AMENDMENT NO. 2 TO YEON BUSINESS CENTER LEASE AGREEMENT
EXHIBIT
10.2
AMENDMENT
NO. 2 TO YEON BUSINESS CENTER LEASE AGREEMENT
(3200
NW Yeon)
DATED:
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____________,
2005
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BETWEEN:
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SCHNITZER
INVESTMENT CORP.,
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an
Oregon corporation
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(“Landlord”)
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AND:
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SCHNITZER
STEEL INDUSTRIES,
INC.,
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an
Oregon corporation
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(“Tenant”)
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Recitals:
A. Landlord
and Tenant are parties to a Yeon Business Center (3200 NW Yeon)
Lease Agreement dated August 7, 2003 (the “Lease
Agreement”), as amended by an Amendment No. 1 to Lease
dated February 1, 2004 (the “First
Amendment”). The Lease Agreement and the First Amendment
are collectively referred to as the “Lease” in this Amendment No. 2 to Yeon
Business Center Lease Agreement (the “Amendment”).
B. Landlord
and Tenant have agreed to expand the Premises by adding to the
Premises approximately 10,572 rentable square feet in the Building (the
“Expansion Space”), on the terms
and conditions set forth in this Amendment. After such expansion, Tenant will
be
the sole tenant in the Building.
C. Capitalized
terms which are used in this Amendment and which are defined
in the Lease shall have the meanings given to them in the Lease, unless
expressly amended by this Amendment.
Agreements:
NOW,
THEREFORE, in consideration of the mutual promises of the parties
set forth in this Amendment, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
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1.
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Design
of Expansion Space Tenant
Improvements
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1.1 General.
Tenant has retained Xxxx Xxxxx Xxxx (the
“Architect”) to design its
improvements to the Expansion Space (the “Expansion Space
Tenant Improvements”). Tenant shall cause the Architect
to prepare the necessary drawings, including without limitation, Basic Plans
and
Working Plans as described below for the Expansion Space Tenant Improvements
(the “Plans”). The Plans are
subject to Landlord’s written approval, which shall not be unreasonably
withheld. Throughout the process of design and construction of the Expansion
Space Tenant Improvements, Xxxxx Xxxx (“Tenant’s
Construction Representative”) shall be available, or
shall make his representative available, for onsite and telephone
consultations
and decisions as necessary. Tenant’s Construction
Representative shall have the authority to bind Tenant as to all matters
relating to the Expansion Space Tenant Improvements.
1.2 Basic
Plans. Tenant shall deliver the Basic Plans
to Landlord by October 12, 2005. The Basic Plans shall clearly identify and
locate on the Basic Plans (i) any equipment requiring special plumbing or
mechanical systems, areas subject to above normal loads, special openings in
the
floor, ceiling, or walls, and other major or special features; and
(ii) locations of telephone and electrical receptacles, outlets, and other
items requiring electrical power (for special conditions and equipment, power
requirements, and manufacturer’s model numbers must be included). Landlord shall
review the Basic Plans and shall, in writing within five business days after
receipt, either approve the Basic Plans (which approval shall not be
unreasonably withheld, conditioned or delayed) or reject them, in which case
Landlord shall specify in reasonable detail the deficiencies in the Basic Plans
as submitted. If the Basic Plans are rejected, Tenant shall resubmit required
changes to the Basic Plans within five business days after Landlord’s rejection
until Landlord’s reasonable approval has been obtained.
1.3 Working
Plans. On or before the date that is the
later of (a) five business days after Landlord’s approval of the Basic
Plans or (b) November 1, 2005, Tenant shall cause the Architect to
produce and deliver to Landlord full working drawings for construction
sufficient to obtain all necessary permits and with sufficient detail to
construct the Expansion Space Tenant Improvements in compliance with the
approved Basic Plans, including specifications for every item included on the
Basic Plan (the “Working Plans”).
1.4 Construction
of Expansion Space Tenant Improvements. Upon completion of the Working Plans, and subject
to Tenant’s prior,
written approval of the original budgeted cost (the “Initial Budget”), Landlord
shall construct the Expansion Space Tenant Improvements. Tenant agrees to
respond to Landlord’s request for approval of the Initial Budget within five
business days of Landlord’s written request therefor. No changes to the Plans or
Initial Budget shall be made except with the approval of both Landlord and
Tenant. The parties acknowledge that the total cost and of, and Initial Budget
for, planning, designing, permitting, installing and constructing (including
labor and materials) the Expansion Space Tenant Improvements may exceed the
“TI
Allowance” (defined below). Landlord shall cause the Expansion Space Tenant
Improvements to be completed in a good and workmanlike manner and in compliance
with the building permit issued therefor (if any) by the City of Portland.
