SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended March 30, 1996.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-10574
THERMO VOLTEK CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-1946800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
470 Wildwood Street, P.O. Box 2878
Woburn, Massachusetts 01888-1578
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Indicate by check mark whether the Registrant (1)
has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for
such shorter period that the Registrant was
required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each
of the issuer's classes of Common Stock, as of the
latest practicable date.
Class Outstanding at April 26, 1996
---------------------------- ------------------------------
Common Stock, $.05 par value 5,386,220
PAGE
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO VOLTEK CORP.
Consolidated Balance Sheet
(Unaudited)
Assets
March 30, December 30,
(In thousands) 1996 1995
--------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $12,601 $ 8,651
Available-for-sale investments, at quoted
market value (amortized cost of $20,705
and $25,795) (includes $1,677 and $1,482 of
related party investments) 21,124 26,038
Accounts receivable, less allowances of $489
and $447 9,658 8,680
Inventories:
Raw materials 3,669 3,598
Work in process 3,466 3,059
Finished goods 2,025 1,924
Prepaid income taxes and other current assets 1,140 1,022
------- -------
53,683 52,972
------- -------
Property, Plant and Equipment, at Cost 7,869 7,677
Less: Accumulated depreciation and
amortization 4,813 4,533
------- -------
3,056 3,144
------- -------
Other Assets 515 648
------- -------
Cost in Excess of Net Assets of Acquired
Companies 11,895 12,081
------- -------
$69,149 $68,845
======= =======
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THERMO VOLTEK CORP.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
March 30, December 30,
(In thousands except share amounts) 1996 1995
--------------------------------------------------------------------------
Current Liabilities:
Notes payable $ 1,147 $ 1,276
Accounts payable 2,879 3,966
Accrued payroll and employee benefits 844 1,128
Accrued income taxes 1,377 1,103
Customer deposits 417 223
Other accrued expenses 2,733 2,611
Due to parent company and Thermo
Electron Corporation 1,288 839
------- -------
10,685 11,146
------- -------
Subordinated Convertible Obligations
(includes $11,500 of related party debt) 32,505 36,740
------- -------
Shareholders' Investment:
Common stock, $.05 par value, 10,000,000
shares authorized; 5,245,273 and 4,881,099
shares issued 262 244
Capital in excess of par value 24,678 20,545
Retained earnings (accumulated deficit) 752 (185)
Treasury stock at cost, 2,029 and 1,958 shares (23) (20)
Cumulative translation adjustment 38 229
Net unrealized gain on available-for-sale
investments 252 146
------- -------
25,959 20,959
------- -------
$69,149 $68,845
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
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THERMO VOLTEK CORP.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
-----------------------
March 30, April 1,
(In thousands except per share amounts) 1996 1995
--------------------------------------------------------------------------
Revenues $10,621 $ 7,308
------- -------
Costs and Operating Expenses:
Cost of revenues 5,390 3,820
Selling, general and administrative
expenses 3,261 2,442
Research and development expenses 710 454
------- -------
9,361 6,716
------- -------
Operating Income 1,260 592
Interest Income 502 538
Interest Expense (includes $177 for notes
to related party in 1996 and 1995) (435) (564)
Other Income - 14
------- -------
Income Before Provision for Income Taxes 1,327 580
Provision for Income Taxes 390 165
------- -------
Net Income $ 937 $ 415
======= =======
Earnings per Share:
Primary $ .18 $ .10
======= =======
Fully diluted $ .11 $ .08
======= =======
Weighted Average Shares:
Primary 5,317 4,045
======= =======
Fully diluted 9,095 8,967
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
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THERMO VOLTEK CORP.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
----------------------
March 30, April 1,
(In thousands) 1996 1995
--------------------------------------------------------------------------
Operating Activities:
Net income $ 937 $ 415
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 422 373
Provision for losses on accounts receivable 43 15
Other noncash items - (10)
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable (1,134) (585)
Inventories (628) (515)
Other current assets (126) 114
Accounts payable (1,041) (129)
Other current liabilities 735 (487)
-------- --------
Net cash used in operating activities (792) (809)
-------- --------
Investing Activities:
Acquisitions, net of cash acquired - (4,000)
Purchases of available-for-sale investments - (7,500)
Proceeds from sale and maturities of
available-for-sale investments 5,000 7,000
Purchases of property, plant and equipment (254) (156)
Other 129 391
-------- --------
Net cash provided by (used in) investing
activities 4,875 (4,265)
-------- --------
Financing Activities:
Net increase (decrease) in short-term obligations (98) 347
Repurchase of long-term obligations - (132)
Net proceeds from issuance of Company
common stock 9 96
-------- --------
Net cash provided by (used in) financing
activities $ (89) $ 311
-------- --------
5PAGE
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THERMO VOLTEK CORP.
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Three Months Ended
----------------------
March 30, April 1,
(In thousands) 1996 1995
--------------------------------------------------------------------------
Exchange Rate Effect on Cash $ (44) (88)
-------- ------
$
Increase (Decrease) in Cash and Cash Equivalents 3,950 (4,851)
Cash and Cash Equivalents at Beginning of Period 8,651 8,955
-------- --------
Cash and Cash Equivalents at End of Period $ 12,601 $ 4,104
======== ========
Cash Paid For:
Interest $ 152 $ 122
Income taxes $ 176 $ 55
Noncash Financing Activities:
Conversions of subordinated convertible
obligations $ 4,235 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
6PAGE
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THERMO VOLTEK CORP.
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Voltek Corp. (the Company) without audit and, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of (a) the results of operations for the
three-month periods ended March 30, 1996 and April 1, 1995, (b) the
financial position at March 30, 1996, and (c) the cash flows for the
three-month periods ended March 30, 1996 and April 1, 1995. Interim results
are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 30, 1995, has
been derived from the consolidated financial statements that have been
audited by the Company's independent public accountants. The consolidated
financial statements and notes are presented as permitted by Form 10-Q and
do not contain certain information included in the annual financial
statements and notes of the Company. The consolidated financial statements
and notes included herein should be read in conjunction with the financial
statements and notes included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 30, 1995, filed with the Securities and
Exchange Commission.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Description of Business
The Company designs, manufactures, and markets instruments that test
electronic and electrical systems and components for immunity to pulsed
electromagnetic interference (pulsed EMI) through its KeyTek Instrument
division (KeyTek), and designs, manufactures, and markets high-voltage
power-conversion systems, modulators, fast-response protection systems, and
related high-voltage equipment for industrial, medical, and environmental
processes, and for defense and scientific research applications, through
its Universal Voltronics division. Through its Comtest Instrumentation B.V.
and Comtest Limited subsidiaries (collectively, Comtest), the Company
provides electromagnetic compatibility (EMC) consulting and
systems-integration services, distributes a range of EMC-related products,
and manufactures and markets specialized power supplies for
telecommunications equipment. Comtest's Verifier division, acquired in July
1994, manufactures a line of electrostatic discharge test equipment that
performs electrical stress tests for semiconductor devices. In March 1995,
the Company acquired Kalmus Engineering Incorporated and R. F. Power Labs,
Incorporated (collectively, Kalmus), which manufacture radio frequency
power amplifiers and systems used to test products for immunity to radiated
or conducted radio frequency interference and for medical imaging and
telecommunications applications.
7PAGE
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THERMO VOLTEK CORP.
Results of Operations
First Quarter 1996 Compared With First Quarter 1995
Revenues increased 45% to $10,621,000 in the first quarter of 1996
from $7,308,000 in the first quarter of 1995, due primarily to an increase
in Comtest revenues of $1,663,000 and an increase of $1,126,000 due to the
inclusion of revenues for the full quarter of 1996 from Kalmus, which was
acquired on March 1, 1995. The increase in revenues at Comtest resulted
primarily from an increase in demand in the Far East for Verifier's
electrostatic discharge test equipment, as well as an increase in revenues
from a new radio frequency interference immunity tester product line that
was introduced in 1995. The balance of the increase in revenues resulted
from greater demand at KeyTek.
The gross profit margin increased to 49% in the first quarter of 1996
from 48% in the first quarter of 1995, due primarily to the inclusion of a
full quarter of higher-margin Kalmus revenues in 1996. This increase was
offset in part by a decline in margins at Verifier due to lower-margin
sales in the Far East.
Selling, general and administrative expenses as a percentage of
revenues decreased to 31% in the first quarter of 1996 from 33% in the
first quarter of 1995, due primarily to an increase in revenues. Research
and development expenses as a percentage of revenues increased to 6.7% in
the first quarter of 1996 from 6.2% in the first quarter of 1995 due to
higher research and development expenditures at Verifier and KeyTek.
Interest income decreased to $502,000 in the first quarter of 1996
from $538,000 in the first quarter of 1995 due primarily to lower average
invested balances. Interest expense decreased to $435,000 in the first
quarter of 1996 from $564,000 in the first quarter of 1995 due to the
conversion of $13,495,000 principal amount of the Company's subordinated
convertible obligations during 1995 and 1996.
The effective tax rate was 29% and 28% in the first quarter of 1996
and 1995, respectively. These rates were below the statutory federal income
tax rate due to the utilization of tax net operating loss carryforwards,
offset in part by the impact of state income taxes.
Liquidity and Capital Resources
Working capital was $42,998,000 at March 30, 1996, compared with
$41,826,000 at December 30, 1995. Included in working capital are cash,
cash equivalents, and available-for-sale investments of $33,725,000 at
March 30, 1996, compared with $34,689,000 at December 30, 1995. During the
first quarter of 1996, $792,000 of cash was used in operating activities
primarily to reduce accounts payable and to support higher accounts
receivable, which resulted from the timing of cash collections. During the
first quarter of 1996, the Company expended $254,000 for purchases of
property, plant and equipment. During the remainder of 1996, the Company
expects to expend approximately $1,400,000 on purchases of property, plant
and equipment.
8PAGE
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THERMO VOLTEK CORP.
PART II - OTHER INFORMATION
Item 6 - Exhibits
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
9PAGE
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THERMO VOLTEK CORP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized as of the 6th day of May 1996.
THERMO VOLTEK CORP.
Paul F. Kelleher
--------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
--------------------
John N. Hatsopoulos
Chief Financial Officer
10PAGE
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THERMO VOLTEK CORP.
Exhibit Index
Exhibit
Number Description of Exhibit Page
---------------------------------------------------------------------------
10.1 Lease Agreement dated October 23, 1995 between John Hancock
Mututal Life Insurance Company and Thermo Voltek Corp.
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
Exhibit 10.1
10/3/95
LEASE
Dated: October 23, 1995
BETWEEN
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
AND
THERMO VOLTEK CORP.
PAGE
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ARTICLE I
SUMMARY OF BASIC LEASE PROVISIONS
1.1 BASIC DATA. 1
1.2 DEFINITIONS. 2
ARTICLE II
DESCRIPTION OF PREMISES
AND APPURTENANT TENANT RIGHTS;
NET RENTABLE AREA
2.1 LOCATION OF PREMISES. 3
2.2 APPURTENANT TENANT RIGHTS AND RESERVATIONS. 3
ARTICLE III
TERM OF LEASE; CONSTRUCTION
3.1 COMMENCEMENT DATE. 5
3.2 INITIAL CONSTRUCTION. 6
3.3 LANDLORD'S CONSTRUCTION CONTRIBUTION. 7
3.4 INTENTIONALLY OMITTED. 7
3.5 INTENTIONALLY OMITTED. 7
3.6 INTENTIONALLY OMITTED. 7
3.7 INTENTIONALLY OMITTED. 7
ARTICLE IV
RENT
4.1 RENT. 7
4.2 BASE RENT. 8
ARTICLE V
USE OF PREMISES
5.1 PERMITTED USE. 8
5.2 ALTERATIONS. 11
ARTICLE VI
ASSIGNMENT AND SUBLETTING
6.1 PROHIBITION. 12
6.2 ACCEPTANCE OF RENT FROM TRANSFEREE. 13
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ARTICLE VII
RESPONSIBILITY FOR REPAIRS
7.1 REPAIRS. 13
ARTICLE VIII
SERVICES TO BE FURNISHED BY LANDLORD
8.1 LANDLORD SERVICES. 17
8.2 CAUSES BEYOND CONTROL OF LANDLORD. 17
ARTICLE IX
REAL ESTATE AND OTHER TAXES; OTHER EXPENSES
9.1 LANDLORD TO PAY REAL ESTATE TAXES. 17
9.2 TENANT'S SHARE OF REAL ESTATE TAXES. 18
ARTICLE X
OPERATING COSTS
10.1 TENANT'S SHARE OF OPERATING COSTS. 20
ARTICLE XI
INDEMNITY
11.1 TENANT'S INDEMNITY. 23
11.2 TENANT'S RISK. 24
11.3 INJURY CAUSED BY THIRD PARTIES. 24
ARTICLE XII
LANDLORD'S ACCESS TO PREMISES
12.1 LANDLORD'S RIGHT OF ACCESS. 24
12.2 ACCESS DURING THE LAST MONTH OF TERM. 25
ARTICLE XIII
CASUALTY
13.1 DEFINITION OF "SUBSTANTIAL DAMAGE" AND "PARTIAL 25
DAMAGE".
13.2 PARTIAL DAMAGE. 26
13.3 SUBSTANTIAL DAMAGE. 26
13.4 ABATEMENT OF RENT. 27
13.5 MISCELLANEOUS. 27
ARTICLE XIV
EMINENT DOMAIN
14.1 RIGHTS OF TERMINATION FOR TAKING. 28
14.2 PAYMENT OF AWARD. 29
14.3 ABATEMENT OF RENT. 29
14.4 MISCELLANEOUS. 29PAGE
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ARTICLE XV
INSURANCE
15.1 PUBLIC LIABILITY AND PROPERTY INSURANCE. 30
15.2 NON-SUBROGATION. 31
15.3 EXTRA HAZARDOUS USE. 31
ARTICLE XVI
DEFAULT
16.1 TENANT'S DEFAULT. 33
16.2 REMEDIES UPON DEFAULT. 35
16.3 DAMAGES UPON TERMINATION. 35
16.4 COMPUTATION OF RENT FOR PURPOSES OF DEFAULT. 36
16.5 RIGHTS OF LANDLORD IN BANKRUPTCY. 37
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 WAIVER. 37
17.2 COVENANT OF QUIET ENJOYMENT. 38
17.3 NO PERSONAL LIABILITY OF LANDLORD. 38
17.4 NOTICE TO MORTGAGEE AND GROUND LESSOR; 38
OPPORTUNITY TO CURE.
