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HomeMy WebLinkAboutAgenda - 01-24-2012 - 5kORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: January 24, 2012 Action Agenda Item No. ,~j- K SUBJECT: Approval of a Lease Agreement between Chapel Hill -Carrboro City Schools and PTA Thrift Shop Managers, LLC DEPARTMENT: Financial Services PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: Lease Agreement Clarence Grier, 919-245-2453 Frank Clifton, 919-245-2306 Dr. Tom Forcella, CHCCS Superintendent, 919-967-8211 Todd LoFrese, CHCCS, 919-967-8211 PURPOSE: To approve a lease agreement between Chapel Hill -Carrboro City Schools (CHCCS) and PTA Thrift Shop Managers, LLC for the lease of office space. BACKGROUND: Due to space and parking limitations, current leased locations do not provide adequate space to operate effectively and working conditions for CHCCSstaff are poor due to the space shortage. In addition, space for meetings with parents, PPT meetings, and space for providing student services is extremely limited. Currently, CHCCS' Pre-IVHead Start administrative team and Preschool Intervention occupy separate office suites approximately 1/4 mile apart and approximately 3 miles from the Lincoln Center. If both programs were housed in one facility, services could be more closely coordinated and the quality of services provided to the public, and particularly to those families that the two programs share, could be improved. Both programs occupy spaces that are not large enough to accommodate their responsibilities. The overcrowding and limited meeting space has compromised confidentiality, and CHCCS staff believes these conditions have affected staff morale. At its November 3, 2011 meeting, the CHCCS Board of Education approved entering into a lease agreement with PTA Thrift Shop Managers, LLC for the rental of office and professional development space for the district in the Town of Carrboro. CHCCS negotiated a rental cost of $17.25 per square foot for the leased premises, subject to an escalation of 2% for each year after the first year. The total estimated annual cost for the lease agreement will be approximately $127,400 in the first year of the lease. The State of North Carolina requires that the County and Local Government Commission approve a lease agreement of this duration and dollar amount. The term of the lease agreement is seven years with the option to renew the lease with written notice 120 days prior to the expiration date of the lease. FINANCIAL IMPACT: The financial impact to the County is approximately $127,400 and is included in CHCCS Capital Investment Plan. CHCCS plans to terminate existing leases to maintain the cost at the amount above plus the 2% escalation each year. RECOMMENDATION(S): The Manager recommends that the Board approve the lease agreement. COMMERCIAL LEASE AGREEMENT (Multi-Tenant Facility) (Note: This form is not intended to be used as a Sublease and SHOiJLD NOT be used in Sublease circumstances) TffiS LEASE AGREEMENT, including any and all addenda attached hereto ("Lease', is by and between PTA Thrift Shop Managers, LLC, a North Carolina limited liability corporation ("Landlord"), whose principal business address is 115 West Main Street; Carrboro, North Carolina 27510, and the Chapel Hill-Carrboro Board of Education, a North Carolina public school board of education (`"Tenant'. whose principal business address is 750 Merritt Mill Road, Chapel Hill, North Carolina 27516 For and in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which aze hereby aclmowledged, the parkies hereto agree as follows: PRENIISES/PROPERTY (Note: In this paragraph, Premises is the actual space being leased and Property is the broader site/location of the Premises.) 1. (a) Landlord leases unto Tenant, and Tenant hereby leases and takes upon the terms and conditions which hereinafter appear, those certain premises depicted on Ezhibit A attached hereto and incorporated herein by reference (hereinafter called the "Premises"), which is a part of a building or buildings located at the Property (defined below). (b) The Premises is located at the following described property ("Property"): (Address): 103 Jones Ferry Road, Canboro, North Cazolina 27510. (For information purposes: (i) the tax parcel number of the Property is 9778756819 ;and, (ii) some or all of the Property is described in Deed Book 284, Page No.1567, Orange County.) All facilities fiunished at the Property and designated for the general use, in common, of occupants of the Property and their invitees, agents or employees, including Tenant hereunder, including but not limited to parking areas, streets, driveways, sidewalks, canopies, roadways, loading platforms, shelters, ramps, landscaped areas, exterior water faucets, irrigation systems, exterior lighting fixtures, signs and other facilities whether of a similar or dissimilar nature ("Common Areas") shall at all times be subject to the exclusive control and management of Landlord, and Landlord shall have the right from time to time to change the azea, level, location and arrangement of the Common Areas and to restrict parking by tenants and their employees to employee parking areas, to make Rules and Regulations (as herein defined) and do such things from time to time as in Landlord's reasonable discretion may be necessary regarding the Common Areas. Tenant shall also have anon-exclusive right, in common with other tenants at the Property, to the use of the Common Areas at the Property, subject to the terms hereo£ (c) At the time of execution of this Lease, the Premises have not yet been constructed. Prior to the Lease Commencement Date, Landlord shall cause the Premises to be constructed in accordance with terms and conditions developed by Landlord, which shall be subject to inspection and review by Tenant at any time after this Lease is executed. Tenant and Landlord, and their respective architects, shall consult with regard to Tenant's intended uses of the Premises to ensure that all applicable building codes and other governmental rules and regulations, including but not limited to any regulations or codes relating to sprinkler and fire alarm systems and areas of refuge, will be met and reflected in the final terms and conditions for the construction project developed by Landlord. At least sixty (60) days prior to the Lease Commencement date, Landlord shall provide written notice to Tenant that a Certificate of Occupancy has been issued for the building and that Tenant may begin making upfits to the Premises as herein provided. The Premises shall be delivered by Landlord to Tenant as "Shell Space" with the following specifications: (1) All utilities shall be connected to the Premises. (2) Electrical service shall be provided to the Premises, and Landlord shall install an electrical service panel providing sufficient electrical power for standard office use, as defined in the final building plans. (3) HVAC units shall be installed and connected to VOV boxes, but Tenant shall be responsible for connecting VOV boxes to grills. (4) Restrooms in comunon areas shall be fully finished and operational. (d) Landlord shall provide to Tenant an allowance of up to twenty-five dollars ($25) per gross square foot of the Premises for Tenant's upfits. Said allowance shall be remitted to Tenant within thirty (30) days of Tenant's submission to Landlord of an invoice itemizing the actual cost to Tenant of Tenant's upfits, along with any supporting documentation reasonably requested by Landlord. Tenant shall be responsible for all architectural fees, drawings, permits, and construction costs for Tenant's upfits. Tenant may select its own design professionals and general contractor for Tenant's upfits, subject to Landlord's approval, which shall not unreasonably be withheld. Landlord recognizes that Tenant maybe subject to public bidding laws and shall not withhold its consent for Tenant's selection of any contractor that is made in accordance with the applicable public bidding laws. Tenant shall ensure that any construction work associated with Tenant's upfits shall be covered by general liability insurance as described in paragraph 10 of this Lease. Tenant shall also ensure that any construction work associated with Tenant's upfit shall be covered by worker's compensation insurance as required by statute. Landlord shall give Tenant access to the Premises and shall permit Tenant to begin making upfits as soon as is reasonably practicable, but in no event later than the date Landlord is issued a certificate of occupancy for the Premises. Landlord shall notify Tenant that a certificate of occupancy has been issued and shall provide Tenant with a copy of such certificate within twenty-four (24) hours of its issuance to Landlord. TERM 2. 