EXHIBIT 10.9.2
SECOND AMENDMENT TO OFFICE/WAREHOUSE LEASE
THIS SECOND AMENDMENT TO OFFICE/WAREHOUSE LEASE is made effective as of
the 14th of July, 2003, by and between Cambridge Apartments, Inc., a Minnesota
corporation ("Lessor"), and Navarre Corporation, a Minnesota corporation
("Lessee").
WHEREAS, Lessor and Lessee entered into a certain Office/Warehouse
Lease dated April 1, 1998, as subsequently amended by that certain First
Amendment to Lease dated April 1, 1998 (collectively, the "Lease") pursuant to
which Lessor leased to Lessee certain premises located in the City of New Hope
(the "City"), County of Hennepin, State of Minnesota consisting of approximately
86,430 square feet of office and warehouse space, commonly described as the
Navarre Building, and located at 0000 00xx Xxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxx
(the "Demised Premises"); and
WHEREAS, Lessee owns two parcels of property adjacent to the Demised
Premises consisting of one parcel located at 0000 00xx Xxxxxx Xxxxx, Xxx Xxxx,
and a second parcel located to the north thereof and known as Outlot A (the
"Lessee Parcels"); and
WHEREAS, on December 20, 2002, the City instituted quick-take
condemnation proceedings on certain property located at 0000 00xx Xxxxxx Xxxxx,
Xxx Xxxx, that is contiguous to the Lessee Parcels, which the City intends to
convey to Lessee (this parcel, together with the Lessee Parcels, shall be
referred to as the "New Facility Land"); and
WHEREAS, Lessee intends to construct a facility on the New Facility
Land consisting of approximately 111,000 square feet of office and warehouse
space (the "New Facility") that Lessee and Lessor intend to be connected through
two covered connection ways to the Demised Premises, including modifications to
the interior of the Demised Premises for compliance with fire, life safety and
accessibility requirements (the "New Facility Connection"), as shown on plans
and specifications set forth in Exhibit A (the "Plans; and Specifications"); and
WHEREAS, in addition to the construction of the New Facility Connection, Lessee
will make certain other improvements to the Demised Premises including, but not
necessarily limited to, the construction of replacement parking on the south end
of the Demised Premises, the relocation of sanitary sewer and gas utilities
serving the Demised Premises on the southwesterly end of the Demised Premises,
the construction of a roadway on the north end of the Demised Premises, the
movement of a fire hydrant on the north end of the Demised Premises, and the
construction of a storm drain on the west side of the Demised Premises
(collectively, the "Permanent Improvements"), all as set forth in the Plans and
as described in the Agreement of Reciprocal Easements, Covenants, Conditions and
Restrictions ("Easement Agreement") of even date herewith between Lessor and
Lessee, a copy of which is attached as Exhibit B to this Addendum; and
WHEREAS, Lessee may enter into a sale/leaseback arrangement with an
investor pursuant to which, upon completion of construction, Lessee would be
under an obligation to sell the New Facility to and lease the New Facility back
from an investor upon such terms and conditions are acceptable to Lessee which
will be stated in a lease agreement ("New Facility Lease"); and
WHEREAS, Lessor and Lessee wish to add this Second Amendment to the
Lease to provide for the construction of the New Facility Connection and the
Permanent Improvements and to address other issues related thereto on the terms
and subject the conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:
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New Facility Connection. Lessor consents to the construction of the New Facility
Connection between the New Facility and the Demised Premises in accordance with
the Plans as an authorized tenant improvement pursuant to the Lease to be
treated as part of the Building in the Demised Premises. As additional
consideration for Lessor permitting the New Facility Connection and the
construction of the Permanent Improvements, when the New Facility and New
Facility Connections and the improvements associated therewith are completed
Lessee has agreed to pay the costs to provide Lessor with an updated survey
("Survey") of the Demised Premises that reflects the location of the easements
and improvements as actually constructed. The Survey is to be provided to Lessor
within two months after completion of the New Facility and the Permanent
Improvements.
Permanent Improvements. Lessor consents to the construction of the Permanent
Improvements on the Demised Premises in accordance with the Plans as an
authorized tenant improvement pursuant to the Lease to be treated as part of the
Demised Premises. Except as provided herein with respect to the New Facility
Connection, Lessor waives any right to require Lessee to remove the Permanent
Improvements at termination of Lessee's tenancy or otherwise.
Construction of New Facility Connection and Permanent Improvements. Lessee
agrees to construct the New Facility Connection and the Permanent Improvements
at its sole cost and expense in accordance with all laws, ordinances,
governmental regulations and insurance requirements affecting the Demised
Premises. Lessee agrees, in addition to the hold harmless requirements under
Paragraph 17, of the Lease, that until the New Facility is completed it will use
its best efforts to obtain a contractual hold harmless endorsement to the
insurance policy for the Demised Premises for the benefit of Lessor and will
provide Lessor with a Certificate of Insurance evidencing the same prior to
commencing construction of the Permanent Improvements. Lessor waives any
requirement that Lessee provide to Lessor copies of approvals, licenses or
permits. Lessee agrees to obtain lien waivers from the general contractor and
all subcontractors involved in the construction of the New Facility Connection
and the Permanent Improvements.