17.5 NO BROKERAGE. 39
17.6 INVALIDITY OF PARTICULAR PROVISIONS. 39
17.7 PROVISIONS BINDING, ETC. 40
17.8 RECORDING. 40
17.9 NOTICES. 40
17.10 WHEN LEASE BECOMES BINDING. 41
17.11 PARAGRAPH HEADINGS. 41
17.12 RIGHTS OF MORTGAGEE. 41
17.13 STATUS REPORT; MODIFICATION. 42
17.14 INTENTIONALLY OMITTED. 43
17.15 SELF-HELP. 43
17.16 RELIEF LIMITED. 43
17.17 HOLDING OVER. 43
17.18 CERTIFICATE. 44
17.19 LATE PAYMENT. 44
17.20 OPTION TO EXTEND. 44
17.21 RIGHT OF FIRST OFFER. 46
17.22 LANDLORD'S WARRANTIES. 46
17.23 TENANT'S RIGHT TO CONTEST. 47
PAGE
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ENUMERATION OF EXHIBITS.
Exhibit A: Plan showing the Premises.
Exhibit B: Description of Lot.
Exhibit B-1: Parking Plan
Exhibit C: Rules and Regulations.
Exhibit D: Site Plan.
Exhibit E: Tenant's Work.
Exhibit F: List of Tenant's Hazardous Materials
Exhibit G: Clerk's Certificate
PAGE
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LEASE
This instrument is an Indenture of Lease between John
Hancock Mutual Life Insurance Company, a Massachusetts
corporation ("the Landlord") and Thermo Voltek Corp., a Delaware
corporation ("the Tenant").
The parties to this instrument hereby agree with each other
as follows:
ARTICLE I
SUMMARY OF BASIC LEASE PROVISIONS
1.1 BASIC DATA.
Date: October 23, 1995
Landlord: John Hancock Mutual Life Insurance
Company
Present Mailing The Real Estate Investment Group
Address of Landlord: 200 Berkeley Street
P.O. Box 111
Boston, Massachusetts 02117
Tenant: Thermo Voltek Corp.
Present Mailing 260 Fordham Road
Address of Tenant: Wilmington, MA 01887
Leased Premises: Premises in the building known as
847 Rogers Street, Lowell, Massachusetts
as shown on Exhibits A-1 and A-2
(collectively, "Exhibit A").
Rentable Area of
Leased Premises: 40,757 rentable square feet.
Rentable Area of
Building: 54,832 square feet.
Lease Term: 60 calendar months (plus the partial
month, if any, immediately following the
Commencement Date).
Term Commencement
Date: December 1, 1995
Base Rent: See Section 4.2 herein
Security Deposit: N/A
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Guarantor of The Tenant's
Obligations: N/A
The Tenant's Proportionate
Share: 74.33%
Option to Extend: One (1) option to extend for a period of five
(5) years as more particularly set forth in Section 17.20.
Right of First
Refusal: See Section 17.21.
1.2 DEFINITIONS.
As used in this Lease. The terms defined in this Section
1.2 shall have the following meanings:
Broker: Meredith & Grew, Inc., 160 Federal Street, Boston,
Massachusetts 02110-1701.
Building: as defined in Section 2.1.
Building Manager: means Meredith & Grew, Inc., 160 Federal
Street, Boston, Massachusetts 02110-1701, or such other managing
agent as may be designated by the Landlord.
Lease: means this lease agreement including all of its
Exhibits as executed and delivered, as amended from time to time
pursuant to the terms hereof.
Lease Year: as defined in Section 10.1(b).
Lot: means the land area described in Exhibit B, subject to
minor adjustments by the Landlord from time to time during the
Lease Term.
Operating Costs: as defined in Section 10.1(a).
Operation: as defined in Section 10.1(b)(1).
Partial Lease Year: as defined in Section 10.1(b).
Partial damage: as defined in Section 13.1.
Permitted Use: office, research and development, light
manufacturing, and, as ancillary uses comprising no more than
half of the space in the Premises, wholesale showroom, warehouse
and distribution (all as and to the extent permitted by
applicable law).
Premises: as defined in Section 2.1.
Property: The Building and the Lot.
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Rules and Regulations: as set forth in Exhibit C and as the
same may be reasonably amended by the Landlord from time to time
(subject to Section 2.2).
Substantial Damage: as defined in Section 13.1.
Taxes: as defined in Section 9.1.
ARTICLE II
DESCRIPTION OF PREMISES
AND APPURTENANT TENANT RIGHTS; NET RENTABLE AREA
2.1 LOCATION OF PREMISES.
The Landlord hereby leases to the Tenant, and the Tenant
hereby accepts from the Landlord, the premises (the "Premises")
identified on Exhibit A in the Landlord's building (the
"Building") located on land owned by the Landlord and more
particularly described in Exhibit B (the "Lot"), known as and
numbered 847 Rogers Street, Lowell, Massachusetts. Nothing in
Exhibit A shall be treated as a representation that the Premises
(other than the Rentable Area thereof described in Section 1.1.)
shall be precisely of the dimensions or shapes as shown, it being
the intention of the parties only to show diagrammatically,
rather than precisely, on Exhibit A the layout of the Premises.
2.2 APPURTENANT TENANT RIGHTS AND RESERVATIONS.
The Tenant shall have, as appurtenant to the Premises,
rights to use in common with others entitled thereto: (a) the
common facilities included in the Building or Lot, including
common bathrooms, walkways, driveways, loading areas and ramps;
and (b) the pipes, ducts, conduits, wires and appurtenant
equipment serving the Premises. The Tenant shall further have,
as appurtenant to the Premises, the right to use eleven (11)
parking spaces designated for the Tenant's exclusive use in the
parking rows situated adjacent to the southeastern side of the
Building and across the driveway adjacent to the pond, as shown
on Exhibit B-1. The Tenant shall also have the right to use an
additional undesignated 132 parking spaces, of which 114 are
located on the Lot, and 18 are located within the easement area
described in an Access and Parking Easement dated December 10,
1984, recorded with the Middlesex North Registry of Deeds in Book
2914, Page 256 ("Parking Easement"). The Landlord agrees to
comply with the terms and conditions of the Parking Easement and
not to apply for or seek to obtain a variance (as contemplated by
Paragraph 4 of the Parking Easement) or otherwise consent to a
reduction in or relocation of the easement area. If the Parking
Easement were to terminate in accordance with its terms, the
Landlord shall use reasonable efforts to replace the lost spaces
by expansion of the parking area on the Lot, but shall not be
deemed to be in default hereunder as a result of such termination
or Landlord's inability, after use of such reasonable efforts, to
PAGE
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fully replace the lost spaces on the Lot. "Reasonable efforts",
for the purpose of the immediately preceeding sentence, shall
consist of the construction of additional parking areas on the
Lot to the extent permitted by applicable law, and, if necessary
to create such additional parking, the Landlord's expenditure of
diligent and reasonable efforts to obtain the appropriate
permits, all at the Landlord's sole cost and expense, provided
that the Landlord shall not be deemed to be in default hereunder
if the Landlord is unable to obtain the required permits after
the expenditure of such diligent and reasonable efforts to do so.
If the Landlord constructs the additional spaces on the Lot, the
Landlord shall have no further obligation to enforce the Parking
Easement, to the extent of the new spaces so provided. The
Landlord agrees to use diligent and reasonable efforts, at
Landlord's sole cost and expense, to enforce the parking rights
of the Tenant hereunder, both on the Lot and in the easement
area, upon written notice from the Tenant that others are
encroaching upon such rights. Such rights shall always be
subject to the Rules and Regulations set forth in Exhibit C
attached hereto and incorporated herein by reference, as the same
may be reasonably amended by the Landlord from time to time with
notice to the Tenant and such other reasonable rules and
regulations from time to time established by the Landlord by
suitable notice, and to the right of the Landlord to designate
and change from time to time areas and facilities so to be used
(subject to the same conditions set forth in clauses (i) through
(iv) below). Notwithstanding anything to the contrary contained
in this Lease, all rules and regulations shall be reasonable,
non-discriminatory, and of general application to all tenants in
the Building. The Landlord reserves the right from time to time,
and at the Landlord's sole discretion, to alter, reduce or
redesign the parking area, to temporarily close portions of the
parking area, or to relocate the ingress and egress to and from
the parking area and Building provided (i) such actions by the
Landlord do not adversely interfere with the Tenant's possessions
and/or use of the Leased Premises or other rights afforded to the
Tenant under the provisions of this Lease, (ii) Landlord shall
provide Tenant with reasonable prior notice as to any such
activities, (iii) Landlord shall use all reasonable efforts to
minimize the impact of any such activities on Tenant's rights
hereunder, and (iv) the Tenant's number of parking spaces shall
remain unchanged, and the adequacy of access thereto shall not be
materially adversely affected. Notwithstanding any supervision
or control over any parking area on the Lot or Building which
the Landlord may undertake pursuant to this Lease or otherwise,
the Tenant acknowledges and agrees that the Landlord shall not be
responsible or obligated hereunder to furnish any security or
security services to any parking area, provided, however, that
the Landlord agrees to keep all parking areas on the Lot
well-lighted, provided that the Landlord has been notified as to
any non-functioning lighting.
Not included in the Premises are the roof and all exterior
perimeter walls of the space identified in Exhibit A, except the
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inner surfaces thereof and the loading dock doors, interior doors
and windows. The Tenant agrees that the Landlord shall have the
right to place in the Premises (above the ceiling, beneath the
floor or inside the walls, and otherwise in such manner as not
unreasonably to interfere with the Tenant's use of the Premises)
utility lines, telecommunication lines, shafts, pipes and the
like, for the use and benefit of the Landlord and other tenants
in the Building, and to replace and maintain and repair such
lines, shafts, pipes and the like, in, over and upon the
Premises. Such lines, shafts, pipes and the like, shall not be
deemed part of the Premises under this Lease.
The Landlord hereby agrees that the Tenant may apply to the
City of Lowell, at any time and from time to time during the
term, for a special permit or variance to permit the Tenant to
expand its light manufacturing activities in the Premises in
excess of that currently permitted in the B-2 zoning district in
which the Premises are located (the "Manufacturing Relief"), if
required for the Tenant's business purposes. The Tenant shall be
responsible for the pursuit of the Manufacturing Relief, provided
that the Landlord shall cooperate with the Tenant in such
proceedings, and shall contribute one-half (1/2) of reasonable
third party costs incurred by the Tenant in such proceedings, up
to a maximum contribution during the lease term of Ten Thousand
($10,000) Dollars. If the Tenant is unable to obtain the
Manufacturing Relief, this Lease shall remain in full force and
effect in accordance with its terms, and, without limitation of
the foregoing, the Tenant shall have no right of termination of
this Lease in such event.
ARTICLE III
TERM OF LEASE; CONSTRUCTION
3.1 COMMENCEMENT DATE.
The Term of this Lease shall be the period specified in
Section 1.1 hereof as the "Lease Term".
The Tenant shall, in all events, be treated as having
commenced beneficial use of the Premises when it begins to move
into the Premises furniture and equipment for its regular
business operations.
As soon as may be convenient after the Commencement Date,
the Landlord and the Tenant agree to join with each other in the
execution, in recordable form, of a written declaration in which
the Commencement Date and specified term of this Lease shall be
stated.
Notwithstanding the foregoing, it is understood and agreed
that the Tenant shall have the right to gain access to the
Premises upon execution of this Lease for the purpose of
performing the work described in Exhibit E hereto ("Tenant's
Work"). The Tenant's occupancy prior to the Commencement Date
shall be subject to all applicable terms of this Lease except
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that the obligation for payment of Base Rent, additional rent and
all other charges under this Lease (other than the utility
charges and other costs payable by the Tenant under Section
4.1(d) below) shall not begin until the Commencement Date). The
Tenant shall deliver to the Landlord certificates evidencing the
insurance required hereunder prior to such occupancy.
3.2 INITIAL CONSTRUCTION.
The Landlord shall deliver the Premises to the Tenant on the
Commencement Date broom clean but otherwise "AS IS" as to
condition and layout, except that prior to the Commencement Date,
the Landlord shall perform such necessary repairs as are required
to ensure that all base building systems are in good operating
condition, except for the Tenant's Work set forth on Exhibit E,
which has been approved by the Landlord. The Landlord agrees
that the Landlord shall be responsible, at its sole cost and
expense, for alterations or additions required to cause the
common areas of the Building to conform with all applicable
requirements of the Americans with Disabilities Act ("ADA").
Landlord agrees to use best efforts to complete those items
identified as Priority 1 and Priority 2 in a report entitled "ADA
Survey" dated October 19, 1992, revised January 19, 1993,
prepared by DuBose Associates, by December 31, 1995.
Notwithstanding the foregoing, Landlord shall not be obligated to
perform the work in said report regarding the stairway, stairwell
and risers unless and until required by a governmental agency; if
so required, Landlord shall perform such work at its sole cost
and expense. The Landlord shall provide the Tenant with its
written confirmation of completion of such items when the work
has been performed. The Landlord and the Tenant shall mutually
cooperate and consult with each other with respect to the
scheduling of work in the Premises so as to minimize the impact
of each upon the other. The Tenant shall be responsible for
alterations or additions within the Premises required to cause
the same to conform with all applicable requirements of the ADA.
All changes and additions shall be part of the Building, except
such items as by writing at the time of approval the parties
agree shall be removed by the Tenant on termination of this
Lease, or the Landlord agrees that the Tenant may then elect to
remove or leave.
3.3 THE LANDLORD'S CONSTRUCTION CONTRIBUTION.
The Landlord shall pay to the Tenant the sum of $40,000,
advanced on a monthly basis after the date hereof against
requisitions with attached invoices for work performed and
expenses incurred by the Tenant for the Tenant's Work in
accordance with Exhibit E. Such payments shall be made by
Landlord within thirty (30) days after each requisition therefor.
3.4 INTENTIONALLY OMITTED.
3.5 INTENTIONALLY OMITTED.
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3.6 INTENTIONALLY OMITTED.
