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EXHIBIT 10.18
LEASE
THIS LEASE AGREEMENT "Lease", entered into August 5, 1999 between
Xxxxxxx X. Xxxxxx or his Assignee (hereinafter referred to as "Host") whose
address is C/O First Xxxxxx Corporation, 000 Xxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxx
00000 and MECHANICAL DYNAMICS, INC., a Michigan corporation (hereinafter
referred to as "Guest") whose address is 0000 Xxxxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx,
Xxxxxxxx 00000 until commencement of the term hereof and thereafter the
Premises, by which the parties agree as follows:
1. Leased Premises. Subject to and upon the terms hereinafter set forth,
and in consideration of the sum of Ten Dollars ($10.00), the premises, and
the mutual covenants set forth herein, the receipt and sufficiency of
which are hereby acknowledged, Host does hereby lease to Guest certain
premises (hereinafter referred to as the "Premises") consisting of a
building (hereinafter referred to as the ("Building") in the Traverwood
Business Center located in Ann Arbor, Michigan, on the site described in
Exhibit A-1 attached hereto (hereinafter referred to as the "Site"), such
leased Premises being approximately 66,878 square feet of Gross Building
Area as generally described in Paragraph 3 hereof; the preliminary site
plan for the Building is attached hereto as Exhibit A-2. Together the
Building and Site are sometimes referred to herein as the "Project". As
used herein, "Gross Building Area" or "GBA" shall refer to the total
square footage of all floor area (including floor area which is below
grade) measured to the predominant outside surface of the Building
exterior walls (or in the case of floor area below grade, the inside face
of the foundation walls).
2. Term.
(a) Initial Term. The term of this Lease shall commence fifteen (15)
days after the date of Substantial Completion of the improvements to
be made by Host ("Host's Improvements", as defined in Paragraph 3 of
this Lease), and shall continue for a period of ten (10) years from
the first of the month coincident with or next following such date
of commencement (hereinafter referred to as the "Commencement
Date"). Guest and Host mutually agree that in the event Substantial
Completion is achieved between December 1, 2000 and January 2, 2001,
Guest may delay the Commencement Date of the Lease until January 15,
2001. As used herein, "Substantial Completion" shall mean the
completion of Host's Improvements in substantial compliance with the
plans, specifications and other contract documents for such
Improvements except for punchlist items which in the aggregate do
not materially interfere with the use and occupancy of the subject
space for its intended purposes and which can be completed without
interfering with the use of such space. Guest acknowledges that a
certificate of occupancy cannot be secured until Guest's cubicles
are installed and wired. Guest shall be allowed access to install
the same as soon as reasonably possible. Should Substantial
Completion of Host's Improvements be delayed due to either (i)
Guest's failure to approve the plans and specifications for said
Improvements
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in a timely manner (as set forth in Paragraph 3), or (ii) change
orders initiated by Guest, then the Commencement Date shall be that
date on which Host's Improvements would have otherwise been
substantially completed but for such delays. Change orders shall
state the delay which will result thereby, if any, in the
Substantial Completion of Host's Improvements. As used herein, the
term "Lease Year" shall mean a period of twelve (12) consecutive
months. The first Lease Year shall begin on the date of commencement
of the term of this Lease if such Commencement Date shall occur on
the first day of a month, or, if not, then on the first day of the
following month.
(b) Renewal Option. Provided Guest is not then in default, Guest shall
have the right to renew the term of this Lease for two (2)
additional successive periods of five (5) years each (the "Option
Periods") on the same terms and conditions with the exception that
(i) Guest shall have no further implied right to renew beyond the
properly exercised Option Periods, (ii) Guest shall not have the
right to assign said rights to any sublessee of the Premises or
assignee of the Lease, nor may any such sublessee or assignee
exercise such renewal rights, and (iii) the leasehold improvements
shall be provided in their then-existing condition (on an "as is"
basis) at the time the Option Periods commence. If Guest elects to
exercise any expansion options as provided in Paragraph 36 hereof,
then the Option Periods shall commence at the expiration of the term
of the Lease as extended pursuant to the provisions of such
expansion options. Guest shall give Host notice that it is
exercising any such right not less than eighteen (18) months prior
to the expiration date of the then current term of the Lease.
(c) Completion Date. Host shall use its best efforts to obtain
Substantial Completion on or before November 1, 2000. In the event
that Substantial Completion of Host's Improvements has not been
attained on or before May 1, 2001, Guest shall have the right to
terminate this Lease by delivery of fifteen (15) days' prior written
notice of termination to Host, unless during such fifteen (15) day
period, Host agrees in writing to extend (i) the lease between First
Properties Associates Limited Partnership and Guest, as lessee, date
July 12, 1989, covering certain premises located at 0000
Xxxxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxx (the "Old Lease"), and
(ii) the Rent Credit as defined in an amendment to the Old Lease
described as the Third Amendment to Lease dated as of August 5,
1999, in both cases, for a period thirty (30) days beyond the date
of actual Substantial Completion of Host's Improvements. Guest
agrees to act promptly in all matters requiring Guest's approval,
including but not limited to approval of plans and specifications so
as not to delay the project commencement and completion.
3. Improvements.
(a) Host's Improvements. Host shall cause to be constructed on the
Land a Building with a Gross Building Area of approximately 66,878
square feet including site work, building shell, mechanical systems,
and interior partitions and finishes but
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excluding the installation of cubicles (including electrical wiring)
and computer and communications cabling (herein sometimes referred
to as "Host's Improvements"). Guest shall be responsible for the
layout, design and installation of all cubicles (including
electrical wiring) and computer and communications cabling; said
design and Guest's contractors must be approved by Host in writing
in advance.
(b) Plans and Specifications. Host's Improvements shall be constructed
in accordance with plans and specifications mutually approved and
agreed upon by Host and Guest as provided hereinafter. The architect
for Host's improvements shall be Xxxxxxxx, Xxxxx and Xxxxxx. The
maximum number of parking spaces allowed by the City of Xxx Arbor
shall be provided not to exceed five spaces per 1,000 square feet of
Gross Building Area, subject to receiving site plan approval from
the City of Xxx Arbor for the amount of parking. Host shall submit
to Guest for its approval the site plan and the final plans and
specifications for Host's Improvements; said plans and
specifications shall be deemed approved unless rejected in writing
within five (5) business days of receipt. A working set of site
plans and building plans and specifications which are approximately
75% complete will be made available for review at least two weeks
prior to submission of final plans. Any denial of such approval
shall be fair and reasonable.
(c) Building Construction. The general contractor for Host's
Improvements shall be X'Xxxx Construction, Inc. ("X'Xxxx"). Host and
Guest shall jointly negotiate a contract with X'Xxxx, which contract
shall provide a guaranteed maximum price which includes a 3%
construction contingency. Host shall provide an allowance (the "Hard
Construction Cost Allowance") of up to $100.00 per square foot of
Gross Building Area for the direct construction costs for Host's
Improvements; "direct construction costs" includes bonding and
permits but excludes extraordinary costs relating to poor soil
conditions, which costs shall be the sole responsibility of Host,
and soft costs such as base building architectural and design
services, legal services, construction financing, permanent
financing origination, title insurance, builder's risk insurance,
brokerage commissions, development fees, real estate taxes and other
carrying costs for the Site. Upon Guest's written request received
on or before the date of commencement of said Improvements, Host
shall increase said Allowance to up to $110.00 per square foot of
Gross Building Area, subject to Host securing additional financing
acceptable to Host within thirty (30) days of notice from Guest that
it wishes to increase said Allowance. Any direct construction costs
for Host's Improvements in excess of said Allowance shall be paid to
Host by Guest within 30 days of date of invoice. X'Xxxx shall
provide a warranty of one year on all work with the exception of the
roof, which shall have a ten year warranty; said warranties shall
commence as of the date of Substantial Completion of Host's
Improvements. The additional cost of any change orders requested by
Guest shall be paid to Host within ten (10) days of date of invoice
and shall include an administrative fee of 10%.
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4. Rent.
(a) Base Rent. Guest shall pay to Host as annual base rent for the
Premises for the term hereof an amount which shall be determined by
multiplying the Rent Factor by the Total Development Cost for the
Project, as further defined below:
(i) "Rent Factor" is the sum of the Rental Rate Constant and the
Debt Service Constant.
(ii) "Rental Rate Constant" is 200 basis points.
(iii) "Debt Service Constant" is the percentage calculated by
dividing the annual payment of principal and interest required for
the Permanent Mortgage Loan by the original principal amount of said
Loan. The Debt Service Constant shall not change if Host refinances
the Permanent Mortgage Loan or pays off said Loan subsequent to the
Commencement Date of the Lease.
(iv) "Permanent Mortgage Loan" is the loan which is secured by
Host to finance the Total Development Cost. Said loan shall (a) have
a minimum term of ten (10) years, (b) be non-recourse to Host, (c)
have a twenty-five year amortization schedule which provides for
level annual payments, and (d) be otherwise acceptable to Host. If
said loan has not been closed as of the Commencement Date, then the
terms set forth in the commitment for said Loan shall be used.
