|Free Sample Clause|
SECTION 8. OPTION TO EXTEND.
(a) Landlord hereby grants Tenant two (2) consecutive options (individually an "Option" and collectively the "Options") to extend the initial Term of the Lease for an additional period of five (5) years per Option (such period may be referred to as the "Option Term"), as to the entire Premises as it may then exist, upon and subject to the terms and conditions of this Section (the "Option To Extend"), and provided that at the time of exercise of each option: (i) Tenant must be in occupancy of seventy-five percent (75%) of the Premises; and (ii) there has been no material adverse change in Tenant's financial position from such position as of the date of execution of the Lease. Tenant shall deliver to Landlord with Tenant's written notice exercising its right hereunder Tenant's most recent annual audited financial statements certified by Tenant's independent certified public accountant, and the most recent publicly-filed financial statements and documents showing Tenant's financial position.
(b) Tenant's election (the "Election Notice") to exercise the Option To Extend must be given to Landlord in writing no earlier than the date which is fifteen (15) months prior to, and no later than the date which is nine (9) months prior to, the then applicable Expiration Date of the initial Term or the Option Term, as applicable. If Tenant either fails or elects not to exercise the then applicable Option to Extend by not timely giving its Election Notice, then such Option to Extend shall be null and void. Further, the second Option shall be void and of no force or effect if the first Option is not validly exercised or is waived, revoked or terminated as provided below after any exercise.
(c) Each Option Term shall commence immediately after the expiration of the preceding initial Term or Option Term, as applicable. Tenant's leasing of the Premises during the Option Term shall be upon and subject to the same terms and conditions contained in the Lease except that: (i) the Monthly Base Rent shall be amended to an amount to equal the "Option Term Rent", defined and determined in the manner set forth in the immediately following Subsection (and otherwise, Tenant shall continue to pay Rent Adjustments, all other Rent and all other charges pursuant to the Lease and Tenant shall continue to pay directly the utility or service provider for all utilities or services which Tenant is to obtain directly pursuant to other provisions of the Lease); (ii) the Security Deposit, if any, shall be increased within fifteen (15) days after the Fair Market Rental Rate (defined below) has been determined to equal one hundred percent (100%) of the highest monthly installment of Monthly Base Rent thereunder, but in no event shall the Security Deposit be decreased; and (iii) Tenant shall accept the Premises in its "AS-IS" condition without any obligation of Landlord to repaint, remodel, repair, improve or alter the Premises or to provide Tenant any allowance. If Tenant timely and properly exercises the Option To Extend, references in the Lease to the Term shall be deemed to mean the initial Term as extended by the Option Term unless the context clearly requires otherwise.
(d) The Option Term Rent shall mean the greater of (i) the Monthly Base Rent payable by Tenant under this Lease calculated at the rate applicable for the last full month of the initial Term with respect to determining Rent for the first Option Term, and for the last full month of the first Option Term with respect to determining Rent for the second Option Term (respectively, the "Preceding Rent") (during the Option Term, Tenant shall continue to pay Rent Adjustments and other charges pursuant to the Lease and Tenant shall continue to pay directly the utility or service provider for all utilities or services which Tenant is to obtain directly pursuant to other provisions of the Lease, but such amounts shall not be counted as part of the Preceding Rent as used herein) or (ii) the "Fair Market Rental Rate". "Fair Market Rental Rate" shall mean as to Monthly Base Rent the monthly net rental (exclusive of expenses and taxes) per rentable square foot which a tenant would pay and which a willing landlord would accept for space in projects within a five (5) mile radius of the Premises of first class standards comparable to the Premises for the period for which such rental is to be paid and for a lease on terms substantially identical to those of the Lease (including, without limitation, those applicable to Operating Expenses and Exclusions), based on prevailing market conditions in such first class projects at the time such determination is made ("Comparable Transactions"). Without limiting the generality of the foregoing, Comparable Transactions shall be for a term similar to the term of tenancy and for space comparable in use, floor layout and levels (if the Building has more than one level), square footage and location within a first class project as the transaction for which Fair Market Rental Rate is being determined; however, leases of unusual or odd shaped spaces shall not be considered. In any determination of Fair Market Rental Rate, the stated or contract monthly net rental in Comparable Transactions shall be appropriately adjusted to take into account the different terms and conditions prevailing in such transactions and those present in the Lease, including, without limitation: (1) the extent to which average annual expenses and taxes per rentable square foot payable by tenants in Comparable Transactions vary from those payable by Tenant under the Lease; (2) the concessions, if any, being given by landlords in Comparable Transactions, such as presence or absence of parking charges, abatement of any such charges, rental abatement periods, loans at below-market interest rates, moving allowances, space planning allowances, lease takeover payments and work allowances, as compared to any tenant improvement, refurbishment or repainting allowance given to Tenant under the Lease for the space for which Fair Market Rental Rate is being determined; (3) the brokerage commissions, fees and bonuses payable by landlords in Comparable Transactions whether to tenant's agent, such landlord or any person or entity affiliated with such landlord), as compared to any such amounts payable by Landlord to any recognized broker(s) on account of the transaction for which Fair Market Rental Rate is being determined; (4) the time value of money; and (5) any material difference between the definition of rentable area and the ratio of project rentable to useable square feet in Comparable Transactions, as compared to such figures applicable to the space for which Fair Market Rental Rate is being determined.