2. The term of this Lease shall commence on the earliest of the following dates("Lease Commencement Date"): a. December 1, 2012, provided Landlord has given Tenant the notice described in paragraph 1(c) at least sixty (60) days before that date; b. March 1, 2013, provided Landlord has given Tenant the notice described in paragraph 1(c) at least sixty (60) days before that date; c. June 1, 2013, provided Landlord has given Tenant the notice described in pazagraph 1(c) at least sixty (60) days before that date; d. July 1, 2013, provided Landlord has given Tenant the notice described in paragraph 1(c) at least sixty (60) days before that date; e. August 1, 2013, provided Landlord has given Tenant the notice described in paragraph 1(c) at least sixty (60) days before that date; or f. Any such other date as Landlord and Tenant may agree to in a writing signed by authorized representatives of both parties. This Lease shall expire exactly seven (7) calendar years after the Lease Commencement Date unless sooner terminated or renewed as herein provided. The first Lease Year Anniversary shall be the date twelve (12) calendar months after the first day of the first full month immediately following the Lease Commencement Date and successive Lease Year Anniversaries shall be the date twelve (12) calendaz months from the previous Lease Year Anniversary. Tenant shall have the option of renewing this Lease, upon written notice given to Landlord at least one hundred and twenty (120) days prior to the end of the then expiring term of this Lease, for two (2) additional term(s) of two (2) years each. RENTAL 3. Tenant agrees to pay Landlord (or its Agent as directed by Landlord), without notice, demand, deduction or set off, an annual rental of seventeen dollars and twenty-five cents ($17.25) dollars per gross square foot of the Premises. Tenant may, at is sole discretion, pay this rent annually in annual lump sums or in equal monthly installments of one and seven sixteenths of a dollar ($1.4375) per gross square foot of the Premises, exact square footage to be determined after a certificate of occupancy for the building has been issued. As of October 26, 2011, non-finalized plans show a gross footage of 7,382 square feet If Tenant opts to pay rent monthly, then (a) the first rental payment shall be made on or by the Lease Commencement Date, and subsequent rental payments shall be on the fast calendar day of each month, and (b) rental for any period during the term hereof which is less than one month shall be the pro-rated portion of the monthly installment of rental due, based upon a 30 day month. If Tenant opts to pay rent annually, then (a~ rental payments shall be made monthly for the period of occupancy between the Lease Commencement Date and the fifteenth (15 ) day of the following August, and subsequent rental payments shall be made on the fifteenth (15'x) day of that and each subsequent August, and (b) rental for any period during the term hereof which is less than one month or one year shall be the pro-rated portion of the monthly or annual installment of rental due, based upon a 30-day month and a 365-day year. Tenant shall have the option of switching from month-to-month to annual rental payments and vice versa at is sole discretion provided rental payments are timely made and there are no periods of occupancy for which Tenant has not made an advance monthly or annual rental payment. The annual rental payable hereunder shall be adjusted every Lease Year Anniversary by two percent (2%) over the amount then payable hereunder. In the event renewal of this Lease is provided for in paragraph 2 hereof and effectively exercised by Tenant, the rental adjustments provided herein shall apply to the term of the Lease so renewed. Any monthly or annual rental(s) spanning a time period that includes a Lease Year Anniversary shall be prorated so that this two percent (2%) escalation applies only to periods of occupancy that occur after the Lease Year Anniversary. Tenant shall pay all rental to Landlord's Agent at the following address: PTA Thrift Store Managers, LLC, P.O. Box 356, Carrboro, NC 27510. LATE CHARGES 4. If Landlord fails to receive full rental payment (either monthly or annual) within fifteen (15) days after it becomes due, Tenant shall pay Landlord, as additional rental, a late charge equal to three percent (3%) of the overdue amount of the monthly (not annual) rental or three hundred dollars ($300),whichever is greater. The parties agree that such a late charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of such late payment. SECURTTY DEPOSTT 5. Tenant shall not be required to make a security deposit. UTILITY BILLS/SERVICE CONTRACTS 6. Landlord and Tenant agree that utility bills and service contracts ("Service Obligations") for the Premises shall be paid by the party indicated below as to each Service Obligation. In each instance, the party undertaking responsibility for payment of a Service Obligation covenants that they will pay the applicable bills prior to delinquency. The responsibility to pay for a Service Obligation shall include all metering, hook-up fees or other miscellaneous charges associated with establishing, installing and maintaining such utility or contract in said party's name. Within thirty (30) days of the Lease Commencement Date, Tenant shall provide Landlord with a copy of any requested Tenant Service Obligation information. Service Obligation Sewer/Septic Water Electric Gas Telephone HVAC (maintenance/service contract) Elevator (including phone line) Security System Fiber Optic Janitor/Cleaning Trash/Dumpster Landscaping/Maintenance Sprinkler System (including phone line) Pest Control Landlord Tenant Not Applicable ® ^ ^ ® ^ ^ ^ ® ^ ^ ® ^ ^ ® ^ ^ ® ^ ® ^ ^ ® ^ ^ ^ ® ^ ^ ® ^ ® ^ a ® a o ® ^ ^ ® ^ ^ Landlord shall not be liable for injury to Tenant's business or loss of income therefrom or for damage that maybe sustained by the person, merchandise or personal property of Tenant, its employees, agents, invitees or contractors or any other person in or about the Premises, caused by or resulting from f re, steam, electricity, gas, water or rain, which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of any utility installations, air conditioning system or other components of the Premises or the Property, except to the extent that such damage or loss is caused by Landlord's negligence or willful misconduct. Landlord represents and warrants that with respect to the heating, ventilation and air conditioning system(s) and utility installations existing as of the Lease Commencement Date shall be in good order and repair. Subject to the provisions of this 6 pazagraph 6, Landlord shall not be liable in damages or otherwise for any discontinuance, failure or interruption of service to the Premises of utilities or the heating, ventilation and air conditioning system(s) and Tenant shall have no right to terminate this Lease or withhold rental because of the same, except to the extent that such damage or loss is caused by Landlord's negligence or willful misconduct. RULES AND REGULATIONS 7. The roles and regulations, if any, attached hereto ("Rules and Regulations") aze made a part of this Lease. Tenant agrees to comply with any Rules and Regulations of Landlord in connection with the Premises which are in effect at the time of the execution of the Lease or which maybe from time to time promulgated by Landlord in its reasonable discretion, provided such Rules and Regulations are in writing and are not in conflict with the terms and conditions of