Exhibit 10.11.1
First Amendment to Net Lease Agreement
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This, First Amendment to Net Lease Agreement ("First Amendment") is
made and entered into as of the 11th day of August, 1998, by, and among X/X Xx.
00, L.L.C., a South Carolina limited liability company ("Landlord"), West
Marine, Inc., a Delaware corporation ("Tenant"), and Xxxxx, Xxxxxxx & Company,
an Illinois corporation ("Contractor").
Recitals:
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A. Landlord, Tenant and Contractor (for certain specified purposes
only) are parties to that certain Net Lease Agreement dated as of March 11, 1997
("Original Lease"). Pursuant to the Original Lease, Landlord is leasing to
Tenant and Tenant is leasing from Landlord, the Premises (as such term is
defined in the Original Lease). The Premises constitute a certain
warehouse/distribution building located in York County, South Carolina.
B. Landlord, Tenant and Contractor have reached certain agreements
in regard revisions to the provisions of the Original Lease. Among other things,
such revisions will benefit the parties under a certain Profit Participation
Agreement into which Landlord and Tenant have heretofore entered in connection
with the Original Lease.
C. As a result of the foregoing, Landlord, Tenant and Contractor
now desire to amend the Original Lease in the manner set forth in this First
Amendment.
Agreements:
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Now, therefore, in consideration of the foregoing Recitals, the mutual
covenants and promises hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency, of all of which is hereby
acknowledged, Landlord, Tenant and Contractor hereby agree as follows:
Section 1 Incorporation of Recitals; Meanings of Terms. The
foregoing Recitals are hereby incorporated into and made a part of this First
Amendment, as if fully set forth herein. Capitalized terms used in this First
Amendment and not otherwise defined herein shall have the respective meanings
given them in the Original Lease.
Section 2 Commencement Date; Rent Commencement; Date. Anything in
the Basic Lease Terms, to the contrary notwithstanding, Landlord, Tenant and
Contractor hereby acknowledge and agree that both the Commencement Date and the
Rent Commencement Date, shall for all purposes under this Lease, be January 1,
1998, provided, however, that (a) the January 1998 installment of the Initial
Annual Base Rent With Respect to the Original Premises shall be One Hundred Four
Thousand One Hundred Three and 08/100ths Dollar ($104,103.08), which amount is
Ten Thousand and 00/100ths Dollars ($10,000.00) less than the monthly
installments thereof for each of the months from February 1998 through December
2002 (inclusive), and (b) the Annual Base Rent With Respect to the Original
Premises for the year 1998 shall be One Million Three Hundred Fifty-Nine
Thousand Two Hundred Thirty-Seven and 00/100ths Dollars ($1,359,237.00), which
amount is, in the aggregate, Ten Thousand and 00/100ths Dollars ($10,000.00)
less than the Annual Base Rent With Respect to the Original Premises for the
years 1999 through 2002 (inclusive). Notwithstanding the foregoing, Landlord and
Tenant acknowledge and agree that (a) certain punch list items remain to be
completed Landlord, one of which is the paving of the parking lot of Original
Premises; and (b) Tenant shall reasonably cooperate with Landlord in regard to
the completion of the paving of the parking lot (including, without limitation,
allowing Landlord and its contractors reasonable access thereto).
Section 3 Expansion Options.
(a) The Original Lease is hereby amended by deleting Sections 1(c)
(1) and 1(c)(2) thereof in their entirety, and inserting in lieu thereof the
provisions attached hereto and made a part hereof as Exhibit A.
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(b) Section 1(c)(3) of the Original Lease is hereby re-designated
as Section l(c)(7), and all references in the Original Lease to Section 1(c)(3)
are hereby amended to be references to Section 1(c)(7).
(c) Section 1(c)(4) of the Original Lease is hereby re-designated as
Section 1(c)(8) and all references in the Original Lease to Section 1(c)(4) are
hereby amended to be references to Section 1 (c)(8).
(d) Section 1(c)(5) of the Original Lease is hereby re-designated as
Section 1(c)(9), and all references in the Original Lease to Section 1(c)(5) are
hereby amended to be references to Section 1(c)(9).