(v) "Total Development Cost" is the sum of:
- "Land Cost", which is deemed to be $1,050,000.00;
- "Hard Construction Cost", which is the portion of the Hard
Construction Cost Allowance which is used; and
- "Soft Cost", which is deemed to be One Million Five Hundred
Eighty-Three Thousand Four Hundred ($1,583,400) Dollars.
The manner in which the annual rent is to be calculated is
illustrated using estimated costs in Exhibit B attached hereto.
(b) Payment Schedule. Said annual rent shall be due and payable in equal
monthly installments in advance on the first day of each calendar
month during the term hereof. Rent for partial months shall be
prorated based on a 365 day year. If any rent payment due hereunder
is more than six (6) days late, Guest shall pay Host a service fee
equal to two percent (2%) of said rent payment. The payment of this
late payment service fee will not constitute a waiver by Host of any
default by Guest under this Lease. The rent to be paid by Guest
hereunder shall not be
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diminished by the additional payments to be made by Guest as
provided in Paragraphs 5,6,7,8 and 16 or elsewhere in this Lease.
(c) Escalation. The annual base rent payable under this Lease shall be
adjusted annually at the beginning of the second Lease Year and each
succeeding Lease Year during the term of this Lease and any renewals
thereof by 2.65%. Commencing with the seventh Lease Year, in the
event the Consumer Price Index (as hereinafter defined and referred
to as "CPI") increases more than 7.0% in the twelve month period
immediately preceding the third month prior to the month in which
such adjustment is to take effect, then the annual increase in the
rent will be 80% of the percentage increase in the CPI during such
period. Adjusted monthly installments of rent shall be rounded to
the nearest whole dollar.. As used herein, "Consumer Price Index"
means the Consumer Price Index for All Urban Consumers, U.S. City
Average, All Items, 1982-84 = 100, as issued by the Bureau of Labor
Statistics, United States Department of Labor. If at any time during
the term hereof the Bureau of Labor Statistics should modify the
methodology used in computing the CPI and should said Bureau
determine that, as a result, the CPI is likely to be different in
the future than would otherwise be the case, then in calculating
rent increases hereunder the CPI shall be adjusted as follows.
Commencing with the first rent adjustment date after the new
methodology becomes effective, the percentage increase in the CPI
during the relevant twelve month period shall be multiplied by an
adjustment factor, which shall be the quotient of a) the increase in
the CPI using the old methodology during the twelve month period
prior to the date the new methodology becomes effective, divided by
the increase in the CPI during said twelve month period using the
new methodology (as estimated by the Bureau of Labor Statistics). If
at any time during the term hereof the United States Bureau of Labor
Statistics shall discontinue the issuance of the CPI, then the
parties agree to use any other standard, nationally recognized cost
of living index then issued and available, which is published by the
United States Government, and if no governmental index is then
published, then by any generally recognized privately published
index of the cost of living.
5. Net Features. The rent during the term of this Lease shall be on a
net-net-net basis. That is to say, Guest, and not Host, shall be
responsible for and pay all costs connected with the Premises and the
grounds and parking facilities subject to the limitations contained in
section 37 hereof appurtenant thereto, including but not limited to: real
estate taxes as hereinafter defined (or any other tax or charge imposed by
any governmental authority expressly designated and identifiable as a
substitute for such taxes), personal property taxes, special assessments,
utilities, service charges, janitorial service, maintenance (including:
(i) maintenance repair and replacement, as necessary, of all plumbing,
electrical, heating/cooling and other mechanical systems; (ii) the
building doors, windows, roof and structure; and (iii) the grounds and
parking facilities), insurance and management. Such items shall be paid
before they become overdue or delinquent. Failure to do so shall be a
default of the Lease. There shall be no deduction from the rent
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on account of Guest's payment of such costs. Latent defects in the roof,
windows, or structure discovered subsequent to the one year warranty
period and prior to the seventh anniversary of the lease Commencement Date
shall be the Host's responsibility to repair or replace as necessary.
6. Real Estate Taxes. From and after the Commencement Date, Guest shall pay
all real estate taxes connected with the Premises and one-half of real
estate taxes connected with the Site (or a greater portion should Guest
exercise its expansion options as provided in Paragraph 36 ("Expansion
Options")). As used herein, "real estate taxes" shall mean: (i) all real
estate, ad valorem or personal property taxes levied with respect to the
Premises, the Site, any fixtures, equipment or other property, real or
personal, located on or about the Premises or the Site; (ii) any other
tax, general or special assessment or other governmental charge of any
description imposed upon or in respect to the Premises or Site, including,
without limitation, a tax upon any rent therefrom, or any occupancy or use
thereof; (iii) any water and sewer general or special assessments,
charges, excises, levies, license and permit fees, transfer taxes, and all
other similar charges, if any, which are levied, assessed, or imposed upon
or become due and payable in connection with, or liens upon, the Premises,
Site or facilities used in connection therewith, and rentals or receipts
therefrom; and (iv) all taxes of whatsoever nature that are imposed in
substitution for or in lieu of any taxes, assessments or other charges
included in this definition. Host shall obtain from the taxing authority a
separate tax parcel for the Site.. Guest's liability for real estate taxes
hereunder shall be paid to Host in the manner set forth in Paragraph 8
hereof. In the event Host is required under any mortgage covering the
Building to escrow real estate taxes, Host may, but shall not be obligated
to, use the amount required to be so escrowed as a basis for its estimate
of such monthly installments. Provided Guest is the sole occupant of the
Building, Guest shall have the right to contest the assessed value of the
Premises after first consulting with Host. If the building becomes
multi-tenant, Host and Guest may mutually agree to contest the assessed
value. In such case, Host will negotiate or contest the assessed value
with the City of Xxx Arbor. Real estate taxes for the first and last years
of this Lease shall be prorated between Host and Guest using the due date
method.
7. Utilities. From and after the Commencement Date, Guest shall be
responsible for the cost of all utilities for the Project including, but
not limited to, the cost of electricity, gas, water, sewer, stormwater
discharge and power for heating, lighting, air-conditioning and
ventilating the Project. Such costs shall be paid by Guest directly to the
providers of such utilities.
8. Operating Expenses: Maintenance and Repair.
(a) Operating Expenses Defined. From and after the Commencement Date,
Guest shall pay Host the Operating Expenses for the Project as
additional rent. As used herein, "Operating Expenses" shall include
all costs of maintaining, repairing , replacing, decorating,
cleaning, operating, servicing and protecting the Project together
with a management fee equal to 5% of the sum of all other Operating
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Expenses and the base rent as set forth in Paragraph 4 hereof. Such
costs shall include but not be limited to:
(i) wages and salaries, including taxes, insurance and benefits,
of all on-site employees engaged in operations and maintenance, as
reasonably allocated by Host.
(ii) cost of all supplies, tools, equipment materials and
professional fees to the extent used in operations and maintenance,
as reasonably allocated by Host;
(iii) cost of all maintenance and service agreements and the
equipment therein, including, but not limited to, parking lot and
facility maintenance, repair and snow removal, window cleaning,
elevator maintenance, janitorial service, landscaping and irrigation
maintenance, hvac systems, roof, carpet, windows, doors, etc.;
(iv) cost of repairs, replacements and general maintenance
(excluding repairs, replacements, alterations and general
maintenance paid by proceeds of insurance);
(v) cost of any system, apparatus, device, or equipment which is
installed for the principal purpose of (a) reducing Operating
Expenses, (b) promoting safety or (c) complying with governmental
requirements which become effective after the Commencement Date;
(vi) the cost of all insurance, including, but not limited to,
the cost of casualty, rent loss and liability insurance, and
insurance on Host's personal property, plus the cost of all
deductible payments made by Host in connection therewith, as more
specifically provided in Paragraph 16 hereof; and
(vii) the cost of real estate taxes, as such term is defined in
Paragraph 6.
(b) Method of Payment. At the Commencement Date and prior to the
beginning of each calendar year thereafter, Host shall have the
right to estimate the Operating Expenses for such calendar year or
portion thereof and notify Guest of its liability for such Operating
Expenses, which amount shall then be due and payable in monthly
installments in advance in accordance with the provisions of
Paragraph 4(b) hereof for the payment of rent. Host may adjust the
estimated monthly installment at the end of any calendar quarter on
the basis of Host's experience and anticipated costs. Within ninety
(90) days following the end of such calendar year (or in the case of
the last calendar year of the Lease term, the termination date),
Host shall furnish Guest with a statement covering the calendar year
just expired showing the total Operating Expenses for such calendar
year and payments made by Guest during such year. If Guest's
liability exceeds Guest's payments for estimated Operating Expenses
during such year, then Guest shall pay Host the deficiency within
fifteen (15) days after receipt of such statement
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without the necessity of additional demand or notice thereof.
If Guest's payments exceed Guest's liability, Guest shall be
entitled to offset such excess payments against payments
next thereafter to come due Host under this Paragraph 8;
provided, that upon the expiration or earlier termination of
this Lease, Host shall refund to Guest such excess payments
so long as Guest is not in default hereunder.