the Lease or any laws, regulations, or policies that govern the Chapel Hill-Carrboro City Schools. Landlord shall use commercially reasonable efforts to enforce such Rules and Regulations at the Property, provided, however, in no event shall Landlord be obligated to make any material expenditures in connection with the enforcement of such Rules and Regulations. Landlord shall not be liable for any damages arising from any use, act or failure to act of any other tenant or occupant (including.such tenant's or occupant's invitees, agents or employees), if any, of the Property except to the extent such damage is caused by Landlord's negligence or willful misconduct. PERMITTED USES 8. The permitted use of the Premises shall be: office space for school district employees and invitees and related public school purposes ("Permitted Use"). The Premises shall be used and wholly occupied by Tenant solely for the purposes of conducting the Permitted Use, and the Premises shall not be used for any other purposes unless Tenant obtains Landlord's prior written approval of any change in use. Landlord makes no representation or warranty regarding the suitability of the Premises for or the legality (under zoning or other applicable ordinances) of the Permitted Use for the Premises, provided however, that Landlord does represent that it has no contractual obligations with other parties which will materially interfere with or prohibit the Permitted Use of Tenant at the Premises. At Tenant's sole expense, Tenant shall procure, maintain and make available for Landlord's inspection from time to time aay governmental license(s) or permit(s) required for the proper and lawful conduct of Tenant's business in the Premises. Tenant shall not cause or permit any waste to occur in the Premises and shall not overload the floor, or any mechanical, electrical, plumbing or utility systems serving the Premises. Tenant shall keep the Premises, and every part thereof, in a clean and wholesome condition, free from any objectionable noises, loud music, objectionable odors or nuisances. TAXES, INSURANCE AND COMMON AREA EXPENSES 9. Landlord shall pay all taxes (including but not limited to, ad valorem taxes, special assessments and any other governmental charges) on the Property, shall procure and pay for such commercial general liability, broad form fire and extended and special perils insurance with respect to the Property as Landlord in its reasonable discretion may deem appropriate and shall maintain and operate the Common Areas and the Property. Tenant shall not be responsible for any of Landlord's costs in obtaining such insurance or in paying such base taxes. Tenant shall, however, reimburse Landlord for its proportionate share of all increases in taxes beginning one (1) calendar yeaz after the Lease Commencement Date. Any such sums shall be billed by Landlord to Tenant annually in arrears and shall be remitted by Tenant to Landlord within thirty (30) days after receipt of notice from Landlord as to the amount due. Tenant shall be solely responsible for insuring Tenant's personal and business property and for paying any taxes or governmental assessments levied thereon. For purposes of this paragraph 9, "Tenant's proportionate shaze" shall be determined based on the percentage of the total gross square footage of the building in which the Premises aze located that are part of the Premises and occupied by Tenant. INSURANCE; WAIVER; INDEMNTTY 10. (a) During the term of this Lease, Tenant shall maintain commercial general liability insurance coverage (occurrence coverage} with broad form contractual liability coverage and with coverage limits of not less than one million dollars ($1,000,000) combined single limit, per occurrence, and three million dollars ($3,000,000) aggregate limit, specifically including liquor liability insurance covering consumption of alcoholic beverages by customers of Tenant should Tenant choose to sell alcoholic beverages. All policies of insurance provided for herein shall name as "additional insureds" Landlord, Landlord's Agent, and all mortgagees of Landlord. Tenant shall provide to Landlord, at least thirty (30) days prior to expiration, certificates of insurance to evidence any renewal or additional insurance procured by Tenant. Tenant shall provide evidence of all insurance required under this Lease to Landlord prior to the Lease Commencement Date. 7 (b) Landlord (for itself and its insurer) waives any rights, including rights of subrogation, and Tenant (for itself and its insurer) waives any rights, including rights of subrogation, each may have against the other for compensation of any loss or damage occasioned to Landlord or Tenant arising from any risk generally covered by the "all risks" insurance required to be carried by Landlord and Tenant. The foregoing waivers of subrogation shall be operative only so long as available in the State of North Carolina. The foregoing waivers shall be effective whether or not the parties maintain the insurance required to be carved pursuant to this Lease. (c) Except as otherwise provided in paragraph 10(b), Tenant indemnifies Landlord for damages proximately caused by the negligence or wrongful conduct of Tenant and Tenant's employees, agents, invitees or contractors. Except as otherwise provided in paragraph 10(b), Landlord indemnifies Tenant for damages proximately caused by the negligence or wrongful conduct of Landlord and Landlord's employees, agents, invitees or contractors. The indemnity provisions in this paragraph 10 cover personal injury and property damage and shall survive the expiration or eazlier termination of this Lease: , REPAIRS BY LANDLORD 11. Landlord agrees to keep in good repair the roof, foundation, structural supports, exterior walls (exclusive of all glass and exclusive of all exterior doors) and the Common Areas of the Property, except repairs rendered necessary by the negligence or intentional wrongful acts of Tenant, its employees, agents, invitees or contractors. Tenant shall promptly report in writing to Landlord any defective condition known to it which Landlord is required to repair, and failure to report such conditions within thirty (30) days shall make Tenant responsible to Landlord for any liability incurred by Landlord by reason of such conditions. REPAIRS BY TENANT 12. (a) Tenant, throughout the initial term of this Lease, and any extension or renewal thereof, at its expense, shall maintain in good order and repair the Premises (except those repairs expressly required to be made by Landlord hereunder), specifically including but not limited to all light bulb and ballast replacements, plumbing fixtures and systems repairs within the Premises and water heater repairs. Tenant shall use only licensed contractors for repairs where such license is required. Landlord shall have the right to approve .the contractor as to any repairs in excess of one thousand dollars ($1,000); provided, however, that if Tenant selects a contractor through a legally required public bidding process, then Landlord may disapprove the contractor only if Landlord will agree to cause the same repairs to be made in a good and workmanlike manner at Landlord's expense by contractor(s) selected by Landlord. (b) Tenant agrees to return the Premises to Landlord at the expiration or prior temunation of this Lease, in as good condition and repair as on the Lease Commencement Date, natural wear and tear, damage by storm, fire, lightning, earthquake or other casualty alone excepted. Tenant, Tenant's employees, agents, invitees or contractors shall take no action which voids any manufacturers or installers warranty with relation to the Premises or the Property. Tenant shall indemnify and hold harmless Landlord from any liability, claim, demand, or cause of action arising on account of Tenant's breach of the provisions of this paragraph 12. There will be heating, ventilation and air conditioning equipment exclusively serving the Premises. Tenant, at its expense, shall provide basic maintenance for such equipment, including repair and replacement of parts, compressors, air handling units and heating units. Provided that Tenant