(e) The determination of Fair Market Rental Rate based upon the foregoing criteria shall be made by Landlord, in the good faith exercise of Landlord's business judgment. Within thirty (30) days after Tenant's exercise of the Option To Extend, Landlord shall notify Tenant of Landlord's determination of Option Term Rent for the Premises. If Landlord notifies Tenant that the Option Term Rent shall equal the Preceding Rent, such determination shall be conclusive and binding to set the Preceding Rent as the Option Term Rent for the then applicable Option Term, and Tenant shall not be entitled or required to give further notice, and the extension shall be effective and binding (subject to Subsection (f) below). Provided however, if Landlord notifies Tenant that Landlord has determined that the Fair Market Rental Rate is greater than the Preceding Rent and that Landlord will require such Fair Market Rental Rate as the Option Term Rent, Tenant may, within thirty (30) days after receipt thereof, deliver to Landlord a written notice either accepting Landlord's estimate of Fair Market Rental Rate or setting forth Tenant's estimate of Fair Market Rental Rate, in which case Landlord and Tenant will promptly meet and attempt to agree upon Fair Market Rental Rate. Tenant's failure to timely deliver such notice within such thirty (30) day period shall be deemed its cancellation of the Option. If no agreement on Fair Market Rental Rate can be reached within ten (10) business days after Landlord's receipt of Tenant's estimate, Landlord and Tenant shall meet within an additional ten (10) business days and each simultaneously submit to the other in a sealed envelope its good faith estimate of Fair Market Rental Rate (the "Estimates"). If the higher Estimate is not more than one hundred five percent (105%) of the lower Estimate, then Fair Market Rental Rate shall be the average of the two Estimates. If such simultaneous submission of Estimates does not occur within such ten (10) business day period, then either party may by notice to the other designate any reasonable time within five (5) business days thereafter and any reasonable place at or near the Building for such meeting to take place. In the event only one party submits an Estimate at that meeting, such Estimate shall be Fair Market Rental. In the event neither party submits an Estimate at that meeting, the transaction for which Fair Market Rental Rate is being determined shall be deemed canceled and of no further force or effect.
(f) If the higher Estimate is more than one hundred five percent (105%) of the lower Estimate, then either Landlord or Tenant may, by written notice given to the other at any time within five (5) business days after receipt of the Estimates, require that the disagreement be resolved by arbitration. In the event neither party gives such written notice within such period, the transaction for which Fair Market Rental Rate is being determined shall be deemed canceled and of no further force or effect. Within five (5) business days after such notice, the parties shall select as arbitrators three (3) mutually acceptable independent MAI appraisers with experience in commercial real estate activities, including at least five (5) years experience in appraising projects within a five (5) mile radius of the Premises of first class standards comparable to the Premises ("Qualified Appraisers"). If the parties cannot timely agree on such arbitrators, then within the following five (5) business days, each shall select and inform the other party of one (1) Qualified Appraiser and within a third period of five (5) business days, the two appraisers (or if only one (1) has been duly selected, such single appraiser) shall select as arbitrators a panel of three additional Qualified Appraisers, which three arbitrators shall proceed to determine Fair Market Rental Rate as provided below. Both Landlord and Tenant shall be entitled to present evidence supporting their respective positions to the panel of three arbitrators.
(g) Once a panel of arbitrators has been selected as provided above, then as soon thereafter as practicable each arbitrator shall select one of the two Estimates as the one which, in its opinion, is closer to Fair Market Rental Rate. The determination by the arbitrators shall be in accordance with the definition and standards for the determination of the Fair Market Rental Rate as set forth above, and in no event shall any arbitrator modify any provision of the Lease in arriving at his or her determination. Upon an Estimate's selection by two (2) of the arbitrators, it shall be the applicable Fair Market Rental Rate and such selection shall be binding upon Landlord and Tenant. If the arbitrators collectively determine that expert advice is reasonably necessary to assist them in determining Fair Market Rental Rate, then they may retain one or more qualified persons, including but not limited to legal counsel, brokers, architects or engineers, to provide such expert advice, provided however, any such advice and consultation shall be in the presence of all the arbitrators, Landlord and Tenant, with full right on the part of each to cross-examine. The party whose Estimate is not chosen by the arbitrators shall pay the costs of the arbitrators and any experts retained by the arbitrators. Any fees of any counsel or expert engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such counsel or expert.
(h) In the event the determination of the Fair Market Rental Rate has been submitted to arbitration but such arbitration has not been concluded prior to the commencement of the applicable Option Term, Tenant shall pay to Landlord the amount set forth in Landlord's Estimate under Subsection (h) above (plus all other Rent due for the Option Term). In the event the Fair Market Rental Rate determined by arbitration results in any Monthly Base Rent different from such amount, Tenant shall immediately pay to Landlord any greater amount so determined by arbitration and if a lesser amount is determined due by arbitration, Landlord shall give Tenant a credit against the next Monthly Base Rent installments due from Tenant to Landlord under the Lease.
(i) This Option to Extend is personal to the original tenant executing this Lease and may not be used by, and shall not be transferable or assignable (voluntarily or involuntarily) to any person or entity other than an Affiliate which is a permitted assignee of the Lease which has satisfied the requirements of this Lease with respect to assignment for Affiliates, and such Affiliate may exercise the right without Tenant joining in or consenting to such exercise, and notwithstanding anything to the contrary, Tenant shall remain liable for all obligations under the Lease, including those resulting from any such exercise with the same force and effect as if Tenant had joined in such exercise.
(j) Upon the occurrence of any of the following events, Landlord shall have the option, exercisable at any time prior to commencement of the Option Term, to terminate all of the provisions of this Section with respect to the Option to Extend, with the effect of canceling and voiding any prior or subsequent exercise so this Option to Extend is of no force or effect:
(i) Tenant's failure to timely exercise the Option to Extend in accordance with the provisions of this Section.
(ii) The existence at the time Tenant exercises the Option to Extend or at the commencement of the Option Term of any Default (as defined in the Lease) on the part of Tenant under the Lease.
(k) Without limiting the generality of any provision of the Lease, time shall be of the essence with respect to all of the provisions of this Section.