(c) Guest Oversight. Inasmuch as Guest will be reimbursing Host
for Operating Expenses pursuant to this Section 8, Host
hereby agrees that Guest shall have the right to annually
review with Host all contracts which are to be let for the
provision of services included in Operating Expenses for the
ensuing Lease Year to insure that (i) the Project is
maintained in good order and repair and in a first class
condition and (ii) Operating Expenses are minimized to the
greatest extent possible, consistent with such standard of
maintenance and repair. Host and Guest agree to cooperate
with each other in minimizing Operating Expenses and
contracting with such service providers as will provide good
quality services at the best possible cost.
9. Security Deposit. As security for Guest's faithful performance of
its obligations hereunder. Guest shall (a) deposit with Host upon
execution hereof the amount of thirty-one thousand, seven hundred
and forty-three ($31,743) Dollars, and (b) deliver a letter to First
Properties Associates Limited Partnership ("FPALP") instructing
FPALP to pay to Host the security deposit in the amount of fifty-two
thousand, five hundred ($52,500) Dollars currently held by FPALP
pursuant to a lease between FPALP and Guest for certain premises at
0000 Xxxxxxxxxxxx Xxxx., Xxx Xxxxx, Xxxxxxxx at the time said lease
is terminated; together such amounts are hereinafter referred to as
the "deposit". If Guest fails to pay the rent or otherwise defaults
with respect to any provision of this Lease, Host may use, apply or
retain all or any portion of said deposit for the payment of any
rent or other charge in default, or for the payment of any other sum
to which Host may become obligated by reason of Guest's default or
to compensate Host for any loss or damage which Host may suffer
thereby. Said deposit shall not be a limitation on Host's damages or
other rights under this Lease, or a payment of liquidated damages or
an advance payment of the rent. If Host so uses or applies all or
any portion of said deposit, Guest shall, within five (5) days after
written demand thereof, deposit cash with Lessor in an amount
sufficient to restore said deposit to the full amount hereinabove
stated and Guest's failure to do so shall be a material breach of
this Lease. Host shall not be required to keep said deposit separate
from its general accounts. If Guest performs all of Guest's
obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Host, shall be returned, without payment
of interest or other increment for its use, to Guest at the
expiration of the term hereof and after Guest has vacated the
Premises. No trust relationship is created herein between Host and
Guest with respect to said security deposit.
10. Place and Form for Payment of Rent. All payments of rent shall be
delivered to Host at First Xxxxxx Corporation, 000 Xxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxxxx 00000 or at such other
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place as Host shall designate from time to time in writing. Rent
payments shall be made payable to Host.
11. Financing. (a) If in connection with obtaining by Host of any
financing or refinancing for the Building, the lender shall request
reasonable modifications in this Lease as a condition to such
financing or refinancing, Guest will not unreasonably withhold,
delay or defer its consent thereto, provided that such modifications
do not increase the obligations of Guest hereunder or in a material
manner adversely affect the leasehold interest hereby created.
(b) Guest agrees that this Lease shall be subordinate to any
mortgages that may hereafter be placed or made upon the Building,
provided the mortgagee named in any such mortgages shall agree to
recognize the lease of Guest in the event of foreclosure if Guest is
not in default.
(c) Guest agrees within ten (10) days after request by Host to
execute in recordable form and deliver to Host (i) a subordination
agreement as required by any such mortgagee provided that such an
agreement contains recognition/nondisturbance provisions
satisfactory to Guest, and (ii) an estoppel certificate certifying
(a) that this Lease is in full force and effect, (b) the date of
commencement of the term of this Lease, (c) that rent is paid
currently without any off-set or defense thereto, (d) the amount of
rent, if any, paid in advance, (e) that there are no uncured
defaults by Host or stating those claimed by Guest (provided that,
in fact, such facts are accurate and ascertainable), and (f) such
other information pertaining to the Lease as may be required by any
such mortgagee.
(d) If proceedings are brought for the foreclosure of, or in the
event of exercise of the power of sale under, any mortgage made by
Host covering the leased Premises, Guest shall become the tenant of,
and attorn to, the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Host under this Lease. The
obligation of Guest hereunder to attorn to the purchaser shall be
conditioned upon the agreement of such purchaser to recognize the
rights of Guest under this Lease. Guest agrees within ten (10) days
after request by Host to execute in recordable form and deliver to
Host an attornment agreement evidencing the provisions of this
subparagraph.
12. Use of Premises. (a) Guest shall use and occupy the Premises only
for office use consistent with the zoning of the Land.
(b) Guest will keep the Premises clean and shall not create any
nuisance, noises, vibrations, electrical discharges, radiation or
other disturbances that shall in any way unreasonably impair the
peace, quietness, comfort, or security of the building wherein the
Premises are situated nor do anything that will cause any extra
hazard, impair the validity of any policy of insurance now or
hereafter placed on the Building, or any of its contents, or that
will increase the rate of premium on any such policy or that will
violate any prohibitions in any such policy.
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(c) Guest, shall, at its own cost and expense, comply with all of
the requirements of all valid laws and regulations, municipal, state
and federal, now in force, or which may hereafter be in force,
pertaining to the Premises, and the use and occupancy thereof.
(d) Guest shall not sell, rent or keep drug paraphernalia,
pornographic materials or sexually explicit materials in or from the
Premises; Guest shall not use the Premises for any activity included
in the definition of "adult entertainment business" in the City of
Xxx Arbor Zoning Ordinance, regardless of whether an activity is a
"principal" activity.
13. Acceptance of Premises. Except as Host and Guest may otherwise agree
in writing at such time, the taking of possession by Guest shall be
conclusive evidence that Guest has examined the Premises, has found
them to be in satisfactory condition and accepts the Premises
"as-is" subject to completion of punch list items, and that Host up
to such time had performed all of its obligations hereunder.
14. Host's Repairs. (a) Subject to the provisions of Paragraph 5, 8 and
34 hereof, Host shall maintain and repair the Premises, the Common
Areas and the structural and public areas of the Building such as
lobbies, stairs, corridors, common restrooms, roof, elevators, and
structural elements; provided, however, should Guest elect to
self-manage the Project (as provided in Paragraph 34), then Guest,
and not Host, shall be responsible for all such maintenance and
repair. Notwithstanding anything herein to the contrary, Guest shall
be solely responsible for locking and unlocking Building entry
doors, security alarms and services.
(b) Except as otherwise provided in the Paragraph hereof relating to
Destruction and in the Paragraph hereof relating to Eminent Domain,
there shall be no allowance, abatement of rental, or liability to
Guest for diminution of rental value or interference with Guest's
business and no claim by Guest for eviction from said Premises by
reason of inconvenience, annoyance or injury to Guest arising from
any repairs, alterations, replacements or improvements made to said
Premises, Building, Common Areas or any portion thereof by Host, its
agents, employees or contractors, or by Host's mortgagee. To the
extent Host may be responsible for repairs under this Lease, Host
shall not be liable to Guest for failure to make repairs to the
Premises, Building, Common Areas or any portion thereof, unless Host
has received from Guest written notice of the need for such repairs
and has failed to commence and diligently complete such repairs
within thirty (30) days of such notice or such greater length of
time as is reasonably required by Host to make such repairs.
(c) The Guest covenants and agrees that if the demised Premises
consists of only a part of a structure owned or controlled by the
Host, the Host may enter the demised Premises at reasonable times
and upon reasonable notice and install or repair pipes, wires and
other appliances or make any repairs deemed by the Host essential to
the use and occupancy of other parts of the Host's building.
(d) Guest acknowledges that the Building cooling system is designed
for a maximum
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internally generated heat load per zone or room of 1 person per 220
square feet and 4.5 xxxxx of lighting and equipment per square foot
in the aggregate. Should the heat load in the Premises exceed the
aforesaid maximum, Guest shall be responsible for the cost of any
consequent modification to the cooling system.
15. Alterations by Guest. Guest shall not make any alterations,
additions and improvements to the Premises without the Host's
written consent, and all alterations, additions and improvements
made by either of the parties hereto upon the Premises, except
movable office furniture and trade fixtures put in at the expense of
the Guest, shall be the property of the Host, and shall remain upon
and be surrendered with the Premises at the termination of this
Lease; provided, however, that the Guest shall have the option of
removing additions made by it if the Premises are restored to good
condition following such removal and any damages to the Premises
resulting from such removal are repaired. Host may, at its option,
require Guest to remove, at Guest's sole expense, improvements made
for or by Guest and repair any damage resulting therefrom, upon the
expiration or earlier termination of this Lease. Should Guest make
any alterations to the Premises, Guest shall have the plans for the
Premises revised to reflect such alterations and shall provide Host
with a set of the revised plans.