shall have obtained Landlord's prior written approval of the contractor and the repair or replacement expenses for heating, ventilation and air conditioning equipment, Tenant shall be responsible only for repair, replacement, or service charges costing two hundred and fifty dollars ($250) or less. Notwithstanding anything in this Lease to the contrary, Landlord shall be solely responsible for any repairs, replacements, or service calls costing in excess of two hundred and fifty dollars ($250), provided that the parties may, if mutually agreed, opt to have Tenant effectuate such repairs, replacements, or service calls and to have Landlord reimburse Tenant for the amount in excess of the stated amount. In no event shall Tenant be responsible for more than two thousand, five hundred dollars ($2,500) in repairs, replacements, or service calls for heating, ventilation, or air conditioning equipment annually, and once such amount has been exhausted, Landlord shall be solely responsible for any additional repair, replacement, or service in excess of the stated amount for the remainder of that year. Notwithstanding the foregoing, Landlord shall be solely responsible for any repairs, replacements, or service calls covered by manufacturers' warranties. ALTERATIONS 13. Tenant shall not make any post-upfit alterations, additions, or improvements to the Premises costing more than one thousand dollars ($1,000) without Landlord's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Tenant shall promptly remove any alterations, additions, or improvements constructed in violation of this paragraph 13 upon Landlord's written request. All approved alterations, additions, and improvements will be accomplished in a good and workmanlike manner, in conformity with all applicable laws and regulations, and by a contractor approved by Landlord, free of any liens or encumbrances; provided, however, that if Tenant selects a contractor through a legally required public bidding process, then Landlord may disapprove the contractor only if Landlord will agree to cause the same alterations, additions, or improvements to be made at its own expense by contractor(s) selected by Landlord. Landlord may require Tenant to remove any alterations, additions or improvements (whether or not made with Landlord's consent) at the termination of the Lease and to restore the Premises to its prior condition, all at Tenant's expense, provided Landlord informed Tenant in writing that Tenant would be required fo remove any particulaz alteration, addition, or improvement at the time the alteration, addition, or improvement was approved by Landlord, if Landlord's consent was sought. All alterations, additions and improvements which Landlord has not required Tenant to remove shall become Landlord's property and shall be surrendered to Landlord upon the termination of this Lease, except that Tenant may remove any of Tenant's machinery, equipment or trade fixtures which can be removed without material damage to the Premises or the Property. Tenant shall repair, at Tenant's expense, any damage to the Premises or the Property caused by the removal of any such machinery, equipment or trade fixtures. DESTRUCTION OF OR DAMAGE TO PREMISES 14. (a) If the Premises are totally destroyed by storm, fire, lightning, earthquake or other casualty, Landlord shall have the right to terminate this Lease on written notice to Tenant within thirty (30) days after such destruction and this Lease shall terminate as of the date of such destruction and rental shall be accounted for as between Landlord and Tenant as of that date; provided, however, that Tenant shall have no obligation to pay rent for any time period(s) after the Premises are totally destroyed. (b) If the Premises are damaged but not wholly destroyed by any such casualties or if the Landlord does not elect to terminate the Lease under pazagraph 14(a) above, Landlord shall commence (or shall cause to be commenced) reconstruction of the Premises within sixty (60) days after such occurrence and prosecute the same diligently to completion, not to exceed one hundred and fifty (150) days from the date upon which Landlord receives all applicable permits and consents as well as insurance proceeds. In the event Landlord shall fail to substantially complete reconstruction of the Premises within said one hundred fifty (150) day period, Tenant may terminate this Lease. (c) In the event of any casualty at the Premises during the last one (1) year of the Lease Term, Landlord and Tenant each shall have the option to terminate this Lease on written notice to the other of exercise thereof within sixty (60) days after such occurrence. (d} In the event of reconstruction of the Premises, Tenant shall continue the operation of its business in the Premises during any such period to the extent reasonably practicable from the standpoint of prudent business management, and the obligation of Tenant to pay annual rental and any other sums due under this Lease, shall remainin full force and effect during the period of reconstmction. The annual rental and other sums due under this Lease shall be abated proportionately with the degree to which Tenant's use of the Premises is impaired, commencing from the date of destruction and continuing during the period of such reconstruction. Tenant shall not be entitled to any compensation or damages from Landlord for loss of use of the whole or any part of the Prenvses, Tenant's personal property, or any inconvenience or annoyance occasioned by such damage, reconstruction or replacement. (e) In the event of the termination of this Lease under any of the provisions of this paragraph 14, both Landlord and Tenant shall be released from any liability or obligation under this Lease arising after the date of termination, except as otherwise provided for in this Lease. GOVERND~NTAL ORDERS 15. Tenant, at its own expense, agrees to comply with: (a) any law, statute, ordinance, regulation, rule, requirement, order, court decision or procedural requirement of any governmental or quasi-governmental authority having jurisdiction over the Premises, (b) the rules and regulations of any applicable governmental insurance authority or any similar body, relative to the Premises and Tenant's activities therein.; (c) provisions of or rules enacted pursuant to any private use restrictions, as the same maybe amended from time to time and (d) the Americans with Disabilities Act (42 U.S.C.S. § 12101, et seq.) and the regulations and accessibility guidelines enacted pursuant thereto, as the same may be amended from time to time. Landlord and Tenant agree, however, that if in order to comply with such requirements the cost to Tenant shall exceed a sum equal to one (1) yeaz's rent, then Tenant may terminate this Lease by giving written notice of termination to Landlord in accordance with the terms of this Lease, which termination shall become effective sixty (60) days after receipt of such notice and which notice shall eliminate the necessity of compliance with such requirements, unless, within thirty (30) days of receiving such notice, Landlord agrees in writing to be responsible for such compliance, at its own expense, and commences compliance activity, in which case Tenant's notice given hereunder shall not terminate this Lease. CONDEMNATION 16. (a) If the entire Premises shall be appropriated or taken under the power of eminent domain by any governmental or quasi- governmental authority or under threat of and in lieu of condemnation (hereinafter, "taken" or "taking"), this Lease shall terminate as of the date of such taking, and Landlord and Tenant shall have no further liability or obligation arising under this Lease after such date, except as otherwise provided for in this Lease. (b) If more than twenty-five percent (25%) of the floor area of the Premises is taken, or if by reason of any taking of the Property or the Premises, regardless of the amount so taken, the remainder of the Premises is not one undivided space or is rendered unusable for the Permitted Use, either Landlord or Tenant shall have the right to terminate this Lease as of the date the portion of the Premises of