WORK LETTER AGREEMENT (DETAILED OFFICE BUILDING) LEASE EXHIBIT
EXHIBIT [INSERT APPLICABLE LETTER]
WORK LETTER AGREEMENT (DETAILED OFFICE BUILDING)
This WORK LETTER AGREEMENT ("Work Letter Agreement") is entered into as _____________________ by and between _______________, ("Landlord"), and ____________________ ("Tenant").
R E C I T A L S:
A. Concurrently with the execution of this Work Letter Agreement, Landlord and Tenant have entered into a lease (the "Lease") covering certain premises (the "Premises") more particularly described in the Lease. All terms not defined herein have the same meaning as set forth in the Lease. To the extent applicable, the provisions of the Lease are incorporated herein by this reference.
B. In order to induce Tenant to enter into the Lease and in consideration of the mutual covenants hereinafter contained, Landlord and Tenant agree as follows:
1. BUILDING SHELL; TENANT IMPROVEMENTS. As used in this Work Letter Agreement, the term "Building Shell" shall mean the industrial building to be constructed by Landlord at Landlord's sole expense in accordance with the plans and specifications described in Exhibit "A-II" to the Lease (collectively, the "Building Plans"), which Building Plans have been approved by Landlord and Tenant. As used in the Lease and this Work Letter Agreement, the term "Tenant Improvements" or "Tenant Improvement Work" means collectively those items of tenant improvement construction relating to the office portion of the Premises ("Office Improvements") shown on the Tenant's Final Plans (described in Paragraph 4 below) and the Above-Standard Improvements (described in Paragraph 5 below).
2. WORK SCHEDULE. Within thirty (30) days after the execution of this Lease, Landlord will deliver to Tenant, for Tenant's review and approval, a schedule ("Work Schedule") which will set forth the timetable for the planning and completion of the installation of the Tenant Improvements and the Commencement Date of the Lease. The Work Schedule will set forth each of the various items of work to be done or approval to be given by Landlord and Tenant in connection with the completion of the Tenant Improvements. The Work Schedule will be submitted to Tenant for its approval, which approval Tenant agrees not to unreasonably withhold, and, once approved by both Landlord and Tenant, the Work Schedule will become the basis for completing the Tenant Improvements. All plans and drawings required by this Work Letter Agreement and all work performed pursuant thereto are to be prepared and performed in accordance with the Work Schedule. If Tenant fails to approve the Work Schedule, as it may be modified after discussion between Landlord and Tenant within ten (10) business days after the date the Work Schedule is first received by Tenant, the Work Schedule shall be deemed to be approved by Tenant as submitted.
3. CONSTRUCTION REPRESENTATIVES. Landlord hereby appoints the following person(s) as Landlord's representative ("Landlord's Representative") to act for Landlord in all matters covered by this Work Letter Agreement: __________.
Tenant hereby appoints the following person(s) as Tenant's representative ("Tenant's Representative") to act for Tenant in all matters covered by this Work Letter Agreement: ____________________.
All communications with respect to the matters covered by this Work Letter Agreement are to made to Landlord's Representative or Tenant's Representative, as the case may be, in writing in compliance with the notice provisions of the Lease. Either party may change its representative under this Work Letter Agreement at any time by written notice to the other party in compliance with the notice provisions of the Lease.
4. TENANT IMPROVEMENT PLANS
(a) Preparation of Space Plans. In accordance with the Work Schedule, Tenant agrees to meet with Landlord's architect and/or space planner for the purpose of promptly preparing preliminary space plans for the interior layout of the Premises ("Space Plans"). The Space Plans are to be sufficient to convey the architectural design of the interior of the Premises and layout of the interior of the Office Improvements therein and are to be submitted to Landlord in accordance with the Work Schedule for Landlord's approval. If Landlord reasonably disapproves any aspect of the Space Plans, Landlord will advise Tenant in writing of such disapproval and the reasons therefor in accordance with the Work Schedule. Tenant will then submit to Landlord for Landlord's approval, in accordance with the Work Schedule, a redesign of the Space Plans incorporating the revisions reasonably required by Landlord.