16. Insurance. (a) During the term hereof Host shall maintain insurance
coverage as follows:
(i) Host shall keep the Building covered by a policy of fire
and extended coverage insurance equal to 100% for the
replacement cost of the Building with an "agreed amount"
endorsement so as to prevent Host from becoming a co-insurer
of any loss. Such policy of insurance shall name Host as the
loss payee. During any reconstruction, alteration or material
remodeling of the Premises such policy shall be in "builder's
risk" form if there would be an exclusion under Host's fire
and extended coverage policy as a result of such
construction, reconstruction, alteration or material
remodeling.
(ii) Host shall maintain an owner/lessor's policy of
commercial general liability and property damage insurance
with limits which are secured for other comparable buildings
owned and/or managed by First Xxxxxx Corporation; however, in
no event shall said limit ever be less than $3 million.
(iii) Host shall maintain a policy of insurance covering loss
of rents resulting from the interruption of Guest's business
due to fire or other casualty for a period of not less than
twelve (12) months. Such policy shall name Host as the loss
payee.
(b) Guest shall pay Host the cost of the insurance to be maintained
by Host hereunder as provided in Paragraph 8.
(c) Guest shall maintain, at Guest's expense, a policy of commercial
general liability and property damage insurance with a combined
single occurrence limit of not less than $3 million insuring Host
and Guest against any liability arising out of the ownership, use,
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occupancy or maintenance of the Premises. Host, although named as an
additional insured party under said policy, shall nonetheless be entitled
to recover under said policy for any loss sustained by it as the result of
the acts or omissions of Guest. Said single limit shall be adjusted at the
beginning of the sixth Lease year and every fifth year thereafter to the
amount then typically being required by new leases for comparable
facilities in southeastern Michigan as mutually agreed upon by Host and
Guest; but in no event shall said limit ever be less than $3 million.
Guest shall cause the issuer of such policy of insurance to deliver to
Host a copy of or Certificate of Insurance for such policy naming Host as
an additional insured party prior to the Commencement Date hereof and with
respect to the renewal or replacement policies, not less than thirty (30)
days prior to the expiration of the policy being renewed or replaced. No
such policy shall be cancelable or subject to reduction of coverage or
other modification except after thirty (30) days' prior written notice to
Lessor. In addition, Guest shall maintain a policy of fire and extended
coverage insurance on its personal property.
(d) All insurance required under this paragraph shall be written by
companies acceptable to Host, shall be reasonably satisfactory to Host in
all respects and shall provide an effective waiver by the insurer of all
rights of subrogation against any named insured and against such insured's
interest in the Premises and any income derived therefrom. Host and Guest
and all other parties claiming under them hereby mutually release and
discharge each other from all claims and liability to the extent covered
by insurance, regardless of the cause of any damage, loss or injury to
person or property to the extent such waiver of liability is permitted by
any applicable policies of insurance maintained by Host and/or Guest, as
the case may be. Provided other tenants of Host waive subrogation against
Guest, Guest waives any and all rights Guest may have against said other
tenants for damage to or destruction of the demised Premises due to any
casualty insurable by the customary form of fire and extended coverage
insurance, whether such damage or destruction be due to said tenants'
negligence or otherwise.
17. Guest's Personal Property. All personal property of Guest kept on the
Premises shall be at Guest's sole risk, and Guest hereby waives all right
of recovery which it might otherwise have against Host for any loss, theft
or damage to Guest's personal property.
18. Destruction - Fire or Other Cause. If the Premises shall be rendered
untenantable by fire or other casualty, then Host shall make the Premises
tenantable as speedily as possible, and the rent shall be abated in whole
or in part, according to the portion of the Premises which is rendered
untenantable, during the period of untenantability, except that there
shall be no such abatement if such fire or other casualty shall be caused
by the gross negligence of Guest or its agents, employees, invitees or
licensees, and further, there shall be no abatement for the time required
for the replacement or repair of any property of Guest, in excess of the
time required to make the Premises tenantable. In the event that the
Premises cannot be made tenantable within ninety (90) days, then either
Host or Guest may terminate this Lease by notification to the other of
such termination within ten (10) days after Host shall have notified Guest
of the time required to make them tenantable. Host shall, in its sole
judgment, reasonably exercised, determine the length of
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time required to make the Premises tenantable, and shall notify Guest of
such determination within ten (10) days after the occurrence of the fire
or other casualty. Notwithstanding the foregoing, in the event that the
Premises shall be so damaged by fire or other casualty that demolition or
substantial reconstruction is required, then Host or Guest may terminate
this Lease by notifying the Guest or Host of such termination within
thirty (30) days after the date of such damage.
19. Eminent Domain. In the event that all or a substantial portion of the
Premises be lawfully condemned or taken in any manner for any public or
quasipublic use, this Lease shall terminate as of the date of actual
taking. In the event that any insubstantial part of the Premises be so
condemned or taken, Host or Guest shall have the right to terminate this
Lease as of the date of actual taking by giving Guest or Host written
notice of such termination; but should Host or Guest not so terminate this
Lease, this Lease shall cease as to the part taken and the rent adjusted
so that Guest shall pay a pro rata portion of the rent determined by the
amount of space (and rate therefor) remaining after the taking. Host shall
be entitled to receive the entir award from any such condemnation or
taking of the Premises or any part thereof, without deduction therefrom
for any estate or interest granted to Guest by this Lease, provided, that
nothing herein contained shall be deemed to prevent Guest from claiming
compensation for relocation costs or loss for interruption of business in
the event an award with respect thereto is provided for by law or is fixed
in the proceeding in which such taking shall occur. In the event of a
partial taking insufficient in size to cause termination of the Lease,
Host shall build, repair or replace any outer walls, floor, or roof
necessary to make the Premises tenantable.
20. Assignment and Subletting. Guest shall not assign this Lease or sublet the
Premises or any part thereof without the written consent of Host, which
consent shall not be unreasonably withheld. Under no circumstances shall
Guest have the right to sublease the Premises to more than three (3)
sublessees. Any other provision of this Paragraph to the contrary
notwithstanding, Host shall not be required to give its consent to an
assignment or subletting of the leased Premises, or any part thereof, if
the effect of such assignment or subletting would be to create a profit
for the Guest. In such cases, any profit from the assignment or subletting
shall be paid to the Host. Guest agrees that it shall not be unreasonable
for Host to withhold its consent to a proposed assignment or subletting
if: (i) Host believes that the proposed assignee or sublessee of 35,000
square feet or more in the premises is not as financially responsible as
Guest on the date hereof; (ii) Host believes that the proposed assignee or
sublessee will not conduct on the Premises a business of a quality equal
to that conducted by Guest; or (iii) Host believes that the business of
the proposed assignee or sublessee, conducted on the Premises, will have
an impact upon the common facilities dissimilar to that of Guest's
business or will require services of Host dissimilar to those required by
Guest. Host's consent to one assignment or sublease shall not waive the
requirement of its consent to any subsequent assignment or sublease. In
the event Host consents to Guest's subletting, Guest shall include in such
sublease all of the pertinent terms contained herein, and Guest shall
furnish Host with a certified copy of any and all subleases affecting the
demised Premises prior to such consent; and in case of default by Guest
giving Host right of entry for breach of condition
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subsequent, Guest, at Host's option, shall assign all of Guest's right,
title and interest in any subleases to Host, and Guest shall incorporate
such provision in any and all subleases made by Guest. Host's consent to
an assignment shall not be effective until Host has received a written
document in which the assignee has assumed and agreed to perform all of
Guest's obligations in the Lease. Host's consent to an assignment or
sublease shall not release the Guest from the payment and performance of
its obligations in the Lease, but rather the Guest and its assignee shall
be jointly and severally primarily liable for such payment and
performance.
21. Default, Eviction, Termination, and Damages. If Guest shall fail to pay
any rent or other charges due hereunder within ten (10) days of the date
said charges are due, or if Guest shall fail to comply with any details,
provisions, or covenants of this Lease other than the payment of rent and
shall not cure such failure within thirty (30) days after written notice
thereof, or if Guest shall be adjudged bankrupt by a court of competent
jurisdiction, or if a receiver or trustee shall be appointed for all or
substantially all of the assets of Guest, then in any such event, Guest
shall be deemed in default. When Guest is in default, Host, besides other
rights or remedies it may have, shall have the right to declare this Lease
terminated and the term ended, shall have the right to evict Guest under
Summary Proceeding law, and shall have the additional and immediate right
of reentry and may remove all persons and property from the leased
Premises and such property may be removed and stored in a public warehouse
or elsewhere at the cost of, and for the account of Guest, without
evidence of notice or resort to legal process and without being deemed
guilty of trespass, or becoming liable for any loss or damage which may be
occasioned thereby. Should Host elect to reenter, as herein provided, or
should it take possession pursuant to legal proceedings or pursuant to any
notice provided for by law, it may either terminate this Lease or it may
from time to time, without terminating this Lease, make such alterations
and repairs as it may deem appropriate in order to re-rent the Premises,
and re-rent said Premises or any part thereof for such term or terms
(which may be for a term extending beyond the term of this Lease) and at
such rental or rentals and upon such other terms and conditions as Host in
its sole discretion may deem advisable. If Host has other unoccupied space
similar to the Premises, Host shall be under no duty to attempt to re-rent
these Premises (and Guest shall be entitled to no reduction in its
indebtedness to Host as a result of any such failure by Host) until such
other space has been rented. Upon each such re-renting, all rentals and
other sums received in any month by Host from such re-renting shall be
applied, first to the payment of any indebtedness other than rent due
hereunder from Guest to Host; second, to the payments of any costs and
expenses of such re-renting, including reasonable brokerage fees and
attorneys' fees and of costs of such alterations and repairs; third, to
the payment of rent and other charges due and unpaid hereunder; and the
residue, if any, shall be held by Host and applied in payment of future
rent as the same may become due and payable hereunder. If such rentals and
other sums received from such re-renting during any month be less than
that to be paid during that month by Guest hereunder, Guest shall pay such
deficiency to Host. Such deficiency shall be calculated and paid monthly.