(e) Section 1(c)(6) of the Original Lease is hereby re-designated as
Section 1(c)(10), and all references in the Original Lease to Section 1(c)(6)
are hereby amended to be references to Section 1(c)(10).
(f) Section 1(c)(7) of the Original Lease is hereby re-designated as
Section 1(c)(11), and all references in the Original Lease to Section 1 (c)(7)
are hereby amended to be references to Section 1(c)(11).
(g) Section 1(c)(8) of the Original Lease is hereby re-designated as
Section 1(c)(12), and all references in the Original Lease to Section 1(c)(8)
are hereby amended to be references to Section 1(c)(12).
(h) Section 1(c)(9) of the Original Least is hereby re-designated as
Section 1(c)(13), and all references in the Original Lease to Section 1(c)(9)
are hereby amended to be references to Section 1(c)(13).
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(i) The first sentence of Section 1(c)(7)(ii) of the Original Lease
(formerly Section 1(c)(3)(ii) of the Original Lease) is hereby amended by
deleting the words "land acquisition fees (including, without limitation, any
fees or amounts paid by Tenant pursuant to the Expansion Contract(s) or in
connection with obtaining any rights thereunder)" therein, and inserting the
words "the purchase price and other land acquisition costs paid by Landlord in
connection with the acquisition of the Expansion Land required hereunder for
such Expansion Premises (exclusive of any Option Fee Additional Rent payments
made by Tenant)."
Section 4 Restoration. Section 12 of the Original Lease is hereby
amended by deleting the eighth sentence thereof in its entirety, and inserting
the following in lieu thereof:
"Notwithstanding the foregoing, in no event shall the total delay
damages with respect to the restoration of the Premises (or any
particular portion thereof) following any damage or destruction
thereof, exceed Four Hundred Fifty Thousand and 00/100ths Dollars
($450,000.00); provided, however, that the foregoing limitation shall
not extend to or affect the delay damages payable in connection with
any Expansion Premises under the Work Letter attached hereto as Exhibit
`B'."
Section 5 Condemnation. Section 13 the Original Lease is hereby
amended by deleting the first sentence thereof in its entirety, and inserting
the following in lieu thereof:
"In the event of a Taking (as such term is defined in the following
sentence), then upon written notice by Tenant to Landlord, this Lease
shall terminate and Base Rent shall be apportioned as of said date. For
purposes of this Lease, a "Taking" (or "Taken") shall in a taking for
any public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in
lieu thereof, of either or both of the following:
"(i) any part of the Premises (including, without limitation, the
shipping or receiving parking or access areas, but excluding
all other portions of the parking area which is included as
part of the Premises (which excluded portions are hereinafter
referred to as the "Remaining Automobile Parking Areas")) that
materially and adversely affects the continued use, occupancy
and enjoyment of the Premises; or
"(ii) any portion of the Remaining Automobile Parking Areas, which
results in the elimination (i.e., after taking into account
any other parking spaces in the parking area adjacent to the
Building, which Landlord provides as reasonable replacements
thereof not later than ninety (90) days after the date of such
Taking) of at least fifteen percent (15%) of the parking
spaces then included in the Remaining Automobile Parking
Areas."
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Section 6 Assignment and Subletting.
(a) Section 14 of the Original Lease is hereby amended by inserting
the following sentence as the third sentence of the first grammatical paragraph
thereof:
"Tenant hereby acknowledges and agrees that the preceding sentence does
not permit Tenant to mortgage, pledge or hypothecate its leasehold
interest to any Tenant Affiliate without Landlord's prior written
consent, and that any such mortgage, pledge or hypothecation requires
Landlord's prior written consent (which consent will not be
unreasonably withheld), as provided in the first sentence of the first
grammatical paragraph of this Section 14."
(b) Section 14 of the Original Lease is hereby amended by deleting
the first sentence of the fourth grammatical paragraph thereof in its entirety,
and inserting the following in lieu thereof.