(b) Preparation of Tenant's Final Plans. Based on the approved Space Plans, and in accordance with the Work Schedule, Landlord's architect will prepare complete architectural plans, drawings and specifications and complete engineered mechanical, structural and electrical working drawings for all of the Office Improvements for the Premises (collectively, the "Tenant's Final Plans"). The Tenant's Final Plans will show: (a) the subdivision (including partitions and walls), layout, lighting, finish and decoration work (including carpeting and other floor coverings) for the office portion of the Premises; (b) all internal and external communications and utility facilities relating to the office portion of the Premises which will require conduiting or other improvements from the base Building Shell work and/or within common areas; and (c) all other specifications for the Office Improvements. The Tenant's Final Plans will be submitted to Tenant for signature to confirm that they are consistent with the Space Plans. If Tenant reasonably disapproves any aspect of the Tenant's Final Plans based on any inconsistency with the Space Plans, Tenant agrees to advise Landlord in writing of such disapproval and the reasons therefor within the time frame set forth in the Work Schedule (which shall be no less than five (5) business days after Tenant's receipt of Tenant's Final Plans). In accordance with the Work Schedule, Landlord will then cause Landlord's architect to redesign the Tenant's Final Plans incorporating the revisions reasonably requested by Tenant so as to make the Tenant's Final Plans consistent with the Space Plans.
(c) Requirements of Tenant's Final Plans. Tenant's Final Plans will include locations and complete dimensions, and the Office Improvements, as shown on the Tenant's Final Plans, will: (i) be compatible with the Building Shell and with the design, construction and equipment of the Building; (ii) comply with all applicable laws, ordinances, rules and regulations of all governmental authorities having jurisdiction, and all applicable insurance regulations; (iii) not require Building service beyond the level normally provided to other tenants in the Development and will not overload the Building floors; and (iv) be of a nature and quality consistent with the overall objectives of Landlord for the Building, as determined by Landlord in its reasonable but subjective discretion.
(d) Submittal of Tenant's Final Plans. Once approved by Landlord and Tenant, Landlord's architect will submit the Tenant's Final Plans to the appropriate governmental agencies for plan checking and the issuance of a building permit. Landlord's architect, with Tenant's cooperation, will make any changes to the Tenant's Final Plans which are requested by the applicable governmental authorities to obtain the building permit. After approval of the Tenant's Final Plans no further changes may be made without the prior written approval of both Landlord and Tenant, and then only after agreement by Tenant to pay any excess costs resulting from the design and/or construction of changes requested by Tenant. Tenant hereby acknowledges that any such changes will be subject to the terms of Paragraph 9 below.
(e) Changes to Shell of Building. If the Tenant's Final Plans of any amendment thereof or supplement thereto shall require changes in the Building Plans and/or the Building Shell, the increased cost thereof will be paid for by Tenant or charged against the "Allowances" described in Paragraph 5 below. Any changes to the Building Plans shall require the prior written approval of Tenant and Landlord (not to be unreasonably withheld or delayed), provided that Landlord shall not need the consent or approval of Tenant for changes to the Building Plans that do not affect the Tenant Improvements and/or the Premises or materially alter the character or the Building.
(f) Work Cost Estimate and Statement. Prior to the commencement of construction of any of the Office Improvements shown on the Tenant's Final Plans and/or the Above-Standard Improvements, Landlord will submit to Tenant a written estimate of the cost to complete the Tenant Improvement Work, which written estimate will be based on the Tenant's Final Plans taking into account any modification which may be required to reflect changes in the Tenant's Final Plans required by the City or County in which the Premises are located (the "Work Cost Estimate"). Tenant will either approve the Work Cost Estimate or disapprove specific items and submit to Landlord revisions to the Tenant's Final Plans to reflect deletions of and/or substitutions for such disapproved items. Submission and approval of the Work Cost Estimate will proceed in accordance with the Work Schedule. Upon Tenant's approval of the Work Cost Estimate (such approved Work Cost Estimate to be hereinafter known as the "Work Cost Statement"), Landlord will have the right to purchase materials and to commence the construction of the items included in the Work Cost Statement pursuant to Paragraph 6 hereof. If the total costs reflective in the Work Cost Statement exceed the applicable Allowance described in Paragraph 5 below, Tenant agrees to pay such excess, as additional rent, prior to the Commencement Date.