taking of the portion of the Premises or Property so taken, upon giving notice of such election within thirty (30) days after receipt by Tenant from Landlord of written notice that said portion of the. Premises or the Property have been or will be so taken. In the event of such termination, both Landlord and Tenant shall be released from any liability or obligation under this Lease arising after the date of termination, except as otherwise provided for in this Lease. (c) Landlord and Tenant, immediately after learning of any taking, shall give notice thereof to each other. (d) If this Lease is not terminated on account of a taking as provided herein above, then Tenant shall continue to occupy that portion of the Premises not taken and the parties shall proceed as follows: (i) at Landlord's cost and expense and as soon as reasonably possible, Landlord shall restore (or shall cause to be restored) the Premises and/or Properly remaining to a complete unit of like quality and character as existed prior to such appropriation or taking, and (ii) the annual rent provided for in paragraph 3 and other sums due under the Lease shall be reduced on an equitable basis, taking into account the relative values of the portion taken as compared to the portion remaining: Provided, however, that nothing in this Lease shall be construed to waive any statutory rights of t~~nation on the part of Tenant that may arise because of any partial taking of the Premises and/or the Property. (e) Landlord shall be entitled to the entire condemnation award for any taking of the Premises and/or the Property or any part thereof. Tenant's right to receive any amounts separately awarded to Tenant directly from the condemning authority for the taking of its merchandise, personal property, relocation expenses and/or interests in other than the real property taken shall not be affected in any manner by the provisions of this paragraph 16, provided Tenant's award does not reduce or affect Landlord's award and provided further, Tenant shall have no claim against Landlord for the loss of its leasehold estate. ASSIGNMENT AND SUBLETTING 17. Tenant shall not assign this Lease or any interest hereunder or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than the Tenant, without Landlord's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Consent to any assignment or sublease shall not impair this provision and all later assignments or subleases shall be made likewise only on the prior written consent of Landlord. No sublease or assignment by Tenant shall relieve Tenant of any liability hereunder. EVENTS OF DEFAULT 18. (a) The happening of any one or more of the following events (hereinafter any one of which may be referred to as an "Event of Default") during the term of this Lease, or any renewal or extension thereof shall constitute a breach of this Lease on the part of the Tenant: (1) Tenant fails to pay when due the rental as provided for herein, taking into account any provisions regarding notice and an opportunity to cure; (2) Tenant abandons or vacates the Premises; (3) Tenant fails to comply with or abide by and perform any material and non-monetary obligation imposed upon Tenant under this Lease within sixty (60) days after written notice of such breach or fails to commence a cure within thirty (30) days of such written notice; (4) Tenant is adjudicated bankrupt; (5) A permanent . receiver is appointed for Tenant's properly and such receiver is not removed within sixty (60) days after written notice from Landlord to Tenant to obtain such removal; (6) Tenant, either voluntarily or involuntarily, takes advantage of any debt or relief proceedings under any present or future law, whereby the rent or any part thereof is, or is proposed to be, reduced or payment thereof deferred and such proceeding is not dismissed within sixty (60) days of the filing thereof; (7) Tenant makes an assignment for benefit of creditors; or (8) Tenant's effects are levied upon or attached under process against Tenant, which is not satisfied or dissolved within thirty (30) days after written notice from Landlord to Tenant to obtain satisfaction thereof. (b) The happening of any one or more of the following events (hereinafter any one of which maybe referred to as an "Event of Default") during the term of this Lease, or any renewal or extension thereof, shall constitute a breach of this Lease on the part of the 10 Landlord: Landlord fails to comply with or abide by and perform any material obligation imposed upon Landlord under this Lease within sixty (60) days after written notice of such breach or fails to commence a cure within thirty (30) days of such written notice. REMEDIES UPON DEFAULT 19. (a) Upon the occurrence of an Event of Default by Tenant, Landlord may pursue any one or more of the following remedies separately or concurrently, without prejudice to any other remedy herein provided or provided by law: (a) Landlord may terminate this Lease by giving written notice to Tenant and upon such termination shall be entitled to recover from Tenant damages as maybe permitted under applicable law; or (b) Landlord may, without terminating this Lease, enter upon and rent the Premises, in whole or in part, at the best price obtainable by reasonable effort, with Tenant being liable to Landlord for the deficiency, if any, between Tenant's rent hereunder and the price obtained by Landlord on reletting. Provided, however, that Landlord's sole remedy for Tenant's failure to timely pay rent shall be to assess the late charges described in paragraph 4 of this Lease unless Tenant has failed to make a required rental payment within ten (10) business days' written notice from Landlord that rent is past due and that failure to make the required rental payment within ten (10) business days from Tenant's receipt of said written notice could result in termination of this Lease, in which case Landlord shall be entitled to exercise any of its remedies under this paragraph 19. No termination of this Lease prior to the normal ending thereof, by lapse of time or otherwise, shall affect Landlord's right to collect rent for the period prior to termination thereof. (b} Upon the occurrence of an Event of Defaulf by the Landlord, Tenant shall have the right, upon written notice to Landlord, to expend any reasonable sums in the convection or curing of Landlord's failure to perform, and to deduct such sums from the rent due for the next rental period following the rental period in which the sums were paid. This remedy shall be in addition to any other remedies available to Tenant pursuant to this Lease, at law or in equity. EXTERIOR SIGNS 20. Tenant shall place no signs upon the outside walls, doors or roof of the Premises or anywhere on the Property, except with the express written consent of the Landlord in Landlord's sole discretion, provided that Landlord shall allow Tenant to display at least one clearly visible exterior sign, of reasonable size, shape and other characteristics, identifying the Premises as office space of the Chapel Hill-Carrboro City Schools. Any consent given by Landlord shall expressly not be a representation of or warranty of any legal entitlement to signage at the Premises or on the Property. Any and all signs placed on the Premises or the Property by Tenant shall be maintained in compliance with governmental n~les and regulations governing such signs and Tenant shall be responsible to Landlord for any damage caused by installation, use or maintenance of said signs, and all damage incident to removal thereof. LANDLORD'S ENTRY OF PREMISES 21. Landlord may advertise the Premises "For Rent" or "For Sale" ninety (90) days before the termination of this Lease. Landlord may enter the Premises upon prior notice at reasonable hours to exhibit same to prospective purchasers or tenants, to make repairs required of Landlord under the terms hereof, for reasonable business purposes and otherwise as may be agreed by Landlord and Tenant. Landlord may enter the Premises at any time without prior notice, in the event of an emergency or to make emergency repairs to the Premises. Upon request of Landlord, Tenant shall provide Landlord