3.7 INTENTIONALLY OMITTED.
ARTICLE IV
RENT
4.1 RENT.
The Base Rent (specified in Section 1.1 hereof) and any
additional rent or other charges payable pursuant to this Lease
(collectively, or individually, "Rent") shall be payable by the
Tenant to the Landlord at the Landlord's mailing address or such
other place as the Landlord may from time to time designate by
notice to the Tenant without prior demand therefor and without
any offset or deduction whatsoever except as otherwise
specifically provided for in this Lease.
a) The Rent shall be payable in advance on the first day
of each and every calendar month during the term of this Lease,
commencing on December 1, 1995.
b) Rent for any partial month shall be paid by the Tenant
to the Landlord at such rate on a pro rata basis. Other charges
payable by the Tenant on a monthly basis, as hereinafter
provided, shall likewise be prorated.
c) Rent, additional rent and any other sums due hereunder
not paid within five (5) days after the date due shall, from and
after the second such occurrence, bear interest at the prime
commercial rate of interest charged by Bank of Boston plus two
(2%) percent (or at any lesser maximum legally permissible rate),
calculated on the basis of a 365-day year for the actual number
of days elapsed, from the due date until paid.
d) The Tenant shall pay all utility costs and any
incremental increase in Operating Costs to the extent due to its
activities at the Premises (such as, for example, additional
cleaning, security, repair or management costs to the extent
occasioned by Tenant's work) during the time period between lease
execution and the Commencement Date. It is understood and agreed
that no Base Rent or other charges, except as specifically set
forth herein, shall be payable with respect to such period.
4.2 BASE RENT
Base Rent for the Commencement Date through May 31, 1998
shall be at a monthly rate of $15,283.88 ($4.50 per rentable
square foot). Base rent for June 1, 1998 through November 30,
2000 shall be at a monthly rate of $16,132.98 ($4.75 per rentable
square foot).
ARTICLE V
USE OF PREMISES
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5.1 PERMITTED USE.
The Tenant agrees that the Premises shall be used and
occupied by the Tenant only for the purposes specified as the
Permitted Use thereof in Section 1.2 of this Lease, and for no
other purpose or purposes.
The Tenant further agrees to conform to the following
provisions during the entire term of this Lease:
a) With the exception of one sign placed on a mutually
acceptable corner of the exterior of the Building and subject to
the Landlord's reasonable review and approval and conformance
with all applicable zoning codes, the Tenant will not place on
the exterior of exterior walls (including both interior and
exterior surfaces of windows and doors) or on any part of the
Building outside the Premises, any signs, symbols, advertisement
or the like visible to public view outside of the Premises
without the prior consent of the Landlord, which consent shall
not be unreasonably withheld or delayed. Without limitation,
lettering on windows is expressly prohibited. Notwithstanding
anything to the contrary contained herein, the Tenant shall have
the right to place lettering identifying the Tenant's business on
the doors to the Premises, subject to the Landlord's reasonable
approval of the size and appearance of such lettering.
b) The Tenant, at its expense, shall comply with all
rules, ordinances, orders, regulations and requirements of any
Board of Fire Underwriters, or any other body hereafter
constituted exercising similar functions and governing insurance
rating bureaus; and shall not do or permit anything to be done in
or upon the Premises, or bring or keep anything therein, except
as now or hereafter permitted by any governmental authority,
Board of Fire Underwriters or any other similar body having
jurisdiction, or insurance rating bureau; and shall keep the
Premises equipped with all safety appliances or equipment
required by any governmental authority, Board of Fire
Underwriters or other similar body or governing insurance rating
bureau by reason of the Tenant's particular use of the Premises
or the location of partitions, trade fixtures or other contents
of the Premises (provided that the Landlord shall furnish the
sprinklers and fire alarm monitoring equipment related thereto
serving the Premises); and shall procure all licenses, permits or
other approvals required because of such use, it being understood
that the foregoing provisions shall not be construed to broaden
in any way the Permitted Use of the Premises;
c) The Tenant, at its expense, shall comply with all
rules, ordinances, orders, permit conditions and regulations of
governmental authorities now or hereafter in force and with any
lawful direction of any public officer, in each case to the
extent the same are applicable to the Premises or the use,
maintenance, occupation or alteration thereof, including, but not
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limited to, the Americans With Disabilities Act. Notwithstanding
anything to the contrary contained in this Lease, the Landlord
shall undertake, at the Landlord's sole cost and expense, all
repairs, alterations, additions and replacements required by any
rule, ordinance, order, permit, condition or regulation of any
governmental authority or by lawful direction of any public
officer of (i) the roof, structural or exterior portions,
foundation, floorslab, loadbearing interior walls or steel frame
of the Building, and (ii) those items, the expense of which is
properly chargeable to "capital account" under generally accepted
accounting principles consistently applied ("GAAP")
(individually, a "Capital Improvement", and collectively,
"Capital Improvements"), except for (x) Capital Improvements
required as a result of a change in law after the date of this
Lease (except the ADA, as in effect as of the date of this
Lease), and (y) Capital Improvements to the extent required as a
result of any Tenant alterations or additions to the Premises.
The foregoing item (x) shall be reimbursed as an Operating Cost
in accordance with Article X below; item (y) shall be reimbursed
by Tenant to Landlord within thirty (30) days of billing
therefor. If the Tenant receives notice of any violation of law,
ordinance, order, permit conditions or regulation applicable to
the Premises or the use and maintenance thereof, it shall give
prompt written notice thereof to the Landlord;
d) The Tenant shall not place a load upon any floor of the
Premises exceeding 250 pounds per square foot, live load, on the
first floor of the Premises, and 125 pounds per square foot, live
load, on the second floor of the Premises. The Tenant shall not
move any safes or heavy objects in or out of the Building without
prior notice to the Landlord, or in violation of the foregoing
standards;
e) The Tenant shall not commit or suffer to be committed
any waste upon the Premises or any public or private nuisance, or
other act or thing which may disturb the quiet enjoyment of any
other tenant or occupant in the Building, nor, without limiting
the generality of the foregoing, shall the Tenant make any
unusual noises in the Building, cause or permit any offensive
odors to be produced upon the Premises, or use any apparatus,
machinery or device in or about the Premises which shall cause
any damage to the Building or the Premises or any vibration
outside of the Premises;
f) The electricity furnished to the Premises shall be
separately metered. The Tenant shall pay directly to the
supplier of electricity, within thirty (30) days of invoice
therefor, the entire cost of such electricity consumed in the
Premises. There shall be available to the Premises at all times
during the Term, as the same may be extended, no less than 900
amperes of electricity with a minimum voltage of 277/480 volt
(120/208 volt transformed). Prior to the Commencement Date, the
Landlord shall disconnect from the electrical panels located in
the Premises any and all electrical conduits supplying
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electricity to any portion of the Building outside of the
Premises. It is expressly understood and agreed that all
electrical panels and transformers within the Premises (including
without limitation those located in the electrical room on the
first floor of the Premises) shall not be relocated and shall be
made available for the Tenant's exclusive use. The Tenant shall
not, without the Landlord's written consent in each instance,
connect to the electrical distribution system any fixtures,
appliances or equipment which exceed the foregoing capacities;
g) The Tenant shall comply and shall cause its employees,
agents and invitees to comply with the Rules and Regulations of
the Building as set forth in Exhibit C and such reasonable
changes therein and other reasonable rules and regulations as the
Landlord shall from time to time establish by notice to the
Tenant for the proper regulation of the Building and the Lot,
provided that such amended or additional rules and regulations
shall be non-discriminatory and of general application to all the
tenants in the Building;
5.2 ALTERATIONS.
The Tenant shall not redecorate or make alterations,
additions or improvements to the Premises, except with the prior
written consent of the Landlord, not to be unreasonably withheld
or delayed. The Landlord's failure to either approve or deny any
written request by the Tenant to make alterations, additions or
improvements for which the Landlord's consent is required under
this Section 5.2, within thirty (30) days after receipt thereof,
shall be deemed approval. Notwithstanding the foregoing, the
Tenant shall have the right, without the Landlord's consent, to
make any non-structural, interior alteration, addition or
improvement to the Premises which (a) does not affect Building
systems, and (b) has a cost of less than $25,000.
All alterations, additions and improvements made by the
Tenant to the Premises shall remain therein and, at the
termination of the Lease, shall be surrendered as a part thereof,
except for moveable trade fixtures and equipment (as
distinguished from leasehold improvements) installed prior to or
during the term of this Lease at the Tenant's sole cost. Such
trade fixtures and equipment may be removed by the Tenant if the
Tenant is not then in default hereunder and if such removal shall
not result in permanent damage to the Premises or the Building.
The Tenant shall remove such trade fixtures and equipment at the
termination of the Lease if requested to do so by the Landlord.
The Tenant shall at its expense promptly repair any and all
damage to the Premises or the Building resulting from any removal
of such fixtures and equipment.
Any personal property which shall remain in the Building or
on the Premises after the expiration or earlier termination of
the Lease shall conclusively be deemed to have been abandoned by
the Tenant, and either may be retained by the Landlord as its own
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property or may be disposed of by sale, storage or otherwise as
the Landlord shall see fit, all at the Tenant's expense.
Notwithstanding the foregoing, the Tenant will, upon request of
the Landlord after the expiration or termination of the Term
hereof, promptly remove from the Building any such personal
property, or if any part of such personal property shall be sold,
the Landlord may receive and retain the proceeds of such sale and
apply the same, at its option, against the expenses of sale, the
costs of moving and storage, any arrears of Rent, additional rent
or other charges payable hereunder or any damages to which the
Landlord may be entitled.
ARTICLE VI
ASSIGNMENT AND SUBLETTING
6.1 PROHIBITION.
Notwithstanding any other provisions of this Lease, the
Tenant shall not assign or otherwise transfer, voluntarily or
involuntarily, this Lease or any interest herein or sublet (which
term, without limitation, shall include granting of concessions,
licenses and the like) or allow any other person to occupy the
whole or any part of the Premises, without, in each instance, the
prior written consent of the Landlord, which consent shall not be
unreasonably withheld or delayed (provided that the Landlord's
evaluation of the same shall not be limited to financial
matters). The Landlord's failure to either approve or deny any
written request by the Tenant to assign or sublet for which the
Landlord's consent is required under this Section 6.1, within
thirty (30) days after receipt thereof, shall be deemed approval.
This prohibition includes any assignment, subletting or other
transfer which would occur by operation of law, reorganization,
acquisition, transfer or other change of the Tenant's corporate
or proprietary structure, including a change in the partners of
any partnership, and the sale, pledge or other transfer of any of
the issued and outstanding capital stock of any corporate tenant
(unless such stock is publicly traded on a recognized security
exchange or over-the-counter market). Notwithstanding anything
to the contrary contained herein, the Tenant shall have the right
to assign this Lease, without the Landlord's consent, (a) to a
parent, or majority owned subsidiary or affiliate, of the Tenant,
(b) in connection with a merger or consolidation of the Tenant,
or (c) in connection with a sale of substantially all of the
assets of the Tenant (each of (a), (b) and (c) being referenced
herein as an "Affiliated Tenant"), provided that in all such
events the successor has a net worth at least equal to the net
worth of the Tenant as of the date hereof.
In any case, where the Landlord shall consent to such
assignment, other transfer or subletting, and those cases in
which consent is not required, the Tenant originally named herein
shall remain fully liable for the Tenant obligations hereunder,
including, without limitation, the obligation to pay the rent and
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other amounts provided under this Lease, and the Tenant also
hereby agrees to pay to the Landlord, within fifteen (15) days of
billing therefor, all reasonable legal fees (not to exceed
$1,000.00) incurred by the Landlord in connection with reviewing
and approving any such assignment, other transfer or subletting.
The Tenant shall give written notice to the Landlord of the terms
of any such proposed assignment or sublease and the Landlord
shall be entitled to fifty percent (50%) of all net profits from
any such sublease or assignment as and when collected. Net
profit shall be calculated by first allowing the Tenant to
recover any actual construction inducement given to the subtenant
or assignee, and any commercially reasonable legal expenses,
third-party brokerage commissions, or rent concessions. No net
profit shall be payable in connection with an assignment or
subletting to an Affiliated Tenant. It shall be a condition of
the validity of any permitted assignment or other transfer or
subletting that the assignee or transferee or sublessee agree
directly with the Landlord, in form reasonably satisfactory to
the Landlord, to be bound by all the Tenant obligations
hereunder, including, without limitation, the obligation to pay
rent and other amounts provided for under this Lease and the
covenant against further assignment or other transfer or
subletting.
6.2 ACCEPTANCE OF RENT FROM TRANSFEREE.
The acceptance by the Landlord of the payment of Rent,
additional rent or other charges following an assignment,
subletting or other transfer prohibited by this Article VI shall
not be deemed to be a consent by the Landlord to any such
assignment, subletting or other transfer, nor shall the same
constitute a waiver of any right or remedy of the Landlord.
ARTICLE VII
RESPONSIBILITY FOR REPAIRS
7.1 REPAIRS.
From and after the date that possession of the Premises is
delivered to the Tenant and until the end of the Lease Term, the
Tenant shall keep the interior, non-structural elements of the
Premises in good order, condition and repair, reasonable wear and
tear and damage by casualty or taking only excepted; and the
Tenant shall surrender the Premises at the end of the Lease Term
in such condition. Notwithstanding the foregoing, the Tenant's
repair obligation hereunder prior to the Commencement Date shall
be limited to the repair of any damage caused by the Tenant or
its agents while installing the Tenant Work. In no event shall
the Tenant be obligated to make any repairs or replacements (i)
which are required as the result of the negligence or willful
misconduct of the Landlord, its agents, employees,
representatives or contractors, or the failure of the Landlord to
perform any of its obligations under this Lease, or (ii) which
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would constitute a Capital Improvement (as defined and subject to
the exclusions set forth in Section 5.1(c) above), all of which
repairs and replacements shall be made by the Landlord at the
Landlord's sole cost and expense. Without limitation of the
foregoing, the Landlord shall be responsible at the Landlord's
expense for the capital replacement of the HVAC system serving
the Premises. Except as may be provided in Articles XIII and XIV
and subject to reimbursement pursuant to Article X, the Landlord
agrees to keep in good order, condition and repair the roof,
foundation, floorslab, loadbearing interior walls, steel frame,
structural and exterior portions of the Building and all utility
lines, HVAC systems, pipes, plumbing and electrical wiring of the
Building outside of the Premises and inside of the Premises to
the extent not exclusively serving the Premises, except any
condition caused by the negligence, willful misconduct or failure
to comply with this Lease of the Tenant or any contractor of the
Tenant or any party for whose conduct the Tenant is responsible.