5. PAYMENT FOR THE TENANT IMPROVEMENTS
(a) Office Allowance. Landlord hereby grants to Tenant a tenant improvement allowance of ___________ Dollars ($_____) per square foot of the various office portions of the Premises, not to exceed $__________ (the "Office Allowance"). The Office Allowance is to be used only for: ____________.
(i) Payment of the cost of preparing the Space Plans and the Tenant's Final Plans, including mechanical, electrical, plumbing and structural, drawings and of all other aspects necessary to complete the Tenant's Final Plans. The Office Allowance will not be used for the payment of extraordinary design work or for payments to any other consultants, designers or architects other than Landlord's architect and/or Tenant's architect.
(ii) The payment of plan check, permit and license fees relating to construction of the Office Improvements.
(iii) Construction of the Office Improvements, including, without limitation, the following:
(aa) Installation within the office portion of the Premises of all partitioning, doors, floor coverings, ceilings, wall coverings and painting, millwork and similar items;
(bb) All electrical wiring, lighting fixtures, outlets and switches, and other electrical work necessary for the office portion of the Premises;
(cc) The furnishing and installation of all duct work, terminal boxes, diffusers and accessories necessary for the heating, ventilation and air conditioning systems within the office portion of the Premises, including the cost of meter and key control for after-hour air conditioning;
(dd) Any additional improvements to the office portion of the Premises required by Tenant for Tenant's use of the Premises including, but not limited to, odor control, special heating, ventilation and air conditioning, noise or vibration control or other special systems or improvements;
(ee) All fire and life safety control systems such as fire walls, sprinklers, halon, fire alarms, including piping, wiring and accessories, necessary for the office portion of the Premises;
(ff) All plumbing, fixtures, pipes and accessories necessary for the office portion of the Premises;
(gg) Testing and inspection costs; and
(hh) Fees for the contractor including, but not limited to, fees and costs attributable to general conditions; plus a $______________fee for Landlord's tenant improvement coordinator.
(iv) Other Costs. All other costs to be expended by Landlord in the construction of the Tenant Improvements, including those costs incurred by Landlord for construction of elements of the Tenant Improvements in the Premises, which construction was performed by Landlord prior to the execution of the Lease by Landlord and Tenant and which construction is for the benefit of tenants and is customarily performed prior the execution of leases for space in the Building for reasons of economics (examples of such construction would include, but not be limited to, the extension of mechanical [including heating, ventilating and air conditioning systems] and electrical distribution systems outside of the core of the Building, wall construction, column enclosures and painting outside of the core of the Building, ceiling hanger wires and window treatment).
(b) Above Standard Allowance. Landlord hereby grants to Tenant an additional allowance of _____________ Dollars per square foot of the Premises ("Above Standard Allowance") for the purchase, construction and installation of the above-standard improvements described on Schedule "1" to this Exhibit "C" ("Above-Standard Improvements"). The Office Allowance and the Above-Standard Allowance are sometimes each individually referred to as an "Allowance" and sometimes collectively referred to as the "Allowances." All costs disbursed or expended by Landlord as part of the Above Standard Allowance shall be fully amortized over the original Term, plus interest at a rate of __________ percent (___%) per year, and the annual amortized amount shall be paid by Tenant monthly, as additional rent under the Lease, in equal installments throughout the Term until such excess costs have been fully repaid.