"Consistent with Landlord's obligation (as provided in the first
grammatical paragraph of this Section 14) not to unreasonably withhold
its consent to a Tenant-requested mortgage, pledge or hypothecation of
Tenant's leasehold interest, Landlord will cooperate with Tenant in
executing any documents reasonably required to effect any financing by
Tenant of this Lease or Tenant's operations in the Premises, so long as
such documents will not subject Landlord's interest in the Premises to
any forfeiture, encumbrance or lien."
Section 7 Landlord's Defaults and Tenant's Remedies. Section 22 of
the Original Lease is hereby amended by deleting the second sentence thereof in
its entirely, and inserting the following in lieu thereof:
"On the occurrence of any default by Landlord as aforesaid, but subject
to the limitations set forth in this Section 22 on Tenant's right to
terminate this Lease, Tenant shall have all rights and remedies
provided at law, in equity or under this Lease."
Section 8 Full Force and Effect. Except as expressly amended by
this First Amendment, the Original Lease shall remain in full force and effect
in accordance with its terms, provisions and conditions. The Original Lease, as
amended by this First Amendment, shall herein and hereafter be referred to as
the "Lease."
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In witness whereof, each of the parties hereto has caused this First
Amendment to be duly executed by its duly authorized officer or agent as of the
day and year first above written.
Landlord:
W/H No. 31, L.L.C., a South Carolina
limited liability company
By: /s/ Xxxxxx X. Xxxxxxx
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Its: Member
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Tenant:
West Marine, Inc., a Delaware corporation
By: /s/ Xxxx X. Xxxx
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Its: Sr. VP & CFO
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Contractor:
Xxxxx, Xxxxxxx & Company, an Illinois
corporation
By: /s/ Xxxxxx X. Xxxxxxx
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Its:
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Exhibit A -- Substitute Sections 1(c)(1) and 1(c)(2) of Lease
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"(c) Expansion Options.
"(1) Real Estate Agreements. Landlord (by virtue of the assignment to
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it from Xxxxx, Xxxxxxx & Company), Carolina Foods, Incorporated (`Carolina
Foods') and Ticor Title Insurance Company, as Escrow Agent (`Ticor'), are
parties to that certain Purchase Agreement, dated February 21, 1997, as amended
by that certain First Addendum to Purchase Agreement dates as of April 24, 1997,
and as also amended by that certain Second Addendum to Purchase Agreement dated
as of May 29, 1998 (collectively, `Carolina Foods Agreement'). In addition, and
in connection with the Carolina Foods Agreement, Landlord and Carolina Foods are
parties to that certain Memorandum of Option to Purchase Real Estate, dated as
of April 24, 1997, recorded with the Clerk of Court, York County, South
Carolina, on April 25, 1997 at Volume 1832, Page 17, as amended by that certain
First Amendment to Memorandum of Option to Purchase Real Estate, dated as of May
29, 1998, to be hereafter recorded with the Clerk of Court, York County, South
Carolina (together, `Carolina Foods Memorandum').
"Landlord (by virtue of the assignment to it by Xxxxx, Xxxxxxx &
Company), Xxxxxxxx Farms, L.L.C. (`Xxxxxxxx Farms') (by virtue of the assignment
to it by Daisy Xxxxxxx Xxxx Xxxxxx, the Estate of Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxx Xxxxxx, Jr., NationsBank Trust of South Carolina, as
Trustee for Xxxxx Xxxxx Xxxx, the Xxxxxxxx Children Partnership, Xxxxx Station
Associates and the Xxxx X. Xxxxxxx Testamentary Trust), and Ticor, are parties
to that certain Purchase Contract dated February 21, 1997, as amended by that
certain First Addendum to Purchase Agreement dated as of May 29, 1998
(collectively, `Xxxxxxxx Agreement'). In addition, and in connection with the
Xxxxxxxx Agreement, Landlord and Xxxxxxxx Farms (by virtue of the aforesaid
assignment to it) are parties to that certain Memorandum of Option to Purchase
Real Estate, dated as of April 24, 1997, recorded with the Clerk of Court, York
County, South Carolina, on April 25, 1997, at Volume 1832, Page 50, as amended
by that certain First Amendment to Memorandum of Option to Purchase Real Estate,
dated as of May 29, 1998, to be hereafter recorded with the Clerk of Court, York
County, South Carolina (together, `Xxxxxxxx Memorandum').