Subject to reimbursement as provided in Article X, the Landlord
shall also be responsible for the repair and maintenance of the
HVAC equipment and sprinkler system serving the Premises.
Without limitation, the Landlord shall not be responsible to make
any improvements or repairs other than as expressly provided in
this Lease, and the Landlord shall not be liable for any failure
to make such repairs unless the Tenant has given notice to the
Landlord of the need to make such repairs and the Landlord has
failed to commence to make such repairs within a reasonable time
thereafter. Notwithstanding the foregoing, prior to the
Commencement Date, the Landlord shall perform at the Landlord's
expense such necessary repairs as are required to ensure that the
HVAC equipment, fire alarm monitoring system and sprinkler system
are in good working order and to ensure that the existing
electrical and plumbing systems are in good working order. The
Landlord shall make all such repairs and replacements without, to
the extent practicable, interfering with the conduct of the
Tenant's business. If during such repairs or replacements, the
Premises are wholly or substantially unsuitable for the conduct
of the Permitted Uses by the Tenant for more than a ten-day
period, there shall be an equitable abatement of Rent payable
after said ten-day period until the repairs or replacements have
been completed.
In addition to the requirements of Section 3.2 herein,
whenever the Tenant shall make repairs, alterations, decorations,
additions, removals, or improvements (including the installation
of any equipment other than normal light business office
equipment) in or to the Premises:
a) No material or equipment shall be incorporated in or
added to the Premises in connection with any such repair,
alteration, decoration, addition, removal or improvement which is
subject to or claimed to be subject to any lien, charge,
mortgage, or other encumbrance of any kind whatsoever or is
subject to any security interest or any form of title retention
agreement other than personal property. Any mechanic's or
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materialmen's lien filed against the Premises or the Building for
work claimed to have been done for, or materials claimed to have
been furnished to the Tenant, shall be immediately discharged by
the Tenant, at the Tenant's expense, by filing the bond required
by law or otherwise. If the Tenant fails so to discharge any
lien, the Landlord may do so at the Tenant's expense and the
Tenant shall reimburse the Landlord for all expenses and costs
incurred by the Landlord in so doing immediately after rendition
of a bill therefor by the Landlord to the Tenant.
b) All installations or work done by or for the Tenant
shall be at its own expense and shall at all times comply with
(i) laws, rules, orders and regulations of governmental
authorities having jurisdiction thereof: (ii) orders, rules and
regulations of any Board of Fire Underwriters, or any other body
hereafter constituted exercising similar functions, and governing
insurance rating bureaus; (iii) with respect only to alterations,
additions or improvements for which the Landlord's consent is
required hereunder, plans and specifications (which shall be
prepared by and at the expense of the Tenant) theretofore
submitted to and approved in writing by the Landlord, such
approval not to be unreasonably withheld.
c) The Tenant shall procure all necessary permits before
undertaking any work in the Premises and shall do all such work
in a good and workmanlike manner, employing new materials of good
quality and shall defend, save harmless, exonerate and indemnify
the Landlord from all injury, loss or damage to any person or
property to the extent occasioned by such work. The Tenant shall
cause contractors employed by the Tenant to carry and maintain in
force during the continuance of any work being performed for the
Tenant Worker's Compensation Insurance in accordance with
statutory requirements and Comprehensive Public Liability
Insurance and Automobile Liability Insurance covering such
contractors on or about the Premises in amounts reasonably
acceptable to the Landlord and to submit certificates evidencing
such coverage to the Landlord prior to the commencement of such
work.
d) The Tenant shall not, at any time prior to or during
the Term of this Lease, directly or indirectly employ, or permit
the employment of, any contractor, mechanic or laborer in the
Premises, whether in connection with any repair work or the
making of any alteration, improvements or additions or otherwise,
if such employment will interfere or cause any conflict with
other contractors, mechanics, or laborers engaged in the
construction, maintenance or operation of the Building by the
Landlord, the Tenant or others. In the event of any such
interference or conflict, the Tenant, upon demand of the
Landlord, shall cause all contractors, mechanics or laborers
causing such interference or conflict to leave the Building
immediately.
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e) The Landlord shall obtain at the Tenant's expense and
maintain in force at all times during the term hereof an annual
service agreement at a competitive rate with a reputable
contractor to ensure that the HVAC equipment exclusively
servicing the Premises is properly maintained (or, if such
service is provided for the entire Building, the Tenant shall pay
the Tenant's Proportionate Share thereof).
f) The Tenant shall not be deemed to be in default under
this Lease due to the Tenant's failure to perform its obligations
under this Section 7.1 if such failure is occasioned by causes
beyond its control, including without limitation, labor disputes,
breakdowns, accident, order or regulation by or of any
governmental authority, or failure of supply, or inability by the
exercise of reasonable diligence to obtain supplies, parts or
employees to perform such obligations, provided that the Tenant
in no event shall be excused from the payment and performance of
all of its other obligations under this Lease during such period,
including without limitation, its obligation to make timely
payment of all Rent hereunder.
ARTICLE VIII
SERVICES TO BE FURNISHED BY THE LANDLORD
8.1 LANDLORD SERVICES.
The Landlord shall maintain in good condition and repair the
common areas, including but not limited to, the access roadways
and drives and the parking areas, drainage areas, and landscaping
on the Lot. Such maintenance shall include without limitation
the removal of snow and ice from all paved areas and walkways of
the Property.
The Landlord shall furnish water at City temperature for
ordinary cleaning, toilet, lavatory and drinking purposes. If
the Tenant uses or consumes water for any other purpose, it shall
reimburse the Landlord therefor, and for any related sewer
charge, as reasonably estimated by the Landlord or, at the
Tenant's election, metered. In the latter event, the Tenant
shall pay the cost of the meter and its installation and
maintenance. Such reimbursement shall be made as and when bills
are rendered.
8.2 CAUSES BEYOND CONTROL OF THE LANDLORD.
The Landlord shall in no event be liable for failure to
perform any of its obligations under this Lease when prevented
from doing so by causes beyond its control, including, without
limitation, labor dispute, breakdown, accident, order or
regulation of or by any governmental authority, or failure of
supply, or inability by the exercise of reasonable diligence to
obtain supplies, parts or employees necessary to furnish services
required under this Lease, or because of war or other emergency,
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or for any cause due to any act, neglect or default of the Tenant
or the Tenant's servants, contractors, agents, employees,
licensees or any person claiming by, through or under the Tenant,
and in no event shall the Landlord ever be liable to the Tenant
for any indirect or consequential damages under the provisions of
this Section 8.2 or any other provision of this Lease.
ARTICLE IX
REAL ESTATE AND OTHER TAXES; OTHER EXPENSES
9.1 LANDLORD TO PAY REAL ESTATE TAXES.
The Landlord shall be responsible for the payment, before
the same becomes delinquent, of all general and special taxes,
including assessments for local improvements, and other
governmental charges which may be lawfully charged, assessed or
imposed (herein collectively called the "Taxes") upon the
Building and the Lot. However, if authorities having
jurisdiction assess real estate taxes, assessments or other
charges which the Landlord considers excessive, the Landlord may
defer compliance therewith to the same extent permitted by the
laws of the jurisdiction in which the same are located, so long
as the validity or amount thereof is contested by the Landlord in
good faith, and so long as the Tenant's occupancy of the Premises
is not disturbed.
9.2 TENANT'S SHARE OF REAL ESTATE TAXES.
With reference to the Taxes described in Section 9.1, it is
agreed as follows:
a) The Tenant shall pay to the Landlord the Tenant's
Proportionate Share of Taxes assessed against the Building and
the Lot during any tax year during the term of this Lease. The
Tenant shall pay to the Landlord pro rated monthly installments
on account of projected Taxes for the Lease Year, calculated by
the Landlord on the basis of the most recent Tax data or budget
available, with an adjustment made to account for actual Taxes
for such Lease Year. Within thirty (30) days after the end of
each full or partial tax year falling within the Lease Term, the
Landlord shall deliver to the Tenant (i) a copy of the paid and
receipted tax bill(s) relating to such tax year and (ii) the
Landlord's computation of the Tenant's Proportionate Share of the
Taxes covered by such bill(s). If the Tax payments previously
made by the Tenant with respect to such tax year either exceed or
are less than the Tenant's Proportionate Share of Taxes evidenced
by such bill(s) the difference shall be paid by or reimbursed to
the Tenant as appropriate, within thirty (30) days after the
Tenant's receipt of such bill(s). The Tenant shall not, in any
event, be liable for any interest or penalty charge payable by
the Landlord with respect to any tax bill unless such charge is
the result of the Tenant's failure to make its Tax payments to
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the Landlord hereunder in a timely manner in accordance with the
provisions of this Section 9.2.
b) An equitable adjustment shall be made in such figures
with respect to the first and last years of the term hereof in
the event that they shall not coincide with the tax year; and an
equitable adjustment shall be made in the event of any change in
the method or system of taxation from that which is now
applicable, including the dates and period for which such taxes
are levied, or otherwise. Where the applicable tax bill is not
available prior to the end of the term hereof, then the aforesaid
adjustment shall be made, tentatively, on the basis of the last
year's taxes, and the amount due shall be treated as an addition
to the rent for the last month of the term of the Lease; and
final adjustment shall be made between the Landlord and the
Tenant within thirty (30) days after the Landlord shall have
received the tax bill for such period.
c) If some method or type of taxation or assessment shall
replace in whole or in part, the current method of assessment of
real estate taxes, or the type thereof, the Tenant agrees that
the Tenant shall pay the Tenant's equitable share of the same
computed in a fashion consistent with the method of computation
herein provided, to the end that the Tenant's cost on account
thereof shall be, to the maximum extent practicable, the same as
the Tenant would bear under the foregoing paragraphs.
d) If a tax (other than a net income tax) is assessed on
account of the rents or other charges payable by the Tenant to
the Landlord under this Lease, the Tenant agrees to pay the same
within ten (10) days after billing therefor, unless applicable
law prohibits the payment of such tax by the Tenant. The
Tenant's obligation to make payment of the same shall be
applicable irrespective of the party to which the tax is
assessed.
e) There shall be excluded from the Taxes and other
charges payable by the Tenant under this Section 9.2 all income,
excess profit, excise, franchise, gift, estate, succession,
inheritance, transfer, mortgage lien and documentary stamp taxes.
f) Notwithstanding anything to the contrary contained
herein, in the event that the Tenant is obligated to pay any
portion of any betterment or special assessment, the Tenant's
payments shall be calculated over the longest period permitted by
the assessing authority, such that the Tenant shall pay a total
amount equal to the Tenant's Proportionate Share of such
assessment multiplied by a fraction, the numerator of which is
the number of years remaining in the Lease Term and the
denominator of which is the greater of (i) the number of years in
the Lease Term or (ii) the number of years for amortization
permitted by the assessing authority.
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g) If the Landlord shall obtain any abatement, refund or
rebate in Taxes, the Landlord shall promptly forward to the
Tenant an amount equal to the Tenant's Proportionate Share
thereof (less the Tenant's Proportionate Share of the cost of
obtaining the same). In addition, if after written request from
the Tenant to the Landlord, the Landlord elects not to pursue an
abatement, the Tenant shall have the right to seek, at the
Tenant's expense and in the Landlord's name and behalf, an
abatement, refund or rebate with respect to the Taxes, and the
Landlord agrees that the Tenant's Proportionate Share of any such
abatement, refund or rebate shall belong to the Tenant, with the
balance thereof, less the Tenant's cost of obtaining the same, to
be remitted to the Landlord. The Landlord's failure to either
elect to pursue an abatement or to refuse to do so within ten
(10) days after the Tenant's written request therefor shall be
deemed a consent by the Landlord for the Tenant to pursue such an
abatement.
ARTICLE X
OPERATING COSTS
10.1 TENANT'S SHARE OF OPERATING COSTS.
a) The Tenant shall pay, as additional rent, the Tenant's
Proportionate Share of Operating Costs for any Lease Year. The
Tenant shall pay to the Landlord pro rata monthly installments on
account of projected Operating Costs for the Lease Year,
calculated by the Landlord on the basis of the most recent
Operating Costs data or budget available, with an adjustment made
to account for actual Operating Costs for such Lease Year.
Within one hundred twenty (120) days after the end of each Lease
Year, the Landlord shall provide to the Tenant a detailed
statement of the Operating Costs for such Lease Year in form and
with accompanying back-up documentation reasonably satisfactory
to the Tenant. If the payments previously made by the Tenant
with respect to such Lease Year either exceed or are less than
the Tenant's Proportionate Share of the actual Operating Costs as
evidenced by such statement, the difference shall be paid by or
reimbursed to the Tenant, as appropriate, within thirty (30) days
after the Tenant's receipt of said statement.
b) For the purposes of this Article "Lease Year" shall
mean any calendar year from January 1 to December 31, except
that the first Lease Year during the term of this Lease shall
commence on the Commencement Date and end on the next following
December 31 and the last Lease Year during the term of this Lease
shall end on the date this Lease terminates (each of such first
and last Lease Years are referred to as a "Partial Lease Year");
and "Operating Costs" shall consist of the commercially
reasonable cost of the following:
(1) All reasonable expense incurred by the Landlord or its
agents which shall be directly related to employment of any day
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and night supervisors, janitors, handymen, carpenters,
landscapers, engineers, firemen, mechanics, electricians,
plumbers, guards, cleaners, and other personnel (including
amounts incurred for wages, salaries and other compensation for
services provided by any of such persons, payroll, social
security, unemployment and similar taxes, workmen's compensation
insurance, disability benefits, pensions, hospitalization,
retirement plans and group insurance, uniforms and working
clothes and the cleaning thereof, and expenses imposed on the
Landlord or its agents pursuant to any collective bargaining
agreement), for services in connection with the operation,
management, repair, maintenance, cleaning and protection
(collectively, "the Operation") of the Building, the Building
heating, ventilating, air conditioning, electrical, plumbing,
fire protection and other systems and the Lot (collectively, "the
Property"), and personnel engaged in supervision of any of the
persons mentioned above;
(2) The cost of services, materials and supplies furnished or
used in the Operation and repair or alteration of the Property;
(3) The cost of replacements for tools and equipment used in the
Operation of the Property;
(4) The amounts paid to managing agents and for legal,
accounting and other professional fees relating to the Operation
of the Property, but excluding brokerage fees and such other fees
paid in connection with negotiations for or enforcement of
leases;
(5) Insurance premiums;
(6) Costs for electricity, steam and other utilities required in
the Operation of the Property;
(7) Water and sewer use charges;
(8) The costs of snow-plowing and removal, landscaping and
parking lot maintenance;
(9) Amounts paid to independent contractors for services,
materials and supplies furnished for the Operation of the
Property;
(10) Capital Improvements required as a result of a change
in law after the date of this Lease (except the ADA, as in effect
as of the date of this Lease), which shall be amortized over
their useful life in accordance with GAAP and reimbursed to the
extent of such useful life over the remaining term hereof; and
(11) All other reasonable and customary expenses incurred in
connection with the operation and maintenance of the Property.