(c) Excess Costs. The cost of each item referenced in Paragraphs 5(a) and 5(b) above shall be charged against the respective Allowance. If the Work Cost for either the Office Improvements or the Above-Standard Improvements exceeds the respective Allowance, Tenant agrees to pay to Landlord such excess including reasonable fees for the contractor prior to the commencement of construction (less any sums previously paid by Tenant for such excess pursuant to the Work Cost Estimate). In no event will the Allowances be used to pay for Tenant's furniture, artifacts, equipment, telephone systems or any other item of personal property which is not affixed to the Premises.
(d) Changes. If, after the Tenant's Final Plans have been prepared and the Work Cost Statement has been established, Tenant requires any changes or substitutions to the Tenant's Final Plans, any additional costs related thereto including reasonable fees for the contractor are to be paid by Tenant to Landlord prior to the Commencement Date. Any changes to the Tenant's Final Plans will be approved by the Landlord and Tenant in the manner set forth in Paragraph 4 above and will, if necessary, require the Work Cost Statement to be revised and agreed upon between Landlord and Tenant in the manner set forth in Subparagraph 4(f) above. Landlord will have the right to decline Tenant's request for a change to the Tenant's Final Plans if such changes are inconsistent with the provisions of Paragraph 4 above, or if the change would unreasonably delay construction of the Tenant Improvements and the Commencement Date of the Lease.
(e) Unused Allowance Amounts. Any unused portion of either Allowance upon completion of the Tenant Improvements will not be refunded to Tenant or be available to Tenant as a credit against any obligations of Tenant under the Lease, provided, however, if Tenant constructs at least 10,000 square feet of office space within the Premises and fails to use the entire Office Allowance and if Tenant is not in default under the Lease, then Tenant may, prior to ________________, apply such unused amount as a credit against Monthly Base Rent due under the Lease and any remaining unused portion after such date will not be refunded to Tenant or be available to Tenant as a credit against any obligations of Tenant under the Lease and will be forfeited by Tenant.
(f) Amendment to Lease. Within fifteen (15) business days following the Commencement Date (as defined in Paragraph 8(a) below), Landlord and Tenant shall execute an amendment to the Lease setting forth a new rent schedule which incorporates the amortization of any costs funded by Landlord with respect to the Above Standard Allowance.
6. CONSTRUCTION OF TENANT IMPROVEMENTS. Until Tenant approves the Tenant's Final Plans and Work Cost Statement, Landlord will be under no obligation to cause the construction of any of the Tenant Improvements. Following Tenant's approval of the Work Cost Statement described in Subparagraph 4(f) above, Landlord's contractor will commence and diligently proceed with the construction of the Tenant Improvements, subject to Tenant Delays (as described in Paragraph 9 below) and Force Majeure Delays (as described in Paragraph 10 below).
7. CONSTRUCTION AND PAYMENT FOR THE BUILDING SHELL. Landlord hereby agrees to use its commercially reasonable efforts to cause the Building Shell to be constructed in accordance with the Building Plans. Except as provided in Paragraph 4(e) above, Landlord shall pay the cost of designing and constructing the Building Shell in accordance with the Building Plans.
8. COMMENCEMENT DATE AND SUBSTANTIAL COMPLETION
(a) Commencement Date. The Term of the Lease will commence on the date (the "Commencement Date") which is the earlier of: (i) the date Tenant or any subtenant of Tenant moves into the Premises to commence operation of its business in all or any portion of the Premises; or (ii) the date the Building Shell and the Tenant Improvements have been "substantially completed" (as defined below); provided, however, that if substantial completion of the Building Shell or the Tenant Improvements is delayed as a result of any Tenant Delays described in Paragraph 9 below, then the Commencement Date as would otherwise have been established pursuant to this Subparagraph 8(a)(ii) will be accelerated by the number of days of such Tenant Delays. Notwithstanding the foregoing, the Rent Commencement Date shall be determined in accordance with Paragraph ___ of the Lease.