No such re-entry or taking possession of said Premises by Host shall be
construed as an election on its part to terminate this Lease unless a
written notice of such intention is given to Guest or unless the
termination
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thereof is decreed by a court of competent jurisdiction. Notwithstanding
any such re-renting without termination, Host may at any time hereafter
elect to terminate this Lease for such previous default. Should Host at
any time terminate this Lease for any default, in addition to any other
remedies it may have, it may recover from Guest all damages it may incur
by reason of such default, including the cost of recovering the leased
Premises, reasonable attorneys' fees, and including the worth at the time
of such termination of the excess, if any, of the amount of rent and
charges equivalent to the rent reserved in this Lease for the remainder of
the stated term over the then reasonable rental value of the leased
Premises for the remainder of the stated term, all of which amounts shall
be immediately due and payable from Guest to Host. In case suit shall be
brought for recovery of possession of the leased Premises, for the
recovery of rent or any other amount due under the provisions of this
Lease, or because of the failure by Guest to abide by any other detail,
provision, or covenant herein contained, Guest shall pay to Host all
expenses incurred therefore, including reasonable attorneys' fees. Guest
and Host hereby waive their rights to jury trial in any litigation that
may arise relating to this Lease.
22. Surrender of Premises. Upon the expiration or the termination of the term
of this Lease, Guest shall quit and surrender the Premises to Host in good
order and condition, ordinary wear, damage by the elements, and damage
which is the responsibility of Host excepted; and Guest shall remove all
of its property and shall repair any damage to the Premises caused by such
removal. Any personal property of Guest or of anyone claiming under Guest
which shall remain on the Premises after the expiration or termination of
the Lease term shall be deemed to have been abandoned by Guest, and either
may be removed by Host as its property or may be disposed of in such
manner as Host may see fit, and Host shall not be responsible for the
same.
23. Access to Premises. Host shall have the right to enter upon the Premises
at all reasonable hours upon reasonable notice for the purpose of
inspecting the same, preventing waste, loss, or destruction, removing
obstructions, making such repairs or alterations as it is obligated to
make under the terms of this Lease, or to enforce any of Host's rights or
powers under this instrument, and Host shall not be liable nor responsible
for any loss that may accrue to Guest's business by reason thereof. The
Host may show the Premises to prospective tenants at any time during the
last eighteen (18) months of the term of this Lease and display a "for
rent" sign subject to Guest's approval of design and location.
24. Heirs and Assigns. The covenants, conditions, and agreements contained in
this Lease shall bind and inure to the benefit of Host and Guest and their
respective heirs, distributees, executors, administrators, successors,
and, except as otherwise provided in this Lease, their assigns.
25. Confidentiality. Guest shall not disclose the terms and conditions of this
Lease to third parties, except to professional advisors of Guest and as
required by securities laws affecting Guest, without the advance written
consent of Host.
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26. Quiet Enjoyment. So long as Guest pays the rent and performs all of its
obligations in this Lease, Guest's possession of the Premises will not be
disturbed by Host, its successors or assigns.
27. Signs. Other than the signage shown on the Project plans and
specifications mutually agreed upon by Host and Guest (as provided in
Paragraph 3), Guest or Host shall not fasten to or paint upon any part of
the Site or Building any sign, advertisement, notice or handbill without
the prior written consent of the Host or Guest. Host may, without notice
to Guest, remove any such sign, advertisement, notice or handbill painted
or affixed in violation of this clause without any liability whatsoever
for damages or otherwise to Guest, and Guest shall be responsible for the
cost of such removal. Host reserves the right to place other signage on
the Site or Building in the event the Building becomes multi-tenanted.
28. Holding Over. In the event that Guest shall hold over after the term of
the Lease, it is agreed that thereafter the tenancy shall be from month to
month in the absence of a written agreement to the contrary on the same
terms and conditions contained herein, with the exception that the rent
shall increase to 120% of the rent in effect at the termination of the
term of the Lease for the first three months and 150% thereafter.
29. Parking. Subject to the provisions of Paragraph 36 (h), Guest shall have
an exclusive license for the use of its agents, employees, suppliers, and
customers over the driveways and parking lots on the Site. Guest shall not
allow its employees, agents or invitees to park on Traverwood Drive or in
lots of other buildings in Traverwood Business Park.
30. Notices. Whenever any notice is required hereunder it shall be made in
writing and served personally or by certified mail, return receipt
requested, at the following addresses (or at such other addresses as the
parties may hereafter designate in writing):
Host: Xxxxxxx X. Xxxxxx
c/o First Xxxxxx Corporation
000 Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxx 00000
Guest: Mechanical Dynamics, Inc.
0000 Xxxxxxxxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxx 00000
until the commencement date of the Lease and thereafter the Premises.
If served personally, service shall be conclusively deemed made at the
time of such service. If served by certified mail, service shall be
conclusively deemed made forty-eight (48) hours after the deposit thereof
in the United States Mail.
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31. Host's Liability. (a) Guest and Host shall mutually indemnify, defend
and hold harmless each other and their respective officers, employees,
agents and invitees from all losses, damage, claims or liability arising
out of any and all injuries to or death of any person or damage to any
property arising out of any occurrence in or about the Premises, or
arising out of any occurrence in or about the Building arising from the
act or neglect of Guest or Host or their respective agents or invitees.
Notwithstanding the foregoing, neither party shall have any obligation to
indemnify the other party against the sole negligence of that party.
(b) The Host shall not be responsible or liable to the Guest for any
loss or damage that may be occasioned by or through the acts or omissions
of persons occupying adjoining premises or any part of the premises
adjacent to or connected with the Premises hereby leased or any part of
the Building of which the leased Premises are a part or for any loss or
damage resulting to the Guest or his property from bursting, stoppage or
leaking of water, gas, sewer or steam pipes.
(c) If Host shall fail to perform any provision of this Lease and if as
a consequence of such default Guest shall recover a money judgement
against Host, such judgement shall be satisfied only out of the proceeds
of sale received upon execution of such judgement and levied against the
interest of Host in the Building or the consideration received by Host
from the sale of Host's interest.
32. Rules and Regulations. Guest and its employees and invitees, shall
faithfully observe and comply with the Rules and Regulations attached to
this Lease, and all reasonable modifications of and additions thereto as
may be from time to time put into effect by Host. Host shall not be
responsible to Guest for the nonperformance of any of said Rules and
Regulations by any other Guest or occupant of the Building. In the event
of a conflict between the terms and provisions of this Lease and the
referenced Rules and Regulations, this Lease shall control. Prior to the
effective date of any intended modifications of or additions to the Rules
and Regulations annexed hereto, Host shall furnish Guest with a written
copy of same.
33. Environmental Law Compliance. The parties acknowledge that there are
certain federal, state and local laws, regulations and guidelines now in
effect, and that additional laws, regulations and guidelines may hereafter
be enacted, concerning the impact on the environment of land use, the
maintenance and operation of structures, and the conduct of business.
Guest will not cause, or permit to be caused, any act or practice on or
about the premises which would adversely affect the environment or violate
any of such laws, regulations, or guidelines. In particular, without
limiting the generality of the foregoing, Guest will not use the premises
to produce, store, process or transport any hazardous waste or hazardous
substance, as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"),
or in the Resource Conservation Recovery Act of 1980, as amended ("RCRA").
Any violation of this covenant shall be an event of default under this
Lease. In the event that a governmental authority deems the Premises,
Building or underlying
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land unsafe for occupancy due to Guest's tenancy, or the operation of its
business at the Premises, then Guest shall be liable and shall fully
compensate Host for the resulting loss sustained by Host. Such liability
shall extend to any and all of Guest's officers, principals, general
partners and guarantors under the Lease. Guest agrees to indemnify and
hold Host harmless against all losses, costs, expense and liability
whatsoever, including Host's costs of defending against the foregoing,
which will include reasonable attorney's fees, and against any costs
necessary in connection with the cleanup or removal of any hazardous waste
or hazardous substance from the premises, caused, or permitted to be
caused, by any act, practice or neglect of Guest with respect to the use
of the premises. Guest shall have no claim against Host by reason of any
changes which Host may be required to make to the premises pursuant to
such laws, regulations, or guidelines. Host hereby represents to Guest
that, to the best of Host's knowledge, no condition currently exists on
the Site which constitutes a violation of any environmental law described
in this Section 33 or otherwise, and Host hereby agrees to indemnify,
defend and hold harmless Guest from any liability, claim, damage or
expense arising out of any environmental condition associated with the
Site in existence prior to the Commencement Date.