Landlord shall use commercially reasonable efforts to minimize disruption of
the
conduct of Tenant’s business in the Building during the construction of the
Expansion Space Tenant Improvements. Tenant acknowledges that all overtime
costs
incurred to comply with this requirement shall be included in the total costs
of
the Expansion Space Tenant Improvements. However, Landlord and Tenant shall
work
collaboratively to determine whether Tenant would prefer business disruption
rather than overtime costs. Tenant shall cooperate and coordinate with Landlord
to minimize disruption of the conduct of Tenant’s business in the Building
during the construction.
1.5 Payment
of Tenant Improvements Costs. Landlord
shall pay up to $105,720.00 (the “TI
Allowance”) towards the costs of designing and
constructing the Expansion Space Tenant Improvements which costs shall include
all costs, fees, and expenses incurred by Landlord in connection with the
planning, design, permitting, installation, labor, materials and construction
of
the Expansion Space Tenant Improvements, which costs, fees and expenses
shall
include
construction supervision fees paid to Landlord’s property
manager, Schnitzer Northwest, LLC. Construction supervision fees paid to
Schnitzer Northwest, LLC, inclusive of Landlord’s overhead charges and overhead
costs of Schnitzer Northwest, LLC (if any), shall not exceed five percent (5%)
of the total cost of designing and constructing the Expansion Space Tenant
Improvements. Landlord shall apply the total amount of the TI Allowance toward
payment of costs of designing and constructing the Expansion Space Tenant
Improvements as those charges become due and payable, and thereafter, Landlord
shall pay, as due, the costs of designing and constructing the Expansion Space
Tenant Improvements, up to the amounts included in the Initial Budget. Within
seven (7) business days after Tenant’s receipt of an invoice including an
itemization of the expenditures and all documentation (e.g. contractor &
sub-contractor invoices, and material invoices) supporting the expenditures
or
such additional documentation reasonably requested by Tenant to support the
invoiced amount, Tenant shall reimburse Landlord the payments made by Landlord
and included in the Initial Budget (and any Change Orders approved by Tenant)
that exceed the TI Allowance.
1.6 Change
Orders. Prior to incurring any costs, fees
or expenses including, without limitation, governmental fees and assessments
in
connection with the design, permitting, installation, labor, materials, and
construction of the Expansion Space Tenant Improvements that exceed the Initial
Budget, and prior to making any modifications to the Plans and/or the materials,
finishes, specifications or timelines provided in the Plans, Landlord shall
obtain the Tenant’s written approval of such cost, fee, expense or modification
(each such change a, “Change Order”). All costs, fees, and
expenses including, without limitation,
governmental fees and assessments in connection with the design, permitting,
installation, labor, materials, and construction of the Expansion Space Tenant
Improvements in excess of the Initial Budget that are pre-approved by Tenant
in
a written Change Order shall be reimbursed to Landlord by Tenant within seven
(7) business days after Tenant’s receipt of an invoice including an itemization
of the expenditures and all documentation (e.g. contractor & sub-contractor
invoices, and material invoices) supporting the expenditures or such additional
documentation reasonably requested by Tenant to support the invoiced amount.
Tenant shall, at its sole cost and expense, arrange for the installation of
all
Tenant’s furniture, fixtures and equipment associated with its business. Costs
associated with Tenant’s equipment, layout, design and construction coordination
are also the sole responsibility of Tenant.
1.7 Tenant
Delay. If there shall be a delay in
Substantial Completion of the Expansion Space Tenant Improvements or the
issuance of a Certificate of Occupancy for the same as a result of:
(a) Tenant’s
failure to deliver any of the Plans within the time periods
required in this Amendment;
(b) Tenant’s
failure to approve or reject any item or proposed Change Order,
or perform any other obligation within three business days after receipt of
written notice from Landlord;
(c) Tenant’s
request for changes in materials, finishes or installations
other than those readily available;
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(d)
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Tenant’s
request to deviate from the Plans;
or
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(e) Subject
to Landlord’s obligation to use commercially reasonable efforts
to minimize disruption of the conduct of Tenant’s business in Section 1.4,
Tenant’s interference with Landlord’s construction of the Expansion Space Tenant
Improvements during Tenant’s work within the Expansion Space (whether such work
is performed by Tenant or its contractor or by Landlord or its contractor on
Tenant’s behalf);
(each
of which shall be deemed a “Tenant
Delay”) then the Expansion Space Commencement Date shall
be accelerated by the number of days or partial days of such Tenant Delay.