(b) Substantial Completion; Punch-List. For purposes of Subparagraph 8(a)(ii) above, the Building Shell and the Tenant Improvements within the Premises and each portion of the Subleased Premises will be deemed to be "substantially completed" when Landlord's contractor certifies in writing to Landlord and Tenant that Landlord: (a) is able to provide Tenant with reasonable access to the Premises; (b) has substantially performed all of the Tenant Improvement Work required to be performed by Landlord under this Work Letter Agreement, other than decoration and minor "punch-list" type items and adjustments which do not materially interfere with Tenant's access to or use of the applicable portion of the Premises; and (c) has obtained a temporary certificate of occupancy or other required equivalent approval from the local governmental authority permitting occupancy of the applicable portion of the Premises. Within thirty (30) days after receipt of such certificate from Landlord's contractor, Tenant will conduct a walk-through inspection of the applicable portion of the Premises with Landlord and provide to Landlord a written punch-list specifying those decoration and other punch-list items which require completion, which items Landlord will thereafter diligently complete.
(c) Delivery of Possession. Landlord agrees to deliver possession of each portion of the Premises to Tenant when the Building Shell and the Tenant Improvements have been substantially completed in accordance with Subparagraph (b) above. The parties estimate that Landlord will deliver possession of each portion of the Premises to Tenant and the Term of this Lease will commence on or before the estimated commencement date set forth in the Work Schedule delivered to Tenant pursuant to Paragraph 2 above (the "Projected Commencement Date"). Landlord agrees to use its commercially reasonable efforts to cause each portion of the Premises to be substantially completed on or before the Projected Commencement Date. In the event Landlord fails to substantially complete construction of the Tenant Improvements within any office portion of the Premises within one hundred twenty (120) days after Tenant's Final Plans for such office portion of the Premises have been approved by Landlord and Tenant, and such failure is solely attributable to the fault of Landlord, Tenant's sole remedy shall be the right to receive one (1) day's worth of Monthly Base Rent credit applicable to such office portion of the Premises (Tenant still being liable for any Monthly Base Rent due to Landlord on the Building Shell in accordance with Exhibit "B" attached to the Lease) for every day past said one hundred twenty (120) period that Landlord fails to substantially complete the construction of said Tenant Improvements. Said one hundred twenty (120) day period shall be extended day-for-day for each day of Tenant Delays and/or Force Majeure Delays (as such terms are defined in Paragraphs 9 and 10 below) incurred by Landlord during the construction of the Tenant Improvements.
9. TENANT DELAYS. For purposes of this Work Letter Agreement, "Tenant Delays" means any delay in the completion of the Building Shell or the Tenant Improvements resulting from any or all of the following: (a) Tenant's failure to timely perform any of its obligations pursuant to this Work Letter Agreement, including any failure to complete, on or before the due date therefor, any action item which is Tenant's responsibility pursuant to the Work Schedule delivered by Landlord to Tenant pursuant to this Work Letter Agreement; (b) Tenant's changes to Space Plans or Tenant's Final Plans after Landlord's approval thereof; (c) changes to the Building Plans resulting from changes to the Tenant's Final Plans after Landlord's approval thereof; (d) Tenant's request for materials, finishes, or installations which are not readily available or which are incompatible with Landlord's standard specifications for tenant improvements for the Development; (e) any delay of Tenant in making payment to Landlord for Tenant's share of the Work Cost; or (f) any other act or failure to act by Tenant, Tenant's employees, agents, architects, independent contractors, consultants and/or any other person performing or required to perform services on behalf of Tenant.
10. FORCE MAJEURE DELAYS. For purposes of this Work Letter, "Force Majeure Delays" means any actual delay in the construction of the Tenant Improvements, which is beyond the reasonable control of Landlord or Tenant, as the case may be, as described in Paragraph __ of the Lease.
IN WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this Work Letter Agreement to be duly executed by their duly authorized representatives as of the date of the Lease.
EXECUTED as of __________, 20__.
COMMERCIAL PROPERTY LANDLORD, INC.,
a ____________ corporation
AGREEABLE TENANT, INC.,
a _____________ corporation