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Operating Costs shall be computed on an accrual basis and shall
be determined in accordance with generally accepted accounting
principles consistently applied. They may be incurred directly
or by way of reimbursement, and shall include taxes applicable
thereto. The following shall be excluded from Operating Costs:
(1) Salaries of officers, executives and employees of the
Landlord not connected with the Operation of the Property;
(2) Depreciation;
(3) Expenses relating to tenants' alterations;
(4) Interest on indebtedness;
(5) Expenses for which the Landlord, by the terms of this Lease
or any other lease, makes a separate charge;
(6) Leasing fees or commissions;
(7) Original costs of acquisition of land or construction,
overhead and profit, interest or penalties resulting from late
payments by the Landlord which are not occasioned by the Tenant's
late payment hereunder, and any other costs benefiting specific
tenants or other occupants of the Building and not all tenants
and all occupants generally; and
(8) Any Operating Costs which constitute a Capital Improvement
(except as expressly provided in Section 10.1(b)(10) of this
Lease).
All Operating Costs shall be reduced by the amount (net of
collection costs) of any insurance reimbursement, discount or
allowance received by the Landlord in connection with such costs.
The Landlord shall identify the receipt of any such
reimbursement, discount or allowance in the annual statement of
Operating Costs to be delivered to the Tenant in accordance with
the foregoing provisions of this Article X.
The Tenant shall have the right from time to time, by its
accountants or representatives upon reasonable notice to the
Landlord, to inspect and examine all of the Landlord's records
(including without limitation supporting data) relating to the
calculation of Operating Costs payable by the Tenant hereunder,
as well as to request and receive reasonable invoice support with
respect to the same. The Landlord shall retain such records for
at least two (2) years. In the event that any such inspection
discloses that the Tenant has paid an amount in excess of the
Tenant's Proportionate Share, the Landlord shall refund such
excess to the Tenant within thirty (30) days. In addition, in
the event that any such inspection discloses that the Landlord
has charged the Tenant in excess of five (5%) percent more than
the amount properly chargeable to the Tenant, the Landlord shall
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reimburse to the Tenant the reasonable costs of such inspection
within thirty (30) days.
ARTICLE XI
INDEMNITY
11.1 TENANT'S INDEMNITY.
To the maximum extent permitted by law, the Tenant shall
indemnify and save harmless the Landlord, the directors,
officers, agents and employees of the Landlord and those in
privity of estate with the Landlord, from and against all claims,
expenses or liability of whatever nature to the extent (a)
arising from any negligence or willful misconduct of the Tenant,
or the Tenant's contractors, licensees, agents, servants or
employees, or the failure of the Tenant or such persons to comply
with any rule, order, regulation or lawful direction now or
hereafter in force of any public authority, in each case to the
extent the same are related to the Premises or the Building, or
the Tenant's use thereof; or (b) arising from any accident,
injury or damage, however caused, to any person or property on or
about the Premises; or (c) arising out of default or breach by
the Tenant under any of the terms or covenants of this Lease or
in connection with any equipment or installations to be
maintained or repaired by the Tenant; or (d) arising from any
accident, injury or damage to any person or property occurring
outside the Premises but within the Building, or on the Lot to
the extent such accident, injury or damage results, or is claimed
to have resulted from, any negligence or willful misconduct on
the part of the Tenant, or the Tenant's contractors, licensees,
agents, servants, employees or customers of anyone claiming by or
through the Tenant; provided, however, that in no event shall the
Tenant be obligated under this Section 11.1 to indemnify the
Landlord, the directors, officers, agents and employees of the
Landlord, or those in privity of estate with the Landlord, for
any claim, expense or liability to the extent the same arises
from or in connection with the negligence or willful misconduct
of the Landlord, its agents, employees, representatives or
contractors.
This indemnity and hold harmless agreement shall include
indemnity against all expenses and liabilities incurred in or in
connection with any such claim or proceeding brought thereon, and
the defense thereof with counsel reasonably acceptable to the
Landlord or counsel selected by an insurance company which has
accepted liability for any such claim.
11.2 TENANT'S RISK.
Except to the extent expressly otherwise provided herein,
the Tenant agrees to use and occupy the Premises and to use such
other portions of the Building and the Lot as the Tenant is
herein given the right to use at the Tenant's sole risk; and to
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the fullest extent permitted by law the Landlord shall have no
responsibility or liability for any loss of or damage to
furnishings, fixtures, equipment or other personal property of
the Tenant or of any persons claiming by, through or under the
Tenant, except to the extent such loss or damage is caused by the
negligence or willful misconduct of the Landlord, its agents,
employees, representatives or contractors.
11.3 INJURY CAUSED BY THIRD PARTIES.
The Tenant agrees that the Landlord shall not be responsible
or liable to the Tenant, or to those claiming by, through or
under the Tenant for any loss or damage resulting to the Tenant
or those claiming by, through or under the Tenant, or its or
their property, that may be occasioned by or through the acts or
omissions of persons occupying adjoining premises or any part of
the premises adjacent to or connecting with the Premises or in
any part of the Building, or for any loss or damage from the
breaking, bursting, stopping or leaking of electric cables and
wires, and water, gas, sewer or steam pipes or like matters,
except to the extent such loss or damage is caused by the
negligence or willful misconduct of the Landlord, its agents,
employees, representatives or contractors.
ARTICLE XII
LANDLORD'S ACCESS TO PREMISES
12.1 LANDLORD'S RIGHT OF ACCESS.
The Landlord shall have the right to enter the Premises at
all reasonable hours, and upon no less than twenty-four (24)
hours' prior telephonic notice (except in the event of
emergency), for the purpose of inspecting or of making repairs,
alterations or additions to the Premises or the Building, and the
Landlord shall also have the right to make access available at
all reasonable hours, and upon no less than twenty-four (24)
hours' prior telephonic notice, to prospective or existing
mortgagees or purchasers of any part of the Building. To assure
access by the Landlord to the Premises, the Tenant shall provide
the Landlord with duplicate copies of all keys used by the Tenant
in providing access to the Premises.
For a period commencing nine (9) months prior to the
expiration of the term of this Lease if the Tenant has not
exercised its rights under Section 17.21 below, and twelve (12)
months prior to the expiration of the term of this Lease if the
Tenant has exercised such rights, the Landlord may have
reasonable access to the Premises at all reasonable hours, upon
reasonable prior notice, for the purpose of exhibiting the same
to prospective tenants.
Except in the event of emergency, the Landlord, or any
person acting under the Landlord, shall be accompanied while
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entering the Premises by a representative, agent or employee of
the Tenant, which representative, agent or employee shall be made
available promptly upon request. If no such representative is
provided, the Landlord may proceed without them.
12.2 ACCESS DURING THE LAST MONTH OF TERM.
If during the last month of the Lease Term, the Tenant shall
have removed all of the Tenant's property therefrom, the Landlord
may immediately enter and alter, renovate and redecorate the
Premises, without elimination or abatement of rent, or incurring
liability to the Tenant for any compensation, and such acts shall
have no effect upon otherwise applicable terms of this Lease.
Nothing in this Section 12.2 shall be deemed to obligate the
Tenant to remove its property from the Premises prior to the
expiration or earlier termination of the Lease Term, as the same
may be extended.
ARTICLE XIII
CASUALTY
13.1 DEFINITION OF "SUBSTANTIAL DAMAGE" AND "PARTIAL DAMAGE"
The term "substantial damage" and "substantial casualty", as
used herein, shall refer to damage which is of such a character
that in the Landlord's reasonable opinion the same cannot, in
ordinary course, be expected to be repaired within 120 calendar
days from the time that such repair work would commence. Any
damage which is not "substantial damage" is "partial damage".
13.2 PARTIAL DAMAGE
If during the Lease Term there shall be partial damage to
the Building by fire or other casualty and if such damage shall
materially interfere with the Tenant's use of the Premises as
contemplated by this Lease, the Landlord shall promptly proceed
to restore the Building to as nearly equivalent as practicable to
its condition immediately prior to the occurrence of such damage.
If during the Lease Term there shall be a partial damage to
the Premises by fire or other casualty, the Landlord shall
promptly proceed to restore the Premises to as nearly equivalent
as practicable to its condition immediately prior to the
occurrence of such damage.
13.3 SUBSTANTIAL DAMAGE.
If during the Lease Term there shall be substantial damage
to the Building by fire or other casualty and if such damage
shall materially interfere with the Tenant's use of the Premises
as contemplated by this Lease, or there shall be substantial
damage to the Premises, the Landlord shall notify the Tenant
within forty-five (45) days after the occurrence thereof as to
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whether the Landlord will undertake restoration and complete the
same in accordance with Section 13.5 below. If Landlord so
notifies the Tenant that the Landlord elects to so restore the
Premises, the Landlord shall promptly restore the Building or the
Premises, as applicable, as nearly equivalent as possible to its
condition immediately prior to the occurrence of such damage. If
the Landlord gives notice to the Tenant within forty-five (45)
days after the occurrence of such damage of the Landlord's
election to terminate this Lease, then this Lease shall terminate
as of the date of such notice with the same force and effect as
if such date were the date originally established as the
expiration date hereof. The Landlord shall have the right to
make such election in the event of substantial damage to the
Building whether or not such damage materially interferes with
the Tenant's use of the Premises. The Tenant shall have the
right to terminate this Lease in the event of a substantial
casualty after which Landlord has failed to give notice of its
election to restore within forty-five (45) days after the
occurrence thereof, which notice to terminate shall be effective
fifteen (15) days after the date when given (unless the Landlord
negates such notice by confirming its election to undertake
restoration as provided herein within such fifteen-day period).
The Tenant shall also have the right to terminate this Lease
after a substantial casualty if, as a result of any cause beyond
the Landlord's control, including a change in law, the Landlord
is unable to restore the Premises to substantially its condition
prior to the casualty, which right shall be exercised by the
Tenant within fifteen (15) days after the Landlord has given
written notice to the Tenant that the Landlord is unable to
undertake and complete restoration of the Premises to
substantially its condition prior to the casualty due to such
causes.
13.4 ABATEMENT OF RENT.
If during the Lease Term the Building or the Premises shall
be damaged by fire or casualty and if such damage shall
materially interfere with the Tenant's use of the Premises as
contemplated by this Lease, a just proportion of the Rent and
other charges payable by the Tenant hereunder shall abate
proportionately for the period in which, by reason of such
damage, there is such interference with the Tenant's use of the
Premises.
13.5 MISCELLANEOUS.
In no event shall the Landlord have any obligation to make
any repairs or perform any restoration work under this Article
XIII if prevented from doing so by reason of any cause beyond its
reasonable control, including without limitation, the
requirements of any applicable laws, codes, ordinances, rules or
regulations, or in the event of damage to or destruction of any
portion of the Building which is not fully covered by the
insurance proceeds received by the Landlord, or in the event that
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any portion of the insurance proceeds must be paid over to or are
retained by the holder of any mortgage or deed of trust on the
Building or Lot, and in such events the Landlord may terminate
this Lease by written notice to the Tenant, given within thirty
(30) days after the date of notice to the Landlord that said
damage or destruction is not so covered, or that the proceeds are
not available for repair of the damage or destruction. If the
Landlord shall fail (whether in the case of partial damage or
substantial damage) either to complete the restoration and repair
of the Premises or Building, as the case may be, or to restore
the same as nearly equivalent as practicable to their condition
immediately prior to the damage or destruction, within one
hundred eighty (180) days from the date of occurrence of the
damage or destruction (subject to force majeure, but in any event
no later than two hundred ten (210) days thereafter), then, in
either such event, the Tenant may terminate this Lease by thirty
(30) days' prior written notice to the Landlord given no later
than thirty (30) days after the expiration of the aforesaid one
hundred eighty (180) day period (as so extended).
ARTICLE XIV
EMINENT DOMAIN
14.1 RIGHTS OF TERMINATION FOR TAKING.
If the Premises, or such portion thereof as to render the
balance (if reconstructed to the maximum extent practicable in
the circumstances) physically unsuitable for the Tenant's
purposes, shall be taken by condemnation or right of eminent
domain (including a temporary taking in excess of 180 days), or
if there is a taking of more than fifteen percent (15%) of the
Tenant's Parking Spaces (unless such loss of parking shall be
compensated for by the provision of replacement parking
reasonably acceptable to the Tenant on the Property or on land
contiguous to the Property), or if as a result of any cause
beyond the Landlord's reasonable control, including a change in
law, the Landlord is unable to restore the Premises to
substantially its condition prior to the taking, the Landlord or
the Tenant shall have the right to terminate this Lease by notice
to the other of its desire to do so, provided that such notice is
given not later than thirty (30) days after the Tenant has been
deprived of possession.
Further, if so much of the Building (which may include the
Premises) or the Lot shall be so taken or condemned or shall
receive any direct or consequential damage by reason of anything
done pursuant to public or quasi-public authority such that
continued operation of the same would, in the Landlord's
reasonable opinion, be uneconomical, the Landlord shall have the
right to terminate this Lease by giving notice to the Tenant of
the Landlord's desire so to do not later than thirty (30) days
after the effective date of such taking.