Landlord shall notify Tenant of any Tenant Delay and the duration
thereof.
1.8 Substantial
Completion. The terms “substantial
completion,” “Substantial Completion,” “Substantially Complete,” “Substantially
complete” and words of similar import (whether or not spelled with initial
capitals) as used in the Amendment shall mean the date of substantial completion
of the Expansion Space Tenant Improvements pursuant to the Working Plans (as
amended by any Change Orders) such that Tenant may commence the installation
of
any of Tenant’s equipment and occupy the Expansion Space for the conduct of its
business (subject to the completion of any additional construction to be
performed by Tenant). The Expansion Space Tenant Improvements shall be deemed
substantially complete notwithstanding the fact that minor details of
construction, mechanical adjustments or decorations which do not materially
interfere with Tenant’s use and enjoyment of the Expansion Space remain to be
performed (items normally referred to as “punch list” items). Certification by
the Architect as to the substantial completion of the Expansion Space Tenant
Improvements shall be conclusive and binding upon Landlord and Tenant. By taking
occupancy of the Expansion Space, Tenant shall be deemed to have accepted the
Expansion Space Tenant Improvements as substantially complete, except for any
latent defects in the Expansion Space Tenant Improvements and except that Tenant
shall, within five business days after entering into possession of the Expansion
Space, provide Landlord with a list of incomplete and/or corrective items
present in the Expansion Space Tenant Improvements and subject to reasonable
discovery by Tenant. Tenant shall give written notice to Landlord of discovery
of any latent defects in the construction of the Expansion Space Tenant
Improvements within five business days of discovery of any such defect and
in no
event later than one year following the date of substantial completion of the
Expansion Space Tenant Improvements. Landlord shall diligently complete, as
soon
as reasonably possible, all punch list items and adjustments that are not
completed upon substantial completion of the Expansion Space Tenant
Improvements. Landlord shall diligently complete, as soon as reasonably possible
following Tenant’s notice thereof, the repair of any latent defects in the
Expansion Space Tenant Improvements if Tenant gives notice of such defects
to
Landlord within one year following the date of substantial completion of the
Expansion Space Tenant Improvements. The Expansion Space Commencement Date
shall
not be delayed because of the existence of uncorrected punch list
items.
2. Expansion
of Premises. Effective on the date of
Substantial Completion of the Expansion Space Tenant Improvements, and subject
to Landlord vacating the Building (the “Expansion Space
Commencement Date”), the Expansion Space shall be added
to the Premises and the term “Premises” shall mean approximately 10,267 rentable
square feet on the lower level of the first floor of the Building, approximately
10,282 rentable square feet on the first floor of
the
Building, and approximately 10,225 rentable square feet on the second
floor of the Building, all as shown on the attached Exhibit A.
3. Extension
of Term. Effective on the Expansion
Space Commencement Date, the Term of the Lease shall be extended to and through
June 30, 2015.
4. Base
Rent. Commencing on the Expansion Space
Commencement Date, and continuing throughout the Term as extended, Base Rent
shall be paid in accordance with the following schedule:
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Rent
Per R.S.F. (Annual)
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Months
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Lower
Level
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First
and Second Floor
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Monthly
Installments
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Expansion
Space Commencement Date through December 31,
2005
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$13.33
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$17.43
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$41,191.34
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1/1/06-12/31/06
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$13.66
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$17.87
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$42,225.61
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1/1/07-12/31/07
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$14.00
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$18.32
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$42,225.61
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1/1/08-12/31/08
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$14.35
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$18.78
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$44,371.08
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1/1/09-12/31/09
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$14.71
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$19.25
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$45,482.28
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1/1/10-12/31/10
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$15.08
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$19.73
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$46,619.12
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1/1/11-12/31/11
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$15.45
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$20.22
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$47,773.06
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1/1/12-12/31/12
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$15.84
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$20.73
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$48,978.28
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1/1/13-12/31/13
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$16.24
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$21.25
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$50,209.15
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1/1/14-6/30/15
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$16.65
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$21.78
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$51,465.67
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5. Operating
Expenses. Effective on the Expansion
Space Commencement Date, and continuing throughout the Term, as extended,
Tenant’s Share of the Building shall be 100%, Tenant’s Share of the Project
shall be 11.408%, and the Base Year shall be 2005.