34. Management by Guest. Provided Guest is the sole Lessee of the initial
Building or after expansions, Guest shall have the right to assume
responsibility for the management, maintenance and repair (including
replacement, as necessary) of the Project by giving Host written notice of
its intentions to assume management of the Project on the date specified
in such notice (which date must be on the first day of a Lease Year): (a)
within six (6) months of Lease execution; or (b) six (6) months prior to
the fifth anniversary of the Commencement Date; or (c) six (6) months
prior to the tenth anniversary of the Commencement Date; or (d) six (6)
months prior to the commencement of the First Option Term hereunder,
provided Guest has properly exercised such Option; or (e) six (6) months
prior to the commencement of the Second Option Term hereunder, provided
Guest has properly exercise such Option. Performance of such
responsibility by Guest shall be on the terms and conditions which are as
follows. Host shall be relieved of its obligation to maintain and repair
the Project (as set forth in Paragraph 14). Guest shall maintain the
Project in good order and repair and in a first-class condition. Guest
shall pay the Operating Expenses for maintenance and repair set forth in
Paragraph 8 directly to the providers of maintenance and repair services.
Guest shall enter into and keep in force maintenance contracts for the
services which are follows: (a) parking facility sweeping, snow removal
and salting; (b) comprehensive landscaping maintenance, including mowing,
fertilization, pruning and the planting of spring and summer annual
flowers; (c) elevator maintenance (full maintenance contract, including
replacements); and (d) heating/cooling systems preventive maintenance (4
times per year). Guest shall police the grounds and the parking facilities
of the Project each day so that said grounds and parking facilities are as
free of litter and debris as is reasonably possible. Should Guest fail to
perform any of its maintenance obligations hereunder within thirty (30)
days of notice from Host, Host shall have the right to enter the Premises,
perform such maintenance and xxxx Xxxxx the reasonable cost thereof. Guest
shall not engage a third party to manage such maintenance and repair
without the advance written approval of
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Host. Upon assumption of Project management by Guest hereunder, Host shall
have all of the rights provided to Guest under Section 8 (c) hereof with
respect to oversight of Project management. In the event Host expands the
Building pursuant to the terms of Paragraph 36 (h), Guest shall cease to
be responsible for the maintenance and repair of the Project and Host
shall assume such responsibility as of the date construction of such
expansion commences in accordance with the terms of this Lease. Host
represents to the best of its knowledge that the premises prior to and
during the construction process does not violate any such laws and
indemnifies Guest against any loss caused by a condition existing prior to
lease commencement.
35. Michigan House Lease. A default by Guest under the lease between First
Properties Associates Limited Partnership (as Assignee of Plymouth Square)
and Guest dated July 12, 1989 for certain premises at 0000 Xxxxxxxxxxxx
Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxx shall be a default under this Lease.
36. Expansion Options. At the option of Guest, Host shall expand the Building
as hereinafter provided.
(a) Building Additions. The expansion of the Building shall be in the
form of two, two-story additions containing, in the aggregate, a
Gross Building Area of approximately 60,000 square feet; the
approximate overall footprint of said additions is depicted on
Exhibit C attached hereto. The first such addition is hereinafter
referred to as the "Phase I Expansion Space"; the second such
addition, the "Phase II Expansion Space".
(b) Guest's Expansion Options. Guest shall have the option to lease the
Phase I Expansion Space as an addition to the Premises. The Phase I
Expansion Space shall have a Gross Building Area between 20,000 and
30,000 square feet. Guest shall determine the exact size of the
Phase I Expansion Space; the bay sizing shall govern the increments
to the area. Said option shall terminate on the date (the "Option
Termination Date") two years from the Commencement Date of this
Lease. Guest shall exercise said option by giving Host notice thirty
(30) days prior to the Option Termination Date. Guest shall have the
right to extend the Option Termination Date by a period of two years
(i.e., to that date four years from the Commencement Date) by giving
Host notice thirty (30) days prior to the then current Option
Termination Date and paying all carrying costs for the land required
for the Phase I Expansion Space for said two year period, which land
is deemed to be 25% of the Site. As used herein, "carrying costs"
shall mean real estate taxes and assessments (prorated on a due date
basis) and interest on the value of said land at the then prime rate
minus 200 basis points. The value of said land is deemed to be $4.00
per square foot of land area. As used herein, "prime rate" shall
mean the prime rate reported in the Wall Street Journal as such rate
may change from time to time. Carrying costs shall be paid in
monthly installments. If Guest exercises its option for the Phase I
Expansion Space, Guest shall have an option to lease the Phase II
Expansion Space as an addition to the
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Premises. The Gross Building Area of the Phase II Expansion Space
shall be approximately the difference between 60,000 square feet and
the Gross Building Area of the Phase I Expansion Space. Said Phase
II option shall terminate on the date (the "Phase II Option
Termination Date) two years from the date the Phase I Expansion
Space becomes part of the leased Premises. Guest shall exercise said
Phase II option by giving Host notice not later than thirty (30)
days prior to the Phase II Option Termination Date. Guest shall have
the right to extend the Phase II Option Termination Date by a period
of one year by giving Host notice thirty (30) days prior to the then
current Termination Date and paying all carrying costs (as described
above) for the land required for the Phase II Expansion Space for
said one year period, which land is deemed to be 25% of the Site.
Exercise by Guest of either of the aforesaid expansion options shall
be subject to Guest not having been in default under this Lease.
Host and Guest acknowledge that while Host shall secure site plan
approval for the entire 120,000 square foot Building forthwith, each
expansion option and Host's ability to perform same, are subject to
securing all necessary governmental approvals. Within thirty days of
the date Guest exercises either of the aforesaid expansion options,
Host and Guest shall execute an amendment to the Lease which adds
the expansion space to the Premises and includes the other pertinent
provisions of this Paragraph 36. Exercise of either expansion option
by Guest shall be subject to a determination by Host in its
reasonable judgement that Guest's financial condition and financial
prospects as of the date Guest gives Host notice of such exercise
are as strong as Guest's financial condition and financial prospects
as of the date hereof. Host shall make such determination within
fifteen (15) days of the date such notice is given; Guest shall
provide Host with such financial data and other information as is
reasonably required by Host to make such determination.
(c) Term. Should Guest exercise the Phase I option, the term of this
Lease shall be extended for a period of ten years from the date of
occupancy of the Phase I expansion space. Should Guest exercise the
Phase II option, the term of the Lease will not change. The Phase I
and Phase II Expansion Spaces shall become part of the leased
Premises (and rent shall become due) as of the date of Substantial
Completion of Host's Expansion Improvements (as hereinafter defined)
with respect to each phase.
(d) Improvements. From the date an amendment for an expansion space is
executed, Host and Guest shalldiligently prosecute the completion of
the Expansion Space. Host shall cause the construction of the
expansion space , including site work, building shell, mechanical
systems, and interior partitions and finishes but excluding the
installation of cubicles (including electrical wiring) and computer
and communications cabling (herein sometimes referred to as "Host's
Expansion Improvements"). Guest shall be responsible for the layout,
design and installation of all cubicles (including electrical
wiring) and computer and communications cabling; said design and
Guest's contractors must be approved by Host in writing in advance.
Host's Expansion Improvements shall be constructed in accordance
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with plans and specifications mutually determined and agreed upon by
Host and Guest as provided hereinafter. The architect for Host's
improvements shall be Xxxxxxxx, Xxxxx and Xxxxxx, or, at Host's
option, another qualified architect. The maximum number of parking
spaces allowed by the City of Xxx Arbor shall be provided not to
exceed five spaces per 1,000 square feet of Gross Building Area.
Host shall submit to Guest for its approval the site plan and final
plans and specifications for Host's Expansion Improvements; said
plans and specifications shall be deemed approved unless rejected in
writing within five (5) business days of receipt. A working set of
site plans and building plans and specifications which are
approximately 75% complete will be made available for review at
least two weeks prior to submission of final plans. Any denial of
such approval shall be fair and reasonable. The general contractor
for Host's Expansion Improvements shall be X'Xxxx Construction or,
at Host's option, another qualified contractor selected by Host
("Contractor"). Host and Guest shall jointly negotiate a contract
with the Contractor, which contract shall provide a guaranteed
maximum price which includes a 3% design and construction
contingency. Host shall provide an allowance (the "Expansion Hard
Construction Cost Allowance") negotiated by Host and Guest for the
direct construction costs for Host's Expansion Improvements; "direct
construction costs" includes bonding and permits but excludes
extraordinary costs relating to poor soil conditions, which costs
shall be the sole responsibility of Host, and soft costs such as
architectural and design services, legal services, construction
financing, permanent financing origination, title insurance,
builder's risk insurance, brokerage commissions, development fees,
real estate taxes and other carrying costs for the Site. Any direct
construction costs for Host's Expansion Improvements in excess of
said improvement allowance shall be paid to Host by Guest within ten
(10) days of date of invoice. Contractor shall provide a warranty of
one year on all work with the exception of the roof, which shall
have a ten year warranty; said warranties shall commence as of the
date of Substantial Completion of Host's Expansion Improvements. The
additional cost of any change orders requested by Guest shall be
paid to Host within ten (10) days of invoice and shall include an
administrative fee of 10%. Host shall not be liable for failure to
give possession of the Expansion Space or any part thereof by reason
of Governmental interference, act of God, labor disputes, fire,
unavoidable casualties or other causes beyond Host's control.