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Should any part of the Premises be so taken or condemned or
receive such damage and should this Lease be not terminated in
accordance with the foregoing provisions, the Landlord shall
promptly after the determination of the Landlord's award on
account thereof, expend so much as may be necessary of the net
amount which may be awarded to the Landlord in such condemnation
proceedings in restoring the Premises to an architectural unit
that is reasonably suitable to the uses of the Tenant permitted
hereunder. Should the net amount so awarded to the Landlord be
insufficient to cover the cost of so restoring the Premises, in
the reasonable estimate of the Landlord, the Landlord may, but
shall have no obligation to, supply the amount of such
insufficiency and restore the Premises to such an architectural
unit, with reasonable diligence, or may terminate this Lease by
giving notice to the Tenant not later than a reasonable time
after the Landlord has determined the estimated cost of such
restoration. Notwithstanding anything to the contrary contained
herein, if the Landlord shall fail to restore the remainder of
the Premises as nearly equivalent as practicable to their
condition immediately prior to the taking within one hundred
eighty (180) days from the date that possession of the portion of
the Premises so taken is delivered to the condemning authority
(subject to force majeure, but in any event no later than two
hundred ten (210) days thereafter), then, in such event, the
Tenant may terminate this Lease by thirty (30) days prior written
notice to the Landlord given no later than thirty (30) days after
the expiration of the aforesaid one hundred eighty (180)-day
period (as so extended).
14.2 PAYMENT OF AWARD.
The Landlord shall have and hereby reserves and excepts, and
the Tenant hereby grants and assigns to the Landlord, all rights
to recover for damages to the Building and the Lot and the
leasehold interest hereby created, and to compensation accrued or
hereafter to accrue by reason of such taking or damage, as
aforesaid. The Tenant covenants to deliver such further
assignments and assurances thereof as the Landlord may from time
to time reasonably request. Nothing contained herein shall be
construed to prevent the Tenant from prosecuting in any
condemnation proceedings a separate claim for the value of any of
the Tenant's usual trade fixtures installed in the Premises by
the Tenant at the Tenant's expense and for relocation expenses,
provided that such action shall not affect the amount of
compensation otherwise recoverable hereunder by the Landlord from
the taking authority.
14.3 ABATEMENT OF RENT.
In the event of any such taking of the Premises, the Rent
and other charges, or a fair and just proportion thereof,
according to the nature and extent of the damage sustained, shall
be suspended or abated, as appropriate and equitable in the
circumstances.
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14.4 MISCELLANEOUS.
In no event shall the Landlord have any obligation to make
any repairs under this Article XIV if prevented from doing so by
reason of any cause beyond its reasonable control, including
requirements of any applicable laws, codes, ordinances, permit
conditions, rules or regulations.
ARTICLE XV
INSURANCE
15.1. PUBLIC LIABILITY AND PROPERTY INSURANCE.
The Tenant agrees to maintain in full force from the date
upon which the Tenant first enters the Premises for any reason,
throughout the Lease Term, and thereafter so long as the Tenant
is in occupancy of any part of the Premises, a policy of
comprehensive public liability insurance, written on an
occurrence basis and including contractual liability coverage to
cover any liabilities assumed under this Lease, insuring against
all claims for injury to or death of persons or damage to
property on or about the Premises or arising out of the use of
the Premises and under which the Landlord, and such other persons
as are in privity of estate with the Landlord (as may be set
forth in a notice given from time to time by the Landlord) are
named as additional insureds, as their respective interests
appear, to the extent of the Tenant's obligations under Section
11.1 above. The minimum limits of liability of such insurance
shall be: Bodily injury - $1,000,000 per occurrence and in the
aggregate over the term of the policy, and Property Damage -
$1,000,000 per occurrence. The Landlord shall have the right
from time to time to reasonably increase such minimum limits
upon notice to the Tenant, provided that any such increase shall
provide for coverage in amounts similar to like coverage being
carried on like property in the greater Boston area.
The Tenant shall also maintain in full force and effect from
the date upon which the Tenant first enters the Premises for any
reason, throughout the Lease Term and thereafter so long as the
Tenant is in occupancy of any part of the Premises, property
insurance covering the Tenant's furnishings, fixtures, equipment
or other personal property of the Tenant written on an "All Risk"
basis for full replacement cost, and such other insurance as the
Landlord may, from time to time, reasonably require. Without
limiting the provisions of Section 11.2, if the Tenant fails to
take out or maintain any policy of insurance required by this
Article XV to be taken out and maintained, such failure shall be
complete defense to any claim asserted by the Tenant against the
Landlord by reason of any loss sustained by the Tenant that would
have been covered by such policy.
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Each such policy shall be non-cancellable and non-amendable
with respect to the Landlord and such designees of the Landlord
without twenty (20) days' prior notice to the Landlord, and a
duplicate original or certificate thereof, together with a copy
of the insurance policies referenced therein, shall be delivered
to the Landlord prior to the Tenant's entry onto this Premises
and thereafter no later than thirty (30) days prior to the
expiration thereof.
15.2 NON-SUBROGATION.
Insofar as, and to the extent that, the following provision
may be effective without invalidating or making it impossible to
secure insurance coverage obtainable from responsible insurance
companies doing business in the locality in which the Premises
are located (even though extra premium may result therefrom), the
Landlord and the Tenant mutually agree that, with respect to any
hazard which is covered by insurance then being carried by them,
respectively, the one carrying such insurance and suffering such
loss releases the other of and from any and all claims with
respect to such loss; and they further mutually agree that their
respective insurance companies shall have no right of subrogation
against the other on account thereof. In the event that extra
premium is payable by either party as a result of this provision,
the other party shall reimburse the party paying such premium the
amount of such extra premium. If, at the request of one party,
this release and non-subrogation provision is waived, then the
obligation of reimbursement shall cease for such period of time
as such waiver shall be effective. If the release of either
party provided above shall contravene any law with respect to
exculpatory agreements, the liability of the party for whose
benefit such release was intended shall remain but shall be
secondary to that of the other party's insurer.
15.3 EXTRA HAZARDOUS USE.
The Tenant covenants and agrees that the Tenant will not do
or permit anything to be done in or upon the Premises, or bring
in anything or keep anything therein, which would invalidate or
be in conflict with insurance coverage maintained by or for the
Landlord with respect to the Building or which would increase the
rate of insurance on the Premises or on the Building above the
standard rate applicable to the Premises or the Building for the
use to which the Tenant has agreed to devote the Premises; and
the Tenant further agrees that, in the event that the Tenant
shall do any of the foregoing, the Tenant will, at the Landlord's
election, cease such activity or promptly pay to the Landlord, on
demand, any such increase resulting therefrom, which shall be due
and payable as additional rent hereunder.
The Tenant shall not cause or permit any hazardous or toxic
wastes, hazardous or toxic substances or hazardous or toxic
materials (collectively, "Hazardous Materials") to be used,
generated, stored or disposed of on, under or about, or
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transported to or from, the Premises (collectively, "Hazardous
Materials Activities") without first receiving the Landlord's
written consent, which may be withheld for any reason and revoked
at any time. If the Landlord consents to any such Hazardous
Materials Activities, the Tenant shall conduct them in strict
compliance (at the Tenant's expense) with all applicable
Regulations, as hereinafter defined, and using all necessary and
appropriate precautions to prevent any spill, discharge, release
or exposure to persons or property. The Landlord shall not be
liable to the Tenant for any loss, cost, expense, claims, damage
or liability arising out of any Hazardous Materials Activities by
the Tenant, the Tenant's employees, agents, contractors,
licensees, customers or invitees, whether or not consented to by
the Landlord. The Tenant shall indemnify, defend with
experienced and competent counsel, and hold the Landlord harmless
from and against any and all loss, costs, expenses, claims,
damages or liabilities arising out of all Hazardous Materials
Activities on the Premises, whether or not consented to by the
Landlord, which obligation shall survive the termination of this
Lease. The Tenant's indemnification set forth in the preceding
sentence shall specifically exclude acts or omissions of other
tenants of the Building and of the Landlord, any pre-existing
condition in the Premises, or migration onto the Property or the
Premises caused by others (so long as the same was not caused by
the Tenant). The Landlord agrees that the Tenant shall have the
right to store and use at the Premises in strict compliance with
law materials of such types and in such quantities as are set
forth on Exhibit F attached hereto and incorporated herein by
this reference. For purposes hereof, Hazardous Materials shall
include but not be limited to substances defined as "hazardous
substances", "toxic substances", or "hazardous wastes" in the
Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended; the Federal Hazardous
Materials Transportation Act, as amended; and the Federal
Resource Conservation and Recovery Act, as amended ("RCRA");
those substances defined as "hazardous wastes" in the
Massachusetts Hazardous Waste Facility Siting Act, as amended
(Massachusetts General Laws Chapter 21D); those substances
defined as "hazardous materials" or "oil" in Massachusetts
General Laws Chapter 21E, as amended; and as such substances are
defined in any regulations adopted and publication promulgated
pursuant to any of said laws (collectively, "Regulations"). If
the Landlord consents to any Hazardous Materials Activities,
prior to using, storing or maintaining any Hazardous Materials on
or about the Premises, the Tenant shall provide the Landlord with
a list of the types and quantities thereof, and shall update such
list as necessary for continued accuracy. The Tenant shall also
provide the Landlord with a copy of any Hazardous Materials
inventory statement required by any applicable Regulations, and
any update filed in accordance with any applicable Regulations.
If the Tenant's activities violate any Regulations or cause a
spill, discharge, release or exposure to any persons or property
in violation of applicable law, the Tenant shall cease such
activities immediately upon notice from the Landlord. The Tenant
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shall immediately notify the Landlord both by telephone and in
writing of any spill, discharge, release or exposure of
Hazardous Materials or of any condition constituting an "imminent
hazard" under any Regulations. The Landlord, the Landlord's
representatives and employees may enter the Premises at any time
during the Term upon no less than twenty-four (24) hours' prior
telephonic notice, accompanied by a representative of the Tenant
if one is available (except in event of emergency) to inspect the
Tenant's compliance herewith, and may disclose any spill,
discharge, release, or exposure or any violation of any
Regulations to any governmental agency with jurisdiction.
Nothing herein contained shall prohibit the Tenant from using
minimal quantities of cleaning fluid and office supplies which
may constitute Hazardous Materials but which are customarily
present in premises devoted to office use, provided that such use
is in compliance with all Regulations and shall be subject to all
of the other provisions of this Section 15.3. The Landlord shall
defend with experienced and competent counsel, indemnify and hold
the Tenant harmless from and against all loss, damages, claims,
liabilities, costs or expenses, including reasonable attorney's
fees, arising from any pre-existing environmental condition
located on the Property, or arising from migration onto the
Property from the property of others (so long as the same was not
caused by the Tenant), which obligation shall survive termination
of this Lease. The Tenant shall not be responsible for any
pre-existing condition in the Premises, or migration onto the
Property or the Premises caused by others (so long as the same
was not caused by the Tenant).
The Tenant shall undertake no environmental testing of the
Property without the Landlord's consent, which consent may be
withheld in the Landlord's sole discretion. Notwithstanding the
foregoing, the Landlord shall not unreasonably withhold its
consent to a request by the Tenant to conduct such testing if
required by law or by a governmental agency, or if required in
connection with a permit for the Permitted Uses, or if the Tenant
reasonably believes that a release for which the Tenant is
responsible hereunder has occurred. If the Tenant requests such
testing, the Landlord may elect to conduct such testing at the
Tenant's expense but at the Landlord's direction, provided that
the scope and expense of the work shall be on commercially
reasonable terms. The provisions of this Article XV shall
survive the expiration or earlier termination of this Lease.
ARTICLE XVI
DEFAULT
16.1 TENANT'S DEFAULT.
The occurrence of any of the following shall constitute an
"Event of Default" on the part of the Tenant:
a) The Tenant shall fail to pay the Rent or other charges
on or before the date on which the same becomes due and payable
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and the same continues for five (5) days after written notice of
such failure by the Landlord to the Tenant, or
b) any default under this Lease which materially,
adversely and immediately jeopardizes the Landlord's interest in
the Leased Premises, such as the Tenant's failure to maintain the
insurance required hereunder, or
c) the Tenant shall fail to perform or observe any other
non-monetary term or condition contained in this Lease within
thirty (30) days after notice from the Landlord thereof, unless
such default is of such a nature that it cannot be cured within
such thirty (30) day period, in which case no event of default
shall occur unless the Tenant shall not commence to cure such
failure promptly within such thirty (30) day period and
thereafter continuously and diligently complete the curing of the
same, or
d) the Tenant shall vacate or abandon the Leased Premises,
or
e) if the Tenant's interest in this Lease shall devolve
upon or pass to any person, whether by operation of law or
otherwise, except as expressly permitted under Article VI,
f) except as otherwise provided by applicable law, if the
estate hereby created shall be taken on execution or by other
process of law, or if the Tenant shall be judicially declared
bankrupt or insolvent according to law, or if any assignment
shall be made of the property of the Tenant for the benefit of
creditors, or if a receiver, guardian, conservator, trustee in
involuntary bankruptcy or other similar officer shall be
appointed to take charge of all or any substantial part of the
Tenant's property by a court of competent jurisdiction, or if a
petition shall be filed for the reorganization of the Tenant
under any provisions of law now or hereafter enacted, and such
proceeding is not dismissed within forty-five (45) days after it
is begun, or if the Tenant shall file a petition for such
reorganization, or for arrangements under any provisions of such
laws providing a plan for a debtor to settle, satisfy or extend
the time for the payment of debts.
16.2 REMEDIES UPON DEFAULT.
(a) If an Event of Default occurs, the Landlord shall have
the right, with or without notice or demand, immediately to
terminate this Lease, and at any time thereafter recover
possession of the Premises or any part thereof and expel and
remove therefrom the Tenant and any other person occupying the
same, by any lawful means, and again repossess and enjoy the
Premises without prejudice to any of the remedies that the
Landlord may have under this Lease, or at law or equity by reason
of the Tenant's default or of such termination.
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(b) Even though the Tenant has breached this Lease, this
Lease shall continue in effect for so long as the Landlord does
not terminate the Tenant's right to possession under Section
16.2(a) hereof, and the Landlord may enforce all of its rights
and remedies under this Lease, including, without limitation, the
right to recover Rent as it becomes due. Acts of maintenance,
preservation or efforts to lease the Premises or the appointment
of a receiver upon application of the Landlord to protect the
Landlord's interest under this Lease shall not constitute an
election to terminate the Tenant's right to possession.