with a functioning key to the Premises and shall replace such key if the locks to the Premises are changed. Provided, however, that Landlord shall consult in advance with Tenant on the time and manner of any such access to the Premises, that any such access shall be consistent with any applicable written policies or procedures of the Chapel Hill-Carrboro Board of Education, that Landlord shall follow Tenant's procedures regazding signing in and wearing or carrying identification while on the Premises, and that such access shall not disrupt Tenant's use of the Premises. QUIET ENJOYMENT 22. So long as Tenant observes and performs the covenants and agreements contained herein, it shall at all times during the Lease term peacefully and quietly have and enjoy possession of the Premises, subject to the terms hereof HOLDING OVER 23. If Tenant remains in possession of the Premises after expiration of the term hereof, Tenant shall be a tenant at sufferance and there shall be no renewal of this Lease by operation of law. In such event, commencing on the date following the date of expiration of the term, the monthly rental payable under Paragraph 3 above shall for each month, or fraction thereof during which Tenant so remains in possession of the Premises, be twice the monthly rental otherwise payable under Paragraph 3 above. 11 EA'VIItONMENTAL LAWS 24. (a) Tenant covenants that with respect to any Hazardous Materials (as defined below) it will comply with any and all federal, state or local laws, ordinances, rules, decrees, orders, regulations or court decisions relating to hazardous substances, hazardous materials, hazardous waste, toxic substances, environmental conditions on, under or about the Premises or the Properly or soil and ground water conditions, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act, the Hazardous Materials Transportation Act, any other legal requirement concerning hazardous or toxic substances, and any amendments to the foregoing (collectively, all such matters being. "Hazazdous Materials Requirements"). Tenant shall remove all Hazardous Materials from the Premises, that were placed on the Premises by Tenant or Tenant's employees, agents, invitees or contractors, either after their use by Tenant or upon the expiration or earlier termination of this Lease, in compliance with all Hazardous Materials Requirements. (b) Tenant shall be responsible for obtaining all necessary permits in connection with its use, storage and disposal of Hazardous Materials, and shall develop and maintain, and where necessary file with the appropriate authorities, all reports, receipts, manifest, filings, lists and invoices covering those Hazardous Materials and Tenant shall provide Landlord with copies of all such items upon request. Tenant shall provide within five (5) days after receipt thereof, copies of all notices, orders, claims or other correspondence from any federal, state or local government or agency alleging any violation of any Hazardous Materials Requirements by Tenant, or related in any manner to Hazardous Materials. In addition, Tenant shall provide Landlord with copies of all responses to such correspondence at the time of the response. (c) Tenant hereby indemnifies and holds harmless Landlord, its successors and assigns from and against any and all losses, liabilities, damages, injuries, penalties, fines, costs, expenses and claims of any and every kind whatsoever (including attorney's fees and costs) paid, incurred or suffered by, or asserted against Landlord as a result of any claim, demand or judicial or administrative action by any person or entity (including governmental or private entities) as a direct result of the presence on or under or the escape, seepage, leakage, spillage, dischazge, emission or release from the Premises or the Property of any Hazardous Materials caused by Tenant or Tenant's employees, agents, or contractors. This indemnity shall also apply to any release of Hazardous Materials caused by a fire or other casualty to the Premises if such Hazazdous Materials were stored on the Premises or the Property by Tenant, its agents, employees, or successors in interest. (d) For purposes of this Lease, "Hazardous Materials" means any chemical, compound, material, substance or other matter that: (i) is defined as a hazardous substance, hazardous material or waste, or toxic substance pursuant to any Hazardous Materials Requirements, (ii) is regulated, controlled or governed by any Hazardous Materials Requirements, (iii) is petroleum or a petroleum product, or (iv) is asbestos, formaldehyde, a radioactive material, drug, bacteria, virus, or other injurious or potentially injurious material (by itself or in combination with other materials). (e) The warranties and indemnities contained in this paragraph 24 shall survive the termination of this Lease. SUBORDINATION; ATTORNMENT; ESTOPPEL 25. (a) This Lease and all of Tenant's rights hereunder aze and shall be subject and subordinate to all currently existing and future mortgages affecting the Premises. Within ten (10) days after the receipt of a written request from Landlord or any Landlord mortgagee, Tenant shall confirm such subordination by executing and delivering Landlord and Landlord's mortgagee a recordable subordination agreement and such other documents as maybe reasonably requested, in form and content satisfactory to Landlord and Landlord's mortgagee. Provided, however, as a condition to Tenant's obligation to execute and deliver any such subordination agreement, the applicable mortgagee must agree that mortgagee shall not unilaterally, materially alter this Lease and this Lease shall not be divested by foreclosure or other default proceedings thereunder so long as Tenant shall not be in default under the terms of this Lease beyond any applicable cure period set forth herein. Tenant acknowledges that any Landlord mortgagee has the right to subordinate at any time its interest in this Lease and the leasehold estate to that of Tenant, without Tenant's consent. (b) If Landlord sells, transfers, or conveys its interest in the Premises or this Lease, or if the same is foreclosed judicially or nonjudicially, or otherwise acquired, by a Landlord mortgagee, upon the request of Landlord or Landlord's successor, Tenant shall attom to said successor, provided said successor accepts the Premises subject to this Lease. Tenant shall, upon the request of Landlord or Landlord's successor, execute an attornment agreement confirming the same, in form and substance acceptable to Landlord or Landlord's successor and Landlord shall thereupon be released and discharged from all its covenants and obligations under this Lease, except those obligations that have accrued prior to such sale, transfer or conveyance; and Tenant agrees to look solely to the successor 12 in interest of Landlord for the performance of those covenants accruing after such sale, transfer or conveyance. Such agreement shall provide, among other things, that said successor shall not be bound by (a) any prepayment of more than one (1) month's rental (except the Security Deposit) or (b) any material amendment of this Lease made after the later of the Lease Commencement Date or the date that such successor's lien or interest first arose, unless said successor shall have consented to such amendment. (c) Within ten (10) days after request from Landlord, Tenant shall execute and deliver to Landlord an estoppel certificate (to be prepared by Landlord and delivered to Tenant) with appropriate facts then in existence concerning the status of this Lease and Tenant's occupancy, and with any exceptions, objections, or amendments thereto noted in writing by Tenant Tenant's failure to execute and deliver the Estoppel Certificate within said ten (10) day period shall be deemed to make conclusive and binding upon Tenant in favor of Landlord and any potential mortgagee or transferee the statements contained in such estoppel certificate without exception. ABANDONMENT 26. Tenant shall not abandon the Premises at any time during the Lease term. If Tenant shall abandon the Premises or be dispossessed by process of law, any personal property