(e) Rent. Guest shall pay to Host as annual base rent for each Expansion
Space for the term hereof an amount which shall be determined by
multiplying the Rent Factor by the Expansion Total Development Cost,
as further defined below:
(i) "Rent Factor" is the sum of the Rental Rate Constant and the
Debt Service Constant
(ii) "Rental Rate Constant" is 200 basis points.
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(iii) "Debt Service Constant" is the percentage calculated by
dividing the annual payment of principal and interest required for
the Expansion Permanent Mortgage Loan by the original principal
amount of said Loan.
(iv) "Expansion Permanent Mortgage Loan" is the loan which is
secured by Host to finance the Expansion Total Development Cost.
Said loan shall (a) have a minimum term of ten (10) years, (b) be
non-recourse, (c) have a twenty-five year amortization schedule
which provides for level annual payments, and (d) be otherwise
acceptable to Host. If said loan has not been closed as of the date
the Expansion Space becomes part of the leased Premises, then the
terms set forth in the commitment for said Loan shall be used.
(v) "Expansion Total Development Cost" is the sum of :
- "Expansion Land Cost" which is deemed to be $17.50 per square
foot of Gross Building Area on the first and second floors of
the Expansion plus $4.00 per square foot of additional land
required in order to provide necessary supplemental parking
should Guest elect finish-off the lower plaza level for office
occupancy;
- "Expansion Hard Construction Cost" which is the portion of the
Expansion Hard Construction Cost Allowance which is used;
- "Expansion Soft Cost", which shall be negotiated by the Host
and Guest and shall include but not be limited to the cost for
the Expansion of interim financing, permanent financing
origination, architectural and engineering, real estate taxes
during construction, builder's risk, insurance, appraisals
legal, accounting, and a contingency of 2%, but shall exclude
the developer's fee and overhead; and
- "Developer's Fee and Overhead" which shall be 3.0% of the sum
of: (a) Expansion Land Cost; (b) Expansion Hard Construction
Cost; and(c) Expansion Soft Cost.
(f) Additional Space. Should Guest require additional space after
exercising both Expansion Options, Host shall use its best efforts
to find additional space at similar terms and conditions coterminous
with the Lease.
(g) Assignment. Guest shall not have the right to assign either
Expansion Option to third parties. Should Guest assign its interest
in the Lease, the Expansion Options shall be terminated.
(h) Host's Right to Expand. Should Guest not exercise either of the
aforesaid options for Expansion Space, Host shall have the right to
construct the Expansion Space and lease such space to third parties.
Should Host exercise said right, upon the
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substantial completion of the Expansion Space, the Building entry
lobby, and elevators, hallways and stairwells which do not
exclusively serve the leased Premises shall cease to be part of the
leased Premises and shall become common area over which Guest shall
have a non-exclusive easement in common with the other tenants of
the Building. In such an event, the rent payable to Host by Guest
hereunder shall be ratably reduced; such reduction shall be computed
based on the rentable area of the Premises (as hereinafter defined)
before and after the common area conversion. As used herein,
"rentable area" shall mean the sum of the Gross Building Area of the
leased Premises (after deduction of the Gross Building Area of the
common areas) and a pro rata share of the Gross Building Area of the
common areas. Where the leased Premises abuts the common area, Gross
Building Area shall be determined by measuring to the midpoint of
common walls. Guest shall pay its pro rata share of the Project Real
Estate Taxes and Operating Expenses for the common areas, grounds
and parking lots of the Project. Said share shall be the proportion
which the rentable area of the Premises after expansion bears to the
total Gross Building Area after expansion. Guest acknowledges
inconveniences may arise during the expansion of the Building. Host
shall not cause any unreasonable inconveniences such as limiting
Guest's access to the Premises or curtailing the services which Host
is obligated to provide hereunder. Should Guest exercise its option
for the Phase I Expansion Space, Guest shall, in the design process
for the Phase I Expansion Space, cooperate with Host in
incorporating into the plans for the Phase I Expansion Space
possible future means of access from the Building entry lobby and
elevator(s) to the Phase II Expansion Space. Should Guest not
exercise its option for the Phase II Expansion Space, then, should
Host exercise its right to construct the Phase II Expansion Space,
Guest shall agree to relinquish, at Host's option, the portion of
the Premises required for such means of egress at the time of such
construction; and the rent and expenses payable hereunder shall be
ratably reduced. If Host should exercise its rights to expand the
Building, then (i) Guest's right to manage the Project shall
terminate as of the date Hosts commences construction of such
expansion, and (ii) Guest's license to use the parking lots on the
Site shall be restated as follows. Guest shall have an exclusive
license for parking for its visitors in a portion of the parking lot
to the west of the Building, and Guest shall have a non-exclusive
license for parking for its employees and agents in the parking lot
to the northeast of the Building as depicted in Exhibit D attached
hereto.
37. Parking Structure. Host shall have the right to construct a parking
structure on the Site in substitution, in whole or in part, for the
Project parking lots and Guest shall have a non-exclusive license for the
use of said structure in common with others. The total number of spaces
which Guest is entitled to use in the structure and remaining parking lots
shall be the same as the number of spaces Guest was entitled to use prior
to the construction of the parking structure. Guest shall be responsible
for its pro rata share of the cost of maintaining and repairing such
structure, which cost shall be included in Operating Expenses but shall
not be higher than the costs to maintain surface parking.
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38. Miscellaneous. (a) The failure of either party to enforce any covenant or
condition of this Lease shall not be deemed a waiver thereof or of the
right of either party to enforce each and every covenant and condition of
this Lease. No provision of this Lease shall be deemed to have been waived
unless such waiver is in writing.
(b) This Lease and the Exhibits attached hereto and forming a part
hereof, set forth the entire agreements between Host and Guest concerning
the leased Premises. Any amendment shall be in writing and signed by each
party.
(c) Each party represents and warrants that there are no claims for
brokerage commissions or finder's fees in connection with the execution of
this Lease with the exception of a commission due to Guest's broker, GVA
Strategis, and each party agrees to indemnify the other against, and hold
it harmless from, all liability arising from any such claim. Guest shall
be liable for the payment of a commission in the amount of Two Hundred
Ninety-Three Thousand Five Hundred ($293,500) Dollars to GVA Strategis;
Host shall reimburse Guest the amount of said commission within ten (10)
days of the date Guest takes occupancy of the Premises.
(d) Guest shall not record this Lease without the written consent of
Host. Upon the request of either party the other party shall join in the
execution of a memorandum of this Lease for recording which shall describe
the parties, the leased Premises, the term and any special provisions.
(e) In the event of any transfer of Host's interest in the Premises, the
transferor shall be automatically relieved of all obligations and
liabilities on the part of Host accruing from and after the date of such
transfer. The release of Host from such obligations and liabilities shall
be expressly conditioned upon an assumption by any transferee of all of
the unperformed terms, covenants and conditions of this Lease arising
after the date of such transfer, including the application of Guest's
security deposit in accordance with the provisions of Paragraph 9 hereof.
(f) Any amount due from Guest to Host which is not paid when due shall
bear interest at the highest legal rate from the date due until paid,
unless otherwise specifically provided herein, but the payment of such
interest shall not excuse or cure any default by Guest.
(g) No payment by Guest of a lesser amount than the monthly rent shall
be deemed to be other than on account of the earliest rent, nor shall any
endorsement or statement on any check or any letter accompanying any
payment be deemed an accord and satisfaction, and Host shall accept such
payment without prejudice to Host's right to recover the balance of such
rent or pursue any other remedy.
(h) Guest agrees to furnish to Host the financial statements of Guest
in a form acceptable to Host at least annually and within thirty days
after Host's request.
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(i) This Lease shall be governed by, and construed in accordance with,
the laws of the State of Michigan. If any provision of this Lease shall,
to any extent, be invalid or unenforceable, the remainder of this Lease
shall not be affected and each provision shall be valid and enforceable to
the fullest extent permitted by law.
(j) In the event that during the term of this Lease, Host is afforded
the opportunity to rent space on the roof of Phase I or subsequent phases
of the Building solely occupied by Guest for the location of one or more
antennae, Guest agrees to such rental; provided, that no such antenna
shall interfere with any antenna, satellite dish or other communications
or similar device that Guest has installed on the roof with Host's
approval and; further provided, that Host shall negotiate any such rental
agreement and, after reimbursement of all of Host's expenses related to
such negotiations, shall share such rental amounts, 50% to Host and 50% to
Guest, provide an accounting of expenses and rent collections to Guest and
remit Guest's share as such rents are collected.