"The Carolina Foods Agreement and the Xxxxxxxx Agreement together
constitute the `Real Estate Agreements' under this Lease. Tenant hereby
acknowledges its approval of the Real Estate Agreements, the Carolina Foods
Memorandum and the Xxxxxxxx Memorandum.
"(2) Option Fees: Option Fee Additional Rent. Under the respective
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Real Estate Agreements, Landlord is to pay certain Option Fees (as such term is
defined in the respective Real Estate Agreements) to the sellers thereunder in
order to maintain the purchase options therein granted, in accordance with
terms, provisions and conditions of each of the Real Estate Agreements. The
maintenance of such purchase options is for the benefit of Tenant in connection
with Tenant's exercise (if any) of the Expansion Option (as such term is defined
in Section 1(c)(3) hereof) under this Lease. Such Option Fees, each of which is
to be paid on or before the first date of the applicable time period therefor
(i.e., on or before April 24th of each applicable year), are as follows:
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"Time Period Option Fee under Carolina Option Fee under Xxxxxxxx
Foods Agreement Agreement
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"4/24/98 - 4/23/99 $13,499.89 $62,952.78
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"4/24/99 - 4/23/00 $13,904.89 $64,841.36
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"4/24/00 - 4/23/01 $14,322.03 $66,786.60
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"4/24/01 - 11/29/01 $14,751.69 $41,462.59
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"In order that Landlord may make the Option Fee payments in a timely
manner in accordance with the respective Real Estate Agreements, Tenant shall
pay to Landlord, as part of the additional rent due and payable by Tenant under
this Lease, the amount of each such Option Fee payments (`Option Fee Additional
Rent'), in accordance with the following provisions:
"(A) Not more than sixty (60) days prior to the due date thereof
(i.e., not earlier than February 26th of each applicable
year), Landlord shall invoice Tenant for the Option Fee
Additional Rent next to come due. Within thirty (30) days
after its receipt of such invoice, Tenant shall pay the full
amount of such Option Fee Additional Rent to Landlord. If
Landlord receives such payment within such thirty (30)-day
period, then Landlord shall be obligated to make the Option
Fee payments due under the respective Real Estate Agreements.
"(B) Anything in this lease to the contrary notwithstanding, the
following provisions shall apply:
"(i) In the event that Landlord fails to invoice Tenant for
the Option Fee Additional Rent next to come due, at
least thirty (30) days prior to the due date for the
Option Fee payment under the respective Real Estate
Agreements, then (a) Tenant shall still be obligated to
pay the Option Fee Additional Rent to Landlord within
(30) days after Landlord's invoice to Tenant therefor,
and (b) Landlord shall nonetheless be obligated
hereunder to make the Option Fee payments then due
under the respective Real Estate Agreements.
"(ii) In the event that Tenant fails to make any Option Fee
Additional Rent payment to Landlord within thirty (30)
days after Landlord's invoice therefor, then (a) Tenant
shall not be in default under this Lease as a result of
such failure (except that if Landlord has already made
the Option Fee payments due under the respective Real
Estate Agreements pursuant to clause B)(i)(b) above,
then Tenant shall be obligated hereunder to pay the
Option Fee Additional Rent to Landlord), (b) Landlord
shall be relieved from any obligations to make the
corresponding Option Fee payments under the respective
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Real Estate Agreements (unless it has already made such
payments pursuant to clause (B)(i)(b) above),
regardless of the fact that such failure of Landlord to
make such Option Fee payments will result in the
forfeiture of Landlord's rights under the respective
Real Estate Agreements to acquire the real property
which is the subject thereof, and (c) Landlord shall
also be relieved from any obligations with respect to
the Expansion Option, except as provided in Section
1(c)(5) hereof.