belonging to Tenant and left on the Premises, at the option of Landlord, shall be deemed abandoned, and available to Landlord to use or sell to offset any rent due or any expenses incurred by removing same and restoring the Premises. NOTICES 27. All notices required or permitted under this Lease shall be in writing and shall be personally delivered or sent by U.S. certified mail, return receipt requested, postage prepaid. Notices to Tenant shall be delivered or sent to the address shown at the beginning of this Lease, except that upon Tenant taking possession of the Premises, then the Premises shall be Tenant's address for such purposes. Notices to Landlord shall be delivered or sent to the address shown at the beginning of this Lease and notices to Agent, if any, shall be delivered or sent to the address set forth in Paragraph 3 hereof All notices shall be effective upon delivery. Any party may change its notice address upon written notice to the other parties, given as provided herein. BROKERS 28. Except as expressly provided herein, Tenant and Landlord agree to indemnify and hold each other harmless from any and all claims of brokers, consultants or real estate agents by, through or under the indemnifying party for fees or commissions arising out of the sale of the Property to Tenant Tenant and Landlord represent and warrant to each other that: (i) except as to the brokers designated below (`Brokers', they have not employed nor engaged any brokers, consultants or real estate agents to be involved in this transaction and (ii) that the compensation of the Brokers is established by and shall be governed by separate agreements entered into as amongst the Brokers, the Tenant and/or the Landlord. KW Commercial Chapel Hill("Listing Agency"), David Bellin and Mike Hickey ("Listing Agent" -License # 190858 & 219787) Acting as: Landlord's Agent and Morris Commercial ("Selling Agency"), Pete Brennan("Selling Agent"- License # 230854) Acting as: Tenant's Agent GENERAL, TERMS 29. (a) "Landlord'.' as used in this Lease shall include the undersigned, its heirs, representatives, assigns and successors in title to the Premises. "Agent" as used in this Lease shall mean the party designated as same in Paragraph 3, its heirs, representatives, assigns and successors. `"Tenant" shall include the undersigned and its heirs, representatives, assigns and successors, and if this Lease shall be validly assigned or sublet, shall include also Tenant's assignees or sublessees as to the Premises covered by such assignment or sublease. "Landlord", "Tenant", and "Agent" include male and female, singular and plural, corporation, partnership or individual, as may fit the particular parties. (b) No failure of Landlord to exercise any power given Landlord hereunder or to insist upon strict compliance by Tenant of its obligations hereunder and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of Landlord's 13 right to demand exact compliance with the material terms hereof. All rights, powers and privileges conferred hereunder upon parties hereto shall be cumulative and not restrictive of those given by law. (c) Time is of the essence in this Lease. (d) This Lease constitutes the sole and entire agreement among the parties hereto and no modification of this Lease shall be binding unless in writing and signed by all parties hereto. (e) Each signatory to this Lease represents and warrants that he or she has full authority to sign this Lease and such instruments as may be necessary to effectuate any transaction contemplated by this Lease on behalf of the party for whom he or she signs and that his or her signature binds such party. (f) Upon request by either Landlord or Tenant, the parties hereto shall execute a short form lease (memorandum of lease) in recordable form, setting forth such provisions hereof (other than the amount of annual rental and other sums due) as either party may wish to incorporate. The cost of recording such memorandum of lease shall be borne by the party requesting execution of same. CONDTTIONS PRECEDENT 30. The parties acknowledge and agree that this Lease shall be valid and enforceable only ifi (a) This Lease is formally approved by the Orange County Board of Commissioners and the Local Government Commission, assuming such approvals are required by law. If either body refuses, for any reason, to formally approve this Lease, it shall be null and void and without legal effect, and Tenant shall have no obligation to make rent payments hereunder, and (b) Landlord obtains a certificate of occupancy for the Premises (excluding any Tenant upfits) by August 1, 2013, at the latest; and (c) Landlord provides Tenant with the final terms and specifications for the construction project and either (i) Tenant determines that the Premises will, if built in accordance with said plans and specifications, adequately meet its needs or (ii) Tenant provides written notice to Landlord, within thirty (30) days of its receipt of the final plans and specifications, that the Premises, if built in accordance with said plans and plans and specifications, will not adequately meets it needs, and Landlord corrects any deficiencies in said plans and specifications before the Lease Commencement Date. Provided, however, that this Lease shall not be contingent upon Landlord's alteration of any aspects of.its final plans and specifications if (i)Tenant previously notified Landlord in writing that the same plans and specifications, before being finalized, would adequately meet its needs or (ii) Tenant previously notified Landlord in writing that the non-finalized plans and specifications would adequately meet its needs and any changes reflected in the final plans and specifications aze non-material. The parties agree that as of October 26, 2011, Tenant has not yet given written notice that the finalized ornon-finalized plans and specifications will adequately meet its need; and (d) Landlord gives Tenant the opportunity to inspect the Premises within fifteen (15) days after final completion of the construction prof ect and either (i) Tenant determines that the Premises (excluding Tenant's upfits) were constructed in substantial compliance with the final terms and specifications or (ii) Tenant provides written notice to Landlord, within five (5) days after the inspection, that the Premises (excluding Tenant's upfits) were not constructed in substantial performance with the final terms and specifications and Landlord cures any substantial defects identified in said written notice before the Lease Commencement Date; and (e) Tenant has been given the opporttwity to inspect the Premises within fifteen (15) business days after substantial completion of the Shell Space of the Property and to provide Landlord, within five (5) business days after the inspection, with written notice of any construction or design defects in the Shell Space that would render the Premises unsafe for the Permitted Uses, and Landlord has cured any such defects before the Lease Commencement Date. TERD'IIl~TATION 31. In addition to and without limiting any other rights or remedies described herein, Tenant shall have the right to terminate this Lease without incurring any liability to Landlord (for rent or otherwise) upon an event ofnon-appropriation. For purposes of this Lease, an event ofnon-appropriation means that Tenant has not been appropriated funds to fulfill its lease obligations in a subsequent fiscal year. If an event ofnon-appropriation occurs, Tenant shall notify Landlord in writing, and this Lease shall terminate effective the last day of the then-current fiscal yeaz. For purposes of this Lease, the relevant fiscal year shall begin on July 1 and end on June 30 of each calendar yeaz. If Tenant terminates because of an event ofnon-appropriation, Tenant shall be liable for any rent otherwise 14 due for the then-current fiscal year but shall not be liable for rent during the subsequent fiscal year and shall not be considered in default of this Lease for declaring an event ofnon-appropriation. IN WITNESS WHEREOF, the parties hereto have hereunto caused this Lease to be duly executed. LANDLORD: PTA Thrift Store Managers, LLC Signature: Printed Name: Date: Title• ~~`i ~/`Y/i ~ Attest (Signature): ' ~~~, (SEAL)/ ~'~ ~~ ~' ^~ ~ ~ ~~ ~ 1"1,~ ~ . Printed Name: `j\'~-`~ Title: (i ,'\' •~..J) Date: L ~ ~ ~ I ~1 TENANT: Chapel Hill-Carrboro Board of Education. Signature: r~ (SEAL) n Printed Name: 41'1'! ~ Z tTl~ /~ • ~td~r~ Title: l,~'lA~~ oard ~ ~ Fi ~tt G~'oj'l Date:_ /~ ~ ~ d/ Attest (Signature): ~ (SEAL) Printed Name: _~~]a~/~ [tom-tdet t Title: fri. ~'~ i 7°u ~1-rYr ~ ter, ~.'tf~lx,ti~--- Date: ~~~ ~41 This instrumeent ~/ s~, jb~n pre-audited in the manner required by the School Budget and Fiscal Control Act. Date: ~ ~ I ' (I 1 _ ~ Signature of Finance Officer: 15 Exhibit A Preliminary sketch showing second floor of building to be constructed at 103 3ones Ferry Road, Carrboro, NC 27510 (the "Premises"). 