Intentional page break.
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This agreement is hereby signed on behalf of the parties effective as of the
date first written above.
Host:
Xxxxxxx X. Xxxxxx
/s/ X.X. Xxxxxx
-----------------------------
Guest:
MECHANICAL DYNAMICS, INC.,
A Michigan corporation
By: /s/ Xxxxx Xxxxxxx
-----------------------
Its: /s/ VP & CFO
-----------------------
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ACKNOWLEDGEMENT OF CORPORATE GUEST
STATE OF
ss.
COUNTY OF
The foregoing instrument was acknowledged before me this 5th day of
August, 1999 by
the of
---------------------- ---------------------- ----------------------
----------------------,
a corporation, on behalf of the corporation.
---------------------
/s/ Xxxxx Xxxxxxx-Xxxxxx
-----------------------------------
Notary Public, Xxxxxxxxxx County
My commission expires: May 17, 2002
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EXHIBIT A-1
LEGAL DESCRIPTION OF THE LAND
Commencing at the South 1/4 corner of Section 15, T2s, R6E, City of Xxx Arbor,
Washtenaw County, Michigan; thence N 01(degree)10'27" W 1000.01 feet along the
North-South 1/4 line of said Section 15 for a PLACE OF BEGINNING; thence N
71(degree)15'31" W 325.00 feet; thence N 30(degree)29'46" W 215.77 feet; thence
S 53(degree)14'25" W 482.04 feet; thence the following four courses along the
Easterly right-of-way line of Traverwood Drive (70 feet wide): 418.79 feet along
the arc of a 672.98-foot radius nontangential circular curve to the right, with
a central angle of 35(degree)39'18", having a chord which bears N
05(degree)57'27" E 412.06 feet, N 23(degree)47'10" E 347.36 feet, 129.14 feet
along the arc of a 538.00-foot radius circular curve to the right, with a
central angle of 13(degree)45'10", having a chord which bears N 30(degree)39'46"
E 128.83 feet, and N 37(degree)32'08" E 307.25 feet; thence S 51(degree)49'25" E
446.69 feet along the Southerly right-of-way line of Huron Parkway (variable
width); thence S 01(degree)10'27" E 808.10 feet to the Place of Beginning, being
a part of the Southwest 1/4 of said Section 15, containing 13.19 acres of land,
more or less, being subject to easements and restrictions of record, if any.
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EXHIBIT A-2
PRELIMINARY SITE PLAN
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EXHIBIT B
ILLUSTRATION OF HYPOTHETICAL RENTAL PAYMENT CALCULATION
(Using Estimated Costs)
Hard costs (66,878 sq. ft. @ $100.00) $6,687,800
Soft costs (60,000 sq. ft. @ $26.39)* 1,583,400
Land Cost (60,000 sq. ft. @ $17.50) 1,050,000
----------
EST. TOTAL DEVELOPMENT COST $9,321,200
X EST. RENT FACTOR (Rental Rate Constant + Debt Service x 10.75%
----------
Constant) (2.00% + 8.75% = 10.75%)
ESTIMATED ANNUAL BASE RENTAL $1,002,029
*NOTE: Soft Costs are based on first two floors only, and not the approximate
6,878 sq. ft. on the lower plaza level.
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EXHIBIT C
FOOTPRINT OF BUILDING ADDITIONS
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EXHIBIT D
EXPANSION PARKING
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EXHIBIT E
RULES AND REGULATIONS
1. The sidewalks and grounds of the Building are not for the use of the
general public, and Host shall in all cases retain the right to control
and prevent access thereto of all persons whose presence in the judgment
of Host shall be prejudicial to the safety, character, reputation and
interests of the Building and its Guests, provided that nothing herein
contained shall be construed to prevent such access to employees or other
persons with whom any Guest normally deals in the ordinary course of its
business, unless such persons are engaged in illegal activities. No Guests
and no employee, agent or invitee of any Guest shall go upon the roof of
the Building.
2. No awnings or other projection shall be attached to the outside walls of
the Building. No curtains, blinds, shades or screens shall be attached to
or hung in, or used in connection with, any window or door of the Premises
without prior written consent of Host. All electric ceiling fixtures hung
in offices or spaces along the perimeter of the Building must be
fluorescent, of a quality, type, design and bulb color approved by Host.
Neither the interior nor exterior of any windows shall be coated or
otherwise unscreened without the written consent of the Host.
3. No bicycles, vehicles, birds or animals of any kind shall be brought into
or kept in or about the Premises. Any preparation of food or beverages in
the Premises shall be done only with equipment approved by Host which does
not overload the electrical wiring of the Premises. No Guest shall cause
or permit any unusual or objectionable odors to be produced or permeate
the Premises.
4. Except with the prior written consent of Host, no Guest shall occupy or
permit any portion of his Premises to be occupied as an office for a
public stenographer or typist, or for the manufacture or sale of liquor,
narcotics or tobacco in any form, or as a xxxxxx or manicure shop, in or
on the Premises. No Guest shall engage or pay any employees on the
Premises, except those actually working for Guest on the Premises, nor
advertise for laborers giving an address at the Premises. The Premises
shall not be used for lodging or sleeping or for any illegal purposes.
5. No Guest shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them, whether by the
use of any musical instrument, radio, phonograph, unusual noise, or any
other way. No Guest shall throw anything out of door, windows or skylights
or down the passageways.
6. Guest shall provide Host with a key for any exterior doors installed by
Guest in the Premises. Each Guest must, upon the termination of its
tenancy, restore to the Host all keys of stores, offices, and toilet
rooms, either furnished to, or otherwise procured by, such Guest and in
the event of the loss of any keys so furnished, such Guest shall pay to
the Host the cost of
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replacing the same or of changing the lock or locks opened by such lost
key if Host shall deem it necessary to make such change.
7. Host shall have the right to prohibit any advertising by any Guest which,
in Host's opinion, tends to impair the reputation of the Building or its
desirability as an office/research building and upon written notice from
Host any Guest shall refrain from or discontinue such advertising.
8. Each guest shall see that the doors of its Premises are closed and
securely locked and must observe strict care and caution that all water
faucets, water apparatus and utilities are shut off before employees leave
the Premises, so as to prevent waste or damage, and for any default or
carelessness Guest shall make good all injuries sustained by other tenants
or occupants of the Building or Host. On multiple-tenancy floors, all
Guests shall keep all doors to the Building corridors closed at all times
except for ingress and egress.
9. The requirements of Guest will be attended to only upon application to
Host. Employees and agents of Host shall not perform any work or do
anything outside of their regular duties unless under special instruction
from Host.
10. Canvassing, soliciting and peddling in the Building are prohibited and
each Guest shall cooperate to prevent the same.
11. Guest shall not cause any noise, odor, vibration or light disturbing or
annoying to other tenants of the Building or to tenants of neighboring
buildings.
12. No air conditioning unit or other similar apparatus shall be installed or
used by any Guest without the written consent of Host.
13. No Guest shall install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building without Host's
consent which consent will not be unreasonably withheld.
14. Each Guest shall store all its trash and garbage within its Premises.
No material shall be placed in the trash boxes or receptacles if such
materials is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of trash and garbage in the
City of Xxx Arbor without being in violation of any law or ordinance
governing such disposal. All garbage and refuse disposal shall be made
only through entryways provided for such purposes and at such times as
Host shall designate. Should the amount of trash generated by Guest exceed
the amount typically generated by users of office space, Guest shall be
responsible for the cost of disposing of such excess. All boxes shall be
broken down before being placed in the Building trash boxes or
receptacles.
15. Host may waive any one or more of these Rules and Regulations for the
benefit of any particular Guest or Guests, but no such waiver by Host
shall be construed as a waiver of such Rules and Regulations in favor of
any other Guest or Guests, nor prevent Host from
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thereafter enforcing any such Rules and Regulations against any or all of
the Guests of the Building.
16. These Rules and Regulations are in addition to and shall not be construed
to in any way modify, alter or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the
Building.
17. Guest shall not operate any equipment that sends out radio frequencies or
otherwise distorts electric power to the building.
18. Smoking is prohibited in the Building restrooms, hallways, lobbies,
lunchrooms and other common areas and on the Building grounds except in
those areas designated by Host. Host shall not be obligated to designate
any such areas.
19. Guest shall place chair mats under all chairs with casters with the
exception of conference room chairs; if Guest does not, Host shall have
the right to provide such chair mats and Guest shall reimburse Host for
the cost of such mats.
20. The moving into or out of the Building of any safes, freight, furniture,
or other bulky matter of any description may only take place during the
hours determined by Host in its absolute discretion. The moving of such
bulky matter may only be made after notice to Host and the persons
employed by any Guest for such work must be acceptable to Host.
21. Host reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building, and for the preservation of
good order therein.
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