"Landlord and Tenant hereby acknowledge and agree that Tenant has
heretofore timely made payment of the first Option Fee Additional Rent which was
due hereunder, and Landlord has heretofore timely made the Option Fee payment
due under the respective Real Estate Agreements due for the period April 24,
1998 through April 23, 1999.
"(3) Expansion Option. Subject to the provisions of this Section 1(c)
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and all Legal Requirements and Private Restrictions, Landlord grants to Tenant
the right, option and privilege to expand the Original Premises on not more than
three (3) separate occasions by adding up to an additional total of Five Hundred
Thirty-Two Thousand Two Hundred Twenty-Four (532,224) square feet as provided by
this Section 1(c); provided, however, that no single expansion shall increase
the square footage of the Building by less than One Hundred Fifty Thousand
(150,000) square feet (in each case, `Expansion Option'). Landlord's duty to
grant the Expansion Option, acquire the Expansion Land (as such term is defined
below in this Section 1(c)(3)) and construct the Expansion Space (as such term
is defined in Section 1(c)(4)), all as provided in this Section 1(c), shall be
subject to the occurrence of the following condition precedent:
"Landlord shall have acquired, pursuant to one or more of the
Real Estate Agreements or pursuant to such other purchase or option
agreements as may be reasonably acceptable to Landlord and Tenant
(including, without limitation, at a price not greater than that set
forth in the Real Estate Agreements) (in each case, `Expansion
Contract'), all or a portion of the land shown on the attached Exhibit
`A-2,' which land (or portion thereof) is sufficient to accommodate the
construction of the Expansion Premises (as such term is defined in
Section 1(c)(4) hereof) pursuant to the Expansion Option then being
exercised (in each case, `Expansion Land'). The Original Land and any
Expansion Land are together hereinafter referred to as the `Land." For
all purposes of this Lease, the Expansion Land shall be deemed to be
sufficient to accommodate the construction of the Expansion Premises
if, and only if, such construction can be commenced and completed
hereon in a commercially reasonable fashion, and in accordance with all
Legal Requirements and all Private Restrictions.
"(4) Exercise of Expansion Options: Landlord's Construction Duties.
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Tenant shall exercise any Expansion Option (if at all) by serving written notice
of its exercise of such Expansion Option on Landlord not later than January 1,
2007; provided, however, that if Tenant has timely exercise its first option
hereunder to extend and renew the Term, then Tenant shall have the right to
exercise any Expansion Option until January 1, 2008; and provided further,
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however, that Tenant's and Landlord's respective rights and obligations in the
event of Tenant's exercise of any Expansion Option shall be governed by this
Section 1(c). Tenant shall have the right to exercise up to two (2) Expansion
Options before November 26, 2001, and not more than three (3) Expansion Options
in total.
"Subject to Sections 1(c)(2) and 1(c)(5) hereof with respect to
Tenant's failure to make timely Option Fee Additional Rent payments, if and only
if Tenant timely exercises either one (1) or two (2) Expansion Options before
November 26, 2001, Landlord (i) shall purchase the Expansion Land (being the
land which meets the requirements set forth in Section 1(c)(3) hereof) in
accordance with the terms, provisions and conditions of this Section 1(c); (ii)
shall construct thereon an expansion to the Building which is generally
described in Tenant's exercise of the Expansion Option in question and conforms
with the requirements of this Section 1(c) (`Expansion Space') together with
additional related site improvements on the Expansion Land as may be
commercially reasonable (which Expansion Space and additional related site
improvements, together with the Expansion Land, are together hereinafter
referred to as the `Expansion Premises'); and (iii) shall lease the Expansion
Premises to Tenant in accordance with the terms, provisions and conditions of
this Section 1(c). Notwithstanding the foregoing, if Tenant exercises an
Expansion Option, the duty to construct any Expansion Premises shall extend
solely to Landlord (and Landlord's successors), and Contractor shall not have
any duty to construct such Expansion Premises.