6. Parking
Spaces. Effective on the Expansion Space
Commencement Date, the number 51 in Section 1.1(q) of the Lease Agreement
shall be replaced with 92. If Tenant wishes to restripe the parking spaces
on
the Land (defined below) in order to increase the number of parking spaces
available to Tenant on the Land, Landlord agrees not to unreasonably withhold
consent to such restriping so long as the restriping will have no material
adverse impact on the remainder of the Project such as by impairing the flow
of
traffic or by reducing the number of permitted parking spaces on any other
part
of the Project. Tenant agrees that Tenant will comply with all notices of
violations of applicable laws, rules, regulations, ordinances, codes, and other
governmental requirements related to the striping of parking spaces on the
Land
at its expense. Tenant will indemnify, defend, and hold Landlord harmless from
and against any all claims, damages, costs, losses, and liabilities related
to
the striping of parking spaces on the Land.
7. Project
Expenses. Effective on the Expansion
Space Commencement Date, the Operating Expenses payable by Tenant as defined
in
Section 6.1 of the Lease Agreement shall not include any share of costs related
to common signage at the Project or to the maintenance,
repair
or replacement of any buildings on the Project and the common
areas in the interior of such buildings except for the Building. However, Tenant
shall pay 100% of Operating Expenses related to the signage on the land
described on the attached Exhibit B (the “Land”) and to the Building.
8. Further
Modifications to Lease. Effective on the
Expansion Space Commencement Date:
8.1 Section 2.3
and Article XVIII of the Lease Agreement are
deleted from the Lease.
8.2 The
Tenant’s termination right relating to the use of the “Permanent
Expansion Premises” as defined and provided in the First Amendment (the last
sentence of Section 1(C) of the First Amendment) is deleted from the
Lease.
8.3 The
following Section 1.1(s) shall be added to the definitions in the
Lease Agreement: “1.1(s) Building
Envelope. The Building Envelope shall include the
Building, the reserved Surface Parking Spaces as provided in Section 1.1(q)
that
are on the Land and the ingress and egress points from NW Yeon Avenue into
the
area of the reserved Surface Parking Spaces on the Land. Nothing herein shall
prohibit the Landlord and other tenants of the Project of using the ingress
and
egress points included in the definition of Building Envelope.”
8.4 The
following shall be added to Section 17.5: “Notwithstanding the
foregoing, Landlord shall not make changes to the Common Areas that would
materially increase, from that existing on the Expansion Space Commencement
Date, the amount of traffic making ingress and egress to and from NW Yeon Avenue
and the Project through the Building Envelope.
8.5 The
following shall be added to the end of Section 10.3 and to the end of
Exhibit H: #1: “Notwithstanding the foregoing, Tenant shall be allowed to place
its professionally prepared signs within the Building Envelope, provided that
the same comply with applicable governmental regulations, are located in a
safe
manner, do not interfere with the ingress and egress of Landlord or other
tenants in the Project, and are approved by Landlord (such approval not to
be
unreasonably withheld, conditioned, or delayed). Further, Tenant shall be
allowed to restrict the placement of signs, placards, pictures, advertisements,
names or notices (“Signage”) within the Building Envelope, and to remove any
Signage placed within the Building Envelope at the expense of the party placing
the Signage therein.
8.6 The
phrase: “by Landlord or on Landlord’s behalf” shall be added to
Section 6.1(b)(i) after the word “incurred” in the second line of that
Section.
9. Sale
of Project. Landlord intends to sell all or
parts of the Project. In connection with any sale of all or any part of the
Project, Landlord shall act in good faith to allocate Project costs to the
Land
in a fair and reasonable manner.
10. Effect
of Amendment. Landlord and Tenant ratify
and confirm all provisions of the Lease. Except as expressly amended by this
Amendment, the Lease remains unmodified and in full force and
effect.
IN
WITNESS WHEREOF, the parties have executed this Amendment effective as
of the date first set forth above.
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LANDLORD:
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SCHNITZER
INVESTMENT CORP., an Oregon
corporation
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By:
Its:
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TENANT:
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SCHNITZER
STEEL INDUSTRIES, INC., an Oregon
corporation
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By:
Its:
EXHIBIT
A
Outline
of Premises Including Expansion Space
EXHIBIT
B
Legal
description of the Land
Parcel
2, Partition Plat No. 1990-25, in the County of Multnomah, and
State of Oregon.