Easement Agreement. Lessee shall make the improvements to both the Demised
Premises and the New Facility as set forth and described in the Easement
Agreement, and to the extent applicable under the Easement Agreement,
obligations of the Lessee as they relate to the Demised Premises as set forth
therein shall be obligations of Lessee under the Lease.
Escrow for New Facility Connection. Lessee agrees that as consideration for
Lessor permitting the New Facility Connection, Lessee shall be obligated to
remove the New Facility Connection within thirty days after the earlier
termination or expiration of the Lease, all as set forth and described in
Section 1(e) of the Easement Agreement. Contemporaneously with the execution of
this Second Amendment Lessee shall deposit with Lessor the sum of $100,000
("Links Security Deposit"), receipt of which is hereby acknowledged by Lessor,
to be held by Lessor for the faithful payment and performance by Lessee of its
obligation to remove the New Facility Connection required by this Paragraph 5
and by the Easement Agreement. Lessor shall credit simple interest ( no
compounding) on the Links Security Deposit each year in an amount equal to the
federal prime rate of interest then in effect as of January 1st each year and
shall provide Lessee with a copy of the interest accrued and credited annually
by February 15th of each year showing the interest accrued for the prior year
(e.g., for interest earnings for 2003 on the initial $100,000 deposit Lessor
shall take the prime rate of interest in effect as of January 1, 2004 and that
interest rate shall be applied for the $100,000 and credited as interest for the
period between the date of this Second Amendment and December 31, 2003 and a
copy of the interest earned shall be sent to Lessee by February 15, 2004).
Lessor may co-mingle such deposit with Lessor's own funds. In the event that
Lessee fails to remove the Links and repair the Demised Premises to the
condition as existed prior to the removal of the Links, normal wear, tear and
casualty excepted, then Lessor shall be entitled, at its option, to use the
Links Security Deposit to complete the removal of the Links and repair of the
Demised Premises. Any funds remaining of the Links Security Deposit, plus
interest accrued thereon after the removal and repair is completed shall belong
to Lessee. If Lessor incurs costs due to Lessee' failure to perform that are in
excess of the Links Security Deposit then Lessee shall be obligated to reimburse
Lessor for the same within ten (10) days of receipt of a written invoice
reflecting and substantiating the costs. As long as Lessee performs the removal
and repairs then Lessor shall return the Links Security
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Deposit and all interest accrued thereon shall be released to Lessee when the
Lease is terminated or has otherwise expired by its terms.
Amendment to Lease Term. Lessor and Lessee hereby agree to amend Paragraph 1 of
the Lease, Term, by replacing said Paragraph 1 in its entirety as follows:
"For and in consideration of the rents, additional rents, terms,
provisions and covenants herein contained, Lessor has let, and demised to Lessee
the Demised Premises as of July 1, 1998 (the "Commencement Date") and the term
shall expire the 30th day of June, 2019 (sometimes called the "Expiration
Date"), unless sooner terminated as hereafter provided; provided, however, the
intention of Lessor and Lessee is to make this Lease Term co-terminious with the
15 year New Facility Lease. Accordingly, when the 15 year New Facility Lease is
finalized with the landlord thereof, the Lessor and Lessee will sign an Addendum
to this Second Amendment to Lease identifying the set Expiration Date for this
Lease. If the parties fail to sign the Addendum then the Expiration Date of this
Lease shall be as stated in the 15 year New Facility Lease or if no date is
stated then June 30, 2019, it being understood that this is the intention of the
Lessor and Lessee."
Amendment to Option Lessor and Lessee hereby agree to amend Paragraph 41 of the
Lease, Term, by deleting the last two sentences of Paragraph 41 and replacing
them as follows:
"The renewal term shall begin on July 1, 2019, and terminate on June
30, 2029; provided, however if Lessor and Lessee have adjusted the Expiration
Date as stated in Paragraph 6 above then the renewal term dates shall be
adjusted to be reflective of the initial Expiration Date. Tenant shall exercise
its option to renew the term of the Lease by giving Lessor written notice of the
exercise of this option by June 30, 2018."
Continuation. Except as otherwise expressly amended hereby, the terms and
provisions of the Lease shall remain in full force and effect.
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IN WITNESS WHEREOF, Lessor and Lessee have caused this Second Amendment to
Office/Warehouse Lease to be executed and delivered effective as of the date
first above written.
LESSOR:
CAMBRIDGE APARTMENTS, INC.
By:__________________________________
Its:________________________________
LESSEE:
NAVARRE CORPORATION
By:__________________________________
Its:________________________________
[Signature Page to Second Amendment to Lease Agreement between Navarre
Corporation and Cambridge Apartments, Inc.]
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