16.3. DAMAGES UPON TERMINATION.
Should the Landlord terminate this Lease pursuant to the
provisions of Section 16.2(a) hereof, the Landlord shall have all
the rights and remedies of a landlord in law or in equity. Upon
such termination, in addition to any other rights and remedies to
which the Landlord may be entitled under applicable law, the
Landlord shall be entitled to recover from the Tenant: (i) the
worth at the time of award of the unpaid Rent and other amounts
which had been earned at the time of termination; (ii) the worth
at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award
exceeds the amount of such Rent loss that the Tenant proves could
have been reasonably avoided; (iii) the worth at the time of
award of the amount by which the unpaid Rent for the balance of
the Term after the time of award exceeds the rental value of the
Premises for the balance of the Term; and (iv) any other amount
necessary to compensate the Landlord for all the detriment
proximately caused by the Tenant's failure to perform its
obligations under this Lease or which, in the ordinary course,
would be likely to result therefrom. The Tenant further
covenants, as an additional cumulative obligation after any such
termination, to punctually pay to the Landlord all sums and
perform all obligations which the Tenant covenants in this Lease
to pay and to perform, as if this Lease had not been terminated.
In calculating the amounts to be paid by the Tenant pursuant to
this Section 16.3, the Tenant shall be credited with any amount
paid to the Landlord pursuant to this Section 16.3 and also (in
respect of the amounts referred to in (i) and (ii)) the net
proceeds of rent obtained by the Landlord by reletting the
Premises through the time of award, after deducting all the
Landlord's expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage
commissions, reasonable fees for legal services and expenses of
preparing the Premises for reletting, it being agreed by the
Tenant that the Landlord may (x) relet the Premises or any part
thereof for a term or terms which may at the Landlord's option be
equal or less than or exceed the period which would otherwise
have constituted the balance of the Term and may grant such
concessions and free rent as the Landlord in its sole judgment
considers advisable or necessary to relet the same and (y) make
such alterations, repairs and decorations in the Premises as the
Landlord in its sole judgment considers advisable or necessary to
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relet the same, and no action of the Landlord in accordance with
the foregoing or failure to relet or collect rent under the
Landlord's reletting of the Premises shall operate or be
construed to release or reduce the Tenant's liability as
aforesaid. The "time of award" shall refer to such time as (I)
the Tenant shall, as a settlement of the amounts due pursuant to
this Section 16.3, pay to the Landlord such sums pursuant to a
written agreement in form and substance satisfactory to the
Landlord, or (II) the date on which a judgment shall be entered
in a court of competent jurisdiction to the effect that the
Tenant shall pay the Landlord the amounts due and owing pursuant
to this Section 16.3. The "worth at the time of award" of the
amounts referred to in (i) and (ii) shall mean such amounts
together with interest at the lesser of eighteen percent (18%)
per annum or the maximum rate allowed by law. The "worth at the
time of award" of the amount referred to in (iii) shall mean such
amounts as computed by referenced to competent appraisal evidence
or the formula prescribed by applicable law.
16.4. COMPUTATION OF RENT FOR PURPOSES OF DEFAULT.
For purposes of computing unpaid Rent which would have
accrued and become payable under this Lease pursuant to the
provisions of Section 16.3, unpaid Rent shall consist of the sum
of:
(1) the total Base Rent for the balance of the Term, plus
(2) a computation of the Operating Expenses and Taxes for
the balance of the Term, the assumed Operating Expenses and Taxes
for the calendar year of the default and each future calendar
year in the Term to be equal to the Operating Expenses and Taxes
for the calendar year prior to the year in which the default
occurs compounded at a per annum rate equal to the mean average
rate of inflation for the preceding five (5) calendar years as
determined by the United States Department of Labor, Bureau of
Labor Statistics Consumer Price Index (All Urban Consumers, All
Items, 1967 equals 100) for the Metropolitan Area or Region of
which Boston, Massachusetts is a part. If such Index is
discontinued or revised, the average rate of inflation shall be
determined by reference to the index designated as the successor
or substitute index by the government of the United States, plus
(3) the amounts, if any, designated in Section 4.1.
16.5. RIGHTS OF LANDLORD IN BANKRUPTCY.
Nothing contained in this Lease shall limit or prejudice the
right of the Landlord to prove for and obtain in proceedings for
bankruptcy or insolvency, by reason of the termination of this
Lease, an amount equal to the maximum allowed by any statute or
rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or
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not the amount be greater, equal to, or less than the amount of
the loss or damages referred to in this Article XVI.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 WAIVER.
Failure on the part of either party to complain of any
action or non-action on the part of the other party, no matter
how frequently the same may occur or how long the same may
continue, shall never be a waiver by either party of their
respective rights hereunder. Further, no waiver at any time of
any of the provisions hereof by either party shall be construed
as a waiver of any of the other provisions hereof, and a waiver
at any time of any of the provisions hereof shall not be
construed as a waiver at any subsequent time of the same
provisions. The consent or approval of the Landlord to or of any
action by the Tenant requiring such consent or approval shall not
be construed to waive or render unnecessary the Landlord's
consent or approval to or of any subsequent similar act by the
Tenant. No option or right granted to the Tenant to renew this
Lease or to extend the Lease Term shall be considered to give the
Tenant any further option or right to renew or extend.
17.2 COVENANT OF QUIET ENJOYMENT.
Subject to the terms and provisions of this Lease and so
long as the Tenant is not in default under this Lease beyond the
expiration of all applicable notice and cure periods, the Tenant
shall lawfully, peaceably and quietly have, hold, occupy and
enjoy the Premises during the term hereof, as the same may be
extended, without hindrance or ejection by the Landlord or by any
persons lawfully claiming under the Landlord.
17.3 NO PERSONAL LIABILITY OF LANDLORD.
The Tenant agrees to look solely to the Landlord's then
equity interest in the Property at the time owned, or in which
the Landlord holds an interest as ground lessee, for recovery of
any judgment from the Landlord; it being specifically agreed that
neither the Landlord (whether the Landlord be an individual,
partnership, firm, corporation, trustee or other fiduciary) nor
any of the partners comprising the Landlord, nor any beneficiary
of any trust of which any person holding the Landlord's interest
is trustee nor any successor in interest to any of the foregoing
shall ever be personally liable for any such judgment, or for the
payment of any monetary obligation to the Tenant. The covenants
of the Landlord contained in this Lease shall be binding upon the
Landlord and the Landlord's successors only with respect to
breaches occurring during the Landlord's and the Landlord's
successors' respective periods of ownership of the Landlord's
interest hereunder.
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17.4 NOTICE TO MORTGAGEE AND GROUND LESSOR; OPPORTUNITY TO CURE.
After receiving notice from any person, firm or other entity
that it holds a mortgage which includes the Premises as part of
the mortgaged premises, or that it is the ground lessor under a
lease with the Landlord, as ground lessee, which includes the
Premises as a part of the demised premises, no notice from the
Tenant to the Landlord shall be effective unless and until a copy
of the same is given to such holder or ground lessor, and the
curing of any of the Landlord's defaults by such holder or ground
lessor shall be treated as performance by the Landlord.
Accordingly, no act or failure to act on the part of the Landlord
which would entitle the Tenant under the terms of this Lease, or
by law, to be relieved of the Tenant's obligations hereunder or
to terminate this Lease, shall result in a release or termination
of such obligations or a termination of this Lease unless (i) the
Tenant shall have first given written notice of the Landlord's
act or failure to act to such holder or ground lessor, if any,
specifying the act or failure to act on the part of the Landlord
which could or would give basis to the Tenant's rights; and (ii)
such holder or ground lessor, after receipt of such notice, has
failed or refused to correct or cure the condition complained of
within a reasonable time thereafter, but nothing contained in
this paragraph shall be deemed to impose any obligation on any
such holder or ground lessor to correct or cure any such
condition. "Reasonable time" as used above means and includes a
reasonable time to obtain possession of the Lot and Building if
any such holder or ground lessor elects to do so and a reasonable
time to correct or cure the condition if such condition is
determined to exist.
17.5 NO BROKERAGE.
The Landlord and the Tenant represent and warrant to each
other that they have dealt only with James Elcock of Meredith &
Grew ("the Landlord's Broker"), and David Pergola of Meredith &
Grew ("the Tenant's Broker") in the negotiation of this Lease.
Each party agrees to defend, indemnify and hold the other party
harmless from and against any claim, liability, cost or expense
arising from a breach of the foregoing representation. The
Landlord shall make payment of the brokerage fee due to the
Landlord's Broker pursuant to and in accordance with a separate
agreement between the Landlord and the Landlord's Broker. The
Tenant's Broker shall look only to the Landlord's Broker for any
commission or fee claimed by the Tenant's Broker, and the
Landlord shall have no liability therefor. The Tenant hereby
agrees to indemnify and hold the Landlord and the Landlord's
agent harmless of and from any and all damages, losses, costs or
expenses (including without limitation, all reasonable attorneys'
fees and disbursements) by reason of any claim of or liability to
the Tenant's Broker and any other broker or other person claiming
through the Tenant and arising out of or in connection with the
negotiation, execution and delivery of this Lease, except for the
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Landlord's Broker (unless and to the extent occasioned by the
Landlord's failure to pay the Landlord's Broker). Additionally,
the Tenant acknowledges and agrees that the Landlord shall have
no obligation for payment of any brokerage fee or similar
compensation to any person with whom the Tenant has dealt or may
in the future deal with respect to leasing of any additional or
expansion space in the Building or renewals or extensions of this
Lease (other than the Landlord's Broker or other persons with
whom the Landlord has dealt or with whom the Landlord may deal in
the future).
17.6 INVALIDITY OF PARTICULAR PROVISIONS.
If any term or provision of this Lease, or the application
thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent
permitted by law.
17.7 PROVISIONS BINDING, ETC.
Except as herein otherwise expressly provided, the terms
hereof shall be binding upon and shall inure to the benefit of
the successors and assigns, respectively, of the Landlord and the
Tenant and, if the Tenant shall be an individual, upon and to his
heirs, executors, administrators, legal representatives,
successors and assigns. Each term and each provision of this
Lease to be performed by either party shall be construed to be
both a covenant and a condition. The reference contained to
successors and assigns of the Tenant is not intended to
constitute a consent to assignment by the Tenant, but has
reference only to those instances in which the Landlord may later
give consent to a particular assignment as required by those
provisions of Article VI hereof or with respect to which the
Landlord's consent is not required under Article VI above. If
the Tenant be several persons, natural or corporate, the
liability of such persons for compliance with the obligations of
the Tenant under this Lease shall be joint and several. In all
instances where the Tenant is required under this Lease to pay
any sum or do any act at or by a particular time. It is agreed
that time is of the essence of the Lease.
17.8 RECORDING.
The Tenant agrees not to record this Lease. Each party
hereto agrees, on request by the other, to execute a Notice or
Short Form of this Lease in recordable form reasonably acceptable
to both parties at the Tenant's expense.
17.9 NOTICES.
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Whenever, by the terms of this Lease, notice shall or may be
given either to the Landlord or to the Tenant, such notice shall
be in writing and shall be sent by registered or certified mail,
postage prepaid or by so-called "express" mail (such as Federal
Express or U.S. Postal Service Express Mail):
If intended for the Landlord, addressed to the Landlord at the
address set forth on the first page of this Lease, or to such
other address or addresses as may from time to time hereafter be
designated by the Landlord by like notice.
with a copy to: Meredith & Grew Incorporated
160 Federal Street
Boston, Massachusetts 02110-1701
If intended for the Tenant, addressed to the Tenant at the
Premises, or to such other address or addresses as may from time
to time hereafter be designated by the Tenant by like notice.
with a copy to : Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254-9046
Attn: Seth Hoogasian, Esq.
All such notices shall be deemed duly given and received
upon delivery in hand or, (a) if mailed by U.S. Mail, on the
earlier of the third business day following the mailing thereof,
or the day of its receipt, or, (b) if sent by a recognized
overnight courier, on the day following deposit with the courier
service.
17.10 WHEN LEASE BECOMES BINDING.
Employees or agents of the Landlord have no authority to
make or agree to make a lease or any other agreement or
undertaking in connection herewith. The submission of this
document for examination and negotiation does not constitute an
offer to lease, or a reservation of, or option for, the Premises,
and this document shall become effective and binding only upon
the execution and delivery hereof by both the Landlord and the
Tenant. All negotiations, consideration, representations and
understandings between the Landlord and the Tenant are
incorporated herein and may be modified or altered only by
written agreement between the Landlord and the Tenant, and no act
or omission of any employee or agent of the Landlord or the
Tenant shall alter, change or modify any of the provisions
hereof.
17.11 PARAGRAPH HEADINGS.
The paragraph headings throughout this instrument are for
convenience and reference only, and the words contained therein
shall in no way be held to explain, modify, amplify or aid in the
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interpretation, construction or meaning of the provisions of this
Lease.
17.12 RIGHTS OF MORTGAGEE.
If any holder of a mortgage or holder of a ground lease of
property which includes the Premises, originally given to a
lender, and executed and recorded subsequent to the date of this
Lease, shall so elect, the interest of the Tenant hereunder shall
be subordinate to the rights of such holder, provided that the
Landlord shall obtain from such holder an agreement with the
Tenant in recordable form, binding upon the successors and
assigns of the parties thereto, by the terms of which such holder
agrees not to disturb the possession and other rights of the
Tenant under or pursuant to this Lease during the Lease Term, as
the same may be extended, so long as the Tenant is not in default
hereunder beyond the expiration of all applicable notice and
cure periods, and in the event of acquisition of title, or coming
into possession, by said holder through foreclosure proceedings
or otherwise, to accept the Tenant as tenant of the Premises
under the terms and conditions hereof, and to assume and perform
all of the Landlord's obligations hereunder which arise from and
after possession of the Property (it being expressly understood
that such holder shall have no liability as to any obligations of
Landlord arising prior to such possession). If any holder of a
mortgage or holder of a ground lease of property which includes
the Premises, originally given to a lender, and executed and
recorded prior to the date of this Lease, shall so elect, this
Lease, and the rights of the Tenant hereunder, shall be superior
in right to the rights of such holder, with the same force and
effect as if this Lease had been executed and delivered, and
recorded, or a statutory notice hereof recorded, prior to the
execution, delivery and recording of any such mortgage. No
assignment of this Lease (except an assignment as to which the
Landlord's consent is not required under this Lease) and no
agreement to make or accept any surrender, termination or
cancellation of this Lease and no agreement to modify so as to
reduce the rent, change the term, or otherwise materially change
the rights of the Landlord under this Lease, or to relieve the
Tenant of any obligations or liability under this Lease, shall be
valid unless consented to in writing by the Landlord's mortgagees
of record, if any. The Tenant agrees on request of the Landlord
to execute and deliver from time to time any agreement which may
reasonably be deemed necessary to implement the provisions of
this Section 17.12. The Landlord hereby represents to the Tenant
that there are no mortgages of the Property of record as of the
date of this Lease.