16 PTA THRIFT STORE LEASE- SUMMARY OF KEY PROVISIONS Prepared by Tharrington Smith, LLP October 27, 2011 Note: because this lease is for part of a building that has not yet been built, there are several non- standard terms. This document summarizes non-standard terms and key lease provisions only. Additional information and analysis available on request. PREMISES. a. CHCCS will lease the upstairs (second) floor of a new building to be constructed at 103 Jones Ferry Road, Carrboro, NC 27510. b. Exhibit A of the lease shows a preliminary floor plan. c. Landlord must ensure that the building is up to code and that a certificate of occupancy is issued for the building shell. d. landlord must ensure that: i. All utilities are connected. ii. An electrical service panel will be installed providing sufficient power for standard office use. iii. HVAC units will be installed and connected to VOV boxes. Tenant will connect VOV boxes to grills. iv. Restrooms in common areas will be fully finished. 2. TERM. a. Lease term will be 7 years, with Tenant having the option to renew for up to 2 additional terms of 2 years each (maximum 11 years). This term is necessary for Landlord to qualify for tax credits that enable it offer a lower rent. b. Landlord must obtain a certificate of occupancy for the building "shell" at least 60 days before Tenant's obligation to pay rent begins. Tenant will make upfits during that time. c. So long as Landlord has first given Tenant 60 days to make upfits, the lease (and Tenant's rental obligations) will commence on the earliest of these dates: i. December 1, 2012. ii. March 1, 2013. iii. June 1, 2013. iv. July 1, 2013. v. August 1, 2013. vi. Any other date by written agreement of the parties. d. If Landlord is not able to obtain a certificate of occupancy for the building "shell" before August 1, 2013, the lease will not become binding. (See "Conditions," below). 3. RENT. a. Rent will be $17.25 per square foot of the premises, annually. b. Landlord will have the option to pay monthly or annually. c. Any partial months or years will be prorated. d. Rent will increase by 29'o each year. e. Based on current specifications, rent is estimated to be approximately $127,340 for the first year. 4. UPFITS. a. Landlord will give Tenant an allowance of up to $25 per gross square foot for Tenant's upfits, based on Tenant's documented upfit costs. b. Based on current specifications, this allowance could total to as much as $184,550. 17 c. Tenant is solely responsible for contracting for upfits. d. Landlord's approval is required for Tenant's choice of contractors and design professionals unless they are selected through a required public bidding process. e. Tenant will have at least 60 days to make upfits before rent obligation begins. 5. LATE FEES AND SECURITY DEPOSIT. a. Landlord may assess late charge of $300 or 39'a of monthly rent, whichever is greater. b. No security deposit. 6. UTILITIES. a. Landlord is responsible for sewer/septic, water, elevator, security system, trash/dumpster, landscaping/maintenance, sprinkler system, and pest control. b. Tenant is responsible for electric, gas, telephone, fiber optic, heating/air conditioning and janitor/cleaning. 7. TAXES. a. Landlord will pay all property taxes and fire insurance. b. Tenant will pay its proportionate share (based on square footage) of any increases in property tax and fire insurance throughout the term. 8. INSURANCE AND INDEMNITY. a. Tenant will maintain general liability insurance with limits of $1 million per occurrence and $3 million aggregate. b. Each party will indemnify the other for damages caused by the negligence or willful misconduct of the other party's agents, employees, contractors, or guests. c. Neither party is responsible to the other for losses covered by insurance. 9. REPAIRS. a. Landlord is responsible for common areas as well as roof, foundation, structural supports, and exterior walls. b. Tenant is responsible for light fixtures, plumbing fixtures, and water heaters. c. Tenant is responsible for individual HVAC repairs of $250 or less, with an annual limit of $2,500. Landlord is responsible for any HVAC repairs over these amounts. d. Landlord's approval is required forTenant's choice of contractor for repairs costing more than $1,000 unless selected through a required public bidding process. 10. ALTERATIONS. a. Landlord approval is required for any alteration costing more than $1,000. Consent may not unreasonably be withheld. b. Landlord's approval is required for Tenants choice of contractor for alterations costing more than $1,000 unless selected through a required public bidding process. 11. REMEDIES FOR DEFAULT. a. If Tenant materially breaches the lease, Landlord may: i. Terminate the lease and seek damages, or ii. Re-let the premises at the best price obtainable using reasonable efforts and charge Tenant for any deficiency over the seven-year term. b. (Negotiated out provisions that would have allowed Landlord to terminate and require Tenant to pay full rent for full term and/or to re-let without using reasonable efforts to obtain a fair rent). c. Failure to pay rent is not a material breach unless Tenant has still not paid within 10 business days of receiving written notice from Landlord that rent is past due. 18 12. CONDITIONS. a. This lease will become binding only if al! of the following conditions are met: i. The lease is approved by both the County Commissioners and LGC. ii. Landlord obtains a certificate of occupancy for the building shell by no later than August 1, 2013. iii. Landlord provides Tenant with final terms & specifications and either: 1. Tenant determines the plans & specifications will meet its needs, or 2. Tenant gives written notice to landlord within 30 days that the plans & specifications will not meet its needs and landlord corrects any deficiencies before the lease commencement date. iv. Landlord gives Tenant the opportunity to inspect the premises within 15 days after substantial completion, and either: 1. Tenant determines that the premises appear to be safe, or 2. Tenant provides written notice within 5 days of the inspection that the premises appear unsafe, and Landlord corrects any deficiencies before the lease commencement date v. Landlord gives Tenant the opportunity to inspect the premises within 15 days after final completion, and either: 1. Tenant determines that the premises were built in compliance with the terms & specifications, or 2. Tenant provides written notice within 5 days of the inspection that the premises were not built incompliance with the terms and specifications, and Landlord corrects any deficiencies before the lease commencement date 13. NON-APPROPRIATION. a. Tenant may terminate the lease if Tenant is not appropriated funds to fulfill its lease obligations for a subsequent fiscal year. This is not considered breach by Tenant. b. Termination would become effective on the last day of the current fiscal year. 14. OTHER TERMS. a. All other provisions are either standard commercial lease terms or have been negotiated to be slightly more favorable to the school system. 15. APPROVALS REQUIRED. a. Because of the term and dollar value, this lease must be approved by the BOE, the County Commissioners, and the LGC. b. If any approval is not obtained, the lease will not become binding on either parry because of conditions built into the lease.