"(5) Tenant's Failure to Pay Option Fee Additional Rent or to
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Exercise Expansion Option Timely. If Tenant has failed to make timely any Option
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Fee Additional Rent payments as required hereunder, or if Tenant exercises an
Expansion Option on or after November 26, 2001, Landlord shall nonetheless be
obligated (i) to exert its reasonable commercial efforts to acquire fee title to
the Expansion Land (at a price not greater than that set forth in the Real
Estate Agreements and otherwise on terms, provisions and conditions reasonable
acceptable to Landlord and Tenant), (ii) if Landlord has acquired the Expansion
Land, thereafter to construct the Expansion Premises, and (iii) if Landlord has
acquired the Expansion Land, to lease the Expansion Premises to Tenant in with
this Section 1(c); provided, however, that, as provided in Section 1(c)(2)
hereof, under no circumstances shall Landlord be obligated to make any Option
Fee payments under either or both of the Real Estate Agreements if Tenant has
failed to make timely any required Option Fee Additional Rent payments
hereunder.
"(6) Landlord Failure to Acquire Expansion Land. If (i) Tenant timely
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exercises either one (1) or two (2) Expansion Options before November 26, 2001,
and (ii) Landlord (A) fails to acquire fee title to the Expansion Land within
ninety (90) days after Tenant has served written notice of its exercise of the
Expansion Option in accordance with Section 1(c)(4) hereof, (B) following its
acquisition of the Expansion Land, fails to construct the Expansion Premises in
question, unless such failure is due to Landlord's inability (after Landlord's
expending commercially reasonable efforts) to acquire all permits and other
authorizations required to construct the Expansion Premises, or the Expansion
Premises cannot reasonably be commenced and constructed, in accordance with all
Legal Requirements and Private Restrictions, and/or (C) following its
acquisition of the Expansion Land, fails to lease the Expansion Premises to
Tenant in accordance with this Section 1(c), then Tenant shall have either one
of the following remedies
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(as its exclusive remedy); provided, however, that if Landlord has satisfied the
foregoing requirements prior to Tenant's exercise of either of the following
remedies, then Tenant's rights to the following remedies shall automatically
expire and be of no further force or effect:
"(i) Tenant may terminate this Lease, effective upon written notice
thereof by Tenant to Landlord. In such event, Landlord shall not
be liable for any damages or other remedies as a result of any
failure or delay in its obligations to Tenant under this Lease.
"(ii) Tenant may purchase the Original Premises and all Expansion
Premises at a price equal to the greater of the following:
"(A) the fair market value of the Original Premises and
such Expansion Premises (which fair market value
shall be determined in accordance with the manner
specified in Section 2(e) hereof, with appropriate
modification to reflect that the fair market purchase
price [and not the fair market rental] is to be
determined), or
"(B) either (1) in the case of the original Landlord, the
Lump Sum Total Project Cost (as such term is defined
in Section 1(c)(7)(i) hereof) plus the Total Direct
Cost of any Expansion Premises (as such term is
defined in Section 1(c)(7)(iii) hereof) for any
Expansion Premises previously constructed by the
original Landlord prior to the date of Tenant's
exercise of the subject Expansion Option (i.e.,
constructed by the original Landlord pursuant to
previously exercised Expansion Options), escalated at
the rate of two percent (2%) per annum compounded
from January 1, 1998 with respect to the Original
Premises and compounded from the Expansion Premises
Commencement Date with respect to each such Expansion
Premises, or (2) in the case of any subsequent
Landlord, the purchase price for the Premises paid by
such subsequent Landlord, escalated at the rate of
two percent (2%) per annum compounded from the date
on which such subsequent Landlord acquired fee title
to the Premises, plus the Total Direct Cost of any
Expansion Premises for any Expansion Premises
previously constructed by such subsequent Landlord
prior to the date of Tenant's exercise of the subject
Expansion Option (i.e., constructed by such
subsequent Landlord pursuant to previously exercises
Expansion Options), escalated at the rate of two
percent (2%) per annum compounded from the Expansion
Premises Commencement Date with respect to each
Expansion Premises constructed by such subsequent
Landlord."
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