17.13 STATUS REPORT; MODIFICATION.
Recognizing that the Landlord may find it necessary to
establish to third parties, such as accountants, banks,
mortgagees or the like, the then current status of performance
hereunder the Tenant agrees to execute in form satisfactory to
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the Landlord within fifteen (15) days of a written request
therefor a certificate stating (i) that this Lease is then in
full force and effect and has not been modified or, if modified,
setting forth the specific nature of all modifications, (ii) the
date to which the Rent and any additional rent or other charges
has been paid, (iii) whether or not the Landlord is in default
under this Lease (and if the Landlord is in default, setting
forth the specific nature of all such defaults), and (iv) any
other matters relating to the Lease reasonably requested by the
Landlord. Without limiting the generality of the foregoing, the
Tenant specifically agrees, promptly upon the commencement of the
Term hereof, to acknowledge to the Landlord satisfaction of any
requirements with respect to construction except for such
matters as the Tenant may set forth specifically in such
statement. The Tenant acknowledges that any statement delivered
pursuant to this Section 17.13 may be relied upon by any
purchaser or owner of the Building, or the Lot or any part
thereof, or the Landlord's interest in the Building or the Lot or
any ground or underlying lease, or by any mortgagee, or by any
assignee of any mortgagee, or by any lessee under any ground or
underlying lease.
17.14 INTENTIONALLY OMITTED.
17.15 SELF-HELP.
The Landlord shall have the right, but shall not be
required, to pay such sums or do any act which requires the
expenditure of moneys which may be necessary or appropriate by
reason of the failure or neglect of the Tenant to perform any of
the provisions of this Lease after the expiration of applicable
notice and grace periods, and in the event of the exercise of
such right by the Landlord, the Tenant agrees to pay to the
Landlord forthwith upon demand the cost of performing the same,
plus an administrative charge (covering overhead and profit) not
to exceed 15% of such cost; and if the Tenant shall default in
such payment, the Landlord shall have the same rights and
remedies as the Landlord has hereunder for the failure of the
Tenant to pay the Rent.
17.16 RELIEF LIMITED
Whenever the Tenant shall claim under any provision of this
Lease, that the Landlord has unreasonably withheld or delayed its
consent to some request of the Tenant, the Tenant shall have no
claim for damages by reason of such alleged withholding or delay,
and the Tenant's sole remedy therefor shall be declaratory or
injunctive relief, but in any event without the recovery of
damages.
17.l7 HOLDING OVER.
Any holding over by the Tenant after the expiration of the
term of this Lease without the written consent of the Landlord
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shall be treated as a tenancy at sufferance at 150% of the rent
specified herein (prorated on a daily basis) and shall otherwise
be on the terms and conditions set forth in this Lease, so far as
applicable.
Any holding over by the Tenant after the expiration of the
term of this Lease with the written consent of the Landlord shall
be on a month-to-month basis, terminable by either party on
thirty (30) days' notice and shall be at the same Rent specified
herein and shall otherwise be on the terms and conditions set
forth herein, so far as applicable.
17.18 CERTIFICATE.
If the Tenant is a corporation, each of the persons
executing this instrument on behalf of the Tenant, hereby
covenants and warrants that the Tenant is a duly existing and
valid corporation and that the Tenant is qualified to do business
in Massachusetts. Further, if the Tenant is a corporation, the
Tenant shall deliver to the Landlord, at the time of execution of
this Lease, a Clerk's or Secretary's Certificate in the form
attached hereto as Exhibit D (or other suitable form satisfactory
to counsel for the Landlord), as to the due authorization of the
execution of this Lease and incumbency of the signing officer.
17.19 LATE PAYMENT.
(a) To the extent provided in Section 4.1(c) above, any Rent
due under this Lease that is not paid to the Landlord within five
(5) days after the date due shall bear interest at the Interest
Rate from the date due until fully paid. The payment of interest
shall not cure any default by the Tenant under this Lease. In
addition, the Tenant acknowledges that the late payment by the
Tenant to the Landlord of rent will cause the Landlord to incur
costs not contemplated by this Lease, the exact amount of which
will be extremely difficult and impracticable to ascertain.
Those costs may include, but not limited to, administrative,
processing and accounting charges and late charges which may be
imposed on the Landlord by the terms of any ground lease,
mortgage or trust deed covering the Demised Premises.
Accordingly, if any Rent due from the Tenant shall not be
received by the Landlord or the Landlord's designee within five
(5) days after receipt of notice from the Landlord, then the
Tenant shall pay to the Landlord, in addition to the interest
provided above, a late charge in the amount of five percent (5%)
of the delinquent installment of Rent. Acceptance of a late
charge by the Landlord shall not constitute a waiver of the
Tenant's default with respect to the overdue amount, not shall it
prevent the Landlord from exercising of its other rights and
remedies.
(b) Should the Tenant deliver to the Landlord, at any time
during the Term, two (2) or more insufficient funds checks, the
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Landlord may require that all monies then and thereafter due from
the Tenant be paid to the Landlord by cashier's check.
17.20 OPTION TO EXTEND.
On the conditions (which conditions the Landlord may waive,
at its election, by written notice to the Tenant at any time)
that the Tenant is not in default of its covenants and
obligations under the Lease and that only the Tenant itself (or
an Affiliated Tenant) is occupying seventy-five percent (75%) or
more of the Premises then demised to the Tenant, both as of the
time of exercise of the Option to Extend, as hereinafter defined,
and at the commencement of the Extension Period, as hereinafter
defined, then the Tenant shall have the right to extend the Term
hereof (the "Option to Extend") for one additional term of five
(5) years (the "Extension Period"), to commence immediately upon
the expiration of the Term.
The Tenant may exercise its Option to Extend by giving
written notice to the Landlord (the "Extension Notice") on or
before the date which is nine (9) months prior to the expiration
of the Term. Such Extension Period shall be upon the same terms
and conditions of this Lease, except that the Base Rent payable
shall be (i) 95% of the then fair market effective rent for the
Premises excluding any improvements of a specialized nature
installed by the Tenant, if the Tenant or an Affiliated Tenant is
occupying the entirety of the Premises, and (ii) 100% of the then
fair market effective rent for the Premises excluding any
improvements of a specialized nature installed by the Tenant, if
the Tenant or an Affiliated Tenant is not occupying the entirety
of the Premises. For the purpose of this Section, fair market
effective rent shall mean the Base Rent with respect to leases
for comparable premises in the area. The Tenant shall, during
the Extension Period, pay the Tenant's Proportionate Share of the
Landlord's Operating Expenses and the Tenant's Proportionate
Share of Real Estate Taxes. Said fair market effective rent for
the Premises shall be agreed upon by the Landlord and the Tenant;
provided, however, if the Landlord and the Tenant are unable to
agree on said fair market effective rent within thirty (30) days
of the date of the Extension Notice, said fair market effective
rent shall be conclusively determined by three (3) appraisers.
Within fifteen (15) days of the expiration of such thirty (30)
day period, the Landlord and the Tenant shall each select an
appraiser, who shall select a third. Should the two appraisers
fail to agree on a third within fifteen (15) days of the date on
which such appraisers have been appointed, or if either the
Landlord or the Tenant shall fail to appoint an appraiser within
the time provided, such appraiser shall be appointed by the
American Institute of Appraisers. Each party shall bear the cost
of the appraiser selected by such party, and the cost of the
third appraiser shall be shared equally by the Landlord and the
Tenant. If the three appraisers are unable to agree upon such
fair market effective rent within fifteen (15) days of the
appointment of the third appraiser, the fair market effective
PAGE
<PAGE>
rent shall be that determined by the appraiser not selected by
either the Landlord or the Tenant.
17.21 RIGHT OF FIRST OFFER.
Provided the Tenant, together with any Affiliated Tenant, is
not in default of the Lease, is in occupancy of the entire Leased
Premises, and subject to existing encumbrances (including but not
limited to existing tenant rights and privileges), the Tenant
shall have the right of first offer to lease the remaining
rentable space on the first floor of the Building ("Expansion
Space"), prior to the Landlord leasing said Expansion Space to a
third party. Prior to marketing said Expansion Space, the
Landlord shall first offer the Expansion Space to the Tenant, in
writing, at terms and conditions acceptable to the Landlord. The
Tenant shall have twenty (20) days from delivery of said written
notice by the Landlord within which to notify the Landlord of its
intent to exercise this right of first offer. In the event the
Tenant notifies the Landlord it does not intend to exercise this
right of first offer or fails to notify the Landlord as
hereinabove provided, the Landlord shall have the right to lease
the Expansion Space to any third party on terms not materially
more favorable to such party than those contained in the Offer
Notice to the Tenant, and the Tenant in that event shall have no
further rights under this Section 17.21 unless the Landlord fails
to consummate such third party lease within six (6) months of the
date of delivery of the Landlord's Offer Notice, in which event
the Tenant's Right of First Offer pursuant to this Section 17.21
shall continue in full force and effect. In the event the Tenant
elects to exercise this right of first offer, the Tenant agrees
to execute documents reasonably requested by the Landlord to
evidence the expansion. This Right of First Offer shall be
ongoing during the Term and Extension Periods, if exercised, but
this sentence shall not be deemed to require the Landlord to
offer any space to the Tenant more than once without the Landlord
having entered into an intervening lease for such space (except
to the extent expressly otherwise provided herein). The
foregoing Section 17.21 shall not be deemed to limit or encumber
the Landlord's right to enter into a new lease, extend or renew a
lease with an existing tenant for space then occupied by such a
tenant.
17.22 LANDLORD'S WARRANTIES.
The Landlord warrants and represents that the Landlord has
good and marketable record title to the Premises, free from any
encumbrances which prohibit or interfere with the exercise or
enjoyment by the Tenant of the Tenant's rights and privileges
under this Lease and that the Landlord has full right, power and
authority to lease the Premises as herein provided.
17.23 TENANT'S RIGHT TO CONTEST.
PAGE
<PAGE>
So long as the Tenant shall be contesting, in good faith and
by appropriate legal proceedings, the validity of any law,
ordinance, order or regulation, compliance with which is the
responsibility of the Tenant under this Lease, the Tenant may
defer compliance with the same provided the Tenant first gives
the Landlord assurance reasonably satisfactory to the Landlord
against any loss, cost or expense on account thereof, including
without limitation posting of a surety bond in an amount and from
an issuer reasonably satisfactory to the Landlord, and further
provided that the same does not subject the Landlord or its
interest in the Property to liability arising therefrom.
IN WITNESS WHEREOF, the parties hereto have caused this
Lease to be executed, under seal, as of the Date set forth in
Section 1.1.
LANDLORD: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: Meliha E. Armour
Meliha E. Armour
Its: Associate Investment Officer
hereunto duly authorized
By: Anne Comstock
Anne Comstock
Its: Investment Officer
hereunto duly authorized
TENANT: THERMO VOLTEK CORP.
By: Michael D. Norton
Michael D. Norton
Its: Vice President
hereunto duly authorized
Exhibit 11
THERMO VOLTEK CORP.
Computation of Earnings per Share
Three Months Ended
-----------------------------
March 30, April 1,
1996 1995
- -----------------------------------------------------------------------------
Computation of Primary Earnings per Share:
Net Income (a) $ 937,000 $ 415,000
----------- -----------
Shares:
Weighted average shares outstanding 5,135,080 4,044,918
Add: Shares issuable from assumed exercise
of options (as determined by the
application of the treasury
stock method) 181,640 -
----------- -----------
Weighted average shares outstanding,
as adjusted (b) 5,316,720 4,044,918
----------- -----------
Primary Earnings per Share (a) / (b) $ .18 $ .10
=========== ===========
Computation of Fully Diluted Earnings
per Share:
Income:
Net Income $ 937,000 $ 415,000
Add: Convertible debt interest, net of tax 106,000 299,000
----------- -----------
Income applicable to common stock assuming
full dilution (c) $ 1,043,000 $ 714,000
----------- -----------
Shares:
Weighted average shares outstanding 5,135,080 4,044,918
Add: Shares issuable from assumed conversion
of subordinated convertible obligations 3,771,516 4,805,708
Shares issuable from assumed exercise of
options (as determined by the application
of the treasury stock method) 188,760 116,044
----------- -----------
Weighted average shares outstanding,
as adjusted (d) 9,095,356 8,966,670
----------- -----------
Fully Diluted Earnings per Share (c) / (d) $ .11 $ .08
=========== ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
VOLTEK CORP.'S QUARTERLY REPORT FILED ON FORM 10-Q FOR THE QUARTER ENDED MARCH
30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 12,601
<SECURITIES> 21,124
<RECEIVABLES> 10,147
<ALLOWANCES> 489
<INVENTORY> 9,160
<CURRENT-ASSETS> 53,683
<PP&E> 7,869
<DEPRECIATION> 4,813
<TOTAL-ASSETS> 69,149
<CURRENT-LIABILITIES> 10,685
<BONDS> 21,005
<COMMON> 262
0
0
<OTHER-SE> 25,697
<TOTAL-LIABILITY-AND-EQUITY> 69,149
<SALES> 10,621
<TOTAL-REVENUES> 10,621
<CGS> 5,390
<TOTAL-COSTS> 5,390
<OTHER-EXPENSES> 710
<LOSS-PROVISION> 43
<INTEREST-EXPENSE> 435
<INCOME-PRETAX> 1,327
<INCOME-TAX> 390
<INCOME-CONTINUING> 937
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 937
<EPS-PRIMARY> .18
<EPS-DILUTED> .11
</TABLE>
