Landlord or its property manager,
or against any of their respective owners, directors, officers,
employees, agents, partners, beneficiaries, trustees or
representatives.

     IN WITNESS WHEREOF, this Work Letter Agreement is executed as of this
23 day of February, 2004.

	 	 	 	 	 	 	 
	LANDLORD:	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	LOUISVILLE COMMERCE REALTY

CORPORATION, a Delaware corporation	 	ELECTRONIC ARTS INC., a Delaware
corporation
	 
 
	 	 	 	 	 	 
	By:

	 	/s/ Tara A. Andrews	 	By:	 	/s/ Ken Kappner
	

	 	

	 	 	 	

	Name:

	 	Tara A. Andrews
	 	Name:	 	Ken Kappner
	

	 	 	 	 	 	

	Its:

	 	Vice President
	 	Its:	 	VP Operations
	

	 	 	 	 	 	

- 11 -

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